Contract

Exhibit 10.5

The Partnership has redacted certain confidential information in this agreement in reliance upon its confidential treatment request that it has filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. In this agreement, we indicate each redaction by use of an asterisk *.

GAS PURCHASE AND PROCESSING AGREEMENT

BETWEEN

NATURAL GAS ASSOCIATES, A COLORADO PARTNERSHIP

AND

SHF PARTNERSHIP, A COLORADO GENERAL PARTNERSHIP

TRAILBLAZER OIL AND GAS, INC., A UTAH CORPORATION

ALFA RESOURCES, INC., A COLORADO CORPORATION

PULSAR OIL AND GAS, INC., A UTAH CORPORATION

OVERTHRUST OIL ROYALTY CORPORATION, A COLORADO CORPORATION

CORVETTE PETROLEUM, LTD., A BRITISH COLUMBIA CORPORATION

XXXXXX XXXXXX, A INDIVIDUAL

XXXX X. XXXXXXXX, A INDIVIDUAL

TRAILBLAZER OIL & GAS GPA.007.E

INDEX

I.	DEFINITIONS	Page 2

II.	PRELIMINARY ACTS OF PARTIES	Page 4

III.	DEDICATION OF ACREAGE	Page 4

IV.	DEDICATION OF PLANT CAPACITY AND PIPELINE GATHERING SYSTEM	Page 5

V.	RESERVATIONS OF SELLER	Page 5

VI.	QUANTITY	Page 6

VII.	POINT(S) OF DELIVERY, PRESSURE AND OWNERSHIP	Page 7

VIII.	GAS MEASUREMENT AND QUALITY	Page 8

IX.	ALLOCATION OF RESIDUE GAS AND PLANT PRODUCTS	Page 10

X.	PRICE	Page 11

XI.	PAYMENT	Page 13

XII.	REGULATORY BODIES	Page 14

XIII.	FORCE MAJEURE	Page 14

XIV.	WARRANTY OF TITLE TO GAS	Page 15

XV.	SELLER'S REPRESENTATIVE	Page 16

XVI.	NOTICES	Page 16

XVII.	EASEMENTS	Page 17

XVIII.	TERM	Page 17

XIX.	DEFAULTS	Page 18

XX.	UNECONOMIC WELL CONNECTIONS AND UNECONOMIC OPERATIONS OF PLANT	Page 19

XXI.	OPTIONS	Page 20

XXII.	SHRINKAGE	Page 22

XXIII.	SPECIAL PROVISIONS	Page 22

XXIV.	MISCELLANEOUS	Page 22

XXXXX

GAS PURCHASE AND PROCESSING AGREEMENT

THIS AGREEMENT, entered into this 21st day of September, by and among Natural Gas Associates, a Colorado partnership, with offices at 0000 Xxxxxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000, hereinafter referred to as "Buyer/Processor", and SHF Partnership, a Colorado general partnership, with offices at 0000 0xx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000; Trailblazer Oil and Gas, Inc., a Utah corporation, with offices at 000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000; Alfa Resources, Inc., a Colorado corporation, with offices at 0000 Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 000000 Pulsar Oil and Gas, Inc., a Utah corporation, with offices at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000; Overthrust Oil Royalty Corporation, a Colorado corporation, with offices at 000 Xxxxx Xxxxxx, 0xx Xxxxx, Xxxxxx, Xxxxxxxx 00000; and Corvette Petroleum, Ltd., a British Columbia corporation, with offices at 0000 Xxxxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X0X0; Xxxxxx Xxxxxx, Xxx 0000, Xxxxxxx, Xxxxxxxx 00000; Xxxx X. Xxxxxxxx, 0000 Xxxxx Xxx., Xxxxxxx, Xxxxxxxx 00000; hereinafter collectively referred to as "Seller".

WITNESSETH THAT:

WHEREAS, Buyer/Processor has constructed or proposes to construct or cause to be constructed and to operate and maintain a natural gas gathering system, compression facilities and natural gas processing facilities, all such facilities in the aggregate hereinafter referred to as the "Facilities", said Facilities to be located in Weld County, Colorado, to enable Buyer/Processor to purchase and accept delivery of Seller's natural gas (including natural gasoline and other liquefiable hydrocarbons) hereinafter referred to as "Gas", produced and saved from the leases committed and dedicated hereunder at the Point(s) of Delivery defined herein; and,

WHEREAS, Seller owns and holds, or has an interest or interests in certain oil and gas leases (the "Leases") located in Weld County, Colorado, which Leases are described and listed in Exhibit "A" attached hereto and incorporated herein by reference; and,

WHEREAS, Seller desires to sell to Buyer/Processor all of the Gas owned or controlled by Seller produced and saved from the Leases dedicated hereunder, as well as to contract with Buyer/Processor to process all of said volumes of Gas upon the terms and for the consideration expressed

herein; and,

WHEREAS, Buyer/Processor desires to purchase and gather all of the Gas owned or controlled by Seller saved and produced from the Leases and process such Gas utilizing the gas processing plant (the "Plant") to be constructed and operated by Buyer/Processor for the consideration herein expressed; and,

WHEREAS, Buyer/Processor has entered into certain third-party Residue Gas Sales and Purchase Agreement(s), which Agreement(s) (is) (are) currently in full force and effect, and pursuant to which Buyer/Processor shall sell all of the Residue Gas resulting from Seller's Gas production dedicated and purchased hereunder.

NOW THEREFORE, in consideration of the premises, mutual covenants and other good and valuable consideration expressed herein, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

For the purpose of this Agreement, unless the context of the instrument requires otherwise, the following terms and expressions used herein shall be defined as follows:

"Accounting Period", except the initial "Accounting Period", shall mean a period of one calendar month, commencing at 8:00 a.m. local time on the first day of each month, and ending at 8:00 a.m. local time on the first day of the succeeding calendar month. The initial "Accounting Period" shall commence at 8:00 a.m. local time on the date of initial deliveries of Gas hereunder, continuing for a period of consecutive calendar days until 8:00 a.m. local time on the first day of the succeeding calendar month.

2.	"BTU" shall mean British Thermal Unit.

"Commence Operations", whether in reference to Seller's original well(s), or to Seller's additional tie-in well(s), shall include, but not be limited to, any of the following acts undertaken by Seller and Buyer/Processor: Negotiations for the purchase of rights-of-way or easements, surveying or staking the course of pipeline(s), ditching and excavation, and such other acts not listed above which demonstrate Buyer/Processor's bona fide effort to tie-in Seller's well(s).

4.	"Cubic Foot of Gas" shall mean the amount of Gas required to fill a cubic foot of space when the Gas is at a base pressure of 14.65 pounds Psia and at a base temperature of 60°F.

5.	"Day" shall mean the 24-hour period commencing at 8:00 a.m. Local Time on one calendar day and ending at 8:00 a.m. Local Time on the following calendar date.

6.	"Point(s) of Delivery" shall mean the point(s) at which Seller delivers Gas to Buyer/Processor at the well-site or other mutually agreeable points on the Buyer/Processor's Gathering System.

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7.	"Gas" shall mean the effluent vapor stream including all of the constituents thereof, entrained liquids as produced from each lease or well, whether a gas well or an oil well dedicated hereunder and delivered by Seller to Buyer/Processor at the Point(s) of Delivery specified herein.

8.	"Mcf" shall mean one thousand (1,000) cubic feet.

9.	"Month" shall mean the period beginning at 8:00 a.m. local time on the first day of a calendar month and ending at 8:00 a.m. local time on the first day of the next succeeding calendar month.

10.	"Psia" shall mean pounds per square inch absolute.

11.	"Psig" shall mean pounds per square inch gauge.

12.	"Seller's Gas Reserves" shall mean the total quantity of Gas attributable to Seller's present or future interest in, and/or which Seller has the right to market from the Leases described in Exhibit "A" attached hereto, as it now exists or is hereafter amended.

13.

"Plant Products" shall mean all liquefiable hydrocarbons extracted and saved at the Plant from Gas delivered by Seller to Buyer/Processor. These liquefiables shall include, but not be limited to, ethane, propane, butane, and natural gasoline, individually or as a mixture, as determined by the latest GPA Publication 2145.

14.	"Plant" shall mean Buyer/Processor's gas processing plant located in the XX/0 xx Xxx. 00, X0X, X00X of the 6th PM, Weld County, Colorado, more particularly described in Exhibit "B" attached hereto.

15.	"Residue Gas" shall mean that portion of the Gas remaining after the extraction therefrom of Plant Products, Plant fuel requirements, and Plant losses or uses.

16.	"Buyer/Processor's Gathering System" shall mean the pipelines (including field compression) and appurtenances constructed by Buyer/Processor for the purpose of accepting delivery and transmitting Seller's Gas from the Point(s) of Delivery to Buyer/Processor's Plant.

17.	"Shrinkage" shall mean that reduction in total volumes of the Gas which results from the extraction of Plant Products, but exclusive of fuel gas.

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18.

"System" shall mean in the aggregate that portion of Buyer/Processor's Gathering System constructed by Buyer/Processor for the benefit of Seller to connect Seller's xxxxx to Buyer/Processor's Gathering System, together with that portion of the Plant capacity dedicated to Seller, as the same may be extended and/or expanded from time to time.

ARTICLE II

PRELIMINARY ACTS OF PARTIES

Seller represents and warrants to Buyer/Processor, its successors and assigns, that Seller owns an interest in, or has the right to market Seller's portion of the Gas underlying the Leases described in Exhibit "A" attached hereto and that Seller intends to construct, or cause to be constructed, the facilities necessary, if any, to enable Seller to sell and deliver to Buyer/Processor at the Point(s) of Delivery, as hereinafter set forth, all Gas attributable to such interest, all in accordance with the provisions of this Agreement.

ARTICLE III

DEDICATION OF ACREAGE

Subject to the terms and conditions contained herein, Seller hereby commits and dedicates to the performance of this Agreement all of Seller's Gas Reserves from the Leases described 1n Exhibit "A" (as it now exists or as amended hereafter), and to insure the faithful performance of the provisions of this Agreement, covenants to sell and deliver to Buyer/Processor at the Point(s) of Delivery all of Seller's Gas Reserves without other disposition except as herein otherwise provided.

Seller shall operate the Leases dedicated hereunder free of any control by Buyer/Processor and shall not be required to produce any well or xxxxx in any manner which in its sole judgment and discretion would not constitute good operating practice, including without limitation the right to make farmouts of any dedicated lease, subject to this Agreement, nor shall Seller be obligated to drill additional xxxxx or to deepen, repair or rework any existing xxxxx, to abandon any well and surrender any lease dedicated hereunder when Seller deems the same no longer capable of producing Gas in commercial quantities under normal methods of operation when in its sole judgment it would not be prudent or profitable to do so.

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ARTICLE IV

DEDICATION OF PLANT CAPACITY AND PIPELINE GATHERING SYSTEM

1.	In consideration of the sale of Gas by Seller to Buyer/Processor hereunder and based upon Buyer/Processor's Plant capacity of fifteen thousand (15,000) MCF per day, Buyer/Processor agrees to dedicate to Seller five thousand two hundred and fifty (5,250) MCF per day of such Plant capacity

2.	In addition, Buyer/Processor agrees to construct and install, or have constructed and installed, for the benefit of Seller four (4) miles of pipeline gathering system, specifically to connect the initial xxxxx of Seller drilled and produced on Seller's acreage dedicated hereunder.

The cost of construction of the System, as the same may be expanded and/or extended from time to time, plus interest on said capital investment at a rate per annum equivalent to the rate paid by Buyer/Processor on any borrowed funds which comprise all or a portion of said capital investment, incurred by Buyer/Processor shall be utilized in determining payout, as defined herein, for the appropriate calculation and distribution of revenues to Seller as provided hereunder.

ARTICLE V

RESERVATIONS OF SELLER

1.	Seller, as a reasonable and prudent operator, hereby expressly reserves the following rights with respect to Seller's Gas Reserves and the Leases subject hereto:

The right to use the Gas produced from the Leases prior to delivery to Buyer/Processor for the following purposes:

For fuel in the development and operation of the well from which the Gas was produced.

For delivery to the lessors of the Leases of the Gas if such lessors are entitled to use or take such Gas in kind under the terms of the Leases;

For fuel in the operation of the facilities which Seller may install in order to deliver Gas hereunder in accordance with the terms thereof.

The right to pool or unitize the Leases (or any portion thereof) with other lands or Leases so long as such action does not reduce Seller's Gas Reserves. In the event of any such pooling or unitization, the Agreement will cover Seller's interest in the pool or unit and the Gas attributable thereto to the extent that such interest is derived from Seller's Gas Reserves.

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Seller shall provide to Buyer/Processor all necessary information whereby Buyer/Processor can make the proper allocation herein called for or required by Buyer/Processor's normal and customary accounting practices or required by Buyer/Processor's normal and customary contract administration practices, when different vintages of Gas are being delivered through a single Point of Delivery.

ARTICLE VI

QUANTITY

Commencing on the date Buyer/Processor first takes delivery of Gas hereunder and continuing thereafter for the term hereof, Buyer/Processor agrees to receive and purchase and Seller agrees to deliver and sell to Buyer/Processor from Seller's Gas Reserves, subject to the limitations and conditions herein elsewhere provided, during each Accounting Period, all of the Gas available from Seller's Gas Reserves.

2.	Buyer/Processor shall receive and purchase Seller's Gas subject to the following limitations:

Buyer/Processor shall be required to receive and purchase Seller's Gas up to five thousand two hundred and fifty (5,250) MCF per day.

Buyer/Processor shall receive and purchase Seller's Gas over and above the dedicated capacity on a capacity available basis.

All other quantity limitations shall be in accordance with the terms and provisions of the Residue Gas Sales and Purchase Agreement(s) entered into by and between Buyer/Processor and Western Slope Gas Company dated February 17, 1983, including any payments required to be made to Buyer/Processor thereunder in the event the purchaser fails to take the required minimum volumes of Gas, which payments shall be passed through and distributed proportionately to Seller by Buyer/Processor in accordance with the pricing provisions contained in Article X hereof.

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During periods that Buyer/Processor is unable to receive the total volumes of Gas delivered to Buyer/Processor from all of Seller's xxxxx and Leases dedicated hereunder, Buyer/Processor shall receive and purchase only that portion of such Gas from the xxxxx and Leases of Seller covered hereby which is ratable on a volumetric basis with the total volumes historically delivered to Buyer/Processor from all of Seller's xxxxx and Leases dedicated hereunder. Buyer/Processor shall reduce or eliminate Gas deliveries from those xxxxx and Leases of Seller from which Gas is being received on a capacity available basis prior to ratably reducing deliveries from Seller's producing xxxxx whose volumes were originally covered by the Plant capacity dedicated to Seller hereunder.

Seller acknowledges and understands that Buyer/Processor will receive and purchase the Gas gathered from Seller's xxxxx and Leases dedicated hereunder utilizing the Facilities which also receive, transmit and process Gas purchased by Buyer/Processor from other xxxxx and leases dedicated to Buyer/Processor by other Sellers.

Seller acknowledges and understands that Buyer/Processor reserves the right to receive and purchase such third-party Gas over and above the dedicated capacity of the Plant on a capacity available basis. Plant capacity priority shall be given to Seller's Gas up to the limit defined in Article IV.1 and Article VI 2.A.

ARTICLE VII

POINT(S) OF DELIVERY, PRESSURE AND OWNERSHIP

The Point(s) of Delivery of all Gas delivered hereunder shall be at the inlet of Buyer/Processor's metering facilities located at Seller's lease separation facilities or at such other Po1nt(s) of Delivery as may be mutally agreed upon in writing by the parties hereto from time to time, and title to said Gas (including such hydrocarbons from the Gas that have not been or cannot be recovered through the use of conventional mechanical wellhead gas-oil separators) shall pass from Seller to Buyer/Processor at said Point(s) of Delivery.

2.	Seller, at its own expense, shall equip. maintain and operate all lease facilities to deliver Seller's Gas to Buyer/Processor at the Point(s) of Delivery, including, but not limited to, installation and maintenance of separation equipment.

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3.	Buyer/Processor shall construct, maintain, own and operate all necessary facilities to accept Seller's Gas from Seller at the Point(s) of Delivery.

Seller will deliver Gas at the required pressure at the Point(s) of Delivery sufficient to enter Buyer/Processor’s Gathering System at a maximum working pressure of Two Hundred (200) pounds Psig. However, in the event Seller determines that such working pressure excessively limits the production of Seller's xxxxx. Seller shall provide written notice thereof to Buyer/Processor. Upon receipt of such notice. Buyer/Processor, as soon a practicable, shall present to Seller a written proposal pursuant to which Buyer/Processor shall construct, own and operate such field compression facilities as may be necessary to reduce such pressure to a mutually accept- able level and shall disclose the charges to be assessed Seller therefore together with a schedule of payment. Once such proposal has been accepted by Seller in writing, Buyer/Processor shall utilize its best efforts to construct or cause to be constructed and placed in operation the required field compression facilities within ninety (90) days of receipt of such written acceptance.

As between the parties hereto, Seller shall be in possession and control of the Gas deliverable hereunder and responsible for any injury or damage caused thereby until the same shall have been delivered to Buyer/Processor, after which delivery Buyer/Processor shall be deemed to be in exclusive possession and control thereof and responsible for any injury or damage caused thereby.

ARTICLE VIII

GAS MEASUREMENT AND QUALITY

Buyer/Processor shall furnish and install a suitable orifice meter at the Point(s) of Delivery of the Gas produced and saved from the Leases described herein. Each meter installed by Buyer/Processor shall be a meter acceptable in the industry and each meter shall be installed and operated in accordance with the physical requirements of American Gas Association Gas Measurement Committee Report No. 3, dated April, 1955, of the Natural Gas Department of the American Gas Association, as amended from time to time, or by any other method commonly used in the industry and mutually acceptable to the parties. Any meter installed hereunder shall be open to inspection by Seller at all reasonable times. The charts and records pertaining to measurement hereunder shall be kept on file by Buyer/Processor for a period of two (2) years for the mutual use of the parties. In the event" any question arises as to the accuracy of the measurement, the meter or meters shall be tested upon the demand of either party. The expense of any such special test shall be borne by the party demanding same if the meter registration is found to be correct, and by Buyer/Processor if found to be incorrect.

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At least semi-annually Buyer/Processor shall calibrate all meters installed hereunder and make adjustments as necessary. Should Seller so desire, Buyer/Processor shall give notice to Seller of the time of such calibrations sufficiently in advance of holding same in order that Seller may have its representative present. With respect to any test made hereunder, a registration within two percent (2%) of correct shall be considered correct. However, the meter or meters, when found to be incorrect, shall be adjusted to one hundred percent (10030 accuracy as soon as possible. Settlement for any period during which the meter registration deviates by more than two percent (2%) of correct shall be corrected at the rate of inaccuracy for any period of inaccuracy which is definitely known or agreed upon; but in case the period is not definitely known or agreed upon, then either for a period of fifteen (15) days prior to the date of said test, or for a period calculated from the beginning of the Accounting Period in which the test was conducted, whichever is longer. The rate of the inaccuracy shall be estimated and agreed upon by the parties hereto on the basis of the best available data, using the first of the following methods which is feasible:

By calibration, test, or mathematical calculation.

By estimation based on comparison of the quantity of deliveries with deliveries during preceding periods under similar conditions when the meter was registering accurately.

All fundamental constants, observations, records and procedures involved in the determination and/or verification of the quantity and other characteristics of Gas measured hereunder, unless otherwise specified herein, shall be 1n accordance with the standards prescribed in American Gas Association Gas Measurement Committee Report No. 3, dated April, 1955, of the Natural Gas Department of the American Gas Association, as amended from time to time, or by any other method commonly used in the industry and mutually acceptable to the parties. The average atmospheric pressure shall be assumed to be 12.3 pounds Psia. The temperature of Gas flowing through each meter shall be determined by a recording thermometer, installed by Buyer/Processor at its sole cost and expense to properly record the temperature of the flowing Gas and the arithmetical average of the temperature recorded while the Gas is flowing during each meter chart interval shall be used in correcting volumes delivered hereunder to a temperature base of sixty degrees Fahrenheit (60°F) and to a pressure base of 14.65 pounds Psia.

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2.	Seller agrees that all Gas delivered to Buyer/Processor hereunder shall:

Contain not more than one grain of hydrogen sulfide per one hundred (100) cubic feet of Gas, or more than five (5) grains of total sulfur per one hundred (100) cubic feet of Gas;

Not have a maximum temperature greater than one hundred twenty degrees Fahrenheit (120°F), or a minimum temperature less than forty degrees Fahrenheit (40°F); and

Be commercially free of all objectionable dust or other solid or liquid or gaseous matters which might interfere with its merchantability or cause injury to or interference with proper operations of Buyer/Processor's Facilities through which the Gas flows; and

Shall not deviate significantly from the Gas Analysis set forth in Exhibit C attached hereto and incorporated herein by reference.

Buyer/Processor may test the Gas for adherence to the specifications above set forth, such testing to be in accordance with generally accepted industry standards and procedures. If the Gas so delivered by Seller does not meet the specifications set forth in Exhibit C above referenced, Buyer/Processor, at its option, may refuse to accept delivery of said Gas into its Facilities.

ARTICLE IX

ALLOCATION OF RESIDUE GAS AND PLANT PRODUCTS

For purposes of determining Plant Product Revenues attributable to Seller's Gas, Buyer/Processor shall multiply the volume in MCF's of Gas attributable to each of Seller's xxxxx by the GPM (Gallons Per MCF) of each Plant Product contained in the well stream. Said GPM shall be determined by chromatograph analysis taken on spot Gas samples from each of Seller's xxxxx and adjusted on an annual basis. The calculated value will be the Total Theoretical Plant Product Content of the Seller's Gas. Said Total Theoretical Plant Product Content shall be divided by the Total Theoretical Plant Product Content of all Gas received and purchased by Buyer/Processer to determine the percentage of Total Plant Products attributable to each of Seller's xxxxx. Division of revenues from Total Plant Products shall be made per the pricing provisions contained herein.

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For the purpose of determining Residue Gas Revenues attributable to Seller's Gas, Buyer/Processor shall divide the volume in MCF's of Gas attributable to each of Seller's xxxxx by the total volume in MCF's of all Gas received and purchased by Buyer/Processor. This fraction shall be multiplied by the total Residue Gas Volume to determine the Residue Gas Volume attributable to each of Seller's xxxxx. Division of Residue Gas Revenues between Buyer/Processor and Seller shall be determined pursuant to the pricing provisions contained herein.

Buyer/Processor will market one hundred percent (100%) of the Plant Products upon terms which, in Buyer/Processor's sole judgment, are the best terms then available. Buyer/Processor will furnish Seller on a monthly basis with reports containing volumes sold by product and the price received therefore. Seller shall have the right at reasonable times during normal business hours to review the books and records of Buyer/Processor pertaining to the sale of Plant Products, Residue Gas and revenues received therefrom.

ARTICLE X

PRICE

Seller shall receive [ * ] percent ([ * ]%) of the Residue Gas Revenues attributable to each of Seller's xxxxx until payout of Buyer/Processor's investment in the System relating to the gathering and processing of Seller's Gas. After payout, Seller shall receive [ * ] percent ([ * ]%) of the Residue Gas Revenues attributable to each of Seller's xxxxx. Total Residue Gas Revenue attributable to each of Seller's xxxxx shall be calculated by multiplying the Residue Gas Volume attributable to each of Seller's xxxxx by the then effective price per MCF being received by Buyer/Processor. All pricing terms and conditions shall be determined pursuant to the terms and provisions contained in the Residue Gas and Sales and Purchase Agreement(s) between Buyer/Processor and Western Slope Gas Company, dated February 17, 1983.

For Plant Products produced and saved at the Plant, Seller shall receive a value equal to [ * ] percent ([ * ]%) of the Total Plant Product Revenue attributable to each of Seller's xxxxx until payout of Buyer/Processor's investment in the System attributable to the gathering and processing of Seller's Gas. After payout, Seller shall receive [ * ] percent ([ * ]%) of the Total Plant Product Revenue attributable to each of Seller's xxxxx. Total Plant Product Revenue shall be the Plant Product Sales Revenue received by Buyer/Processor. Should the actual Propane plus GPM content of Seller's Gas deviate from that shown on Exhibit C, Seller's share of Total Plant Product Revenue shall be adjusted in accordance with the table set out below:

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Inlet Propane plus	% (Before Payout)	% (After Payout)

3.80+	55	70
3.50 - 3.79	50	65
3.25 - 3.49	45	60
3.00 - 3.24	40	55
2.75 - 2.99	35	50
2.50 - 2.74	20	35
2.25 - 2.49	Not Economic	Not Economic

Total Plant Product Revenue attributable to each of Seller's xxxxx shall be calculated by multiplying the percentage of Total Plant Product attributable to each of Seller's xxxxx by the Total Plant Product Revenue.

System payout shall be that point in time when Buyer/Processor's net operating income from Seller's Gas equals Buyer/Processor's investment, plus interest, attributable to the construction of Seller's System. Net operating income will be comprised of Buyer/Processor's Residue Gas and Plant Product Revenues attributable to Seller's Gas, less Plant Operating Costs attributable to Seller's Gas. Plant Operating Costs attributable to Seller's Gas, for the purpose of determining payout, shall be shared proportionately by Seller by multiplying the total Plant Operating Costs by the ratio of Seller's Gas delivered thereto to the total volumes of Gas received and purchased by Buyer/Processor at the Plant.

Buyer/Processor's investment attributable to Seller's System shall be determined pursuant to the capital account of Seller based upon the components of Seller's System and Buyer/Processor's investment, plus interest, attributable thereto. Seller shall receive a quarterly statement of the capital account identifying the capital costs charged to the account and the revenues credited thereto, as the same may be amended from time to time to reflect costs of construction of Plant expansion and/or extensions of Buyer/Processor's Gathering System to connect additional xxxxx of Seller and/or accept additional volumes of Gas from Seller.

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5.	Seller agrees that it will supply data and information at Buyer/Processor's reasonable request, and otherwise cooperate with Buyer/Processor in any regulatory proceeding wherein the price or other provisions set forth herein may be the subject of review.

It shall be the sole obligation of Seller to prepare, file and diligently pursue any application required to be filed with applicable state and federal agencies pursuant to the Natural Gas Policy Act of 1978 or subsequent legislation or regulation thereunder for a determination of eligibility for maximum lawful price categories. Seller agrees to provide Buyer/Processor with copies of such filings within sixty (60) days of connection of Seller's xxxxx covered thereby.

Should Buyer/Processor make payment to Seller based on the price for any category of Gas subject to any governmental agency or judicial review of such determination, and if it is subsequently determined that the Gas for which payment was made was not eligible for the price upon which payment was based, or if the price to be paid hereunder for such Gas 1s determined to be in excess of the maximum lawful price permitted by applicable NGPA price categories, or if for any reason Buyer/Processor is not permitted to receive or retain such prices in its resale rates, then the rate thereafter to be paid shall be accordingly reduced and Seller will refund to Buyer/Processor any previous excess payments together with interest at the rate prescribed in 18 C.F.R. Sec. 273.302 or subsequent regulation.

8.	Seller agrees to pay, or cause to be paid, the taxes lawfully levied on the Gas delivered hereunder prior to its delivery to Buyer/Processor, as well as its proportionate share of taxes, if any, levied upon the Plant Products to be marketed by Buyer/Processor hereunder.

ARTICLE XI

PAYMENT

After delivery of Seller's Gas has commenced, Buyer/Processor shall mail a statement to Seller indicating the quantity of Gas delivered during the preceding calendar month; adjustments, if any, made by Buyer/Processor; and the amount due and paid for all such Gas, such statement and payments to all owners of interest as provided below to be mailed either on or before the last day of each month, for Gas purchased the preceding calendar month, or ten (10) days after receipt by Buyer/Processor of payment from the purchaser of the Gas from Buyer/Processor, whichever is later. It shall be the obligation of the Buyer/Processor and Buyer/Processor agrees to cause proper settlement and accounting to be made to all owners of interest in the proceeds from the sale of Gas delivered to Buyer/Processor hereunder. Buyer/Processor hereby indemnifies and holds Seller harmless of and from any and all claims, demands, actions, causes of action, costs, damages and expenses related to, arising out of or in any way stemming from such obligation of Buyer/Processor. Buyer/Processor, at its election, may deduct from its payment to Seller, sums, if any, due to Buyer/Processor under the terms of this Agreement.

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Each party hereto shall have, at its expense, the right at all times to examine the books and records of the other party, during normal working hours, to the extent necessary to verify the accuracy of any statement, charge, computation, or demand made under or pursuant to the Agreement. Each party agrees to keep records and books of account in accordance with generally accepted accounting principles in the industry. Any statement shall be final as to both parties unless questioned within two (2) years after payment thereof has been made.

ARTICLE XII

REGULATORY BODIES

This Agreement is subject to all present and future valid laws and lawful orders of all regulatory bodies now or hereafter having jurisdiction of the parties, or either of them; and should either of the parties, by force of such law or regulation imposed at any time during the term of this Agreement, be ordered or required to. do any act inconsistent with the provisions of this Agreement, the Agreement shall continue nevertheless and shall be deemed modified to conform with the requirements of such law or regulation.

ARTICLE XIII

FORCE MAJEURE

Except for Buyer/Processor's obligation to make proper settlement, accounting and distribution of proceeds to all interest owners as provided above for Gas delivered hereunder, neither party hereto shall be liable for any failure to perform the terms of this Agreement when such failure is due to "force majeure" as hereinafter defined.

The term "force majeure" as employed in this Agreement shall mean acts of God, strikes, lockouts or industrial disputes or disturbances, arrests and restraints from rulers or people, interruptions by government or court orders, present and future valid orders of any regulatory body having proper jurisdiction, acts of the public enemy, wars, riots, blockades, insurrections, inability to secure materials, including inability to secure materials by reason of allocations promulgated by authorized governmental agencies, epidemics, landslides, lightning, earthquakes, fires, storms, floods, washouts, explosions, breakage or accident to machinery or lines of pipe, freezing of xxxxx or pipelines, inability to obtain easements or rights-of-way, the making of repairs or alterations to pipelines or plants, or any other cause whether of the kind herein enumerated or otherwise, not reasonably within the control of the party claiming "force majeure", the same shall, so far as possible, be remedied with all reasonable dispatch. The settlement of strikes or lockouts or industrial disputes or disturbances shall be entirely within the discretion of the party having the difficulty, and the above requirement that any "force majeure" shall be remedied with all reasonable dispatch, shall not require the settlement of strikes, lockouts or industrial disputes or disturbances by acceding to the demands of any opposing party therein when such course is inadvisable in the discretion of the party having the difficulty.

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ARTICLE XIV

WARRANTY OF TITLE TO GAS

Seller hereby warrants title to the Gas sold and delivered hereunder and the right of Seller to sell the same; and the Seller warrants that all such Gas is owned by Seller, or that Seller has the right to market said Gas free from all liens and adverse claims, including liens to secure payments of production taxes, severance taxes, and other taxes. Seller agrees to indemnify Buyer/Processor and save it harmless from all suits, actions, debts, accounts, damages, costs, losses and expenses arising from or out of adverse claims of any and all persons, firms, or corporations to said Gas or to royalties, overriding royalties, taxes, license fees, or charges thereon, which are applicable before the title to the Gas passes to Buyer/Processor. Buyer/Processor, at any time thereafter, when it shall appear to Buyer/Processor by reason of receipt of written notice of claim or dispute that the ownership or title to all or part of the Leases, or the Gas produced therefrom, may be in a party or parties other than Seller or upon learning of any other claims, liens, taxes, royalties, fees, expenses or other adverse claims, may retain as security for the performance of Seller's obligations with respect thereto, the entire purchase price of the Gas until Buyer/Processor has been satisfied as to the amount of such claim or ownership claimed, and thereafter up to the amount of such ownership interest or claim until it has been finally determined and satisfied or until Seller shall have furnished a bond to Buyer/Processor in an amount and with sureties satisfactory to Buyer/Processor, conditioned upon the protection of Buyer/Processor with respect to such ownership or claim.

- 15 -

ARTICLE XV

SELLER'S REPRESENTATIVE

Seller hereby appoints Trailblazer Oil and Gas, Inc., the Operator of the xxxxx drilled or to be drilled upon the Leases dedicated hereunder and in which Seller owns an interest, as its Representative with respect to all matters under this Agreement, including but not limited to the following:

1.	To give and receive all notices;

2.	To make and witness any tests to be made of the Gas and measuring equipment and adjustments to such equipment;

3.	To deliver the quantities of Gas deliverable hereunder;

4.	To obtain, execute and deliver to Buyer/Processor such division order title opinions and division orders as may be required by Buyer/Processor hereunder; and

5.	To comply with the requirements, rules and regulations of any duly constituted authority having jurisdiction.

Buyer/Processor may act, and shall be fully protected in acting, in reliance upon any and all acts and things done and performed by or agreements made with respect to all matters dealt with herein by said Representative on behalf of Seller as fully and with the same effect as though Seller had done, performed, made or executed the same.

Seller may change its Representative designated above, or designate a new Representative from time to time by delivery of written notice of change and designation of Representative to Buyer/Processor. The Representative so designated shall have and may exercise all power and authority therein granted with like effect as though named as such Representative herein in the first instance.

ARTICLE XVI

NOTICES

Any notice or notices, request, demands or statements provided for in this Agreement shall be in writing and deemed to be delivered to Seller when addressed to Seller's Representative, and to Buyer/Processor when addressed to Buyer/Processor and deposited in the United States Mail first class, postage prepaid at their respective addresses as set out below, or at such address as either party may from time to time designate as the address for such purpose by registered or certified letter addressed to the other party.

- 16 -

TO:	Seller's Representative

Trailblazer Oil and Gas, Inc.

000 Xxxxxxx Xxxxxx, Xxxxx 000

Xxxxxx, Xxxxxxxx 00000

Attn: _________________

TO:	BUYER/PROCESSOR

Natural Gas Associates

0000 Xxxxxxx Xxxxx

0000 Xxxxxxxx - X.X. Xxx 0000

Xxxxxx, Xxxxxxxx 8D217

Attn: X. X. xxXxxxxxxxxxx

ARTICLE XVII

EASEMENTS

To the extent that it may contractually or lawfully do so under its leasehold interest without impairing its own similar right, Seller hereby assigns and transfers to Buyer/Processor any easement across the Seller's Lease(s), and across any adjoining lands in which Seller may have an interest, for the purposes of installing, using, inspecting, repairing, operating, replacing, and/or removing Buyer/Processor's pipe, meters, lines, and other equipment used or useful in the performance of this Agreement. It is intended that any property of Buyer/Processor placed in or upon any of such land shall remain the personal property of Buyer/Processor, subject to removal by it upon the expiration or termination of this Agreement for any reason. Buyer/Processor shall have a reasonable time after the expiration or termination of this Agreement to remove same. Buyer/Processor shall indemnify and hold Seller harmless of and from any and all claims and damages for all injuries to persons, including death, or damage to property arising out of or incident to Buyer/Processor's use of the easement hereunder transferred, only in the event said claim or damage shall be the result of negligence legally imputable to Buyer/Processor; its employees, agents, and representatives.

ARTICLE XVIII

TERM

This Agreement shall be effective from the date hereof and shall continue and remain in full force and effect for the economic life of the Facilities, unless earlier terminated by mutual Agreement between the parties hereto. Suspension of Plant operations as defined herein shall not constitute or provide a basis for termination of this Agreement.

- 17 -

ARTICLE XIX

DEFAULTS

1.	It is covenanted and agreed that if either party shall fail to perform any of the covenants or obligations imposed upon it under and by virtue of this Agreement, the other party may terminate this Agreement by proceeding as follows:

The party not in default shall cause a written notice to be served on the other party in default, stating specifically the cause for terminating this Agreement, and declaring it to be the intention of the party giving notice to terminate the same; thereupon, the party in default shall have thirty (30) days after the service of the aforesaid notice in which to remedy or remove the cause or causes stated in the notice for terminating the Agreement. If within said thirty (30) days the party in default does so remove and remedy said cause or causes, and fully indemnifies the party not in default for any and all consequences of such breach, then such notice shall be withdrawn and this entire Agreement shall continue in full force and effect.

In case the party 1n default does not remedy and remove the cause or causes, or does not indemnify the party giving the notice for any and all consequences of such breach, within said period of thirty (30) days, then this Agreement shall become null and void from and after the expiration of said period.

Any cancellation of this Agreement pursuant to the provisions of this Article shall be without prejudice to the obligation of Buyer/Processor to make proper settlement, accounting and distribution of proceeds to all owners of interest in the proceeds received for Gas delivered to Buyer/Processor hereunder and Plant Products processed therefrom to the time of cancellation, and without waiver of any remedy to which the party not in default may be entitled for violations of this Agreement.

- 18 -

ARTICLE XX

UNECONOMIC WELL CONNECTIONS AND UNECONOMIC OPERATIONS OF PLANT

The Buyer/Processor will either install, or cause to be installed a System to connect and receive Gas from Seller's xxxxx, which, in Buyer/Processor's sole opinion, is economically feasible to gather. If in Buyer/Processor's sole opinion it is uneconomic to connect one of Seller's xxxxx to Buyer/Processor's Gathering System, Buyer/Processor shall be under no obligation to do so, or to accept any Gas produced from said well. If Buyer/Processor elects not to construct a System and connect a well, Buyer/Processor nevertheless may, upon Seller's request, accept Gas from any such well or lease if Seller shall acquire and assign without charge to Buyer/Processor, a measuring station site on Buyer/Processor's existing Gathering System at a mutually agreeable point, together with all necessary rights of ingress and egress thereto, and shall bear the cost of constructing, operating, and maintaining all facilities necessary to deliver the Gas from such well into Buyer/Processor's Gathering System at said mutually agreeable point. Should Seller elect not to deliver Gas from such well, Buyer/Processor shall release from this Agreement such well and the acreage attributable thereto, but only as to the formation in which such well is then completed.

Buyer/Processor will install or cause to be installed a System to receive Seller's Gas from Seller's xxxxx, which, in Buyer/Processor's opinion are economically feasible to gather. An economic well shall be defined as a well which will produce a stabilized flow after six (6) months of two hundred and fifty (250) MCF per day of Gas per mile of pipeline installed by Buyer/Processor to receive Seller's Gas. Should Buyer/Processor connect Seller's well and said well produces a stabilized flow after six (6) months of less than two hundred and fifty (250) MCF per day per mile of pipeline installed by Buyer/Processor to receive Seller's Gas, Seller shall indemnify Buyer/Processor for all costs of said connection, adjusted for actual length of pipeline and proportional to the ratio of actual stabilized volume at the end of six (6) months to two hundred and fifty (250) MCF per day. The terms of said indemnification shall be negotiated between Buyer/Processor and Seller.

Should Buyer/Processor and Seller determine prior to connection of Seller's well that said well will not meet the criteria for an economic well connection, Buyer/Processor shall install the necessary System required to connect Seller's well to Buyer/Processor's Gathering System upon receiving a written indemnification from Seller of Buyer/Processor's actual cost for said System pursuant to the terms above.

- 19 -

If, in the opinion of Buyer/Processor, the Plant is or becomes uneconomic to operate due to its volume, quality, plant product content, governmental regulation or any other cause, Buyer/Processor may either modify or suspend Plant operations, in which case Buyer/Processor shall not be obligated to take delivery of, or may cease processing the Gas from Seller's xxxxx, so long as such condition exists. For the purposes hereof, "uneconomic operation" shall be defined as circumstances under which Buyer/Processor's share of net operating revenues of the Plant is insufficient to offset actual Plant operating costs.

During periods of uneconomic operation of the Plant and/or suspension of operation of portions thereof. Buyer/Processor, at the request of the Seller, shall place back in service and operate such suspended portions of the Plant as may be necessary to accept and process Seller's Gas. In consideration thereof, Seller agrees to reimburse Buyer/Processor, in the same proportion as the ratio of the Gas volumes supplied by Seller bear to the total Gas volumes supplied to the Plant by other third-party sellers, for any losses (costs of Plant operations in excess of revenues attributable to Plant operations after deducting payments to all contributing producers for Gas delivered to and processed by the Plant) incurred by Buyer/Processor during such continued uneconomic operations. Buyer/Processor may, at its option, elect to sell the Plant rather than operate the same under the terms of this paragraph. In such event, Seller shall be given notice thereof and first right of refusal to purchase its proportionate share of the Plant from Buyer/Processor based upon Seller's then dedicated capacity thereof upon terms to be negotiated between the parties.

ARTICLE XXI

OPTIONS

Crude Oil Purchase Option: Seller is currently marketing all crude oil and/or condensate produced from xxxxx drilled on the Leases dedicated hereunder and in which Seller owns, has an interest, or is otherwise authorized to market to a legitimate crude oil purchaser other than Associated Natural Gas, Inc. which is active in the area of said Leases pursuant to a written agreement currently in effect.

If, upon expiration of the primary term of the crude oil purchase agreement between Seller and the current purchaser, or effective January 1, 1984, whichever shall first occur, should seller receive a bona fide written offer from either its current purchaser or any other bona fide purchaser of crude oil at a price per barrel of less than fifty ($.50) cents above that then being offered by Associated Natural Gas, Inc., which is a price equal to the highest published price of a major oil company for the area in question, Seller shall notify Associated Natural Gas, Inc., at which time Associated Natural Gas, Inc., as an independent contractor, shall be given an option and right of first refusal, to be exercised within fifteen (15) days from receipt of such notice, to purchase all of Seller's crude oil and/or condensate above referenced at a price equivalent to the highest published posted price of a major oil company for the area in question. In the event Associated Natural Gas exercises it option, Seller agrees to enter into a Crude 011 Purchase Agreement with Associated Natural Gas, Inc.

- 20 -

In the event Seller should receive a bona fide written offer from such purchaser at a price per barrel differential of fifty ($.50) cents or more above that then being offered by Associated Natural Gas, Inc., Seller shall notify Associated Natural Gas, Inc., at which time Associated Natural Gas, Inc., as an independent contractor, shall be given an option and right of first refusal, to be exercised within fifteen (15) days from receipt of such notice, to purchase all of Seller's crude oil and/or condensate at an equivalent price. In the event Associated Natural Gas, Inc. exercises its option, Seller agrees to enter into a Crude Oil Purchase Agreement with Associated Natural Gas, Inc., at such price.

In the event Associated Natural Gas, Inc. fails to exercise any option above provided within the fifteen (15) day period, Seller may accept the outstanding bona fide written offer and market its crude oil and/or condensate to such purchaser for the primary term of such agreement, the notice and option process set out above shall be repeated.

- 21 -

ARTICLE XXII

SHRINKAGE

Buyer/Processor agrees to use ordinary care in transporting the Gas produced by Seller and purchased and gathered by Buyer/Processor hereunder to its point of delivery at the Plant, and after processing such Gas, deliver the Gas to its purchaser at the tailgate of said Plant. However, the parties understand and agree that certain volumetric gains and losses in the Gas will occur and shall be shared by and among Seller and other third-party sellers, whose Gas is also being purchased by Buyer/Processor and transported to the Plant, in the proportion that each party delivers Gas into Buyer/Processor's Gathering System at their respective Point(s) of Delivery.

ARTICLE XXIII

SPECIAL PROVISIONS

ARTICLE XXIV

MISCELLANEOUS

No waiver by either Seller or Buyer/Processor of any default of the other under this Agreement shall operate as a waiver of any future default, whether of like or different character or nature, nor shall any failure to exercise any right hereunder be considered as a waiver of such right in the future.

The parties hereto assume full responsibility and liability for the maintenance and operation of their respective properties and agree to indemnify and save harmless the other party from all liability and expense on account of any damages, claims or actions arising from any act or accident in connection with the installation, presence, maintenance or operation of the property or equipment of the indemnifying party.

- 22 -

3.	Respecting the rights of third parties hereunder:

This Agreement shall be binding upon and inure to the benefit of the parties hereto, their successors, assigns, heirs, administrators and/or executors. Either party may assign his or its right, title, and interest in, to and under this Agreement, including, without limitation, any and all renewals, extensions, amendments, and/or supplements hereto; provided, however, that no such assignment shall in any way operate to enlarge, alter, or change any obligation of the other party or parties hereto. No assignment shall be effective or binding until a copy of same has been furnished to the other party.

Nothing in this Agreement, expressed or implied, confers any rights or remedies on any person or entity not a party hereto other than successors and assigns, or heirs, administrators or executors of the parties hereto.

Seller agrees that Buyer/Processor, its successors and assigns, shall have the right, but not the obligation, at any time to redeem for Seller, its successors and assigns, or other interest owners by payment of any taxes, deeds of trust, judgments or other liens on the Leases described in Exhibit "A" hereto, on Seller's Gas Reserves or the production therefrom, in the event of default of payment by Seller or other interest owners, and be subrogated to the rights of the holder or holders thereof. Seller further agrees that any such redemption and payment by Buyer/Processor for the account of Seller or other interest owners shall be applied by way of a set-off against the purchase price which Buyer/Processor would otherwise pay to Seller and the other interest owners under Articles X and XI of this Agreement, such set-off to continue until all payments by Buyer/Processor under this Agreement, plus interest, have been fully recouped by Buyer/Processor.

5.	Seller expressly does not by the terms of this Agreement, sell, transfer or assign unto Buyer/Processor any title or interest whatsoever in the Leases or any pipe, meters, lines or other equipment of any nature owned or used by Seller in the operation of its xxxxx and the Leases.

Any notice, request, demand or statement provided for in this Agreement, except as otherwise herein provided, shall be given in writing, delivered in person or sent by U.S. Mail, postage prepaid to the parties at the respective addresses herein referenced, or at such other addresses as may be hereafter furnished by one party to the other party in writing.

- 23 -

It is agreed that this Agreement may be ratified and adopted by any owner of an interest in the Leases subject hereto, or any leases with which the Leases subject hereto may be pooled or unitized, by execution and delivery to Buyer/Processor of a separate written instrument ratifying and adopting this Agreement insofar as said owner's interest in any such lands or leases is concerned, whereupon such owner shall become a party Seller under this Agreement with like force and effect and to the same extent as though such owner had executed this Agreement at the time of its execution and delivery; and all the terms and provisions of this Agreement shall thereupon become binding upon Buyer/Processor and any such interest owner.

Each Seller executing or ratifying this Agreement makes and enters into this Agreement severally and not jointly with other sellers, and they are not acting as partners, joint venturers, or otherwise jointly in this transaction, and nothing herein contained or provided shall operate to create, or be construed as creating, any such relationship. It is essentially provided that there shall never be any joint liability against the parties designated herein as Seller and that no single party Seller shall be liable for the acts or omissions of any other single party Seller.

This Agreement constitutes the entire agreement and understanding between the parties hereto and supersedes and renders null and void and of no further force and effect any prior understandings, negotiations or agreements between the parties relating to the subject matter hereof. No provision of this Agreement may be changed, modified, waived or discharged orally, and no change, modification, waiver or amendment of any provision will be effective except by written instrument to be executed and approved by the parties hereto.

10.	This Agreement shall be construed and governed by the laws of the State of Colorado.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

BUYER/PROCESSOR - NATURAL GAS ASSOCIATES, A PARTNERSHIP
BY:	ASSOCIATED NATURAL GAS, INC., MANAGING PARTNER


BY:	/s/ X.X. xxXXXXXXXXXXX
	X.X. xxXXXXXXXXXXX, PRESIDENT


		SELLER (Partnership):
		SHF PARTNERSHIP


		, PARTNER

- 24 -

ATTEST:		SELLER (Corporation):
		TRAILBLAZER OIL AND GAS, INC.


BY:	/s/ Xxxxxxxx X. Xxxxxx	BY:	/s/ E. Xxxxxxx Xxxxxxxx
	, SECRETARY		, PRESIDENT


ATTEST:		SELLER (Corporation):
		ALFA RESOURCES, INC.


BY:	/s/ Xxxxxx X. Xxxxxxx	BY:	/s/ Xxxxxxxx X. Xxx
	ASST., SECRETARY		, SECRETARY TREASURER


ATTEST:		SELLER (Corporation):
		PULSAR OIL AND GAS, INC.


BY:	/s/ Xxxxx Xxxxxxx	BY:	/s/ Xxxxxx X. Xxxxxxxxx
	, SECRETARY		, PRESIDENT


ATTEST:		SELLER (Corporation):
		OVERTHRUST OIL ROYALTY CORPORATION


BY:	/s/ Xxxxxx X. Xxxxxx	BY:	/s/ Xxxxxx X Xxxxx
, SECRETARY			, PRESIDENT


		SELLER (Corporation):
ATTEST:		CORVETTE PETROLEUM, LTD.


BY:		BY:
	, SECRETARY		, PRESIDENT


ATTEST		SELLER ( Individual ):
		XXXXXX XXXXXX


BY:	/s/ Xxxxxxxx X. Xxxxxx	BY:	/s/ Xxxxxx Xxxxxx
			Xxxxxx Xxxxxx


		SELLER (Individual):
ATTEST		XXXX X. XXXXXXXX


BY:	/s/ Xxxxxxxx X. Xxxxxx	BY:	/s/ Xxxx X. Xxxxxxxx
			Xxxx X. Xxxxxxxx

- 25 -

ATTEST:		SELLER (Corporation):
		TRAILBLAZER OIL AND GAS, INC.


BY:		BY:
	, SECRETARY		, PRESIDENT


ATTEST:		SELLER (Corporation):
		ALFA RESOURCES, INC.


BY:		BY:
	ASST., SECRETARY		, SECRETARY TREASURER


ATTEST:		SELLER (Corporation):
		PULSAR OIL AND GAS, INC.


BY:		BY:
	, SECRETARY		, PRESIDENT


ATTEST:		SELLER (Corporation):
		OVERTHRUST OIL ROYALTY CORPORATION


BY:		BY:
, SECRETARY			, PRESIDENT


		SELLER (Corporation):
ATTEST:		CORVETTE PETROLEUM, LTD.


BY:	/s/ Xxxxxx X. Xxxx	BY:	/s/ Xxxx X. Xxxxxxxx
	, SECRETARY		, PRESIDENT


ATTEST		SELLER ( Individual ):
		XXXXXX XXXXXX


BY:		BY:
			Xxxxxx Xxxxxx


		SELLER (Individual):
ATTEST		XXXX X. XXXXXXXX


BY:		BY:
			Xxxx X. Xxxxxxxx

- 26 -

STATE OF COLORADO	)
	) ss.
CITY AND COUNTY OF DENVER	)

Before me, Xxxxxxx Xxxxx, a Notary Public in and for said County and State, on this 21 day of September, 1983, personally appeared X. X. xxXxxxxxxxxxx, known to me to be the President of Associated Natural Gas, Inc., a Colorado corporation, the Managing Partner of Natural Gas Associates, a Colorado Partnership, on behalf of said partnership and acknowledged to me that he executed this Agreement for the uses and purposes therein set forth.

Given under my hand and seal of office this 21 day of September, 1983.

		/s/ Xxxxxxx Xxxxx
		NOTARY PUBLIC
		00000 Xxxxx Xxx
MY COMMISSION EXPIRES:		Xxxxxxxxxxx, XX 00000

0-00-00

XXXXX XX XXXXXXXX	)
	) ss.
CITY AND COUNTY OF GREELEY	)

Before me,__________, a Notary Public in and for said County and State, on this _________ day of __________, 1983, personally appeared ________, known to me to be the partner of SHF Partnership, a Colorado general partnership, on behalf of said partnership, and acknowledged to me that he executed the same as his free act and deed and for the considerations and purposes therein expressed, and as the act and deed of said partnership and in the capacity therein stated.

Given under my hand and seal of office this ______ day of ________, 1983.


		NOTARY PUBLIC

MY COMMISSION EXPIRES:

STATE OF COLORADO	)
	) ss.
CITY AND COUNTY OF DENVER	)

Before me, Xxxxxxxx X. Xxxxxx, a Notary Public in and for said County and State, on this 7th day of September, 1983, personally appeared E. Xxxxxxx Xxxxxxxx, and ________, known to me to be the President and Secretary, respectively, of Trailblazer Oil and Gas, Inc., a Utah corporation, on behalf of said corporation and acknowledged to me that they executed this Agreement for the considerations and purposes therein set forth.

Given under my hand and seal of office this 7th day of September, 1983.

		/s/ Xxxxxxxx X. Xxxxxx
		NOTARY PUBLIC

MY COMMISSION EXPIRES:

September 18, 0000

- 00 -

XXXXX XX XXXXXXXX	)
	) ss.
CITY AND COUNTY OF DENVER	)

Before me, Xxxxxxxx Xxxxx , a Notary Public in and for said County and State, on this 7 day of Sept, 1983, personally appeared ________________ and Xxxxxxxx X. Xxx known to me to be the President and Secretary, respectively, of Alfa Resources, Inc., a Colorado corporation, on behalf of said corporation and acknowledged to me that they executed this Agreement for the considerations and purposes therein set forth.

Given under my hand and seal of office this 7 day of Sept., 1983.

		/s/ Xxxxxxxx Xxxxx
		NOTARY PUBLIC

MY COMMISSION EXPIRES:		0000 Xx. XXXXXXXX
		XXXXXX, XX 00000
6/24/85

STATE OF COLORADO	)
	) ss.
CITY AND COUNTY OF DENVER	)

Before me, Xxxxxxxx Xxxxx, a Notary Public in and for said County and State, on this 7 day of Sept, 1983, personally appeared Xxxxxx X. Xxxxxxxxx and Xxxxx Xxxxxxx, known to me to be the President and Secretary respectively, of Pulsar Oil and Gas, Inc., a Utah corporation, on behalf of said corporation and acknowledged to me that they executed this Agreement for the considerations and purposes therein set forth.

Given under my hand and seal of office this 7 day of Sept, 1983.

		/s/ Xxxxxxxx Xxxxx
		NOTARY PUBLIC

MY COMMISSION EXPIRES:		0000 Xx. XXXXXXXX
		XXXXXX, XX 00000
6/24/85

STATE OF COLORADO	)
	) ss.
CITY AND COUNTY OF DENVER	)

Before me, Xxxxx X. Xxxxxxxx, a Notary Public in and for said County and State, on this 7 day of Sept, 1983, personally appeared Xxxxxx Xxxxxx and Xxxxxx X. Xxxxx, known to me to be the President and Secretary, respectively, of Overthrust Oil Royalty Corporation, a Colorado corporation, on behalf of said corporation and acknowledged to me that they executed this Agreement; for the considerations and purposes therein set forth.

Given under my hand and seal of office this 7 day of Sept, 1983,

		/s/ Xxxxx X. Xxxxxxxx
		NOTARY PUBLIC

MY COMMISSION EXPIRES:

12-31-86

- 28 -

	)
	) ss.
	)

Before me,_________, a Notary Public in and for said County and State, on this ________ day of _________1983 personally appeared ________ and ________, known to me to be the President and Secretary, respectively, of Corvette Petroleum, Ltd., a British Columbia corporation, on behalf of said corporation and acknowledged to me that they executed this Agreement for the considerations and purposes therein set forth.

Given under my hand and seal of office this ________ day of ________, 1983


		NOTARY PUBLIC

MY COMMISSION EXPIRES:

STATE OF COLORADO	)
	) ss.
CITY AND COUNTY OF DENVER	)

Before me, Xxxxxxxx X. Xxxxxx, a Notary Public in and for said County and State, on this 7th day of September, 1983 personally appeared Xxxxxx Xxxxxx to me known to be the person described in and who executed the foregoing Agreement for and considerations and purposes therein set forth.

Given, under my hand and seal of office this 7th day of September, 1983

		/s/ Xxxxxxxx X. Xxxxxx
		NOTARY PUBLIC

MY COMMISSION EXPIRES:

September 18, 0000

XXXXX XX XXXXXXXX	)
	) ss.
CITY AND COUNTY OF DENVER	)

Before me, Xxxxxxxx X. Xxxxxx, a Notary Public in and for said County and State, on this 7th day of September, 1983 personally appeared Xxxx X. Xxxxxxxx to me known to be the person described in and who executed the foregoing Agreement for and considerations and purposes therein set forth.

Given under my hand and seal of office this 7th day September, 1983

		/s/ Xxxxxxxx X. Xxxxxx
		NOTARY PUBLIC

MY COMMISSION EXPIRES:

September 18, 0000

- 00 -

XXXXXXXX XX XXXXXXX XXXXXXXX	)
	) ss.
CITY OF VANCOUVER	)

Before me, Xxxxxx X. Xxxxx, a Notary Public in and for said County and State, on this 13th day of September,,1983 personally appeared J. Xxxxxxx Xxxxxxxx and Xxxxxx X. Xxxx, known to me to be the President and Secretary, respectively, of Corvette Petroleum, Ltd., a British Columbia corporation, on behalf of said corporation and acknowledged to me that they executed this Agreement for the considerations and purposes therein set forth.

Given under my hand and seal of office this 13th day of September, 1983

		/s/ Xxxxxx X. Xxxxx
		NOTARY PUBLIC
		XXXXXX X. XXXXX
MY COMMISSION EXPIRES:		BARRISTER & SOLICITOR STE. 1202 000 XXXX XXXXXX XX. XXXXXXXXX, X.X X0X 0X0 TELEPHONE: (000) 000-0000

N/A

STATE OF COLORADO	)
	) ss.
CITY AND COUNTY OF DENVER	)

Before me, ________, a Notary Public in and for said County and State, on this ________ day of ________, 1983 personally appeared ________ to me known to be the person described in and who executed the foregoing Agreement for and considerations and purposes therein set forth.

Given under my hand and seal of office this ________ day of ________, 1983


		NOTARY PUBLIC

MY COMMISSION EXPIRES:

STATE OF COLORADO	)
	) ss.
CITY AND COUNTY OF DENVER	)

Before me, ________ a Notary Public in and for said County and State, on this ________day of _________, 1983 personally appeared_______ to me known to be the person described in and who executed the foregoing Agreement for and considerations and purposes therein set forth.

Given under my hand and seal of office this ____ day of ____, 1983


		NOTARY PUBLIC

MY COMMISSION EXPIRES:

- 30 -

ATTEST:		SELLER (Corporation):
		TRAILBLAZER OIL AND GAS, INC.


BY:		BY:
	, SECRETARY		, PRESIDENT


ATTEST:		SELLER (Corporation):
		ALFA RESOURCES, INC.


BY:		BY:
	ASST., SECRETARY		, SECRETARY TREASURER


ATTEST:		SELLER (Corporation):
		PULSAR OIL AND GAS, INC.


BY:		BY:
	, SECRETARY		, PRESIDENT


ATTEST:		SELLER (Corporation):
		OVERTHRUST OIL ROYALTY CORPORATION


BY:		BY:
, SECRETARY			, PRESIDENT


		SELLER (Corporation):
ATTEST:		CORVETTE PETROLEUM, LTD.


BY:		BY:
	, SECRETARY		, PRESIDENT


ATTEST		SELLER ( Individual ):
		XXXXXX XXXXXX


BY:		BY:
			Xxxxxx Xxxxxx


		SELLER (Individual):
ATTEST		XXXX X. XXXXXXXX


BY:		BY:
			Xxxx X. Xxxxxxxx


		SELLER (Partnership)
		SHF


BY:	/s/ Xxxxxxxx X. Xxxxxx		/s/ H. Xxxxx Xxxxxx
			, Partner

- 31 -

STATE OF COLORADO	)
	) ss.
CITY AND COUNTY OF DENVER	)

Before me, __________, a Notary Public in and for said County and State, on this ________ day of ________, 1983, personally appeared X. X. xxXxxxxxxxxxx, known to me to be the President of Associated Natural Gas, Inc., a Colorado corporation, the Managing Partner of Natural Gas Associates, a Colorado Partnership, on behalf of said partnership and acknowledged to me that he executed this Agreement for the uses and purposes therein set forth.

Given under my hand and seal of office this ________ day of ________, 1983.


		NOTARY PUBLIC

MY COMMISSION EXPIRES:

STATE OF COLORADO	)
	) ss.
CITY AND COUNTY OF GREELEY	)

Before me, Xxxxxxxx X. Xxxxxx, a Notary Public in and for said County and State, on this 19th day September, 1983, personally appeared H. Xxxxx Xxxxxx, known to me to be the partner of SHF Partnership, a Colorado general partnership, on behalf of said partnership, and acknowledged to me that he executed the same as his free act and deed and for the considerations and purposes therein expressed, and as the act and deed of said partnership and in the capacity therein stated.

Given under my hand and seal of office this 19th day of September, 1983.

		/s/ Xxxxxxxx X. Xxxxxx
		NOTARY PUBLIC

MY COMMISSION EXPIRES:

September 18, 0000

XXXXX XX XXXXXXXX	)
	) ss.
CITY AND COUNTY OF DENVER	)

Before me, ________, a Notary Public in and for said County and State, on this ________ day of ________, 1983, personally appeared ________ and ______________, known to me to be the President and Secretary, respectively, of Trailblazer Oil and Gas, Inc., a Utah corporation, on behalf of said corporation and acknowledged to me that they executed this Agreement for the considerations and purposes therein set forth.

Given under my hand and seal of office this ________day of , ________, 1983.


		NOTARY PUBLIC

MY COMMISSION EXPIRES:

- 32 -

EXHIBIT "A"

Lease Schedule

LESSOR	LESSEE	DESCRIPTION	LEASE EXPIRATION DATE	BOOK	REC. NO.	GROSS ACRES	NET ACRES	WORKING INTEREST %	NET REVENUE %

(A)Ruby Xxxxxx Xxxxxxx/First National. Bank of Xxxxxxx	Xxxxxxx Petroleum Corp. of Michigan	Township 6 North, Range 66 West Sec. 6: W½SW¼, part of the NW½NW½ Sec. 7: NW¼	8/30/83*	932	1853646	304.93	225.85	100%	77.5%

(B)Xxxx Xxxxxx Xxxxxxx	Xxxxxxx Petroleum, Corp. of Michigan	Township 6 North, Range 66 West Sec. 7: NW½ (Lots 1 & 2)	8/30/83*	932	1853645	-	79.08	100%	77.5%

(B)Xxxxxxx X. Xxxxxxx, et ux, Xxxxx X. Xxxxxxx, et ux, & Xxxxxxxx X. Xxxxx, et vir	Xxxxxxx Petroleum, Corp. of Michigan	Township 7 North, Range 66 West Sec. 33: SW¼	10/05/84	939	1860790	79.317	39.66	100%	77.5%

Xxxx Xxxx	Xxxxxxx Petroleum, Corp. of Michigan	Township 7 North, Range 66 West Sec. 21: SW¼	7/08/86	958	1879881	160,00	160.00	100%	78.0%

Xxxxxxx X. Xxxxxx, et ux	Xxxxxxx Petroleum, Corp. of Michigan	Township 7 forth, Range 00 Xxxx Xxx. 00: NW½	7/25/86	931	1852675	138.00	138.00	100%	73.0%

Xxx Xxxx and Xxxxx Xxxxx, Trustees	Xxxxxxx Petroleum, Corp. of Michigan	Township 7 forth, Range 00 Xxxx Xxx. 00: NE¼	8/31/86	932	1854407	160.00	160.00	100%	78.0%

Xxx X. Xxxxx, et xx	Xxxxxxx Petroleum, Corp. of Michigan	Township 7 North. Range 66 West Sec. 31: NE¼	6/11/84	932	1854406	160.00	160.00	100%	78.0%

T. Xxxxxx Xxxxxxxx, et ux	Xxxxxxx Petroleum, Corp. of Michigan	Township 7 North, Range 66 West Sec. 32: SE¼ and part of the SW¼	6/09/83*	933	1854579	243.60	243.60	100%	78.0%

Xxxxxx Xxxxxxxxx, et ux	X.X. XXXXXXX	Township 7 North, Range 00 Xxxx Xxx. 00: Xxx X - XXx	7/06/83*	909	1830787	155.48	155.48	94.89124%	78.0%

- 33 -

EXHIBIT "A"

Lease Schedule

LESSOR	LESSEE	DESCRIPTION	LEASE EXPIRATION DATE	BOOK	REC. NO.	GROSS ACRES	NET ACRES	WORKING INTEREST %	NET REVENUE %

(A)Xxxxxx X. Xxxx	X.X. XXXXXXX	Township 6 North, Range 66 West Sec. 7: E½	4/14/83*	909	1830794	330.00	110.00	100%	78.0%

(B)Xxxxx Xxxxxxx	X.X. XXXXXXX	Township 6 North, Range 66 West Sec. 7: E½	4/30/83*	909	1830795	-	110.00	100%	78.0%

{C)Xxxxxxx X. Xxxx	X.X. XXXXXXX	Township 6 North, Range 66 West Sec. 7: E½	4/30/83*	909	1830797	-	110.00	100%	78.0%

Xxxxxxxxx Farms, Colorado Partnahip	X.X. XXXXXXX	Township 6 North, Range 66 West Sec. 4: NW¼, W½NE¼	7/31/85	915	1837161.	240.00	240.00	100%	78.0%

Xxx Xxxxxxxx, Inc. Colorado Corporation	X.X. XXXXXXX	Township 7 North, Range 66 West Sec. 33: SE¼ Sec. 34: S½	7/04/83*	915	1837165	480.00	480.00	100%	78.0%

Xxx Xxxxxxxx, Inc. Colorado Corporation	X.X. XXXXXXX	Township 6 North, Range 66 West Sec. 2: Part of NW¼ Sec. 10: NE¼	7/04/83*	915	1837166	262.00	262.00	100%	78.0%

Xxx X. Xxxxxxxx	X.X. XXXXXXX	Township 7 North, Range 66 West Sec. 34: NW¼	7/04/83*	915	1837164	175.00	175.00	100%	78.0%

Xxxxx X. Xxxxxxxx	X.X. XXXXXXX	Township 7 North, Range 66 West Sec. 25: Part of E½	7/04/83*	915	1837163	152.00	152.00	100%	78.0%

Xxxxx Xxxxxx Xxxxxxxx	X.X. XXXXXXX	Township 7 North, Range 66 West Sec. 36: NE¼ and part of NW3/4	7/31/85	915	1837162	163.40	163.40	100%	78.0%

Xxx Xxxxxxx & Sons, Inc.	X.X. XXXXXXX	Township 7 North, Range 66 West Sec. 27: NE¼	7/20/83**	915	1837156	160.00	160.00	100%	78.0%

- 34 -

EXHIBIT "A"

Lease Schedule

LESSOR	LESSEE	DESCRIPTION	LEASE EXPIRATION DATE	BOOK	REC. NO.	GROSS ACRES	NET ACRES	WORKING INTEREST %	NET REVENUE %

Xxxxx X. Xxxxxx, et ux	Xxxxxxx Petroleum, Corp. of Michigan	Township 7 North, Range 66 West Sec. 20: Part of N½SE¼	7/01/86	946	1868292	301.00	301.00	94.89124%	74.02%

Xxxxxx Xxxxxxx, and Xxxxxxx X. Xxxxxx	Xxxxxxx Petroleum, Corp. of Michigan	Township 7 North, Range 66 West Sec. 21: and part of SE¼	6/11/86	946	1868285	301.00	301.00	100%	78.0%

Xxxxxxx X. Xxxxxx, et ux , as joint tenants	Xxxxxxx Petroleum, Corp. of Michigan	Township 7 North, Range 66 West Sec. 28: Part of NW¼ and part of Sec. 29: Part of NE¼	6/15/86	946	1868288	177.00	177.00	94.89124%	74.02%

Xxxxx Xxxxx Xxxxxxx & Co., A Colorado Part.	Xxxxxxx Petroleum, Corp. of Michigan	Township 7 North, Range 66 West Sec. 28: Lot "A"-part of SW¼	6/17/86	953	1875261	102.00	102.00	94.89124%	74.02%

(A) Xxxxxx X. Xxxxxx, representative of estate of Pearl M. Xxxx	Xxxxxxx Petroleum, Corp. of Michigan	Township 7 North, Range 66 West Sec. 28: SE¼, part of W½ and part of SW¼NE¼	6/12/86	946	1868293	220.00	42.165	94.89124%	74.02%

(B)Xxxxxx X. Xxxxxx, representative of estate of Xxxxxxxx-Xxxxxxx	Xxxxxxx Petroleum, Corp. of Michigan	Township 7 North, Range 66 West Sec. 28: SE¼, part of and part of SW¼NE¼	6/12/86	946	1868283		42.165	94.89124%	74.02%

(C) Xxxxxx Xxxxxxx, and Xxxxxxx X. Xxxxxxx	Xxxxxxx Petroleum, Corp. of Xxxxxxxx	Xxxxxxxx 0 Xxxxx, Xxxxx 00 Xxxx Xxx, 00: SE¼, part of W½ and part of SW¼NE¼	6/12/86	946	1868286		84.33	94.89124%	74.02%

(A) Xxxxxx Xxxxxxxx, et ux	Xxxxxxx Petroleum, Corp. of Michigan	Township 7 North, Range 66 West Sec. 20: SE¼SE¼, SW¼SE¼ and part of NW¼SE¼	6/02/85	971	1896717	85.00	42.50	94.89124%	74.02%

- 35 -

EXHIBIT "A"

Lease Schedule

LESSOR	LESSEE	DESCRIPTION	LEASE EXPIRATION DATE	BOOK	REC. NO.	GROSS ACRES	NET ACRES	WORKING INTEREST %	NET REVENUE %

(B)Xxxxxx Xxxxxxxx, et ux	Xxxxxxx Petroleum, Company	Township 7 North, Range 66 West Sec. 20; SE¼SE¼, SW¼SE¼ and part of NW¼SE¼	6/02/85	946	1868291	-	42.50	94.89124%	74.02%

Xxxx X. Xxxxx	Xxxxxxx Petroleum, Company	Township 7 North, Range 66 West Sec. 20: Part of SE¼SE¼;	6/17/86	956	1877714	81.09	67.14	94.89124%	74.02%

Xxxxxx X. Xxxxxx, et ux	X.X. Xxxxxxx	Township 7 North, Range 66 West Sec. 29: Part of E½	9/15/86	958	1879882	180.00	180.00	94.89124%	74.02%

Xxxxxx X. Xxxxxxxx, et ux	Xxxxxxx Petroleum, Company	Township 7 North, Range 66 West Sec. 21: Part of N½SW¼NW¼	1½4/84	956	1877715	9.20	9.20	100%	78.0%

Xxxxxx X. Xxxxxxx, et ux	Xxxxxxx Petroleum, Company	Township 7 North, Range 66 West Sec. 21: Parcel "A" - S½SW¼NW¼ and	1½4/84	961	1883692	27.00	27.00	100%	78.0%

X. Xxxxx Xxxxxxxxx,	Xxxxxxx Petroleum, Company	Township 7 North, Range 00 Xxxx Xxx 00: N½ W½ NW¼	1½4/84	960	1882662	40.00	40.00	100%	78.0%

Xxxx Xxxxxx Xxxxxx	Xxxxxxx Petroleum, Company	Xxxxxxxx 0 Xxxxx, Xxxxx 00 Xxxx Xxx. 00: W½NW¼	11/19/84	960	1882663	80.00	80.00	100%	78.0%

Xxxxx X. Xxxxxx, et ux	Xxxxxxx Petroleum, Company	Township 7 North, Range 66 West Sec. 21: Part of S½W½NW¼	1½4/84	960	1882661	10.00	10.00	100%	78.0%

Xxxx Xxxxxxx, et ux	Carbonit Exploration	Township 7 North, Range 66 West Sec. 29: Part of E½	7/14/84	933	1854757	140.70	140.70	100%	78.0%

						5,117.717	5,012.770

FOOTNOTES:

*	Lease held by production

**	Lease term extended to October 4, 1983 at which time the obligatory well will be drilled.

- 36 -

RECORDED EXEMPTION NO.

B 0993 XXX 01923141 04/11/83 15:32 $30.O0 9/010

F 0819 XXXX XXX XXXXXXXXXX CLERK & RECORDER WELD CO, CO

Exhibit "B"

Xxxxx Plant Site

LOCATION MAP

Scale 1:8000

- 37 -

Exhibit "C"

INLET GAS ANALYSIS

XXXXX PLANT

		Mole %	GPM

Hydrogen Sulfide	(H2S)	0.00
Nitrogen	(N2)	3.31
Carbon Dioxide	(CO2)	1.27
Methane	(C1)	76.77
Ethane	(C2)	6.25
Propane	(C3)	5.69	1.57
Iso-Butane	(iC4)	1.00	0.32
Normal-Butane	(nC4)	3.21	1.01
ISO-Pentane	(iC5)	0.79	0.29
Normal-Pentane	(nC5)	0.98	0.35
Hexanes Plus	(C6+)	0.73	0.33
		100.00	3.87

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