Common use of Borrowing Base Clause in Contracts

Borrowing Base. (a) The Borrowing Base shall be determined in accordance with Section 2.08(b) by the Administrative Agent with the concurrence of the Lenders and is subject to redetermination in accordance with Section 2.08(d). Upon any redetermination of the Borrowing Base, such redetermination shall remain in effect until the next Redetermination Date. So long as any of the Commitments are in effect or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date until the first redetermination or reduction pursuant to Section 2.08, the amount of the Borrowing Base shall be $155,000,000 (the “Initial Borrowing Base”) which amount is comprised of the Oil and Gas Properties Collateral Value. (b) Upon receipt of the reports required by Section 8.07 and such other reports, data and supplemental information as may from time to time be reasonably requested by the Administrative Agent (the “Engineering Reports”), the Borrowing Base shall be redetermined for each Borrowing Base Period and each such redetermination shall be effective as of the date set forth in such notice of redetermination delivered by the Administrative Agent to Borrower (the “Scheduled Redetermination Date”). The Oil and Gas Properties Collateral Value shall be determined based upon the loan collateral value assigned to the Mortgaged Properties. The Borrowing Base shall be equal to the sum of the Oil and Gas Properties Collateral Value and such other credit factors (including without limitation the assets, liabilities, cash flow, business, properties, prospects, management and ownership of the Borrower and its Subsidiaries) which the Lenders deem significant. The Lenders’ determination of the Borrowing Base shall be in their sole discretion and shall not be subject to review or challenge. Upon each redetermination of the Borrowing Base, the Administrative Agent shall recommend to the Lenders a new Borrowing Base and the Lenders in accordance with their customary policies and procedures for extending credit to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement in the event of any increase in the Borrowing Base and by agreement of at least the Majority Lenders in the event of any redetermination to maintain or reduce the Borrowing Base. If a redetermined Borrowing Base is not approved by the Administrative Agent and the applicable Lenders within twenty (20) days of the submission to the Lenders by the Administrative Agent of its recommended Borrowing Base, the Administrative Agent shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within ten (10) days thereafter its proposed Borrowing Base. Promptly following the 10th day after such request, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (or all Lenders in the case of an increase). If the Borrower does not furnish the Engineering Reports by the date required, the Lenders may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwise. (c) The Borrower shall have the right to reduce the amount of the Borrowing Base upon not less than thirty (30) days’ prior written notice to the Administrative Agent (who shall promptly notify the Lenders) of the reduction, which shall specify the effective date thereof and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof, no more than an amount which would cause a Borrowing Base Deficiency) and shall be irrevocable and effective only upon receipt by the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine the Borrowing Base at any subsequent Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either in relation to the Borrowing Base prior or subsequent to any such optional reduction by Borrower. (d) In addition to “Scheduled Redeterminations” pursuant to Section 2.08(b), the Borrower and the Majority Lenders may each request one (1) additional redetermination of the Borrowing Base during each Borrowing Base Period. In the event the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to this Section 2.08(d), the Borrower shall deliver written notice of such request to the Administrative Agent which shall include: (i) Engineering Report(s) prepared as of a date not more than thirty (30) calendar days prior to the date of such request, and (ii) such other information as Administrative Agent and the Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to the date of such request. Likewise, in the event the Lenders exercise their option for a Special Borrowing Base Determination, the Administrative Agent shall give the Borrower notice of the redetermined Borrowing Base which shall state the effective date of the redetermination.

Borrowing Base. (a) The Borrowing Base in effect as of the Closing Date is $160,000,000.00 relative to the Proved Reserves attributable to the Borrowing Base Oil and Gas Properties. The Borrowing Base shall be determined in accordance with Section 2.08(bredetermined from time to time pursuant to the provisions of this Section. (b) by On or before each March 31 and September 30 until the Maturity Date, the Borrower shall furnish to the Administrative Agent a Reserve Report, which shall set out, as of each preceding December 31 or June 30, as applicable, the Proved Reserves attributable to the Borrowing Base Oil and Gas Properties. Each Reserve Report may be prepared by the Borrower’s own internal petroleum engineers and shall be certified by the President or other Responsible Officer of the Borrower. Each Reserve Report relating to the Proved Reserves attributable to the Borrowing Base Oil and Gas Properties as of December 31 shall be audited by C▇▇▇▇▇ G▇▇▇▇▇▇▇▇ & Associates, Inc. or other independent reservoir engineers acceptable to Administrative Agent. Each Reserve Report as of June 30 shall include a reconciliation from the prior December 31 Reserve Report. Upon receipt of each such Reserve Report, the Administrative Agent shall make a determination of the Borrowing Base which shall become effective on or about May 1 and November 1 of each year commencing May 1, 2008, and, in the case of an increase in the Borrowing Base, upon approval of all Lenders and the L/C Issuer, and in the case of maintaining or decreasing the Borrowing Base, upon approval of the Administrative Agent and the Required Lenders and in any case with the concurrence subsequent written notification from the Administrative Agent to the Borrower. Such redetermined Borrowing Base, subject to the other provisions of this Agreement, shall be the Borrowing Base until the effective date of the next redetermination of the Borrowing Base as set out in this Section 2.02. (c) During each period between scheduled redeterminations of the Borrowing Base, the Administrative Agent shall have the right to initiate one (1) unscheduled redetermination of the Borrowing Base by requesting in writing that the Borrower provide an unscheduled and unaudited Reserve Report regarding the Proved Reserves attributable to the Borrowing Base Oil and Gas Properties with an effective date not more than sixty days prior to Borrower’s delivery of such Reserve Report to the Administrative Agent, and such Reserve Report shall be delivered to the Administrative Agent within thirty days after Borrower’s receipt of such written request. (d) In addition to the redetermination provided for in Section 2.02(c), upon a Material Disposition or any material (in the judgment of the Administrative Agent or the Required Lenders) defect in title, or failure of title to, five percent (5%) or more of the PV-10 of the Borrowing Base Oil and Gas Properties, the Administrative Agent may, and upon the request of the Required Lenders shall, redetermine the Borrowing Base by requesting in writing that the Borrower provide an unscheduled Reserve Report regarding the Proved Reserves attributable to the Borrowing Base Oil and is subject Gas Properties with an effective date not more than sixty days prior to redetermination in accordance with Section 2.08(d). Upon any Borrower’s delivery of such Reserve Report to the Administrative Agent, and such Reserve Report shall be delivered to the Administrative Agent within thirty days after Borrower’s receipt of such written request. (e) During each period between scheduled redeterminations of the Borrowing Base, the Borrower shall have the right to request, by written notice to the Administrative Agent, one (1) unscheduled redetermination of the Borrowing Base, subject to contemporaneously providing to the Administrative Agent a Reserve Report with an effective date not more than sixty days prior to the date of such notice. (f) In addition to the redetermination provided for in Section 2.02(d), upon a Material Acquisition, the Borrower may, from time to time upon written notice to the Administrative Agent, propose to add Oil and Gas Properties to the Borrowing Base Oil and Gas Properties. Any such proposal to add Oil and Gas Properties to the Borrowing Base Oil and Gas Properties shall remain in effect until be accompanied by a Reserve Report applicable to such properties that conforms to the next Redetermination Date. So long as requirements of Section 2.02, and evidence sufficient to establish that the Borrower or the other applicable Loan Party has Marketable Title to such Oil and Gas Properties, and any such addition shall become effective at such time as: (a) the Administrative Agent, with the approval of all the Lenders, has made a determination of the Commitments amount by which the Borrowing Base would be increased as the result of such addition and (b) the conditions set out in Article IV hereof, to the extent they are applicable to such additional Oil and Gas Properties of the Borrower, have been satisfied. In determining the increase in effect or the Borrowing Base pursuant to this Section, the Administrative Agent and the Lenders shall apply the parameters and other credit factors set out in Section 2.02. (g) If at any LC Exposure or Loans are outstanding hereunder, this facility shall be governed time the Borrower proposes to increase the Borrowing Base by adding additional Oil and Gas Properties to the then effective Borrowing Base. During the period from Base Oil and after the Closing Date until the first redetermination or reduction Gas Properties pursuant to Section 2.082.02(f), and the amount of the Borrowing Base would exceed the amount of the Aggregate Revolving Commitments stated on Schedule 2.01, the Borrower may request an increase in the Aggregate Revolving Commitment pursuant to Section 2.15. (h) If in connection with a redetermination of the Borrowing Base maintaining or decreasing the Borrowing Base, the Required Lenders cannot otherwise agree on the new Borrowing Base, then the Borrowing Base shall be the Administrative Agent’s calculation of the “weighted arithmetic average” (as hereinafter calculated) of the Borrowing Base, as determined by each individual Lender and communicated to the Administrative Agent in writing. However, the amount of the Borrowing Base shall never be $155,000,000 (increased at any time without the unanimous consent of all the Lenders, notwithstanding anything else herein to the contrary. For purposes of this paragraph, the “Initial Borrowing Base”) which amount is comprised of the Oil and Gas Properties Collateral Value. (b) Upon receipt of the reports required by Section 8.07 and such other reports, data and supplemental information as may from time to time be reasonably requested by the Administrative Agent (the “Engineering Reports”), the Borrowing Base shall be redetermined for each Borrowing Base Period and each such redetermination shall be effective as of the date set forth in such notice of redetermination delivered by the Administrative Agent to Borrower (the “Scheduled Redetermination Date”). The Oil and Gas Properties Collateral Value shall be determined based upon the loan collateral value assigned to the Mortgaged Properties. The Borrowing Base shall be equal to the sum of the Oil and Gas Properties Collateral Value and such other credit factors (including without limitation the assets, liabilities, cash flow, business, properties, prospects, management and ownership of the Borrower and its Subsidiaries) which the Lenders deem significant. The Lenders’ determination weighted arithmetic average” of the Borrowing Base shall be determined by first multiplying the Borrowing Base proposed in writing to Administrative Agent by each Lender by such Lender’s Pro Rata Share, and then adding the results of each such calculation, with the resultant sum being the Borrowing Base. (i) The Borrowing Base shall represent the Required Lenders’ approval (except where unanimous consent is required) of the Administrative Agent’s determination, in accordance with their sole discretion customary oil and shall not gas lending practices, of the maximum loan amount that may be subject to review or challengesupported by the Borrowing Base Oil and Gas Properties and the Borrower acknowledges, for purposes of this Agreement, such determination by the Administrative Agent as being the maximum loan amount that may be supported by the Borrowing Base Oil and Gas Properties. Upon each In making any redetermination of the Borrowing Base, the Administrative Agent shall recommend to the Lenders a new Borrowing Base and the Lenders in accordance with their customary policies shall apply the parameters and procedures for extending other credit to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement in the event of any increase in the Borrowing Base and by agreement of at least the Majority Lenders in the event of any redetermination to maintain or reduce the Borrowing Base. If a redetermined Borrowing Base is not approved factors consistently applied then generally being utilized by the Administrative Agent and each such Lender, respectively, for Borrowing Base redeterminations for other similarly situated borrowers. The MLP, the applicable Borrower, Lenders within twenty (20) days of the submission to the Lenders by and the Administrative Agent acknowledge that (i) due to the uncertainties of its recommended the oil and gas extraction process, the Borrowing BaseBase Oil and Gas Properties are not subject to evaluation with a high degree of accuracy and are subject to potential rapid deterioration in value, (ii) for this reason and the difficulties and expenses involved in liquidating and collecting against the Borrowing Base Oil and Gas Properties, the Administrative Agent shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within ten (10) days thereafter its proposed Borrowing Base. Promptly following the 10th day after such request, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (or all Lenders in the case of an increase). If the Borrower does not furnish the Engineering Reports by the date required, the Lenders may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwise. (c) The Borrower shall have the right to reduce the amount Agent’s determination of the Borrowing Base upon not less than thirty (30) days’ prior written notice to the Administrative Agent (who shall promptly notify the Lenders) of the reduction, which shall specify the effective date thereof and the maximum loan amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof, no more than an amount which would cause a Borrowing Base Deficiency) and shall be irrevocable and effective only upon receipt by the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine the Borrowing Base at any subsequent Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either in relation with respect to the Borrowing Base prior or subsequent to any such optional reduction Oil and Gas Properties contains an equity cushion, which equity cushion is acknowledged by Borrower. (d) In addition to “Scheduled Redeterminations” pursuant to Section 2.08(b), the Borrower as essential for the adequate protection of the Lenders, and the Majority Lenders may each request one (1iii) additional redetermination of decisions regarding the Borrowing Base during each Borrowing Base Period. In the event the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to this Section 2.08(d), the Borrower shall deliver written notice of such request to the Administrative Agent which shall include: (i) Engineering Report(s) prepared as of a date not more than thirty (30) calendar days prior to the date of such request, and (ii) such other information as Administrative Agent and be made by the Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to the date of such request. Likewise, in the event the Lenders exercise their option for a Special Borrowing Base Determination, the Administrative Agent shall give the Borrower notice of the redetermined Borrowing Base which shall state the effective date of the redeterminationsole discretion.

Borrowing Base. (a) The Borrowing Base shall be determined in accordance with Section 2.08(b) by the Administrative Agent with the concurrence of the Lenders and is subject to redetermination in accordance with Section 2.08(d). Upon any redetermination of the Borrowing Base, such redetermination shall remain in effect until the next Redetermination Date. So long as any of the Commitments are in effect or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date until date hereof to the first redetermination or reduction pursuant to Section 2.08, the amount of Determination Date the Borrowing Base shall be $155,000,000 30,000,000 (the “Initial Borrowing Base”) which amount is comprised of the Oil and Gas Properties Collateral Value). (b) Upon receipt By March 15 and September 15 of the reports required by Section 8.07 and such other reportseach year beginning March 15, data and supplemental information as may from time 2013, Borrower shall furnish to time be reasonably requested by the Administrative Agent (the “Engineering Reports”)all information, the Borrowing Base shall be redetermined for each Borrowing Base Period reports and each such redetermination shall be effective as of the date set forth in such notice of redetermination delivered by the data that Administrative Agent to Borrower has then requested concerning Restricted Persons’ businesses and properties (the “Scheduled Redetermination Date”). The including their Oil and Gas Properties Collateral Value and interests and the reserves and production relating thereto), together with, as applicable, the Engineering Report as of January 1 of such year described in Section 6.2(f) or as of July 1 of such year described in Section 6.2(g). Within 15 days after receiving such information, reports and data, or as promptly thereafter as practicable, Administrative Agent shall determine the amount of a proposed Borrowing Base; and Administrative Agent shall then deliver to each Lender such proposed Borrowing Base. Within 15 days after the Lenders’ receipt of such proposed Borrowing Base, or as promptly thereafter as practicable, Required Lenders shall agree on an amount for the Borrowing Base (provided that all Lenders must agree on any increase in the Borrowing Base), which Borrowing Base need not be determined equal to such proposed Borrowing Base. Required Lenders shall determine the amount of the Borrowing Base based upon the loan collateral value assigned that they in their discretion assign to the Mortgaged Properties. The Borrowing Base shall be equal to the sum discounted net present value of the various Oil and Gas Properties of Restricted Persons included in the Collateral Value at the time in question and based upon such other credit factors (including without limitation the assets, liabilities, cash flow, hedged and unhedged exposure to price, foreign exchange rate, and interest rate changes, business, properties, prospects, management and ownership of the Borrower and its SubsidiariesRestricted Persons) which the Lenders as they in their discretion deem significant. The Lenders’ determination of the Borrowing Base shall be in their sole discretion and shall not be subject to review or challenge. Upon each redetermination of the Borrowing Base, the Administrative Agent shall recommend to the Lenders a new Borrowing Base and the Lenders in accordance with their customary policies and procedures for extending credit to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement in the event of any increase in the Borrowing Base and by agreement of at least the Majority Lenders in the event of any redetermination to maintain or reduce the Borrowing Base. If a redetermined Borrowing Base is not approved by the Administrative Agent and the applicable Lenders within twenty (20) days of the submission to the Lenders by the Administrative Agent of its recommended Borrowing Base, the Administrative Agent shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within ten (10) days thereafter its proposed Borrowing Base. Promptly following the 10th day after such request, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Required Lenders (or all Lenders in the case of an increase)increase in the Borrowing Base) have not approved the Borrowing Base within the 15 day period after their receipt of such proposed Borrowing Base, Administrative Agent shall poll Lenders to ascertain the highest Borrowing Base then acceptable to a number of Lenders sufficient to constitute Required Lenders (or all Lenders in the case of an increase in the Borrowing Base) and such amount shall then become the Borrowing Base. Administrative Agent shall by notice to Borrower designate such amount as the new Borrowing Base available to Borrower hereunder, which designation shall take effect immediately on the date such notice is sent (herein called a “Determination Date”) and shall remain in effect until but not including the next date as of which the Borrowing Base is redetermined. IT IS EXPRESSLY UNDERSTOOD THAT LENDERS AND ADMINISTRATIVE AGENT HAVE NO OBLIGATION TO AGREE UPON OR DESIGNATE THE BORROWING BASE AT ANY PARTICULAR AMOUNT, WHETHER IN RELATION TO THE MAXIMUM CREDIT AMOUNT OR OTHERWISE, AND THAT LENDERS’ COMMITMENTS TO ADVANCE FUNDS HEREUNDER IS DETERMINED BY REFERENCE TO THE BORROWING BASE FROM TIME TO TIME IN EFFECT, WHICH BORROWING BASE SHALL BE USED FOR CALCULATING COMMITMENT FEES UNDER SECTION 2.5 AND, TO THE EXTENT PERMITTED BY LAW AND REGULATORY AUTHORITIES, FOR THE PURPOSES OF CAPITAL ADEQUACY DETERMINATION AND REIMBURSEMENTS UNDER SECTION 3.2. (c) If the Borrower does not furnish the Engineering Reports all such information, reports and data by the date requiredspecified in the first sentence of subsection (a) of this section, the Lenders Administrative Agent may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwise. (c) The Borrower shall have the right to reduce the amount of that Required Lenders determine and may redetermine the Borrowing Base upon not less than thirty from time to time thereafter (30provided that all Lenders must agree to any increase in the Borrowing Base) days’ prior written notice to the Administrative Agent until each Lender receives all such information, reports and data, whereupon Required Lenders (who or all Lenders, as applicable) shall promptly notify the Lenders) of the reduction, which shall specify the effective date thereof and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof, no more than an amount which would cause designate a new Borrowing Base Deficiency) and shall be irrevocable and effective only upon receipt by the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine the Borrowing Base at any subsequent Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either in relation to the Borrowing Base prior or subsequent to any such optional reduction by Borroweras described above. (d) In addition to “Scheduled Redeterminations” pursuant to Section 2.08(b), the Borrower and the Majority Lenders may each request one (1) additional redetermination redeterminations of the Borrowing Base during pursuant to subsections (a) and (b) of this section, Borrower and Administrative Agent (or Administrative Agent at the request of Required Lenders) may each request additional determinations (“Special Determinations” ) of the Borrowing Base Periodfrom time to time; provided, that no such Person may request more than 1 Special Determination between Scheduled Determinations. In the event Administrative Agent (or Administrative Agent at the request of Required Lenders) requests such a Special Determination, Administrative Agent shall promptly deliver notice of such request to Borrower and Borrower shall, within 30 days following the date of such request, deliver to Lenders an Engineering Report as of the last day of the calendar month preceding the date of such request prepared by Staff Engineers (or Majority Lenders request prepared by Independent Engineers) and such other information that Administrative Agent shall have requested. In the event Borrower requests a “Special Borrowing Base Determination” pursuant to this Section 2.08(d), the Borrower shall deliver written notice of such request to the Administrative Agent which shall include: Lenders that includes (i) an Engineering Report(s) Report prepared by Staff Engineers as of a date not more than thirty (30) calendar 30 days prior to the date of such requestrequest (or, in the case of a request made on the 31st day of any calendar month, 31 days), and (ii) such other information requested by Administrative Agent. Upon receipt of such Engineering Report and other information, Administrative Agent shall, subject to approval of Required Lenders, or all Lenders in the event of a proposed increase in the Borrowing Base, redetermine the Borrowing Base in accordance with the procedure set forth in subsection (a) of this section, which Borrowing Base shall become effective on the Determination Date (or as soon thereafter as Administrative Agent and Required Lenders, or all Lenders in the Lenders shall request prepared as event of a date not more proposed increase in the Borrowing Base, approve such Borrowing Base and provide notice thereof to Borrower). (e) Not less than thirty fifteen (3015) calendar days prior to the date any Disposition of Restricted Persons’ Oil and Gas Properties (other than pursuant to Section 7.5(b)) or Hedging Contracts, Borrower shall furnish to Administrative Agent information on such requestDisposition. Likewise, If Administrative Agent or Borrower determine that such Disposition would result in the event aggregate Disposition of Restricted Persons’ Oil and Gas Properties or Hedging Contracts since the Lenders exercise their option for a Special most recent redetermination of the Borrowing Base Determinationequal to an amount greater than 5% of the Borrowing Base then in effect, Borrower shall furnish to Administrative Agent all information, reports and data that Administrative Agent has then requested concerning such sales and Oil and Gas Properties, including the interests and the reserves and production relating thereto and information regarding such Hedging Contracts, and shall furnish to Administrative Agent all information, reports and data which Administrative Agent has then requested concerning Restricted Persons’ businesses and properties which are not being Disposed of, including their Oil and Gas Properties and interests and the reserves and production relating thereto and the remaining Hedging Contracts. Administrative Agent shall give propose a Borrowing Base, subject to the Borrower notice agreement of all Lenders under the standards provided in subsection (b) above and taking into account the proposed Disposition of Restricted Persons’ properties or Hedging Contracts. If each Lender is satisfied that the proceeds of the redetermined Disposition of the properties and such Hedging Contract close out, net of out-of-pocket costs and expenses, will be sufficient to pay any Borrowing Base which shall state Deficiency resulting from the effective date proposed redetermination of the redeterminationBorrowing Base, then (x) Restricted Persons may Dispose of such Oil and Gas Properties and, if applicable, such Hedging Contract, (y) the new Borrowing Base shall be designated as provided herein, and (z) Borrower shall pay the Borrowing Base Deficiency resulting from the redetermination of the Borrowing Base pursuant hereto on the day of such Disposition.

Borrowing Base. (a) The For the period from and including the Closing Date to but excluding the date of the first determination of the Borrowing Base pursuant to the further provisions of this Section 2.07, the initial amount of the Borrowing Base has been set by the Administrative Agent and acknowledged by the Borrower and agreed to by the Lenders to be $110,000,000. For each and every determination or redetermination of the Borrowing Base under this Agreement, the Borrowing Base shall be determined or redetermined based on the oil and gas reserves attributable to the Oil and Gas Properties of the Borrower and its Subsidiaries. (b) Promptly after December 31 of each calendar year, commencing December 31, 2015, and in accordance with Section 2.08(bany event prior to April 1st of each calendar year (commencing April 1, 2016), the Borrower shall furnish to the Administrative Agent a Reserve Report in form and substance reasonably satisfactory to the Administrative Agent, prepared by an Approved Engineer, which Reserve Report shall be dated as of December 31 of the immediately preceding calendar year. In addition, within ninety (90) days after each June 30, commencing June 30, 2015, the Borrower shall furnish to the Administrative Agent a Reserve Report in form and substance satisfactory to the Administrative Agent prepared by the Borrower’s petroleum engineers, which report shall be dated as of June 30 of such calendar year. Each such Reserve Report shall be accompanied by additional data concerning pricing, hedging, quantities and purchasers of production, and other information and engineering and geological data as the Administrative Agent or the Required Lenders may reasonably request. Within fifteen (15) days after receipt of such Reserve Report and all such information, the Administrative Agent shall make an initial determination of the new Borrowing Base (the “Proposed Borrowing Base”) and upon such initial determination shall promptly notify the Lenders in writing of its initial determination of the Proposed Borrowing Base. Such initial determinations made by the Administrative Agent with shall be so made by the concurrence Administrative Agent in the exercise of the Lenders and is subject to redetermination its sole discretion in accordance with Section 2.08(d)the Administrative Agent’s customary practices and standards for oil and gas lending as they exist at the particular time, and may include a consideration of the value of the Oil and Gas Properties that are subject to legal, valid and enforceable mortgage liens held by the Administrative Agent for the ratable benefit of the Lenders. Upon In no event shall the Proposed Borrowing Base exceed the Aggregate Maximum Credit Amount of the Lenders. The Required Lenders shall approve or reject the Administrative Agent’s initial determinations of the Proposed Borrowing Base by written notice to the Administrative Agent within fifteen (15) days of the Administrative Agent’s notification of its initial determinations; provided, however, that with respect to any redetermination of Proposed Borrowing Base that is equal to or less than the Borrowing Base then in effect (but not with respect to any increase in the Borrowing Base) the failure by any Lender to confirm or disapprove in writing the Administrative Agent’s determination of the Proposed Borrowing Base shall be deemed an approval of the Proposed Borrowing Base. If the Required Lenders fail to approve any such determination of the Proposed Borrowing Base made by the Administrative Agent hereunder in such fifteen (15) day period, then the Administrative Agent shall poll the Lenders to ascertain the highest Proposed Borrowing Base then acceptable to the Required Lenders for purposes of this Section 2.07(b) and, subject to the last sentence of this Section 2.07(b), such redetermination amounts shall become the new Borrowing Base, effective on the date 715347206 14464587 specified in this Section 2.07. Until such approval or deemed approval, the Borrowing Base in effect before the Proposed Borrowing Base shall remain in effect. Upon agreement by the Administrative Agent and the Required Lenders of the new Borrowing Base, the Administrative Agent shall, by written notice to the Borrower and the Lenders, designate the new Borrowing Base available to the Borrower. Such designation shall be effective as of the Business Day specified in such written notice (or, if no effective date is specified in such written notice, the next Business Day following delivery of such written notice), and such new Borrowing Base shall remain in effect until the next Redetermination Date. So long as any of the Commitments are in effect determination or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date until the first redetermination or reduction pursuant to Section 2.08, the amount of the Borrowing Base in accordance with this Agreement. Anything herein contained to the contrary notwithstanding, any determination or redetermination of the Borrowing Base resulting in any increase of the Borrowing Base in effect immediately prior to such determination or redetermination shall be $155,000,000 (require the “Initial Borrowing Base”) which amount is comprised approval of all the Lenders in their sole discretion in accordance with their respective customary practices and standards for oil and gas lending as they exist at the particular time, and may include a consideration of the value of the Oil and Gas Properties Collateral Value. (b) Upon receipt of the reports required by Section 8.07 that are subject to legal, valid and such other reports, data and supplemental information as may from time to time be reasonably requested enforceable mortgage liens held by the Administrative Agent for the ratable benefit of the Lenders. (c) In addition to each scheduled redetermination of the “Engineering Reports”Borrowing Base pursuant to Section 2.07(b) (and in addition to any redetermination of the Borrowing Base pursuant to Section 2.07(f) and (g)), the Borrowing Base shall be redetermined for each Borrowing Base Period and each such redetermination shall be effective as of the date set forth in such notice of redetermination delivered Borrower may by notifying the Administrative Agent thereof, and the Administrative Agent may, at the direction of the Required Lenders, by notifying the Borrower thereof, each elect to Borrower (cause the “Scheduled Borrowing Base to be redetermined once between each scheduled Redetermination Date”pursuant to Section 2.07(b). If such discretionary redetermination of the Borrowing Base pursuant to the provisions of this Section 2.07(c) is initiated by the Borrower, the Borrower shall deliver a written request to the Administrative Agent together with a Reserve Report in form and substance satisfactory to the Administrative Agent, prepared by the Borrower’s petroleum engineers, containing information similar to the Reserve Reports delivered pursuant to Section 2.07(b), and such other updated engineering, production, operating and other data as the Administrative Agent, the Issuer or any Lender may reasonably request; provided that if the Required Lenders have requested the discretionary redetermination of the Borrowing Base pursuant to the provisions of this Section 2.07(c), the Borrower shall deliver to the Administrative Agent such Reserve Report and other information within thirty (30) days of receipt of a request therefor. The Administrative Agent shall have fifteen (15) days following receipt of such requested information to make an initial redetermination of the Borrowing Base, and the Administrative Agent and the Required Lenders shall approve and designate the new Borrowing Base in accordance with the procedures and standards described in Section 2.07(b). (d) With the delivery of each Reserve Report, the Borrower shall provide to the Administrative Agent a certificate from a Responsible Officer certifying that, to the best of such Responsible Officer’s knowledge and in all material respects: (i) the information contained in each such Reserve Report and any other information delivered in connection therewith is true and correct, (ii) the Borrower or the Guarantors owns good and defensible title to the Oil and Gas Properties Collateral Value shall be determined based upon the loan collateral value assigned evaluated in each such Reserve Report and such Properties are free of all Liens except for Liens permitted by Section 9.03, (iii) except as set forth on an exhibit to the Mortgaged Properties. The certificate, on a net basis there are no gas imbalances, take or pay or other prepayments in excess of the volume specified in Section 7.20 with respect to their Oil and Gas Properties evaluated in such Reserve Report that would require the Borrower or any of its Subsidiaries to deliver Hydrocarbons either 715347206 14464587 generally or produced from such Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor, (iv) none of their Oil and Gas Properties have been transferred since the date of the last Borrowing Base shall be equal determination except as set forth on an exhibit to the sum certificate, which certificate shall list all of its Oil and Gas Properties sold and in such detail as reasonably required by the Administrative Agent, (v) attached to the certificate is a list of all marketing agreements entered into subsequent to the later of the date hereof or the most recently delivered Reserve Report that the Borrower could reasonably be expected to have been obligated to list on Schedule 7.20 had such agreement been in effect on the date hereof, (vi) attached thereto is a schedule of the Oil and Gas Properties Collateral Value evaluated by such Reserve Report that are Mortgaged Properties and demonstrating the percentage of the present value that such other credit factors Mortgaged Properties represent, and (including without limitation vii) the assets, liabilities, cash flow, business, properties, prospects, management and ownership outstanding amount of the Debt of the Borrower or any of its Subsidiaries does not exceed the amount permitted to be incurred pursuant to Section 9.02(f). (e) Notwithstanding anything herein the contrary, in the event that the Borrower does not furnish any required Reserve Report within ten (10) days of date the required herein, the Administrative Agent and its Subsidiaries) which the Required Lenders deem significant. The Lenders’ determination of may nonetheless designate the Borrowing Base from time to time thereafter until the Administrative Agent receives such Reserve Report, whereupon the Administrative Agent and the Required Lenders or all Lenders, as applicable, shall be designate a new Borrowing Base in their sole discretion accordance with the general procedures outlined in Section 2.07(b). (f) In addition to any redetermination described in Section 2.07(b) or (c), if at any time the aggregate fair market value of Oil and shall not be subject Gas Properties sold or disposed of pursuant to review or challenge. Upon Section 9.12(d), together with the aggregate net fair market value to the Borrower of all Material Swap Transactions, in each case, since the most recent redetermination of the Borrowing Base, exceeds five percent (5%) of the value of proved developed Oil and Gas Properties included in the most recently delivered Reserve Report, then the Administrative Agent shall recommend to may, at the Lenders a new Borrowing Base and direction of the Lenders in accordance with their customary policies and procedures for extending credit to oil and gas reserve-based customers shall establish Required Lenders, by notifying the redetermined Borrowing Base by unanimous agreement in the event of any increase in the Borrowing Base and by agreement of at least the Majority Lenders in the event of any redetermination to maintain or Borrower thereof, reduce the Borrowing Base. If a redetermined , effective immediately upon such sale, disposition or consummation of Material Swap Transaction by an amount equal to the Borrowing Base is not approved value (as determined by the Administrative Agent in its reasonable judgment) of such Oil and Gas Properties sold or disposed of and Swap Transactions in respect of commodities assigned, terminated (other than as a result of the expiration thereof), unwound, sold or liquidated, and such new Borrowing Base shall be effective and applicable to the Borrower, the Administrative Agent, the Issuer and the applicable Lenders within twenty (20) days until the next redetermination or modification of the submission Borrowing Base pursuant to the Lenders by the Administrative Agent of its recommended Borrowing Basethis Agreement. Upon any such redetermination, the Administrative Agent shall notify each Lender that the recommended promptly deliver a New Borrowing Base has not been approved and request that each Lender submit Notice to the Administrative Agent within ten (10) days thereafter its proposed Borrowing Base. Promptly following Borrower and the 10th day after such request, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (or all Lenders in the case of an increase). If the Borrower does not furnish the Engineering Reports by the date required, the Lenders may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwiseLenders. (cg) The Borrower shall have Notwithstanding the right to reduce the amount requirements of Section 12.02(b)(ii), any decrease of the Borrowing Base upon not less than thirty (30) days’ prior written notice to resulting solely as a result of any incurrence of Debt incurred by the Administrative Agent (who shall promptly notify the Lenders) of the reduction, which shall specify the effective date thereof and the amount of such reduction (which shall not be less than $1,000,000 Borrower or any whole multiple of $1,000,000 in excess thereof, no more than an amount which would cause a Borrowing Base Deficiencyits Subsidiaries pursuant to Section 9.02(f) and shall be irrevocable and become effective only upon receipt by the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated notice thereof to determine the Borrowing Base at any subsequent Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either in relation to the Borrowing Base prior or subsequent to any such optional reduction by Borrower. (d) In addition to “Scheduled Redeterminations” pursuant to Section 2.08(b), the Borrower and the Majority Lenders may each request one (1) additional redetermination Lenders, and shall not require any approval of the Borrowing Base during each Borrowing Base PeriodLenders or the Required Lenders. In the event the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to this Section 2.08(d), the Borrower shall deliver written notice of such request to the Administrative Agent which shall include: (i) Engineering Report(s) prepared as of a date not more than thirty (30) calendar days prior to the date of such request, and (ii) such other information as Administrative Agent and the Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to the date of such request. Likewise, in the event the Lenders exercise their option for a Special Borrowing Base Determination, the Administrative Agent shall give the Borrower notice of the redetermined Borrowing Base which shall state the effective date of the redetermination.715347206 14464587

Borrowing Base. (a) The Borrowing Base shall be determined in accordance with Section 2.08(b) by the Administrative Agent with the concurrence of the Lenders and is subject to redetermination in accordance with Section 2.08(d2.08(c). Upon any redetermination of the Borrowing Base, such redetermination shall remain in effect until the next successive Redetermination Date. So long as any of the Commitments are in effect or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date until the first redetermination or reduction pursuant to Section 2.082.08 or adjusted pursuant to Section 8.07(b), the amount of the Borrowing Base shall be $155,000,000 35,000,000 (the “Initial Borrowing Base”) which amount is comprised of the Oil and Gas Properties Collateral Value). (b) Upon receipt of the reports required by Section 8.07 and such other reports, data and supplemental information as may from time to time be reasonably requested by the Administrative Agent (the “Engineering Reports”), the Borrowing Base shall be redetermined for each Borrowing Base Period and each such redetermination shall be effective as of the date set forth in such notice of redetermination delivered by the Administrative Agent to Borrower (the “Scheduled Redetermination Date”). The Oil and Gas Properties Collateral Value Borrowing Base shall be determined based upon the loan collateral value assigned to the Mortgaged Properties. The Borrowing Base shall be equal to the sum of the Oil and Gas Properties Collateral Value and such other credit factors (including without limitation the assets, liabilities, cash flow, business, properties, prospects, management and ownership of the Borrower and its SubsidiariesBorrower) which the Lenders deem significant. The Lenders’ determination of the Borrowing Base shall be in their sole discretion and shall not be subject to review or challenge. Upon each redetermination of the Borrowing Base, the Administrative Agent shall recommend to the Lenders a new Borrowing Base and the Lenders in accordance with their customary policies and procedures for extending credit to oil and gas reserve-based customers shall (by unanimous agreement) establish the redetermined Borrowing Base by unanimous agreement in the event of Base; provided, however, that any increase decrease in the Borrowing Base and by agreement or reaffirmation of at least the Majority Lenders in the event of any redetermination to maintain or reduce the Borrowing Base. If a redetermined existing Borrowing Base is not approved by the Administrative Agent and the applicable Lenders within twenty (20) days of the submission to the Lenders by the Administrative Agent of its recommended Borrowing Base, the Administrative Agent shall notify each require Majority Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within ten (10) days thereafter its proposed Borrowing Base. Promptly following the 10th day after such request, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (or all Lenders in the case of an increase)approval. If the Borrower does not furnish the Engineering Reports by the date required, the Lenders may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwise. (c) The Borrower shall have the right to reduce the amount of the Borrowing Base upon not less than thirty (30) days’ prior written notice to the Administrative Agent (who shall promptly notify the Lenders) of the reduction, which shall specify the effective date thereof and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof, no more than an amount which would cause a Borrowing Base Deficiency) and shall be irrevocable and effective only upon receipt by the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine the Borrowing Base at any subsequent Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either in relation to the Borrowing Base prior or subsequent to any such optional reduction by Borrower. (d) In addition to “Scheduled RedeterminationsBorrowing Base Determinations” pursuant to Section 2.08(b), the Borrower and the Majority Lenders may each request one (1) additional redetermination of the Borrowing Base during each Borrowing Base Period. In the event the Borrower or Majority Lenders request requests a “Special Borrowing Base Determination” pursuant to this Section 2.08(d2.08(c), the Borrower shall deliver written notice of such request to the Administrative Agent which shall include: (i) Engineering Report(s) prepared as of a date not more than thirty (30) calendar days prior to the date of such request, and (ii) such other information as Administrative Agent and the Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to the date of such request. Likewise, in the event the Lenders exercise their option for a Special Borrowing Base Determination, the Administrative Agent shall give the Borrower notice of the redetermined Borrowing Base which shall state the effective date of the redeterminationBase.

Borrowing Base. (a) The Borrowing Base in effect from time to time shall represent the maximum amount (subject to the Total Commitment) of Loans that the Banks will make to the Borrower. During the period from and after the Effective Date until the Borrowing Base is redetermined in accordance with this Section, the amount of the Borrowing Base shall be $20,000,000. The Borrowing Base shall be determined in accordance with Section 2.08(b2.04(b) by the Administrative Agent with the concurrence and approved by all of the Lenders and Banks or the Majority Banks, as applicable. The Borrowing Base is subject to redetermination in accordance with Section 2.08(d2.04(d). Upon any redetermination of the Borrowing Base, such redetermination shall remain in effect until the next Redetermination Datesuccessive date that the redetermined Borrowing Base becomes effective subject to the notice requirements specified in Section 2.04(e) for both the scheduled redetermination and unscheduled redeterminations. So long as any part of the Commitments are in effect or any LC Exposure or and until all of the Loans outstanding hereunder are outstanding hereunderpaid in full, this facility Agreement shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date until the first redetermination or reduction pursuant to Section 2.08, the amount of the Borrowing Base shall be $155,000,000 (the “Initial Borrowing Base”) which amount is comprised of the Oil and Gas Properties Collateral Value.HOU04:43581.4 (b) Upon The Agent will after receipt of the reports required by most recent Reserve Report delivered to the Banks under Section 8.07 5.10, and such other reports, data and supplemental information as may from time to time be reasonably requested by the Administrative Agent (the “Engineering Reports”)Agent, but in no event later than May 1 and November 1 of each year commencing May 1, 1997, redetermine the Borrowing Base shall be redetermined for based on such Reserve Report. The Agent and each Bank will redetermine the Borrowing Base Period in accordance with their respective normal and each customary oil and gas lending criteria as such redetermination shall be effective as exist at that particular time taking into account all of the date set forth in such notice of redetermination delivered by the Administrative Agent to Borrower (the “Scheduled Redetermination Date”). The Oil assets and Gas Properties Collateral Value shall be determined based upon the loan collateral value assigned to the Mortgaged Properties. The Borrowing Base shall be equal to the sum of the Oil and Gas Properties Collateral Value and such other credit factors (including without limitation the assets, liabilities, cash flow, business, properties, prospects, management and ownership liabilities of the Borrower and its Subsidiaries) which the Lenders deem significant. The Lenders’ determination Agent and each Bank, in their sole discretion, may make reasonable adjustments to the rates, volumes and prices and other assumptions set forth in the Reserve Reports and such other data and supplemental information. Each redetermination of the Borrowing Base shall which would increase the Borrowing Base must be in their sole discretion approved by all of the Banks, and shall not be subject to review or challenge. Upon each other redetermination of the Borrowing Base, the Administrative Agent shall recommend to the Lenders a new Borrowing Base and the Lenders in accordance with their customary policies and procedures for extending credit to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement in the event of any increase in the Borrowing Base and by agreement of at least the Majority Lenders in the event of any redetermination to maintain or reduce the Borrowing Base. If a redetermined Borrowing Base is not must be approved by the Administrative Agent and the applicable Lenders Majority Banks. Failure of a Bank to object to a redetermination within twenty (20) 14 days after notice of the submission such redetermination is given to the Lenders such Bank by the Administrative Agent of its recommended Borrowing Base, the Administrative Agent shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within ten (10) days thereafter its proposed Borrowing Base. Promptly following the 10th day after be deemed an approval of such request, the Administrative Agent shall determine the Borrowing Base for redetermination by such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (or all Lenders in the case of an increase). If the Borrower does not furnish the Engineering Reports by the date required, the Lenders may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwiseBank. (c) The Borrower Agent may exclude any Oil and Gas Property or portion of production therefrom from the Borrowing Base, at any time, because the status of title to such Oil or Gas Property is not reasonably satisfactory to Agent or because such Oil and Gas Property is not subject to a first priority lien in favor of the Agent as security for the Obligations. (d) So long as any of the Commitments are in effect and until payment in full of all Loans hereunder, effective on or about May 1 and November 1 of each year commencing May 1, 1997 (each being a "Scheduled Redetermination Date"), the Agent with the approval of all of the Banks or the Majority Banks, as applicable, shall have the right to reduce redetermine the amount of the Borrowing Base upon not less than thirty in accordance with Section 2.04(b). In addition, at any time after the first scheduled Redetermination Date, (30i) days’ prior written notice to the Administrative Agent (who shall promptly notify the Lenders) Borrower may request a redetermination of the reduction, which shall specify the effective date thereof Borrowing Base on its own initiation at any time in connection with a proposed acquisition of Oil and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple Gas Properties with a fair market value in excess of $1,000,000 in excess thereof10,000,000 and at one additional time during any consecutive twelve (12) month period, no more than an amount which would cause and (ii) the Agent and Majority Banks may each initiate a Borrowing Base Deficiency) and shall be irrevocable and effective only upon receipt by the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine redetermination of the Borrowing Base at any subsequent Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amounttime as they so elect; provided, either in relation to however, that the Borrowing Base prior or subsequent to any such optional reduction by Borrower. (d) In addition to “Scheduled Redeterminations” pursuant to Section 2.08(b), the Borrower Agent and the Majority Lenders Banks may each request initiate only one such unscheduled redetermination during any consecutive twelve (112) additional month period (each being an "Unscheduled Redetermination Date"). Any redetermination of the Borrowing Base during each on an Unscheduled Redetermination Date shall be in accordance with Section 2.04(b). (e) The Agent shall promptly notify in writing the Borrower and the Banks of the new Borrowing Base. Such redetermination of the Borrowing Base Period. In the event the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to this Section 2.08(d), the Borrower shall deliver written not be in effect until notice of such request is given to the Administrative Agent which shall include: (i) Engineering Report(s) prepared as of a date not more than thirty (30) calendar days prior to the date of such request, and (ii) such other information as Administrative Agent and the Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to the date of such requestBorrower. Likewise, in the event the Lenders exercise their option for a Special Borrowing Base Determination, the Administrative Agent shall give the Borrower notice of the redetermined Borrowing Base which shall state the effective date of the redetermination.HOU04:43581.4

Borrowing Base. (a) The For the period from and including the Closing Date to but excluding the date of the first determination of the Borrowing Base pursuant to the further provisions of this Section 2.07, the initial amount of the Borrowing Base has been set by the Administrative Agent and acknowledged by the Borrower and agreed to by the Lenders to be $90,000,000 (the “Base Amount”). For each and every determination or redetermination of the Borrowing Base under this Agreement, the Borrowing Base shall be determined or redetermined based only on the oil and gas reserves attributable to the Oil and Gas Properties of the Borrower and its Subsidiaries located in accordance the State of Alabama. (b) Promptly after January 1 of each calendar year, commencing January 1, 2008, and in any event prior to March 31 of each calendar year (commencing March 31, 2008), the Borrower shall furnish to the Administrative Agent a Reserve Report in form and substance reasonably satisfactory to the Administrative Agent, prepared by an Approved Engineer, which Reserve Report shall be dated as of January 1 of such calendar year together with additional data concerning pricing, hedging, quantities and purchasers of production, and other information and engineering and geological data as the Administrative Agent may reasonably request. Within fifteen (15) days after receipt of such Reserve Report and all such information, the Administrative Agent shall make an initial determination of the new Borrowing Base (the “Proposed Borrowing Base”), which for purposes of this Section 2.08(b2.07(b) is the semi-annual determination described in Section 2.07(c), and upon such initial determination shall promptly notify the Lenders in writing of its initial determination of the Proposed Borrowing Base. Such initial determinations made by the Administrative Agent with shall be so made by the concurrence Administrative Agent in the exercise of the Lenders and is subject to redetermination its sole discretion in accordance with Section 2.08(d). Upon any redetermination the Administrative Agent’s customary practices and standards for oil and gas lending as they exist at the particular time, and may include a consideration of the value of the Oil and Gas Properties that are subject to legal, valid and enforceable mortgage liens held by the Administrative Agent for the ratable benefit of the Lenders. In no event shall the Proposed Borrowing Base exceed the Aggregate Maximum Credit Amount of the Lenders. The Required Lenders shall approve or reject the Administrative Agent’s initial determinations of the Proposed Borrowing Base by written notice to the Administrative Agent within fifteen (15) days of the Administrative Agent’s notification of its initial determinations; provided, however, that failure by any Lender to confirm in writing, the Administrative Agent’s determination of the Proposed Borrowing Base shall be deemed an approval of the Proposed Borrowing Base. If the Required Lenders fail to approve any such determination of the Proposed Borrowing Base made by the Administrative Agent hereunder in such fifteen (15) day period, then the Administrative Agent shall poll the Lenders to ascertain the highest Proposed Borrowing Base then acceptable to the Required Lenders for purposes of this Section 2.07(b) and, subject to the last sentence of this Section 2.07(b), such amounts shall become the new Borrowing Base, effective on the date specified in this Section 2.07. Until such redetermination approval or deemed approval, the Borrowing Base in effect before the Proposed Borrowing Base shall remain in effect. Upon agreement by the Administrative Agent and the Required Lenders of the new Borrowing Base, the Administrative Agent shall, by written notice to the Borrower and the Lenders, designate the new Borrowing Base available to the Borrower. Such designation shall be effective as of the Business Day specified in such written notice (or, if no effective date is specified in such written notice, the next Business Day following delivery of such written notice), and such new Borrowing Base shall remain in effect until the next Redetermination Date. So long as any of the Commitments are in effect determination or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date until the first redetermination or reduction pursuant to Section 2.08, the amount of the Borrowing Base in accordance with this Agreement. Anything herein contained to the contrary notwithstanding, any determination or redetermination of the Borrowing Base resulting in any increase of the Borrowing Base in effect immediately prior to such determination or redetermination shall be $155,000,000 (require the “Initial Borrowing Base”) which amount is comprised approval of all the Lenders in their sole discretion in accordance with their respective customary practices and standards for oil and gas lending as they exist at the particular time, and may include a consideration of the value of the Oil and Gas Properties Collateral Value. (b) Upon receipt of the reports required by Section 8.07 that are subject to legal, valid and such other reports, data and supplemental information as may from time to time be reasonably requested enforceable mortgage liens held by the Administrative Agent for the ratable benefit of the Lenders. (the “Engineering Reports”)c) In addition, within ninety (90) days after each June 30, commencing June 30, 2008, the Borrower shall furnish to the Administrative Agent a Reserve Report in form and substance satisfactory to the Administrative Agent, prepared by the Borrower’s petroleum engineers or on behalf of Borrower by petroleum engineers under the Management Services Agreement, which report shall be dated as of July 1 of such calendar year together with additional data concerning pricing, hedging, quantities and purchasers of production, and other information and engineering and geological data as the Administrative Agent may reasonably request. Within fifteen (15) days after receipt of such Reserve Report and all such information, the Administrative Agent shall make an initial determination of a Proposed Borrowing Base, and upon such initial determination shall promptly notify the Lenders in writing of initial determination of the Proposed Borrowing Base. Such initial determination shall be made in the same manner and be subject to the same approvals as prescribed above with respect to the annual review, and likewise the Administrative Agent shall communicate the results of such initial determinations to the Lenders. The Required Lenders shall approve such determinations of the Proposed Borrowing Base by written notice to the Administrative Agent within fifteen (15) days of the giving of notice of such determinations by the Administrative Agent to such Lenders; provided, however, that failure by any Lender to confirm in writing the Administrative Agent’s determination of the Proposed Borrowing Base shall be redetermined for each deemed an approval of the Proposed Borrowing Base. If the Required Lenders fail to approve any such determination of the Proposed Borrowing Base Period made by the Administrative Agent hereunder in such fifteen (15) day period, then the Administrative Agent shall poll the Lenders to ascertain the highest Proposed Borrowing Base then acceptable to the Required Lenders for purposes of this Section 2.07(c) and, subject to the last sentence of this Section 2.07(c), such amounts shall become the new Borrowing Base, effective on the date specified in this Section 2.07. Upon agreement by the Administrative Agent and each such redetermination the Required Lenders of the amount of credit to be made available to the Borrower hereunder, the Administrative Agent shall, by written notice to the Borrower and the Lenders, designate the new Borrowing Base available to the Borrower. Such designation shall be effective as of the date set forth Business Day specified in such written notice (or, if no effective date is specified in such written notice, the next Business Day following delivery of redetermination delivered by the Administrative Agent to Borrower (the “Scheduled Redetermination Date”). The Oil such written notice) and Gas Properties Collateral Value shall be determined based upon the loan collateral value assigned to the Mortgaged Properties. The such new Borrowing Base shall be equal remain in effect until the next determination or redetermination of the Borrowing Base in accordance with this Agreement. Anything herein contained to the sum contrary notwithstanding, any determination or redetermination of the Borrowing Base resulting in any increase of the Borrowing Base in effect immediately prior to such determination or redetermination shall require the approval of all the Lenders in their sole discretion in accordance with their respective customary practices and standards for oil and gas lending as they exist at the particular time, and may include a consideration of the value of the Oil and Gas Properties Collateral Value and such other credit factors (including without limitation the assets, liabilities, cash flow, business, properties, prospects, management and ownership of the Borrower and its Subsidiaries) which the Lenders deem significant. The Lenders’ determination of the Borrowing Base shall be in their sole discretion and shall not be that are subject to review or challenge. Upon each redetermination of the Borrowing Baselegal, the Administrative Agent shall recommend to the Lenders a new Borrowing Base valid and the Lenders in accordance with their customary policies and procedures for extending credit to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement in the event of any increase in the Borrowing Base and by agreement of at least the Majority Lenders in the event of any redetermination to maintain or reduce the Borrowing Base. If a redetermined Borrowing Base is not approved enforceable mortgage liens held by the Administrative Agent and for the applicable Lenders within twenty (20) days ratable benefit of the submission to the Lenders by the Administrative Agent of its recommended Borrowing Base, the Administrative Agent shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within ten (10) days thereafter its proposed Borrowing Base. Promptly following the 10th day after such request, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (or all Lenders in the case of an increase). If the Borrower does not furnish the Engineering Reports by the date required, the Lenders may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwise. (c) The Borrower shall have the right to reduce the amount of the Borrowing Base upon not less than thirty (30) days’ prior written notice to the Administrative Agent (who shall promptly notify the Lenders) of the reduction, which shall specify the effective date thereof and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof, no more than an amount which would cause a Borrowing Base Deficiency) and shall be irrevocable and effective only upon receipt by the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine the Borrowing Base at any subsequent Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either in relation to the Borrowing Base prior or subsequent to any such optional reduction by Borrower. (d) In addition to “Scheduled Redeterminations” pursuant to Section 2.08(b)the foregoing scheduled annual and semi annual determinations of the Borrowing Base, the Borrower Required Lenders shall have the right to redetermine the Borrowing Base at their sole discretion at any time and from time to time but not more often than two (2) times every calendar year. If the Majority Required Lenders may each request one (1) additional shall elect to make a discretionary redetermination of the Borrowing Base during each Borrowing Base Period. In the event the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to the provisions of this Section 2.08(d2.07(d), the Borrower shall within thirty (30) days of receipt of a request therefor from the Administrative Agent, deliver written notice to the Administrative Agent a Reserve Report in form and substance satisfactory to the Administrative Agent, prepared by the Borrower’s petroleum engineers containing information similar to the Reserve Reports delivered pursuant to Section 2.07(c), together with such updated engineering, production, operating and other data as the Administrative Agent, the Issuer or any Lender may reasonably request. The Administrative Agent shall have fifteen (15) days following receipt of such requested information to make an initial redetermination of the Borrowing Base, and the Administrative Agent and the Required Lenders shall approve and designate the new Borrowing Base in accordance with the procedures and standards described in Section 2.07(b). (e) In addition to the foregoing determinations of the Borrowing Base, the Borrower may request a redetermination of the Borrowing Base at any time and from time to time but not more often than two (2) times every calendar year, by delivering a written request to the Administrative Agent, together with (a) an engineering fee in the aggregate amount of $2,500 for the account of the Administrative Agent in immediately available funds, and (b) a Reserve Report in form and substance satisfactory to the Administrative Agent, prepared by the Borrower’s petroleum engineers containing information similar to the Reserve Reports delivered pursuant to Section 2.07(c), together with such other updated engineering, production, operating and other data as the Administrative Agent, the Issuer or any Lender may reasonably request. Each such discretionary redetermination of the Borrowing Base shall be made in the same manner and in accordance with the procedures and standards set forth above by adjusting the Borrowing Base then in effect. The Administrative Agent shall have fifteen (15) days following receipt of such requested information to make an initial redetermination of the Borrowing Base, and the Administrative Agent and the Required Lenders shall approve and designate the new Borrowing Base in accordance with the procedures and standards described in Section 2.07(b). (f) In addition to the Borrower’s right to request a discretionary Borrowing Base redetermination as set forth in Section 2.07(e), the Borrower may request a redetermination of the Borrowing Base at any time and from time to time upon the acquisition by the Borrower of (i) additional Oil and Gas Properties or (ii) a Person that owns Oil and Gas Properties, the purchase price of which shall includerepresent at least 20% of the Borrowing Base then in effect, by delivering a written request to the Administrative Agent, together with (a) an engineering fee in the aggregate amount of $2,500 for the account of the Administrative Agent in immediately available funds, (b) a Reserve Report in form and substance satisfactory to the Administrative Agent with respect to Oil and Gas Properties represented in the existing Borrowing Base, prepared and delivered in accordance with Section 2.07(c), (c) a Reserve Report in form and substance satisfactory to the Administrative Agent, with respect to Oil and Gas Properties acquired since the most recent redetermination of the Borrowing Base, prepared and delivered in accordance with Section 2.07(b), and (d) a most recent draft of the agreements by which the Borrower proposes to acquire such additional Oil and Gas Properties or such Person that owns such Oil and Gas Properties, which drafts shall be supplemented upon execution by true and complete executed copies of the same. Each such redetermination of the Borrowing Base under this Section 2.07(f) shall be made in the same manner and in accordance with the procedures and standards set forth above by adjusting the Borrowing Base then in effect. The Administrative Agent shall have fifteen (15) days following receipt of such requested information to make an initial redetermination of the Borrowing Base, and the Administrative Agent and the Required Lenders shall approve and designate the new Borrowing Base in accordance with the procedures and standards described in Section 2.07(b). (g) Notwithstanding anything to the contrary contained herein, upon the consummation of a Material Swap Transaction, the Required Lenders shall have the right to redetermine the Borrowing Base using information available to them, and the redetermined Borrowing Base shall become the new Borrowing Base immediately upon notice by the Administrative Agent to the Borrower, effective and applicable to the Borrower, the Administrative Agent, and each Lender on such date until the next redetermination or modification thereof hereunder (subject to the reduction described in Section 2.07(i)). The Borrowing Base will also be redetermined or adjusted in accordance with the provisions of Section 8.12(c) or Section 9.12(d). (h) With the delivery of each Reserve Report, the Borrower shall provide to the Administrative Agent a certificate from a Responsible Officer certifying that, to the best of such Responsible Officer’s knowledge and in all material respects: (i) Engineering Report(sthe information contained in each such Reserve Report and any other information delivered in connection therewith is true and correct, (ii) prepared the Borrower or the Guarantors owns good and defensible title to the Oil and Gas Properties evaluated in each such Reserve Report and such Properties are free of all Liens except for Liens permitted by Section 9.03, (iii) except as set forth on an exhibit to the certificate, on a net basis there are no gas imbalances, take or pay or other prepayments in excess of a date not more than thirty the volume specified in Section 7.20 with respect to their Oil and Gas Properties evaluated in such Reserve Report that would require the Borrower or any of its Subsidiaries to deliver Hydrocarbons either generally or produced from such Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor, (30iv) calendar days prior to none of their Oil and Gas Properties have been sold since the date of the last Borrowing Base determination except as set forth on an exhibit to the certificate, which certificate shall list all of its Oil and Gas Properties sold and in such requestdetail as reasonably required by the Administrative Agent, (v) attached to the certificate is a list of all marketing agreements entered into subsequent to the later of the date hereof or the most recently delivered Reserve Report that the Borrower could reasonably be expected to have been obligated to list on Schedule 7.20 had such agreement been in effect on the date hereof, (vi) attached thereto is a schedule of the Oil and Gas Properties evaluated by such Reserve Report that are Mortgaged Properties and demonstrating the percentage of the present value that such Mortgaged Properties represent, (vii) the outstanding amount of the Debt of the Borrower or any of its Subsidiaries permitted to be incurred pursuant to Section 9.02(e), and (iiviii) such other information as the amount of the Non-Alabama Total Revolving Credit Exposure. (i) Notwithstanding anything herein the contrary, in the event that the Borrower does not furnish any required Reserve Report within ten (10) days of date the required herein, the Administrative Agent and the Required Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to may nonetheless designate the date of such request. Likewise, in the event the Lenders exercise their option for a Special Borrowing Base Determination, from time to time thereafter until the Administrative Agent receives such Reserve Report, whereupon the Administrative Agent and the Required Lenders or all Lenders, as applicable, shall give the Borrower notice of the redetermined designate a new Borrowing Base which shall state in accordance with the effective date general procedures outlined in Section 2.07(b). (j) Notwithstanding the requirements of the redetermination.Se

Borrowing Base. (a) The Borrowing Base shall be determined in accordance with Section 2.08(b) by the Administrative Agent with the concurrence Determination of the Lenders and is subject to redetermination in accordance with Section 2.08(d). Upon any redetermination of the Borrowing Base, such redetermination shall remain in effect until the next Redetermination Date. So long as any of the Commitments are in effect or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date until date -------------------------------------- hereof to the date of the first redetermination or reduction pursuant to Section 2.08, the amount of the Borrowing Base shall be $155,000,000 (the “Initial Borrowing Base”) which amount is comprised of the Oil and Gas Properties Collateral Value. (b) Upon receipt of the reports required by Section 8.07 and such other reports, data and supplemental information as may from time to time be reasonably requested by the Administrative Agent (the “Engineering Reports”), the Borrowing Base shall be redetermined for each Borrowing Base Period and each such redetermination shall be effective as of the date set forth in such notice of redetermination delivered by the Administrative Agent to Borrower (the “Scheduled Redetermination Date”). The Oil and Gas Properties Collateral Value shall be determined based upon the loan collateral value assigned to the Mortgaged Properties. The Borrowing Base shall be equal to the sum of the Oil and Gas Properties Collateral Value and such other credit factors (including without limitation the assets, liabilities, cash flow, business, properties, prospects, management and ownership of the Borrower and its Subsidiaries) which the Lenders deem significant. The Lenders’ determination of the Borrowing Base shall pursuant to the further provisions of this Section 2.16, the initial amount of the Borrowing ------------ Base will be in their sole discretion an amount set by the Agent on the Closing Date and shall not be subject to review or challengeacknowledged by the Borrower (the "Initial Borrowing Base"). Upon each redetermination ------------------------ (b) Annual Scheduled Determinations of the Borrowing Base. Promptly after ------------------------------------------------------- July 1 of each calendar year (commencing July 1, 2002), and in any event prior to September 1 of each calendar year, the Administrative Agent Borrower shall recommend furnish to the Lenders Agent a report in form and substance satisfactory to the Agent, prepared by an Approved Engineer, which report shall be dated as of July 1 of such calendar year and shall set forth the oil and gas reserves attributable to the Borrowing Base Properties, and a projection of the rate of production and net operating income with respect thereto, as of such date, together with additional data concerning pricing, hedging, operating costs, quantities and purchasers of production, and other information and engineering and geological data as the Agent may reasonably request. Within forty-five (45) days after receipt of such report and information and its review and approval by Agent, the Agent shall, by written notice to the Borrower, designate the new Borrowing Base and the Lenders in accordance with their customary policies and procedures for extending credit to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement in the event of any increase in the Borrowing Base and by agreement of at least the Majority Lenders in the event of any redetermination to maintain or reduce the Borrowing Base. If a redetermined Borrowing Base is not approved by the Administrative Agent and the applicable Lenders within twenty (20) days of the submission available to the Lenders by the Administrative Agent of its recommended Borrowing Base, the Administrative Agent shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within ten (10) days thereafter its proposed Borrowing Base. Promptly following the 10th day after such request, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (or all Lenders in the case of an increase). If the Borrower does not furnish the Engineering Reports by the date required, the Lenders may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwiseBorrower. (c) The Borrower shall have the right to reduce the amount Semi-Annual Scheduled Determination of the Borrowing Base upon not Base. In addition, --------------------------------------------------------- promptly after January 1 of each calendar year (commencing January 1, 2003), and in any event prior to March 1st of each calendar year, the Borrower shall furnish to Agent a report in form and substance satisfactory to the Agent, prepared (i) prior to the occurrence of an Event of Default or in the event Excess Availability is greater than $25,000,000.00, by the Borrower's petroleum engineers and (ii) after the occurrence of an Event of Default or in the event Excess Availability is less than thirty $25,000,000.00 by an Approved Engineer, and, in either case, reviewed and approved by Agent, which report shall be dated as of January 1 of such calendar year and shall set forth the oil and gas reserves attributable to the Borrowing Base Properties, and a projection of the rate of production and net operating income with respect thereto, as of such date, together with additional data concerning pricing, hedging, operating costs, quantities and purchasers of production, and other information and engineering and geological data as the Agent may reasonably request. Within forty-five (3045) days’ prior days after receipt of such report and information by Agent and its review and approval by Agent, the Agent shall, by written notice to the Administrative Agent (who shall promptly notify Borrower, designate the Lenders) of the reduction, which shall specify the effective date thereof and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof, no more than an amount which would cause a new Borrowing Base Deficiency) and shall be irrevocable and effective only upon receipt by the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine the Borrowing Base at any subsequent Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either in relation available to the Borrowing Base prior or subsequent to any such optional reduction by Borrower. (d) In addition to “Scheduled Redeterminations” pursuant to Section 2.08(b), the Borrower and the Majority Lenders may each request one (1) additional redetermination of the Borrowing Base during each Borrowing Base Period. In the event the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to this Section 2.08(d), the Borrower shall deliver written notice of such request to the Administrative Agent which shall include: (i) Engineering Report(s) prepared as of a date not more than thirty (30) calendar days prior to the date of such request, and (ii) such other information as Administrative Agent and the Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to the date of such request. Likewise, in the event the Lenders exercise their option for a Special Borrowing Base Determination, the Administrative Agent shall give the Borrower notice of the redetermined Borrowing Base which shall state the effective date of the redetermination.

Borrowing Base. (a) The For the period from and including the Closing Date to but excluding the date of the first determination of the Borrowing Base pursuant to the further provisions of this Section 2.07, the initial amount of the Borrowing Base has been set by the Administrative Agent and acknowledged by the Borrower and agreed to by the Lenders to be $205,000,000 (the “Base Amount”). For each and every determination or redetermination of the Borrowing Base under this Agreement, the Borrowing Base shall be determined or redetermined based on the oil and gas reserves attributable to the Oil and Gas Properties of the Borrower and its Subsidiaries. (b) Promptly after January 1 of each calendar year, commencing January 1, 2010, and in accordance any event prior to March 31 of each calendar year (commencing March 31, 2010), the Borrower shall furnish to the Administrative Agent a Reserve Report in form and substance reasonably satisfactory to the Administrative Agent, prepared by an Approved Engineer, which Reserve Report shall be dated as of January 1 of such calendar year together with additional data concerning pricing, hedging, quantities and purchasers of production, and other information and engineering and geological data as the Administrative Agent may reasonably request. Within fifteen (15) days after receipt of such Reserve Report and all such information, the Administrative Agent shall make an initial determination of the new Borrowing Base (the “Proposed Borrowing Base”), which for purposes of this Section 2.08(b2.07(b) is the semi-annual determination described in Section 2.07(c), and upon such initial determination shall promptly notify the Lenders in writing of its initial determination of the Proposed Borrowing Base. Such initial determinations made by the Administrative Agent with shall be so made by the concurrence Administrative Agent in the exercise of the Lenders and is subject to redetermination its sole discretion in accordance with Section 2.08(d). Upon any redetermination the Administrative Agent’s customary practices and standards for oil and gas lending as they exist at the particular time, and may include a consideration of the value of the Oil and Gas Properties that are subject to legal, valid and enforceable mortgage liens held by the Administrative Agent for the ratable benefit of the Lenders. In no event shall the Proposed Borrowing Base exceed the Aggregate Maximum Credit Amount of the Lenders. The Required Lenders shall approve or reject the Administrative Agent’s initial determinations of the Proposed Borrowing Base by written notice to the Administrative Agent within fifteen (15) days of the Administrative Agent’s notification of its initial determinations; provided, however, that failure by any Lender to confirm in writing the Administrative Agent’s determination of the Proposed Borrowing Base shall be deemed an approval of the Proposed Borrowing Base. If the Required Lenders fail to approve any such determination of the Proposed Borrowing Base made by the Administrative Agent hereunder in such fifteen (15) day period, then the Administrative Agent shall poll the Lenders to ascertain the highest Proposed Borrowing Base then acceptable to the Required Lenders for purposes of this Section 2.07(b) and, subject to the last sentence of this Section 2.07(b), such amounts shall become the new Borrowing Base, effective on the date specified in this Section 2.07. Until such redetermination approval or deemed approval, the Borrowing Base in effect before the Proposed Borrowing Base shall remain in effect. Upon agreement by the Administrative Agent and the Required Lenders of the new Borrowing Base, the Administrative Agent shall, by written notice to the Borrower and the Lenders, designate the new Borrowing Base available to the Borrower. Such designation shall be effective as of the Business Day specified in such written notice (or, if no effective date is specified in such written notice, the next Business Day following delivery of such written notice), and such new Borrowing Base shall remain in effect until the next Redetermination Date. So long as any of the Commitments are in effect determination or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date until the first redetermination or reduction pursuant to Section 2.08, the amount of the Borrowing Base in accordance with this Agreement. Anything herein contained to the contrary notwithstanding, any determination or redetermination of the Borrowing Base resulting in any increase of the Borrowing Base in effect immediately prior to such determination or redetermination shall be $155,000,000 (require the “Initial Borrowing Base”) which amount is comprised approval of all the Lenders in their sole discretion in accordance with their respective customary practices and standards for oil and gas lending as they exist at the particular time, and may include a consideration of the value of the Oil and Gas Properties Collateral Value. (b) Upon receipt of the reports required by Section 8.07 that are subject to legal, valid and such other reports, data and supplemental information as may from time to time be reasonably requested enforceable mortgage liens held by the Administrative Agent for the ratable benefit of the Lenders. (the “Engineering Reports”)c) In addition, within ninety (90) days after each June 30, commencing June 30, 2010, the Borrower shall furnish to the Administrative Agent a Reserve Report in form and substance satisfactory to the Administrative Agent prepared by the Borrower’s petroleum engineers, which report shall be dated as of July 1 of such calendar year together with additional data concerning pricing, hedging, quantities and purchasers of production, and other information and engineering and geological data as the Administrative Agent may reasonably request. Within fifteen (15) days after receipt of such Reserve Report and all such information, the Administrative Agent shall make an initial determination of a Proposed Borrowing Base, and upon such initial determination shall promptly notify the Lenders in writing of initial determination of the Proposed Borrowing Base. Such initial determination shall be made in the same manner and be subject to the same approvals as prescribed above with respect to the annual review, and likewise the Administrative Agent shall communicate the results of such initial determinations to the Lenders. The Required Lenders shall approve such determinations of the Proposed Borrowing Base by written notice to the Administrative Agent within fifteen (15) days of the giving of notice of such determinations by the Administrative Agent to such Lenders; provided, however, that failure by any Lender to confirm in writing the Administrative Agent’s determination of the Proposed Borrowing Base shall be redetermined for each deemed an approval of the Proposed Borrowing Base. If the Required Lenders fail to approve any such determination of the Proposed Borrowing Base Period made by the Administrative Agent hereunder in such fifteen (15) day period, then the Administrative Agent shall poll the Lenders to ascertain the highest Proposed Borrowing Base then acceptable to the Required Lenders for purposes of this Section 2.07(c) and, subject to the last sentence of this Section 2.07(c), such amounts shall become the new Borrowing Base, effective on the date specified in this Section 2.07. Upon agreement by the Administrative Agent and each such redetermination the Required Lenders of the amount of credit to be made available to the Borrower hereunder, the Administrative Agent shall, by written notice to the Borrower and the Lenders, designate the new Borrowing Base available to the Borrower. Such designation shall be effective as of the date set forth Business Day specified in such written notice (or, if no effective date is specified in such written notice, the next Business Day following delivery of redetermination delivered by the Administrative Agent to Borrower (the “Scheduled Redetermination Date”). The Oil such written notice) and Gas Properties Collateral Value shall be determined based upon the loan collateral value assigned to the Mortgaged Properties. The such new Borrowing Base shall be equal remain in effect until the next determination or redetermination of the Borrowing Base in accordance with this Agreement. Anything herein contained to the sum contrary notwithstanding, any determination or redetermination of the Borrowing Base resulting in any increase of the Borrowing Base in effect immediately prior to such determination or redetermination shall require the approval of all the Lenders in their sole discretion in accordance with their respective customary practices and standards for oil and gas lending as they exist at the particular time, and may include a consideration of the value of the Oil and Gas Properties Collateral Value and such other credit factors (including without limitation the assets, liabilities, cash flow, business, properties, prospects, management and ownership of the Borrower and its Subsidiaries) which the Lenders deem significant. The Lenders’ determination of the Borrowing Base shall be in their sole discretion and shall not be that are subject to review or challenge. Upon each redetermination of the Borrowing Baselegal, the Administrative Agent shall recommend to the Lenders a new Borrowing Base valid and the Lenders in accordance with their customary policies and procedures for extending credit to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement in the event of any increase in the Borrowing Base and by agreement of at least the Majority Lenders in the event of any redetermination to maintain or reduce the Borrowing Base. If a redetermined Borrowing Base is not approved enforceable mortgage liens held by the Administrative Agent and for the applicable Lenders within twenty (20) days ratable benefit of the submission to the Lenders by the Administrative Agent of its recommended Borrowing Base, the Administrative Agent shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within ten (10) days thereafter its proposed Borrowing Base. Promptly following the 10th day after such request, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (or all Lenders in the case of an increase). If the Borrower does not furnish the Engineering Reports by the date required, the Lenders may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwise. (c) The Borrower shall have the right to reduce the amount of the Borrowing Base upon not less than thirty (30) days’ prior written notice to the Administrative Agent (who shall promptly notify the Lenders) of the reduction, which shall specify the effective date thereof and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof, no more than an amount which would cause a Borrowing Base Deficiency) and shall be irrevocable and effective only upon receipt by the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine the Borrowing Base at any subsequent Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either in relation to the Borrowing Base prior or subsequent to any such optional reduction by Borrower. (d) In addition to “Scheduled Redeterminations” pursuant to Section 2.08(b)the foregoing scheduled annual and semi annual determinations of the Borrowing Base, the Borrower Required Lenders shall have the right to redetermine the Borrowing Base at their sole discretion at any time and from time to time but not more often than two (2) times every calendar year. If the Majority Required Lenders may each request one (1) additional shall elect to make a discretionary redetermination of the Borrowing Base during each Borrowing Base Period. In the event the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to the provisions of this Section 2.08(d2.07(d), the Borrower shall within thirty (30) days of receipt of a request therefor from the Administrative Agent, deliver written notice to the Administrative Agent a Reserve Report in form and substance satisfactory to the Administrative Agent, prepared by the Borrower’s petroleum engineers containing information similar to the Reserve Reports delivered pursuant to Section 2.07(c), together with such updated engineering, production, operating and other data as the Administrative Agent, the Issuer or any Lender may reasonably request. The Administrative Agent shall have fifteen (15) days following receipt of such requested information to make an initial redetermination of the Borrowing Base, and the Administrative Agent and the Required Lenders shall approve and designate the new Borrowing Base in accordance with the procedures and standards described in Section 2.07(b). (e) In addition to the foregoing determinations of the Borrowing Base, the Borrower may request a redetermination of the Borrowing Base at any time and from time to time but not more often than two (2) times every calendar year, by delivering a written request to the Administrative Agent, together with (a) an engineering fee in the aggregate amount of $2,500 for the account of the Administrative Agent which shall include: (i) Engineering Report(s) prepared as of a date not more than thirty (30) calendar days prior to the date of such requestin immediately available funds, and (iib) a Reserve Report in form and substance satisfactory to the Administrative Agent, prepared by the Borrower’s petroleum engineers containing information similar to the Reserve Reports delivered pursuant to Section 2.07(c), together with such other information updated engineering, production, operating and other data as the Administrative Agent and Agent, the Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to the date of such Issuer or any Lender may reasonably request. Likewise, Each such discretionary redetermination of the Borrowing Base shall be made in the event same manner and in accordance with the Lenders exercise their option for a Special procedures and standards set forth above by adjusting the Borrowing Base Determination, the then in effect. The Administrative Agent shall give the Borrower notice of the redetermined Borrowing Base which shall state the effective date of the redetermination.have fifteen (15) days

Borrowing Base. (ai) The initial Borrowing Base in effect as of the Closing Date is as set forth in Section 2.2(a)(i) above. (ii) Subject to Section 2.2(e) below, the Borrowing Base shall be re-determined not less than every six (6) months (based upon the most recent Reserve Report) pursuant to the following provisions of this Section 2.2(b). However, if Borrower changes its fiscal year, then the next re-determination date shall be no later than seventy-five (75) days following Borrower’s new fiscal year end date. On or before each February 15 and August 15, until the Maturity Date, the Borrower shall furnish to Administrative Agent a Reserve Report (with “effective dates” of January 31 and July 31 respectively), which shall set forth, effective as of the effective dates, as applicable, the Proved Reserves attributable to the Properties. Each Reserve Report shall be a complete report prepared by Engineers or, if agreed in writing by Administrative Agent, by Borrower’s in-house engineers, relating to the Proved Reserves attributable to the Properties in accordance with Section 2.08(b5.6. For the avoidance of doubt, within thirty (30) by the days following receipt of each such Reserve Report, Administrative Agent with the concurrence shall, in its sole discretion, make a determination of the Lenders and Borrowing Base which shall become effective upon written notification from Administrative Agent to Borrower until the effective date of the next redetermination as set forth in this Section 2.2(b). (iii) Administrative Agent is subject not required to redetermination consider any Proved Reserves attributable to the Properties for inclusion in the Borrowing Base if, in Administrative Agent’s reasonable opinion, Administrative Agent, on behalf of Lenders, does not have a first priority security interest or mortgage Lien on such Properties. In no event will the Borrowing Base exceed Twenty-Five Million Dollars ($25,000,000). (iv) Subject to Section 2.2(e) below, Administrative Agent shall determine the Borrowing Base in accordance with Section 2.08(d)its customary lending practices based on the maximum Revolving Loan amount that may be supported by the Properties and Borrower acknowledge, for purposes of this Agreement, such determination by Administrative Agent as being the maximum Revolving Loan amount that may be supported by the Properties. Upon In making any redetermination of the Borrowing Base, such redetermination shall remain in effect until the next Redetermination Date. So long as any of the Commitments are in effect or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date until the first redetermination or reduction pursuant to Section 2.08, the amount of the Borrowing Base shall be $155,000,000 (the “Initial Borrowing Base”) which amount is comprised of the Oil and Gas Properties Collateral Value. (b) Upon receipt of the reports required by Section 8.07 and such other reports, data and supplemental information as may from time to time be reasonably requested by the Administrative Agent (shall apply consistently the “Engineering Reports”), the Borrowing Base shall be redetermined for each Borrowing Base Period parameters and each such redetermination shall be effective as of the date set forth in such notice of redetermination delivered by the Administrative Agent to Borrower (the “Scheduled Redetermination Date”). The Oil and Gas Properties Collateral Value shall be determined based upon the loan collateral value assigned to the Mortgaged Properties. The Borrowing Base shall be equal to the sum of the Oil and Gas Properties Collateral Value and such other credit factors then generally being utilized by Administrative Agent for Borrowing Base redeterminations for Lender’s similarly situated borrowers. The Borrower and Administrative Agent acknowledge that (including without limitation A) due to the assets, liabilities, cash flow, business, properties, prospects, management and ownership uncertainties of the Borrower Hydrocarbon extraction process, the Properties are not subject to evaluation with a high degree of accuracy and its Subsidiariesare subject to potential rapid deterioration in value, and (B) which for this reason and the Lenders deem significant. The Lenders’ difficulties and expenses involved in liquidating and collecting against the Properties, Administrative Agent’s determination of the Borrowing Base shall maximum Revolving Loan amount that may be in their sole discretion and shall not be subject to review or challenge. Upon each redetermination of the Borrowing Base, the Administrative Agent shall recommend to the Lenders a new Borrowing Base and the Lenders in accordance with their customary policies and procedures for extending credit to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement in the event of any increase in the Borrowing Base and by agreement of at least the Majority Lenders in the event of any redetermination to maintain or reduce the Borrowing Base. If a redetermined Borrowing Base is not approved supported by the Properties contains an equity cushion, which equity cushion is acknowledged by Borrower as essential for the adequate protection of Administrative Agent and the applicable Lenders within twenty (20) days of the submission to the Lenders by the Administrative Agent of its recommended Borrowing Base, the Administrative Agent shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within ten (10) days thereafter its proposed Borrowing Base. Promptly following the 10th day after such request, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (or all Lenders in the case of an increase). If the Borrower does not furnish the Engineering Reports by the date required, the Lenders may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwiseLenders. (c) The Borrower shall have the right to reduce the amount of the Borrowing Base upon not less than thirty (30) days’ prior written notice to the Administrative Agent (who shall promptly notify the Lenders) of the reduction, which shall specify the effective date thereof and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof, no more than an amount which would cause a Borrowing Base Deficiency) and shall be irrevocable and effective only upon receipt by the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine the Borrowing Base at any subsequent Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either in relation to the Borrowing Base prior or subsequent to any such optional reduction by Borrower. (d) In addition to “Scheduled Redeterminations” pursuant to Section 2.08(b), the Borrower and the Majority Lenders may each request one (1) additional redetermination of the Borrowing Base during each Borrowing Base Period. In the event the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to this Section 2.08(d), the Borrower shall deliver written notice of such request to the Administrative Agent which shall include: (i) Engineering Report(s) prepared as of a date not more than thirty (30) calendar days prior to the date of such request, and (ii) such other information as Administrative Agent and the Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to the date of such request. Likewise, in the event the Lenders exercise their option for a Special Borrowing Base Determination, the Administrative Agent shall give the Borrower notice of the redetermined Borrowing Base which shall state the effective date of the redetermination.

Borrowing Base. (a) The Borrowing Base shall be determined in accordance with Section 2.08(b) by the Administrative Agent with the concurrence of the Lenders and is subject to redetermination in accordance with Section 2.08(d). Upon any redetermination of the Borrowing Base, such redetermination shall remain in effect until the next successive Redetermination Date. So long as any of the Commitments are in effect or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date until the first redetermination or reduction pursuant to Section 2.082.08(d) or adjusted pursuant to Section 8.08(c), the amount of the Borrowing Base shall be $155,000,000 (the “Initial Borrowing Base”) which amount is comprised of the Oil and Gas Properties Collateral Value50,000,000. (b) Upon receipt of the reports required by Section 8.07 and such other reports, data and supplemental information as may from time to time be reasonably requested by the Administrative Agent (the “"Engineering Reports”"), the Borrowing Base shall be redetermined for each Borrowing Base Period and each such redetermination shall be effective as of the date set forth in such notice of redetermination delivered by the Administrative Agent to Borrower (the “Scheduled Redetermination Date”). The Oil and Gas Properties Collateral Value shall be determined based upon the loan collateral value assigned to the Mortgaged Properties. The Borrowing Base shall be equal to the sum of the Oil and Gas Properties Collateral Value and such other credit factors (including without limitation the assets, liabilities, cash flow, business, properties, prospects, management and ownership of the Borrower and its Subsidiaries) which the Lenders deem significant. The Lenders’ determination of the Borrowing Base shall be in their sole discretion and shall not be subject to review or challenge. Upon each redetermination of the Borrowing Base, the Administrative Agent will redetermine the Borrowing Base. Such redetermination will be in accordance with its normal and customary procedures for evaluating oil and gas reserves and other related assets as such exist at that particular time. The Administrative Agent, in its sole discretion, may make adjustments to the rates, volumes and prices and other assumptions set forth therein in accordance with its normal and customary procedures for evaluating oil and gas reserves and other related assets as such exist at that particular time. The Administrative Agent shall recommend propose to the Lenders a new Borrowing Base within 14 days following receipt by the Administrative Agent and the Lenders of the Engineering Reports in accordance a timely and complete manner. After having received notice of such proposal by the Administrative Agent, the Lenders shall have 14 days to agree or disagree with such proposal. Any Lenders that have not communicated their customary policies and procedures for extending credit approval or disapproval at the end of the 14 days shall be deemed to oil and gas reserve-based customers shall establish have approved the Administrative Agent's proposal of the redetermined Borrowing Base by unanimous agreement in Base. To the event extent that within such 14 days the Administrative Agent has not received the requisite number of any approvals from the Lenders of the redetermined Borrowing Base, the requisite number of Lenders shall, within a reasonable period of time, agree on a new Borrowing Base. Any increase in the Borrowing Base and by agreement of at least the Majority Lenders in the event of any redetermination to maintain or reduce the Borrowing Base. If a redetermined Borrowing Base is not must be approved by the Administrative Agent and the applicable Lenders within twenty (20) days all of the submission to Lenders and any decrease in or reaffirmation of the Lenders existing Borrowing Base must be approved by the Administrative Agent of its recommended Borrowing Base, the Administrative Agent shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within ten (10) days thereafter its proposed Borrowing Base. Promptly following the 10th day after such request, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (or all Lenders in the case of an increase). If the Borrower does not furnish the Engineering Reports by the date required, the Lenders may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwiseLenders. (c) The Borrower Administrative Agent may exclude any Oil and Gas Property or portion of production therefrom or any income from any other Property from the Borrowing Base, at any time, because title information is not reasonably satisfactory, such Property is not Collateral or such Property is not assignable. (d) So long as any of the Commitments are in effect and until payment in full of all Loans hereunder, on or around the first Business Day of December, 2000 and thereafter on or around the first Business Day of each April and October, commencing April, 2001 (each being a "Scheduled Redetermination Date"), the Lenders shall have the right to reduce redetermine the amount of the Borrowing Base upon not less than thirty in accordance with Section 2.08(b). In addition, (30i) days’ prior written notice the Borrower may initiate a redetermination of the Borrowing Base at any other time as it so elects by specifying in writing to the Administrative Agent (who shall will promptly notify the Lenders) of the reduction, date by which shall specify the effective date thereof and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof, no more than an amount which would cause a Borrowing Base Deficiency) and shall be irrevocable and effective only upon receipt by the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine the Borrowing Base at any subsequent Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either in relation Borrower will furnish to the Borrowing Base prior or subsequent to any such optional reduction by Borrower. (d) In addition to “Scheduled Redeterminations” pursuant to Section 2.08(b), the Borrower and the Majority Lenders may each request one (1) additional redetermination of the Borrowing Base during each Borrowing Base Period. In the event the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to this Section 2.08(d), the Borrower shall deliver written notice of such request to the Administrative Agent which shall include: (i) Engineering Report(s) prepared as of a date not more than thirty (30) calendar days prior to the date of such request, and (ii) such other information as Administrative Agent and the Lenders shall request prepared as of a date not more than thirty (30Reserve Report in accordance with Section 8.07(b) calendar days prior to and the date of by which such request. Likewiseredetermination is requested to occur; provided, in the event the Lenders exercise their option for a Special Borrowing Base Determinationhowever, the Administrative Agent shall give that the Borrower notice of may initiate only one such unscheduled redetermination between Scheduled Redetermination Dates during the redetermined Borrowing Base which shall state first twelve (12) months after the effective date of Closing Date and thereafter, may initiate only one such unscheduled redetermination per year and (ii) the redetermination.Majority Lenders may initiate a

Borrowing Base. (a) The For the period from and including the Closing Date to but excluding the date of the first determination of the Borrowing Base pursuant to the further provisions of this Section 2.07, the initial amount of the Borrowing Base has been set by the Administrative Agent and acknowledged by the Borrower and agreed to by the Lenders to be $150,000,000 (the “Base Amount”). For each and every determination or redetermination of the Borrowing Base under this Agreement, the Borrowing Base shall be determined or redetermined based on the oil and gas reserves attributable to the Oil and Gas Properties of the Borrower and its Subsidiaries not located in accordance the State of Alabama. (b) Promptly after January 1 of each calendar year, commencing January 1, 2008, and in any event prior to March 31 of each calendar year (commencing March 31, 2008), the Borrower shall furnish to the Administrative Agent a Reserve Report in form and substance reasonably satisfactory to the Administrative Agent, prepared by an Approved Engineer, which Reserve Report shall be dated as of January 1 of such calendar year together with additional data concerning pricing, hedging, quantities and purchasers of production, and other information and engineering and geological data as the Administrative Agent may reasonably request. Within fifteen (15) days after receipt of such Reserve Report and all such information, the Administrative Agent shall make an initial determination of the new Borrowing Base (the “Proposed Borrowing Base”), which for purposes of this Section 2.08(b2.07(b) is the semi-annual determination described in Section 2.07(c), and upon such initial determination shall promptly notify the Lenders in writing of its initial determination of the Proposed Borrowing Base. Such initial determinations made by the Administrative Agent with shall be so made by the concurrence Administrative Agent in the exercise of the Lenders and is subject to redetermination its sole discretion in accordance with Section 2.08(d). Upon any redetermination the Administrative Agent’s customary practices and standards for oil and gas lending as they exist at the particular time, and may include a consideration of the value of the Oil and Gas Properties that are subject to legal, valid and enforceable mortgage liens held by the Administrative Agent for the ratable benefit of the Lenders. In no event shall the Proposed Borrowing Base exceed the Aggregate Maximum Credit Amount of the Lenders. The Required Lenders shall approve or reject the Administrative Agent’s initial determinations of the Proposed Borrowing Base by written notice to the Administrative Agent within fifteen (15) days of the Administrative Agent’s notification of its initial determinations; provided, however, that failure by any Lender to confirm in writing the Administrative Agent’s determination of the Proposed Borrowing Base shall be deemed an approval of the Proposed Borrowing Base. If the Required Lenders fail to approve any such determination of the Proposed Borrowing Base made by the Administrative Agent hereunder in such fifteen (15) day period, then the Administrative Agent shall poll the Lenders to ascertain the highest Proposed Borrowing Base then acceptable to the Required Lenders for purposes of this Section 2.07(b) and, subject to the last sentence of this Section 2.07(b), such amounts shall become the new Borrowing Base, effective on the date specified in this Section 2.07. Until such redetermination approval or deemed approval, the Borrowing Base in effect before the Proposed Borrowing Base shall remain in effect. Upon agreement by the Administrative Agent and the Required Lenders of the new Borrowing Base, the Administrative Agent shall, by written notice to the Borrower and the Lenders, designate the new Borrowing Base available to the Borrower. Such designation shall be effective as of the Business Day specified in such written notice (or, if no effective date is specified in such written notice, the next Business Day following delivery of such written notice), and such new Borrowing Base shall remain in effect until the next Redetermination Date. So long as any of the Commitments are in effect determination or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date until the first redetermination or reduction pursuant to Section 2.08, the amount of the Borrowing Base in accordance with this Agreement. Anything herein contained to the contrary notwithstanding, any determination or redetermination of the Borrowing Base resulting in any increase of the Borrowing Base in effect immediately prior to such determination or redetermination shall be $155,000,000 (require the “Initial Borrowing Base”) which amount is comprised approval of all the Lenders in their sole discretion in accordance with their respective customary practices and standards for oil and gas lending as they exist at the particular time, and may include a consideration of the value of the Oil and Gas Properties Collateral Value. (b) Upon receipt of the reports required by Section 8.07 that are subject to legal, valid and such other reports, data and supplemental information as may from time to time be reasonably requested enforceable mortgage liens held by the Administrative Agent for the ratable benefit of the Lenders. (the “Engineering Reports”)c) In addition, within ninety (90) days after each June 30, commencing June 30, 2008, the Borrower shall furnish to the Administrative Agent a Reserve Report in form and substance satisfactory to the Administrative Agent, prepared by the Borrower’s petroleum engineers or on behalf of Borrower by petroleum engineers under the Management Services Agreement, which report shall be dated as of July 1 of such calendar year together with additional data concerning pricing, hedging, quantities and purchasers of production, and other information and engineering and geological data as the Administrative Agent may reasonably request. Within fifteen (15) days after receipt of such Reserve Report and all such information, the Administrative Agent shall make an initial determination of a Proposed Borrowing Base, and upon such initial determination shall promptly notify the Lenders in writing of initial determination of the Proposed Borrowing Base. Such initial determination shall be made in the same manner and be subject to the same approvals as prescribed above with respect to the annual review, and likewise the Administrative Agent shall communicate the results of such initial determinations to the Lenders. The Required Lenders shall approve such determinations of the Proposed Borrowing Base by written notice to the Administrative Agent within fifteen (15) days of the giving of notice of such determinations by the Administrative Agent to such Lenders; provided, however, that failure by any Lender to confirm in writing the Administrative Agent’s determination of the Proposed Borrowing Base shall be redetermined for each deemed an approval of the Proposed Borrowing Base. If the Required Lenders fail to approve any such determination of the Proposed Borrowing Base Period made by the Administrative Agent hereunder in such fifteen (15) day period, then the Administrative Agent shall poll the Lenders to ascertain the highest Proposed Borrowing Base then acceptable to the Required Lenders for purposes of this Section 2.07(c) and, subject to the last sentence of this Section 2.07(c), such amounts shall become the new Borrowing Base, effective on the date specified in this Section 2.07. Upon agreement by the Administrative Agent and each such redetermination the Required Lenders of the amount of credit to be made available to the Borrower hereunder, the Administrative Agent shall, by written notice to the Borrower and the Lenders, designate the new Borrowing Base available to the Borrower. Such designation shall be effective as of the date set forth Business Day specified in such written notice (or, if no effective date is specified in such written notice, the next Business Day following delivery of redetermination delivered by the Administrative Agent to Borrower (the “Scheduled Redetermination Date”). The Oil such written notice) and Gas Properties Collateral Value shall be determined based upon the loan collateral value assigned to the Mortgaged Properties. The such new Borrowing Base shall be equal remain in effect until the next determination or redetermination of the Borrowing Base in accordance with this Agreement. Anything herein contained to the sum contrary notwithstanding, any determination or redetermination of the Borrowing Base resulting in any increase of the Borrowing Base in effect immediately prior to such determination or redetermination shall require the approval of all the Lenders in their sole discretion in accordance with their respective customary practices and standards for oil and gas lending as they exist at the particular time, and may include a consideration of the value of the Oil and Gas Properties Collateral Value and such other credit factors (including without limitation the assets, liabilities, cash flow, business, properties, prospects, management and ownership of the Borrower and its Subsidiaries) which the Lenders deem significant. The Lenders’ determination of the Borrowing Base shall be in their sole discretion and shall not be that are subject to review or challenge. Upon each redetermination of the Borrowing Baselegal, the Administrative Agent shall recommend to the Lenders a new Borrowing Base valid and the Lenders in accordance with their customary policies and procedures for extending credit to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement in the event of any increase in the Borrowing Base and by agreement of at least the Majority Lenders in the event of any redetermination to maintain or reduce the Borrowing Base. If a redetermined Borrowing Base is not approved enforceable mortgage liens held by the Administrative Agent and for the applicable Lenders within twenty (20) days ratable benefit of the submission to the Lenders by the Administrative Agent of its recommended Borrowing Base, the Administrative Agent shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within ten (10) days thereafter its proposed Borrowing Base. Promptly following the 10th day after such request, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (or all Lenders in the case of an increase). If the Borrower does not furnish the Engineering Reports by the date required, the Lenders may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwise. (c) The Borrower shall have the right to reduce the amount of the Borrowing Base upon not less than thirty (30) days’ prior written notice to the Administrative Agent (who shall promptly notify the Lenders) of the reduction, which shall specify the effective date thereof and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof, no more than an amount which would cause a Borrowing Base Deficiency) and shall be irrevocable and effective only upon receipt by the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine the Borrowing Base at any subsequent Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either in relation to the Borrowing Base prior or subsequent to any such optional reduction by Borrower. (d) In addition to “Scheduled Redeterminations” pursuant to Section 2.08(b)the foregoing scheduled annual and semi annual determinations of the Borrowing Base, the Borrower Required Lenders shall have the right to redetermine the Borrowing Base at their sole discretion at any time and from time to time but not more often than two (2) times every calendar year. If the Majority Required Lenders may each request one (1) additional shall elect to make a discretionary redetermination of the Borrowing Base during each Borrowing Base Period. In the event the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to the provisions of this Section 2.08(d2.07(d), the Borrower shall within thirty (30) days of receipt of a request therefor from the Administrative Agent, deliver written notice to the Administrative Agent a Reserve Report in form and substance satisfactory to the Administrative Agent, prepared by the Borrower’s petroleum engineers containing information similar to the Reserve Reports delivered pursuant to Section 2.07(c), together with such updated engineering, production, operating and other data as the Administrative Agent, the Issuer or any Lender may reasonably request. The Administrative Agent shall have fifteen (15) days following receipt of such requested information to make an initial redetermination of the Borrowing Base, and the Administrative Agent and the Required Lenders shall approve and designate the new Borrowing Base in accordance with the procedures and standards described in Section 2.07(b). (e) In addition to the foregoing determinations of the Borrowing Base, the Borrower may request a redetermination of the Borrowing Base at any time and from time to time but not more often than two (2) times every calendar year, by delivering a written request to the Administrative Agent, together with (a) an engineering fee in the aggregate amount of $2,500 for the account of the Administrative Agent in immediately available funds, and (b) a Reserve Report in form and substance satisfactory to the Administrative Agent, prepared by the Borrower’s petroleum engineers containing information similar to the Reserve Reports delivered pursuant to Section 2.07(c), together with such other updated engineering, production, operating and other data as the Administrative Agent, the Issuer or any Lender may reasonably request. Each such discretionary redetermination of the Borrowing Base shall be made in the same manner and in accordance with the procedures and standards set forth above by adjusting the Borrowing Base then in effect. The Administrative Agent shall have fifteen (15) days following receipt of such requested information to make an initial redetermination of the Borrowing Base, and the Administrative Agent and the Required Lenders shall approve and designate the new Borrowing Base in accordance with the procedures and standards described in Section 2.07(b). (f) In addition to the Borrower’s right to request a discretionary Borrowing Base redetermination as set forth in Section 2.07(e), the Borrower may request a redetermination of the Borrowing Base at any time and from time to time upon the acquisition by the Borrower of (i) additional Oil and Gas Properties or (ii) a Person that owns Oil and Gas Properties, the purchase price of which shall includerepresent at least 20% of the Borrowing Base then in effect, by delivering a written request to the Administrative Agent, together with (a) an engineering fee in the aggregate amount of $2,500 for the account of the Administrative Agent in immediately available funds, (b) a Reserve Report in form and substance satisfactory to the Administrative Agent with respect to Oil and Gas Properties represented in the existing Borrowing Base, prepared and delivered in accordance with Section 2.07(c), (c) a Reserve Report in form and substance satisfactory to the Administrative Agent, with respect to Oil and Gas Properties acquired since the most recent redetermination of the Borrowing Base, prepared and delivered in accordance with Section 2.07(b), and (d) a most recent draft of the agreements by which the Borrower proposes to acquire such additional Oil and Gas Properties or such Person that owns such Oil and Gas Properties, which drafts shall be supplemented upon execution by true and complete executed copies of the same. Each such redetermination of the Borrowing Base under this Section 2.07(f) shall be made in the same manner and in accordance with the procedures and standards set forth above by adjusting the Borrowing Base then in effect. The Administrative Agent shall have fifteen (15) days following receipt of such requested information to make an initial redetermination of the Borrowing Base, and the Administrative Agent and the Required Lenders shall approve and designate the new Borrowing Base in accordance with the procedures and standards described in Section 2.07(b). The Borrower, Administrative Agent and Lenders agree that the Borrowing Base may be increased by an amount up to $25,000,000 above the Base Amount, as requested by Borrower, upon Administrative Agent’s receipt of executed copies of the purchase agreement and conveyances pursuant to which Borrower or its Subsidiaries acquired the Oil and Gas Properties of CoLa Resources LLC included in the reserve report received by Administrative Agent dated , 2008; provided that such increase in the Borrowing Base is subject to the requirements of Section 8.12 and 8.13. (g) Notwithstanding anything to the contrary contained herein, upon the consummation of a Material Swap Transaction, the Required Lenders shall have the right to redetermine the Borrowing Base using information available to them, and the redetermined Borrowing Base shall become the new Borrowing Base immediately upon notice by the Administrative Agent to the Borrower, effective and applicable to the Borrower, the Administrative Agent, and each Lender on such date until the next redetermination or modification thereof hereunder (subject to the reduction described in Section 2.07(i)). The Borrowing Base will also be redetermined or adjusted in accordance with the provisions of Section 8.12(c) or Section 9.12(d). (h) With the delivery of each Reserve Report, the Borrower shall provide to the Administrative Agent a certificate from a Responsible Officer certifying that, to the best of such Responsible Officer’s knowledge and in all material respects: (i) Engineering Report(sthe information contained in each such Reserve Report and any other information delivered in connection therewith is true and correct, (ii) prepared the Borrower or the Guarantors owns good and defensible title to the Oil and Gas Properties evaluated in each such Reserve Report and such Properties are free of all Liens except for Liens permitted by Section 9.03, (iii) except as set forth on an exhibit to the certificate, on a net basis there are no gas imbalances, take or pay or other prepayments in excess of a date not more than thirty the volume specified in Section 7.20 with respect to their Oil and Gas Properties evaluated in such Reserve Report that would require the Borrower or any of its Subsidiaries to deliver Hydrocarbons either generally or produced from such Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor, (30iv) calendar days prior to none of their Oil and Gas Properties have been sold since the date of the last Borrowing Base determination except as set forth on an exhibit to the certificate, which certificate shall list all of its Oil and Gas Properties sold and in such requestdetail as reasonably required by the Administrative Agent, (v) attached to the certificate is a list of all marketing agreements entered into subsequent to the later of the date hereof or the most recently delivered Reserve Report that the Borrower could reasonably be expected to have been obligated to list on Schedule 7.20 had such agreement been in effect on the date hereof, (vi) attached thereto is a schedule of the Oil and Gas Properties evaluated by such Reserve Report that are Mortgaged Properties and demonstrating the percentage of the present value that such Mortgaged Properties represent, (vii) the outstanding amount of the Debt of the Borrower or any of its Subsidiaries permitted to be incurred pursuant to Section 9.02(e), and (iiviii) such other information as Administrative Agent and the Lenders shall request prepared as of a date not more than thirty Alabama Total Revolving Credit Exposure. (30i) calendar days prior to Notwithstanding anything herein the date of such request. Likewisecontrary, in the event the Lenders exercise their option for a Special Borrowing Base Determination, the Administrative Agent shall give the Borrower notice of the redetermined Borrowing Base which shall state the effective date of the redetermination.eve

Borrowing Base. (a) The Borrowing Base shall be determined in accordance with Section 2.08(b) by the Administrative Agent with the concurrence of the Lenders and is subject to redetermination in accordance with Section 2.08(d). Upon any redetermination of the Borrowing Base, such redetermination shall remain in effect until the next Redetermination Date. So long as any of the Commitments are in effect or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date until to the first redetermination or reduction pursuant to Section 2.08, the amount of Determination Date the Borrowing Base shall be $155,000,000 95,000,000 (the “Initial Borrowing Base”) which amount is comprised of the Oil and Gas Properties Collateral Value). (b) Upon receipt By April 1 and October 1 of the each year, beginning April 1, 2019, Borrower shall furnish to each Lender all information, reports required by Section 8.07 and such other reports, data and supplemental information as may from time to time be that Administrative Agent has then reasonably requested by the Administrative Agent concerning Restricted Persons’ businesses and properties (the “Engineering Reports”), the Borrowing Base shall be redetermined for each Borrowing Base Period and each such redetermination shall be effective as of the date set forth in such notice of redetermination delivered by the Administrative Agent to Borrower (the “Scheduled Redetermination Date”). The including their Oil and Gas Properties Collateral Value and interests and the reserves and production relating thereto), together with, 45 CREDIT AGREEMENT as applicable, the Engineering Report as of January 1 of such year described in Section 6.2(e) or as of July 1 of such year described in Section 6.2(f). Within 15 days after receiving such information, reports and data, or as promptly thereafter as practicable, Administrative Agent shall determine the amount of a proposed Borrowing Base; and Administrative Agent shall then notify each Lender of such proposed Borrowing Base. Within 15 days after the Lenders’ receipt of such proposed Borrowing Base, or as promptly thereafter as practicable, Required Lenders shall agree on an amount for the Borrowing Base (provided that all Non-Defaulting Lenders must agree on any increase in the Borrowing Base), which Borrowing Base need not be determined equal to such proposed Borrowing Base. Required Lenders shall determine the amount of the Borrowing Base based upon the loan collateral value assigned that they in their discretion assign to the Mortgaged Properties. The Borrowing Base shall be equal to the sum discounted net present value of the various Oil and Gas Properties of Restricted Persons included in the Collateral Value at the time in question and based upon such other credit factors (including without limitation the assets, liabilities, cash flow, hedged and unhedged exposure to price, foreign exchange rate, and interest rate changes, business, properties, prospects, management and ownership of the Borrower and its SubsidiariesRestricted Persons) which the Lenders as they in their discretion deem significant. The Lenders’ determination If, in the case of any proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect, at the end of such 15 days, any Lender has not communicated its approval or disapproval in writing to Administrative Agent, such silence shall be in their sole discretion and shall not deemed to be subject to review or challenge. Upon each redetermination an approval of the proposed Borrowing Base. If, in the Administrative Agent shall recommend to the Lenders a new case of any proposed Borrowing Base and that would increase the Borrowing Base then in effect, at the end of such 15 days, any Lender has not communicated its approval or disapproval in writing to Administrative Agent, such silence shall be deemed to be a disapproval of the proposed Borrowing Base. If Required Lenders (or all Non-Defaulting Lenders in accordance with their customary policies and procedures for extending credit to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement in the event case of any an increase in the Borrowing Base and by agreement of at least the Majority Lenders in the event of any redetermination to maintain or reduce Base) have not approved the Borrowing Base. If a redetermined Borrowing Base is not approved by within the Administrative Agent and the applicable Lenders within twenty (20) days 15 day period after their receipt of the submission to the Lenders by the Administrative Agent of its recommended such proposed Borrowing Base, the Administrative Agent shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit poll Lenders to the Administrative Agent within ten (10) days thereafter its proposed Borrowing Base. Promptly following the 10th day after such request, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating ascertain the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Required Lenders (or all Non-Defaulting Lenders in the case of an increase)increase in the Borrowing Base) and such amount shall then become the Borrowing Base. Administrative Agent shall by notice to Borrower designate the amount so determined by the Lenders as the new Borrowing Base available to Borrower hereunder, which designation shall take effect immediately on the date such notice is sent and shall remain in effect until but not including the next Determination Date. IT IS EXPRESSLY UNDERSTOOD THAT LENDERS AND ADMINISTRATIVE AGENT HAVE NO OBLIGATION TO AGREE UPON OR DESIGNATE THE BORROWING BASE AT ANY PARTICULAR AMOUNT, WHETHER IN RELATION TO THE AGGREGATE MAXIMUM CREDIT AMOUNT OR OTHERWISE, AND THAT LENDERS’ COMMITMENTS TO ADVANCE FUNDS HEREUNDER ARE DETERMINED BY REFERENCE TO THE BORROWING BASE FROM TIME TO TIME IN EFFECT, WHICH BORROWING BASE SHALL BE USED FOR CALCULATING COMMITMENT FEES UNDER SECTION 2.5 AND, TO THE EXTENT PERMITTED BY LAW AND REGULATORY AUTHORITIES, FOR THE PURPOSES OF CAPITAL ADEQUACY DETERMINATION AND REIMBURSEMENTS UNDER SECTION 3.2. (c) If the Borrower does not furnish the Engineering Reports all such information, reports and data by the date requiredspecified in the first sentence of subsection (b) of this section, the Lenders Administrative Agent may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwise. (c) The Borrower shall have the right to reduce the amount of that Required Lenders determine and may redetermine the Borrowing Base upon not less than thirty from time to time thereafter (30provided that all Non-Defaulting Lenders must agree to any increase in the Borrowing Base) days’ prior written notice to the Administrative Agent until each Lender receives all such information, reports and data, whereupon Required Lenders (who or all Non-Defaulting Lenders, as applicable) shall promptly notify the Lenders) of the reduction, which shall specify the effective date thereof and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof, no more than an amount which would cause designate a new Borrowing Base Deficiency) and shall be irrevocable and effective only upon receipt by the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine the Borrowing Base at any subsequent Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either in relation to the Borrowing Base prior or subsequent to any such optional reduction by Borroweras described above. (d) In addition to “the Scheduled Redeterminations” pursuant to Section 2.08(b)Determinations of the Borrowing Base, the Borrower and Administrative Agent (or Administrative Agent at the Majority Lenders request of Required Lenders) may each request one additional determinations (1“Special Determinations”) additional redetermination of the Borrowing Base during each Borrowing Base Periodfrom time to time; provided, that no such Person may request more than 1 Special Determination between Scheduled Determinations. In the event Administrative Agent (or Administrative Agent at the request of Required Lenders) requests such a Special Determination, Administrative Agent shall promptly deliver notice of such request to Borrower or Majority and Borrower shall, within 30 days following the date of such request, deliver to Lenders an Engineering Report prepared by Staff Engineers (or, at Borrower’s option, prepared by Independent Engineers) as of the last day of the calendar month preceding the date of such request and such other information that Administrative Agent shall have reasonably requested. In the event Borrower requests a “Special Borrowing Base Determination” pursuant to this Section 2.08(d), the Borrower shall deliver written notice of such request to the Administrative Agent which shall include: Lenders that includes (i) an Engineering Report(sReport prepared by Staff Engineers (or, at Borrower’s option, prepared by Independent Engineers), (ii) prepared the amount of the Borrowing Base requested by Borrower and to become effective on the Determination Date applicable to such Special Determination and (iii) such other information reasonably requested by Administrative Agent. Upon receipt of such Engineering Report and other information, Administrative Agent shall, subject to approval of Required Lenders, or all Non-Defaulting Lenders in the event of a proposed increase in the Borrowing Base, redetermine the Borrowing Base in accordance with the procedure set forth in subsection (b) of this section, which Borrowing Base shall become effective on the Determination Date applicable to such Special Determination. (e) Notwithstanding anything to the contrary contained herein, each time Borrower issues any Permitted Unsecured Indebtedness (excluding, for the avoidance of doubt, any Permitted Refinancing), on the date of issuance thereof the Borrowing Base then in effect shall each be reduced automatically by an amount equal to the product of (x) 0.25 and (y) the stated principal amount of the Permitted Unsecured Indebtedness so issued, and if such reduced Borrowing Base would be less than the Aggregate Elected Commitment Amount then in effect, the Aggregate Elected Commitment Amount shall be reduced automatically to an amount equal to such reduced Borrowing Base. The Borrowing Base and, if applicable, the Aggregate Elected Commitment Amount as so reduced shall become the new Borrowing Base and Aggregate Elected Commitment Amount, respectively, immediately upon such date of issuance and shall remain in effect until the next date as of which the Borrowing Base is redetermined pursuant to this Agreement. For purposes of this subsection (e), if any such Permitted Unsecured Indebtedness is issued at a date not more discount or otherwise sold for less than thirty “par”, the reduction shall be calculated based upon the stated principal amount without reference to such discount. (30f) calendar days prior Upon the consummation of a Triggering Disposition, the Borrowing Base shall automatically be decreased by an amount equal to the aggregate Borrowing Base value (as determined by Administrative Agent and approved by the Required Lenders in each case in their discretion and consistent with the standards set forth in Section 2.8(b)) of the Oil and Gas Properties directly or indirectly sold or Disposed of and Hedging Contracts directly or indirectly terminated or monetized, as applicable. Such decrease in the Borrowing Base shall occur automatically upon the consummation of such Triggering Disposition on the date of such requestTriggering Disposition, and (ii) such other information as Administrative Agent and upon the approval of the Required Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to the date amount of such requestreduction as set forth above. Likewise, Upon any such reduction in the event the Lenders exercise their option for a Special Borrowing Base DeterminationBase, the Administrative Agent shall give promptly by notice to Borrower designate such amount as the Borrower notice of the redetermined new Borrowing Base which shall state the effective date of the redeterminationavailable to Borrower hereunder.

Borrowing Base. (a) For the period from and including the Closing Date to but excluding the date of the first determination of the Borrowing Base pursuant to the further provisions of this Section 2.07, the initial amount of the Borrowing Base has been set by the Administrative Agent and acknowledged by the Borrower and agreed to by the Lenders to be $100,000,000. (b) Promptly after January 1 of each calendar year, commencing January 1, 2007, and in any event prior to March 31 of each calendar year (commencing March 31, 2007), the Borrower shall furnish to the Administrative Agent a Reserve Report in form and substance reasonably satisfactory to the Administrative Agent, prepared by an Approved Engineer, which Reserve Report shall be dated as of January 1 of such calendar year together with additional data concerning pricing, hedging, quantities and purchasers of production, and other information and engineering and geological data as the Administrative Agent may reasonably request. Within fifteen (15) days after receipt of all such Reserve Report and information, the Administrative Agent shall make an initial determination of the new Borrowing Base (the “Proposed Borrowing Base”), which for purposes of this Section 2.07(b) is the semi-annual determination described in Section 2.07(c), and upon such initial determination shall promptly notify the Lenders in writing of its initial determination of the Proposed Borrowing Base. Such initial determinations made by the Administrative Agent shall be so made by the Administrative Agent in the exercise of its sole discretion in accordance with the Administrative Agent’s customary practices and standards for oil and gas lending as they exist at the particular time. In no event shall the Proposed Borrowing Base exceed the aggregate Loan Commitments of the Lenders. The Required Lenders shall approve or reject the Administrative Agent’s initial determinations of the Proposed Borrowing Base by written notice to the Administrative Agent within fifteen (15) days of the Administrative Agent’s notification of its initial determinations; provided, however that failure by any Lender to confirm in writing, the Administrative Agent’s determination of the Proposed Borrowing Base shall be determined in accordance with Section 2.08(b) and shall be deemed an approval of the Proposed Borrowing Base. If the Required Lenders fail to approve any such determination of the Proposed Borrowing Base made by the Administrative Agent with hereunder in such fifteen (15) day period, then the concurrence of Administrative Agent shall poll the Lenders and is to ascertain the highest Proposed Borrowing Base then acceptable to the Required Lenders for purposes of this Section 2.07(b) and, subject to redetermination in accordance with the last sentence of this Section 2.08(d2.07(b). Upon any redetermination of , such amounts shall become the new Borrowing Base, effective on the date specified in this Section 2.07. Until such redetermination approval or deemed approval, the Borrowing Base in effect before the Proposed Borrowing Base shall remain in effect. Upon agreement by the Administrative Agent and the Required Lenders of the new Borrowing Base, the Administrative Agent shall, by written notice to the Borrower and the Lenders, designate the new Borrowing Base available to the Borrower. Such designation shall be effective as of the Business Day specified in such written notice (or, if no effective date is specified in such written notice, the next Business Day following delivery of such written notice) and such new Borrowing Base shall remain in effect until the next Redetermination Date. So long as any of the Commitments are in effect determination or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date until the first redetermination or reduction pursuant to Section 2.08, the amount of the Borrowing Base shall be $155,000,000 (in accordance with this Agreement. Anything herein contained to the “Initial Borrowing Base”) which amount is comprised contrary notwithstanding, any determination or redetermination of the Oil Borrowing Base resulting in any increase of the Borrowing Base in effect immediately prior to such determination or redetermination shall require the approval of all the Lenders in their sole discretion in accordance with their respective customary practices and Gas Properties Collateral Valuestandards for oil and gas lending as they exist at the particular time. (bc) Upon In addition, within ninety (90) days after each June 30, commencing June 30, 2007, the Borrower shall furnish to the Administrative Agent a Reserve Report in form and substance satisfactory to the Administrative Agent, prepared by the Borrower’s petroleum engineers or on behalf of Borrower by petroleum engineers under the Management Services Agreement, which report shall be dated as of July 1 of such calendar year together with additional data concerning pricing, hedging, quantities and purchasers of production, and other information and engineering and geological data as the Administrative Agent may reasonably request. Within fifteen (15) days after receipt of all such Reserve Report and information, the reports required Administrative Agent shall make an initial determination of a Proposed Borrowing Base, and upon such initial determination shall promptly notify the Lenders in writing of initial determination of the Proposed Borrowing Base. Such initial determination shall be made in the same manner and be subject to the same approvals as prescribed above with respect to the annual review, and likewise the Administrative Agent shall communicate the results of such initial determinations to the Lenders. The Required Lenders shall approve such determinations of the Proposed Borrowing Base by Section 8.07 and written notice to the Administrative Agent within fifteen (15) days of the giving of notice of such other reports, data and supplemental information as may from time to time be reasonably requested determinations by the Administrative Agent (to such Lenders; provided, however that failure by any Lender to confirm in writing the “Engineering Reports”), Administrative Agent’s determination of the Proposed Borrowing Base shall be, and shall be redetermined for each deemed, an approval of the Proposed Borrowing Base. If the Required Lenders fail to approve any such determination of the Proposed Borrowing Base Period made by the Administrative Agent hereunder in such fifteen (15) day period, then the Administrative Agent shall poll the Lenders to ascertain the highest Proposed Borrowing Base then acceptable to the Required Lenders for purposes of this Section 2.07(c) and, subject to the last sentence of this Section 2.07(c), such amounts shall become the new Borrowing Base, effective on the date specified in this Section 2.07. Upon agreement by the Administrative Agent and each such redetermination the Required Lenders of the amount of credit to be made available to the Borrower hereunder, the Administrative Agent shall, by written notice to the Borrower and the Lenders, designate the new Borrowing Base available to the Borrower. Such designation shall be effective as of the date set forth Business Day specified in such written notice (or, if no effective date is specified in such written notice, the next Business Day following delivery of redetermination delivered by the Administrative Agent to Borrower (the “Scheduled Redetermination Date”). The Oil such written notice) and Gas Properties Collateral Value shall be determined based upon the loan collateral value assigned to the Mortgaged Properties. The such new Borrowing Base shall be equal to remain in effect until the sum of the Oil and Gas Properties Collateral Value and such other credit factors (including without limitation the assets, liabilities, cash flow, business, properties, prospects, management and ownership of the Borrower and its Subsidiaries) which the Lenders deem significant. The Lenders’ next determination or redetermination of the Borrowing Base in accordance with this Agreement. Anything herein contained to the contrary notwithstanding, any determination or redetermination of the Borrowing Base resulting in any increase of the Borrowing Base in effect immediately prior to such determination or redetermination shall be require the approval of all the Lenders in their sole discretion and shall not be subject to review or challenge. Upon each redetermination of the Borrowing Base, the Administrative Agent shall recommend to the Lenders a new Borrowing Base and the Lenders in accordance with their respective customary policies practices and procedures standards for extending credit to oil and gas reserve-based customers shall establish lending as they exist at the redetermined Borrowing Base by unanimous agreement in the event of any increase in the Borrowing Base and by agreement of at least the Majority Lenders in the event of any redetermination to maintain or reduce the Borrowing Base. If a redetermined Borrowing Base is not approved by the Administrative Agent and the applicable Lenders within twenty (20) days of the submission to the Lenders by the Administrative Agent of its recommended Borrowing Base, the Administrative Agent shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within ten (10) days thereafter its proposed Borrowing Base. Promptly following the 10th day after such request, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (or all Lenders in the case of an increase). If the Borrower does not furnish the Engineering Reports by the date required, the Lenders may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwise. (c) The Borrower shall have the right to reduce the amount of the Borrowing Base upon not less than thirty (30) days’ prior written notice to the Administrative Agent (who shall promptly notify the Lenders) of the reduction, which shall specify the effective date thereof and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof, no more than an amount which would cause a Borrowing Base Deficiency) and shall be irrevocable and effective only upon receipt by the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine the Borrowing Base at any subsequent Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either in relation to the Borrowing Base prior or subsequent to any such optional reduction by Borrowertime. (d) In addition to “Scheduled Redeterminations” pursuant to Section 2.08(b)the foregoing scheduled annual and semi annual determinations of the Borrowing Base, the Borrower Required Lenders shall have the right to redetermine the Borrowing Base at their sole discretion at any time and from time to time but not more often than two (2) times every calendar year. If the Majority Required Lenders may each request one (1) additional shall elect to make a discretionary redetermination of the Borrowing Base during each Borrowing Base Period. In the event the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to the provisions of this Section 2.08(d2.07(d), the Borrower shall within thirty (30) days of receipt of a request therefor from the Administrative Agent, deliver written notice to the Administrative Agent a Reserve Report in form and substance satisfactory to the Administrative Agent, prepared by the Borrower’s petroleum engineers containing information similar to the Reserve Reports delivered pursuant to Section 2.07(c), together with such updated engineering, production, operating and other data as the Administrative Agent, the Issuer or any Lender may reasonably request. The Administrative Agent shall have fifteen (15) days following receipt of such requested information to make an initial redetermination of the Borrowing Base, and the Administrative Agent and the Required Lenders shall approve and designate the new Borrowing Base in accordance with the procedures and standards described in Section 2.07(b). (e) In addition to the foregoing determinations of the Borrowing Base, the Borrower may request a redetermination of the Borrowing Base at any time and from time to time but not more often than two (2) times every calendar year, by delivering a written request to the Administrative Agent, together with (a) an engineering fee in the aggregate amount of $2,500 for the account of the Administrative Agent which in immediately available funds, and (b) a Reserve Report in form and substance satisfactory to the Administrative Agent, prepared by the Borrower’s petroleum engineers containing information similar to the Reserve Reports delivered pursuant to Section 2.07(c), together with such other updated engineering, production, operating and other data as the Administrative Agent, the Issuer or any Lender may reasonably request. Each such discretionary redetermination of the Borrowing Base shall includebe made in the same manner and in accordance with the procedures and standards set forth above by adjusting the Borrowing Base then in effect. The Administrative Agent shall have fifteen (15) days following receipt of such requested information to make an initial redetermination of the Borrowing Base, and the Administrative Agent and the Required Lenders shall approve and designate the new Borrowing Base in accordance with the procedures and standards described in Section 2.07(b). (f) In addition to the Borrower’s right to request a discretionary Borrowing Base redetermination as set forth in Section 2.07(e), the Borrower may request a redetermination of the Borrowing Base at any time and from time to time upon the acquisition by the Borrower of additional Oil and Gas Properties, by delivering a written request to the Administrative Agent, together with (a) an engineering fee in the aggregate amount of $2,500 for the account of the Administrative Agent in immediately available funds, (b) with respect to Oil and Gas Properties represented in the existing Borrowing Base, a Reserve Report in form and substance satisfactory to the Administrative Agent, prepared and delivered in accordance with Section 2.07(c), and (c) with respect to Oil and Gas Properties acquired since the most recent redetermination of the Borrowing Base, a Reserve Report in form and substance satisfactory to the Administrative Agent, prepared and delivered in accordance with Section 2.07(b). Each such redetermination of the Borrowing Base under this Section 2.07(f) shall be made in the same manner and in accordance with the procedures and standards set forth above by adjusting the Borrowing Base then in effect. The Administrative Agent shall have fifteen (15) days following receipt of such requested information to make an initial redetermination of the Borrowing Base, and the Administrative Agent and the Required Lenders shall approve and designate the new Borrowing Base in accordance with the procedures and standards described in Section 2.07(b). (g) Notwithstanding anything to the contrary contained herein, upon the termination of the Gas Purchase Contract or the consummation of a Material Swap Transaction, the Required Lenders shall have the right to redetermine the Borrowing Base using information available to them, and the redetermined Borrowing Base shall become the new Borrowing Base immediately upon notice by the Administrative Agent to the Borrower, effective and applicable to the Borrower, the Administrative Agent, and each Lender on such date until the next redetermination or modification thereof hereunder (subject to the reduction described in Section 2.07(i)). The Borrowing Base will also be redetermined or adjusted in accordance with the provisions of Section 8.12(c) or Section 9.12(d). (h) With the delivery of each Reserve Report, the Borrower shall provide to the Administrative Agent a certificate from a Responsible Officer certifying that, to the best of such Responsible Officer’s knowledge and in all material respects: (i) Engineering Report(sthe information contained in the Reserve Report and any other information delivered in connection therewith is true and correct, (ii) prepared the Borrower or the Guarantors owns good and defensible title to the Oil and Gas Properties evaluated in such Reserve Report and such Properties are free of all Liens except for Liens permitted by Section 9.03, (iii) except as set forth on an exhibit to the certificate, on a net basis there are no gas imbalances, take or pay or other prepayments in excess of a date not more than thirty the volume specified in Section 7.20 with respect to their Oil and Gas Properties evaluated in such Reserve Report that would require the Borrower or any of its Subsidiaries to deliver Hydrocarbons either generally or produced from such Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor, (30iv) calendar days prior to none of their Oil and Gas Properties have been sold since the date of the last Borrowing Base determination except as set forth on an exhibit to the certificate, which certificate shall list all of its Oil and Gas Properties sold and in such requestdetail as reasonably required by the Administrative Agent, (v) attached to the certificate is a list of all marketing agreements entered into subsequent to the later of the date hereof or the most recently delivered Reserve Report that the Borrower could reasonably be expected to have been obligated to list on Schedule 7.20 had such agreement been in effect on the date hereof and (iivi) attached thereto is a schedule of the Oil and Gas Properties evaluated by such other information as Reserve Report that are Mortgaged Properties and demonstrating the percentage of the present value that such Mortgaged Properties represent. (i) Notwithstanding anything herein the contrary, in the event that the Borrower does not furnish any required Reserve Report within ten (10) days of date the required herein, the Administrative Agent and the Required Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to may nonetheless designate the date of such request. Likewise, in the event the Lenders exercise their option for a Special Borrowing Base Determination, from time to time thereafter until the Administrative Agent receives such Reserve Report, whereupon the Administrative Agent and the Required Lenders or all Lenders, as applicable, shall give the Borrower notice of the redetermined designate a new Borrowing Base which shall state in accordance with the effective date of the redeterminationgeneral procedures outlined in Section 2.07(b).

Borrowing Base. (a) The Borrowing Base shall be determined in accordance with Section 2.08(b) by the Administrative Agent and the Co-Agent with the concurrence of the Majority Lenders and is subject to redetermination in accordance with Section 2.08(d). Upon any redetermination of the Borrowing Base, such redetermination shall remain in effect until the next successive Redetermination Date. So long as any of the Commitments are in effect or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date until the first redetermination or reduction pursuant to Section 2.082.08(d), the amount of the Borrowing Base shall be $155,000,000 (the “Initial Borrowing Base”) which amount is comprised of the Oil and Gas Properties Collateral Value225,000,000. (b) Upon receipt of the reports Reserve Reports required by Section 8.07 and such other reports, data and supplemental information as may from time to time be reasonably requested by the Administrative Agent and the Co-Agent (the “"Engineering Reports”"), the Borrowing Base shall be redetermined for each Borrowing Base Period and each such redetermination shall be effective as of the date set forth in such notice of redetermination delivered by the Administrative Agent to Borrower (the “Scheduled Redetermination Date”). The Oil and Gas Properties Collateral Value shall be determined based upon the loan collateral value assigned to the Mortgaged Properties. The Borrowing Base shall be equal to the sum of the Oil and Gas Properties Collateral Value and such other credit factors (including without limitation the assets, liabilities, cash flow, business, properties, prospects, management and ownership of the Borrower and its Subsidiaries) which the Lenders deem significant. The Lenders’ determination of the Borrowing Base shall be in their sole discretion and shall not be subject to review or challenge. Upon each redetermination of the Borrowing Base, the Administrative Agent and the Co-Agent will redetermine the Borrowing Base. Such redetermination will be in accordance with their normal and customary procedures for evaluating oil and gas reserves and other related assets as such exist at that particular time. The Administrative Agent and the Co-Agent, in their sole discretion, may make adjustments to the rates, volumes and prices and other assumptions set forth therein in accordance with its normal and customary procedures for evaluating oil and gas reserves and other related assets as such exist at that particular time. The Administrative Agent and the Co-Agent shall recommend propose to the Lenders a new Borrowing Base within 30 days following receipt by the Administrative Agent, the Co-Agent and the Lenders of the Engineering Reports in accordance with their customary policies a timely and procedures for extending credit to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement in the event complete manner. After having received notice of any increase in the Borrowing Base and by agreement of at least the Majority Lenders in the event of any redetermination to maintain or reduce the Borrowing Base. If a redetermined Borrowing Base is not approved such proposal by the Administrative Agent and the applicable Co-Agent, the Majority Lenders within twenty (20) shall have 15 days to agree or disagree with such proposal. If at the end of the submission 15 days, the Majority Lenders have not communicated their approval or disapproval, such silence shall be deemed to the Lenders by be an approval and the Administrative Agent of its recommended Agent's and the Co-Agent's proposal shall be the new Borrowing Base. If however, the Administrative Agent shall Majority Lenders notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within ten (10) 15 days thereafter its proposed Borrowing Base. Promptly following the 10th day after such requestof their disapproval, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (or all Lenders in the case shall, within a reasonable period of an increase). If the Borrower does not furnish the Engineering Reports by the date requiredtime, the Lenders may nonetheless determine agree on a new Borrowing Base. It is expressly understood that The Administrative Agent, the Co-Agent and the Majority Lenders shall have no obligation to determine the must approve a new Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwiseBase. (c) The Borrower Administrative Agent and the Co-Agent may exclude any Oil and Gas Property or portion of production therefrom or any income from any other Property from the Borrowing Base, at any time, because title information is not reasonably satisfactory. (d) So long as any of the Commitments are in effect and until payment in full of all Loans hereunder, on or around the first Business Day of each June (being a "Scheduled Redetermination Date"), the Lenders shall have the right to reduce redetermine the amount of the Borrowing Base upon not less than thirty in accordance with Section 2.08(b). In addition, (30i) days’ prior written notice the Majority Lenders may initiate a redetermination of the Borrowing Base at any other time as they so elect by specifying in writing to the Borrower the date on which the Borrower is to furnish, or cause to be furnished, a Reserve Report in accordance with Section 8.07(b) and the date on which such redetermination is to occur; provided, however, that the Majority Lenders may initiate only one such unscheduled redetermination during any consecutive twelve (12) month period, and (ii) the Borrower may, from time to time, initiate a redetermination of the Borrowing Base at any other time as it so elects by specifying in writing to the Administrative Agent (who shall will promptly notify the Lenders) the date on which the Borrower will furnish, or cause to be furnished, a Reserve Report in accordance with Section 8.07(b) and the date on which such redetermination is requested to occur; provided, however, that the Borrower may initiate only one such unscheduled redetermination during any consecutive twelve (12) month period. Any such unscheduled Borrowing Base redeterminations shall be made in accordance with the procedures described in Section 2.08(b). (e) If at any time, and from time to time, the Borrowing Base Utilization exceeds 50%, the Administrative Agent and the Co-Agent may, or upon request of the reductionMajority Lenders shall, which shall specify the effective date thereof and redetermine the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof, no more than an amount which would cause a the Borrowing Base Deficiencyby specifying in writing to the Borrower the date on which the Borrower is to furnish a Reserve Report in accordance with Section 8.07(b) and shall be irrevocable and effective only upon receipt by the date on which such redetermination is to occur provided, however, that the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine the Borrowing Base at any subsequent Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either in relation to the Borrowing Base prior or subsequent to any such optional reduction by Borrower. (d) In addition to “Scheduled Redeterminations” pursuant to Section 2.08(b), the Borrower Co-Agent and the Majority Lenders may each request initiate only one such unscheduled redetermination between Scheduled Redetermination Dates in addition to any redeterminations provided by Section 2.08(d). (1f) additional The Administrative Agent shall promptly notify in writing the Borrower and the Lenders of the new Borrowing Base. Any redetermination of the Borrowing Base during each Borrowing Base Period. In the event the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to this Section 2.08(d), the Borrower shall deliver not be in effect until written notice of such request to is received by the Administrative Agent which shall include: (i) Engineering Report(s) prepared as of a date not more than thirty (30) calendar days prior to the date of such request, and (ii) such other information as Administrative Agent and the Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to the date of such request. Likewise, in the event the Lenders exercise their option for a Special Borrowing Base Determination, the Administrative Agent shall give the Borrower notice of the redetermined Borrowing Base which shall state the effective date of the redeterminationBorrower.

Borrowing Base. (a) The Borrowing Base shall be determined in accordance with Section 2.08(b) by During the Administrative Agent with period from the concurrence Closing Date to the date of the Lenders and is subject to redetermination in accordance with Section 2.08(d). Upon any next redetermination of the Borrowing Base, such redetermination shall remain in effect until Base pursuant to the next Redetermination Date. So long as any provisions of the Commitments are in effect or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Section 2.9 [Borrowing Base. During the period from and after the Closing Date until the first redetermination or reduction pursuant to Section 2.08], the amount of the Borrowing Base shall be $155,000,000 (the “Initial Borrowing Base”) which amount is comprised of the Oil and Gas Properties Collateral Value2,000,000,000. (b) Upon receipt each delivery of a Reserve Report pursuant to Section 8.3.8 [Reserve Reports], together with such engineering and other data from the Borrower as is customarily provided, the Administrative Agent shall, within a reasonable period of time, make a good faith determination of the reports required proposed Borrowing Base, and promptly thereafter the Administrative Agent will propose by Section 8.07 notice in writing to the Lenders such Borrowing Base for acceptance by (i) the Required Borrowing Base Lenders with respect to any reaffirmations or reductions in the Borrowing Base and (ii) the Required Increasing Borrowing Base Lenders with respect to any increases in the Borrowing Base. If such other reportsBorrowing Base, data and supplemental information as may from time to time be reasonably requested proposed by the Administrative Agent (is accepted by the “Engineering Reports”)Applicable Borrowing Base Lenders, the then such accepted Borrowing Base shall be redetermined for each communicated by the Administrative Agent to the Borrower on or about (i) with respect to any June 30 Reserve Report, (x) if the Administrative Agent shall have received the June 30 Reserve Report in a timely and complete manner, the immediately following October 15 and (y) if the Administrative Agent shall not have received the June 30 Reserve Report in a timely and complete manner, then fifteen (15) days after the Administrative Agent has received the complete June 30 Reserve Report from the Borrower and the Administrative Agent has had a reasonable opportunity to determine the proposed Borrowing Base Period or (ii) with respect to any December 31 Reserve Report, (x) if the Administrative Agent shall have received the December 31 Reserve Report in a timely and each complete manner, the immediately following April 15 and (y) if the Administrative Agent shall not have received the December 31 Reserve Report in a timely and complete manner, then fifteen (15) days after the Administrative Agent has received the complete December 31 Reserve Report from the Borrower and the Administrative Agent has had a reasonable opportunity to determine the proposed Borrowing Base (the applicable date in any of the foregoing clauses (i)(x), (i)(y), (ii)(x) or (ii)(y), the “Applicable Date”); provided that if such redetermination proposed Borrowing Base is not approved by the Applicable Borrowing Base Lenders prior to the Applicable Date, then the Applicable Borrowing Base Lenders will establish and agree to a Borrowing Base established using criteria agreed upon by the Applicable Borrowing Base Lenders, and such amount will be communicated to the Borrower, within 30 days following the Applicable Date. Any Lender that shall fail to reject the proposed Borrowing Base within fifteen (15) days of notice of the proposed Borrowing Base shall be deemed to have approved the proposed amount of such Borrowing Base. The new Borrowing Base shall become effective as of the date set forth in such notice of redetermination delivered by that the Borrower receives notification from the Administrative Agent of the new Borrowing Base, and until that time, the old Borrowing Base shall continue to Borrower (the “Scheduled Redetermination Date”)be in effect. The Oil Borrowing Base, as determined and Gas Properties Collateral Value established pursuant to this Section 2.9 [Borrowing Base] shall be determined based subject, at all times, to the redetermination or adjustment of the then effective Borrowing Base as a result of a redetermination of the Borrowing Base pursuant to Section 2.9(c) [Borrowing Base] or a reduction of the Borrowing Base pursuant to Section 2.9(e) [Borrowing Base] or Section 8.1.18(c) [Title Information]. (c) Not more than once in any fiscal year, the Administrative Agent upon the loan collateral value assigned instruction of the Required Borrowing Base Lenders, may request from the Borrower an Alternate Reserve Report for the purpose of redetermining the Borrowing Base, and not more than twice in any fiscal year, the Borrower shall have the right to request a redetermination of the Borrowing Base by sending a written notice to the Mortgaged PropertiesAdministrative Agent of such request along with an Alternate Reserve Report. The In connection with any redetermination of the Borrowing Base related to a delivery of an Alternate Reserve Report, the Administrative Agent shall make a good faith determination, in a reasonably prompt manner, of a new Borrowing Base, and the Administrative Agent shall propose by notice in writing, in a reasonably prompt manner, such new Borrowing Base to the Lenders, and the Applicable Borrowing Base Lenders shall agree to review in a reasonably prompt manner, and (if acceptable) approve a new Borrowing Base, which shall become effective upon receipt by the Borrower of notice of such new Borrowing Base. Any Lender that shall fail to reject the proposed Borrowing Base within fifteen (15) days of notice of the proposed Borrowing Base shall be equal deemed to have approved the sum proposed amount of the Oil and Gas Properties Collateral Value and such other credit factors (including without limitation the assets, liabilities, cash flow, business, properties, prospects, management and ownership of the Borrower and its Subsidiaries) which the Lenders deem significantBorrowing Base. The Lenders’ determination of the Borrowing Base shall be in their sole discretion and shall not be subject to review or challenge. Upon each In connection with any such redetermination of the Borrowing Base, the Borrower shall deliver promptly upon the request of the Administrative Agent shall recommend an Alternate Reserve Report to the Lenders a new Administrative Agent; provided that the Borrower’s failure to deliver such Alternate Reserve Report shall not preclude or impact the making of such redetermination of the Borrowing Base by the Administrative Agent or the approval of such Borrowing Base by the Applicable Borrowing Base Lenders. (d) The Borrowing Base shall represent the good faith determination by the Administrative Agent of the loan value of the Borrowing Base Properties based upon, among other things, information contained in the Reserve Report and the Lenders in accordance with their customary the applicable definitions and provisions herein contained, the Administrative Agent’s standard policies regarding energy lending, industry lending practices, and procedures consideration for extending credit to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement in nature of the event facilities established hereunder. The Borrower acknowledges that the determination of any increase in the Borrowing Base and contains an equity cushion (market value in excess of the value of all Indebtedness of the Loan Parties), which is acknowledged by agreement the Borrower to be essential for the adequate protection of at least the Majority Lenders in the event of any redetermination to maintain or reduce the Borrowing Base. If a redetermined Borrowing Base is not approved by the Administrative Agent and the applicable Lenders within twenty (20) days of the submission to the Lenders by the Administrative Agent of its recommended Borrowing Base, the Administrative Agent shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within ten (10) days thereafter its proposed Borrowing Base. Promptly following the 10th day after such request, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (or all Lenders in the case of an increase). If the Borrower does not furnish the Engineering Reports by the date required, the Lenders may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwiseLenders. (ce) The Borrower shall have Unless otherwise waived in writing by the right to reduce Required Lenders, (i) in the amount event of the Disposition or other early monetization or early termination of one or more Swap Agreements that had been assigned aggregate Borrowing Base Value (since the last redetermination of the Borrowing Base) in excess of 5% of the Borrowing Base upon not less than thirty (30) days’ prior written notice to the Administrative Agent (who shall promptly notify the Lenders) of the reductionthen in effect, which shall specify the effective date thereof and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof, no more than an amount which would cause a Borrowing Base Deficiency) and shall be irrevocable and effective only upon receipt by the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine the Borrowing Base at any subsequent Scheduled Redetermination Date shall be reduced (effective upon such Disposition, monetization or other Special Borrowing Base Determination at any particular amount, either in relation termination) by an amount equal to the Borrowing Base prior Value of such Swap Agreement(s); provided that in determining the 5% threshold, to the extent such Swap Agreement is replaced, in whole or subsequent to any such optional reduction by Borrower. (d) In addition to “Scheduled Redeterminations” in part, in a substantially contemporaneous transaction, with one or more Swap Agreements otherwise permitted under this Agreement and covering Hydrocarbons of the type that were hedged pursuant to Section 2.08(b)such replaced Swap Agreement(s) and with notional volumes, prices, tenors and economic effect during such tenors not less favorable to the Borrower and/or such Restricted Subsidiary than those set forth in such replaced Swap Agreement(s) and the Majority Lenders may each request one (1) additional redetermination of the Borrowing Base during each Borrowing Base Period. In the event without payments by the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to this Section 2.08(d)and/or such Restricted Subsidiary in connection therewith, only the Borrower shall deliver written notice part of such request to the Administrative Agent which Swap Agreement that is not so replaced shall include: (i) Engineering Report(s) prepared as of a date not more than thirty (30) calendar days prior to the date of be counted in such request, 5% and (ii) such other information as Administrative Agent and the Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to the date of such request. Likewise, in the event the Lenders exercise their option for a Special Borrowing Base Determinationshall be reduced upon the circumstances set forth in, the Administrative Agent shall give the Borrower notice and in accordance with, Section 8.2.1(m)(x) [Indebtedness] and Section 8.2.13(f) [Sale of the redetermined Borrowing Base which shall state the effective date of the redeterminationProved Reserves; Pooling].

Borrowing Base. (a) For the period from and including the Closing Date to but excluding the date of the first determination of the Borrowing Base pursuant to the further provisions of this Section 2.07, the initial amount of the Borrowing Base has been set by the Administrative Agent and acknowledged by the Borrower and agreed to by the Lenders to be $75,000,000. (b) Promptly after January 1 of each calendar year, commencing January 1, 2007, and in any event prior to March 31 of each calendar year (commencing March 31, 2007), the Borrower shall furnish to the Administrative Agent a Reserve Report in form and substance reasonably satisfactory to the Administrative Agent, prepared by an Approved Engineer, which Reserve Report shall be dated as of January 1 of such calendar year together with additional data concerning pricing, hedging, quantities and purchasers of production, and other information and engineering and geological data as the Administrative Agent may reasonably request. Within fifteen (15) days after receipt of all such Reserve Report and information, the Administrative Agent shall make an initial determination of the new Borrowing Base (the “Proposed Borrowing Base”), which for purposes of this Section 2.07(b) is the semi-annual determination described in Section 2.07(c), and upon such initial determination shall promptly notify the Lenders in writing of its initial determination of the Proposed Borrowing Base. Such initial determinations made by the Administrative Agent shall be so made by the Administrative Agent in the exercise of its sole discretion in accordance with the Administrative Agent’s customary practices and standards for oil and gas lending as they exist at the particular time, and may include a consideration of the value of the Oil and Gas Properties that are subject to legal, valid and enforceable mortgage liens held by the Administrative Agent for the ratable benefit of the Lenders. In no event shall the Proposed Borrowing Base exceed the aggregate Loan Commitments of the Lenders. The Required Lenders shall approve or reject the Administrative Agent’s initial determinations of the Proposed Borrowing Base by written notice to the Administrative Agent within fifteen (15) days of the Administrative Agent’s notification of its initial determinations; provided, however that failure by any Lender to confirm in writing, the Administrative Agent’s determination of the Proposed Borrowing Base shall be determined in accordance with Section 2.08(b) and shall be deemed an approval of the Proposed Borrowing Base. If the Required Lenders fail to approve any such determination of the Proposed Borrowing Base made by the Administrative Agent with hereunder in such fifteen (15) day period, then the concurrence of Administrative Agent shall poll the Lenders and is to ascertain the highest Proposed Borrowing Base then acceptable to the Required Lenders for purposes of this Section 2.07(b) and, subject to redetermination in accordance with the last sentence of this Section 2.08(d2.07(b). Upon any redetermination of , such amounts shall become the new Borrowing Base, effective on the date specified in this Section 2.07. Until such redetermination approval or deemed approval, the Borrowing Base in effect before the Proposed Borrowing Base shall remain in effect. Upon agreement by the Administrative Agent and the Required Lenders of the new Borrowing Base, the Administrative Agent shall, by written notice to the Borrower and the Lenders, designate the new Borrowing Base available to the Borrower. Such designation shall be effective as of the Business Day specified in such written notice (or, if no effective date is specified in such written notice, the next Business Day following delivery of such written notice) and such new Borrowing Base shall remain in effect until the next Redetermination Date. So long as any of the Commitments are in effect determination or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date until the first redetermination or reduction pursuant to Section 2.08, the amount of the Borrowing Base in accordance with this Agreement. Anything herein contained to the contrary notwithstanding, any determination or redetermination of the Borrowing Base resulting in any increase of the Borrowing Base in effect immediately prior to such determination or redetermination shall be $155,000,000 (require the “Initial Borrowing Base”) which amount is comprised approval of all the Lenders in their sole discretion in accordance with their respective customary practices and standards for oil and gas lending as they exist at the particular time, and may include a consideration of the value of the Oil and Gas Properties Collateral Value. (b) Upon receipt of the reports required by Section 8.07 that are subject to legal, valid and such other reports, data and supplemental information as may from time to time be reasonably requested enforceable mortgage liens held by the Administrative Agent for the ratable benefit of the Lenders. (the “Engineering Reports”)c) In addition, within ninety (90) days after each June 30, commencing June 30, 2007, the Borrower shall furnish to the Administrative Agent a Reserve Report in form and substance satisfactory to the Administrative Agent, prepared by the Borrower’s petroleum engineers or on behalf of Borrower by petroleum engineers under the Management Services Agreement, which report shall be dated as of July 1 of such calendar year together with additional data concerning pricing, hedging, quantities and purchasers of production, and other information and engineering and geological data as the Administrative Agent may reasonably request. Within fifteen (15) days after receipt of all such Reserve Report and information, the Administrative Agent shall make an initial determination of a Proposed Borrowing Base, and upon such initial determination shall promptly notify the Lenders in writing of initial determination of the Proposed Borrowing Base. Such initial determination shall be made in the same manner and be subject to the same approvals as prescribed above with respect to the annual review, and likewise the Administrative Agent shall communicate the results of such initial determinations to the Lenders. The Required Lenders shall approve such determinations of the Proposed Borrowing Base by written notice to the Administrative Agent within fifteen (15) days of the giving of notice of such determinations by the Administrative Agent to such Lenders; provided, however that failure by any Lender to confirm in writing the Administrative Agent’s determination of the Proposed Borrowing Base shall be, and shall be redetermined for each deemed, an approval of the Proposed Borrowing Base. If the Required Lenders fail to approve any such determination of the Proposed Borrowing Base Period made by the Administrative Agent hereunder in such fifteen (15) day period, then the Administrative Agent shall poll the Lenders to ascertain the highest Proposed Borrowing Base then acceptable to the Required Lenders for purposes of this Section 2.07(c) and, subject to the last sentence of this Section 2.07(c), such amounts shall become the new Borrowing Base, effective on the date specified in this Section 2.07. Upon agreement by the Administrative Agent and each such redetermination the Required Lenders of the amount of credit to be made available to the Borrower hereunder, the Administrative Agent shall, by written notice to the Borrower and the Lenders, designate the new Borrowing Base available to the Borrower. Such designation shall be effective as of the date set forth Business Day specified in such written notice (or, if no effective date is specified in such written notice, the next Business Day following delivery of redetermination delivered by the Administrative Agent to Borrower (the “Scheduled Redetermination Date”). The Oil such written notice) and Gas Properties Collateral Value shall be determined based upon the loan collateral value assigned to the Mortgaged Properties. The such new Borrowing Base shall be equal remain in effect until the next determination or redetermination of the Borrowing Base in accordance with this Agreement. Anything herein contained to the sum contrary notwithstanding, any determination or redetermination of the Borrowing Base resulting in any increase of the Borrowing Base in effect immediately prior to such determination or redetermination shall require the approval of all the Lenders in their sole discretion in accordance with their respective customary practices and standards for oil and gas lending as they exist at the particular time, and may include a consideration of the value of the Oil and Gas Properties Collateral Value and such other credit factors (including without limitation the assets, liabilities, cash flow, business, properties, prospects, management and ownership of the Borrower and its Subsidiaries) which the Lenders deem significant. The Lenders’ determination of the Borrowing Base shall be in their sole discretion and shall not be that are subject to review or challenge. Upon each redetermination of the Borrowing Baselegal, the Administrative Agent shall recommend to the Lenders a new Borrowing Base valid and the Lenders in accordance with their customary policies and procedures for extending credit to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement in the event of any increase in the Borrowing Base and by agreement of at least the Majority Lenders in the event of any redetermination to maintain or reduce the Borrowing Base. If a redetermined Borrowing Base is not approved enforceable mortgage liens held by the Administrative Agent and for the applicable Lenders within twenty (20) days ratable benefit of the submission to the Lenders by the Administrative Agent of its recommended Borrowing Base, the Administrative Agent shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within ten (10) days thereafter its proposed Borrowing Base. Promptly following the 10th day after such request, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (or all Lenders in the case of an increase). If the Borrower does not furnish the Engineering Reports by the date required, the Lenders may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwise. (c) The Borrower shall have the right to reduce the amount of the Borrowing Base upon not less than thirty (30) days’ prior written notice to the Administrative Agent (who shall promptly notify the Lenders) of the reduction, which shall specify the effective date thereof and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof, no more than an amount which would cause a Borrowing Base Deficiency) and shall be irrevocable and effective only upon receipt by the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine the Borrowing Base at any subsequent Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either in relation to the Borrowing Base prior or subsequent to any such optional reduction by Borrower. (d) In addition to “Scheduled Redeterminations” pursuant to Section 2.08(b)the foregoing scheduled annual and semi annual determinations of the Borrowing Base, the Borrower Required Lenders shall have the right to redetermine the Borrowing Base at their sole discretion at any time and from time to time but not more often than two (2) times every calendar year. If the Majority Required Lenders may each request one (1) additional shall elect to make a discretionary redetermination of the Borrowing Base during each Borrowing Base Period. In the event the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to the provisions of this Section 2.08(d2.07(d), the Borrower shall within thirty (30) days of receipt of a request therefor from the Administrative Agent, deliver written notice to the Administrative Agent a Reserve Report in form and substance satisfactory to the Administrative Agent, prepared by the Borrower’s petroleum engineers containing information similar to the Reserve Reports delivered pursuant to Section 2.07(c), together with such updated engineering, production, operating and other data as the Administrative Agent, the Issuer or any Lender may reasonably request. The Administrative Agent shall have fifteen (15) days following receipt of such requested information to make an initial redetermination of the Borrowing Base, and the Administrative Agent and the Required Lenders shall approve and designate the new Borrowing Base in accordance with the procedures and standards described in Section 2.07(b). (e) In addition to the foregoing determinations of the Borrowing Base, the Borrower may request a redetermination of the Borrowing Base at any time and from time to time but not more often than two (2) times every calendar year, by delivering a written request to the Administrative Agent, together with (a) an engineering fee in the aggregate amount of $2,500 for the account of the Administrative Agent in immediately available funds, and (b) a Reserve Report in form and substance satisfactory to the Administrative Agent, prepared by the Borrower’s petroleum engineers containing information similar to the Reserve Reports delivered pursuant to Section 2.07(c), together with such other updated engineering, production, operating and other data as the Administrative Agent, the Issuer or any Lender may reasonably request. Each such discretionary redetermination of the Borrowing Base shall be made in the same manner and in accordance with the procedures and standards set forth above by adjusting the Borrowing Base then in effect. The Administrative Agent shall have fifteen (15) days following receipt of such requested information to make an initial redetermination of the Borrowing Base, and the Administrative Agent and the Required Lenders shall approve and designate the new Borrowing Base in accordance with the procedures and standards described in Section 2.07(b). (f) In addition to the Borrower’s right to request a discretionary Borrowing Base redetermination as set forth in Section 2.07(e), the Borrower may request a redetermination of the Borrowing Base at any time and from time to time upon the acquisition by the Borrower of additional Oil and Gas Properties the purchase price of which shall includerepresent at least 20% of the Borrowing Base then in effect, by delivering a written request to the Administrative Agent, together with (a) an engineering fee in the aggregate amount of $2,500 for the account of the Administrative Agent in immediately available funds, (b) with respect to Oil and Gas Properties represented in the existing Borrowing Base, a Reserve Report in form and substance satisfactory to the Administrative Agent, prepared and delivered in accordance with Section 2.07(c), and (c) with respect to Oil and Gas Properties acquired since the most recent redetermination of the Borrowing Base, a Reserve Report in form and substance satisfactory to the Administrative Agent, prepared and delivered in accordance with Section 2.07(b). Each such redetermination of the Borrowing Base under this Section 2.07(f) shall be made in the same manner and in accordance with the procedures and standards set forth above by adjusting the Borrowing Base then in effect. The Administrative Agent shall have fifteen (15) days following receipt of such requested information to make an initial redetermination of the Borrowing Base, and the Administrative Agent and the Required Lenders shall approve and designate the new Borrowing Base in accordance with the procedures and standards described in Section 2.07(b). (g) Notwithstanding anything to the contrary contained herein, upon the termination of the Gas Purchase Contract or the consummation of a Material Swap Transaction, the Required Lenders shall have the right to redetermine the Borrowing Base using information available to them, and the redetermined Borrowing Base shall become the new Borrowing Base immediately upon notice by the Administrative Agent to the Borrower, effective and applicable to the Borrower, the Administrative Agent, and each Lender on such date until the next redetermination or modification thereof hereunder (subject to the reduction described in Section 2.07(i)). The Borrowing Base will also be redetermined or adjusted in accordance with the provisions of Section 8.12(c) or Section 9.12(d). (h) With the delivery of each Reserve Report, the Borrower shall provide to the Administrative Agent a certificate from a Responsible Officer certifying that, to the best of such Responsible Officer’s knowledge and in all material respects: (i) Engineering Report(sthe information contained in the Reserve Report and any other information delivered in connection therewith is true and correct, (ii) prepared the Borrower or the Guarantors owns good and defensible title to the Oil and Gas Properties evaluated in such Reserve Report and such Properties are free of all Liens except for Liens permitted by Section 9.03, (iii) except as set forth on an exhibit to the certificate, on a net basis there are no gas imbalances, take or pay or other prepayments in excess of a date not more than thirty the volume specified in Section 7.20 with respect to their Oil and Gas Properties evaluated in such Reserve Report that would require the Borrower or any of its Subsidiaries to deliver Hydrocarbons either generally or produced from such Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor, (30iv) calendar days prior to none of their Oil and Gas Properties have been sold since the date of the last Borrowing Base determination except as set forth on an exhibit to the certificate, which certificate shall list all of its Oil and Gas Properties sold and in such requestdetail as reasonably required by the Administrative Agent, (v) attached to the certificate is a list of all marketing agreements entered into subsequent to the later of the date hereof or the most recently delivered Reserve Report that the Borrower could reasonably be expected to have been obligated to list on Schedule 7.20 had such agreement been in effect on the date hereof and (iivi) attached thereto is a schedule of the Oil and Gas Properties evaluated by such other information as Reserve Report that are Mortgaged Properties and demonstrating the percentage of the present value that such Mortgaged Properties represent. (i) Notwithstanding anything herein the contrary, in the event that the Borrower does not furnish any required Reserve Report within ten (10) days of date the required herein, the Administrative Agent and the Required Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to may nonetheless designate the date of such request. Likewise, in the event the Lenders exercise their option for a Special Borrowing Base Determination, from time to time thereafter until the Administrative Agent receives such Reserve Report, whereupon the Administrative Agent and the Required Lenders or all Lenders, as applicable, shall give the Borrower notice of the redetermined designate a new Borrowing Base which shall state in accordance with the effective date of the redeterminationgeneral procedures outlined in Section 2.07(b).

Borrowing Base. (a) The Borrowing Base shall be determined in accordance with Section 2.08(b) by During the Administrative Agent with period from the concurrence Closing Date to the date of the Lenders and is subject to redetermination in accordance with Section 2.08(d). Upon any next redetermination of the Borrowing Base, such redetermination shall remain in effect until Base pursuant to the next Redetermination Date. So long as any provisions of the Commitments are in effect or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Section 2.9 [Borrowing Base. During the period from and after the Closing Date until the first redetermination or reduction pursuant to Section 2.08], the amount of the Borrowing Base shall be $155,000,000 (the “Initial Borrowing Base”) which amount is comprised of the Oil and Gas Properties Collateral Value2,250,000,000. (b) Upon receipt each delivery of a Reserve Report pursuant to Section 8.3.8 [Reserve Reports], together with such engineering and other data from the Borrower as is customarily provided, the Administrative Agent shall, within a reasonable period of time, make a good faith determination of the reports required proposed Borrowing Base, and promptly thereafter the Administrative Agent will propose by Section 8.07 notice in writing to the Lenders such Borrowing Base for acceptance by (i) the Required Borrowing Base Lenders with respect to any reaffirmations or reductions in the Borrowing Base and (ii) the Required Increasing Borrowing Base Lenders with respect to any increases in the Borrowing Base. If such other reportsBorrowing Base, data and supplemental information as may from time to time be reasonably requested proposed by the Administrative Agent (is accepted by the “Engineering Reports”)Applicable Borrowing Base Lenders, the then such accepted Borrowing Base shall be redetermined for each communicated by the Administrative Agent to the Borrower on or about (i) with respect to any June 30 Reserve Report, (x) if the Administrative Agent shall have received the June 30 Reserve Report in a timely and complete manner, the immediately following October 15 and (y) if the Administrative Agent shall not have received the June 30 Reserve Report in a timely and complete manner, then fifteen (15) days after the Administrative Agent has received the complete June 30 Reserve Report from the Borrower and the Administrative Agent has had a reasonable opportunity to determine the proposed Borrowing Base Period or (ii) with respect to any December 31 Reserve Report, (x) if the Administrative Agent shall have received the December 31 Reserve Report in a timely and each complete manner, the immediately following April 15 and (y) if the Administrative Agent shall not have received the December 31 Reserve Report in a timely and complete manner, then fifteen (15) days after the Administrative Agent has received the complete December 31 Reserve Report from the Borrower and the Administrative Agent has had a reasonable opportunity to determine the proposed Borrowing Base (the applicable date in any of the foregoing clauses (i)(x), (i)(y), (ii)(x) or (ii)(y), the “Applicable Date”); provided that if such redetermination proposed Borrowing Base is not approved by the Applicable Borrowing Base Lenders prior to the Applicable Date, then the Applicable Borrowing Base Lenders will establish and agree to a Borrowing Base established using criteria agreed upon by the Applicable Borrowing Base Lenders, and such amount will be communicated to the Borrower, within 30 days following the Applicable Date. Any Lender that shall fail to reject the proposed Borrowing Base within fifteen (15) days of notice of the proposed Borrowing Base shall be deemed to have approved the proposed amount of such Borrowing Base. The new Borrowing Base shall become effective as of the date set forth in such notice of redetermination delivered by that the Borrower receives notification from the Administrative Agent of the new Borrowing Base, and until that time, the old Borrowing Base shall continue to Borrower (the “Scheduled Redetermination Date”)be in effect. The Oil Borrowing Base, as determined and Gas Properties Collateral Value established pursuant to this Section 2.9 [Borrowing Base] shall be determined based subject, at all times, to the redetermination or adjustment of the then effective Borrowing Base as a result of a redetermination of the Borrowing Base pursuant to Section 2.9(c) [Borrowing Base] or a reduction of the Borrowing Base pursuant to Section 2.9(e) [Borrowing Base] or Section 8.1.18(c) [Title Information]. (c) Not more than once in any fiscal year, the Administrative Agent upon the loan collateral value assigned instruction of the Required Borrowing Base Lenders, may request from the Borrower an Alternate Reserve Report for the purpose of redetermining the Borrowing Base, and not more than twice in any fiscal year, the Borrower shall have the right to request a redetermination of the Borrowing Base by sending a written notice to the Mortgaged PropertiesAdministrative Agent of such request along with an Alternate Reserve Report. The In connection with any redetermination of the Borrowing Base related to a delivery of an Alternate Reserve Report, the Administrative Agent shall make a good faith determination, in a reasonably prompt manner, of a new Borrowing Base, and the Administrative Agent shall propose by notice in writing, in a reasonably prompt manner, such new Borrowing Base to the Lenders, and the Applicable Borrowing Base Lenders shall agree to review in a reasonably prompt manner, and (if acceptable) approve a new Borrowing Base, which shall become effective upon receipt by the Borrower of notice of such new Borrowing Base. Any Lender that shall fail to reject the proposed Borrowing Base within fifteen (15) days of notice of the proposed Borrowing Base shall be equal deemed to have approved the sum proposed amount of the Oil and Gas Properties Collateral Value and such other credit factors (including without limitation the assets, liabilities, cash flow, business, properties, prospects, management and ownership of the Borrower and its Subsidiaries) which the Lenders deem significantBorrowing Base. The Lenders’ determination of the Borrowing Base shall be in their sole discretion and shall not be subject to review or challenge. Upon each In connection with any such redetermination of the Borrowing Base, the Borrower shall deliver promptly upon the request of the Administrative Agent shall recommend an Alternate Reserve Report to the Lenders a new Administrative Agent; provided that the Borrower’s failure to deliver such Alternate Reserve Report shall not preclude or impact the making of such redetermination of the Borrowing Base by the Administrative Agent or the approval of such Borrowing Base by the Applicable Borrowing Base Lenders. (d) The Borrowing Base shall represent the good faith determination by the Administrative Agent of the loan value of the Borrowing Base Properties based upon, among other things, information contained in the Reserve Report and the Lenders in accordance with their customary the applicable definitions and provisions herein contained, the Administrative Agent’s standard policies regarding energy lending, industry lending practices, and procedures consideration for extending credit to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement in nature of the event facilities established hereunder. The Borrower acknowledges that the determination of any increase in the Borrowing Base and contains an equity cushion (market value in excess of the value of all Indebtedness of the Loan Parties), which is acknowledged by agreement the Borrower to be essential for the adequate protection of at least the Majority Lenders in the event of any redetermination to maintain or reduce the Borrowing Base. If a redetermined Borrowing Base is not approved by the Administrative Agent and the applicable Lenders within twenty (20) days of the submission to the Lenders by the Administrative Agent of its recommended Borrowing Base, the Administrative Agent shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within ten (10) days thereafter its proposed Borrowing Base. Promptly following the 10th day after such request, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (or all Lenders in the case of an increase). If the Borrower does not furnish the Engineering Reports by the date required, the Lenders may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwiseLenders. (ce) The Borrower shall have Unless otherwise waived in writing by the right to reduce Required Lenders, (i) in the amount event of the Disposition or other early monetization or early termination of one or more Swap Agreements that had been assigned aggregate Borrowing Base Value (since the last redetermination of the Borrowing Base) in excess of 5% of the Borrowing Base upon not less than thirty (30) days’ prior written notice to the Administrative Agent (who shall promptly notify the Lenders) of the reductionthen in effect, which shall specify the effective date thereof and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof, no more than an amount which would cause a Borrowing Base Deficiency) and shall be irrevocable and effective only upon receipt by the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine the Borrowing Base at any subsequent Scheduled Redetermination Date shall be reduced (effective upon such Disposition, monetization or other Special Borrowing Base Determination at any particular amount, either in relation termination) by an amount equal to the Borrowing Base prior Value of such Swap Agreement(s); provided that in determining the 5% threshold, to the extent such Swap Agreement is replaced, in whole or subsequent to any such optional reduction by Borrower. (d) In addition to “Scheduled Redeterminations” in part, in a substantially contemporaneous transaction, with one or more Swap Agreements otherwise permitted under this Agreement and covering Hydrocarbons of the type that were hedged pursuant to Section 2.08(b)such replaced Swap Agreement(s) and with notional volumes, prices, tenors and economic effect during such tenors not less favorable to the Borrower and/or such Restricted Subsidiary than those set forth in such replaced Swap Agreement(s) and the Majority Lenders may each request one (1) additional redetermination of the Borrowing Base during each Borrowing Base Period. In the event without payments by the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to this Section 2.08(d)and/or such Restricted Subsidiary in connection therewith, only the Borrower shall deliver written notice part of such request to the Administrative Agent which Swap Agreement that is not so replaced shall include: (i) Engineering Report(s) prepared as of a date not more than thirty (30) calendar days prior to the date of be counted in such request, 5% and (ii) such other information as Administrative Agent and the Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to the date of such request. Likewise, in the event the Lenders exercise their option for a Special Borrowing Base Determinationshall be reduced upon the circumstances set forth in, the Administrative Agent shall give the Borrower notice and in accordance with, Section 8.2.1(m)(x) [Indebtedness] and Section 8.2.13(f) [Sale of the redetermined Borrowing Base which shall state the effective date of the redeterminationProved Reserves; Pooling].

Borrowing Base. (a) The Borrowing Base shall be determined in accordance with Section 2.08(b) by the Administrative Agent with the concurrence of the Lenders and is subject to redetermination in accordance with Section 2.08(d). Upon any redetermination of the Borrowing Base, such redetermination shall remain in effect until the next Redetermination Date. So long as any of the Commitments are in effect or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date until is $160,000,000.00 relative to the first redetermination or reduction pursuant Proved Reserves attributable to Section 2.08, the amount of the Borrowing Base shall be $155,000,000 (the “Initial Borrowing Base”) which amount is comprised of the Oil and Gas Properties Collateral Value. (b) Upon receipt of the reports required by Section 8.07 and such other reports, data and supplemental information as may from time to time be reasonably requested by the Administrative Agent (the “Engineering Reports”), the Borrowing Base shall be redetermined for each Borrowing Base Period and each such redetermination shall be effective as of the date set forth in such notice of redetermination delivered by the Administrative Agent to Borrower (the “Scheduled Redetermination Date”). The Oil and Gas Properties Collateral Value shall be determined based upon the loan collateral value assigned to the Mortgaged Properties. The Borrowing Base shall be equal redetermined from time to time pursuant to the sum provisions of this Section. As of the Fifth Amendment Effective Date the Borrowing Base is $145,000,000.00. (b) After the Fifth Amendment Effective Date, on or before each March 31, June 30, September 30 and December 31 until the Maturity Date, the Borrower shall furnish to the Administrative Agent a Reserve Report, which shall set out, as of each preceding December 31, March 31, June 30 or September 30, as applicable, the Proved Reserves attributable to the Borrowing Base Oil and Gas Properties. Each Reserve Report may be prepared by the Borrower’s own internal petroleum engineers, shall be certified by the President or other Responsible Officer of the Borrower and shall be internally generated and prepared on a roll forward basis from the prior Reserve Report. Each Reserve Report relating to the Proved Reserves attributable to the Borrowing Base Oil and Gas Properties Collateral Value as of December 31 shall be audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & Associates, Inc. or other independent reservoir engineers acceptable to Administrative Agent. Each Reserve Report as of March 30, June 30 and September 30 shall include a reconciliation from the prior December 31 Reserve Report. Upon receipt of each such other credit factors (including without limitation Reserve Report, the assets, liabilities, cash flow, business, properties, prospects, management and ownership of the Borrower and its Subsidiaries) which the Lenders deem significant. The Lenders’ Administrative Agent shall make a determination of the Borrowing Base which shall become effective no earlier than February 1, May 1, August 1 and November 1, as applicable, of each year commencing on or about May 1, 2010, in the case of an increase in the Borrowing Base, upon approval of all Lenders and the L/C Issuer (although the Borrowing Base may be increased, the Borrower has no right to request additional Credit Extensions and the Lenders have no commitment to lend any additional funds under this Agreement or any other Loan Document), and in the case of maintaining or decreasing the Borrowing Base, upon approval of the Administrative Agent and the Required Lenders and in any case with the subsequent written notification from the Administrative Agent to the Borrower. Administrative Agent shall announce the redetermined Borrowing Base on or about May 1, 2010 (but no later than May 15, 2010) with respect to the December 31, 2009 Reserve Report, on or about August 1, 2010 (but no later than August 15, 2010) with respect to the March 31 Reserve Report, on or about November 1, 2010 (but no later than November 15, 2010) with respect to the June 30 Reserve Report and on or about February 1, 2011 (but no later than February 15, 2011) with respect to the September 30 Reserve Report. Such redetermined Borrowing Base, subject to the other provisions of this Agreement, shall be the Borrowing Base until the effective date of the next redetermination of the Borrowing Base as set out in their sole discretion and shall not be subject to review or challenge. Upon this Section 2.02. (c) During each redetermination period between scheduled redeterminations of the Borrowing Base, the Administrative Agent Required Lenders shall recommend have the right to initiate one (1) unscheduled redetermination of the Lenders a new Borrowing Base and the Lenders in accordance with their customary policies and procedures for extending credit to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement requesting in writing that the event of any increase in Borrower provide an unscheduled and unaudited Reserve Report regarding the Proved Reserves attributable to the Borrowing Base Oil and by agreement Gas Properties with an effective date not more than thirty days prior to Borrower’s delivery of at least the Majority Lenders in the event of any redetermination such Reserve Report to maintain or reduce the Borrowing Base. If a redetermined Borrowing Base is not approved by the Administrative Agent Agent, and the applicable Lenders within twenty (20) days of the submission to the Lenders by the Administrative Agent of its recommended Borrowing Base, the Administrative Agent such Reserve Report shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit be delivered to the Administrative Agent within ten thirty days after Borrower’s receipt of such written request; provided, however, that there shall not be any more than two (102) days thereafter its proposed Borrowing Base. Promptly following the 10th day after such request, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (or all Lenders in the case of an increase). If the Borrower does not furnish the Engineering Reports by the date required, the Lenders may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwise. (c) The Borrower shall have the right to reduce the amount unscheduled redeterminations of the Borrowing Base upon not less than thirty under this Section 2.02(b) during any twelve (3012) days’ prior written notice to the Administrative Agent (who shall promptly notify the Lenders) of the reduction, which shall specify the effective date thereof and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof, no more than an amount which would cause a Borrowing Base Deficiency) and shall be irrevocable and effective only upon receipt by the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine the Borrowing Base at any subsequent Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either in relation to the Borrowing Base prior or subsequent to any such optional reduction by Borrowermonth period. (d) In addition to “Scheduled Redeterminations” pursuant to the redetermination provided for in Section 2.08(b2.02(c), upon a Material Disposition or any material (in the Borrower and judgment of the Majority Lenders may each request one Administrative Agent or the Required Lenders) defect in title, or failure of title to, two percent (12%) additional redetermination or more of the PV-10 of the Borrowing Base during each Borrowing Base Period. In the event the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to this Section 2.08(d)Oil and Gas Properties, the Borrower shall deliver written notice of such request to the Administrative Agent which shall include: (i) Engineering Report(s) prepared as may, and upon the request of a the Required Lenders shall, redetermine the Borrowing Base by requesting in writing that the Borrower provide an unscheduled Reserve Report regarding the Proved Reserves attributable to the Borrowing Base Oil and Gas Properties with an effective date not more than thirty days prior to Borrower’s delivery of such Reserve Report to the Administrative Agent, and such Reserve Report shall be delivered to the Administrative Agent within thirty days after Borrower’s receipt of such written request. (30e) calendar During each period between scheduled redeterminations of the Borrowing Base, the Borrower shall have the right to request, by written notice to the Administrative Agent, one (1) unscheduled redetermination of the Borrowing Base, subject to contemporaneously providing to the Administrative Agent a Reserve Report with an effective date not more than thirty days prior to the date of such requestnotice; provided, however, that there shall not be any more than two (2) unscheduled redeterminations of the Borrowing Base under this Section 2.02(e) during any twelve (12) month period. (f) In addition to the redetermination provided for in Section 2.02(d), upon a Material Acquisition, the Borrower may, from time to time upon written notice to the Administrative Agent, propose to add Oil and Gas Properties to the Borrowing Base Oil and Gas Properties. Any such proposal to add Oil and Gas Properties to the Borrowing Base Oil and Gas Properties shall be accompanied by a Reserve Report applicable to such properties that conforms to the requirements of Section 2.02, and evidence sufficient to establish that the Borrower or the other applicable Loan Party has Marketable Title to such Oil and Gas Properties, and any such addition shall become effective at such time as: (iia) the Administrative Agent, with the approval of all the Lenders, has made a determination of the amount by which the Borrowing Base would be increased as the result of such other information as addition and (b) the conditions set out in Article IV hereof, to the extent they are applicable to such additional Oil and Gas Properties of the Borrower, have been satisfied. In determining the increase in the Borrowing Base pursuant to this Section, the Administrative Agent and the Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to apply the date of such request. Likewise, parameters and other credit factors set out in the event the Lenders exercise their option for a Special Borrowing Base Determination, the Administrative Agent shall give the Borrower notice of the redetermined Borrowing Base which shall state the effective date of the redeterminationSection 2.02.

Borrowing Base. (a) The Borrowing Base shall be determined cumulative of all other limitations contained in accordance with Section 2.08(b) by this Agreement and the Administrative Agent with the concurrence of the Lenders and is subject to redetermination in accordance with Section 2.08(d)other Loan Documents. Upon any redetermination of the The initial Borrowing Base, such redetermination shall remain in effect until the next Redetermination Date. So long as any of the Commitments are in effect or any LC Exposure or Loans are outstanding hereunder, this facility Base shall be governed by the then effective Borrowing Base$65,000,000 and shall be redetermined from time to time as provided herein. During the period from and after the Closing Date until the first redetermination or reduction pursuant to Section 2.08In addition, the amount of the Borrowing Base shall be $155,000,000 (the “Initial Borrowing Base”) which amount is comprised redetermined semiannually as provided below. Upon delivery of the Oil and Gas Properties Collateral Value. (b) Upon receipt of the engineering reserve evaluation reports required by Section 8.07 subsection 9.1(j) (collectively, the "Engineering Reports") and such other reports, data and supplemental information as may may, from time to time time, be reasonably requested by the Administrative Agent and the Banks, together with a certificate from the chief financial officer or chief accounting officer of Borrower that, to the best of such officer's Knowledge, (A) the “factual information upon which such Engineering Reports”)Reports are based is true and correct, (B) the certificate identifies the Properties covered by the Engineering Reports that have not been previously included in any prior Engineering Report, and (c) no Mortgaged Properties have been sold since the last Determination Date, on each Determination Date or on such other date as otherwise permitted hereunder, the Administrative Agent shall redetermine the Borrowing Base in accordance with its customary practices and standards for loans secured by similar types of property. Within 30 days of its receipt of the Engineering Reports, the Administrative Agent shall provide such redetermined Borrowing Base in writing to the Banks. Within ten days after their receipt of such information, the Banks shall give the Administrative Agent written notice of whether the Banks approve of the Administrative Agent's proposed Borrowing Base. For any redetermination of the Borrowing Base that results in an increase of the Borrowing Base, approval of all of the Banks shall be redetermined for each required. For any other redeterminations of the Borrowing Base, approval of the Majority Banks shall be required. The Borrowing Base Period and each such redetermination established pursuant to this subsection 2.8(a) shall be effective as of the date set forth the Borrower is notified in such notice of redetermination delivered writing by the Administrative Agent to Borrower (the “Scheduled Redetermination Date”). The Oil and Gas Properties Collateral Value shall be determined based upon the loan collateral value assigned to the Mortgaged Properties. The Borrowing Base shall be equal to the sum of the Oil and Gas Properties Collateral Value and such other credit factors (including without limitation requisite Bank approval. In the assets, liabilities, cash flow, business, properties, prospects, management and ownership of the Borrower and its Subsidiaries) which the Lenders deem significant. The Lenders’ determination of the Borrowing Base shall be in their sole discretion and shall event that any Bank does not be subject to review or challenge. Upon each approve a proposed redetermination of the Borrowing Base, but the Required Banks do (each non-approving Bank in such case is hereinafter referred to as a "Dissenting Bank"), the Banks agree to maintain the Borrowing Base in effect immediately prior to the delivery of the most recent Engineering Reports until the earlier of: (a) the date on which the Borrower shall notify the Administrative Agent in writing of its willingness to accept the Borrowing Base as determined by the Dissenting Bank(s), if applicable, (b) the date on which Eligible Assignee or Assignees shall recommend become party to this Agreement pursuant to Section 2.8(c) or (c) in cases of proposed decreases but not increases of the Lenders a Borrowing Base, 75 days after the Borrower has been notified in writing of Dissenting Bank(s) and neither of (a) or (b) above shall have occurred. The new Borrowing Base shall be effective concurrently with the earlier to occur of (a), (b) or, if applicable, (c) above and the Lenders shall remain in accordance with their customary policies and procedures for extending credit effect until it is subsequently redetermined pursuant to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement in the event of any increase in the Borrowing Base and by agreement of at least the Majority Lenders in the event of any redetermination to maintain this subsection 2.8(a) or reduce the Borrowing Base. If a redetermined Borrowing Base is not approved by the Administrative Agent and the applicable Lenders within twenty (20) days of the submission to the Lenders by the Administrative Agent of its recommended Borrowing Base, the Administrative Agent shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within ten (10) days thereafter its proposed Borrowing Base. Promptly following the 10th day after such request, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (or all Lenders in the case of an increasesubsection 2.8(b). If the Borrower does not furnish the Engineering Reports by the date required, the Lenders may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwise. (cb) The Borrower shall have In addition to the right to reduce the amount determinations of the Borrowing Base upon required pursuant to subsection 2.8(a), special determinations thereof may be made for any reason (but not less than thirty (30) days’ prior written notice to the Administrative Agent (who shall promptly notify the Lenders) of the reduction, which shall specify the effective date thereof and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof, no more than an amount which would cause a Borrowing Base Deficiencyonce between Determination Dates) and shall be irrevocable and effective only upon receipt by at the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine the Borrowing Base at any subsequent Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, option of either in relation to the Borrowing Base prior or subsequent to any such optional reduction by Borrower. (di) In addition to “Scheduled Redeterminations” pursuant to Section 2.08(b), the Borrower and the Majority Lenders may each request one (1) additional redetermination of the Borrowing Base during each Borrowing Base Period. In the event the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to this Section 2.08(d), the Borrower shall deliver written notice of such request to the Administrative Agent which shall include: (i) Engineering Report(s) prepared as of a date not more than thirty (30) calendar days prior to the date of such request, and (ii) such other information as Administrative Agent and the Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to the date of such request. Likewise, in the event the Lenders exercise their option for a Special Borrowing Base Determination, the Administrative Agent shall give the Borrower notice of the redetermined Borrowing Base which shall state the effective date of the redetermination.)

Borrowing Base. (a) The During the period from the date hereof to the first Determination Date, the Conforming Borrowing Base shall be determined in accordance with Section 2.08(b$20,000,000 and the Borrowing Base shall be $25,000,000 (such $25,000,000 being the “Initial Borrowing Base”). (b) by the By March 1 and September 1 (or October 1, as applicable) of each year, Borrower shall furnish to each Lender all information, reports and data required hereunder and that Administrative Agent with has then reasonably requested concerning Restricted Persons’ businesses and properties (including their Oil and Gas Properties and interests and the concurrence reserves and production relating thereto), together with, as applicable, the Engineering Report as of the preceding December 31 described in Section 4.2(e) or as of the preceding June 30 (or August 31, as applicable) described in Section 4.2(f), as applicable. Within 15 days after receiving such information, reports and data, or as promptly thereafter as practicable, Administrative Agent shall determine the amount of a proposed Borrowing Base, and Administrative Agent shall then deliver to each Lender such proposed Borrowing Base. Within 15 days after the Lenders’ receipt of such proposed Borrowing Base, or as promptly thereafter as practicable, Required Lenders and is subject to redetermination shall agree on an amount for the Borrowing Base (provided that all Lenders must agree on any increase in accordance with Section 2.08(d). Upon any redetermination of the Borrowing Base), which Borrowing Base need not be equal to such redetermination shall remain in effect until the next Redetermination Date. So long as any of the Commitments are in effect or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective proposed Borrowing Base. During the period from and after the Closing Date until the first redetermination or reduction pursuant to Section 2.08, Required Lenders shall determine the amount of the Borrowing Base shall be $155,000,000 (the “Initial Borrowing Base”) which amount is comprised of the Oil and Gas Properties Collateral Value. (b) Upon receipt of the reports required by Section 8.07 and such other reports, data and supplemental information as may from time to time be reasonably requested by the Administrative Agent (the “Engineering Reports”), the Borrowing Base shall be redetermined for each Borrowing Base Period and each such redetermination shall be effective as of the date set forth in such notice of redetermination delivered by the Administrative Agent to Borrower (the “Scheduled Redetermination Date”). The Oil and Gas Properties Collateral Value shall be determined based upon the loan collateral value assigned that they in their discretion assign to the Mortgaged Properties. The Borrowing Base shall be equal to the sum discounted net present value of the various Oil and Gas Properties of Restricted Persons included in the Collateral Value at the time in question and based upon such other credit factors (including without limitation the assets, liabilities, cash flow, hedged and unhedged exposure to price, foreign exchange rate, and interest rate changes, business, properties, prospects, management and ownership of the Borrower and its SubsidiariesRestricted Persons) which the Lenders as they in their discretion deem significant. The Lenders’ determination of the Borrowing Base shall be in their sole discretion and shall not be subject to review or challenge. Upon each redetermination of the Borrowing Base, the Administrative Agent shall recommend to the Lenders a new Borrowing Base and the Lenders in accordance with their customary policies and procedures for extending credit to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement in the event of any increase in the Borrowing Base and by agreement of at least the Majority Lenders in the event of any redetermination to maintain or reduce the Borrowing Base. If a redetermined Borrowing Base is not approved by the Administrative Agent and the applicable Lenders within twenty (20) days of the submission to the Lenders by the Administrative Agent of its recommended Borrowing Base, the Administrative Agent shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within ten (10) days thereafter its proposed Borrowing Base. Promptly following the 10th day after such request, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Required Lenders (or all Lenders in the case of an increase). If increase in the Borrower does Borrowing Base) have not furnish approved the Engineering Reports by Borrowing Base within the date required15 day period after their receipt of such proposed Borrowing Base, Administrative Agent shall poll Lenders to ascertain the highest Borrowing Base then acceptable to a number of Lenders may nonetheless determine a new sufficient to constitute Required Lenders (or all Lenders in the case of an increase in the Borrowing Base) and such amount shall then become the Borrowing Base. It Administrative Agent shall by notice to Borrower designate such amount as the new Borrowing Base available to Borrower hereunder, which designation shall take effect immediately on the date such notice is expressly understood that sent (herein called a “Determination Date”) and shall remain in effect until but not including the Lenders shall have no obligation to determine next date as of which the Borrowing Base at any particular amountis redetermined. IT IS EXPRESSLY UNDERSTOOD THAT LENDERS AND ADMINISTRATIVE AGENT HAVE NO OBLIGATION TO AGREE UPON OR DESIGNATE THE 005697 000041 19362918.6 39 [CREDIT AGREEMENT] BORROWING BASE AT ANY PARTICULAR AMOUNT, either in relation to the Maximum Revolving Credit Amount or otherwise. (cWHETHER IN RELATION TO THE MAXIMUM CREDIT AMOUNT OR OTHERWISE, AND THAT LENDERS’ COMMITMENTS TO ADVANCE FUNDS HEREUNDER IS DETERMINED BY REFERENCE TO THE BORROWING BASE FROM TIME TO TIME IN EFFECT, WHICH BORROWING BASE SHALL BE USED FOR CALCULATING UNUSED FEES UNDER SECTION 2.5(C) The Borrower shall have the right to reduce the amount of the Borrowing Base upon not less than thirty (30) days’ prior written notice to the Administrative Agent (who shall promptly notify the Lenders) of the reductionAND, which shall specify the effective date thereof and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 in excess thereofTO THE EXTENT PERMITTED BY LAW AND REGULATORY AUTHORITIES, no more than an amount which would cause a Borrowing Base Deficiency) and shall be irrevocable and effective only upon receipt by the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine the Borrowing Base at any subsequent Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either in relation to the Borrowing Base prior or subsequent to any such optional reduction by Borrower. (d) In addition to “Scheduled Redeterminations” pursuant to Section 2.08(b), the Borrower and the Majority Lenders may each request one (1) additional redetermination of the Borrowing Base during each Borrowing Base Period. In the event the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to this Section 2.08(d), the Borrower shall deliver written notice of such request to the Administrative Agent which shall include: (i) Engineering Report(s) prepared as of a date not more than thirty (30) calendar days prior to the date of such request, and (ii) such other information as Administrative Agent and the Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to the date of such request. Likewise, in the event the Lenders exercise their option for a Special Borrowing Base Determination, the Administrative Agent shall give the Borrower notice of the redetermined Borrowing Base which shall state the effective date of the redetermination.FOR THE PURPOSES OF CAPITAL ADEQUACY DETERMINATION AND REIMBURSEMENTS UNDER

Borrowing Base. (a) The For the period from and including the Closing Date to but excluding the date of the first determination of the Borrowing Base pursuant to the further provisions of this Section 2.07, the initial amount of the Borrowing Base has been set by the Administrative Agent and acknowledged by the Borrower and agreed to by the Lenders to be $55,000,000 (the “Base Amount”). For each and every determination or redetermination of the Borrowing Base under this Agreement, the Borrowing Base shall be determined or redetermined based on the oil and gas reserves attributable to the Oil and Gas Properties of the Borrower and its Subsidiaries. (b) Promptly after January 1 of each calendar year, commencing January 1, 2014, and in accordance any event prior to March 31 of each calendar year (commencing March 31, 2014), the Borrower shall furnish to the Administrative Agent a Reserve Report in form and substance reasonably satisfactory to the Administrative Agent, prepared by an Approved Engineer, which Reserve Report shall be dated as of January 1 of such calendar year together with additional data concerning pricing, hedging, quantities and purchasers of production, and other information and engineering and geological data as the Administrative Agent may reasonably request. Within fifteen (15) days after receipt of such Reserve Report and all such information, the Administrative Agent shall make an initial determination of the new Borrowing Base (the “Proposed Borrowing Base”), which for purposes of this Section 2.08(b2.07(b) is the semi-annual determination described in Section 2.07(c), and upon such initial determination shall promptly notify the Lenders in writing of its initial determination of the Proposed Borrowing Base. Such initial determinations made by the Administrative Agent with shall be so made by the concurrence Administrative Agent in the exercise of the Lenders and is subject to redetermination its sole discretion in accordance with Section 2.08(d)the Administrative Agent’s customary practices and standards for oil and gas lending as they exist at the particular time, and may include a consideration of the value of the Oil and Gas Properties that are subject to legal, valid and enforceable mortgage liens held by the Administrative Agent for the ratable benefit of the Lenders. Upon In no event shall the Proposed Borrowing Base exceed the Aggregate Maximum Credit Amount of the Lenders. The Required Lenders shall approve or reject the Administrative Agent’s initial determinations of the Proposed Borrowing Base by written notice to the Administrative Agent within fifteen (15) days of the Administrative Agent’s notification of its initial determinations; provided, however, that with respect to any redetermination of Proposed Borrowing Base that is equal to or less than the Borrowing Base then in effect (but not with respect to any increase in the Borrowing Base) the failure by any Lender to confirm in writing the Administrative Agent’s determination of the Proposed Borrowing Base shall be deemed an approval of the Proposed Borrowing Base. If the Required Lenders fail to approve any such determination of the Proposed Borrowing Base made by the Administrative Agent hereunder in such fifteen (15) day period, then the Administrative Agent shall poll the Lenders to ascertain the highest Proposed Borrowing Base then acceptable to the Required Lenders for purposes of this Section 2.07(b) and, subject to the last sentence of this Section 2.07(b), such redetermination amounts shall become the new Borrowing Base, effective on the date specified in this Section 2.07. Until such approval or deemed approval, the Borrowing Base in effect before the Proposed Borrowing Base shall remain in effect. Upon agreement by the Administrative Agent and the Required Lenders of the new Borrowing Base, the Administrative Agent shall, by written notice to the Borrower and the Lenders, designate the new Borrowing Base available to the Borrower. Such designation shall be effective as of the Business Day specified in such written notice (or, if no effective date is specified in such written notice, the next Business Day following delivery of such written notice), and such new Borrowing Base shall remain in effect until the next Redetermination Date. So long as any of the Commitments are in effect determination or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date until the first redetermination or reduction pursuant to Section 2.08, the amount of the Borrowing Base in accordance with this Agreement. Anything herein contained to the contrary notwithstanding, any determination or redetermination of the Borrowing Base resulting in any increase of the Borrowing Base in effect immediately prior to such determination or redetermination shall be $155,000,000 (require the “Initial Borrowing Base”) which amount is comprised approval of all the Lenders in their sole discretion in accordance with their respective customary practices and standards for oil and gas lending as they exist at the particular time, and may include a consideration of the value of the Oil and Gas Properties Collateral Value. (b) Upon receipt of the reports required by Section 8.07 that are subject to legal, valid and such other reports, data and supplemental information as may from time to time be reasonably requested enforceable mortgage liens held by the Administrative Agent for the ratable benefit of the Lenders. (the “Engineering Reports”)c) In addition, within ninety (90) days after each June 30, commencing June 30, 2013, the Borrower shall furnish to the Administrative Agent a Reserve Report in form and substance satisfactory to the Administrative Agent prepared by the Borrower’s petroleum engineers, which report shall be dated as of July 1 of such calendar year together with additional data concerning pricing, hedging, quantities and purchasers of production, and other information and engineering and geological data as the Administrative Agent may reasonably request. Within fifteen (15) days after receipt of such Reserve Report and all such information, the Administrative Agent shall make an initial determination of a Proposed Borrowing Base, and upon such initial determination shall promptly notify the Lenders in writing of initial determination of the Proposed Borrowing Base. Such initial determination shall be made in the same manner and be subject to the same approvals as prescribed above with respect to the annual review, and likewise the Administrative Agent shall communicate the results of such initial determinations to the Lenders. The Required Lenders shall approve such determinations of the Proposed Borrowing Base by written notice to the Administrative Agent within fifteen (15) days of the giving of notice of such determinations by the Administrative Agent to such Lenders; provided, however, that with respect to any Proposed Borrowing Base that is equal to or less than the Borrowing Base then in effect (but not with respect to any increase in the Borrowing Base) the failure by any Lender to confirm in writing the Administrative Agent’s determination of the Proposed Borrowing Base shall be redetermined for each deemed an approval of the Proposed Borrowing Base. If the Required Lenders fail to approve any such determination of the Proposed Borrowing Base Period made by the Administrative Agent hereunder in such fifteen (15) day period, then the Administrative Agent shall poll the Lenders to ascertain the highest Proposed Borrowing Base then acceptable to the Required Lenders for purposes of this Section 2.07(c) and, subject to the last sentence of this Section 2.07(c), such amounts shall become the new Borrowing Base, effective on the date specified in this Section 2.07. Upon agreement by the Administrative Agent and each such redetermination the Required Lenders of the amount of credit to be made available to the Borrower hereunder, the Administrative Agent shall, by written notice to the Borrower and the Lenders, designate the new Borrowing Base available to the Borrower. Such designation shall be effective as of the date set forth Business Day specified in such written notice (or, if no effective date is specified in such written notice, the next Business Day following delivery of redetermination delivered by the Administrative Agent to Borrower (the “Scheduled Redetermination Date”). The Oil such written notice) and Gas Properties Collateral Value shall be determined based upon the loan collateral value assigned to the Mortgaged Properties. The such new Borrowing Base shall be equal remain in effect until the next determination or redetermination of the Borrowing Base in accordance with this Agreement. Anything herein contained to the sum contrary notwithstanding, any determination or redetermination of the Borrowing Base resulting in any increase of the Borrowing Base in effect immediately prior to such determination or redetermination shall require the approval of all the Lenders in their sole discretion in accordance with their respective customary practices and standards for oil and gas lending as they exist at the particular time, and may include a consideration of the value of the Oil and Gas Properties Collateral Value and such other credit factors (including without limitation the assets, liabilities, cash flow, business, properties, prospects, management and ownership of the Borrower and its Subsidiaries) which the Lenders deem significant. The Lenders’ determination of the Borrowing Base shall be in their sole discretion and shall not be that are subject to review or challenge. Upon each redetermination of the Borrowing Baselegal, the Administrative Agent shall recommend to the Lenders a new Borrowing Base valid and the Lenders in accordance with their customary policies and procedures for extending credit to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement in the event of any increase in the Borrowing Base and by agreement of at least the Majority Lenders in the event of any redetermination to maintain or reduce the Borrowing Base. If a redetermined Borrowing Base is not approved enforceable mortgage liens held by the Administrative Agent and for the applicable Lenders within twenty (20) days ratable benefit of the submission to the Lenders by the Administrative Agent of its recommended Borrowing Base, the Administrative Agent shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within ten (10) days thereafter its proposed Borrowing Base. Promptly following the 10th day after such request, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (or all Lenders in the case of an increase). If the Borrower does not furnish the Engineering Reports by the date required, the Lenders may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwise. (c) The Borrower shall have the right to reduce the amount of the Borrowing Base upon not less than thirty (30) days’ prior written notice to the Administrative Agent (who shall promptly notify the Lenders) of the reduction, which shall specify the effective date thereof and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof, no more than an amount which would cause a Borrowing Base Deficiency) and shall be irrevocable and effective only upon receipt by the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine the Borrowing Base at any subsequent Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either in relation to the Borrowing Base prior or subsequent to any such optional reduction by Borrower. (d) In addition to “Scheduled Redeterminations” pursuant to Section 2.08(b)the foregoing scheduled annual and semi annual determinations of the Borrowing Base, the Borrower Required Lenders shall have the right to redetermine the Borrowing Base at their sole discretion at any time and from time to time but not more often than two (2) times every calendar year. If the Majority Required Lenders may each request one (1) additional shall elect to make a discretionary redetermination of the Borrowing Base during each Borrowing Base Period. In the event the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to the provisions of this Section 2.08(d2.07(d), the Borrower shall within thirty (30) days of receipt of a request therefor from the Administrative Agent, deliver written notice to the Administrative Agent a Reserve Report in form and substance satisfactory to the Administrative Agent, prepared by the Borrower’s petroleum engineers containing information similar to the Reserve Reports delivered pursuant to Section 2.07(c), together with such updated engineering, production, operating and other data as the Administrative Agent, the Issuer or any Lender may reasonably request. The Administrative Agent shall have fifteen (15) days following receipt of such requested information to make an initial redetermination of the Borrowing Base, and the Administrative Agent and the Required Lenders shall approve and designate the new Borrowing Base in accordance with the procedures and standards described in Section 2.07(b). (e) In addition to the foregoing determinations of the Borrowing Base, the Borrower may request a redetermination of the Borrowing Base at any time and from time to time but not more often than two (2) times every calendar year, by delivering a written request to the Administrative Agent, together with (a) an engineering fee in the aggregate amount of $2,500 for the account of the Administrative Agent which shall include: (i) Engineering Report(s) prepared as of a date not more than thirty (30) calendar days prior to the date of such requestin immediately available funds, and (iib) a Reserve Report in form and substance satisfactory to the Administrative Agent, prepared by the Borrower’s petroleum engineers containing information similar to the Reserve Reports delivered pursuant to Section 2.07(c), together with such other updated engineering, production, operating and other data as the Administrative Agent, the Issuer or any Lender may reasonably request. Each such discretionary redetermination of the Borrowing Base shall be made in the same manner and in accordance with the procedures and standards set forth above by adjusting the Borrowing Base then in effect. The Administrative Agent shall have fifteen (15) days following receipt of such requested information as to make an initial redetermination of the Borrowing Base, and the Administrative Agent and the Required Lenders shall request prepared as of a date not more than thirty approve and designate the new Borrowing Base in accordance with the procedures and standards described in Section 2.07(b). (30f) calendar days prior In addition to the date Borrower’s right to request a discretionary Borrowing Base redetermination as set forth in Section 2.07(e), the Borrower may request a redetermination of such request. Likewisethe Borrowing Base at any time and from time to time upon the acquisition by the Borrower of (i) additional Oil and Gas Properties or (ii) a Person that owns Oil and Gas Properties, in each case, the event purchase price of which shall represent at least 20% of the Lenders exercise their option for a Special Borrowing Base Determinationthen in effect, by delivering a written request to the Administrative Agent, together with (a) an engineering fee in the aggregate amount of $2,500 for the account of the Administrative Agent shall give in immediately available funds, (b) a Reserve Report in form and substance satisfactory to the Administrative Agent with respect to Oil and Gas Properties represented in the existing Borrowing Base, prepared and delivered in accordance with Section 2.07(c), (c) a Reserve Report in form and substance satisfactory to the Administrative Agent, with respect to Oil and Gas Properties acquired since the most recent redetermination of the Borrowing Base, prepared and delivered in accordance with Section 2.07(b), and (d) a most recent draft of the agreements by which the Borrower notice proposes to acquire such additional Oil and Gas Properties or such Person that owns such Oil and Gas Properties, which drafts shall be supplemented upon execution by true and complete executed copies of the redetermined same. Each such redetermination of the Borrowing Base which under this Section 2.07(f) shall state be made in the effective date of same manner and in accordance with the redetermination.procedures and standards set forth above by adjusting the Borrowing Base then in effect. The Administrative Agent shall have fifteen (15) days following

Borrowing Base. (a) The On or before February 15 and August 15 of each year Borrower shall furnish to Bank (i) a report in form and substance satisfactory to Bank, of a petroleum engineer satisfactory to Bank, which report shall be dated as of January 1 and July 1 of such year and shall set forth the proven oil and gas reserves of Borrower, as of such date; (ii) any updated production history of the proven oil and gas reserves of Borrower; (iii) the discounted net present value (at a rate reasonably acceptable to Bank); (iv) the net general overhead and administrative expenses and the lease operating expenses attributable to the Oil and Gas Properties of Borrower for the prior twelve month period; and (v) such other information as to the operations of Borrower as Bank shall reasonably request. Together with each of the reports to be furnished pursuant to this Section 2.2 (a) Borrower shall furnish to Bank such additional data and information concerning pricing, quantities or volume of production from or attributable to the Oil and Gas Properties with respect thereto as Bank may reasonably request. (b) After receipt of all of the information required by Section 2.2(a), Bank may redetermine the amount of the Borrowing Base shall be determined in accordance with Section 2.08(b) by the Administrative Agent customary practices of Bank for oil and gas loans to be effective as of April 1 and October 1 of such year. In connection with the concurrence of the Lenders and is subject to redetermination in accordance with Section 2.08(d). Upon any redetermination initial Redetermination of the Borrowing BaseBase as set forth herein, such redetermination Borrower agrees to pay to Bank an Engineering Fee in the amount of $5,000.00. Thereafter, upon delivery to Bank of the information required by 2.2(a), Borrower shall remain pay to Bank an Engineering Fee in effect until the amount of $5,000.00. Until the next Redetermination Date. So long as any determination of the Commitments are in effect or any LC Exposure or Loans are outstanding hereunderamount of the Borrowing Base by Bank, this facility shall be governed by the then effective amount of the Borrowing Base. During the period from and after Base as of the Closing Date shall be deemed to be $500,000 and thereafter, until the first redetermination or reduction pursuant to Section 2.08each new determination of Borrowing Base is made by Bank, the amount of the Borrowing Base shall be $155,000,000 (deemed to be the “Initial Borrowing Base”) which amount is comprised Base last deemed or calculated, as the case may be. In addition to the foregoing, Bank or Borrower may initiate a redetermination of the Oil and Gas Properties Collateral Value. Borrowing Base at any other time as it so elects, provided, however, that Borrower may initiate only two (b2) Upon receipt of such unscheduled redeterminations during any consecutive twelve (12) month period by specifying in writing to Bank the reports date on which Borrower will furnish the information required by Section 8.07 2.2(a) and the date on which it desire such other reports, data and supplemental redetermination to occur. Bank shall have at least forty-five (45) days after the delivery of the information as may from time required by Section 2.2(a) to time be reasonably requested by the Administrative Agent (the “Engineering Reports”), make any unscheduled redetermination of the Borrowing Base shall be redetermined for each requested by Borrower. Bank may, at any time and at its expense, initiate an unscheduled redetermination of the Borrowing Base Period by specifying in writing to Borrower the date by which Borrower is to furnish the information required by Section 2.2(a) and each the projected date on which such redetermination is to occur. Failure of Borrower to timely furnish such information required by Section 2.2(a) shall be effective as not preclude Bank's right to redetermine the Borrowing Base based on information previously furnished to Bank. Bank shall promptly notify in writing Borrower of the date set forth in such notice of new Borrowing Base. Any redetermination delivered by the Administrative Agent to Borrower (the “Scheduled Redetermination Date”). The Oil and Gas Properties Collateral Value shall be determined based upon the loan collateral value assigned to the Mortgaged Properties. The Borrowing Base shall be equal to the sum of the Oil and Gas Properties Collateral Value and such other credit factors (including without limitation the assets, liabilities, cash flow, business, properties, prospects, management and ownership of the Borrower and its Subsidiaries) which the Lenders deem significant. The Lenders’ determination of the Borrowing Base shall be in their sole discretion and shall not be subject effective until written notice is sent to review or challenge. Upon each redetermination of the Borrowing Base, the Administrative Agent shall recommend to the Lenders a new Borrowing Base and the Lenders in accordance with their customary policies and procedures for extending credit to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement in the event of any increase in the Borrowing Base and by agreement of at least the Majority Lenders in the event of any redetermination to maintain or reduce the Borrowing Base. If a redetermined Borrowing Base is not approved by the Administrative Agent and the applicable Lenders within twenty (20) days of the submission to the Lenders by the Administrative Agent of its recommended Borrowing Base, the Administrative Agent shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within ten (10) days thereafter its proposed Borrowing Base. Promptly following the 10th day after such request, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (or all Lenders in the case of an increase). If the Borrower does not furnish the Engineering Reports by the date required, the Lenders may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwiseBorrower. (c) The Borrower shall have In the right to reduce event the aggregate unpaid principal amount of all Advances, shall, at any time, be in excess of the amount of the Borrowing Base upon not less than in effect at such time, then Borrower shall, within thirty (30) days’ prior written notice days of such event, at the option of Borrower, subject to the Administrative Agent approval of Bank, either (who shall promptly notify i) subject to the LendersBank Lien, by instruments satisfactory in form and substance to Bank, provide additional collateral with value in amounts satisfactory to Bank, in order to increase the Borrowing Base by an amount at least equal to such excess; or (ii) prepay the outstanding principal of the Note in an aggregate amount at least equal to such excess; or (iii) pay to Bank up to one hundred percent (100%) of the reduction, which shall specify Net Proceeds from Production until the effective date thereof and the aggregate unpaid principal amount of such reduction (which shall not be all Advances, is equal to or less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof, no more than an amount which would cause a Borrowing Base Deficiency) and shall be irrevocable and effective only upon receipt by the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine the Borrowing Base at any subsequent Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either then in relation to the Borrowing Base prior or subsequent to any such optional reduction by Borrowereffect. (d) In addition to “Scheduled Redeterminations” pursuant to Section 2.08(b), the Borrower and the Majority Lenders may each request one (1) additional redetermination of the Borrowing Base during each Borrowing Base Period. In the event the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to this Section 2.08(d), the Borrower shall deliver written notice of such request to the Administrative Agent which shall include: (i) Engineering Report(s) prepared as of a date not more than thirty (30) calendar days prior to the date of such request, and (ii) such other information as Administrative Agent and the Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to the date of such request. Likewise, in the event the Lenders exercise their option for a Special Borrowing Base Determination, the Administrative Agent shall give the Borrower notice of the redetermined Borrowing Base which shall state the effective date of the redetermination.

Borrowing Base. (a) The Borrowing Base shall be determined in accordance with Section 2.08(b) by the Administrative Agent with the concurrence of the Majority Lenders and is subject to redetermination in accordance with Section 2.08(d). Upon any redetermination of the Borrowing Base, such redetermination shall remain in effect until the next successive Redetermination Date. So long as any of the Commitments are in effect or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date Date, until the first redetermination or reduction pursuant to Section 2.082.08(d) or adjustment pursuant to Section 8.08(c), the amount of the Borrowing Base shall be $155,000,000 (the “Initial Borrowing Base”) which amount is comprised of the Oil and Gas Properties Collateral Value200,000,000.00. (b) Upon receipt of the reports required by Section 8.07 and such other reports, data and supplemental information as may from time to time be reasonably requested by the Administrative Agent (the “Engineering Reports”), the Borrowing Base shall be redetermined for each Borrowing Base Period and each such redetermination shall be effective as of the date set forth in such notice of redetermination delivered by the Administrative Agent to Borrower (the “Scheduled Redetermination Date”). The Oil and Gas Properties Collateral Value shall be determined based upon the loan collateral value assigned to the Mortgaged Properties. The Borrowing Base shall be equal to the sum of the Oil and Gas Properties Collateral Value and such other credit factors (including without limitation the assets, liabilities, cash flow, business, properties, prospects, management and ownership of the Borrower and its Subsidiaries) which the Lenders deem significant. The Lenders’ determination of the Borrowing Base shall be in their sole discretion and shall not be subject to review or challenge. Upon each redetermination of will redetermine the Borrowing Base. Such redetermination will be made by the Agent and the applicable number of required Lenders, as provided below, in accordance with their normal and customary procedures for evaluating oil and gas reserves and other related assets as such exist at that particular time. The Agent, in its sole discretion, may make adjustments to the Administrative rates, volumes and prices and other assumptions set forth therein in accordance with its normal and customary procedures for evaluating oil and gas reserves and other related assets as such exist at that particular time. The Agent shall recommend propose to the Lenders a new Borrowing Base and the Lenders in accordance with their customary policies and procedures for extending credit to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement in the event of any increase in the Borrowing Base and by agreement of at least the Majority Lenders in the event of any redetermination to maintain or reduce the Borrowing Base. If a redetermined Borrowing Base is not approved by the Administrative Agent and the applicable Lenders within twenty (20) days following receipt by the Agent and the Lenders of the submission Engineering Reports. Lenders holding 100% of the Aggregate Revolving Credit Commitments must approve increases to the Lenders by the Administrative Agent of its recommended Borrowing Base, while the Administrative Agent approval of the Majority Lenders is required to approve a decrease in, or maintain, the Borrowing Base. After having received notice of such proposal by the Agent, all of the Lenders shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within have ten (10) days thereafter to agree or disagree with such proposal. If at the end of the ten (10) days, any Lender shall have not communicated its proposed approval or disapproval, such silence shall be deemed to be an approval of the Agent’s proposal, and the Agent’s proposal shall be the new Borrowing Base. Promptly following If however, within the 10th day after such requesttime prescribed by the preceding sentence, (i) all the Lenders have not approved (or have not been deemed to have approved) the Agent’s proposal with respect to an increase in the Borrowing Base, or (ii) the Majority Lenders have not approved (or have not been deemed to have approved) the Agent’s proposal with respect to a decrease in, or maintenance of, the Administrative Borrowing Base, the Agent shall determine and, as applicable, either all the Lenders (with respect to an increase in the Borrowing Base for such Redetermination by calculating Base) or the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (with respect to a decrease in, or all Lenders in the case of an increase). If the Borrower does not furnish the Engineering Reports by the date requiredmaintenance of, the Lenders may nonetheless determine Borrowing Base) shall, within an additional ten (10) days, agree upon a new Borrowing Base. It is expressly understood that If the Agent and, as applicable, either all the Lenders or the Majority Lenders cannot otherwise agree on a redetermination of the Borrowing Base within such additional ten (10) day period then no later than five days after the end of such ten (10) day period, the Lenders shall have no obligation submit to determine the Agent in writing, and/or the Agent shall poll the Lenders, for their individual recommendations for such redetermined Borrowing Base in accordance with their respective customary practices and standards for oil and gas loans, whereupon the Agent shall designate the Borrowing Base at the largest amount approved by all of the Lenders (for any particular amountincrease) or by the Majority Lenders (for maintenance of the Borrowing Base at its current level or for any decrease). However, either in relation the amount of the Borrowing Base shall never be increased at any time without the unanimous consent of the Lenders, notwithstanding anything else herein to the Maximum Revolving Credit Amount or otherwisecontrary. (c) The Borrower Agent may exclude any Oil and Gas Property or portion of production therefrom or any income from any other Property from the Borrowing Base, at any time, because title information is not satisfactory to the Agent in its sole discretion exercised in good faith. (d) So long as any of the Commitments are in effect and until payment in full of all Loans and satisfaction of the LC Obligations hereunder, on or around the first Business Day of each November and May, commencing November 1, 2007 (each being a “Scheduled Redetermination Date”), the Lenders shall have the right to reduce redetermine the amount of the Borrowing Base upon not less than thirty in accordance with Section 2.08(b). In addition, (30i) days’ prior written notice the Borrower may initiate a redetermination of the Borrowing Base at any other time as it so elects by specifying in writing to the Administrative Agent (who shall will promptly notify the Lenders) of the reduction, date by which shall specify the effective date thereof Borrower will furnish to the Agent and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 Lenders a Reserve Report in excess thereof, no more than an amount which would cause a Borrowing Base Deficiencyaccordance with Section 8.07(b) and shall be irrevocable the date by which such redetermination is requested to occur; provided, however, that the Borrower may initiate only one such unscheduled redetermination between Scheduled Redetermination Dates and effective only upon receipt by (ii) the Administrative Agent. The Borrowing Base once reduced at Borrower’s election Agent may not be reinstated by Borrower, nor shall Lenders be obligated to determine initiate a redetermination of the Borrowing Base at any subsequent other time as it so elects by specifying in writing to the Borrower the date by which the Borrower is to furnish a Reserve Report in accordance with Section 8.07(b) and the date on which such redetermination is to occur; provided, however, that the Agent may initiate only one such unscheduled redetermination between Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either in relation to the Borrowing Base prior or subsequent to any such optional reduction by BorrowerDates. (de) In addition to “Scheduled Redeterminations” pursuant to Section 2.08(b), The Agent shall promptly notify in writing the Borrower and the Majority Lenders may each request one (1) additional of the new Borrowing Base. Any redetermination of the Borrowing Base during each Borrowing Base Period. In the event the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to this Section 2.08(d), the Borrower shall deliver not be in effect until written notice of such request is given to the Administrative Agent which shall include: (i) Engineering Report(s) prepared as of a date not more than thirty (30) calendar days prior to the date of such request, and (ii) such other information as Administrative Agent and the Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to the date of such request. Likewise, in the event the Lenders exercise their option for a Special Borrowing Base Determination, the Administrative Agent shall give the Borrower notice of the redetermined Borrowing Base which shall state the effective date of the redeterminationBorrower.

Borrowing Base. As further set forth in clauses (a) The Borrowing Base shall be determined and (h) of this Section 2.07, for the period from and including the First Amendment Effective Date until redetermined or recalculated in accordance with this Agreement, the initial Borrowing Base is $200,000,000. (a) RBL Component. For the period from and including the ClosingFirst Amendment Effective Date to but excluding the date of the first determination of the Borrowing BaseRedetermination Date thereafter pursuant to the further provisions of this Section 2.08(b) 2.07, Section 2.07, the initial amount of the Borrowing BaseRBL Component has been set by the Administrative Agent with and acknowledged by the concurrence Borrower and agreed to by the Lenders to be $110,000,000.62,500,000. The Borrower and the Lenders acknowledge and agree that the initial Borrowing Base has been determined as of the Lenders First Amendment Effective Date as if the Borrower and is its Subsidiaries no longer own (and accordingly, without giving any value in the RBL Component to) the MidCon Assets. Notwithstanding the foregoing, the RBL Component may be subject to redetermination in accordance with further adjustments pursuant to Section 2.08(d)2.07(f) and Section 2.07(g) from time to time prior to the first Scheduled RBL Component Redetermination. Upon any For each and every determination or redetermination of the Borrowing BaseBaseRBL Component under this Agreement, the Borrowing BaseRBL Component shall be determined or redetermined based on the oil and gas reserves attributable to the Oil and Gas Properties of the Borrower and its Subsidiaries. (b) The RBL Component shall be redetermined semi-annually in accordance with this Section 2.07(b) (a “Scheduled RBL Component Redetermination”). Promptly after December 31 of each calendar year, commencing December 31, 2015, and in any event prior to April 1st of each calendar year (commencing April 1, 2016), the Borrower shall furnish to the Administrative Agent a Reserve Report in form and substance reasonably satisfactory to the Administrative Agent, prepared by an Approved Engineer, which Reserve Report shall be dated as of December 31 of the immediately preceding calendar year. In addition, within ninety (90) days after each June 30, commencing June 30, 2015,2016, the Borrower shall furnish to the Administrative Agent a Reserve Report in form and substance satisfactory to the Administrative Agent prepared by the Borrower’s petroleum engineers, which report shall be dated as of June 30 of such calendar year. Each such Reserve Report shall be accompanied by additional data concerning pricing, hedging, quantities and purchasers of production, and other information and engineering and geological data as the Administrative Agent or the Required Lenders may reasonably request. Within fifteen (15) days after receipt of such Reserve Report and all such information, the Administrative Agent shall make an initial determination of the new Borrowing BaseRBL Component (the “Proposed Borrowing BaseRBL Component”) and upon such initial determination shall promptly notify the Lenders in writing of its initial determination of the Proposed Borrowing BaseRBL Component (the “Proposed RBL Component Notice”). Such initial determinations made by the Administrative Agent shall be so made by the Administrative Agent in the exercise of its sole discretion in accordance with the Administrative Agent’s customary practices and standards for oil and gas lending as they exist at the particular time, and may include a consideration of the value of the Oil and Gas Properties that are subject to legal, valid and enforceable mortgage liens held by the Administrative Agent for the ratable benefit of the Lenders. In no event shall the Proposed Borrowing BaseRBL Component exceed the Aggregate Maximum Credit Amount of the Lenders. The Required Lenders shall approve or reject the Administrative Agent’s initial determinations of the Proposed Borrowing BaseRBL Component by written notice to the Administrative Agent within fifteen (15) days of the Administrative Agent’s notification of its initial determinations; provided, however, that with respect to any Proposed Borrowing BaseRBL Component that is equal to or less than the Borrowing BaseRBL Component then in effect (but not with respect to any increase in the Borrowing BaseRBL Component) the failure by any Lender to confirm or disapprove in writing the Administrative Agent’s determination of the Proposed Borrowing BaseRBL Component shall be deemed an approval of the Proposed Borrowing BaseRBL Component. If the Required Lenders fail to approve any such determination of the Proposed Borrowing BaseRBL Component made by the Administrative Agent hereunder in such fifteen (15) day period, then the Administrative Agent shall poll the Lenders to ascertain the highest Proposed Borrowing BaseRBL Component then acceptable to the Required Lenders for purposes of this Section 2.07(b) and, subject to the last sentence of this Section 2.07(b), such redetermination amounts shall become the new Borrowing BaseRBL Component, effective on the date specified in this Section 2.07. Until such approval or deemed approval, the Borrowing BaseRBL Component in effect before the Proposed Borrowing BaseRBL Component shall remain in effect. Upon agreement by the Administrative Agent and the Required Lenders of the new Borrowing BaseRBL Component, the Administrative Agent shall, by written notice to the Borrower and the Lenders, designate the new Borrowing BaseRBL Component available to the Borrower (the “New RBL Component Notice”). Such designation shall be effective as of the Business Day specified in such written notice (or, if no effective date is specified in such written notice, the next Business Day following delivery of such written notice), and such new Borrowing BaseRBL Component shall remain in effect until the next Redetermination Date. So long as any of the Commitments are in effect determination or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date until the first redetermination or reduction pursuant to Section 2.08, the amount of the Borrowing Base BaseRBL Component in accordance with this Agreement. Anything herein contained to the contrary notwithstanding, any determination or redetermination of the Borrowing BaseRBL Component resulting in any increase of the Borrowing BaseRBL Component in effect immediately prior to such determination or redetermination shall be $155,000,000 (require the “Initial Borrowing Base”) which amount is comprised approval of all the Lenders in their sole discretion in accordance with their respective customary practices and standards for oil and gas lending as they exist at the particular time, and may include a consideration of the value of the Oil and Gas Properties Collateral Value. (b) Upon receipt of the reports required by Section 8.07 that are subject to legal, valid and such other reports, data and supplemental information as may from time to time be reasonably requested enforceable mortgage liens held by the Administrative Agent for the ratable benefit of the Lenders. (c) In addition to each scheduled redetermination of the “Engineering Reports”Borrowing BaseScheduled RBL Component pursuant to Section 2.07(b) (and in addition to any redetermination of the Borrowing BaseRBL Component pursuant to SectionSections 2.07(f) and (g)), the Borrowing Base shall be redetermined for each Borrowing Base Period and each such redetermination shall be effective as of the date set forth in such notice of redetermination delivered Borrower may by notifying the Administrative Agent thereof, and the Administrative Agent may, at the direction of the Required Lenders, by notifying the Borrower thereof, each elect to Borrower cause the Borrowing BaseRBL Component to be redetermined once between each scheduledScheduled RBL Component Redetermination (the an “Scheduled Redetermination DateInterim RBL Component Redetermination”) pursuant to Section 2.07(b). If such discretionary redetermination of the Borrowing BaseRBL Component pursuant to the provisions of this Section 2.07(c) is initiated by the Borrower, the Borrower shall deliver a written request to the Administrative Agent together with a Reserve Report in form and substance satisfactory to the Administrative Agent, prepared by the Borrower’s petroleum engineers, containing information similar to the Reserve Reports delivered pursuant to Section 2.07(b), and such other updated engineering, production, operating and other data as the Administrative Agent, the Issuer or any Lender may reasonably request; provided that if the Required Lenders have requested the discretionary redetermination of the Borrowing BaseRBL Component pursuant to the provisions of this Section 2.07(c), the Borrower shall deliver to the Administrative Agent such Reserve Report and other information within thirty (30) days of receipt of a request therefor. The Administrative Agent shall have fifteen (15) days following receipt of such requested information to make an initial redetermination of the Borrowing BaseRBL Component, and the Administrative Agent and the Required Lenders shall approve and designate the new Borrowing BaseRBL Component in accordance with the procedures and standards described in Section 2.07(b). (d) With the delivery of each Reserve Report, the Borrower shall provide to the Administrative Agent a certificate from a Responsible Officer certifying that, to the best of such Responsible Officer’s knowledge and in all material respects: (i) the information contained in each such Reserve Report and any other information delivered in connection therewith is true and correct, (ii) the Borrower or the Guarantors owns good and defensible title to the Oil and Gas Properties Collateral Value shall be determined based upon the loan collateral value assigned evaluated in each such Reserve Report and such Properties are free of all Liens except for Liens permitted by Section 9.03, (iii) except as set forth on an exhibit to the Mortgaged Properties. The certificate, on a net basis there are no gas imbalances, take or pay or other prepayments in excess of the volume specified in Section 7.20 with respect to their Oil and Gas Properties evaluated in such Reserve Report that would require the Borrower or any of its Subsidiaries to deliver Hydrocarbons either Third Amended and Restated Credit Agreement – Page 41 715347206 14464587 716874472 14464587 generally or produced from such Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor, (iv) none of their Oil and Gas Properties have been transferred since the date of the last Borrowing Base shall be equal BaseRBL Component determination except as set forth on an exhibit to the sum certificate, which certificate shall list all of its Oil and Gas Properties sold and in such detail as reasonably required by the Administrative Agent, (v) attached to the certificate is a list of all marketing agreements entered into subsequent to the later of the date hereof or the most recently delivered Reserve Report that the Borrower could reasonably be expected to have been obligated to list on Schedule 7.20 had such agreement been in effect on the date hereof, (vi) attached thereto is a schedule of the Oil and Gas Properties Collateral Value evaluated by such Reserve Report that are Mortgaged Properties and demonstrating the percentage of the present value that such other credit factors Mortgaged Properties represent, and (including without limitation vii) the assets, liabilities, cash flow, business, properties, prospects, management and ownership outstanding amount of the Debt of the Borrower and or any of its SubsidiariesSubsidiaries does not exceed the amount permitted to be incurred pursuant to Section 9.02(f). (e) which Notwithstanding anything herein the Lenders deem significant. The Lenders’ determination of the Borrowing Base shall be in their sole discretion and shall not be subject to review or challenge. Upon each redetermination of the Borrowing Basecontrary, the Administrative Agent shall recommend to the Lenders a new Borrowing Base and the Lenders in accordance with their customary policies and procedures for extending credit to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement in the event of any increase in the Borrowing Base and by agreement of at least the Majority Lenders in the event of any redetermination to maintain or reduce the Borrowing Base. If a redetermined Borrowing Base is not approved by the Administrative Agent and the applicable Lenders within twenty (20) days of the submission to the Lenders by the Administrative Agent of its recommended Borrowing Base, the Administrative Agent shall notify each Lender that the recommended Borrowing Base has Borrower does not been approved and request that each Lender submit to the Administrative Agent furnish any required Reserve Report within ten (10) days of date the required herein, the Administrative Agent and the Required Lenders may nonetheless designate the Borrowing BaseRBL Component from time to time thereafter until the Administrative Agent receives such Reserve Report, whereupon the Administrative Agent and the Required Lenders or all Lenders, as applicable, shall designate a new Borrowing BaseRBL Component in accordance with the general procedures outlined in Section 2.07(b). (f) In addition to any redetermination described in Section 2.07(b) or (c), if at any time the aggregate fair market value of Oil and Gas Properties sold or disposed of pursuant to Section 9.12(d), together with the aggregate net fair market value to the Borrower of all Material Swap Transactions, in each case, since the most recent redetermination of the Borrowing BaseRBL Component, exceeds five percent (5%) of the value of proved developed Oil and Gas Properties included in the most recently delivered Reserve Report, then the Administrative Agent may, at the direction of the Required Lenders, by notifying the Borrower thereof, reduce the Borrowing BaseRBL Component, effective immediately upon such sale, disposition or consummation of Material Swap Transaction by an amount equal to the Borrowing BaseRBL Component value (as determined by the Administrative Agent in its proposed reasonable judgment) of such Oil and Gas Properties sold or disposed of and Swap Transactions in respect of commodities assigned, terminated (other than as a result of the expiration thereof), unwound, sold or liquidated, and such new Borrowing BaseBaseRBL Component shall be effective and applicable to the Borrower, the Administrative Agent, the Issuer and the Lenders until the next redetermination or modification of the Borrowing BaseRBL Component pursuant to this Agreement. Promptly following the 10th day after Upon any such requestredetermination, the Administrative Agent shall determine the promptly deliver a New Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable BaseRBL Component Notice to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (or all Lenders in the case of an increase). If the Borrower does not furnish the Engineering Reports by the date required, the Lenders may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwise. (c) The Borrower shall have the right to reduce the amount of the Borrowing Base upon not less than thirty (30) days’ prior written notice to the Administrative Agent (who shall promptly notify the Lenders) of the reduction, which shall specify the effective date thereof and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 in excess thereof, no more than an amount which would cause a Borrowing Base Deficiency) and shall be irrevocable and effective only upon receipt by the Administrative Agent. The Borrowing Base once reduced at Borrower’s election may not be reinstated by Borrower, nor shall Lenders be obligated to determine the Borrowing Base at any subsequent Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either in relation to the Borrowing Base prior or subsequent to any such optional reduction by Borrower. (d) In addition to “Scheduled Redeterminations” pursuant to Section 2.08(b), the Borrower and the Majority Lenders may each request one Lenders. So long as the Borrower has not affirmatively elected to include the MidCon Assets in the determination of the RBL Component, any sale or other disposition of the MidCon Assets otherwise permitted under Section 9.12(d) shall not result in a reduction in the RBL Component. (1g) additional redetermination Notwithstanding the requirements of Section 12.02(b)(ii), any decrease of the Borrowing Base during each Borrowing Base Period. In the event BaseRBL Component resulting solely as a result of any incurrence of Debt incurred by the Borrower or Majority Lenders request a “Special Borrowing Base Determination” any of its Subsidiaries pursuant to this Section 2.08(d), 9.02(f) shall become effective upon Third Amended and Restated Credit Agreement – Page 42 715347206 14464587 716874472 14464587 the Administrative Agent’s notice thereof to the Borrower shall deliver written notice of such request to and the Administrative Agent which shall include: (i) Engineering Report(s) prepared as of a date not more than thirty (30) calendar days prior to the date of such requestLenders, and (ii) such other information as Administrative Agent and shall not require any approval of the Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to or the date of such request. Likewise, in the event the Lenders exercise their option for a Special Borrowing Base Determination, the Administrative Agent shall give the Borrower notice of the redetermined Borrowing Base which shall state the effective date of the redeterminationRequired Lenders.

Borrowing Base. (a) The Borrowing Base shall be determined in accordance with Section 2.08(b) by the Administrative Agent with the concurrence of the Majority Lenders and is subject to redetermination in accordance with Section 2.08(d). Upon any redetermination of the Borrowing Base, such redetermination shall remain in effect until the next successive Redetermination Date. So long as any of the Commitments are in effect or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date Date, until the first redetermination or reduction pursuant to Section 2.082.08(d) or adjustment pursuant to Section 8.08(c), the amount of the Borrowing Base shall be $155,000,000 (the “Initial Borrowing Base”) which amount is comprised of the Oil and Gas Properties Collateral Value200,000,000.00. (b) Upon receipt of the reports required by Section 8.07 and such other reports, data and supplemental information as may from time to time be reasonably requested by the Administrative Agent (the “"Engineering Reports”"), the Borrowing Base shall be redetermined for each Borrowing Base Period and each such redetermination shall be effective as of the date set forth in such notice of redetermination delivered by the Administrative Agent to Borrower (the “Scheduled Redetermination Date”). The Oil and Gas Properties Collateral Value shall be determined based upon the loan collateral value assigned to the Mortgaged Properties. The Borrowing Base shall be equal to the sum of the Oil and Gas Properties Collateral Value and such other credit factors (including without limitation the assets, liabilities, cash flow, business, properties, prospects, management and ownership of the Borrower and its Subsidiaries) which the Lenders deem significant. The Lenders’ determination of the Borrowing Base shall be in their sole discretion and shall not be subject to review or challenge. Upon each redetermination of will redetermine the Borrowing Base. Such redetermination will be made by the Agent and the applicable number of required Lenders, as provided below, in accordance with their normal and customary procedures for evaluating oil and gas reserves and other related assets as such exist at that particular time. The Agent, in its sole discretion, may make adjustments to the Administrative rates, volumes and prices and other assumptions set forth therein in accordance with its normal and customary procedures for evaluating oil and gas reserves and other related assets as such exist at that particular time. The Agent shall recommend propose to the Lenders a new Borrowing Base and the Lenders in accordance with their customary policies and procedures for extending credit to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement in the event of any increase in the Borrowing Base and by agreement of at least the Majority Lenders in the event of any redetermination to maintain or reduce the Borrowing Base. If a redetermined Borrowing Base is not approved by the Administrative Agent and the applicable Lenders within twenty (20) days following receipt by the Agent and the Lenders of the submission Engineering Reports. Lenders holding 100% of the Aggregate Revolving Credit Commitments must approve increases to the Lenders by the Administrative Agent of its recommended Borrowing Base, while the Administrative Agent approval of the Majority Lenders is required to approve a decrease in, or maintain, the Borrowing Base. After having received notice of such proposal by the Agent, all of the Lenders shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within have ten (10) days thereafter to agree or disagree with such proposal. If at the end of the ten (10) days, any Lender shall have not communicated its proposed approval or disapproval, such silence shall be deemed to be an approval of the Agent's proposal, and the Agent's proposal shall be the new Borrowing Base. Promptly following If however, within the 10th day after such requesttime prescribed by the preceding sentence, (i) all the Lenders have not approved (or have not been deemed to have approved) the Agent's proposal with respect to an increase in the Borrowing Base, or (ii) the Majority Lenders have not approved (or have not been deemed to have approved) the Agent's proposal with respect to a decrease in, or maintenance of, the Administrative Borrowing Base, the Agent shall determine and, as applicable, either all the Lenders (with respect to an increase in the Borrowing Base for such Redetermination by calculating Base) or the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (with respect to a decrease in, or all Lenders in the case of an increase). If the Borrower does not furnish the Engineering Reports by the date requiredmaintenance of, the Lenders may nonetheless determine Borrowing Base) shall, within an additional ten (10) days, agree upon a new Borrowing Base. It is expressly understood that If the Agent and, as applicable, either all the Lenders or the Majority Lenders cannot otherwise agree on a redetermination of the Borrowing Base within such additional ten (10) day period then no later than five days after the end of such ten (10) day period, the Lenders shall have no obligation submit to determine the Agent in writing, and/or the Agent shall poll the Lenders, for their individual recommendations for such redetermined Borrowing Base in accordance with their respective customary practices and standards for oil and gas loans, whereupon the Agent shall designate the Borrowing Base at the largest amount approved by all of the Lenders (for any particular amountincrease) or by the Majority Lenders (for maintenance of the Borrowing Base at its current level or for any decrease). However, either in relation the amount of the Borrowing Base shall never be increased at any time without the unanimous consent of the Lenders, notwithstanding anything else herein to the Maximum Revolving Credit Amount or otherwisecontrary. (c) The Borrower Agent may exclude any Oil and Gas Property or portion of production therefrom or any income from any other Property from the Borrowing Base, at any time, because title information is not satisfactory to the Agent in its sole discretion exercised in good faith. (d) So long as any of the Commitments are in effect and until payment in full of all Loans and satisfaction of the LC Obligations hereunder, on or around the first Business Day of each November and May, commencing November 1, 2007 (each being a "Scheduled Redetermination Date"), the Lenders shall have the right to reduce redetermine the amount of the Borrowing Base upon not less than thirty in accordance with Section 2.08(b). In addition, (30i) days’ prior written notice the Borrower may initiate a redetermination of the Borrowing Base at any other time as it so elects by specifying in writing to the Administrative Agent (who shall will promptly notify the Lenders) of the reduction, date by which shall specify the effective date thereof Borrower will furnish to the Agent and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 Lenders a Reserve Report in excess thereof, no more than an amount which would cause a Borrowing Base Deficiencyaccordance with Section 8.07(b) and shall be irrevocable the date by which such redetermination is requested to occur; provided, however, that the Borrower may initiate only one such unscheduled redetermination between Scheduled Redetermination Dates and effective only upon receipt by (ii) the Administrative Agent. The Borrowing Base once reduced at Borrower’s election Agent may not be reinstated by Borrower, nor shall Lenders be obligated to determine initiate a redetermination of the Borrowing Base at any subsequent other time as it so elects by specifying in writing to the Borrower the date by which the Borrower is to furnish a Reserve Report in accordance with Section 8.07(b) and the date on which such redetermination is to occur; provided, however, that the Agent may initiate only one such unscheduled redetermination between Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either in relation to the Borrowing Base prior or subsequent to any such optional reduction by BorrowerDates. (de) In addition to “Scheduled Redeterminations” pursuant to Section 2.08(b), The Agent shall promptly notify in writing the Borrower and the Majority Lenders may each request one (1) additional of the new Borrowing Base. Any redetermination of the Borrowing Base during each Borrowing Base Period. In the event the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to this Section 2.08(d), the Borrower shall deliver not be in effect until written notice of such request is given to the Administrative Agent which shall include: (i) Engineering Report(s) prepared as of a date not more than thirty (30) calendar days prior to the date of such request, and (ii) such other information as Administrative Agent and the Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to the date of such request. Likewise, in the event the Lenders exercise their option for a Special Borrowing Base Determination, the Administrative Agent shall give the Borrower notice of the redetermined Borrowing Base which shall state the effective date of the redeterminationBorrower.

Borrowing Base. (a) The Borrowing Base shall be determined in accordance with Section 2.08(b) by the Administrative Agent with the concurrence of and the Lenders and is subject to redetermination in accordance with Section 2.08(d2.08(c). Upon any redetermination of the Borrowing Base, such redetermination shall remain in effect until the next successive Redetermination DateDate unless otherwise adjusted as contemplated by Section 2.08(e), Section 2.08(f), Section 8.07(c) or Section 9.14. So long as any of the Commitments are in effect or any LC Exposure or Loans are outstanding hereunder, this facility shall be governed by the then effective Borrowing Base. During the period from and after the Closing Date Date, until the first redetermination or reduction pursuant to Section 2.082.08(c) or adjustment pursuant to Section 2.08(e), Section 2.08(f), Section 8.07(c) or Section 9.14, the amount of the Borrowing Base shall be $155,000,000 (the “Initial Borrowing Base”) which amount is comprised of the Oil and Gas Properties Collateral Value275,000,000.00. (b) Upon Within twenty (20) days following its receipt of the reports required by Section 8.07 8.06 and such other reports, data and supplemental information as may from time to time be reasonably requested by the Administrative Agent (the “Engineering Reports”), the Administrative Agent will propose to the Lenders a Borrowing Base, in its sole discretion and in accordance with its normal and customary procedures for evaluating oil and gas reserves and other related assets as such exist at that particular time. Following receipt of such proposal, Lenders holding 100% of the Aggregate Commitments must approve any increase to the Borrowing Base and the Required Lenders must approve a decrease in, or maintenance of, the Borrowing Base, which approvals shall be redetermined made by each Lender, in its sole discretion and in accordance with its normal and customary procedures for each Borrowing Base Period evaluating oil and each gas reserves and other related assets as such redetermination shall be effective as of the date set forth in such exist at that particular time. After having received notice of redetermination delivered such proposal by the Administrative Agent Agent, all of the Lenders shall have fifteen (15) days to Borrower agree or disagree with such proposal. If at the end of the fifteen (the “Scheduled Redetermination Date”). The Oil and Gas Properties Collateral Value 15) days, any Lender shall have not communicated its approval or disapproval, such silence shall be determined based upon deemed to be an approval of the loan collateral value assigned to Administrative Agent’s proposal, and the Mortgaged Properties. The Borrowing Base Administrative Agent’s proposal shall be equal to the sum of new Borrowing Base. If however, within the Oil and Gas Properties Collateral Value and such other credit factors time prescribed by the preceding sentence, (including without limitation the assets, liabilities, cash flow, business, properties, prospects, management and ownership of the Borrower and its Subsidiariesi) which all the Lenders deem significant. The Lenders’ determination of have not approved (or have not been deemed to have approved) the Administrative Agent’s proposal with respect to an increase in the Borrowing Base shall be in their sole discretion and shall Base, or (ii) the Required Lenders have not be subject approved (or have not been deemed to review have approved) the Administrative Agent’s proposal with respect to a decrease in, or challenge. Upon each redetermination of maintenance of, the Borrowing Base, the Administrative Agent shall recommend to poll the Lenders a new to ascertain the highest Borrowing Base amount and highest amount approved by either all the Lenders in accordance (with their customary policies and procedures for extending credit respect to oil and gas reserve-based customers shall establish the redetermined Borrowing Base by unanimous agreement in the event of any an increase in the Borrowing Base and by agreement of at least Base) or the Majority Required Lenders in the event of any redetermination (with respect to maintain a decrease in, or reduce maintenance of, the Borrowing Base. If a redetermined Borrowing Base is not approved by ) shall become the Administrative Agent and the applicable Lenders within twenty (20) days of the submission to the Lenders by the Administrative Agent of its recommended Borrowing Base, the Administrative Agent shall notify each Lender that the recommended Borrowing Base has not been approved and request that each Lender submit to the Administrative Agent within ten (10) days thereafter its proposed Borrowing Base. Promptly following the 10th day after such request, the Administrative Agent shall determine the Borrowing Base for such Redetermination by calculating the highest Borrowing Base then acceptable to the Administrative Agent and a number of Lenders sufficient to constitute Majority Lenders (or all Lenders in the case of an increase). If the Borrower does not furnish the Engineering Reports by the date required, the Lenders may nonetheless determine a new Borrowing Base. It is expressly understood that the Lenders shall have no obligation to determine the Borrowing Base at any particular amount, either in relation to the Maximum Revolving Credit Amount or otherwise. (c) The Borrower So long as any of the Commitments are in effect and until payment in full of all Loans and satisfaction of the LC Obligations hereunder, on or around the first Business Day of each November and May, commencing May 1, 2014 (each being a “Scheduled Redetermination Date”), the Lenders shall have the right to reduce redetermine the amount of the Borrowing Base upon not less than thirty in accordance with Section 2.08(b). In addition, (30i) days’ prior written notice the Borrower may initiate a redetermination of the Borrowing Base at any other time as it so elects by specifying in writing to the Administrative Agent (who shall will promptly notify the Lenders) of the reduction, date by which shall specify the effective date thereof Borrower will furnish to the Administrative Agent and the amount of such reduction (which shall not be less than $1,000,000 or any whole multiple of $1,000,000 Lenders a Reserve Report in excess thereof, no more than an amount which would cause a Borrowing Base Deficiencyaccordance with Section 8.06(b) and shall be irrevocable the date by which such redetermination is requested to occur; provided, however, that the Borrower may initiate only one such unscheduled redetermination between Scheduled Redetermination Dates and effective only upon receipt by (ii) the Administrative Agent. The Borrowing Base once reduced at Borrower’s election Agent may not be reinstated by Borrower, nor shall Lenders be obligated to determine initiate a redetermination of the Borrowing Base at any subsequent other time as it so elects by specifying in writing to the Borrower the date by which the Borrower is to furnish a Reserve Report in accordance with Section 8.06(b) and the date on which such redetermination is to occur; provided, however, that the Administrative Agent may initiate only one such unscheduled redetermination between Scheduled Redetermination Date or other Special Borrowing Base Determination at any particular amount, either in relation to the Borrowing Base prior or subsequent to any such optional reduction by BorrowerDates. (d) In addition to “Scheduled Redeterminations” pursuant to Section 2.08(b), The Administrative Agent shall promptly notify in writing the Borrower and the Majority Lenders may each request one (1) additional of the new Borrowing Base. Any redetermination of the Borrowing Base during shall not be in effect until written notice is given to the Borrower. (e) Notwithstanding anything to the contrary contained herein, each time the Borrower issues any Senior Unsecured Notes, then on the date of issuance thereof, the Borrowing Base Periodthen in effect shall be reduced automatically by an amount equal to twenty-five percent (25%) of the stated principal amount of such Senior Unsecured Notes so issued; provided that notwithstanding the foregoing, with respect to any such Debt issued on or before the date of the first redetermination of the Borrowing Base pursuant to this Agreement, the Borrowing Base shall only be reduced by the amount of such Debt issued in excess of $150,000,000.00. The Borrowing Base as so reduced shall become the new Borrowing Base immediately upon such date of issuance and shall remain in effect until redetermined pursuant to this Agreement. For purposes of this Section 2.08(e), if any Senior Unsecured Notes are is issued at a discount or otherwise sold for less than “par”, the reduction shall be calculated based upon the stated principal amount without reference to such discount. Such automatic redetermination of the Borrowing Base shall not constitute a ‘special redetermination’ under Section 2.08(c)(ii) of the Credit Agreement. (f) In the event the Borrower or Majority Lenders request a “Special Borrowing Base Determination” pursuant to this Section 2.08(d), that the Borrower shall deliver written notice of such request to notify the Administrative Agent which shall include: (i) Engineering Report(s) prepared of the assignment, termination or unwinding of any Hedge Agreement as of a date not more than thirty (30) calendar days prior to the date of such request, and (ii) such other information as Administrative Agent and the Lenders shall request prepared as of a date not more than thirty (30) calendar days prior to the date of such request. Likewise, provided in the event the Lenders exercise their option for a Special Borrowing Base DeterminationSection 8.01(i), the Administrative Agent shall give have the Borrower notice of right to adjust the redetermined Borrowing Base which shall state to reflect the effective date economic effect of such assignment, termination or unwinding on the redeterminationBorrowing Base.