1 EXHIBIT 2.4 ASSET PURCHASE AGREEMENT

1
EXHIBIT 2.4

ASSET PURCHASE AGREEMENT

BETWEEN

XXXXXXXXX DRILLING COMPANY

AND

XXXXX DRILLING CORPORATION
2
TABLE OF CONTENTS

Page
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ARTICLE I

THE ASSET PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
SECTION 1.1 The Asset Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
SECTION 1.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
SECTION 1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF PDC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
SECTION 2.1 Organization, Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
SECTION 2.2 Authority; Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
SECTION 2.3 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF XXXXX DRILLING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
SECTION 3.1 Organization, Standing and Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
SECTION 3.2 Authority; Non-Contravention. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
SECTION 3.3 Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
SECTION 3.4 Drilling Contracts and Other Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
SECTION 3.5 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
SECTION 3.6 Drilling Rigs, Equipment and Vehicle. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
SECTION 3.7 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
SECTION 3.8 Normal Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
SECTION 3.9 Stock Ownership and Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-

ARTICLE IV

ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
SECTION 4.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
SECTION 4.2 Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
SECTION 4.3 XxXxx Drilling Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
SECTION 4.4 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
SECTION 4.5 PDC Assumption of Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
SECTION 4.6 PDC Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
SECTION 4.7 Sales and Transfer Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
SECTION 4.8 No Implied Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-

ARTICLE V

CONDITIONS PRECEDENT TO THE ASSET PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
SECTION 5.1 Conditions to Each Party's Obligation to Effect the Asset Purchase . . . . . . . . . . . . . . -6-
SECTION 5.2 Conditions to Obligation of XxXxx Drilling to Effect the Asset Purchase . . . . . . . . . . . . -7-
SECTION 5.3 Conditions to Obligations of PDC to Effect the Asset Purchase . . . . . . . . . . . . . . . . . -8-

ARTICLE VI

GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
SECTION 6.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
SECTION 6.2 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
SECTION 6.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
SECTION 6.4 Entire Agreement; No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . -10-
SECTION 6.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
SECTION 6.6 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
SECTION 6.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
SECTION 6.8 Enforcement of This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-

ANNEX 1 Description of Drilling Rigs, Equipment and Vehicle
ANNEX 2 List of Drilling Contracts and Other Agreements
ANNEX 3 List of XxXxx Drilling Stockholders

EXHIBIT A(I) Non-Competition Agreement - XxXxx Drilling Corporation
EXHIBIT A(II) Non-Competition Agreement - X.X. XxXxx
EXHIBIT A(III) Non-Competition Agreement - Xxxxx Xxxxx
EXHIBIT B Xxxx of Sale and Assignment

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ASSET PURCHASE AGREEMENT

ASSET PURCHASE AGREEMENT, dated as of August 1, 1997 (this
"Agreement"), among XXXXXXXXX DRILLING COMPANY ("PDC"), a Delaware corporation
and a wholly-owned subsidiary of Xxxxxxxxx Energy, Inc. ("PEC"), and XXXXX
DRILLING CORPORATION, a privately-held Texas corporation ("XxXxx Drilling").

WITNESSETH:

WHEREAS, XxXxx Drilling owns three drilling rigs, related
drilling equipment and vehicle (collectively, the "Drilling Rigs, Equipment and
Vehicle"), and leases certain vehicles (the "Leased Vehicles"), all as more
particularly described on Annex 1 in the case of the Drilling Rigs, Equipment
and Vehicle, and Annex 2 in the case of the Leased Vehicles.

WHEREAS, PDC desires to purchase, and XxXxx Drilling desires
to sell, all of XxXxx Drilling's right, title and interest in and to the
Drilling Rigs, Equipment and Vehicle and the Leased Vehicles (the "Asset
Purchase") for the consideration set forth and provided for herein; and

WHEREAS, PDC, on the one hand, and XxXxx Drilling, on the
other, desire to make certain representations, warranties and agreements in
connection with the Asset Purchase.

NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:

ARTICLE I

THE ASSET PURCHASE

SECTION 1.1 The Asset Purchase. Upon the terms and subject
to the conditions of this Agreement, at the Closing (as defined in Section 1.3
below) provided herein, PDC shall purchase from XxXxx Drilling and XxXxx
Drilling shall sell to PDC, all of XxXxx Drilling's right, title and interest
in and to the Drilling Rigs, Equipment and Vehicle and the Leased Vehicles.

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SECTION 1.2 Purchase Price. PDC agrees to pay to XxXxx
Drilling at the Closing a total of $3,500,000 (the "Purchase Price") for all of
XxXxx Drilling's right, title and interest in and to the Drilling Rigs,
Equipment and Vehicle and the Leased Vehicles. The Purchase Price shall be
paid by cashier's check.

SECTION 1.3 Closing. The closing of the Asset Purchase (the
"Closing") shall take place at 9:00 a.m., local time, on the date of this
Agreement at the offices of PEC in Snyder, Texas or at such other time and
place as PDC and XxXxx Drilling shall agree.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF PDC

PDC represents and warrants to XxXxx Drilling as follows:

SECTION 2.1 Organization, Standing and Power. PDC is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power and
authority to carry on its business as now being conducted.

SECTION 2.2 Authority; Non-Contravention. PDC has all
requisite power and authority to enter into this Agreement and to consummate
the Asset Purchase. The execution and delivery by PDC of this Agreement and
the consummation by PDC of the Asset Purchase have been duly authorized by all
necessary corporate action on the part of PDC. This Agreement has been duly
executed and delivered by PDC and (assuming the valid authorization, execution
and delivery of this Agreement by XxXxx Drilling) constitutes a valid and
binding obligation of PDC enforceable against PDC in accordance with its terms,
except to the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws of
general applicability relating to or affecting the enforcement of creditors'
rights and by the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law). No filing
or registration with, or authorization, consent or approval of, any domestic
(federal and state), foreign or supranational court, commission, governmental
body, regulatory agency, authority or tribunal (a "Governmental Agency") is
required by or with respect to PDC in connection with the execution and
delivery of this Agreement by PDC or is necessary for the consummation by PDC
of the Asset Purchase.

SECTION 2.3 Brokers. No broker, investment banker or other
person is entitled to any broker's, finder's or other similar fee or commission
in connection with the transactions

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contemplated by this Agreement based upon arrangements made by or on behalf of
PDC or Xxxxxxxxx Energy, Inc ("PEC"), the sole stockholder of PDC.

The representations and warranties of PDC under this Article
II shall survive the Closing.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF XXXXX DRILLING

XxXxx Drilling represents and warrants as follows:

SECTION 3.1 Organization, Standing and Power. XxXxx Drilling
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Texas and has the requisite corporate power and
authority to carry on its business as now being conducted.

SECTION 3.2 Authority; Non-Contravention. XxXxx Drilling has
all requisite power and authority to enter into this Agreement and to
consummate the Asset Purchase. This Agreement has been duly executed and
delivered by XxXxx Drilling and (assuming the valid authorization, execution
and delivery of this Agreement by PDC) constitutes a valid and binding
obligation of XxXxx Drilling enforceable against it in accordance with its
terms, except to the extent enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other similar
laws of general applicability relating to or affecting the enforcement of
creditors' rights and by the effect of general principles of equity (regardless
of whether enforceability is considered in a proceeding in equity or at law).
The execution and delivery of this Agreement do not, and the consummation of
the Asset Purchase and compliance with the provisions hereof will not, conflict
with, or result in any violation of, or default (with or without notice of
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of a material
benefit under, or result in the creation of any lien, security interest,
charges or encumbrances upon any of the properties or assets of XxXxx Drilling
under, any provision of (i) the Articles of Incorporation or Bylaws of XxXxx
Drilling (true and complete copies of which as of the date hereof have been
delivered to PDC), (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to XxXxx Drilling or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to XxXxx Drilling or any
of its respective properties or assets. No filing or registration with, or
authorization, consent or approval of, any Governmental Entity is required by
or with respect to XxXxx Drilling in connection with the execution and delivery

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of this Agreement by XxXxx Drilling or is necessary for the consummation by
XxXxx Drilling of the Asset Purchase.

SECTION 3.3 Title. Set forth in Annex 1 is a description of
the Drilling Rigs, Equipment and Vehicle which description is accurate and
complete in all material respects. XxXxx Drilling has good title to a 100%
interest in the Drilling Rigs, Equipment and Vehicle and a valid leasehold
interest in the Leased Vehicles, subject to no Liens. For purposes of this
Agreement "Liens" means liens, mortgages, pledges, security interests,
encumbrances, claims or charges of any kind.

SECTION 3.4 Drilling Contracts and Other Agreements. Set
forth in Annex 2 is a true and complete list and description of all oral and
written drilling contracts (the "Drilling Contracts") and lease agreements
relating to the Leased Vehicles (collectively, the "Leased Vehicles Lease
Agreements") to which XxXxx Drilling is a party. A complete copy of each of
the Drilling Contracts and the Leased Vehicles Lease Agreements has previously
been delivered to PDC. XxXxx Drilling has performed all of its obligations
arising to date under the Drilling Contracts and Leased Vehicles Lease
Agreements, and each of the Drilling Contracts and Agreements, and is in good
standing and in full force and effect. Also set forth on Annex 2 is a
description of the outstanding purchase orders of XxXxx Drilling ("Purchase
Orders") relating to drill pipe and certain other executory contracts of XxXxx
Drilling (all contracts and agreements listed on Annex 2 being hereinafter
collectively referred to as the "Subject Contracts"). Except as set forth on
Annex 2, none of the Drilling Rigs, Equipment and Vehicle or the Leased
Vehicles is subject to any written or oral contracts and agreements.

SECTION 3.5 Litigation. Other than possible xxxxxxx'x
compensation cases, there is no suit, action, investigation or proceeding
pending or, to the knowledge of XxXxx Drilling, threatened against XxXxx
Drilling at law or in equity before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind,
that would impair the ability of XxXxx Drilling to perform its obligations
hereunder or to consummate the transactions contemplated hereby, and there is
no judgment, decree, injunction, rule or order of any court, governmental
department, commission, board, bureau, agency, instrumentality or arbitrator to
which XxXxx Drilling is subject that would impair the ability of XxXxx Drilling
to perform its obligations hereunder or to consummate the transactions
contemplated hereby.

SECTION 3.6 Drilling Rigs, Equipment and Vehicle. Appendix 1
to Exhibit B sets forth or incorporates by reference a list of all drilling
rigs and related drilling equipment and vehicle owned by XxXxx Drilling, which
list is true, correct and complete in all materials respects.

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SECTION 3.7 Brokers. No broker, investment banker or other
person is entitled to any broker's, finder's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of XxXxx Drilling.

SECTION 3.8 Normal Operations. Any xxxxx currently being
drilled by XxXxx Drilling under the Drilling Contracts are drilling under
normal operations.

SECTION 3.9 Stock Ownership and Control. Annex 3 sets forth
a true and correct list of the holders of XxXxx Drilling's voting securities
and the number of such securities owned by each such holder.

The representations and warranties of XxXxx Drilling set forth
in this Article III shall survive Closing for a period of one year, except as
to any representation or warranty as to which PDC has given XxXxx Drilling a
written notice of breach within such one-year period.

ARTICLE IV

ADDITIONAL AGREEMENTS

SECTION 4.1 Fees and Expenses. All costs and expenses
incurred by PDC in connection with this Agreement and the transactions
contemplated hereby shall be paid by PDC; such costs and expenses incurred by
XxXxx Drilling shall be paid by XxXxx Drilling.

SECTION 4.2 Reasonable Efforts. Upon the terms and subject
to the conditions set forth in this Agreement, each of the parties agrees to
use all reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Asset Purchase and
the other transactions contemplated by this Agreement and the prompt
satisfaction of the conditions hereto.

SECTION 4.3 XxXxx Drilling Indemnification. On and after the
Closing Date, XxXxx Drilling and X.X. XxXxx ("XxXxx"), an officer, director and
stockholder of XxXxx Drilling, shall jointly and severally indemnify and hold
PEC and PDC harmless against and in respect of all actions, suits, demands,
judgments, costs and expenses (including reasonably attorneys' fees of PEC or
PDC), relating to any misrepresentation, breach of any representation or
warranty or non-fulfillment of any agreement on the part of XxXxx Drilling
contained in this Agreement. This indemnification provided for in this Section
4.3 shall

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terminate and be of no further force and effect one year from the Closing Date,
except as to any representation or warranty as to which a written notice of
claim for indemnification has been given to XxXxx Drilling and XxXxx prior to
the expiration of such one-year period.

SECTION 4.4 Public Announcements. Unless otherwise required
by law or the rules and regulations of the Securities and Exchange Commission,
neither PDC, PEC nor XxXxx Drilling shall issue any press release or make any
public statement with respect to the Asset Purchase prior to Closing.

SECTION 4.5 PDC Assumption of Contracts. Effective as of
7:00 a.m. Snyder, Texas time on the date of this Agreement ("Effective Time of
Assumption"), PDC hereby assumes all obligations and rights and benefits of
XxXxx Drilling under the Purchase Orders and all obligations and rights and
benefits of XxXxx Drilling under all of the other Subject Contracts. XxXxx
Drilling shall be responsible for and shall have the benefit of all obligations
and rights and benefits under each of the Drilling Contracts and Leased
Vehicles Lease Agreements with respect to periods prior to the Effective Time
of Assumption. XxXxx Drilling shall xxxx applicable third parties for all
services and materials supplied or furnished under the Drilling Contracts for
periods through the Effective Time of Assumption, and PDC shall xxxx for all
services and materials thereafter supplied or furnished under the Drilling
Contracts. Within ten (10) days following the receipt by PDC of any revenues
under the Drilling Contracts attributable to periods prior to the Effective
Time of Assumption, PDC shall pay such revenues to XxXxx Drilling.

SECTION 4.6 PDC Indemnification. PDC shall indemnify and
hold XxXxx Drilling harmless from all costs and liabilities (including
reasonable attorney's fees) incurred by XxXxx Drilling under any of the Subject
Contracts for events occurring after the Effective Time of Assumption.

SECTION 4.7 Sales and Transfer Taxes. PDC agrees to pay any
and all sales and/or transfer taxes due with respect to the Asset Purchase.

SECTION 4.8 No Implied Warranties. It is understood and
agreed that XxXxx Drilling is not making and has not made any representation or
warranty of any kind, express or implied, to PDC except for those specifically
provided in this Agreement. Except for the matters covered by such
representations and warranties, PDC is relying on its own investigation and
analysis in entering into this Agreement and consummating the transaction
contemplated hereby. Without limiting the generality of the foregoing, and
notwithstanding any otherwise express representations and warranties made by
XxXxx Drilling in this Agreement, XxXxx Drilling makes no representation or
warranty to PDC regarding any projections, estimates, or budgets heretofore
delivered or made available to PDC of past or future revenues, expenses, or
expenditures, results of operations (or any component thereof),

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cash flows or financial conditions of XxXxx Drilling, PDC, or the Drilling
Rigs, Equipment and Vehicle or the future operations of PDC.

The provisions of this Article IV shall survive the Closing.

ARTICLE V

CONDITIONS PRECEDENT TO THE ASSET PURCHASE

SECTION 5.1 Conditions to Each Party's Obligation to Effect
the Asset Purchase. The respective obligations of each party to effect the
Asset Purchase shall be subject to the fulfillment or waiver (where
permissible) at or prior to the Closing Date of each of the following
conditions:

(a) No Order. No Governmental Entity or court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any law, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which is then in effect and
has the effect of prohibiting the Asset Purchase or any of the other
transactions contemplated hereby; provided that, in the case of any such
decree, injunction or other order, each of the parties shall have used
reasonable best efforts to prevent the entry of any such injunction or other
order and to appeal as promptly as practicable any decree, injunction or other
order that may be entered.

(b) Consents. XxXxx Drilling shall have received written
consents of the other party or parties to each of the Drilling Contracts, the
Leased Vehicles Lease Agreements and the Purchase Orders for the assumption
thereof by PDC pursuant to the provisions of Section 4.4 of this Agreement and
delivered copies thereof to PDC.

(c) Non-Competition Agreements. A Non-Competition
Agreement in the respective forms attached hereto as Exhibits A(I), A(II) and
A(III) shall have been executed and delivered by XxXxx Drilling, XxXxx and
Xxxxx Xxxxx ("Essex"), as the case may be, and the cash compensation due under
Section 2 of the [respective agreements with XxXxx and Essex] shall have been
paid by PDC.

SECTION 5.2 Conditions to Obligation of XxXxx Drilling to
Effect the Asset Purchase. The obligation of XxXxx Drilling to effect the
Asset Purchase shall be subject to the fulfillment at or prior to the Closing
of the following additional conditions; provided that XxXxx Drilling may waive
any of such conditions in its sole discretion:

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(a) Performance of Obligations; Representations and
Warranties. PDC shall have performed in all material respects each of its
agreements contained in this Agreement required to be performed on or prior to
the Closing, and each of the representations and warranties of PDC contained in
this Agreement shall be true and correct on and as of the Closing.

(b) Officers' Certificate. PDC shall have furnished to
XxXxx Drilling a certificate, dated the Closing, signed by the appropriate
officers of PDC, certifying to the effect that to the best of the knowledge and
belief of PDC, the conditions set forth in Section 5.1 and Section 5.2(a) have
been satisfied in full.

(c) Payment of Purchase Price. PDC shall have made
delivery of the Purchase Price as provided in Section 1.2 of this Agreement.

(d) Xxxx of Sale and Assignment. PDC shall have executed
and delivered the Xxxx of Sale and Assignment, in the form attached hereto as
Exhibit B, covering the Drilling Rigs, Equipment and Vehicle set forth on Annex
1 and the Drilling Contracts, Leased Vehicles Lease Agreements and Purchase
Orders set forth on Annex 2.

SECTION 5.3 Conditions to Obligations of PDC to Effect the
Asset Purchase. The obligations of PDC to effect the Asset Purchase shall be
subject to the fulfillment at or prior to the Closing of the following
additional conditions, provided that PDC may waive any such conditions in its
sole discretion:

(a) Performance of Obligations; Representations and
Warranties. XxXxx Drilling shall have performed in all material respects each
of its agreements contained in this Agreement required to be performed on or
prior to the Closing, and each of the respective representations and warranties
of XxXxx Drilling contained in this Agreement shall be true and correct in all
material respects on and as of the Closing.

(b) Officers' Certificate. XxXxx Drilling shall have
furnished to PDC a certificate, dated the Closing, certifying to the effect
that to the best of the knowledge and belief of XxXxx Drilling, the conditions
set forth in Section 5.1 and Section 5.3(a) have been satisfied.

(c) Opinion of Counsel. PDC shall have received an
opinion of Xxxx & Xxxx, L.L.P., Midland, Texas, counsel to XxXxx Drilling,
dated the Closing, substantially identical in form and substance to that
attached hereto as Exhibit C.

(d) Xxxx of Sale and Assignment. XxXxx Drilling shall
have executed and delivered the Xxxx of Sale and Assignment, in the form
attached hereto as Exhibit B, covering

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the Drilling Rigs, Equipment and Vehicle set forth on Annex 1 and the Drilling
Contracts, Leased Vehicles Lease Agreements and Purchase Orders set forth on
Annex 2.

(e) Title. XxXxx Drilling shall have endorsed and
delivered the title certificate to the motor vehicle described in Annex 1.

ARTICLE VI

GENERAL PROVISIONS

SECTION 6.1 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally, sent by overnight courier or telecopied (with a confirmatory copy
sent by overnight courier) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):

(a) if to PDC, to:

Xxxxxxxxx Energy, Inc.
0000 Xxxxxx Xxxxxxx
X.X. Xxxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: A. Xxxxx Xxxxxxxxx
President and Chief Operating Officer

with copies to:

Xxxxxx X. Xxxxxxxx, Esq.
Xxxxx & Xxxxxxxxx LLP
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000-0000

(b) if to XxXxx Drilling, to:

X.X. XxXxx, President
XxXxx Drilling Corporation
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000

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with copies to:

Xxxxxxx X. Xxxx, Xx., Esq.
Xxxx & Xxxx, L.L.P.
000 Xxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000

SECTION 6.2 Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated, and the words "hereof', "herein" and "hereunder"
and similar terms refer to this Agreement as a whole and not to any particular
provision of this Agreement, unless the context otherwise requires. The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."

SECTION 6.3 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.

SECTION 6.4 Entire Agreement; No Third-Party Beneficiaries.
This Agreement, including the documents and instruments referred to herein, (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) is not intended to confer upon any person other
than the parties any rights or remedies hereunder; provided, however, that
legal counsel for XxXxx Drilling hereto may rely upon the representations and
warranties of XxXxx Drilling contained herein and in the certificates delivered
pursuant to Section 5.3(b).

SECTION 6.5 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Texas,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.

SECTION 6.6 Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.

-10-
14
SECTION 6.7 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule
of law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby are not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions be consummated as originally
contemplated to the fullest extent possible.

SECTION 6.8 Enforcement of This Agreement. The parties agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.

IN WITNESS WHEREOF, PDC and XxXxx Drilling have executed this
Agreement as of the date first written above.

PDC:

XXXXXXXXX DRILLING COMPANY

By: /s/ Xxxxx X. Xxxxx
-----------------------------------
Xxxxx X. Xxxxx

Vice President-Finance and Chief
Financial Officer

Attest:

/s/ Xxxx Xxxxxx
------------------------------------

Xxxx Xxxxxx, Assistant Secretary

-11-
15

XXXXX DRILLING:

XXXXX DRILLING CORPORATION

By: /s/ X.X. XxXxx
----------------------------------

X.X. XxXxx
President

Attest:

/s/ X.X. XxXxx
-------------------------------
X.X. XxXxx, Secretary

TO INDUCE XXXXXXXXX DRILLING COMPANY TO ENTER INTO THIS ASSET PURCHASE
AGREEMENT AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE UNDERSIGNED, BEING AN
OFFICER, DIRECTOR AND STOCKHOLDER OF XXXXX DRILLING CORPORATION, ACCEPTS AND
AGREES TO BE BOUND BY THE INDEMNIFICATION PROVISIONS OF SECTION 4.3 OF THE
ABOVE ASSET PURCHASE AGREEMENT.

/s/ X.X. XxXxx
--------------------------------------
X.X. XxXxx

-12-
16
ANNEX 1
TO
ASSET PURCHASE AGREEMENT

DESCRIPTION OF DRILLING RIGS, EQUIPMENT
AND VEHICLE
PER WHEREAS CLAUSE

A. Drilling Rigs and Equipment.

Rig No. Drawworks Manufacturer
------- ----------------------

1 N-42 Xxxxxxxx
2 U-36-Mid Continent
3 Skytop Xxxxxxxx N-75

All related parts and equipment, including engines, mud pumps, hooks
and blocks, derricks, substructives, rotary tables, blow-out
prevention equipment, drill bits and all tubular goods on the rigs and
in the yard leased by XxXxx Drilling, all of which are set forth on
Appendix I to the Xxxx of Sale and Assignment attached to this
Agreement as Exhibit B, less the parts and related equipment sold or
disposed of since April 13, 1997, and plus the parts and related
equipment acquired by XxXxx Drilling since April 13, 1997, in each
case in the ordinary course of business, consistent with past
practice.

NOTE: For more specific information concerning the rigs and related
equipment, see Appendix I, to Xxxx of Sale and Assignment attached to
this Agreement as Exhibit B.

B. Vehicle.

1995 Chevrolet Pickup
ID No. 0XXXX00X0X0000000
1997 Sticker No. 12075676

AX 1-1
17
ANNEX 2
TO
ASSET PURCHASE AGREEMENT

LIST OF DRILLING CONTRACTS AND OTHER AGREEMENTS
PER SECTION 3.4

A. Drilling Contracts.

1. Master Drilling Contract dated as of June 30, 1997, between
Burlington Resources Oil & Gas Co., as Operator, and XxXxx
Drilling Corporation, as Contractor, as supplemented by Bid
Sheet and Drilling Order of even date, between Coastal
Management Corporation, as Agent for Burlington Resources, and
XxXxx Drilling Corporation, which Bid Sheet and Drilling Order
specifically relates to the drilling of the W.N. Xxxxxxx No.
1226 Well in Xxxxxxx 00, Xxxxx X-00, XXX Xxxxxx, Xxxxx Xxxxxx,
Xxxxx (Rig #2 - Currently Drilling).

2. IADC Drilling Bid Proposal and Daywork Drilling Contract
effective as of June 16, 1997, between Petroleum Development
Corporation, as Operator, and XxXxx Drilling Corporation, as
Contractor, governing the drilling of the Xxxxxx-State #1 Well
in Xxxxxxx 00, X-00-X, X-00-X, Xxx Xxxxxx, Xxx Xxxxxx (Rig #3
-Currently Drilling).

3. IADC Drilling Bid Proposal and Footage Drilling Contract
effective as of July 1, 1997, between Xxxx X. Xxxxxxx
Corporation, as Operator, and XxXxx Drilling Corporation, as
Contractor, governing the drilling of the Xxxxxx Xxxx A-3 Well
in Xxxxxxx 00, X-00-X, X-00-X, Xxx Xxxxxx, Xxx Xxxxxx (Rig
#1).

4. IADC Drilling Bid Proposal and Footage Drilling Contract
effective as of June 12, 1997, between Xxxxx X. Xxxxxxxxx Oil
& Gas, Inc., as Operator, and XxXxx Drilling Corporation, as
Contractor, governing the drilling of the Royal Xxxxx #1 Well
in Section 22,T-19-S, X-00-X, Xxx Xxxxxx, Xxx Xxxxxx (Rig #1).

5. IADC Drilling Bid Proposal and Daywork Drilling Contract
effective as of June 19, 1997, between Xxxxxx Oil Company, as
Operator, and XxXxx Drilling Corporation, as Contractor,
governing the drilling of the Xxxxxx "33" Federal #6 Well in
Xxxxxxx 00, X-00-X, X-00-X, Xxx Xxxxxx, Xxx Xxxxxx (Rig #3).

AX 2-1
18
6. Miscellaneous Master Drilling Contracts respectively between
the following named Operators and XxXxx Drilling Corporation:

Operator

Amerada Xxxx Corporation

Bass Enterprises Production Company

Burlington Resources

Xxxx Xxxxxxx Corporation

Marathon Oil Company

Xxxxxx & Parsley

Pogo Producing Company

Santa Fe Energy Resources

B. Leased Vehicles Lease Agreements.

1. GMAC Lease Agreement dated January 20, 1997, between Xxxx
Xxxxxxx Chevrolet Buick, as Lessor, and XxXxx Drilling Corp.,
as Lessee, covering a 1997 Chevrolet K1500 Pickup Truck (VIN
0XXXX00X0X0000000).

2. Vehicle Lease Agreement dated November 1, 1994, between LAI
Trust, as Lessor, and XxXxx Drilling, Inc., as Lessee, as
supplemented by Lease Supplement between the same parties,
covering a 1996 Chevrolet C- 1500 Pickup Truck (VIN
1GCEC19MITE260441).

C. Purchase Orders.

1. Tubular Goods Order No. 34440-00 to Grant Prideco, Inc. in the
amount of $503,452.95 for approximately 15,000 feet of drill
pipe and related tubular goods as therein described.

AX 2-2
19
2. Tubular Goods Order No. 34441-00 to Grant Prideco, Inc. in the
amount of $108,432.68 for approximately 3,000 feet of drill
pipe and related tubular goods as therein described.

D. Other Agreements

1. Service Agreement dated February 25, 1997, between Cellular
One and XxXxx Drilling Corp., relating to cellular phone ESN
No. 21216642980.

2. Service Agreement dated February 4, 1997, between Cellular One
and XxXxx Drilling Corp., relating to cellular phone ESN Nos.
21216729212, 21216640239, and 2l2l6640241.

3. Service Agreement dated January 23, 1997, between Cellular One
and XxXxx Drilling Corp,, relating to cellular phone ESN Nos.
21216621678 and C3121ECC.

AX 2-3
20
ANNEX 3
TO
ASSET PURCHASE AGREEMENT

LIST OF XXXXX DRILLING STOCKHOLDERS
PER SECTION 3.9

XXXXX DRILLING CORPORATION STOCKHOLDERS

Name Number of Shares Percentage
---- ------

Xxxxx Xxxxx . . . . . . . . . . . 5,667 56.67%
X.X. XxXxx . . . . . . . . . . . 4,333 43.33%
------ ------
Total . . . . . . . . . 10,000 100.00%
====== ======

AX 3-1
21
EXHIBIT A(I)

XXXXXXXXX DRILLING COMPANY

NON-COMPETITION AGREEMENT

THIS NON-COMPETITION AGREEMENT is made and entered into this
_____ day of August, 1997 (this "Agreement"), by and between XXXXXXXXX DRILLING
COMPANY, a Delaware corporation ("PDC"), and XXXXX DRILLING CORPORATION, a
Texas corporation ("XxXxx Drilling").

RECITALS:

A. Simultaneously with the execution of this Agreement,
PDC and XxXxx Drilling have entered into that certain Asset Purchase Agreement,
dated of even date herewith (the "Asset Purchase Agreement"), providing for,
among other things, the purchase by PDC of the drilling rigs, related equipment
and vehicle owned by XxXxx Drilling.

B. The execution and delivery of this Agreement is a
condition to the consummation of the Asset Purchase contemplated by the Asset
Purchase Agreement, and the parties are entering into this Agreement in order
to fulfill such condition.

NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties, intending to be legally bound, hereby agree as follows:

1. Period of Agreement.

The period of this Agreement shall commence on the date hereof
and remain in effect through the first to occur of (i) August 1, 2002, or (ii)
a Change in Control of PDC or Xxxxxxxxx Energy, Inc. ("PEC"), the sole
stockholder of PDC (the "Non-Compete Period"). For purposes of this Agreement,
"Change in Control" shall be deemed to have occurred, if (i) a tender offer
shall be made and consummated for the ownership of more than fifty percent of
the outstanding voting securities of PEC, or (ii) there is a merger,
consolidation or other reorganization of PEC or PDC with another entity and as
a result of such merger, consolidation or other reorganization, less than fifty
percent of the outstanding voting securities of the surviving or resulting
entity shall be owned by the former stockholders of PEC as the same shall have
existed immediately prior to such merger, consolidation or other
reorganization.

AX 3-1
22
2. Compensation.

Simultaneously with the execution of this Agreement, PDC has
paid X.X. XxXxx, by cashier's check, the amount of $749,000 as additional
compensation for entering into this Agreement.

3. Covenant Not to Compete.

(a) XxXxx Drilling covenants and agrees that during the
Non-Compete Period, XxXxx Drilling shall not, without the prior written consent
of PDC, directly or indirectly, alone or in association with any other person,
carry on, be engaged, concerned, or take part in, render services to, or
otherwise assist, or own, share in the earnings of, or invest in the stock,
bonds, or other securities of, any person which is engaged in, the contract oil
and gas well drilling business within the Permian Basin of West Texas and
Southeastern New Mexico (the "Competitive Business"); provided, however, that
XxXxx Drilling may (i) invest and/or engage in any business that routinely
provides third-party services (as such term is commonly used in the contract
oil and gas well drilling business) to a Competitive Business, but is not
engaged in the actual conduct of a Competitive Business, or (ii) invest in
stock, bonds, or other securities of any Competitive Business (but without
otherwise participating in the Competitive Business) if: (A) such stock,
bonds, or other securities are listed on any national securities exchange or
are registered under Section 12(g) of the Securities Exchange Act of 1934, as
amended; (B) the investment does not exceed, in the case of any class of
capital stock of any one issuer, two percent (2%) of the issued and outstanding
shares, or, in the case of bonds or other securities of any one issuer, two
percent (2%) of the aggregate principal amount thereof issued and outstanding;
and (C) such investment would not prevent, directly or indirectly, the
transaction of business by PDC or any affiliate of PDC with any state,
district, territory, or possession of the United States or any governmental
subdivision, agency, or instrumentality thereof by virtue of any statute, law,
regulation or administrative practice. The period of time during which XxXxx
Drilling is prohibited from engaging in certain activities by this Section
shall be extended by the length of time during which XxXxx Drilling is in
breach of the terms of this section.

(b) It is understood by and between the parties hereto
that the foregoing covenant by XxXxx Drilling not to enter into competition
with PDC as set forth in Section 2(a) hereof is an essential element of this
Agreement and the Asset Purchase Agreement and that, but for the agreement of
XxXxx Drilling to comply with such covenant, PDC would not have agreed to enter
into this Agreement or the Asset Purchase Agreement. PDC and XxXxx Drilling
have independently consulted with their respective counsel and have been
advised in all respects concerning the reasonableness and propriety of such
covenant, with specific regard to the nature of the business conducted by PDC
and its affiliates. XxXxx Drilling agrees that such covenant is reasonable in
scope, geographic area, and duration, and that compliance with such covenant
would not impose economic hardship on XxXxx Drilling.

Exh A(I) - 2
23
4. Restrictions on Soliciting Business of PDC.

XxXxx Drilling further covenants and agrees that during the
Non-Compete Period, XxXxx Drilling will not, either for itself or for any other
person or entity, directly or indirectly, engage in any of the following
activities in a Competitive Business without the express prior written consent
of PDC:

(a) Solicit or hire any of the employees of PDC or
solicit or take away any of PDC's customers, lessors, or suppliers or attempt
any of the foregoing:

(b) Acquire or attempt to acquire rights providing any
product or service in a Competitive Business within the territory described in
Section 2 hereof; or

(c) Engage in any act which would interfere with or harm
any business relationship PDC has with any customer, lessor, employee,
principal or supplier.

5. Specific Performance.

Without intending to limit the remedies available to PDC,
XxXxx Drilling acknowledges that PDC will have no adequate remedies at law if
XxXxx Drilling violates the terms of Sections 2 or 3, hereof. In such event,
XxXxx Drilling agrees that PDC shall have the right, in addition to any other
rights it may have, to obtain in any court of competent jurisdiction specific
performance of such Sections of this Agreement or injunctive relief to restrain
any breach or threatened breach thereof. Nothing herein shall be construed as
prohibiting PDC from pursuing any other remedies available to PDC (whether at
law or in equity) for such breach or threatened breach, including, without
limitation, the recovery of monetary damages from XxXxx Drilling.

The provisions of this Section 4 shall survive the expiration,
termination or cancellation of this Agreement.

6. Attorneys Fees and Costs.

If an action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys fees, costs and necessary expenses in addition to any
other relief to which that party may be entitled. This provision is applicable
to this entire Agreement.

7. Representations and Warranties of PDC and XxXxx
Drilling.

(a) Representations and Warranties of PDC. PDC hereby
represents and warrants to XxXxx Drilling that: (i) it has all requisite power
to enter into and perform its

Exh A(I) - 3
24
obligations under this Agreement; (ii) this Agreement has been duly and validly
authorized by all necessary corporate action on the part of PDC; (iii) the
execution of this Agreement by PDC and performance of PDC's obligations
hereunder do not require the consent or approval of any other party; and (iv)
this Agreement is a valid and binding obligation of PDC.

(b) Representations and Warranties of XxXxx Drilling.
XxXxx Drilling hereby represents and warrants to PDC that: (i) XxXxx Drilling
has the capacity and power to enter into and perform obligations of XxXxx
Drilling under this Agreement; (ii) XxXxx Drilling has duly and validly
executed this Agreement; (iii) the execution of this Agreement and performance
of obligations of XxXxx Drilling hereunder do not require the consent or
approval of any other party; and (iv) this Agreement constitutes a valid and
binding obligation of XxXxx Drilling.

8. General Provisions.

(a) Compliance with Laws. The parties agree that they
will comply with all applicable laws and regulations of government bodies or
agencies in their respective performance of their obligations under this
Agreement.

(b) Governing Law and Construction. This Agreement will
be governed by and construed in accordance with the laws of the State of Texas
without reference to its conflict-of-laws principles. This Agreement's final
form resulted from review and negotiations among the parties and their
attorneys, and no part of this Agreement should be construed against any party
on the basis of authorship.

(c) Forum for Dispute Resolution. If any dispute arises
among the parties concerning the interpretation or performance of any portion
of this Agreement which the parties are unable to resolve themselves, and any
party brings an action against any other party seeking a declaratory order,
specific performance, damages, or any other legal or equitable relief based on
this Agreement, the parties agree that the forum for any such action shall be
an appropriate federal or state court in Texas having jurisdiction, agree that
venue will be proper in such courts, and waive any objections based on
inconvenience of the forum, and further agree that the prevailing party in any
such action, as determined by the court, shall be awarded its reasonable
attorneys' fees and costs in addition to any relief or judgment the court
awards.

(d) Entire Agreement; Amendment. This Agreement
constitutes the entire agreement between the parties with respect to the
subject matter contained herein and supersedes any previous oral or written
communications, representations, understandings or agreements with respect
thereto. The terms of this Agreement may be modified only in a writing, signed
by authorized representatives of both parties.

Exh A(I) - 4
25
(e) Assignability. This Agreement will be binding upon
the parties' respective successors and permitted assigns. Neither party may
assign this Agreement and/or any of its rights and/or obligations hereunder
without the prior written consent of the other party, and any such attempted
assignment will be void; provided, however, that PDC may assign this Agreement
to PEC or to another subsidiary of PEC without the prior written consent of
XxXxx Drilling, and provided further that a transfer by PDC as a result of a
merger or sale of all or substantially all of the assets of PDC with or to a
third party that assumes PDC's obligations hereunder by operation of law or
otherwise shall not constitute a prohibited assignment under this Section 8(e).

(f) Waiver. A waiver of a breach or default under this
Agreement will not constitute a waiver of any other breach or default. Failure
or delay by either party to enforce compliance with any term or condition of
this Agreement will not constitute a waiver of such term or condition.

(g) Severability. If any provision of this Agreement is
declared to be invalid, the parties agree that such invalidity will not affect
the validity of the remaining provisions of this Agreement, and further agree,
to the extent possible, to substitute for the invalid provision a valid
provision that approximates the intent and economic effect of the invalid
provision as closely as possible.

(h) Headings. The titles of the Sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

(i) Notice. Any notice, request, consent, demand or
other communication required to be given under this Agreement will be in
writing and will be given personally, by facsimile or by mailing the same,
first-class, postage prepaid to the appropriate address and facsimile number
set forth below or to such other person or at such other address as may
hereafter be designated by like notice. Notices by mail will be considered
delivered and become effective three days after the mailing thereof. All
notices by facsimile will be considered delivered and become effective
immediately upon the confirmed (by answer back or other tangible printed
verification or successful receipt) sending thereof.

To PDC:
Xxxxxxxxx Drilling Company
0000 Xxxxxx Xxxxxxx
X.X. Xxxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: A. Xxxxx Xxxxxxxxx
President and Chief Operating Officer

Exh A(I) - 5
26
To XXXXX DRILLING:

XxXxx Drilling Corporation
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000

with copies to:

Xxxxxxx X. Xxxx, Xx., Esq.
Xxxx & Xxxx, L.L.P.
000 Xxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000

(j) Counterparts. This Agreement may be executed in
counterparts and by the parties hereto in separate counterparts, each of which
will be deemed an original, but all of which together will constitute one and
the same instrument.

IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be executed by their respective representatives as of the day and year first
above written.

"PDC"

XXXXXXXXX DRILLING COMPANY

By:
----------------------------------
Xxxxx X. Xxxxx
Vice President-Finance

"XXXXX DRILLING"

XXXXX DRILLING CORPORATION

By:
----------------------------------
X.X. XxXxx
President

Exh A(I) - 6
27
EXHIBIT A(II)

XXXXXXXXX DRILLING COMPANY

NON-COMPETITION AGREEMENT

THIS NON-COMPETITION AGREEMENT is made and entered into this
_____ day of August, 1997 (this "Agreement"), by and between XXXXXXXXX DRILLING
COMPANY, a Delaware corporation ("PDC"), and X.X. XxXxx, an individual residing
in Midland, Texas ("X.X. XxXxx").

RECITALS:

C. Simultaneously with the execution of this Agreement,
PDC has entered into that certain Asset Purchase Agreement, dated of even date
herewith (the "Asset Purchase Agreement"), between PDC and XXXXX DRILLING
CORPORATION ("XxXxx Drilling"), providing for, among other things, the purchase
by PDC of the drilling rigs, related equipment and vehicle owned by XxXxx
Drilling.

D. G.H. XxXxx is an officer, a director and a
stockholder of XxXxx Drilling.

E. The execution and delivery of this Agreement is a
condition to the consummation of the Asset Purchase contemplated by the Asset
Purchase Agreement, and the parties are entering into this Agreement in order
to fulfill such condition.

1. Period of Agreement.

The period of this Agreement shall commence on the date hereof
and remain in effect through the first to occur of (i) August 1, 2002, or (ii)
a Change in Control of PDC or Xxxxxxxxx Energy, Inc., the sole stockholder of
PDC ("PEC"), unless sooner terminated as the result of the death of X.X. XxXxx
(the "Non-Compete Period"). For purposes of this Agreement, "Change in
Control" shall be deemed to have occurred, if (i) a tender offer shall be made
and consummated for the ownership of more than fifty percent of the outstanding
voting securities of PEC, or (ii) there is a merger, consolidation or other
reorganization of

Exh A(II)-1
28
PEC or PDC with another entity and as a result of such merger, consolidation or
other reorganization, less than fifty percent of the outstanding voting
securities of the surviving or resulting entity shall be owned by the former
stockholders of PEC as the same shall have existed immediately prior to such
merger, consolidation or other reorganization.

2. Compensation.

Simultaneously with the execution of this Agreement, PDC has
paid X.X. XxXxx, by cashier's check, the amount of $749,000 as additional
compensation for entering into this Agreement.

3. Covenant Not to Compete.

(a) X.X. XxXxx covenants and agrees that during the
Non-Compete Period, X.X. XxXxx shall not, without the prior written consent of
PDC, directly or indirectly, and whether as a principal or as an agent,
officer, director, employee, consultant, or otherwise, alone or in association
with any other person, carry on, be engaged, concerned, or take part in, render
services to, or otherwise assist, or own, share in the earnings of, or invest
in the stock, bonds, or other securities of, any person which is engaged in,
the contract oil and gas well drilling business within the Permian Basin of
West Texas and Southeastern New Mexico (the "Competitive Business"); provided,
however, that X.X. XxXxx may (i) invest and/or engage in any business that
routinely provides third-party services (as such term is commonly used in the
contract oil and gas well drilling business) to a Competitive Business, but is
not engaged in the actual conduct of a Competitive Business, or (ii) invest in
stock, bonds, or other securities of any Competitive Business (but without
otherwise participating in the Competitive Business) if: (A) such stock,
bonds, or other securities are listed on any national securities exchange or
are registered under Section 12(g) of the Securities Exchange Act of 1934, as
amended; (B) the investment does not exceed, in the case of any class of
capital stock of any one issuer, two percent (2%) of the issued and outstanding
shares, or, in the case of bonds or other securities of any one issuer, two
percent (2%) of the aggregate principal amount thereof issued and outstanding;
and (C) such investment would not prevent, directly or indirectly, the
transaction of business by PDC or any affiliate of PDC with any state,
district, territory, or possession of the United States or any governmental
subdivision, agency, or instrumentality thereof by virtue of any statute, law,
regulation or administrative practice. The period of time during which X.X.
XxXxx is prohibited from engaging in certain activities by this Section shall
be extended by the length of time during which X.X. XxXxx is in breach of the
terms of this section.

(b) It is understood by and between the parties hereto
that the foregoing covenant by X.X. XxXxx not to enter into competition with
PDC as set forth in Section 3(a) hereof is an essential element of this
Agreement and the Asset Purchase Agreement and that, but for the agreement of
X.X. XxXxx to comply with such covenant, PDC would not have

Exh A(II)-2
29
agreed to enter into this Agreement or the Asset Purchase Agreement. PDC and
X.X. XxXxx have independently consulted with their respective counsel and have
been advised in all respects concerning the reasonableness and propriety of
such covenant, with specific regard to the nature of the business conducted by
PDC and its affiliates. X.X. XxXxx agrees that such covenant is reasonable in
scope, geographic area, and duration, and that compliance with such covenant
would not impose economic or professional hardship on X.X. XxXxx.

4. Restrictions on Soliciting Business of PDC.

X.X. XxXxx further covenants and agrees that during the
Non-Compete Period, X.X. XxXxx will not, either for himself or for any other
person or entity, directly or indirectly, engage in any of the following
activities in a Competitive Business without the express prior written consent
of PDC:

(a) Solicit or hire any of the employees of PDC or
solicit or take away any of PDC's customers, lessors, or suppliers or attempt
any of the foregoing:

(b) Acquire or attempt to acquire rights providing any
product or service in a Competitive Business within the territory described in
Section 3 hereof; or

(c) Engage in any act which would interfere with or harm
any business relationship PDC has with any customer, lessor, employee,
principal or supplier.

5. Specific Performance.

Without intending to limit the remedies available to PDC, X.X.
XxXxx acknowledges that PDC will have no adequate remedies at law if X.X. XxXxx
violates the terms of Section 3 or 4, hereof. In such event, X.X. XxXxx agrees
that PDC shall have the right, in addition to any other rights it may have, to
obtain in any court of competent jurisdiction specific performance of such
Sections of this Agreement or injunctive relief to restrain any breach or
threatened breach thereof. Nothing herein shall be construed as prohibiting
PDC from pursuing any other remedies available to PDC (whether at law or in
equity) for such breach or threatened breach, including, without limitation,
the recovery of monetary damages from X.X. XxXxx.

The provisions of this Section 5 shall survive the expiration,
termination or cancellation of this Agreement.

Exh A(II)-3
30
6. Attorneys Fees and Costs.

7. Representations and Warranties of PDC and X.X. XxXxx.

(a) Representations and Warranties of PDC. PDC hereby
represents and warrants to X.X. XxXxx that: (i) it has all requisite power to
enter into and perform its obligations under this Agreement; (ii) this
Agreement has been duly and validly authorized by all necessary corporate
action on the part of PDC; (iii) the execution of this Agreement by PDC and
performance of PDC's obligations hereunder do not require the consent or
approval of any other party; and (iv) this Agreement is a valid and binding
obligation of PDC.

(b) Representations and Warranties of X.X. XxXxx. X.X.
XxXxx hereby represents and warrants to PDC that: (i) X.X. XxXxx has the
capacity and power to enter into and perform obligations of X.X. XxXxx under
this Agreement; (ii) X.X. XxXxx has duly and validly executed this Agreement;
(iii) the execution of this Agreement and performance of obligations of X.X.
XxXxx hereunder do not require the consent or approval of any other party; and
(iv) this Agreement constitutes a valid and binding obligation of X.X. XxXxx.

8. General Provisions.

Exh A(II)-4
31
further agree that the prevailing party in any such action, as determined by
the court, shall be awarded its reasonable attorneys' fees and costs in
addition to any relief or judgment the court awards.

(e) Assignability. This Agreement will be binding upon
the parties' respective successors and permitted assigns. Neither party may
assign this Agreement and/or any of its rights and/or obligations hereunder
without the prior written consent of the other party, and any such attempted
assignment will be void; provided, however, that PDC may assign this Agreement
to PEC or to another subsidiary of PEC without the prior written consent of
X.X. XxXxx, and provided further that a transfer by PDC as a result of a merger
or sale of all or substantially all of the assets of PDC with or to a third
party that assumes PDC's obligations hereunder by operation of law or otherwise
shall not constitute a prohibited assignment under this Section 8(e).

(h) Headings. The titles of the Sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

Exh A(II)-5
32
To PDC:

Xxxxxxxxx Drilling Company
0000 Xxxxxx Xxxxxxx
X.X. Xxxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: A. Xxxxx Xxxxxxxxx
President and Chief Operating Officer

To X.X. XxXxx:

X.X. XxXxx
XxXxx Drilling Corporation
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000

with copies to:

Xxxxxxx X. Xxxx, Xx., Esq.
Xxxx & Xxxx, L.L.P.
000 Xxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000

Exh A(II)-6
33
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be executed by their respective representatives as of the day and year first
above written.

"PDC"

XXXXXXXXX DRILLING COMPANY

By:
--------------------------------
Xxxxx X. Xxxxx
Vice President-Finance

"X.X. XXXXX"

-----------------------------------
X.X. XxXxx

Exh A(II)-7
34
EXHIBIT A(III)

XXXXXXXXX DRILLING COMPANY

NON-COMPETITION AGREEMENT

THIS NON-COMPETITION AGREEMENT is made and entered into this
_____ day of August, 1997 (this "Agreement"), by and between XXXXXXXXX DRILLING
COMPANY, a Delaware corporation ("PDC"), and XXXXX XXXXX, an individual
residing in Midland, Texas ("D Essex").

RECITALS:

F. Simultaneously with the execution of this Agreement,
PDC has entered into that certain Asset Purchase Agreement, dated of even date
herewith (the "Asset Purchase Agreement"), between PDC and XxXxx Drilling
Corporation ("XxXxx Drilling"), providing for, among other things, the purchase
by PDC of the drilling rigs, related equipment, rolling stock and office
equipment owned by XxXxx Drilling.

G. Xxxxx Xxxxx is an officer, a director and a
stockholder of XxXxx Drilling.

H. The execution and delivery of this Agreement is a
condition to the consummation of the Asset Purchase contemplated by the Asset
Purchase Agreement, and the parties are entering into this Agreement in order
to fulfill such condition.

1. Period of Agreement.

The period of this Agreement shall commence on the date hereof
and remain in effect through the first to occur of (i) August 1, 2002, or (ii)
a Change in Control of PDC or Xxxxxxxxx Energy, Inc., the sole stockholder of
PDC ("PEC"), unless sooner terminated as the result of the death of D Essex
(the "Non-Compete Period"). For purposes of this Agreement, "Change in
Control" shall be deemed to have occurred, if (i) a tender offer shall be made
and consummated for the ownership of more than fifty percent of the outstanding
voting securities of PEC, or (ii) there is a merger, consolidation or other
reorganization of PEC or PDC with another entity and as a result of such
merger, consolidation or other reorganization, less than

Exh A(III)-1
35
fifty percent of the outstanding voting securities of the surviving or
resulting entity shall be owned by the former stockholders of PEC as the same
shall have existed immediately prior to such merger, consolidation or other
reorganization.

2. Compensation.

Simultaneously with the execution of this Agreement, PDC has
paid D Essex by cashier's check, the amount of $1,000 as compensation for
entering into this Agreement.

3. Covenant Not to Compete.

(a) D Essex covenants and agrees that during the
Non-Compete Period, D Essex shall not, without the prior written consent of
PDC, directly or indirectly, and whether as a principal or as an agent,
officer, director, employee, consultant, or otherwise, alone or in association
with any other person, carry on, be engaged, concerned, or take part in, render
services to, or otherwise assist, or own, share in the earnings of, or invest
in the stock, bonds, or other securities of, any person which is engaged in,
the contract oil and gas well drilling business within the Permian Basin of
West Texas and Southeastern New Mexico (the "Competitive Business"); provided,
however, that D Essex may (i) invest and/or engage in any business that
routinely provides third-party services (as such term is commonly used in the
contract oil and gas well drilling business) to a Competitive Business, but is
not engaged in the actual conduct of a Competitive Business, or (ii) invest in
stock, bonds, or other securities of any Competitive Business (but without
otherwise participating in the Competitive Business) if: (A) such stock,
bonds, or other securities are listed on any national securities exchange or
are registered under Section 12(g) of the Securities Exchange Act of 1934, as
amended; (B) the investment does not exceed, in the case of any class of
capital stock of any one issuer, two percent (2%) of the issued and outstanding
shares, or, in the case of bonds or other securities of any one issuer, two
percent (2%) of the aggregate principal amount thereof issued and outstanding;
and (C) such investment would not prevent, directly or indirectly, the
transaction of business by PDC or any affiliate of PDC with any state,
district, territory, or possession of the United States or any governmental
subdivision, agency, or instrumentality thereof by virtue of any statute, law,
regulation or administrative practice. The period of time during which D Essex
is prohibited from engaging in certain activities by this Section shall be
extended by the length of time during which D Essex is in breach of the terms
of this section.

(b) It is understood by and between the parties hereto
that the foregoing covenant by D Essex not to enter into competition with PDC
as set forth in Section 3(a) hereof is an essential element of this Agreement
and the Asset Purchase Agreement and that, but for the agreement of D Essex to
comply with such covenant, PDC would not have agreed to enter into this
Agreement or the Asset Purchase Agreement. PDC and D Essex have independently
consulted with their respective counsel and have been advised in all respects
concerning the

Exh A(III)-2
36
reasonableness and propriety of such covenant, with specific regard to the
nature of the business conducted by PDC and its affiliates. D Essex agrees
that such covenant is reasonable in scope, geographic area, and duration, and
that compliance with such covenant would not impose economic or professional
hardship on D Essex.

4. Restrictions on Soliciting Business of PDC.

D Essex further covenants and agrees that during the
Non-Compete Period, D Essex will not, either for himself or for any other
person or entity, directly or indirectly, engage in any of the following
activities in a Competitive Business without the express prior written consent
of PDC:

(a) Solicit or hire any of the employees of PDC or
solicit or take away any of PDC's customers, lessors, or suppliers or attempt
any of the foregoing:

(b) Acquire or attempt to acquire rights providing any
product or service in a Competitive Business within the territory described in
Section 3 hereof; or

(c) Engage in any act which would interfere with or harm
any business relationship PDC has with any customer, lessor, employee,
principal or supplier.

5. Specific Performance.

Without intending to limit the remedies available to PDC, D
Essex acknowledges that PDC will have no adequate remedies at law if D Essex
violates the terms of Section 3 or 4, hereof. In such event, D Essex agrees
that PDC shall have the right, in addition to any other rights it may have, to
obtain in any court of competent jurisdiction specific performance of such
Sections of this Agreement or injunctive relief to restrain any breach or
threatened breach thereof. Nothing herein shall be construed as prohibiting
PDC from pursuing any other remedies available to PDC (whether at law or in
equity) for such breach or threatened breach, including, without limitation,
the recovery of monetary damages from D Essex.

The provisions of this Section 5 shall survive the expiration,
termination or cancellation of this Agreement.

6. Attorneys Fees and Costs.

Exh A(III)-3
37
7. Representations and Warranties of PDC and D Essex.

(a) Representations and Warranties of PDC. PDC hereby
represents and warrants to D Essex that: (i) it has all requisite power to
enter into and perform its obligations under this Agreement; (ii) this
Agreement has been duly and validly authorized by all necessary corporate
action on the part of PDC; (iii) the execution of this Agreement by PDC and
performance of PDC's obligations hereunder do not require the consent or
approval of any other party; and (iv) this Agreement is a valid and binding
obligation of PDC.

(b) Representations and Warranties of D Essex. D Essex
hereby represents and warrants to PDC that: (i) D Essex has the capacity and
power to enter into and perform obligations of D Essex under this Agreement;
(ii) D Essex has duly and validly executed this Agreement; (iii) the execution
of this Agreement and performance of obligations of D Essex hereunder do not
require the consent or approval of any other party; and (iv) this Agreement
constitutes a valid and binding obligation of D Essex.

8. General Provisions.

Exh A(III)-4
38
agreements with respect thereto. The terms of this Agreement may be modified
only in a writing, signed by authorized representatives of both parties.

(e) Assignability. This Agreement will be binding upon
the parties' respective successors and permitted assigns. Neither party may
assign this Agreement and/or any of its rights and/or obligations hereunder
without the prior written consent of the other party, and any such attempted
assignment will be void; provided, however, that PDC may assign this Agreement
to PEC or to a subsidiary of PEC without the prior written consent of D Essex
and provided further that a transfer by PDC as a result of a merger or sale of
all or substantially all of the assets of PDC with or to a third party that
assumes PDC's obligations hereunder by operation of law or otherwise shall not
constitute a prohibited assignment under this Section 8(e).

(h) Headings. The titles of the Sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

To PDC:

Xxxxxxxxx Drilling Company
0000 Xxxxxx Xxxxxxx
X.X. Xxxxxx 0000
Xxxxxx, Xxxxx 00000

Exh A(III)-5
39
Facsimile: (000) 000-0000
Attention: A. Xxxxx Xxxxxxxxx
President and Chief Operating Officer

To D Essex:

Xxxxx Xxxxx
000 Xxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000

with copies to:

Xxxxxxx X. Xxxx, Xx., Esq.
Xxxx & Xxxx, L.L.P.
000 Xxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000

Exh A(III)-6
40
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be executed by their respective representatives as of the day and year first
above written.

"PDC"

XXXXXXXXX DRILLING COMPANY

By:
-------------------------------------
Xxxxx X. Xxxxx
Vice President-Finance

"D Essex"

----------------------------------------
Xxxxx Xxxxx

Exh A(III)-7
41
EXHIBIT B

XXXX OF SALE AND ASSIGNMENT

KNOW ALL MEN BY THESE PRESENTS, that, pursuant to that certain
Asset Purchase Agreement, dated of even date herewith ("Asset Purchase
Agreement") between XXXXXXXXX DRILLING COMPANY ("PDC"), a Delaware corporation,
and XXXXX DRILLING CORPORATION ("XxXxx Drilling"), a Texas corporation (XxXxx
Drilling is referred to herein as the "Assignor"), the Assignor, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, hereby grants, bargains, sells, conveys and transfers unto PDC
(the "Assignee"), all of the Assignor's right, title and interest in and to (i)
the Drilling Rigs, Equipment and Vehicle set forth in Appendix I attached
hereto and incorporated herein by this reference; and (ii) the Drilling
Contracts and Other Agreements described in Appendix II attached hereto and
incorporated herein by this reference.

This Xxxx of Sale and Assignment is executed pursuant to that
certain Asset Purchase Agreement (the "Agreement") dated as of August 1, 1997,
between PDC and XxXxx Drilling. The representations, warranties, covenants,
and obligations contained in the Agreement shall survive the execution and
delivery of this Xxxx of Sale and Assignment in accordance with the provisions
of the Agreement, and execution and delivery of this Xxxx of Sale and
Assignment shall not affect, expand, diminish, or otherwise impair any of the
representations, warranties, covenants, and obligations in the Agreement.

THE EXPRESS REPRESENTATIONS AND WARRANTIES OF XXXXX DRILLING CONTAINED
IN THE AGREEMENT ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND
WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY, BY XXXXX DRILLING WITH RESPECT TO
THE ASSETS TRANSFERRED HEREBY. WITHOUT LIMITING THE FOREGOING, PDC ACCEPTS THE
ASSETS IN THEIR "AS IS" CONDITION, WITH ALL FAULTS AND DEFECTS, AND WITHOUT
WARRANTY OF ANY KIND, EXPRESS, IMPLIED, OR STATUTORY, AS TO CONDITION,
MERCHANTABILITY, CONFORMITY TO MODELS OR SAMPLES, OR FITNESS FOR A PARTICULAR
PURPOSE.

TO HAVE AND TO HOLD the same unto the Assignee and the
Assignee's successors and assigns forever. The Assignor hereby covenants and
agrees that it has the full right, power and authority to sell, convey and
transfer the foregoing property to the Assignee pursuant to this Xxxx of Sale
and Assignment.

Exh B-1
42
IN WITNESS WHEREOF, the Assignor has caused this Xxxx of Sale
and Assignment to be duly executed by its duly authorized officer as of the
_____ day of August, 1997.

XXXXX DRILLING CORPORATION

By:
--------------------------------------
X.X. XxXxx
President

XXXXXXXXX DRILLING COMPANY

By:
--------------------------------------
Xxxxx X. Xxxxx
Vice President-Finance

Exh B-2
43
APPENDIX I
TO
XXXX OF SALE AND ASSIGNMENT
FROM
XXXXX DRILLING CORPORATION
TO
XXXXXXXXX DRILLING COMPANY
(LIST OF ASSETS ASSIGNED)

A. DRILLING RIGS AND EQUIPMENT

The Drilling Rigs and Equipment includes all of the drilling rigs,
parts and related equipment, including engines, mud pumps, hooks and
blocks, derricks substructives, rotary tables, blow-out prevention
equipment, drill bits and all tubular goods on the rigs and in the
yard leased by XxXxx Drilling, all of which are listed below, less the
parts and related equipment sold or disposed of since April 13, 1997,
and plus the parts and related equipment acquired by XxXxx Drilling
since April 13, 1997, in each case in the ordinary course of business,
consistent with past practice.

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

RIG NO. 1

Drawworks: N-42 Xxxxxxxx Dwks, Single Drum, with Xxxxxx Catheads,
22" Parmac Single Brake, Extended skid for two (2)
Engine In-Line Compound, Top mtd Air Compressor &
fawick Clutches. Rated 10,000 ft. capacity.

Dwks Engines: Two (2) New Style Caterpillar D-3406 Engines with
Radiator mtd. On Master Skids: (SN-67B12455 &
67B12441) with Twin Disc. TCI Torque converters Type
F11524.

Mast & Sub: 127 ft. X.X. Xxxxx Xxxx XX X-0000, XXX 450M# Csg Cap.
350M#, Set Back 250M#, 4 sheave crown & 1 fast line
sheave, grooved for 1 1/8" line. 14 ft. Clear High x
42 ft. Long Substructure.Mud Pumps:

Exh B-3
44
RIG NO. 1

Ideco 600 Duplex Pump (600 hp) with
relief valves K-20 Pulsation Dampener,
Intergal mounted on extended pump skid
complete with D-379 Caterpillar engine
(SN-67B5537) complete with Pump
Sheave, pillar block Engine Sheave,
Clutch, Belts & Guard.

EWCO (15W-600) Xxxxx Xxxxxxxx Duplex Mud Tank System:
Pump (600 hp) with relief valves, CE
Dampener, Intergal mounted on extended
pump skid complete with D-3412 (1200
rpm) Caterpillar Engine (SN38S12059),
Complete with pump sheave, pillar
block Engine Sheave, Belts & belt
Guard.

Two (2) Tank 500 bbl System, Shaker & Rotary Table:
Suction Tank, 10' x 5' x 50',
including Xxxxx Shale Shaker. Suction
Tank, Incl. 100 bbl Pre-mix section
with 5 x 6 Cent. Pump, driven with D-
3304 Cat Engine. Complete with all
Extensions, Walkways, Rails, and
suction connections.

Ideco 23' rated @ 175 Ton. Hook & Block:

Ideco 200 Ton Combination Shorty (1 Swivel:
1/8") Block w/150 Ton Hydra Hook.

Xxxxxxx Denver 200 Ton. Handling Equip:

Type B-42" Xxxxxx Tool Tongs Generator House:
4 1/2" Elevators & Slips
Drill Collar Slips & Clamps Elevator
Bails, Lift Subs, X-over Subs,
Saver Subs, Bit Subs. Lot.

Exh B-4
45
RIG NO. 1

Two (2) 3304 Caterpillar Engines (4B-
13076) intergal with two (2) 90 XX
Xxxx Generator, Complete with Control
Panel, Transformers, housed in 8 x 25'
skidded house. 80 Gal Air Volume
Tank, with Quincy Compressor driven by
10 hp electric motor. One (1) 5 x 6
Centrifugal pump with 25 hp. electric
motor.

Blow Out Prevention Two (2) 12" Xxxxxxx Type E-3, 0000# BOP, with 4 1/2"
Equipment: Pipe & Blind Rams.

One (1) 12" 3000# GK Hydril Annular.

Lot of Misc. 12" Spools, X-Over Studded Adapters.

Accumulator & Koomey "80" 120 gal Model 25040, SN12/14701, 5 Station
Control Equipment: Controls, actuated by both air and electric motor
driven Triplex pump.

Choke Manifold: Choke Manifold 2 1/16" x 4 1/16" 3000# WKM Xxxxxx, 0 x
4-way Cross, Manual Chokes.

Drilling Line: 1 1/8" x 5000 ft. @ $1.20/ft.

Special Equipment: BRT Rotary Table Bushing

Xxxxxxx Denver Air Hoist

Halliburton Wire Line Unit

Ideal Wire Line Anchor

Exh B-5
46
RIG NO. 1

Satellite Weight Indicator

Instrumentation: Star 3 pen recorder
Satellite Automatic Driller
7-14 Degree Deviation Instr.

Lighting Fixtures: Fluorescent & Vapor Proof Lights throughout Rig.

Fabricated Items: Fuel Tank (8400 gal) Xxxxxx Fuel

Two (2) 8'dia x 32'L, skidded Water Tanks. Ea. 500
bbl. W/Cent. Pump

Top Drillers Dog House 8'W x 8'H x 22'L with 3' Porch
Heaters & Lockers

Change House 8'W x 26'L

Lubester 3 compartment, with tool box, skidded 8'W x
12'L

Skidded Mud Mixing Cent. Pump with Electric Motor.
And Mud Xxxxxx, mtd on 6' x 6' Skid with lifting eye.

Misc. Fabricated Catwalk, 2 Sec. 5"W x 30'L
Items: 1 1/8" Skidded Drig Line Spool
8'W x 15' Xxxxxxx Stand
(4) Sets Pipe Racks 42"H.
V-Door Ramp 66"W x 12L

Big Canvas: Full Set of Rig Canvas for Mast and wind walls on
floor

Rubber Goods: 3 1/2" x 55' Rotary Hose, 8" Suction & vibrating hoses
for all systems

Toolpushers Trailer 8'W x 40'2 axle Trailer House, with bedroom, bath,
House: kitchen, & office area

Exh B-6
47
RIG NO. 1

DRILL PIPE, DRILL COLLARS & XXXXX

(280 JTS) 9000 FT, 4 1/2" 16.60 # XH Grade E. Drill Pipe 6-6 1/8" OD Jts.

27-6 1/4" OD x 2 1/4" ID Drill Collars W/XH Connections

15 8" OD x 2 1/2" ID Drill Collars w/6 5/8" Reg. Conn.

1 4" x 40' Square Xxxxx

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

RIG NO. 2

Drawworks: U-36-A Mid Continent Dwks, Single Drum, with Type 33
Xxxxxx Catheads, V 80 Parmac Hydro. Brake, with
extended in-line two (2) Engine Compound with 16"
clutches. Compound driven 390 Quincy Air Comp.

Dwks Engines: Two (2) Caterpillar X-0000 XXXX Engines N-67U5220 &
67U5233) with Twin Disc TCI 3 stage Converters Type
F11524

Masts & Sub: 131' Xxx X. Xxxxx (SN-T-2845) with 4-42" sheave Crown,
1 fast line sheave for 1 1/8" with 13 ft. Clear Sub x
48'L. GNW 550M#; Csg cap. 375M#, Set Back 250M#.

Mud Pumps: Cont. Xxxxx XX-000 Duplex Pump (SN69) with 3"
Discharge Valves, 2" Cameron & Relief Valves, K-20
Dampener. Pump Sheave. Mtd. on 8"W x 28'L Pump Skid
with Cross Skid with D-379 Caterpillar, Pump Dn tail
Shaft, 24" Clutch & 16"-16D Sheave. Belts, and Guard.

Oilwell Duplex Pump Type A-700, 7 3/4" x 16,

Exh B-7
48
RIG NO. 1

(SN-P- 118-43) With necessary valves, relief Valves and
K-20 Dampener, Mtd on 8'W x 32'L Pump Skid with Cross
Skid with D-379 Cat. Engine, 14"-14D Pump Sheave, 24"
Fawick Clutch, Belts & Guard.

Mud Tank System: Two (2) Tank 650 bbl System Shaker and Suction Tank.
Shaker & Suction Mud Tank 10'W x 6'H x 40'L extension
for Brandt Shaker, Lightning Mixer, and walkways.
Intermediate Tank (Pre-mix) 8'W x 30'L w/14' extension
for 6 x 8 Cent Pump, with V6-71 Detroit Engine with
mud xxxxxx, 10 hp agitator 10 hp mtr. Driving 5 x 6
cent. Pump.

Rotary Table: Xxxxxxx 00 0/0" (XX 21-106)

Hook & Block: Xxxxxxx Denver 200 Ton 4 sheave Block for 1 1/8" Line
(SN-6245) with X.X. Unimatic 6150 Hook (SN-359)

Swivel: Oilwell PC-300 Ton

Handling Equip: Type B 42" Xxxxxx tool Tongs; 4 1/2" Drill Pipe
Elevators & Slips Drill Collar Slips & Clamps
Elevator Bails, Lift Subs, X-Over Subs, Saver Subs,
Bits Subs. Lot.

Generator House: Two (2) D-3306TPC Caterpillar Engines w/150 XX Xxxx
(EX9E) Generators; Sq. D. Control Panel. Day Tank, 2
x 3 Cent. Pump w/20 hp Electric motor; Xxxxxxx Denver
Screw Type Compressor Model EBGRDA (SN-771761) driven
by 30 hp Electric Mtr. all in 8W x 26L x 9H skidded
Gen. House.

Blow Out Prevention Two (2) 13 5/8" Xxxxxxx Type E-3000# BOP, with 4 1/2"
Equipment: Blind & Pipe Rams.

One (1) 13 5/8" 3000# Xxxxxxx Annular

Exh B-8
49
RIG NO. 2

Lot of Misc. 13 3/8" Spools, X-Over Studded Adapter
Flanges.

Accumulator & Control Equipment: Type 80 Koomey Model 180-115, (SN 3500), Seven (7)
station, 18 bottles, 300 psi Triplex Pump UET 20B, 20
hp Elect. Mtr. (both air & hydraulic actuated)
Suitcases for Hydr. Lines to Rig.

Choke Manifold: 2 1/16" x 4 1/16" 5000#, 1-4 1/16 WKM Valve, 1-4 1/16"
XxXxxx Xxxxx, 0-0" Xxxxxx Valves, 2-2" WKM L Xxxxxx, 0
x 4 four way Cross. Two manual Chokes.

Drilling Line: 1 1/8" x 5000' Drilling Line (new) @ $1.40/ft.

Special Equipment: Varco 5 1/4" Hex Xxxxxx Xxxxx Bushing

Ingersol Rand HUL 40 Air Hoist

Halliburton Wire Line Unit

National Ideal Wire Line Anchor

Xxxxxx Xxxxxx Weight Indicator

Instrumentation: Star 3-pen Recorder
Satellite Automatic Driller
7-14 degree Deviation Instr.

Lighting Fixtures: Fluorescent & Vapor Proof Lights throughout Rig.

Fabricated Items: Fuel Tank (8400 gal) Xxxxxx Fuel

Two (2) 8" dia. x 32'L , skidded Water Tanks. Each
500 bbl, w/Cent. Pump

Top Drillers Dog House, 8W x 8H x 22'L with 3' Porch.
Lockers & Heaters

Exh B-9
50
RIG NO. 2

Change House, 8"W x 16'L, with Lockers & Bench

Storage & Tool House 7'W x 20'L

Lubester, 3 compartment, 39" dia. x 5'L, with Tool Box
on 9'W x 12'L skid.

Fabricated Items: 8W x 22W Skidded Parts and Tool House.

Misc. Fabricated Catwalk, 2 Sec. 5W x 30'L
Items: 1 1/8 Drilling Line Spool Skd.
8'W x 15'H Xxxxxxx Stand
(4) Sets Pipe Racks 42"H
V-Door Ramp 66"W x 12'L

Rig Canvas: Full Set of Rig Canvas for Mast and wind walls on
Floor.

Rubber Goods: 3 1/2" x 55' Rotary Hose, 8" Suction and vibrating
hoses for all systems.

Toolpushers Trailer: 8'W x 40'L 1996 "Idle Time" Trailer House with
Bedroom, Bath, Kitchen & Living Room

DRILL PIPE, DRILL COLLARS & XXXXX

(290 JTS) 9300 FT. 4 1/2" 16.60 LB. XH Gr. E. Drill
Pipe 6 1/8-6 1/4" OD Jts.

(93 JTS) 3000 FT. 4 1/2" 16.60 LB. XH Gr. G. Drill Pipe
6 1/4" OD Jts.

24 - New 6 1/2" OD x 2 1/4" ID Drill Collars w/XH Conn.

14 - 8" OD x 2 1/2" ID Drill Collars w/XH Conn.

1 - 5 1/4" Hex Xxxxx

Exh B-10
51
RIG NO. 2

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

RIG NO. 3

Drawworks: Skytop Xxxxxxxx N-75, Single Drum, Xxxxx grooved (1
1/4") Line. Xxxxxx Make up & Break. Out Catheads.
Drillers Console, Crown-o-matic, & over-running Clutch
for Brake. Mtd. On Extended Skid for three (3)
Engine In-Line Compound, 24" Fawick Clutches &
Spiders, w two (2) top mounted Ingersol Rand air
Compressors 242-5CI, (SN-30T 485459 & 30T-556282),
with Double (2) 16"D Gr. Pedestal Pump Drives.
Hydromatic Brake:

Exh B-11
52
RIG NO. 3

Parmac 342-34" Double Hydro. Brake (SN-51702)
Engines: Three (3) Caterpillar D-353E Engines, complete with
Air Starters, Gen. Radiator Group, & Clutch Hubs.
(SN-46B7624) (46B09177) (46B7467).

Mast & Substructure: 142 Ft. Superior Mast (SN-NA) 768,000# Static Hook
Load. (Mfg 1981). Six (6) Sheave 52" and one (1)
Fast Line Sheave, all for 1 1/4" Line. Complete with
Racking Board, Standpipe Manifold, Ladder, Boom & Tong
Cwts. Substructure: 14'H x 30W x 54'L, Box on Box
Stairs, Safety Rails. Build in Air Volume Tank Parts
House & Starting Fuel Tank in Subs.

Mud Pumps: Continental Emsco DB-700 Duplex Mud Pump (SN-266), 7
1/2 x 16", with Quick Change Steel Fluid End, with
C.E. PD-53 Pulsation Dampener (SN276), 3" Relief
Valves, Type D Pressure Gauge, Rod Cooling Pump, Belts
& Guard. Driven from Engine Compound. (Like New).

Continental Emsco DB-700 Duplex Mud Pump (SN 263) 700
hp, 7 1/2" x 16". Quick Change Valve Cast Steel Fluid
End. C.E. PD-53 Dampener (SN259) Relief Valve,
Cooling Pump, Type D Pressure Gauge. Mounted on 8W x
32"L Pump Skid with Cross Engine Skid with D-379 Cat.
Engine, Pump Drive Tail Shaft, Clutch and Drive
Sheave. Belts and Guard. (like new).Mud Tank:

Three (3) Tank 750 bbl System. Shaker Rotary Table:
Tank 9'11"W x 5'6"H x 42'L, W/4 Slant
Btm Compartments, Plumbing, Mud
Agitator Top Mtd Walkways, Rumba
Single Shale Shaker with 3 hp mtr.
Stairs, Rails, Skidded. Volume Tank,
9'11"W x 5'6"H

Exh X-00
00
XXX XX. 0

x 30'L, (3) Compartment Slant Bottom,
Plumbing, w/12'L Pump Room, with
Mission 6 x 8 Centrifugal Pumps & 50
hp mtrs. Top mtd walkways, Rails,
Stairs, skidded. Suction Tank, 9'11"
x 5'6" x 30L, w/12'L Pump Room Ext.
with 6 x 8" Centrifugal Pump & 50 hp
Mt., (2) Compartment, Slant Bottom,
Plumbing, Mud Mixer, Top Mtd Walkways,
Stairs, Rails, Skidded. Also used as
(Premix Tank)Rotary Table:

Oilwell A-20 1/2" Rotary Table, 00 Xxxx & Xxxxx:
0/0" Xxxxxx, XX X000X-000, w/split
bushing.

Oilwell 000 Xxx Xxxxx, Xx. 0 0/0", X/ Xxxxxx:
BJ 5350-350 Ton Dynaplex Hook.

Oilwell PC-300 (300 Ton) Handling Equip:

Type B 42" Xxxxxx Tool Tongs Generator House:
4 1/2" Drill Pipe Elevators(3) & Slips
Drill Collar Slips and Clamps
2 3/4 x 108" Elevator Links
Lift Subs, X-Over Subs, Saver Subs,
Bit Subs

Two (2) Kato Generator Sets. 1-300KW
(SN-77974-2) with Cat. D-353E
(SN46B7757) 1-325KW Kato (SN82891)
with D353E Cat. (SN-46B7715). Quincy
390 Compressor w/35 hp mtr. 3" x 2"
Cent. Pump w/20 hp Mtr. Simplex Mod
Controls on

Generator & Xxxxx Xxxxxxx Electrical
Control Panel, all mtd in 9'11" x 9'H
x 40L Skidded Gen. House.

Exh B-13
54
RIG NO. 3

Blow Out Prevention Hydril 13 5/8" 5000# Annular
Equipment: Hydril 11" 5000# Annular
Hydril 11" 5000# Double Blow Out Preventer w/ 4 1/2"
Blind and Pipe Rams.
Lot of Misc. 11' & 13 5/8" Spools, X-Over Studded
Adapter Flanges

Accumulator & Valvcon 80 Gallon 5 Station Closing Unit (SN 5074) w
Control Equip: Hydraulic Fl. Reservoir, both Air & hydraulic Pump.,
Triplex Hydr. Pump w/Elec. Mtr. (8) Bottles, Skidded.

Suitcases for Hydraulic Lines to Rig 5 Station Remote
Closing Unit.

Choke Manifold: (2) 4 1/16" Manual Gate Valves, (2) 4 1/16" Demco
Manual Valves, 2" Check Valves 4 way cross with manual
Chokes.

Drilling Line: 1 1/4" x 7500 ft. Drilling Line (new)

Special Equipment: Varco 5 1/2" HD Hex Xxxxx Bushing
Ingersol Rand HUL Air Hoist
Xxxxxx "Retriever" Hydr. Wire Line measuring Device
(15000' cap) w/15 hp mtr.
National "D" Wire Line Anchor
Xxxxxx Xxxxxx Weight Indicator w/gauges.

Instrumentation: Star 3 pen recorder
Satellite Automatic Driller
7-14 degree deviation Instr.

Lighting Fixtures: Fluorescent & Vapor Proof Lights & Writing throughout
Rig

Fabricated Items: Fuel Tank (8400 gal) Property (Xxxxxx Fuel)

Exh B-14
55
RIG NO. 3

Two (2) 8' Dia. x 32' Long Skidded Water Tanks, (500
bbl) ea w/cent. pump

Top Drillers Dog House 8'W x 8'H x 30'L, with
knowledge box, lockers, Bench Storage, Cabinets,
Parts, Bins, Heater, Skidded

Mud & Tool House 8'W x 36'L on 40'L Skid.

Tool & Storage House 7" x 20'L Skidded.

Lubester, 4 Compartment (1000 gal)
Oil Storage Tank. 40" Dia x 8'L mtd. on 9'W x 16'L
Skid.

Misc. Fabricated Catwalk, 2 Section, 6'W x 42" H, x 35' Long (plated
Items: 1/2 Steel top)
1 1/4" Drilling Line Spool on Skid
8'W x 15' H Xxxxxxx Stand
V Door Ramp, 5 1/2' x 12'L
Junk Box 8'W x 36"H x 24'L Skidded.
(10) - 8'W x 30'L & (8) 8'W x 12' L Steel
Reinforced Wooden Mats, for Substructure and Pumps

Rig Canvas: Full Set of Rig Canvas for Mast and Wind Walls on
Floor

Rubber Goods: 4 1/2" ID x 55' L Rotary Hose
2 - 10" OD x 5' Long Suction Hoses
4 - 3 1/2" ID x 8' x 10' Long Vibrated Hoses

Toolpusher Trailer: 8'W x 40'L "1995 Idle Time" Trailer w/bedroom, Bath,
Kitchen & Living Room

DRILL PIPE, DRILL COLLARS & XXXXX

(220 JTS) 7,000 ft. 4 1/2" 20# Gr. "G" Drill Pipe 6
1/4 OD Jts.

Exh B-15
56
RIG NO. 3

(179 JTS) 5,700 ft. 4 1/2" 16.60# Gr. "E" Drill Pipe 6 1/4" OD Jts.

00 - 0 0/0" XX x 0 0/0" XX Drill Collars w/XH Conn. New

6 - 6/3/4" OD x 2 3/8" ID Drill Collars w/XH conn.

18 - 8" OD x 2 1/2" ID Drill Collars New

1 - 5 1/4" Hex Xxxxx

X. VEHICLE

Year Description
---- -----------
1995 Chevrolet Pickup ID No.
0XXXX00X0X0000000 1997 Sticker No.
12075676

Exh B-16
57
APPENDIX II
TO
XXXX OF SALE AND ASSIGNMENT
FROM
XXXXX DRILLING CORPORATION
TO
XXXXXXXXX DRILLING COMPANY
(LIST OF DRILLING CONTRACTS AND OTHER AGREEMENTS ASSIGNED)

A. Drilling Contracts.

6. Miscellaneous Master Drilling Contracts respectively between
the following named Operators and XxXxx Drilling Corporation:

Exh B-17
58
Operator

Amerada Xxxx Corporation

Bass Enterprises Production Company

Burlington Resources

Xxxx Xxxxxxx Corporation

Marathon Oil Company

Xxxxxx & Parsley

Pogo Producing Company

Santa Fe Energy Resources

B. Leased Vehicles Lease Agreements.

C. Purchase Orders.

1. Tubular Goods Order No. 34440-00 to Grant Prideco, Inc. in the
amount of $503,452.95 for approximately 15,000 feet of drill
pipe and related tubular goods as therein described.

2. Tubular Goods Order No. 34441-00 to Grant Prideco, Inc. in the
amount of $108,432.68 for approximately 3,000 feet of drill
pipe and related tubular goods as therein described.

Exh B-18
59
D. Other Agreements

1. Service Agreement dated February 25, 1997, between Cellular
One and XxXxx Drilling Corp., relating to cellular phone ESN
No. 21216642980.

2. Service Agreement dated February 4, 1997, between Cellular One
and XxXxx Drilling Corp., relating to cellular phone ESN Nos.
21216729212, 21216640239, and 2l2l6640241.

3. Service Agreement dated January 23, 1997, between Cellular One
and XxXxx Drilling Corp,, relating to cellular phone ESN Nos.
21216621678 and C3121ECC.

Exh B-19

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Table of Contents

1 EXHIBIT 2.4 ASSET PURCHASE AGREEMENT

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