EXHIBIT 10.1 ASSET PURCHASE AGREEMENT

                                                                    EXHIBIT 10.1

                          ASSET PURCHASE AGREEMENT

     This Asset Purchase Agreement (this "Agreement") is entered into as of
September 6, 2007, by and between Gateway Offshore Pipeline Company, a Nebraska
corporation ("Buyer"), Gateway Energy Corporation, a Delaware corporation
("Parent"), Gulfshore Midstream Pipelines, Ltd., a Texas limited partnership
("Seller"), and Gulfshore Midstream, LLC (the "General Partner"), Trailblazer
Partners, Ltd. and Bayou Trail Enterprises, Ltd. (collectively, with the General
Partner, the "Partners").

                                    Recitals:

     WHEREAS, the Partners own all of the general partner and limited partner
interests of Seller and Seller desires to sell the Assets (as hereinafter
defined) of Seller to Buyer, and Buyer desires to acquire from Seller the Assets
for the consideration and on the terms set forth in this Agreement;

     NOW, THEREFORE, in consideration of the mutual covenants, undertakings,
representations and warranties set forth herein, the Parties agree as follows:

                                    ARTICLE 1
                                   Definitions

     For purposes of this Agreement, the terms set forth below shall have the
following meanings:

     1.1 "Action" means any action, suit, arbitration, proceeding or
investigation by or before any Governmental Authority or arbitrator.

     1.2 "Adjustment Period" shall have the meaning set forth on Section 2.3.1.

     1.3 "Affiliate" means:

          1.3.1 with respect to any Person which is a business entity:

                    (a) any Person owning or holding, directly or indirectly,
          10% or more of the equity capital in such business entity, or

                    (b) any Person in which such business entity owns or holds,
          directly or indirectly, 10% or more of the equity capital;

          1.3.2 with respect to any Person which is a trust or similar entity:

                     (a) any trustee or other fiduciary of such trust or similar
          entity; or

                    (b) any direct or indirect beneficiary of such trust or
          similar entity;

          1.3.3 with respect to any natural Person, any spouse, parent, child,
grandchild grandparent, brother or sister of such Person.

<PAGE>


     1.4 "Agreement" means this Agreement, together with the Schedules and
Exhibits hereto.

     1.5 "Assets" means all of the assets to be sold to Buyer pursuant to
Section 2.1.

     1.6 "Assumed Contracts" shall have the meaning set forth in Section 2.1.4.

     1.7 "Assumed Liabilities" shall have the meaning set forth in Section 2.4.

     1.8 ."Basket" shall have the meaning set forth in Section 10.4.1.

     1.9 "Borrowed Money Indebtedness" means without duplication (i) all
obligations of Seller for borrowed money or funded indebtedness or issued in
substitution for or exchange for borrowed money or funded indebtedness, (ii) any
indebtedness evidenced by any note, bond, debenture or other similar instrument,
(iii) all obligations of Seller issued or assumed as the deferred purchase price
of property (but excluding trade accounts payable and other accrued current
liabilities arising in the ordinary course of business consistent with past
practices), (iv) all obligations of Seller for the reimbursement of any obligor
on any letter of credit, banker's acceptance or similar credit transaction that
has been drawn upon; (v) any indebtedness guaranteed by Seller, (vi) any
obligations under, or associated with, any hedging, derivative or swap
agreements, and (vii) all unpaid interest, premiums, penalties, redemption costs
and other charges in respect of the prepayment of any obligations of the type
described in each of the foregoing in clauses (i) through (vi) in connection
with the consummation of the transaction contemplated by this Agreement.

     1.10 "Business" means the business related to the Assets as conducted by
Seller prior to the Closing.

     1.11 "Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in Houston, Texas are authorized or required to
close.

     1.12 "Buyer" shall have the meaning set forth in the first paragraph of
this Agreement.

     1.13 "Buyer Indemnitees" shall have the meaning set forth in Section 10.1.

     1.14 "Charter Documents" means, (a) with respect to any corporation, the
articles or certificate of incorporation of the entity, and its by-laws, and any
amendments to such documents, (b) with respect to a limited partnership, the
articles or certificate of organization or formation of the entity, and its
partnership agreement, and (c) with respect to a limited liability company, the
articles or certificate of organization or formation of the entity, and its
operating or limited liability company agreement.

     1.15 "Closing" means the consummation of the transactions contemplated
hereby.

     1.16 "Closing Date" shall have the meaning set forth in Section 2.6.1.

     1.17 "Closing Payment Amount" shall have the meaning set forth in Section
2.6.3.

<PAGE>


     1.18 "Closing Statement" shall have the meaning set forth in Section 2.3.3.

     1.19 "Code" shall mean the Internal Revenue Code of 1986, as amended, or
any successor law, and regulations issued thereunder.

     1.20 "Common Stock" shall have the meaning set forth in Section 2.3.1.

     1.21 "Consent" shall have the meaning set forth in Section 3.8.

     1.22 "Contracts" means all contracts, agreements, undertakings,
instruments, leases, licenses, commitments and arrangements, except Permits.

     1.23 "Conveyance" means a bill of sale, in the form attached hereto as
Exhibit A, together with such deeds, conveyances, certificates of title,
assignments, assurances and other instruments and documents as Buyer may
reasonably request in order to effect the sale, conveyance and transfer of the
Assets from Seller to Buyer, provided that any such instruments or documents of
conveyance and transfer are in form and substance reasonably acceptable to
Seller.

     1.24 "Damages" means all losses, claims, damages, costs, fines, penalties,
obligations, payments and Liabilities (including those arising out of any
Action), together with all reasonable costs and expenses (including reasonable
outside attorneys' fees and reasonable out-of-pocket expenses) incurred in
connection with any of the foregoing. Notwithstanding anything to the contrary
contained in this Agreement, Damages shall not include any exemplary, punitive,
special, indirect, consequential, remote, or speculative damages, including lost
profits.

     1.25 "Dollars" or "$" means lawful currency of the United States.

     1.26 "Easements" means rights-of-way, servitudes, rights of egress and
ingress and other similar rights related to the use or enjoyment of real
property.

     1.27 "Effective Time" shall have the meaning set forth in Section 2.1.

     1.28 Reserved.

     1.29 "Environment" means soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.

     1.30 "Environmental Law" means any Law pertaining to health (with respect
to exposure to Hazardous Materials) or the Environment currently in effect in
any or all jurisdictions in which Seller owns Assets or has owned assets or
conducts or has conducted business, including the Clean Air Act, as amended, the
Comprehensive Environmental, Response, Compensation, and Liability Act of 1980,
as amended, the Federal Water Pollution Control Act, as amended, the Resource
Conservation and Recovery Act of 1976, as amended, the Safe Drinking Water Act,
as amended, the Toxic Substances Control Act, as amended, the Hazardous & Solid
Waste Amendments Act of 1984, as amended, the Superfund Amendments and

                                       3

<PAGE>


Reauthorization Act of 1986, as amended, the Hazardous Materials Transportation
Act, as amended, the Oil Pollution Act of 1990, and any state and local Laws
implementing or comparable to the foregoing federal Laws.

     1.31 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

     1.32 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

     1.33 "Extended Representations" shall have the meaning set forth in Section
10.3.4.

     1.34 "GAAP" means U.S. generally accepted accounting principles at the time
in effect and applied on a basis consistent with prior periods.

     1.35 "Governmental Authority" means any federal, state or local government,
any of its subdivisions, agencies, authorities, commissions, boards or bureaus,
any federal, state or local court or tribunal and any arbitrator or arbitral
tribunal.

     1.36 "Hazardous Materials" means any waste or other substance that is
listed, defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any mixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.

     1.37 "Knowledge" means present, actual and not imputed or constructive
knowledge, without any duty of inquiry. For purposes of Seller's Knowledge, it
shall be the Knowledge of Jerry Verbout and Paul VanderLinden. For purposes of
Buyer's or Parent's Knowledge, it shall be the Knowledge of any officer of the
Buyer or Parent.

     1.38 "Indebtedness" means, (i) Borrowed Money Indebtedness; and (ii) the
amount of any capital lease obligations that would be required to be reflected
as a liability on the balance sheets of Seller.

     1.39 "Indemnitee" shall have the meaning set forth in Section 10.3.1.

     1.40 "Insurance Policies" shall have the meaning set forth in Section 3.16.

     1.41 "Intellectual Property" means all trade names, trademarks, service
marks, patent rights, patent applications, copyrights, know-how, trade secrets,
domain names and other intellectual property rights.

     1.42 "Law" means any applicable law, statute, or ordinance of any nation or
state, including the United States of America, and any political subdivision
thereof, including any state of the United States of America, any regulation,
policy, protocol, proclamation, or executive order promulgated by any
Governmental Authority, any rule or regulation of any self-regulator
organization such as a securities exchange or public utilities commission, or
any applicable judgment, order, decree, or decision of any court or other
Governmental Authority having the effect of law in any such jurisdiction.

                                        4

<PAGE>


     1.43 "Lease" means any lease or sublease of real or personal property.

     1.44 "Leased Personal Property" means all right, title and interest of
Seller, as lessee, in and to any personal property leased to Seller.

     1.45 "Liability" means any Indebtedness, obligation, duty or liability of
any nature (including any undisclosed, unfixed, unliquidated, unsecured,
unmatured, unaccrued, unasserted, contingent, conditional, inchoate, implied,
vicarious, joint, several or secondary liability) whether known or unknown,
whenever or wherever arising, regardless of whether such debt, obligation, duty
or liability would be required to be disclosed on a balance sheet.

     1.46 "Lien" means any lien, mortgage, deed of trust, security interest,
charge, pledge, retention of title agreement, easement, encroachment, condition,
reservation, covenant or other encumbrance affecting title or the use, benefit
or value of the asset in question.

     1.47 "Material Adverse Effect" means any condition, circumstance, event,
change, or effect that (i) when used with respect to Seller or the Assets ,
would reasonably be expected to cause loss or liability in excess of $350,000
with respect to Seller or the Assets after the Closing, or (ii) when used with
respect to the ability of a Person to perform its obligations under this
Agreement, would reasonably be expected to materially and adversely affect such
ability.

     1.48 "Material Contracts" shall have the meaning set forth in Section 3.11.

     1.49 "Material Lease" means a Lease relating to Leased Personal Property
involving a term of more than six (6) months or rental obligations exceeding
$50,000 per annum.

     1.50 "Order" means any order, judgment, injunction, decree, determination
or award of any Governmental Authority.

     1.51 "Party" means each of Seller, the Partners, Buyer and Parent, and
"Parties" means Seller, the Partners, Buyer and Parent, collectively.

     1.52 "Permit" means any permit, license, certificate (including a
certificate of occupancy), registration, authorization or approval issued by a
Governmental Authority.

     1.53 "Permitted Liens" means (a) Liens for Taxes that are not yet due and
payable or that are being contested in good faith by appropriate proceedings and
as to which adequate reserves have been established , consistently applied, and
(b) mechanics' and materialmen's Liens not filed of record and similar charges
not delinquent or that are filed of record but are being contested in good faith
by appropriate proceedings.

     1.54 "Person" means any natural person, corporation, partnership, limited
liability company, trust, unincorporated organization or other entity.

     1.55 "Pipeline" shall have the meaning set forth in Section 2.1.1.

     1.56 "Pledge Agreement" means the Pledge Agreement, by and between Seller
and Buyer in the form attached hereto as Exhibit C.

                                       5

<PAGE>


     1.57 "Purchase Price" shall have the meaning set forth in Section 2.3.1.

     1.58 "Real Property" means the real property owned, leased, or in which
Seller has an interest, together with all buildings and other structures,
facilities or improvements currently or hereafter located thereon, all fixtures,
systems, equipment and items of personal property attached or appurtenant
thereto and all easements, licenses, rights and appurtenances relating to the
foregoing.

     1.59 "Registration Rights Agreement" means the Registration Rights
Agreement, by and between Seller and the Parent in the form attached hereto as
Exhibit B.

     1.60 "Review Period" shall have the meaning set forth in Section 2.6.1.

     1.61 ."Seller" shall have the meaning set forth in the first paragraph of
this Agreement.

     1.62 "Seller Indemnitees" shall have the meaning set forth in Section 10.2.

     1.63 "Tax" or "Taxes" means all income, profits, franchise, gross receipts,
capital, sales, use, withholding, value added, ad valorem, transfer, employment,
social security, disability, occupation, property, severance, production, excise
and other taxes, duties and similar governmental charges and assessments imposed
by or on behalf of any Governmental Authority (including interest and penalties
thereon).

     1.64 "Tax Return" means any return, report, statement, form or other
documentation (including any additional or supporting material and any
amendments or supplements) filed or maintained, or required to be filed or
maintained, with respect to or in connection with the calculation,
determination, assessment or collection of any Taxes.

     1.65 "Third Party Claim" shall have the meaning set forth in Section
10.3.2.

     1.66 "Update" shall have the meaning set forth in Section 5.6.

                                   ARTICLE II
                         Purchase and Sale of Interests

     2.1 Assets to be Sold. Upon the terms and subject to the conditions set
forth in this Agreement, at the Closing, but effective as of August 1, 2007 (the
"Effective Time"), Seller shall sell, convey, assign, transfer and deliver to
Buyer, and Buyer shall purchase and acquire from Seller, free and clear of any
Liens other than Permitted Liens, all of Seller's right, title and interest in
and to the following (but excluding the Excluded Assets):

          2.1.1 all pipeline assets described in Schedule 2.1.1 (the "Pipeline")
     and all rights, title and interest in any easements or Permits related
     thereto; however, Buyer acknowledges that Seller does not own fee title to
     any Real Property relating to the Pipeline and is not including fee title
     to any Real Property as part of the Assets;

                                       6

<PAGE>


          2.1.2 all Tangible Personal Property specifically related to the
     Pipeline, including without limitation, measurement facilities and chemical
     injection equipment;

          2.1.3 all accounts receivable accruing on or after the Effective Time;

          2.1.4 all Material Contracts listed in Schedule 2.1.4 (the "Assumed
     Contracts");

          2.1.5 all Governmental Authorizations and all pending applications
     therefor or renewals thereof, in each case to the extent transferable to
     Buyer, including those listed in Schedule 2.1.5;

          2.1.6 all data and records related to the operations of Seller related
     to the Pipeline, including client and customer lists and records, referral
     sources, research and development reports and records, production reports
     and records, service and warranty records, equipment logs, operating guides
      and manuals, financial and accounting records, oil spill response plans,
     creative materials, advertising materials, promotional materials, studies,
     reports, correspondence and other similar documents and records and other
     records described in Schedule 2.1.6;

          2.1.7 all of the intangible rights and property of Seller relating to
     the Pipeline, including going concern value, goodwill, telephone, telecopy
     and e-mail addresses and listings and those items listed in Schedule 2.1.7;
     however, Buyer acknowledges that no Intellectual Property is being conveyed
     or included as part of the Assets;

          2.1.8 all insurance benefits, including rights and proceeds, arising
     from or relating to the Assets or the Assumed Liabilities on or after the
     Effective Time, unless expended in accordance with this Agreement;

          2.1.9 all claims of Seller against third parties relating to the
     Assets, whether choate or inchoate, known or unknown, contingent or
     noncontingent, arising on or after the Effective Time, including all such
     claims listed in Schedule 2.1.9; and

          2.1.10 all rights of Seller relating to deposits, prepaid expenses,
     bonds, claims for refunds, and rights to offset in respect thereof, to the
     extent that such deposits, expenses, bonds, and claims for refunds were
     paid or made on or after the Effective Time and relate to Assets described
     in Sections 2.1.1 through 2.1.9.

          All of the property and assets to be transferred to Buyer hereunder
are herein referred to collectively as the "Assets."

          Any Liability incurred by the Parties related to the Assets shall be
the responsibility of a Party based upon whether such Liability is a Retained
Liability or an Assumed Liability, as set forth below in Sections 2.4 and 2.5.

     2.2 Excluded Assets. Notwithstanding anything to the contrary contained in
Section 2.1 or elsewhere in this Agreement, the following assets of Seller
(collectively, the "Excluded Assets") are not part of the sale and purchase
contemplated hereunder, are excluded from the Assets and shall remain the
property of Seller after the Closing:

                                       7

<PAGE>


          2.2.1 all cash, cash equivalents and short-term investments;

          2.2.2 all minute books, partnership interest transfer records and
     company seals;

          2.2.3 those rights relating to deposits and claims for refunds and
     rights to offset in respect thereof to the extent arising prior to the
     Effective Time including those listed in Schedule 2.2.3;

          2.2.4 all insurance policies and rights thereunder (except to the
     extent specified above in Section 2.1.8);

          2.2.5 all of the Contracts of the Seller other than the Assumed
     Contracts;

          2.2.6 all personnel records;

          2.2.7 all claims for refund of Taxes and other governmental charges of
     whatever nature;

          2.2.8 all rights in connection with and assets of the Employee Plans;
     and

          2.2.9 all rights of Seller under this Agreement, the Conveyance, and
     the Registration Rights Agreement.

     2.3 Consideration.

          2.3.1 Purchase Price. The consideration for the Assets (the "Purchase
     Price") will be (a) $3,130,00.00 (the "Cash Consideration"), (b) 1,550,000
     shares of common stock, par value $0.25 per share ("Common Stock") of the
     Parent issued to Seller, and (c) the assumption of the Assumed Liabilities.

          2.3.2 Payment of Purchase Price. The Cash Consideration to be paid at
     Closing pursuant to Section 2.3.1 shall be paid by Buyer to Seller at
     Closing by wire transfer of immediately available funds to the bank account
     described in wire transfer instructions provided by Seller to Buyer at
     least two (2) Business Days prior to Closing.

     2.4 Assumed Liabilities. On the Closing Date, but effective as of the
Effective Time, Buyer and Parent shall assume and agree to discharge and bear
sole responsibility for the following Liabilities relating to the Assets (the
"Assumed Liabilities"):

          2.4.1 any trade account payable (other than a trade account payable to
     any Partner or a Affiliate of a Partner) incurred by Seller in the ordinary
     course of business for services or goods received during the Adjustment
     Period;

          2.4.2 any Liability arising after the Effective Time under the Assumed
     Contracts which shall include any obligations to be performed after the
     Closing Date (other than any Liability relating to a breach that occurred
     prior to the Effective Time);

          2.4.3 any Liability of Seller described in Schedule 2.4.3; and

                                       8

<PAGE>


          2.4.4 in recognition that the conveyance of the Assets is on an
     "as-is, where-is" basis, any other Liability relating to the physical
     condition of the Assets and their continued use or abandonment, including,
     without limitation, any obligations with respect to repair, maintenance,
     abandonment, removal and operation related to the post-Effective Time use
     of the Assets, and any other post-Effective Time use of the Assets.

     2.5 Retained Liabilities. The Retained Liabilities shall remain the sole
responsibility of and shall be retained, paid, performed and discharged solely
by Seller. "Retained Liabilities" shall mean every liability of the Seller other
than Assumed Liabilities, including without limitation:

          2.5.1 any trade account payable incurred by Seller in the ordinary
     course of business for services or goods received prior to the Effective
     Time;

          2.5.2 any Liability for a breach of the Assumed Contracts arising
     before the Effective Time (with the exception of those Liabilities set
     forth in Schedule 2.5.2);

          2.5.3 any Liability for violation of Environmental Laws arising before
     the Effective Time ;

          2.5.4 any Liability for Taxes (excluding transfer Taxes) due before
     the Effective Time, but only for an amount as prorated between the Parties
     to take into account the portion of any annual tax related to the time
     period prior to the Effective Time;

          2.5.5 any Liability as described in Schedule 2.5.5.

     2.6 Closing.

          2.6.1 Time and Place. On the terms and subject to the conditions of
     this Agreement, the Closing shall take place at such location or by such
     means as the Parties may hereafter agree at 10:00, Central Time, five (5)
     days after all of the conditions to Closing have been first satisfied (or
     if such a date falls on a weekend or a holiday recognized by the state
     courts of Harris County, Texas, the first business day thereafter), or such
     other date as the Parties may agree in writing (the "Closing Date").

          2.6.2 Deliveries by Seller. At the Closing, Seller shall deliver to
     Buyer the following:

               (a) the Conveyance, in sufficient duplicate originals to allow
          recording in all appropriate jurisdictions and offices, duly executed
          and acknowledged/notarized by Seller;

               (b) to the extent any of the Assets are burdened by Liens or
          Security Interests, executed and acknowledged/notarized originals of a
           Partial Release of Liens and Security Interests, or similar
          instruments, in a form reasonably satisfactory to Purchaser, releasing
          the Assets from any and all mortgages, liens, financing statements or
          other security interests and Seller shall cause such Partial Release
          to be filed in the appropriate offices within 24-hours of the Closing;
          and

                                       9

<PAGE>


               (c) an executed statement described in Treasury Regulation
          1.1445-2(b)(2) certifying that Seller is not a foreign person within
          the meaning of the Code.

               (d) the recorded Charter Documents of Seller, certified by the
          Secretary of State of the State of Texas dated within ten (10)
          Business Days of the Closing Date.


               (e) A certificate of the Secretary or other authorized
          representative of General Partner of Seller dated the Closing Date
          certifying (i) the adoption of resolutions of the Managers of the
          General Partner authorizing the transactions contemplated by this
          Agreement, (ii) the incumbency and signatures of those officers of the
          Managers of Seller that executed this Agreement and any documents or
          agreements related to the Closing, and (iii) a true and correct copy
          of the Charter Documents of Seller in effect on the Closing Date, all
          in form and substance reasonably satisfactory to Buyer;

               (f) a certificate of an executive officer of Seller dated the
          Closing Date certifying that the conditions to Buyer's obligation to
          consummate the transactions contemplated by this Agreement as set
          forth in Section 8.1 have been satisfied in all respects;

               (g) the Registration Rights Agreement duly executed by Seller, in
          the form set forth in Exhibit B hereto, and any related documents or
          instruments necessary for the issuance of the Common Stock to Seller;

               (h) the Pledge Agreement duly executed by Seller, in the form set
          forth in Exhibit C hereto; and

               (i) such other documents, instruments and certificates as Buyer
          may reasonably request in connection with the transactions
          contemplated by this Agreement, provided that such documents shall be
          in form and substance acceptable to Seller.

          2.6.3 Deliveries by Buyer. At the Closing, Buyer shall deliver to
     Seller the following:

               (a) the payment described in Section 2.3.2;

               (b) a Certificate of Good Standing of Buyer dated within ten (10)
          Business Days of the Closing Date issued by the Secretary of State of
          the State of Nebraska;

               (c) a Certificate of Good Standing of Parent dated within ten
          (10) Business Days of the Closing Date issued by the Secretary of
          State of the State of Delaware;

                                       10

<PAGE>


               (d) a certificate of the Secretary of Buyer dated the Closing
          Date certifying (i) the adoption of resolutions of the Board of
          Directors of Buyer authorizing the transactions contemplated by this
          Agreement, (ii) the incumbency and signatures of those officers of
          Buyer that executed this Agreement and any documents or agreements
          related to the Closing, and (iii) a true and correct copy of the
          Charter Documents of Buyer in effect on the Closing Date, all in form
          and substance reasonably satisfactory to Seller;

               (e) a certificate of the Secretary of Parent dated the Closing
          Date certifying (i) the adoption of resolutions of the Board of
          Directors of Parent authorizing the transactions contemplated by this
          Agreement, (ii) the incumbency and signatures of those officers of
          Parent that executed this Agreement and any documents or agreements
          related to the Closing, and (iii) a true and correct copy of the
          Charter Documents of Parent in effect on the Closing Date, all in form
          and substance reasonably satisfactory to Seller;

               (f) A certificate of an executive officer of Buyer dated the
          Closing Date certifying that the conditions to Seller's obligations to
          consummate the transactions contemplated by this Agreement set forth
          in Section 8.2 have been satisfied;

               (g) the Registration Rights Agreement duly executed by Parent and
          Buyer, in the form set forth in Exhibit B hereto, and any related
          documents or instruments necessary for the issuance of the Common
          Stock to Seller including amendments which may be required to Buyer's
          Charter Documents (if any);

               (h) the Pledge Agreement duly executed by Buyer, in the form set
          forth in Exhibit C hereto; and

               (i) Such other documents, instruments and certificates as Seller
           may reasonably request in connection with the transactions
          contemplated by this Agreement provided that such documents shall be
          in form and substance acceptable to Buyer.

     2.7 Expenses. Seller and Buyer shall each pay their respective expenses
incurred in connection with the negotiation, execution, closing, and performance
of this Agreement, including without limitation, all legal fees and expenses.
Without limitation of the foregoing, Buyer shall be responsible for and pay all
sales, transfer, deed, stamp, notary public and other similar taxes, duties and
transfer fees applicable to the transactions contemplated by this Agreement
(other than stock transfer taxes), including fees to record transfer documents
and all costs, expenses and fees related to acquiring Consents.

     2.8 Allocation of Purchase Price. Seller and Buyer agree that the Purchase
Price and the Liabilities of Seller (plus other relevant items) will be
allocated to the Assets of Seller for Tax purposes in a manner mutually agreed
upon by the Parties. Seller and Buyer will file all Tax Returns (including
amended returns and claims for refund) and information reports in a manner
consistent with such allocation.

                                       11

<PAGE>


     2.9 Casualty Loss During the Adjustment Period. The Parties agree that
Section 5.3(e), below, governs their rights in the event of a casualty loss
occurring during the Adjustment Period.

                                  ARTICLE III
        Representations and Warranties of Seller and the General Partner

     Seller and the General Partner, jointly and severally, make the following
representations and warranties to Buyer and Parent:

     3.1 Corporate Organization. Seller is a limited partnership duly organized,
validly existing, under the laws of the State of Texas. Seller has all
partnership power needed to own or lease and operate the Assets and to conduct
its business as now conducted.

     3.2 Due Qualification. Seller is duly qualified to do business under the
laws of each jurisdiction in which the nature of its Business or Assets makes
such qualification necessary.

     3.3 Partnership Documentation. Copies of the Charter Documents that have
been delivered to Buyer are complete and correct. The partnership interest
transfer records of Seller are set forth in the limited partnership agreement.
Other than as set forth in such records, no interest in Seller has been issued,
sold or transferred.

     3.4 Capitalization. The Partners are and will be on the Closing Date the
record and beneficial owners and holders of all of the partnership interests of
Seller, free and clear of all Liens. There are no Contracts relating to the
issuance, sale or transfer of any partnership interests of Seller.

     3.5 Authorization; Execution and Validity. The execution, delivery and
performance by Seller of this Agreement and the consummation by Seller of the
transactions contemplated hereby to be consummated by it have been duly
authorized by all necessary partnership action. This Agreement has been duly and
validly executed and delivered by Seller and the Partners, constitutes a valid
and binding obligation of Seller and the Partners and is enforceable against
Seller and the Partners in accordance with its terms, except to the extent that
the enforcement hereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar Laws now or hereafter in effect
relating to creditors' rights generally, and (ii) general principles of equity
regardless of whether enforceability is considered in a proceeding in equity or
at law. At or prior to Closing, Seller shall deliver to Buyer a certificate of
Seller certifying that a resolution has been adopted by the managers of the
General Partner of Seller authorizing the transactions contemplated by this
Agreement.

     3.6 Financial Statements; Books and Records; Absence of Undisclosed
Liabilities.

          3.6.1 Financial Statements. Seller has delivered to Buyer the account
     receivable records, meter readings, account payable records, and any
     related working documents requested by Buyer that Seller maintains relating
     to Seller's normal practice of accounting for the Assets. Such documents
     fairly present the financial condition and results of operations of the
     Seller as of the respective dates of and for the periods referred to in
     such documents. The Buyer recognizes that Seller does not maintain audited
     financial statements.

                                       12

<PAGE>


          3.6.2 Books and Records. To Seller's Knowledge, the books of account
     and other financial records of Seller which have been made available to
     Buyer, are complete and correct in all material respects and represent
     actual, bona fide transactions and have been maintained in accordance with
     sound business practices.

     3.7 Absence of Certain Changes. Except as set forth on Schedule 3.7, during
the sixty (60) days preceding the date of the Effective Time Seller has
conducted its Business in the ordinary course consistent with past practices and
there has been no material (a) event or occurrence that has had or is reasonably
expected to have a Material Adverse Effect on the Assets, (b) amendment or
termination of any Material Contract, Material Lease or Permit relating to the
Assets, (c) destruction, damage or other loss to any of the Assets of Seller
that is not covered by insurance and that is reasonably likely to result in a
material interruption of Seller's Business, (d) sale, lease, or other
disposition of any of the Assets of Seller other than Assets sold, leased or
otherwise disposed of in the ordinary course of business , (e) purchase or lease
of any Assets of Seller, other than Assets purchased or leased in the ordinary
course of business, or (g) agreement or commitment by Seller to take any action
described in this Section 3.7.

     3.8 No Conflict; Seller Consents. Except as set forth on Schedule 3.8, the
execution, delivery and performance of this Agreement by each of Seller and the
Partners will not to their Knowledge (a) violate any Law to which either Seller
or Partners are subject, (b) violate any Charter Document, (c) violate any Order
to which either Seller or Partners are a party or by which either Seller or
Partners are bound, (d) require any consent, approval, authorization, waiver or
notification from any Person, including any Governmental Authority, from any
Person, including any Governmental Authority (other than consents related to the
assignment of specific contracts, permits or licenses, collectively, a
"Consent," which are addressed herein in section 5.1), (e) breach in any
material respect any contract, agreement, or Permit of Seller, or (f) result in
the creation of any Lien on any of the Assets of Seller.

                                       13

<PAGE>


     3.9 Easements. Each Easement is valid, existing and enforceable; there has
not been, and there currently is not any event (with or without notice, lapse of
time or both with respect thereto) that would result in the termination,
impairment or limitation of any Easement; no future payments of any kind are due
under any Easement in order to maintain its existence other than annual lease
payments to the Mineral Management Service of the Department of Interior or
other similar payments disclosed by Seller to Buyer; each Easement is perpetual
or continues for a term of years; and the continuation, validity and
enforceability of each Easement will not be disturbed by the transaction
contemplated herein. Notwithstanding the above, Buyer acknowledges that the
Mineral Management Service and other fee title owners of Real Property
underlying the Easements may need to provide a Consent to the assignment of the
Easements. The Parties' obligations with respect to obtaining such Consents are
governed by those portions of Article V discussing Consents.

     3.10 Personal Property.

          3.10.1 Owned Personal Property. Subject to Permitted Liens, Seller has
     good and marketable title to all personal property comprising a portion of
     the Assets owned by Seller, other than (i) property that has been disposed
     of in the ordinary course of business, (ii) property that has been disposed
     of in transactions disclosed to Buyer prior to the date hereof, and (iii)
     Leased Personal Property.

          3.10.2 Leased Personal Property. Schedule 3.10.2 lists all of Seller's
     Material Leases of Personal Property that pertain to personal property
     comprising a portion of the Assets. All such Material Leases of Leased
     Personal Property are valid and binding and in full force and effect. There
     has been no breach of any such Material Lease by Seller or, to Seller's
     Knowledge, any other Person, which breach has not been cured or waived.

     3.11 Contracts. To Seller's Knowledge, Schedule 3.11 lists all written
Contracts and describes in reasonable detail all unwritten Contracts to which
the Assets of Seller are subject, meeting any of the following descriptions
("Material Contracts"):

          3.11.1 Contracts that could, by their terms, require payment or
     payments by or to Seller totaling more than Ten Thousand Dollars
     ($10,000.00) during any twelve (12) month period, and that relate to the
     Assets;

          3.11.2 Contracts relating to Borrowed Money Indebtedness or the
     creation of any guarantee or security interest affecting the Assets or
     contracts involve sums in excess of $50,000 which include indemnity
     obligations;

          3.11.3 Contracts entered into by Seller other than in the ordinary
     course of its business and that relate to the Assets;

          3.11.4 Contracts that materially limit the freedom of Seller to
     compete in any line of business or to conduct business in any geographic
     location, and that relate to the Assets;

                                       14

<PAGE>


          3.11.5 Contracts relating to the purchase, sale or combination of any
     business or line of business (by asset transfer, equity transfer, merger,
     consolidation or otherwise), and that relate to the Assets;

          3.11.6 Contracts relat