THIRD AMENDMENT OF PURCHASE AND SALE AGREEMENT

This Third Amendment of Purchase and Sale Agreement (the “Amendment”) dated July 11, 2013, is made by and among Gastar Exploration Texas, LP (“Seller”), Gastar Exploration USA, Inc. (“Seller Guarantor”) and Cubic Energy, Inc. (“Buyer”). Buyer and Seller are sometimes referred to herein, collectively, as the “Parties” and, individually, as a “Party”.

WHEREAS, the Parties and Seller Guarantor executed a Purchase and Sale Agreement (the “Original PSA”) on April 19, 2013; and

WHEREAS, the Parties and Seller Guarantor amended the Original PSA through (i) that certain First Amendment of Purchase and Sale Agreement dated June 11, 2013 (the “First Amendment”) and (ii) that certain Second Amendment of Purchase and Sale Agreement dated June 27, 2013 (the “Second Amendment”) (the Original PSA as amended by the First Amendment and the Second Amendment is hereinafter referred to as the “PSA”). Capitalized terms used but not defined herein shall have the meanings given such terms in the PSA. All references to “Section” are references to sections in the PSA.

WHEREAS, the undersigned desire to further amend the PSA as provided herein by executing this Amendment.

NOW, THEREFORE, for and in consideration of the mutual promises contained in this Amendment, the benefits to be derived by each party hereto, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties and Seller Guarantor agree as follows.

If (i) all conditions precedent to the obligations of Buyer set forth in Section 8.02 have been met and (ii) the transactions contemplated by this Agreement are not consummated on or before the Closing Date because of: (A) the failure of Buyer to perform any of its material obligations hereunder or (B) the failure of any of Buyer’s representations or warranties hereunder to be true and correct in all material respects as of the date of this Agreement and the Closing, then, in either event, this Agreement shall terminate pursuant to Section 11.01(b) and Seller shall retain the Deposit as liquidated damages. The provision for payment of liquidated damages in this Section 3.02(b) has been included because, in the event of a termination of this Agreement described in this Section 3.02(b), the actual damages to be incurred by Seller can reasonably be expected to approximate the amount of liquidated damages called for herein and because the actual amount of such damages would be difficult if not impossible to measure accurately.

Section 11.01 Right of Termination. This Agreement and the transactions contemplated hereby shall be completely terminated at any time at or prior to the Closing as follows:

a)    by mutual written consent of the Parties;

b)    automatically, without any action by either Party, if the Closing shall not have occurred on or before July 31, 2013. The Parties agree and acknowledge that (i) in the event of such a termination, the Deposit shall automatically become the property of Gastar without any action by either Party and (ii) time is of the essence in the performance of this Agreement;

c)    by Seller, by written notice to Buyer, at Seller’s option, in the event the conditions set forth in Section 8.01 are not satisfied to the satisfaction of Seller at or prior to the Closing Date;

d)    by Buyer, by written notice to Seller, at Buyer’s option, if the conditions set forth in Section 8.02 are not satisfied to the satisfaction of Buyer at or prior to the Closing Date; or

e)    by either Party, by written notice to the other, if the sum of all Title Defect Amounts and Environmental Defect Amounts exceeds 15% of the Purchase Price.

Section 7.08 LOR 7 Well. Notwithstanding anything to the contrary in this Agreement and subject to the terms and conditions of such contract operating agreement delivered pursuant to Section 8.01(f), (a) Buyer and Seller agree that the LOR 7 Well shall be retained by Seller and excluded from the purchase and sale contemplated by this Agreement, and (b) Buyer agrees that no reduction to the Purchase Price shall be made on account of the exclusion of the LOR 7 Well from the purchase, sale and assignment contemplated by this Agreement.

14.07 (No Third Party Beneficiaries), 14.08 (Assignment), 14.09 (Governing Law), 14.10 (Notices), 14.11 (Severability), 14.12 (Counterparts) of the PSA shall apply to this Amendment as if set forth in full in this Amendment, mutatis mutandis.

  

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

By: /s/ Henry J. Hansen                

Name:    Henry J. Hansen

Title:    Vice President, Land

By: /s/ Calvin A. Wallen, III            

Name:    Calvin A. Wallen, III

Title:    President

(solely for the purpose of acknowledging this Amendment)

By: /s/ Henry J. Hansen                

Name:    Henry J. Hansen

Title:    Vice President, Land