MEMBERSHIP INTEREST PURCHASE AGREEMENT

Exhibit 10.4

Execution Version

MEMBERSHIP INTEREST PURCHASE AGREEMENT

dated

June 30, 2009

by and between

SANDRIDGE MIDSTREAM, INC. ,
a Texas corporation

as Seller

and

TCW PECOS MIDSTREAM, L.L.C. ,
a Texas limited liability company

as Buyer

TABLE OF CONTENTS

MEMBERSHIP INTEREST PURCHASE AGREEMENT

     This Membership Interest Purchase Agreement (this “ Agreement ”), dated June 30, 2009 (the “ Closing Date ”) is entered into by and between SandRidge Midstream, Inc., a Texas corporation (“ Seller ”), and TCW Pecos Midstream, L.L.C., a Texas limited liability company (“ Buyer ”).

RECITALS

     WHEREAS, (a) Seller has formed, by causing that certain Certificate of Formation, dated as of the Closing Date (the “ Certificate of Formation ”), to be filed with the Secretary of the State of Delaware, Piñon Gathering Company, LLC, a Delaware limited liability company (the “ Company ”); (b) Seller and the Company have executed that certain Limited Liability Company Agreement, dated as of the Closing Date (the “ LLC Agreement ”); and (c) Seller owns all of the issued and outstanding membership interests of the Company (the “ Membership Interests ”);

     WHEREAS, (a) each of SandRidge Exploration and Production, LLC, a Delaware limited liability company (“ SR E&P ”) and SandRidge Energy, Inc., a Delaware corporation (“ SR Energy ”), has transferred, conveyed and assigned to Seller, pursuant to the terms of that certain Assignment, Bill of Sale and Conveyance, dated as of the Closing Date (the “ Intercompany Conveyance ”), each of SR E&P’s and SR Energy’s respective right, title and interest in and to the Assets owned by it on the Closing Date, free and clear of all Liens (other than Permitted Liens); (b) Seller has transferred, conveyed and assigned to the Company, pursuant to the terms of that certain Assignment, Bill of Sale and Conveyance, dated as of the Closing Date (the “ Company Conveyance ” and together with the Intercompany Conveyance, the “ Asset Conveyances ”), all of Seller’s right, title and interest in and to the Assets, free and clear of all Liens (other than Permitted Liens and any encumbrance, mortgage or security interest created in the Company Conveyance); and (c), as a result of the consummation of the transactions described in clauses (a) and (b), the Company owns all of the Assets (as defined below);

     WHEREAS, (a) SR E&P and the Company have entered into that certain Gathering Agreement, dated as of the Closing Date (the “ Gathering Agreement ”), and (b) Seller and the Company have entered into that certain Operations and Maintenance Agreement, dated as of the Closing Date (the “ O&M Agreement ”); and

     WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, all of the Membership Interests, subject to the terms and conditions described in this Agreement.

     NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller agree as follows:

ARTICLE 1
DEFINITIONS AND RULES OF CONSTRUCTION

          Section 1.1 Definitions . As used herein, the following terms shall have the following meanings:

     “ Affiliate ” means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person through one or more intermediaries or otherwise. For the purposes of this definition, “control” means, where used with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the

management and policies of such Person, whether through the ownership of voting securities or interests, by Contract or otherwise, and the terms “controlling” and “controlled” have correlative meanings.

     “ Agreement ” has the meaning provided such term in the Preamble.

     “ Asset Conveyances ” has the meaning provided such term in the Recitals.

     “ Assets ” has the meaning provided such term in Section 2.2 .

     “ Assignment of Membership Interests ” has the meaning provided such term in Section 7.1(a)(i) .

     “ Business Day ” means any day that is not a Saturday, Sunday or legal holiday in the State of Texas and that is not otherwise a federal holiday in the United States.

     “ Buyer ” has the meaning provided such term in the Preamble.

     “ Buyer Approvals ” has the meaning provided such term in Section 5.4(a) .

     “ Buyer Indemnified Parties ” has the meaning provided such term in Section 8.2(a) .

     “ CERCLA ” means the Federal Comprehensive Environmental Response, Compensation, and Liability Act, as amended, 42 U.S.C. § 9601 et seq .

     “ Certificate of Formation ” has the meaning provided such term in the Recitals.

     “ Certification of Non-Foreign Status ” has the meaning provided such term in Section 7.1(a)(iii) .

     “ Claim Notice ” has the meaning provided such term in Section 8.3(a) .

     “ Closing Date ” has the meaning provided such term in Preamble.

     “ Code ” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

     “ Company ” has the meaning provided such term in the Recitals.

     “ Company Contracts ” has the meaning provided such term in Section 2.2(c) .

     “ Company Conveyance ” has the meaning provided such term in the Recitals.

     “ Confidentiality and Disclosure Agreement ” has the meaning provided such term in Section 7.1(a)(ii) .

     “ Constituents of Concern ” means any substance defined as a hazardous substance, hazardous waste, hazardous material, toxic substance, solid waste, pollutant or contaminant by any Environmental Law.

     “ Contract ” means any legally binding agreement, commitment, lease, license or contract.

     “ Dedicated Area ” has the meaning provided such term in the Gathering Agreement.

     “ Direct Claim ” has the meaning provided such term in Section 8.3(d) .

     “ Dollars ” and “ $ ” mean the lawful currency of the United States.

     “ Easements ” has the meaning provided such term in Section 2.2(b) .

     “ Environmental Law ” means all applicable Laws and Environmental Permits of any Governmental Authority relating to the environment, natural resources, or the protection thereof, including: (a) all requirements pertaining to liability for reporting, management, licensing, permitting, investigation, and remediation of emissions, discharges, releases, or threatened releases of a Constituent of Concern; and (b) CERCLA, the Hazardous Materials Transportation Act, 49 U.S.C. § 5101 et. seq., the Federal Clean Water Act, the Federal Clean Air Act, the Federal Solid Waste Disposal Act (which includes the Resource Conservation and Recovery Act), the Federal Toxic Substances Control Act, and the Federal Insecticide, Fungicide and Rodenticide Act, the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et. seq., and the Safe Drinking Water Act, 42 U.S.C. §300f et. seq., and any applicable Law relating to occupational health and safety, the environment, natural resources or the protection thereof, each as amended from time to time, including any regulations promulgated pursuant thereto, and any state or local counterparts.

     “ Environmental Permits ” all permits, licenses, registrations, authorizations, certificates and approvals, and any other similar items, of Governmental Authorities required by Environmental Laws and necessary for or held in connection with the ownership and/or operation of the Assets.

     “ Excluded Assets ” has the meaning provided such term in Section 2.3 .

     “ Expansions ” has the meaning provided such term in the Gathering Agreement.

     “ FTC ” means the Federal Trade Commission.

     “ Fundamental Representations and Warranties ” means the representations and warranties contained in Sections 3.1 , 3.2 , 3.3 , 3.5 , 3.6 , 4.1 , 4.2 , 4.3 , 4.4 , 4.5 , 4.13 , 5.1 , 5.2 , 5.3 and 5.6 .

     “ GAAP ” means generally accepted accounting principles of the United States, consistently applied.

     “ Gathering Agreement ” has the meaning provided such term in the Recitals.

     “ Gathering System ” has the meaning provided such term in Section 2.2(a) .

     “ Governmental Authority ” means any federal, state, municipal, local or similar authority, regulatory or administrative agency, court or arbitral body with jurisdiction over the Parties, this Agreement, any of the transactions contemplated hereby, the Assets or the Membership Interests.

     “ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

     “ Income Tax ” means any Tax based upon, measured by, or calculated with respect to (a) net income, profits or similar measures (including capital gains Taxes and minimum Taxes) or (b) multiple bases if one or more of the bases upon which such Tax is based, measured by or calculated is described in clause (a), in each case together with any interest, penalties, or additions to such Tax, including Texas franchise tax.

     “ Indebtedness for Borrowed Money ” means, with respect to any Person, at any date, without duplication: (a) all obligations of such Person for borrowed money, including all principal, interest,

premiums, fees, expenses, overdrafts and penalties with respect thereto; (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (c) all obligations of such Person to pay the deferred purchase price of property, except trade payables incurred in the ordinary course of business; (d) all obligations of such Person to reimburse any bank or other Person in respect of amounts paid or payable under a letter of credit or similar instrument; (e) all capitalized lease obligations; (f) all other obligations of a Person which would be required to be shown as indebtedness on a balance sheet of such Person prepared in accordance with GAAP; and (g) all indebtedness of any other Person of the type referred to in clauses (a) to (f) above, directly or indirectly guaranteed by such Person or secured by any assets of such Person, whether or not such indebtedness has been assumed by such Person.

     “ Indemnified Party ” has the meaning provided such term in Section 8.3(a) .

     “ Indemnifying Party ” has the meaning provided such term in Section 8.3(a) .

     “ Intellectual Property ” means: (a) trademarks, service marks, trade dress, slogans, logos, and all goodwill associated therewith, and any applications or registrations for any of the foregoing; (b) copyrights and any related applications or registrations; (c) patents and any related applications or registrations; (d) all confidential information, know-how, trade secrets and similar proprietary rights in confidential inventions, discoveries, improvements, processes, techniques, devices, methods, patterns, formulae and specifications; and (e) all other intellectual property rights, statutory or common law, in the United States or worldwide.

     “ Intercompany Conveyance ” has the meaning provided such term in the Recitals.

     “ IRS ” means the United States Internal Revenue Service.

     “ Knowledge ” means: (a) with respect to Seller, the actual knowledge, after due inquiry, of the natural Persons identified in Schedule 1.1(a) , as “Seller’s Persons With Knowledge”; and (b) with respect to Buyer, the actual knowledge, after due inquiry, of the natural Persons identified in Schedule 1.1(a) as “Buyer’s Persons With Knowledge”.

     “ Law ” means any statute, writ, law, common law, rule, regulation, ordinance, order, judgment, injunction, award, determination or decree of a Governmental Authority, or any requirement under the common law, in each case as in effect on and as interpreted on the Closing Date or on and as of the Closing Date, as applicable, unless the context otherwise clearly requires a different date, in which case on and as of such date applicable to the Parties, this Agreement, any of the transactions contemplated hereby, the Assets or the Membership Interest.

     “ Lien ” means any charge, pledge, option, mortgage, deed of trust, hypothecation, encumbrance or security interest.

     “ Line Pack ” has the meaning provided such term in the Gathering Agreement.

     “ LLC Agreement ” has the meaning provided such term in Recitals.

     “ Losses ” has the meaning provided such term in Section 8.2(a) .

     “ Membership Interests ” has the meaning provided such term in the Recitals.

     “ Non-Income Tax ” means any Tax other than an Income Tax or a Transfer Tax.

     “ O&M Agreement ” has the meaning provided such term in the Recitals.

     “ O&M Assets ” means the assets described in clauses (g) and (l) of the definition of Excluded Assets.

     “ Organizational Documents ” means any charters, articles of incorporation, certificates of incorporation, certificates of formation, articles of association, bylaws, operating agreements, certificates of limited partnership, partnership agreements, limited liability company agreements, regulations, and all other similar documents, instruments or certificates executed, adopted or filed in connection with the creation, formation or organization of any Person, including any amendments thereto.

     “ Parties ” means, collectively, Seller and Buyer, and “ Party ” means, individually, either Buyer or Seller.

     “ Permits ” has the meaning provided such term in Section 2.2(d) .

     “ Permitted Liens ” means the Liens listed on Schedule 1.1(b) and any other: (a) Liens for Taxes and assessments not yet due or delinquent; (b) statutory Liens (including materialmen’s, warehousemen’s, mechanic’s, repairmen’s, landlord’s, and other similar Liens) arising in the ordinary course of business and securing payments not yet due or delinquent; (c) rights of lessors and lessees under leases and rights of third parties under any Company Contract; (d) rights of licensors and licensees under licenses executed in the ordinary course of business; (e) restrictive covenants, easements and defects, imperfections, or irregularities of title or Liens, if any, in each case that are of a nature that do not, or that would not reasonably be expected to, materially and adversely affect the ownership, or adversely affect the use or operation of the Assets; (f) purchase money Liens and Liens securing rental payments under capital lease arrangements set forth on Schedule 2.2(c) ; (g) restrictions on transfer with respect to which consents or waivers are obtained for the transactions contemplated by this Agreement to the extent disclosed on Schedule 1.1(d) ; (h) Liens created by Buyer, or its successors and assigns; and (i) terms and conditions of the Permits listed on any of the Schedules .

     “ Person ” means any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, Governmental Authority or other entity of any kind.

     “ Personal Property ” has the meaning provided such term in Section 2.2(e) .

     “ Purchase Price ” has the meaning provided such term in Section 2.5 .

     “ Reasonable Efforts ” means efforts in accordance with reasonable legal, commercial practice and without the incurrence of any material expense or risk.

     “ Records ” has the meaning provided such term in Section 2.2(f) .

     “ Representatives ” means a Person’s directors, managers, partners, officers, employees, duly authorized agents, or professional advisors (including attorneys, accountants, consultants, bankers, financial advisors and any representatives of such advisors).

     “ Retained Liabilities ” has the meaning provided such term in Section 2.4 .

     “ Schedules ” means the schedules attached to this Agreement.

     “ Seller ” has the meaning provided such term in the Preamble.

     “ Seller Approvals ” has the meaning provided such term in Section 3.4 .

     “ Seller Entities ” means, collectively, SR E&P, Seller and SR Energy, and “ Seller Entity ” means, individually, any of SR E&P, Seller or SR Energy.

     “ Seller Guaranty Agreement ” has the meaning provided such term in Section 7.1(a)(iv) .

     “ Seller Indemnified Parties ” has the meaning provided such term in Section 8.2(b) .

     “ Seller Marks ” has the meaning provided such term in Section 6.3 .

     “ SR E&P ” has the meaning provided such term in the Recitals.

     “ SR E&P Guaranty Agreement ” has the meaning provided such term in Section 7.1(a)(v) .

     “ SR Energy ” has the meaning provided such term in the Recitals.

     “ SR Energy Buyer Guaranty Agreement ” has the meaning provided such term in Section 7.1(a)(vii) .

     “ SR Energy Company Guaranty Agreement ” has the meaning provided such term in Section 7.1(a)(vi) .

     “ Straddle Period ” has the meaning provided such term in Section 6.6(c) .

     “ Tax Returns ” means any form, report, return, statement, election, document, estimated tax filing, declaration, or other information, filed with or required to be supplied to any Taxing Authority by any Person with respect to Taxes, including any amendments thereof or schedule or attachment thereto, and any documents with respect to or accompanying requests for the extension of time in which to file any such report, return, statement, election, document, declaration or other information.

     “ Taxes ” means all (a) federal, state, provincial, county, local and foreign taxes, assessments, duties, levies, imposts or other similar charges, including all income, franchise, margin, profits, capital gains, capital stock, transfer, gross receipts, sales, use, service, occupation, ad valorem, property, excise, severance, windfall profit, production, custom, premium, stamp, license, payroll, employment, social security, unemployment, disability, environmental, alternative minimum, add-on, value-added, withholding and other taxes, assessments, duties, levies, imposts or other similar charges of any kind, and all estimated taxes, deficiency assessments, additions to tax, penalties and interest, and (b) liability for items within clause (a) of any other Person by Contract, operation of law (including Treasury Regulation section 1.1502-6) or otherwise.

     “ Taxing Authority ” means, with respect to any Tax, a Governmental Authority that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such entity, including any Governmental Authority that imposes, or is charged with collecting, Social Security or similar charges or premiums.

     “ Third Party Claim ” has the meaning provided such term in Section 8.3(a) .

     “ Third Party Gathering Agreement ” means that certain Gas Gathering Agreement dated June 26, 2009 between Enterprise Products Operating, LLC, as shipper, and SandRidge Midstream, Inc., as gatherer.

     “ Transaction Documents ” means this Agreement, the Gathering Agreement, the O&M Agreement, the Assignment of Membership Interests, the Asset Conveyances, the Seller Guaranty Agreement, the SR E&P Guaranty Agreement, the SR Energy Company Guaranty Agreement, SR Energy Buyer Guaranty Agreement, the Confidentiality and Disclosure Agreement and the Third Party Gathering Agreement, and any other agreement or document that may be required to be executed to consummate the transactions contemplated hereby or thereby.

     “ Transfer Taxes ” has the meaning provided in Section 6.6(a) .

ARTICLE 2
PURCHASE AND SALE; CLOSING

          Section 2.1 Sale and Purchase of Membership Interests . Upon the terms and subject to the conditions set forth herein, Seller shall sell, assign and transfer to Buyer, and Buyer will purchase, acquire and accept from Seller, the Membership Interests on the Closing Date.

          Section 2.2 Assets . The term “ Assets ” shall mean, less and except the Excluded Assets (and all other assets of the Seller Entities not described in this Section 2.2 ), all right, title and interest of the Company in and to the following assets:

          (a) that certain 2” to 20” diameter natural gas pipeline located in Pecos and Terrell Counties, Texas, which is approximately three hundred and seventy (370) miles in length that gathers all of the gas produced by Seller and its Affiliates within the Dedicated Area, including above-ground facilities or structures, compression equipment and facilities, Line Pack, and the valves, machinery, equipment, gauges, meters, fittings, fixtures and improvements related thereto, as more particularly described on Schedule 2.2(a) (the “ Gathering System ”);

          (b) all rights-of-way, easement rights and surface rights owned or held in connection with the ownership or operation of the Gathering System, together with any and all other rights, tenements, easements, appendages, appurtenant rights, privileges, leases, Contracts and agreements related to real property as may be required in connection with the ownership of the Gathering System, as more particularly described on Schedule 2.2(b) (the “ Easements ”);

          (c) all Contracts necessary for the ownership or operation of the Gathering System, as more particularly described on Schedule 2.2(c) (the “ Company Contracts ”);

          (d) all permits necessary in connection with the ownership or operation of the Assets, including the Environmental Permits, licenses, certificates, consents, approvals, waivers, authorizations and registrations issued by a Governmental Authority and necessary in connection with the ownership of the Gathering System, as more particularly described on Schedule 2.2(d) (the “ Permits ”);

          (e) the items of personal property (tangible or intangible) necessary in connection with the ownership or operation of the Gathering System, as more particularly described on Schedule 2.2(e) (the “ Personal Property ”); and

          (f) all records, documents, books, supplier lists and work orders necessary to operate the Gathering System, and all other documents and data (including electronic data) relating to the

operation of the Assets (including past operations), including all of the foregoing necessary to cause operations to remain in compliance with applicable Law (the “ Records ”).

          Section 2.3 Excluded Assets . All assets of the Seller Entities listed on Schedule 2.3 , and any other assets of the Seller Entities and their Affiliates described below, will be retained by the Seller Entities (or their Affiliates, as applicable) and will not be included in the Assets (the “ Excluded Assets ”):

          (a) cash;

          (b) accounts receivable (including any imbalance receivables), trade credits, proceeds or revenues accruing for any period prior to the Closing Date;

          (c) all personal property relating to any Seller Entity generally and not involving or relating solely to the Assets or the business related to the Assets, or that may be necessary or useful in such Seller Entity’s (or any of its Affiliates’) development, construction, operation and/or ownership of any Expansions;

          (d) each Seller Entity’s Organizational Documents, duplicate copies of the Records as are necessary to enable the Seller Entities to file Tax Returns and reports, and any other records or materials relating to any Seller Entity generally and not involving or relating solely to the Assets or the business related to the Assets, and any of the foregoing that may be necessary or useful in such Seller Entity’s (or any of its Affiliates’) operation of the Assets pursuant to the O&M Agreement, or development, construction, operation and/or ownership of any Expansions;

          (e) refunds of premiums from any insurance policy of any Seller Entity and any Tax refunds due to any Seller Entity resulting from this Agreement or the transactions contemplated hereby;

          (f) all proceeds, claims and rights under any: (i) insurance policies covering the Assets that relate to any damage or destruction (whether by fire, theft, vandalism or other casualty) that has occurred prior to the Closing Date; and (ii) condemnation or eminent domain awards that relate to any condemnation of any Assets that has occurred prior to the Closing Date;

          (g) all, as relate to the ownership or operation of the Assets: (i) Intellectual Property; (ii) software licenses and software license agreements; (iii) information technology hardware of any kind whatsoever; (iv) office supplies, furniture and equipment, including computers, printers, copiers, personal handheld devices and phones; (v) tools and rolling stock; (vi) SCADA-related licenses, equipment and software; and (vii) FCC permits, licenses, and other similar documents and consents;

          (h) all wellhead separation equipment, meters and flowlines, and any equipment dedicated to the removal of carbon dioxide or other inert gasses or the recovery of any hydrocarbon liquids;

          (i) all rights-of-way, easement rights and surface rights owned or held by the Seller Entities (or their Affiliates, as applicable) for the purposes of the development, construction, operation and/or ownership of any Expansions and the conduct of oil and gas exploration and production activities;

          (j) all Contract rights owned or held by the Seller Entities (or their Affiliates, as applicable) to the extent necessary for the development, construction, operation and/or ownership of any Expansions and the conduct of oil and gas exploration and production activities;

          (k) all rights under any permits owned or held by the Seller Entities (or their Affiliates, as applicable) to the extent necessary for the development, construction, operation and/or ownership of any Expansions and the conduct of oil and gas exploration and production activities; and

          (l) all permits that are to be held by Seller under the O&M Agreement as more particularly set forth on Schedule 2.3(l) .

          Section 2.4 Retained Liabilities . Upon and after the Closing Date, Seller shall retain and be liable for the following liabilities and obligations (without duplication, the “ Retained Liabilities ”):

          (a) all liabilities and obligations of any Seller Entity arising out of, or relating to, any Excluded Asset;

          (b) any liabilities of any Seller Entity or the Company resulting from the consummation of the transactions contemplated by this Agreement, including Taxes; and

          (c) all other liabilities of any Seller Entity arising from, based on, related to, or associated with, the formation of the Company, the contribution of the Assets to the Company, or any act, omission, event, condition or circumstance involving or relating to the use, ownership or operation of the Assets occurring or existing before the Closing Date (including accounts payable, Taxes, and wellhead and other imbalances).

          Section 2.5 Consideration . In consideration of the sale and purchase of the Membership Interests as contemplated by Section 2.1 , on the Closing Date, Buyer shall pay to Seller an aggregate of two hundred million dollars ($200,000,000.00) in cash by means of a completed wire transfer of immediately available funds to an account designated in writing by Seller (the “ Purchase Price ”). BUYER AND SELLER ACKNOWLEDGE AND AGREE THAT THE TERMS OF THIS AGREEMENT, INCLUDING THE LIMITATIONS ON, AND DISCLAIMERS OF WARRANTIES AND REPRESENTATIONS OF, SELLER CONTAINED IN THIS AGREEMENT, ARE A BARGAINED FOR AND MATERIAL PART OF THE CONSIDERATION FOR THE MEMBERSHIP INTERESTS.

          Section 2.6 Allocation of Purchase Price . Seller and Buyer recognize that the purchase of the Membership Interests will be treated for federal income tax purposes as the purchase of the Assets of the Company. Seller and Buyer agree to cooperate in good faith to determine a reasonable allocation of the Purchase Price as determined for federal income tax purposes among the Assets in accordance with Section 1060 of the Code and the Treasury regulations thereunder. On or prior to the date ninety (90) days after the Closing Date, Buyer shall provide to Seller Buyer’s proposed allocation of the Purchase Price. Within thirty (30) days after the receipt of such allocation, Seller shall propose to Buyer any changes to such allocation or otherwise shall be deemed to have agreed with such allocation. Seller and Buyer shall cooperate in good faith to attempt to mutually agree to such allocation and shall reduce any such agreement to writing, including jointly and properly completing an IRS Form 8594, and any other forms or statements required by the Code, Treasury regulations or the IRS, together with any and all attachments required to be filed therewith. Seller and Buyer shall file timely any such forms and statements with the IRS. The allocation of the Purchase Price shall be revised to take into account any subsequent adjustments to the Purchase Price in the manner provided by Section 1060 of the Code and the Treasury Regulations thereunder. Seller and Buyer shall not file (and Seller shall cause SR E&P not to file) any Tax Return or other documents or otherwise take any position with respect to Taxes that is inconsistent with any agreed upon allocation of the Purchase Price. Notwithstanding the foregoing, Buyer shall not be required to agree upon the allocation of the Purchase Price for Tax purposes with Seller and, if no agreement is reached, the Parties may report different allocations of the Purchase Price.

          Section 2.7 Other Payments . Upon receipt, Buyer shall promptly send to Seller any third party invoices received by Buyer (or its Affiliates) that are attributable to the Retained Liabilities. Upon receipt, Seller shall promptly pay (and cause SR E&P to pay) such invoices directly to the appropriate third party. Upon receipt, Buyer will promptly remit to Seller all amounts received by Buyer that are attributable to the Excluded Assets (including Retained Liabilities) or that are otherwise attributable to periods on or before the Closing Date.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER ENTITIES

     Seller hereby represents and warrants to Buyer as follows:

          Section 3.1 Organization of Seller Entities; Authority . SR E&P and SR Energy are duly organized, validly existing and in good standing under the Laws of the State of Delaware and Seller is duly organized, validly existing and in good standing under the Laws of the State of Texas, and each Seller Entity has all requisite power and authority, as applicable, to own, lease and operate its properties and carry on its businesses as now being conducted. Each Seller Entity is duly qualified or licensed to do business as a foreign entity in good standing in every jurisdiction in which such qualification is required.

          Section 3.2 Authorization; Enforceability . Each Seller Entity has the requisite corporate or limited liability company power, as applicable, to execute and deliver the Transaction Documents to which it is a party and to perform all obligations to be performed by it under the Transaction Documents to which it is a party. The execution and delivery by each Seller Entity of the Transaction Documents to which it is a party and the consummation of the transactions contemplated thereby have been duly and validly authorized and approved by all requisite corporate or limited liability company action, as applicable, on part of such Seller Entity. Each Transaction Document (a) has been duly and validly executed and delivered by each Seller Entity that is a party thereto and (b) constitutes a valid and binding obligation of each Seller Entity that is a party thereto, enforceable against each such Seller Entity in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity.

          Section 3.3 No Violation; No Conflict . Except as disclosed on Schedule 3.3 , the execution and delivery of each Transaction Document by the Seller Entities party thereto and the consummation of the transactions contemplated thereby by the Seller Entities (assuming all of the Seller Approvals have been made, given or obtained, other than those that are customarily made, given or obtained after the Closing Date) do not and shall not:

          (a) violate or conflict with any Law applicable to any Seller Entity;

          (b) violate or conflict with any Organizational Document of any Seller Entity; or

          (c) (i) violate, conflict with, result in a breach of any provision of, constitute a default (or an event that, with notice or lapse of time, or both, would constitute a default) under, or result in the termination of or a right of termination, cancellation, acceleration or amendment under, any of the terms, conditions or provisions of any Contract to which any Seller Entity is a party or by which its assets or properties may be bound; or (ii) result in the creation of any Lien on the Membership Interests or the Assets (other than a Permitted Lien or any encumbrance, mortgage or security interest created in the Company Conveyance or the Assignment of Membership Interests).

          Section 3.4 Consents and Approvals . No filing or registration with, declaration or notification to, or order, authorization, consent or approval of, any Governmental Authority or any other Person is required in connection with the execution and delivery of any Transaction Document by the Seller Entities party thereto and the consummation of the transactions contemplated thereby by the Seller Entities party thereto, except for the required filings, consents, approvals, registrations, declarations, orders, authorizations and notices set forth on Schedule 3.4 (the “ Seller Approvals ”).

          Section 3.5 Litigation . Except as set forth on Schedule 3.5 (and except for Taxes, Environmental Matters and Permits, which are addressed in Sections 4.8 , 4.9 and 4.11 , respectively), as of the Closing Date: (a) there are no lawsuits, claims, proceedings, investigations, reviews, audits or other actions before any Governmental Authority pending or, to the Knowledge of Seller, threatened in writing by any Person against any Seller Entity that would reasonably be expected to have, individually or in the aggregate, an adverse effect on the Seller Entities’ ability to perform their respective obligations under the Transaction Documents to which they are a party, including their obligations to consummate any transactions contemplated thereby; and (b) there is no order or unsatisfied judgment from any Governmental Authority that would reasonably be expected to have, individually or in the aggregate, an adverse effect on the Seller Entities’ ability to perform their respective obligations under the Transaction Documents to which they are a party, including their obligations to consummate any transactions contemplated thereby.

          Section 3.6 Brokers’ Fees . No broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by this Agreement based upon arrangements made by any Seller Entity or any of their respective Affiliates or Representatives.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY

      Seller hereby represents and warrants to Buyer as follows:

          Section 4.1 Organization of the Company; Authority .

          (a) The Company is a limited liability company, duly organized, validly existing and in good standing under the Laws of the State of Delaware and has all requisite limited liability company power and authority to own, lease and operate its properties and carry on its business as now being conducted.

          (b) The Company is duly qualified as a foreign limited liability company and is in good standing in the State of Texas.

          (c) Seller has made available to Buyer true and complete copies of all existing Organizational Documents of the Company.

          Section 4.2 Authorization; Enforceability . The Company has the requisite limited liability company power to execute and deliver the Transaction Documents to which it is a party and to perform all obligations to be performed by it thereunder. The execution and delivery by the Company of the Transaction Documents to which it is a party and the consummation of the transactions contemplated thereby have been duly and validly authorized and approved by all requisite limited liability company