PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement (this “ Agreement ”) is made and entered into this 9th day of September, 2009, by and between Ambrose Energy I, Ltd., a  Texas limited partnership, ("Seller") and Callon Petroleum Operating Company, a Delaware corporation, (“ Buyer ”).  Buyer and Seller are collectively referred to herein as the “ Parties ”, and are sometimes referred to individually as a “ Party .”

WHEREAS, Seller is willing to sell to Buyer, and Buyer is willing to purchase from Seller, the Assets (as hereinafter defined), all upon the terms and conditions hereinafter set forth:

NOW, THEREFORE, in consideration of the mutual benefits derived and to be derived from this Agreement by each party, Seller and Buyer hereby agree as follows:

Section 1.01           Agreement to Sell and Purchase .  Subject to and in accordance with the terms and conditions of this Agreement, Seller agrees to sell and Buyer agrees to purchase the Assets from Seller.

Section 1.02           Assets .  Subject to Section 1.03 , the term “ Assets ” shall mean all of Seller’s right, title and interest in and to the following:

(a)           the oil, gas, and mineral leases described in Exhibit A attached hereto (collectively, the “ Leases ”), and any other oil, gas, and mineral leasehold interests, overriding royalty interest, non-working or carried interests, operating rights, record title and other similar interests in the Leases (collectively, the “ Subject Interests ” or, singularly, a “ Subject Interest ”), together with:

(b)           to the extent assignable or transferable, all easements, rights-of-way, servitudes, surface leases, surface use agreements and other rights or agreements related to the use of the surface and subsurface, in each case to the extent used or held for use in connection with the operation of the Subject Interests, including but not limited to any recorded agreements described in Exhibit B hereto (collectively, the “ Surface Agreements ”);

(c)           to the extent assignable or transferable, all permits, licenses, franchises, consents, approvals, and other similar rights and privileges (the “ Permits ”), in each case to the extent used or held for use in connection with the operation of the Subject Interests;

(d)           to the extent assignable or transferable, all real and personal property, and fixtures including without limitation, structures, wellhead equipment, pumps, pumping units, flowlines, gathering systems, pipe, tanks, buildings, treatment facilities, injection facilities, disposal facilities, compression facilities and other materials, supplies, and facilities, equipment, machinery, fixtures, spare parts, inventory and other personal property used or held for use in connection with the operation of the Subject Interests or in connection with the production, treatment, compression, gathering, transportation, sale or disposal of oil, gas or other hydrocarbons produced from or attributable to the Subject Interests (collectively the “ Facilities ”); and any water, byproducts or waste produced therefrom or therewith or otherwise attributable thereto, including all wells drilled on lands covered by the Leases or lands pooled or unitized therewith (whether producing, shut in or abandoned, and whether for production, produced water injection or disposal, or otherwise), limited to those described in Exhibit C attached hereto (collectively, the “ Wells ”),

(e)           to the extent assignable or transferable, all contracts, agreements, equipment leases, production sales and marketing contracts, farmout and farmin agreements, operating agreements, service agreements, unit agreements, gas gathering and transportation agreements, equipment leases and rental contracts, service agreements, supply agreements and other contracts, agreements, and arrangements and other contracts, agreements and arrangements that used or held for use in connection the Subject Interests, including but not limited to those described in Exhibit D attached hereto (collectively, the “ Contracts ”); and

(f)            to the extent assignable or transferable, originals (or copies to the extent that Seller does not possess originals) of all books, correspondence, information, records, files, maps, databases and geological and geophysical data, in the possession of Seller relating to the Subject Interests and/or the Wells, or the maintenance or operations thereof, including, but not limited to, all title opinions, maps, drilling reports, all electronic files, data, programs and software, logs, seismic, and geophysical data, analyses and information, and all other records and data relating to the land, title, geological, engineering, accounting and operational matters, regardless of the form of media on which it is stored, that, in each case, relate to the Subject Interests and/or the Wells, which are in the possession or control of Seller (the “ Records ”).

Section 1.03           Excluded Assets .  Notwithstanding the foregoing, the Assets shall not include, and there is excepted, reserved, and excluded from the sale, transfer, and assignment contemplated hereby the following (collectively, the “ Excluded Assets ”): (a) all trade credits and all accounts, accounts receivable, checks, funds, promissory notes, instruments and general intangibles (as such terms are defined in the Texas Uniform Commercial Code) attributable to the Assets with respect to any period of time prior to the Effective Time; (b) all claims and causes of action of Seller (i) arising from acts, omissions or events, or damage to or destruction of property, occurring prior to the Effective Time, (ii) arising under or with respect to any of the Contracts that are attributable to periods of time prior to the Effective Time (including claims for adjustments or refunds), or (iii) with respect to any of the other Excluded Assets; (c) all rights and interests of Seller (i) under any policy or agreement of insurance or indemnity, (ii) under any bond, or (iii) to any insurance or condemnation proceeds or awards arising, in each case, from acts, omissions or events, or damage to or destruction of property, occurring prior to the Effective Time; (d) all Hydrocarbons produced from or attributable to the Subject Interests with respect to all periods prior to the Effective Time, together with all proceeds from the sale of such Hydrocarbons; (e) all claims of Seller for refunds of or loss carry forwards with respect to (i) ad valorem, severance, production or any other taxes attributable to any period prior to the Effective Time, (ii) income, margin or franchise taxes, or (iii) any taxes attributable to the other Excluded Assets, and such other refunds, and rights thereto, for amounts paid in connection with the Assets and attributable to the period prior to the Effective Time, including refunds of amounts paid under any gas gathering or transportation agreement; (f) all amounts due or payable to Seller as adjustments to insurance premiums related to the Assets with respect to any period prior to the Effective Time; (g) all proceeds, income or revenues (and any security or other deposits made) attributable to (i) the Assets for any period prior to the Effective Time, or (ii) any other Excluded Assets; (h) all vehicles, trailers, rolling stock, personal computers and associated peripherals and all radio, telephone and other communication equipment; (i) all of Seller’s proprietary computer software, technology, patents, trade secrets, copyrights, names, trademarks, logos and other intellectual property; (j) all of Seller’s rights and interests in geological and geophysical data that cannot be transferred without the consent of, or payment to, any third party; (k) all documents and instruments of Seller that may be protected by an attorney-client privilege; (l) data and other information that cannot be disclosed or assigned to Buyer as a result of confidentiality or similar arrangements under agreements with persons unaffiliated with Seller; (m) all audit rights arising under any of the Contracts or otherwise with respect to any period prior to the Effective Time; (n) all corporate, partnership, income tax and financial records of Seller; and (o) all (i) agreements and correspondence between Seller and any advisor of Seller (the “Advisor”) relating to the transactions contemplated in this Agreement, (ii) lists of prospective purchasers for such transactions compiled by either Seller or the Advisor, (iii) bids submitted by other prospective purchasers of the Assets, (iv) analyses by Seller or the Advisor of any bids submitted by any prospective purchaser, (v) correspondence between or among Seller or the Advisor, or either of their respective representatives, and any prospective purchaser other than Buyer, and (vi) correspondence between Seller or the Advisor or any of their respective representatives with respect to any of the bids, the prospective purchasers, the engagement or activities of the Advisor, or the transactions contemplated in this Agreement.

Section 2.01          Purchase Price .  The total consideration for the purchase, sale, and conveyance of the Assets to Buyer is Buyer’s payment to Seller of the sum of Sixteen Million, Two Hundred Fifty Thousand and No/100 ($16,250,000.00) Dollars (the “ Purchase Price ”), as adjusted in accordance with the provisions of this Agreement; and the assumption of the Assumed Obligations.

Section 2.02          Allocated Value(s) .  The Purchase Price is allocated among the Assets by Buyer, as set forth in Exhibit E attached hereto (the “ Allocated Value(s) ”).  Seller and Buyer agree that the Allocated Value(s) shall be used to compute any adjustments to the Purchase Price pursuant to the provisions of Article IV .  Any subsequent adjustments to the Purchase Price hereunder shall be reflected in the allocation hereunder consistent with Treasury Regulation § 1.1060-IT(f).  For tax purposes, the Parties agree to report the transactions contemplated by this Agreement in a manner consistent with the terms of this Agreement, including the allocations set forth above as of the Closing Date, and that neither Party will take any position inconsistent therewith, including in any tax return, in any refund claim, in any litigation or arbitration or otherwise.

Section 2.03          Earnest Money Deposit .  Concurrently with the execution of this Agreement by Buyer and Seller, Buyer shall deposit with Seller, by wire transfer of immediately available funds to an account designated by Seller, the sum of One Million and No/100 ($1,000,000.00) Dollars as an earnest money deposit (the “Earnest Money Deposit”) to assure Buyer’s performance of its obligations under this Agreement.  If Closing occurs, the Earnest Money Deposit, together with interest earned thereon, will be applied to reduce the Purchase Price.  If Closing fails to occur, the Earnest Money Deposit shall be handled in accordance with Section 16.02 hereof.

Section 2.04           1031 Exchange .  Seller, in lieu of the sale of the Assets to Buyer for the cash consideration provided herein, shall have the right at any time prior to Closing to assign subject to Buyer's approval, which approval shall not be unreasonably withheld, all or a portion of its rights under this Agreement to a qualified intermediary, in order to accomplish the transaction in a manner that will comply, either in whole or in part with the requirements of a like-kind exchange pursuant to §1031 of the Internal Revenue Code of 1986, as amended.  In the event Seller does assign its rights under this Agreement pursuant to this Article 2.04 , Seller agrees to notify Buyer in writing of such assignment not less than seven (7) days before Closing.  If Seller assigns its rights under this Agreement, Buyer agrees to (i) consent to Seller's assignment of its rights in this Agreement, and (ii) deposit at Closing with the qualified escrow or qualified trust account the Purchase Price, as adjusted pursuant to this Agreement, i.e. subject to the Purchase Price Adjustments on the Pre-Closing Statement, in immediately available funds pursuant to wire transfer instructions to be provided by Seller to Buyer, before the Closing Date.  Seller indemnifies Buyer for any cost, claim or liability arising from any assignment by Seller pursuant to the provisions of this Section.

If the transactions contemplated hereby are consummated in accordance with the terms and provisions hereof, the ownership of the Assets shall be transferred from Seller to Buyer on the Closing Date, but effective for all purposes as of 7:00 a.m. local time at the location of the Assets on September 1, 2009 (the “ Effective Time ”), pursuant to an assignment in the form of the Assignment, Bill of Sale, and Conveyance attached hereto as Exhibit F (the “ Assignment ”), containing a special warranty of title from Seller to Buyer as to the Leases and Wells being conveyed thereby in the form stated therein, subject to Permitted Encumbrances and the terms of this Agreement.  If Closing occurs, Buyer shall be entitled to be paid, or credited for, any and all revenues or other amounts realized from or accruing to the purchased Assets subsequent to the Effective Time and shall be responsible for all expenses for the development and operation of the purchased Assets subsequent to the Effective Time.  Seller shall be entitled to retain any and all revenues and other amounts realized from and accruing to the Assets prior to the Effective Time, and, subject to the terms of this Agreement, shall be responsible for all expenses for the development and operation of the Assets incurred prior to the Effective Time.

Section 4.01           Examination Period.   For a period of forty-five (45) days after the execution of this Agreement until 5:00 p.m., local time in Midland, Texas (the “ Examination Period ”), at Buyer’s sole cost and risk, Seller

(a)           shall permit Buyer and/or its representatives to examine, at reasonable times during normal business days and hours and in Seller’s offices, all abstracts of title, title opinions, title files, ownership maps, lease, well and division order files, assignments, operating and accounting records and all Surface Agreements, Permits, Contracts, and other agreements pertaining to the Assets insofar as same may now be in existence and in the possession or control of Seller, subject to such restrictions upon disclosure as may exist under confidentiality or other agreements binding upon Seller or such data; and

(b)           shall provide access to the Assets to Buyer and/or its representatives in order for Buyer to (i) conduct a Phase I environmental site assessment, as that term is defined by the Association of Standards, Tests and Measurements and (ii) assess them.  When Seller is not the operator of the Assets, it shall use its best efforts to obtain access for Buyer and/or its representatives to such facility(ies) for the above stated purposes.  Except as otherwise required by law, such Phase I environmental site assessment, and all reports, drafts, data, and analyses relating thereto shall remain strictly confidential and Buyer shall not disclose the same to any third party without the prior written consent of Seller which shall not be unreasonably withheld.

(a)            Definition of Defensible Title .  As used in this Agreement, the term “ Defensible Title ” shall mean, subject to Permitted Encumbrances.

(b)            Definition of Title Defect .  As used in this Agreement, the term “ Title Defect ” shall mean any defect which alone, or in conjunction with other defects, causes Seller not to have Defensible Title to the Subject Interest, Lease, or Well.

(c)            Title Adjustment .  There shall not exist at Closing hereunder any uncured Title Defects asserted by Buyer except where:

(d)           " Defect Value " shall be determined based upon the criteria set forth below:

(e)           “ Allocated Value ” attributed to each Lease or Well shall be that which is set forth on Exhibit E attached to this Agreement.

(f)           “ Net Revenue Interest ” shall mean Seller’s interest in and to all production of Hydrocarbons saved, produced and sold or which can be produced and sold from any Well or Lease after giving effect to all valid lessor’s royalties, overriding royalties, production payments, carried interest, liens, and other encumbrances or charges against production therefrom.

(g)           “ Working Interest ” shall mean with respect to the Leases and the Wells, Seller’s interest in and to the full and entire leasehold estate created under and by virtue of the Leases and all rights and obligations of every kind and character appurtenant thereto or arising therefrom, without regard to any valid lessor’s royalty, overriding royalties, production payments, carried interest, liens, or other encumbrances or charges against production therefrom insofar as such interest in said leasehold estate is burdened with the obligation to bear and pay costs of operations.

(h)           “Permitted Encumbrances” shall mean:

(i)            “ Governmental Authority ” shall mean, as to any given Asset, the United States and the state, county, parish, city and political subdivisions in which such Asset is located and that exercises jurisdiction over such Asset, and any agency, department, board or instrumentality thereof that exercises jurisdiction over such Asset.

Section 4.03            Title Review .  At its sole cost and expense, Buyer shall commence and diligently pursue such examination of title to the Assets as Buyer desires and may continue such examination through the Closing Date, as defined in Section 10.01 below.

Section 4.04            Determination of Title Defects and the Defect Values .  Buyer shall notify Seller in writing of any claimed Title Defect on or before ten (10) business days prior to Closing at 5:00 p.m., local time in Midland, Texas (the “ Title Defects Notice ”).  The Title Defects Notice shall:

Any Title Defect that is not timely identified in the Title Defect Notice shall thereafter be forever waived and expressly assumed by Buyer, except to the extent any such unasserted Title Defect constitutes a breach of Seller’s special warranty of title contained in the form of Assignment attached hereto as Exhibit F .  Closing shall occur notwithstanding the Title Defects identified by Buyer, subject to Section 10.03 .

Within five (5) business days after Seller’s receipt of the Title Defects Notice, Seller shall give written counter-notice (“ Seller’s Notice ”) to Buyer that:

If Seller’s Notice expresses the intent to cure any of the Title Defects, it shall have until Closing (the “ Cure Period ”) to correct such asserted Title Defect at its own expense.  If the Title Defect has not been cured within the Cure Period, the amount of the Defect Value Adjustment shall be credited by Buyer as part of the Purchase Price Adjustment, pursuant to Section 10.03 , below, and the Title Defect shall be assumed by Buyer.

The failure of Seller to deliver Seller’s Notice within the time prescribed shall be deemed to be:

If the existence of a Title Defect or the amount of the Defect Value Adjustment is to be determined by arbitration pursuant to Article XV hereof, the Purchase Price, shall be reduced by the amount of the Defect Value Adjustment Buyer proposed for that Title Defect on the Closing Date and that amount shall be paid into a mutually agreeable interest bearing trust account with the proceeds and interest attributable thereto being promptly dispersed pursuant to the final arbitration award.

Section 4.05           Suspense Funds Held by Seller .  Seller agrees to convey to Buyer and Buyer agrees to receive all third party suspense funds held by Seller, if any, as of the Closing Date, for the benefit of royalty, overriding royalty and working interest owners attributable to the Leases or Wells, except and excluding minimum suspense funds and suspense accounts with a negative balance, the amount of such funds to be adjusted with respect to the suspense funds received and disbursed by Seller.  Buyer will defend, indemnify and hold Seller harmless from and against any future liability associated with such funds.  Seller will defend, indemnify and hold Buyer harmless from and against any liability associated with such funds arising prior to the Closing Date.

Section 4.06           Preferential Rights to Purchase and Consents .  Seller shall use its reasonable efforts, but without any obligation to incur any cost or expense in connection therewith (other than de minimis amounts), to comply with all preferential right to purchase provisions relative to any Asset prior to the Closing. Prior to the Closing, Seller shall notify Buyer of the existence of any preferential purchase rights, if any preferential purchase rights are exercised or if the requisite period has elapsed without said rights having been exercised. If a third party who has been offered an interest in any Asset pursuant to a preferential right to purchase elects prior to the Closing to purchase all or part of such Asset pursuant to the aforesaid offer, the interest or part thereof so affected will be eliminated from the Assets and the Purchase Price shall be reduced by the Allocated Value of such Asset. Closing shall not occur until all preferential rights have either been waived, exercised or the time for exercising has passed.

Seller shall use all reasonable efforts to obtain all necessary consents from third parties to assign the Assets prior to Closing (other than governmental approvals that are customarily obtained after Closing) and Buyer shall assist Seller with such efforts.  To the extent such consents are not obtained prior to Closing and, pursuant to an express provision of the document providing for such consent, would give rise to a claim for material specified liquidated damages or cause a termination of the Lease or other Asset to be assigned as a result of the failure to obtain such consent, then such failure shall constitute a Title Defect as to that portion of the Assets affected thereby.  In all other cases, such unobtained consent shall not constitute Title Defects.

(a)            Adverse Environmental Condition .  “ Adverse Environmental Condition ” means any contamination or condition exceeding currently allowed regulatory limits and not otherwise authorized by permit or law, resulting from any discharge, release, disposal, production, storage, treatment, or any other activities on, in or from any Lease or Well, or the migration or transportation from other lands to any Lease or Well, prior to the Effective Time, of any wastes, pollutants, contaminants, Hazardous Substances or other materials or substances subject to any state or federal law or regulation relating to the protection of the environment, including, but not limited to, the Clean Air Act, the Comprehensive Environmental Response, Compensation and Liability Substance Control Act, the Hazardous Waste and Solid Waste Amendments Act of 1984, the Superfund Amendments and Reauthorization Act of 1986, the Hazardous Materials Transportation Act, the Clean Water Act, the National Environmental Policy Act, the Endangered Species Act, the Fish and Wildlife Coordination Act, the National Historic Preservation Act, and the Oil Pollution Act of 1990, as well as any state and local regulation or law governing the same, similar or related matters (“Environmental Laws”).

(b)            Environmental Assessment .  At its sole cost and expense, Buyer may commence and diligently pursue a Phase I environmental site assessment of the Assets as Buyer desires and may continue such examination through the Closing Date.  Seller shall fully cooperate with Buyer and Buyer’s representatives in regard to this assessment by providing on a timely basis all information reasonably requested and access to the Assets, together with complete copies of any and all previous Phase I or Phase II environmental site assessment reports on the Assets, if any, which Seller has in its possession or control.  Buyer shall consult with Seller before conducting any work comprising Buyer’s environmental site assessment of the Assets, shall perform all such work in a safe and workmanlike manner so as not to unreasonably interfere with Seller’s operations, and will comply with all applicable laws, rules and regulations.  Seller shall have the right to have a representative or representatives accompany Buyer and Buyer’s environmental consultant at all times during Buyer’s environmental site assessment of the Assets.  Buyer shall give Seller notice not more than five (5) days and not less than forty-eight (48) hours before any visits by Buyer or its environmental consultant to the Assets.  With respect to any samples taken in connection with Buyer’s environmental site assessment of the Assets, Buyer shall take split samples, providing one of each such sample, properly labeled and identified, to Seller.   BUYER HEREBY AGREES TO RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS EACH  SELLER AND ITS RESPECTIVE PARTNERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, REPRESENTATIVES, MEMBERS, SHAREHOLDERS, AFFILIATES, HEIRS, SUCCESSORS AND ASSIGNS, FROM AND AGAINST ALL CLAIMS, LOSSES, DAMAGES, COSTS, EXPENSES, CAUSES OF ACTION AND JUDGMENTS OF ANY KIND OR CHARACTER (INCLUDING THOSE RESULTING FROM SELLER’S SOLE, JOINT, COMPARATIVE OR CONCURRENT NEGLIGENCE OR STRICT LIABILITY) ARISING OUT OF OR RELATING TO BUYER’S ENVIRONMENTAL SITE ASSESSMENT OF THE ASSETS.

Unless otherwise required by applicable law, Buyer shall (and shall cause Buyer’s environmental consultant to) treat confidentially any matters revealed by Buyer’s environmental review of the Assets and any reports or data generated from such review (the “ Environmental Information ”), and Buyer shall not (and shall cause Buyer’s environmental consultant to not) disclose any Environmental Information to any Governmental Authority or other third party without the prior written consent of Seller.  Unless otherwise required by law, Buyer may use the Environmental Information only in connection with the transactions contemplated by this Agreement.  If Buyer, Buyer’s environmental consultant, or any third party to whom Buyer has provided any Environmental Information become legally compelled to disclose any of the Environmental Information, Buyer shall provide Seller with prompt notice sufficiently prior to any such disclosure so as to allow Seller to file any protective order, or seek any other remedy, as it deems appropriate under the circumstances.  If this Agreement is terminated prior to the Closing, Buyer shall deliver the Environmental Information to Seller, which Environmental Information shall become the sole property of Seller.  Buyer shall provide copies of the Environmental Information to Seller without charge whether or not Closing occurs.

(c)            Notice of Adverse Environmental Condition .  Buyer shall notify Seller in writing of any claimed Adverse Environmental Condition (" Environmental Defect ") on or before ten (10) business days prior to Closing at 5:00 p.m., local time in Midland, Texas (“ Environmental Defects Notice ”).  The Environmental Defects Notice shall set forth:

(d)            Determination of Adverse Environmental Conditions and Remediation Values .  Within five (5) business days after Seller’s receipt of the Environmental Defects Notice, Seller shall give written counter notice (“ Seller’s Environmental Notice ”) to Buyer that:

(e)            Exclusive Remedy .  Subject to Section 16.01(a) , this Section 4.07 shall be the exclusive right and remedy of Buyer with respect to any Environmental Defect.

Section 4.08            Limitation of Remedies for Title and Environmental Defects .

  Notwithstanding anything to the contrary contained in Article IV hereof, (a) if the Defect Value of a given Title Defect or the Remediation Value Adjustment of a given Environmental Defect does not exceed $25,000, as determined pursuant to Article IV or Article XV hereof, then no adjustment to the Purchase Price shall be made for such Title Defect or Environmental Defect and no such Title Defect or Environmental Defect shall be counted toward the Aggregate Deductible, (b) if the aggregate net adjustment to the Purchase Price determined in accordance with this Agreement for all Title Defects and Environmental Defects does not exceed 2% of the Purchase Price (the “ Aggregate Deductible ”), then no adjustment to the Purchase Price shall be made therefor, and (c) if the aggregate net adjustment to the Purchase Price determined in accordance with this Agreement for all Title Defects and Environmental Defects does exceed the Aggregate Deductible, then the Purchase Price shall only be adjusted by the amount of such excess.  If Seller elects to retain any Assets related to an Environment Defect under Section 4.07 , the Environmental Defect Value with respect to all such Environmental Defects shall not be counted towards the Aggregate Deductible.

Section 5.01            Representations and Warranties . Seller represents and warrants to Buyer that:

(a)            Existence .  Seller is duly formed and validly existing and in good standing under the laws of its state of formation.  Seller has full legal power, right, and authority to carry on its business as such is now being conducted and as contemplated to be conducted.

(b)            Legal Power .  Seller has the legal power and right to enter into and perform this Agreement and the transactions contemplated hereby.  The execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement will not violate, or be in conflict with:

(c)            Execution .  The execution, delivery, and performance of this Agreement and the transactions contemplated hereby are duly and validly authorized by all requisite action on the part of Seller.  This Agreement constitutes the legal, valid and binding obligation of Seller enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency or other laws relating to or affecting the rights of creditors generally, and by equitable principles which may limit the availability of certain equitable remedies (such as specific performance) in certain instances

(d)            Brokers .  No broker or finder is entitled to any brokerage or finder’s fee, or to any commission, based in any way on agreements, arrangements or understandings made by or on behalf of Seller or any affiliate of Seller for which Buyer has or will have any liabilities or obligations (contingent or otherwise).

(e)            Bankruptcy .  There are no bankruptcy, reorganization or arrangement proceedings pending, being contemplated by or to the best of Seller’s knowledge threatened against Seller.

(f)            Suits and Claims .  There is no claim, investigation, suit or proceedings by any person or entity or by any Governmental Authority pending against Seller in any legal, administrative or arbitration proceeding or, to Seller’s knowledge, threatened against Seller that will materially affect Seller’s ability to consummate the transactions contemplated herein or materially affect Seller’s title to, ownership or operation of, or the value of its interest in the Assets.

(g)            Taxes .  Seller has paid all ad valorem, property, production, severance, excise, and similar taxes and assessments based on or measured by the ownership of Assets or the production of Hydrocarbons or the receipt of proceeds therefrom that have become due and payable.

(h)            Leases and Contracts .  All material Leases and Contracts are in full force and effect and Seller is not in default with respect to any of its material obligations thereunder.

(i)            Governmental Approvals .  Except as shown on Schedule 5.01(i) , Seller has obtained all material consents, approvals, certificates, licenses, permits, and other authorizations of Governmental Authorities required for Seller to own, develop, operate, and maintain the Assets in the manner currently owned, developed, operated and maintained and the Assets have been developed, operated, and maintained in material compliance with all such consents, approvals, certificates, licenses, permits, and other authorizations.

(j)             Royalties .  All royalties, rentals, and other payments due under the Leases have been paid in all material respects or the operator has properly created suspense accounts therefor.

(k)            Compliance .  All Wells have been, in all material respects, drilled, completed, and operated in compliance with the Leases, the Contracts and all applicable laws and rules, regulatio