LIMITED PARTNERSHIP AGREEMENT OF INDIGO ENERGY PARTNERS, LP

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Section 3.01.   Capital Contributions . This Agreement contemplates that the Partners will make substantial cash and other property contributions to the Partnership in exchange for their respective interests in the Partnership. The Partners shall contribute to the capital of the Partnership as their initial Capital Contribution the sums and property set forth on Schedule 1 to this Agreement. Pursuant to applicable Treasury Regulations, including Treasury Regulation Section 1.704-1(b)(2)(iv)(d), the Book Value of any property contributed to the Partnership by the Partners as all or a portion of their initial Capital Contribution shall reflect the agreed fair market value of such property on the date of its contribution to the Partnership. Each Partner’s contribution to the Partnership shall be reflected in such Partner’s respective Capital Account in the amount set forth next to such Partner’s name on Schedule 1 to this Agreement.

Section 3.02.   Withdrawals from Capital Accounts . No Partner shall be entitled to receive interest on or to withdraw any amount from such Partner’s Capital Account other than as expressly provided herein.

Section 3.03.   Capital Accounts . A Capital Account shall be established and maintained for each Partner in compliance with the provisions of applicable Treasury Regulations, including Treasury Regulation Section 1.704-1(b)(2)(iv). In general, such Capital Accounts shall be maintained as follows:

(a)   General Rules . Each Partner’s Capital Account shall be (i) credited with the amount of money contributed by such Partner to the Partnership, (ii) credited or debited, as the case may be, with such Partner’s allocation of income, gain, loss and expense made to such Partner pursuant to the terms of this Agreement, and (iii) debited with the amount of cash and the Net Fair Market Value of such property distributed to such Partner pursuant to the terms of this Agreement.

(b)   Special Rules . If any Partner’s interest in the Partnership is sold, exchanged or liquidated, the following special rules shall apply when determining the Capital Account balances of any new or remaining Partners:

(i)   If such sale or exchange (together with such other sales or exchanges of interests in the Partnership as occur during any relevant time period) causes a termination of the Partnership within the meaning of Code Section 708(b)(1)(B), the Capital Accounts of the Partnership shall be redetermined in accordance with applicable Treasury Regulations, including Treasury Regulation Section 1.708-1(b)(1)(iv) and credited with the fair market value of property contributed by such Partner to the Partnership (net of liabilities secured by such contributed property that the Partnership is considered to assume or take subject to under Code Section 752).

(ii)   If such sale or exchange does not cause a termination of the Partnership within the meaning of Code Section 708(b)(1)(B) and if the Partnership has in effect at the time of such sale or exchange an election under Code Section 754, the Capital Account of the selling or exchanging Partner shall be carried over to the transferee Partner, and there shall not be made to the Capital Account of the Partner who receives the special tax basis adjustment under Code Section 743 a corresponding adjustment except to the extent such a special tax basis adjustment would be reflected in a Partner’s respective Capital Account pursuant to applicable Treasury Regulations, including Treasury Regulation Section 1.704-1(b)(2)(iv)(m).

(iii)   If such sale or exchange is not described in clause (i) or (ii) of this paragraph (b), the Capital Account of the selling or exchanging Partner shall be carried over to the transferee Partner.

(iv)   If a Partner’s interest in the Partnership is redeemed by the Partnership through a distribution in complete liquidation of such interest, except as provided in paragraph (a) of this Section, the Capital Accounts of the remaining Partners shall be adjusted only to the extent required by applicable Treasury Regulations, including Treasury Regulation Section 1.704-(1)(b)(2)(iv)(m).

Section 3.04.   Determination of and Adjustments to Book Value and Capital Accounts . When determining the Book Value of the assets of the Partnership and the appropriate balances in each Partner’s respective Capital Account resulting from any adjustments to such Book Value, in accordance with the provisions of applicable Treasury Regulations, including Treasury Regulation Section 1.704-(1)(b)(2)(iv), the following accounting rules shall apply:

(a)   The initial Book Value of any asset contributed by a Partner to the Partnership shall be its Gross Fair Market Value on the date of contribution.

(b)   The Book Value of all Partnership assets may, in the sole discretion of the Managing General Partner, be adjusted to equal their respective Gross Fair Market Values, as of the following times:

(i)   the acquisition of an interest (including an additional interest) in the Partnership by any new or existing Partner in exchange for more than a de   minimis capital contribution to the Partnership if the Managing General Partner determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners with respect to the Partnership.

(ii)   the distribution by the Partnership to a Partner of more than a de   minimis amount of money or other Partnership property if the Managing General Partner determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners with respect to the Partnership.

(iii)   the liquidation of the Partnership within the meaning of applicable Treasury Regulations, including Treasury Regulation Section 1.704-1(b)(2)(ii)(g); or

(iv)   the occurrence of any other event (including, without limitation, a refinancing of any property of the Partnership) if the Managing General Partner determines that such adjustment is necessary or appropriate to reflect the economic interests of the Partners with respect to the Partnership and is not prevented by applicable Treasury Regulations.

(c)   The Book Value of any Partnership asset distributed to any Partner shall be adjusted to equal its Gross Fair Market Value on the date of such distribution.

(d)   The Book Value of Partnership assets shall not be increased or decreased to reflect any adjustments to the adjusted tax basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), except to the extent that such adjustments are taken into account in determining and maintaining capital accounts pursuant to applicable Treasury Regulations, including Treasury Regulation Section 1.704-1(b)(2)(iv)(m); provided, however, that Book Value shall not be adjusted pursuant to this provision to the extent that such adjustment was previously reflected in the Book Value of the Partnership’s assets.

(e)   If the Book Value of an asset has been determined or adjusted pursuant to the foregoing provisions of this Section, such Book Value shall thereafter be reduced by the Depreciation taken into account with respect to such asset for purposes of computing the Net Book Profits and the Net Book Losses of the Partnership pursuant to the terms of this Agreement.

Section 3.05.   Additional Capital Contributions . Except as specifically provided for in this Agreement, no Partner shall be obligated to make any additional capital contributions to the Partnership; and unless specifically consented to by the affected Partner, no Partner’s respective interest in the Partnership shall be diluted as the result of any additional capital contributions made to the Partnership by any other Partner.

Section 3.06.   Partnership Borrowings . In the event that at any time or from time to time during the term hereof, the Managing General Partner determines that the Partnership has need of additional funds in excess of the Capital Contributions to the Partnership, for the conduct of the business of the Partnership or the payment of any of its obligations, expenses, costs, liabilities or expenditures, including, but not limited to, operating deficits, the Managing General Partner may, in its sole discretion, borrow such funds for and on behalf of the Partnership, on such terms and conditions as the Managing General Partner shall decide, from commercial banks or other financial institutions or other persons including Partners; provided that the outstanding principal amount of any such borrowing(s) shall not exceed at any one time, in the aggregate, Five Hundred Thousand Dollars ($500,000.00). The Managing General Partner may secure the repayment of such borrowings by mortgage, hypothecation, pledge or other assignment of or arrangement of security interest in all or any part of the property then owned or thereafter acquired by the Partnership. Notwithstanding the foregoing, the Managing General Partner shall have no obligation to lend any funds to the Partnership, though nothing herein contained shall preclude the Managing General Partner from loaning or advancing funds to the Partnership.

Section 3.07.   Capital Contribution of the Company . The Company will (i) pay, or provide for by in-kind contributions to the individual Operators on behalf of the Partnership, one hundred percent (100%) of the Tangible Drilling and Completion Costs, ranging from twenty-five percent (25%) to thirty percent (30%) of the cost of the turnkey price per well (any Tangible Drilling and Completion Costs in excess of such maximum will be paid for or provided by Operators); (ii) provide the leases for the wells, pay all leasehold acquisition costs, provide geologic and exploration services and advance funds to the Partnership as necessary as a result of working capital deficiencies, and (iii) make its contribution to the Program by direct payment to its vendors and subcontractors in its capacity as Managing General Partner (the “Company Capital Contribution”). The magnitude of the Company Capital Contribution will not be known in advance but will be determined by the final amount of the Tangible Drilling and Completion Costs.

Section 4.01.   Ownership by Partners of Partnership . Each Partner shall have and own an undivided interest in the Partnership equal to his or her Percentage Interest in the Partnership in accordance with the terms hereof; provided, however, that no Partner shall have any right of partition with respect to any property or assets of the Partnership.

Section 4.02.   Percentage Interest in Partnership . Each Partner’s Percentage Interest in the Partnership will be set forth on Schedule 1 attached hereto, as may be amended from time to time.

Section 4.03.   Limitation on Distributions . Except as expressly provided herein, the Managing General Partner shall make no in-kind distribution of the property of the Partnership to any Partner with respect to his or her interest in the Partnership; and notwithstanding anything contained herein, the Managing General Partner shall make no distributions or take any other action in violation of the Act.

Section 5.01.   General Management . Except as otherwise provided herein, the management and control of the day to day operation of the Partnership and the maintenance of the property of the Partnership shall rest exclusively with the Managing General Partner. The Partnership will pay the Managing General Partner a reasonable monthly fee per Developmental Gas Well for administrative and managerial services provided to or for the Partnership. Such fee will be set by the Managing General Partner at its sole judgment and discretion. Such fee is a net fee and the Partnership shall pay the usual and ordinary costs of the business expenses of the Partnership. The Partnership shall pay the Managing General Partner as additional compensation any amounts, which after payment of expenses, remain from the allocations to geological and consulting fees and brokerage fees.

Section 5.02.   Powers of the Managing General Partner . The Managing General Partner is hereby authorized and empowered to carry out and implement any and all of the purposes of the Partnership; and, in that connection, the Managing General Partner, or its authorized agents, shall, except as otherwise expressly provided herein, have all the rights and powers and shall be subject to all the restrictions and liabilities of a partner in a general partnership. In that connection, the powers of the Managing General Partner shall include, but not be limited to, the following:

(a)   to engage personnel, attorneys, accountants or such other persons as it may deem necessary or advisable;

(b)   to amend this Agreement, subject to Section 6.04(b);

(c)   to open, maintain and close bank accounts and to draw checks and other orders for the payment of money;

(d)   to execute, on behalf of the Partnership, any and all documents or instruments of any kind required to be executed by the Partnership under this Agreement or which the Managing General Partner may deem appropriate in carrying out the purposes of the Partnership, including without limitation, instruments assigning or conveying leasehold and other interests in oil and gas properties (including existing wells) to the Partnership, the Drilling and Operating Agreement, the Operating Agreement, production sales contracts, hedging contracts and arrangements, applications and other documents relating to price determinations under applicable federal and state laws and regulations, and all other agreements, documents or instruments of any kind or character or amendments thereto;

(e)   to make, in its sole discretion, on behalf of the Partnership all decisions required to be made by the Partnership under the Drilling and Operating Agreement, the Operating Agreement and other agreements to which the Partnership is a party;

(f)   to make, in its sole discretion or on behalf of the Partnership, all decisions concerning the pricing and marketing of all oil and gas production owned by the Partnership;

(g)   to invest any funds of the Partnership not necessary for the operation of the business of the Partnership and not distributed to the Partners in United States Treasury Bills, money market funds, commercial paper, bank certificates of deposit, repurchase agreements and savings and loan certificates;

(h)   to take such actions, incur such expenses and make such payments on behalf of the Partnership as may be necessary or advisable in connection with the conduct of the affairs of the Partnership;

(i)   to borrow funds in the name and on behalf of the Partnership, and pledge Partnership assets to secure the repayment thereof, as provided in Section 3.06 hereof;

(j)   to execute any and all documents and agreements necessary or appropriate to accomplish the Conversion Option, including without limitation, any applicable amendments to this Partnership Agreement and the Certificate of Limited Partnership of the Partnership; and

(k)   to ratify and adopt, as acts of the Partnership, the acts of any nominee or designee made in furtherance of the interests of the Partnership.

Section 5.03.   Activity of the Managing General Partner . Although nothing contained herein shall require the Managing General Partner to devote its full time to the conduct of the affairs of the Partnership, the Managing General Partner shall use its best efforts in carrying out and implementing the purposes of the Partnership and shall devote to the conduct of the affairs of the Partnership such time and activity as shall be necessary therefor. Nothing in this Agreement shall preclude the Managing General Partner from engaging, directly or indirectly, as owner, operator or otherwise in other activities for profit, including any oil and gas business for its own account or the organization and management of other business entities formed for the purposes of oil and gas exploration and development, in the geographic area of the Partnership’s operations or elsewhere.

Section 5.04.   Activities of HUB. HUB will act as advisor to the Partnership and advise the Partnership on day to day operations including providing the Partnership with prospects, consisting of drill site acreage subject to any existing title or operating encumbrances or third party agreements affecting the prospects or to which HUB is a party.

Section 5.05.   Transfer of Assets and Other Acts Outside Ordinary Business of the Partnership . Except as provided under Section 3.06, the Managing General Partner shall not voluntarily sell, convey, exchange, mortgage, pledge, hypoth

ecate or otherwise transfer a substantial part of the assets of the Partnership (more than 50%) unless it shall have first obtained the written consent of at least a Majority in Interest of the Participant Partners.

Section 5.06.   Insurance Coverage . In addition to the insurance coverage required of the Operator under the Operating Agreement and of the Driller under the Drilling and Operating Agreement, the Managing General Partne

may maintain on behalf of the Partnership and the Participant General Partners such other insurance and in such amounts as it shall deem to be appropriate under the circumstances, including public liability, employment, fire, casualty, liability and property damage insurance; provided, however, that the Managing General Partner shall have no obligation to procure any such insurance. The Managing General Partner shall have no obligation to procure title insurance with respect to the Partnership’s oil and gas properties.

Section 5.07.   Holding of Property . Property owned by the Partnership shall be held in the name of the Partnership. Subject to the provisions of this Article V and the other applicable provisions of this Agreement, the Managing General Partner shall, in its capacity as the Managing General Partner, have the right, power and authority, for and on behalf of the Partnership, to lease, sell, mortgage, convey, refinance, grant easements on or other rights with respect to any property of the Partnership. In no event shall any party dealing with the Managing General Partner with respect to any property of the Partnership, or to whom any such property, or any part thereof, shall be conveyed, contracted to be sold, leased, or mortgaged by the Managing General Partner for and on behalf of the Partnership, be obligated to see that the terms of this Agreement have been complied with, or be obligated to inquire into the necessity or expediency of any act or action of the Managing General Partner, or be obligated or privileged to inquire into any of the terms of this Agreement. Every contract, agreement, deed, mortgage, lease or other instrument or document executed by the Managing General Partner with respect to any property or activity of the Partnership shall be conclusive evidence in favor of any and every person relying thereon or claiming thereunder that (a) at the time or times of the execution and delivery thereof, the Partnership was in full force and effect, (b) such instrument or document was duly executed in accordance with the terms and provisions of this Agreement and is binding upon the Partnership and all of the Partners hereof; and (c) the Managing General Partner was duly authorized and empowered to execute and deliver any and every such instrument or document for and on behalf of the Partnership. The manner of holding title to any property of the Partnership, or any part thereof, shall be solely for the convenience of the Partnership; accordingly, no spouse, heir, legal representative, successor or assign of any Partner shall have any right, title or interest in and to any property of the Partnership by reason of the manner in which title shall be held; and all such property shall be treated as property of the Partnership subject to the terms of this Agreement. All Partnership funds and temporary investments shall be held in the name of the Partnership in bank or other appropriate accounts, and shall not be commingled with funds or other property of any Partner or other person or entity.

Section 5.08.   Meetings and Voting . The Managing General Partner or any Participant Partners holding not less than one-third of the Units then outstanding may call a meeting of the Partners for any reasonable time, upon at least five (5) days’ notice to the other Partners. Such meetings shall be for the purpose of receiving the reports of the Managing General Partner provided in Section 9.03 hereof, for taking any action required of the Participant Partners hereunder and for taking any other actions deemed appropriate by the Managing General Partner.

Section 5.09.   No Management Rights . No Participant Partner shall take part in the management of the business of the Partnership or transact any business for or on behalf of the Partnership. No Participant Partner shall have the power to sign for or to bind the Partnership.

Section 5.10.   Transactions with the Partnership . The Managing General Partner, without the written consent of a Majority in Interest of the Participant Partners, shall not:

(a)   cause or permit the Partnership to enter into any agreement with itself or any Affiliate which is not in the best interest of and for the benefit of the Partnership or which would be in contravention of the Managing General Partner’s fiduciary obligations to the Partnership, it being recognized, however, that the Partnership intends to enter into the Drilling and Operating Agreements with various Operators and HUB as advisor, and may enter into natural gas gathering and/or sales agreements with an Affiliate or Affiliates of the Managing General Partner, in each case on terms at least as favorable to the Partnership as those offered to third parties;

(b)   take any action with respect to the assets or property of the Partnership which does not benefit the Partnership,