Document:

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                                                                   EXHIBIT 10.21

                           PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement ("Agreement") is made this 31st day of March,
2000, between UNION OIL COMPANY OF CALIFORNIA, a California corporation, whose
address is P. O. Box 69200, Lafayette, Louisiana 70593-9200 ("Seller"), and
ENERGY PARTNERS, LTD., a Delaware corporation, whose address is 201 St. Charles
Avenue, Suite 3400, New Orleans, Louisiana 70170 ("Purchaser").

                                    RECITALS

WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to purchase
from Seller on the terms and conditions set forth in this Agreement certain oil
and gas interests, properties and related rights.

NOW, THEREFORE, for good and valuable consideration and the covenants and
agreements contained herein, Seller and Purchaser agree as follows:

                                       I.

                                PURCHASE AND SALE

1.1      EFFECTIVE DATE AND ASSETS AND DISCLAIMER OF REPRESENTATIONS AND
         WARRANTIES: Subject to the terms and conditions of this Agreement,
         Seller shall sell and Purchaser shall purchase and pay for at Closing
         (as defined herein), effective as of 7:00 a.m. on January 1, 2000
         ("Effective Date"), ON AN "AS IS, WHERE IS, WITH ALL FAULTS" BASIS,
         WITHOUT ANY REPRESENTATION OR WARRANTY OF TITLE, EXCEPT AS SET FORTH IN
         SECTION 1.6, WHATSOEVER, EITHER EXPRESS OR IMPLIED, EVEN FOR THE RETURN
         OF THE PURCHASE PRICE, AND WITHOUT ANY OTHER REPRESENTATIONS AND
         WARRANTIES OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING,
         WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY OF TITLE, FITNESS
         FOR A PARTICULAR PURPOSE, MERCHANTABILITY, OR FREEDOM FROM HIDDEN VICES
         OR DEFECTS OF THE MATERIAL, EQUIPMENT OR FACILITIES CONVEYED, AND
         WITHOUT WARRANTY OF ANY KIND OR NATURE WHATSOEVER, the following:

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All of Seller's right, title and interest in and to:

(a)      The oil, gas and mineral leases described on Exhibit "A" attached
         hereto, including any and all record title, operating rights, leasehold
         interests, oil and gas leasehold estates, royalties, overriding
         royalties and other mineral interests as set forth in Exhibit "A"
         attached hereto and made a part hereof, whether or not specifically
         described on said exhibit ("Leasehold Property"); and,

(b)      All wells, equipment and facilities which are located on, appurtenant
         to, or used directly in connection with the production, treatment or
         transportation of oil and gas from the Leasehold Property including but
         not limited to platforms, pipelines, gathering systems, fixtures, tools
         and other personal property acquired for use or used on the Leasehold
         Property; and,

(c)      Any easements, rights of way, permits, licenses, surface leases, use
         agreements, and servitudes to the extent assignable, applicable or used
         in connection with operation of the Leasehold Property, including but
         not limited to those listed on Exhibit "B", together with all of
         Seller's rights and interests in and to all units, pooling and
         unitization agreements, operating agreements, gas balancing agreements,
         gas sales contracts and other agreements and instruments to the extent
         that they directly relate to or are associated with the Leasehold
         Property, including, but not limited to those identified on Exhibit "E"
         attached hereto; except any insurance contracts or bonds held by Seller
         or its parent, subsidiary or affiliated Corporations for Seller's
         benefit; and any employment, consulting, office lease or accounting
         service contracts; and,

(d)      All other miscellaneous interests or other assets on or used in
         connection with the Leasehold Property, including at Purchaser's
         expense, copies of all files and records (except as set forth below)
         relating to the Leasehold Property: subject to any restrictions on
         Seller's disclosure of the same, including but not limited to lease
         files, unit files, lease contract files, well files and geological
         data, but excluding data or information which is (1) utilized to
         calculate reserves (2) restricted by third party agreement (3) covered
         by the attorney-client privilege and (4) corporate, tax or computer
         records (collectively, the "Records"). THIS AGREEMENT BY SELLER TO
         CONVEY COPIES OF THE AFOREMENTIONED RECORDS IS GRANTED BY SELLER TO THE
         EXTENT THAT SELLER HAS AUTHORITY TO DO SO WITHOUT VIOLATING ANY
         CONFIDENTIALITY OBLIGATIONS TO A THIRD PARTY, IS WITHOUT WARRANTY AS TO
         THE ACCURACY OR COMPLETENESS OF THE INFORMATION DELIVERED, AND SHALL BE
         AT PURCHASER'S SOLE EXPENSE.

All of the foregoing rights, interests and properties are hereinafter
collectively referred to as the "Assets."

It is specifically agreed that Seller is not selling and Purchaser is not
purchasing the following assets ("Excluded Assets"):

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         (i)      Those interests in pipelines, facilities, contract rights and
                  surface access agreements owned by Unocal that are not used in
                  connection with the Assets or which cover lands described in
                  the Leasehold Property, but which are used in connection with
                  properties that are not being sold under the terms of this
                  Agreement to the extent only identified on Exhibit "C";

         (ii)     any right to use the "Seller" name, marks, trade dress or
                  insignia, or to use the name of any other subsidiary of Seller
                  and all of Seller's intellectual property, including, but not
                  limited to patents, trade secrets, and copyrights;

         (iii)    all amounts due or payable to Seller as adjustments or refunds
                  under any contracts affecting the Assets for all periods of
                  time prior to the Effective Date, specifically including,
                  without limitation, amounts recoverable from audits under
                  operating agreements;

         (iv)     all rights, titles, claims and interests of Seller or its
                  Affiliates, which accrued prior to the Effective Date, to or
                  under any policy or agreement of insurance or indemnity, any
                  bond, or to any insurance proceeds or awards; and any
                  employment, consulting, office lease or accounting service
                  contracts;

         (v)      all claims and chooses in action of Seller arising from acts,
                  omissions or events, or damages to or destruction of property,
                  occurring prior to the Effective Date; and

         (vi)     all proceeds, benefits, refunds, settlement, income or revenue
                  accruing and attributable to the Assets prior to the Effective
                  Date, and any claims of Seller for refunds of or losses
                  carried forwards with respect to taxes attributable to the
                  Assets for any period prior to the Effective Date.

1.2      CLOSING: Closing, as used herein, shall mean the date on which the
         Purchase Price (as defined below) is to be paid to Seller and the
         conveyancing instruments (as described herein) are to be delivered to
         Purchaser. Closing shall occur on March 31, 2000, at Seller's office
         located at Suite 3400, 201 St. Charles Avenue, New Orleans, Louisiana
         70170, or at such other place, date and time as may be mutually agreed
         upon by Seller and Purchaser.

1.3      ASSUMPTION OF OBLIGATIONS: From and after the Effective Date, but
         subject to the terms of Section 1.5 and except for those matters
         specifically retained by Seller in this Agreement and those matters set
         forth on Exhibit "D", for which Seller retains liability ("Retained
         Matters"), Purchaser shall personally assume, pay for, discharge, be
         responsible for, perform and comply with all duties, liabilities and
         obligations of Seller, express or implied, relating to the Assets,
         including, but not limited to, those arising from or by virtue of
         Contract, as hereinafter defined, and those arising from or by virtue
         of any permit, statute, rule, regulation or order of any governmental
         authority, together with all

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         Assumed Liabilities (as hereinafter defined), REGARDLESS OF WHETHER
         ATTRIBUTABLE (IN WHOLE OR IN PART) TO THE SOLE, JOINT OR CONCURRENT
         NEGLIGENCE, STRICT LIABILITY, BREACH OF CONTRACT, ENVIRONMENTAL
         LIABILITY, REGULATORY LIABILITY OR OTHER FAULT OR RESPONSIBILITY OF
         SELLER OR ANY OTHER PERSON OR PARTY, except as otherwise set forth
         herein. For purposes hereof, the following terms shall have the
         following respective definitions:

         "ASSUMED LIABILITIES" means all Environmental Liabilities, General
         Liabilities, Plugging and Abandonment Obligations and other liabilities
         and obligations assumed by Purchaser under the terms of this Agreement.

         "GENERAL LIABILITIES" means subject to the limitations of Section 1.5
         below, all obligations, duties, losses, liabilities, claims, fines,
         expenses, damages, costs (including attorneys fees and expenses) or
         penalties created by, related to, or arising out of ownership or
         operation of the Assets, any contractual relationship, or any
         applicable law, order, rule, regulation, judgment or decree of any
         federal, state, tribal, county or municipal governing authority having
         jurisdiction over the Assets or the Parties, whether Accruing before or
         after the Effective Date and whether attributable, in whole or in part,
         to actions, events or conditions existing or occurring before or after
         the Effective Date; excluding those obligations, duties or liabilities
         for the payment of royalties, overriding royalties and taxes which
         Accrued prior to the Effective Date, those addressed in Section 1.5 and
         Retained Matters.

         "ENVIRONMENTAL LAWS" means any applicable laws, orders, rules,
         regulations, judgments or decrees of any federal, state, tribal, county
         or municipal governing authority having jurisdiction over any Asset or
         Party which relate to pollution, the protection or cleanup of the
         environment, or the release or disposal of deleterious substances into
         the environment, including but not limited to ambient air, surface
         water, groundwater, land surface or subsurface strata; including all
         such laws, orders, rules, regulations, judgments or decrees as they may
         be amended, varied or modified in the future.

         "ENVIRONMENTAL LIABILITIES" means all obligations, duties, losses,
         liabilities, claims, fines, expenses, damages, costs (including
         attorney's fees and expenses) or penalties created by, related to, or
         arising out of any Environmental Law, whether Accruing before or after
         the Effective Date, and whether attributable, in whole or in part, to
         actions, events or conditions existing or occurring before or after the
         Effective Date.

         "PLUGGING AND ABANDONMENT OBLIGATIONS" means all usual and normal
         prudent operations for the plugging, abandonment, surface restoration,
         site clearance, and disposal of related waste materials, including NORM
         and asbestos, of all oil, gas, injection, water or other wells, sumps,
         pits, ponds, tanks, impoundments, foundations, pipelines, structures
         and equipment of any kind or description on the Assets, in compliance
         with all applicable contractual obligations and applicable rules and
         regulations of governmental bodies having

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         jurisdiction over the Assets. Plugging and Abandonment Obligations do
         not include cleanup of polluted lands, air or water other than routine
         cleanup normally associated with plugging and abandonment (such cleanup
         obligations which are other than routine being included within the
         definition of Environmental Liabilities).

         "ACCRUING" or "ACCRUED" means, with respect to any obligation, duty,
         loss, liability, claim, fine, expense, damage, cost or penalty, the
         occurring or happening of any event which causes such obligation, duty,
         loss, liability, claim, fine, expense, damage, cost or penalty to
         become demandable, requirable, assertible, enforceable, due and owing,
         or being incurred or occurring, as the case may be.

1.4      CALL ON PRODUCTION:

(a)      On Oil - If not already reserved by another party, Seller hereby
         reserves, at its option, the option to buy any and all oil and other
         liquid hydrocarbons produced from or attributable to the Assets from
         the Effective Date to May 1, 2000 at 7:00 a.m.

(b)      Applicable price - The price to be paid shall be:

         (i)      Seller's posted market price at the wells for oil or
                  condensate, or if Seller has no posted price at the well
                  prevailing in the field where produced for substance of like
                  grade and gravity. If there are no such posted price, the
                  price to be paid by Seller will be the average price being
                  paid by purchasing companies in the field or locality where
                  the Assets are located for substance of like grade and
                  gravity.

         (ii)     Seller shall never be required to pay a price higher than the
                  price allowed by State or Federal statutes or regulations in
                  effect at the time of purchase.

1.5      RETAINED CONTRACTUAL OBLIGATIONS: To the extent binding on Seller,
         Purchaser and Seller agree that the Assets shall be conveyed subject to
         the terms and conditions of the contracts, agreements, letter
         agreements, pooling agreements, easements, rights-of-way and all other
         agreements or instruments which are listed on Exhibit "E" and the
         leases described on Exhibit "A" hereto (collectively the "Contracts").

         Upon closing, Purchaser shall expressly assume Seller's obligations
         under the Contracts insofar as such obligations relate to the Assets
         and are attributable to the period of time after the Effective Date.

         However, under no circumstance shall Purchaser assume or be responsible
         for (i) contractual performance or non-performance by Seller due and
         owing prior to the Effective Date; (ii) underpayments or failure to pay
         royalties, overriding royalties, and other burdens due by Seller on or
         under the Assets prior to the Effective Date; or (iii) any accounting
         or payments due to third parties for hydrocarbon production (or the
         proceeds from the sale thereof) or transportation or processing
         attributable to the period of time

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         prior to the Effective Date; all of which shall remain the
         responsibility of Seller for which Seller shall indemnify and hold
         harmless Purchaser.

1.6      TITLE:

         Seller will convey all of its rights, title and interest in and to the
         Assets to Purchaser without warranty of title, express, statutory or
         implied, EXCEPT that Seller specifically warrants and agrees to defend
         title to the interests in the Assets as set forth and described on
         Exhibit "A" hereto, against any and all claims and demands of all
         persons claiming an interest (including an encumbrance) in the Assets
         by, through and/or under Seller and/or Spirit (as hereinafter defined)
         but not otherwise; and with full substitution and subrogation to all
         rights and actions of warranty against all former owners and vendors.

                                       II.

                                  CONSIDERATION

2.1      PURCHASE PRICE; ALLOCATIONS: Subject to the terms and conditions of
         this Agreement, Purchaser shall purchase the Assets at Closing for
         forty-eight million two hundred fifty thousand ($48,250,000.00)
         ("Purchase Price"), in cash, subject to the adjustments provided in
         Section 2.3 below and other amounts provided elsewhere herein.

2.2      Intentionally omitted.

2.3      ADJUSTED PURCHASE PRICE: The net price which Purchaser shall pay for
         the Assets ("Adjusted Purchase Price") shall be:

(a)      The Purchase Price as set forth in Section 2.1 above;

(b)      Plus the amount of all expenditures made by Seller that are
         attributable to the Assets for the period between the Effective Date
         and Closing, including, without limitation, royalties, rentals and
         similar charges and expenses, including those billed under applicable
         operating agreements, and all prepaid expenses;

(c)      Less the amount of (or Purchaser's good faith estimate of) any
         expenditures that are attributable to the Assets prior to the Effective
         Date, which have not been paid for or satisfied by Seller.

(d)      Plus the value of all oil in storage at 7:00 a.m. on the Effective Date
         that is credited to the Assets (value to be the market or contract
         price in effect as of Effective Date less royalties, other lease
         burdens and taxes on production) which has not been sold prior to
         closing. If the Effective Date is subsequent to the date of this
         instrument, all oil, condensate or liquid hydrocarbons in storage shall
         be gauged and all gas meter charts

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         shall be replaced at the Effective Date with Purchaser having the right
         to have a representative present at the Effective Date for
         Seller-operated interests;

(e)      Less the amount of the proceeds received by Seller between the
         Effective Date and Closing that are attributable to the Assets after
         the Effective Date, net of any royalties, other lease burdens and any
         production, severance, sales or windfall profit taxes not reimbursed to
         Seller by the Purchaser;

(f)      Less the amount of (or Seller's good faith estimate of) all proceeds
         owed by Seller to Purchaser for the oil and other liquid hydrocarbons
         produced from or attributable to the Assets from the Effective Date to
         May 1, 2000 at 7:00 a.m.

(g)      Less or plus, as applicable, any amounts determined to be a price
         adjustment pursuant to Article III hereof ("Title Examination");

(h)      Less an amount equal to the value of the Assets, determined pursuant to
         Article III hereof, with respect to which Preferential Purchase Rights
         have been exercised;

(i)      Less or plus any other amounts mutually agreed upon in writing by the
         parties hereto;

(j)      Plus the amount of royalty overpaid to the MMS by Purchaser for
         production attributable to Seller's interest in the Assets prior to the
         Effective Date. The parties agree for the limited purpose of this
         adjustment (subject to the provisions of Section 9.3 below) that this
         amount is $2,447,124.92.

2.4      PAYMENT OF ADJUSTED PURCHASE PRICE: At Closing, Purchaser shall pay to
         Seller the Adjusted Purchase Price, by cashier's check or wire transfer
         of cash in United States Currency, in a manner specified by Seller in
         writing. Seller shall present to Purchaser at least three business days
         prior to Closing a proposed closing statement and the parties shall
         agree on said statement prior to Closing.

2.5      Intentionally omitted.

                                      III.

                                TITLE EXAMINATION

3.1      ACCESS TO TITLE INFORMATION: After the date of this Agreement and until
         Closing, at Purchaser's request, Seller shall make the records
         described in Section 1.1(d) available to Purchaser at Seller's office
         located at 4021-4023 Ambassador Caffery Parkway, Lafayette, Louisiana
         70503, or such other place as deemed appropriate by Seller, during
         normal business hours for examination by Purchaser. Seller shall not be
         obligated to perform any additional title work, and any additional
         abstracts and title opinions will not be made current by Seller. NO
         WARRANTY OR REPRESENTATION OF ANY KIND

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         IS MADE BY SELLER, AS TO THE INFORMATION SO SUPPLIED, AND PURCHASER
         AGREES THAT ANY CONCLUSIONS DRAWN THEREFROM SHALL BE THE RESULT OF ITS
         OWN INDEPENDENT REVIEW AND JUDGMENT. NO WARRANTY OF ANY KIND IS MADE BY
         SELLER AS TO THE INFORMATION SO SUPPLIED, AND PURCHASER AGREES THAT ANY
         CONCLUSIONS DRAWN THEREFROM SHALL BE THE RESULT OF ITS OWN INDEPENDENT
         REVIEW AND JUDGMENT. SUBJECT TO THE OTHER PROVISIONS OF THIS AGREEMENT,
         PURCHASER ASSUMES THE RISK OF ANY TITLE DEFECTS AND/OR CONFLICTING
         ADVERSE RIGHT(S), TITLE(S) AND/OR INTEREST(S) WHICH A RECORD TITLE
         CHECK AND/OR PHYSICAL INSPECTION REVEALS OR WOULD HAVE REVEALED.

3.2      TITLE DEFECTS: For the purpose of this Agreement, a "Title Defect"
         shall mean a material (defined as greater than $10,000) deficiency
         (other than with respect to a Permitted Encumbrance, as defined below)
         in one or more of the following respects only:

(a)      Seller's title at the Effective Date, as to one or more of the Assets,
         is subject to an outstanding mortgage, deed of trust, lien or
         encumbrance or adverse claim that is not listed on Exhibit "F" attached
         hereto, nor considered a "Permitted Encumbrance," as that term is
         defined below;

(b)      Seller's interest in any of the Assets is more or less than represented
         on Exhibit "A" hereto;

(c)      Seller's rights and interests are subject to being reduced now or in
         the future by virtue of the exercise by a third party of a
         reversionary, back-in or similar right not listed on Exhibit "G"
         attached hereto, nor considered a "Permitted Encumbrance," as that term
         is defined below;

3.3      PERMITTED ENCUMBRANCES: "Permitted Encumbrances," as that term is used
         in this Agreement, means:

(a)      liens for taxes not yet delinquent;

(b)      lessor's royalties, overriding royalties, reversionary interests and
         other lease burdens that do not operate, now or in the future, to
         reduce the net revenue interest of Seller in any of the Assets to less
         than the amount set forth therefor on Exhibit "A";

(c)      Contracts that do not, now or in the future, operate to increase the
         working interest or decrease the net revenue interest of Seller in any
         of the Assets from that set forth on Exhibit "A";

(d)      rights of way, easements, and other agreements of a similar nature
         relating to or restricting surface use on, over or in respect of the
         Assets;

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(e)      preferential rights to purchase which, prior to Closing, have either
         expired or have been waived by the holders thereof to the extent such
         rights affect the Assets;

(f)      all necessary consents, permissions and approvals by third parties in
         connection with the sale and transfer of the Assets which have been
         obtained prior to Closing and those governmental consents customarily
         generated and received in the ordinary course of business at a
         post-Closing date;

(g)      such Title Defects or other deficiencies or irregularities waived by
         Purchaser in writing;

(h)      liens released at or prior to Closing;

(i)      rights reserved or vested in any governmental subdivision, political
         entity or public authority to control rights or regulate the Assets in
         any manner, and all applicable laws, rules and orders of such
         subdivisions, entities and authorities; and

(j)      all matters disclosed in Exhibit "H" hereto which affect the quality or
         quantity of title.

3.4      NOTICE OF TITLE DEFECT: Upon discovery of a Title Defect, the
         discovering party shall immediately notify the other party in writing
         of the nature of the Title Defect and the proposed adjustment in the
         Purchase Price attributable to such Title Defect.

3.5      REMEDIES FOR TITLE DEFECTS:

(a)      Upon timely delivery of notice of a Title Defect either by Purchaser or
         by Seller of an increase or decrease in interest, Purchaser and Seller
         shall meet and use their reasonable efforts to agree on the validity of
         the claim and the amount of any required price adjustment. If the
         parties cannot agree on the amount of a price adjustment, such amount
         shall be determined in accordance with the following guidelines:

         (i)      If it is determined that a Title Defect exists which results
                  in Seller owning a different interest than that shown on
                  Exhibit "A" and Seller has elected not to attempt to cure such
                  Title Defect, then Seller shall reduce or increase the
                  Purchase Price, as appropriate. Purchaser must accept or
                  reject this adjusted Purchase Price within twenty-four (24)
                  hours from receipt of written notice thereof. If rejected by
                  Purchaser, this Agreement shall terminate.

         (ii)     Seller may elect to cure any or all Title Defects; provided,
                  however, if Seller elects to cure a Title Defect, but has not
                  been able to do so by the Closing Date, the Parties shall
                  proceed with the Closing, with the Defect Value being an
                  adjustment to the Purchase Price.

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         (iii)    If a Title Defect is a lien, encumbrance or other charge which
                  is liquidated in amount, and provided that Purchaser approves
                  same, Seller can reserve the option to retain the obligation
                  of this Title Defect and to challenge the validity of any such
                  Title Defect or any portion thereof and to hold Purchaser
                  harmless with regard thereto. Purchaser agrees to cooperate
                  with Seller in such efforts at no risk or expense to
                  Purchaser.

(b)      Notwithstanding anything to the contrary hereinabove, the Purchase
         Price will be adjusted only if the net amount of all adjustments in
         favor of Purchaser or Seller, taken together, exceeds five percent (5%)
         of the Purchase Price. In the event the net amount of the purchase
         price adjustments exceeds twenty percent (20%) of the total Purchase
         Price, then either Seller or Purchaser may, upon written notice to the
         other party, terminate this Agreement, and the same shall be of no
         further force and effect.

(c)      If a Title Defect is a Section 3.2 (a)-(c) Title Defect which increases
         or decreases Seller's interest in the Assets, and Seller does not elect
         to or does not cure the Title Defect, the Purchase Price shall be
         adjusted up or down by the Defect Value of the Title Defect.

(d)      If Seller contests the existence of a Title Defect or Purchaser's good
         faith estimate of the Defect Value of the Title Defect or if Purchaser
         contests Seller's cure, the Parties shall meet and use their best
         efforts to agree on the validity, cure and/or value of the Title
         Defect. If the Parties cannot agree on the validity, cure and/or value
         of a Title Defect, and neither Party elects to waive its claim, the
         dispute shall be submitted to arbitration in accordance with the
         arbitration procedures set forth in EXHIBIT "I".

(e)      For purposes hereof, the term "Defect Value shall mean (i) with respect
         to a claim of Title Defect is made pursuant to Section 3.2 (a) for a
         matter not covered by Sections 3.2 (b) or (c), the value of the defect
         for a defect that is a liquidated or certain amount shall be such
         liquidated or certain amount, and as to unliquidated or uncertain
         amounts it shall be an amount necessary to compensate Purchaser for the
         adverse economic effect of such Title Defect on the value of the
         property(ies) affected, taking into consideration all relevant factors,
         including the practical and legal effect of the Title Defect.

(f)      If Purchaser is entitled to receive an adjustment for a Title Defect,
         as provided in this Agreement, Seller shall have the right, but not the
         obligation, to attempt to cure the Title Defect and cancel the
         reduction in the Purchase Price. If Seller chooses to cure the Title
         Defect, but has not done so by Closing, Seller shall have the right to
         postpone Closing for a period not to exceed twenty (20) business days
         from the original Closing Date.

3.6      PREFERENTIAL PURCHASE RIGHTS: With respect to each preferential
         purchase right covering the Leasehold Property, Seller shall send to
         the holder of such right a notice offering to sell to such holder, in
         accordance with the contractual provisions applicable to such right,
         those Assets covered by such right on substantially the same terms
         hereof, subject to

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         adjustments in the same manner as the Purchase Price is adjusted
         pursuant to Section 3.5 of this Agreement. Preferential purchase rights
         shall not be considered Title Defects hereunder provided such are
         waived or exercised prior to Closing.

         If, prior to Closing, any holder of a preferential purchase right
         notifies Seller that it intends to consummate the purchase of the
         Assets to which its preferential purchase right applies, then those
         Assets shall be excluded from the Assets to be conveyed to Purchaser,
         and the Purchase Price shall be reduced as set forth in Section 3.5.

                                       IV.

                             ENVIRONMENTAL CONDITION

4.1      NO ADMISSION AGAINST INTEREST: Nothing contained in this Article IV, or
         elsewhere in this Agreement, shall be construed to be an admission
         against interest as to Seller or Purchaser. Seller and Purchaser have
         not included environmental liability related provisions herein due to
         any perceived liability and specifically disclaim the existence of any
         such liability to third parties (including governmental entities) based
         on contract, tort, statute or otherwise.

4.2      PHYSICAL CONDITION OF THE ASSETS: The Assets have been used for oil and
         gas drilling and production operations, related oil field operations,
         and possibly, for the storage and disposal of waste materials or
         hazardous substances. Physical changes in or under the Leasehold
         Properties or adjacent lands may have occurred as a result of such
         uses. The Assets also may contain buried pipelines and other equipment,
         whether or not of a similar nature, the locations of which may not now
         be known by Seller nor readily apparent by a physical inspection of the
         property. Purchaser understands that Seller does not have the requisite
         information with which to determine the exact nature or condition of
         the Assets nor the effect any such use has had on the physical
         condition of the Assets. Pursuant to the Safe Water Drinking and Toxic
         Enforcement Act of 1986, Purchaser is hereby notified and assumes the
         risk that detectable amounts of chemicals known to cause cancer, birth
         defects and other reproductive harm may be found in, on or around the
         Assets. In addition, Purchaser acknowledges that some oil field
         production equipment may contain asbestos and/or naturally-occurring
         radioactive material (NORM). In this regard, Purchaser expressly
         understands that NORM may affix or attach itself to the inside of
         wells, materials and equipment as scale or in other forms, and that
         wells, materials and equipment located on the Assets described herein
         may contain NORM and that NORM-containing materials may be buried or
         have been otherwise disposed of on or under the Assets. Purchaser also
         expressly understands that special procedures may be required for the
         removal and disposal of asbestos and NORM from the Assets where it may
         be found, and that Purchaser assumes all liability and responsibility
         for such activities when and if performed.

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4.3      ENDANGERED SPECIES, CRITICAL HABITAT, WETLANDS, GEOLOGIC HAZARDS AND
         FLOODING: "Endangered Species" as used herein shall have the same
         meaning as "endangered species" is defined pursuant to 16 U.S.C.
         1532(6) or the laws of the state in which the Leasehold Property is
         located; as "threatened species" is defined pursuant to 16 U.S.C.
         1533(30) or the laws of the state in which the Leasehold Property is
         located; and/or, as a candidate species for such listing under federal
         or state law. "Critical Habitat" as used herein shall have the meaning
         as defined pursuant to 16 U.S.C. 1532(5). "Wetland" as used herein
         shall have the meaning as defined in 40 Code of Federal Regulations
         ss.230.3(a), or under the laws of the state in which the Leasehold
         Property is located. "Geologic Hazards" as used herein shall include
         seismic hazard and any earth slides or other earth movement. "Flooding"
         as used herein shall include the risks associated with a flood plain,
         flood way or restriction zone and/or any diminution in the value of the
         Leasehold Property or restriction of its use by reason of the risk of
         water entering or remaining thereon. WITHOUT IN ANY WAY LIMITING ANY
         OTHER DISCLAIMERS OF WARRANTY HEREIN AND NOTWITHSTANDING ANY
         DISCLOSURES MADE BY SELLER TO PURCHASER, SELLER DISCLAIMS ANY EXPRESS
         OR IMPLIED WARRANTY OR REPRESENTATION AS OF THE DATE OF THIS AGREEMENT
         AND/OR AS OF THE CLOSING OF THE COMPLETENESS OF ANY SUCH DISCLOSURE OR
         THAT THE PROPERTY IS FREE FROM ANY ENDANGERED SPECIES OR THAT ALL OR
         ANY PART OF THE PROPERTY IS NOT A CRITICAL HABITAT OR A WETLAND, OR
         THAT ANY PART OF THE ASSETS DOES NOT INCLUDE A GEOLOGIC HAZARD, OR THAT
         ANY PART OF THE PROPERTY IS NOT SUBJECT TO FLOODING. Notwithstanding
         any knowledge that could be imputed to Seller, Purchaser has the
         obligation to ascertain the presence of and extent of any Endangered
         Species, Critical Habitat, Wetland, Geologic Hazards and the risk of
         Flooding on the Property.

4.4      ENVIRONMENTAL ASSESSMENT DURING EXAMINATION PERIOD: Purchaser has had
         at least thirty (30) days to make its environmental assessment
         ("Examination Period"). Purchaser and its agents shall have the right
         to enter upon the Assets and all buildings and improvements thereon,
         inspect the same, conduct soil and water tests and borings, and
         generally conduct such tests, examinations, investigations and studies
         as may be necessary or appropriate for the preparation of appropriate
         engineering and other reports, and evaluations relating to the Assets,
         their condition, and the presence of waste or contaminants. If such an
         assessment was performed, Purchaser agrees to immediately provide to
         Seller a copy of the environmental assessment, including any reports,
         data and conclusions upon which it is based.

4.5      WITHDRAWAL BY PURCHASER DUE TO ENVIRONMENTAL PROBLEMS: If, during the
         Examination Period, Purchaser, in its sole discretion, determines that
         hazardous waste materials located on the Assets may create substantial
         problems for Purchaser or users of the Assets and the reasonable
         remediation and/or clean up costs which are asserted and currently
         required by a governmental entity, having jurisdiction over the
         affective property(ies), pursuant to applicable law exceeds 5% of the
         Purchase Price, then, by so notifying Seller in writing within the
         Examination Period, Purchaser may, if Seller in its

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         sole discretion elects not to indemnify Purchaser against any loss,
         terminate this Agreement, upon which termination of this Agreement
         shall be null and void, and Purchaser shall have no further obligation
         or liability of any kind hereunder or with respect hereto. Failure of
         Purchaser to so notify Seller within the Examination Period shall be
         deemed a waiver of any right to terminate the Agreement relating to any
         environmental problems. If Seller contests the existence of an
         environmental problem or the amount of reasonable remediation and/or
         clean-up costs (which shall mean only the cost to remedy such
         Environmental Liability using the most cost effective methods and
         manner to satisfy applicable Environmental Laws, and which are
         consistent with the continued use of the affected Assets in the same
         capacity and for the same purposes as they were being used on the
         Effective Dates) and the parties are unable to reach mutual agreement,
         then if after Seller notifies Purchaser that it does not concur with
         the existence of a required remediation or cleanup or with respect to
         Purchaser's determination of the estimated remediation and/or clean-up
         costs, Purchaser may still elect to terminate this Agreement and
         request a determination of the value of the required remediation and/or
         clean-up costs by the following procedure: the Parties will submit the
         issue to arbitration in accordance with the arbitration procedures set
         forth in EXHIBIT "I". If the arbitrators determine that the required
         remediation and/or clean-up costs are equal to or less than 5% of the
         Purchase Price, Purchaser will pay the arbitration costs. If the
         arbitrators find that the required remediation and/or clean-up costs do
         exceed 5% of the Purchase Price, Seller will pay the arbitration costs.
         If Purchaser does not elect to terminate this Agreement in a written
         notice to Seller prior to the commencement of arbitration in connection
         with this Section, then Purchaser shall be deemed to have waived its
         right to terminate this Agreement under this Section unless and until
         the arbitors determine that the required remediation and/or clean-up
         costs do exceed 5% of the Purchase Price, and if such arbitors
         determine that the required remediation and/or clean-up costs are equal
         to or less than 5% of the Purchase Price, then Purchaser shall pay all
         arbitration costs an proceed toward Closing, subject to the other terms
         and conditions of this Agreement. Notwithstanding anything stated
         herein to the contrary, if Purchaser elects to pursue arbitration under
         this Section, then at any time prior to a determination by the
         arbitors, Seller has the right, upon written notice to Purchaser, to
         elect to terminate this Agreement (and this Agreement shall thereafter
         be null and void) and the parties will be responsible for their own
         respective fees or other costs regarding arbitration incurred them.

4.6      CONDITIONAL ACCESS TO ASSETS: Purchaser is hereby granted access to the
         Assets to conduct its environmental assessment upon the following
         conditions:

(a)      The environmental assessment shall be conducted at Purchaser's sole
         risk and expense, and Purchaser waives and releases all claims against
         Seller, its directors, officers, employees and agents and parent or
         subsidiary companies for injury to, or death of, persons or damage to
         property arising in any way from the exercise of rights granted to
         Purchaser hereby. REGARDLESS OF THE SOLE, JOINT OR CONCURRENT
         NEGLIGENCE, STRICT LIABILITY, PREMISES LIABILITY, BREACH OF

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         CONTRACT OR OTHER FAULT OR RESPONSIBILITY OF SELLER OR ANY OTHER PERSON
         OR PARTY.

(b)      Purchaser RELEASES AND AGREES TO INDEMNIFY, DEFEND AND HOLD HARMLESS
         Seller, its directors, officers, employees, agents and Affiliates
         against all claims for injury to, or death of, persons or damage to
         property arising in any way from the exercise of access rights granted
         to Purchaser for environmental due diligence or due diligence for any
         other purpose. Purchaser shall indemnify Seller, its directors,
         officers, employees, agents and Affiliates against and hold each and
         all of said indemnitees harmless from any and all loss, cost, damage,
         expense or liability, including attorney's fees, arising out of (i) any
         and all third party statutory or common-law liens or other encumbrances
         for labor or materials furnished in connection with such tests,
         samplings, studies or surveys as Purchaser may conduct with respect to
         the Assets; and (ii) any injury to or death of persons or damage to
         property occurring in, on or about the Assets as the result of
         Purchaser's due diligence activities REGARDLESS OF THE SOLE, JOINT OR
         CONCURRENT NEGLIGENCE, STRICT LIABILITY, PREMISES LIABILITY, BREACH OF
         CONTRACT, OR OTHER FAULT OR RESPONSIBILITY OF SELLER OR ANY OTHER PARTY
         OR PERSON (except for any such injuries or damages caused solely by the
         gross negligence or willful misconduct of any said indemnitees). The
         foregoing obligation of indemnity shall survive Closing or termination
         of this Agreement without Closing.

4.7      "AS IS, WHERE IS" PURCHASE: In the event Purchaser does not elect to
         terminate this Agreement as above provided, then Purchaser shall
         acquire the Assets in their "AS IS, WHERE IS, WITH ALL FAULTS"
         condition and shall assume the risks that the Assets may contain waste
         materials, contaminants or hazardous substances, that adverse physical
         conditions, including, but not limited to, the presence of waste
         materials, contaminants or hazardous substances or the presence of
         unknown abandoned oil and gas wells, water wells, pits, sumps and
         pipelines may not have been revealed by Purchaser's investigation,
         including, but not limited to, any and all Environmental Liabilities
         and other Assumed Liabilities. Except as otherwise set forth herein, on
         and after the Effective Date, all responsibility and liability related
         to all such adverse environmental conditions, whether known or unknown,
         shall be transferred to and borne solely by Purchaser.

4.8      ASSUMPTION AND INDEMNIFICATION OF ENVIRONMENTAL RISK AND ENVIRONMENTAL
         LIABILITIES: Except as otherwise set forth herein, Purchaser, subject
         to the terms of this Agreement, shall assume full responsibility for,
         and agrees to comply with and perform all environmentally-related
         duties and obligations of Seller and TO INDEMNIFY, DEFEND AND HOLD
         HARMLESS SELLER, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
         REPRESENTATIVES AND AFFILIATED OR PARENT COMPANIES (WHICH ADDITIONAL
         PARTIES ARE HEREINAFTER COLLECTIVELY REFERRED TO AS "SELLER'S AGENTS"),
         from and against all losses, liabilities, causes of action, damages,
         liens, penalties, fines, settlements, judgments, expenses, attorney's
         fees, court costs and claims (hereinafter

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         referred to collectively as "claims") caused by or arising out of any
         rule, order, permit, statute, or regulation of a governmental authority
         applicable to any waste material, contaminant or hazardous substance on
         or included with the Assets or the presence, disposal, release or
         threatened release of any waste material, contaminant or hazardous
         substance from the Assets into the atmosphere or into or upon land or
         any water course or body of water, including ground water, whether or
         not such claims are attributable to Seller's activities or the
         activities of third parties, whether or not Seller or the Seller's
         Agents were or are aware of such activities and whether or not such
         claims arose prior to, during or after the period of Seller's ownership
         of the Assets, including, but not limited to, any and all Environmental
         Liabilities. This indemnification and assumption of responsibility
         shall also apply to liability for voluntary environmental response
         actions undertaken pursuant to the Comprehensive Environmental Response
         Compensation and Liability Act (CERCLA) or any other federal, state or
         local law, regulation or order. THE ASSUMPTION AND INDEMNIFICATION OF
         ALL ENVIRONMENTAL LIABILITIES BY PURCHASER, UNDER SECTION IV SHALL
         APPLY REGARDLESS OF WHETHER SUCH LIABILITIES ARE KNOWN OR UNKNOWN,
         RELATE TO ACTIONS, EVENTS OR CONDITIONS EXISTING OR OCCURRING PRIOR TO
         OR AFTER THE EFFECTIVE DATE, AND REGARDLESS OF WHETHER ATTRIBUTABLE (IN
         WHOLE OR IN PART) TO THE ACTIONS, SOLE, JOINT OR CONCURRENT NEGLIGENCE,
         STRICT LIABILITY, BREACH OF CONTRACT, PRODUCTS LIABILITY, ENVIRONMENTAL
         LIABILITY, OR OTHER FAULT, LIABILITY OR RESPONSIBILITY OF SELLER, THE
         SELLER'S AGENTS OR ANY OTHER PERSON OR PARTY, AND REGARDLESS OF WHETHER
         ASSERTED UNDER ANY THEORY OF LIABILITY; PROVIDED, HOWEVER, THAT THIS
         ASSUMPTION AND INDEMNIFICATION BY PURCHASER SHALL NOT COVER OR INCLUDE
         CLAIMS OR LIABILITIES DIRECTLY RELATING TO THOSE HAZARDOUS MATERIALS
         WHICH HAVE BEEN TRANSPORTED FOR DISPOSAL PRIOR TO THE EFFECTIVE DATE BY
         SELLER OFF OF THE ASSETS TO PROPERTIES OWNED BY SELLER AND/OR THIRD
         PARTIES (INSOFAR AS SUCH HAZARDOUS MATERIALS ARE REGULATED BY
         GOVERNMENTAL AGENCIES UNDER CURRENT, APPLICABLE ENVIRONMENTAL LAWS) AND
         SELLER RETAINS SUCH LIABILITY AND SHALL INDEMNIFY PURCHASER FOR SAME.

4.9      EXCLUSIVE REMEDY. The indemnities provided in this Article IV and
         elsewhere in this Agreement set forth the exclusive remedy of the
         parties with respect to the claims, liabilities and obligations covered
         thereby.

                                       V.

5.1      CASUALTY LOSS: The risk of casualty loss relating to the Assets shall
         pass from Seller to Purchaser as of the Effective Date, and Purchaser
         shall assume all risk of any change in condition of the Assets from and
         after the Effective Date, REGARDLESS OF THE

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         SOLE, JOINT OR CONCURRENT NEGLIGENCE, STRICT LIABILITY, BREACH OF
         CONTRACT OR OTHER FAULT OR RESPONSIBILITY OF SELLER OR ANY OTHER PARTY
         OR PERSON, except to the extent any change in condition is directly
         caused by the gross negligence or willful misconduct of Seller.

                                       VI.

                                 REPRESENTATIONS

6.1      PURCHASER'S REPRESENTATIONS: Purchaser represents and warrants to
         Seller as of the Effective Date and Closing as follows:

(a)      EXISTENCE: Purchaser is duly organized, validly existing, and in good
         standing under the corporation laws of the jurisdiction of its
         organization and is duly qualified at Closing to carry on business in
         the state(s) where the Assets are located.

(b)      AUTHORIZATION: Purchaser has the corporate power and authority to enter
         into and perform this Agreement and the transactions contemplated
         hereby. The execution, delivery and performance of this Agreement and
         the transactions contemplated hereby have been duly and validly
         authorized by all requisite corporate action on the part of Purchaser.
         This Agreement has been duly executed and delivered on behalf of
         Purchaser, and at Closing all documents and instruments required
         hereunder to be executed and delivered by Purchaser shall have been
         fully executed and delivered.

(c)      BROKERS: Purchaser has not incurred any obligation or liability,
         contingent or otherwise, for brokers' or finders' fees with respect to
         the matters provided for in this Agreement which will be the
         responsibility of Seller; and any such obligation or liability that may
         exist shall be the sole obligation of the creating party.

(d)      ENFORCEABILITY: This Agreement constitutes, and the documents and
         instruments to be executed pursuant hereto will constitute, the legal,
         valid and binding obligations of Purchaser, enforceable against
         Purchaser in accordance with their respective terms, except to the
         extent that such enforcement may be limited by applicable bankruptcy,
         insolvency and similar laws affecting creditors' rights generally and
         by general equitable principles.

(e)      FURTHER DISTRIBUTION: Purchaser is acquiring the Assets for its own
         account and not with the intent of making a public distribution thereof
         within the meaning of the Securities Act of 1933, as amended, and the
         rules and regulations promulgated thereunder.

(f)      FEDERAL LEASES: If the Assets include any federal leases, Purchaser is
         qualified to own such federal leases or will be so qualified at
         Closing, and, if Purchaser intends to operate such assets, Purchaser is
         qualified to operate such federal lease or will be so qualified at
         Closing.

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6.2      SELLER'S REPRESENTATIONS: Seller represents and warrants to Purchaser
         as follows as of the Effective Date and the Closing:

(a)      EXISTENCE: Seller is duly organized, validly existing, and in good
         standing under the corporation laws of the jurisdiction of its
         organization and is duly qualified at to carry on business in the
         state(s) where the Assets are located.

(b)      AUTHORIZATION: Seller has the corporate power and authority to enter
         into and perform this Agreement and the transactions contemplated
         hereby. The execution, delivery and performance of this Agreement and
         the transactions contemplated hereby have been duly and validly
         authorized by all requisite corporate action on the part of Seller.
         This Agreement has been duly executed and delivered on behalf of
         Seller, and at Closing all documents and instruments required hereunder
         to be executed and delivered by Seller shall have been fully executed
         and delivered.

(c)      BROKERS: Seller has not incurred any obligation or liability,
         contingent or otherwise, for brokers' or finders' fees with respect to
         the matters provided for in this Agreement which will be the
         responsibility of Purchaser; and any such obligation or liability that
         may exist shall be the sole obligation of the creating party.

(d)      ENFORCEABILITY: This Agreement constitutes, and the documents and
         instruments to be executed pursuant hereto will constitute, the legal,
         valid and binding obligations of Seller, enforceable against Seller in
         accordance with their respective terms, except to the extent that such
         enforcement may be limited by applicable bankruptcy, insolvency and
         similar laws affecting creditors' rights generally and by general
         equitable principles.

(e)      NO VIOLATIONS: The execution, delivery and performance of this
         Agreement by Seller, and the transactions contemplated hereby, will not
         violate (i) any material agreement or instrument to which Seller is a
         party or by which Seller or the Assets is bound, (ii) any judgment,
         order, ruling or decree applicable to Seller or the Assets, (iii) any
         law, rule or regulation applicable to Seller or the Assets or (iv) any
         of the organizational documents of Seller.

(f)      NO CONSENTS: The execution, delivery and performance of this Agreement
         by Seller does not require the consent, approval, authorization, order
         or other action of, nor any filing with, any third party.

(g)      PREFERENTIAL PURCHASE RIGHTS AND CONSENTS TO ASSIGNMENT: To the best of
         Seller's knowledge, the Assets are not subject to any agreements
         containing preferential purchase rights or consent to assignment
         provisions that must be complied with prior to the assignment of the
         Assets to Purchaser.

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Purchase and Sale Agreement
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(h)      LITIGATION: Excluding any ongoing MMS audits, and except as set forth
         on Exhibit "J" is neither any claim, suit, action, or other proceeding
         pending before any court or governmental agency nor, to Seller's
         knowledge, any claim, dispute, suit, action, investigation or other
         proceeding threatened against the Assets or against Seller or any
         Affiliate of Seller relating to the Assets.

(i)      TAXES: To Seller's knowledge, all ad valorem, property, production,
         excise, severance, windfall profit and similar taxes and assessments
         payable with respect to the Assets and based on or measured by the
         ownership of property or the production or removal of hydrocarbons or
         the receipt of proceeds therefrom have been and will be timely paid in
         all respects.

(j)      LEASES: To Seller's knowledge, (i) Seller is not in material default
         under any of the terms and provisions of any of the leases or under any
         agreement to which the same are subject; and (ii) all royalties,
         rentals, and other payments due thereunder by Seller have been timely
         and properly paid in full on or before the due dates thereof.

(k)      MARKETING: Except as provided in Section 1.4 above and as set forth on
         Exhibit "K", no amount of Seller's hydrocarbons produced from the
         Assets and marketed by others is subject to a sales or processing
         contract (except for contracts terminable without penalty by Seller on
         not more than 30 days' notice), and no person has any call upon, option
         to purchase or similar rights under any agreement with respect to the
         Assets or to the production therefrom. Seller has not in any respect
         collected, nor will Seller in any respect collect, any proceeds from
         the Assets that are subject to refund by Purchaser. Seller has not been
         nor will Seller be obligated by virtue of any prepayment made under any
         gas transportation, production sales contract or any other contract
         containing a "take or pay" clause, or under any gas balancing, deferred
         production or similar arrangement to deliver oil, gas or other minerals
         produced from or allocated to any of the Assets at some future time
         without receiving full payment therefor at the time of delivery.

(l)      CONTRACT RIGHTS: To Seller's knowledge, with respect to the Contracts:
         (i) all Contracts are identified on Exhibit "E" which have not
         previously expired or been terminated by mutual agreement and all such
         Contracts are in full force and effect and are the valid and legally
         binding obligations of the parties thereto and are enforceable in
         accordance with their respective terms, except to the extent that such
         enforcement may be limited by applicable bankruptcy, insolvency and
         similar laws affecting creditors' rights generally, and by general
         equitable principles; (ii) Seller is not in material breach or default
         with respect to any of its obligations under any Contract; and (iii)
         neither Seller nor any other party to any Contract has given or
         threatened to give notice of any action to terminate, cancel, rescind,
         or procure a judicial reformation of any Contract or any provision
         thereof.

6.3      DISCLAIMER OF REPRESENTATIONS AND WARRANTIES: Except as otherwise set
         forth herein, including but not limited to the warranties set forth in
         Section 1.6, THE ASSETS ARE SOLD "AS IS," "WHERE IS" AND "WITH ALL
         FAULTS AS TO ALL MATTERS,"

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         AND SELLER EXPRESSLY DISCLAIMS AND NEGATES ANY REPRESENTATION OR
         WARRANTY, EXPRESS, IMPLIED, AT COMMON LAW, BY STATUTE, OR OTHERWISE
         RELATING TO (a) THE CONDITIONS OF THE ASSETS (INCLUDING, WITHOUT
         LIMITATION, ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, OF
         FITNESS FOR A PARTICULAR PURPOSE, OR OF CONFORMITY TO MODELS OR SAMPLES
         OF MATERIALS), (b) ANY INFRINGEMENT BY SELLER OF ANY PATENT OR
         PROPRIETARY RIGHT OF ANY THIRD PARTY, (c) ANY INFORMATION, DATA OR
         OTHER MATERIALS (WRITTEN OR ORAL) FURNISHED TO PURCHASER BY OR ON
         BEHALF OF SELLER (INCLUDING WITHOUT LIMITATION, IN RESPECT OF
         GEOLOGICAL AND ENGINEERING DATA, THE EXISTENCE OR EXTENT OF OIL, GAS OR
         OTHER MINERAL RESERVES, THE RECOVERABILITY OF OR THE COST OF RECOVERING
         ANY SUCH RESERVES, THE VALUE OF SUCH RESERVES, ANY PRODUCT PRICING
         ASSUMPTIONS, AND THE ABILITY TO SELL OIL OR GAS PRODUCTION AFTER
         CLOSING), (d) THE ENVIRONMENTAL CONDITION AND OTHER CONDITION OF THE
         ASSETS AND ANY POTENTIAL LIABILITY ARISING FROM OR RELATED TO THE
         ASSETS, AND (e) THE FAILURE OF ANY COMPUTER, ELECTRONICS, SOFTWARE, OR
         COMPONENTS TO BE FREE OF ANY BUGS OR ERRORS, INCLUDING, BUT NOT LIMITED
         TO, ANY DEFICIENCIES RELATING TO THE INABILITY TO PROPERLY FUNCTION
         BEYOND DECEMBER 31, 1999.

                                      VII.

                              CONDITIONS OF CLOSING

Purchaser's and Seller's obligations to consummate the transactions provided for
herein are subject to the satisfaction or waiver by the other party of the
following conditions:

7.1      REPRESENTATIONS: The representations of Purchaser and Seller contained
         in Article VI hereof shall be true and correct in all material respects
         on the date of Closing as though made on and as of that date.

7.2      PERFORMANCE: Both Purchaser and Seller shall have performed in all
         material respects the obligations, covenants and agreements hereunder
         to be performed by them at or prior to Closing.

7.3      PENDING MATTERS: No suit, action or other proceeding by a third party
         or a governmental authority shall be pending or threatened which seeks
         substantial damages from Purchaser or Seller in connection with the
         Assets, or seeks to restrain, enjoin or otherwise prohibit the
         consummation of the transactions contemplated by this Agreement.

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7.4      HART-SCOTT-RODINO ACT: If either party is of the opinion that the
         transaction described in this instrument falls within the purview of
         the Hart-Scott-Rodino ("HSR Act"), Purchaser shall prepare and submit
         in a timely manner, any necessary filings for Purchaser in connection
         with the transactions contemplated by this Agreement under the HSR Act
         and the rules and regulations thereunder. Purchaser shall request
         expedited treatment of such filing by the Federal Trade Commission,
         shall promptly make any appropriate or necessary subsequent or
         supplemental filings, and shall furnish to Seller copies of all filings
         made under the HSR Act at the same time they are filed with the
         government.

7.5      GOVERNMENTAL BONDS: Purchaser shall have delivered to Seller either:
         (i) copies of any bonds covering the Assets required under any laws,
         rules or regulations of any federal, state or local governmental agency
         having jurisdiction over the Assets issued by corporate sureties
         satisfactory to Seller; or (ii) a commitment by a surety company,
         satisfactory to Seller, to issue such bonds upon Closing, and (iii)
         copies of all other necessary or appropriate consents, permits,
         insurance, approvals, authorizations and similar items required of
         Purchaser to purchase, receive, own, and operate the Assets as of the
         Closing and to otherwise transact business in the applicable
         jurisdiction(s).

7.6      CONSENTS AND WAIVERS: All necessary consents, permissions and approvals
         by third parties in connection with the sale and transfer of the Assets
         shall have been received prior to Closing, except those governmental
         consents customarily generated and received in the ordinary course of
         business at a post-Closing date.

7.7      PLUGGING AND ABANDONMENT: The parties hereto recognize that the United
         States Department of Interior, Minerals Management Service ("MMS")
         shall require Purchaser to post supplemental bonds specific to the
         plugging and abandonment and restoration of the Leasehold Property (the
         "P&A Bonds"). In the event (i) Purchaser qualifies with the MMS as a
         company exempt from this type of supplemental bonding requirement and
         (ii) as a result of such qualification, the MMS releases in favor of
         Purchaser the P&A Bonds, Purchaser shall immediately provide to Seller
         a bond in an amount equal to the lessor of (i) an amount sufficient to
         cover the costs (limited to Seller's interest, being 80%), at the time,
         to plug and abandon and restore the Leasehold Property to the extent
         and only the extent such Leasehold Property includes those wells and
         platforms, which were in existence before the date that the Regional
         Director of the MMS approves the assignment of leasehold interest from
         Seller in favor of Purchaser (the "Assignment"); or (ii) an amount
         equal to the amount of the P&A Bonds, as required by the MMS to approve
         the Assignment.

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                                      VIII.

                                     CLOSING

8.1      CLOSING ITEMS: At Closing, as defined in Section 1.2 hereof, the
         following shall occur, unless postponed pursuant to Section 3.5(g)
         hereof:

(a)      Seller shall execute, acknowledge and deliver Assignments of Oil and
         Gas Lease and a Bill of Sale substantially in the form and substance of
         Exhibit "L" attached hereto, covering all of the Assets to be sold
         pursuant hereto and the Indemnity Agreement substantially in the form
         and substance of Exhibit "L-1" attached hereto ("Indemnity Agreement").

(b)      Purchaser shall deliver to Seller either by cashier's check or wire
         transfer of cash as specified by Seller the remaining balance of the
         total Purchase Price as adjusted hereunder.

(c)      Purchaser shall provide Seller with executed change of operator forms
         on all wells (active or inactive) operated by Seller, as required by
         the Minerals Management Service to effect a change of operator for the
         properties being sold. Seller shall execute same at Closing, and
         promptly thereafter, file said forms with the Minerals Management
         Service.

(d)      Seller shall provide Purchaser with executed non-foreign affidavits,
         and such other instruments and documents as may be reasonably requested
         by Seller.

(e)      Seller shall (subject to the terms of applicable operating agreements
         and other provisions hereof) deliver to Purchaser exclusive possession
         of the Assets, effective as of the Effective Date.

(f)      Upon Purchaser's request, Seller shall, at or as promptly as reasonably
         possible after Closing, provide Purchaser, at Purchaser's expense, with
         copies of the Records. All information and data shall be furnished as a
         matter of convenience only to Purchaser and Purchaser's reliance on
         same shall be at Purchaser's sole risk.

(g)      Seller shall deliver letters in lieu of transfer orders directing all
         purchasers of production to pay Purchaser the proceeds of production
         produced from the Assets from and after the Effective Date, to the
         extent that such purchasers of production have not already paid the
         same to Seller.

(h)      Seller and Purchaser will execute all documentation necessary to
         reflect the termination of agreements between the parties relating to
         the Assets described on Exhibit "M". Copies of such instruments shall
         be in substantially the form and substance of Exhibit "M-1" attached
         hereto.

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Immediately after Closing, Purchaser shall notify all pertinent operators,
non-operators, oil or gas purchasers, governmental agencies and royalty owners
that it has purchased the Assets.

8.2      ADDITIONAL CLOSING ITEMS: Contemporaneously with the Closing of the
         transactions contemplated hereby, and for the same stated
         consideration, Seller will (i) cause Spirit Energy Management, L.L.C.
         and Spirit 76 Development, L.P. (collectively "Spirit") to convey to
         Purchaser all of their rights in the Assets, being all rights in the
         Assets created by that certain deed entitled "Conveyance of Overriding
         Royalty Interest", executed by Seller in favor of Spirit and (ii)
         execute and cause Spirit and Concord Investors LLC to execute a waiver
         in connection therewith. Such conveyance and waiver to be in the form
         attached hereto as Exhibit "N-1". At Closing, Seller shall provide to
         Purchaser a legal opinion in a form similar to that attached hereto as
         Exhibit "N" upon which Purchaser may rely in connection with these
         matters.

         Contemporaneously with the Closing, Seller will also cause Unocal
         Pipeline Company to convey in favor EPL Pipeline, L.L.C. the pipeline,
         rights-of-way, surface lease and equipment, as further identified in
         the Pipeline Purchase Agreement to be entered into by said parties, a
         copy of which is attached hereto and made a part hereof as Exhibit "O".

                                       IX.

                             CONTINUING OBLIGATIONS

9.1      FINAL ACCOUNTING: Within 120 days after Closing, Seller shall provide
         Buyer with a statement of accounting ("Final Accounting"). Buyer shall
         have the right to cause its accountant, in consultation with Seller's
         accountant, to review the Final Accounting within an additional sixty
         (60) days following Seller's delivery of such notice. If Buyer's
         accountant and Seller's accountant are unable to agree upon the Final
         Accounting within an additional sixty (60) days following completion of
         Buyer's review thereof, then the two respective accountants jointly
         shall select, within such sixty (60) day period, an independent
         accounting firm of national reputation that shall determine the Final
         Accounting as soon as reasonably possible, but in no event later than
         210 days after Closing. The determination by such independent
         accounting firm shall be conclusive. The expense of such independent
         accounting firm shall be borne by Seller and Buyer, in equal
         proportions. The Final Accounting, including a determination by an
         accounting firm, shall not limit the parties' rights and obligations
         pursuant to Section 9.3 below.

9.2      RECEIPTS AND CREDITS: Except as otherwise provided in this Agreement,

(a)      All monies, proceeds, receipts, credits and income attributable to the
         Assets for all periods of time on and after the Effective Date shall be
         the sole property and entitlement of the Purchaser, and to the extent
         received by Seller, Seller shall fully disclose, account for and
         transmit same to Purchaser promptly.

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(b)      All monies, proceeds, receipts and income attributable to the Assets
         for all periods of time prior to the Effective Date shall be the sole
         property and entitlement of Seller and, to the extent received by
         Purchaser, Purchaser shall fully disclose, account for and transmit
         same to Seller promptly.

(c)      All costs, expenses, disbursements, obligations and liabilities
         attributable to the Assets for periods of time prior to the Effective
         Date, regardless of when due or payable shall be the sole obligation of
         Seller and Seller shall promptly pay, or if paid by Purchaser, promptly
         reimburse Purchaser for and hold Purchaser harmless from and against
         same.

(d)      All costs, expenses, disbursements, obligations and liabilities
         attributable to the Assets for periods of time on and after the
         Effective Date, regardless of when due or payable, shall be the sole
         obligation of Purchaser, and Purchaser shall promptly pay, or if paid
         by Seller, promptly reimburse Seller for and hold Seller harmless from
         and against same.

9.3      UNDERPAYMENT OR FAILURE TO PAY ROYALTY

         Notwithstanding the adjustment to the Purchase Price contained in
         Section 2.3(j) or the Final Accounting (including a determination by an
         accounting firm), the obligation of Seller to indemnify and hold
         harmless Purchaser from any claims or damages arising out of or related
         to Seller's underpayment or failure to pay royalties shall survive the
         Final Accounting and any determination by an accounting firm pursuant
         thereto.

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9.4      INDEMNITIES:

(a)      Purchaser agrees to indemnify, defend and hold harmless Seller, its
         officers, directors, employees, agents, representatives and affiliated
         or parent companies (which additional parties are hereinafter
         collectively referred to as "Seller Agents") from and against any and
         all losses, liabilities, causes of action, damages, liens, penalties,
         fines, settlements, judgments, expenses, attorney's fees, court costs
         and claims (hereinafter referred to collectively as "claims") arising
         (i) from the breach of this Agreement by Purchaser, (ii) from the
         Assumed Liabilities, or (iii) on or after the Effective Date, in any
         way connected with, attributable to, or resulting from Purchaser's
         ownership or operation of, or activities on the Assets, including, but
         not limited to, claims for damage to property or injury or death to
         persons, claims for breach of duties and obligations arising under or
         by virtue of any lease, contract, agreement, permit, applicable statute
         or rule. Purchaser's obligations to indemnify, defend and hold
         harmless, as set forth above, shall also specifically extend to all
         such claims REGARDLESS OF WHETHER ATTRIBUTABLE, IN WHOLE OR IN PART TO,
         CLAIMS WHICH ARE KNOWN OR UNKNOWN, CLAIMS ARISING FROM THE SOLE, JOINT,
         CONCURRENT NEGLIGENCE, STRICT LIABILITY, BREACH OF CONTRACT,
         ENVIRONMENTAL LIABILITY, PRODUCTS LIABILITY, OR OTHER FAULT OR
         RESPONSIBILITY OF SELLER, ITS SELLER AGENTS OR ANY OTHER PARTY OR
         PERSON, AND REGARDLESS WHETHER OR NOT SUCH CLAIMS AROSE PRIOR TO THE
         EFFECTIVE DATE OR RELATE TO CONDITIONS THAT EXISTED PRIOR TO THE
         EFFECTIVE DATE. In addition, and without limiting the generality of the
         foregoing, Purchaser shall be solely liable and responsible for the
         proper plugging and abandoning of all wells now located on or hereafter
         drilled on the Assets, and any surface restoration or environmental
         clean-up associated therewith, and shall indemnify, defend and hold
         harmless Seller and its agents from and against all claims relating to
         same.

(b)      Except as otherwise set forth herein and except for the Assumed
         Liabilities of Purchaser, Seller agrees to indemnify, defend and hold
         harmless, Purchaser and its agents, officers, from and against any and
         all claims arising from the breach of this Agreement by Seller and/or
         any obligations or liabilities retained by Seller hereinafter. Seller's
         obligations to indemnify, defend and hold harmless, as set forth above,
         shall also specifically extend to all such claims REGARDLESS OF WHETHER
         ATTRIBUTABLE, IN WHOLE OR IN PART TO, CLAIMS WHICH ARE KNOWN OR
         UNKNOWN, CLAIMS ARISING FROM THE SOLE, JOINT, CONCURRENT NEGLIGENCE,
         STRICT LIABILITY, BREACH OF CONTRACT, ENVIRONMENTAL LIABILITY, PRODUCTS
         LIABILITY, OR OTHER FAULT OR RESPONSIBILITY OF PURCHASER, ITS
         PURCHASER AGENTS OR ANY OTHER PARTY OR PERSON.

(c)      Nothing in this section shall reduce or diminish the specific indemnity
         and assumption of liability and responsibility by Purchaser with regard
         to environmental risks set forth

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         hereinabove in Article IV or the specific indemnity and assumption of
         liability and responsibility of Seller as set forth in Indemnity
         Agreement to be executed by Seller at Closing.

(d)      Any claim for indemnity under any provision of this Agreement,
         including Sections 4.8 and 9.4, shall be made by written notice from
         the party seeking indemnification (the "Indemnified Party") to the
         party required to provide same (the "Indemnifying Party"), together
         with a written description of any third party claim against the
         Indemnified Party, stating the nature and basis of such claim and, if
         ascertainable, the amount thereof. The Indemnifying Party shall have a
         period of thirty (30) days after receipt of such notice within which to
         respond thereto or, in the case of a third party claim which requires a
         shorter time for response, then within such shorter period as specified
         by the Indemnified Party in such notice (the "Notice Period"). If the
         Indemnifying Party denies liability or fails to respond to the notice
         within the Notice Period, the Indemnified Party may defend or
         compromise the claim as it deems appropriate without prejudice to any
         of the Indemnified Party's rights hereunder, with no further obligation
         to inform the Indemnifying Party of the status of the claim and no
         right of the Indemnifying Party to approve or disapprove any action,
         taken in connection therewith by the Indemnified Party. If the
         Indemnifying Party accepts liability, it shall so notify the
         Indemnified Party within the Notice Period and elect either: (i) to
         undertake the defense or compromise of such third party claim with
         counsel selected by the Indemnifying Party and reasonably approved by
         the Indemnified Party, or (ii) to instruct the Indemnified Party to
         defend or compromise such claim. If the Indemnifying Party undertakes
         the defense or compromise of such third party claim, the Indemnified
         Party shall be entitled, at its own expense, to participate in such
         defense. No compromise or settlement of any third party claim shall be
         made without reasonable notice to the Indemnified Party and, unless
         such compromise or settlement includes a general release of the
         Indemnified Party in respect of the matter with no admission of
         liability on the part of the Indemnified Party and non constraints on
         the future conduct of its business, without the prior written approval
         of the Indemnified Party.

9.5      FURTHER ASSURANCES: After Closing, Seller and Purchaser agree to take
         such further actions and to execute, acknowledge and deliver all such
         further documents that are necessary or useful in carrying out the
         purposes of this Agreement or of any document delivered pursuant
         hereto.

9.6      RECORDING: Purchaser shall immediately file for all requisite approvals
         of the appropriate federal governmental agencies to the Assignment(s)
         of the Assets. The Assignment(s) of federal oil and gas leases shall be
         filed in the appropriate governmental offices in compliance with the
         applicable rules of such governmental agencies. Purchaser shall supply
         Seller with a true and accurate photocopy of all the recorded and filed
         Assignment(s) within a reasonable period of time after their recording
         and filing.

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9.7      CONFIDENTIALITY AND PUBLICITY: In the event Closing does not occur for
         any reason except as required by law and with prior notice to Seller,
         Purchaser and its officers, directors, employees, agents and
         representatives will hold in strict confidence all data and information
         obtained from Seller in connection with the Assets, whether before or
         after execution of this Agreement, except any data or information
         which:

(a)      at the time of the disclosure to Purchaser by Seller is in the public
         domain;

(b)      after disclosure to Purchaser by Seller becomes part of the public
         domain by publication or otherwise, except by breach of this provision
         by Purchaser;

(c)      Purchaser can establish by competent proof was rightfully in its
         possession at the time of disclosure to Purchaser by Seller;

(d)      Purchaser rightfully received from third parties free of any
         obligations of confidence; or,

(e)      is developed independently by Purchaser, provided the person or persons
         alleged to have independently developed the information shall not have
         any access to data or information obtained from Seller in connection
         with the transactions contemplated by this Agreement.

If this Agreement is terminated for any reason, Purchaser shall return to Seller
all copies of confidential information, as requested by Seller, in the
possession of Purchaser obtained from Seller or pursuant to any provision of
this Agreement, which information is at the time of termination required to be
held in confidence pursuant to this section.

9.8      PRESERVATION OF BOOKS AND RECORDS: For a period of six (6) years after
         Closing, Seller will retain the books, records and files pertaining to
         the Assets and will make such books, records and files available to
         Purchaser upon reasonable notice at Seller's headquarters (or at such
         other location in the United States as Seller may designate in writing
         to Purchaser) at reasonable times and during regular office hours.

9.9      THIRD-PARTY CONSENTS Certain of the transfers contemplated by this
         Agreement are subject to various forms of third-party consents, which
         are identified on Exhibit "P" ("Consents"). Seller and Purchaser shall
         cooperate and shall promptly take such action as may be required to
         obtain all necessary Consents prior to Closing. Seller and Purchaser
         agree that to the extent any Assets, contract or permit that would
         otherwise be assigned under this Agreement is not capable of being
         assigned, transferred, subleased or sublicensed without any such
         Consent of, or waiver by any other party thereto, or any other Person,
         or if such assignment, transfer, sublease or sublicense or attempted
         assignment, transfer, sublease or sublicense would constitute a breach
         thereof, or a violation of any law, this Agreement shall not constitute
         an assignment, transfer, sublease or sublicense, or an attempted
         assignment, transfer, sublease or sublicense of any such contract or
         permit. With respect to each Asset, contract that, but for the reasons
         set forth in the first sentence of this Section, would be assigned,
         Seller agrees to provide Purchaser with the benefits (including the
         right to

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         terminate any such contract or permit in accordance with the terms
         thereof) of such Asset, contract or permit, to the extent related to
         transactions or periods that occur at or after Closing, and to the
         extent it is possible to do so; and, if and to the extent such benefits
         are provided to Purchaser, Purchaser agrees to observe and perform such
         contract or permit. Seller shall continue to use its reasonable efforts
         to obtain an assignment to Purchaser of each Asset, contract or permit
         that, but for the reasons set forth in the first sentence of this
         Section, would be assigned; provided, however, that Seller shall not be
         required to pay any consideration or suffer any financial disadvantage
         to obtain such assignment.

                                       X.

                                      TAXES

10.1     APPORTIONMENT OF AD VALOREM AND PROPERTY TAXES: All ad valorem taxes,
         real property taxes, personal property taxes and similar obligations
         with respect to the Assets for the tax period in which the Effective
         Date occurs shall be apportioned as of the Effective Date between
         Seller and Purchaser. That portion of such apportioned tax liability
         which is attributable to Seller shall be credited to Purchaser's
         account. Purchaser shall file or cause to be filed all required reports
         and returns incident to such taxes and shall pay or cause to be paid to
         the taxing authorities all such taxes relating to the tax period in
         which the Effective Date occurs. Seller will use its reasonable efforts
         to provide Purchaser with all necessary information. Purchaser shall
         supply Seller with copies of the filed reports and proof of payment
         promptly after filing and paying them.

10.2     SALES TAXES, FILING FEES, ETC.: The transactions contemplated by this
         Agreement are an occasional sale and should be deemed exempt from any
         state and local sales and use taxes, and the Parties hereto will use
         reasonable efforts to report and have this transfer treated as exempt
         from such taxes. The Purchase Price and the Adjusted Purchase Price
         provided for herein are net of any sales taxes or other transfer taxes
         in connection with the sale of the Assets. Purchaser shall be liable
         for any sales tax or other transfer tax, as well as any applicable
         conveyance, transfer and recording fees and real estate transfer stamps
         or taxes imposed on the transfer of the Assets pursuant to this
         Agreement. If Seller is required by applicable state law to report and
         pay these taxes and/or fees, Purchaser shall, upon presentment of an
         invoice by Seller, promptly deliver a check to Seller in full payment
         of the invoice. Purchaser shall defend, indemnify and hold Seller
         harmless with respect to the payment of any of those taxes including
         any interest or penalties assessed thereon.

10.3     OTHER TAXES: All production, severance, excise, and other similar such
         taxes or fees (other than income taxes) relating to production of oil,
         gas and condensate attributable to the Assets prior to the Effective
         Date shall be paid by Seller, and all such taxes relating to such
         production on and after the Effective Date shall be paid by Purchaser.
         Purchaser and Seller shall supply each other with copies of the filed
         reports and proof of payment promptly after filing and paying them.

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                                       XI.

                                   TERMINATION

This Agreement and the transactions contemplated hereby may be terminated only
in the following instances:

(a)      If the conditions set forth in Article VII are not satisfied or waived
         as of Closing;

(b)      By way of Sections 3.5(b), 4.5 hereof or any other right to terminate
         under Article IV hereof;

(c)      At any time by mutual written agreement of Seller and Purchaser and in
         accordance with any other express provisions of this Agreement.

                                      XII.

                                  MISCELLANEOUS

12.1     GOVERNING LAW: This Agreement shall be governed by and interpreted in
         accordance with the laws of the State of Louisiana. All assignments and
         instruments executed in accordance with this Agreement shall be
         governed by and interpreted in accordance with the laws of the state
         where the Assets conveyed thereby are located.

12.2     ENTIRE AGREEMENT: This Agreement, together with any confidentiality
         agreements relating to the Assets previously executed by Purchaser, and
         the Indemnity Agreement to be executed by Seller at Closing constitute
         the entire agreement between the parties and supersede all prior
         agreements, understandings, negotiations and discussions, whether oral
         or written, of the parties. No supplement, amendment, alteration,
         modification, waiver or termination of this Agreement shall be binding
         unless executed in writing by the parties hereto.

12.3     WAIVER: No waiver of any of the provisions of this Agreement shall be
         deemed or shall constitute a waiver of any other provisions hereof
         (whether or not similar), nor shall such waiver constitute a continuing
         waiver unless otherwise expressly provided.

12.4     CAPTIONS: The captions in this Agreement are for convenience only and
         shall not be considered a part of or affect the construction or
         interpretation of any provision of this Agreement.

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12.5     ASSIGNMENT: Prior to closing, neither party hereto shall assign this
         Agreement or any of its rights or obligations hereunder without the
         prior written consent of the other party, and any assignment made
         without such consent shall be void. Except as otherwise provided
         herein, this Agreement shall be binding upon and inure to the benefit
         of the parties hereto and their respective permitted successors and
         assigns.

12.6     NOTICES: Any notice provided or permitted to be given under this
         Agreement shall be in writing, and may be served by personal delivery
         or by depositing same in the United States mail, addressed to the party
         to be notified, postage prepaid, and registered or certified with a
         return receipt requested. Notices deposited in the mail in the manner
         hereinabove described shall be deemed to have been given and received
         upon the date of delivery as shown on the return receipt. Notice served
         in any other manner shall be deemed to have been given and received
         only if and when actually received by the addressee. For purposes of
         notice, until receipt of written notice changing same, the addresses of
         the parties shall be as follows:

         SELLER'S MAILING
         Union Oil Company of California
         4021-4023 Ambassador Caffery Parkway
         Post Office Box 69200 (70596-9200)
         Lafayette, Louisiana 70503
         Attention: Dalton F. Smith III

         PURCHASER'S MAILING ADDRESS:
         Energy Partners, Ltd.
         201 St. Charles Avenue
         Suite 3400
         New Orleans, Louisiana  70170
         Attention: L. Keith Vincent

12.7     WAIVER OF COMPLIANCE WITH BULK TRANSFER LAWS: Purchaser waives
         compliance with any applicable bulk transfer law relating to the
         transactions contemplated by this Agreement, and agrees to assume all
         risk and liability in connection with the failure to so comply.

12.8     UTPCPL WAIVER: TO THE EXTENT APPLICABLE TO THE ASSETS OR ANY PORTION
         THEREOF, PURCHASER HEREBY WAIVES THE PROVISIONS OF THE LOUISIANA UNFAIR
         TRADE PRACTICES AND CONSUMER PROTECTION LAW (LA. R. S. 51:1402, ET
         SEQ.). PURCHASER WARRANTS AND REPRESENTS THAT IT: (i) IS EXPERIENCED
         AND KNOWLEDGEABLE WITH RESPECT TO THE OIL AND GAS INDUSTRY GENERALLY
         AND WITH TRANSACTIONS OF THIS TYPE SPECIFICALLY; (ii) POSSESSES AMPLE
         KNOWLEDGE, EXPERIENCE AND EXPERTISE TO EVALUATE INDEPENDENTLY THE
         MERITS AND RISKS OF THE TRANSACTION HEREIN CONTEMPLATED; AND, (iii) IS

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         NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION IN NEGOTIATIONS
         WITH SELLER.

12.9     WAIVER OF CONSUMER RIGHTS PURCHASER HEREBY WAIVES ITS RIGHTS UNDER THE
         DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT, SECTION 17.41 ET
         SEQ., BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL
         RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF ITS OWN
         SELECTION, PURCHASER VOLUNTARILY CONSENTS TO THIS WAIVER. IN ADDITION,
         TO THE EXTENT APPLICABLE TO THE ASSETS OR ANY PORTION THEREOF,
         PURCHASER HEREBY WAIVES THE PROVISIONS OF THE TEXAS CONSUMER PROTECTION
         LAWS REGARDING FALSE, MISLEADING AND DECEPTIVE BUSINESS PRACTICES,
         UNCONSCIONABLE ACTIONS AND BREACHES OF WARRANTY; PROVIDED, HOWEVER,
         THAT NOTHING HEREIN CONTAINED SHALL BE DEEMED A WAIVER BY PURCHASER
         WHERE SUCH WAIVER IS PROHIBITED BY LAW. IN ORDER TO EVIDENCE ITS
         ABILITY TO GRANT SUCH WAIVER, PURCHASER HEREBY REPRESENTS AND WARRANTS
         TO SELLER THAT PURCHASER (i) IS IN THE BUSINESS OF SEEKING OR
         ACQUIRING, BY PURCHASE OR LEASE, GOODS, OR SERVICES FOR COMMERCIAL OR
         BUSINESS USE, (ii) HAS ASSETS OF FIVE MILLION DOLLARS OR MORE ACCORDING
         TO IT MOST RECENT FINANCIAL STATEMENT PREPARED IN ACCORDANCE WITH
         GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, (iii) HAS KNOWLEDGE AND
         EXPERIENCE IN FINANCIAL MATTERS THAT ENABLE IT TO EVALUATE THE MERITS
         AND RISKS OF THE TRANSACTION CONTEMPLATED HEREBY, AND (iv) IS NOT IN A
         SIGNIFICANTLY DISPARATE BARGAINING POSITION. Nothing in this Section
         shall be interpreted as a waiver of the express representations and
         warranties in this Agreement.

12.10    WAIVER OF JURY TRIAL: SELLER AND PURCHASER DO HEREBY IRREVOCABLY WAIVE,
         TO THE FULLEST EXTENT PERMITTED BY LAW, AND ANY AND ALL RIGHT TO A
         TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER LEGAL PROCEEDING BASED UPON,
         ARISING OUT OF, OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
         CONTEMPLATED HEREBY.

12.11    LIMITATION OF LIABILITY: NOTWITHSTANDING ANYTHING HEREIN PROVIDED TO
         THE CONTRARY, SELLER AND PURCHASER DO HEREBY COVENANT AND AGREE THAT
         THE RECOVERY BY EITHER PARTY HERETO OF ANY DAMAGES SUFFERED OR INCURRED
         BY IT AS A RESULT OF ANY BREACH BY THE OTHER PARTY OF ANY OF ITS
         COVENANTS, AGREEMENTS, REPRESENTATIONS, GUARANTIES, WARRANTIES,
         DISCLAIMERS, WAIVERS OR CONTINUING OBLIGATIONS UNDER THIS AGREEMENT
         SHALL BE LIMITED TO THE ACTUAL DAMAGES SUFFERED OR INCURRED BY THE
         NON-BREACHING PARTY AS A RESULT OF SUCH BREACH, AND IN NO EVENT SHALL
         SUCH RECOVERY INCLUDE ANY INDIRECT,

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         CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES; PROVIDED, HOWEVER, THAT
         NOTHING IN THIS SECTION SHALL REDUCE OR DIMINISH THE SPECIFIC INDEMNITY
         AND ASSUMPTIONS OF LIABILITY AND RESPONSIBILITY OF SELLER AS SET FORTH
         IN THE INDEMNITY AGREEMENT TO BE EXECUTED BY SELLER AT CLOSING.

12.12    NO ADMISSIONS: The Purchaser and Seller agree that neither this
         Agreement, nor any part hereof, nor any performance under this
         Agreement, nor any payment of any amount pursuant to any provision of
         this Agreement shall constitute or be construed as a finding, evidence
         of, or an admission or acknowledgment of any liability, fault, or past
         or present wrongdoing, or violation of any law, rule, regulation, or
         policy, by either Seller or Purchaser or by their respective officers,
         directors, employees or agents.

12.13    ANNOUNCEMENTS: Purchaser agrees that prior to the issuance of its
         initial press announcement, if any, which specifically addresses its
         acquisition of the Assets as being from Seller, it shall seek the
         approval of Seller of same; provided, however, that such approval
         cannot be unreasonably withheld. Seller and Purchaser, including their
         respective Affiliates, agree that from the date of this Agreement and
         continuing for twelve (12) months after the Closing if reserve volumes
         are estimated in a news release in conjunction with a Purchase Price
         disclosure the release must state that the reserve estimates are the
         disclosing Party's reserve estimates; provided, that either Party may
         make all disclosures which are required or prudent under applicable
         laws, including, but not limited to, rules, regulations and guidelines
         of the Securities and Exchange Commission and applicable stock
         exchanges.

12.14    BOOKS AND RECORDS: Seller shall, at or as promptly as reasonably
         possible after Closing, provide and make available to the Purchaser, at
         Purchaser's cost and expense, subject to the attorney-client privilege,
         photocopies of the Records. Notwithstanding any other provision herein
         contained, Purchaser shall retain all original documents, if any,
         delivered by Seller hereunder which pertain to the Assets (documents
         delivered by Seller hereunder may be maintained on compact discs) for
         as long as it so desires and make the same available after the Closing
         for inspection and copying by Seller during normal business hours, upon
         reasonable request and upon reasonable notice; provided, however, that
         during the first six (6) years after Closing, such books, records or
         documents shall not be disposed of or destroyed by Purchaser without
         first advising Seller in writing and giving Seller reasonable
         opportunity to obtain possession thereof.

12.15    THIRD PARTY BENEFICIARIES: Neither this Agreement, nor any performance
         hereunder by Seller or Purchaser, shall be deemed or interpreted to
         create any right, claim, cause of action, or remedy on behalf of any
         person not a party hereto.

12.16    EXPENSES: Except as otherwise provided herein, each party shall be
         solely responsible for all expenses incurred by it in connection with
         this transaction, including without limitation, fees and expenses of
         its own legal counsel and accountants.

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12.17    SEVERABILITY: If any term or other provision of this Agreement is
         invalid, illegal or incapable of being enforced under any applicable
         rule or law, all other conditions and provisions of this Agreement
         shall nevertheless remain in full force and effect so long as the
         economic or legal substance of the transaction contemplated hereby is
         not affected in a materially adverse manner with respect to either
         party.

12.18    USE OF SELLER'S NAME: As soon as practicable after Closing, Purchaser
         shall remove or cause to be removed the names and marks used by Seller
         and all variations and derivations thereof and logos relating thereto
         from the Assets and shall not thereafter make any use whatsoever of
         those names, marks and logos.

12.19    SURVIVAL: Except as otherwise specifically provided in this Agreement,
         all covenants, agreements, representations, guaranties, warranties,
         disclaimers, waivers and continuing obligations shall survive the
         execution of the Agreement, the Closing, and the delivery and recording
         of any deeds, assignments or bills of sale which convey title to the
         Assets from Seller to Purchaser.

12.20    LISTING OF EXHIBITS: The Exhibits listed below are attached to this
         Agreement and by this reference are fully incorporated herein:

         Exhibit "A" - Assets
         Exhibit "B" - Easements etc.
         Exhibit "C" - Assets Not Sold
         Exhibit "D" - Retained Matters
         Exhibit "E" - Contracts
         Exhibit "F" - Liens, Mortgage etc.
         Exhibit "G" - Back-in, Reversion etc.
         Exhibit "H" - Quality or Quantity of Title
         Exhibit "I" - Arbitration
         Exhibit "J" - Litigation
         Exhibit "K" - Marketing
         Exhibit "L" - Assignment and Bill of Sale
         Exhibit "L-1" - Indemnity Agreement
         Exhibit "M" - Termination of Agreement
         Exhibit "M-1" - Termination of Agreement
         Exhibit "N" - Legal Opinion
         Exhibit "N-1" - Override Conveyance
         Exhibit "N-2" - Consent and Waiver
         Exhibit "O" - Pipeline Purchase Agreement
         Exhibit "P" - Consents

12.21    COUNTERPARTS: This Agreement may be executed in one or more
         counterparts, each of which shall be deemed an original, but all of
         which shall constitute one and the same instrument.

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Page No. 33

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first set forth above.

WITNESSES:                                   SELLER:

                                             UNION OIL COMPANY OF CALIFORNIA

                                             BY:
-------------------------------                 --------------------------------
                                                 Robert C. Gnagy
                                                 Attorney-in-Fact

-------------------------------

                                             PURCHASER:

                                             ENERGY PARTNERS, LTD.

                                             BY:
-------------------------------                 --------------------------------
                                                 Richard A. Bachmann
                                                 President

-------------------------------

<PAGE>   34

Purchase and Sale Agreement
Page No. 34

STATE OF LOUISIANA

PARISH OF ORLEANS

         On this 31st day of March, 2000, before me appeared Robert C. Gnagy, to
me personally known, who, being by me duly sworn, did say that he is the
Attorney-in-Fact of UNION OIL COMPANY OF CALIFORNIA, a California Corporation,
and that the foregoing instrument was executed on behalf of said Corporation and
said Appearer acknowledged said instrument to be the free act and deed of said
Corporation.

                             ------------------------
                                  NOTARY PUBLIC

My commission is for life.

STATE OF LOUISIANA

PARISH OF ORLEANS

         On this 31st day of March, 2000, before me appeared Richard A.
Bachmann, to me personally known, who, being by me duly sworn, did say that he
is the President of ENERGY PARTNERS, LTD. a Delaware Corporation, and that the
foregoing instrument was executed on behalf of said Corporation and said
Appearer acknowledged said instrument to be the free act and deed of said
Corporation.

                             ------------------------
                                  NOTARY PUBLIC

My commission is for life.<PAGE>   1
                                                                   EXHIBIT 10.22

                                 BAY MARCHAND 2
                            ASSET PURCHASE AGREEMENT

                                     Between

                              SHELL OFFSHORE INC.,
                 SHELL OIL & GAS INVESTMENT LIMITED PARTNERSHIP,
                    SHELL CONSOLIDATED ENERGY RESOURCES INC.,
                                       AND
                          SHELL FRONTIER OIL & GAS INC.
                           (COLLECTIVELY AS "SELLER")

                                       and

                              ENERGY PARTNERS, LTD.
                                       AND
                         UNION OIL COMPANY OF CALIFORNIA
                          (COLLECTIVELY AS "PURCHASER")

                               Dated June 23, 1998
                             Effective April 1, 1998

<PAGE>   2

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
<S>                                                                        <C>
SECTION 1 - DEFINITIONS/EXHIBITS..........................................    2
    1.1     Agreement.....................................................    2
    1.2     Affiliate.....................................................    3
    1.3     Exhibits......................................................    4
    1.4     Closing.......................................................    4
    1.5     Effective Time................................................    4
    1.6     Known/Knowledge...............................................    5
    1.7     Lease.........................................................    5
    1.8     MMS...........................................................    5
    1.9     Net Revenue Interest..........................................    6
    1.10    Leasehold Interests...........................................    6
    1.11    Oil & Gas Interests...........................................    6
    1.12    Operator......................................................    6
    1.13    Party.........................................................    7
    1.14    Working Interest..............................................    7

SECTION 2 - PURCHASE AND SALE.............................................    7
    2.1     Purchase and Sale of Assets...................................    7
            2.1.1     Lease(s)............................................    7
            2.1.2     Associated Interests................................    8
            2.1.3     Wells...............................................    8
            2.1.4     Platforms & Facilities..............................    8
            2.1.5     Easements...........................................    9
            2.1.6     Contract Rights.....................................    9
            2.1.7     Business Records....................................    9
    2.2     Excluded Assets...............................................   10
            2.2.1     Licensed Data.......................................   10
            2.2.2     Trade Accounts and Causes of Action.................   10
            2.2.3     Third Party Equipment...............................   11
            2.2.4     Other Excluded Assets...............................   11
    2.3     Assets Subject to Existing Agreements.........................   11
    2.4     Purchase Price................................................   13
    2.5     Additional Consideration......................................   14
    2.6     Title and Risk of Loss........................................   17
    2.7     Specific Performance..........................................   18

SECTION 3 - TITLE AND ENVIRONMENTAL.......................................   18
    3.1     Title Matters.................................................   18
    3.2     Physical Condition of the Assets..............................   18
    3.3     NORM..........................................................   19
    3.4     Availability of Data..........................................   20

SECTION 4 - CLOSING.......................................................   20
    4.1     Time..........................................................   20
    4.2     Closing.......................................................   21
</TABLE>

                                       i
<PAGE>   3

<TABLE>
<S>                                                                        <C>
    4.3     Post Closing Obligations......................................   23
            4.3.1   Recording & Filing....................................   23
            4.3.2   Change of Operator....................................   23
            4.3.3   Notices to Third Parties..............................   24
            4.3.4   Property Records......................................   24
            4.3.5   Use of Name...........................................   25
    4.4     Governmental Approvals........................................   26
    4.5     Operations After the Effective Time...........................   26

SECTION 5 - GENERAL REPRESENTATIONS AND WARRANTIES........................   28
    5.1     Reciprocal Representations and Warranties.....................   28
            (a)     Corporate Organization................................   28
            (b)     Requisite Approvals...................................   28
            (c)     Impediments to Consummation of Agreement..............   29
            (d)     Bankruptcy............................................   29
            (e)     MMS Approval..........................................   30
    5.2     SELLER's Representations & Warranties.........................   30
            (a)     Permits...............................................   30
            (b)     Compliance with Laws..................................   30
            (c)     Preferential Purchase Rights and Consents to
                    Assignment............................................   31
            (d)     Litigation............................................   31
            (e)     Taxes.................................................   31
            (f)     Leases and Wells......................................   32
            (g)     Marketing ............................................   32
            (h)     Contract Rights ......................................   33
            (i)     Environmental Matters ................................   34
    5.3     PURCHASER's Representations & Warranties .....................   37
            (a)     Receipt of Data ......................................   37
            (b)     Independent Evaluation ...............................   37
            (c)     No Securities Distribution ...........................   38
    5.4     Survival of Representations & Warranties .....................   39

SECTION 6 - ACCOUNTING FOR REVENUE & EXPENSES ............................   39
    6.1     Adjustments ..................................................   39
            6.1.1   Final Accounting .....................................   40
            6.1.2   Notice to Remitters of Proceeds ......................   43
    6.2     Allocation of Tax Liabilities ................................   43
    6.3     Purchaser's Representation ...................................   44

SECTION 7 - SELLER'S AND PURCHASER'S OBLIGATIONS .........................   44
    7.1     PURCHASER's Assumed Obligations ..............................   44
    7.2     Plugging and Abandonment of Wells, Removal of Facilities......   45

SECTION 8 - DISCLAIMER OF WARRANTY/INDEMNIFICATION .......................   46
    8.1     Sale "As Is" "Where Is" ......................................   46
    8.2     Disclaimer Regarding Oil & Gas Interests......................   48
    8.3     DISCLAIMER REGARDING INFORMATION .............................   50
</TABLE>

                                    ii
<PAGE>   4

<TABLE>
<S>                                                                        <C>
    8.4     Indemnification...............................................   50
    8.5     Limitation of Liability ......................................   58

SECTION 9 - ADMINISTRATIVE PROVISIONS ....................................   58
    9.1     Expenses of Sale .............................................   58
    9.2     Third Party Rights ...........................................   59
    9.3     Further Actions ..............................................   59
    9.4     Assignment ...................................................   60
    9.5     Notices ......................................................   60
    9.6     Public Announcements .........................................   62
    9.7     Time Limits ..................................................   62
    9.8     Compliance with Laws & Regulations ...........................   63
    9.9     Applicable Law ...............................................   63
    9.10    Arbitration ..................................................   64
    9.11    Severance of Invalid Provisions ..............................   67
    9.12    Construction & Interpretation.................................   67
            9.12.1    Headings for Convenience ...........................   67
            9.12.2    Gender & Number ....................................   68
            9.12.3    Independent Representation .........................   68
    9.13    Integrated Agreement .........................................   68
    9.14    Binding Effect ...............................................   69
    9.15    Multiple Counterparts ........................................   70
    9.16    Fair Notice Disclosure Statement .............................   70
    9.17    Call on Production ...........................................   70
</TABLE>

SCHEDULES

Schedule 2.1.3          Wells
Schedule 2.1.6          Contract Rights
Schedule 5.2(g)         Marketing
Schedule 5.2(h)         Contract Rights
Schedule 5.2(h)(a)
Schedule 5.2(i)         Environmental Matters

                                      iii
<PAGE>   5

                            ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT ("Agreement") is dated June 23, 1998, (but is
effective as of the Effective Time) by and between SHELL OFFSHORE INC. ("SOI"),
a Delaware corporation, having a post office address of P.O. Box 61933, New
Orleans, Louisiana 70161, SHELL OIL & GAS INVESTMENT LIMITED PARTNERSHIP, a
Delaware limited partnership, having an address of P.O. Box 61933, New Orleans,
Louisiana 70161, SHELL CONSOLIDATED ENERGY RESOURCES INC., a Delaware
corporation, having an address of P.O. Box 61933, New Orleans, Louisiana 70161,
and SHELL FRONTIER OIL & GAS INC., A Delaware corporation, having an address of
P.O. Box 61933, New Orleans, Louisiana 70161 (herein all four companies are
collectively referred to as "SELLER"), and ENERGY PARTNERS, LTD. ("EPL"), a
Delaware corporation, the address for which is 1100 Poydras Street, Suite 1850,
New Orleans, Louisiana 70163-1850 and UNION OIL COMPANY OF CALIFORNIA ("UNION"),
a California corporation, the address for which is 14141 Southwest Freeway,
Sugar Land, Texas 77478 (herein both companies are collectively referred to as
"PURCHASER"). For all purposes of this Agreement, including but not limited to
ownership, liabilities, obligations, and indemnities assumed or conveyed
hereunder, and rights, title and interests to be acquired hereunder, PURCHASER
shall mean EPL in the proportion of Twenty Percent (20%) and Union in the
proportion of Eighty Percent (80%). SELLER and PURCHASER (and each of their

<PAGE>   6

respective entities) are sometimes separately referred to as a "Party" and are
sometimes collectively referred to as "Parties".

     WHEREAS, subject to the terms and conditions set forth in this Agreement,
PURCHASER desires to purchase from SELLER, and SELLER desires to sell to
PURCHASER, SELLER's interests in certain oil and gas properties located in the
Outer Continental Shelf of the Gulf of Mexico.

     NOW THEREFORE, in consideration of the mutual promises contained herein,
the benefits to be derived by each Party hereunder, and other good and valuable
consideration, PURCHASER and SELLER agree as follows:

                        SECTION 1 - DEFINITIONS/EXHIBITS

     The following terms as used in this Agreement shall have the definitions
set forth below:

1.1    AGREEMENT: shall mean this "Asset Purchase Agreement," together with its
       attached Exhibits and the operative conveyances and Closing documents,
       all of which are incorporated into this Agreement for all purposes and as
       fully as if set forth in the text of this Agreement.

                                       -2-

<PAGE>   7

1.2    AFFILIATE: shall mean:

       (a)    Any corporation, limited liability company or partnership
              (including a limited partnership), or other entity owned or
              controlled by a Party to this Agreement. Ownership or control by a
              Party is deemed to exist if a Party to this Agreement directly or
              indirectly owns or controls fifty percent (50%) or more of the
              outstanding stock of the corporation having the right to vote for
              directors of the corporation (or fifty percent (50%) or more of
              the interests of the partnership or other entity). The stock (or
              interests in a partnership or other entity) owned or controlled by
              a Party shall include all stock (or other interests) directly or
              indirectly owned or controlled by any other corporation,
              partnership or other entity owned or controlled by a Party to this
              Agreement; and

       (b)    any "parent" corporation, partnership or other entity that
              directly or indirectly owns or controls fifty percent (50%) or
              more of the outstanding stock (or other interests) having the
              right to vote for directors of a Party to this Agreement, and also
              includes any "sister" corporation, partnership or other entity in
              which the parent corporation directly or indirectly owns or

                                      -3-

<PAGE>   8

              controls fifty percent (50%) of the voting stock (or other
              interests) in such sister corporation.

1.3    EXHIBITS: Attached hereto and forming an integral part of this Agreement
       are Exhibits "1" through "7" which are individually described as follows:

       Exhibit "1"      Description of Property

       Exhibit "2a-d"   Assignments

       Exhibit "2e"     Bill of Sale

       Exhibit "3"      Excluded Property

       Exhibit "4"      Financial Closing Document

       Exhibit "5"      Lease of Platform Space Agreement

       Exhibit "6"      Geophysical Data Non-Exclusive License Agreement

       Exhibit "7a-d"   Non-Foreign Affidavits

1.4    CLOSING: shall mean (i) the execution and delivery of the operative
       conveyances and other closing documents evidencing this transaction, and
       (ii) the payment of the Purchase Price to SELLER, and any other amounts
       to be paid at Closing pursuant to the terms of this Agreement.

1.5    EFFECTIVE TIME: shall mean April 1, 1998.

                                      -4-

<PAGE>   9

1.6    KNOWN/KNOWLEDGE: Whenever a statement regarding the existence (or
       absence) of any fact in this Agreement is qualified by a phrase such as
       "to such Party's Knowledge" or "Known to such Party," the Parties intend
       that the only information to be attributed to such Party is information
       actually known to (a) the person in the case of an individual or (b) in
       the case of a corporation (or other business entity), a current officer
       or employee who devotes attention to matters of such nature during the
       course of his employment by such corporation or its Affiliates. Unless
       otherwise specifically provided in this Agreement, no Party is
       represented or obligated to have undertaken a separate investigation in
       connection with the transaction contemplated in this Agreement to
       determine the existence (or absence) of any statement or representation
       qualified by a phrase such as "to such Party's knowledge" or "known to
       such Party."

l.7    LEASE: shall mean the oil and gas lease(s) (or portion(s) thereof)
       identified in Exhibit "1" attached hereto and the lands affected by each
       such Lease.

1.8    MMS: shall mean the U.S. Department of the Interior, Minerals Management
       Service, or any successor agency, and the records maintained at the New
       Orleans, La. Regional Office of that agency, or any successor agency.

                                      -5-

<PAGE>   10

1.9    NET REVENUE INTEREST: shall mean the aggregate fractional or percentage
       ownership of SELLER as of the Effective Time, of the right to receive
       hydrocarbon production (either in-kind or the share of proceeds from
       sales of hydrocarbon production) from the applicable Leases, after the
       deduction of all burdens upon a Lease such as the lessor's royalty on
       production (other than taxes) as that ownership is set out in Exhibit
       "1", subject to any exclusions noted in Exhibit "1."

1.10   LEASEHOLD INTERESTS: shall mean all of SELLER's right, title and interest
       in those certain Lease(s), including working interests, overriding
       royalty interests, and other oil and gas leasehold estates or interests,
       as set forth in Exhibit "1".

1.11   OIL & GAS INTERESTS: shall mean Leasehold Interests, together with
       SELLER's right, title and interest in the well(s), platforms, pipeline
       laterals and all related equipment, contract rights, assets, etc., all as
       described in Section 2.1 below.

1.12   OPERATOR: shall mean the person, designated or approved as Operator of
       the Oil & Gas Interests under the terms of the applicable joint operating
       agreement, if any, or by the appropriate governmental agency.

                                      -6-

<PAGE>   11

1.13   PARTY: shall mean any of the named SELLER and PURCHASER (and each of
       their respective entities).

1.14   WORKING INTEREST: shall mean the aggregate fractional or percentage
       record title interests and operating rights of SELLER in and to each
       Lease as of the Effective Time by virtue of which SELLER has the right to
       conduct the operations contemplated by a Lease and this Agreement.

                          SECTION 2 - PURCHASE AND SALE

2.1    PURCHASE AND SALE OF ASSETS: Except for the excluded assets listed in
       Section 2.2 below, upon Closing SELLER agrees to sell and PURCHASER
       agrees to purchase, for the consideration recited and upon the terms and
       conditions contained in this Agreement, the Oil & Gas Interests,
       including without limitation the following:

       2.1.1  LEASE(S): SELLER's record title interests (or operating rights),
              overriding royalty interests, and other mineral interests
              comprising the Working Interest and Net Revenue Interest in each
              Lease, or portion thereof, and other interests in oil and gas

                                      -7-

<PAGE>   12

              described in Exhibit "1" and all rights, privileges and
              obligations appurtenant to each Lease; and

       2.1.2  ASSOCIATED INTERESTS: SELLER's rights in any unit in, which a
              Lease is included, to the extent that these rights arise from and
              are associated with a Lease, including without limitation, all
              rights derived from any pooling order, operating agreement,
              communitization or other agreement or from any declaration or
              order of any governmental body; and

       2.1.3  WELLS: SELLER's right, title and interest in all oil, gas or
              condensate wellbore(s) (whether producing, not producing or
              abandoned), water source, water injection and other injection and
              disposal wells and systems located on a Lease (or lands pooled
              with a Lease); and

       2.1.4  PLATFORMS & FACILITIES: SELLER's right, title and interest in all
              platforms, facilities, pipelines, gathering systems, equipment,
              fixtures, inventory, spare parts, tools and other personal
              property located on a Lease or lands unitized therewith or
              acquired for use on a Lease (but excepting any excluded assets
              listed in Section 2.2 below); and

                                      -8-
<PAGE>   13

       2.l.5  EASEMENTS: SELLER's right, title and interest in all easements,
              rights of way, licenses, permits, including, but not limited to
              any and all EPA discharge permits, servitudes, surface leases and
              similar interests applicable or used in operating a Lease, wells,
              platforms or pipelines described above, to the extent assignable
              or transferable; and

       2.1.6  CONTRACT RIGHTS: SELLER's right, title and interest in the
              contracts and contractual rights, obligations and interests
              relating to any Lease, as identified on Schedule 2.1.6 hereto to
              the extent assignable or transferable; and

       2.1.7  BUSINESS RECORDS: All other tangibles, miscellaneous interests or
              other assets on or used in connection with a Lease, including
              without limitation, proprietary geophysical, seismic, geological,
              and geochemical data, photocopies of all (except originals of all
              well logs, geological, well and production data and engineering
              drawings, photographs and surveys,) the contents of the Data Room,
              as well as electronic digital transmittal of geological well, and
              production data, lease files, land files, well files, production
              records, accounting records, division order files,

                                      -9-

<PAGE>   14

              abstracts, title opinions and contract files, insofar as they
              exist and directly relate to the Oil & Gas Interests or lands
              unitized therewith (but excluding any internal valuations, price
              forecasts or interpretive data or documentation.

2.2    EXCLUDED ASSETS: The assets to be assigned and conveyed under this
       Agreement do not include (collectively, the "Excluded Assets");

       2.2.1  LICENSED DATA: Seismic, geophysical, geological or geochemical
              data licensed from third parties or subject to a confidentiality
              obligation in favor of a third party or any of SELLER's
              intellectual property, software, patents, trademarks, logos or
              service marks used in developing or operating a Lease; and

       2.2.2  TRADE ACCOUNTS AND CAUSES OF ACTION: Accounts and receivables or
              refunds, income or revenue, deposits, insurance or condemnation
              proceeds or awards, rights with respect to operations or claims
              and causes of action in favor of SELLER which are attributable to
              SELLER's ownership of the Oil & Gas Interests prior to the
              Effective Time, particularly such claims regarding

                                      -10-

<PAGE>   15

              the accounting for any SELLER's or Affiliate's overriding royalty
              interest(s); and

       2.2.3  THIRD PARTY EQUIPMENT: Any leased equipment for which PURCHASER
              does not specifically assume the lease or third party equipment
              and property that may be located on a Lease (including without
              limitation, contractor equipment, compression facilities, and oil
              spill response equipment), certain pipelines and applicable
              right-of-way grant(s), fixtures, and equipment which belong to
              third parties such as lessors, purchasers and transporters of
              hydrocarbons, and other pipelines and applicable right-of-way
              grant(s), belonging to Affiliates of SELLER; and

       2.2.4  OTHER EXCLUDED ASSETS: Those assets listed on Exhibit "3" hereof,
              entitled "Excluded Property".

2.3    ASSETS SUBJECT TO EXISTING AGREEMENTS: Unless specifically excepted or
       reserved, and to the extent that they are binding on SELLER, PURCHASER
       and SELLER agree that the sale of the Oil & Gas Interests will be made
       subject to (and PURCHASER upon Closing accepts the Oil & Gas Interests
       subject to) any and all reservations, exceptions, limitations, contracts,
       assignments, subleases, farmout agreements, calls on

                                      -11-

<PAGE>   16

       production as set forth in Paragraph 9.17, joint operating agreements,
       letter agreements, pooling or unitization agreements, easements,
       rights-of-way and all other agreements or instruments (i) which are of
       record with the MMS, or (ii) which have been made available to PURCHASER
       for its review prior to Closing, or (iii) which are listed on Schedule
       2.1.6 or (iv) are referred to in the contracts listed on Schedule 2.1.6.
       Upon Closing, PURCHASER further agrees to expressly assume SELLER's
       obligations and liabilities under the above-referenced contracts which
       are assigned to PURCHASER at Closing or after and are identified on
       Schedule 2.1.6 insofar as such obligations or liabilities relate to the
       Oil & Gas Interests and are attributable to the period of time after the
       Effective Time, and to execute any documents necessary to effectuate such
       assumption by PURCHASER.

       2.3.1  However, under no circumstance shall PURCHASER assume or be
              responsible for (i) contractual performance or nonperformance by
              SELLER due and owing prior to the Effective Time, (ii)
              underpayments or failure to pay royalties, overriding royalties,
              and other lease burdens due by SELLER on or under the Leases prior
              to the Effective Time, (iii) property damage sustained by third
              parties, or personal injury or death occurring prior to the
              Closing (other than those injuries or

                                      -12-

<PAGE>   17

              damages sustained by Purchaser's employees and/or contractors),
              (iv) any fines or penalties attributable to ownership or
              operations prior to the Closing; or (v) any accounting or payments
              due to third parties for hydrocarbon production (or the proceeds
              from the sale thereof) or transportation or processing,
              attributable to the period of time prior to the Effective Time,
              all of which shall remain the responsibility of SELLER.

2.4    PURCHASE PRICE: PURCHASER agrees that the total purchase price for the
       Oil & Gas Interests shall be Forty-five Million, Eight Hundred Thousand
       and no/hundredths ($45,800,000) Dollars (the "Purchase Price") payable at
       Closing and subject to adjustments as provided for in Section 6.0 hereof.
       The payment of the Purchase Price shall be made by electronic transfer of
       immediately available funds (EFT) to the credit of SELLER's bank accounts
       at Chase Manhattan Bank, as set forth below:

                                      -13-

<PAGE>   18

<TABLE>
<CAPTION>
                                                                        Purchase
            Seller                 Account No.                           Price
            ------                 -----------                          --------
<S>                                <C>                                  <C>
SOI                                322018773 Chase Manhattan            $   200,000
                                   Bank N.Y. a/k/a Chase MB
                                   -  ABA #021000128

Shell Frontier Oil & Gas Inc.      144815663 Chase New York             $10,300,000
                                   -  ABA #021000021

Shell Consolidated Energy          323060595 Chase Manhattan            $15,500,000
Resources Inc.                     Bank - ABA #021000021

Shell Oil & Gas                    6301222778500 Chase                  $19,800,000
Investment Limited                 Manhattan Bank Delaware -
Partnership                        ABA #031100267
</TABLE>

       At and after Closing, the Purchase Price shall be subject to adjustment
       pursuant to Section 6.0.

2.5    ADDITIONAL CONSIDERATION:

       2.5.4  As additional consideration, PURCHASER shall assume SELLER's
              responsibility and liability for the proper plugging and
              abandonment of all wellbores and the removal of any platforms,
              facilities and pipelines located on each Lease including those
              wellbores identified on Schedule 2.1.3.

                                      -14-
<PAGE>   19

       2.5.2  In addition, except as provided in Section 2.5.3, PURCHASER
              assumes responsibility and liability for the following
              occurrences, events and activities on or related to the Leasehold
              Interests ("Environmental Obligations"), after the Effective Time;
              provided, however, that with regard to Sections 2.5.2(a), (b) and
              (c), PURCHASER assumes such Environmental Obligations, regardless
              of whether resulting from any acts or omissions of SELLER prior to
              the Effective Time or the condition of the Oil & Gas Interests
              when acquired;

              (a)    Environmental pollution or contamination, including
                     pollution or contamination of the soil, sea, groundwater or
                     air by hydrocarbons, brine, NORM or otherwise;

              (b)    Underground injection activities and waste disposal onsite;

              (c)    Clean-up responses, and the cost of remediation, control,
                     assessment or compliance with respect to surface, sea
                     floor, and subsurface pollution.

                                      -15-

<PAGE>   20

              (d)    PURCHASER's failure to comply with applicable land use,
                     surface disturbance, licensing or notification
                     requirements;

              (e)    PURCHASER's disposal on the Oil & Gas Interests of any
                     hazardous substances, wastes, materials, and products
                     generated by or used in connection with the ownership or
                     operation of the Oil & Gas Interests after the Effective
                     Time; and

              (f)    PURCHASER's non-compliance with environmental or land use
                     rules, regulations, demands, or orders of appropriate state
                     or federal regulatory agencies.

       2.5.3  PURCHASER'S Environmental Obligations do not include the
              following, all of which shall remain the responsibility of SELLER:

              (a)    Any civil or criminal fines or penalties that may be levied
                     against SELLER or PURCHASER by any court or regulatory
                     authority for any violation of any laws, rules or
                     regulations in connection with the ownership or operation
                     of the Oil & Gas Interests before the Effective Time;

                                      -16-

<PAGE>   21

              (b)    Transportation and disposal offsite from the Oil & Gas
                     Interests before the Effective Time of any hazardous
                     substances, wastes, NORM, materials, and products generated
                     by or used in connection with the ownership or operation of
                     the Oil & Gas Interests before the Effective Time; and

              (c)    Claims against PURCHASER by third parties, including
                     governmental agencies and based upon laws, regulations,
                     orders and/or rules enacted prior to Closing, resulting
                     from the Environmental Obligations, which arose or accrued
                     prior to the Closing and are asserted within eighteen (18)
                     months of Closing and are attributable to the ownership or
                     operation of the Oil & Gas Interests prior to the Closing.
                     It is agreed and understood, moreover, that this exclusion
                     and SELLER's indemnity obligations with respect to the same
                     under this Agreement shall be limited only to Claims
                     against PURCHASER and/or the Oil & Gas Interests by third
                     parties, including governmental agencies.

       2.6    TITLE AND RISK OF LOSS: SELLER shall deliver possession of the Oil
              & Gas Interests to PURCHASER at the Closing. Title to

                                      -17-

<PAGE>   22

              and risk of loss with respect to the Oil & Gas Interests shall
              pass to PURCHASER as of the Closing.

       2.7    SPECIFIC PERFORMANCE: Each Party shall have the right of specific
              performance with respect to the obligations set forth in this
              Agreement.

                          SECTION 3 - TITLE AND ENVIRONMENTAL

       3.1    TITLE MATTERS: SELLER WILL CONVEY ALL OF ITS RIGHT, TITLE AND
              INTEREST IN AND TO THE OIL & GAS INTERESTS TO PURCHASER WITHOUT
              WARRANTY OF TITLE, EXPRESS, STATUTORY OR IMPLIED, except that
              SELLER will specially warrant and agree to defend title to the
              interests in the Oil & Gas Interests conveyed, as set forth in
              Exhibit "1", against any claims and demands of all persons
              claiming an interest (including an encumbrance) in the Oil & Gas
              Interests by, through and under SELLER, but not otherwise.

       3.2    PHYSICAL CONDITION OF THE ASSETS: PURCHASER acknowledges that the
              Oil & Gas Interests have been used by SELLER for oil and gas
              drilling and production operations and related oilfield operations
              and physical changes in the Oil & Gas Interests may have occurred
              as a result of such uses. In this regard, the Oil & Gas Interests
              may also contain unplugged (or improperly

                                      -18-

<PAGE>   23
         plugged) wellbores or buried pipelines or other equipment, whether or
         not of a similar nature, the locations of which may not now be known by
         SELLER or be readily apparent by a physical inspection of the property.
         PURCHASER and SELLER understand that neither SELLER nor PURCHASER has
         the requisite information with which to determine the exact condition
         of the Oil & Gas Interests nor the effect of any such use has had on
         the physical condition of the Oil & Gas Interests.

3.3      NORM: PURCHASER acknowledges that some oilfield production equipment
         comprising the Oil & Gas Interests may contain asbestos and/or
         naturally occurring radioactive material ("NORM"). In this regard,
         PURCHASER specifically acknowledges that NORM may affix or attach
         itself to the inside of wellbores, materials and equipment as scale or
         in other forms, and that wells, materials and equipment comprising the
         Oil & Gas Interests and being located on a Lease may contain NORM and
         that NORM containing materials may have been disposed of on a Lease.
         PURCHASER expressly understands that special procedures may be required
         for the removal and disposal of asbestos and NORM from the Oil & Gas
         Interests if and where they may be found, and that pursuant to, and
         subject to the terms of Section 2.5, PURCHASER assumes all of SELLER'S
         liability for or in connection with the assessment, remediation,
         removal, transportation or disposal of any such

                                      -19-
<PAGE>   24
         materials present on a Lease at or after the Effective Time in
         accordance with all requirements of governmental agencies.

3.4      AVAILABILITY OF DATA: SELLER represents that all historical file
         information of SELLER regarding hydrocarbon production and produced
         water that may have been spilled or disposed of on-site and the
         locations thereof, together with all underground injection and solid
         waste disposal sites have been made available to PURCHASER for
         inspection prior to the Closing except for interpretive or predictive
         reservoir data or information which would reasonably be considered
         confidential or proprietary. SELLER has not caused any environmental
         assessment of the Oil & Gas Interests to be performed or (except as
         noted above) attempted to determine the exact nature of the
         environmental condition of the Oil & Gas Interests for the purposes of
         this sale.

                               SECTION 4 - CLOSING

4.1      TIME: The Closing shall be held on or before June 23, 1998, (unless
         otherwise mutually delayed as provided in this Section), at the offices
         of SELLER at 701 Poydras Street, New Orleans, Louisiana. The time and
         place for Closing may be changed to an earlier or later time and place
         by mutual

                                      -20-
<PAGE>   25
         written agreement of the Parties, but any acceleration or delay in the
         Closing shall not change the Effective Time.

4.2      CLOSING: The following shall take place at Closing:

         (a)      SELLER and PURCHASER shall execute and deliver the assignments
                  and bill of sale on the forms which are attached as Exhibits
                  "2a" through "2e", conveying the Oil & Gas Interests to
                  PURCHASER.

         (b)      PURCHASER shall pay to SELLER by wire transfer an amount equal
                  to the Purchase Price ($45,800,000.00), subject to adjustments
                  pursuant to Section 6.1 and the Financial Closing Document,
                  which is attached hereto as Exhibit "4."

         (c)      PURCHASER and SELLER shall execute and deliver the remaining
                  exhibits, including the Lease of Platform Space Agreement,
                  Exhibit "5" hereto; the Geophysical Data Non-Exclusive License
                  Agreement, Exhibit "6" hereto; and the Non-Foreign Affidavits,
                  which are attached hereto as Exhibit "7," and documents
                  contemplated by the transaction described herein and any other
                  agreements relative hereto deemed necessary or appropriate by
                  the Parties.

                                      -21-
<PAGE>   26

         In addition, the Parties shall execute other appropriate instruments
         necessary to effect or support the transaction contemplated in this
         Agreement, including without limitation, any ratification or joinder
         documents consistent with the terms of this Agreement required to
         transfer any Contract Rights and any lease assignment forms, and
         Designations of Operator or other forms required by federal or state
         agencies to transfer operatorship of the Oil & Gas Interests to
         PURCHASER.

         Upon PURCHASER's completion of its Closing obligations, SELLER shall
         deliver to PURCHASER, exclusive possession of the Oil & Gas Interests
         as of the Closing. Notwithstanding any other provision of this
         Agreement, the failure of PURCHASER to deliver all of the Purchase
         Price, as adjusted as contemplated above, at Closing shall entitle
         SELLER to withhold all conveyancing documents until such time as it has
         received the full consideration for the conveyance. This right shall be
         in addition to all other rights and remedies that SELLER may have under
         this Agreement or at law or in equity.

         No agreement to be executed and delivered at the Closing, or action to
         be taken at the Closing, shall be effective until

                                      -22-
<PAGE>   27
         all such agreements have been executed and delivered or actions have
         been taken, and all such agreements and actions shall be deemed to be
         effective concurrently.

4.3      POST CLOSING OBLIGATIONS: Upon condition that the Closing shall have
         occurred, SELLER and PURCHASER agree to perform the following
         "post-Closing obligations":

         4.3.1    RECORDING & FILING: Within fifteen (15) days of Closing,
                  PURCHASER shall (i) file or record the conveyancing documents
                  in the appropriate governmental records and (ii) file for
                  approval with the applicable governmental agencies all state
                  and federal transfer and assignment documents for the Oil &
                  Gas Interests. The recording Party shall provide a copy of
                  same, including recording date, to the non-recording Party.

         4.3.2    CHANGE OF OPERATOR: Where SOI is the designated Operator of a
                  Lease, PURCHASER shall promptly file all appropriate forms,
                  declarations or bonds with federal and state governmental
                  agencies relative to EPL's assumption of operations from SOI.
                  EPL shall also take all actions necessary to qualify as a
                  successor Operator to SOI under any applicable joint operating

                                      -23-
<PAGE>   28
                  agreement (subject to the terms of any such operating
                  agreement).

         4.3.3    NOTICES TO THIRD PARTIES: PURCHASER shall notify all lessors,
                  royalty owners, operators, non-operators, purchasers of
                  production and governmental agencies that PURCHASER has
                  purchased the Oil & Gas Interests and has assumed liability
                  for their continued operation from and after the Closing.
                  PURCHASER and SELLER shall execute all transfer orders and
                  division orders necessary to transfer payment of the proceeds
                  from the sale of production from the Oil & Gas Interests as of
                  the Effective Time to PURCHASER.

         4.3.4    PROPERTY RECORDS: Within thirty (30) days after Closing,
                  SELLER shall deliver to PURCHASER legible photocopies (or as
                  agreed to by the parties, original records) of the property,
                  business, and accounting records in this Agreement (subject to
                  the limitations contained in this Agreement). If SELLER
                  retains any original records, PURCHASER shall have the right
                  to review (and copy at PURCHASER'S expense) such original
                  records during SELLER's normal business hours. PURCHASER shall
                  retain any original records delivered, and SELLER shall retain
                  any such original records not

                                      -24-
<PAGE>   29
                  delivered to PURCHASER for a period of seven (7) years from
                  the Effective Time. SELLER reserves the right to access (and
                  copy at SELLER's expense) all original records delivered for a
                  period of seven (7) years from the Effective Time (and
                  PURCHASER agrees to grant SELLER access to the records during
                  PURCHASER's normal business hours). In the event that SELLER
                  or PURCHASER wishes to destroy any original books or records
                  in its possession or in the possession of any of its
                  Affiliates prior to such date, such party shall give not less
                  than sixty (60) days notice to the other party and such other
                  party shall have the right, at its own expense, during
                  reasonable business hours, to remove such books and records
                  and to keep possession of same. After the seventh anniversary
                  of the Effective Time, each party will retain (and may
                  destroy) such books and records in accordance with such
                  party's customary record retention practices. If PURCHASER
                  transfers any portion of Oil & Gas Interests, PURCHASER shall
                  ensure that this records retention obligation shall continue
                  as its Assignee's obligation.

         4.3.5    USE OF NAME: On or before ninety (90) days after Closing,
                  PURCHASER will remove, or cause to be

                                      -25-
<PAGE>   30
                  removed, from the platforms and facilities pertaining to the
                  Oil & Gas Interests, the name, logo and service mark of SELLER
                  and all variations and derivations thereof, and will not
                  thereafter make use thereof.

4.4      GOVERNMENTAL APPROVALS: PURCHASER and SELLER shall execute and file all
         forms (and PURCHASER shall perform all acts) required by the MMS (and
         other appropriate governmental agencies) to transfer operatorship of
         the Oil & Gas Interests from SELLER to PURCHASER, as applicable,
         effective as of the Effective Time. The conveyances (along with any
         change in operatorship) involved in this transaction are subject to
         approval by the MMS (and possibly other governmental agencies).

4.5      OPERATIONS AFTER THE EFFECTIVE TIME: Because Closing occurs subsequent
         to the Effective Time, SELLER'S operation of the Oil & Gas Interests
         from the Effective Time to Closing has been for the account of
         PURCHASER. Further, SELLER agrees to assist in the operation of the
         Oil & Gas Interests for a period not to exceed thirty (30) days
         following the actual date of Closing, or such earlier date as is
         mutually agreed to by SELLER and PURCHASER. The date when SELLER ceases
         to assist in the operation of the Oil & Gas Interests shall be referred
         to hereafter as the "Termination Date".

                                      -26-
<PAGE>   31

         From Closing to the Termination Date, as an accommodation to PURCHASER,
         SELLER shall make good faith efforts to assist in the operation of the
         Oil & Gas Interests in the ordinary course of business and in material
         compliance with all applicable laws, ordinances, rules and regulations,
         orders, terms of permits and authorizations by any governmental body
         which may have jurisdiction over the Oil & Gas Interests. During this
         period SELLER shall endeavor to (i) assist PURCHASER in the training of
         personnel in the operations of the Oil & Gas Interests and (ii) make
         royalty payments due, and handle revenue accounting, on the Oil & Gas
         Interests for a period of 30 days subsequent to the date of Closing.

         Under no circumstances shall SELLER be liable to PURCHASER from Closing
         to the Termination Date, in the course of its endeavors under this
         Paragraph 4.5, other than and only to the extent of its willful
         misconduct.

         It is understood that SELLER shall not be obligated to provide any
         transportation for personnel and/or equipment to and from the Oil & Gas
         Interests. SELLER'S actual expenses from Closing to the Termination
         Date shall be paid for by PURCHASER and included in the Final
         Accounting.

                                      -27-
<PAGE>   32

               SECTION 5 - GENERAL REPRESENTATIONS AND WARRANTIES

5.1      RECIPROCAL REPRESENTATIONS AND WARRANTIES: SELLER and PURCHASER each
         represent and warrant to the other, that as of the date of this
         Agreement, as of the Effective Time and as of the Closing:

         (a)      CORPORATE ORGANIZATION: The Party making the representation is
                  a corporation or partnership validly existing and in good
                  standing under the laws of its state of incorporation or
                  formation and duly qualified with the MMS, with the power and
                  authority to own property and assets such as the Oil & Gas
                  Interests and to carry on its business as now being conducted.

         (b)      REQUISITE APPROVALS: The Party making the representation has
                  the power and authority to execute and deliver this Agreement
                  and to consummate the transaction contemplated in this
                  Agreement. This Agreement constitutes a valid and binding
                  obligation of the Party making the representation, enforceable
                  against it in accordance with the terms hereof, and no other
                  act, approval or proceeding on its part is required to
                  authorize the execution and delivery of this Agreement or the
                  consummation of the transaction

                                      -28-
<PAGE>   33

                  contemplated hereunder. This Agreement (and all closing
                  documents) are executed by appropriate officials having full
                  authority to execute and deliver such documents on behalf of
                  the Party making the representation.

         (c)      IMPEDIMENTS TO CONSUMMATION OF AGREEMENT: This Agreement, and
                  the execution and delivery hereof by the representing and
                  warranting Party, do not, and the consummation of the
                  transaction contemplated hereunder will not, violate any
                  provision of, or constitute a default under, the charter,
                  articles, or by-laws of such Party or any law or regulation to
                  which it is subject, or any provision of any agreement,
                  indenture, mortgage, lien, lease, instrument, order,
                  arbitration award, judgment, or decree to which it is a Party
                  or by which it or any of its assets or properties is bound.

         (d)      BANKRUPTCY: There are no bankruptcy, reorganization or
                  receivership proceedings pending, being contemplated or
                  threatened against the Party making the representation.

                                      -29-
<PAGE>   34

         (e)      MMS APPROVAL: The Party making this representation is not
                  aware of the existence of any fact or condition that may cause
                  the MMS to withhold unconditional approval, to the extent MMS
                  approval is required under applicable law, of the transfer of
                  the Oil & Gas Interests from SELLER to PURCHASER.

5.2      SELLER'S REPRESENTATIONS & WARRANTIES: SELLER represents and warrants
         to PURCHASER, that as of the date of this Agreement, the Effective Time
         and the Closing:

         (a)      PERMITS: All material permits affecting the Oil & Gas
                  Interests have been made available to PURCHASER and are being
                  transferred to PURCHASER in this transaction, but only to the
                  extent transferable.

         (b)      COMPLIANCE WITH LAWS: To SELLER's Knowledge, SELLER has not
                  violated any applicable laws or statutes, or any applicable
                  regulations, rules or orders promulgated by the Federal Energy
                  Regulatory Commission, the MMS or any other federal or state
                  regulatory agency, or any of their predecessor agencies, which
                  might materially and adversely affect the value to PURCHASER
                  of the Oil & Gas Interests, or the production therefrom.

                                      -30-
<PAGE>   35

         (c)      PREFERENTIAL PURCHASE RIGHTS AND CONSENTS TO ASSIGNMENT: The
                  Oil & Gas Interests are not subject to any agreements
                  containing preferential purchase rights or consent to
                  assignment provisions that must be complied with prior to the
                  assignment of the Oil & Gas Interests to PURCHASER.

         (d)      LITIGATION: Except for suits claiming monetary damages for
                  personal injury for which Seller is retaining liability, there
                  is neither any claim, suit, action, or other proceeding
                  pending before any court or governmental agency nor, to
                  SELLER's Knowledge, any claim, dispute, suit, action,
                  investigation or other proceeding threatened against the Oil &
                  Gas Interests or against SELLER or any Affiliate of SELLER
                  relating to the Oil & Gas Interests.

         (e)      TAXES: To SELLER's Knowledge, all ad valorem, property,
                  production, excise, severance, windfall profit and similar
                  taxes and assessments payable with respect to the Oil & Gas
                  Interests and based on or measured by the ownership of
                  property or the production or removal of hydrocarbons or the
                  receipt

                                      -31-
<PAGE>   36
                  of proceeds therefrom have been and will be timely paid in all
                  respects.

         (f)      LEASES AND WELLS: To SELLER's Knowledge, (i) SELLER is not in
                  material default under any of the terms and provisions of any
                  of the Leases or under any agreement to which the same are
                  subject; (ii) all royalties, rentals, and other payments due
                  thereunder by SELLER have been timely and properly paid in
                  full on or before the due dates thereof; (iii) all of the
                  wells on Schedule 2.1.3 have been drilled, completed, and
                  operated (some of which have been plugged and abandoned)
                  within the boundaries of the Leases or Oil & Gas Interests or
                  within the limits otherwise permitted by contract, pooling, or
                  unit agreement, and by law and in compliance with all
                  applicable rules, regulations, permits, judgments, orders and
                  decrees of any court or the federal and state regulatory
                  authorities having jurisdiction thereof; and (iv) to SELLER'S
                  Knowledge, the wells listed on Schedule 2.1.3 are the only
                  wells drilled on the Leases by SELLER, Shell Oil Company or
                  their Affiliates.

         (g)      MARKETING: Except as set forth on Schedule 5.2(g), no amount
                  of SELLER's hydrocarbons produced from the Oil

                                      -32-
<PAGE>   37

                  & Gas Interests and marketed by others is subject to a sales
                  or processing contract (except for contracts terminable
                  without penalty by SELLER on not more than 30 days notice),
                  and no person has any call upon, option to purchase or similar
                  rights under any agreement with respect to the Oil & Gas
                  Interests or to the production therefrom. SELLER has not in
                  any respect collected, nor will SELLER in any respect collect,
                  any proceeds from the sale of hydrocarbons produced from the
                  Oil & Gas Interests that are subject to refund by PURCHASER.
                  SELLER has not been nor will SELLER be obligated by virtue of
                  any prepayment made under any gas transportation, production
                  sales contract or any other contract containing a "take or
                  pay" clause, or under any gas balancing, deferred production
                  or similar arrangement to deliver oil, gas or other minerals
                  produced from or allocated to any of the Oil & Gas Interests
                  at some future time without receiving full payment therefor at
                  the time of delivery.

         (h)      CONTRACT RIGHTS: To SELLER's Knowledge, except as disclosed on
                  Schedule 5.2(h), with respect to the Contract Rights: (i) all
                  Contract Rights which have not previously expired or been
                  terminated by mutual

                                      -33-
<PAGE>   38

                  agreement are in full force and effect and are the valid and
                  legally binding obligations of the parties thereto and are
                  enforceable in accordance with their respective terms, except
                  to the extent that such enforcement may be limited by
                  applicable bankruptcy, insolvency and similar laws affecting
                  creditors' rights generally, and by general equitable
                  principles; (ii) SELLER is not in material breach or default
                  with respect to any of its obligations under any Contract
                  Right; and (iii) neither SELLER nor any other party to any
                  Contract Right has given or threatened to give notice of any
                  action to terminate, cancel, rescind, or procure a judicial
                  reformation of any Contract Right or any provision thereof and
                  (iv) except as set forth on Schedule 5.2(h)(a) and the
                  Excluded Property shown on Exhibit "3," SELLER owns all
                  material assets dedicated to or utilized by SELLER on the
                  Leases and will transfer same to PURCHASER. All Contract
                  Rights are identified in Schedule 2.1.6.

         (i)      ENVIRONMENTAL MATTERS: To SELLER's Knowledge, except as
                  disclosed on Schedule 5.2(i): (i) SELLER has obtained all
                  permits, licenses, and other authorizations that are required
                  under federal, state, and local laws with respect to pollution
                  or protection

                                      -34-
<PAGE>   39

                  of the environment relating to the Oil & Gas Interests,
                  including laws relating to actual or threatened emissions,
                  discharges, or releases of pollutants, contaminants, or
                  hazardous substances, or other toxic materials or wastes into
                  ambient air, surface water, ground water or land, or otherwise
                  relating to the manufacture, processing, distribution, use,
                  treatment, storage, disposal, transport, or handling of
                  pollutants, contaminants of hazardous substances, or other
                  toxic materials or wastes ("Environmental Laws"); and (ii) no
                  written notice has been received addressed to SELLER from a
                  third party or governmental agency of any past, present, or
                  future events, conditions, circumstances, activities,
                  practices, incidents, actions, or plans that may interfere or
                  prevent continued compliance, or that may give rise to any
                  material liability, or otherwise form the basis of any
                  material claim, action, suit, proceeding, hearing or
                  investigation, based on or related to the processing,
                  distribution, use, treatment, storage, disposal, transport, or
                  handling, or the emission, discharge, release or threatened
                  release into the environment, of any pollutant, contaminant,
                  or hazardous substance or other toxic

                                      -35-
<PAGE>   40

                  material or waste from or attributable to any Oil & Gas
                  Interest.

         (j)      SELLER'S Working Interest and Net Revenue Interest in each of
                  the Leases are as shown on Exhibit "1" and for purposes of
                  SELLER'S warranty, as set forth above in Section 3.1, SELLER
                  warrants that SELLER is delivering the Working Interest and
                  Net Revenue Interest reflected on Exhibit "1".

         (k)      There are no overriding royalty, production payments, net
                  profit interests or other revenue burdens on the Leases other
                  than the royalty due the MMS under each of the Leases.

         (1)      SELLER has provided to PURCHASER all daily production reports
                  and daily down time reports for the time period from Effective
                  Time to Closing covering the Oil & Gas Interests.

         (m)      Except for personal employee files and other information that
                  would reasonably be considered as confidential or proprietary,
                  to SELLER'S Knowledge, all technical, contract, legal, land,
                  production, well and other files specific to the Oil & Gas
                  Interests,

                                      -36-
<PAGE>   41

                  necessary and material for a proper evaluation of the Oil &
                  Gas Interests, and currently in the possession of SELLER or
                  its Affiliates, has been made available to PURCHASER for their
                  review.

5.3      PURCHASER'S REPRESENTATIONS & WARRANTIES: PURCHASER represents and
         warrants to SELLER, that as of the date of this Agreement, the
         Effective Time and the Closing:

         (a)      RECEIPT OF DATA: Based upon SELLER's representation made
                  herein in Section 5.2(m) above, PURCHASER represents that it
                  has had the opportunity to perform due diligence on the Oil &
                  Gas Interests that PURCHASER wishes to purchase, which include
                  physical inspection(s), environmental assessment(s),
                  reviewing well data and other files and performing all of
                  PURCHASER's necessary tasks involved in evaluating the Oil &
                  Gas Interests.

         (b)      INDEPENDENT EVALUATION: Based upon SELLER's representation
                  made herein in Section 5.2(m) above, PURCHASER represents and
                  acknowledges that it is knowledgeable of the oil and gas
                  business and of the usual and customary practices of producers
                  such as SELLER and that it has had access to the Oil & Gas

                                      -37-
<PAGE>   42

                  Interests, the officers and employees of SELLER, and the
                  books, records and files of SELLER relating to the Oil & Gas
                  Interests. In making the decision to enter into this Agreement
                  and consummate the transactions contemplated hereby, PURCHASER
                  has relied solely on its own independent due diligence
                  investigation of the Oil & Gas Interests and upon the
                  representations and warranties made in Section 5 of this
                  Agreement. ACCORDINGLY, PURCHASER ACKNOWLEDGES THAT SELLER HAS
                  NOT MADE, AND SELLER HEREBY EXPRESSLY DISCLAIMS AND NEGATES
                  ANY REPRESENTATIONS OR WARRANTY (OTHER THAN THOSE EXPRESS
                  REPRESENTATIONS AND WARRANTIES MADE IN SECTION 5 OF THIS
                  AGREEMENT), EXPRESS, IMPLIED, AT COMMON LAW, BY STATUTE OR
                  OTHERWISE, RELATING TO THE OIL & GAS INTERESTS.

             (c)  NO SECURITIES DISTRIBUTION: PURCHASER represents to SELLER
                  that PURCHASER intends to acquire the Oil & Gas Interests for
                  PURCHASER's own benefit and account and that PURCHASER IS not
                  acquiring such interests with the intent of distributing
                  fractional undivided interests in the Oil & Gas Interests that
                  would be subject to regulation by federal or state securities
                  law, and that if, in the future, PURCHASER should sell or
                  otherwise dispose of the Oil & Gas Interests in any

                                      -38-

<PAGE>   43

                  manner that would be subject to securities regulation,
                  PURCHASER will fully comply with all federal and state
                  securities laws.

5.4      SURVIVAL OF REPRESENTATIONS & WARRANTIES: All of the representations,
         warranties, indemnities and agreements of or by the Parties to this
         Agreement shall survive the Closing of this transaction as provided
         herein and shall not merge into the conveyancing documents.

                  SECTION 6 - ACCOUNTING FOR REVENUE & EXPENSES

6.1      ADJUSTMENTS: Anything herein to the contrary notwithstanding, all
         hydrocarbon production revenues and expenses (including without
         limitation, Lease rental or maintenance expenses, capital expenditures
         or prepaid charges and royalties, overriding royalties, and other
         payments out of production, but excluding all noncash charges
         attributable to depletion, depreciation, bad debt losses, lease
         abandonment, etc.), produced from or attributable to any part of Oil &
         Gas Interests and relating to the period prior to the Effective Time,
         shall be owned by and borne by SELLER ("SELLER Amounts") and all
         similar hydrocarbon production revenues and expenses, produced from or
         attributable to the Oil & Gas Interests conveyed by SELLER to PURCHASER
         pursuant to this Agreement

                                      -39-
<PAGE>   44
         which relate to the period after the Effective Time, shall be owned by
         and borne by PURCHASER ("PURCHASER Amounts"). The Purchase Price shall
         be adjusted based on the PURCHASER Amounts and SELLER Amounts specified
         in the Financial Closing Document submitted by SELLER at Closing, which
         is attached hereto as Exhibit "4." All other SELLER Amounts or
         PURCHASER Amounts not specifically set forth on the Financial Closing
         Document shall be handled in accordance with Section 6.1.1.

         6.1.1    FINAL ACCOUNTING:

         (a)      SELLER and PURCHASER shall use their best efforts to
                  accomplish a single final accounting and cash adjustment for
                  the period before and after the Effective Time no later than
                  one hundred twenty (120) days after Closing to accomplish the
                  purposes of Section 6.1 and of this Agreement ("Final
                  Accounting"). SELLER shall prepare the Final Accounting and
                  submit same to PURCHASER for acceptance. To the extent
                  reasonably required by SELLER, PURCHASER shall assist in the
                  preparation of the Final Accounting. PURCHASER shall have the
                  right to audit the Final Accounting. The Parties' failure to
                  complete the Final Accounting shall not constitute a waiver of
                  the right to receive any amount otherwise

                                      -40-
<PAGE>   45
                  due. The Final Accounting shall become final and binding upon
                  the Parties and payable one hundred twenty (120) days after
                  receipt thereof by PURCHASER (the "Final Accounting Date")
                  unless PURCHASER gives written notice of its desire to audit
                  or of its disagreement (an "Accounting Notice") to SELLER
                  prior to such date. Time is of the essence with respect to the
                  Accounting Notice. Any Accounting Notice which sets out a
                  disagreement shall specify in detail the dollar amount, nature
                  and basis of any disagreement so asserted. If an Accounting
                  Notice is received by SELLER in a timely manner, then,
                  following any requested audit, the Final Accounting (as
                  revised in accordance with clause (i) or (ii) below) shall
                  become final and binding on the Parties and any amounts due
                  shall be payable by the earlier of thirty (30) days after (i)
                  the date SELLER and PURCHASER agree in writing with respect to
                  all matters as to which there are disagreements or (ii) the
                  date on which the Arbitrator (as hereinafter defined) issues
                  its decision.

         (b)      During the one hundred twenty (120) days following the date of
                  receipt by SELLER of an Accounting Notice which requests an
                  audit, SELLER shall make available

                                      -41-
<PAGE>   46
                  the necessary records to permit the audit and SELLER and
                  PURCHASER shall attempt (in good faith) to resolve in writing
                  any differences that they may have with respect to all matters
                  specified in the Accounting Notice or discovered in the audit.
                  If, at the end of the one hundred twenty (120) day period,
                  SELLER and PURCHASER have not reached agreement on such
                  matters, pursuant to the arbitration provision of this
                  Agreement and this Section, the matters that remain in dispute
                  shall be submitted to an arbitrator (the "Arbitrator") for
                  review and final binding resolution. The Arbitrator shall be a
                  member of a recognized independent public accounting firm and
                  shall be agreed upon by SELLER and PURCHASER in writing. All
                  determinations and adjustments with respect to allocating
                  items to the period before or after the Effective Time shall
                  be in accordance with generally accepted accounting
                  principles, consistently applied. The Arbitrator shall render
                  a decision resolving the matters in dispute within fifteen
                  (15) days following their submission to the Arbitrator.

         (c)      If SELLER or PURCHASER receive any proceeds or pay any
                  additional expenses for or on behalf of the other Party (in
                  the case of PURCHASER, SELLER Amounts, and

                                      -42-
<PAGE>   47
                  in the case of SELLER, PURCHASER Amounts), they shall promptly
                  invoice the other Party for such expenses (who shall promptly
                  pay such invoice) or remit to the other Party the proceeds
                  received (to the extent such amounts had not been previously
                  accounted for in the Final Accounting).

         6.1.2    NOTICE TO REMITTERS OF PROCEEDS: After the Closing, PURCHASER
                  shall inform the remitters to pay PURCHASER, to the extent
                  practical, the revenues after the Effective Time. To the
                  extent that any remitter pays revenues to the incorrect Party,
                  that Party shall promptly remit such revenues (without
                  interest) to the correct Party.

6.2      ALLOCATION OF TAX LIABILITIES: All taxes (except state or federal
         income taxes) pertaining to the Oil & Gas Interests or production from
         the Oil & Gas Interests and similar obligations ("Taxes") are SELLER's
         responsibility where attributable to the period prior to the Effective
         Time and PURCHASER's responsibility where attributable to the period
         after the Effective Time (regardless of when assessed on the Oil & Gas
         Interests). To the extent possible, amounts relating to Taxes shall be
         included in the Final Accounting. Each Party shall be responsible for
         its own state or federal

                                      -43-
<PAGE>   48
         income taxes or franchise taxes. After the Effective Time, each Party
         shall supply the other Party all information and documents reasonably
         necessary to comply with tax and financial reporting requirements and
         audits.

6.3      PURCHASER'S REPRESENTATION: For the purposes of this Section 6, EPL
         shall be the sole designated representative of Purchaser and all
         communications to or by the Purchaser shall be through such designated
         representative.

               SECTION 7 - SELLER'S AND PURCHASER'S OBLIGATIONS

7.1      PURCHASER'S ASSUMED OBLIGATIONS: After the Closing, but subject to
         Section 2.3.1 and Section 2.5, PURCHASER shall assume and perform all
         of the rights, duties, obligations and liabilities of ownership and
         operation of the Oil & Gas Interests, as follows:

         (a)      The express and implied obligations, conditions and covenants
                  under the terms of each Lease or the contracts described in
                  Schedule 2.1.6 to which the Oil & Gas Interests are subject;
                  and

         (b)      Responsibility for compliance with all applicable laws,
                  regulations, ordinances, rules and orders and

                                      -44-
<PAGE>   49
                  the procurement and maintenance of all permits and bonds
                  required by governmental authorities relating to the Oil & Gas
                  Interests and which accrue after the Closing; and

         (c)      Subject to Section 4.3 hereof, responsibility for royalties,
                  rentals, shut-in payments (if any) to which the Oil & Gas
                  Interests are subject and which are attributable to the period
                  after the Effective Time; and

         (d)      All other obligations assumed by PURCHASER under the terms of
                  this Agreement or otherwise as lessee and operator of the
                  Lease(s).

7.2      PLUGGING AND ABANDONMENT OF WELLS, REMOVAL OF FACILITIES: PURCHASER
         recognizes and specifically assumes SELLER's obligations with respect
         to the Oil & Gas Interests to:

                  (i)      properly plug and abandon (or replug) any and all
                           oil, gas or condensate wellbore(s) (whether producing
                           or abandoned or plugged prior to or after the
                           Effective Time), water source, water injection and
                           other injection

                                      -45-
<PAGE>   50
                           and disposal wells and systems located on each Lease
                           (or lands pooled with a Lease); and

                  (ii)     properly remove and dispose of all structures,
                           equipment and facilities, including but not limited
                           to, platforms, templates, pipelines, and all
                           flowlines; and

                  (iii)    restore each Lease and wellsite(s) associated with
                           the Oil & Gas Interests;

         all in accordance with the rules, regulations, and requirements of any
         governmental authority having jurisdiction thereof, and in accordance
         with all obligations, express or implied, in any contract assumed by
         PURCHASER, whether or not any such obligations arise prior to or after
         the Effective Time. PURCHASER agrees to pay all costs and expenses
         associated with any such plugging and abandoning, removal, or
         restoration.

               SECTION 8 - DISCLAIMER OF WARRANTY/INDEMNIFICATION

8.1      SALE "AS IS" "WHERE IS": PURCHASER REPRESENTS THAT IT HAS INSPECTED THE
         OIL & GAS INTERESTS AND ACCEPTED THE PHYSICAL AND ENVIRONMENTAL
         CONDITION OF SAME ON AN "AS IS-WHERE IS"

                                      -46-
<PAGE>   51

         BASIS SUBJECT TO THE TERMS OF THIS AGREEMENT. EXCEPT AS OTHERWISE
         EXPRESSLY SET FORTH IN THIS AGREEMENT, PURCHASER RELEASES SELLER FROM
         ANY LIABILITY WITH RESPECT TO THE PHYSICAL AND ENVIRONMENTAL CONDITION
         OF THE OIL & GAS INTERESTS AT THE EFFECTIVE TIME WHETHER OR NOT CAUSED
         BY OR ATTRIBUTABLE TO SELLER'S NEGLIGENCE, FAULT, OR STRICT LIABILITY,
         AND WHETHER OR NOT ARISING DURING THE PERIOD OF, OR FROM, OR IN
         CONNECTION WITH SELLER'S OWNERSHIP OF THE OIL & GAS INTERESTS OR USE OF
         THE PROPERTY DESCRIBED IN THE LEASES BEFORE OR AT THE EFFECTIVE TIME.
         WITHOUT LIMITING THE ABOVE, AND EXCEPT AS OTHERWISE EXPRESSLY SET FORTH
         IN THIS AGREEMENT, PURCHASER WAIVES ANY RIGHT TO RECOVER FROM SELLER
         AND FOREVER RELEASES AND DISCHARGES SELLER AND SUBJECT TO, AND AS
         PROVIDED IN, THIS AGREEMENT, AGREES TO RELEASE, INDEMNIFY, DEFEND AND
         HOLD SELLER HARMLESS FROM ANY AND ALL DAMAGES, CLAIMS, LOSSES,
         LIABILITIES, PENALTIES, FINES, LIENS, JUDGMENTS, COSTS AND EXPENSES
         WHATSOEVER, (INCLUDING WITHOUT LIMITATION, ATTORNEYS' FEES AND COSTS),
         WHETHER DIRECT OR INDIRECT, KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN,
         THAT MAY ARISE ON ACCOUNT OF OR IN ANY WAY BE CONNECTED WITH THE
         PHYSICAL CONDITION OF THE OIL & GAS INTERESTS AT THE EFFECTIVE TIME OR
         ANY LAW OR REGULATION APPLICABLE THERETO, INCLUDING WITHOUT LIMITATION,
         THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY
         ACT OF 1980, AS AMENDED (42 U.S.C. SECTION 9601 et. seq.), THE
         RESOURCE CONSERVATION AND RECOVERY ACT OF 1976 (42 U.S.C.

                                      -47-
<PAGE>   52

         SECTION 6901. et. seq.), THE CLEAN WATER ACT (33 U.S.C. SECTIONS 466
         et. seq.) THE SAFE DRINKING NG WATER ACT (14 U.S.C. SECTIONS
         1401-1450), THE HAZARDOUS MATERIALS TRANSPORTATION ACT (49 U.S.C.
         SECTION 7401 et. seq.) AS AMENDED, THE CLEAN AIR ACT AMENDMENTS OF
         1990, AND ANY OTHER APPLICABLE FEDERAL, STATE OR LOCAL LAW, WHETHER OR
         NOT ARISING DURING THE PERIOD OF, OR FROM, OR IN CONNECTION WITH,
         SELLER's OWNERSHIP OF THE OIL & GAS INTERESTS OR USE OF THE PROPERTY
         DESCRIBED IN THE LEASES AT OR PRIOR TO THE EFFECTIVE TIME, AND WHETHER
         OR NOT ATTRIBUTABLE TO THE STRICT LIABILITY OF SELLER OR THE SOLE,
         JOINT OR CONCURRENT, ACTIVE OR PASSIVE, NEGLIGENCE OF SELLER, EVEN IF
         CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SELLER PRIOR TO
         CLOSING.

8.2      DISCLAIMER REGARDING OIL & GAS INTERESTS: EXCEPT AS MAY BE OTHERWISE
         PROVIDED FOR IN THIS AGREEMENT, PURCHASER ACKNOWLEDGES THAT SELLER HAS
         NOT MADE, AND SELLER HEREBY EXPRESSLY DISCLAIMS AND NEGATES, ANY
         REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, RELATING TO THE
         CONDITION OF ANY IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT,
         INVENTORY, MACHINERY, FIXTURES AND PERSONAL PROPERTY CONSTITUTING PART
         OF THE OIL & GAS INTERESTS (INCLUDING, WITHOUT LIMITATION (a) ANY
         IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY (b) ANY IMPLIED OR
         EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (c) ANY IMPLIED
         OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR

                                      -48-
<PAGE>   53

         SAMPLES OF MATERIALS, (d) ANY RIGHTS OF PURCHASER UNDER APPROPRIATE
         STATUTES TO CLAIM DIMINUTION OF CONSIDERATION OR RETURN OF THE PURCHASE
         PRICE, (e) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM PATENT OR
         TRADEMARK INFRINGEMENT, (f) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM
         FROM REDHIBITORY VICES OR DEFECTS OR OTHER VICES OR DEFECTS, WHETHER
         KNOWN OR UNKNOWN, (g) ANY AND ALL IMPLIED WARRANTIES EXISTING UNDER
         APPLICABLE LAW NOW OR HEREAFTER IN EFFECT AND (h) ANY IMPLIED OR
         EXPRESS WARRANTY REGARDING ENVIRONMENTAL LAWS OR THE RELEASE OF
         MATERIALS INTO THE ENVIRONMENT OR PROTECTION OF THE ENVIRONMENT OR
         HEALTH, IT BEING THE EXPRESS INTENTION OF SELLER AND PURCHASER THAT
         (EXCEPT TO THE EXTENT EXPRESSLY PROVIDED IN THIS AGREEMENT) THE
         IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT, INVENTORY, MACHINERY,
         FIXTURES AND PERSONAL PROPERTY SHALL BE CONVEYED TO PURCHASER AS IS AND
         IN THEIR PRESENT CONDITION AND STATE OF REPAIR AND PURCHASER REPRESENTS
         TO SELLER THAT PURCHASER HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS
         WITH RESPECT TO THE IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT,
         INVENTORY, MACHINERY, FIXTURES AND PERSONAL PROPERTY AS PURCHASER
         DEEMS APPROPRIATE AND PURCHASER WILL ACCEPT THE IMMOVABLE PROPERTY,
         MOVABLE PROPERTY, EQUIPMENT, INVENTORY, MACHINERY, FIXTURES AND
         PERSONAL PROPERTY AS IS, IN THEIR PRESENT CONDITION AND STATE OF
         REPAIR.

                                      -49-
<PAGE>   54
8.3      DISCLAIMER REGARDING INFORMATION: EXCEPT AS MAY BE OTHERWISE SET FORTH
         IN THIS AGREEMENT, SELLER HEREBY EXPRESSLY NEGATES AND DISCLAIMS, AND
         PURCHASER HEREBY WAIVES AND ACKNOWLEDGES THAT SELLER HAS NOT MADE, ANY
         REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, RELATING TO (a) THE
         ACCURACY, COMPLETENESS OR MATERIALITY OF ANY INFORMATION, DATA OR OTHER
         MATERIALS (WRITTEN OR VERBAL) NOW, HERETOFORE, OR HEREAFTER FURNISHED
         TO PURCHASER BY OR ON BEHALF OF SELLER OR (b) PRODUCTION RATES,
         RECOMPLETION OPPORTUNITIES, DECLINE RATES, GEOLOGICAL OR GEOPHYSICAL
         DATA OR INTERPRETATIONS, THE QUALITY, QUANTITY, RECOVERABILITY OR COST
         OF RECOVERY OF ANY HYDROCARBON RESERVES, ANY PRODUCT PRICING
         ASSUMPTIONS, OR THE ABILITY TO SELL OR MARKET ANY HYDROCARBONS AFTER
         CLOSING.

8.4      INDEMNIFICATION:

         (a)      PURCHASER shall indemnify, defend and hold harmless SELLER and
                  its respective Affiliates, and SELLER's and each such
                  Affiliate's directors, officers, employees, stockholders and
                  agents, from and against any and all claims, liabilities,
                  losses, causes of actions, costs and expenses (including,
                  without limitation, those involving theories of negligence or
                  strict liability and including court costs and attorneys'
                  fees) ("Losses") asserted against, resulting from, imposed

                                      -50-

<PAGE>   55
                  upon or incurred by SELLER as a result of, or arising out of,
                  the breach of any of the representations, warranties,
                  covenants or agreements of PURCHASER contained in this
                  Agreement or as a result of, or arising out of, PURCHASER'S
                  ownership or operation after the Closing of the Oil & Gas
                  Interests, including, but not limited to, the obligation to
                  properly plug and abandon all wells now or hereafter located
                  on any of the Oil & Gas Interests, or as a result of, or
                  arising out of, any matter or circumstance relating to the
                  Environmental Obligations assumed by PURCHASER pursuant to
                  Section 2.5.2, regardless in each case whether known or
                  unknown, whether attributable to periods of time before or
                  after the Effective Time or Closing, and regardless of the
                  strict liability of SELLER or whether SELLER was or was
                  alleged to have been negligent, including without limitation,
                  the sole, joint or concurrent, active or passive negligence of
                  SELLER, even if SELLER was or was alleged to have been grossly
                  negligent or guilty of willful misconduct; provided, however,
                  that PURCHASER shall have no obligation to indemnify SELLER
                  and the other persons entitled to indemnification under this
                  Section 8.4(a) with respect to any matter to the extent SELLER
                  is expressly indemnifying

                                      -51-
<PAGE>   56

                  PURCHASER for such matter pursuant to Section 8.4(b) of this
                  Agreement.

         (b)      SELLER shall indemnify, defend and hold harmless PURCHASER and
                  its Affiliates, and each PURCHASER and their respective
                  Affiliates, directors, officers, employees, stockholders and
                  agents, from and against all Losses asserted against,
                  resulting from, imposed upon or incurred by each PURCHASER or
                  such other persons entitled to indemnification under this
                  Section 8.4(b), as a result of, or arising out of, (i) the
                  breach of any of the representations, warranties, covenants or
                  agreements of SELLER contained in this Agreement, (ii) the
                  Excluded Assets, (iii) any matter or circumstance described in
                  Sections 2.3.1 or in 2.5.3 and (iv) the breach of the limited
                  title warranty in Section 3.1.

         (c)      Notwithstanding anything to the contrary in this Agreement,
                  the liability of SELLER and PURCHASER under this Agreement and
                  any documents delivered in connection herewith or contemplated
                  hereby shall be limited as follows:

                                      -52-
<PAGE>   57

                  (i)      In no event shall any amounts be recovered from
                           SELLER under Section 8.4(b) or otherwise for any
                           breach of any representation or warranty of SELLER
                           set forth in Section 5 for which a written notice of
                           claim specifying in reasonable detail the specific
                           nature of the Losses and the estimated amount of such
                           Losses ("Claim Notice") is not delivered to SELLER
                           prior to the close of business on December 23, 1999
                           at 5:00 p.m., local time, and the indemnity
                           obligation of SELLER in Section 8.4(b) with respect
                           to such representations and warranties shall
                           terminate on said date; provided however, that the
                           indemnity obligation of SELLER with respect to the
                           Excluded Assets, the matters identified in Section
                           2.3.1, Sections 2.5.3 and 5.2 and the special title
                           warranty in Section 3.1, shall survive in each case
                           without limitation as to time.

                  (ii)     Except as set forth above, the representations and
                           warranties of the Parties set forth in this Agreement
                           shall survive the Closing for a period of 18 months
                           and all representations

                                      -53-
<PAGE>   58

                           and warranties of the Parties under this Agreement
                           shall terminate at 5:00 p.m., local time in New
                           Orleans, Louisiana, on December 23, 1999; provided,
                           however, that any such representation or warranty
                           that is the subject of a Claim Notice delivered in
                           good faith in compliance with the requirements of
                           Section 8.4(d) shall survive with respect only to the
                           specific matter described in such Claim Notice until
                           the earlier to occur of (A) the date on which a final
                           nonappealable resolution of the matter described in
                           such Claim Notice has been reached or (B) the date on
                           which the matter described in such Claim Notice has
                           otherwise reached final resolution.

                  (iii)    Notwithstanding anything to the contrary herein, in
                           no event shall SELLER indemnify PURCHASER or any
                           other person, or be otherwise liable in any way
                           whatsoever to PURCHASER or any other person, for any
                           Losses arising from the breach of a representation or
                           warranty of SELLER in excess of an amount equal to
                           the Purchase Price; provided further that in the
                           event of an arbitrator's award equal to fifty

                                      -54-
<PAGE>   59

                           percent or more of the Purchase Price (excluding
                           interest), SELLER shall have the option to satisfy
                           said award by electing to return the Purchase Price
                           in full (including interest, and as adjusted for all
                           [proceeds of productions received by Purchaser and
                           attributable to the Oil & Gas Interests and all
                           operating and capital costs and other expenses and
                           costs associated with the operation of the Oil & Gas
                           Interests] between the Effective Time and the date of
                           such rescission) in exchange for a reassignment by
                           PURCHASER to SELLER of the Oil & Gas Interests.

Except as set forth hereinbelow, no amount shall be recovered from any Party for
the breach or untruth of any representations or warranties of the other Party,
or for any other matter, to the extent that the Party claiming a Loss as a
result thereof had actual knowledge of such breach, untruth or other matter at
or prior to the Closing, nor shall PURCHASER be entitled to rescission or
reduction of price with respect to any such matter. The Parties specifically
agree that this provision does not apply to the representations and warranties
contained in Paragraphs 5.2(j) and (k).

                                      -55-
<PAGE>   60

                  (d)      All claims for indemnification under this Agreement
                           shall be asserted and resolved pursuant to this
                           Section 8.4(d). Any person claiming indemnification
                           hereunder is hereinafter referred to as the
                           "Indemnified Party" and any person against whom such
                           claims are asserted hereunder is hereinafter referred
                           to as the "Indemnifying Party." In the event that any
                           Losses are asserted against or sought to be collected
                           from an Indemnified Party by a third party, said
                           Indemnified Party shall with reasonable promptness
                           provide to the Indemnifying Party a Claim Notice. The
                           Indemnifying Party shall not be obligated to
                           indemnify the Indemnified Party with respect to any
                           such Losses if the Indemnified Party fails to notify
                           the Indemnifying Party thereof in accordance with the
                           provisions of this Agreement in reasonably sufficient
                           time so that the Indemnifying Party's ability to
                           defend against the Losses is not prejudiced. The
                           Indemnifying Party shall have thirty (30) days from
                           the personal delivery or receipt of the Claim Notice
                           (the "Notice Period") to notify the Indemnified Party
                           (i) whether or not it disputes the liability of the
                           Indemnifying Party to the Indemnified Party hereunder
                           with respect to such Losses and/or (ii) whether or
                           not

                                      -56-
<PAGE>   61

                           it desires, at the sole cost and expense of the
                           Indemnifying Party, to defend the Indemnified Party
                           against such Losses; provided, however, that any
                           Indemnified Party is hereby authorized prior to and
                           during the Notice Period to file any motion, answer
                           or other pleading that it shall deem necessary or
                           appropriate to protect its interests or those of the
                           Indemnifying Party (and of which it shall have given
                           notice and opportunity to comment to the Indemnifying
                           Party). In the event that the Indemnifying Party
                           notifies the Indemnified Party within the Notice
                           Period that it desires to defend the Indemnified
                           Party against such Losses, the Indemnifying Party
                           shall have the right to defend all appropriate
                           proceedings, and with counsel of its own choosing,
                           which proceedings shall be promptly settled or
                           prosecuted by them to a final conclusion. If the
                           Indemnified Party desires to participate in, but not
                           control, any such defense or settlement it may do so
                           at its sole cost and expense. If requested by the
                           Indemnifying Party, the Indemnified Party agrees to
                           cooperate with the Indemnifying Party and its counsel
                           in contesting any Losses that the Indemnifying Party
                           elects to contest or, if appropriate and related to
                           the claim in question, in making any counterclaim
                           against the

                                      -57-
<PAGE>   62

                           person asserting the third party Losses, or any
                           cross-complaint against any person. No claim may be
                           settled or otherwise compromised without the prior
                           written consent of the Indemnifying Party, and no
                           claim may be settled or compromised by the
                           Indemnifying Party without the prior written consent
                           of the Indemnified Party, unless such settlement or
                           compromise entails a full and unconditional release
                           of the Indemnified Party without any admission or
                           finding of fault or liability.

8.5      LIMITATION OF LIABILITY: Neither party shall be liable to the other
         under any circumstances for consequential, exemplary, punitive, or
         indirect damage of any kind or nature, under any theory of tort,
         contract, or equity or indemnity, and each party expressly releases the
         other therefrom.

                      SECTION 9 - ADMINISTRATIVE PROVISIONS

9.1      EXPENSES OF SALE: Except as otherwise specifically provided herein,
         each Party to this Agreement shall pay its own expenses (including
         without limitation, the fees and expenses of their respective agents,
         brokers, representatives, counsel and accountants) with respect to the
         negotiation, execution

                                      -58-
<PAGE>   63

         and the delivery of this Agreement and the consummation of the
         transactions under this Agreement.

9.2      THIRD PARTY RIGHTS: Except as to those indemnity obligations owed to
         the indemnified entities or persons listed in Section 8 hereof,
         notwithstanding any other provision of this Agreement, this Agreement
         shall not create benefits on behalf of any person who is not a Party to
         this Agreement (including without limitation, any broker or finder,
         creditor or other person), and this Agreement shall be effective only
         as between the Parties hereto, their successors and permitted assigns.

9.3      FURTHER ACTIONS: PURCHASER and SELLER further agree that each will,
         from time to time and upon reasonable request, execute, acknowledge and
         deliver, or cause to be executed, acknowledged and delivered, such
         instruments, and take such other action as may be necessary, or
         advisable, to carry out their obligations under this Agreement.
         Furthermore, SELLER agrees to take such other actions as may be
         necessary to reacquire any and all overriding royalty interests it may
         have created so that same may be conveyed to PURCHASER hereunder and
         furthermore agrees to obtain a release of or a bond covering any lien
         or encumbrance created by SELLER or placed against the Oil & Gas
         Interests.

                                      -59-
<PAGE>   64

9.4      ASSIGNMENT: Prior to Closing, neither Party shall assign the Asset
         Purchase Agreement or any of its rights or obligations under said
         agreement without obtaining the prior written consent of the other
         Party, and any purported assignment by any Party without the prior
         written consent of the other Party shall be void. The Asset Purchase
         Agreement and its respective covenants shall be referenced in any
         assignment affecting the Oil & Gas Interests.

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

                                      -60-
<PAGE>   65

For purposes of notice, the addresses of the Parties shall be as follows:

<TABLE>
<S>                                     <C>
EXPRESS MAIL                            REGULAR MAIL
Shell Offshore Inc.                     Shell Offshore Inc.
ATTN: Contracts Manager                 ATTN: Contracts Manager
701 Poydras Street                      P.O. Box 61933
New Orleans, LA 70139                   New Orleans, LA 70161
Telephone - (504) 728-6704
Facsimile - (504) 728-0399

Shell Oil & Gas Investment              Shell Oil & Gas Investment
   Limited Partnership                     Limited Partnership
c/o Shell Offshore Inc.                 c/o Shell Offshore Inc.
ATTN: Contracts Manager                 P.O. Box 61933
701 Poydras Street                      New Orleans, LA 70161
New Orleans, LA 70139
Telephone - (504) 728-6704
Facsimile - (504) 728-0399

Shell Consolidated Energy               Shell Consolidated Energy
   Resources Inc.                          Resources Inc.
c/o Shell Offshore Inc.                 c/o Shell Offshore Inc.
ATTN: Contracts Manager                 P.O. Box 61933
701 Poydras Street                      New Orleans, LA 70161
New Orleans, LA 70139
Telephone - (504) 728-6704
Facsimile - (504) 728-0399

Shell Frontier Oil & Gas Inc.           Shell Frontier Oil & Gas Inc.
c/o Shell Offshore Inc.                 c/o Shell Offshore Inc.
ATTN: Contracts Manager                 P.O. Box 61933
701 Poydras Street                      New Orleans, LA 70161
New Orleans, LA 70139
Telephone - (504) 728-6704
Facsimile - (504) 728-0399

EXPRESS MAIL and REGULAR MAIL
                      PURCHASER
Energy Partners, Ltd.
ATTN: Richard A. Bachmann
1100 Poydras Street
Suite 1850
New Orleans, LA 70163-1850
Telephone - (504) 569-1875
Facsimile - (504) 569-1874
</TABLE>

                                      -61-
<PAGE>   66

         Union Oil Company of
            California
         ATTN: Land Manager
         14141 Southwest Freeway
         Sugar Land, TX 77478
         Telephone - (281) 491-7600
         Facsimile - (281) 287-7388

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

9.6      PUBLIC ANNOUNCEMENTS: The Parties agree that prior to making any public
         announcement or statement with respect to the transaction contemplated
         by this Agreement, the Party desiring to make such public announcement
         or statement shall obtain the written approval of the other Party to
         the text of such announcement or statement, which approval may be
         withheld for any reason. To the extent required by applicable law or by
         any applicable rules, regulations or orders of any governmental
         authority or agency having jurisdiction, or necessary to comply with
         disclosure requirements of applicable securities laws or any applicable
         stock exchanges, a Party may disclose pertinent information; however,
         it shall not do so until giving the other Party at least forty eight
         (48) hours notice to comment on the content thereof.

9.7      TIME LIMITS: Time is of the essence in this Agreement and all time
         limits shall be strictly construed and enforced. The

                                      -62-
<PAGE>   67

         failure or delay of any Party in the enforcement of the rights granted
         under this Agreement shall not constitute a waiver of said rights nor
         shall it be considered as a basis for estoppel. Except as otherwise
         limited by the time limits contained in this Agreement, such Party may
         exercise its rights under this Agreement despite any delay or failure
         to enforce the rights when the right or obligation arose.

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

9.9      APPLICABLE LAW: THE PROVISIONS OF THIS AGREEMENT AND THE RELATIONSHIP
         OF THE PARTIES SHALL BE GOVERNED AND INTERPRETED ACCORDING TO THE LAWS
         OF THE STATE OF LOUISIANA WITHOUT GIVING EFFECT TO PRINCIPLES OF
         CONFLICTS OF LAWS.

                                      -63-
<PAGE>   68

9.10     ARBITRATION: Any controversy or claim ("Claim"), whether based on
         contract, tort, statute or other legal or equitable theory arising out
         of or related to the breach of one or more of the warranties and
         representations made in this Agreement, or as a result of any other
         matters which may give rise to a liability with respect to this
         Agreement, shall be settled by arbitration in accordance with the
         Commercial Arbitration Rules of the American Arbitration (the "Rules"),
         and this provision. The arbitration shall be governed by the United
         States Arbitration Act, 9 U.S.C. 1-16, to the exclusion of any
         provision of state law inconsistent therewith or which would produce a
         different result, and judgment upon the award rendered by the
         arbitrator may be entered by any court having jurisdiction.

         The arbitration shall be held in New Orleans, Louisiana.

         There shall three arbitrators, one selected by SELLER, one by PURCHASER
         and the third mutually agreeable to the Parties. In the event, the
         Parties cannot agree on an arbitrator, the arbitrator shall be selected
         in accordance with the Rules.

         The arbitrator shall determine the Claims of the Parties and render a
         final award in accordance with the substantive law of the State of
         Louisiana, excluding the conflicts provisions of

                                      -64-
<PAGE>   69

         such law. The arbitrator shall set forth the reasons for the award in
         writing. All statutes of limitations and defenses based upon passage of
         time applicable to any Claim (including any counterclaim or set off)
         shall be interrupted by the filing of the arbitration and suspended
         while the arbitration is pending.

         The obligation to arbitrate any Claim shall extend to the successors,
         assigns and third party beneficiaries of the Parties. The Parties shall
         use their best efforts to cause the obligation to arbitrate any Claim
         to extend to any officer, director, employee, shareholder, agent,
         trustee, affiliate, or subsidiary. The terms hereof shall not limit any
         obligations of a Party to defend, indemnify, or hold harmless another
         Party against court proceedings or other Claims, losses, damages or
         expenses.

         The arbitrator shall order the Parties to promptly exchange copies of
         all exhibits and witness lists, and, if requested by a Party, to
         produce other relevant documents, to answer interrogatories, to respond
         to requests for admissions (which shall be deemed admitted if not
         denied) and to produce for deposition and, if requested, at the hearing
         all witnesses that such Party has listed and all other persons within
         such Party's control. Any additional discovery shall only occur by

                                      -65-
<PAGE>   70

         agreement of the Parties or as ordered by the arbitrator upon finding
         good cause.

         Each Party shall bear its own costs, expenses and attorney's fees;
         provided that if court proceedings to stay litigation or compel
         arbitration are necessary, the Party who unsuccessfully opposes such
         proceedings shall pay all reasonable associated costs, expenses, and
         attorney's fees in connection with such court proceeding.

         In order to prevent irreparable harm, the arbitrator shall have the
         power to grant temporary or permanent injunctive or other equitable
         relief. Prior to the appointment of an arbitrator a Party may,
         notwithstanding any other provision of this Agreement, seek temporary
         injunctive relief from any court of competent jurisdiction; provided
         that the Party seeking such relief shall (if arbitration has not
         already been commenced) simultaneously commence arbitration. Such court
         ordered relief shall not continue more than 10 days after the
         appointment of the arbitrator and in no event for longer than 60 days.

         The cost of the arbitrator shall be shared equally by all parties.

                                      -66-
<PAGE>   71

9.11     SEVERANCE OF INVALID PROVISIONS: In case of a conflict between the
         provisions of this Agreement and the provisions of any applicable laws
         or regulations, the provisions of the laws or regulations shall govern
         over the provisions of this Agreement. If, for any reason and for so
         long as, any clause or provision of this Agreement is held by a court
         of competent jurisdiction to be illegal, invalid, unenforceable or
         unconscionable under any present or future law (or interpretation
         thereof), the remainder of this Agreement shall not be affected by such
         illegality or invalidity. Any such invalid provision shall be deemed
         severed from this Agreement as if this Agreement had been executed with
         the invalid provision eliminated.

9.12     CONSTRUCTION & INTERPRETATION: The interpretation and construction of
         the terms of this Agreement will be governed by the following
         conventions:

         9.12.1   HEADINGS FOR CONVENIENCE: Except for the definition headings,
                  all the table of contents, captions, numbering sequences, and
                  paragraph headings used in this Agreement are inserted for
                  convenience only and shall in no way define, limit or describe
                  the scope or intent of this Agreement or any part thereof, nor
                  have

                                      -67-
<PAGE>   72

                  any legal effect other than to aid a reasonable interpretation
                  of this Agreement.

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

         9.12.3   INDEPENDENT REPRESENTATION: Each Party has had the benefit of
                  independent representation with respect to the subject matter
                  of this Agreement. This Agreement, though drawn by one Party,
                  shall be construed fairly and reasonably and not more strictly
                  against one Party than another.

9.13     INTEGRATED AGREEMENT: This Agreement, the Exhibits and Schedules
         attached and incorporated herein, and the instruments delivered at or
         in connection with the Closing hereunder ("Closing Documents") contain
         the final and entire agreement of the Parties with respect to the
         subject matter of

                                      -68-
<PAGE>   73

         this contract. There are no representations, warranties or promises,
         oral or written, between the Parties other than those included in this
         Agreement or in any Closing Document. Upon execution of this Agreement
         by all Parties, this Agreement shall supersede and replace all previous
         negotiations, understandings or promises, whether written or oral,
         relative to the subject of this Agreement. Each of the Parties
         acknowledges that no other Party has made any promise, representation
         or warranty that is not expressly stated in this Agreement or in any
         Closing Document. This Agreement shall not be modified or changed (nor
         any provision of this Agreement waived) except by a written amendment
         signed by all the Parties. This Agreement is entire as to all the
         performances to be rendered under it, and breach of any provision shall
         constitute a breach of the entire Agreement. A waiver of any breach or
         failure to enforce any of the terms or conditions of this Agreement
         shall not in any way affect, limit or waive a Party's rights under this
         Agreement at any time to enforce strict compliance thereafter with
         every term or condition of this Agreement.

9.14     BINDING EFFECT: This Agreement shall be binding upon and inure to the
         benefit of the Parties and their respective successors and assigns.

                                      -69-
<PAGE>   74

9.15     MULTIPLE COUNTERPARTS: This Agreement may be executed by signing the
         original or a counterpart hereof. If this Agreement is executed in
         multiple counterparts, each counterpart shall be deemed an original,
         and all of which when taken together shall constitute but one and the
         same agreement with the same effect as if all Parties had signed the
         same instrument.

9.16     FAIR NOTICE DISCLOSURE STATEMENT: PURCHASER'S ATTENTION IS DIRECTED TO
         CERTAIN PROVISIONS OF THIS AGREEMENT WHICH REQUIRE PURCHASER TO DEFEND,
         INDEMNIFY AND HOLD SELLER HARMLESS IRRESPECTIVE OF THE STRICT LIABILITY
         OF SELLER OR THE SOLE, JOINT OR CONCURRENT, ACTIVE OR PASSIVE,
         NEGLIGENCE OF SELLER, AND IN SOME CASES THE GROSS NEGLIGENCE OR WILLFUL
         MISCONDUCT OF SELLER.

9.17     CALL ON PRODUCTION: If PURCHASER elects to sell oil or other
         hydrocarbons produced from the Leases, SELLER reserves and shall have
         the ongoing right and option, but not the obligation for a period of
         five (5) years from the Effective Time, to purchase same at the
         wellhead. SELLER will be responsible for all costs to move the oil
         onshore. Payment shall be based on the delivery gravity and average
         daily quantities produced during the month. The price will be the
         highest of the following daily postings in effect each day during the
         calendar month of delivery:

                                      -70-
<PAGE>   75

         -        Mobil La. Gulf Coast (onshore)

         -        EXXON's Louisiana - South Louisiana Sweet

         -        Amoco's Louisiana - South Louisiana Sweet

         -        Koch's South Louisiana Sweet

         -        Chevron's South Louisiana Sweet (onshore)

         -        Equiline's Bay Marchand

         In the event that less than two of the above companies post a reference
         Louisiana posting price for crude oil of like quality and gravity,
         SELLER shall pay PURCHASER a mutually agreed upon price which
         represents the reasonable value of the crude oil at the well.

         If PURCHASER receives from a responsible third party a bona fide offer
         to purchase oil, PURCHASER shall furnish SELLER a copy of this offer as
         written on letterhead of the third party offeror, SELLER shall then
         have five (5) business days from receipt thereof to either waive its
         right to or elect to purchase, as applicable, on terms equivalent to
         those offered to PURCHASER. Failure to timely reply to such notice
         shall be construed as a waiver. Once waived, the preferential right
         provided herein shall not be enforceable for the term of the
         PURCHASER-third party contract if PURCHASER accepts said third party
         offer. However, the term of any such PURCHASER-third party contract
         shall be no longer than twelve months in

                                      -71-
<PAGE>   76

         duration. At the end of each twelve month term, SELLER shall have the
         option to purchase the oil on terms equivalent to those offered to
         PURCHASER. This Call on Production option will terminate upon the
         SELLER's second waiver to purchase such oil under the terms and
         conditions of a responsible third party bona fide offer.

         IN WITNESS WHEREOF, the Parties have executed the Agreement as of the
date first above written.

<TABLE>
<S>                                          <C>
WITNESSES                                    SHELL OFFSHORE INC.

                                             By: /s/ K. R. SISSELL
------------------------------------            --------------------------------
                                                  K. R. Sissell
                                                  Attorney-in-Fact

------------------------------------

                                             SHELL OIL & GAS INVESTMENT LIMITED
                                             PARTNERSHIP

                                             By: /s/ K. R. SISSELL
------------------------------------            --------------------------------
                                                  K. R. Sissell
                                                  Attorney-in-Fact for
                                                  Shell Offshore Inc., as
                                                  Managing General Partner

------------------------------------

                                             SHELL CONSOLIDATED ENERGY RESOURCES
                                             INC.

                                             By: /s/ K. R. SISSELL
------------------------------------            --------------------------------
                                                  K. R. Sissell
                                                  Attorney-in-Fact

------------------------------------
</TABLE>

                                      -72-
<PAGE>   77

<TABLE>
<S>                                          <C>
                                             SHELL FRONTIER OIL & GAS INC.

                                             By: /s/ K. R. SISSELL
------------------------------------            --------------------------------
                                                  K. R. Sissell
                                                  Attorney-in-Fact

------------------------------------

                                             ENERGY PARTNERS, LTD.

                                             By: /s/ RICHARD A. BACHMANN
------------------------------------            --------------------------------
                                                  Richard A. Bachmann
                                                  President

------------------------------------

                                             UNION OIL COMPANY OF CALIFORNIA

                                             By: /s/ ROBERT C. GNAGY
------------------------------------            --------------------------------
                                                  Robert C. Gnagy
                                                  Attorney-in-Fact

------------------------------------
</TABLE>

                                      -73-
<PAGE>   78

STATE OF LOUISIANA
PARISH OF ORLEANS

     BEFORE ME, the undersigned Notary Public, on this day personally appeared
K. R. SISSELL, known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged to me that he, being fully authorized to
do so, executed and delivered the same as Attorney-in-Fact for Shell Offshore
Inc., a Delaware corporation, on the day and year therein mentioned and as the
act and deed of said corporation, for the purpose and consideration therein
expressed.

     GIVEN UNDER MY HAND AND SEAL OFFICE, this 23rd day of June, 1998.

                                              /s/ CYNTHIA A. NICHOLSON
                                              ----------------------------------
                                              Notary Public

My Commission is for life.                                [STAMP]

STATE OF LOUISIANA
PARISH OF ORLEANS

     BEFORE ME, the undersigned Notary Public, on this day personally appeared
K. R. SISSELL, known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged to me that he, being fully authorized to
do so, executed and delivered the same as Attorney-in-Fact for Shell Offshore
Inc., as Managing General Partner of Shell Oil & Gas Investment Limited
Partnership, a Delaware limited partnership, on the day and year therein
mentioned and as the act and deed of said partnership, for the purpose and
consideration therein expressed.

     GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 23rd day of June, 1998.

                                              /s/ CYNTHIA A. NICHOLSON
                                              ----------------------------------
                                              Notary Public

My Commission is for life.                                [STAMP]

                                      -74-
<PAGE>   79

STATE OF LOUISIANA
PARISH OF ORLEANS

     BEFORE ME, the undersigned Notary Public, on this day personally appeared
K. R. SISSELL, known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged to me that he, being fully authorized to
do so, executed and delivered the same as Attorney-in-Fact for Shell
Consolidated Energy Resources Inc., a Delaware corporation, on the day and year
therein mentioned and as the act and deed of said corporation, for the purpose
and consideration therein expressed.

     GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 23rd day of June, 1998.

                                              /s/ CYNTHIA A. NICHOLSON
                                              ----------------------------------
                                              Notary Public

My Commission is for life.                                [STAMP]

STATE OF LOUISIANA
PARISH OF ORLEANS

     BEFORE ME, the undersigned Notary Public, on this day personally appeared
K. R. SISSELL, known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged to me that he, being fully authorized to
do so, executed and delivered the same as Attorney-in-Fact for Shell Frontier
Oil & Gas Inc., a Delaware corporation, on the day and year therein mentioned
and as the act and deed of said corporation, for the purpose and consideration
therein expressed.

     GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 23rd day of June, 1998.

                                              /s/ CYNTHIA A. NICHOLSON
                                              ----------------------------------
                                              Notary Public

My Commission is for life.                                [STAMP]

                                      -75-
<PAGE>   80

STATE OF LOUISIANA
PARISH OF ORLEANS

     BEFORE ME, the undersigned Notary Public, on this day personally appeared
RICHARD A. BACHMANN, known to me to be the person whose name is subscribed to
the foregoing instrument and acknowledged to me that he, being fully authorized
to do so, executed and delivered the same as the President of Energy Partners,
Ltd., a Delaware corporation, on the day and year therein mentioned and as the
act and deed of said corporation, for the purpose and consideration therein
expressed.

     GIVEN UNDER MY HAND AND SEAL OFFICE, this 23rd day of June, 1998.

                                              /s/ CYNTHIA A. NICHOLSON
                                              ----------------------------------
                                              Notary Public

My Commission is for life.                                [STAMP]

STATE OF LOUISIANA
PARISH OF ORLEANS

     BEFORE ME, the undersigned Notary Public, on this day personally appeared
ROBERT C. GNAGY, known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged to me that he, being fully authorized to
do so, executed and delivered the same as the Attorney-in-Fact of Union Oil
Company of California, a California corporation, on the day and year therein
mentioned and as the act and deed of said corporation, for the purpose and
consideration therein expressed.

     GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 23rd day of June, 1998.

                                              /s/ CYNTHIA A. NICHOLSON
                                              ----------------------------------
                                              Notary Public

My Commission is for life.                                [STAMP]

                                      -76-

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