EAGLE FORD PURCHASE AND SALE AGREEMENT by and between CHESAPEAKE EXPLORATION, L.L.C. (the Seller) and EXCO OPERATING COMPANY, LP (the Buyer) July 2, 2013

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is entered this 2^nd day of July, 2013 (the “Execution Date”), between CHESAPEAKE EXPLORATION, L.L.C., an Oklahoma limited liability company (the “Seller”), and EXCO OPERATING COMPANY, LP a Delaware limited partnership (the “Buyer”). The Buyer and the Seller may be referred to herein collectively as the “Parties”, or individually as a “Party”.

A.    The Seller desires to sell and the Buyer desires to purchase all of the Seller’s right, title and interest in and to the Properties (as hereinafter defined).

B.    The purchase and sale of the Properties will be consummated on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

“AAA” means the American Arbitration Association.

“Accounting Referee” means Ernst & Young LLP or another nationally recognized accounting firm mutually agreed upon by the Parties, provided, however, prior to the appointment of any Accounting Referee, each Party will certify in writing to the other Party that such Accounting Referee has neither performed any work for such Party or such Party’s Affiliates or Chesapeake Oilfield Services Group nor been an officer, director or employee of such Party or its Affiliates or Chesapeake Oilfield Services Group within the preceding five (5) year period.

“Affiliate” means, with respect to any Party, any other Person that directly or indirectly (through one or more intermediaries or otherwise) Controls, is Controlled by, or is under common Control with such Party, provided, however, the Parties specifically acknowledge and agree that for purposes of this Agreement no Chesapeake Oilfield Services Group member is an Affiliate of Chesapeake Energy Corporation or any of its subsidiaries including the Seller.

“Aggregate Defect Threshold” has the meaning specified in Section 2.1.2.

“Agreement” has the meaning specified in the introductory paragraph and includes the Exhibits and Schedules attached hereto.

“Allocated Value” means that portion of the Purchase Price attributable to each Well and PUD as set forth on Exhibit A-2.

“Arbitrable Dispute” means (except for: (a) disputes involving Title Defects, Environmental Defects or any cure relating thereto or involving Title Benefits each of which will be resolved as provided in Section 2.1.10, or (b) any matters to be resolved by the Accounting Referee as provided in Section 2.8) any and all disputes, claims, counterclaims, demands, causes of action, controversies and other matters in question arising out of or relating to this Agreement or the alleged breach or termination hereof, or in any way relating to matters that are the subject of this Agreement or the transactions contemplated hereby or the relationship between the Parties created by this Agreement, regardless of whether (a) allegedly extra-contractual in nature, (b) sounding in contract, tort or otherwise, (c) provided for by Law or otherwise, or (d) seeking damages or any other relief, whether at Law, in equity or otherwise.

“Assignment” means, as applicable: (a) the Assignments, Bills of Sale and Conveyances to Buyer and/or to Buyer Designee in substantially the same form attached hereto as Exhibit B-1 with respect to the Properties, but excluding the Rig Contracts; and (b) the Assignment and Assumption Agreements in substantially the same form attached hereto as Exhibit B-2 with respect to the Rig Contracts.

“Assumed Obligations” means (x) subject to the rights of the Buyer under Section 10.2, all of the liabilities and obligations set forth in subsections (a) through (d) below and (y) those liabilities that result in a downward adjustment to the Purchase Price pursuant to Section 2.6: (a) all liabilities, costs, expenses, duties and obligations of every kind and character of the Seller with respect to the Properties arising from and after the Effective Time with respect to the Properties or to the ownership, use, operation or other disposition thereof and under the terms of all oil, gas and mineral leases, easements and similar agreements constituting part of the Properties, as well as under the terms and provisions of all Contracts (including, for the avoidance of doubt, the Rig Contracts) constituting part of the Properties and under any Contracts entered into by the Seller after the Execution Date which are both attributable to, and constitute part of, the Properties and are entered into in compliance with Section 5.2; (b) all other liabilities, costs, expenses, duties and obligations of every kind and character of the Seller with respect to the Properties or to the ownership, use, operation or other disposition thereof, whether or not attributable to periods before or after the Effective Time to the extent arising out of or relating to (but only to the extent arising out of or relating to): (i) Gas Imbalances, (ii) the payment of the amount of the Suspended Funds as provided in Section 5.8, (iii) all real property, use, occupation, ad valorem, severance, production and personal property Taxes on the Properties for calendar year 2013, subject to Section 2.6, and thereafter, (iv) obligations to properly plug and abandon or re-plug or re-abandon or remove wells, flowlines, gathering lines or other facilities, equipment or other personal property or fixtures located on the Real Property Interests or lands pooled or unitized therewith

or otherwise comprising part of the Properties, and (v) obligations to restore the surface of the Real Property Interests or lands pooled or unitized therewith and any other obligations relating to the failure of the Real Property Interests or lands pooled or unitized therewith to comply with Environmental Laws, including any and all obligations to bring the Properties into compliance with applicable Environmental Laws (including conducting any remediation activities that may be required on or otherwise in connection with activities on the Properties), excluding, however, any such obligations to the extent relating to any Excluded Assets (subject to such exclusion, the “Environmental Obligations”); (c) all third party claims, demands, violations, actions, assessments, penalties, fines, costs, expenses, obligations or other liabilities with respect to the ownership, operation or maintenance of any of the Properties attributable to periods from and after the Effective Time; and (d) all losses, claims, liabilities, demands, costs and expenses arising out of, incident to or in connection with the accounting for, failure to pay or the incorrect payment to any royalty owner, overriding royalty owner, working interest owner or other interest holder under the Real Property Interests and/or units comprising a part of the Properties insofar as the same are attributable to periods and Hydrocarbons produced from and after the Effective Time.

“Basket” has the meaning specified in Section 10.6.1.

“Benefit Notice” has the meaning specified in Section 2.1.9.

“Business Day” means any day other than Saturday or Sunday or a day on which banking institutions in Oklahoma City, Oklahoma are authorized by Law to close.

“Buyer” has the meaning specified in the introductory paragraph.

“Buyer Designee” means any direct or indirect wholly owned subsidiary of Buyer.

“Buyer Indemnified Parties” has the meaning specified in Section 10.2.

“Casualty” means volcanic eruptions, acts of God, terrorist acts, fire, explosion, earthquake, wind storm, flood, drought, condemnation, the exercise of eminent domain, confiscation or seizure.

“Casualty Loss” has the meaning specified in Section 2.4.

“Chesapeake Oilfield Services Group” means COS Holdings, L.L.C., an Oklahoma limited liability company and its direct and indirect subsidiaries and its and their respective successors.

“Claimant” has the meaning specified in Section 14.2.

“Closing” means the closing and consummation of the transactions contemplated by this Agreement.

“Closing Date” means the date on which the Closing occurs, which will be July 31, 2013, or if all of the conditions set forth in Section 6 and Section 7 have not yet been satisfied or waived as of such date, three (3) Business Days following the satisfaction or waiver of such conditions unless otherwise changed by the mutual written agreement of the Parties.

“Closing Statement” has the meaning specified in Section 2.7.

“Code” means the Internal Revenue Code of 1986, as amended.

“Confidentiality Agreement” means that certain Confidentiality Agreement dated September 7, 2012 between Chesapeake Energy Corporation and EXCO Resources, Inc.

“Consultant” has the meaning specified in Section 2.1.10.

“Contracts” has the meaning specified in the definition of Properties.

“Control” means the possession, directly or indirectly, of the power, directly or indirectly, to direct or cause the direction of the management or policies of the controlled Person, whether through the ownership of equity interests in or voting rights attributable to the equity interests in such Person, by contract or agency, by the general partner of a Person that is a partnership, or otherwise; and “Controls” and “Controlled” have meanings correlative thereto.

“Core Area” means all of the lands covered by the Leases set forth in Exhibit A-3 except, however, for the lands specifically excepted from such Leases as described in Exhibit A-3.

“Cure Period” has the meaning specified in Section 2.1.8.

“Customary Post-Closing Consents” has the meaning specified in the definition of Permitted Encumbrances.

“Debt Financing” means any financing contemplated by Buyer to fund the purchase of the Properties.

“Debt Financing Commitment” means any financing commitment (including pursuant to a commitment letter) provided by one or more Financing Sources to the Buyer and its Affiliates in connection with any Debt Financing.

“Defect Notice” has the meaning specified in Section 2.1.

“Defect Notice Date” has the meaning specified in Section 2.1.

“Defensible Title” means title deducible of record and/or provable title to the Seller’s interest in a Property evidenced by documentation that although not constituting

perfect, merchantable or marketable title, can be successfully defended if challenged which, as of the Effective Time: (a) (i) entitles the Seller to receive, throughout the productive life of a Property, not less than the Net Revenue Interest set forth in Exhibit A-2 for such Property (except for (A) decreases in connection with any operation in which the owner of such Property may elect after the Closing to be a non-consenting co-owner, (B) decreases resulting from the establishment after the Execution Date, in accordance with Section 5.2, of pools or units and (C) decreases required to allow other working interest owners, pipelines or plants to make up past underproduction), and (ii) obligates the Seller to bear, throughout the productive life of a Well or PUD (and the plugging, abandonment and salvage thereof), a percentage of the costs and expenses relating to the maintenance, development and operations of such Well or PUD not greater than the Working Interest set forth in Exhibit A-2 with respect to such Property, except increases in such Working Interest that result in at least a proportionate increase in the Net Revenue Interest for such Property; and (b) subject to Permitted Encumbrances, is free and clear of all Liens.

“Deposit” has the meaning specified in Section 2.

“DOJ” has the meaning specified in Section 5.9.

“Dollar” means the United States of America dollar.

“Effective Time” means 7:00 a.m. Central Standard Time, April 1, 2013.

“Environmental Claim” has the meaning specified in Section 3.10.2.

“Environmental Defect” means a condition or circumstance constituting a violation of applicable Environmental Laws existing as of the Effective Time and/or as of the Closing with respect to any Property that requires, if known, or will require, once discovered, reporting to a Governmental Authority, investigation, monitoring, removal, cleanup, remediation, restoration or correction under Environmental Laws.

“Environmental Law” means any Law relating to the environment, health and safety, hazardous materials (including the use, handling, transportation, production, disposal, discharge or storage thereof), industrial hygiene, the environmental conditions on, under, or about any of the Properties, including soil, groundwater, and indoor and ambient air conditions or the reporting or remediation of environmental contamination and includes, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, including the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. § 9601 et seq.; the Resource Conservation and Recovery Act, including the Hazardous and Solid Waste Amendments Act of 1984, 42 U.S.C. § 6901 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. § 1471 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601 through 2629; the Oil Pollution Act, 33 U.S.C. § 2701 et seq.; the Emergency Planning and Community Right to Know Act,

42 U.S.C. § 11001 et seq.; the Safe Drinking Water Act, 42 U.S.C. §§ 300f through 300j; the Rivers and Harbors Act of 1899, 33 U.S.C. § 401 et seq.; and the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq.; as any of the foregoing may be amended and any other Law the purpose of which is to conserve or protect human health, the environment, wildlife or natural resources.

“Escrow Account” means the escrow account established pursuant to the Escrow Agreement.

“Escrow Agent” means Bank of America, N. A., a national banking association, or any successor escrow agent appointed pursuant to the terms of the Escrow Agreement.

“Escrow Agreement” means that certain Escrow Agreement dated as of the Execution Date among the Seller, the Buyer and the Escrow Agent.

“Escrow Balance” means the amount outstanding at any given time in the Escrow Account (which initially shall be an amount equal to the Deposit, and thereafter as such amount is increased by interest accruing thereon or reduced from time to time in accordance with the terms of this Agreement and those of the Escrow Agreement).

“Excluded Assets” means: (a) all limited liability company, partnership, financial, tax, and legal (other than title and Contract) records of the Seller; (b) any existing or future refund of costs, Taxes or expenses borne by the Seller or the Seller’s predecessors in title attributable to the period prior to the Effective Time; (c) any and all proceeds from production and from the settlements of contract disputes with purchasers of Hydrocarbons or byproducts from the Real Property Interests, including settlement of take-or-pay disputes, insofar as said proceeds are attributable to periods of time prior to the Effective Time; (d) all rights and interests of the Seller (i) under any policy or agreement of insurance or indemnity (including any rights, claims or causes of action of the Seller against third parties under any indemnities or hold harmless agreements and any indemnities received in connection with the Seller’s prior acquisition of any of the Properties) to the extent and only to the extent such rights and interests relate to the ownership of the Properties prior to the Effective Time and (ii) under any bond; (e) all Hydrocarbons produced from the Properties with respect to all periods prior to the Effective Time and all proceeds from the disposition thereof; (f) all of the Seller’s proprietary computer software, patents, trade secrets, copyrights, names, trademarks, logos and other intellectual property; (g) all accounts receivable and all audit rights arising under any of the applicable contracts or otherwise with respect to the Properties and any period prior to the Effective Time or to any of the Excluded Assets, except for any Gas Imbalances; (h) any geological or geophysical information constituting proprietary seismic data, studies core samples and information to be covered by license agreements and any geological or geophysical information which the Seller is prohibited, by agreement, from sharing with a third party; (i) (A) all mineral interests and lessor royalties owned by the Seller and its Affiliates including any and all mineral interests burdened by

or relating to any of the Real Property Interests or burdened by other oil, gas and mineral leases, and (B) all other royalty interests and other overriding royalty interests owned by the Seller or its Affiliates, in the case of (B), to the extent they do not, individually or in the aggregate, reduce the Seller’s interest in any Property below the Net Revenue Interest and overriding royalty interest, if any, for such Property as described in Exhibit A-2; (j) all claims of the Seller for refunds of or loss carry forwards with respect to (i) production, ad valorem or any other taxes attributable to any period prior to the Effective Time, (ii) income or franchise taxes or (iii) any taxes attributable to the Excluded Assets; (k) all “virtual courthouses” of the Seller and Seller’s exclusive use arrangements with title abstract facilities and all documents and instruments of the Seller that may be protected by an attorney-client privilege (except, for the avoidance of doubt, title opinions) and all data that cannot be disclosed to the Buyer as a result of confidentiality arrangements under agreements with third parties (provided that the Seller has used its commercially reasonable efforts to obtain waivers of such confidentiality arrangements); (l) all of the Gathering Assets; (m) all non-Lease Owned assets, including compressors on the wellheads of the Wells operated by the Seller or its Affiliates owned by or leased from the Seller, its Affiliates or third parties and all licensed radio frequencies and associated communications infrastructure including towers, antennas, data links and network circuits; (n) all drilling rigs and related equipment, work over rigs and related equipment, tools and other equipment brought onto a well site temporarily for purposes of drilling, reworking or maintaining a well, all vehicles, and any other non-Lease Owned equipment, inventory, machinery, tools and other personal property; (o) that portion of all Leases covering lands located outside the Core Area and Non-Core Units; (p) those oil and gas wells described in Schedule 1.1 attached hereto; (r) those certain agreements between the Seller and/or its Affiliates, on the one hand, and Aubrey McClendon and/or his affiliates, on the other hand, constituting the Chesapeake Energy Corporation Founder Well Participation Program; (s) that certain Firm Gas Transportation Agreement for Intrastate Service by and between Enterprise Texas Pipeline LLC and Chesapeake Energy Marketing Inc.; and (t) that certain Gas Gathering Contract Cost of Service – Eagle Ford by and between Seller, Chesapeake Energy Marketing, Chesapeake Operating, Inc. and Mockingbird Midstream Gas Services, L.L.C., dated July 1, 2012.

“Execution Date” has the meaning specified in the introductory paragraph.

“Farmout Agreement” means the Farmout Agreement between the Buyer and the Seller to be entered into at Closing, substantially in the form of Exhibit E.

“Final Statement” has the meaning specified in Section 2.8.

“Financing Sources” means any financial institutions that have committed to provide or otherwise entered into agreements in connection with a Debt Financing in connection with the transactions contemplated hereby and their respective Affiliates, officers, directors, employees and representatives involved in the Debt

Financing and permitted successors and assigns. Each of the foregoing financial institutions is a “Financing Source”.

“FTC” has the meaning specified in Section 5.9.

“GAAP” means generally accepted accounting principles, consistently applied, as recognized by the U.S. Financial Accounting Standards Board (or any generally recognized successor). The requisite that such principles be consistently applied means that the accounting principles in a current period are comparable in all material respects to those applied in preceding periods.

“Gas Imbalances” means any gas production, pipeline or transportation imbalance attributable to Hydrocarbons produced from the Seller’s interest in a Well or any interests pooled or unitized therewith.

“Gathering Assets” means all of the gathering lines, flow lines, gas lines, gas processing and gathering line compression facilities, processing plants, storage rights and transportation capacity (including downstream transportation capacity), tubing, pumps, motors, gauges, meters, valves, SCADA and other automation equipment and other machinery and equipment constituting part of or comprising the gas gathering systems including all of the rights of way, surface interests, surface lease agreements, surface use agreements, railroad crossings, easements and similar real estate interests related thereto and all contracts, Permits, pipeline and plant imbalances, and Records relating to the ownership, operation or maintenance.

“Governmental Authority” means any national, state, county or municipal government or division thereof, domestic or foreign, any agency, board, bureau, commission, court, department or other instrumentality of any such government, or other authority exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power, or any court or governmental tribunal or arbitrator in any case that has jurisdiction over any of the Parties or any of their respective properties or assets.

“Holdback Period” has the meaning specified in Section 2.1.11.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the applicable rules and regulations promulgated thereunder.

“Hydrocarbons” means oil, condensate, gas, casinghead gas and other liquid or gaseous hydrocarbons.

“Individual Benefit Amount” has the meaning specified in Section 2.1.9.

“Individual Claim” has the meaning specified in Section 10.6.1.

“Individual Defect Threshold” has the meaning specified in Section 2.1.1.

“Knowledge” of a fact or matter means (a) with respect to the Seller, that the officers and employees of the Seller and/or its Affiliates listed in Schedule 1.2A attached hereto have no actual knowledge that the matter being represented and warranted is not true and accurate and (b) with respect to the Buyer, that the employees of the Buyer listed in Schedule 1.2B attached hereto have no actual knowledge that the matter being represented and warranted is not true and accurate.

“Laws” means any and all applicable laws, statutes, ordinances, permits, decrees, writs, injunctions, orders, codes, judgments, principles of common law, rules or regulations (including Environmental Laws) which are promulgated, issued or enacted by a Governmental Authority having jurisdiction.

“Lease Owned” means any personal property, equipment or fixture asset in which the Seller owns an interest related to the current operation of a Well or Wells or within a Unit for a Well or Wells which (a) was charged to the joint account of the working interest owners in such Well or Wells or (b) which would have been charged to the joint account of the working interest owners in such Well or Wells if there had been any co-tenants in such Well or Wells.

“Leases” means oil and gas leases, oil, gas and mineral leases, leasehold estates, partial or other interests therein and subleases thereof, operating rights and other rights authorizing the owner thereof to explore for and produce oil, gas or related Hydrocarbons.

“Lien” means any lien, mortgage, security interest, pledge, charge, encumbrance or other arrangements substantially equivalent thereto, but does not include any production payment, net profits interest, overriding royalty interest or similar interest to the extent any such interest does not reduce the Seller’s Net Revenue Interest below that shown on Exhibit A-2.

“Marketing Agreements” means (a) the Crude Oil Purchase Contract between the Buyer and Chesapeake Energy Marketing, Inc. to be entered into at Closing, substantially in the form attached as Exhibit D-1, and (b) the Transaction Confirmation between the Buyer and Chesapeake Energy Marketing, Inc. to be entered into at Closing, substantially in the form attached as Exhibit D-2.

“Material Adverse Effect” means any result, consequence, condition or matter which (a) materially adversely affects the Properties or the operations, rights, results of operations or the value of the Properties taken as a whole, or (b) materially impairs, prevents or delays the Seller’s ability to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement; provided, however, that, in any event, the following shall not be deemed to constitute, create or cause a Material Adverse Effect: (i) any changes, circumstances, effects, events, results, occurrences, or inaccuracies (each an “Event”) that affect generally the oil and gas industry, such as fluctuations in the price of oil and gas, or that result from international, national, regional, state or local economic conditions, from general

developments or from other general economic conditions, facts or circumstances, including changes in Tax policy or other fiscal conditions, that are not subject to the control of the relevant Party, (ii) an Event that results from any of the transactions contemplated in this Agreement or the public announcement thereof, or (iii) an Event that results from conditions or events resulting from an outbreak or escalation of hostilities (whether nationally or internationally), or the occurrence of any other calamity or crisis (whether nationally or internationally), including the occurrence of one or more terrorist attacks.

“Net Revenue Interest” (or “NRI”) means the decimal interest in and to all production of the Hydrocarbons produced and saved or sold from or allocated to the relevant Property after giving effect to all valid lessors’ royalties, overriding royalties and/or other non-expense bearing burdens against production.

“Nonconsented Interest” has the meaning specified in Section 2.2.2.

“Non-Core Units” means each of the pooled units and the leasehold retained tracts located outside the Core Area as described in Exhibit A-4.

“NORM” has the meaning specified in Section 5.15.

“Ordinary Course of Business” means in the ordinary course of business consistent with past custom and practice.

“Party” and “Parties” have the meanings specified in the introductory paragraph.

“Payout Balances” has the meaning specified in Section 3.11.

“Permits” has the meaning specified in Section 3.6.

“Permitted Encumbrances” means (a) royalties, overriding royalties and other burdens on production to the extent they do not, individually or in the aggregate, reduce the Seller’s Net Revenue Interest or increase the Seller’s Working Interest (without at least a proportionate corresponding increase in the Seller’s Net Revenue Interest) in any Property from that described for the Seller in Exhibit A-2; (b) Liens for Taxes for which payment is not due or which are being contested in good faith by appropriate proceedings; (c) Liens of mechanics, materialmen, warehousemen, landlords, vendors, and carriers and any similar Liens arising by operation of Law which, in each instance, arise in the Ordinary Course of Business for sums not yet due or which are being contested in good faith by appropriate proceedings; (d) operating agreements, unit agreements, unitization and pooling designations and declarations, gathering and transportation agreements, processing agreements, and Hydrocarbon purchase contracts and all of the other Contracts to the extent that such agreements and Contracts do not, individually or in the aggregate, reduce the Net Revenue Interest or increase the Working Interest (without at least a proportionate corresponding increase in the Net Revenue Interest) in any Property from that

described therefor in Exhibit A-2 and to the extent they will not prevent the future operation or use of the Property in accordance with the development map attached as a part of Exhibit A-2; (e) regulatory authority of Governmental Authorities not presently violated, easements, surface leases and rights, plat restrictions, zoning laws, restrictive covenants and conditions, and building and other land use laws and similar encumbrances to the extent they do not adversely interfere in any material way with the present or future operation or use of the Properties subject thereto or affected thereby; (f) all rights to consent by, required notices to, filings with or other actions by Governmental Authorities in connection with the sale, disposition, transfer or conveyance of federal, state, tribal or other governmental oil and gas leases or interests therein or related thereto, or the transfer of operations of any of the Wells, where the same are customarily obtained subsequent to the assignment, disposition or transfer of such oil and gas leases or interests therein, or such operations (“Customary Post-Closing Consents”); (g) except in circumstances where such rights have already been triggered, conventional rights of reassignment obligating the lessee to reassign or offer to reassign its interests in any lease prior to a release or abandonment of such lease; (h) non-governmental third party consents and preferential rights to purchase; (i) rights of tenants-in-common in and to the Properties to the extent that such rights do not, individually or in the aggregate, reduce the Net Revenue Interest or increase the Working Interest (without at least a proportionate corresponding increase in the Net Revenue Interest) in any Property from that described therefor in Exhibit A-2 and to the extent they will not prevent the future operation or use of the Property in accordance with the development map attached as a part of Exhibit A-2; and (j) all defects or irregularities of title, if any, affecting the Properties, in each case, to the extent that such rights do not, individually or in the aggregate, reduce the Net Revenue Interest or increase the Working Interest (without at least a proportionate corresponding increase in the Net Revenue Interest) in any Property from that described therefor in Exhibit A-2 and which do not, individually or in the aggregate, adversely interfere in any material way with the present or future operation or use of the Properties subject thereto or affected thereby and which would be accepted by a reasonably prudent and sophisticated buyer engaged in the business of owning, developing and operating oil and gas properties in the same geographical location with knowledge of all the facts and appreciation of their legal significance; (k) all defects or irregularities (i) arising out of lack of corporate authorization or a variation in corporate name unless the Buyer provides affirmative written evidence that the action was not authorized and will result in another party’s superior claim of title, (ii) that have been cured or remedied by applicable statutes of limitation or statutes for prescription, (iii) consisting of the failure to recite marital status in documents or omissions of heirship proceedings, unless the Buyer provides affirmative evidence that such failure or omission will result in another party’s superior claim of title, (iv) that have been cured by possession under applicable statutes of limitation, or (v) resulting from lack of survey or failure to record releases of liens, production payments or mortgages that have expired by their own terms or the enforcement of which are barred by applicable statutes of limitation; (l) any provision in a Lease, surface lease, easement or other surface use

agreement entered into prior to the Effective Time providing a third party with rights to an overriding royalty interest or other burdens or payments triggered by the use of the relevant surface property for drilling or other purposes to the extent that any such lease or agreement does not, individually or in the aggregate, reduce the Net Revenue Interest or increase the Working Interest (without at least a proportionate corresponding increase in the Net Revenue Interest) in any Property from that described therefor in Exhibit A-2 and which does not, individually or in the aggregate, adversely interfere in any material way with the present or future operation or use of the Properties subject thereto or affected thereby and which would be accepted by a reasonably prudent and sophisticated buyer engaged in the business of owning, developing and operating oil and gas properties in the same geographical location with knowledge of all the facts and appreciation of their legal significance; and (m) rights vested in or reserved to any Governmental Authority to regulate the Properties, to terminate any right, power, franchise, license or permit afforded by such Governmental Authority, or to purchase, condemn or expropriate any of the Properties.

“Person” means an individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization or other entity or Governmental Authority.

“PPR” has the meaning specified in Section 2.2.

“Properties” means all of the Seller’s right, title and interest in and to the following, excluding the Excluded Assets: (a) all Leases, operating rights, working interests and net revenue interests, whether producing or non-producing, described in Exhibit A-1 attached hereto and made a part hereof, TO THE EXTENT AND ONLY TO THE EXTENT such Leases cover lands located within the Core Area and Non-Core Units (the “Real Property Interests”); (b) all wells located upon the Real Property Interests or Units or otherwise used in connection with the ownership or operation of the Properties, including the wells described in Exhibit A-2 (the “Wells”), the PUDs described in Exhibit A-2 and all Lease Owned tangible personal property, equipment, fixtures and improvements, including, but not by way of limitation, all injection wells, salt water disposal facilities, well heads, casing, tubing, pumps, motors, gauges, valves, heaters, treaters, water lines, vessels, tanks, boilers, separators, treating equipment, compressors, other equipment, automation systems including meters and related telemetry on wells, power lines, telephone and communication lines and other appurtenances owned in connection with the production, treating, storing, transportation or marketing of Hydrocarbons from the Wells, to the extent each of the foregoing is Lease Owned; (c) all presently existing unitization, pooling and/or communitization agreements, declarations or designations and statutorily, judicially or administratively created drilling, spacing and/or production units, whether recorded or unrecorded, insofar as the same are attributable or allocated to the Real Property Interests, and all of the Seller’s interest in and to the properties covered or units created thereby which are attributable to

the Real Property Interests (such interest in such properties or units, collectively, the “Units”); (d) all presently existing and valid Hydrocarbon sales agreements, operating agreements, gathering agreements, transportation agreements, farmout and farmin agreements, unitization, pooling and communitization agreements, purchase agreements, exploration agreements, area of mutual interest agreements, exchange and processing contracts and agreements, partnership and joint venture agreements and any other contracts, agreements and instruments, in each case, to the extent the above agreements cover, are attributable to or relate to the Real Property Interests, Wells, PUDs or any interests pooled, communitized or unitized therewith including those contracts and agreements described on Exhibit C (collectively, the “Contracts”); (e) all Hydrocarbons in, on, under or produced from the Real Property Interests or any interests pooled or unitized therewith from and after the Effective Time and the proceeds thereof; (f) all easements, surface leases, subsurface leases, permits, licenses, servitudes, rights of way and all other rights and appurtenances situated on or used in connection with the Real Property Interests, Wells, PUDs or any interests pooled or unitized therewith; (g) all rights, benefits and obligations arising from or in connection with any Gas Imbalances as of the Effective Time; (h) to the extent the same are assignable or transferable, and further to the extent the same are related to the Real Property Interests, Wells or PUDs, all of the Seller’s interests in and to all orders, contracts, title opinions and documents, abstracts of title, leases, division of interest statements, participation agreements, and all other agreements and instruments, easements, rights-of-way, licenses, authorizations, permits and similar rights and interests, subject to the rights of third parties; (i) any Lease Owned gathering lines, flow lines, gas lines, gas processing and compression facilities and related assets which are located on the Real Property Interests and utilized in connection with the Wells, including any easements related thereto; (j) the Records; and (k) any and all proceeds actually received by the Seller from third parties and any and all causes of action against third parties, in each case, solely to the extent relating to any Assumed Obligation.

“Proportionate Share” has the meaning in Section 10.2.

“PUDS” means the development locations described in Exhibit A-2.

“Purchase Price” has the meaning specified in Section 2.

“Real Property Interest” has the meaning specified in the definition of Properties.

“Records” means all of the Seller’s and its Affiliates files, records and data (including electronic data) including but not limited to lease files, land files, wells files, division order files, abstracts, title files, engineering and/or production files, maps and Tax and accounting records, in each case, to the extent related to the Real Property Interests, Wells or PUDs and excluding Excluded Assets.

“Required Consent” means a consent by a third party (including a consent under a Contract) that, if not obtained prior to the assignment of a Real Property Interest

or Well, either (a) voids, nullifies or grants a third party the right to void the Assignment with respect to such Property or (b) terminates the Seller’s interest in the Property subject to such consent; provided, however, "Required Consent" (i) does not include any consent which by its terms cannot be unreasonably withheld (unless the agreement containing such consent requirement provides that any assignment without consent will be ineffective or void or will give the other party thereto the right to terminate such agreement) or any Customary Post-Closing Consent and (ii) does include the two consents set forth on Schedule 2.2.

“Respondent” has the meaning specified in Section 14.2.

“Retained Liabilities” means those liabilities and obligations of the Seller arising from the following: (a) all losses, claims, liabilities, demands, costs and expenses arising out of, incident to or in connection with the Seller’s failure to pay or incorrect payment of any (i) real property, sales, use, occupation, production, personal property, ad valorem and severance taxes attributable or allocable to the Seller’s interest in the Properties (excluding any sales or transfer taxes arising from the transactions contemplated herein and excluding the Assumed Obligations described in subpart (b)(iii) of Assumed Obligations) attributable to periods prior to the Effective Time or (ii) income or franchise Taxes; (b) claims, demands, damages, costs and expenses, obligations or other liabilities with respect to bodily injury or death arising from operations on the Properties prior to the Closing Date, insofar as the claims (or portions thereof) are attributable or allocable to the Seller’s interest in the Properties; (c) all third party claims, demands, violations, actions, damages, assessments, penalties, fines, costs, expenses, obligations or other liabilities with respect to the ownership, operation or maintenance of any of the Properties prior to the Effective Time, including claims by holders of royalties, overriding royalty interests or other burdens on production that are attributable to periods prior to the Effective Time, but excluding, however, the Environmental Obligations and other obligations specifically assumed by the Buyer under the definition of Assumed Obligations; (d) all claims, demands, violations, actions, damages, assessments, penalties, fines, costs, expenses, obligations or other liabilities with respect to the Seller’s interest in any of the Excluded Assets whether attributable to periods before or after the Effective Time; (e) all claims, actions, suits and proceedings set forth on Schedule 3.4, provided, however, with respect to any such lawsuit based on claims for failure to pay or the incorrect payment to any royalty owner, overriding royalty owner, working interest owner or other interest holder in the Contracts, Real Property Interests Wells or Units comprising a part of the Properties, the Seller shall only be responsible as provided in this Subpart (e) to the extent attributable to actions, omissions, occurrences or conditions occurring prior to the Closing Date; (f) all claims, demands, violations, actions, damages, assessments, penalties, fines, costs, expenses, obligations or other liabilities which are caused by, arise out of, or result from off-site disposal of any substance defined or regulated as a “pollutant,” “hazardous waste,” or “hazardous substance” under any Environmental Law, to the extent that such disposal occurred prior to the Closing Date; and (g) all losses, claims,

liabilities, demands, costs and expenses with respect to the operation of any of the Properties to the extent arising out of conduct of the Seller as operator of a Property for which other joint working interest owners would have no liability under the applicable joint operating agreement.

“Rig Contracts” means each of the drilling rig Contracts described in Schedule 1.3 attached hereto.

“Seller Indemnified Parties” has the meaning specified in Section 10.3.

“Special Damages” has the meaning specified in Section 15.16.

“Suspended Funds” means funds which the Seller is holding as of the Effective Time which are owing to third party owners of royalty, overriding royalty, working or other interests in respect of past production of oil, gas or other Hydrocarbons attributable to the Properties.

“Taxes” means taxes of any kind, levies or other like assessments, customs, duties, imposts, charges or fees, including income, gross receipts, ad valorem, value added, excise, real or personal property, asset, sales, use, royalty, license, payroll, transaction, capital, net worth and franchise taxes, withholding, employment, social security, workers compensation, utility, severance, production, unemployment compensation, occupation, premium, windfall profits, transfer and gains taxes or other governmental taxes imposed or payable to the United States or any other Governmental Authority, and in each instance such term shall include any interest, penalties or additions to tax attributable to any such Tax, including penalties for the failure to file any tax return or report.

“Title Benefit” has the meaning specified in Section 2.1.9.

“Title Defect” means, as to the Seller’s interest in the Properties listed on Exhibit A-2, any condition that causes the Seller’s title to such Property to be less than Defensible Title. Notwithstanding the foregoing, the following shall not be considered Title Defects:

records by an abstract of title, title opinion or landman’s title chain which documents shall be included in the Defect Notice;

“Units” has the meaning specified in the definition of Properties.

“Wells” has the meaning specified in the definition of Properties.

“Working Interest” (or “WI”) means the decimal interest in the full and entire leasehold estate in any Property and all rights and obligations of every kind and character pertinent thereto or arising therefrom, without regard to any valid lessor royalties, overriding royalties and/or other burdens against production insofar as said interest in said leasehold is burdened with the obligation to bear and pay the cost of exploration, development and operation.

other gender, and words, terms and titles (including terms defined herein) in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires. Exhibits and Schedules referred to herein are attached to and by this reference incorporated herein for all purposes.

Seller Indemnified Parties from and against all Losses arising from or related to the activities of the Buyer or its employees, agents, contractors and other representatives in connection with such examinations or investigations. The Buyer must deliver to the Seller, on or before 6:00 p.m. Central Daylight Time on or before July 29, 2013 (the “Defect Notice Date”), a written notice specifying each defect associated with the Properties that the Buyer asserts constitutes a Title Defect or an Environmental Defect, a specific description of each such Title Defect or Environmental Defect and the basis for such assertion under the terms of this Agreement, the amount of the adjustment to the Purchase Price that the Buyer asserts based on such Title Defect or Environmental Defect and its method of calculating such adjustment, together with data and information evidencing the Buyer’s review of public record or other information proving the existence of such Title Defect or Environmental Defect reasonably necessary for the Seller to verify the existence of the alleged Title Defect or Environmental Defect (“Defect Notice”). The Buyer shall bear the burden of proof to establish each alleged Title Defect or Environmental Defect. Any matters that may otherwise constitute Title Defects or Environmental Defects, but of which the Seller has not been specifically notified in writing by the Buyer by the Defect Notice Date in accordance with the foregoing, shall be deemed to have been waived by the Buyer for all purposes, except with respect to Buyer’s (or Buyer Designee’s, as applicable) rights under the special warranty of title contained in the Assignment and without prejudice to the Buyer’s rights under Section 10.2(a) below. All adjustments to the Purchase Price based on Title Defects will be based on the Allocated Values attributable to the affected Properties. Upon timely delivery of a Defect Notice of a Title Defect or Environmental Defect under this Section 2.1, the Buyer and the Seller will in good faith negotiate the validity of the claim and the amount of any adjustment to the Purchase Price using the following criteria:

above the Aggregate Defect Threshold. With respect to any Title Defects for which an adjustment equal to the entire Allocated Value of the affected Property is made to the Purchase Price hereunder, at the Seller’s option, as a condition precedent to such adjustment, the Buyer will execute and deliver to the Seller an assignment (in substantially the same form as the Assignment) of the Property for which the entire Allocated Value has been credited to the Buyer. With respect to any Environmental Defects for which an adjustment equal to or exceeding the entire Allocated Value of the affected Property is otherwise required to be made to the Purchase Price hereunder, at the Buyer’s option, the Buyer will execute and deliver to the Seller an assignment (in substantially the same form as the Assignment) of such affected Property and, notwithstanding anything in this Agreement to the contrary, the Purchase Price adjustment in respect of such Environmental Defects instead will be limited to the Allocated Value of such affected Property. Any Property reconveyed to the Seller pursuant to this Section 2.1.2 shall be deemed to be an Excluded Asset and, for clarity, shall have reconveyed along with it all Properties of the types listed in subparts (b) through (k) of the definition of “Properties” to the extent (and then only to the extent) such other Properties are located in, on or under, or are used in connection with, or are otherwise attributable to or related to such Property, which other Properties shall also be deemed to be Excluded Assets.

ratio of the Net Revenue Interest to the Working Interest each as set forth in Exhibit A-2 for such Well or PUD.

attributable to each (a “Benefit Notice”), provided, however that no Title Benefit shall be taken into account under this Agreement unless the value of such individual benefit is determined to be more than Twenty-Five Thousand Dollars ($25,000.00) (the “Individual Benefit Amount”) and no adjustment will be made to the Purchase Price for Title Benefits except to the extent that the total of all adjustments for Title Benefits that individually exceed the Individual Benefit Amount (after offsetting any Title Defects and Environmental Defects that individually exceed the Individual Defect Thresholds) exceed Three Million Five Hundred Thousand Dollars ($3,500,000) (the “Aggregate Benefit Threshold”). The amount of each Title Benefit shall be determined in the same manner as provided in this Section 2.1 with respect to Title Defects. The Seller shall be deemed to have conclusively waived any Title Benefit of which the Seller fails to notify the Buyer in writing in the manner described in this Section 2.1.9. After taking into account all of the Title Defects that are cured, the remaining value of the Seller’s Title Benefits that individually exceed the Individual Benefit Amount shall be used to further reduce the aggregate Title Defect amount by subtracting such remaining value of the Seller’s Title Benefits that individually exceed the Individual Benefit Amount from the remaining aggregate value of Title Defects that individually exceed the Individual Defect Threshold and then, if there is any Title Benefit value remaining, to the extent exceeding the Aggregate Benefit Threshold as an upward adjustment to the Purchase Price.

and gas titles involving properties in the state where the applicable Property is located) practicing in the state where the applicable Property is located selected by the Seller and the Buyer, in the case of a Title Defect or Title Benefit, or to an environmental expert (with at least ten (10) years’ experience in environmental matters involving properties in the state where the applicable Property is located) selected by the Seller and the Buyer, in the case of an Environmental Defect (each such title attorney or environmental expert hereinafter, a “Consultant”). In the event the Seller and the Buyer are unable to agree on any Consultant, the Seller on the one hand and the Buyer on the other hand will each appoint one Consultant and the two Consultants so appointed will appoint a third Consultant and the three Consultants so appointed will resolve such matter provided that in no event shall any Consultant have worked as an employee or outside counsel for any Party or its Affiliates during the five (5) year period preceding the arbitration or have any financial interest in the dispute. The cost of each Consultant shall be paid fifty percent (50%) by the Seller and fifty percent (50%) by the Buyer. The Seller and the Buyer shall each present to the Consultant(s), with a simultaneous copy to the other Party, a single written statement of its position on the defect, benefit or dispute in question, together with a copy of this Agreement and any supporting material that such party desires to furnish, not later than ten (10) Business Days after appointment of the Consultant(s). In making their determination, the Consultant(s) shall be bound by the terms of this Agreement and, without any additional or supplemental submittals by either Party, may consider available legal and industry matters as in their opinion are necessary or appropriate to make a proper determination. Additionally, any Consultant may consult with and engage disinterested third parties to advise him, including petroleum engineers or environmental engineers. Within sixty (60) days following the submission of such written statements to the Consultant(s), applying the principles set forth in this Section 2.1, the Consultant(s) shall make a determination of the matter submitted based solely on the single written statement of each Party. The decision of the Consultant(s) shall be in writing and conclusive and binding on the Seller and the Buyer and shall be enforceable against the Parties in any court of competent jurisdiction. Any amount owing by one Party as a result of such determination by the Consultant(s) will be paid as provided in Sections 2.1.11 and 2.9 hereof. The Consultant(s) shall act as experts for the limited purpose of determining the specific title or environmental dispute presented to them, shall not act as arbitrators, shall not consider, hear or decide any matters except the specific title or environmental disputes presented to them and shall not award damages, interest or penalties to either Party. The Consultants shall not have the powers of the arbitrators under Section 14 and shall not consider any matters that are Arbitrable Disputes.

Following the Initial Release and continuing until the end of the Holdback Period, as each such Title Defect or Environmental Defect allegation is finally cured, resolved or determined (or the claim therefor waived) pursuant to the terms of this Agreement, the Buyer and/or the Seller, as applicable, shall have the right to be paid from the Escrow Balance (and the Seller and the Buyer shall promptly execute and deliver Joint Instructions to the Escrow Agent to effect the same) an amount equal to (i) in the case of such a release to the Buyer, the amount finally determined to be owed to the Buyer in respect of such alleged Title Defect or Environmental Defect, or (ii) in the case of such a release to the Seller, the amount finally determined to be owed to the Seller in respect of such alleged Title Defect or Environmental Defect. If there are remaining Purchase Price adjustments required to be made in the Buyer’s favor in respect of Title Defects and Environmental Defects after the Escrow Account is exhausted, then such amounts shall be promptly paid to the Buyer

by the Seller, as applicable, as they are finally determined and in accordance with Section 2.1.10 and Section 2.9.

Following the preparation of the description and the recording of any Non-Recorded Non-Core Unit in accordance with Section 5.14, the Seller shall have the right to be paid from the Escrow Balance the Allocated Value associated with the Well(s) in such Non-Recorded Non-Core Unit as set forth on Schedule 2.1.11 hereto and contemporaneously with the delivery by Seller to Buyer of an Assignment of such Non-Core Non-Recorded Unit, the Seller and the Buyer shall promptly execute and deliver a Joint Instruction to the Escrow Agent to release to the Seller the Allocated Value of the Wells associated with such Non-Recorded Non-Core Unit. If there is any Non-Recorded Non-Core Unit for which the description and recording thereof occurs after the Escrow Account is exhausted, then promptly following Buyer’s receipt of notice from the Seller that the description of such Non-Recorded Non-Core Unit has been prepared and filed in accordance with Section 5.14, Seller shall deliver to Buyer an Assignment of such Non-Recorded Non-Core Unit (and associated Well(s)) and contemporaneously therewith the Buyer shall pay the Seller the Allocated Value associated therewith.

If there are any funds remaining in the Escrow Account at the end of the Holdback Period, then the Seller and the Buyer shall promptly execute and deliver a Joint Instruction to the Escrow Agent directing the Escrow Agent to release the remaining Escrow Balance to the Seller within three (3) Business Days of its receipt of such Joint Instruction.

applies (determined by and in accordance with the agreement under which the PPR arises), or (b) no waiver, consent or exercise notice has been received by the Seller from the holder of a PPR but the time for exercising such PPR has not expired, then the Properties covered by that PPR, will not be sold to the Buyer (subject to the remaining provisions in this Section 2.2), and the Purchase Price will be reduced by the Allocated Value of the interest in the Properties subject to such PPR. If, as of the Closing Date, a holder of a Required Consent that is set forth on Schedule 2.2 (a “Subject Required Consent”) (a) has not yet delivered such Subject Required Consent and the time for granting such consent has not expired or (b) has placed additional conditions on the proposed assignee that involve the payment of money, posting of collateral security or the performance of other material obligations by the assignee that would not be required in the absence of the assignment of the Property subject to such Subject Required Consent, then the Seller’s interest in the Property covered by that Subject Required Consent will not be conveyed to the Buyer at Closing (subject to the remaining provision in this Section 2.2), and the Purchase Price will be reduced by the Allocated Value of Seller’s interest in the Properties subject to such unobtained Subject Required Consent. If, as of the Closing Date, a holder of a Required Consent that is not a Subject Required Consent (a) has not yet delivered such Required Consent and the time for granting such consent has not expired or (b) has placed additional conditions on the proposed assignee that involve the payment of money, posting of collateral security or the performance of other material obligations by the assignee that would not be required in the absence of the assignment of the Property subject to such Required Consent, then the Seller’s interest in the Property covered by that Required Consent will not be conveyed to the Buyer at Closing but shall still be considered part of the Properties in accordance with the provisions of Section 2.2.2, adjustments to the Purchase Price with respect to such Property will still be made pursuant to Sections 2.3, 2.5 and 2.6, with respect to such Property, and the Purchase Price will not be reduced as a result of such non-conveyance.

notice, the Seller shall sell, assign, and convey to the Buyer (and/or the Buyer Designee, as applicable) and the Buyer shall (and/or shall cause the Buyer Designee, as applicable to) purchase and accept from the Seller such Properties pursuant to the terms of this Agreement and for the Allocated Value of such Properties, subject to adjustments in accordance with Sections 2.3, 2.5 and 2.6. If Properties have been excluded from the Properties sold to the Buyer at the Closing due to a failure to obtain a Subject Required Consent in accordance with Section 2.2.1, and if such Subject Required Consent has been received or deemed received pursuant to the terms of the underlying agreement on or before the date one (1) year after the Closing Date, the Seller shall so notify the Buyer and within three (3) Business Days after the Buyer’s receipt of such notice, the Seller shall assign and convey to the Buyer (and/or the Buyer Designee, as applicable) and the Buyer shall (and/or shall cause the Buyer Designee, as applicable to) accept from the Seller such Properties pursuant to the terms of this Agreement and for the Allocated Value of such Properties, subject to adjustments in accordance with Sections 2.3, 2.5 and 2.6. If Properties have been excluded from the Properties sold to the Buyer at the Closing due to a failure to obtain a Required Consent other than a Subject Required Consent in accordance with Section 2.2.1, and if such Required Consent has been received or deemed received pursuant to the terms of the underlying agreement on or before the date one (1) year after the Closing Date, the Seller shall so notify the Buyer and within ten (10) Business Days after the Buyer’s receipt of such notice, the Seller shall assign and convey to the Buyer (and/or the Buyer Designee, as applicable) and the Buyer shall (and/or shall cause the Buyer Designee, as applicable to) accept from the Seller such Properties pursuant to the terms of this Agreement. As between the Buyer and the Seller, with respect to any Property for which a Required Consent other than a Subject Required Consent has not been obtained by the Closing, (i) the Seller shall hold such Property as nominee for the Buyer, effective as of the Effective Time, (ii) the Buyer shall pay any costs and expenses associated with that Property, and (iii) the Seller shall pay the Buyer any revenues associated with such Property. If any Required Consent other than a Subject Required Consent has not been received or deemed received on or before the one (1) year anniversary of the Closing Date, (i) the Seller shall no longer hold such Property (a “Nonconsented Interest”) as nominee for the Buyer, and each Party shall repay to the other Party any amounts previously paid hereunder in respect of the Nonconsented Interest (including the Allocated Value and all other amounts of any adjustments pursuant to Sections 2.3, 2.5 and 2.6 with respect to such Nonconsented Interest) or otherwise paid in respect of such Nonconsented Interest during the period of time following the Closing up until such Nonconsented Interest is deemed to be an Excluded Asset, (ii) such Nonconsented Interest will be deemed not to have been conveyed to the Buyer hereunder and (iii) such Nonconsented Interest shall be an Excluded Asset; provided, however, that with respect to any such Nonconsented Interest

with respect to which the Required Consent provides that such consent cannot be unreasonably withheld or similar language, the Seller will have the election to assign such Nonconsented Interest to the Buyer and provide the Buyer with an indemnity against the loss of such Nonconsented Interest and any loss or expense paid by the Buyer which results from any action by the holder of such Required Consent to invalidate the Nonconsented Interest as a result of the failure to obtain such consent.

any Title Defect or any Environmental Defect or to remedy any breach of this Agreement by the Seller and (ii) any costs incurred or paid by the Seller to repair or restore any Property affected by a Casualty Loss; (c) the Initial Farmout Well Costs, as set forth in Section 5.13; (d) the positive amount, if any, by which the aggregate amount of all costs and expenses incurred prior to the Effective Date relating to the development of the Wells listed in Schedule 2.5 paid by the Seller (including any prepayments) exceeds the aggregate Allocated Values of such Wells; and (e) any other amount agreed upon by the Buyer and the Seller.

efforts to agree upon the Closing Statement, provided that in the event the Buyer and the Seller cannot reach agreement prior to the Closing with respect to any item, the Closing Statement as submitted by the Seller shall control with respect to such item. The Closing Statement will be used to adjust the Purchase Price at Closing. Any final adjustments, if necessary, will be made pursuant to Section 2.8 of this Agreement.

Referee shall not have the powers of the arbitrators under Section 14 and shall not consider any matters that are Arbitrable Disputes. Upon agreement of the Parties to the adjustments to the Final Statement, or upon resolution of such adjustments by the Accounting Referee, as the case may be, the Final Statement (as adjusted pursuant to such agreement or resolution by the Accounting Referee) will be deemed final and binding on all of the Parties and the aggregate amount due to either the Buyer or the Seller pursuant to such Final Statement will be paid in accordance with Section 2.9.

The allocation agreed to by the Buyer and the Seller or determined by the Accounting Referee shall become the final allocation (the “Allocation”).

before or by any Governmental Authority with respect to the Seller’s interest in the Properties or which question the validity of this Agreement or any other action taken or to be taken in connection herewith.

contracts affecting its interest in any of the Properties which are not, by the terms thereof, subject to termination upon ninety (90) days or less notice; (c) all Contracts with Chesapeake Oilfield Services Group or Affiliates of the Seller which will be binding on the Properties after Closing and which cannot be terminated by the Buyer upon ninety (90) days or less notice; (d) any Contract included in the Properties that constitutes a lease under which the Seller is the lessee of real, immovable, personal or movable property that (i) cannot be terminated by the Seller without penalty upon ninety (90) days or less notice and (ii) involves an annual base rental of more than One Hundred Thousand Dollars ($100,000); (e) all Contracts that are not otherwise disclosed pursuant to the other subparts of this Section that can reasonably be expected to result in aggregate expenditures by the Seller of more than One Hundred Thousand Dollars ($100,000) during the current or any subsequent calendar year; and (f) all production payments or net profits interests burdening its interest in any of the Properties. The contracts listed on Schedule 3.8 affecting its interest in the Properties are in full force and effect and the Seller has not, and to the Seller’s Knowledge, no other party is in default thereunder. The Seller has neither given to nor received from any third party any notice of any action or intent to terminate or materially amend any such contract. The Seller has made available to the Buyer complete copies of all contracts listed on Schedule 3.8 and all amendments thereto.

in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors’ rights generally.

acceleration or termination which would not prevent the consummation of the transactions contemplated hereby by the Buyer or result in the Seller incurring any loss or liability therefrom.

agreements; or (b) grant to any Person any new consent to assign right or preferential purchase right, in each case, with respect to the transfer of any Property.

is resigning as operator, effective upon the consummation of the Closing and recommending that the Buyer be elected as successor operator.

in respect of any Taxes with respect to the Properties for a period ending prior to the Effective Time; and (b) the Seller agrees to reimburse the Buyer for any Taxes paid by the Buyer or its Affiliates with respect to the Properties for a period ending prior to the Effective Time (excluding any sales or transfer taxes arising from the transactions contemplated herein and excluding the Assumed Obligations described in subpart (b)(iii) of Assumed Obligations).

any HSR Act filing to consummate the transactions consummated hereby. All filing fees incurred in connection with the filings made pursuant to this Section 5.9 shall be borne by the Party responsible for such filing fees under the HSR Act.

the Initial Farmout Leases solely to the extent they lie within the boundary of the Initial Farmout Unit for such Initial Farmout Well in the same form of assignment prescribed by the Farmout Agreement; (c) subject to Section 5.10, from and after the Closing, the Initial Farmout Wells shall be subject to all of the same rights, terms and conditions contained in the Farmout Agreement applicable to the Option Test Wells and accordingly governed by the same provisions as contained therein including the applicable JOA as provided therein; and (d) the Buyer shall reimburse the Seller for all costs paid by the Seller in the drilling, completing, setting of surface equipment, producing, operating and maintaining such Initial Farmout Wells (“Initial Farmout Well Costs”). Within the Closing Statement, the Seller shall provide the Buyer with a statement of the Initial Farmout Well Costs and, at Closing, the Buyer shall reimburse the Seller for such Initial Farmout Well Costs. Periodically during the six (6) months immediately following Closing, the Seller shall provide the Buyer with appropriate updates and revisions to the Initial Farmout Well Costs and upward or downward adjustments to such Initial Farmout Well Costs shall be made between the Parties as of the final day of the third and sixth months following the Closing and thereafter, to the extent necessary thereafter, as the Parties agree. At the time the Parties agree that all such costs have been accounted for, a final statement of such costs (“Final Costs”) shall be rendered by the Seller and provided to the Buyer, at which time any final adjustments shall occur. In the event there is a dispute related to the Final Costs, either Party shall have the right to refer such dispute for resolution to an Accounting Referee in the manner provided in Section 2.8 above. Each Initial Farmout Well shall be drilled and/or completed without cost or expense to the Seller, with due diligence, in a workmanlike manner and in accordance with good oil field practices to the Objective Depth (as defined in the Farmout Agreement).

between the Seller and CNOOC, dated November 15, 2010 (the “Development Agreement”) to permit the Seller to transfer the Properties and the Leases (as defined in the Farmout Agreement) to the Buyer in accordance with the terms of this Agreement or the Farmout Agreement, as applicable, free and clear of any and all restrictions and other terms in the Development Agreement (other than any (i) existing joint operating agreements that were entered into, or (ii) any joint operating agreements that have been deemed to have been entered into, in each case in connection with any Well or in connection with any well proposal made with respect to the Properties).

this Agreement to be performed or complied with by the Buyer on or prior to the Closing Date;

to pay, defend, indemnify, reimburse and hold harmless the Seller and the Seller’s directors, partners, members, managers, officers, agents and employees (the “Seller Indemnified Parties”) for, from and against any loss, damage, diminution in value, claim, liability, debt, obligation or expense (including interest, reasonable legal fees, and expenses of litigation and attorneys’ fees in enforcing this indemnity ) incurred, suffered, paid by or resulting to any of the Seller Indemnified Parties and which results from, arises out of or in connection with, is based upon, or exists by reason of: (a) any breach of or default in any representation or warranty of the Buyer set forth in this Agreement or in the certificate delivered by the Buyer pursuant to Section 7.5 or any failure by the Buyer to perform any covenant or obligation set forth in this Agreement which is not cured as provided in Section 13 of this Agreement; and (b) any of the Assumed Obligations.

to assume the defense of such claim and to employ counsel reasonably satisfactory to such indemnified party. Notwithstanding any of the foregoing to the contrary, the indemnified party will be entitled to select its own counsel and assume the defense of any action brought against it if (i) the indemnified party has been advised by counsel that an actual conflict of interest exists between the indemnifying Party and the indemnified party in connection with the defense of such action or proceeding, (ii) such action or proceeding seeks injunctive relief with respect to the indemnified claim or is part of a criminal proceeding or (iii) the indemnifying Party fails to select counsel reasonably satisfactory to the indemnified party, in each case, with the expenses of such defense to be paid by the indemnifying Party. As a condition to the indemnifying Party’s obligations hereunder, the indemnified party will in good faith cooperate with and assist the indemnifying Party in the prosecution or defense of such indemnified claim at no unreasonable out of pocket expense to the indemnified party. No indemnifying Party shall consent to entry of any judgment or enter into any settlement with respect to a claim either (a) without the consent of the indemnified party, which consent shall not be unreasonably withheld, or (b) unless such judgment or settlement includes as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability with respect to such claim. No indemnified party shall consent to entry of any judgment or enter into any settlement of any such action, the defense of which has been assumed by an indemnifying Party, without the consent of such indemnifying Party, which consent shall not be unreasonably withheld.

has already been made to the Purchase Price under the terms of this Agreement; (b) the Seller will have no liability to the Buyer or the Buyer Indemnified Parties under this Section 10 for any matter (including any breach of a representation or warranty, except any such breach under Section 3.10 or Section 3.12 and excluding any breach of a covenant) which constitutes a Title Defect or an Environmental Defect; and (c) the limitations set forth in Section 10.6.1 and 10.6.2 shall not apply to the Seller’s obligations under the last sentence of Section 3.5 or Sections 2.8, 2.9, 5.6, 5.7, 5.8, 5.11, 5.12 or 10.2(b). Claims for Title Defects or Environmental Defects, whether or not resulting in a Purchase Price adjustment because the applicable Aggregate Defect Threshold is not exceeded, are not subject to the terms of this Section 10, may not be claimed under this Section 10, may not be included for purposes of determining whether the limitations set forth in this Section 10.6 have been met and may not be included in the Basket for purposes of the limitations set forth in this Section 10.6.

claiming default will serve written notice to the other Party specifying the nature of such default and demanding performance. If such a default by the Seller has not been cured within the sooner of ten (10) days after receipt of such default notice or the date specified in Section 12.1(b) above and each of the conditions contained in Section 7 has been either fulfilled or waived in writing (other than conditions pertaining to the execution and delivery of documents and payment of monies by the Buyer the fulfillment of which is to occur at the Closing), the Buyer will be entitled to exercise all remedies arising at law by reason of such default, including termination of this Agreement pursuant to Section 12. If such a default by the Buyer has not been cured within the sooner of ten (10) days after receipt of such default notice or the date specified in Section 12.1(c) above and each of the conditions contained in Section 6 has been either fulfilled or waived in writing (other than conditions pertaining to the execution and delivery of documents the fulfillment of which is to occur at the Closing), the Seller will be entitled to either: (a) exercise all remedies arising at law by reason of such default, including termination of this Agreement pursuant to Section 12; or (b) at the request of the Seller, the Parties will jointly instruct the Escrow Agent to pay the Escrow Balance to the Seller as liquidated damages in lieu of all other damages (and as the Seller’s sole remedy in such event, other than termination of this Agreement). The Parties hereby acknowledge that the extent of damages to the Seller occasioned by such failure or refusal by the Buyer would be impossible or extremely impractical to ascertain and that the amount of the Deposit is a fair and reasonable estimate of such damages under the circumstances.

Claimant has appointed. Respondent shall respond to Claimant within thirty (30) days after receipt of Claimant’s notice, identifying the arbitrator Respondent has appointed. All arbitrators must be neutral parties who have never been officers, directors or employees of or performed material work for the Parties or any of their Affiliates or the Chesapeake Oilfield Services Group within the preceding five (5) year period. Unless expressly provided otherwise in this Agreement arbitrators must have a formal education or training in the area of dispute resolution and must have not less than seven (7) years experience as a lawyer in the energy industry with experience in exploration, production or transactional issues. The two (2) arbitrators so chosen shall select a third arbitrator within thirty (30) days after the second arbitrator has been appointed. If either the Respondent fails to name its Party-appointed arbitrator within the time permitted, or if the two arbitrators are unable to agree on a third arbitrator within thirty (30) days from the date the second arbitrator has been appointed, then the missing arbitrator(s) shall be selected by the AAA with due regard given to the selection criteria above and input from the Parties and other arbitrators. The AAA shall select the missing arbitrator(s) not later than ninety (90) days from initiation of arbitration. In the event the AAA should fail to select the third arbitrator within ninety (90) days from initiation of arbitration, then either Party may petition the Chief United States District Judge for the Northern District of Texas to select the third arbitrator. Due regard shall be given to the selection criteria above and input from the Parties and other arbitrators.

binding on and non-appealable by the Parties. Each Party agrees that any arbitration award against it may be enforced in any court of competent jurisdiction and that any Party may authorize any such court to enter judgment on the arbitrators’ decisions. The arbitrators may not grant or award indirect, consequential, punitive or exemplary damages or damages for lost profits.

Party to this Agreement to assure that the benefits of this Agreement are realized by the Parties.

adverse to the Financing Sources under the Debt Financing Commitments or any other Financing Source without their prior written consent.

assign its rights under this Agreement to a Qualified Intermediary (as that term is defined in §1.1031(k)-1(g)(4)(v) of the Treasury Regulations) or to a Qualified Exchange Accommodation Titleholder (as that term is defined in Revenue Procedure 2000-37). In addition, should the Seller choose to structure the transaction provided under the terms of this Agreement as a non-simultaneous like-kind exchange, the Buyer agrees to execute all documents reasonably necessary to effectuate the non-simultaneous like-kind-exchange. Notwithstanding the foregoing, the Buyer shall have no increased liability hereunder on account of such non-simultaneous like-kind exchange and the Seller shall remain liable hereunder for all obligations of the Seller hereunder even if the Seller chooses to structure the transaction as a non-simultaneous like-kind exchange.

IN WITNESS WHEREOF, the Seller has executed this Agreement effective as of the Effective Date.

IN WITNESS WHEREOF, the Buyer has executed this Agreement effective as of the Effective Date.