ASSET PURCHASE AND SALE AGREEMENT

ASSET PURCHASE AND SALE AGREEMENT

Woodford Area

between

Linn Energy Holdings, LLC

Midcontinent I, LLC

Midcontinent II, LLC

Linn Operating, Inc.

as “Sellers”

and

Devon Energy Production Company, LP

as “Buyer”

Dated as of October 9, 2008

THIS ASSET PURCHASE AND SALE AGREEMENT dated October 9, 2008, is made by and between Linn Energy Holdings, LLC, a Delaware limited liability company (“ LEH ”), Midcontinent I, LLC, an Oklahoma limited liability company, Midcontinent II, LLC, an Oklahoma limited liability company, and Linn Operating, Inc., a Delaware corporation (“ LOI ”) (collectively “ Sellers ”), and Devon Energy Production Company, LP, an Oklahoma limited partnership (“ 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 located in Blaine, Caddo, Canadian, Grady and Kingfisher Counties, Oklahoma.

B.       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 any ratifications, extensions, renewals, and/or amendments to such Leases, whether or not such ratifications, extensions, renewals, or amendments are described on Exhibit A (the “ Subject Leases ”), but insofar only as the Subject Leases cover, include or pertain to the Deep Rights, together with a right of ingress and egress through the Shallow Zones for the purpose of accessing, drilling to, testing, completing in, producing from, reworking, and exploiting the Deep Zones;

(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 Deep Zones of or underlying (1) the lands described in Exhibit A   hereto or described in or covered by any of the Subject Leases, and/or (2) any lands spaced, pooled or unitized with any of those lands (collectively, the “ Lands ”) (including interests and rights in or attributable to the Subject Leases, overriding royalties, production payments, operating rights, working interests, leasehold cost-bearing interests, and net profits interests in the Lands or the Subject Leases, and fee

mineral interests, fee and term royalty interests, and other interests insofar as they cover or are entitled to share in the production or proceeds of production of Hydrocarbons derived from or attributable to the Deep Zones of the Lands), even though Sellers’ interest therein may be incorrectly described in, or omitted from, Exhibit A ;

(c)           All rights, titles and interests of Sellers in and to, or otherwise derived from all 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 Governmental Entity having jurisdiction, voluntary unitization agreements, designations and/or declarations) existing and valid as of the Closing Date that are related to any of the properties described in Sections 1.1(a) or (b) above, but only as any of the foregoing relate to the Deep Rights;

(d)           All rights, titles and interests of Sellers in and to, or otherwise derived from all contracts and agreements related to the Oil and Gas Properties, including but not limited to the Material Contracts, that may be transferred to and assumed by Buyer without resulting in any breach or violation by Seller or Buyer of any obligation or requirement therein, or Applicable Law, but only to the extent the same relate to the Deep Rights and only to the extent such rights, titles and interests may be transferred to and assumed by Buyer without prejudicing Sellers’ retained rights with respect to the Shallow Zones in any material respect;

(e)           one copy of all files, data, documentation, and records (including electronic data) that directly pertain to the assets, properties, interests and rights described or referenced in Sections 1.1(a), (b), (c), (d) and/or (f) , and are in the possession or under the control of any Seller or any Affiliate of any Seller, including lease files, land files, division order files, abstracts, title files, and accounting records, but excluding any of the files, data, documentation, and records which constitute any of the “Excluded Assets” (as defined in Section 1.2) (the “ Records ”);

(f)           a right to use any of surface use agreements, easements, rights of way, licenses, authorizations, permits, and similar rights and interests held by Sellers that are applicable to, or used in connection with the Oil and Gas Properties, but only insofar as Sellers can transfer to or confer on Buyer the right to such use or such use by Buyer would not limit Seller’s use as respect the Excluded Assets in any material respect (collectively, the “ Surface Contracts ”); and

(g)           all claims, rights, and causes of action of Sellers against third parties, asserted and unasserted, known and unknown, but only to the extent each such claim, right or cause of action results or arises from any circumstance, matter or event which could reasonably be expected to adversely affect the value, use or operation of the “Oil and Gas Properties” (as defined in this Section 1.1) on or after the Effective Date, but excluding any such claims, rights, and causes of action which are not assignable or transferable under Applicable Law.  If necessary to give effect to the assignment of such rights, claims, and causes of action, Sellers will assign at the Closing to Buyer the right to be subrogated to such rights, claims, and causes of action;

As used herein:  (i) “ Oil and Gas Properties ” means the properties, assets, rights, and interests described in Sections 1.1 (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 Sections 1.1 (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)           All right, title and interest of Sellers in the Subject Leases and Lands to the extent covering, including or pertaining to the Shallow Zones, together with a right to use the Surface Contracts to access the same;

(b)           All right, title and interest of Sellers in and to the wellbores only of all wells located on the Oil and Gas Properties that are, as of the Effective Date, producing from or completed in and capable of producing from the Deep Zones (the “ Existing Deep Wells ”), together with all associated production of Hydrocarbons from those wellbores and the right to complete, recomplete or re-enter any Existing Deep Well, but not the right to deepen or sidetrack any Existing Deep Well; and, further, together with so much of those rights, titles and interests described in Sections 1.1(a) , 1.1(b) and 1.1(c) insofar as and only insofar as the same pertain to the wellbores only of the Existing Deep Wells and the associated production of Hydrocarbons therefrom, and together with so much of the rights, titles and interests derived from contracts and agreements described in Section 1.1(d) insofar as and only insofar as the same pertains to the wellbores only of the Existing Deep Wells and the right of production of Hydrocarbons therefrom;

(c)           All right, title and interest of Sellers in all equipment, machinery, fixtures, facilities, and other tangible personal property and improvements located in, on, or under the Properties or used or held for use in connection with the operation of the Properties, including, but not limited to pumps, well equipment (surface and subsurface), saltwater disposal wells, lines and facilities, sulfur recovery facilities, compressors, compressor stations, dehydration facilities, treating facilities, pipeline gathering lines, flow lines, transportation lines (including long lines and laterals), valves, meters, separators, tanks, tank batteries, buildings, roads, and other fixtures;

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

(e)           All of Sellers’ right, title, and interest in any Leases, overriding royalties, production payments, net profits interests, fee or term mineral interests, fee or term royalty interests and other interests in oil, gas, and other minerals not expressly included in the definition of Oil and Gas Properties 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 or in flow lines, gathering systems or transmission pipelines;

(f)           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;

(g)           All contracts of insurance or indemnity;

(h)           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), except for the claims and causes of action described in Section 1.1(g);

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

(j)           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 transferable upon payment of a fee or other consideration, and if Buyer has paid such fee or other consideration prior to the Closing Date, then such data, materials, or information shall be transferred to Buyer;

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

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

(m)           All documents and instruments of Sellers that may be 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, except such documents and instruments as may be subject to a confidentiality agreement or a protective order);

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

(o)           Any other right or interest in and to the Properties to the extent attributable to the period prior to the Effective Date, except for rights, claims and causes of action described in Section 1.1(g);

(p)           All original lease files, title opinions,  and accounting records and other files that relate to the Properties;

(q)           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; and

(r)           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.

The properties and interests specified in the foregoing paragraphs (a) through (r) 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 1.3.                                  Non-Assumption .  Buyer does not and shall not assume, and shall not be deemed to have assumed any obligation, undertaking, responsibility or liability of Seller under any contract or agreement to the extent or insofar as that obligation, undertaking, responsibility or liability pertains to the Excluded Assets.

Section 2.1.                                  Purchase Price .

In partial consideration of the sale of the Properties by Sellers to Buyer, Buyer shall pay to Sellers cash in the amount of Two-Hundred Twenty-Nine Million, One-Hundred Thirty-Five Thousand, One-Hundred Fifty-Six Dollars ($229,135,156.00) (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 adjustments for Title Defects provided for in Article VIII , appropriate adjustments shall be made between Buyer and Sellers so that:

(i)           all direct, non-affiliated third-party expenses reasonably incurred by Sellers for work done in the drilling and operation of the Oil and Gas

Properties on or after the Effective Date in accordance with this Agreement will be borne by Buyer, excluding all such third-party expenses to the extent pertaining or attributable to any of the Excluded Assets, and all production and proceeds (net of applicable gathering, transportation charges 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 and belong to Buyer, and

(ii)           all expenses for work done in the operation of the Oil and Gas Properties before the Effective Date will be borne by Sellers and all proceeds (net of applicable production, severance, and similar Taxes) from the sale of oil, gas, or other minerals produced therefrom before the Effective Date will be received by and belong to Sellers.

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

(i)           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), and

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

Notwithstanding any other provision in this Agreement to the contrary, Buyer shall not have any obligation, responsibility, liability or undertaking for any cost or expense incurred in connection with the ownership, use or operation of any Excluded Assets, including the Existing Deep Wells.

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 and, any other adjustments provided in this Agreement to be made at the Closing to the Purchase Price.   If the amount of adjustments so determined which would result in a credit to Buyer exceed 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.  If the parties are unable to resolve any disagreement concerning any proposed Purchase Price adjustment provided for in or to be made pursuant to Section 2.2 at the Closing (excluding any adjustment provided for elsewhere in this Agreement, such as an adjustment resulting from a Title Defect ) then the amount of the adjustment to the Purchase Price with respect to all disputed items shall be the amount that is midway between Sellers’ and Buyer’s good faith proposed adjustment with respect to such disputed items.

(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 and elsewhere in this Agreement, 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 .  This Section 2.3 shall not apply or pertain to any Party’s rights or obligations under Article XI , or with respect to any breach by any Party of any of its obligations, undertakings, representations or warranties contained in this Agreement.

(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, except and excluding any dispute concerning any adjustment resulting from any Title Defect or alleged Title Defect, which shall be handled and resolved in accordance with Section 8.2, then 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 a 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 the 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 Applicable 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, on the one hand, and Buyer, on the other hand.

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 the Escrow Agent cash equal to five percent (5%) of the Purchase Price as a deposit (such amount, together with all interest earned thereon, the “ Deposit ”) to be held by Escrow Agent pursuant to the Escrow Agreement.  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 sum of the Deposit, as determined by the parties pursuant to Section 2.3(a) .  At Closing, the Deposit will become the Holdback Amount referenced in Section 8.6(d) .  The Holdback Amount will be released to Buyer or Sellers in accordance with Section ­­­8.6(d) .

(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 .

Buyer and Sellers have agreed 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 is set forth on Exhibit C 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 November 24, 2008, or (ii) 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, each Seller hereby represents and warrants to Buyer as follows:

Section 4.1.                                  Organization and Existence .

Seller is a limited liability company or corporation duly formed or organized, validly existing, and in good standing under the Applicable Laws of the State of Delaware or the State of Oklahoma.  Seller is duly qualified to do business in Oklahoma and duly qualified to do business and in good standing in each jurisdiction in which either the ownership or use of its properties, or the nature of its activities, requires such qualification under Applicable Law, except where the failure to be so qualified or in good standing will not in any manner impair Seller’s ability to consummate the transactions contemplated hereby by Seller in accordance with this Agreement or result in Buyer incurring any loss or liability in connection therewith.

Section 4.2.                                  Power and Authority .

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

Section 4.3.                                  Valid and Binding Agreement .

This Agreement has been duly executed and delivered by Seller and constitutes, and the Assignment and each other agreement, instrument, or document executed or to be executed by Seller 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 Seller and constitutes, or when executed and delivered will constitute, a valid and legally binding obligation of Seller, 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 Seller of this Agreement, the Assignment, and each other agreement, instrument, or document executed or to Sellers’ Knowledge to be executed by Seller 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 Seller’s Governing Documents, (b) materially conflict with or result in a material violation of any provision of, or constitute (with or without the giving of notice or the passage of time or both) a material 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 material lease, contract, agreement, or other instrument or obligation to which Seller is a party or by which any Seller or any of its properties may be bound, (c) result in the creation or imposition of any Lien or other encumbrance upon any of the Properties, or (d) result in a material violation of any Applicable Law binding upon the Seller.

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 customarily obtained after the consummation of the purchase and sale of oil and gas properties consisting in part of such type of leases and compliance with the qualification requirements to obtain such approvals, no material consent, approval, order, or authorization of, or declaration, filing, or registration with, any court or other Governmental Entity or of any third party is required to be obtained or made by Seller in connection with the execution, delivery, or performance by Seller of this Agreement, the Assignment, each other agreement, instrument, or document executed or to be executed by Seller in connection with the transactions contemplated hereby to which they are a party or the consummation by them of the transactions contemplated hereby or thereby.

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 Seller or the Properties (including any Proceedings pending or threatened (i) challenging or pertaining to Seller’s title to any of the Properties, (ii) alleging the violation of any Applicable Law by Seller with respect to its ownership or operation of any of the Properties, or (iii) affecting the execution and delivery of this Agreement by Seller or the consummation of the transactions contemplated hereby by Seller.

Section 4.7.                                  Contracts .

Section 4.7 of Sellers Disclosure Schedule identifies and lists all Material Contracts.  To Sellers’ Knowledge, none of the Sellers is in material breach of or material default under any Material Contract except as disclosed on Section 4.7 of the Sellers Disclosure Schedule.  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 hedges, futures, options, swaps or other derivatives with respect to the sale of production that will be binding on Sellers (or Buyer as Sellers’ transferee) or the Properties after Closing.  To Sellers’ Knowledge, the Records include a true and complete copy of each of the Material Contracts.  No notice of default or breach has been received or delivered by Seller under any Material Contract, the resolution of which is currently outstanding, and no currently effective notices have been received by Seller of the exercise of any premature termination, price redetermination, market-out or curtailment of any Material Contract.

Section 4.8.                                  Compliance with Laws .

The ownership, use, and operation of the Oil and Gas Properties and the Surface Contracts by Seller and its respective Affiliates have been in compliance in all material respects with all Applicable Laws.  

Section 4.9.                                  Taxes .

(a)           Except as set forth in Section 4.9 of the Sellers Disclosure Schedule and excluding gross production taxes withheld and remitted by first purchasers or other Persons, all ad valorem (but excluding ad valorem taxes pertaining to non-producing leases) 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, but excluding gross production taxes withheld and remitted by first purchasers or other Persons, (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 Properties or Sellers with respect to the Properties by any taxing authority.

(d)           None of the Properties were 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 4.10.                                  Net Revenue Interest in Leases .

Section 4.11.                                  Leases .

Except as set forth in Section 4.11 of Sellers Disclosure Schedule, (i) each of the Subject Leases identified at Exhibit “A” is either in its stated primary term or held by production if beyond its stated primary term, and (ii) Seller has complied in all material respects with its obligations under those Subject Leases.

Section 4.12.                                 Prepayments; Imbalances

Other than royalties, overrides or similar arrangements reflected in Exhibit A, none of the Oil and Gas Properties are subject to any outstanding obligations for the future delivery of any of the Hydrocarbons attributable or allocable to any of the Subject Leases as a result or on account of any deficiency payments, prepayment, advance payment, take-or-pay payment or similar payment heretofore received by Seller and, to Sellers’ Knowledge, no payments for production of Hydrocarbons attributable to any Seller’s interest in the Subject Leases have been received which are subject to refund or recoupment out of future production.  Except as identified in Section 4.12 of Sellers Disclosure Schedule, there are no Imbalances.

Section 4.13.                                  Current Commitments .

Section 4.13 of the Sellers Disclosure Schedule contains a true and complete list of (i) all currently outstanding or pending proposals received or made by Seller with respect to the drilling of any well (excluding the Existing Deep Wells) to any of the Deep Zones as of the date of this Agreement and (ii) all authorizations for expenditures received or prepared by Sellers for currently proposed or on-going operations or capital expenditures with respect to any of the Oil and Gas Properties by any Person, including Seller.  Except for (i) the continuing operations conducted at the Oil and Gas Properties in the ordinary course, (ii) operations conducted at the Properties before the date hereof, and (iii) any operation at the Oil and Gas Properties necessary to address an emergency, Seller has not become legally obligated as of the date hereof to expend in excess of Twenty-Five Thousand Dollars ($25,000.00) (net to Seller’s interest in the pertinent Oil and Gas Properties) in connection with any operation conducted after the Effective Date with respect to the Oil and Gas Properties other than the commitments disclosed on Section 4.13.

Section 4.14.                                  Environmental Matters .

(a)           To Sellers’ Knowledge, the Properties and any operations conducted with respect to the Properties are and, within the time periods specified under all applicable

statutes of limitations, have been in compliance in all material respects with all applicable Environmental Laws and are not subject to any material Environmental Liabilities.

(b)           Sellers have made available to Buyer complete and correct copies of all environmental site assessment reports, studies, analyses, and correspondence concerning alleged environmental matters (including any alleged non-compliance with any Environmental Law, any alleged exposure to Hazardous Materials, or any release, threatened release, or disposal of Hazardous Materials) that are in the possession or control of Sellers or any Affiliate of Sellers and relate to the ownership or operation of the Properties.

Section 4.15.                                  Fees and Commissions .

Buyer will have no responsibility for payment of any broker’s, finder’s, financial advisors’ or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon any arrangements made by or on behalf of Sellers.

Section 4.16.                                  Preferential Rights and Consents

Section 4.17.                                  Disclaimer of Warranties .

Other than those expressly set out in this Article IV , and the special warranty of title included in the Assignment, Sellers hereby expressly disclaim any and all representations or warranties with respect to the Properties or the transactions contemplated hereby.  In addition, each Seller’s liability under the special warranty of title shall be limited to those Properties specifically sold or conveyed or purported to be sold or conveyed by that Seller.  As respects any representation or warranty (express, implied, under Law or otherwise), Buyer agrees that the Properties are being sold by each Seller “where is” and “as is”, with all faults, subject only to the representations and warranties in this Article IV , and the special warranty of title contained in the Assignment.  Specifically as a part of (but not in limitation of) the foregoing, except as otherwise provided in this Article IV and the special warranty of title contained in the Assignment, 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) 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) 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 ARE PROVIDED TO BUYER AS A CONVENIENCE AND BUYER’S RELIANCE ON OR USE OF THE SAME IS AT BUYER’S SOLE RISK, EXCEPT SELLERS HEREBY REPRESENT TO BUYER THAT NO SELLER HAS FURNISHED OR WILL INTENTIONALLY FURNISH BUYER WITH ANY RECORDS, INFORMATION OR DATA WITH THE INTENT TO MISLEAD BUYER IN CONNECTION WITH BUYER’S DILIGENCE OF THE OIL AND GAS PROPERTIES.

Section 4.18.                                  Disclosures .

The matters set forth on the Sellers Disclosure Schedule are not necessarily matters that Sellers are required to disclose or matters 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 limited partnership, duly organized, legally existing and in good standing under the Applicable Laws of the State of Oklahoma, and is qualified to do business and in good standing in Oklahoma.  Buyer is also qualified to own and operate oil and gas properties with all applicable Governmental Entities having jurisdiction over the 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 the power and authority to own and operate oil and gas properties, 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 material 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, prevent or impair the sale of the Properties to Buyer or the delivery of the Adjusted Purchase Price to Sellers.

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, prevent or impair the sale of the Properties to Buyer or the delivery of the Adjusted Purchase Price to Sellers.

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 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.  At Closing, Buyer will have had access, if allowed and as facilitated and directed by Sellers, to the Properties, the pertinent officers and consultants of Sellers, and the books, records, and files of Sellers relating to the Properties.  In making the decision to enter into this Agreement Buyer has relied, and in making its decision to consummate the transactions contemplated hereby, Buyer will rely on its own independent due diligence investigation of the Properties and has been and will be advised by and has relied and will rely solely on the terms and conditions of this Agreement, and all documents to be delivered by Sellers pursuant to Sections   9.1(c) , (e) , (f) , (g) , and (h) and 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 the Closing 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 (which shall include Sellers’ normal business hours) and in a manner so as to not interfere in any material respect with the normal business operations of the Sellers to the Properties and to any well, production, lease, contract, or other title files, and other files of Sellers pertaining to the ownership or operation of the Properties for Buyer’s and its attorneys and other authorized representatives’ inspection and review, and Sellers will use their Reasonable Best Efforts to arrange for Buyer, and its attorneys and other representatives, to have reasonable access to any such files in the office of Sellers.

Section 6.2.                                  Conduct of Operations .

From the date hereof until the Closing Date, unless otherwise agreed in writing by Buyer, Sellers will:

(a)           comply in all material respects with all Applicable Laws and Environmental Laws pertaining to the Properties and the terms and conditions of the Material Contracts.

(b)           notify Buyer of the proposed commencement of the drilling of any oil or gas well having a target deep in any of the Deep Zones promptly after Sellers have received notice of that proposal;

(c)           pay all Taxes and assessments with respect to the Properties that become due and payable prior to the Closing Date;

(d)           respond to and consult with Buyer with respect to any reasonable request or inquiry made by Buyer concerning the status of the Oil and Gas Properties or any operations conducted or proposed to be conducted at the Lands; and

Section 6.3.                                  Restrictions on Certain Actions .

From the date hereof until the Closing Date, Sellers will not, without Buyer’s prior 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 Subject 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 Buyer of 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)           act in any manner with respect to the Properties other than in the normal, usual and customary manner, consistent with prior prudent practices (including paying or causing to be paid all associated costs and expenses of owning, operating and using the Properties, including those meant to preserve the Properties intact) and other than in compliance with the Subject Leases and all Applicable Laws;

(e)           make or enter into an agreement, contract or commitment affecting the Deep Rights (other than with respect to an Existing Deep Well;

(f)           make or agree to any material revision, amendment or change to any of the Scheduled Contracts and Permits;

(g)           grant or suffer to exist any Lien upon the Properties (other than Permitted Encumbrances or any Lien which will be released in full at the Closing);

(h)           waive, compromise or settle any material claim or cause of action if such waiver, compromise or settlement would adversely affect the value, use, ownership or operation of any of the Deep Rights in any respect;

(i)           make or incur, or agree to make or incur, any expenditure or series or related expenditures exceeding Twenty-Five Thousand Dollars ($25,000) for which Buyer will be responsible after the Closing under the terms of this Agreement, except any expenditure necessary to maintain the Oil and Gas Properties in accordance with Section 6.3(d) or to address an emergency, or to preserve Sellers interest in the Shallow Zones; or

(j)           release (or permit to terminate), or modify or reduce its rights under, any Subject Lease, or any Material Contract, or modify any existing production sales contracts or enter into any new production sales contracts, except contracts terminable by Sellers with notice of 60 days or less.