1.

Property to be Sold and Purchased

1

2.

Purchase Price

2

3.

Representations of Seller

3

(a)

Organization and Qualification

3

(b)

Due Authorization

3

(c)

Approvals

3

(d)

Valid, Binding and Enforceable

4

(e)

No Litigation

4

(f)

Warranty of Title

4

(g)

No AFE Items or Well Abandonments, No P&A Liabilities

5

(h)

Production Marketing

5

(i)

Gas Balancing, Take or Pay, Allowables

5

(j)

Taxes Paid

6

(k)

Hazardous Substances, Applicable Environmental Laws

6

(l)

Leases

6

(m)

Material Contracts; Operations

6

(m)

Permits

7

(n)

Compliance with Laws

7

(p)

Tax Partnerships

7

(q)

No Material Misstatement

8

(r)

Not a Foreign Person

8

(s)

Consents and Preferential Purchase Rights

8

4.

Representations of Buyer

8

(a)

Organization and Qualification

8

(b)

Due Authorization

8

(c)

Approvals

8

(d)

Valid, Binding and Enforceable

8

(e)

No Litigation

8

(f)

Sufficient Funds

9

(g)

Regulatory

9

(h)

Independent Evaluation

9

(i)

Accredited Investor

9

5.

Certain Covenants of Seller Pending Closing

9

(a)

Access by Buyer

9

(i)

Records

9

(ii)

Physical Inspection

10

(iii)

Environmental Inspections

10

(iv)

Coordination of Inspections

10

(v)

Copies of Reports

10

(vi)

Restoration of Properties

11

(vii)

Confidentiality Agreement

11

(b)

Interim Operation

11

(c)

Preferential Rights and Consents

12

6.

Due Diligence Reviews

13

(a)

Review By Buyer

13

i)

Determination of Defects

13

(ii)

Defect Claim Threshold

13

(b)

Nature of Defects

14

(i)

NRI or WI Variances

14

(ii)

Liens

14

(iii)

Imperfections in Title

14

(iv)

Representation Untrue

14

(c)

Sellers Response

14

(i)

Cure

14

(ii)

Postpone Closing

15

(iii)

Adjustment

15

(iv)

Dispute Resolution

15

(d)

Covered by Representations, Agreements

15

(e)

Definitions

15

(f)

Sellers Title Benefit Notices

17

(g)

Remedies for Title Benefits

18

7.

Certain Price Adjustments

18

8.

Conditions Precedent to the Obligations of Buyer to Close

19

(a)

Representations True and Correct

19

(b)

Compliance with Covenants and Agreements

19

(c)

Price Adjustment Limitations

19

(d)

Litigation

19

(e)

Material Adverse Change

19

9.

Conditions Precedent to the Obligations of Seller to Close

20

(a)

Representations True and Correct

20

(b)

Compliance With Covenants and Agreements

21

(c)

Litigation

21

(d)

Price Adjustment Limitations

21

10.

Closing

22

(a)

Actions At Closing

22

(i)

Delivery of Conveyance

22

(ii)

Federal and State Conveyance Forms

22

(iii)

Letters in Lieu

22

(iv)

Affiliate Contracts

22