DEED OF TRUST, MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF PRODUCTION AND PROCEEDS, FINANCING STATEMENT AND FIXTURE FILING

DEED OF TRUST, MORTGAGE, SECURITY AGREEMENT,

ASSIGNMENT OF PRODUCTION AND PROCEEDS,

FINANCING STATEMENT AND FIXTURE FILING

THIS DEED OF TRUST, MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF PRODUCTION AND PROCEEDS, FINANCING STATEMENT AND FIXTURE FILING (this “Instrument”), dated as of December 31, 2008, is from REDWOOD ENERGY PRODUCTION, L.P., a Texas limited partnership (“Mortgagor”), with an address at One Maritime Plaza, Suite 700, San Francisco, California 94111, to MICHAEL M. LOGAN, as trustee, with an address at 1675 Broadway, Suite 1650, Denver, Colorado 80202 (“Trustee”), and to BANK OF OKLAHOMA, NATIONAL ASSOCIATION, a national banking association (“BOK”), with an address at 1675 Broadway, Suite 1650, Denver, Colorado 80202.

Pursuant to the terms of an Amended and Restated Term Loan Agreement dated as of December 31, 2008, as the same may hereafter be amended, modified, extended or amended and restated from time to time (the “Term Loan Agreement”), BOK is to make an amortizing term loan (the “Loan”) to Madisonville Midstream LLC (“Borrower”).  The Loan is being guaranteed by Mortgagor.

All of the property described under 1 through 8 below is herein collectively called the “Collateral”:

1.          All of the present right, title and interest of Mortgagor and any and all additional interests hereafter acquired by Mortgagor (all of the foregoing being herein collectively called the “Interests”), including without limitation the Working Interests defined on Exhibit “A” attached hereto and Net Revenue Interests defined on Exhibit “A” attached hereto: (a) in and to all of the fee estates, surface estates, easements, rights-of-way, mineral estates, leasehold estates, oil and gas leases, oil, gas and mineral leases, licenses, subleases and sublicenses described or referred to in Exhibit “A” attached hereto and made a part hereof or covering or relating to all or any part of the land described in Exhibit “A” or the description of which is incorporated in Exhibit “A”, and (b) in and to any other interests covering or relating to all or any part of the land described in Exhibit “A” or the description of which is incorporated in Exhibit “A” (the “Land”);

2.          All of the oil, gas, casinghead gas, coalbed methane and other hydrocarbons, whether solid, liquid or gaseous, and all other associated or related substances (“Hydrocarbons”) owned by Mortgagor and attributable to any of the Interests, including without limitation all of the severed and extracted Hydrocarbons owned by Mortgagor and any and all “as-extracted collateral” (as defined in the applicable version of the Uniform Commercial Code);

3.          All of the items incorporated as part of or attributed or affixed to any of the real property included in the Interests;

4.           All wells, platforms, derricks, casing, tubing, tanks, tank batteries, separators, dehydrators, compressors, rods, pumps, flow lines, water lines, gas lines, machinery, pipelines, power lines and other goods and equipment, and all other personal property and fixtures, now or hereafter owned, leased or used by Mortgagor and attributable to any of the Interests, including without limitation any and all such items which are used or purchased for the production, treatment, storage, transportation, manufacture or sale of Hydrocarbons and any and all such items described on Exhibit “A”;

5.           All of the inventory, accounts, contract rights, chattel paper, payment intangibles, promissory notes, supporting obligations and general intangibles of Mortgagor, whether heretofore or hereafter arising, in connection with the Interests and any other contract or agreement relating to the exploration for Hydrocarbons, the operation of any property for the production of Hydrocarbons or the treatment, storage, transportation, gathering, handling, processing, manufacture, sale or marketing of Hydrocarbons, including without limitation any of the foregoing described on Exhibit “A” and any and all operating, pooling, commodity hedge, swap, exchange, forward, futures, floor, collar or cap agreements entered into by or on behalf of Mortgagor or to which Mortgagor is a party or has rights;

6.           All logs, maps, geologic data, seismic data, gravitational data, magnetic data, other geophysical data, geochemical data, engineering data, formation tests, core samples, drilling reports, division orders, transfer orders, title opinions, reserve reports, lease files, well files and other information, data and records, whether in paper, electronic or any other form, and related computer hardware and software relating to or used in connection with any of the Interests, to the extent that Mortgagor has the right to grant a mortgage and security interest therein;

7.           All of the rights, privileges, benefits, hereditaments and appurtenances in any way belonging, incidental or appertaining to any of the property described under Paragraphs 1 through 6 above; and

8.           All of the proceeds and products of the property described under Paragraphs l through 7 above, including without limitation condemnation awards and the proceeds of any and all title insurance policies and other insurance policies covering all or any part of said property and, to the extent they may constitute proceeds, instruments, accounts, chattel paper, payment intangibles, promissory notes, supporting obligations, securities, general intangibles and contract rights.

IN CONSIDERATION of ten dollars ($10.00) in hand paid to Mortgagor, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Mortgagor hereby:

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A.         Grants, bargains, sells, assigns, transfers, pledges, mortgages and conveys the Collateral to Trustee, WITH POWER OF SALE pursuant to this Instrument and applicable law, for the benefit of BOK, but subject to the rights of BOK under the assignment made in paragraph C below;

B.          Grants, bargains, sells, assigns, transfers, pledges, mortgages and grants a security interest in the Collateral to BOK, WITH POWER OF SALE pursuant to this Instrument and applicable law;

TO HAVE AND TO HOLD the Collateral to BOK and its successors and assigns forever, and TO HAVE AND TO HOLD the Collateral to Trustee and his successors and assigns forever, IN TRUST, subject to all of the terms, conditions, covenants and agreements herein set forth, for the security and benefit of BOK; and

C.          Assigns to BOK all of the severed and extracted Hydrocarbons produced from or attributed to any of the Collateral, together with all amounts that become payable to Mortgagor with respect to any of the Collateral, whether now owned or hereafter acquired, and all of the proceeds thereof.

AND in furtherance thereof Mortgagor warrants, represents, covenants and agrees as follows:

ARTICLE I

Obligations

Section 1.1             This Instrument is executed, acknowledged and delivered by Mortgagor to secure and enforce the following obligations (herein called the “Obligations”):

A.         Payment of and performance of all obligations of Borrower under or in connection with the Promissory Note dated December 31, 2008, as the same may be amended, renewed, extended or substituted for (the “Note”), made by Borrower in the face amount of $6,697,847.18, payable to the order of BOK on or before December 31, 2011 (or such earlier date as may be specified in the Term Loan Agreement), with interest at the rates specified in the Term Loan Agreement;

B.          All indebtedness, liabilities and obligations of Borrower or Mortgagor to BOK, of every kind and character, now existing or hereafter arising, pursuant to the Term Loan Agreement;

C.          All other indebtedness, liabilities and obligations of Borrower or Mortgagor to BOK, of every kind and character, now existing or hereafter arising, whether direct or indirect, primary or secondary, joint, several or joint and several (including, without limitation, Mortgagor’s guaranty of the Note and the Loan, any and all obligations of Borrower or Mortgagor to BOK for fees,

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costs and expenses pursuant to or in connection with any loan agreements now or hereafter in force and any hedging obligations that Borrower or Mortgagor may hereafter incur to BOK), it being contemplated that Borrower or Mortgagor may hereafter become indebted to BOK in such further sums;

D.          Payment of all sums advanced and costs and expenses incurred by BOK (whether directly or indirectly or on its behalf by Trustee and including without limitation all reasonable legal fees) in connection with the Obligations or any part thereof, any renewal, extension or change of or substitution for the Obligations or any part thereof, or the acquisition or perfection of the security therefor, whether such advances, costs and expenses were made or incurred at the request of Mortgagor, Trustee or BOK;

E.          Payment of all other indebtedness and liabilities and performance of all other obligations of Mortgagor to BOK arising pursuant to this Instrument or in connection with this Instrument; and

F.          All renewals, extensions, amendments and changes of, or substitutions or replacements for, all or any part of the items described under A through E above; provided that such renewals, extensions, amendments, changes of, or substitutions or replacements for, all or any part of the foregoing:

(1)     shall not together in unpaid principal amount aggregate more than $20,000,000 at any time, which amount contemplates all futures advances;

(2)     shall have been made on or before December 31, 2011; and

(3)     shall completely mature prior to December 31, 2013.

Section 1.2             The maximum amount of the Obligations that may be outstanding at any time or from time to time that shall be secured by this Instrument, including as a mortgage or as a pledge or assignment of Hydrocarbons, is $20,000,000.

ARTICLE II

Warranties, Representations and Covenants

Section 2.1             Mortgagor warrants, represents and covenants to and with BOK that: (a) Mortgagor has the right to receive at all times the “Net Revenue Interest” specified in Exhibit “A” of all Hydrocarbons produced from the wells located on the Collateral; (b) Mortgagor’s share of development and operating costs with respect to any of the wells or properties included in the Collateral is no greater than the “Working Interest” specified in Exhibit “A” for that

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well or property (unless Mortgagor’s right to receive production proceeds from such well or property has been increased by a proportionate amount over the applicable “Net Revenue Interest” specified for such well or property in Exhibit “A”); (c) Mortgagor is the lawful owner of good and defensible title to the Collateral, free and clear of all liens, security interests, encumbrances and burdens, except liens, security interests and other matters permitted by the terms of the Term Loan Agreement; (d) each loan, the payment of which constitutes an Obligation hereunder, is or shall be for a business or commercial purpose; and (e) so long as any or all parts of the Obligations remain unpaid or unsatisfied, Mortgagor will defend the title to the Collateral against the claims of all persons whomsoever claiming or to claim the same or any part thereof.

Section 2.2             Mortgagor covenants that, so long as any part of the Obligations remains unpaid or unsatisfied, unless BOK shall have otherwise consented in writing:

A.         Mortgagor shall promptly and, insofar as not contrary to applicable law, at Mortgagor’s own expense, file and refile in such offices, at such times and as often as may be necessary, this Instrument and every other instrument in addition or supplemental hereto, including applicable financing statements, as may be necessary to create, perfect, maintain and preserve the lien, encumbrance and security interest intended to be created hereby and the rights and remedies of BOK and Trustee hereunder;

B.          Mortgagor shall execute, acknowledge and deliver to BOK and/or Trustee such other and further instruments and do such other acts as in the reasonable opinion of BOK may be necessary or desirable to more fully identify and subject to the lien, encumbrance and security interest and assignment created hereby any property intended by the terms hereof to be covered hereby, to assure the first priority thereof, and otherwise to effect the intent of this Instrument, promptly upon request of BOK and at Mortgagor’s expense; and

C.          If the title, interest, lien or encumbrance, as the case may be, of Mortgagor, BOK or Trustee to the Collateral or any part thereof, or the security of this Instrument, or the rights or powers of BOK or Trustee hereunder, shall be attacked, either directly or indirectly, or if any legal proceedings are commenced involving Mortgagor or the Collateral, Mortgagor shall promptly give written notice thereof to BOK and at Mortgagor’s own expense shall take all reasonable steps diligently to defend against any such attack or proceedings; and BOK and/or Trustee may take such independent action in connection therewith as it may in its discretion deem advisable, and all costs and expenses,

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including, without limitation, reasonable attorneys’ fees and legal expenses, incurred by BOK or Trustee in connection therewith shall be a demand obligation owing by Mortgagor to BOK, shall bear interest at the rate provided in the Note, and shall be a part of the Obligations.

ARTICLE III

Collection of Proceeds of Production

Section 3.1             Pursuant to the assignment made by Mortgagor in paragraph C of the granting clause of this Instrument, BOK is entitled to receive all of the severed and extracted Hydrocarbons produced from or attributed to all of the Interests, together with all of the proceeds thereof. Mortgagor acknowledges and agrees that said assignment is intended to be an absolute and unconditional assignment and not merely a pledge of or creation of a security interest therein or assignment as additional security.  Mortgagor hereby authorizes and directs all parties producing, purchasing, receiving or having in their possession any such Hydrocarbons or proceeds to treat and regard BOK as the party entitled, in Mortgagor’s place and stead, to receive such Hydrocarbons and proceeds; and said parties shall be fully protected in so treating and regarding BOK and shall be under no obligation to see to the application by BOK of any such proceeds received by it.  Notwithstanding the foregoing, so long as there is no Event of Default (as defined in Section 5.1 below), Mortgagor shall continue to receive all the severed and extracted Hydrocarbons produced or attributed to all of the Interests, together with all of the proceeds thereof.

Section 3.2             All of the proceeds received by BOK pursuant to Section 3.1 shall be applied by BOK in accordance with the terms of the Term Loan Agreement and Section 5.10 below.

Section 3.3             Upon any sale of any of the Collateral by or for the benefit of BOK pursuant to Article V, the Hydrocarbons thereafter produced from or attributed to the part of the Collateral so sold, and the proceeds thereof, shall be included in such sale and shall pass to the purchaser free and clear of the provisions of this Article.

Section 3.4             BOK is hereby absolved from all liability for failure to enforce collection of any such Hydrocarbons or proceeds and from all other responsibility in connection therewith, except the responsibility to account to Mortgagor for proceeds actually received.

Section 3.5             Mortgagor shall indemnify BOK against all claims, actions, liabilities, judgments, costs,

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reasonable attorneys’ fees and other charges of whatsoever kind or nature (herein called “Claims”) made against or incurred by BOK as a consequence of the assertion, either before or after the payment in full of the Obligations, that BOK received Hydrocarbons or proceeds pursuant to this Article which were claimed by or due to third persons.  BOK shall have the right to employ attorneys and to defend against any Claims, and unless furnished with reasonable indemnity, BOK shall have the right to pay or compromise and adjust all Claims. Mortgagor shall indemnify and pay to BOK all such amounts as may be paid in respect thereof or as may be successfully adjudicated against BOK.  The liabilities of Mortgagor as set forth in this Section