UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 14, 2004

PARALLEL PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation)

0-13305 75-1971716
(Commission file number) (IRS employer identification number)

1004 N. Big Spring, Suite 400, Midland, Texas 79701
(Address of principal executive offices) (Zip code)

(432) 684-3727
(Registrant's telephone number including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))

Item 2.01 Completion of Acquisition or Disposition of Assets.

As reported in our Form 8-K Report dated September 16, 2004 and filed
with the Securities and Exchange Commission on September 22, 2004, Parallel,
L.P., a wholly-owned subsidiary of Parallel Petroleum Corporation (collectively,
"Parallel"), entered into a Purchase and Sale Agreement with Caprock Oil & Gas,
L.P. for the purchase of producing oil and gas properties located in Andrews and
Gaines Counties, Texas in the Permian Basin of west Texas. In a separate but
related Purchase and Sale Agreement, Parallel, L.P. also agreed to purchase the
interests owned by Bradley W. Bunn in the same properties. Bradley W. Bunn is an
affiliate and principal of Caprock Oil & Gas, L.P. Under terms of both
agreements, Parallel, L.P. or Parallel Petroleum Corporation will become the
operator of the properties.

Parallel, L.P. completed both of the property acquisitions on October
14, 2004. The effective date of both acquisitions is October 1, 2004.

The net purchase price for the properties owned by Caprock Oil & Gas,
L.P. was approximately $12.87 million and the net purchase price for the
properties owned by Bradley W. Bunn was approximately $746,000.

The combined acreage and wells acquired by Parallel, L.P. under the two
purchase and sale agreements is approximately 5,360 gross (3,109 net) acres and
67 gross (39 net) producing oil and gas wells. The wells produce from the Queen
and San Andres formations at depths of approximately 4,200 to 4,900 feet. Proved
reserves from the acquired properties are estimated to be 2.0 million equivalent
barrels of oil and the aggregate daily production from the acquired interests is
approximately 200 equivalent barrels of oil per day. Parallel's average working
interest and net revenue interest in the acquired properties is 56.6% and 43.8%,
respectively.

The properties were initially offered for sale by Caprock under a
competitive bid process. The terms of the definitive purchase and sale
agreements resulted from negotiations with Caprock and Bradley W. Bunn.

Neither Parallel Petroleum Corporation nor Parallel, L.P. has any
relationship with Caprock or Bradley W. Bunn, other than in respect of the
purchase and sale agreements.

The purchase price for both transactions was financed with loan
proceeds drawn under Parallel's revolving credit facility provided by First
American Bank, SSB, BNP Paribas, Citibank, F.S.B. and Western National Bank. You
can find additional information about our revolving credit facility in our Form
8-K Report dated September 27, 2004 and filed with the Securities and Exchange
Commission on October 1, 2004.

All of the acquired properties were pledged as additional collateral to
further secure the payment and performance of Parallel's indebtedness and
obligations under the revolving credit facility.

Item 9.01 Financial Statements and Exhibits.

Exhibit No. Description

10.1 Purchase and Sale Agreement,
dated as of September 16, 2004,
between Parallel, L.P. and
Caprock Oil & Gas, L.P.

10.2 Purchase and Sale Agreement,
dated September 16, 2004,
between Parallel, L.P.
and Bradley W. Bunn

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Dated: October 19, 2004

PARALLEL PETROLEUM CORPORATION

By: /s/ Larry C. Oldham
-----------------------------------
Larry C. Oldham, President and Chief
Executive Officer

Exhibit 10.1

PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement ("Agreement"), dated as of September
16, 2004, is by and between CAPROCK OIL & GAS, L.P., a Texas limited
partnership, whose address is 850 E. Broadway, Andrews, Texas 79714 ("Seller"),
and PARALLEL L.P., whose address is 1004 N. Big Spring Street, Midland, Texas
79701 ("Buyer"). Seller and Buyer are sometimes together referred to herein as
"Parties".

WITNESSETH:

WHEREAS, Seller owns certain oil and gas leasehold interests and
related assets more fully described on the exhibits hereto; and

WHEREAS, Seller desires to sell and Buyer desires to acquire these
interests and related assets on the terms and conditions hereinafter provided;

NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, Seller and Buyer hereby agree as follows:

ARTICLE 1. DEFINITIONS

1.1. "Agreement" shall mean this Purchase and Sale Agreement between
Seller and Buyer.

1.2. "Assets" shall mean the following-described assets and properties
(except to the extent constituting Excluded Assets):

(a) the Leases;

(b) the Personal Property and Incidental Rights; and

1.3. "Assumed Obligations" shall mean:

(a) all Environmental Obligations or Liabilities;

(b) all obligations with respect to gas production, sales or, subject
to Article 18, processing imbalances with third parties; and

(c) all liabilities, duties, and obligations that arise out of the
ownership, operation or use of the Assets after the Effective Time.

1.4. "Closing" shall be as defined in Section 13.1.

1.5. "Closing Date" shall be as defined in Section 13.1.

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1.6. "Effective Time" shall mean 7:00 a.m., local time, on October 1,
2004.

1.7. "Environmental Defect" shall mean: (i) a condition or activity
with respect to an Asset that is in violation, or reasonably likely to violate,
any federal, state or local statute or regulation ("Environmental Law") relating
to natural resources, conservation, the environment, or the emission, release,
storage, treatment, disposal, transportation, handling or management of
industrial or solid waste, hazardous waste, hazardous or toxic substances,
chemicals or pollutants, petroleum, including crude oil, natural gas, natural
gas liquids, or liquefied natural gas, and any wastes associated with the
exploration and production of oil and gas ("Regulated Substances"); or (ii) the
presence of Regulated Substances in the soil, groundwater, or surface water in,
on, at or under an Asset in any manner or quantity which is required to be
remediated by Environmental Law or by any applicable action or guidance levels
or other standards published by any governmental agency with jurisdiction over
the Assets. Buyer and Seller agree that for a condition to be in violation of
any statute or regulation referred to in the preceding sentence, it shall not be
necessary that Seller shall be under notice of violation from a federal or state
regulatory agency.

1.8. "Environmental Obligations or Liabilities" shall mean all
liabilities, obligations, expenses (including, without limitation, all
attorneys' fees), fines, penalties, costs, claims, suits or damages (including
natural resource damages) of any nature, associated with the Assets, whether
arising before or after the Effective Time, and attributable to or resulting
from: (i) pollution or contamination of soil, groundwater or air, on the Assets
and any other contamination of or adverse effect upon the environment, (ii)
underground injection activities and waste disposal, (iii) clean-up responses,
remedial, control or compliance costs, including the required cleanup or
remediation of spills, pits, ponds, or lagoons, including any subsurface or
surface pollution caused by such spills, pits, ponds, or lagoons, (iv)
noncompliance with applicable land use, permitting, surface disturbance,
licensing or notification requirements, (v) all obligations for plugging,
replugging and abandoning any wells, the restoration of any well sites, tank
battery sites and gas plant sites, the proper removal, disposal and abandonment
of any wastes or fixtures, and the proper capping and burying of all flow lines,
which are included in the Assets; and (vi) violation of any federal, state or
local environmental or land use law. Notwithstanding anything to the contrary
set forth in, or implied by, this Section 1.8, "Environmental Obligations or
Liabilities" does not include (i) personal injury or wrongful death occurring
prior to the Closing or (ii) offsite waste disposal occurring prior to the
Closing Date.

1.9. "Excluded Assets" shall mean the following:

(a) (i) all trade credits, accounts receivable, notes receivable and
other receivables attributable to Seller's interest in the Assets with respect
to any period of time prior to the Effective Time; (ii) all deposits, cash,
checks in process of collection, cash equivalents and funds attributable to
Seller's interest in the assets with respect to any period of time prior to the
Effective Time; and (iii) all proceeds, benefits, income or revenues accruing
(and any security or other deposits made) with respect to the Assets prior to
the Effective Time;

(b) all corporate, financial, and tax records of Seller; however, Buyer
shall be entitled to receive copies of any tax records which directly relate to
any Assumed Obligations, or which are necessary for Buyer's ownership,
administration, or operation of the Assets;

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(c) all claims and causes of action of Seller arising from acts,
omissions or events, or damage to or destruction of the Assets, occurring prior
to the Effective Time except to the extent directly related to the Assumed
Obligations;

(d) except as otherwise provided in Article 15, all rights, titles,
claims and interests of Seller relating to the Assets prior to the Effective
Time (i) under any policy or agreement of insurance or indemnity; (ii) under any
bond; or (iii) to any insurance or condemnation proceeds or awards;

(e) all Hydrocarbons produced from or attributable to the Assets with
respect to all periods prior to the Effective Time, together with all proceeds
from or of such Hydrocarbons, except the Inventory Hydrocarbons;

(f) claims of Seller for refund of or loss carry forwards with respect'
to production, windfall profit, severance, ad valorem or any other taxes
attributable to any period prior to the Effective Time, or income or franchise
taxes;

(g) all amounts due or payable to Seller as adjustments or refunds
under any contracts or agreements (including take-or-pay claims) affecting the
Assets, respecting periods prior to the Effective Time;

(h) 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;

(i) all proceeds, benefits, income or revenues accruing (and any
security or other deposits made) with respect to the Assets, and all accounts
receivable attributable to the Assets, prior to the Effective Time;

(j) all of Seller's intellectual property, including, but not limited
to, proprietary computer software, patents, trade secrets, copyrights, names,
marks and logos;

(k) all of Seller's remote terminal units, radio control alarms, radio
towers located on the leases, areas, and lands described in Exhibit A.

1.10. "Hydrocarbons" shall mean crude oil, natural gas, casinghead gas,
condensate, sulphur, natural gas liquids and other liquid or gaseous
hydrocarbons (including CO2), and shall also refer to all other minerals of
every kind and character which may be covered by or included in the Leases
and Assets.

1.11. "Inventory Hydrocarbons" shall mean all merchantable oil and
condensate (for oil or liquids in storage tanks, being only that oil or liquids
physically above the top of the pipeline connection from such tanks) produced
from or attributable to the Leases prior to the Effective Time which have not
been sold by Seller and are in storage at the Effective Time.

1.12. "Leases" shall mean, except to the extent constituting Excluded
Assets, any and all interests owned by Seller and set forth on Exhibit A, or
which Seller is entitled to receive by reason

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of any participation, joint venture, farm-in, farm-out, joint operating
agreement or other agreement, in and to the oil, gas and/or mineral leases,
permits, licenses, concessions, leasehold estates, royalty interests, overriding
royalty interests, net revenue interests, executory interests, net profit
interests, working interests, reversionary interests, fee and term mineral
interests, and any other interests of Seller in Hydrocarbons, it being the
intent hereof if the legal descriptions and depth limitations set forth on
Exhibit A do not correctly describe such leases or interests or all of the lands
covered thereby, that the "Leases" shall nevertheless include all of Seller's
right, title and interest in the Leases and other interests described on Exhibit
A and all land and depths covered thereby even though such interests may be
incorrectly described.

1.13. "Performance Deposit" shall be as defined in Section 3.2.

1.14. "Personal Property and Incidental Rights" shall mean all right,
title and interest of Seller in and to or derived from the following insofar as
the same do not constitute Excluded Assets and are attributable to, appurtenant
to, incidental to, or used for the operation of the Leases:

(a) all easements, rights-of-way, permits, licenses, servitudes,
surface leases and fee parcels or other interests;

(b) all wells, equipment and other personal property, inventory, spare
parts, tools, fixtures, pipelines, wellhead equipment, casing, tubing, pumps,
motors, machinery, gathering lines and facilities, telephone lines, boilers,
buildings, injection wells and facilities, saltwater disposal wells and
facilities, central processing facilities, metering facilities, compression
facilities, platforms, tank batteries, appurtenances, and improvements now or as
of the Effective Time situated upon the Leases or the land covered by the
instruments described in Section 1.14(a) or used or held for use in connection
with the development or operation of the Leases or the production, treatment,
storage, compression; processing or transportation of Hydrocarbons from or in
the Leases;

(c) all contracts, agreements, and title instruments to the extent,
attributable to and affecting the Assets in existence at Closing, including all
Hydrocarbon sales, purchase, gathering, transportation, treating, marketing,
exchange, processing, and fractionating contracts, and joint operating
agreements, unitization, pooling and communitization agreements; and

(d) originals of all lease files, land files, well files, production
records, division order files, abstracts, title opinions, and contract files,
insofar as the same are directly related to the Leases; including, without
limitation, all seismic, geological, geochemical, and geophysical information
and data, to the extent that such data is not subject to any third party
restrictions, but excluding Seller's proprietary interpretations of same.

1.15. "Purchase Price" shall be as defined in Section 3.1.

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royalties, overriding royalties and other burdens on production; production
expenses, operating expenses and all expenditures attributable to the operation
of the Assets; personal injuries; and Taxes (provided, that all Taxes based on
or measured by production or the value thereof shall be deemed for purposes of
this Agreement to be attributable to the period when such production was
produced, notwithstanding that such Taxes may not be assessed or paid in a
subsequent period); but not including any such items to the extent the Purchase
Price is reduced therefor pursuant to Section 3.3(b)(2 or 5), except those
specifically included in the definition of "Assumed Obligations."

ARTICLE 2. AGREEMENT TO PURCHASE AND SELL

Subject to the terms and conditions of this Agreement, Seller agrees to
sell and convey to Buyer and Buyer agrees to purchase and pay for the Assets and
to assume the Assumed Obligations.

ARTICLE 3. PURCHASE PRICE AND PAYMENT

3.1. Purchase Price.

Subject to adjustment as set forth below, the Purchase Price for the
Assets shall be Thirteen Million One Hundred Forty-Six Thousand Two Hundred
Twenty-One Dollars ($13,146,221.00), allocated among the Assets as provided in
Exhibit B.

3.2. Performance Deposit.

Immediately upon the execution hereof, Buyer shall tender to the trust
account of Turner, Davis & Gerald, by bank wire transfer, a Performance Deposit
equal to ten percent (10%) of the Purchase Price, which Performance Deposit
shall be non-interest-bearing and non-refundable except as provided herein.

3.3. Final Settlement/Purchase Price Adjustments.

Within 90 days after Closing, Seller shall provide to Buyer, for
Buyer's concurrence, an accounting (the "Final Settlement Statement") of the
actual amounts of Seller's and Buyer's Credits for the adjustment set out in
this Section 3.3. Buyer shall have the right for 30 days after receipt of the
Final Settlement Statement to audit and take exceptions to such adjustments. The
Parties shall attempt to resolve any disagreements on a best efforts basis.
Those credits agreed upon by Buyer and Seller shall be netted and the final
settlement shall be paid as directed in writing by the receiving party, on final
adjustment by the party owing it (the "Final Settlement").

The Purchase Price shall be adjusted as follows:

(a) The Purchase Price shall be adjusted upward by the following
("Seller's Credits"):

(1) the value of (i) all Inventory Hydrocarbons, such value to
be based upon actual sales receipts if available or, in the absence thereof,
upon the prevailing market value for

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crude oil in effect as of the Effective Time adjusted for grade and gravity,
less taxes and transportation fees deducted by the purchaser of such oil, such
oil to be measured at the Effective Time by the operators of the Assets; and
(ii) the value of all of Seller's unsold inventory of gas plant products, if
any, attributable to the Leases at the Effective Time valued in the same manner
as if such products had been sold under the contract then in existence between
Seller and the purchaser of such products or, if there is no such contract,
valued in the same manner as if said products had been sold at the posted price
for said products;

(2) the amount of all production expenses, operating expenses
and all expenditures attributable to the operation of the Assets after August 1,
2004, and actually paid by Seller in accordance with generally accepted
accounting principles;

(3) an amount equal to the sum of any upward adjustments
provided elsewhere in this Agreement; and

(4) any other amount agreed upon by Seller and Buyer in
writing prior to Closing.

(b) The Purchase Price shall be adjusted downward by the following
("Buyer's Credits"):

(1) the total collected sales value of all Hydrocarbons sold
by the Seller after August 1, 2004, all of which are attributable to the Assets,
and any other monies collected by the Seller with respect to the ownership or
operation of the Assets after August 1, 2004, but excepting interest income. To
the extent collected as of Closing, such revenue shall be included in the
preliminary statement referenced in Section 3.3(c). To the extent collected
after Closing such revenue, less Seller's reasonable estimate of amounts then
owing to Seller, shall be delivered to Buyer within five (5) business days after
receipt of such revenue by Seller. Delivery or acceptance of such revenue shall
not be considered a waiver of any rights to further adjustments or calculations
a party may have pursuant to this Agreement;

(2) the amount of all unpaid ad valorem, property, production,
net profits, excise, severance and similar taxes and assessments (but not
including income taxes) ("Taxes"), which taxes and assessments become due and
payable or accrue to the Assets prior to the Effective Time, which amount shall,
where possible, be computed based upon the tax rate and values applicable to the
tax period in question; otherwise, the amount of the adjustment under this
paragraph shall be computed based upon such Taxes assessed against the
applicable portion of the Assets for the immediately preceding tax period just
ended;

(3) an amount equal to the sum of any downward adjustments
provided elsewhere in this Agreement;

(4) an amount equal to the sum of amounts held in suspense by
Seller for the account of third parties as set forth in Schedule 3.3(b)(4)
hereto (subject to reasonable updating through the Closing Date) (obligations
for payment of which amounts to such third parties Buyer shall assume at
Closing);(5) an amount equal to all unpaid royalties, overriding royalties and
other burdens on production, production expenses, operating expenses and all
expenditures attributable

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to the operation of the Assets prior to the Effective Time in accordance with
generally accepted accounting principles; and

(6) any other amount agreed upon by Seller and Buyer in
writing prior to Closing.

(c) Seller shall prepare and deliver to Buyer, at least five "Business
Days" prior to Closing, Seller's estimate of the adjusted Purchase Price to be
paid at Closing, together with a preliminary statement setting forth Seller's
estimate of the amount of each adjustment to the Purchase Price to be made
pursuant to this Section 3.3. The Parties shall negotiate in good faith and
attempt to agree on such estimated adjustments prior to Closing. In the event
any estimated adjustment amounts are not agreed upon prior to Closing, the
estimate of the adjusted Purchase Price for purposes of Closing shall be
calculated based on Seller's and Buyer's agreed upon estimated adjustments (and
any disputes shall be resolved by the parties in connection with the resolution
of the Final Settlement Statement).

ARTICLE 4. SELLER'S REPRESENTATIONS AND WARRANTIES

Seller represents and warrants to Buyer as of the date hereof, and the
Closing Date that:

(a) Seller is a limited partnership, duly organized, validly existing,
and in good standing under the laws of the state of Texas, and is duly qualified
to carry on its business in those states where it is required to do so.

(b) Seller has all requisite power and authority to carry on its
business as presently conducted, to enter into this Agreement and the other
documents and agreements contemplated hereby, and to perform its obligations
under this Agreement and the other documents and agreements contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement will not violate, nor be in conflict
with, any provision of its governing documents or any agreement or instrument to
which it is a party or by which it is bound (except any provision contained in
agreements customary in the oil and gas industry relating to (1) the
Preferential Purchase Rights (defined below) covering all or any portion of the
Assets; (2) required consents to transfer the Assets; (3) maintenance of uniform
interest provisions; and (4) any other third-party approvals or consents
contemplated herein), or any judgment, decree, order, statute, rule, or
regulation applicable to Seller.

(c) This Agreement, and all documents and instruments required
hereunder to be executed and delivered by Seller at Closing, constitute legal,
valid and binding obligations of Seller and is enforceable in accordance with
its respective terms, subject to applicable bankruptcy and other similar laws of
general application with respect to creditors.

(d) There are no bankruptcy, reorganization or receivership proceedings
pending, being contemplated by, or to the actual knowledge of Seller threatened
against Seller.

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(e) The execution, delivery and performance of this Agreement and the
transaction contemplated hereunder have been duly and validly authorized by all
requisite authorizing action, corporate, partnership or otherwise, on the part
of Seller.

(f) Except as shown on Exhibit G, there are no claims, demands,
actions, suits, or proceedings (including condemnation, expropriation, or
forfeiture proceedings) pending, or to the knowledge of Seller threatened,
against Seller or any of its affiliates, or any Asset (a) seeking to prevent the
consummation of the transactions contemplated hereby, or (b) which, singly or in
the aggregate, would adversely affect the Assets.

(g) Except for contracts or arrangements terminable on 30 days' notice
and except as specifically indicated in Schedule 4(g), no hydrocarbons produced
from the Assets are subject to a sales contract or other agreement relating to
the production, gathering, transporting, processing, treating or marketing of
hydrocarbons, and no person has any call upon or option to purchase the Assets
or the production therefrom.

(h) Seller is not obligated, by virtue of a prepayment arrangement, a
"take or pay" arrangement, a production payment or any other arrangement, to
deliver hydrocarbons produced from the Assets at some future time without then
or thereafter receiving full payment therefor.

(i) All information pertaining to expenses and revenues associated with
the Assets as contained in the Divestiture Package describing the Assets
prepared by Riviera Energy Corporation concerning the Assets is accurate and
complete in all material respects.

ARTICLE 5. BUYER'S REPRESENTATIONS AND WARRANTIES

Buyer represents and warrants to Seller as of the date hereof, and the
Closing Date that:

(a) Buyer is a limited partnership, duly organized, validly existing,
and in good standing under the laws of the state of Texas, and as of the Closing
Date is duly qualified to carry on its business in those states where it is
required to do so.

(b) Buyer has all requisite power and authority to carry on its
business as presently conducted, to enter into this Agreement and the other
documents and agreements contemplated hereby, and to perform it obligations
under this Agreement and the other documents and agreements contemplated hereby.
The consummation of the transactions contemplated by this Agreement will not
violate, nor be in conflict with, any provision of Buyer's articles of
incorporation, partnership agreement(s), by-laws or governing documents or any
material agreement or instrument to which it is a party or by which it is bound,
or any judgment, decree, order, statute, rule, or regulation applicable to
Buyer.

(c) The execution, delivery and performance of this Agreement and the
transactions contemplated hereunder have been duly and validly authorized by all
requisite authorizing action, corporate, company, partnership or otherwise, on
the part of Buyer.

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(d) This Agreement, and all documents and instruments required
hereunder to be executed and delivered by Buyer at Closing, constitute legal,
valid and binding obligations of Buyer in accordance with their respective
terms, subject to applicable bankruptcy and other similar laws of general
application with respect to creditors.

(e) There are no bankruptcy, reorganization or receivership proceedings
pending, being contemplated by, or to the actual knowledge of Buyer threatened
against Buyer.

(f) Buyer has not incurred any obligation or liability, contingent or
otherwise, for brokers' or finders' fees in connection with this Agreement and
the transaction provided herein.

(g) Buyer is an experienced and knowledgeable investor and operator in
the oil and gas business. Prior to entering into this Agreement, Buyer was
advised by and has relied on its own expertise and legal, tax, reservoir
engineering, and other professional counsel concerning this Agreement, the
Assets and the value thereof; however, Buyer has relied and based its offer to
purchase the Assets on information furnished to Buyer by Seller and Riviera
Energy Corporation.

(h) Buyer has the financial resources to close the transaction
contemplated by this Agreement, and if third party financing is a requirement
for Buyer's ability to close, Buyer has obtained such financing or will have
obtained such financing before the Closing Date.

ARTICLE 6. ACCESS TO INFORMATION AND INSPECTIONS

6.1. Title Files.

Promptly after the execution of this Agreement and until the Closing
Date, Seller shall permit Buyer and its representatives at reasonable times
during normal business hours to examine and copy, in Seller's offices at their
actual location, all abstracts of title, title opinions; title files, ownership
maps, lease files, assignments, division orders, payout statements and
agreements pertaining to the Assets as requested by Buyer, insofar as the same
may now be in existence and in the possession of Seller. No warranty of any kind
is made by Seller as to the information so supplied, and Buyer agrees that any
conclusions drawn therefrom are the result of its own independent review and
judgment.

6.2. Other Files.

Promptly after the execution of this Agreement and until the Closing
Date, Seller shall permit Buyer and its representatives at reasonable times
during normal business hours to examine, in Seller's offices at their actual
location, all production, well, regulatory, engineering, seismic, geological,
geophysical and geochemical information, accounting information and other
information, files, books, records, and data pertaining to the Assets as
requested by Buyer, insofar as the same may now be in existence and in the
possession of Seller, excepting economic evaluations, reserve reports and any
such information that is subject to the attorney/client and work product
privileges. Seller shall use its commercially reasonable efforts to cause third
party operators of the Assets to afford Buyer similar access to their files and
records relating to the Assets.

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6.3. Confidentiality Agreement.

All such information made available to Buyer shall be maintained
confidential by Buyer until Closing. The information protected by such
confidentiality obligation does not include any information that (i) at the time
of disclosure is generally available to and known by the public (other than as a
result of a disclosure by Buyer), or (ii) is or was available to Buyer on a
nonconfidential basis. Buyer may disclose the information or portions thereof to
those employees, agents or representatives of Buyer or its lenders who need to
know such information for the purpose of assisting Buyer in connection with its
performance of this Agreement. Further, in the event that Buyer is requested or
required (by deposition, interrogatory, request for ocuments, subpoena, civil
investigative demand or similar process) to disclose any of the information,
Buyer shall provide Seller with prompt written notice of such request or
requirement, so that Seller may seek such protective order or other appropriate
remedy as it may desire. Buyer shall further take whatever reasonable steps
which may be necessary to ensure that Buyer's employees, consultants and agents
comply with the provisions of this Section 6.3.

6.4. Inspections.

Promptly after the execution of this Agreement and until Closing,
Seller, subject to any necessary third-party operator approval, shall permit
Buyer and its representatives at reasonable times and at their sole risk, cost
and expense, to conduct reasonable inspections of the Assets.

ARTICLE 7. ENVIRONMENTAL MATTERS AND ADJUSTMENTS

7.1. Upon execution of and pursuant to the terms of this Agreement,
Buyer shall have the right, at reasonable times during normal business hours, to
conduct its investigation into the status of the physical and environmental
condition of the Assets. If, in the course of conducting such investigation,
Buyer discovers that any Asset is subject to a material Environmental Defect,
Buyer may raise such Environmental Defect in the manner set forth hereafter. No
later than 5:00 p.m.,three (3) business days prior to Closing (the
"Environmental Defect Notice Date"), Buyer shall notify Seller in writing
specifying such Environmental Defects, if any, the Assets affected thereby, and
Buyer's good faith estimate of the net reduction in value of the Assets affected
by such defects (the "Environmental Defect Value"). Prior to Closing, Buyer and
Seller shall treat all information regarding any environmental conditions as
confidential, whether material or not, and shall not make any contact with any
governmental authority or third party regarding same without the written consent
of the other party unless required by law.

7.2. If Buyer fails to notify Seller prior to or on the Environmental
Defect Notice Date, of any Environmental Defects, all Environmental Defects not
timely noticed to Seller pursuant to Section 7.1 will be deemed waived, Seller
shall be released from any liability therefor, the Parties shall proceed with
Closing, Seller shall be under no obligation to correct the defects, and Buyer
shall assume the risks, liability and obligations associated with such defects.
Seller may, but shall be under no obligation to, correct at its own cost and
expense such defects on or before the Closing Date.

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7.3. In the event that Buyer provides Seller with an Environmental
Defect Notice, Seller, at its sole option, shall, (i) agree to cure or remediate
any Environmental Defect within a reasonable time after Closing as provided in
Section 7.4; or, (ii) reduce the Purchase Price by the amount of the
Environmental Defect Value; provided, however, if an Environmental Defect poses
a material risk of any claims by third parties for damages, injunctive relief or
any other remedy other than the remediation contemplated in determining the
Environmental Defect Value, or if the estimated Environmental Defect Value
exceeds 20% of the Allocated Value of the affected Asset, then Buyer shall have
the right to delete the affected Asset from the Assets to be conveyed under this
Agreement, and receive a reduction of the Purchase Price in the amount of the
Allocated Value of such Asset, in which event 100% of the Allocated Value of
such Asset shall be included in the calculation of total defects for purposes of
Article 9. Regardless of Seller's intention to cure or remediate an
Environmental Defect after Closing, the value of all Environmental Defects not
cured or remediated by Closing shall be included in the calculation of total
defects for purposes of Article 9.

7.4 If Seller elects to proceed under Section 7.3(i) with respect to an
Environmental Defect, Seller shall remediate such Environmental Defect as soon
as reasonably practicable after Closing in accordance with applicable law, in
which case the following provisions will govern the remediation:

(a) An amount equal to the Environmental Defect Value of such
Environmental Defect shall be placed in escrow by Buyer, with an escrow agent
and pursuant to an escrow agreement mutually acceptable to the Parties, and the
Purchase Price shall be reduced by such amount.

(b) Buyer will grant access to the Assets after Closing to Seller, and
third parties conducting assessments or remediation, to the extent and as long
as necessary to conduct and complete the assessment or remediation work, to
remove equipment and facilities, and to perform any other activities reasonably
necessary in connection with assessment or remediation. Buyer will use its
commercially reasonable efforts not to interfere with Seller's ingress and
egress or assessment or remediation activities. Seller will make reasonable
efforts to perform the work so as to minimize disruption to Buyer's business
activities and to the Assets.

(c) Seller shall retain the liability for, and shall indemnify, defend
and hold harmless Buyer from any Claims with respect to the Environmental
Defect, until such time as the remediation has been completed and accepted by
Buyer, and upon such acceptance by Buyer (which acceptance shall not be
unreasonably withheld or delayed), the amount escrowed on account of such
Environmental Defect shall be released to Seller (together with all interest
earned thereon .in the escrow account), and Seller shall have no further
liability or indemnification obligation with respect to such Environmental
Defect.

(d) Until Seller completes remediation of an Environmental Defect,
Seller and Buyer will each notify the other of any pending or threatened claim,
action, or proceeding by any authority or private party that relates to or would
affect the Environmental Defect or the remediation of the Assets affected by the
Environmental Defect.

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(e) If Seller undertakes remediation as to any Asset in which Seller's
ownership is less than 100%, Buyer will bill the other working interest owners
for their share of the remediation expenses in advance of Seller beginning such
remediation to the extent permitted under the applicable operating agreement and
will pay over to Seller any amount so received provided that Buyer shall have no
obligation to initiate any legal proceeding to collect such amounts and shall
be entitled to deduct any reasonable costs of collection from the amount
received to be paid to Seller.

ARTICLE 8. TITLE DEFECTS AND ADJUSTMENTS

8.1. Definitions.

For purposes hereof, the terms set forth below shall have the meanings
assigned thereto.

(a) "Allocated Value" shall mean the dollar amount allocated to each
producing Asset as set forth on Exhibit B.

(b) "Defensible Title", subject to and except for the Permitted
Encumbrances (as hereinafter defined), means: As to the Leases, such title held
by Seller and reflected by appropriate documentation properly filed in the
official records of the jurisdiction in which the Lease or Leases are located
that (a) entitles Seller and will entitle Buyer, after Closing, to own and
receive and retain, without suspension, reduction or termination, payment of
revenues for not less than the net revenue interest shown on Exhibit B of all
oil and gas produced, saved and marketed from or attributable to the well or
unit indicated through the plugging, abandonment and salvage of such wells; (b)
obligates Seller, and will obligate Buyer after Closing, to bear the costs and
expenses relating to the maintenance, development and operation of such well or
unit through the plugging, abandonment and salvage of such wells in an amount
not greater than the expense interest of Seller set forth in Exhibit B (unless
Seller's net revenue interest therein is proportionately increased); and (c) the
Assets are free and clear of any liens, burdens or encumbrances of any kind or
character.

(c) "Title Defect" shall mean any matter which (i) causes Seller to
have less than Defensible Title to any of the Assets as of the Closing Date, or
(ii) causes any of the following to be untrue:

(A) Leases. The Leases are in full force and effect, are valid
and subsisting. Except for the matters described in Schedule 8.1(c)(A), within
the last two years Seller has not been notified by any lessor under any Lease or
by any other party of a default under any Lease that has not been resolved or of
any requirements or demands to drill additional wells on any of the Leases.
Further, all contracts affecting the Assets are of the type generally found in
the oil and gas industry in the geological area in which the Assets in question
are located, do not (individually or in the aggregate) contain unusual or unduly
burdensome provisions which may operate in a materially adverse manner with
respect to the Assets or to the Buyer, and are in form and substance considered
conventional within the oil and gas industry in the geographical area in which
the Assets are located.

(B) Material Contracts; Required Capital Expenditures. Seller
is not in default, and within the last two years has not received any written
notice from any person alleging

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that Seller is in default, in any material respect under any material
contract or agreement pertaining to the Assets except for those alleged defaults
described in Schedule 8.1(c)(B).

(D) Tax Partnerships. To the best of Seller's knowledge, no
portion of the Assets (1) has been contributed to and is currently owned by a
tax partnership; (2) is subject to any form of agreement (whether formal or
informal, written or oral) deemed by any federal tax statute, rule or regulation
to be or to have created a tax partnership; or (3) otherwise constitutes
"partnership property" (as that term is used throughout Subchapter K of Chapter
1 of Subtitle A of the Code) of a tax partnership. For purposes of this Section
8.1(c)(D) a "tax partnership" is any entity, organization or group deemed to be
a partnership within the meaning of section 761 of the Code or any similar
federal statute, rule or regulation, and that is not excluded from the
application of the partnership provisions of Subchapter K of Chapter 1 of
Subtitle A of the Code by reasons of elections made, pursuant to section 761 (a)
of the Code and all such similar federal statutes, rules and regulations, to be
excluded from the application of all such partnership provisions.

(d) "Title Defect Property" shall mean any Lease or portion thereof
burdened by a Title Defect.

(e) "Permitted Encumbrances" shall mean any of the following matters:

(i) defects in the early chain of title consisting of failure
to recite marital status or the omission of succession or heirship proceedings;

(ii) defects or irregularities arising out of prior oil and
gas leases which, on their face, expired more than ten (10) years prior to the
Effective Time, and which have not been released of record;

(iii) tax liens and mechanic's liens for amounts not yet due
and payable, or those that are being contested in good faith by Seller in the
ordinary course of business (which contests and contested amounts are described
in Schedule 8.1 (e)(iii) hereto);

(iv) to the-extent any of the following do not materially
diminish the value of, or impair the conduct of operations on, any of the Assets
and do not impair Seller's right to receive the revenues attributable thereto:
(x) easements, rights-of-way, servitudes, permits, surface leases and other
rights in respect of surface operations, pipelines, grazing, hunting, fishing,
logging, canals, ditches, reservoirs or the like, and (y) easements for streets,
alleys, highways, pipelines, telephone lines, power lines, railways and other
similar rights-of-way, on, over or in respect of property owned or leased by
Seller or over which Seller owns rights of way, easements, permits or licenses;

(v) all lessors' royalties, overriding royalties, net profits
interests, carried interest, production payments, reversionary interests and
other burdens on or deductions from the proceeds of production if the net
cumulative effect of such burdens or deductions does not reduce the net revenue
interest of Seller in any well affected thereby to a percentage less than that
percentage reflected in Exhibit B or impair the right to receive revenues
attributable thereto;

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(vi) preferential rights to purchase and required third party
consents to assignments and similar agreements with respect to which waivers or
consents are obtained from the appropriate parties prior to the Closing Date, or
the appropriate time period for asserting the rights has expired without an
exercise of the rights prior to the Closing Date;

(vii) all rights to consent by, required notices to, filings
with, or other actions by governmental entities and tribal authorities in
connection with the sale or conveyance of oil and gas leases or interests if
they are customarily obtained subsequent to the sale or conveyance;

(viii) defects or irregularities of title arising out of
events or transactions which have been barred by limitations;

(ix) any encumbrance or other matter (other than liens
securing indebtedness originated by or expressly assumed by Seller or its
affiliates, which shall not be subject to any deductible) having an aggregate
adverse effect on the value of the Assets of less than $10,000, the parties
agreeing that such amount will be a per Asset deductible rather than a
threshold; and

(x) any encumbrance or other matter (whether or not
constituting a "Title Defect") expressly waived in writing by Buyer.

8.2. Notice of Title Defects.

No later than 5:00 p.m., three (3) business days prior to Closing (the
"Title Defect Notice Date"), Buyer may provide Seller written notice of any
Title Defect along with a description of those matters which, in Buyer's
reasonable opinion, constitute Title Defects and setting forth in detail Buyer's
calculation of the value for each Defect. Seller may elect, at its sole cost and
expense, but without obligation, to cure all or any portion of such Title
Defects. Buyer's failure to deliver to Seller such notice on or before the
Defect Notice Date shall be deemed a waiver by Buyer of all Title Defects that
Seller does not have notice of on such date. Any defect or deficiency concerning
Seller's title to the Assets not asserted by Buyer prior to the Title Defect
Notice Date shall be deemed waived by Buyer for all purposes.

8.3. Title Defect Adjustment.

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seven (7) days after receipt by Buyer of Notice from Seller of such failure or
refusal to cure any such Title Defect, to waive all of the Title Defects
applicable to such Closing Deferred Property (which waived Title Defects shall
be deemed Permitted Encumbrances) and proceed to Closing on such Closing
Deferred Property. If Buyer does not elect to waive an existing Title Defect,
Seller shall retain the affected Closing Deferred Property and the Parties shall
have no further obligation with respect thereto. In the event that any such
property is retained by Seller and such property has been receiving revenue,
without complaint, for a period in excess of two years, then Buyer agrees (i)
not to take any action to interfere with such revenue stream, and (ii) to the
extent that Buyer becomes payor of such revenue, to pay Seller such revenue upon
receipt of an indemnity agreement from Seller.

8.4. Title Defect Values.

In determining the value of a Title Defect, it is the intent of the
Parties to include, to the extent possible, only that portion of the lands,
leases and wells, whether an undivided interest, separate interest or otherwise,
materially and adversely affected by the defect. The Title Defect value shall in
no event exceed the Allocated Value of the affected Asset. Subject to such
limitation; the "Title Defect Value" shall be determined by the parties in good
faith taking into account all relevant factors, including, but not limited to,
the following:

(i) the Allocated Value of the leases, lands and well
affected by the Title Defect;

(ii) the reduction in the warranted NRI of the Title Defect
Property, or the amount by which the cost sharing percentage for such property
is greater than the warranted WI;

(iii) the productive status of the Title Defect Property
(i.e., proved developed producing, etc.) and the present value of the future
income expected to be produced therefrom;

(iv) if the Title Defect represents only a possibility of
title failure, the probability that such failure will occur;

(v) the legal effect of the Title Defect; and

(vi) if the Title Defect is a lien or encumbrance on the
leases, lands or wells, the cost of removing such lien or encumbrance.

8.5. Title Warranty.

SELLER SHALL CONVEY SELLER'S INTERESTS IN AND TO THE ASSETS TO BUYER
SUBJECT TO ALL ROYALTIES, OVERRIDING ROYALTIES, BURDENS AND ENCUMBRANCES. SELLER
SHALL WARRANT TITLE TO THE ASSETS AGAINST ALL ADVERSE CLAIMS, LIENS, BURDENS AND
ENCUMBRANCES ARISING BY, THROUGH OR UNDER SELLER, BUT NOT OTHERWISE. IMBALANCES
WITH RESPECT TO OIL OR NATURAL GAS ARE GOVERNED BY ARTICLE 18 HEREOF. THE
PARTIES AGREE THAT THE EXISTENCE OF ANY SUCH IMBALANCES SHALL NOT BE DEEMED A
TITLE DEFECT.

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ARTICLE 9. THRESHOLD AMOUNT FOR DEFECTS/OPTION TO TERMINATE

9.1 For the purpose of determining adjustments to the Purchase Price or
triggering Seller's obligation to respond to asserted Environmental Defects
pursuant to Article 7.1 and asserted Title Defects pursuant to Article 8.2, the
asserted Environmental Defects and/or asserted Title Defects (together referred
to as "Aggregate Asserted Defects") must exceed three percent (3%) of the
Purchase Price before there shall be any adjustments to the Purchase Price for
any such Asserted Alleged Defects or further action required by Seller under
Articles 7 or 8 with respect to such asserted Environmental Defects and/or
asserted Title Defects. Upon the Aggregate Asserted Defects exceeding the Defect
Threshold Amount, asserted Environmental Defects and asserted Title Defects
shall be handled pursuant to the applicable Article hereof; provided, however,
that the amount of Aggregate Asserted Defects up to the Defect Threshold Amount
under either one of the referenced Articles, or both collectively, shall be
treated as a deductible amount to be satisfied by Buyer prior to Seller having
any obligation under either or both of such Articles.

9.2 If (i) the aggregate of the values attributable to all Title
Defects determined pursuant to Article 8 plus the value of all Environmental
Defects determined pursuant to Article 7 shall exceed ten percent (10%) of the
Purchase Price or (ii) the aggregate value of a reduction to the Purchase Price
pursuant to Article 10 exceeds ten percent (10%) of the Purchase Price, then
either Buyer or Seller may, at its sole option, terminate this Agreement without
any further obligation by giving written notice of termination. In the event of
such termination, Seller shall return the Performance Deposit to Buyer, without
interest, within five (5) days of receipt of the notice of termination and
neither party shall have any further obligation or liability hereunder.

ARTICLE 10. PREFERENTIAL PURCHASE RIGHTS AND CONSENTS

10.1. Actions and Consents.

(a) Seller and Buyer agree that each shall use all reasonable efforts
to take or cause to be taken all such action as may be necessary to consummate
and make effective the transaction provided in this Agreement and to assure that
it will not be under any material corporate, legal, or contractual restriction
that could prohibit or delay the timely consummation of such transaction.

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Purchase Rights are discovered after Closing, or if a third party Preferential
Purchase Rights holder alleges improper notice, then Buyer agrees to cooperate
with Seller in giving effect to any such valid third party Preferential Purchase
Rights. In the event any such valid third party preferential purchase rights are
validly exercised after Closing, Buyer's sole remedy against Seller shall be
return by Seller to Buyer of that portion of the Purchase Price allocated under
Exhibit B to the portion of the assets on which such rights are exercised and
lost by Buyer to such third party. The parties agree that the Allocated Values
for properties subject to Preferential Purchase Rights shall be the sole
responsibility of Buyer, and Buyer agrees to indemnify and hold Seller harmless
from all liability and claims related to the reasonableness of such values.

(c) With respect to any portion of the Assets for which a Preferential
Purchase Right has not been asserted prior to Closing or a consent or other
approval to assign has not been granted and for which the time for election to
exercise such Preferential Purchase Right or to grant such consent has not
expired, Closing with respect to the portion of the Assets subject to such
outstanding obligations will be deferred (the "Third Party Interests"). Closing
with respect to all other Assets will proceed as provided in this Agreement, but
the Base Purchase Price delivered to Seller at Closing will be reduced by the
allocated value of the Third Party Interests. In the event that within ninety
(90) days after Closing any such Preferential Purchase Right is waived or
consent or approval is obtained or the time for election to purchase or to
deliver a consent or approval passes (such that under the applicable documents,
Seller may sell the affected Third Party Interest to Buyer), then the Closing
with respect to the applicable portion of the Third Party Interests will proceed
promptly. If such waivers, consents or approvals as are necessary are not
received by Seller within the applicable ninety (90) day period, Seller shall
retain such Third Party Interests and the parties shall have no further
obligation to each other with respect thereto.

ARTICLE 11. COVENANTS OF SELLER

11.1. Covenants of Seller Pending Closing.

(a) From and after the date of execution of this Agreement and until
the Closing, and subject to Section 11.2 and the constraints of applicable
operating and other agreements, Seller shall operate, manage, and administer the
Assets in a good and workmanlike manner consistent with its past practices, and
shall carry on its business with respect to the Assets in substantially the same
manner as before execution of this Agreement. Seller shall use all reasonable
efforts to preserve in full force and effect all Leases, operating agreements,
easements, rights-of-way, permits, licenses, and agreements which relate to the
Assets in which Seller owns an interest, and shall perform all obligations of
Seller in or under all such agreements relating to the Assets; provided,
however, Buyer's sole remedy for Seller's breach of its obligations under this
Section 10.1(a) shall be limited to the amount of that portion of the Purchase
Price allocated in Exhibit B to that portion of the Assets affected by such
breach. Seller shall, except for emergency action taken in the face of serious
risk to life, property, or the environment (1) submit to Buyer, for prior
written approval, all requests for operating or capital expenditures and all
proposed contracts and agreements relating to the Assets which involve
individual commitments of more than $25,000; (2) consult with, inform, and
advise Buyer regarding all material matters concerning the operation,
management, and administration of the Assets; (3) obtain Buyer's written
approval prior to voting under any operating, unit, joint

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venture, partnership or similar agreement; and (4) not approve or elect to go
nonconsent as to any proposed well or plug and abandon or agree to plug and
abandon any well without Buyer's prior written approval. On any matter requiring
Buyer's approval under this Section 10.1(a), Buyer shall respond within five (5)
days to Seller's request for approval and failure of Buyer to respond to
Seller's request for approval within such time shall release Seller from the
obligation to obtain Buyer's approval before proceeding on such matter.

(b) Seller shall promptly notify Buyer of any suit, lessor demand
action, or other proceeding before any court, arbitrator, or governmental agency
and any cause of action which relates to the Assets or which might result in
impairment or loss of Seller's interest in any portion of the Assets or which
might hinder or impede the operation of the Assets.

11.2. Limitations on Seller's Covenants Pending Closing.

To the extent Seller is not the operator of any of the Assets, the
obligations of Seller in Section 11.1 concerning operations or activities which
normally or pursuant to existing contracts are carried out or performed by the
operator, shall be construed to require only that Seller use all reasonable
efforts (without being obligated to incur any expense or institute any cause of
action) to cause the operator of such Assets to take such actions or render such
performance within the constraints of the applicable operating agreements and
other applicable agreements.

ARTICLE 12. CLOSING CONDITIONS

12.1. Seller's Closing Conditions.

The obligations of Seller under this Agreement are subject, at the
option of Seller, to the satisfaction, at or prior to the Closing, of the
following conditions:

(a) all representations and warranties of Buyer contained in this
Agreement shall be true in all material respects at and as of the Closing as if
such representations and warranties were made at and as of the Closing, and
Buyer shall have performed and satisfied all agreements required by this
Agreement to be performed and satisfied by Buyer at or prior to the Closing;

(b) the execution, delivery, and performance of this Agreement and the
transactions contemplated thereby have been duly and validly authorized by all
necessary action, corporate, partnership or otherwise, on the part of Buyer;

(c) all necessary consents of and filings with any state or federal
governmental authority or agency relating to the consummation of the
transactions contemplated by this Agreement shall have been obtained,
accomplished or waived, except to the extent that such consents and filings are
normally obtained, accomplished or waived after Closing; and

(d) as of the Closing Date, no suit, action or other proceeding
(excluding any such matter initiated by Seller) shall be pending or threatened
before any court or governmental agency seeking

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to restrain Seller or prohibit the Closing or seeking damages against Seller as
a result of the consummation of this Agreement.

12.2. Buyer's Closing Conditions.

The obligations of Buyer under this Agreement are subject, at the
option of Buyer, to the satisfaction, at or prior to the Closing, of the
following conditions:

(a) all representations and warranties of Seller contained in this
Agreement shall be true in all material respects at and as of the Closing as if
such representations and warranties were made at and as of the Closing, and
Seller shall have performed and satisfied all agreements required by this
Agreement to be performed and satisfied by Seller at or prior to the Closing;

(d) as of the Closing Date, no suit, action or other proceeding
(excluding any such matter initiated by Buyer) shall be pending or threatened
before any court or governmental agency seeking to restrain Buyer or prohibit
the Closing or seeking damages against Buyer as a result of the consummation of
this Agreement.

ARTICLE 13. CLOSING

13.1. Closing.

The closing of this transaction (the "Closing") shall be held at the
offices of Turner, Davis & Gerald, 400 W. Illinois, Suite 1400, Midland, Texas
79701, at 10:00 a.m., local time, on October 15, 2004, or at such earlier date
or place as the Parties may agree in writing (herein called "Closing Date").
Time is of the essence and the Closing Date shall not be extended unless by
written agreement of the Parties. On or before five (5) business days prior to
Closing, Buyer and Seller shall use their best efforts to provide each other
copies of all closing documents.

13.2. Seller's Closing Obligations.

At Closing, except to the extent comprising the Excluded Assets, Seller
shall deliver to Buyer the following:

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(a) the Assignment and Conveyance substantially in the form attached
hereto as Exhibit C and such other documents as may be reasonably necessary to
convey all of Seller's interest in the Assets to Buyer in accordance with the
provisions hereof;

(b) a nonforeign affidavit executed by Seller in the form attached as
Exhibit D;

(d) copies of all third-party waivers, consents, approvals, permits and
actions obtained;

(e) exclusive possession of the Assets;

(f) letters-in-lieu of transfer orders in form acceptable to Seller and
Buyer;

(g) a Reporting and Accounting Memorandum executed by Seller in the
form attached as Exhibit E; and

(h) releases of all liens and encumbrances burdening the Assets in form
and substance reasonably satisfactory to Buyer.

13.3. Buyer's Closing Obligations.

At Closing, Buyer shall deliver to Seller (i) by wire transfer in
immediately available funds to an Account designated by Seller, the Purchase
Price (less the Performance Deposit) as adjusted by Section 3.3, and (ii) a
Reporting and Accounting Memorandum executed by Buyer in the form attached as
Exhibit E.

13.4. Joint Closing Obligations.

Both Parties at Closing shall execute a Settlement Statement evidencing
the amount actually wire transferred and all adjustments to the Purchase Price
taken into account at Closing. All events of Closing shall each be deemed to
have occurred simultaneously with the other, regardless of when actually
occurring, and each shall be a condition precedent to the other.

ARTICLE 14. LIMITATIONS ON WARRANTIES AND REMEDIES

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PART OF THE ASSETS ARE SOLD HEREUNDER "AS IS, WHERE IS, AND WITH ALL FAULTS" AND
NO WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED,
INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR CONDITION, ARE GIVEN BY OR ON BEHALF OF SELLER. IT IS UNDERSTOOD AND
AGREED THAT PRIOR TO CLOSING BUYER SHALL HAVE INSPECTED THE ASSETS FOR ALL
PURPOSES AND HAS SATISFIED ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL
CONDITION, BOTH SURFACE AND SUBSURFACE, AND THAT BUYER ACCEPTS SAME IN ITS "AS
IS, WHERE IS AND WITH ALL FAULTS" CONDITION. THE WARRANTIES OF SELLER CONTAINED
IN THIS AGREEMENT ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, AND BUYER HEREBY WAIVES ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR CONDITION, OR CONFORMITY TO SAMPLES.

ARTICLE 15. CASUALTY LOSS AND CONDEMNATION

If, prior to the Closing, all or any portion of the Assets is destroyed
by fire or other casualty or if any portion of the Assets shall be taken by
condemnation or under the right of eminent domain (all of which are herein
called "Casualty Loss" and limited to property damage or taking only), Buyer and
Seller must agree prior to Closing either (i) to delete that portion of the
Assets which is subject to the Casualty Loss from the Assets, and the Purchase
Price shall be reduced by the value allocated to the deleted interest as set out
in Exhibit B, or (ii) for Buyer to proceed with the purchase of such Assets,
notwithstanding any such destruction or taking (without reduction of the
Purchase Price) in which case Seller shall pay, at the Closing, to Buyer all
sums paid to Seller by third parties by reason of the destruction or taking of
such Assets and shall assign, transfer and set over unto Buyer all insurance
proceeds received by Seller as well as all of the right, title and interest of
Seller in and to any claims, causes of action, unpaid proceeds or other payments
from third parties arising out of such destruction or taking; provided, however,
if the value of that portion of the Assets affected by the Casualty Loss, not to
exceed that allocated in Exhibit B, exceeds $3,000,000, Buyer and Seller shall
each have the right to terminate this Agreement upon written notification to the
other, Seller shall return the Performance Deposit to Buyer, the transaction
shall not close and thereafter neither Buyer nor Seller shall have any liability
or further obligations to the other hereunder. Prior to Closing, Seller shall
not voluntarily compromise, settle or adjust any amounts payable by reason of
any Casualty Loss without first obtaining the written consent of Buyer.

ARTICLE 16. DEFAULT AND REMEDIES

16.1. Seller's Remedies.

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other remedies being expressly waived by Seller. Notwithstanding any provision
hereof to the contrary Seller may retain the Deposit as a liquidated damage only
in the event the transaction contemplated by this Agreement is terminated due
solely to the breach hereof by Buyer in the absence of any material breach
hereof by Seller. If the transaction contemplated by this Agreement fails to
close or is terminated for any other reason, the Performance Deposit shall be
returned to Buyer.

16.2. Buyer's Remedies.

Upon failure of Seller to comply herewith by the Closing Date, as it may be
extended in accordance herewith, Buyer, at its sole option and in addition to
any other remedies it may have at law or equity, may (i) enforce specific
performance, or (ii) terminate this Agreement. In the event Buyer elects to
terminate this Agreement as set forth above, Seller shall immediately return the
Performance Deposit to Buyer.

16.3. Other Remedies.

Notwithstanding the foregoing, termination of this Agreement shall not
prejudice or impair Buyer's obligations under Section 6.3 (and the
confidentiality agreements referenced therein). The prevailing party in any
legal proceeding brought under or to enforce this Agreement shall be
additionally entitled to recover court costs and reasonable attorneys' fees from
the non-prevailing party.

16.4. Effect of Termination.

In the event of termination of this Agreement under this Article 16, the
transaction shall not close and neither Buyer nor Seller shall have any further
obligations, remedies, liabilities, rights or duties to the other hereunder,
except as expressly provided herein.

ARTICLE 17. ASSUMPTION AND INDEMNITY

17.1. Assumed Obligations; Pre-Closing Liabilities.

Upon and after Closing Buyer shall own the Assets, together with all
the rights, duties, obligations, and liabilities accruing after Closing,
including the Assumed Obligations and Buyer's indemnity obligations hereunder.
Buyer agrees to assume and pay, perform, fulfill and discharge all Assumed
Obligations. Seller agrees to retain and pay, perform, fulfill and discharge all
Retained Obligations.

17.2. Buyer's Indemnity.

Page 22
<page>

(collectively the "Claims"), with respect to all liabilities and obligations or
alleged or threatened liabilities and obligations caused by, related to,
attributable to, or arising out of the Assumed Obligations.

17.3. Seller's Indemnity.

Seller agrees to indemnify, defend and hold Buyer harmless from and
against any and all Claims for or with respect to all liabilities and
obligations or alleged or threatened liabilities and obligations caused by,
related to, attributable to, or arising out of the Retained Obligations.

17.4. Negligence.

THE INDEMNIFICATION, RELEASE AND ASSUMPTION PROVISIONS PROVIDED FOR IN
THIS AGREEMENT SHALL BE APPLICABLE WHETHER OR NOT THE LOSSES, COSTS, EXPENSES
AND DAMAGES IN QUESTION AROSE SOLELY OR IN PART FROM THE ACTIVE, PASSIVE,
COMPARATIVE, OR CONCURRENT NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OF THE
PARTIES HERETO.

17.5. Broker or Finder's Fee.

Each party hereby agrees to indemnify and hold the other harmless from
and against any claim for a brokerage or finder's fee or commission in
connection with this Agreement or the transactions contemplated by this
Agreement to the extent such claim arises from or is attributable to the actions
of such indemnifying party, including, without limitation, any and all losses,
damages, punitive damages, attorneys' fees, costs and expenses of any kind or
character arising out of or incurred in connection with any such claim or
defending against the same.

ARTICLE 18. GAS IMBALANCES

Seller and Buyer will use their best efforts to update (to the
Effective Time) the gas imbalance volume amounts listed on Exhibit F. If, prior
to the Final Settlement Date, either party hereto notifies the other party
hereto that the volumes set forth in Exhibit F are incorrect, then Buyer or
Seller will pay the other at the Final Settlement, as appropriate, an amount
equal to $4.00 per net mmbtu variance from the net imbalance shown on Exhibit F.
Subject to such adjustment on the Final Settlement Date, as of the Closing Buyer
agrees to assume any liability and obligation for gas production imbalances
(whether over or under) attributable to the Assets. Except as set forth in this
Article 18, in assuming this liability at Closing, Buyer shall not be obligated
to make any additional payment over the Purchase Price to Seller, and Seller
shall not be obligated to refund any of said price to reimburse Buyer for any
over-balances existing at the time of sale.

Page 23
<page>

ARTICLE 19. MISCELLANEOUS

19.1. Public Announcements.

The parties hereto agree that prior to Closing, prior to making any
public announcement or statement with respect to the transaction contemplated by
this Agreement, the party desiring to make such public announcement or statement
shall consult with the other party hereto and exercise its best efforts to (i)
agree upon the text of a joint public announcement or statement to be made by
both of such parties; or (ii) obtain written approval of the other party hereto
to the text of a public announcement or statement to be made solely by Seller or
Buyer, as the case may be. Nothing contained in this paragraph shall be
construed to require either party to obtain approval of the other party hereto
to disclose information with respect to the transaction contemplated by this
Agreement to any state or federal governmental authority or agency to the extent
(i) required by applicable law or by any applicable rules, regulations or orders
of any governmental authority or agency having jurisdiction; or (ii) necessary
to comply with disclosure requirements of the New York Stock Exchange or other
recognized exchange or over the counter, and applicable securities laws.

19.2. Filing and Recording of Assignments, etc.

Buyer shall be solely responsible for all filings and recording of
assignments and other documents related to the Assets and for all fees connected
therewith, and Buyer shall furnish copies of all such filed and/or recorded
documents to Seller. Seller shall not be responsible for any loss to Buyer
because of Buyer's failure to file or record documents correctly or promptly.
Buyer shall promptly file all appropriate forms, declarations or bonds with
federal and state agencies relative to its assumption of operations and Seller
shall cooperate with Buyer in connection with such filings.

19.3. Further Assurances and Records.

(a) After the Closing each of the parties will execute, acknowledge and
deliver to the other such further instruments, and take such other action, as
may be reasonably requested in order to more effectively assure to said party
all of the respective properties, rights, titles, interests, estates, and
privileges intended to be assigned, delivered or inuring to the benefit of such
party in consummation of the transactions contemplated hereby.

(b) Buyer agrees to maintain the files and records of Seller that are
acquired pursuant to this Agreement for seven (7) years after Closing. Buyer
shall provide Seller and its representatives reasonable access to and the right
to copy such files and records for the purposes of (i) preparing and delivering
any accounting provided for under this Agreement and adjusting, prorating and
settling the charges and credits provided for in this Agreement; (ii) complying
with any law, rule or regulation affecting Seller's interest in the Assets prior
to the Closing Date; (iii) preparing any audit of the books and records of any
third party relating to Seller's interest in the Assets prior to the Closing
Date, or responding to any audit prepared by such third parties; (iv) preparing
tax returns; (v) responding to or disputing any tax audit; or (vi) asserting,
defending or otherwise dealing with any claim or dispute under this Agreement.

Page 24
<page>

(c) Buyer agrees that within thirty (30) days after Closing or within
thirty (30) days after operations are actually transferred, whichever is later,
it will remove or cause to be removed the names and marks used by Seller and all
variations and derivatives thereof and logos relating thereto from the Assets
and will not thereafter make any use whatsoever of such names, marks and logos.

(d) To the extent not obtained or satisfied as of Closing, Seller
agrees to continue to use all reasonable efforts, and to cooperate with Buyer's
efforts to obtain for Buyer (i) access to files, records and data relating to
the Assets in the possession of Seller or third parties, including, but not
limited to, information required by Buyer in order for Buyer to comply with
requirements of the Securities and Exchange Commission, which, among other
things, require Buyer to provide information regarding the Assets for up to the
three (3) calendar years prior to the calendar year of the Effective Time
hereof; and (ii) access to wells constituting a part of the Assets operated by
third parties for purposes of inspecting same.

(e) Buyer shall comply with all current and subsequently amended
applicable laws, ordinances, rules, and regulations applicable to the Assets and
shall promptly obtain and maintain all permits required by governmental
authorities in connection with the Assets.

19.4. Notices.

Except as otherwise expressly provided herein, all communications
required or permitted under this Agreement shall be in writing and any
communication or delivery hereunder shall be deemed to have been duly given and
received when actually delivered to the address of the parties to be notified as
set forth below and addressed as follows:

If to Seller, as follows:
------------------------
Caprock Oil & Gas, L.P.
850 E. Broadway
Andrews, Texas 79714
Attention: Mr. Bradley W. Bunn
FAX: 432-523-6245

If to Buyer:
------------
Parallel L.P.
1004 N. Big Spring, Suite 400
Midland, Texas 79701
Attention: Mr. John Rutherford
FAX: 432-684-3905

Provided, however, that any notice required or permitted under this
Agreement will be effective if given verbally within the time provided, so long
as such verbal notice is followed by written notice thereof in the manner
provided herein within twenty-four (24) hours following the end of such time
period. Any party may, by written notice so delivered to the other, change the
address to which delivery shall thereafter be made.

Page 25
<page>

19.6. Incidental Expenses.

Buyer shall bear and pay (i) all state or local government sales,
transfer, gross proceeds, or similar taxes incident to or caused by the transfer
of the Assets to Buyer, (ii) all documentary, transfer and other state and local
government taxes incident to the transfer of the Assets to Buyer; and (iii) all
filing, recording or registration fees for any assignment or conveyance
delivered hereunder. Each party shall bear its own respective expenses incurred
in connection with the negotiation and Closing of this transaction, including it
own consultants' fees, attorneys' fees, accountants' fees, and other similar
costs and expenses.

19.7. Waiver.

Any of the terms, provisions, covenants, representations, warranties or
conditions hereof may be waived only by a written instrument executed by the
party waiving compliance. Except as otherwise expressly provided in this
Agreement, the failure of any party at any time or times to require performance
of any provision hereof shall in no manner affect such party's right to enforce
the same. No waiver by any party of any condition, or of the breach of any term,
provision, covenant, representation or warranty contained in this Agreement,
whether by conduct or otherwise, in any one or more instances, shall be deemed
to be or construed as a further or continuing waiver of any such condition or
breach or a waiver of any other condition or of the breach of any other term,
provision, covenant, representation or warranty.

19.8. Binding Effect; Assignment.

All the terms, provisions, covenants, obligations, indemnities,
representations, warranties and conditions of this Agreement shall be
enforceable by the parties hereto and their respective successors and assigns.
The rights of each party under this Agreement are personal to that party and may
not be assigned or transferred to any other party, firm, corporation or other
entity, without the prior, express and written consent of the other party, and
such consent may be withheld for any reason, including convenience. Any attempt
to assign this Agreement over the objection or without the express written
consent of the other party shall be absolutely void. Seller may condition its
consent to assign this Agreement on Buyer providing Seller with an appropriate
guarantee of its assignee's performance. In the event Buyer sells or assigns all
or a portion of the Assets, this Agreement shall remain in effect between Buyer
and Seller as to all the Assets regardless of such assignment.

19.9. Taxes.

(a) Seller and Buyer agree that this transaction is not subject to the
reporting requirement of Section 1060 of the Internal Revenue Code of 1986, as
amended, and that, therefore, IRS Form 8594, Asset Acquisition Statement, is not
required to be and will not be filed for this transaction. In the event the
parties mutually agree that a filing of Form 8594 is required, the parties will
confer and cooperate in the preparation and filing of their respective forms to
reflect a consistent reporting of the agreed upon allocation.

Page 26
<page>

(b) Seller shall be responsible for and shall pay all taxes
attributable to or arising from the ownership or operation of the Assets prior
to the Effective Time. Buyer shall be responsible for and shall pay all taxes
attributable to or arising from the ownership or operation of the Assets after
the Effective Time. Any party which pays such taxes for the other party shall be
entitled to prompt reimbursement upon evidence of such payment.

Each party shall be responsible for its own federal income taxes, if
any, as may result from this transaction.

(c) If this transaction is determined to result in state sales or
transfer taxes, Buyer shall be solely responsible for any and all such taxes due
on the Assets acquired by Buyer by virtue of this transaction. If Buyer is
assessed such taxes, Buyer shall promptly remit same to the taxing authority. If
Seller is assessed such taxes, Buyer shall reimburse Seller for any such taxes
paid by Seller to the taxing authority.

19.10. Confidentiality of Agreement.

Except as otherwise provided herein, this Agreement and the terms and
provisions thereof, including the Purchase Price, shall be maintained
confidential by Buyer and Seller until Closing; provided, however, that this
Agreement and the terms and provisions thereof may be disclosed to Buyer's
lenders, if any, and their consultants, who shall be required to keep such
information confidential.

19.11. Audits.

It is expressly understood and agreed that Seller retains its right to
receive its proportionate share of the proceeds from any audits relating to
activities prior to the Effective Time, except to the extent such proceeds are
directly related to the Assumed Obligations.

19.12. Like-Kind Exchanges.

Each party consents to the other party's assignment of its rights and
obligations under this Agreement to its Qualified Intermediary (as that term is
defined in Section 1. 1031 (k)-I(g)(4)(v) of the Treasury Regulations) in
connection with effectuation of a like-kind exchange. However, Seller and Buyer
acknowledge and agree that any assignment of this Agreement to a Qualified
Intermediary does not release either party from any of their respective
liabilities and obligations to each other under this Agreement. Each party
agrees to cooperate with the other to attempt to structure the transaction as a
like-kind exchange.

19.13. Governing Law.

THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAWS OTHERWISE APPLICABLE TO SUCH DETERMINATIONS.

Page 27
<page>

19.14. Entire Agreement.

This Agreement embodies the entire agreement between the Parties and
replaces and supersedes all prior agreements, arrangements and understandings
related to the subject matter hereof, whether written or oral. No other
agreement, statement, or promise made by any party, or to any employee, officer
or agent of any party, which is not contained in this Agreement shall be binding
or valid. This Agreement may be supplemented, altered, amended, modified or
revoked by writing only, signed by the Parties hereto. The headings herein are
for convenience only and shall have no significance in the interpretation
hereof. The Parties stipulate and agree that this Agreement shall be deemed and
considered for all purposes, as prepared through the joint efforts of the
Parties, and shall not be construed against one party or the other as a result
of the preparation, submittal or other event of negotiation, drafting or
execution thereof. It is understood and agreed that there shall be no
third-party beneficiary of this Agreement, and that the provisions hereof do not
impart enforceable rights in anyone who is not a party or a successor or
assignee of a party hereto.

19.15. Exhibits.

All Exhibits attached to this Agreement, and the terms of those
Exhibits which are referred to in this Agreement, are made a part hereof and
incorporated herein by reference.

19.16. Delivery of Files After Closing.

The Assets set out in Section 1.14(d) shall be provided by Seller to
Buyer as soon as reasonably possible after the Closing Date at a location to be
specified by Seller. Any transportation, postage, or delivery costs from
Seller's offices shall be at Buyer's sole cost, risk and expense.

19.17. Survival.

The representations contained in Section 4(i) shall terminate at
Closing. All of the other representations, warranties, indemnities, covenants
and agreements of or by the parties hereto, shall survive the execution and
delivery of the Assignment and Conveyance indefinitely.

19.18. Subsequent Adjustments.

Regardless of the date set for the Final Settlement, Buyer and Seller
agree that their intent is to allow for the earliest practical forwarding of
revenue and reimbursement of expenses between them, and Seller and Buyer
recognize that either may receive funds or pay expenses after the Final
Settlement Date which are properly the property or obligation of the other.
Therefore, upon receipt of net proceeds or payment of net expenses due to or
payable by the other party hereto, whichever occurs first, Seller or Buyer, as
the case may be, shall submit a statement to the other party hereto showing the
relevant items of income and expense. Payment of any net amount due by Seller or
Buyer, as the case may be, on the basis thereof shall be made within ten days of
receipt of the statement.

Page 28
<page>

19.19. Counterparts.

This Agreement may be executed in any number of counterparts, and each
and every counterpart shall be deemed for all purposes one (1) agreement.

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.

SELLER:

CAPROCK OIL & GAS, L.P.
By: Caprock RSE, Inc., G.P.

By: /s/ Bradley W. Bunn
---------------------------------
Bradley W. Bunn, President

BUYER:

PARALLEL L.P.
By: Parallel Petroleum Corporation,
its General Partner

By: /s/ John S. Rutherford
----------------------------------
John S. Rutherford, Vice President

Page 29

Exhibit A
---------

Attached to and made a part of that certain Purchase and Sale
Agreement dated September 16, 2004, by and between CAPROCK OIL
& GAS, L.P., as Seller, and PARALLEL L.P., as Buyer

<table>
- -------------------------------------------------------------------------------
Caprock Interests

Lease Name W.I. N.R.I.
- -------------------------------------------------------------------------------
<c> <c>
Akers 0.67135600 0.50000900
Armstrong 1.00000000 0.72562770
Armstrong ORRI 0.05625000
Block A-22 Unit 0.72334710 0.57285400
Coast 1.00000000 0.75000000
Colgan State A 0.41062500 0.27844600
Cone 0.85750000 0.72680030
ECM Lease 1.00000000 0.75000000
ECM Lease ORRI 0.06250000
ECM South 1.00000000 0.75000000
Elizabeth Crews Mast 0.43000000 0.32250000
Elizabeth Crews Mast ORRI 0.06250000
Lawrence A 0.24905813 0.18679359
Lawrence B 0.24905813 0.18679359
Lawrence C 0.87500000 0.65625000
Lawrence D 0.25540673 0.19121497
Mast 0.40000000 0.31937500
McConal Clark 0.51437500 0.41045000
Metzger 0.70000000 0.52500000
Metzger ORRI 0.06250000
Metzger SWD 1.00000000
Moore Leasehold 0.75000000
Moore SA 0.40000000 0.31200000
Moore SA ORRI 0.06213810
N. Means Queen Sand Unit 1.00000000 0.80000000
N.Means Queen Sand Unit ORRI 0.00793000
PKC 0.92500000 0.64637500
PKC ORRI 0.08750000
PKC "A" 0.92500000 0.64637500
PKC "A" ORRI 0.08750000
Reed SA 0.40000000 0.30000000
S.E. Mayo SWD 1.00000000
Simmons 0.71725000 0.51860300
Thompson B 0.28000000 0.22400000
W.G. Mayo #1 0.86312500 0.66460590
W.G. Mayo #1 ORRI 0.03125000
W.G. Mayo #2 & #3 0.76937500 0.59230210
W.G. Mayo #2 & #3 ORRI 0.03125000
Yeager 0.85750000 0.71429880
- -------------------------------------------------------------------------------
</table>

<page>
EXHIBIT A

Attached to and made a part of that certain Purchase and Sale Agreement
dated September 16, 2004, by and between CAPROCK OIL & GAS, L.P., as
Seller, and PARALLEL L.P., as Buyer

ANDREWS COUNTY, TEXAS

MOORE SA LEASE:
- --------------

1. Oil and Gas Lease dated January 13, 1953, from E. J. Koenig, as Lessor,
to Cities Service Oil Co., as Lessee, recorded in Volume 114, page 595
of the Deed Records of Andrews County, Texas, covering all of Section
12, Block A-20, PSL, Andrews County, Texas.

2. Oil and Gas Lease dated February 18, 1953, from J. M. White, as Lessor,
to Cities Production Corporation, as Lessee, recorded in Volume 115,
page 185 of the Deed Records of Andrews County, Texas, covering all of
Section 12, Block A-20, PSL, Andrews County, Texas.

3. Oil and Gas Lease dated February 11, 1953, from Charles M. Klapproth,
as Lessor, to Cities Service Oil Co., as Lessee, recorded in Volume
117, page 242 of the Deed Records of Andrews County, Texas, covering
all of Section 12, Block A-20, PSL, Andrews County, Texas.

4. Oil and Gas Lease dated February 14, 1953, from R. W. Hamilton, as
Lessor, to Cities Production Corporation, as Lessee, recorded in Volume
117, page 326 of the Deed Records of Andrews County, Texas, covering
all of Section 12, Block A-20, PSL, Andrews County, Texas.

5. Oil and Gas Lease dated February 13, 1953, from Magdalene Markham,
dealing in her separate property, joined by her husband, Jimmy C.
Markham, pro forma, as Lessors, to Cities Production Corporation, as
Lessee, recorded in Volume 118, page 038 of the Deed Records of Andrews
County, Texas, covering all of Section 12, Block A-20, PSL, Andrews
County, Texas.

6. Oil and Gas Lease dated March 11, 1954, from E. Hayes Sieber,
individually and as Attorney-in-Fact for Harry C. Sieber, a single man;
Alma S. Rasmussen and husband, Carl C. Rasmussen; Jerome T. Sieber,
Jr.; Helen Sieber Yoder and husband, Clarence Yoder; and Marion Sieber
Saybolt and husband, W. D. Saybolt, as Lessors, to Cities Production
Corporation, as Lessee, recorded in Volume 129, page 234 of the Deed
Records of Andrews County, Texas, covering all of Section 12, Block
A-20, PSL, Andrews County, Texas.

Exhibit "A" - Page 1

7. Oil and Gas Lease dated March 15, 2003, from Headington Royalty, Inc.,
as Lessor, to Caprock Oil & Gas, Inc., as Lessee, recorded in Volume
802, page 085 of the Deed Records of Andrews County, Texas, covering
the S/2 of Section 12, Block A-20, PSL, Andrews County, Texas.

Working Interest Net Revenue Interest ORI

.4000000 .312000 .0621381

REED SA LEASE:
- -------------

1. Oil and Gas Lease dated March 17, 1953, from E. J. Koenig, as Lessor,
to Cities Production Corporation, as Lessee, recorded in Volume 119,
page 60 of the Deed Records of Andrews County, Texas, covering the N/2
NE/4 of Section 13, Block A-20, PSL, Andrews County, Texas.

2. Oil and Gas Lease dated February 18, 1953, from J. M. White, as Lessor,
to Cities Production Corporation, as Lessee, recorded in Volume 120,
page 14 of the Deed Records of Andrews County, Texas, covering the N/2
NE/4 of Section 13, Block A-20, PSL, Andrews County, Texas.

3. Oil and Gas Lease dated March 19, 1953, from Lorainne D. Bucy, a widow,
as Lessor, to Cities Production Corporation, as Lessee, recorded in
Volume 119, page 63 of the Deed Records of Andrews County, Texas,
covering the N/2 NE/4 of Section 13, Block A-20, PSL, Andrews County,
Texas.

4. Oil and Gas Lease dated December 1, 2002, from Reed Oil Trust, Russell
H. Reed, Jr., Trustee, as Lessor, to Caprock Operating, Inc., as
Lessee, recorded in Volume 795, page 510 of the Oil and Gas Lease
Records of Andrews County, Texas, covering the N/2 NE/4 of Section 13,
Block A-20, PSL, Andrews County, Texas.

5. Oil and Gas Lease dated February 5, 2003, from Andrea Knickerbocker,
separate property, as Lessor, to Caprock Operating, Inc., as Lessee,
recorded in Volume 801, page 040 of the Oil and Gas Lease Records of
Andrews County, Texas, covering the N/2 NE/4 of Section 13, Block A-20,
PSL, Andrews County, Texas.

6. Oil and Gas Lease dated June 25, 2003, from Helen Crosland Hendricks,
as Lessor, to Caprock Operating, Inc., as Lessee, recorded in Volume
810, page 141 of the Oil and Gas Lease Records of Andrews County,
Texas, covering the N/2 NE/4 of Section 13, Block A-20, PSL, Andrews
County, Texas.

7. Oil and Gas Lease dated June 25, 2003, from Mary B. Balle, as Lessor,
to Caprock Operating, Inc., as Lessee, recorded in Volume 810, page 143
of the Oil and Gas Lease Records of Andrews County, Texas, covering the
N/2 NE/4 of Section 13, Block A-20, PSL, Andrews County, Texas.

Exhibit "A" - Page 2
<page>

8. Oil and Gas Lease dated June 25, 2003, from Shelley McClaine McLarty,
as Lessor, to Caprock Operating, Inc., as Lessee, recorded in Volume
810, page 145 of the Oil and Gas Lease Records of Andrews County,
Texas, covering the N/2 NE/4 of Section 13, Block A-20, PSL, Andrews
County, Texas.

9. Oil and Gas Lease dated June 25, 2003, from Henry L. Enochsen and Mary
J. Enochsen, joint tenants, as Lessors, to Caprock Operating, Inc., as
Lessee, recorded in Volume 810, page 156 of the Oil and Gas Lease
Records of Andrews County, Texas, covering the N/2 NE/4 of Section 13,
Block A-20, PSL, Andrews County, Texas.

10. Oil and Gas Lease dated August 27, 2003, from Lisa Kaindl, as Lessor,
to Caprock Operating, Inc., as Lessee, recorded in Volume 811, page 069
of the Oil and Gas Lease Records of Andrews County, Texas, covering the
N/2 NE/4 of Section 13, Block A-20, PSL, Andrews County, Texas.

11. Oil and Gas Lease dated September 2, 2003, from James Eric Kaindl, as
Lessor, to Caprock Operating, Inc., as Lessee, recorded in Volume 812,
page 214 of the Oil and Gas Lease Records of Andrews County, Texas,
covering the N/2 NE/4 of Section 13, Block A-20, PSL, Andrews County,
Texas.

12. Oil and Gas Lease dated September 2, 2003, from Ruby G. Goggans, as
Lessor, to Caprock Operating, Inc., as Lessee, recorded in Volume 815,
page 523 of the Oil and Gas Lease Records of Andrews County, Texas,
covering the N/2 NE/4 of Section 13, Block A-20, PSL, Andrews County,
Texas.

13. Oil and Gas Lease dated September 2, 2003, from Carol Ware Richards, as
Lessor, to Caprock Operating, Inc., as Lessee, recorded in Volume 815,
page 996 of the Oil and Gas Lease Records of Andrews County, Texas,
covering the N/2 NE/4 of Section 13, Block A-20, PSL, Andrews County,
Texas.

14. Oil and Gas Lease dated December 11, 2003, from Lois B. Crosland,
individually and as Independent Executrix of the Estate of J. W.
Crosland, Jr., as Lessor, to Caprock Operating, Inc., as Lessee,
recorded in Volume 816, page 541 of the Oil and Gas Lease Records of
Andrews County, Texas, covering the N/2 NE/4 of Section 13, Block A-20,
PSL, Andrews County, Texas.

15. Oil and Gas Lease dated June 26, 2003, from JLG Energy Partners, Ltd.,
as Lessor, to Caprock Operating, Inc., as Lessee, recorded in Volume
810, page 152 of the Oil and Gas Lease Records of Andrews County,
Texas, covering the N/2 NE/4 of Section 13, Block A-20, PSL, Andrews
County, Texas.

16. Oil and Gas Lease dated June 26, 2003, from Betty Jo Greene Morgan
Living Trust, Michael Morgan, Trustee, as Lessor, to Caprock Operating,
Inc., as Lessee, recorded in Volume 810, page 154 of the Oil and Gas
Lease Records of Andrews County, Texas, covering the N/2 NE/4 of
Section 13, Block A-20, PSL, Andrews County, Texas.

Exhibit "A" - Page 3
<page>

17. Oil and Gas Lease dated November 28, 2003, from Bank One N.A., Agent of
Suzanne Heath Manges Separate Property Trust, as Lessor, to Caprock
Operating, Inc., as Lessee, recorded in Volume 815, page 49 of the Oil
and Gas Lease Records of Andrews County, Texas, covering the N/2 NE/4
of Section 13, Block A-20, PSL, Andrews County, Texas.

18. Oil and Gas Lease dated July 7, 2003, from Bank of Oklahoma N.A., Agent
for First National Bank of Santa Fe, Trustee of the Lamar Lunt Trust
u/t/a 1-2-65, as Lessor, to Caprock Operating, Inc., as Lessee,
recorded in Volume 810, page 147 of the Oil and Gas Lease Records of
Andrews County, Texas, covering the N/2 NE/4 of Section 13, Block A-20,
PSL, Andrews County, Texas.

19. Oil and Gas Lease dated January 27, 2004, from Lavern Jean Kaindl
Schneider, as Lessor, to Caprock Oil & Gas, Inc., as Lessee, recorded
in Volume 820, page 101 of the Deed Records of Andrews County, Texas,
covering the N/2 NE/4 of Section 13, Block A-20, PSL, Andrews County,
Texas.

Working Interest Net Revenue Interest

.4000000 .3000000

ANDREWS AND GAINES COUNTIES, TEXAS

MAST LEASE:
- -----------

1. Oil and Gas Lease dated May 20, 1938, from E. R. Crews Estate et al, as
Lessors, to Sinclair Prairie Oil Company, as Lessee, recorded in Volume
43, page 531 of the Deed Records of Andrews County, Texas, covering the
following-described land in Andrews County, Texas:

First Tract: SW/4 of Section 13 and SW/4 of Section 15, Block
A-36; NE/4 of Section 2, SW/4 of Section 10 and
N/2 NW/4 of Section 8, Block A-34; and

Second Tract: S-3/4 of W/2 of Section 8, Block A-34.

2. Oil and Gas Lease dated May 20, 1938, from Lou Ella Crews, as Lessor,
to Sinclair Prairie Oil Company, as Lessee, recorded in Volume 43, page
528 of the Deed Records of Andrews County, Texas, covering the same
lands described immediately above.

3. Oil and Gas Lease dated June 1, 1999, from NationsBank, N.A., Trustee
of V. P. Baker Family Royalty Trust, as Lessor, to Caprock Operating,
Inc., as Lessee, recorded in Volume 739, page 846 of the Deed Records
of Andrews County, Texas, covering the NE/4 of Section 2, Block A-34,
PSL, Andrews and Gaines Counties, Texas.

Exhibit "A" - Page 4
<page>

4. Oil and Gas Lease dated December 20, 1999, from Winston Partners, Ltd.,
as Lessor, to Caprock Operating, Inc., as Lessee, recorded in Volume
745, page 883 of the Deed Records of Andrews County, Texas, covering
the NE/4 of Section 2, Block A-34, PSL, Andrews and Gaines Counties,
Texas.

5. Oil and Gas Lease dated December 16, 1956, from V.P. Baker, as Lessor,
to Sinclair Oil & Gas Company, as Lessee, recorded in Volume 191, page
206 of the Deed Records of Andrews County, Texas, covering the NE/4 of
Section 2, Block A-34, PSL, Andrews and Gaines Counties, Texas.

6. Oil and Gas Lease dated December 16, 1956, from Donald Winston, Trustee
under the agreement dated December 31, 1941, between Francisca S.
Winston and Charles S. Whitaker, Trustee, as Lessor, to Sinclair Oil
and Gas Company, as Lessee, recorded in Volume 191, page 209 of the
Deed Records of Andrews County, Texas, covering the NE/4 of Section 2,
Block A-34, PSL, Andrews and Gaines Counties, Texas.

Working Interest Net Revenue Interest

.4000000 .3193750

NORTH MEANS QUEEN SAND UNIT:
- ---------------------------

1. Oil and Gas Lease dated June 26, 1952, from Elizabeth Crews Mast, et
al., as Lessors, to J. Lawrence Green, as Lessee, recorded in Volume
113, page 188 of the Deed Records of Andrews County, Texas, and Volume
70, page 473 of the Oil and Gas Records of Gaines County, Texas,
covering the W/160 acres of Section 11, Block A-20; and NW/4 of Section
1, Block A-34, PSL, Andrews and Gaines Counties, Texas.

2. Oil and Gas Lease dated April 17, 1956, from V. P. Baker, as Lessor, to
Humble Oil & Refining Co., as Lessee, recorded in Volume 171, page 156
of the Deed Records of Andrews County, Texas, and Volume 101, page 8 of
the Oil and Gas Records of Gaines County, Texas, covering the NW/4 of
Section 1, Block A-34, PSL, Andrews and Gaines Counties, Texas.

3. Oil and Gas Lease dated April 17, 1956, from Donald Winston, Trustee
under Agreement dated December 31, 1941, between Francisca S. Winston
and Charles S. Whitaker, as Trustee, as Lessors, to Humble Oil &
Refining Co., as Lessee, recorded in Volume 171, page 158 of the Deed
Records of Andrews County, Texas, and Volume 101, page 10 of the Oil
and Gas Records of Gaines County, Texas, covering the NW/4 of Section
1, Block A-34, PSL, Andrews and Gaines Counties, Texas.

4. Oil and Gas Lease dated December 1, 1955, from W. B. Osborn, as Lessor,
to W. B. Osborn, Jr., as Lessee, recorded in Volume 103, page 622 of
the Oil and Gas Records of Gaines County, Texas, covering the S/2 of
Section 22, Block A-22, PSL Survey, Gaines County, Texas.

Exhibit "A" - Page 5
<page>

5. Oil and Gas Lease dated February 2, 1953, from John J. Fleet, as
Lessor, to W. B. Osborn, as Lessee, recorded in Volume 73, page 247 of
the Oil and Gas Records of Gaines County, Texas, covering the S/2 of
Section 22, Block A-22, PSL Survey, Gaines County, Texas.

6. Oil and Gas Lease dated November 14, 1956, from M. Scarborough as Agent
and Attorney-in-Fact for Catherine Scarborough, et al., as Lessors, to
L. A. Douglas, as Lessee, recorded in Volume 105, page 492 of the Oil
and Gas Records of Gaines County, Texas, covering the S/2 of Section
22, Block A-22, PSL Survey, Gaines County, Texas.

7. Oil and Gas Lease dated September 21, 1954, from L. P. Enlow and wife,
Mae Enlow, as Lessors, to C. R. Craig, as Lessee, recorded in Volume
142, page 139 of the Deed Records of Andrews County, Texas, and Volume
86, page 238 of the Oil and Gas Records of Gaines County, Texas,
covering the NW/4 of Section 2, Block A-34, PSL Survey, Gaines County,
Texas.

8. Oil and Gas Lease dated December 23, 1954, from Harold H. Kendrick, as
Lessor, to Gulf Oil Corporation, as Lessee, recorded in Volume 146,
page 154 of the Deed Records of Andrews County, Texas, and Volume 87,
page 295 of the Oil and Gas Records of Gaines County, Texas, covering
the NW/4 of Section 2, Block A-34, PSL Survey, Andrews and Gaines
Counties, Texas.

9. Oil and Gas Lease dated December 30, 1954, from Gladys Holbrook and
husband, Roy C. Holbrook, as Lessors, to Gulf Oil Corporation, as
Lessee, recorded in Volume 145, page 156 of the Deed Records of Andrews
County, Texas, and Volume 87, page 297 of the Oil and Gas Records of
Gaines County, Texas, covering the NW/4 of Section 2, Block A-34, PSL
Survey, Andrews and Gaines Counties, Texas.

10. Oil and Gas Lease dated March 13, 1957, from G. T. Hall and wife,
Florence Hall, as Lessors, to BBM Drilling Company, as Lessee, recorded
in Volume 193, page 226 of the Deed Records of Andrews County, Texas,
and Volume 107, page 605 of the Oil and Gas Records of Gaines County,
Texas, covering the NW/4 of Section 2, Block A-34, PSL Survey, Andrews
and Gaines Counties, Texas.

11. Oil and Gas Lease dated February 12, 1959, from Donald Winston,
Trustee, as Lessor, to Gulf Oil Corporation, as Lessee, recorded in
Volume 232, page 171 of the Deed Records of Andrews County, Texas, and
Volume 122, page 480 of the Oil and Gas Records of Gaines County,
Texas, covering the NW/4 of Section 2, Block A-34, PSL Survey, Andrews
and Gaines Counties, Texas.

12. Oil and Gas Lease dated February 14, 1959, from V. P. Baker and wife,
Zella D. Baker, as Lessor, to Gulf Oil Corporation, as Lessee, recorded
in Volume 232, page 166 of the Deed Records of Andrews County, Texas,
and Volume 122, page 474 of the Oil and Gas Records of Gaines County,
Texas, covering the NW/4 of Section 2, Block A-34, PSL Survey, Andrews
and Gaines Counties, Texas.

Exhibit "A" - Page 6
<page>

13. Oil and Gas Lease dated February 13, 1953, from Magdaline Markham and
husband, Jimmy C. Markham, as Lessors, to Cities Production Company, as
Lessee, recorded in Volume 118, page 38 of the Deed Records of Andrews
County, Texas, covering Section 12, Block A-20, PSL Survey, Andrews
County, Texas.

14. Oil and Gas Lease dated January 13, 1953, from E. J. Koenig, as Lessor,
to Cities Service Oil Company, as Lessee, recorded in Volume 114, page
595 of the Deed Records of Andrews County, Texas, covering Section 12,
Block A-20, PSL Survey, Andrews County, Texas.

15. Oil and Gas Lease dated February 11, 1953, from Chas. L. Klapproth, as
Lessor, to Cities Service Oil Company, as Lessee, recorded in Volume
117, page 242 of the Deed Records of Andrews County, Texas, covering
Section 12, Block A-20, PSL Survey, Andrews County, Texas.

16. Oil and Gas Lease dated February 18, 1953, from J. M. White, as Lessor,
to Cities Production Company, as Lessee, recorded in Volume 115, page
185 of the Deed Records of Andrews County, Texas, covering Section 12,
Block A-20, PSL Survey, Andrews County, Texas.

17. Oil and Gas Lease dated February 14, 1953, from R. W. Hamilton, as
Lessor, to Cities Production Company, as Lessee, recorded in Volume
117, page 326 of the Deed Records of Andrews County, Texas, covering
Section 12, Block A-20, PSL Survey, Andrews County, Texas.

18. Oil and Gas Lease dated March 11, 1954, from E. Hayes Sieber,
Individually and as Attorney-in-Fact for Harry G. Sieber, et al., as
Lessors, to Cities Production Company, as Lessee, recorded in Volume
129, page 234 of the Deed Records of Andrews County, Texas, covering
Section 12, Block A-20, PSL Survey, Andrews County, Texas.

19. Oil and Gas Lease dated February 28, 1931, from Sun Oil Company of
Delaware, as Lessor, to H. A. Moore, as Lessee, recorded in Volume 25,
page 368 of the Deed Records of Andrews County, Texas, covering Section
12, Block A-20, PSL Survey, Andrews County, Texas.

20. Oil and Gas Lease dated February 18, 1953, from J. M. White, as Lessor,
to Cities Production Company, as Lessee, recorded in Volume 120, page
14 of the Deed Records of Andrews County, Texas, covering the N/2 NE/4
of Section 13, Block A-20, PSL Survey, Andrews County, Texas.

21. Oil and Gas Lease dated March 17, 1953, from E. J. Koenig, as Lessor,
to Cities Production Company, as Lessee, recorded in Volume 119, page
60, of the Deed Records of Andrews County, Texas, covering the N/2 NE/4
of Section 13, Block A-20, PSL Survey, Andrews County, Texas.

Exhibit "A" - Page 7
<page>

22. Oil and Gas Lease dated March 19, 1953, from Lorainne D. Bucy, as
Lessor, to Cities Production Company, as Lessee, recorded in Volume
119, page 63 of the Deed Records of Andrews County, Texas, covering the
N/2 NE/4 of Section 13, Block A-20, PSL Survey, Andrews County, Texas.

23. Oil and Gas Lease dated January 15, 1955, from R. H. Reed, as Lessor,
to J. C. Ratliff, Jr., as Lessee, recorded in Volume 146, page 298 of
the Deed Records of Andrews County, Texas, covering the N/2 NE/4 of
Section 13, Block A-20, PSL Survey, Andrews County, Texas.

24. Oil and Gas Lease dated January 20, 1955, from A. Knickerbocker, as
Lessor, to J. C. Ratliff, Jr., as Lessee, recorded in Volume 146, page
309 of the Deed Records of Andrews County, Texas, covering the N/2 NE/4
of Section 13, Block A-20, PSL Survey, Andrews County, Texas.

25. Oil and Gas Lease dated January 14, 1955, from Lamar Hunt, as Lessor,
to A. Knickerbocker, as Lessee, recorded in Volume 146, page 313 of the
Deed Records of Andrews County, Texas covering the N/2 NE/4 of Section
13, Block A-20, PSL Survey, Andrews County, Texas.

26. Oil and Gas Lease dated January 20, 1955, from Hazel Greene,
Individually and as Independent Executrix of the Estate of J. L.
Greene, Deceased, as Lessor, to A. Knickerbocker, as Lessee, recorded
in Volume 146, page 311 of the Deed Records of Andrews County, Texas,
covering the N/2 NE/4 of Section 13, ,Block A-20, PSL Survey, Andrews
County, Texas.

27. Oil and Gas Lease dated January 20, 1955, from Heath M. Robinson, et
al., as Lessor, to J. C. Ratliff, Jr., as Lessee, recorded in Volume
146, page 302 of the Deed Records of Andrews County, Texas, covering
the N/2 NE/4 of Section 13, Block A-20, PSL Survey, Andrews County,
Texas.

28. Oil and Gas Lease dated March 1, 1955, from V. P. Baker, as Lessor, to
Cities Production Company, as Lessee, recorded in Volume 148, page 131
of the Deed Records of Andrews County, Texas, and Volume 88, page 65
Oil and Gas Records of Gaines County, Texas, covering the N/2 and SE/4
of Section 10, Block A-34, PSL Survey, Andrews County, Texas and S/2
and S/2 NE/4 of Section 1, Block A-34, PSL Survey, Andrews and Gaines
Counties, Texas.

29. Oil and Gas Lease dated February 19, 1954, from Elizabeth Crews Mast
and husband, Henrie E. Mast, et al., as Lessors, to Cities Production
Company, as Lessee, recorded in Volume 130, page 262 of the Deed
Records of Andrews County, Texas, covering the SE/4 and N/2 SW/4 of
Section 1, Block A-34, PSL Survey, Andrews County, Texas.

30. Oil and Gas Lease dated June 4, 1954, from Elizabeth Crews Mast and
husband, Henrie E. Mast, et al., as Lessors, to Cities Production
Company, as Lessee, recorded in Volume 133, page 507 of the Deed
Records of Andrews County, Texas, and Volume 83, page 111 of the

Exhibit "A" - Page 8
<page>

Oil and Gas Records of Gaines County, Texas, covering the S/2 NE/4 of
Section 1, Block A-34, PSL Survey, Andrews and Gaines Counties, Texas.

31. Oil and Gas Lease dated June 4, 1954, from Elizabeth Crews Mast and
husband, Henrie E. Mast, et al., as Lessors, to Cities Production
Company, as Lessee, recorded in Volume 133, page 509 of the Deed
Records of Andrews County, Texas, covering the S/2 SW/4 of Section 1,
Block A-34, PSL Survey, Andrews County, Texas.

32. Oil and Gas Lease dated June 21, 1956, from Marshall & Winston, Inc.,
as Lessor, to Cities Service Production Company, as Lessee, recorded in
Volume 178, page 196 of the Deed Records of Andrews County, Texas,
covering the S/2 SW/4 of Section 1, Block A-34, PSL Survey, Andrews
County, Texas.

33. Oil and Gas Lease dated March 29, 1956, from Donald Winston, Trustee,
as Lessor, to Cities Service Production Company, as Lessee, recorded in
Volume 174, page 472 of the Deed Records of Andrews County, Texas, and
Volume 103, page 336 of the Oil and Gas Records of Gaines County,
Texas, covering the S/2 and S/2 NE/4 of Section 1, Block A-34, PSL
Survey, Andrews County, Texas.

34. Oil and Gas Lease dated June 27, 1972, from Amoco Production Company,
as Lessor, to Earl R. Bruno, as Lessee, recorded in Volume 477, page
289 of the Deed Records of Andrews County, Texas, and Volume 279, page
826 of the Oil and Gas Records of Gaines County, Texas, covering the
SW/4 and E/2 SE/4 of Section 10, Block A-34, PSL Survey, Andrews and
Gaines Counties, Texas.

35. Oil and Gas Lease dated May 20, 1938, from Jessie Elizabeth Crews Mast,
et al., as Lessors, to Sinclair Prairie Oil Company, as Lessee,
recorded in Volume 43, page 528 of the Deed Records of Andrews County,
Texas, covering the NE/4 of Section 2 and SW/4 of Section 10, both in
Block A-34, PSL Survey, Andrews and Gaines Counties, Texas.

36. Oil and Gas Lease dated December 19, 1956, from Donald Winston,
Trustee, as Lessor, to Sinclair Oil & Gas Company, as Lessee, recorded
in Volume 191, page 209 of the Deed Records of Andrews County, Texas,
covering the NE/4 of Section 2, Block A-34, PSL Survey, Andrews and
Gaines Counties, Texas.

37. Oil and Gas Lease dated December 19, 1956, from V. P. Baker, as Lessor,
to Sinclair Oil & Gas Company, as Lessee, recorded in Volume 191, page
206 of the Deed Records of Andrews County, Texas, covering the NE/4 of
Section 2, Block A-34, PSL Survey, Andrews and Gaines Counties, Texas.

38. Oil and Gas Lease dated October 10, 1956, from Donald Winston, Trustee,
as Lessor, to Sinclair Oil & Gas Company, as Lessee, recorded in Volume
188, page 277 of the Deed Records of Andrews County, Texas, covering
the SW/4 of Section 10, Block A-34, PSL Survey, Andrews County, Texas.

Exhibit "A" - Page 9
<page>

39. Oil and Gas Lease dated October 10, 1956, from V. P. Baker, as Lessor,
to Sinclair Oil & Gas Company, as Lessee, recorded in Volume 186, page
350 of the Deed Records of Andrews County, Texas, covering the SW/4 of
Section 10, Block A-34, PSL Survey, Andrews County, Texas.

40. Oil and Gas Lease dated October 10, 1956, from George T. and Gladys
Abell, as Lessors, to Sinclair Oil & Gas Company, as Lessee, recorded
in Volume 186, page 352 of the Deed Records of Andrews County, Texas,
covering the SW/4 of Section 10, Block A-34, PSL Survey, Andrews
County, Texas.

41. Oil and Gas Lease dated October 10, 1956, from Addilee L. Penn and
husband, William Y. Penn, and Mrs. N. A. Lancaster, a widow, as
Lessors, to Sinclair Oil & Gas Company, as Lessee, recorded in Volume
186, page 347 of the Deed Records of Andrews County, Texas, covering
the SW/4 of Section 10, Block A-34, PSL Survey, Andrews County, Texas.

42. Oil and Gas Lease dated April 9, 1951, from Elizabeth Crews Mast,
Individually and as Attorney-in-Fact for Eli Rush Crews et al., as
Lessors, to Cities Service Oil Company, as Lessee, recorded in Volume
103, page 27 of the Deed Records of Andrews County, Texas, covering the
N/2 of Section 10, Block A-34, PSL Survey, Andrews County, Texas.

43. Oil and Gas Lease dated June 9, 1956, from Westbrook Oil Corporation,
as Lessor, to BBM Drilling Company, as Lessee, recorded in Volume 178,
page 225 of the Deed Records of Andrews County, Texas, covering the N/2
of Section 10, Block A-34, PSL Survey, Andrews County, Texas.

44. Oil and Gas Lease dated April 6, 1954, from Elizabeth Crews Mast and
husband, Henrie E. Mast et al., as Lessors, to Cities Production
Company, as Lessee, recorded in Volume 133, page 513 of the Deed
Records of Andrews County, Texas, covering the SE/4 of Section 10,
Block A-34, PSL Survey, Andrews County, Texas.

45. Oil and Gas Lease dated July 1, 1955, from Donald Winston, Trustee, et
al., as Lessors, to Cities Service Production Company, as Lessee,
recorded in Volume 156, page 95 of the Deed Records of Andrews County,
Texas, covering the N/2 and SE/4 of Section 10, Block A-34, PSL Survey,
Andrews County, Texas.

46. Oil and Gas Lease dated August 1, 1956, from Westbrook Oil Corporation,
as Lessor, to BBM Drilling Company, as Lessee, recorded in Volume 178,
page 359 of the Deed Records of Andrews County, Texas, covering the
W/2 SE/4 of Section 10, Block A-34, PSL Survey, Andrews County, Texas.

INSOFAR AND ONLY INSOFAR as said leases cover and pertain to the
unitized Queen Sand formation, as more specifically defined in the
North Means Queen Sand Unit Agreement dated October 16, 1961, recorded
in Volume 273, page 467 of the Deed Records of Andrews County, Texas
(as amended in Volume 288, page 320, Deed Records of Andrews County),
and in Volume 141, page 65 of the oil and Gas Records of Gaines County,
Texas, together with all amendments and supplements pertaining thereto.

Exhibit "A" - Page 10
<page>

Working Interest Net Revenue Interest ORI

1.0000000 .8000000* .00793

* This represents the "unit" net revenue interest attributable
to the working interest; however, the net revenue interest
varies from tract to tract and production is disbursed on a
"tract" basis.

GAINES COUNTY, TEXAS

AKERS LEASE:
- -----------

1. Oil and Gas Lease dated August 13, 1958, from Mabee Royalties, Inc., W.
A. Yeager and J. M. Armstrong, as Lessors, to A. N. Hendrickson, as
Lessee, recorded in Volume 118, page 185 of the Oil and Gas Records of
Gaines County, Texas.

2. Oil and Gas Lease dated September 3, 1958, from The Samuel Roberts
Noble Foundation, Inc., as Lessor, to Samedan Oil Corporation, as
Lessee, recorded in Volume 118, page 429 of the Oil and Gas Records of
Gaines County, Texas.

3. Oil and Gas Lease dated September 20, 1958 from Smith Spradling, et
ux., as Lessors, to Samedan Oil Corporation, as Lessee, recorded in
Volume 118, page 450 of the Oil and Gas Records of Gaines County,
Texas.

4. Oil and Gas Lease dated September 20, 1958, from Velma Roring, et vir,
as Lessors, to Samedan Oil Corporation, as Lessee, recorded in Volume
119, page 47 of the Oil and Gas Records of Gaines County, Texas.

5. Oil and Gas Lease dated September 20, 1958, from G. C. Forbes, et ux.,
as Lessors, to Samedan Oil Corporation, as Lessee, recorded in Volume
119, page 49 of the Oil and Gas Records of Gaines County, Texas.

6. Oil and Gas Lease dated September 20, 1958, from M. A. Moore, as
Lessor, to Samedan Oil Corporation, as Lessee, recorded in Volume 119,
page 87 of the Oil and Gas Records of Gaines County, Texas.

7. Oil and Gas Lease dated October 7, 1980 from First National Bank,
Midland and Jessie Blevins Crump, Co-Trustees, as Lessors, to Ernest W.
Thornton and Dyrel W. Collins, as Lessees, recorded in Volume 259, page
384 of the Oil and Gas Records of Gaines County, Texas.

8. Oil and Gas Lease dated September 4, 1980 from Jessie B. Crump, David
Blevins and Fort Worth National Bank, Co-Trustees of Joe and Jessie
Crump Fund, as Lessors, to Ernest W. Thornton and Dyrel W. Collins, as
Lessees, recorded in Volume 257, page 535 of the Oil and Gas Records of
Gaines County, Texas.

Exhibit "A" - Page 11
<page>

9. Oil and Gas Lease dated July 11, 1980 from First National Bank of Fort
Worth, Agent for W. S. Spradling, et al., as Lessors, to Ernest W.
Thornton and Dyrel W. Collins, as Lessees, recorded in Volume 255, page
17 of the Oil and Gas Records of Gaines County, Texas.

10. Oil and Gas Lease dated October 7, 1980 from First National Bank in
Midland, Independent Executor and Trustee u/w/o Irma Wrage Hendrickson,
as Lessors, to Ernest W. Thornton and Dyrel W. Collins, as Lessees,
recorded in Volume 258, page 282 of the Oil and Gas Records of Gaines
County, Texas.
11. Oil and Gas Lease dated October 7, 1980 from First National Bank,
Midland, Independent Executor of the Estate of A. N. Hendrickson, as
Lessor, to Ernest W. Thornton and Dyrel W. Collins, as Lessees,
recorded in Volume 258, page 285 of the Oil and Gas Records of Gaines
County, Texas.

12. Oil and Gas Lease dated July 10, 1980 from Samedan Oil Corporation, as
Lessor, to Ernest W. Thornton and Dyrel W. Collins, as Lessees,
recorded in Volume 254, page 485 of the Oil and Gas Records of Gaines
County, Texas.

13. Oil and Gas Lease dated April 1, 1980 from W. A. Yeager, as Lessor, to
Ernest W. Thornton and Dryel W. Collins, as Lessees, recorded in Volume
260, page 414 of the Oil and Gas Records of Gaines County, Texas.

INSOFAR ONLY as said Leases 1 through 13 cover the E/40 acres of the
N/2 S/2 of Section 12, Block A-22, PSL, Gaines County, Texas, as to
rights below 4,350 feet subsurface not to exceed 100 feet below the
Base of the San Andres Formation.

14. Oil and Gas Lease dated May 1, 1980, from the Estate of J. M. Armstrong
and Mary Lee Armstrong, as Lessors, to Ernest W. Thornton and Dyrel W.
Collins, as Lessees, recorded in Volume 261, page 137 of the Oil and
Gas Records of Gaines County, Texas,

Working Interest Net Revenue Interest

.6713560 .5000090

ARMSTRONG LEASE:
- ---------------

1. Oil and Gas Lease dated August 13, 1958, from Mabee Royalties, Inc. ,
et al., as Lessors, to A. N. Hendrickson, as Lessee, recorded in Volume
118, page 185 of the Oil and Gas Records of Gaines County, Texas.

2. Oil and Gas Lease dated September 3, 1958, from The Samuel Roberts
Noble Foundation, Inc., as Lessors, to Samedan Oil Corporation, as
Lessee, recorded in Volume 118, page 429 of the Oil and Gas Records of
Gaines County, Texas.

Exhibit "A" - Page 12
<page>

3. Oil and Gas Lease dated September 20, 1958, from Smith Spradling and
wife, Verda Spradling, as Lessors, to Samedan Oil Corporation, as
Lessee, recorded in Volume 118, page 450 of the Oil and Gas Records of
Gaines County, Texas.

4. Oil and Gas Lease dated September 20, 1958, from Velma Roring and
husband, John Roring, as Lessors, to Samedan Oil Corporation, as
Lessee, recorded in Volume 119, page 47 of the Oil and Gas Records of
Gaines County, Texas.

5. Oil and Gas Lease dated September 20, 1958, from C. C. Forbes and wife,
Ilamae Forbes, as Lessors, to Samedan Oil Corporation, as Lessee,
recorded in Volume 119, page 49 of the Oil and Gas Records of Gaines
County, Texas.

6. Oil and Gas Lease dated September 20, 1958, from M. M. Moore, as
Lessor, to Samedan Oil Corporation, as Lessee, recorded in Volume 119,
page 87 of the Oil and Gas Records of Gaines County, Texas.

7. Oil and Gas Lease dated December 21, 1956, from Mattie Williams, et
vir, as Lessors, to BBM Drilling Company, as Lessee, recorded in Volume
106, page 162 of the Oil and Gas Records of Gaines County, Texas.

8. Oil and Gas Lease dated June 1, 1987, from First Interstate Bank of
Casper, Trustee, as Lessor, to Caprock Oil & Gas, Inc., as Lessee,
recorded in Volume 336, page 453 of the Oil and Gas Records of Gaines
County, Texas.

9. Oil and Gas Lease dated August 1, 1986, from L. W. Biddick, Trustee, as
Lessor, to Caprock Oil & Gas, Inc., as Lessee, recorded in Volume 330,
page 224 of the Oil and Gas Records of Gaines County, Texas.

10. Oil and Gas Lease dated September 26, 1986, from Ronald J. Byers, as
Lessor, to Caprock Oil & Gas, Inc., as Lessee, recorded in Volume 332,
page 49 of the Oil and Gas Records of Gaines County, Texas.

11. Oil and Gas Lease dated July 7, 1987, from First RepublicBank Midland,
Trustee, as Lessor, to Caprock Oil & Gas, Inc., as Lessee, recorded in
Volume 338, page 279 of the Oil and Gas Records of Gaines County,
Texas.

12. Oil and Gas Lease dated August 10, 1987, from Texaco, Inc., as Lessor,
to Caprock Oil & Gas, Inc., as Lessee, recorded in Volume 343, Page 164
of the Oil and Gas Records of Gaines County, Texas.

13. Oil and Gas Lease dated November 25, 1957, from Robert M. Payne and
wife, Mary Jane Payne, as Lessors, to Phillips Petroleum Company, as
Lessee, recorded in Volume 113, page 421 of the oil and Gas Records of
Gaines County, Texas.

Exhibit "A" - Page 13
<page>

14. Oil and Gas Lease dated January 30, 1958, from Warren D. Anderson, as
Lessor, to Phillips Petroleum Company, as Lessee, recorded in Volume
114, page 345 of the oil and Gas Records of Gaines County, Texas.

15. Oil and Gas Lease dated January 24, 1958, from Warren D. Anderson, as
Lessor, to Phillips Petroleum Company, as Lessee, recorded in Volume
114, page 337 of the oil and Gas Records of Gaines County, Texas.

16. Oil and Gas Lease dated December 9, 1957, from H. L. Huffman, as
Lessor, to Phillips Petroleum Company, as Lessee, recorded in Volume
113, page 417 of the Oil and Gas Records of Gaines County, Texas.

17. Oil and Gas Lease dated December 4, 1957, from Jane Johnson Wilson and
husband, Charles F. Wilson, as Lessors, to Phillips Petroleum Company,
as Lessee, recorded in Volume 114, page 343 of the oil and Gas Records
of Gaines County, Texas.

18. Oil and Gas Lease dated November 29, 1957, from R. S. Anderson, as
Lessor, to Phillips Petroleum Company, as Lessee, recorded in Volume
113, page 419 of the Oil and Gas Records of Gaines County, Texas.

19. Oil and Gas Lease dated November 25, 1957, from the First National Bank
of Midland, Texas, as Attorney-in-Fact for N. K. Ellis, as Lessor, to
Phillips Petroleum Company, as Lessee, recorded in Volume 114, page 341
of the Oil and Gas Records of Gaines County, Texas.

20. Oil and Gas Lease dated November 25, 1957, from The First National Bank
of Midland, Texas, Executor and Trustee of the Estate of H. H. Watson,
deceased, as Lessor, to Phillips Petroleum Company, as Lessee, recorded
in Volume 113, page 415 of the Oil and Gas Records of Gaines County,
Texas.

21. Oil and Gas Lease dated August 13, 1958, from Mabee Royalties, Inc. as
Lessor, to A. N. Hendrickson, as Lessee, recorded in Volume 118, page
185 of the Oil and Gas Records of Gaines County, Texas.

22. Oil and Gas Lease dated November 15, 1958, from J. L. Crump, as Lessor,
to A. N. Hendrickson, as Lessee, recorded in Volume 120, page 216 of
the Oil and Gas Records of Gaines County, Texas.

23. Oil and Gas Lease dated August 26, 1986, from Samedan Oil Corporation,
as Lessor, to Caprock Oil & Gas, Inc., as Lessee, recorded in Volume
331, page 71 of the Oil and Gas Records of Gaines County, Texas.

24. Oil and Gas Lease dated June 1, 1987, from Don R. Lisle and Mary Ann
Treadwell, Trustees for the John and Velma Roring Trusts, as Lessors,
to Caprock Oil & Gas, Inc., as Lessee, recorded in Volume 337, page 298
of the Oil and Gas Records of Gaines County, Texas.

Exhibit "A" - Page 14
<page>

25. Oil and Gas Lease dated September 5, 1984, from the J. E. and L. E.
Mabee Foundation, Inc. as Lessor, to Caprock Oil & Gas, Inc., as
Lessee, recorded in Volume 301, page 257 of the Oil and Gas Records of
Gaines County, Texas.

INSOFAR AND ONLY INSOFAR as Leases 1 through 25 cover the NW/4 of the
SE/4 of Section 12, Block A-22, PSL Survey, Gaines County, Texas.

Working Interest Net Revenue Interest Royalty Interest

1.0000000 .7256277 .0562500

BLOCK A-22 UNIT:
- ---------------

All oil and gas rights in the Unitized Formation in the Unit Area, as
defined in Unit Agreement dated July 1, 1963, recorded in Volume 170,
page 62, Oil and Gas Records of Gaines County, Texas, comprised of the
following lands and the oil, gas and mineral leases embracing same, all
in Block A-22, PSL, Gaines County, Texas:

Tract No. Land Description
--------- ----------------
1 S/2 S/2 NE/4 Section 19,
2 SE/4 Section 20,
3 S/2 SE/4 Section 12,
4 N/2 SW/4 Section 20,
5 S/2 NW/4 Section 20,
6 SW/4 Section 11; N/2 NW/4 Section 20,
7 NE/4 SE/4 Section 12,
8 S/2 SW/4 Section 20,
9 W/2 W/2 Section 21,
10 NE/4 Section 22,
11 E/2 SE/4 Section 19, and
12 N/2 NE/4, N/2 S/2 NE/4 Section 19

Working Interest Net Revenue Interest

.7233471** .5728540*/**

* This represents the net revenue attributable to this interest
on a "unit" basis, although disbursements are actually made on
a tract basis and the net revenue interest attributable to the
working interest of Caprock Oil & Gas, Inc. varies from tract
to tract.

** These interests are subject to reduction to 3/4 of each
interest reflected upon "payout" as defined in Assignment from
Ralph Viney & Associates, Inc., dated August 16, 1984,
recorded in Volume 461, page 532, Deed Records of Gaines
County, Texas.

Exhibit "A" - Page 15

COAST LEASE:
- -----------

Oil and Gas Lease dated June 3, 1953, from Catherine Boysen Lawrence
and husband, C. Harrison Lawrence, as Lessors, to Phillips Petroleum
Company, as Lessee, recorded in Volume 76, page 46 of the Oil and Gas
Lease Records of Gaines County, Texas, covering the N/2 NW/4 of Section
11, Block A-22, PSL, Gaines County, Texas, plus additional lands
located in the said Section 11.

Working Interest Net Revenue Interest

1.0000000 .7500000

COLGAN STATE "A" LEASE:
- ----------------------

Oil and Gas Lease dated December 31, 1955, from Ella H. Colgan and
husband, F. R. Colgan, Individually and as Agents for the State of
Texas, as Lessors, to E. F. Alstrin, as Lessee, recorded in Volume 97,
page 387 of the Oil and Gas Records of Gaines County, Texas, INSOFAR
AND ONLY INSOFAR as said lease covers S/2 S/2 NE/4 of Section 19, Block
A-22, PSL Survey, Gaines County, Texas.

Working Interest Net Revenue Interest

.4106250 .2784460

CONE LEASE:
- ----------

1. Oil and Gas Lease dated November 15, 1957, from Hattie C. Williams, et
vir, as Lessors, to W. A. Yeager, as Lessee, recorded in Volume 113,
page 149 of the Oil and Gas Records of Gaines County, Texas.

2. Oil and Gas Lease dated June 25, 1982, from Tom R. Cone, as Lessor, to
Alvin Collins, as Lessee, recorded in Volume 278, page 483 of the oil
and Gas Records of Gaines County, Texas.

3. Oil and Gas Lease dated June 25, 1982, from Cathie Cone Auvenshine, as
Lessor, to Alvin Collins, as Lessee, recorded in Volume 279, page 160
of the Oil and Gas Records of Gaines County, Texas.

4. Oil and Gas Lease dated May 4, 1983, from W. A. Yeager, as Lessor, to
Caprock Oil & Gas, Inc., as Lessee, recorded in Volume 286, page 785 of
the Oil and Gas Records of Gaines County, Texas.

Exhibit "A" - Page 16
<page>

5. Oil and Gas Lease dated August 26, 1983, from Mary Lee Armstrong, as
Lessor, to Caprock Oil & Gas, Inc., as Lessee, recorded in Volume 290,
page.776 of the oil and Gas Records of Gaines County, Texas.

6. Oil and Gas Lease dated May 4, 1983, from the Estate of J. M.
Armstrong, deceased, as Lessor, to Caprock Oil & Gas, Inc., as Lessee,
recorded in Volume 287, page 621 of the oil and Gas Records of Gaines
County, Texas.

7. Oil and Gas Lease dated April 30, 1984, from Kenneth G. Cone, as
Lessor, to Caprock Oil & Gas, Inc., as Lessee, recorded in Volume 296,
page 479 of the Oil and Gas Records of Gaines County, Texas.

8. Oil and Gas Lease dated October 1, 1970, from J. E. and L. E. Mabee
Foundation, as Lessor, to Mabee Petroleum Corp., as Lessee, recorded in
Volume 197, page 646 of the oil and Gas Records of Gaines County,
Texas.

INSOFAR ONLY as said Lease Nos. 1 through 8 above cover the S/2 SW/4 of
Section 12, Block A-22, PSL Survey, Gaines County, Texas.

Working Interest Net Revenue Interest

.8575000 .7268003

ECM:
- ----

Oil and Gas Lease dated January 2, 2003, from Henrie E. Mast, Jr.; Mary
Mast Toubin; Martha Mast Watts; Daniel C. Watts; Laurel E. Watts;
Thomas Rush Mast; Steven J. Mast; William T. Mast; Jonathan Rush Crews;
Mary Suzanne Crews Crist; Sarah Louise Crews Parks; and Timothy Francis
Crews, as Lessors, to Caprock Oil & Gas, Inc., as Lessee, recorded in
Volume 770, page 86 of the Official Records of Gaines County, Texas,
covering the W/2 of Section 10 and the E/2 of Section 21, Block A-22,
PSL, Gaines County, Texas.

Working Interest Net Revenue Interest ORI

1.0 .7500000 .0625000

ECM SOUTH:
- ---------

1. Oil and Gas Lease dated January 2, 2003, from Henrie E. Mast, Jr.; Mary
Mast Toubin; Martha Mast Watts; Daniel C. Watts; Laurel E. Watts;
Thomas Rush Mast; Steven J. Mast; William T. Mast; Jonathan Rush Crews;
Mary Suzanne Crews Crist; Sarah Louise Crews Parks; and Timothy Francis
Crews, as Lessors, to Caprock Oil & Gas, Inc., as Lessee, recorded in
Volume 770, page 463 of the Official Records of Gaines County, Texas,
covering the N/2 NE/4 of Section 1, Block A-34, PSL, Gaines County,
Texas.

Exhibit "A" - Page 17
<page>

2. Oil and Gas Lease dated June 18, 2003, fromWinston Partners, Ltd., as
Lessor, to Caprock Oil & Gas, Inc., as Lessee, recorded in Volume 780,
page 187 of the Official Records of Gaines County, Texas, covering the
N/2 NE/4 of Section 1, Block A-34, PSL, Gaines County, Texas.

3. Oil and Gas Lease dated July 25, 2003, from Bank of America, N.A.,
Trustee of the V. P. Baker Family Trust, as Lessor, to Caprock Oil &
Gas, Inc., as Lessee, recorded in Volume 782, page 346 of the Official
Records of Gaines County, Texas, covering the N/2 NE/4 of Section 1,
Block A-34, PSL, Gaines County, Texas.

Working Interest Net Revenue Interest

1.0 .75000000

LAWRENCE "A" LEASE:
- ------------------

Oil and Gas Lease dated June 12, 1952, from Catherine B. Lawrence and
husband, Charles H. Lawrence, as Lessors, to G. B. Crain, as Lessee,
recorded in Volume 67, page 194 of the Oil and Gas Lease Records of
Gaines County, Texas, covering the W/160 acres of Section 21 and the
NE/4 of Section 20, Block A-22, PSL Survey, Gaines County, Texas.

Working Interest Net Revenue Interest

.24905813 .18679359

LAWRENCE "B" LEASE:
- ------------------

Oil and Gas Lease dated July 12, 1955, from Catherine B. Lawrence and
husband, C. Harrison Lawrence, as Lessors, to D. E. Billings, as
Lessee, recorded in Volume 93, page 31 of the Oil and Gas Lease Records
of Gaines County, Texas, covering the S/2 SW/4 of Section 20, Block
A-22, PSL Survey, Gaines County, Texas.

Working Interest Net Revenue Interest

.24905813 .18679359

LAWRENCE "C" LEASE:
- ------------------

Oil and Gas Lease dated June 3, 1953, between Catherine Boysen
Lawrence, et vir, as Lessors, to Phillips Petroleum Company, as Lessee,
recorded in Volume 76, page 46, of the oil and Gas Records of Gaines
County, Texas, covering the S/2 NW/4 of Section 20, Block A-22, PSL
Survey, Gaines County, Texas.

Working Interest Net Revenue Interest

.8750000 .6562500

Exhibit "A" - Page 18
<page>

LAWRENCE "D" LEASE:
- ------------------

Oil and Gas Lease dated January 12, 1952, from Catherine B. Lawrence
and husband, Charles H. Lawrence, as Lessors, to G. B. Crain, as
Lessee, recorded in Volume 67, page 395 of the Oil and Gas Lease
Records of Gaines County, Texas, covering the SE/4 of Section 20, Block
A-22, PSL Survey, Gaines County, Texas.

Working Interest Net Revenue Interest

.25540673 .19121497

ELIZABETH CREWS MAST LEASE:
- --------------------------

Oil, Gas and Mineral Lease dated January 2, 2003, from Henry E. Mast,
Jr., Mary Mast Toubin, Martha Mast Watts, Daniel C. Watts, Laurel E.
Watts, Thomas Rush Mast, Steven J. Mast, William T. Mast, Jonathan Rush
Crews, Mary Suzanne Crews Crist, Sara Louise Crews Parks, and Timothy
Francis Crews, as Lessors, to Caprock Oil & Gas, Inc., as Lessee,
recorded in Volume 770, page 86 of the Official Public Records of
Gaines County, Texas, covering the W/2 of Section 10, Block A-20, PSL,
and the E/2 of Section 21, Block A-22, PSL, Gaines County, Texas.

Working Interest Net Revenue Interest ORI

.4300000 .3225000 .0625

W. G. MAYO #1, #2, AND #3 LEASE:
- --------------------------------

1. Oil and Gas Lease dated March 28, 1980, from W. G. Mayo and Virginia F.
Mayo, as Lessors, to S. K. Rogers, et al., as Lessees, recorded in
Volume 250, page 805 of the Oil and Gas Lease Records of Gaines County,
Texas, covering 168.46 acres of land out of the East part of the W/2 of
Section 19, Block A-22, PSL, Gaines County, Texas.

2. Oil and Gas Lease dated June 12, 1980, from the Estate of Robert M.
Payne, deceased, as Lessor, to Rogers & Bryant Oil Company, as Lessee,
recorded in Volume 254, page 185 of the Oil and Gas Lease Records of
Gaines County, Texas, covering the W/2 of Section 18, the South 5/8 of
the E/2 of Section 18, and the W/2 of Section 19, all in Block A-22,
PSL, Gaines County, Texas.

3. Oil and Gas Lease dated June 12, 1980, from Ilamae Forbes, a widow, as
Lessor, to Rogers & Bryant Oil Company, as Lessee, recorded in Volume
254, page 187 of the Oil and Gas Lease Records of Gaines County, Texas,
covering the W/2 of Section 18, the South 5/8 of the E/2 of Section 18,
and the W/2 of Section 19, all in Block A-22, PSL, Gaines County,
Texas.

Exhibit "A" - Page 19
<page>

4. Oil and Gas Lease dated June 3, 1980, from L. W. Biddick, as Lessor, to
Rogers & Bryant Oil Company, as Lessee, recorded in Volume 254, page
189 of the Oil and Gas Lease Records of Gaines County, Texas, covering
the W/2 of Section 18, the South 5/8 of the E/2 of Section 18, and the
W/2 of Section 19, all in Block A-22, PSL, Gaines County, Texas.

5. Oil and Gas Lease dated June 5, 1980, from R. S. Anderson, as Lessor,
to Rogers & Bryant Oil Company, as Lessee, recorded in Volume 254, page
191 of the Oil and Gas Lease Records of Gaines County, Texas, covering
the W/2 of Section 18, the South 5/8 of the E/2 of Section 18, and the
W/2 of Section 19, all in Block A-22, PSL, Gaines County, Texas.

6. Oil and Gas Lease dated June 6, 1980, from the First National Bank of
Casper, Wyoming, Trustee of the Inez Tate Trust, as Lessor, to Rogers &
Bryant Oil Company, as Lessee, recorded in Volume 254, page 193 of the
Oil and Gas Lease Records of Gaines County, Texas, covering the W/2 of
Section 18, the South 5/8 of the E/2 of Section 18, and the W/2 of
Section 19, all in Block A-22, PSL, Gaines County, Texas.

7. Oil and Gas Lease dated June 2, 1980, from H. L. Huffman, as Lessor, to
Rogers & Bryant Oil Company, as Lessee, recorded in Volume 254, page
195 of the Oil and Gas Lease Records of Gaines County, Texas, covering
the W/2 of Section 18, the South 5/8 of the E/2 of Section 18, and the
W/2 of Section 19, all in Block A-22, PSL, Gaines County, Texas.

8. Oil and Gas Lease dated June 2, 1980, from L. E. Windham and wife,
Thelma Windham, as Lessors, to Rogers & Bryant Oil Company, as Lessees,
recorded in Volume 254, page 197 of the Oil and Gas Lease Records of
Gaines County, Texas, covering the W/2 of Section 18, the South 5/8 of
the E/2 of Section 18, and the W/2 of Section 19, all in Block A-22,
PSL, Gaines County, Texas.

9. Oil and Gas Lease dated June 16, 1980, from Jane J. Wilson, et vir, as
Lessors, to Rogers & Bryant Oil Company, as Lessee, recorded in Volume
254, page 199 of the Oil and Gas Lease Records of Gaines County, Texas,
covering the W/2 of Section 18, the South 5/8 of the E/2 of Section 18,
and the W/2 of Section 19, all in Block A-22, PSL, Gaines County,
Texas.

10. Oil and Gas Lease dated April 25, 1980, from Samedan Oil Corporation,
as Lessor, to Rogers & Bryant Oil Company, as Lessee, recorded in
Volume 252, page 225 of the Oil and Gas Lease Records of Gaines County,
Texas, covering the W/2 of Section 19 and the W/2, SE/4, and S/2 S/2
NE/4 of Section 18, all in Block A-22, PSL, Gaines County, Texas.

11. Oil and Gas Lease dated June 6, 1980, from Donald R. Lisle and Mary Ann
Treadwell, Co-Trustees of the John and Velma Roring Trust, as Lessors,
to Rogers & Bryant Oil Company, as Lessee, recorded in Volume 254, page
228 of the Oil and Gas Lease Records of Gaines County, Texas, covering
the W/2 of Section 18, the South 5/8 of the E/2 of Section 18, and the
W/2 of Section 19, all in Block A-22, PSL, Gaines County, Texas.

12. Oil and Gas Lease dated August 19, 1980, from Angle Oil Company, as
Lessor, to David Turrentine and S. K. Rogers, as Lessees, recorded in
Volume 255, page 525 of the Oil and Gas Lease Records of Gaines County,
Texas.

Exhibit "A" - Page 20
<page>

of the E/2 of Section 18, and the W/2 of Section 19, all in Block A-22,
PSL, Gaines County, Texas.

13. Oil and Gas Lease dated August 20, 1980, from the First National Bank
of Fort Worth, Agent for William S. Spradling, and First National Bank
of Fort Worth, Independent Executor of the Estate of Verda Spradling,
as Lessors, to David Turrentine and S. K. Rogers, as Lessees, recorded
in Volume 256, page 319 of the Oil and Gas Lease Records of Gaines
County, Texas, covering the W/2 of Section 18, the South 5/8
of the E/2 of Section 18, and the W/2 of Section 19, all in Block A-22,
PSL, Gaines County, Texas.

14. Oil and Gas Lease dated September 29, 1980 from the Estate of Robert M.
Payne, Sr., and Mary Jane Payne, a widow, as Lessors, to Rogers &
Bryant Oil Company, as Lessee, recorded in Volume 259, page 715 of the
Oil and Gas Lease Records of Gaines County, Texas, covering the W/2 of
Section 18, the South 5/8 of the E/2 of Section 18, and the W/2 of
Section 19, all in Block A-22, PSL, Gaines County, Texas.

15. Oil and Gas Lease dated June 6, 1980 from the First National Bank of
Casper, Wyoming, Trustee of the M. E. Tate Trust, as Lessors, to Rogers
& Bryant Oil Company, as Lessee, recorded in Volume 259, page 717 of
the Oil and Gas Lease Records of Gaines County, Texas, covering the W/2
of Section 18, the South 5/8 of the E/2 of Section 18, and the W/2 of
Section 19, all in Block A-22, PSL, Gaines County, Texas.

16. Oil and Gas Lease dated June 5, 1980 from Nancy Anderson Phariss, Janet
Anderson Carrell, Gary Anderson Fell, Kenneth Donald Anderson and Karen
Anderson Richert, as Lessors, to Rogers & Bryant Oil Company, as
Lessee, recorded in Volume 302, page 383 of the Oil and Gas Lease
Records of Gaines County, Texas, covering the W/2 of Section 18, the
South 5/8 of the E/2 of Section 18, and the W/2 of Section 19, all in
Block A-22, PSL, Gaines County, Texas.

17. Oil and Gas Lease dated July 17, 1980, from Phillip E. Peacock, Trustee
under the Will of Inez Lester Peacock, as Lessor, to Rogers & Bryant
Oil Company, as Lessee, recorded in Volume 302, page 145 of the oil and
Gas Lease Records of Gaines County, Texas, covering the W/2 of Section
18, the South 5/8 of the E/2 of Section 18, and the W/2 of Section 19,
all in Block A-22, PSL, Gaines County, Texas.

18. Oil and Gas Lease dated July 17, 1980 from Phillip E. Peacock, as
Lessor, to Rogers & Bryant Oil Company, as Lessee, recorded in Volume
302, page 147 of the Oil and Gas Lease Records of Gaines County, Texas,
covering the W/2 of Section 18, the South 5/8 of the E/2 of Section 18,
and the W/2 of Section 19, all in Block A-22, PSL, Gaines County,
Texas.

19. Oil and Gas Lease dated July 17, 1980 from Virginia S. Peacock, as
Lessor, to Rogers & Bryant Oil Company, as Lessee, recorded in Volume
302, page 149 of the Oil and Gas Lease Records of Gaines County, Texas,
covering the W/2 of Section 18, the South 5/8 of the E/2 of Section 18,
and the W/2 of Section 19, all in Block A-22, PSL, Gaines County,
Texas.

20. Oil and Gas Lease dated July 17, 1980 from Jerry Shinalt, as Lessor, to
Rogers & Bryant Oil Company, as Lessee, recorded in Volume 302, page
151 of the Oil and Gas Lease Records

Exhibit "A" - Page 21
<page>

of Gaines County, Texas, covering the W/2 of Section 18, the South 5/8
of the E/2 of Section 18, and the W/2 of Section 19, all in Block A-22,
PSL, Gaines County, Texas.

21. Oil and Gas Lease dated July 17, 1980 from J. Hoke Peacock, II,
Successor Trustee under the Will of Inez Lester Peacock, as Lessor, to
Rogers & Bryant Oil Company, as Lessee, recorded in Volume 302, page
143 of the Oil and Gas Lease Records of Gaines County, Texas, covering
the W/2 of Section 18, the South 5/8 of the E/2 of Section 18, and the
W/2 of Section 19, all in Block A-22, PSL, Gaines County, Texas.

22. Oil and Gas Lease dated July 17, 1980 from Virginia S. Peacock and J.
Hoke Peacock, II, Co-Trustees under the Will of James L. Peacock, as
Lessors, to Rogers & Bryant Oil Company, as Lessee, recorded in Volume
302, page 153 of the Oil and Gas Lease Records of Gaines County, Texas.

E/2 of Section 18, and the W/2 of Section 19, all in Block A-22, PSL,
Gaines County, Texas.

Working Interest Net Revenue Interest ORI

.8631250 (#1) .6646059 (#1) .0312500 (#1)
.7693750 (#2 and #3) .5923021 (#2 and #3) .0312500 (#2 and #3)

S. E. MAYO SWD:
- ---------------

S. E. Mayo Disposal Well Contract dated July 1, 1989, entered into by
and between Caprock Oil & Gas, Inc. and S. E. Mayo, pertaining to the
S. E. Mayo SWD Well located on the W/2 W/2 of Section 19, Block A-22,
PSL, Gaines County, Texas.

Working Interest Net Revenue Interest

1.0000000

McCONAL-CLARK LEASE:
- -------------------

Oil and Gas Lease dated March 21, 1952, from M. G. McConal, et al., as
Lessors, to D. R. Crain, as Lessee, recorded in Volume 68, page 547 of
the Oil and Gas Records of Gaines County, Texas, INSOFAR ONLY as said
lease covers the North 3/4 of the NE/4 of Section 19, Block A-22, PSL
Survey, Gaines County, Texas.

Working Interest Net Revenue Interest

.5143750 .4104500

Exhibit "A" - Page 22
<page>

METZGER LEASE:
- -------------

Oil and Gas Lease dated April 8, 1953, from Catherine B. Lawrence, et
vir, as Lessors, to Kerr-McGee Oil Industries, Inc., as Lessee,
recorded in Volume 74, page 329 of the Oil and Gas Records of Gaines
County, Texas, INSOFAR AND ONLY INSOFAR as said lease covers and
pertains to the S/2 NW/4 of Section 11, Block A-22, PSL, Gaines County,
Texas.

Working Interest Net Revenue Interest ORI

.7000000 .5250000 .0625000

METZGER NO. 1 SWD:
- -----------------

Metzger No. 1 SWD Well, located 2,173 feet from the east line and 467
feet from the south line of Section 11, Block A-22, PSL, Gaines County,
Texas.

Working Interest Net Revenue Interest

1.0000000

PKC AND PKC "A" LEASE:
- ---------------------

Oil and Gas Lease dated April 8, 1953, from Catherine B. Lawrence and
C. H. Lawrence, as Lessors, to Kerr-McGee Oil Industries, Inc., as
Lessee, recorded in Volume 74, page 329 of the Oil and Gas Records of
Gaines County, Texas, insofar and only insofar as said lease covers the
following described lands:

Tract 1: The N/2 NW/4 of Section 20, Block A-22, PSL Survey, Gaines
County, Texas.

Tract 2: The SW/4 of Section 11 and the N/2 SW/4 of Section 20, Block
A-22, PSL, Gaines County, Texas.

Working Interest Net Revenue Interest ORI

.9250000 .6463750 .0875000

SIMMONS LEASE:
- -------------

1. Oil and Gas Lease dated June 17, 1980, from Florence Hall, as Lessor,
to Ernest W. Thornton and Dyrel W. Collins, as Lessees, recorded in
Volume 253, page 885 of the Oil and Gas Records of Gaines County,
Texas, INSOFAR AND ONLY INSOFAR as said lease covers the NE/4 of
Section 12, Block A-22, PSL Survey, Gaines County, Texas.

2. Oil and Gas Lease dated August 18, 1980 from the Estate of Ruth W.
Shelton, Deceased, as Lessor, to Ernest W. Thornton and Dyrel W.
Collins, as Lessees, recorded in Volume 255, page 414 of the Oil and
Gas Records of Gaines County, Texas, INSOFAR AND ONLY

Exhibit "A" - Page 23
<page>

INSOFAR as said lease covers the NE/4 of Section 12, Block A-22, PSL
Survey, Gaines County, Texas.

3. Oil and Gas Lease dated January 22, 1980 from Midland National Bank,
Trustee, as Lessor, to W & W Oil Company, as Lessee, recorded in Volume
249, page 714 of the Oil and Gas Records of Gaines County, Texas,
INSOFAR AND ONLY INSOFAR as said lease covers the NE/4 of Section 12,
Block A-22, PSL Survey, Gaines County, Texas.

4. Oil and Gas Lease dated January 24, 1980 from Luther J. Simmons, as
Lessor, to Ernest W. Thornton and Dyrel W. Collins, as Lessees,
recorded in Volume 249, page 702 of the Oil and Gas Records of Gaines
County, Texas, INSOFAR AND ONLY INSOFAR as said lease covers the NE/4
of Section 12, Block A-22, PSL Survey, Gaines County, Texas.

5. Oil and Gas Lease dated January 24, 1980 from James T. Rather, as
Lessor, to Ernest W. Thornton and Dyrel W. Collins, as Lessees,
recorded in Volume 249, page 706 of the Oil and Gas Records of Gaines
County, Texas, INSOFAR AND ONLY INSOFAR as said lease covers the NE/4
of Section 12, Block A-22, PSL Survey, Gaines County, Texas.

6. Oil and Gas Lease dated January 24, 1980 from B. C. Rather, as Lessor,
to Ernest W. Thornton and Dyrel W. Collins, as Lessees, recorded in
Volume 249, page 704 of the Oil and Gas Records of Gaines County,
Texas, INSOFAR AND ONLY INSOFAR as said lease covers the NE/4 of
Section 12, Block A-22, PSL Survey, Gaines County, Texas.

7. Oil and Gas Lease dated January 24, 1980 from Grace M. White, as
Lessor, to Ernest W. Thornton and Dyrel W. Collins, as Lessees,
recorded in Volume 249, page 710 of the Oil and Gas Records of Gaines
County, Texas, INSOFAR AND ONLY INSOFAR as said lease covers the NE/4
of Section 12, Block A-22, PSL Survey, Gaines County, Texas.

8. Oil and Gas Lease dated January 24, 1980 from James G. White, as
Lessor, to Ernest W. Thornton and Dyrel W. Collins, as Lessees,
recorded in Volume 249, page 708 of the Oil and Gas Records of Gaines
County, Texas, INSOFAR AND ONLY INSOFAR as said lease covers the NE/4
of Section 12, Block A-22, PSL Survey, Gaines County, Texas.

9. Oil and Gas Lease dated January 24, 1980 from Robert K. White, as
Lessor, to Ernest W. Thornton and Dyrel W. Collins, as Lessees,
recorded in Volume 253, page 657 of the Oil and Gas Records of Gaines
County, Texas, INSOFAR AND ONLY INSOFAR as said lease covers the NE/4
of Section 12, Block A-22, PSL Survey, Gaines County, Texas.

10. Oil and Gas Lease dated January 24, 1980 from James M. White, as
Lessor, to Ernest W. Thornton and Dyrel W. Collins, as Lessees,
recorded in Volume 254, page 1 of the Oil and Gas Records of Gaines
County, Texas, INSOFAR AND ONLY INSOFAR as said lease covers the NE/4
of Section 12, Block A-22, PSL Survey, Gaines County, Texas.

Working Interest Net Revenue Interest

.7172500 .5186030

Exhibit "A" - Page 24
<page>

THOMPSON B LEASE:
- ----------------

1. Oil and Gas Lease dated January 31, 2001, from Caprock Oil & Gas, Inc.,
as Lessor, to H. L. Huffman Estate Trust #02249, NationsBank, Texas,
Trustee, Individually and as Agent for the State of Texas, as Lessee,
recorded in Volume 726, page 624 of the Gaines County Records.

2. Oil and Gas Lease dated January 31, 2001, from Caprock Oil & Gas, Inc.,
as Lessor, to Lorry Anderson Chapman, Individually and as Agent for the
State of Texas, as Lessee, recorded in Volume 726, page 614 of the
Gaines County Records.

3. Oil and Gas Lease dated January 30, 2001, from Caprock Oil & Gas, Inc.,
as Lessor, to Carolyn Kay Lisle 1990 Revocable Trust, Individually and
as Agent for the State of Texas, as Lessee, recorded in Volume 726,
page 604 of the Gaines County Records.

4. Oil and Gas Lease dated January 31, 2001, from Caprock Oil & Gas, Inc.,
as Lessor, to Nancy Anderson Olson, Individually and as Agent for the
State of Texas, as Lessee, recorded in Volume 726, page 594 of the
Gaines County Records.

5. Oil and Gas Lease dated January 31, 2001, from Caprock Oil & Gas, Inc.,
as Lessor, to Kenneth Donald Anderson, Individually and as Agent for
the State of Texas, as Lessee, recorded in Volume 726, page 584 of the
Gaines County Records.

6. Oil and Gas Lease dated January 31, 2001, from Caprock Oil & Gas, Inc.,
as Lessor, to Gary Anderson Fell, Individually and as Agent for the
State of Texas, as Lessee, recorded in Volume 726, page 574 of the
Gaines County Records.

7. Oil and Gas Lease dated January 31, 2001, from Caprock Oil & Gas, Inc.,
as Lessor, to Janet Anderson Loeffler, Individually and as Agent for
the State of Texas, as Lessee, recorded in Volume 726, page 564 of the
Gaines County Records.

8. Oil and Gas Lease dated January 31, 2001, from Caprock Oil & Gas, Inc.,
as Lessor, to M. E, and Inez Tate Trust, Donald Chapman, Trustee,
Individually and as Agent for the State of Texas, as Lessee, recorded
in Volume 726, page 554 of the Gaines County Records.

9. Oil and Gas Lease dated January 31, 2001, from Caprock Oil & Gas, Inc.,
as Lessor, to Mary Ann Curtis Family Trust, Joyce Silvernail, Trustee,
Individually and as Agent for the State of Texas, as Lessee, recorded
in Volume 726, page 544 of the Gaines County Records.

10. Oil and Gas Lease dated January 31, 2001, from Caprock Oil & Gas, Inc.,
as Lessor, to Elizabeth Ann Forbes, Trustee of the Ilamae Forbes
Revocable Trust dated May 28, 1981, Individually and as Agent for the
State of Texas, as Lessee, recorded in Volume 726, page 534 of the
Gaines County Records.

Exhibit "A" - Page 25
<page>

11. Oil and Gas Lease dated January 31, 2001, from Caprock Oil & Gas, Inc.,
as Lessor, to L. W. Biddick Trust dated March 8, 1982, individually and
as Agent for the State of Texas, as Lessee, recorded in Volume 726,
page 524 of the Gaines County Records.

12. Oil and Gas Lease dated January 31, 2001, from Caprock Oil & Gas, Inc.,
as Lessor, to William Smith Spradling, Individually and as Agent for
the State of Texas, as Lessee, recorded in Volume 726, page 514 of the
Gaines County Records.

13. Oil and Gas Lease dated January 31, 2001, from Caprock Oil & Gas, Inc.,
as Lessor, to David Essex, Individually and as Agent for the State of
Texas, as Lessee, recorded in Volume 726, page 504 of the Gaines County
Records.

14. Oil and Gas Lease dated January 31, 2001, from Caprock Oil & Gas, Inc.,
as Lessor, to Karen Sue Anderson, Individually and as Agent for the
State of Texas, as Lessee, recorded in Volume 726, page 494 of the
Gaines County Records.

15. Oil and Gas Lease dated January 31, 2001, from Caprock Oil & Gas, Inc.,
as Lessor, to Jane Johnson Wilson, by John D. Schofield,
Attorney-In-Fact, Individually and as Agent for the State of Texas, as
Lessee, recorded in Volume 726, page 484 of the Gaines County Records.

16. Oil and Gas Lease dated January 31, 2001, from Caprock Oil & Gas, Inc.,
as Lessor, to Holly E. Reimers, Individually and as Agent for the State
of Texas, as Lessee, recorded in Volume 726, page 474 of the Gaines
County Records.

17. Oil and Gas Lease dated January 31, 2001, from Caprock Oil & Gas, Inc.,
as Lessor, to Darrell Jackson, Individually and as Agent for the State
of Texas, as Lessee, recorded in Volume 726, page 464 of the Gaines
County Records.

18. Oil and Gas Lease dated February 1, 2001, from Caprock Oil & Gas, Inc.,
as Lessor, to Samedan Oil Corporation, Individually and as Agent for
the State of Texas, as Lessee, recorded in Volume 748, page 783 of the
Gaines County Records.

INSOFAR ONLY as the above leases cover the E/2 W/2 of Section 21, Block
A-22, PSL, Gaines County, Texas.

Working Interest Net Revenue Interest

.2800000 .2240000

YEAGER LEASE:
- ------------

Exhibit "A" - Page 26
<page>

2. Oil and Gas Lease dated March 15, 1984, from Tom R. Cone, as Lessor, to
Caprock Oil & Gas, Inc., as Lessee, recorded in Volume 294, page 820 of
the Oil and Gas Records of Gaines County, Texas.

3. Oil and Gas Lease dated March 15, 1984, from Cathie Cone Auvenshine, as
Lessor, to Caprock Oil & Gas, Inc., as Lessee, recorded in Volume 294,
page 626 of the Oil and Gas Records of Gaines County, Texas.

4. Oil and Gas Lease dated December 16, 1983, from W. A. Yeager, as
Lessor, to Caprock Oil & Gas, Inc., as Lessee, recorded in Volume 293,
page 60 of the Oil and Gas Records of Gaines County, Texas.

5. Oil and Gas Lease dated December 16, 1983, from the Estate of J. M.
Armstrong, deceased and Mary Lee Armstrong, as Lessors, to Caprock Oil
& Gas, Inc., as Lessee, recorded in Volume 293, page 65 of the oil and
Gas Records of Gaines County, Texas.

6. Oil and Gas Lease dated August 26, 1983, from Mary Lee Armstrong, as
Lessor, to Caprock Oil & Gas, Inc., as Lessee, recorded in Volume 290,
page 776 of the Oil and Gas Records of Gaines County, Texas.

7. Oil and Gas Lease dated April 10, 1984, from Kenneth G. Cone, as
Lessor, to Caprock Oil & Gas, Inc., as Lessee, recorded in Volume 296,
page 482 of the oil and Gas Records of Gaines County, Texas.

8. Oil and Gas Lease dated October 1, 1970 from the J. E. and L. F. Mabee
Foundation, as Lessor, to Mabee Petroleum Corp., as Lessee, recorded in
Volume 197, page 646 of the oil and Gas Records of Gaines County,
Texas.

INSOFAR ONLY as said Lease Nos. 1 through 8 cover and pertain to the
SE/4 SE/4 of Section 12, Block A-22, PSL Survey, Gaines County, Texas.

Working Interest Net Revenue Interest

.8575000 .7142988

Exhibit "A" - Page 27

EXHIBIT B

Attached to and made a part of that certain Purchase and Sale Agreement
dated September 16, 2004, by and between CAPROCK OIL & GAS, L.P., as
Seller, and PARALLEL L.P., as Buyer
<table>
Allocated Price, M$
Caprock Interests To NRI & ORRI
----------------------------------- ---------------------------
Lease Name W.I. N.R.I.
- --------------------------------------------- --------------------- ------------------- ---------------------------
<s> <c> <c> <c>
Akers 0.67135600 0.50000900 $84,071.00
Armstrong 1.00000000 0.72562770 $54,000.00
Armstrong ORRI 0.05625000 $10,000.00
Block A-22 Unit 0.72334710 0.57285400 $92,669.00
Coast 1.00000000 0.75000000 $15,000.00
Colgan State A 0.41062500 0.27844600 $239,965.00
Cone 0.85750000 0.72680030 $2,942,616.00
ECM Lease 1.00000000 0.75000000 $40,000.00
ECM Lease ORRI 0.06250000 $11,000.00
ECM South 1.00000000 0.75000000 $30,000.00
Elizabeth Crews Mast 0.43000000 0.32250000 $1,242,700.00
Elizabeth Crews Mast ORRI 0.06250000 $338,500.00
Lawrence A 0.24905813 0.18679359 $161,888.00
Lawrence B 0.24905813 0.18679359 $386,040.00
Lawrence C 0.87500000 0.65625000 $1,233,750.00
Lawrence D 0.25540673 0.19121497 $484,411.00
Mast 0.40000000 0.31937500 $48,400.00
McConal Clark 0.51437500 0.41045000 $2,134,655.00
Metzger 0.70000000 0.52500000 $82,600.00
Metzger ORRI 0.06250000 $13,000.00
Metzger SWD 1.00000000 $50,000.00
Moore Leasehold 0.75000000 $20,000.00
Moore SA 0.40000000 0.31200000 $56,400.00
Moore SA ORRI 0.06213810 $3,000.00
N. Means Queen Sand Unit 1.00000000 0.80000000 $128,000.00
N.Means Queen Sand Unit ORRI 0.00793000 $5,000.00
PKC 0.92500000 0.64637500 $314,478.00
PKC ORRI 0.08750000 $100,000.00
PKC "A" 0.92500000 0.64637500 $1,387,404.00
PKC "A" ORRI 0.08750000 $140,000.00
Reed SA 0.40000000 0.30000000 $20,000.00
S.E. Mayo SWD 1.00000000 $50,000.00
Simmons 0.71725000 0.51860300 $15,786.00
Thompson B 0.28000000 0.22400000 $1,050,000.00
W.G. Mayo #1 0.86312500 0.66460590 $43,149.00
W.G. Mayo #1 ORRI 0.03125000 $5,000.00
W.G. Mayo #2 & #3 0.76937500 0.59230210 $65,377.00
W.G. Mayo #2 & #3 ORRI 0.03125000 $8,500.00
Yeager 0.85750000 0.71429880 $38,861.00
- -----------------------------------------------------------------------------------------------------------
Total $13,146,221.00
- ----------------------------------------------------------------------------------------------------------
</table>

EXHIBIT C

Attached to and made a part of that certain Purchase and Sale Agreement
dated September 16, 2004, by and between CAPROCK OIL & GAS, L.P., as
Seller, and PARALLEL L.P., as Buyer

CONVEYANCE, ASSIGNMENT AND BILL OF SALE

STATE OF ______________ ss.
ss.
COUNTY OF _____________ ss.

THAT, _______________________________________________________ , whose
address is ______________________________________________________ (collectively,
"Assignor"), in consideration of Ten Dollars ($10.00) and other good and
valuable consideration to it in hand paid, the receipt and sufficiency of which
are hereby acknowledged, does hereby grant, bargain, convey, sell, assign, and
transfer unto ____________________________________________ , whose address is
___________________________________________________________ ("Assignee"), the
following interests (the "Assets"):

1. all of Assignor's right, title, and interest, if any, in and
to, except to the extent constituting Excluded Assets, the
following (the "Leases"): any and all interests owned by
Assignor and set forth on "Exhibit A" hereto, or which
Assignor is entitled to receive by reason of any
participation, joint venture, farm-in, farm-out, joint
operating agreement or other agreement, in and to the oil, gas
and/or mineral leases, permits, licenses, concessions,
leasehold estates; royalty interests, overriding royalty
interests, net revenue interests, executory interests, net
profit interests, working interests, reversionary interests,
fee and term mineral interests, and any other interests of
Assignor in crude oil, natural gas, casinghead gas,
condensate, sulphur, natural gas liquids and other liquid or
gaseous hydrocarbons (including CO2), and shall also refer to
all other minerals of every kind and character which may be
covered by or included in the Leases and Assets (collectively,
"Hydrocarbons"), it being the intent hereof if the legal
descriptions and depth limitations set forth on "Exhibit A" do
not correctly describe such leases or interests or all of the
lands covered thereby, that the "Leases" shall nevertheless
include all of Assignor's right, title and interest in the
Leases and other interests described on Exhibit A and all land
and depths covered thereby even though such interests may be
incorrectly described;

2. all of Assignor's right, title and interest in and to or
derived from the following insofar as the same do not
constitute Excluded Assets and are attributable to,
appurtenant to, incidental to, or used for the operation of
the Leases: (a) all easements, rights-of-way, permits,
licenses, servitudes, surface leases and fee parcels or other
interests; (b) all wells located upon the Leases or on lands
pooled or unitized with any portion thereof, or on lands
located within any governmental drilling and spacing units
which includes any portion thereof, and all equipment and
other

Exhibit "C" Page 1

<page>

personal property, inventory, spare parts, tools, fixtures,
pipelines, wellhead equipment, casing, tubing, pumps, motors,
machinery, gathering lines and facilities, telephone lines,
boilers, buildings, injection wells and facilities, saltwater
disposal wells and facilities, central processing facilities,
metering facilities, compression facilities, platforms, tank
batteries, appurtenances, and improvements now or as of 7:00
a.m., local time, on October 1, 2004 (the "Effective Time")
situated upon the Leases or the land covered by the easements,
rights-of-way, permits, licenses, servitudes, surface leases
and fee parcels or other interests described below or used or
held for use in connection with the development or operation
of the Leases or the production, treatment, storage,
compression, processing or transportation of Hydrocarbons from
or in the Leases; (d) all contracts, agreements, and title
instruments to the extent attributable to and affecting the
Assets in existence on the date hereof, including all
Hydrocarbon sales, purchase, gathering, transportation,
treating, marketing, exchange, processing, and fractionating
contracts, and joint operating agreements, unitization,
pooling and communitization agreements; and (e) originals of
all lease files, land files, well files, production records,
division order files, abstracts, title opinions, and contract
files, insofar as the same are directly related to the Leases;
including, without limitation, all seismic, geological,
geochemical, and geophysical information and data, to the
extent that such data is not subject to any third party
restrictions, but excluding Assignor's proprietary
interpretations of same;

3. all of Assignor's right, title and interest in all
merchantable oil and condensate (for oil or liquids in storage
tanks, being only that oil or liquids physically above the top
of the pipeline connection from such tanks) produced from or
attributable to the Leases prior to the Effective Time which
have not been sold by Assignor and are in storage at the
Effective Time;

SAVE AND EXCEPT, the following (the "Excluded Assets"):

1. (i) all trade credits, accounts receivable, notes receivable
and other receivables attributable to Assignor's interest in
the Assets with respect to any period of time prior to the
Effective Time; (ii) all deposits, cash, checks in process of
collection, cash equivalents and funds attributable to
Assignor's interest in the assets with respect to any period
of time prior to the Effective Time; and (iii) all proceeds,
benefits, income or revenues accruing (and any security or
other deposits made) with respect to the Assets prior to the
Effective Time;

2. all corporate, financial, and tax records of Assignor;
however, Assignor shall be entitled to receive copies of any
tax records which directly relate to any Assumed Obligations,
or which are necessary for Assignee's ownership,
administration, or operation of the Assets;

3. all claims and causes of action of Assignor arising from acts,
omissions or events, or damage to or destruction of the
Assets, occurring prior to the Effective Time except to the
extent directly related to the Assumed Obligations;

Exhibit "C" Page 2
<page>

4. except as otherwise provided in Article 15 of the P&S
Agreement, all rights, titles, claims and interests of Seller
relating to the Assets prior to the Effective Time (i) under
any policy or agreement of insurance or indemnity; (ii) under
any bond; or (iii) to any insurance or condemnation proceeds
or awards; (f) all Hydrocarbons produced from or attributable
to the Assets with respect to all periods prior to the
Effective Time, together with all proceeds from or of such
Hydrocarbons, except the Inventory Hydrocarbons;

5. claims of Assignor for refund of or loss carry forwards with
respect to production, windfall profit, severance, ad valorem
or any other taxes attributable to any period prior to the
Effective Time, or income or franchise taxes;

6. all amounts due or payable to Assignor as adjustments or
refunds under any contracts or agreements (including
take-or-pay claims) affecting the Assets, respecting periods
prior to the Effective Time;

7. all amounts due or payable to Assignor as adjustments to
insurance premiums related to the assets with respect to any
period prior to the Effective Time;

8. all proceeds, benefits, income or revenues accruing (and any
security or other deposits made) with respect to the Assets,
and all accounts receivable attributable to the Assets, prior
to the Effective Time;

9. all of Assignor's intellectual property, including, but not
limited to, proprietary computer software, patents, trade
secrets, copyrights, names, marks and logos;

10. all of Assignor's remote terminal units, radio control alarms,
radio towers, [and leased automobiles and trucks] located on
the leases, areas, and lands described in "Exhibit A" hereto.

Assignee, in consideration of the mutual benefits to be derived
hereunder by its acceptance hereof, understands and agrees to the following
terms and conditions:

1. This Assignment is made subject to that certain Purchase and
Sale Agreement (the "P&S Agreement") dated
______________________, between Assignor and
Assignee, and all terms and conditions, of said P&S Agreement
are incorporated herein by reference to the same extent and
with the same effect as if copied in full herein. In the event
of a conflict between the terms and conditions of this
Assignment and the P&S Agreement, the P&S Agreement shall
govern and control. Capitalized terms used herein but not
defined herein shall have the respective meanings set forth in
the P&S Agreement.

2. Assignee assumes all rights or obligations associated with gas
imbalances attributable to the Assets, regardless of when such
imbalances occurred or accrued.

3. Assignee hereby assumes all duties, liabilities and
obligations, express or implied, imposed upon Assignor under
the provisions of the Leases and any and all

Exhibit "C" Page 3
<page>

assignments, subleases, farmout agreements, assignments of
overriding royalty, joint operating agreements, easements,
rights-of-way, and all other contracts, agreements and
instruments affecting the Property, whether recorded or
unrecorded, and under all applicable laws, rules, regulations,
orders and ordinances; including, but not limited to, the
plugging and abandonment of the wells included in this
assignment as well as any other wells drilled hereafter on the
Leases, and the clean-up and restoration of the premises on
which the wells are located.

4. THIS ASSIGNMENT IS MADE WITHOUT WARRANTY OF ANY TYPE, EXPRESS,
STATUTORY, OR IMPLIED, INCLUDING BUT NOT LIMITED TO,
WARRANTIES OF TITLE, EXCEPT THAT ASSIGNOR WARRANTS TITLE TO
THE ASSETS AGAINST ALL ADVERSE CLAIMS, LIENS, BURDENS AND
ENCUMBRANCES ARISING BY, THROUGH OR UNDER ASSIGNOR, BUT NOT
OTHERWISE. This Assignment is made with full substitution and
subrogation to Assignee in and to all covenants and warranties
by others heretofore given or made with respect to the subject
Assets.

5. Assignor and Assignee will execute, acknowledge and deliver to
the other such further instruments, and take such other
action, as may be reasonably requested in order to more
effectively assure to said party all of the respective
properties, rights, titles, interest, estates and privileges
intended to be assigned, delivered or inuring to the benefit
of such party in consummation of the transaction contemplated
hereby.

TO HAVE AND TO HOLD the same unto the said Assignee forever. The
provisions hereof shall be covenants running with the land and shall inure to
the benefit of and be binding upon Assignor and Assignee, their respective
personal representatives, successors and assigns.

Exhibit "C" Page 4

IN WITNESS HEREOF, the undersigned have executed this instrument on the
date of the acknowledgments annexed hereto, but to be effective for all purposes
as of the Effective Time.

ASSIGNOR:

-------------------------------------

By:
-------------------------------------
-------------, -----------------

ASSIGNEE:

-------------------------------------

By:
-------------------------------------
-------------, -----------------

ACKNOWLEDGMENTS

Exhibit "C" Page 5

EXHIBIT D

Attached to and made a part of that certain Purchase and Sale
Agreement dated September 16, 2004, by and between CAPROCK OIL
& GAS, L.P., as Seller, and PARALLEL L.P., as Buyer

NON-FOREIGN AFFIDAVIT
Exemption from Withholding of Tax For
Dispositions of U.S. Real Property Interests

Section 1445 of the Internal Revenue Code provides that a transferee of
a U.S. real property interest must withhold tax if the transferor is a foreign
person. To inform ____________________ that withholding of tax is not required
upon the disposition of U.S. real property interests by
___________________________________ the undersigned hereby certifies the
following:

1. The undersigned are not foreign corporations, foreign
partnerships, foreign trusts, or foreign estates for purposes
of U.S. income taxation;

2. The undersigned's taxpayer identification number is:

3. The home or office address of the undersigned is
_________________________.

The undersigned understand that this certification may be disclosed to
the Internal Revenue Service by _____________________________ and that any false
statement contained herein could be punished by fine, imprisonment, or both.

Under penalties of perjury, I declare that I have examined this
certificate and, to the best of my knowledge and belief, it is true, correct,
and complete, and I further declare that I have authority to sign this document.

DATED this _____ day of __________, 200___.

-------------------------------------

By:
-------------------------------------
-------------, -----------------

EXHIBIT E

Attached to and made a part of that certain Purchase and Sale
Agreement dated September 16, 2004, by and between CAPROCK OIL
& GAS, L.P., as Seller, and PARALLEL L.P., as Buyer

Reporting and Accounting Memorandum

In connection with the Purchase and Sale Agreement (the "P&S
Agreement") between _____________________________________________________
("Buyer") and ____________ ___________________________________________________
(collectively, "Seller"), and contingent upon a _____________, 200___, closing,
the following is hereby agreed between the parties:

1. Seller will prepare and submit state production reports for
the field for the production month of ___________, 200_____.
All subsequent monthly production reports will be the
responsibility of Buyer. Seller will send a copy of the
_________, 200___ reports as filed to Buyer.

2. Change of operator forms will be prepared by Seller showing
__________ as the new operator of the Assets effective
______________, 200____. ________'s State of ___________
operator number is _____________.

3. Letters-in-lieu, effective with ___________, 200____
production will be sent to the purchasers by Buyer. Seller
shall prepare the letters and provide them at closing.

4. Seller will make royalty distributions for the production
month of ________, 200____. Royalty distributions for the
production month of __________, 200____ will be the
responsibility of Buyer.

5. Seller will pay severance taxes for the production month of
_________, 200____. Severance tax payments for the production
month of __________, 200____ will be the responsibility of
Buyer.

6. Seller will make rental, minimum royalty and any other lease
(including surface) obligation payments due on or before
__________, 200____. Buyer will make subsequent monthly
payments. Buyer agrees to indemnify and hold Seller harmless
for any missed lease rental and/or minimum royalty payments
from closing through ____________, 200____.

7. Buyer will take any royalty monies in suspense accounts.

8. Seller will make gas nominations for the production month of
__________, 200____. Buyer will make gas nominations beginning
for the production month of ________, 200____.

Exhibit "E" - Page 1
<page>

9. Seller will have their measurement service agent process the
volumes for the wellhead meter points to be used in reporting
and allocating for __________, 200____ production which will
be closed out in __________, 200____ accounting. Buyer will
take over this measurement function effective __________,
200____. Seller will provide Buyer with volume and integration
statements for___________, 200____ production.

10. Joint interest billings (JIBs) for the month of
__________covering expenses incurred through ___________,
200____, will be prepared by Seller. Buyer will prepare JIBs
for___________, 200____ activity forward. Such JIB's will be
mailed out to working interest owners in early ________,
200____.

11. Buyer will assume actual field operations at 7:00 am the day
after the Closing Date.

12. If either party receives revenue or other payments for the
benefit of the other party, the party receiving revenue shall
promptly forward such revenue to the other party. If either
party pays invoices or otherwise incurs expenses for the
benefit of the other party and provides supporting
documentation related thereto, the party for whose benefit the
payment in question was made shall promptly reimburse the
party making such payment. For purposes of this paragraph,
"promptly" shall be understood to mean within five (5)
business days, in the absence of extenuating circumstances.

13. This agreement is intended to set forth the division of
reporting and other responsibilities between the parties, but
is not intended to alter any provisions of the P&S Agreement
related to which party will be ultimately financially
responsible for payments made before or after the Effective
Time of the P&S Agreement. In the event of any conflict
between the provisions of this memorandum and the P&S
Agreement, the P&S Agreement shall control. All capitalized
terms not defined herein shall have the meanings given in the
P&S Agreement.

Signed the ______day of ____________, 200____.

Exhibit "E" - Page 2

EXHIBIT F

Attached to and made a part of that certain Purchase and Sale
Agreement dated September 16, 2004, by and between CAPROCK OIL
& GAS, L.P., as Seller, and PARALLEL L.P., as Buyer

GAS IMBALANCES

None.

EXHIBIT G

Attached to and made a part of that certain Purchase and Sale Agreement
dated September 16, 2004, by and between CAPROCK OIL & GAS, L.P., as
Seller, and PARALLEL L.P., as Buyer

LITIGATION

Jackson v. Caprock Operating, Inc. and Caprock Oil & Gas, Inc., Cause No.
03-08-14642 in the 106th Judicial District Court of Gaines County, Texas

Schedule 3.3(b)(4)

Attached to and made a part of that certain Purchase and Sale Agreement
dated September 16, 2004, by and between CAPROCK OIL & GAS, L.P., as
Seller, and PARALLEL L.P., as Buyer

Suspense Funds

None.

Schedule 4(g)

Attached to and made a part of that certain Purchase and Sale Agreement
dated September 16, 2004, by and between CAPROCK OIL & GAS, L.P., as
Seller, and PARALLEL L.P., as Buyer

Production Sales Contracts

None.

Schedule 8.1(c)(A)

Attached to and made a part of that certain Purchase and Sale Agreement
dated September 16, 2004, by and between CAPROCK OIL & GAS, L.P., as
Seller, and PARALLEL L.P., as Buyer

Notice of Lease Terminations

None.

Schedule 8.1(c)(B)

Attached to and made a part of that certain Purchase and Sale Agreement
dated September 16, 2004,by and between CAPROCK OIL & GAS, L.P., as
Seller, and PARALLEL L.P., as Buyer

Material Contracts

None.

Schedule 8.1(c)(D)

Attached to and made a part of that certain Purchase and Sale Agreement
dated September 16, 2004, by and between CAPROCK OIL & GAS, L.P., as
Seller, and PARALLEL L.P., as Buyer

Tax Partnerships

None.

Exhibit 10.2

PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement ("Agreement"), dated as of September
16, 2004, is by and between BRADLEY W. BUNN, whose address is 850 E. Broadway,
Andrews, Texas 79714 ("Seller"), and PARALLEL L.P., whose address is 1004 N. Big
Spring Street, Midland, Texas 79701 ("Buyer"). Seller and Buyer are sometimes
together referred to herein as "Parties".

WITNESSETH:

WHEREAS, Seller owns certain oil and gas leasehold interests and
related assets more fully described on the exhibits hereto; and

WHEREAS, Seller desires to sell and Buyer desires to acquire these
interests and related assets on the terms and conditions hereinafter provided;

NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, Seller and Buyer hereby agree as follows: ARTICLE 1.
DEFINITIONS

1.1. "Agreement" shall mean this Purchase and Sale Agreement between
Seller and Buyer.

1.2. "Assets" shall mean the following-described assets and properties
(except to the extent constituting Excluded Assets):

(a) the Leases;

(b) the Personal Property and Incidental Rights; and

1.3. "Assumed Obligations" shall mean:

(a) all Environmental Obligations or Liabilities;

(b) all obligations with respect to gas production, sales or, subject
to Article 18, processing imbalances with third parties; and

(c) all liabilities, duties, and obligations that arise out of the
ownership, operation or use of the Assets after the Effective Time.

1.4. "Closing" shall be as defined in Section 13.1.

1.5. "Closing Date" shall be as defined in Section 13.1.

1.6. "Effective Time" shall mean 7:00 a.m., local time, on October 1,
2004.

Page 1
<page>

1.9. "Excluded Assets" shall mean the following:

Page 2
<page>

(h) 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;

(j) all of Seller's intellectual property, including, but not limited
to, proprietary computer software, patents, trade secrets, copyrights, names,
marks and logos;

(k) all of Seller's remote terminal units, radio control alarms, radio
towers located on the leases, areas, and lands described in Exhibit A.

1.12. "Leases" shall mean, except to the extent constituting Excluded
Assets, any and all interests owned by Seller and set forth on Exhibit A, or
which Seller is entitled to receive by reason of any participation, joint
venture, farm-in, farm-out, joint operating agreement or other agreement, in and
to the oil, gas and/or mineral leases, permits, licenses, concessions, leasehold
estates, royalty interests, overriding royalty interests, net revenue interests,
executory interests, net profit interests, working interests, reversionary
interests, fee and term mineral interests, and any other interests of Seller in
Hydrocarbons, it being the intent hereof if the legal descriptions and depth
limitations set

Page 3
<page>

forth on Exhibit A do not correctly describe such leases or interests or all of
the lands covered thereby, that the "Leases" shall nevertheless include all of
Seller's right, title and interest in the Leases and other interests described
on Exhibit A and all land and depths covered thereby even though such interests
may be incorrectly described.

1.13. "Performance Deposit" shall be as defined in Section 3.2.

(a) all easements, rights-of-way, permits, licenses, servitudes,
surface leases and fee parcels or other interests;

1.15. "Purchase Price" shall be as defined in Section 3.1.

1.16. "Retained Obligations" shall mean all liabilities, duties, and
obligations that arise out of the ownership, operation or use of the Assets
prior to the Effective Time (including, without limitation, (i) all indebtedness
of Seller for borrowed money which is secured by liens on or security interests
in the Assets; and (ii) the following to the extent the same are attributable to
periods prior to the Effective Time in accordance with generally accepted
accounting principles: liabilities for royalties, overriding royalties and other
burdens on production; production expenses, operating expenses and all
expenditures attributable to the operation of the Assets; personal injuries; and
Taxes (provided, that all Taxes based on or measured by production or the value
thereof shall be deemed for purposes of this Agreement to be attributable to the
period when such production was produced, notwithstanding that such Taxes may
not be assessed or paid in a subsequent period); but not

Page 4
<page>

including any such items to the extent the Purchase Price is reduced therefor
pursuant to Section 3.3(b)(2 or 5), except those specifically included in the
definition of "Assumed Obligations."

ARTICLE 2. AGREEMENT TO PURCHASE AND SELL

Subject to the terms and conditions of this Agreement, Seller agrees to
sell and convey to Buyer and Buyer agrees to purchase and pay for the Assets and
to assume the Assumed Obligations.

ARTICLE 3. PURCHASE PRICE AND PAYMENT

3.1. Purchase Price.

Subject to adjustment as set forth below, the Purchase Price for the
Assets shall be Seven Hundred Sixty-Seven Thousand Nine Hundred Thirty-Three
Dollars ($767,933.00), allocated among the Assets as provided in Exhibit B.

3.2. Performance Deposit.

3.3. Final Settlement/Purchase Price Adjustments.

The Purchase Price shall be adjusted as follows:

(a) The Purchase Price shall be adjusted upward by the following
("Seller's Credits"):

(1) the value of (i) all Inventory Hydrocarbons, such value to
be based upon actual sales receipts if available or, in the absence thereof,
upon the prevailing market value for crude oil in effect as of the Effective
Time adjusted for grade and gravity, less taxes and transportation fees deducted
by the purchaser of such oil, such oil to be measured at the Effective Time by
the operators of the Assets; and (ii) the value of all of Seller's unsold
inventory of gas plant products, if any, attributable to the Leases at the
Effective Time valued in the same manner as if such products had been sold under
the contract then in existence between Seller and the purchaser

Page 5
<page>

of such products or, if there is no such contract, valued in the same manner as
if said products had been sold at the posted price for said products;

(3) an amount equal to the sum of any upward adjustments
provided elsewhere in this Agreement; and

(4) any other amount agreed upon by Seller and Buyer in
writing prior to Closing.

(b) The Purchase Price shall be adjusted downward by the following
("Buyer's Credits"):

(3) an amount equal to the sum of any downward adjustments
provided elsewhere in this Agreement;

(5) an amount equal to all unpaid royalties, overriding
royalties and other burdens on production, production expenses, operating
expenses and all expenditures attributable to the operation of the Assets prior
to the Effective Time in accordance with generally accepted accounting
principles; and

(6) any other amount agreed upon by Seller and Buyer in
writing prior to Closing.

Page 6
<page>

ARTICLE 4. SELLER'S REPRESENTATIONS AND WARRANTIES

Seller represents and warrants to Buyer as of the date hereof, and the
Closing Date that:

(a) The execution and delivery of this Agreement and the consummation
of the transactions contemplated by this Agreement will not violate, nor be in
conflict with, any agreement or instrument to which Seller is a party or by
which Seller is bound (except any provision contained in agreements customary in
the oil and gas industry relating to (1) the Preferential Purchase Rights
(defined below) covering all or any portion of the Assets; (2) required consents
to transfer the Assets; (3) maintenance of uniform interest provisions; and (4)
any other third-party approvals or consents contemplated herein), or any
judgment, decree, order, statute, rule, or regulation applicable to Seller.

(b) This Agreement, and all documents and instruments required
hereunder to be executed and delivered by Seller at Closing, constitute legal,
valid and binding obligations of Seller and is enforceable in accordance with
its respective terms, subject to applicable bankruptcy and other similar laws of
general application with respect to creditors.

(c) There are no bankruptcy, reorganization or receivership proceedings
pending, being contemplated by, or to the actual knowledge of Seller threatened
against Seller.

(d) Except as shown on Exhibit G, there are no claims, demands,
actions, suits, or proceedings (including condemnation, expropriation, or
forfeiture proceedings) pending, or to the knowledge of Seller threatened,
against Seller, or any Asset (a) seeking to prevent the consummation of the
transactions contemplated hereby, or (b) which, singly or in the aggregate,
would adversely affect the Assets.

(e) Except for contracts or arrangements terminable on 30 days' notice
and except as specifically indicated in Schedule 4(g), no hydrocarbons produced
from the Assets are subject to a sales contract or other agreement relating to
the production, gathering, transporting, processing, treating or marketing of
hydrocarbons, and no person has any call upon or option to purchase the Assets
or the production therefrom.

(f) Seller is not obligated, by virtue of a prepayment arrangement, a
"take or pay" arrangement, a production payment or any other arrangement, to
deliver hydrocarbons produced from the Assets at some future time without then
or thereafter receiving full payment therefor.

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<page>

(g) All information pertaining to expenses and revenues associated with
the Assets, as contained in the Divestiture Package prepared by Riviera Energy
Corporation, is accurate and complete in all material respects.

ARTICLE 5. BUYER'S REPRESENTATIONS AND WARRANTIES

Buyer represents and warrants to Seller as of the date hereof, and the
Closing Date that:

(e) There are no bankruptcy, reorganization or receivership proceedings
pending, being contemplated by, or to the actual knowledge of Buyer threatened
against Buyer.

(f) Buyer has not incurred any obligation or liability, contingent or
otherwise, for brokers' or finders' fees in connection with this Agreement and
the transaction provided herein.

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<page>

ARTICLE 6. ACCESS TO INFORMATION AND INSPECTIONS

6.1. Title Files.

6.2. Other Files.

Promptly after the execution of this Agreement and until the Closing
Date, Seller shall permit Buyer and its representatives at reasonable times
during normal business hours to examine, in Seller's offices at their actual
location, all production, well, regulatory, engineering, seismic, geological,
geophysical and geochemical information, accounting information and other
information, files, books, records, and data pertaining to the Assets as
requested by Buyer, insofar as the same may now be in existence and in the
possession of Seller, excepting economic evaluations, reserve reports and any
such information that is subject to the attorney/client and work product
privileges. Seller shall use its commercially reasonable efforts to cause third
party operators of the Assets to afford Buyer similar access to their files and
records relating to the Assets.

6.3. Confidentiality Agreement.

All such information made available to Buyer shall be maintained
confidential by Buyer until Closing. The information protected by such
confidentiality obligation does not include any information that (i) at the time
of disclosure is generally available to and known by the public (other than as a
result of a disclosure by Buyer), or (ii) is or was available to Buyer on a
nonconfidential basis. Buyer may disclose the information or portions thereof to
those employees, agents or representatives of Buyer or its lenders who need to
know such information for the purpose of assisting Buyer in connection with its
performance of this Agreement. Further, in the event that Buyer is requested or
required (by deposition, interrogatory, request for documents, subpoena, civil
investigative demand or similar process) to disclose any of the information,
Buyer shall provide Seller with prompt written notice of such request or
requirement, so that Seller may seek such protective order or other appropriate
remedy as it may desire. Buyer shall further take whatever reasonable steps
which may be necessary to ensure that Buyer's employees, consultants and agents
comply with the provisions of this Section 6.3.

6.4. Inspections.

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ARTICLE 7. ENVIRONMENTAL MATTERS AND ADJUSTMENTS

Page 10
<page>

(e) If Seller undertakes remediation as to any Asset in which Seller's
ownership is less than 100%, Buyer will bill the other working interest owners
for their share of the remediation expenses in advance of Seller beginning such
remediation to the extent permitted under the applicable operating agreement and
will pay over to Seller any amount so received provided that Buyer shall have no
obligation to initiate any legal proceeding to collect such amounts and shall be
entitled to deduct any reasonable costs of collection from the amount received
to be paid to Seller.

ARTICLE 8. TITLE DEFECTS AND ADJUSTMENTS

8.1. Definitions.

For purposes hereof, the terms set forth below shall have the meanings
assigned thereto.

(a) "Allocated Value" shall mean the dollar amount allocated to each
producing Asset as set forth on Exhibit B.

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<page>

and salvage of such wells in an amount not greater than the expense interest of
Seller set forth in Exhibit B (unless Seller's net revenue interest therein is
proportionately increased); and (c) the Assets are free and clear of any liens,
burdens or encumbrances of any kind or character.

(c) "Title Defect" shall mean any matter which (i) causes Seller to
have less than Defensible Title to any of the Assets as of the Closing Date, or
(ii) causes any of the following to be untrue:

(B) Material Contracts; Required Capital Expenditures. Seller
is not in default, and within the last two years has not received any written
notice from any person alleging that Seller is in default, in any material
respect under any material contract or agreement pertaining to the Assets except
for those alleged defaults described in Schedule 8.1(c)(B).

(d) "Title Defect Property" shall mean any Lease or portion thereof
burdened by a Title Defect.

(e) "Permitted Encumbrances" shall mean any of the following matters:

(i) defects in the early chain of title consisting of failure
to recite marital status or the omission of succession or heirship proceedings;

Page 12
<page>

(ii) defects or irregularities arising out of prior oil and
gas leases which, on their face, expired more than ten (10) years prior to the
Effective Time, and which have not been released of record;

(viii) defects or irregularities of title arising out of
events or transactions which have been barred by limitations;

(x) any encumbrance or other matter (whether or not
constituting a "Title Defect") expressly waived in writing by Buyer.

8.2. Notice of Title Defects.

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<page>

Buyer's calculation of the value for each Defect. Seller may elect, at its sole
cost and expense, but without obligation, to cure all or any portion of such
Title Defects. Buyer's failure to deliver to Seller such notice on or before the
Defect Notice Date shall be deemed a waiver by Buyer of all Title Defects that
Seller does not have notice of on such date. Any defect or deficiency concerning
Seller's title to the Assets not asserted by Buyer prior to the Title Defect
Notice Date shall be deemed waived by Buyer for all purposes.

8.3. Title Defect Adjustment.

Seller shall have the opportunity to cure, until sixty (60) days after
Closing ("Cure Period"), any Title Defect. If Seller elects to attempt to cure a
Title Defect after Closing, Closing with respect to the portion of the Assets
affected by such Title Defect will be deferred (the "Closing Deferred
Property"). Closing with respect to all other Assets will proceed as provided in
this Agreement (subject to Article 9 and the other provisions of this
Agreement), but the Base Purchase Price delivered to Seller at such initial
Closing will be reduced by the Allocated Value of all Closing Deferred
Properties. If Seller cures any Title Defect within the Cure Period, then the
Closing with respect to the Closing Deferred Property for which such Title
Defect has been cured will proceed and will be finalized within seven (7) days
following the end of the Cure Period. If Seller fails or refuses to cure any
Title Defect prior to the expiration of the Cure Period, Buyer may separately
elect with respect to each affected Closing Deferred Property, by notice to
Seller delivered within seven (7) days after receipt by Buyer of Notice from
Seller of such failure or refusal to cure any such Title Defect, to waive all of
the Title Defects applicable to such Closing Deferred Property (which waived
Title Defects shall be deemed Permitted Encumbrances) and proceed to Closing on
such Closing Deferred Property. If Buyer does not elect to waive an existing
Title Defect, Seller shall retain the affected Closing Deferred Property and the
Parties shall have no further obligation with respect thereto. In the event that
any such property is retained by Seller and such property has been receiving
revenue, without complaint, for a period in excess of two years, then Buyer
agrees (i) not oftlineto take any action to interfere with such revenue stream,
and (ii) to the extent that Buyer becomes payor of such revenue, to pay Seller
such revenue upon receipt of an indemnity agreement from Seller.

8.4. Title Defect Values.

(i) the Allocated Value of the leases, lands and well
affected by the Title Defect;

(ii) the reduction in the warranted NRI of the Title Defect
Property, or the amount by which the cost sharing percentage for such property
is greater than the warranted WI;

(iii) the productive status of the Title Defect Property
(i.e., proved developed producing, etc.) and the present value of the future
income expected to be produced therefrom;

Page 14
<page>

(iv) if the Title Defect represents only a possibility of
title failure, the probability that such failure will occur;

(v) the legal effect of the Title Defect; and

(vi) if the Title Defect is a lien or encumbrance on the
leases, lands or wells, the cost of removing such lien or encumbrance.

8.5. Title Warranty.

ARTICLE 9. THRESHOLD AMOUNT FOR DEFECTS/OPTION TO TERMINATE

ARTICLE 10. PREFERENTIAL PURCHASE RIGHTS AND CONSENTS

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<page>

10.1. Actions and Consents.

(b) Seller shall notify all holders of (i) preferential rights to
purchase the Assets ("Preferential Purchase Rights"), (ii) rights of consent to
the assignment, or (iii) rights of approval to the assignment of the Assets, and
of such terms and conditions of this Agreement to which the holders of such
rights are entitled. Seller shall promptly notify Buyer if any Preferential
Purchase Rights are exercised, any consents or approvals denied, or if the
requisite period has elapsed without said rights having been exercised or
consents or approvals having been received. If prior to Closing, any such
Preferential Purchase Rights are timely and properly exercised, or Seller is
unable to obtain a necessary consent or approval prior to Closing, the interest
or part thereof so affected shall be eliminated from the Assets and the Purchase
Price reduced by the portion of the Purchase Price allocated to such interest or
part thereof as provided in Exhibit B. If any additional Preferential Purchase
Rights are discovered after Closing, or if a third party Preferential Purchase
Rights holder alleges improper notice, then Buyer agrees to cooperate with
Seller in giving effect to any such valid third party Preferential Purchase
Rights. In the event any such valid third party preferential purchase rights are
validly exercised after Closing, Buyer's sole remedy against Seller shall be
return by Seller to Buyer of that portion of the Purchase Price allocated under
Exhibit B to the portion of the assets on which such rights are exercised and
lost by Buyer to such third party. The parties agree that the Allocated Values
for properties subject to Preferential Purchase Rights shall be the sole
responsibility of Buyer, and Buyer agrees to indemnify and hold Seller harmless
from all liability and claims related to the reasonableness of such values.

ARTICLE 11. COVENANTS OF SELLER

11.1. Covenants of Seller Pending Closing.

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<page>

11.2. Limitations on Seller's Covenants Pending Closing.

ARTICLE 12. CLOSING CONDITIONS

12.1. Seller's Closing Conditions.

The obligations of Seller under this Agreement are subject, at the
option of Seller, to the satisfaction, at or prior to the Closing, of the
following conditions:

(a) all representations and warranties of Buyer contained in this
Agreement shall be true in all material respects at and as of the Closing as if
such representations and warranties were made

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<page>

at and as of the Closing, and Buyer shall have performed and satisfied all
agreements required by this Agreement to be performed and satisfied by Buyer at
or prior to the Closing;

(d) as of the Closing Date, no suit, action or other proceeding
(excluding any such matter initiated by Seller) shall be pending or threatened
before any court or governmental agency seeking to restrain Seller or prohibit
the Closing or seeking damages against Seller as a result of the consummation of
this Agreement.

12.2. Buyer's Closing Conditions.

The obligations of Buyer under this Agreement are subject, at the
option of Buyer, to the satisfaction, at or prior to the Closing, of the
following conditions:

ARTICLE 13. CLOSING

13.1. Closing.

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<page>

13.2. Seller's Closing Obligations.

At Closing, except to the extent comprising the Excluded Assets, Seller
shall deliver to Buyer the following:

a) the Assignment and Conveyance substantially in the form attached
hereto as Exhibit C and such other documents as may be reasonably necessary to
convey all of Seller's interest in the Assets to Buyer in accordance with the
provisions hereof;

(b) a nonforeign affidavit executed by Seller in the form attached as
Exhibit D;

(d) copies of all third-party waivers, consents, approvals, permits and
actions obtained;

(e) exclusive possession of the Assets;

(f) letters-in-lieu of transfer orders in form acceptable to Seller and
Buyer;

(g) a Reporting and Accounting Memorandum executed by Seller in the
form attached as Exhibit E; and

(h) releases of all liens and encumbrances burdening the Assets in form
and substance reasonably satisfactory to Buyer.

13.3. Buyer's Closing Obligations.

13.4. Joint Closing Obligations.

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<page>

ARTICLE 14. LIMITATIONS ON WARRANTIES AND REMEDIES

THE EXPRESS REPRESENTATIONS AND WARRANTIES OF SELLER CONTAINED IN THIS
AGREEMENT ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND
WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY
REPRESENTATION OR WARRANTY WITH RESPECT TO THE QUALITY, QUANTITY OR VOLUME OF
THE RESERVES, IF ANY, OF OIL, GAS OR OTHER HYDROCARBONS IN OR UNDER THE
LEASES, OR THE ENVIRONMENTAL CONDITION OF THE ASSETS. THE ITEMS OF PERSONAL
PROPERTY, EQUIPMENT, IMPROVEMENTS, FIXTURES AND APPURTENANCES CONVEYED AS PART
OF THE ASSETS ARE SOLD HEREUNDER "AS IS, WHERE IS, AND WITH ALL FAULTS" AND NO
WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED,
INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR CONDITION, ARE GIVEN BY OR ON BEHALF OF SELLER. IT IS UNDERSTOOD AND
AGREED THAT PRIOR TO CLOSING BUYER SHALL HAVE INSPECTED THE ASSETS FOR ALL
PURPOSES AND HAS SATISFIED ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL
CONDITION, BOTH SURFACE AND SUBSURFACE, AND THAT BUYER ACCEPTS SAME IN ITS "AS
IS, WHERE IS AND WITH ALL FAULTS" CONDITION. THE WARRANTIES OF SELLER CONTAINED
IN THIS AGREEMENT ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, AND BUYER HEREBY WAIVES ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR CONDITION, OR CONFORMITY TO SAMPLES.

ARTICLE 15. CASUALTY LOSS AND CONDEMNATION

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<page>

ARTICLE 16. DEFAULT AND REMEDIES

16.1. Seller's Remedies.

Upon failure of Buyer to consummate the transactions contemplated
hereby by the Closing Date, as it may be extended in accordance herewith,
Seller's sole and exclusive remedy for such breach and any other breach of this
Agreement by Buyer other than Section 6.3 shall be to retain the Performance
Deposit as a liquidated damage and not as a penalty, and terminate this
Agreement, all other remedies being expressly waived by Seller. Notwithstanding
any provision hereof to the contrary Seller may retain the Deposit as a
liquidated damage only in the event the transaction contemplated by this
Agreement is terminated due solely to the breach hereof by Buyer in the absence
of any material breach hereof by Seller. If the transaction contemplated by this
Agreement fails to close or is terminated for any other reason, the Performance
Deposit shall be returned to Buyer.

16.2. Buyer's Remedies.

Upon failure of Seller to comply herewith by the Closing Date, as it
may be extended in accordance herewith, Buyer, at its sole option and in
addition to any other remedies it may have at law or equity, may (i) enforce
specific performance, or (ii) terminate this Agreement. In the event Buyer
elects to terminate this Agreement as set forth above, Seller shall immediately
return the Performance Deposit to Buyer.

16.3. Other Remedies.

16.4. Effect of Termination.

In the event of termination of this Agreement under this Article 16,
the transaction shall not close and neither Buyer nor Seller shall have any
further obligations, remedies, liabilities, rights or duties to the other
hereunder, except as expressly provided herein.

ARTICLE 17. ASSUMPTION AND INDEMNITY

17.1. Assumed Obligations; Pre-Closing Liabilities.

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<page>

17.2. Buyer's Indemnity.

Buyer agrees to indemnify, defend and hold Seller harmless from and
against any and all claims, demands, losses, damages, punitive damages, costs,
expenses, causes of action or judgments of any kind or character including,
without limitation, any interest, penalty, reasonable attorneys' fees and other
costs and expenses incurred in connection therewith or the defense thereof
(collectively the "Claims"), with respect to all liabilities and obligations or
alleged or threatened liabilities and obligations caused by, related to,
attributable to, or arising out of the Assumed Obligations.

17.3. Seller's Indemnity.

17.4. Negligence.

17.5. Broker or Finder's Fee.

ARTICLE 18. GAS IMBALANCES

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<page>

ARTICLE 19. MISCELLANEOUS

19.1. Public Announcements.

19.2. Filing and Recording of Assignments, etc.

19.3. Further Assurances and Records.

(c) Buyer agrees that within thirty (30) days after Closing or within
thirty (30) days after operations are actually transferred, whichever is later,
it will remove or cause to be removed the

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<page>

names and marks used by Seller and all variations and derivatives thereof and
logos relating thereto from the Assets and will not thereafter make any use
whatsoever of such names, marks and logos.

19.4. Notices.

If to Seller, as follows:
Bradley W. Bunn
850 E. Broadway
Andrews, Texas 79714
FAX: 432-523-6245

If to Buyer:
Parallel L.P.
1004 N. Big Spring, Suite 400
Midland, Texas 79701
Attention: Mr. John Rutherford
FAX: 432-684-3905

19.6. Incidental Expenses.

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<page>

and (iii) all filing, recording or registration fees for any assignment or
conveyance delivered hereunder. Each party shall bear its own respective
expenses incurred in connection with the negotiation and Closing of this
transaction, including it own consultants' fees, attorneys' fees, accountants'
fees, and other similar costs and expenses.

19.7. Waiver.

19.8. Binding Effect; Assignment.

19.9. Taxes.

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<page>

Each party shall be responsible for its own federal income taxes, if
any, as may result from this transaction.

19.10. Confidentiality of Agreement.

19.11. Audits.

19.12. Like-Kind Exchanges.

19.13. Governing Law.

19.14. Entire Agreement.

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<page>

writing only, signed by the Parties hereto. The headings herein are for
convenience only and shall have no significance in the interpretation hereof.
The Parties stipulate and agree that this Agreement shall be deemed and
considered for all purposes, as prepared through the joint efforts of the
Parties, and shall not be construed against one party or the other as a result
of the preparation, submittal or other event of negotiation, drafting or
execution thereof. It is understood and agreed that there shall be no
third-party beneficiary of this Agreement, and that the provisions hereof do not
impart enforceable rights in anyone who is not a party or a successor or
assignee of a party hereto.

19.15. Exhibits.

All Exhibits attached to this Agreement, and the terms of those
Exhibits which are referred to in this Agreement, are made a part hereof and
incorporated herein by reference.

19.16. Delivery of Files After Closing.

19.17. Survival.

19.18. Subsequent Adjustments.

19.19. Counterparts.

This Agreement may be executed in any number of counterparts, and each
and every counterpart shall be deemed for all purposes one (1) agreement.

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<page>

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.

SELLER:

/s/ Bradley W. Bunn
------------------------------------
BRADLEY W. BUNN

BUYER:

PARALLEL L.P.
By: Parallel Petroleum Corporation,
its General Partner

By: /s/ John S. Rutherford
----------------------------------
John S. Rutherford, Vice President

Page 28

EXHIBIT A

Attached to and made a part of that certain Purchase and Sale
Agreement dated September 16, 2004, by and between BRADLEY W.
BUNN, as Seller, and PARALLEL L.P., as Buyer

Exhibit "A"

<table>
-----------------------------------------------------------
Bunn's Interest

Lease Name W.I. N.R.I.
<s> <c> <c>
Elizabeth Crews Mast 0.02000000 0.01500000
Lawrence A 0.08000000 0.06000000
Lawrence B 0.08000000 0.06000000
Lawrence D 0.08000000 0.06000000
Moore SA 0.02500000 0.01950000
Reed SA 0.02500000 0.01875000
Thompson B 0.10000000 0.08000000
-----------------------------------------------------------
</table>

<page>
EXHIBIT A

Attached to and made a part of that certain Purchase and Sale
Agreement dated September 16, 2004, by and between BRADLEY W.
BUNN, as Seller, and PARALLEL L.P., as Buyer

ANDREWS COUNTY, TEXAS

MOORE SA LEASE:
- --------------

7. Oil and Gas Lease dated March 15, 2003, from Headington Royalty, Inc.,
as Lessor, to Caprock Oil & Gas, Inc., as Lessee, recorded in Volume
802, page 085 of the Deed

Exhibit "A" - Page 1

Records of Andrews County, Texas, covering the S/2 of Section 12, Block
A-20, PSL, Andrews County, Texas.

Working Interest Net Revenue Interest

.02500000 .0195000

REED SA LEASE:
- -------------

8. Oil and Gas Lease dated June 25, 2003, from Shelley McClaine McLarty,
as Lessor, to Caprock Operating, Inc., as Lessee, recorded in Volume
810, page 145 of the Oil and Gas

Exhibit "A" - Page 2
<page>

Lease Records of Andrews County, Texas, covering the N/2 NE/4 of
Section 13, Block A-20, PSL, Andrews County, Texas.

17. Oil and Gas Lease dated November 28, 2003, from Bank One N.A., Agent of
Suzanne Heath Manges Separate Property Trust, as Lessor, to Caprock
Operating, Inc., as Lessee,

Exhibit "A" - Page 3
<page>

recorded in Volume 815, page 49 of the Oil and Gas Lease Records of
Andrews County, Texas, covering the N/2 NE/4 of Section 13, Block A-20,
PSL, Andrews County, Texas.

19. Oil and Gas Lease dated January 27, 2004, from Lavern Jean Kaindl
Schneider, as Lessor, to Caprock Oil & Gas, Inc., as Lessee, recorded
in Volume 820, page 101 of the Deed Records of Andrews County, Texas
covering the N/2 NE/4 of Section 13, Block A-20, PSL, Andrews County,
Texas

Working Interest Net Revenue Interest

.0250000 .0187500

GAINES COUNTY, TEXAS

LAWRENCE "A" LEASE:
- ------------------

Working Interest Net Revenue Interest

.08000000 .06000000

LAWRENCE "B" LEASE:
- ------------------

Working Interest Net Revenue Interest

.08000000 .06000000

Exhibit "A" - Page 4
<page>

LAWRENCE "D" LEASE:
- ------------------

Working Interest Net Revenue Interest

.08000000 .06000000

ELIZABETH CREWS MAST LEASE:
- --------------------------

Working Interest Net Revenue Interest

.0200000 .0150000

THOMPSON B LEASE:
- ----------------

Exhibit "A" - Page 5
<page>

Exhibit "A" - Page 6
<page>

INSOFAR ONLY as the above leases cover the E/2 W/2 of Section 21, Block
A-22, PSL, Gaines County, Texas.

Working Interest Net Revenue Interest

.1000000 .0800000

Exhibit "A" - Page 7

EXHIBIT B

Attached to and made a part of that certain Purchase and Sale Agreement
dated September 16, 2004, by and between BRADLEY W. BUNN, as Seller,
and PARALLEL L.P., as Buyer

<table>
- ----------------------------------------------------------------------------
Bunn's Interest Allocated Price
M$
Lease Name W.I. N.R.I. To NRI
<s> <c> <c> <c>
Elizabeth Crews Mast 0.02000000 0.01500000 $57,800.00
Lawrence A 0.08000000 0.06000000 $52,000.00
Lawrence B 0.08000000 0.06000000 $124,000.00
Lawrence D 0.08000000 0.06000000 $152,000.00
Moore SA 0.02500000 0.01950000 $3,525.00
Reed SA 0.02500000 0.01875000 $1,250.00
Thompson B 0.10000000 0.08000000 $377,358.00
- ----------------------------------------------------------------------------
Total $767,933.00
- ----------------------------------------------------------------------------
</table>

EXHIBIT C

Attached to and made a part of that certain Purchase and Sale Agreement
dated September 16, 2004, by and between BRADLEY W. BUNN, as Seller,
and PARALLEL L.P., as Buyer

CONVEYANCE, ASSIGNMENT AND BILL OF SALE

STATE OF _____________ ss.
ss.
COUNTY OF ___________ ss.

ASSIGNMENT, BILL OF SALE AND CONVEYANCE

KNOW ALL MEN BY THESE PRESENTS:

THAT, _______________________________________________________ , whose
address is (collectively, "Assignor"), in consideration of Ten Dollars ($10.00)
and other good and valuable consideration to it in hand paid, the receipt and
sufficiency of which are hereby acknowledged, does hereby grant, bargain,
convey, sell, assign, and transfer unto
____________________________________________ , whose address is ("Assignee"),
the following interests (the "Assets"):

1. all of Assignor's right, title, and interest, if any, in and to,
except to the extent constituting Excluded Assets, the following (the
"Leases"): any and all interests owned by Assignor and set forth on
"Exhibit A" hereto, or which Assignor is entitled to receive by reason
of any participation, joint venture, farm-in, farm-out, joint
operating agreement or other agreement, in and to the oil, gas and/or
mineral leases, permits, licenses, concessions, leasehold estates;
royalty interests, overriding royalty interests, net revenue
interests, executory interests, net profit interests, working
interests, reversionary interests, fee and term mineral interests, and
any other interests of Assignor in crude oil, natural gas, casinghead
gas, condensate, sulphur, natural gas liquids and other liquid or
gaseous hydrocarbons (including CO2), and shall also refer to all
other minerals of every kind and character which may be covered by or
included in the Leases and Assets (collectively, "Hydrocarbons"), it
being the intent hereof if the legal descriptions and depth limitation
set forth on "Exhibit A" do not correctly describe such leases or
interests or all of the lands covered thereby, that the "Leases" shall
nevertheless include all of Assignor's right, title and
interest in the Leases and other interests described on Exhibit A and
all land and depths covered thereby even though such interests may be
incorrectly described;

2. all of Assignor's right, title and interest in and to or derived from
the following insofar as the same do not constitute Excluded Assets
and are attributable to, appurtenant to, incidental to, or used for
the operation of the Leases: (a) all easements, rights-of-way,
permits, licenses, servitudes, surface leases and fee parcels or other
interests; (b) all wells located upon the Leases or on lands pooled or
unitized

Exhibit "C" -- Page 1

<page>

with any portion thereof, or on lands located within any governmental
drilling and spacing units which includes any portion thereof, and all
equipment and other personal property, inventory, spare parts, tools,
fixtures, pipelines, wellhead equipment, casing, tubing, pumps, motors,
machinery, gathering lines and facilities, telephone lines, boilers,
buildings, injection wells and facilities, saltwater disposal wells and
facilities, central processing facilities, metering facilities,
compression facilities, platforms, tank batteries, appurtenances, and
improvements now or as of 7:00 a.m., local time, on October 1, 2004
(the "Effective Time") situated upon the Leases or the land covered by
the easements, rights-of-way, permits, licenses, servitudes, surface
leases and fee parcels or other interests described below or used or
held for use in connection with the development or operation of the
Leases or the production, treatment, storage, compression, processing
or transportation of Hydrocarbons from or in the Leases; (d) all
contracts, agreements, and title instruments to the extent attributable
to and affecting the Assets in existence at on the date hereof,
including all Hydrocarbon sales, purchase, gathering, transportation,
treating, marketing, exchange, processing, and fractionating contracts,
and joint operating agreements, unitization, pooling and
communitization agreements; and (e) originals of all lease files, land
files, well files, production records, division order files, abstracts,
title opinions, and contract files, insofar as the same are directly
related to the Leases; including, without limitation, all seismic,
geological, geochemical, and geophysical information and data, to the
extent that such data is not subject to any third party restrictions,
but excluding Assignor's proprietary interpretations of same;

3. all of Assignor's right, title and interest in all merchantable oil
and condensate (for oil or liquids in storage tanks, being only that
oil or liquids physically above the top of the pipeline connection
from such tanks) produced from or attributable to the Leases prior to
the Effective Time which have not been sold by Assignor and are in
storage at the Effective Time;

SAVE AND EXCEPT, the following (the "Excluded Assets"):

Exhibit "C" -- Page 2
<page>

7. all amounts due or payable to Assignor as adjustments to
insurance premiums related to the assets with respect to any
period prior to the Effective Time;

9. all of Assignor's intellectual property, including, but not
limited to, proprietary computer software, patents, trade
secrets, copyrights, names, marks and logos;

10. all of Assignor's remote terminal units, radio control alarms,
radio towers, [and leased automobiles and trucks] located on
the leases, areas, and lands described in "Exhibit A" hereto.

Assignee, in consideration of the mutual benefits to be derived
hereunder by its acceptance hereof, understands and agrees to the following
terms and conditions:

1. This Assignment is made subject to that certain Purchase and
Sale Agreement (the "P&S Agreement") dated
______________________, between Assignor and Assignee, and all
terms and conditions, of said P&S Agreement are incorporated
herein by reference to the same extent and with the same
effect as if copied in full herein. In the event of a conflict
between the terms and conditions of this Assignment and the
P&S Agreement, the P&S Agreement shall govern and control.
Capitalized terms used herein but not defined herein shall
have the respective meanings set forth in the P&S Agreement.

2. Assignee assumes all rights or obligations associated with gas
imbalances attributable to the Assets, regardless of when such
imbalances occurred or accrued.

Exhibit "C" -- Page 3
<page>

3. Assignee hereby assumes all duties, liabilities and
obligations, express or implied, imposed upon Assignor under
the provisions of the Leases and any and all assignments,
subleases, farmout agreements, assignments of overriding
royalty, joint operating agreements, easements, rights-of-way,
and all other contracts, agreements and instruments affecting
the Property, whether recorded or unrecorded, and under all
applicable laws, rules, regulations, orders and ordinances;
including, but not limited to, the plugging and abandonment of
the wells included in this assignment as well as any other
wells drilled hereafter on the Leases, and the clean-up and
restoration of the premises on which the wells are located.

Exhibit "C" -- Page 4

IN WITNESS HEREOF, the undersigned have executed this instrument on the
date of the acknowledgments annexed hereto, but to be effective for all purposes
as of the Effective Time.

ASSIGNOR:

-------------------------------------

By:
-------------------------------------
-------------, -----------------

ASSIGNEE:

By:
----------------------------------
-------------, -----------------

ACKNOWLEDGMENTS

Exhibit "C" -- Page 5

EXHIBIT D

Attached to and made a part of that certain Purchase and Sale Agreement
dated September 16, 2004, by and between BRADLEY W. BUNN, as Seller, and
PARALLEL L.P., as Buyer

NON-FOREIGN AFFIDAVIT
Exemption from Withholding of Tax For
Dispositions of U.S. Real Property Interests

Section 1445 of the Internal Revenue Code provides that a transferee of a
U.S. real property interest must withhold tax if the transferor is a foreign
person. To inform ____________________ that withholding of tax is not required
upon the disposition of U.S. real property interests by
___________________________________ the undersigned hereby certifies the
following:

1. The undersigned are not foreign corporations, foreign
partnerships, foreign trusts, or foreign estates for purposes
of U.S. income taxation;

2. The undersigned's taxpayer identification number is:

3. The home or office address of the undersigned is
_________________________.

DATED this _____ day of __________, 200___.

By:
--------------------------------
-------------, -----------------

Exhibit "D" -- Page 1

EXHIBIT E

Attached to and made a part of that certain Purchase and Sale Agreement
dated September 16, 2004, by and between BRADLEY W. BUNN, as Seller, and
PARALLEL L.P., as Buyer

Reporting and Accounting Memorandum

In connection with the Purchase and Sale Agreement (the "P&S Agreement")
between _____________________________________________________ ("Buyer") and
____________ ___________________________________________________ (collectively,
"Seller"), and contingent upon a , 200 , closing, the following is hereby agreed
between the parties:

2. Change of operator forms will be prepared by Seller showing
__________ as the new operator of the Assets effective
______________, 200____. ________'s State of
operator number is .

3. Letters-in-lieu, effective with ___________, 200____
production will be sent to the purchasers by Buyer. Seller
shall prepare the letters and provide them at closing.

4. Seller will make royalty distributions for the production
month of ________, 200____. Royalty distributions for the
production month of __________, 200____ will be the
responsibility of Buyer.

5. Seller will pay severance taxes for the production month of
_________, 200____. Severance tax payments for the production
month of __________, 200____ will be the responsibility of
Buyer.

7. Buyer will take any royalty monies in suspense accounts.

8. Seller will make gas nominations for the production month of
__________, 200____. Buyer will make gas nominations beginning
for the production month of ________, 200____.

Exhibit "E" -- Page 1
<page>

11. Buyer will assume actual field operations at 7:00 am the day
after the Closing Date.

Signed the ______day of ____________, 200____.

Exhibit "E" -- Page 2

EXHIBIT F

Attached to and made a part of that certain Purchase and Sale Agreement
dated September 16, 2004, by and between BRADLEY W. BUNN, as Seller, and
PARALLEL L.P., as Buyer

GAS IMBALANCES

None.

EXHIBIT G

Attached to and made a part of that certain Purchase and Sale Agreement
dated September 16, 2004, by and between BRADLEY W. BUNN, as Seller, and
PARALLEL L.P., as Buyer

LITIGATION

Jackson v. Caprock Operating, Inc. and Caprock Oil & Gas, Inc., Cause No.
03-08-14642 in the 106th Judicial District Court of Gaines County, Texas

Schedule 3.3(b)(4)

Attached to and made a part of that certain Purchase and Sale Agreement
dated September 16, 2004, by and between BRADLEY W. BUNN, as Seller, and
PARALLEL L.P., as Buyer

Suspense Funds

None.

Schedule 4(g)

Attached to and made a part of that certain Purchase and Sale Agreement
dated September 16, 2004, by and between BRADLEY W. BUNN, as Seller, and
PARALLEL L.P., as Buyer

Production Sales Contracts

None.

Schedule 8.1(c)(A)

Attached to and made a part of that certain Purchase and Sale Agreement
dated September 16, 2004, by and between BRADLEY W. BUNN, as Seller, and
PARALLEL L.P., as Buyer

Notice of Lease Terminations

None.

Schedule 8.1(c)(B)

Attached to and made a part of that certain Purchase and Sale Agreement
dated September 16, 2004, by and between BRADLEY W. BUNN, as Seller, and
PARALLEL L.P., as Buyer

Material Contracts

None.

Schedule 8.1(c)(D)

Attached to and made a part of that certain Purchase and Sale Agreement
dated September 16, 2004, by and between BRADLEY W. BUNN, as Seller, and
PARALLEL L.P., as Buyer

Tax Partnerships

None.