PURCHASE OPTION AGREEMENT

Exhibit 10.6

PURCHASE OPTION AGREEMENT

by and between

ATLAS PIPELINE MID-CONTINENT WESTTEX, LLC

and

PIONEER NATURAL RESOURCES USA, INC.

Dated July 27, 2007

TABLE OF CONTENTS

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EXHIBITS AND SCHEDULES TO PURCHASE AGREEMENT

EXHIBITS

SCHEDULES

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PURCHASE OPTION AGREEMENT

THIS PURCHASE OPTION AGREEMENT is made and entered into this 27th day of July, 2007 by and between Atlas Pipeline Mid-Continent WestTex, LLC, a Delaware limited liability company (“ Seller ”), and Pioneer Natural Resources USA, Inc., a Delaware corporation (“ Buyer ”).

WHEREAS , Seller owns the Subject Assets, either of record or beneficially, as more fully described in Section 3.2 and the exhibits and schedules hereto;

WHEREAS , the transactions contemplated by the Original MFA have been consummated including the assignment of the “Assets” (as defined in the Original MFA) by Western to Seller as contemplated by the Original MFA, and, as a result, Seller owns a direct undivided 72.802% interest in the System;

WHEREAS , Buyer is in the business of owning and operating midstream natural gas assets and currently owns a direct undivided 27.198% interest in the System; and

WHEREAS , Seller desires to grant to Buyer exclusive options to acquire, upon and subject to the terms and conditions herein, collectively an additional direct undivided 22% interest in the System.

NOW, THEREFORE , in consideration of the mutual promises made herein, and subject to the conditions hereinafter set forth, the parties agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.1 Definitions . The terms set forth below shall have the meanings ascribed to them in this Article 1 or in the part of this Agreement referred to below:

“ Accountants ” shall have the meaning set forth in Section 7.9(c) .

“ Adjusted Purchase Price ” shall mean, with respect to any Option Percentage designated in any Election Notice, and as of the Closing Date with respect to such Option Percentage, a portion of the Total Unadjusted Purchase Price that is proportionate to the ratio of such Option Percentage to 100% of the Assets, increased or decreased, whichever the case may be, by the adjustments set forth in Section 3.2 .

“ Adjustment Period ” shall have the meaning set forth in Section 3.2(a) .

“ Affiliate ” with respect to a Person, shall mean any other Person controlling, controlled by or under common control with such Person. As used in this definition, the term “control,” including the correlative terms “controlling,” “controlled by” and “under common control with,” shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management or policies of a Person, whether through ownership of voting securities, by contract or otherwise.

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“ Agreement ” shall mean this Purchase Option Agreement as the same may be modified or amended in accordance with the terms hereof from time to time.

“ Allocation Statement ” shall have the meaning set forth in Section 9.5 .

“ Ancillary Agreements ” means the GSA, OEA and Memorandum of Contract.

“ Assets ” shall mean a direct undivided 30.21895% interest in and to the Subject Assets. For the avoidance of doubt, it is intended that the Assets include a direct undivided 22% interest in the System.

“ Assumed Seller Obligations ” shall have the meaning set forth in Section 11.3 .

“ Audited Financial Statements ” shall have the meaning set forth in Section 7.9(c) .

“ Benedum Plant ” shall mean that certain gas compression, treating and cryogenic processing facility located in Upton County, Texas, with capacity of approximately 45 mmcf/d including, without limitation, an amine treating plant, condensate stabilizer system, gas processing plant and eight (8) compressors.

“ Business Day ” shall mean any day other than a Saturday, a Sunday or a day on which banks in Houston, Texas are authorized or required by law to be closed.

“ Buyer ” shall have the meaning set forth in the preamble to this Agreement.

“ Buyer Non-Consent Capital Expenditures ” shall mean, with respect to any Option Percentage acquired by Buyer under this Agreement, the sum of the capital expenditures incurred and paid for by Seller during the Adjustment Period and attributable to such Option Percentage if Buyer has not agreed, pursuant to Article VI of the OEA, to fund the portion of such capital expenditures that are attributable to Buyer’s Existing System Interest.

“ Buyer Indemnitees ” shall mean Buyer, Buyer’s Affiliates, joint owners and venturers, co-lessees and partners, and each of their respective officers, directors, employees, agents and representatives, successors and permitted assigns; provided , however , Buyer Indemnities do not include Seller or any of its Affiliates or any of their respective officers, directors, employees, agents and representatives or any of their respective successors and assigns (other than Buyer and Buyer’s successors and assigns).

“ Buyer’s Existing System Interest ” shall have the meaning set forth in Section 2.1(c) .

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

“ Claim ” shall have the meaning set forth in Section 11.4(a) .

“ Claim Notice ” shall have the meaning set forth in Section 11.5(b) .

“ Closing ” shall have the meaning set forth in Section 9.1 .

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“ Closing Date ” shall have the meaning set forth in Section 9.1 .

“ Code ” shall mean the Internal Revenue Code of 1986, as amended, or any amending or superseding tax laws of the United States of America.

“ Contracts ” shall have the meaning set forth in Section 2.3(e) .

“ Conveyance ” shall have the meaning set forth in Section 4.1(b) .

“ Defensible Title ” shall mean that title of Seller with respect to the Real Property Interests included in the Assets, that, except for and subject to Permitted Encumbrances, is free and clear of all liens, encumbrances, security interests, pledges and other defects.

“ Effective Time ” shall have the meaning set forth in Section 2.5(a) .

“ Election Notice ” shall mean the First Election Notice or Second Election Notice, as applicable.

“ Environmental Laws ” shall mean any and all federal, state and local laws, statutes, regulations, rules, orders, ordinances, rules of common law, approvals, registrations, exemptions, licenses or permits of any Governmental Body pertaining to health, safety, the environment, wildlife or natural resources in effect as of the Closing Date in any and all jurisdictions in which any of the Assets are located, including the Clean Air Act, the Federal Water Pollution Control Act, the Rivers and Harbors Act of 1899, the Safe Drinking Water Act, the Comprehensive Environmental Response, Compensation and Liability Act; the Superfund Amendments and Reauthorization Act of 1986, the Solid Waste Disposal Act, the Resource Conservation and Recovery Act, the Hazardous and Solid Waste Amendments of 1984, the Toxic Substances Control Act, the Emergency Planning and Community Right-to-Know Act, the National Environmental Policy Act, the Occupational Safety and Health Act, the Oil Pollution Act, the Pipeline Safety Act, the Natural Gas Pipeline Safety Act, and the Hazardous Materials Transportation Uniform Safety Act, as each is amended from time to time and any state laws implementing the foregoing federal laws, any state laws pertaining to management of Hazardous Substances, including the handling of oil and gas exploration and production or processing wastes or the use, maintenance and closure of pits and impoundments, all other federal, state or local environmental conservation or protection laws, and any common law creating liability for environmental conditions.

“ Environmental Liabilities ” shall mean any and all environmental response costs (including costs of remediation), damages, natural resource damages, settlements, consulting fees, expenses, penalties, fines, orphan share, prejudgment and post-judgment interest, court costs, attorneys’ fees, and other liabilities incurred or imposed (i) pursuant to any order, notice of responsibility, directive (including requirements embodied in Environmental Laws), injunction, judgment or similar act (including settlements) by any Governmental Body to the extent arising out of any violation of, or remedial obligation under, any Environmental Laws which are attributable to the ownership or operation of the Assets or (ii) pursuant to any claim or cause of action by a Governmental Body or other Person for personal injury, property damage, damage to natural resources, remediation or response costs to the extent arising out of any violation of, or

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any remediation obligation under, any Environmental Laws or a Release of Hazardous Substances which is attributable to the ownership or operation of the Assets.

“ Equipment ” shall have the meaning set forth in Section 2.3(b) .

“ ERISA ” shall mean the Employment Retirement Income Security Act of 1974, as amended.

“ ERISA Affiliate ” shall mean, with respect to any Person that is an entity, trade or business, any entity, trade or business that is a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(l) of ERISA that includes such Person, or that is a member of the same “controlled group” as such Person pursuant to Section 4001(a)(14) of ERISA.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, together with the rules and regulations of the SEC promulgated thereunder.

“ Excluded Assets ” shall have the meaning set forth in Section 2.4 .

“ Excluded Offsite Environmental Liability ” shall have the meaning set forth in Section 11.3(a) .

“ FERC ” means the Federal Energy Regulatory Commission, or any successor agency.

“ Final First Purchase Price ” shall have the meaning set forth in Section 9.4(b) .

“ Final Purchase Price ” shall mean the Final First Purchase Price (if any) or the Final Second Purchase Price (if any), as applicable.

“ Final Second Purchase Price ” shall have the meaning set forth in Section 9.4(b) .

“ Final Valuation Date ” shall mean the date on which all adjustments are made to arrive at the Final Purchase Price with respect to any Option Percentage pursuant to Section 9.4(b) (whether by mutual agreement of Buyer and Seller or by final determination of the arbitrator as contemplated in Section 9.4(b) ).

“ Financial Statements ” shall have the meaning set forth in Section 7.9(a) .

“ First Closing ” shall have the meaning set forth in Section 9.1 .

“ First Election Notice ” shall have the meaning set forth in Section 2.1(a) .

“ First Option ” shall have the meaning set forth in Section 2.1(a) .

“ First Option Payment ” shall have the meaning set forth in Section 2.1(a) .

“ First Option Percentage ” shall have the meaning set forth in Section 2.1(a) .

“ First Option Period ” shall have the meaning set forth in Section 2.1(a) .

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“ First Unadjusted Purchase Price ” shall have the meaning set forth in Section 2.1(a) .

“ GAAP ” shall mean generally accepted accounting principles in effect in the United States of America as amended from time to time.

“ Governmental Authorizations ” shall have the meaning set forth in Section 5.11 .

“ Governmental Body ” or “ Governmental Bodies ” shall mean any federal, state, local, municipal, or other government; any governmental, regulatory or administrative agency, commission, body or other authority exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power; and any court or governmental tribunal.

“ GSA ” shall mean that certain Gas Sales and Purchase Contract dated November 23, 1992 and effective October 1, 1992, by and between Buyer (as successor in interest to Parker & Parsley Petroleum Company et. al.) and Seller (as successor in interest to Western), as amended, including as amended by the GSA Amendment.

“ GSA Amendment ” shall mean that certain Amendment to Gas Sales and Purchase Contract dated effective as of the date hereof, between Buyer and Seller in the form of Exhibit C attached hereto.

“ Guaranty ” means that certain Guaranty dated as of the date hereof, executed by the Seller Guarantor in the form of Exhibit E attached hereto.

“ Hazardous Substances ” means: (i) any pollutants, contaminants, solid wastes, toxic or hazardous or extremely hazardous substances, materials, wastes, constituents, compounds, or chemicals as these or similar terms are regulated by, or may form the basis of liability under, any Environmental Laws; (ii) any asbestos containing materials, polychlorinated biphenyls or radon; and (iii) any petroleum, Hydrocarbons, petroleum products, natural gas, crude oil and any fractions, components or derivatives thereof.

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

“ Hydrocarbons ” shall mean oil, gas, condensate and other gaseous and liquid hydrocarbons or any combination thereof and sulphur and other minerals extracted from or produced with any of the foregoing.

“ Imbalances ” shall mean over-deliveries or under-deliveries with respect to Hydrocarbons allocated to the Assets.

“ Indemnified Party ” shall have the meaning set forth in Section 11.5(a) .

“ Indemnifying Party ” shall have the meaning set forth in Section 11.5(a) .

“ Indemnity Claim ” shall have the meaning set forth in Section 11.5(b) .

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“ Laws ” shall mean all statutes, laws, rules, regulations, ordinances, orders, and codes of Governmental Bodies.

“ MFA ” shall mean that certain Master Formation Agreement dated June 1, 2007, between Western and Seller Guarantor, as amended as of the date hereof (the “ Original MFA ”), and as may be further amended.

“ Material Adverse Effect ” shall mean any effect that is or would reasonably be expected to have any effect that is material and adverse to the ownership, operation or value of the Assets, taken as a whole; provided, however , that “Material Adverse Effect” shall not include (i) any effect resulting from entering into this Agreement or the announcement of the transactions contemplated by this Agreement, (ii) any effect resulting from changes in general market, economic, financial or political conditions or any outbreak of hostilities or war, (iii) any effect that affects the Hydrocarbon processing, gathering or transportation industry generally (including changes in commodity prices or general market prices in the Hydrocarbon processing, gathering or transportation industry generally), and (iv) any effect resulting from a change in Laws or regulatory policies.

“ Midkiff/Benedum Gathering System ” shall mean the gathering system consisting of approximately 2,500 miles of two inch (2”) to thirty inch (30”) pipeline located in Ector, Midland, Martin, Glasscock, Irion, Reagan, Sterling and Upton counties, Texas, including, without limitation, approximately 2,400 active meters (with electronic flow measurement and communications) and twelve (12) compressor stations with a total of approximately 9,400 horsepower.

“ Midkiff Deduction ” shall have the meaning set forth in Section 8.1(d) .

“ Midkiff Line ” shall mean that certain approximately 10 mile pipeline between the tailgate of the Midkiff Plant and Northern Natural Gas Company’s interstate pipeline.

“ Midkiff Plant ” shall mean that certain gas compression, treating and cryogenic facility located in Reagan County, Texas, with capacity of approximately 120 mmcfd including, without limitation, an amine treating plant, condensate stabilizer system, three (3) processing plants and thirteen (13) compressors.

“ Mutual Release ” shall mean that certain Mutual Release of Claims dated of even date herewith, among Buyer, Seller and Western.

“ Negative Section 9.4(b) Adjustment Amount ” shall have the meaning set forth in Section 9.4(b) .

“ NGA ” shall have the meaning set forth in Section 5.17 .

“ NGL Inventory ” shall have the meaning set forth in Section 2.3(d) .

“ NGPA ” shall have the meaning set forth in Section 5.17 .

“ NORM ” shall mean naturally occurring radioactive material.

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“ OEA ” shall mean that certain Operation and Expansion Agreement, dated as of November 23, 1992, by and between Buyer (as successor in interest to Parker & Parsley Gas Processing Co.) and Seller (as successor in interest to Western), as amended, including as amended by the OEA Amendment.

“ OEA Amendment ” shall mean that certain First Amendment to Operation and Expansion Agreement dated effective as of the date hereof, between Buyer and Seller in the form of Exhibit D attached hereto.

“ Option ” shall mean the First Option or the Second Option, as applicable.

“ Option Percentage ” shall mean the First Option Percentage or Second Option Percentage, as applicable.

“ Payee ” shall have the meaning set forth in Section 11.4(e) .

“ Permitted Encumbrances ” shall mean (a) the documents and instruments pursuant to which any interest in the Real Property Interests were created; (b) oil, gas or other mineral reservations or interests; (c) any agreement pursuant to which any Asset is leased; (d) any (i) undetermined or inchoate liens or charges constituting or securing the payment of expenses that were incurred incidental to maintenance, development or operation of the Assets and are not more than 60 days past due or are being contested in good faith, and (ii) materialmen’s, mechanics’, repairmen’s, employees’, contractors’, operators’ or other similar liens or charges for amounts arising in the ordinary course of business securing amounts that are not more than 60 days past due or are being contested in good faith; (e) any liens for Taxes and assessments not yet delinquent or, if delinquent, that are being contested in good faith in the ordinary course of business; (f) any obligations or duties affecting the Assets to any Governmental Body with respect to any franchise, grant, license or permit, and all applicable Laws of any Governmental Body; (g) any easements, rights-of-way, servitudes, permits, leases, and other rights in respect to surface operations to the extent they do not operate to interfere materially with the operation of the Assets as currently operated; (h) third party consents to assignments or similar agreements; (i) all rights to consent by, required notices to, filings with or other actions by any Governmental Body in connection with the sale or conveyance of any Asset to the extent such consents are customarily obtained after Closing; (j) the terms and conditions of the Contracts; (k) all rights reserved to or vested in any Governmental Body to control or regulate any of the Assets in any manner, and all obligations and duties under all applicable Laws of any such Governmental Body or under any franchise, grant, license or permit issued by any such Governmental Body; (1) all other liens, charges, encumbrances, security interests, pledges, defects or irregularities that do not, individually or in the aggregate, materially interfere with the use, ownership, operation or value of the Assets; (m) Imbalances associated with the Assets; (n) defects based solely on (i) lack of information in Seller’s files, or (ii) references to a document(s) if such referenced document(s) do not constitute a defect; (o) defects arising out of lack of corporate or other entity authorization resulting in another party’s actual and superior claim of title to the relevant Real Property Interests; (p) defects that have been cured by applicable Laws of limitations or prescription; and (q) defects specifically disclosed in writing by Seller to Buyer prior to the execution of this Agreement as set forth in Schedule 4.1(c) or of which Buyer has knowledge prior to the execution of this Agreement.

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“ Person ” shall mean an individual, partnership, corporation (including a business trust), firm, association, joint venture, limited liability company, unincorporated organization, or other entity, or a Governmental Body.

“ Pipelines ” shall have the meaning set forth in Section 2.3(c) .

“ Plants ” shall mean the Benedum and Midkiff Plants.

“ Positive Section 9.4(b) Adjustment Amount ” shall have the meaning set forth in Section 9.4(b) .

“ Preference Right ” shall mean any right or agreement that enables any Person to purchase or acquire any Asset or any interest therein or portion thereof as a result of or in connection with (i) the sale, assignment or other transfer of any Asset or any interest therein or portion thereof or (ii) the execution or delivery of this Agreement or the consummation or performance of the terms and conditions contemplated by this Agreement.

“ Property Costs ” shall have the meaning set forth in Section 2.5(b) .

“ Provisions ” shall have the meaning set forth in Section 11.7(a) .

“ Real Property Interests ” shall mean the easements, rights-of-way and fee interests in real property identified on Schedule 2.3(a).

“ Records ” shall have the meaning set forth in Section 2.3(f) .

“ Release ” shall have the meaning specified in CERCLA; provided, however , that to the extent any other applicable state law has a meaning of “Release” that is broader than that specified in CERCLA, such broader meaning shall apply.

“ REGARDLESS OF FAULT ” shall have the meaning set forth in Section 11.4(a) .

“ Retained Asset ” shall have the meaning set forth in Section 7.6(b) .

“ SEC ” shall mean the United States Securities and Exchange Commission, or any successor agency.

“ Second Closing ” shall have the meaning set forth in Section 9.1 .

“ Second Election Notice ” shall have the meaning set forth in Section 2.1(b) .

“ Second Option ” shall have the meaning set forth in Section 2.1(b) .

“ Second Option Payment ” shall have the meaning set forth in Section 2.1(b) .

“ Second Option Percentage ” shall have the meaning set forth in Section 2.1(b) .

“ Second Option Period ” shall have the meaning set forth in Section 2.1(b) .

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“ Second Unadjusted Purchase Price ” shall have the meaning set forth in Section 2.1(b) .

“ Section 10.3 Event ” shall have the meaning set forth in Section 10.3 .

“ Securities Act ” shall mean the Securities Act of 1933, as amended.

“ Seller ” shall have the meaning set forth in the preamble to this Agreement.

“ Seller Guarantor ” shall mean Atlas Pipeline Partners, L.P., a Delaware limited partnership.

“ Seller Indemnitees ” shall mean Seller, Seller’s Affiliates, joint owners and venturers, co-lessees and partners, and each of their respective officers, directors, employees, agents and representatives, successors and permitted assigns; provided , however , Seller Indemnities do not include Buyer or any of its Affiliates or any of their respective officers, directors, employees, agents and representatives or any of their respective successors and assigns.

“ Shares ” shall have the meaning set forth in Section 2.3(g) .

“ Specified Rate ” shall mean 8.0% simple interest per annum.

“ Subject Assets ” shall have the meaning set forth in Section 2.3 .

“ Sunset ” shall have the meaning set forth in Section 2.3(g) .

“ Surface Contracts ” shall have the meaning set forth in Section 2.3(a) .

“ Suspense Funds ” shall mean the amount of monies held in suspense by Seller associated with the System as shown on Schedule 1.1.

“ System ” shall mean the Midkiff/Benedum Gathering System, the Benedum Plant and the Midkiff Plant, as more fully depicted on the map attached hereto as Exhibit A.

“ Tax Allocation Referree ” shall have the meaning set forth in Section 9.5 .

“ Taxes ” shall mean all federal, state, local, and foreign income, profits, franchise, sales, use, ad valorem, property, severance, production, excise, stamp, documentary, real property transfer or gain, gross receipts, goods and services, registration, capital, transfer, withholding taxes, or other governmental fees or charges imposed by any taxing authority, including any interest, penalties or additional amounts which may be imposed with respect thereto.

“ Tax Returns ” shall have the meaning set forth in Section 5.8(a) .

“ Total Unadjusted Purchase Price ” shall mean Two Hundred and Thirty Million Dollars ($230,000,000).

“ Transfer Requirement ” shall mean any consent, approval, authorization or permit of, or filing with or notification to, any Person which is required to be obtained, made or complied with for or in connection with any sale, assignment or transfer of any Asset or any interest therein,

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other than any consent of, notice to, filing with, or other action by a Governmental Body in connection with the sale or conveyance of any Asset or interest therein, if they are not required prior to the assignment of such Asset or interest or they are customarily obtained subsequent to the sale or conveyance (including consents from state agencies).

“ Transfer Taxes ” shall have the meaning set forth in Section 12.3 .

“ Unadjusted Purchase Price ” shall mean the First Unadjusted Purchase Price or Second Unadjusted Purchase Price, as applicable.

“ Western ” shall mean Western Gas Resources, Inc., a Delaware corporation.

ARTICLE 2

THE OPTION

Section 2.1 Grant of Option .

(a) For Ten Thousand Dollars ($10,000) (the “ First Option Payment ”) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Seller, Seller hereby grants to Buyer the exclusive and irrevocable option to purchase up to (as determined by Buyer in its sole discretion) a direct undivided 66.18364% interest in the Assets (which 66.18364% (i) is a direct undivided 20% in the Subject Assets and (ii) is intended to include a direct undivided 14.5604% interest in the System). The percentage of the Assets (if any) which Buyer so elects to purchase under this Section 2.1(a) is hereinafter referred to as the “ First Option Percentage .” The unadjusted purchase price to be paid by Buyer for the sale of the First Option Percentage (the “ First Unadjusted Purchase Price ”) shall equal the product obtained by multiplying (A) the Total Unadjusted Purchase Price by (B) a percentage equal to the First Option Percentage. The First Unadjusted Purchase Price is subject to adjustment as set forth in Sections 3.2 and 9.4 . If Buyer in its sole and unfettered discretion desires to exercise the option referred to in this Section 2.1(a) (the “ First Option ”), Buyer shall provide written notice of such election (the “ First Election Notice ”) any time after June 15, 2008 and before November 2, 2008 (the “ First Option Period ”); provided , however , if as of November 1, 2008, there are one or more casualty events which in the aggregate materially affect any material portion of the Assets, then the First Option Period may, at Buyer’s election, be extended until December 1, 2008. If the First Election Notice is timely provided, Buyer and Seller shall consummate the sale and purchase of the First Option Percentage subject to and in accordance with the other terms and provisions of this Agreement.

(b) For Ten Thousand Dollars ($10,000) (the “ Second Option Payment ”) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Seller, Seller hereby grants to Buyer the exclusive and irrevocable option to purchase up to (as determined by Buyer in its sole discretion) a direct undivided 100% interest in the Assets less the First Option Percentage (if any) previously acquired by Buyer under this Agreement (which direct undivided interest in the Assets (i) is a pro rata portion of a direct undivided interest in the Subject Assets and (ii) includes a pro rata portion of a direct undivided interest in the System). The percentage of the Assets (if any) which Buyer so elects to purchase under this Section 2.1(b) is hereafter referred to as the “ Second Option Percentage .” The

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unadjusted purchase price to be paid by Buyer for the sale of the Second Option Percentage (the “ Second Unadjusted Purchase Price ”) shall equal the product obtained by multiplying (A) the Total Unadjusted Purchase Price by (B) a percentage equal to the Second Option Percentage. The Second Unadjusted Purchase Price is subject to adjustment as set forth in Sections 3.2 and 9.4 . If Buyer in its sole and unfettered discretion desires to exercise the option referred to in this Section 2.1(b) (the “ Second Option ”), Buyer shall provide written notice of such election (the “ Second Election Notice ”) any time after June 15, 2009 and before November 2, 2009 (the “ Second Option Period ”); provided , however , if as of November 1, 2009, there are one or more casualty events which in the aggregate materially affect any material portion of the Assets, then the Second Option Period may, at Buyer’s election, be extended until December 1, 2009. If the Second Election Notice is timely provided, Buyer and Seller shall consummate the sale and purchase of the Second Option Percentage subject to and in accordance with the other terms and provisions of this Agreement.

(c) Buyer currently owns a direct undivided 27.198% interest in the System (“ Buyer’s Existing System Interest ”). For the avoidance of doubt, the Buyer’s Existing System Interest held by Buyer is in addition to any interests that may be purchased by Buyer under this Agreement. If any such interests are so acquired, the parties shall promptly amend the OEA to reflect such acquisition.

Section 2.2 Execution and Delivery of Certain Documents . Contemporaneously with the execution and delivery of this Agreement:

(a) Seller and Buyer shall execute and deliver to each other the GSA Amendment and OEA Amendment, which agreements shall become effective as of the date hereof and shall remain effective in accordance with their respective terms and provisions without regard to whether or not this Agreement is hereafter terminated or any Closing occurs;

(b) Seller shall cause the Seller Guarantor to execute and deliver to Buyer the Guaranty; and

(c) Seller shall execute and deliver (properly notarized for recording) to Buyer one or more (as determined by Buyer) originals of the Memorandum of Contract in the form attached hereto as Exhibit F (and Buyer shall have the right to record such document and certified copies of the same in the applicable public records where the Assets are located).

Section 2.3 Subject Assets . As used herein, the term “ Subject Assets ” means, subject to the terms and conditions of this Agreement, all of Seller’s right, title and interest and estate, real or personal, recorded or unrecorded, movable or immovable, tangible or intangible, in and to the following (but excluding the Excluded Assets):

(a) All easements, permits, licenses, servitudes, rights-of-way, and fee interests in real property appurtenant to, and used or held for use in connection with the System, including those described in Schedule 2.3(a) (“ Surface Contracts ”).

(b) All equipment, machinery, fixtures and other tangible personal property and improvements located on the System or used or held for use in connection with the operation of the System, including those identified on Schedule 2.3(b) (“ Equipment ”).

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(c) All flow lines, pipelines, gathering systems and appurtenances thereto being a part of the System or used, or held for use, in connection with the operation of the System, including those identified on Schedule 2.3(c) (“ Pipelines ”).

(d) The natural gas liquids inventory that exists as of the Effective Time at the Plants (the “ NGL Inventory ”).

(e) All contracts, agreements and instruments by which the System is bound, or that relate to or are otherwise applicable to the System, only to the extent applicable to the System rather than Seller’s other properties, including but not limited to, operating agreements, exchange agreements, transportation and gathering agreements, agreements for the purchase and sale of oil, gas, casinghead gas or other Hydrocarbons, real estate leases or processing agreements to the extent applicable to the System, including those identified in Schedule 2.3(e) (collectively, the “ Contracts ”).

(f) All land files; gas contract files; gas gathering and processing files; abstracts; title opinions; land surveys; maps; engineering data and reports; and other books, records, data, files, and accounting records, in each case to the extent related primarily to the System, or used or held for use primarily in connection with the maintenance or operation thereof, but excluding (i) any books, records, data, files, maps and accounting records to the extent disclosure or transfer is restricted by third-party agreement or applicable Law, (ii) computer or communications software or intellectual property (including tapes, codes, data and program documentation and all tangible manifestations and technical information relating thereto) other than the software more specifically described in Schedule 2.3(f), (iii) attorney-client privileged communications and work product of Seller’s legal counsel (other than title opinions), (iv) reserve studies and evaluations, and (v) records relating to the negotiation and consummation of the sale of the Assets (subject to such exclusions, the “ Records ”); provided, however , that Seller may retain the originals of such Records and provide Buyer with copies thereof at Seller’s cost.

(g) All of the issued and outstanding capital stock (the “ Shares ”) of Setting Sun Pipeline Corporation, a Delaware corporation (“ Sunset ”).

For the avoidance of doubt, the Assets include the items referred to in (a) through (f) above, whether now owned or hereafter acquired by Seller before the applicable Closing. The applicable schedules and exhibits hereto shall be updated by way of amendment (as may be appropriate) after June 1, 2008 but before July 1, 2008 and again after June 1, 2009 but before July 1, 2009 (and, periodically thereafter as appropriate prior to the First Closing if the First Election Notice is given and again periodically thereafter as appropriate prior to the Second Closing if the Second Election Notice is given). Seller shall keep Buyer apprised of such acquisitions and provide drafts of the amendments for Buyer’s review and approval.

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Section 2.4 Excluded Assets . Notwithstanding the foregoing, the Subject Assets shall not include, and there is excepted, reserved and excluded from the transaction contemplated hereby (collectively, “ Excluded Assets ”):

(a) All corporate, financial, income and franchise tax and legal records of Seller that relate to Seller’s business generally (whether or not relating to the Assets), and all books, records and files that relate to the Excluded Assets and those records retained by Seller pursuant to Section 2.3(f) and copies of any other Records retained by Seller pursuant to Section 2.6 .

(b) All rights to any refund of Taxes or other costs or expenses borne by Seller or Seller’s predecessors in interest and title attributable to periods prior to the Effective Time.

(c) Seller’s area-wide bonds, permits and licenses or other permits, licenses or authorizations used in the conduct of Seller’s business generally.

(d) All trade credits, account receivables, note receivables, and other receivables attributable to the Assets with respect to any period of time prior to the Effective Time.

(e) All computer equipment and phone equipment other than the computers and software more specifically described on Schedule 2.3(f).

(f) Those items listed on Schedule 2.4(f).

(g) All rights, titles, claims and interests of Seller or any Affiliate of Seller (i) to or under any policy or agreement of insurance or any insurance proceeds except to the extent provided in Section 2.5 and Section 4.2 and (ii) to or under any bond or bond proceeds; provided that the Assets shall include their pro rata share of insurance covering claims made (and proceeds in respect thereof) between (or arising out of events or circumstances between) the Effective Time and any Closing Date to the extent the liabilities with respect to such events or circumstances are assumed by Buyer with respect to any Option Percentage acquired under this Agreement.

(h) Any patent, patent application, logo, service mark, copyright, trade name or trademark of or associated with Seller or any Affiliate of Seller or any business of Seller or of any Affiliate of Seller.

(i) All vehicles used in connection with the Assets, except as set forth on Schedule 2.3(b).

Section 2.5 Effective Time; Proration of Costs and Revenues .

(a) Subject to Section 2.6 , possession of any Option Percentage acquired hereunder shall be transferred from Seller to the Buyer at the applicable Closing, but, if such Closing occurs, certain financial benefits and burdens of such Option Percentage shall be transferred as provided in this Agreement effective as of 7:00 A.M., local time, where the respective Assets included in such Option Percentage are located, on July 1, 2007 (the “ Effective Time ”) as described below.

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(b) With respect to any Option Percentage acquired hereunder, Buyer shall receive and be entitled to the economic benefit of all income, proceeds, receipts and credits earned with respect to such Option Percentage at or after the Effective Time under the terms of the OEA (or under the terms of any insurance policy of Seller) as if Buyer owned such Option Percentage during the Adjustment Period relating thereto, and shall bear the economic burden of and be responsible for (and entitled to any refunds with respect to) the applicable Property Costs incurred at and after the Effective Time under the terms of the OEA as if Buyer owned such Option Percentage during the Adjustment Period relating thereto. Seller shall retain the economic benefit of and be entitled to all income, proceeds, receipts and credits earned with respect to such Option Percentage prior to the Effective Time under the terms of the OEA, and shall be responsible for (and entitled to any refunds with respect to) all applicable Property Costs incurred prior to the Effective Time under the terms of the OEA. “ Earned ” and “ incurred ,” as used in this Agreement, shall be interpreted in accordance with GAAP. “ Property Costs ” means all costs attributable to the ownership and operation of any Option Percentage acquired hereunder (including costs of insurance and ad valorem, property and similar Taxes based upon or measured by the ownership or operation of such Option Percentage, but excluding any other Taxes) incurred in the ownership and operation of the Assets and payable by a “System Owner” (as defined in the OEA) under the terms of the OEA with respect to such System Owner’s interest in the System, but excluding liabilities, losses, costs, and expenses attributable to those liabilities and obligations referred to in Sections 11.3(a) through (f)  (all of which are retained by Seller). Notwithstanding anything to the contrary in this Agreement, Property Costs shall not include capital expenditures for which Buyer is a non-consenting party pursuant to Article VI of the OEA and such capital expenditures shall be subject solely to the provisions of Section 2.5(c) below. For purposes of this Section 2.5 , determination of whether Property Costs are attributable to the period before or after the Effective Time shall be based on when services are rendered, when the goods are delivered, or when the work is performed. For clarification, the date an item or work is ordered is not the date of a pre-Effective Time transaction for settlement purposes, but rather the date on which the item ordered is delivered to the job site, or the date on which the work ordered is performed, shall be the relevant date. Taxes, right-of-way fees, insurance premiums and other Property Costs that are paid periodically shall be prorated based on the number of days in the applicable period falling before and the number of days in the applicable period falling at or after the Effective Time. In each case, Buyer shall bear the economic burden of and be responsible for the portion allocated to any Option Percentage acquired under this Agreement with respect to the period at and after the Effective Time and Seller shall be responsible for the portion allocated to such Option Percentage with respect to the period before the Effective Time.

(c) If Seller incurs and pays for any capital expenditures with respect to the System pursuant to Article VI of the OEA during the Adjustment Period with respect to any Option Percentage acquired hereunder and such capital expenditures constitute Buyer Non-Consent Capital Expenditures, then such capital expenditures shall, to the extent necessary after the applicable Closing, not be treated as Property Costs or otherwise affect the purchase price, but rather shall be treated in a manner consistent with how such expenditures would have been treated under the OEA if Buyer owned such Option Percentage during and after the Adjustment Period and Buyer were a non-consenting party pursuant to Article VI of the OEA with respect to such capital expenditures ( i.e. , the costs of such capital expenditures allocated to such Option Percentage plus a return on investment shall be recovered by Seller during and after the

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Adjustment Period (from cash flow attributable to the assets acquired with the capital expenditures) to the extent provided in Article VI, Section 2 of the OEA) and Buyer shall have no obligation to reimburse Seller or otherwise pay for any of such capital expenditures before or after the applicable Closing. For the avoidance of doubt, if Seller has recovered an amount equal to its investment plus the specified return as provided in Article VI, Section 2 of the OEA before the applicable Closing, then the assets included in such Option Percentage attributable to the capital expenditures under this Section 2.5(c) shall not be burdened by any cost recovery or return on investment in favor of Seller after Closing with respect to the capital expenditures in question.

Section 2.6 Delivery of Records . Pioneer, at Pioneer’s cost, may request copies of the Records at anytime following each Closing, which Records will be provided to Pioneer upon Pioneer’s request within thirty (30) days after such request to the extent documents similar in nature to the Records are to be made available to a party to the OEA.

ARTICLE 3

PURCHASE PRICE AND ADJUSTMENTS

Section 3.1 Purchase Price . The purchase price for any Option Percentage acquired hereunder, as of the Closing Date with respect to such Option Percentage, shall be the Adjusted Purchase Price with respect to such Option Percentage.

Section 3.2 Adjustments to the Purchase Price . Between the date of this Agreement and the Closing Date with respect to any Option Percentage acquired hereunder, the Unadjusted Purchase Price with respect to such Option Percentage shall be adjusted in the manner specified below (without duplication), with all such amounts being determined in accordance with GAAP, in order to reach the Adjusted Purchase Price with respect to such Option Percentage:

(a) Decreased by the aggregate amount of income, proceeds, receipts and credits received by Seller (i) pursuant to the terms of the OEA (or under the terms of Seller’s insurance policies) or (ii) pursuant to negative adjustments to the “Agreed Asset Value” and/or “Adjusted Agreed Asset Value” under the MFA with respect to such Option Percentage between the Effective Time and such Closing Date (the “ Adjustment Period ”) that are attributable to the ownership and operation of such Option Percentage during the Adjustment Period.

(b) Intentionally omitted.

(c) Increased by the amount of all Property Costs and other costs attributable to the ownership and operation of such Option Percentage under the terms of the OEA at or after the Effective Time which are paid by Seller, except (i) any such Property Costs and other such costs already deducted in the determination of proceeds in Section 3.2(a) and (ii) capital expenditures referred to in Section 2.5(c) .

(d) Intentionally omitted.

(e) Increased or decreased as agreed upon in writing by Seller and Buyer.

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(f) Decreased by an amount equal to the product obtained by multiplying (i) the net aggregate overproduction of Hydrocarbons constituting Imbalances allocated to such Option Percentage as of the Effective Time by (ii) $7.50 per MMBtu.

(g) Decreased by the amount of the Suspense Funds associated with such Option Percentage existing as of the Effective Time.

(h) If the aggregate of the adjustments in Sections 3.2(a) and (c)  would result in a decrease to the Unadjusted Purchase Price with respect to such Option Percentage (such aggregate amount, the “ Negative Amount ”), then decreased by an amount equal to interest on the Negative Amount accruing at the Specified Rate from the date of this Agreement until the Closing Date applicable to such Option Percentage.

(i) If the aggregate of the adjustments in Sections 3.2(a) and (c)  would result in an increase to the Unadjusted Purchase Price with respect to such Option Percentage (such aggregate amount, the “ Positive Amount ”), then increased by an amount equal to interest on the Positive Amount accruing at the Specified Rate from the date of this Agreement until the Closing Date applicable to such Option Percentage.

(j) Increased by an amount equal to interest on the Unadjusted Purchase Price with respect to such Option Percentage accruing at the Specified Rate from the date of this Agreement until the Closing Date applicable to such Option Percentage.

Each adjustment made pursuant to Section 3.2(a) shall serve to satisfy, up to the amount of the adjustment, Buyer’s entitlement under Section 2.5 to the value of income, proceeds, receipts and credits earned with respect to the applicable Option Percentage acquired hereunder during the applicable Adjustment Period, and as such, Buyer shall not receive any income, proceeds, receipts and credits to the extent an offsetting adjustment thereto has been made. Similarly, the adjustment described in Section 3.2(c) shall serve to satisfy, up to the amount of the adjustment, Buyer’s obligation under Section 2.5 to pay Property Costs and other costs attributable to the ownership and operation of the applicable Option Percentage acquired hereunder which are incurred during the applicable Adjustment Period, and as such, Buyer shall not be separately obligated to pay for any Property Costs or other such costs to the extent an offsetting adjustment thereto has been made.

ARTICLE 4

TITLE MATTERS

Section 4.1 Seller’s Title .

(a) Except for the special warranty of title referenced in Section 4.1(b) and the representation and warranty set forth in Section 5.19 (insofar as Section 5.19 applies to the special warranty of title referred to in the Original MFA and “Conveyance” referred to in said Section 5.19 ), Seller makes no warranty or representation, express, implied, statutory or otherwise, with respect to Seller’s title to any of the Assets, and Buyer hereby acknowledges and agrees that the sole remedy for any defect of title shall be through Seller pursuant to the special warranty of title referenced in Section 4.1(b) and as set forth in Section 10.3 and Section 11.4 .

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(b) The conveyance to be delivered by Seller to Buyer with respect to any Closing shall be substantially in the form of Exhibit B hereto (the “ Conveyance ”) and contain a special warranty of Defensible Title by, through and under Seller, but not otherwise, to the Real Property Interests included in the Assets, but shall otherwise be without warranty of title of any kind, express, implied, statutory or otherwise.

(c) Buyer shall not be entitled to protection under Seller’s special warranty of title in any Conveyance against any matter that would cause Seller not to have Defensible Title that is disclosed in writing to Buyer on Schedule 4.1(c) or of which Buyer has knowledge prior to the date hereof.

(d) Notwithstanding anything herein provided to the contrary but subject to Section 10.3 , if any title defect results from any matter which could also result in the breach of any representation or warranty of Seller set forth in Article 5 , then Buyer shall only be entitled to assert such matter as a breach of Seller’s special warranty of title contained in the Conveyance to the extent not prohibited by Section 4.1(c) but shall be precluded from also asserting such matter as the basis of the breach of any such representation or warranty of Seller set forth in Article 5 other than Section 5.19 (insofar as Section 5.19 applies to the special warranty of title referred to in the Original MFA and “Conveyance” referred to in said Section 5.19 ). Seller shall keep Buyer informed of any title defects or alleged title defects Seller becomes aware of prior to the final Closing and shall use commercially reasonable efforts to cure such title defects.

Section 4.2 Damage or Condemnation .

(a) Seller shall be responsible for all risk of loss with respect to, and any change in the condition of, the Assets from the Effective Time until the applicable Closing and the depreciation of personal property due to ordinary wear and tear.

(b) Subject to the provisions of Section 8.2(e) hereof, if, after the date of this Agreement but prior to the Closing Date with respect to any Option Percentage any portion of the Assets is damaged or destroyed by fire or other casualty and/or is taken in condemnation or under right of eminent domain, and the loss (including lost profits) from such all such casualty and/or taking events is reasonably expected to exceed ten percent (10%) of the Unadjusted Purchase Price with respect to such Option Percentage, the transaction evidenced by this Agreement may nevertheless be consummated if (i) Buyer and Seller agree in writing prior to the applicable Closing that Seller will either (A) cause the Assets affected by any casualty and/or taking to be repaired or restored to at least their condition prior to such casualty or taking, at Seller’s sole cost, as promptly as reasonably practicable (which work may extend after the applicable Closing Date) or (B) indemnify Buyer through a document reasonably acceptable to Seller and Buyer against all costs and expenses that Buyer reasonably incurs to repair or replace the Assets subject to such casualty and/or taking events or (ii) Buyer elects in its sole discretion to close without any reduction in such Unadjusted Purchase Price as a result of such casualty and/or taking events. In each case, Seller shall (except as hereinafter provided) retain all rights to insurance and other claims against third parties with respect to the casualty or taking except to the extent the parties otherwise agree in writing.

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(c) If, after the date of this Agreement but prior to the Closing Date with respect to any Option Percentage any portion of the Assets is destroyed or damaged by fire or other casualty and/or is taken in condemnation or under right of eminent domain, and the loss (including lost profits) reasonably expected to result from all such casualty and/or taking events is ten percent (10%) or less of the Unadjusted Purchase Price with respect to such Option Percentage or if Buyer makes an election under clause (ii) of Section 4.2(b) above, then the transaction evidenced by this Agreement shall nevertheless be consummated (subject to the other terms and provisions of this Agreement) and Seller shall, at the applicable Closing, pay to Buyer such Option Percentage’s pro rata share of all sums paid to Seller by third parties by reason of such casualty and/or taking events and shall assign, transfer and set over to Buyer or subrogate Buyer to all of Seller’s right, title and interest (if any) in such Option Percentage’s pro rata share of insurance claims, unpaid awards, and other rights against third parties (other than Affiliates of Seller and its and their directors, officers, employees and agents) arising out of the casualty and/or taking.

(d) This Section 4.2 shall not be subject to the limitation contained in Section 11.7(d) .

Section 4.3 Government Approvals Respecting Assets . Except with respect to any filing under the HSR Act and with FERC under the NGA which shall be governed by Section 7.2 , Buyer, within thirty (30) days after each Closing at Buyer’s own expense, shall file for approval with the applicable government agencies all assignment documents and other state and federal transfer documents required to effectuate the transfer of the Assets. Buyer further agrees, promptly after each Closing, to take all other actions reasonably required of it by federal or state agencies having jurisdiction to obtain all requisite regulatory approvals with respect to this transaction, and to use its reasonable commercial efforts to obtain the approval by such federal or state agencies, as applicable, of Seller’s assignment documents requiring federal or state approval in order for Buyer to be recognized by the federal or state agencies as the owner of the applicable Option Percentage. Buyer shall provide Seller with the approved copies of the assignment documents and other state and federal transfer documents, as soon as they are available.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF SELLER

Section 5.1 Generally .

(a) Any representation or warranty qualified “to the knowledge of Seller” or “to Seller’s knowledge” or with any similar knowledge qualification is limited to matters within the actual knowledge of the officers of Seller and the employees of Seller listed on Schedule 5.l(a). “ Actual knowledge ” for purposes of this Agreement means information actually personally known by such officers and employees.

(b) Inclusion of a matter on a Schedule in relation to a representation or warranty which addresses matters having a Material Adverse Effect shall not be deemed an indication that such matter does, or may, have a Material Adverse Effect. Likewise, the inclusion of a matter on a Schedule in relation to a representation or warranty shall not be deemed an

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indication that such matter necessarily would, or may, breach such representation or warranty absent its inclusion on such Schedule. Matters may be disclosed on a Schedule to this Agreement for purposes of information only.

(c) Subject to the foregoing provisions of this Section 5.1 , the disclaimers and waivers contained in Section 11.8 and the other terms and conditions of this Agreemen