SUBSIDIARY GUARANTEE

Exhibit 10(v)-7

SUBSIDIARY GUARANTEE

     THIS SUBSIDIARY GUARANTEE (this “Guarantee”) made and delivered as of November 28, 2007, by each of the Subsidiaries of EnergySouth, Inc., a Delaware corporation (“Parent Borrower”), identified on the signature pages of this Guarantee (each a “Guarantor” and collectively the “Guarantors”) in favor of (i) each of the lenders from time to time parties to the Credit Agreement described below (each a “Lender” and collectively the “Lenders”), (ii) Regions Bank, in its capacities as Administrative Agent, Issuing Bank, and Swingline Lender under the terms of the Credit Agreement and the other Loan Documents referred to in the Credit Agreement (in such capacities, the “Administrative Agent”, “Issuing Bank” and “Swingline Lender”, respectively), and (iii) such of the Lenders and their respective Affiliates that are other Secured Parties as provided in the Credit Agreement (the Lenders, the Administrative Agent, the Issuing Bank, the Swingline Lender, and such other Secured Parties collectively referred to herein as the “Guaranteed Parties”).

W I T N E S S E T H:

     WHEREAS, Bay Gas Storage Company, Ltd., an Alabama limited partnership (“Subsidiary Borrower” and, together with Parent Borrower, the “Borrowers”), Parent Borrower, the Lenders, the Administrative Agent, the Issuing Bank, and the Swingline Lender are parties to a certain Amended and Restated Credit Agreement dated as of November 28, 2007 (as the same may be further amended, restated, and supplemented from time to time, the “Credit Agreement”; capitalized terms used in this Guarantee that are defined in the Credit Agreement are used herein with the respective meanings given to such capitalized terms in the Credit Agreement);

     WHEREAS, the Credit Agreement provides for the issuance of the Bay Gas LC for the account of Subsidiary Borrower and the making of Bay Gas Revolving Loans to the Subsidiary Borrower;

     WHEREAS, it is a condition to the ESI Lenders’ obligation to make ESI Revolving Loans and Swingline Loans to Parent Borrower, and to issue Letters of Credit for the account of Parent Borrower, as provided in the Credit Agreement, that each Guarantor, as a Subsidiary, unconditionally guarantee the payment of (i) all ESI Revolving Loans and Swingline Loans to Parent Borrower, (ii) all obligations of Parent Borrower to reimburse the Issuing Bank in respect of LC Disbursements made under the ESI LCs, and (iii) all other Obligations of Parent Borrower and all Subsidiaries, including without limitation, all payments, obligations and liabilities in respect of Hedging Obligations and Treasury Management Obligations owing to any Lenders or their respective Affiliates, as provided in the Credit Agreement (the ESI Revolving Loans and Swingline Loans to Parent Borrower, ESI LC reimbursement obligations of Parent Borrower, and such other Obligations of Parent Borrower and the Subsidiaries being herein collectively referred to as the “Parent Guaranteed Obligations”; the term “Parent Guaranteed Obligations” to include, without limitation (x) all principal and interest due with respect to all ESI Revolving Loans and the Swingline Loans to Parent Borrower outstanding under the terms

of the Credit Agreement, all interest and fees accruing on outstanding ESI LCs and unpaid ESI LC reimbursement obligations, and all payments due from, and all interest and fees payable by, any Subsidiaries in respect of Hedging Obligations and Treasury Management Obligations owing to any Lenders or their respective Affiliates, including without limitation, all interest and fees accruing or that would have accrued after the filing of a petition in bankruptcy or other insolvency proceeding (whether or not such claim for interest is allowed or allowable in such proceeding), (y) all commitment fees, Letter of Credit fees, and all other fees, expenses, and amounts otherwise payable by Parent Borrower or any Subsidiaries for reimbursement or indemnification under the terms of the Credit Agreement, any other Loan Document, and any other document evidencing or governing such Hedging Obligations and Treasury Management Obligations, and (z) all renewals, extensions, modifications, and refinancings (in whole or in part) of any of the amounts referred to above);

     WHEREAS, it is a condition to the Issuing Bank’s obligation to issue the Bay Gas LC for the account of Subsidiary Borrower, and to the Bay Gas Lenders’ obligations to make Bay Gas Revolving Loans to the Subsidiary Borrower, as provided in the Credit Agreement, that each Guarantor, as a Subsidiary, unconditionally guarantee the payment of (i) all LC Disbursements made in respect of the Bay Gas LC, (ii) all Bay Gas Revolving Loans, and (iii) all other Obligations of Subsidiary Borrower, including without limitation, all payments, obligations and liabilities in respect of Hedging Obligations and Treasury Management Obligations owing by Subsidiary Borrower to any Lenders or their respective Affiliates, as provided in the Loan Documents (the LC Disbursements made in respect of the Bay Gas LC, the Bay Gas Revolving Loans, and such other Obligations of Subsidiary Borrower being herein collectively referred to as the “Subsidiary Borrower Guaranteed Obligations”; the term “Subsidiary Borrower Guaranteed Obligations” to include, without limitation (x) all principal and interest due with respect to all LC Disbursements made in respect of the Bay Gas LC, all Bay Gas Revolving Loans, and all payments due from, and all interest and fees payable by, Subsidiary Borrower in respect of the Bay Gas LC and all Hedging Obligations and Treasury Management Obligations owing to any Lenders or their respective Affiliates, including, without limitation, all interest and fees accruing or that would have accrued after the filing of a petition in bankruptcy or other insolvency proceeding (whether or not such claim for interest is allowed or allowable in such proceeding), (y) all commitment fees and other fees, expenses and amounts otherwise payable by Subsidiary Borrower for reimbursement or indemnification under the terms of the Credit Agreement, the Bay Gas LC, any other Loan Document, and any other document evidencing or governing such Hedging Obligations and Treasury Management Obligations, and (z) all renewals, extensions, modifications, and refinancings (in whole or in part) of any of the amounts referred to above); and

     WHEREAS, the making of the ESI Revolving Loans and Swingline Loans to Parent Borrower, the issuance of the ESI LCs for the account of Parent Borrower, the issuance of the Bay Gas LC for the account of Subsidiary Borrower, and the making of the Bay Gas Revolving Loans to the Subsidiary Borrower, will result in direct and substantial benefits to each Guarantor;

     NOW, THEREFORE, in order to induce the Guaranteed Parties to make the Loans and otherwise to extend and continue to extend credit to Borrowers hereafter, and in

consideration of $10.00 and other good and valuable consideration received by each Guarantor, each Guarantor hereby declares and agrees:

     1. Each Guarantor hereby unconditionally and irrevocably guarantees to the Guaranteed Parties, and any transferee of any of the Parent Guaranteed Obligations, jointly and severally, the full and prompt payment when due of all Parent Guaranteed Obligations and all costs, charges and expenses (including reasonable attorneys’ fees) incurred or sustained by the Guaranteed Parties in enforcing the obligations of such Guarantor hereunder. Each Guarantor hereby unconditionally and irrevocably guarantees to the Guaranteed Parties, and any transferee of any of the Subsidiary Borrower Guaranteed Obligations, jointly and severally, the full and prompt payment when due of all Subsidiary Borrower Guaranteed Obligations and all costs, charges and expenses (including reasonable attorneys’ fees) incurred or sustained by the Guaranteed Parties in enforcing the obligations of such Guarantor hereunder. If any portion of the Parent Guaranteed Obligations or the Subsidiary Borrower Guaranteed Obligations is not paid when due, each Guarantor hereby agrees to and will immediately pay same, without resort by the Guaranteed Parties to any other person or party. The obligation of each Guarantor to the Guaranteed Parties hereunder is primary, absolute and unconditional, except as may be specifically set forth herein. Any and all payments by each Guarantor hereunder shall be made free and clear of, and without deduction for, any set-off, counterclaim, recoupment, or withholding so that, in each case, each Guaranteed Party will receive, after giving effect to any Taxes (other than taxes applicable to the Guaranteed Party of the types described in the definition of “Excluded Taxes” as set forth in the Credit Agreement), the full amount that it would otherwise be entitled to receive with respect to the Guaranteed Obligations (but without duplication of amounts for Taxes already included in the Guaranteed Obligations). Each Guarantor acknowledges and agrees that this is a guarantee of payment when due, and not of collection.

     2. This Guarantee is continuing in nature and shall be effective with respect to the full amount outstanding under all Parent Guaranteed Obligations and all Subsidiary Borrower Guaranteed Obligations, now existing or hereafter made or extended, and notwithstanding (i) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or like proceeding relating to any Guarantor or Borrower, or any action taken with respect to this Guarantee by any trustee or receiver, or by any court, in any such proceeding, (ii) any lack of validity or enforceability of the Credit Agreement, the Bay Gas LC or the other Loan Documents, or (iii) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Guarantor. Each Guarantor acknowledges and agrees that the number and amounts of outstanding Parent Guaranteed Obligations and the Subsidiary Borrower Guaranteed Obligations may fluctuate from time to time hereafter, and that Borrowers may make payments to the Guaranteed Parties from time to time hereafter. Each Guarantor expressly agrees that this Guarantee shall continue in full force and effect notwithstanding such fluctuations and payments, and whether or not any Parent Guaranteed Obligations or Subsidiary Borrower Guaranteed Obligations are outstanding at any particular time, until such time as all Parent Guaranteed Obligations and Subsidiary Borrower Guaranteed Obligations have been paid in full and any commitment of the Guaranteed Parties under the Credit Agreement has been terminated.

     3. Each Guarantor hereby waives notice of the Guaranteed Parties’ acceptance of this Guarantee and the creation, extension or renewal of any ESI Revolving Loans, Swingline Loans, ESI LCs, or other Parent Guaranteed Obligations, or the Bay Gas LC or any Bay Gas Revolving Loans or other Subsidiary Borrower Guaranteed Obligations. Each Guarantor hereby consents and agrees that, at any time or times, without notice to or further approval from such Guarantor, and without in any way affecting the obligations of such Guarantor hereunder, the Guaranteed Parties may, with or without consideration (i) release, compromise with, or agree not to sue, in whole or in part, Borrowers or any other obligor, guarantor, endorser or surety on any Parent Guaranteed Obligations or any Subsidiary Borrower Guaranteed Obligations, (ii) renew, extend, accelerate, or increase or decrease the principal amount of any Parent Guaranteed Obligations or any Subsidiary Borrower Guaranteed Obligations, either in whole or in part, (iii) amend, waive, or otherwise modify any of the terms of any Parent Guaranteed Obligations or any Subsidiary Borrower Guaranteed Obligations or of any Security Documents or other undertakings of Borrowers or any other obligor, endorser, guarantor or surety in connection with any Parent Guaranteed Obligations or any Subsidiary Borrower Guaranteed Obligations, and (iv) apply any payment received from Borrowers or from any other obligor, guarantor, endorser or surety on any Parent Guaranteed Obligations or any Subsidiary Borrower Guaranteed Obligations to any of the liabilities of Borrowers or of such other obligor, guarantor, endorser, or surety which the Guaranteed Parties may choose.

     4. Each Guarantor hereby consents and agrees that the Guaranteed Parties may at any time or times, either with or without consideration, surrender, release or receive any property or other collateral of any kind or nature whatsoever held by it or for its account securing any Parent Guaranteed Obligations or any Subsidiary Borrower Guaranteed Obligations, or substitute any collateral so held by the Guaranteed Parties for other collateral of like or different kind, without notice to or further consent from such Guarantor, and such surrender, receipt, release or substitution shall not in any way affect the obligations of such Guarantor hereunder. The Guaranteed Parties shall have full authority to adjust, compromise, and receive less than the amount due upon any such collateral, and may enter into any accord and satisfaction agreement with respect to the same as the Guaranteed Parties may deem advisable without affecting the obligations of such Guarantor hereunder. The Guaranteed Parties shall be under no duty to undertake to collect upon such collateral or any part thereof, and no Guarantor’s obligations hereunder shall be affected by the Guaranteed Parties’ alleged negligence or mistake in judgment in handling, disposing of, obtaining, or failing to collect upon or perfect a security interest in, any such collateral.

     5. Each Guarantor hereby waives presentment, demand, protest, and notice of dishonor of any of the liabilities guaranteed hereby. The Guaranteed Parties shall have no duty or obligation (i) to proceed or exhaust any remedy against either Borrower, any other Guarantor or obligor, guarantor, endorser, or surety on any Parent Guaranteed Obligations or any Subsidiary Borrower Guaranteed Obligations, or any other security held by the Guaranteed Parties for any Parent Guaranteed Obligations or any Subsidiary Borrower Guaranteed Obligations, or (ii) to give any notice whatsoever to either Borrower or any other Guarantor, obligor, guarantor, endorser, or surety on any Parent Guaranteed Obligations or any Subsidiary Borrower Guaranteed Obligations, in any case before bringing suit, exercising rights to any such security or instituting proceedings of any kind against any other Guarantor, either Borrower, or

any of them, and each Guarantor hereby waives any requirement for such actions by the Guaranteed Parties. Upon default by either Borrower and the Guaranteed Parties’ demand to any Guarantor hereunder, such Guarantor shall be held and bound to the Guaranteed Parties directly as principal debtor in respect of the payment of the amounts hereby guaranteed, such liability of such Guarantor being joint and several with Borrowers, each other Guarantor, and all other obligors, guarantors, endorsers and sureties on any Parent Guaranteed Obligations or any Subsidiary Borrower Guaranteed Obligations.

     6. Each Guarantor hereby waives to the fullest extent possible as against Borrowers and their assets, any and all rights, whether at law, in equity, by agreement or otherwise, to subrogation, indemnity, reimbursement, contribution, payment or any other claim, cause of action, right or remedy that would otherwise arise out of any payment by such Guarantor hereunder, notwithstanding the manner or nature of such payment including but not limited to (a) direct payment by such Guarantor, (b) set-off by the Administrative Agent, the Issuing Bank or any Lender against any liability or deposit owed by such entity to such Guarantor, (c) recovery by the Administrative Agent, the Issuing Bank or any Lender against such Guarantor or any property of such Guarantor, as the result of any judgment, judgment lien, or legal process, (d) the application of the proceeds of any disposition of all or any part of the collateral to the repayment or all or any part of the Parent Guaranteed Obligations or Subsidiary Borrower Guaranteed