ASSET PURCHASE AND SALE AGREEMENT

ASSET PURCHASE AND SALE AGREEMENT

Verden Area

between

Linn Energy Holdings, LLC

Linn Operating, Inc.

Mid-Continent I, LLC

Mid-Continent II, LLC

Linn Exploration Midcontinent, LLC

as “Sellers”

and

Laredo Petroleum, Inc.

as “Buyer”

Dated as of May 30, 2008

THIS ASSET PURCHASE AND SALE AGREEMENT dated May 30, 2008, is made by and between Linn Energy Holdings, LLC, a Delaware limited liability company (“ LEH ”), Linn Operating, Inc., a Delaware corporation (“ LOI ”), Mid-Continent I, LLC, a Delaware limited liability company, Mid-Continent II, LLC, a Delaware limited liability company, and Linn Exploration Midcontinent, LLC, an Oklahoma limited liability company (collectively “ Sellers ”), and Laredo Petroleum, Inc., a Delaware corporation (“ Buyer ”).

A.       Sellers desire to sell, assign and convey to Buyer, and Buyer desires to purchase and accept from Sellers, certain oil and gas properties and related assets located in the Verden area in Caddo, Grady and Comanche Counties, Oklahoma.

B.            As part of the consideration for the purchase and sale of the Assets, as further described herein, Buyer and Seller agree to enter into the Participation Option Agreement further described herein, which will give Seller the option to participate in certain wells under the terms and conditions of the Participation Option Agreement.

C.       Sellers and Buyer deem it in their mutual best interests to execute and deliver this Agreement.

NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual covenants and agreements contained herein, Sellers and Buyer do hereby agree as follows:

Section 1.1.                                  Assets Included .

Subject to Section 1.2 , Sellers agree to sell and Buyer agrees to purchase, for the consideration hereinafter set forth, and subject to the terms and provisions herein contained, the following described properties, rights and interests:

(a)           All right, title and interest of Sellers in and to the Leases described on Exhibit A attached hereto and made a part hereof for all purposes (and any ratifications and/or amendments, renewals or extensions to such Leases, whether or not such ratifications, amendments, renewals or extensions are described on such Exhibit A );

(b)           Without limitation of the foregoing but subject to Section 1.2 , all other right, title and interest (of whatever kind or character, whether legal or equitable, and whether vested or contingent) of Sellers in and to the oil, gas, and other minerals in and under or that may be produced from the lands described in Exhibit A   hereto, described in any of the Leases described on such Exhibit A or included within the area outlined in red on the Plat attached as Exhibit A-1 hereto (including interests in Leases, overriding royalties, production payments and net profits interests in such lands or such Leases, and

fee mineral interests, fee royalty interests, and other interests in so far as they cover such lands), even though Sellers’ interest therein may be incorrectly described in, or omitted from, such Exhibit A ;

(c)           All rights, titles and interests of Sellers in and to, or otherwise derived from, all presently existing and valid oil, gas, or mineral unitization, pooling, or communitization agreements, declarations, and/or orders and in and to the properties covered and the units created thereby (including all units formed under orders, rules, regulations, or other official acts of any federal, state, or other authority having jurisdiction, voluntary unitization agreements, designations and/or declarations) relating to the properties described in paragraphs (a) and (b) above;

(d)           All rights, titles, and interests of Sellers in and to the Material Contracts and all presently existing and valid production sales (and sales related) contracts, operating agreements, and other agreements and contracts which relate to any of the properties described in paragraphs (a ), (b) and (c) above, or which relate to the exploration, development, operation, or maintenance thereof or the treatment, storage, transportation or marketing of production therefrom (or allocated thereto);

(e)           All rights, titles, and interests of Sellers in and to all materials, supplies, machinery, equipment, improvements and other personal property and fixtures (including all wells, wellhead equipment, pumping units, flowlines, tanks, buildings, injection facilities, saltwater disposal facilities, compression facilities, gathering systems, and other equipment), and all easements, rights-of-way, surface tracts, surface leases and other surface rights, all Permits and licenses, and all other appurtenances being used or held for use in connection with, or otherwise related to, the exploration, development, operation or maintenance of any of the properties described in paragraphs (a) , (b) and (c) above, or the treatment, storage, transportation, or marketing of production therefrom (or allocated thereto);

(f)           Subject to any third party rights, all of Sellers’ lease files, title opinions, production records, well files, accounting records (but not including general financial and accounting records attributable to Sellers or Sellers’ business), seismic records and surveys, gravity maps, electric logs, geological or geophysical data and records, and other files, documents and records of every kind and description which relate to the properties described above (the “ Records ”); provided, however that Sellers may, at their expense, retain copies of any or all of the Records; and

(g)           To the extent transferable, all of Sellers’ right to enforce representations, warranties and indemnities under agreements with third parties in favor of Sellers respecting one or more of the properties and interests described in paragraphs (a) , (b) and (c) above.

As used herein:  (i) “ Oil and Gas Properties ” means the properties and interests described in paragraphs (a) , (b) and (c) above, save and except for any such properties or assets that are Excluded Assets; and (ii) “ Properties ” means the Oil and Gas Properties plus the properties and interests described in paragraphs (d) , (e) , (f) and (g) above, save and except for any such properties or assets that are Excluded Assets.

Section 1.2.                                  Assets Excluded .

(a)           Any accounts receivable or accounts payable accruing before the Effective Date;

(b)           All of Sellers’ right, title and interest in any oil, gas or mineral Leases, overriding royalties, production payments, net profits interests, fee mineral interests, fee royalty interests and other interests in oil, gas and other minerals not included within the area outlined in red on Exhibit A-1 and all oil, gas or other hydrocarbon production from or attributable to the Properties with respect to all periods prior to the Effective Date, all proceeds attributable thereto, and all Hydrocarbons that, at the Effective Date, are owned by Sellers and are in storage or within processing plants;

(c)           Any rebate or refund of costs, Taxes, or expenses borne by Sellers or Sellers’ predecessors in title attributable to periods prior to the Effective Date;

(d)           Any and all proceeds from the settlements of contract disputes with purchasers of Hydrocarbons from the Properties, including settlement of take-or-pay disputes, insofar as said proceeds are attributable to periods of time prior to the Effective Date;

(e)           Any and all proceeds from settlements with regard to reclassification of oil or gas produced from the Properties, insofar as said proceeds are attributable to periods of time prior to the Effective Date;

(f)           All contracts of insurance;

(g)           All claims (including insurance claims) and causes of action of Sellers against one or more third parties arising from acts, omission, or events occurring prior to the Effective Date and all claims under any joint interest audit attributable to any period prior to the Effective Date;

(h)           All limited liability company, financial, tax, and legal (other than title) books and records of Sellers;

(i)           Any geological, geophysical or seismic data, materials, or information, including maps, interpretations, records, or other technical information related to or based upon any such data, materials or information, and any other asset, data, materials, or information, the transfer of which is restricted or prohibited under the terms of any third party license, confidentiality agreement, or other agreement or the transfer of which would require the payment of a fee or other consideration to any third party; provided, however, that if any such data, materials, or information is (i) restricted or disclosure is prohibited, at Buyer’s option (A) Sellers shall use Reasonable Best Efforts to cause such restrictions or prohibitions to be removed or waived so that such data, materials or

information might be transferred to Buyer, and Buyer will reimburse Sellers for any third-party expense incurred by Sellers in connection therewith, or (B) Sellers shall transfer to Buyer such restricted geological, geophysical or other information in accordance with the Participation Option Agreement; and (ii) transferable upon payment of a fee or other consideration, such data, materials, or information shall be transferred to Buyer subject to the payment by Buyer of such fee or other consideration;

(j)           All share drive and accounting servers related to the Properties regardless of where such servers are located;

(k)           All of Sellers’ accounting or other administrative systems, computer software, patents, trade secrets, copyrights, names, trademarks, logos, and other intellectual property;

(l)           All documents and instruments of Sellers that are protected by an attorney-client privilege (exclusive of title opinions in respect of the Oil and Gas Properties and all documents and instruments related to any matters in Sellers Disclosure Schedule);

(m)           All of the other properties, interests and assets described on Exhibit B , together with any rights, liabilities, or obligations associated with such assets;

(n)           The Existing Hedges and all hedging transactions and any gains or losses attributable to any hedging activities;

(o)           Any other right or interest in and to the Properties to the extent attributable to the period prior to the Effective Date;

(p)           All bonds, letters of credit and guarantees if any, posted by Sellers or any Affiliate with any Governmental Authority or third person and relating to the Properties;

(q)           All (i) correspondence or other documents or instruments of Sellers relating to the transactions contemplated hereby, (ii) lists of other prospective purchasers of Sellers or the Properties compiled by Sellers, (iii) bids submitted to Sellers by other prospective purchasers of Sellers or the Properties, (iv) analyses by Sellers or any Affiliates thereof submitted by other prospective purchasers of Sellers or the Properties, and (v) correspondence between or among Sellers or their Affiliates or their respective representatives with respect to, or with, any other prospective purchasers of Sellers or the Properties;

(r)           Eighty percent (80%) of Sellers’ total interest in (i) the wellbore of the Weber 3-4 Well (API # 01522984A) in Section 4-6N-9W of Caddo County, Oklahoma and (ii) the McGuire 1-24 Well (API # 05123416) in Section 24-3N-8W of Grady County, Oklahoma, together with the right to deepen, sidetrack, recomplete or drill a replacement for either of the foregoing; and

(s)           All rights, titles, interests and obligations retained by Sellers or granted to Sellers pursuant to that certain Participation Option Agreement further described herein.

The properties and interests specified in the foregoing paragraphs (a) through (s) of this Section 1.2 are herein collectively called the “ Excluded Assets ”.  It is understood that certain of the Excluded Assets may not be embraced by the term “ Properties ”.  The fact that certain assets have been expressly excluded is not intended to suggest that had they not been excluded they would have constituted Properties and may not be used to interpret the meaning of any word or phrase used in describing the Properties.

Section 2.1.                                  Purchase Price .

In consideration of the sale of the Properties by Sellers to Buyer, Buyer shall pay to Sellers cash in the amount of One Hundred Eighty Five Million Dollars ($185,000,000.00) (the “ Purchase Price ”).  The Purchase Price, as adjusted pursuant to this Article II and the other applicable provisions hereof, is herein called the “ Adjusted Purchase Price ”.

Section 2.2.                                  Accounting Adjustments .

(a)           Subject to Section 2.2(b) , and in addition to other adjustments to the Purchase Price provided for in this Agreement including, without limitation, adjustments due to Title Defects and/or Environmental Defects or the exclusion of certain Oil and Gas Properties from this transaction or from assignment at Closing, appropriate adjustments shall be made between Buyer and Sellers so that:

(i)           all expenses (including all drilling costs, all capital expenditures, and all overhead administrative charges under applicable operating agreements, and all other operating costs actually charged by third parties) for work done in the operation of the Properties on or after the Effective Date will be borne by Buyer, and all proceeds (net of applicable gathering and transportation charges deducted or netted by the purchaser of production, as well as production, severance, and similar Taxes) from the sale of oil, gas or other minerals produced from the Oil and Gas Properties on or after the Effective Date will be received by Buyer, and

(ii)           all expenses for work done in the operation of the Properties, or otherwise attributable to the ownership or operation of the Properties, before the Effective Date will be borne by Sellers and all proceeds (net of applicable gathering and transportation charges deducted or netted by the purchaser of production, as well as production, severance, and similar Taxes) from the sale of oil, gas, or other minerals produced therefrom before the Effective Date will be received by Sellers.

(b)           It is agreed that, in making the adjustments contemplated by Section 2.2(a) :

(i)           Oil which was produced from the Oil and Gas Properties and which was, on the Effective Date, stored in tanks, but without taking into account tank bottom sediment and water,  located on the Oil and Gas Properties (or located elsewhere but used to store oil produced from the Oil and Gas Properties prior to delivery to oil purchasers) and above pipeline connections shall be measured, gauged or strapped by the parties on the Effective Date; the intent being that the oil in storage above the pipeline connection or through the meters on the pipelines prior to the Effective Date shall belong to Sellers, and the oil placed in such storage facilities from and after the Effective Date and oil production upstream of the production meter charts shall belong to Buyer.

(ii)           ad valorem Taxes assessed with respect to a period which begins before and ends on or after the Effective Date shall be prorated based on the number of days in such period which fall on each side of the Effective Date (with the day on which the Effective Date falls being counted in the period after the Effective Date),

(iii)           the Purchase Price will be adjusted by the value of any natural gas Imbalances, such value to be derived by multiplying the net overproduced or net underproduced Imbalance volumes as of the Effective Date by $3.00 per Mcf so that the Purchase Price will be adjusted upward if there is a net underproduced Imbalance or adjusted downward if there is a net overproduced Imbalance.

(iv)           no consideration shall be given to the local, state, or federal income tax liabilities of any party.

Section 2.3.                                  Closing and Post-Closing Accounting Settlements .

(a)           No later than three (3) business days prior to the Closing Date, the parties shall determine, based upon the best information reasonably available to them, the amount of the adjustments provided for in Section 2.2 .   If the amount of adjustments so determined which would result in a credit to Buyer exceeds the amount of adjustments so determined which would result in a credit to Sellers, Buyer shall receive a credit, for the amount of such excess, against the Purchase Price to be paid at Closing, and, if the converse is true, Buyer shall pay to Sellers, at Closing (in addition to amounts otherwise then owed), the amount of such excess.

(b)           On or before 120 days after Closing, Buyer and Sellers shall review any additional information which may then be available pertaining to the adjustments provided for in Section 2.2 , shall determine if any additional adjustments (whether the same be made to account for expenses or revenues not considered in making the adjustments made at Closing, or to correct errors made in such adjustments) should be made beyond those made at Closing, and shall make any such adjustments by appropriate payments from Sellers to Buyer or from Buyer to Sellers.   Following such additional adjustments, no further adjustments to the Purchase Price shall be made under this Section 2.3 .

(c)           If a dispute arises under Section 2.3(b) with respect to any additional adjustments (an “ Accounting Dispute ”) that the parties have been unable to resolve prior to the end of the 120 day period in Section 2.3(b) above, then, at the written request of either Sellers or Buyer (the “ Request Date ”), each of Sellers and Buyer shall nominate and commit one of their senior officers to meet at a mutually agreed time and place not later than ten days after the Request Date to attempt to resolve same.  If such senior officers have been unable to resolve such Accounting Dispute within a period of 30 days after the Request Date, any party shall have the right, by written notice to the other specifying in reasonable detail the basis for the Accounting Dispute, to resolve the Accounting Dispute by submission thereof to an independent public accounting firm mutually agreeable to the parties, which firm shall serve as sole arbitrator (the “ Accounting Referee ”).  The scope of the Accounting Referee’s engagement shall be limited to the resolution of the items described in the notice of the Accounting Dispute given in accordance with the foregoing and each party’s corresponding calculation of the adjustments pursuant to Section 2.2 .  The Accounting Referee shall be instructed by the parties to resolve the Accounting Dispute as soon as reasonably practicable in light of the circumstances but in no event in excess of 15 days following the submission of the Accounting Dispute to the Accounting Referee.  The decision and award of the Accounting Referee shall be binding upon the parties as an award under the Federal Arbitration Act and final and nonappealable to the maximum extent permitted by law, and judgment thereon may be entered in a court of competent jurisdiction and enforced by any party as a final judgment of such court.  The fees and expenses of the Accounting Referee shall be borne equally by Sellers and Buyer.

Section 2.4.                                  Payment of Adjusted Purchase Price .

(a)           Within one Business Day after the execution and delivery of this Agreement, Buyer shall tender to Sellers cash equal to five percent (5%) of the Purchase Price as a deposit (such amount, together with all interest earned thereon, the “ Deposit ”).  The Deposit is considered and recognized by Sellers and Buyer as an earnest money deposit on the Purchase Price and as security for Buyer’s performance hereunder.  The Deposit shall (i) be applied against the Adjusted Purchase Price owing by Buyer at the Closing pursuant to Section 2.4(b) , (ii) retained by Sellers pursuant to Section 10.2 or (iii) returned to Buyer pursuant to Section 10.2 , as applicable.

(b)           At the Closing, Buyer shall pay to Sellers cash equal to the Adjusted Purchase Price less the Deposit.

(c)           All cash payments by Buyer pursuant to this Section 2.4 shall be made in immediately available funds by confirmed wire transfer to a bank account or accounts designated by Sellers, as applicable.

Section 2.5.                                  Allocation of Purchase Price .

(a)           Buyer has used its reasonable business judgment to  allocate the Purchase Price among the Oil and Gas Properties on Exhibit C .

(b)           On or before the Closing Date, the Buyer and Sellers shall agree in writing as to the allocation of the Adjusted Purchase Price among the Properties under the methodology required by Section 1060 of the Code.  Such agreed allocation shall be set forth on Schedule 2.5 attached hereto.  The Buyer and Sellers shall report the transactions contemplated hereby on all Tax Returns, including, but not limited to Form 8594, in a manner consistent with such allocation.  If, contrary to the intent of the parties hereto as expressed in this Section 2.5 , any taxing authority makes or proposes an allocation different from the allocation determined under this Section 2.5 , Buyer and Sellers shall cooperate with each other in good faith to contest such taxing authority’s allocation (or proposed allocation); provided, however, that, after consultation with the party adversely affected by such allocation (or proposed allocation), the other party hereto may file such protective claims or Tax Returns as may be reasonably required to protect its interests.

The closing of the transactions contemplated hereby (the “ Closing ”) shall take place (i) at the offices of Sellers at 600 Travis Street, Suite 5100, Houston, Texas 77002, at 10:00 a.m. (local Houston, Texas time) on August 15, 2008, or (ii) on an earlier date, at Buyer’s discretion, after the completion of Buyer’s title and environmental due diligence pursuant to Article VIII , but no earlier than five (5) Business Days after the date of Buyer’s written notice delivered to Sellers in accordance with Section 12.1 below, or (iii) at such other time or place or on such other date as the parties hereto shall agree.  The date on which the Closing is required to take place is herein referred to as the “ Closing Date ”.  All Closing transactions shall be deemed to have occurred simultaneously.

Except as provided in Sellers Disclosure Schedule, Sellers, jointly and severally, hereby represent and warrant to Buyer as follows:

Section 4.1.                                  Organization and Existence .

Each Seller is a limited liability company or corporation duly formed and validly existing under the laws of the State of Delaware or State of Oklahoma.

Section 4.2.                                  Power and Authority .

Each Seller has all requisite corporate or limited liability company power and authority to execute, deliver, and perform this Agreement and each other agreement, instrument, or document executed or to be executed by Sellers in connection with the transactions contemplated hereby to which it is a party and to consummate the transactions contemplated hereby and thereby.  The execution, delivery, and performance by Sellers of this Agreement and each other agreement, instrument, or document executed or to be executed by Sellers in connection with the transactions contemplated hereby to which it is a party, and the consummation by it of the

transactions contemplated hereby and thereby, have been duly authorized by all necessary action of Sellers.

Section 4.3.                                  Valid and Binding Agreement .

This Agreement has been duly executed and delivered by Sellers and constitutes, and each other agreement, instrument, or document executed or to be executed by Sellers in connection with the transactions contemplated hereby to which it is a party has been, or when executed will be, duly executed and delivered by Sellers and constitutes, or when executed and delivered will constitute, a valid and legally binding obligation of Sellers, enforceable against it in accordance with their respective terms, except that such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors’ rights generally and (b) equitable principles which may limit the availability of certain equitable remedies (such as specific performance) in certain instances.

Section 4.4.                                  Non-Contravention .

Other than requirements (if any) that there be obtained consents to assignment (or waivers of preferential rights to purchase) from third parties, neither the execution, delivery, and performance by Sellers of this Agreement and each other agreement, instrument, or document executed or to Sellers’ Knowledge to be executed by Sellers in connection with the transactions contemplated hereby to which it is a party nor the consummation by it of the transactions contemplated hereby and thereby do and will (a) conflict with or result in a violation of Sellers’ Governing Documents, (b) conflict with or result in a violation of any provision of, or constitute (with or without the giving of notice or the passage of time or both) a default under, or give rise (with or without the giving of notice or the passage of time or both) to any right of termination, cancellation, or acceleration under, any bond, debenture, note, mortgage or indenture, or any lease, contract, agreement, or other instrument or obligation to which Sellers are a party or by which Sellers or any of their properties may be bound, (c) result in the creation or imposition of any lien or other encumbrance upon the properties of Sellers, or (d) violate any Applicable Law binding upon Sellers, except, in the instance of clause (b) or clause (c) above, for any such conflicts, violations, defaults, terminations, cancellations or accelerations which would not, individually or in the aggregate, have a Material Adverse Effect.

Section 4.5.                                  Approvals .

Other than requirements (if any) that there be obtained consents to assignment (or waivers of preferential rights to purchase) from third parties and except for approvals required to be obtained from Governmental Entities who are lessors under leases forming a part of the Oil and Gas Properties (or who administer such leases on behalf of such lessors) which are obtained post-closing, no consent, approval, order, or authorization of, or declaration, filing, or registration with, any court or governmental agency or of any third party is required to be obtained or made by Sellers in connection with the execution, delivery, or performance by Sellers of this Agreement, each other agreement, instrument, or document executed or to be executed by Sellers in connection with the transactions contemplated hereby to which they are a party or the consummation by them of the transactions contemplated hereby and thereby, except for such consents, approvals, orders, authorizations, declarations, filings, or registrations which,

if not obtained or made (as applicable), would not, individually or in the aggregate, have a Material Adverse Effect.

Section 4.6.                                  Litigation .

Except as listed on Section 4.6 of the Sellers Disclosure Schedule, there are no Proceedings pending or, to Sellers’ Knowledge, threatened, against or affecting Sellers or the Properties (including any actions challenging or pertaining to Sellers’ title to any of the Properties), or affecting the execution and delivery of this Agreement by Sellers or the consummation of the transactions contemplated hereby by Sellers.

Section 4.7.                                  Contracts .

Section 4.7 of the Sellers Disclosure Schedule lists all Material Contracts.  None of the Sellers is in default under any Material Contract except as disclosed on Section 4.7 of the Sellers Disclosure Schedule and except such defaults as would not, individually or in the aggregate, have a Material Adverse Effect.  To Sellers’ Knowledge, all Material Contracts are in full force and effect.  Except as disclosed on Section 4.7 of the Sellers Disclosure Schedule, there are no futures, options, swaps or other derivatives with respect to the sale of production that will be binding on Sellers or the Properties after the Effective Date.  Except as disclosed on Section 4.7 of Sellers Disclosure Schedule, as of the date identified on such Schedule, there were no contracts for the purchase, sale or exchange of oil, gas or other hydrocarbons produced from or attributable to the Oil and Gas Properties that will be binding on the Buyer, the Sellers or the Oil and Gas Properties after the Effective Date that Buyer will not be entitled to terminate at will (without penalty) on thirty (30) days notice or less.  No notice of default or breach has been received or delivered by any Seller under any Material Contract, the resolution of which is currently outstanding, and no currently effective notices have been received by any Seller of the exercise of any premature termination, price redetermination, market-out or curtailment of any Material Contract.

Section 4.8.                                  Commitments, Abandonments or Proposals .

Except as listed on Section 4.8 of the Sellers Disclosure Schedule (a) no proposals are currently outstanding by Sellers or other working interest owners to drill additional wells, or to deepen, plug back, sidetrack or rework existing wells, or to conduct other operations for which consent is required under the applicable operating agreement, or to conduct any other operations other than normal operations of existing wells on the Oil and Gas Properties, except for operations which would require capital expenditures for such single operation, net to Sellers’ interest, of less than $100,000, and (b) no pooling proceedings are currently pending by Sellers or other working interest owners before the Oklahoma Corporation Commission with respect to the Oil and Gas Properties, except for pooling proceedings which, if Sellers participated in the proposed operation, would require capital expenditures, net to Sellers’ interest, of less than $100,000.

Section 4.9.                                  Production Sales Contracts .

There exist no agreements or arrangements for the sale of Hydrocarbons from the Oil and Gas Properties (including calls on, or other rights to purchase, production, whether or not the same are currently being exercised) other than (a) production sales contracts (in this Section, the

“ Scheduled Production Sales Contracts ”) disclosed in Section 4.9 of the Sellers Disclosure Schedule or (b) agreements or arrangements which are cancelable on thirty (30) days notice or less without penalty or detriment.  To Sellers’ Knowledge, during Sellers’ Period of Ownership, all proceeds from the sale of Hydrocarbons from the Oil and Gas Properties are being received (without offset, abatement or reduction) by Sellers in a timely manner and are not being held in suspense, except for such instances which would not reasonably be expected to have a Material Adverse Effect on Sellers or the Properties taken as a whole.

Section 4.10.                                  Plugging and Abandonment .

To Sellers’ Knowledge, except for wells listed in Section 4.10 of the Sellers Disclosure Schedule, there are no dry holes, or shut in or otherwise inactive wells, located on the Oil and Gas Properties or on lands pooled or unitized therewith, except for wells that have been properly plugged and abandoned in accordance with Applicable Law.

Section 4.11.                                  Permits .

Sellers have all Permits necessary or appropriate to own and where Seller operates, operate the Oil and Gas Properties as presently being owned and operated, except for such Permits the absence of which would not be reasonably expected to have a Material Adverse Effect, and to Sellers’ Knowledge, such Permits are in full force and effect.  Except as set forth in Section 4.11 of the Sellers Disclosure Schedule, Sellers have not received written notice of any violations in respect of any Permits and to Sellers’ Knowledge, there are no violations in respect of any Permit and no one has communicated to Sellers that there are any violations in respect of any Permit, except for such violations which would not reasonably be expected to have a Material Adverse Effect.

Section 4.12.                                  Payment of Expenses .

All expenses (including all bills for labor, materials, and supplies used or furnished for use in connection with the Properties, and all severance, production, ad valorem, and other similar Taxes) relating to the ownership or operation by Sellers of the Properties, have been, and are being, paid (timely, and before the same become delinquent) by Sellers, except such expenses and Taxes as are disputed in good faith by Sellers and for which an adequate accounting reserve has been established by Sellers.  Sellers are not delinquent with respect to their obligations to bear costs and expenses relating to the development and operation of the Oil and Gas Properties.

Section 4.13.                                  Compliance with Laws .

To Sellers’ Knowledge, the ownership and operation of the Properties operated by Sellers have been in compliance with all Applicable Laws.  Notwithstanding the foregoing, this Section 4.13 does not relate to environmental matters (including compliance with Environmental Laws or matters that would constitute Environmental Defects), it being agreed that such matters are covered by and dealt with in Section 4.17 and Article VIII , exclusively.

Section 4.14.                                  Imbalances; Prepayments.

Section 4.14 of the Sellers Disclosure Schedule sets forth all Imbalances as of the date set forth in such Section with respect to the Oil and Gas Properties.  Sellers are not obligated by virtue of a take or pay payment, advance payment or other similar payment (other than royalties, overriding royalties and similar arrangements reflected in Exhibit C ), to deliver Hydrocarbons, or proceeds from the sale thereof, attributable to the Oil and Gas Properties at some future time without receiving payment therefor at or after the time of delivery.

Section 4.15.                                  Intellectual Property .

To Sellers’ Knowledge, Sellers own or have valid licenses or other rights to use all patents, copyrights, trademarks, software, databases, geological data, geophysical data, engineering data, maps, interpretations, and other technical information used by Sellers in connection with their ownership and operation of the Properties as presently conducted, subject to the limitations contained in the agreements governing the use of the same, which limitations are customary for companies engaged in the business of the exploration and production of Hydrocarbons.

Section 4.16.                                  Taxes .

(a)           Except as set forth in Section 4.16 of the Sellers Disclosure Schedule, all ad valorem and severance Taxes due and payable for the Properties have been timely paid in accordance with Applicable Laws and are not delinquent, or if not paid, are being contested in good faith by one or more of the Sellers.

(b)           With respect to all Taxes related to the Properties, (i) all material Tax Returns relating to the Properties required to be filed on or before the Effective Date by Sellers with respect to any Taxes for any period ending on or before the Effective Date have been timely filed with the appropriate Governmental Entity, (ii) to Sellers Knowledge, such Tax Returns are true and correct in all respects, and (iii) all Taxes reported on such Tax Returns have been paid or provided for, except those being contested in good faith.

(c)           With respect to all Taxes related to the Properties (i) there are not currently in effect any extension or waiver by Sellers of any statute of limitations of any jurisdiction regarding the assessment or collection of any Tax related to the Properties, and (ii) there are no administrative Proceedings or lawsuits pending against the Sellers with respect to the Properties by any taxing authority.

(d)           Neither Seller was bound as of the Effective Date or will be bound at Closing by any tax partnership agreement binding upon Sellers that would preclude Sellers form being entitled to dispose of the property.

Section 4.17.                                  Environmental Matters .

Sellers have not received any notification of, individually or in the aggregate, any pending or threatened investigation, claim, penalty or action by any Governmental Entity or other Person relating to the environmental condition of the Properties, and to Sellers’ Knowledge (a) there has been no release or threat of release of any Hazardous Substance (as the terms “release” and “Hazardous Substance” are defined under Environmental Laws) on or from any of the Properties, or as a consequence of Sellers’ operations or activities on the Properties, or any of them, prior to the date of this Agreement, or (b) no condition exists on or under any of the Properties as of the date of this Agreement which could have a Material Adverse Effect on Sellers and/or the Properties taken as a whole.

Section 4.18.                                  Preferential Purchase Rights and Required Consents .

Section 4.19.                                  Payment of Burdens on Production .

Section 4.20.                                  Fees and Commissions .

Section 4.21.                                  Disclaimer of Warranties .

Other than those expressly set out in this Article IV , Sellers hereby expressly disclaim any and all representations or warranties with respect to the Properties or the transactions contemplated hereby.  Subject to and without in any manner affecting or diminishing Sellers’ indemnity obligations under Section 11.2 below, Buyer agrees that the Properties are otherwise being sold by each Seller “where is” and “as is”, with all faults.  Specifically as a part of (but not in limitation of) the foregoing, Buyer acknowledges that Sellers have not made, and Sellers hereby expressly disclaim, any representation or warranty (express, implied, under common law, by statute or otherwise) as to the title or condition of the Properties (INCLUDING ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS) .   OTHER THAN THOSE EXPRESSLY SET OUT IN THIS ARTICLE IV , SELLERS MAKE NO REPRESENTATION OR WARRANTY AS TO (I) THE AMOUNT, VALUE, QUALITY, QUANTITY, VOLUME, OR DELIVERABILITY OF

ANY OIL, GAS, OR OTHER MINERALS OR RESERVES (IF ANY) IN, UNDER, OR ATTRIBUTABLE TO THE PROPERTIES, (II) THE PHYSICAL, OPERATING, REGULATORY COMPLIANCE, SAFETY, OR ENVIRONMENTAL CONDITION OF THE PROPERTIES, BOTH SURFACE AND SUBSURFACE, INCLUDING MATTERS RELATED TO THE PRESENCE, RELEASE OR DISPOSAL OF HAZARDOUS MATERIALS, SOLID WASTES, ASBESTOS OR NATURALLY OCCURRING RADIOACTIVE MATERIALS ( “ NORM ” ), OR (III) THE GEOLOGICAL OR ENGINEERING CONDITION OF THE PROPERTIES OR ANY VALUE THEREOF.  SELLERS MAKE NO WARRANTY OR REPRESENTATION, EXPRESS, STATUTORY, OR IMPLIED, AS TO (A) THE ACCURACY, COMPLETENESS, OR MATERIALITY OF ANY DATA, INFORMATION, OR RECORDS FURNISHED TO BUYER IN CONNECTION WITH THE PROPERTIES OR OTHERWISE CONSTITUTING A PORTION OF THE PROPERTIES; (B) THE PRESENCE, QUALITY, AND QUANTITY OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE PROPERTIES; (C) THE ABILITY OF THE PROPERTIES TO PRODUCE HYDROCARBONS, INCLUDING PRODUCTION RATES, DECLINE RATES, AND RECOMPLETION OPPORTUNITIES; (D) EXCEPT AS PROVIDED IN SECTIONS 4.13 AND/OR 4.14 , IMBALANCE OR PAYOUT ACCOUNT INFORMATION, ALLOWABLES, OR OTHER REGULATORY MATTERS, (E) THE PRESENT OR FUTURE VALUE OF THE ANTICIPATED INCOME, COSTS, OR PROFITS, IF ANY, TO BE DERIVED FROM THE PROPERTIES, (F) EXCEPT AS PROVIDED IN SECTION 4.17 , THE ENVIRONMENTAL CONDITION OF THE PROPERTIES, (G) ANY PROJECTIONS AS TO EVENTS THAT COULD OR COULD NOT OCCUR, (H) ANY OTHER MATTERS CONTAINED IN OR OMITTED FROM ANY INFORMATION OR MATERIAL FURNISHED TO BUYER BY SELLERS OR OTHERWISE CONSTITUTING A PORTION OF THE PROPERTIES, OR (I) ANY PORTION OF THE PROPERTIES OTHER THAN THE PORTIONS OF THE PROPERTIES BEING SOLD OR CONVEYED BY THAT PARTICULAR SELLER. ANY DATA, INFORMATION, OR OTHER RECORDS FURNISHED BY SELLERS PURSUANT TO SECTION 6.1 OR UNDER OTHER PROVISIONS OF THIS AGREEMENT ARE PROVIDED TO BUYER AS A CONVENIENCE AND BUYER’S RELIANCE ON OR USE OF THE SAME IS AT BUYER’S SOLE RISK.

Section 4.22.                                  Disclosures .

The matters set forth on the Sellers Disclosure Schedule are not necessarily matters that Sellers are required to disclose or matter that would constitute a breach of any representation or warranty had such matters not been disclosed.

Section 5.1.                                  Organization and Existence .

Buyer is a corporation, duly organized, legally existing and in good standing under the laws of the State of Delaware, and is qualified to do business and in good standing in each of the states in which Oil and Gas Properties are located where the laws of such state would require a

corporation owning the Oil and Gas Properties located in such state to so qualify.  Buyer is also qualified to own and operate oil and gas properties with all applicable governmental agencies having jurisdiction over the Oil and Gas Properties, to the extent such qualification is necessary or appropriate or will be necessary or appropriate upon consummation of the transactions contemplated hereby.

Section 5.2.                                  Power and Authority .

Buyer has full corporate power and authority to execute, deliver, and perform this Agreement and each other agreement, instrument, or document executed or to be executed by Buyer in connection with the transactions contemplated hereby to which it is a party and to consummate the transactions contemplated hereby and thereby.  The execution, delivery, and performance by Buyer of this Agreement and each other agreement, instrument, or document executed or to be executed by Buyer in connection with the transactions contemplated hereby to which it is a party, and the consummation by it of the transactions contemplated hereby and thereby, have been duly authorized by all necessary corporate action of Buyer.

Section 5.3.                                  Valid and Binding Agreement .

This Agreement has been duly executed and delivered by Buyer and constitutes, and each other agreement, instrument, or document executed or to be executed by Buyer in connection with the transactions contemplated hereby to which it is a party has been, or when executed will be, duly executed and delivered by Buyer and constitutes, or when executed and delivered will constitute, a valid and legally binding obligation of Buyer, enforceable against it in accordance with their respective terms, except that such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors’ rights generally, and (b) equitable principles which may limit the availability of certain equitable remedies (such as specific performance) in certain instances.

Section 5.4.                                  Non-Contravention .

Neither the execution, delivery, and performance by Buyer of this Agreement and each other agreement, instrument, or document executed or to Buyer’s Knowledge to be executed by Buyer in connection with the transactions contemplated hereby to which it is a party and the consummation by it of the transactions contemplated hereby and thereby do not and will not (i) conflict with or result in a violation of Buyer’s Governing Documents, (ii) conflict with or result in a violation of any provision of, or constitute (with or without the giving of notice or the passage of time or both) a default under, or give rise (with or without the giving of notice or the passage of time or both) to any right of termination, cancellation, or acceleration under, any bond, debenture, note, mortgage, indenture, or any lease, contract, agreement, or other instrument or obligation to which Buyer is a party or by which Buyer or any of its properties may be bound, (iii) result in the creation or imposition of any lien or other encumbrance upon the properties of Buyer, or (iv) violate any Applicable Law binding upon Buyer, except, in the instance of clauses (ii) and (iii) above, for which any such conflicts, violations, defaults, terminations, cancellations or accelerations which would not, individually or in the aggregate, have a Material Adverse Effect.

Section 5.5.                                  Approvals.

Other than requirements (if any) that there be obtained consents to assignment (or waivers of preferential rights to purchase) from third parties, no consent, approval, order, or authorization of, or declaration, filing, or registration with, any court or governmental agency or of any third party is required to be obtained or made by Buyer in connection with the execution, delivery, or performance by Buyer of this Agreement and each other agreement, instrument, or document executed or to be executed by Buyer in connection with the transactions contemplated hereby to which it is a party or the consummation by it of the transactions contemplated hereby and thereby, except, for such consents, approvals, orders, authorizations, declarations, filings, or registrations which, if not obtained or made (as applicable), would not, individually or in the aggregate, have a Material Adverse Effect.

Section 5.6.                                  Pending Litigation .

There are no Proceedings pending or, to Buyer’s Knowledge, threatened against or affecting the execution and delivery of this Agreement by Buyer or the consummation of the transactions contemplated hereby by Buyer.

Section 5.7.                                  Knowledgeable Purchaser .

Buyer is a knowledgeable purchaser, owner and operator of oil and gas properties, has the ability to evaluate (and in fact has evaluated) the Properties for purchase.  Buyer is an “accredited investor,” as defined in Regulation D promulgated pursuant to the Securities Act, and is acquiring the Properties for its own account and not with the intent to make a distribution within the meaning of the Securities Act (and the rules and regulations pertaining thereto) or a distribution thereof in violation of any other applicable securities laws.   In making the decision to enter into this Agreement and to consummate the transactions contemplated hereby, Buyer has relied only on Sellers’ representations and warranties under Article IV and its own independent due diligence investigation of the Properties.  Buyer acknowledges that it has been advised by and has relied on its own expertise and legal, land, tax, reservoir engineering, and other professional counsel concerning this transaction, the Properties and the value thereof.

Section 5.8.                                  Funds .

Buyer has, and at Closing Buyer will have sufficient cash and other sources of immediately available funds, as are necessary in order to pay the Adjusted Purchase Price to Sellers at the Closing and otherwise consummate the transactions contemplated hereby.

Section 5.9.                                  Fees and Commissions .

No broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Buyer.

Section 6.1.                                  Access to Files .

Subject to the terms of the Confidentiality Agreement and Article IX , from the date hereof until the Closing Date, Sellers will give Buyer, and its attorneys and other authorized representatives, access at all reasonable times and in a manner so as to not interfere with the normal business operations of the Sellers to the Properties and to any contract files, lease or other title files, production files, well files, and other files of Sellers pertaining to the ownership or operation of the Properties, and Sellers will use their Reasonable Best Efforts to arrange for Buyer, and its attorneys and other representatives, to have access to any such files in the office of Sellers.

Section 6.2.   Conduct of Operations .

From the date hereof until the Closing Date, Sellers will (i) continue the routine operation of the Oil and Gas Properties in the ordinary course of business as previously conducted prior to the date of this Agreement; (ii) continue the routine renewal of Leases scheduled to expire on or before the Closing Date, the costs associated with such Lease renewal program being allocated between the parties as of the Effective Date; (iii) fulfill all contractual obligations and conditions imposed on Sellers respecting the Oil and Gas Properties in the ordinary course of business as previously conducted including, without limitation, the timely payment of royalties, delay rentals, shut-in royalty payments and other payments required under Leases and Material Contracts; (iv) operate the Oil and Gas Properties in material compliance with all Applicable Laws and Environmental Laws and Material Contracts, and (v) continue in the ordinary course of business with all approved capital expenditures respecting the Oil and Gas Properties.  Without expanding any obligations that Sellers may have to Buyer, it is expressly agreed that Sellers shall never have any liability to Buyer with respect to operation of an Oil and Gas Property greater than that which it might have as the operator to a non-operator under Applicable Law and under the applicable operating agreement (or, in the absence of such an agreement, under the AAPL 610 (1989 Revision) form Operating Agreement).

Section 6.3.   Restrictions on Certain Actions .

From the date hereof until the Closing Date, Sellers will not, without Buyer’s prior written consent in connection with the Properties:

(a)           expend any funds, or make any commitments to expend funds (including entering into new agreements which would obligate Sellers to expend funds), or otherwise incur any other obligations or liabilities, other than to pay expenses or to incur liabilities in the ordinary course of business as previously conducted prior to the date of this Agreement in connection with operation of the Properties after the Effective Date, except in the event of an emergency requiring immediate action to protect life or preserve the Properties;

(b)           except where necessary to prevent the termination of a Lease or other material agreement governing Sellers’ interest in the Properties, propose the drilling of any additional wells, or propose the deepening, plugging back or reworking of any

existing wells, or propose the conducting of any other operations which require consent under the applicable operating agreement, or propose the conducting of any other operations other than the normal operation of the existing wells on the Oil and Gas Properties, or propose the abandonment of any wells on the Oil and Gas Properties (and Sellers agree that they will advise and seek Buyer’s direction as to any such proposals made by third parties and will respond to each such proposal made by a third party in the manner requested by Buyer);

(c)           sell, transfer, or abandon any portion of the Properties other than items of materials, supplies, machinery, equipment, improvements, or other personal property or fixtures forming a part of the Properties (and then only if the same is replaced with an item of substantially equal suitability, free of liens and security interests, which replacement item will then, for the purposes of this Agreement, become part of the Properties);

(d)           voluntarily relinquish operations of any Oil and Gas Property currently operated by Sellers to anyone other than Buyer; or

(e)           release (or permit to terminate), or modify or reduce its rights under, any Lease forming a part of the Oil and Gas Properties, or any Material Agreement, or modify any existing production sales contracts or enter into any new production sales contracts, except contracts terminable by Sellers with notice of thirty (30) days or less.

Section 6.4.   Lease Renewals and Top Leasing .

Section 6.5.   Payment of Expenses .

Sellers will cause all expenses (including all bills for labor, materials, and supplies used or furnished for use in connection with the Properties and all severance, production, and similar Taxes) relating to the ownership or operation of the Properties prior to the Effective Date to be

promptly paid and discharged, except for expenses disputed in good faith and respecting which Sellers have agreed to remain responsible and hold Buyer harmless with respect thereto.

Section 6.6.   Preferential Rights and Third Party Consents .

Sellers will use Reasonable Best Efforts to request, from the appropriate parties (and in accordance with the documents creating such rights and/or requirements), waivers of the preferential rights to purchase, or requirements that consent to assignment be obtained, which are identified in Section 4.18 of the Sellers Disclosure Schedule.  Sellers shall have no obligation to assure that such waivers are obtained, and if all such waivers (or any other waivers of preferential rights to purchase or requirements that consent be obtained to assignment, even if the same are not listed on such Section 4.18) are not obtained, Buyer may treat any waiver which is not obtained as a matter which causes Sellers’ title to not be sufficient to meet the standards set forth in Article VIII (except the following shall not apply: (i) the $50,000 threshold provided for in Section 8.1(c) , (ii) Section 8.1(d)(iii)(B) , and (iii) Section 8.4(a) ); provided, however, that if the unobtained waiver is a waiver of a preferential right to purchase, and if both Buyer and Sellers agree to the treatment of such matter (and agree upon an appropriate allocation of the Purchase Price), Sellers will tender (at the agreed allocated portion of the Purchase Price) the required interest in the Property affected by such unwaived preferential right to purchase to the holder, or holders, of such right who have elected not to waive such preferential right to purchase, and if, and to the extent that, such preferential right to purchase is exercised by such party or parties, such interest in such Property will be excluded from the transaction contemplated hereby and the Purchase Price will be reduced by the amount paid, or to be paid, by the party exercising such preferential right to purchase (and Sellers shall collect such amount from such purchaser).

Section 7.1.                                  Reasonable Best Efforts .

Each party hereto agrees that it will not voluntarily undertake any course of action inconsistent with the provisions or intent of this Agreement and will use its Reasonable Best Efforts to take, or cause to be taken, all action and to do, or cause to be done, all things reasonably necessary, proper, or advisable under Applicable Laws to consummate the transactions contemplated by this Agreement, including (i) cooperation in determining whether any consents, approvals, orders, authorizations, waivers, declarations, filings, or registrations of or with any Governmental Entity or third party are required in connection with the consummation of the transactions contemplated hereby; (ii) Reasonable Best Efforts to obtain any such consents approvals, orders, authorizations, and waivers and to effect any such declarations, filings, and registrations; (iii) Reasonable Best Efforts to cause to be lifted or rescinded any injunction or restraining order or other order adversely affecting the ability of the parties to consummate the transactions contemplated hereby; (iv) Reasonable Best Efforts to defend, and cooperation in defending, all Proceedings challenging this Agreement or the consummation of the transactions contemplated hereby; and (v) the execution of any additional instruments necessary to consummate the transactions contemplated hereby.

Section 7.2.                                  Notice of Litigation .

Until the Closing, (i) Buyer, upon learning of the same, shall promptly notify Sellers of any Proceeding which is commenced or threatened against Buyer and which affects this Agreement, the Properties or the transactions contemplated hereby, and (ii)  Sellers, upon learning of the same, shall promptly notify Buyer of any Proceeding which is commenced or threatened against Sellers which affects this Agreement, the Properties or the transactions contemplated hereby.

Section 7.3.                                  Notification of Certain Matters .

Until the Closing, Sellers shall give prompt notice to Buyer of:  (i) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence of which, to Sellers’ Knowledge, would be likely to cause any representation or warranty made by Sellers in Article IV to be untrue or inaccurate at or prior to the Closing, and (ii) any failure of Sellers to comply with or satisfy any covenant, condition, or agreement to be complied with or satisfied by Sellers hereunder prior to Closing.  Until the Closing, Buyer shall give prompt notice to Sellers of:  (i) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence of which, to Buyer’s Knowledge, would be likely to cause any representation or warranty contained in Article V to be untrue or inaccurate at or prior to the Closing, and (ii) any failure of Buyer to comply with or satisfy any covenant, condition, or agreement to be complied with or satisfied by Buyer hereunder prior to Closing.  The delivery of any notice pursuant to this Section 7.3 shall not be deemed to (x) modify the representations or warranties hereunder of the party delivering such notice, (y) modify the conditions set forth in Article IX , or (z) limit or otherwise affect the remedies available hereunder to the party receiving such notice.

Section 7.4.                                  Fees and Expenses .

(a)           Except as otherwise provided herein, (i) all fees and expenses incurred in connection with this Agreement by Sellers will be borne by and paid by Sellers, and (ii) all fees and expenses incurred in connection with this Agreement by Buyer will be borne by and paid by Buyer.

(b)           All required documentary, filing and recording fees and expenses in connection with the filing and recording of the Assignment and other instruments required to convey title to the Properties to Buyer shall be borne by Buyer.  Buyer shall assume responsibility for, and shall bear and pay, any applicable state sales and use Taxes (including any applicable interest or penalties) incurred or imposed with respect to the transactions contemplated by this Agreement.

Section 7.5.                                  Public Announcements .

Except as may be required by Applicable Law, neither Buyer nor Sellers shall issue any press release or otherwise make any statement to the public generally with respect to this Agreement or the transactions contemplated hereby without the prior consent of the other party (which consent shall not be unreasonably withheld and which consent, if given verbally, shall be confirmed in writing within one Business Day thereafter).  Any such press release or statement required by Applicable Law shall only be made after reasonable notice to the other parties.

Section 7.6.                                  Casualty Loss Prior to Closing.

In the event of damage by fire or other casualty to any of the Properties after the Effective Date and prior to the Closing, then this Agreement shall remain in full force and effect, and (unless Buyer and Sellers shall otherwise agree) in such event:

(a)           as to each such Property so damaged which is an Oil and Gas Property, then, at Seller’s election, either (i) such Property shall be treated as if it had an asserted Title Defect associated with it and the procedure provided for in Article VIII shall be applicable thereto (except the following shall not apply: (A) the $50,000 threshold provided for in Section 8.1(c) , (B) Section 8.1(d)(iii)(B) , and (C) Section 8.5(a) ), or (ii) the Purchase Price will not be adjusted, and if Sellers should be entitled to make any claims under any insurance policy with respect to such damage, Sellers shall, at its election, either collect (and when collected pay over to Buyer), or assign to Buyer, such claims,

(b)           as to each such Property which is other than an Oil and Gas Property, Sellers shall, at its election, either collect (and when collected pay over to Buyer), or assign to Buyer, any and all insurance claims relating to such loss, and Buyer shall take title to the Property affected by such loss without reduction of the Purchase Price, and

(c)           notwithstanding paragraphs (a) and (b) above, should Sellers make any claim under applicable insurance policies but the monies recoverable under such policies (i) are less than the full Allocated Value for the Property affected by the casualty, in the case of a total loss, or (ii) are insufficient to compensate Buyer for the diminution in value to the Property affected by the casualty, in the case of a partial loss (in either case, a “ Casualty Deficit ”) , the parties agree that Buyer shall be entitled at Closing to a credit against the Purchase Price equal to the Casualty Deficit.  If Sellers and Buyer are unable to agree as to the monetary amount constituting a Casualty Deficit (in the case of partial losses only), such matters shall be considered a Defect Dispute to be resolved by the Independent Expert pursuant to Section 8.3 below.

Section 7.7.                                  Governmental Bonds .

At or prior to Closing, Buyer shall deliver to Sellers evidence that Buyer has completed all action necessary to permit Buyer to post bonds or other security immediately following the Closing with all applicable Governmental Entities meeting the requirements of such Governmental Entities to own, and where appropriate, operate, the Properties.

Section 7.8.                                  Assumed Obligations .

At Closing, Buyer shall assume and agree to pay, perform and discharge the Assumed Obligations.

Section 7.9.   Operational Transition .

IT IS RECOGNIZED THAT THERE IS NO ASSURANCE GIVEN BY SELLERS THAT BUYER SHALL SUCCEED SELLERS AS OPERATOR OF ANY OIL AND GAS

PROPERTY WHERE OTHER PARTIES OWN INTERESTS IN THE WELLS LOCATED THEREON, but Sellers shall cooperate with Buyer to see that Buyer shall succeed Sellers as operator of all the Sellers operated properties, by: (a) delivering at Closing, signed counterparts of letters addressed to non-operating working interest owners of the Sellers operated Oil and Gas Properties advising them of the sale of those Oil and Gas Properties by Sellers to Buyer; and seeking such owners’ considera