BEPARIKO BIOCOM
AGREEMENT OF LIMITED PARTNERSHIP
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>5
<FILENAME>b318282ex_10-3.txt
<DESCRIPTION>AGREEMENT OF LIMITED PARTNERSHIP
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.3

THE LIMITED PARTNERSHIP INTERESTS CREATED BY THIS AGREEMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED NOR HAVE THERE BEEN ANY
CORRESPONDING REGISTRATIONS UNDER THE SECURITIES ACT OF ANY STATE AND, AS A
RESULT, ANY INTEREST PURCHASED IN THIS PARTNERSHIP MAY NOT BE SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED WITHOUT ALL APPLICABLE REGISTRATIONS UNDER SUCH
SECURITIES ACTS OR THE AVAILABILITY OF AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF STATE AND FEDERAL SECURITIES LAWS.




                        AGREEMENT OF LIMITED PARTNERSHIP


                                       OF

            TOUCHSTONE RESOURCES -2001 HACKBERRY DRILLING FUND, L. P.
                          (a Texas Limited Partnership)









                                 Prepared by:
                                 Hughes, Watters & Askanase, L.L.P.
                                 1415 Louisiana, 37th Floor
                                 Houston, Texas 77002
                                 Phone: 713/759-0818




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                                TABLE OF CONTENTS

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ARTICLE  I - GENERAL PROVISIONS...................................................................................1

   1.1      FORMATION OF THE PARTNERSHIP..........................................................................1
   1.2      NAME OF THE PARTNERSHIP...............................................................................1
   1.3      OTHER ACTS AND FILINGS................................................................................1
   1.4      NAMES AND ADDRESSES OF PARTNERS.......................................................................1
   1.5      PURPOSES OF THE PARTNERSHIP...........................................................................1
   1.6      TERM OF THE PARTNERSHIP...............................................................................2
   1.7      PRINCIPAL PLACE OF BUSINESS AND REGISTERED OFFICE AND REGISTERED AGENT OF THE PARTNERSHIP.............2
   1.8      INVESTMENT REPRESENTATIONS OF LIMITED PARTNERS........................................................2

ARTICLE  II - DEFINITIONS.........................................................................................2

   2.1      AFFILIATE.............................................................................................2
   2.2      AGREEMENT.............................................................................................3
   2.3      AMI...................................................................................................3
   2.4      ASSIGNEE..............................................................................................3
   2.5      CAPITAL ACCOUNT.......................................................................................3
   2.6      CAPITAL CONTRIBUTIONS.................................................................................3
   2.7      CERTIFICATE OF LIMITED PARTNERSHIP....................................................................3
   2.8      COMMITMENT............................................................................................3
   2.9      DISTRIBUTIONS.........................................................................................3
   2.10     FISCAL YEAR...........................................................................................3
   2.11     GENERAL PARTNER.......................................................................................3
   2.12     INTERNAL REVENUE CODE.................................................................................3
   2.13     LIMITED PARTNER.......................................................................................4
   2.14     MAJORITY VOTE.........................................................................................4
   2.15     MANAGEMENT FEE........................................................................................4
   2.16     NET CASH AVAILABLE....................................................................................4
   2.17     OPTION................................................................................................4
   2.18     PARTNER...............................................................................................4
   2.19     PARTNERSHIP...........................................................................................4
   2.20     PARTNERSHIP INTEREST..................................................................................4
   2.21     PARTNERSHIP PROPERTY..................................................................................4
   2.22     TOUCHSTONE............................................................................................4

ARTICLE  III - CAPITAL CONTRIBUTIONS..............................................................................5

   3.1      COMMITMENTS...........................................................................................5
   3.2      PAYMENTS OF COMMITMENTS...............................................................................5
   3.3      FAILURE TO MAKE ADDITIONAL CAPITAL CONTRIBUTIONS......................................................5
   3.4      CAPITAL CONTRIBUTIONS.................................................................................6
   3.5      RETURN OF CAPITAL.....................................................................................6
   3.6      NO INTEREST ON CAPITAL CONTRIBUTION...................................................................6
   3.7      CAPITAL ACCOUNT.......................................................................................6

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ARTICLE  IV - PARTNERS' SHARE OF PARTNERSHIP INCOME OR LOSS ITEMS.................................................7

   4.1      ALLOCATIONS...........................................................................................7
   4.2      SPECIAL ALLOCATIONS...................................................................................7
   4.3      OTHER ALLOCATION ISSUES...............................................................................7
   4.4      LIMITATIONS ON ALLOCATIONS............................................................................8
   4.5      TRANSFERS.............................................................................................9
   4.6      EXPERTS...............................................................................................9

ARTICLE  V - PARTNERSHIP DISTRIBUTIONS............................................................................9

   5.1      ORDINARY DISTRIBUTIONS................................................................................9
   5.2      DISTRIBUTIONS TO BE DETERMINED MONTHLY................................................................9

ARTICLE  VI - THE GENERAL PARTNER.................................................................................9

   6.1      MANAGEMENT OF THE PARTNERSHIP.........................................................................9
   6.2      AUTHORITY OF THE GENERAL PARTNER.....................................................................13
   6.3      ASSIGNMENT OF THE INTEREST OF THE GENERAL PARTNER AND ADMISSION OF ADDITIONAL GENERAL PARTNERS.......13
   6.4      REMOVAL AND WITHDRAWAL OF THE GENERAL PARTNER........................................................13
   6.5      OTHER ACTIVITIES OF THE GENERAL PARTNER..............................................................15
   6.6      COMPENSATION TO THE GENERAL PARTNER..................................................................16
   6.7      LOANS BY THE GENERAL PARTNER TO THE PARTNERSHIP......................................................16
   6.8      EXERCISE OF OPTION...................................................................................16
   6.9.     AREA OF MUTUAL INTEREST..............................................................................17

ARTICLE  VII - THE LIMITED PARTNERS..............................................................................18

   7.1      LIMITATIONS REGARDING THE LIABILITY AND AUTHORITY OF THE LIMITED PARTNERS............................18
   7.2      ASSIGNMENT OF INTEREST OF LIMITED PARTNER............................................................18
   7.3      ASSIGNMENT OF RIGHT TO RECEIVE DISTRIBUTIONS.........................................................19
   7.4      DRAG-ALONG RIGHTS....................................................................................19
   7.5      NO ASSIGNMENT ALLOWED UNDER CERTAIN CIRCUMSTANCES....................................................20
   7.6      WITHDRAWAL...........................................................................................20
   7.7      PARTNERSHIP ACTIONS INITIATED BY THE LIMITED PARTNERS................................................20
   7.8      DEATH, INSANITY, INCOMPETENCE OR BANKRUPTCY OF A LIMITED PARTNER.....................................20

ARTICLE  VIII - BOOKS, RECORDS, BANKING RELATIONSHIPS AND REPORTS................................................21

   8.1      BOOKS AND RECORDS....................................................................................21
   8.2      FINANCIAL AND TAX REPORTING YEAR.....................................................................21
   8.3      FINANCIAL REPORTS TO PARTNERS........................................................................21
   8.4      TAX RETURNS..........................................................................................21
   8.5      TAX ELECTIONS AND ALLOCATIONS........................................................................22
   8.6      TAX MATTERS PARTNER; TAX CONTROVERSIES...............................................................22
   8.7      OTHER REPORTS........................................................................................22
   8.8      CONFIDENTIALITY......................................................................................23
   8.9      BANKING..............................................................................................24
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ARTICLE  IX - PARTNERSHIP LITIGATION AND INDEMNIFICATION.........................................................24

   9.1      PARTNERSHIP LITIGATION...............................................................................24
   9.2      INDEMNIFICATION AND INSURANCE........................................................................24
   9.3      LIMITATION ON LIABILITY OF LIMITED PARTNERS FOR INDEMNIFICATION......................................25
   9.4      LIABILITY OF GENERAL PARTNER.........................................................................25

ARTICLE  X - AMENDMENTS AND MERGERS..............................................................................25

   10.1     AMENDMENT WITHOUT CONSENT............................................................................25
   10.2     AMENDMENTS...........................................................................................25
   10.3     AMENDMENTS AFTER CHANGE OF LAW.......................................................................26
   10.4     MERGERS AND CONVERSIONS..............................................................................26

ARTICLE  XI - DURATION AND TERMINATION...........................................................................26

   11.1     DISSOLUTION OF PARTNERSHIP...........................................................................26
   11.2     DISTRIBUTION OF ASSETS UPON DISSOLUTION..............................................................27
   11.3     GENERAL PARTNER'S AUTHORITY TO CONDUCT DISSOLUTION...................................................27
   11.4     RETURN OF CAPITAL CONTRIBUTION.......................................................................28

ARTICLE  XII - MEETINGS AND VOTING RIGHTS........................................................................28

   12.1     NOTICE AND CALL OF MEETINGS..........................................................................28
   12.2     ONE VOTE PER ONE PERCENT OF PARTNERSHIP INTEREST.....................................................28
   12.3     CONSENTS.............................................................................................29

ARTICLE  XIII - MISCELLANEOUS....................................................................................29

   13.1     NOTICE...............................................................................................29
   13.2     WAIVER...............................................................................................29
   13.3     CAPTIONS.............................................................................................29
   13.4     SEVERABILITY.........................................................................................29
   13.5     GOVERNING LAW........................................................................................29
   13.6     CUMULATIVE RIGHTS AND REMEDIES.......................................................................29
   13.7     COUNTERPARTS.........................................................................................30
   13.8     CONSTRUCTION.........................................................................................30
   13.9     ENTIRE AGREEMENT.....................................................................................30
   13.10    CREDITORS............................................................................................30
   13.11    AUTHORITY............................................................................................30
   13.12    SIGNATURES...........................................................................................30
   13.13    SUCCESSORS AND ASSIGNS...............................................................................30
   13.14    MEDIATION............................................................................................30
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                        AGREEMENT OF LIMITED PARTNERSHIP

                                       OF

           TOUCHSTONE RESOURCES - 2001 HACKBERRY DRILLING FUND L. P.

         This Agreement of Limited Partnership of Touchstone Resources-2001
Hackberry Drilling Fund, L. P. is made and entered into by the General Partner,
and those persons listed on Exhibit A to this Agreement as the Limited Partners,
and any other persons that may be admitted subsequently to the Partnership as
Limited Partners pursuant to the terms hereof.

                         ARTICLE I - GENERAL PROVISIONS

1.1 Formation of the Partnership. By entering into and complying with the terms
of this Agreement, the Partners form a limited partnership pursuant to the Texas
Revised Limited Partnership Act, as it may be amended from time to time. Except
as expressly provided herein to the contrary, the rights and obligations of the
Partners and the administration and termination of the Partnership shall be
governed by the Texas Revised Limited Partnership Act. The General Partner is
authorized to execute, file and cause to be published with the proper
authorities in the State of Texas and each other jurisdiction in which the
Partnership conducts business, a certificate of limited partnership and/or such
other certificates or documents as required by the limited partnership act,
fictitious or assumed name act or similar statute there in effect and to
preserve the limited liability of the Limited Partners. To the extent that
similar laws of other jurisdictions also so require, the Partners agree to form
a limited partnership under the laws of each such other jurisdiction in
compliance with those laws.

1.2 Name of the Partnership. The name of the Partnership shall be Touchstone
Resources-2001 Hackberry Drilling Fund L. P. or such other name as shall be
selected from time to time by the General Partner upon written notice to the
Limited Partners.

1.3 Other Acts and Filings. The General Partner and, if necessary, the Limited
Partners, from time to time shall execute or cause to be executed all such
certificates or other documents, and do or cause to be done all such filing,
recording, publishing or other acts, as the General Partner may deem to be
appropriate to comply with the requirements of law for the formation and/or
operation of a limited partnership in the State of Texas and all other
jurisdictions where the Partnership shall desire to conduct business and to
preserve the limited liability of the Limited Partners to the fullest possible
extent.

1.4 Names and Addresses of Partners. The name of the General Partner is
Touchstone Resources Ventures, LLC, a Texas limited liability company, and its
business address is 5858 Westheimer, Suite 708, Houston, Texas 77057, telephone
number 713-784-1113, and facsimile number 713-785-8530. The names and business
or mailing address of each Limited Partner and the date upon which each such
Partner entered into the Partnership are as set forth from time to time in the
records of the Partnership, and as initially set forth on Exhibit A hereto.


<PAGE>
1.5 Purposes of the Partnership. The purpose of the Partnership shall be to
acquire, lease, drill, and if successful, develop and manage two prospects
located in Jefferson County, Texas on the lands as set forth on Exhibit B
hereto, and pursuant to the terms hereof, to exercise an option to drill two
more wells on two other prospects also described on Exhibit B; and thereafter,
with the properties and production therefrom, to engage in the oil and gas
business and to purchase, sell, own and operate these oil, gas or mineral
properties now existing or in the future, and conduct any other business
activity directly or indirectly related to these oil and gas properties
developed in connection herewith.


1.6 Term of the Partnership. The Partnership commenced upon the filing and
recording of the required certificate of limited partnership with the Secretary
of State of the State of Texas on October 31, 2001 and shall continue in
existence through December 31, 2060, unless continued for a longer period as
provided in this Agreement, or unless sooner terminated pursuant to the terms
hereof.

1.7 Principal Place of Business and Registered Office and Registered Agent of
the Partnership. The principal place of business and registered office of the
Partnership shall be located at 5858 Westheimer, Suite 708, Houston, Texas
77057, or at such other place or places as the General Partner may from time to
time designate by notice to the Limited Partners. Mr. Mark A. Bush, President of
Touchstone Resources Ventures, L.L.C. shall be the registered agent at that
address, until such time that another registered agent is duly appointed by the
General Partner. The Partnership may also maintain such other offices as the
General Partner shall deem appropriate.

1.8 Investment Representations of Limited Partners. Each Limited Partner hereby
represents that it is an "accredited investor," as that term is defined in
Regulation D promulgated under the Securities Act of 1933, as amended. Each
Limited Partner also represents that by reason of its business and financial
experience, and the business and financial experience of those persons retained
by it to advise it with respect to its investment herein, it has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective investment and is
able to bear the economic risk of such investment. Each Limited Partner has had
access to and received information from the Partnership and the General Partner
concerning the Partnership's proposed business and operations, as requested by
each Limited Partner. Each Limited Partner also represents that it is acquiring
the interests in the Partnership hereunder for investment purposes only and not
with a view to the resale or distribution thereof.

                            ARTICLE II - DEFINITIONS

         Unless otherwise expressly provided in this Agreement or unless the
context otherwise requires, the terms having initial capital letters set forth
herein shall have the meanings set forth below.

2.1 Affiliate. Any of (a) any person or entity directly or indirectly
controlling, controlled by or under common control with another person or
entity, (b) any person or entity owning or controlling 10% or more of the
outstanding voting securities of such other person or entity or any person of
which 10% or more of the outstanding voting securities are directly or
indirectly owned or controlled by the person or entity in question, (c) any
officer, director or partner of such entity, or (d) if such other person is an
officer, director or partner, any entity for which such person acts in such
capacity.



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2.2 Agreement. This Agreement of Limited Partnership of Touchstone
Resources-2001 Hackberry Drilling Fund, L. P., as it may be amended from time to
time.

2.3 AMI. AMI shall mean the geographical area of mutual interest as defined by
the map attached hereto as Exhibit C. With respect to the South China and South
French prospects listed on Exhibit C, the AMI shall remain in place for the term
of the Partnership. With respect to the Carr and Mid-French prospects, if the
Partnership does not exercise its option to drill these prospects, the AMI with
respect to these prospects will lapse with respect to those prospects as of the
date the option exercise price is due to SK Resources, Inc.

2.4 Assignee. A party that has acquired a beneficial interest in the
Partnership, but that is not a substitute Limited Partner.

2.5 Capital Account. The Capital Account maintained for each Partner pursuant to
Section 3.7 of this Agreement.

2.6 Capital Contributions. The cash and the agreed upon fair market value of
other property actually contributed to the capital of the Partnership by any of
the Partners. The Capital Contribution of substitute Limited Partners shall be
that attributable to the Partnership Interest assigned to that substitute, as
well as any additional amount thereafter contributed.

2.7 Certificate of Limited Partnership. The Certificate of Limited Partnership,
as it may be amended from time to time, as required to be filed by the General
Partner under the Texas Revised Limited Partnership Act.

2.8 Commitment. The total Capital Contribution that a Partner has agreed to make
to the Partnership as of the execution hereof as set forth on Exhibit A hereto.

2.9 Distributions. Distributions in cash or property from the Partnership to one
or more Partners pursuant to Article V or Article XI of this Agreement.

2.10 Fiscal Year. This shall be defined as (i) the period commencing on the
effective date of this Agreement (the effective date being the time when the
Limited Partners entered into the Partnership) and ending on December 31, (ii)
any subsequent twelve (12) month period commencing on January 1 and ending on
December 31, or (iii) any portion of the period described in clause (ii) for
which the Partnership is required to close its books and allocate profits,
losses, and other items of Partnership income, gain, loss, or deduction pursuant
to Article IV hereof.

2.11 General Partner. Touchstone Resources Ventures, L.L.C., a Texas limited
liability company, and any other person that may become a substitute or
additional General Partner and which is elected or admitted hereto as a General
Partner pursuant to the terms hereof.

2.12 Internal Revenue Code. The Internal Revenue Code of 1986, as amended (26
U.S.C.). Section references to the Internal Revenue Code are to the Section of
the Internal Revenue Code as of the date of this Agreement. All such references
to the Internal Revenue Code and to Sections thereof are deemed to include
appropriate portions of any subsequently enacted internal revenue law, code, act
or similar legislation dealing with the same subject matter as contained in the
Internal Revenue Code. All references to "Treasury Regulations" shall be those
regulations or proposed regulations as promulgated by the Internal Revenue
Service pursuant to the Internal Revenue Code.



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2.13 Limited Partner. Any person or entity, properly executing this Agreement as
a limited partner, who is accepted by the General Partner, such acceptance to be
evidenced by the execution of this Agreement and, as required, the filing of any
certificates, and any person who is otherwise admitted to the Partnership in
accordance with the terms hereof as a limited partner.

2.14 Majority Vote. The affirmative vote of those Partners owning more than
fifty-one per cent (51%) of the aggregate outstanding Partnership Interests;
expressly provided, that if the reference is to the Majority Vote of the Limited
Partners, the reference shall mean fifty-one per cent (51%) of the Partnership
Interests.

2.15 Management Fee. A fee payable to the General Partner equal to $10,000 per
well drilled by the Partnership, payable out of the cash Capital Contributions
of the Limited Partners on or before the commencement of drilling the applicable
well.

2.16 Net Cash Available. Net Cash Available shall mean the gross cash proceeds
from Partnership operations (expressly including income from sales of oil and
gas and sales of properties in the ordinary course of business) after the
portion used to pay or establish reserves for all Partnership expense,
(expressly provided that no individual reserve account may exceed $50,000 per
annum), debt repayment, contingencies and replacements, to be determined in the
sole discretion of the General Partner. Net Cash Available shall not be reduced
by depreciation, depletion, amortization, cost recovery allowance or any other
similar allowance, but shall be increased by any reduction of cash reserves
previously established pursuant to the first sentence of this definition, and
shall include noncash items as otherwise set forth in this Agreement.

2.17 Option. The option by the Partnership to drill the Carr Prospect and the
Mid-French Prospect as defined in Exhibit B.

2.18 Partner. A General Partner or any Limited Partner or any duly admitted
successors.

2.19 Partnership. Touchstone Resources-2001 Hackberry Drilling Fund Partnership,
L. P., the limited partnership created under this Agreement.

2.20 Partnership Interest. The percentage interest of each Partner described as
the "Partnership Interest" on Exhibit A hereto. The Partnership Interest of any
Partner shall be personal property for all purposes.

2.21 Partnership Property. All assets, properties and rights of any type owned
by the Partnership.

2.22 Touchstone. Touchstone shall mean Touchstone Resources USA, Inc., a Texas
corporation.



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                       ARTICLE III - CAPITAL CONTRIBUTIONS

3.1 Commitments. Subject to the terms and conditions hereof, each Limited
Partner, upon admission to the Partnership, agrees to contribute to the
Partnership the total amount of cash as set forth or described opposite that
Partner's name on Exhibit A hereto under the column headed "Commitment," which
Commitment includes such Partner's Initial Capital Contribution. As of the
execution hereof, each Partner shall make the Capital Contribution as described
on Exhibit A under the column headed "Initial Capital Contribution," by paying
an amount of cash equal to the amount set forth opposite that Partner's name on
Exhibit A hereto. Except as specifically provided in this Agreement, the
Commitment of a Partner: (i) shall represent the maximum aggregate amount of
cash and property that such Partner shall be required to contribute to the
capital of the Partnership; and (ii) shall not be changed during the term of the
Partnership.

3.2 Payments of Commitments. After the payment of the Initial Capital
Commitment, the Partners may be required from time to time, in accordance with
the terms hereof, to pay in cash the unfunded portion of the Commitment due to
the Partnership. The General Partner shall, in its sole and absolute discretion,
determine whether additional amounts of capital are required by the business
plans of the Partnership. The only person authorized to call any remaining
portion of the Commitment shall be the duly constituted and authorized General
Partner, and no creditor of the Partnership shall have any rights, legal or
equitable, to require the General Partner to make a call for any unfunded
portion of the Commitment. Based on the amount necessary to call, the General
Partner shall be required to send written notice at least ten (10) business days
prior to the date all or any portion of the unfunded portion of the Commitment
is due. The Partners shall have ten (10) business days from the receipt of the
written notice in which to fund the amount set forth in such funding notice,
provided, that no Partner shall be required to contribute any amount that would
cause the aggregate Capital Contributions made hereunder to exceed such
Partner's Commitment, as amended hereby.

3.3 Failure to Make Additional Capital Contributions. If any Partner (the
"Defaulting Partner") fails or refuses to pay any additional Commitment to the
Partnership within the thirty (30) day period provided for in Section 3.1, the
Defaulting Partner's right to receive distributions from the Partnership or vote
on any Partnership matter shall be immediately suspended. Unless a portion of
the Defaulting Partner's interest in the Partnership is acquired by another
Partner pursuant to the terms hereof, the Defaulting Partner shall continue to
be allocated such Partner's share of Partnership income, gains, losses,
deductions and credits. Except as otherwise provided in this Section, the
suspension shall remain in effect from the date it is invoked until the
Defaulting Partner contributes to the Partnership (i) the amount of the
Defaulting Partner's deficiency and (ii) interest on the outstanding balance
thereof at an annually compounding rate of eighteen percent (18%) per annum. Any
distributions to which the Defaulting Partner would otherwise be entitled, but
which are withheld by the Partnership pursuant to this Section, shall be applied
against the deficiency and interest owed by the Defaulting Partner to the
Partnership, first against interest accrued on such Defaulting Partner's
deficiency and then against the deficiency itself. A Defaulting Partner's
Capital Account will be credited to the extent such credits are applied against
the deficiency. Interest credited will be treated as income of the Partnership.
The Partnership shall have a lien against the Defaulting Partner's Partnership
Interest and each Partner hereby assigns to the Partnership a security interest
in such Partner's Partnership Interest, to secure all obligations of the Partner
to the Partnership under this Agreement. Each Partner agrees to execute such


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<PAGE>

financing statements and other documents as the General Partner may reasonably
request to perfect the security interest granted by this Agreement. The
Partnership shall also be authorized to reduce the Defaulting Partner's
Partnership Interest to a percentage calculated as follows: the Defaulting
Partner's Partnership Interest immediately prior to the default, shall be
reduced to a percentage to reflect the relative Capital Contributions of all of
the Limited Partners as affected by the amount in default, further multiplied by
0.90. The Partnership may take any other legal action to recover the amount of
any deficiency or interest owed by a Defaulting Partner to the Partnership,
including foreclosing on the Partnership's security interest in the Defaulting
Partner's Partnership Interest and the Defaulting Partner shall be further
liable to the Partnership for any reasonable attorneys' fees and collection and
court costs incurred by the Partnership in taking such action. The General
Partner shall also be expressly authorized to sell the Partnership Interest of
the Defaulting Limited Partner to other Partners, in exchange for the amount of
the additional Capital Contribution and the fair market value of the Partnership
Interest, as determined by the General Partner, in its sole discretion. Pursuant
to the express terms and conditions of Section 6.8 below, in the event a Limited
Partner determines not to vote in favor of the exercise of the Option, that
Limited Partner shall not be considered a "Defaulting Limited Partner" in the
event that it determines not to fund that portion of the Commitment associated
with the drilling of the prospects in the Option.

3.4 Capital Contributions. Except as agreed to by a Majority Vote of the Limited
Partners, all Capital Contributions, after the Initial Capital Contribution,
shall be in cash. The obligation of a Partner to satisfy its Commitment shall be
without interest except as provided in Section 3.3 above.

3.5 Return of Capital. Except upon dissolution and liquidation of the
Partnership as set forth herein, there is neither an agreement nor a time set
for the return of any Capital Contribution. To the extent funds are available
therefore, the General Partner may return capital out of proceeds of
refinancing, operating revenue (expressly provided that ordinary distributions
as provided in Article V are not a return of capital for purposes hereof) or out
of proceeds of sales of Partnership Property, after reserving sufficient funds
for payment of all debts, working capital, contingencies, replacements, and
withdrawals of capital, if any, and to the extent of available funds, the
General Partner shall return said capital at dissolution and termination, as
hereinafter set forth. A Partner shall not be entitled to withdraw any part of
its Capital Contribution or to receive any distribution from the Partnership,
except as provided herein, or as may be agreed to by the General Partner.

3.6 No Interest on Capital Contribution. No Partner shall be entitled to
interest of any kind on Capital Contributions.

3.7 Capital Account. A capital account ("Capital Account") shall be established
for each Partner and shall be maintained in such a manner as to correspond with
the requirements of Treasury Regulations under Section 704(b) of the Code (the
"Allocation Regulations"), including the calculation of "simulated depletion,"
"simulated basis," "simulated gain" and "simulated loss" as those terms are
described in the Allocation Regulations. If any additional interests are to be
issued in the Partnership in consideration for a contribution of property or
cash or if any Partnership property is to be distributed in liquidation of the
Partnership or an interest in the Partnership, the Capital Accounts of the
Partners (and the amounts at which all Partnership Properties are carried on its
books and records utilized in the calculation of the Capital Accounts) shall,
immediately prior to such issuance or distribution, as the case may be, be
adjusted consistent with the provisions of the Allocation Regulations.



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        ARTICLE IV - PARTNERS' SHARE OF PARTNERSHIP INCOME OR LOSS ITEMS

4.1 Allocations. Except as otherwise provided herein or unless another
allocation is required by the Allocation Regulations, for purposes of
maintaining the Partners' Capital Accounts, all items of Partnership income,
gain, loss, deduction and credit (including "simulated depletion," "simulated
gain" and "simulated loss" as those terms are defined in the Allocation
Regulations) shall be allocated among the Partners pro rata in accordance with
their Partnership Interests. For purposes of computing the amount of each such
item of income, gain, deduction or loss, the determination, recognition and
classification of such item shall be the same as its determination, recognition
and classification for federal income tax purposes unless otherwise required by
the Allocation Regulations. It is the intent of the Partners that the
allocations provided for in this Article IV qualify and meet the requirements of
Section 514(c)(9)(E) of the Code and the General Partner shall interpret them
accordingly.

4.2 Special Allocations. Notwithstanding any other provision of this Agreement
to the contrary:

         4.2.1 Income from the sale, exchange or other disposition of production
         from wells shall be allocated among the Partners in proportion to their
         Partnership Interests.

         4.2.2 Gain or "simulated gain," if any, resulting from the sale or
         other taxable disposition of all or any interest in those wells shall
         be allocated among the Partners so that the portion of each Partner's
         Capital Account attributable to the interest sold ("simulated basis"
         plus allocable gain or "simulated gain") shall be in proportion to
         their Partnership Interests (or as close thereto as possible).

4.3 Other Allocation Issues. The Partnership shall, except to the extent such
item is subject to allocation pursuant to Section 704(c) of the Code, allocate
each item of income, gain, loss, deduction and credit, as determined for federal
and other income tax purposes, in the same manner as such item was allocated for
Capital Account purposes.

         4.3.1 The depletion allowance shall be computed separately by each
         Partner for federal income tax purposes and not by the Partnership. For
         this purpose, the adjusted tax basis in each oil and gas property of
         the Partnership shall be allocated among the Partners in proportion to
         their Partnership Interests.

         4.3.2 Gain or loss on the disposition of an oil and gas property shall
         be computed separately by each Partner for federal income tax purposes.
         For purposes of that calculation, the amount realized shall be an
         amount that represents recovery of the adjusted "simulated basis" of
         the property and shall be allocated to the Partners in proportion to
         their Partnership Interests.

         4.3.3 No allocation under Sections 4.3, 4.3.1 and 4.3.2 shall be
         charged or credited to a Partner's Capital Account.



                                       7
<PAGE>

4.4      Limitations on Allocations.

         4.4.1 Minimum Gain Chargeback. Notwithstanding any provisions of this
         Article IV, if there is a net decrease in Partnership minimum gain
         during any Fiscal Year or other period, prior to any other allocation
         pursuant hereto, each Partner shall be specially allocated items of
         Company income and gain for such year (and, if necessary, subsequent
         years) in an amount and manner required by Treasury Regulation Section
         1.704-2. Notwithstanding any provision of this Article IV, if there is
         a net decrease in partner nonrecourse debt minimum gain, any Partner
         with a share of that partner nonrecourse debt minimum gain as of the
         beginning of such year shall be allocated items of income and gain for
         the year (and, if necessary, for succeeding years) equal to that
         Partner's share of the net decrease in the partner nonrecourse debt
         minimum gain, as provided in Treasury Regulation Section 1.704-2(i)(4).

         4.4.2 Qualified Income Offset. Any Partner who unexpectedly receives
         an adjustment, allocation or distribution described in Treasury
         Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) that causes or
         increases a negative balance in its capital account beyond the sum of
         the amount of such Partner's obligation to restore its deficit capital
         account plus its share of minimum gain shall be allocated items of
         income and gain sufficient to eliminate such increase or negative
         balance caused thereby, as quickly as possible, to the extent required
         by such Treasury Regulation.

         4.4.3 Gross Income Allocation. If any Partner has a deficit capital
         account at the end of any Fiscal Year which is in excess of the sum (i)
         the amount such Partner is obligated to restore pursuant to any
         provision of this Agreement and (ii) the amount such Partner is deemed
         to be obligated to restore pursuant to Treasury Regulation Section
         1.704-2, each such Partner shall be specially allocated items of
         Partnership income and gain in the amount of such excess as quickly as
         possible, provided that an allocation pursuant to this Section 4.4.3
         shall be made only if and to the extent that such Partner would have a
         deficit Capital Account in excess of such sum after all other
         allocations provided for in this Article IV have been made as if this
         Section 4.4.3 were not in this Agreement.

         4.4.4 Section 704(b) Limitation. Notwithstanding any other provision
         of this Agreement to the contrary, no allocation of any item of income
         or loss shall be made to a Partner if such allocation would not have
         "economic effect" pursuant to Treasury Regulation Section
         1.704(b)(2)(ii) or otherwise be in accordance with its interest in the
         Partnership within the meaning of Treasury Regulation Sections
         1.704-1(b)(3) and 1.704-2. To the extent an allocation cannot be made
         to a Partner due to the application of this Section 4.4.4, such
         allocation shall be made to the other Partner(s) entitled

         4.4.5 Curative Allocation. Any allocations of items of income, gain, or
         loss pursuant to these Sections 4.4.1 through 4.4.4 shall be taken into
         account in computing subsequent allocations pursuant to this Article
         IV, so that the net amount of any items so allocated and the income,
         loses and other items allocated to each Partner pursuant to this
         Article IV shall, to the extent possible, be equal to the net amount
         that would have been allocated to each Partner had no allocations ever
         been made pursuant to Sections 4.4.1 through 4.4.4.



                                       8
<PAGE>

4.5 Transfers. Unless the General Partner, transferor Partner and transferee
Partner agree otherwise, income, gain, loss, deduction or credit attributable to
any interest in the Partnership which has been transferred shall be allocated
between the transferor and the transferee equally among the days of the
Partnership's fiscal year without regard to Partnership operations during such
days.

4.6 Experts. The General Partner may rely upon, and shall have no liability to
the Limited Partners or the Partnership if it does rely upon, the written
opinion of tax counsel or accountants retained by the Partnership from time to
time with respect to all matters (including disputes with respect thereto)
relating to computations and determinations required to be made under this
Article IV or other provisions of this Agreement.

                      ARTICLE V - PARTNERSHIP DISTRIBUTIONS

5.1 Ordinary Distributions. All Distributions of Net Cash Available, except
Distributions made pursuant to dissolution of the Partnership or in redemption
of any Partner's interest in the Partnership, shall be distributed to and among
the Partners in accordance with their Partnership Interests, as set forth on
Exhibit A hereto.

5.2 Distributions to be Determined Monthly. The General Partner shall make
monthly Distributions of Net Cash Available to the Partners. The General Partner
shall use its best business judgment in determining whether the business and
expected operations of the Partnership will permit current Distributions of Net
Cash Available. The General Partner shall have the express authority, upon
approval by a Majority Vote of the Limited Partners (expressly including any
Partnership Interests held by the General Partner), to make Distributions with
Partnership Property in kind, rather than in Net Cash Available, provided each
Partner receives its distributive share based on its Partnership Interest of
each item of Partnership Property so distributed.

                         ARTICLE VI- THE GENERAL PARTNER

6.1 Management of the Partnership. The General Partner shall have the duty and
the full, exclusive and absolute right, power and authority to manage, control,
administer and operate the Partnership and the assets, properties, investments,
business and affairs thereof in accordance with all the provisions of this
Agreement and the duties of loyalty and care to the Partnership and Partners
required by the Texas Revised Partnership Act, expressly provided that the
duties of loyalty and care shall be discharged by the conduct of Partnership
business in good faith and in a manner the General Partner reasonably believes
to be in the best interests of the Partnership. The General Partner shall have
all of the rights, powers and authority conferred upon it by law or under the
provisions hereof. The General Partner shall have the power and authority to do
or cause to be done any and all acts deemed by it to be necessary or appropriate
to the management, administration and operation of the Partnership. The scope of
such power and authority shall encompass all matters in any way connected with
or incident to such business, including, but not limited to, the power and
authority as follows:

         6.1.1 to expend the Partnership's capital and profits in furtherance of
         the business of the Partnership;

                                       9
<PAGE>

         6.1.2 to invest in, acquire, start up, own, hold, develop, sell,
         dispose of, manage, control, operate or otherwise deal with and take
         any and all other necessary and desirable actions related to the
         development of any oil and gas prospect or potential drilling site,
         development, acquisition, drilling, ownership and operation of any oil,
         gas or mineral property or interest, real or personal, pursuant to any
         agreement, exploration agreement, drilling agreement, option agreement,
         lease agreement, overriding royalty agreement, farmout agreement, or
         chose in action and relating to the development, drilling, operating or
         production of oil, gas or minerals, or any business related or
         necessary thereto, and perform and/or offer any other services or
         activities that may be related, directly or indirectly, to the
         ownership and operation of the properties, businesses, and investments
         of the Partnership. It is intended that the General Partner shall have
         unlimited discretion in connection with the activities and functions
         described in this subsection. Title to Partnership Property of any kind
         or character, whether real, personal, tangible or intangible and
         contracts or other documents made or executed by the General Partner on
         behalf of the Partnership may be taken, made or executed in the name of
         the Partnership or solely in the name of the General Partner as trustee
         or in the name of any nominee or trustee, without disclosure to third
         parties of the existence of the Partnership. No Partner shall
         individually have any ownership interest in Partnership Property;

         6.1.3 to enter into agreements to conduct seismic operations or
         otherwise acquire options for leases, leases (either alone or in
         conjunction with others); conduct all manner of geological and
         geophysical investigations; to make any reparations of damages
         necessary or desirable incurred in connection with the geological or
         geophysical investigations and any related drilling operations; drill,
         test, complete, equip, rework, recomplete, re-equip, plug back, deepen,
         side track and plug and abandon Partnership wells; furnish, by lease or
         otherwise, tangible lease and well equipment with respect to any such
         Partnership wells; pay delay rentals on leases owned by the
         Partnership; give or receive dryhole or bottomhole contributions of
         acreage, money, or both, to encourage drilling by others or by the
         Partnership in the vicinity of or on Partnership Properties; operate
         producing Partnership Properties and enter into operating agreements
         with others with respect to such Partnership Properties on such terms
         as the General Partner deems appropriate; execute documents or
         instruments of any kind to carry out the purposes of the Partnership,
         including without limitation, farmout agreements, unitization
         agreements, net operating profits agreements and conveyances, gas or
         gasoline plant contracts, recycling agreements, joint venture
         agreements and partnership agreements; purchase and establish
         inventories of pipe and other equipment and material; hold Partnership
         Properties in the name of a nominee; administer non-producing leases
         owned by the Partnership; sell, relinquish, release, farmout, or
         otherwise dispose of any producing or non-producing leases owned by the
         Partnership; produce, treat, transport and market oil and gas, and
         execute division orders, gas sales contracts and other marketing
         agreements; and sell or pledge payments from production from leases
         owned by the Partnership;

         6.1.4 to pay any and all reasonable fees and to make any and all
         reasonable expenditures which the General Partner, in its sole
         discretion, deems necessary or appropriate in connection with the
         organization of the Partnership, the management of the affairs of the
         Partnership and the carrying out of its obligations and
         responsibilities under this Agreement;


                                       10
<PAGE>

         6.1.5 to execute such instruments and agreements, to employ persons,
         arrange for services and to incur costs as the General Partner
         determines are reasonably necessary or desirable to carry out the
         purposes of the Partnership and to execute any licenses and permits,
         and any other documents related to or required for the business of the
         Partnership;

         6.1.6 to enter into, execute, acknowledge and deliver contracts for the
         purchase or sale or other disposition of the Partnership's investments
         or properties or any portion thereof or interest therein that may now
         or may hereafter be owned by the Partnership, specifically including,
         but not limited to net operating profits interests; and to enter into,
         execute, acknowledge and deliver any and all contracts, agreements or
         other instruments including receipts, releases and discharges necessary
         or appropriate to carry on the business of the Partnership as set forth
         herein, on the terms and conditions the General Partner shall determine
         to be in the best interests of the Partnership;

         6.1.7 to the extent that funds of the Partnership are, in the judgment
         of the General Partner, not immediately required for the conduct of the
         Partnership's business, to temporarily invest the excess funds in those
         income producing accounts of the Partnership as the General Partner
         deems appropriate;

         6.1.8 with respect to any operation of the Partnership, to enter into
         any partnership agreement, limited partnership agreement, syndication,
         sharing arrangement or joint venture, or other related agreements for
         the use and/or development of any Partnership Property and any other
         similar agreements, with any person or persons acceptable to the
         General Partner and which are engaged in any business or transaction in
         which the Partnership is authorized hereby to engage;

         6.1.9 to sell, exchange, trade, surrender, release, abandon or
         otherwise dispose of any Partnership Property, upon such terms and
         consideration as the General Partner may determine to be in the best
         interests of the Partnership;

         6.1.10 to employ, on behalf of the Partnership, agents, employees,
         managers, consultants, accountants, lawyers, clerical staff and such
         other assistants and services as may seem proper and pay such
         remuneration as the General Partner may deem reasonable and
         appropriate;

         6.1.11 to purchase, lease, rent, or otherwise acquire or obtain the use
         of machinery, equipment, tools, materials and all other kinds and types
         of real or personal property that may in any way be deemed necessary,
         convenient or advisable in connection with carrying on the business of
         the Partnership and to incur expenses for travel, telephone, telegraph,
         insurance and such other things, whether similar or dissimilar, as the
         General Partner may deem necessary or appropriate for carrying on and
         performing the business of the Partnership;

         6.1.12 to guarantee the payment of money or the performance of any
         contract or obligation by any person, firm or corporation on behalf of
         the Partnership in furtherance of the business of the Partnership and
         to enter into any commodity hedges that the General Partner deems
         necessary or desirable to hedge the risks of fluctuations in oil and
         gas prices;

                                       11
<PAGE>

         6.1.13 to sue and be sued, complain and defend in the name and on
         behalf of the Partnership and to pay, extend, renew, modify, adjust,
         submit to arbitration, prosecute, defend or compromise, upon such
         evidence as the General Partner may deem sufficient, any obligation,
         suit, liability, cause of action, or claim, including taxes, either in
         favor of or against the Partnership; provided that the General Partner
         may not confess a judgment against the Partnership;

         6.1.14 to make such classifications, determinations, and allocations as
         the General Partner may deem advisable, having due regard for any
         relevant generally accepted accounting principles and to cause to be
         filed any and all tax returns, both state and federal, and cause to be
         paid any and all taxes, charges and assessments that may be levied
         against the Partnership, unless they are contested in good faith by the
         General Partner;

         6.1.15 to purchase insurance, or extend the General Partner's
         insurance, at the Partnership's expense, to protect Partnership assets
         and the business of the Partnership against loss and to protect the
         General Partner against liability to third parties arising out of
         Partnership activities;

         6.1.16 to lend money to the Partnership on a recourse basis and to
         charge the Partnership interest thereon pursuant to Section 6.7;

         6.1.17 to enter into agreements on behalf of the Partnership on
         competitive terms (terms that are at least as favorable to the
         Partnership as those available from independent third parties competent
         to perform and performing similar services or selling or purchasing
         similar goods or products in the geographic area where the subject
         services are to be performed or the subject goods or products are to be
         delivered) with the General Partner or any Affiliate of the General
         Partner;

         6.1.18 to sell all or substantially all of the properties and other
         assets of the Partnership for fair market value to the General Partner,
         any Affiliate of the General Partner or any other person in connection
         with the dissolution and termination of the Partnership and to receive
         therefore consideration representing such fair market value consisting
         of cash, securities, other property of any other form or any
         combination thereof, as the General Partner deems to be in the best
         interests of the Partnership, provided, however, that no such sale
         shall be consummated without the prior written authorization or
         ratification of the Majority Vote of the Limited Partners;

         6.1.19 to use best efforts in the development or exploration of oil and
         gas prospects, to comply with and insure compliance with all federal,
         state, local or municipal laws, rules, orders, regulations, statutes,
         ordinances, codes, decrees or requirements of any governmental
         authority regulating, relating to or imposing liability or standards of
         conduct concerning environmental protection matters ("Environmental
         Laws"), including, without limitation, any hazardous materials,
         hazardous wastes, hazardous constituents, hazardous or toxic
         substances, petroleum products, all as defined or regulated as such


                                       12
<PAGE>

         under any Environmental Law, and to obtain and comply with and maintain
         any and all licenses, approvals, registrations or permits required by
         any Environmental Laws, promptly comply with all lawful orders and
         directives of all governmental authorities respecting Environmental
         Laws; expressly provided that the General Partner shall be expressly
         authorized to contest such orders and directives in good faith by
         appropriate proceedings, and to expend capital of the Partnership as
         may be necessary or desirable in connection with compliance with
         Environmental Laws;

         6.1.20 to prepare, execute and file any and all documents which may be
         necessary or advisable, in the discretion of the General Partner, in
         order to comply with the Internal Revenue Code and any regulations
         promulgated thereunder;

         6.1.21   to admit substitute Limited Partners in accordance with
                  the provisions hereof;

         6.1.22   to make or revoke any election permitted the Partnership
                  by any taxing authority;

         6.1.23   to take such other action and perform such other acts as the
                  General Partner deems necessary or appropriate to carry out
                  the business of the Partnership;

         6.1.24   Notwithstanding any of the above enumerated powers, the
                  General Partner shall not have the authority to borrow funds
                  on behalf of the Partnership without the unanimous consent of
                  the Limited Partners.

6.2 Authority of the General Partner. No person or entity dealing with the
Partnership shall be required to inquire into the authority of the General
Partner to take any action or make any decision.

6.3 Assignment of the Interest of the General Partner and Admission of
Additional General Partners. The interest of the General Partner shall not be
assigned and another general partner shall not be admitted to the Partnership
without the Majority Vote of the Limited Partners (including the Partnership
Interests of the General Partner held as a Limited Partner); provided, however,
that, to the extent that the laws of the applicable jurisdiction(s) allow, the
General Partner may assign all or any part of its interest in the Partnership
to, and substitute as a general partner a corporation or partnership or other
entity wholly owned or controlled by the General Partner or its shareholder;
provided that (i) pursuant to the terms hereof, "control" by the shareholder or
the General Partner shall mean beneficial ownership of more than 51% of the
equity of any entity, and (ii) such substitution shall have complied with
Subparagraph 6.4.2 hereof.



                                       13
<PAGE>

6.4 Removal and Withdrawal of the General Partner. At a meeting called upon the
written request of Limited Partners holding 20% or more of the Partnership
Interests then held by the Limited Partners (not including any Partnership
Interests held by the General Partner as a Limited Partner), a Majority Vote of
the Limited Partners (including any Partnership Interests held by the General
Partner as a Limited Partner) shall effect the removal of the General Partner;
provided, however, that the General Partner may be removed only (i) for fraud,
malfeasance, gross negligence in the performance of its duties as a General
Partner, or other act or misconduct of similar severity and magnitude or (ii) in
the event that there is a change in the equity ownership of the General Partner
which results in more than 50% of the capital stock being held by persons who
are not (a) shareholders of the parent corporation on the date of formation of
the Partnership or (b) members of the immediate family of those shareholders.
The General Partner may only unilaterally elect to withdraw from the Partnership
by giving written notice to all of the Limited Partners to be mailed no earlier
than 150 and no later than 120 days prior to the proposed withdrawal date and
such withdrawal and soliciting the vote thereof; a Majority Vote of approval by
the Limited Partners is necessary to permit the General Partner to withdraw
without a breach of this Agreement. Simultaneously with its giving notice of
withdrawal, the General Partner shall call a meeting of the Limited Partners in
the manner set forth herein, for the purpose of voting on the withdrawal and, if
the withdrawal is approved, electing a substitute General Partner. The Limited
Partners shall have the right to propose alternate nominees for election as
General Partner by mailing a notice to all Partners no later than ten (10) days
prior to the meeting. Upon such removal or in the event that the General Partner
is permitted to withdraw from the Partnership, the Limited Partners may continue
with the business of the Partnership by agreeing in writing to continue the
Partnership's business and electing a substitute general partner by a vote of
all of the remaining Limited Partners (which will include any remaining interest
as a Limited Partner held by the General Partner). The substitution of a new
general partner upon removal or withdrawal shall be effective only if and when
each of the following conditions have been satisfied:

         6.4.1 the substitute general partner shall have agreed to accept the
         responsibilities of the removed or withdrawn General Partner and
         continue the business of the Partnership and shall have agreed to
         assume liability for any Partnership obligations or guarantees arising
         from and after the date of substitution;

         6.4.2 the substitute general partner or the Partnership shall have
         purchased or agreed to purchase one percent (1%) (or more if the
         General Partner and the substitute general partner agree) of the
         removed or withdrawn General Partner's Partnership Interest in the
         Partnership at a price and on such terms as are mutually agreeable
         between the removed or withdrawn General Partner and such substitute
         general partner, or, if no agreement can be reached, at a cash price
         for the 1% interest based on the definition of book value as set forth
         in the most recent financial statements (provided that all oil and gas
         properties shall be valued based on the most recent reserve report
         received by the Partnership) of the Partnership, and the substitute
         general partner shall have tendered all such consideration agreed upon
         to the withdrawn or removed General Partner, or the Partnership shall
         have set sufficient funds aside in a separate account for delivery to
         the withdrawing General Partner on the date set for withdrawal or
         removal;

         6.4.3 the remaining Partnership Interests, if any, of the withdrawn or
         removed General Partner after the conditions of 6.4.2 have been met,
         shall be converted into a Partnership Interest of a Limited Partner,
         and such conversion shall be evidenced by an amendment of this
         Agreement; and

         6.4.4 the Certificate of Limited Partnership shall have been amended
         and filed with all of the appropriate authorities to name the
         substitute general partner and to change the name and address of the
         registered agent and its address as may be required to reflect the
         withdrawal or removal of the removed or withdrawn General Partner.

                                       14
<PAGE>

         Upon the occurrence of an event of withdrawal pursuant to the Texas
Revised Limited Partnership Act, the General Partner shall notify all Partners
of the event of withdrawal within 30 days after the date of occurrence. All the
rights and interest of the removed or withdrawn General Partner with respect to
any interest it may hold as a Limited Partner shall continue after its removal
or withdrawal, including any interest converted pursuant to Section 6.4.3 above.
In the event of removal or withdrawal of the General Partner (whether or not
such withdrawal would constitute a breach of this Agreement), unless all of the
remaining Limited Partners (including the Partnership Interests of the General
Partner as a Limited Partner) shall have agreed upon a substitute general
partner to replace the removed or withdrawn General Partner, and said substitute
General Partner complies with all conditions herein, the Partnership shall
thereupon be dissolved and commence to wind up its affairs pursuant to Article
XI hereof. Effective as of the date at which all of the conditions set forth
above have been satisfied, the removal or withdrawal of the General Partner and
the substitution of the substitute general partner shall be deemed to occur
simultaneously, so at no time will the Partnership be without a General Partner.

         In the event the General Partner elects to withdraw, but all of the
conditions set forth above have not been satisfied by the proposed date of
withdrawal set forth in the General Partner's notice of withdrawal, the General
Partner shall have the option of any one of the following: (i) abandon its
efforts to withdraw, and continue as the Partnership's General Partner; (ii)
extend the notice period for one and only one sixty (60) day period, during
which time the withdrawing General Partner, the Limited Partners and/or the
Partnership may continue to attempt to satisfy the terms and conditions set
forth above; or (iii) withdraw from the Partnership, which withdrawal shall not
be a breach of this Agreement.

6.5 Other Activities of the General Partner. Notwithstanding any of the terms of
this Agreement, pursuant to the express terms of the Texas Revised Partnership
Act, all of the Partners hereby agree that it shall not be a breach of this
Agreement or a breach of any statutory or common law duty of loyalty or care for
the General Partner and any of its Affiliates to engage in any of the following
activities:

         6.5.1 own or operate, directly or indirectly any other interests in oil
         or gas producing properties, either owned prior to the date hereof or
         developed outside the Partnership, wherever located, whether through
         working interests, royalty interests, net revenue interests, overriding
         royalty interests, or any other form of real property ownership
         interest in an oil or gas property, subject to the agreements
         concerning the AMI in Section 6.9;

         6.5.2 to own working interests and net revenue interests in the
         prospects that are included in the Partnership Property, and to receive
         and own working and net revenue interests in those prospects
         disproportionately to the ratios in which the Partnership owns working
         and net revenue interests.

         6.5.3 to cause an affiliate, to act as operator of any wells owned,
         directly or indirectly, by the Partnership;

         6.5.4 own partnership interests or act as a general partner for any
         other limited partnership that owns oil and gas properties;

                                       15
<PAGE>

         6.5.5 to cause an affiliate to market and sell oil and gas production
         on behalf of the Partnership upon terms and conditions as may be agreed
         between the General Partner and such affiliate;

         6.5.6 to exercise any power authorized pursuant to Paragraph 6.1
         hereof.

         Neither the General Partner nor any Limited Partner will be required to
devote its full time and effort to the affairs of this Partnership, but the
General Partner shall devote such time and attention to the affairs of the
Partnership as it shall determine, in the exercise of its reasonable judgment,
to be necessary for the conduct of Partnership business. The General Partner
reserves the right, and it shall not be a breach of this Agreement or any common
law or statutory duty of care or loyalty to invest in, pursue, develop, own,
manage, operate, or otherwise participate in (including, without limitation, as
an investor in, lender to, consultant, or advisor to) any entity formed for
purposes identical or similar to those for which the Partnership is formed; and,
subject to the agreements of the Partners herein concerning the AMI, to compete,
directly or indirectly, with the business of the Partnership and neither the
Partnership nor any Partners shall have any rights or claims as a result of such
activities. Subject to the express terms hereof concerning the AMI, neither the
General Partner, nor any Limited Partner shall have any obligations to first
present any such business opportunity to the Partnership or the Partners and
failure to present such opportunities shall not be a breach of this Agreement or
a breach of any statutory duty of loyalty or care. If the General Partner
follows any procedures set forth in this Agreement, it cannot be held liable for
a breach of duty of care, and the fact that the General Partner does not
precisely follow any procedure shall not give rise to any presumption of a
breach of duty of care, if the General Partner is acting in good faith and in a
manner the General Partner reasonably believes to be in the best interests of
the Partnership.

6.6 Compensation to the General Partner. The General Partner shall charge the
Management Fee, which shall be due and payable on or before the commencement of
drilling any wells. The General Partner shall not be entitled to any
compensation other than its Management Fee and the Partnership Interests in the
Partnership. In addition, the General Partner shall be reimbursed by the
Partnership for direct and indirect fees and costs incurred by it on behalf of
the Partnership for partnership accounting, auditors, attorneys and consultants
and any other expenditures reasonably required to operate the business of the
Partnership, and expended by the General Partner on behalf of the Partnership.

6.7 Loans by the General Partner to the Partnership. If pursuant to the terms
hereof, the General Partner or any of its Affiliates shall lend funds to the
Partnership, the General Partner shall charge interest to the Partnership at the
cost of borrowed funds to itself, provided that the aggregate rate charged to
the Partnership shall not exceed the maximum rate permitted under Texas or
federal law.



                                       16
<PAGE>

6.8 Exercise of Option. The Partnership shall have the right to exercise an
option to drill two more prospects, the "Carr" and the "Mid-French, " as
described in Exhibit B hereto. In accordance with the option letter agreements
with SK Resources, Inc., rights under which have been assigned by the General
Partner to the Partnership, the Partnership shall have thirty (30) days from the
date the last well drilled reaches its "Casing Point" as set forth in the
applicable Exploration Agreement. Beginning no later than one week before the
Partnership believes the last well will reach its casing point, the General
Partner shall send written notice to all Partners of its determination to
exercise the option. If the General Partner exercises the Option, it must
request a vote of the Limited Partners to approve that exercise and the Limited
Partners shall have two weeks to return their vote. The General Partner shall
provide information about its drilling results to the Limited Partners in
connection with the vote. The Option may be approved and accepted only by a
Majority Vote of the Limited Partners. If the Partnership, through the vote of
the Limited Partners, determines to accept the Option, the General Partner shall
call the required Capital Contributions, with a due date no later than seven (7)
days before the cash is due to exercise the Option. If fewer than all of the
Limited Partners elect to exercise the Option, but there are sufficient partner
votes to obtain the Majority Vote of the Limited Partners, the following will
apply: (a) any Limited Partner who determines to not vote in favor of the Option
will not be considered a "Defaulting Limited Partner" within the meaning of
Section 3.3, if it declines to fund the portion of the Commitment required to
drill the Mid-French and Carr Prospects, and there shall be no penalties
assessed against any Limited Partner who does not vote in favor of exercising
the Option, if that Limited Partner does not fund any portion of the Commitment
called by the General Partner to meet the financial obligations for the exercise
of the Option, and (b) the General Partner may, in its sole discretion, (i)
determine to leave the rights to the Carr and Mid-French Prospects in the
Partnership, and amend this Agreement to provide for special allocations of
income and expense to those Limited Partners who actually fund the drilling of
the prospects in the Option, (ii) amend this Agreement to admit new Limited
Partners or adjust the Partnership Interest of existing Limited Partners who
would contribute the remaining funds required to drill the Option, and make pro
rata adjustments in Partnership Interests according to capital actually
contributed, or (iii) amend this Agreement to spin off the Carr and Mid-French
Prospects from the Partnership to create a new partnership or simply hold
working interests outside of this Agreement. If the Partnership, through its
Limited Partners, fails to fund the exercise of the Option, or declines or
refuses to exercise the Option, the Partnership shall assign the Option
agreements back to Touchstone, who will be free to exercise the Option and sell
any interests in those prospects to finance the exercise of the Option and
drilling thereon as it sees fit.

6.9. Area of Mutual Interest. With respect to any business activities relating
to the oil and gas industry, including exploration, production, drilling,
transportation, marketing, processing or any other activity directly or
indirectly related to any of those activities, each Partner shall have the
obligation to present any such opportunity that arises in or is related to the
properties located in the AMI to the Partnership by giving written notice to the
General Partner, who shall send written notice to all Partners. The Partnership
shall have sixty (60) days to consider whether or not to accept the opportunity
in the AMI. The General Partner shall send written notice to all Limited
Partners, and call for a vote of the Partners of the Partnership. The
opportunity may only be accepted by a Majority Vote of the Limited Partners. If
the Partnership accepts the opportunity it must provide the necessary funds
within thirty (30) days of the Partnership Vote pursuant to the capital call
provisions of Section III. If the Partnership fails to raise the funds, declines
to accept the opportunity, or does not respond at all, then the Partner who
presented the opportunity in the AMI is free to undertake the opportunity
without any obligation to the Partnership or the Partners. To the extent that
any opportunity in the AMI is modified, rearranged or anticipated to be
conducted in a format other that originally presented to the Partnership, the
Partner involved must present the opportunity again to the Partnership for its
consideration and vote in accordance with this provision.




                                       17
<PAGE>

                       ARTICLE VII - THE LIMITED PARTNERS

7.1 Limitations Regarding the Liability and Authority of the Limited Partners.
No Limited Partner, as such, shall be personally liable for any of the debts of
the Partnership, except (1) to the extent of its unpaid Commitment that has been
called by the General Partner pursuant to the express terms hereof, and (2) to
the extent that the law requires otherwise. The Partners intend to confer upon
each Limited Partner the most complete limitation on liability permitted by law,
and in connection therewith, and subject to the voting procedures and
requirements set forth in this Agreement, hereby grant express authorization to
the Limited Partners to maintain their limited liability hereunder in connection
with all activities permitted of limited partners under the Texas Revised
Limited Partnership Act, particularly Section 3.03(b), as it may be amended or
interpreted. No Limited Partner, as such, shall take an active role in the
management of the business or transact any business on behalf of the Partnership
other than as expressly permitted by the Texas Revised Limited Partnership Act,
or be entitled to any priority over any other Limited Partner.



7.2 Assignment of Interest of Limited Partner. A Limited Partner may not sell,
assign or transfer all or any portion of an interest in the Partnership so as to
cause the transferee to become a substitute Limited Partner of the Partnership
unless and until all of the following steps have first been completed:

         7.2.1 written notice of the proposed transfer shall be sent no later
         than twenty (20) days prior to the date proposed by the Limited Partner
         for the transfer.

         7.2.2 the transferee to be substituted and the General Partner shall
         have approved (and the General Partner shall not unreasonably withhold
         any such approvals) and executed an appropriate amendment to this
         Agreement and shall have executed all other certificates, instruments
         and documents and taken all such additional action, as the General
         Partner may deem appropriate to preserve both the limited liability
         status of the Partnership after the completion of such sale or
         assignment and preserve the federal partnership tax status of the
         Partnership and to comply with applicable securities laws.

         7.2.3 the transferor or its transferee shall have supplied to the
         Partnership a favorable opinion of responsible counsel acceptable in
         form and substance to the General Partner and its counsel concerning
         the legality of the transfer under applicable state and federal
         securities laws.

         7.2.4 the payment of all costs and expenses, by the transferor or its
         transferee, incurred by the General Partner or the Partnership in
         connection with effectuating the provisions of this Section 7.2,
         including all attorneys' fees and filing costs, whether or not the
         interests in the Partnership are actually transferred. Such costs shall
         include the reasonable costs of complying with Sections 734, 743 and
         755 of the Internal Revenue Code. Upon fully complying with all of the
         requirements of this Section 7.2, the transferee shall thereupon become
         a substituted Limited Partner.




                                       18
<PAGE>

7.3 Assignment of Right to Receive Distributions. A Limited Partner may, without
first complying with Section 7.2 hereof, assign to any person or entity all or
any portion of its right to receive Distributions hereunder, provided, however,
that no such assignment shall be effective as to the General Partner until the
written approval of the General Partner shall have been obtained with respect to
any assignment, the granting of which approval shall not be unreasonably
withheld or delayed by the General Partner, and until the General Partner shall
have received:

         7.3.1 a copy of the instrument of assignment, in recordable form,
         executed by both the assignor and assignee of such distributive right;

         7.3.2 an instrument in such form as may be prescribed by or otherwise
         acceptable to the General Partner, executed by the assignor, with its
         signature guaranteed in the same manner as that required for the
         transfer of securities under stock transfer laws of the state governing
         such transfer, which instrument shall instruct the General Partner as
         to the amount of, to whom, and where such Distributions are to be paid;
         and

         7.3.3 a favorable opinion of responsible counsel for the assignor or
         assignee acceptable in form and substance to the General Partner and
         its counsel concerning the legality of the transfer under applicable
         state and federal securities laws.

         Once such documents have been received by the General Partner, the
General Partner shall, unless further documentation is, in the discretion of the
General Partner, reasonably required from either the assignor or the assignee,
or both, remit directly to the named assignee all Distributions to which it may
be entitled pursuant to the provisions of both this Agreement and the assignment
and mail to the assignee a copy of all materials thereafter sent to the assignor
Limited Partner. So long as the party to whom such distributive share was
remitted or allocated was either the assignor Limited Partner or the assignee
named in the instrument of assignment, the General Partner shall be free from
liability to any person if such Distribution or allocation is received by a
person not entitled thereto. All costs and expense, if any, incurred by the
General Partner or the Partnership in effectuating the assignment of a Limited
Partner's distributive rights in the Partnership shall be reimbursed by the
assignor Limited Partner to the General Partner or the Partnership, as
applicable.

7.4 Drag-Along Rights. In the event the Partners who collectively own more than
50% of the Partnership Interests ("Controlling Partners") receive an offer to
purchase, or otherwise agree to convey through sale of assets, merger or
interest exchange, more 50% of the Partnership Interests or substantially all of
the assets of the Partnership, as the case may be, the Controlling Partners may
send written notice of such offer (a "Purchase Proposal") to all other Partners
(the "Non Controlling Partners") of the Partnership. Upon the sending of this
notice, all Non Controlling Partners shall, for twenty (20) calendar days: (i)
be obligated, if applicable, to consent to the purchase all of the Partnership
Interests or all or substantially all of the assets of the Partnership pursuant
to the Purchase Proposal, (ii) be obligated, if applicable, upon written notice
from the Partnership or the Controlling Partners, to offer all of the Non
Controlling Partners' Partnership Interests for sale to the purchaser, or (iii)
have the right to match the Purchase Proposal upon the same terms and conditions
as the offer to the Controlling Partners. If Non Controlling Partners do not
determine to match the Purchase Proposal within the twenty-day period, and if
the Controlling Partners agree to sell all of their Partnership Interests, or
agree to vote their Partnership Interests to approve a merger, an interest
exchange or sale of all or substantially all of the assets of the Partnership,


                                       19
<PAGE>

all of the Partners, including the General Partner, agree hereby to vote, convey
or transfer their Partnership Interests in the same manner as the Controlling
Partners, or to consent to the sale of all or substantially all of the assets of
the Partnership. If the Controlling Partners invoke this Section 7.4 and
determine to accept the Purchase Proposal, and the Non Controlling Partners do
not elect to match the offer, the Controlling Partners shall be required to
deliver to the Non Controlling Partners a binding contract for the sale of
either all of their Partnership Interests or otherwise acquire all or
substantially all of the assets of the Partnership, in which all Partners
receive the same treatment and are offered the same terms and conditions for the
sale of their Partnership Interests, or other sale or acquisition of the
Partnership. If the Non Controlling Partners elect to match the offer, they must
deliver to the Controlling Partners a binding contract to purchase all of their
Partnership Interests or otherwise acquire all or substantially all of the
assets of the Partnership, in which all Partners receive the same treatment and
are offered the same terms and conditions for the sale of their Partnership
Interests or other sale or acquisition of the Partnership, which terms will be
the same as, equivalent to or better than the terms of the Purchase Proposal.

7.5 No Assignment Allowed Under Certain Circumstances. Notwithstanding anything
contained herein, no Limited Partner shall have the right to assign an interest
in the Partnership, or any portion thereof pursuant to Section 7.2 or 7.3, if
such assignment would result (directly or indirectly) in the (a) termination of
the Partnership for tax purposes within the meaning of Section 708(b) of the
Internal Revenue Code; (b) violation of the Securities Act of 1933, as amended,
or any rules or regulations thereunder or any applicable state securities laws
or any rules or regulations thereunder; or (c) violation of any investment
representation given by such Limited Partner in connection with its acquisition
of interests in the Partnership.

7.6 Withdrawal. A Limited Partner shall not withdraw from the Partnership or
otherwise cease to be a Limited Partner without the consent of the General
Partner, which consent may be withheld in the General Partner's sole and
absolute discretion.

7.7 Partnership Actions Initiated by the Limited Partners. Before any action may
be taken by a vote of Limited Partners where less than a unanimous vote of
Limited Partners is required to approve the action at issue and where the
General Partner has not proposed such action, the party or parties seeking such
vote shall provide to the Partnership an opinion of responsible counsel
acceptable to the General Partner to the effect that (i) the voting by Limited
Partners on such matter and any action proposed to be undertaken as a result of
or in connection with such vote will not subject any Limited Partner to
liability as a general partner and (ii) the action at issue is otherwise
permissible under applicable state and federal statutes governing limited
partnerships.

7.8 Death, Insanity, Incompetence or Bankruptcy of a Limited Partner. The death,
insanity, incompetence or bankruptcy of a Limited Partner shall not dissolve the
Partnership for state law purposes, and the remaining Partners shall hereby
agree to immediately reconstitute the Partnership in those events. In such
event, the executors or administrators of the estate of the deceased Limited
Partner, the legal representative of the estate of the insane or incompetent
Limited Partner or the successors in interest to the bankrupt Limited Partner
shall, for the purpose of settling the estate, have all of the rights of an
assignee of that Limited Partner, including the same rights, subject to the same
limitations, that such Limited Partner would have had under the provisions of
this Article to assign its interest in the Partnership and to provide in the
instrument of assignment that the assignee, if the General Partner so consents
in writing and if the other requirements set forth in this Article are
satisfied, may become a substitute Limited Partner. The estate of the deceased
shall nevertheless continue to be liable for all of the deceased's obligations
as a Limited Partner.

                                       20
<PAGE>

        ARTICLE VIII - BOOKS, RECORDS, BANKING RELATIONSHIPS AND REPORTS

8.1 Books and Records. The Partnership shall maintain adequate books and records
as prescribed by the Texas Revised Limited Partnership Act, as it may be amended
and the Limited Partners shall have the right to inspect those records and make
and/or receive copies thereof as prescribed by the Texas Revised Limited
Partnership Act. The financial records of the Partnership shall be maintained on
the cash/tax basis of accounting, in accordance with the requirements of the
Internal Revenue Service, expressly provided that the General Partner may
authorize a different form of accounting if required to do so by the Internal
Revenue Service or if the General Partner determines a different form of
accounting is in the best interests of a majority-in-interest of the Partners.
The Partnership shall maintain financial records consistent with accepted
accounting principles for the method of accounting adopted, provided, however,
that for federal income tax reporting purposes, it shall maintain its books
consistent with federal income tax reporting principles. The General Partner
shall establish procedures to ensure that all deeds, leases, contracts, title
matters, surveys and other documentation, records and financial information
relating to the ownership, maintenance, development and sale of the Partnership
Properties are maintained in safekeeping and organized and accessible to the
Parties.

8.2 Financial and Tax Reporting Year. The Partnership shall report its financial
and tax results based on the Fiscal Year.

8.3 Financial Reports to Partners. The General Partner shall provide the
Partners with written reports concerning the activities of the Partnership and
its financial condition no less frequently than quarterly and must include a
balance sheet, income statement, a source and use of funds statement and a
statement of changes in Partner's capital, and may include any other statements
reasonably requested by the Limited Partners or otherwise considered necessary
or desirable by the General Partner. All reports of income to the Limited
Partners shall designate the source and type of income in a manner so that a
partner that may not be subject to federal income taxation may make an
independent determination of the taxability of that income. The General Partner
shall be specifically empowered to retain an accounting firm on behalf of the
Partnership to review and sign the Partnership information returns and income
tax returns. All costs and expenses incurred in connection with such accounting
services shall be borne by the Partnership. The General Partner will use its
best efforts to cause the quarterly reports to be prepared and furnished to the
Limited Partners within 45 days of the end of the quarter, and the annual
reports of the Partnership to be prepared and furnished to the Limited Partners
within 120 days after the end of each calendar year. The annual report to the
Partners shall also include an examination of the internal controls of the
Partnership.

8.4 Tax Returns. The General Partner shall arrange for the preparation and
filing on behalf of the Partnership of all necessary tax and information
returns, reports, and other similar documents with appropriate governmental
agencies. The General Partner shall further provide to all Partners all reports
and other information necessary for the Partners to meet their tax reporting and
payment requirements to appropriate governmental agencies. The General Partner
shall provide all such reports on a timely basis, as required by the various
governmental agencies. With respect to the information report to Partners for
federal income tax purposes (currently via Schedule K-1), the General Partner
shall use its best efforts to provide such information report on or before the
earlier of March 15 of the year following the year to which such report relates
or such earlier date as may be required by rule or regulation for such report.



                                       21
<PAGE>

8.5 Tax Elections and Allocations. The General Partner shall make such tax
elections as it deems to be in the best interests of the Partners, except that
no election shall be made by the Partnership to exclude the Partnership or any
of the Partners from the application of the provisions of Subchapter K of the
Internal Revenue Code or from any similar state or local tax laws. The General
Partner, with the Majority Vote of the Limited Partners, may determine whether
to exercise the election to adjust the basis of Partnership Property upon a sale
or disposition of an interest in the Partnership pursuant to Sections 734, 743,
754 and 755 of the Internal Revenue Code. No Partner shall file a notice with
the Internal Revenue Service of its intention to treat any item on that
Partner's federal income tax return inconsistently with the treatment of that
item on the Partnership's tax return, without the written consent of the General
Partner.

8.6 Tax Matters Partner; Tax Controversies. The General Partner shall be the Tax
Matters Partner as defined by Section 6231(a)(7) of the Internal Revenue Code.
As Tax Matters Partner, the General Partner shall advise the Partners promptly
of any material developments as to pending tax controversies (i.e., audits,
administrative appeals and litigation) involving the Partnership. The
Partnership shall indemnify and hold harmless the General Partner for its
actions as Tax Matters Partner in the same manner and to the same extent it
indemnifies and holds the General Partner harmless for its actions as a General
Partner.

8.7 Other Reports. From time to time, at the discretion of the General Partner,
it may prepare such other reports as may be necessary to reflect the financial
and economic results of the operations of the Partnership. Such reports may
include such information as contributions, expenditures, estimated and/or actual
income to the Partnership and Distributions to the Partners, together with
reports on any other matters, as determined by the General Partner.

8.8 Partners' Rights to Inspect and Copy Partnership Records. During the term of
the Partnership, and for a period of four years thereafter, the General Partner,
at the expense of the Partnership, shall maintain in the Partnership's principal
place of business specified herein all records required to be kept pursuant to
the Texas Revised Limited Partnership Act, including a current list of the
names, addresses and interests held by each of the Partners of the Partnership,
including the dates on which each of the Partners became a Partner, copies of
federal, state and local information and income tax returns for each of the
Partnership's six most recent tax years, as prepared by the Partnership, copies
of this Agreement and the Partnership's Certificate of Limited Partnership,
including all amendments or restatements, executed copies of any powers of
attorney under which this Agreement, the Partnership's Certificate of Limited
Partnership and any amendments or restatements thereof have been executed, and a
written statement of the amount of Capital Contributions actually made by each
Partner. A Limited Partner or an assignee of an interest in the Partnership, on
written request stating a proper purpose may examine and copy, in person or by
the Limited Partner's or assignee's representative, at any reasonable time, and
upon reasonable advance notice, for any proper purpose, and at the Limited
Partner's expense, records required to be maintained under the Texas Revised
Limited Partnership Act and such other information regarding the business,
affairs and financial condition of the Partnership as is just and reasonable for
the Limited Partner or assignee to examine and copy, provided that well reports,
logs, acquisition analysis and information and other similar records may be kept
confidential by the General Partner and only released upon arrangements
satisfactory to the General Partner to preserve confidentiality, which may
include the execution and delivery of a confidentiality agreement. Upon written
request by any Limited Partner or an assignee of an interest of a Limited
Partner made to the General Partner at the address specified herein, the
Partnership shall provide the requesting Limited Partner or assignee, without
charge, true copies of this Agreement, the Certificate of Limited Partnership
and all amendments and restatements and any of the federal, state or local
information and income tax returns for each of the Partnership's six most recent
tax years.



                                       22
<PAGE>

8.9 Confidentiality. The Partners acknowledge and agree that all information
provided to them by or on behalf of the Partnership or the General Partner
concerning the business or assets of the Partnership, a Partner or any prospect
held by the Partnership shall be deemed strictly confidential and shall not,
without the prior consent of the General Partner, be (i) disclosed to any Person
(other than a Partner) or (ii) used by a Limited Partner other than for a
Partnership purpose or a purpose reasonably related to protecting such Partner's
interest in the Partnership. The General Partner hereby consents to the
disclosure by each Limited Partner of Partnership information to such Limited
Partner's accountants, attorneys and similar advisors bound by a duty of
confidentiality. The foregoing requirements of this Section 8.9 shall not apply
to a Limited Partner with regard to any information that is currently or
becomes: (i) required to be disclosed pursuant to applicable law or a domestic
national securities exchange rule (but in each case only to the extent of such
requirement); (ii) required to be disclosed in order to protect such Limited
Partner's interest in the Partnership (but only to the extent of such
requirement and only after consultation with the General Partner); (iii)
publicly known or available in the absence of any improper or unlawful action on
the part of such Limited Partner; or (iv) known or available to such Limited
Partner via legitimate means other than through or on behalf of the Partnership
or the General Partner. For purposes of this Section 8.9, Partnership
information provided by one Limited Partner to another shall be deemed to have
been provided on behalf of the Partnership.

         (a)      To the extent permitted by applicable law, the General Partner
                  may, in its sole and absolute discretion, keep confidential
                  from any Limited Partner information to the extent the General
                  Partner reasonably determines that disclosure of such
                  information to such Limited Partner likely would have a
                  material adverse effect upon the Partnership, a Partner or a
                  prospect of the Partnership due to an actual or likely
                  conflict of business interests between such Limited Partner
                  and one or more other parties or an actual or likely
                  imposition of additional statutory or regulatory constraints
                  upon the Partnership or a Partner. The foregoing provisions of
                  this Section 8.9 shall not apply to permit the General Partner
                  to keep confidential from a Limited Partner: (i) any
                  information that such Limited Partner requires to comply with
                  applicable law; or (ii) such Limited Partner's Capital Account
                  balance.



                                       23
<PAGE>

The Limited Partners acknowledge that the General Partner is expected to acquire
confidential third party information that, pursuant to related fiduciary,
contractual, legal or similar obligations, cannot be disclosed to the
Partnership or the Limited Partners.


         (b)      8.10 Banking. The General Partner shall establish such banking
                  and other financial institution accounts and relationships as
                  it shall deem appropriate for the business of the Partnership.
                  The General Partner shall be authorized to designate persons
                  to draw checks and other drafts on such accounts for
                  Partnership purposes. Each bank and financial institution
                  shall be relieved of any responsibility to inquire into the
                  authority of the General Partner or its authorized designee to
                  deal with Partnership funds and shall be absolved of all
                  liability with respect to withdrawals from Partnership
                  accounts by the General Partner or any authorized designee.

             ARTICLE IX - PARTNERSHIP LITIGATION AND INDEMNIFICATION

9.1      Partnership Litigation.  The General Partner shall:

         9.1.1 arrange to prosecute, defend, settle or compromise actions at law
         or in equity at the expense of the Partnership as such may be necessary
         to enforce or protect the interests of the Partnership; and

         9.1.2 satisfy any judgment, decree, decision or settlement, first, out
         of any insurance proceeds available therefore, next, out of the
         Partnership assets and income, and, finally, out of the assets of the
         General Partner.

9.2 Indemnification and Insurance. The Partnership (but not any Partner) shall
be required to indemnify and shall be permitted to provide insurance to the
Partners of the Partnership to the full extent permitted by the laws of the
State of Texas, it being the express intention hereof that all permissive
provisions of the Texas Revised Limited Partnership Act, as it may be amended,
shall be mandatory for the purposes of this Agreement.

         9.2.1 The indemnification set forth in this Section 9.2 shall in no
         event cause the Limited Partners to incur any personal liability nor
         shall it result in any liability of the Limited Partners to any third
         party.

         9.2.2 The Partnership shall and does hereby indemnify and save harmless
         the General Partner, and each of its officers, directors, agents, or
         employees from any loss, damage, claim or liability, including but not
         limited to reasonable attorneys= fees and expenses, that they may incur
         by reason of any act, or failure to act, performed by such person on
         behalf of the Partnership in the furtherance of the Partnership=s
         interest to the full extent a partnership may indemnify the General
         Partner or its officers, directors, agents or employees under the terms
         of Article 11 of the Texas Revised Limited Partnership Act (or any
         successor provision); provided, however, in no event shall the
         Partnership indemnify the General Partner, its officers, directors,
         agents, or employees for any act or performance which is a material
         breach of any obligation under this Agreement, or the General
         Partner's, its officer's, director's, agent's or employee's, respective
         act of fraud, willful misconduct, or gross negligence. It is the
         express intent of this Agreement to provide an indemnity to the General
         Partner and its officers, directors, employees or agents for their acts
         or omissions of negligence or comparative, contributory negligence or
         similar liability specifically including the indemnified person's sole,
         partial or concurrent negligence. The indemnification rights herein
         contained shall be cumulative of, and in addition to, any and all other
         rights, remedies and resources to which the General Partner shall be
         entitled, whether pursuant to some other provision of this Agreement,
         at law or in equity.



                                       24
<PAGE>

9.3 Limitation on Liability of Limited Partners for Indemnification. No Limited
Partner shall be required to reimburse the General Partner for any liability
above that liability stated in Section 7.1 hereof, unless the liability was
founded on the Limited Partner's unauthorized participation in the management of
the Partnership under the terms and conditions of applicable state law.

9.4 Liability of General Partner. Neither the General Partner nor any of its
officers, directors, employees or agents shall be liable, responsible or
accountable to the Partnership or the other Partners in damages or otherwise for
any act or omission preformed or omitted by such person in connection with its
acts carried out on behalf of the Partnership specifically including such
person's sole, partial or concurrent negligence, provided, however, the General
Partner or any of its officers, directors, employees or agents shall be liable
for any material breach of any obligation under this Agreement by such person,
or for fraud, willful misconduct, gross negligence committed by such person
toward the Partnership.

                       ARTICLE X - AMENDMENTS AND MERGERS

10.1 Amendment Without Consent. The General Partner may, without prior notice to
or consent of the Limited Partners, amend any provision of this Agreement, if
such amendment does not have an adverse effect upon the Limited Partners or the
Partnership, as the case may be. It is intended that amendments permissible
pursuant to this Section 10.1 be strictly technical in nature and include
changes of the name and location of the principal place of business of the
Partnership, as may be necessary or desirable under the rules of any
jurisdiction in which the Partnership transacts business, any change that is
necessary or advisable in the opinion in the General Partner to qualify the
Partnership as a limited partnership or a partnership in which the Partners have
limited liability under the laws of any state or to insure that the Partnership
will not be treated as an association taxable as a corporation for federal
income tax purposes or to insure that the sale of any interests herein will not
violate any federal or state securities laws, subject to the limitations on
amendments set forth in Section 10.2, below. The General Partner shall obtain a
written opinion of counsel confirming that such amendment does not contravene
any provisions of this Agreement or adversely affect the Limited Partners.
Written notice of the amendment shall thereafter be sent by the General Partner
to the Limited Partners as soon as reasonably possible.



                                       25
<PAGE>

10.2 Amendments. Amendments to this Agreement may be proposed by either the
General Partner or by Limited Partners that own at least 20% of the Partnership
Interests then held by Limited Partners (including any Partnership Interests in
the Partnership then held by the General Partner as a Limited Partner).
Following the proposal of an amendment, the General Partner shall submit to the
Limited Partners a verbatim statement of any proposed amendment, provided that
counsel for the Partnership may make such changes in form thereto as may be
necessary, and shall include in any submission the recommendation of the General
Partner as to the proposed amendment. The General Partner shall seek the written
vote of the Limited Partners on the proposed amendment or shall call a meeting
to vote thereon and transact any other business that it may deem appropriate, at
which meeting the Limited Partner shall be entitled to vote in person or by
proxy. Any such meeting shall be conducted according to Article XII hereof. A
proposed amendment shall be adopted and effective as an amendment hereto if it
is approved by the General Partner and the Majority Vote of Limited Partners
(including any Partnership Interests held by the General Partner as a Limited
Partner), provided, however, that, except as expressly provided in Section 3.1
concerning the revisions by the General Partner the relative percentages to be
contributed by the Partners, no amendment which has the effect of either
increasing the required Commitment or Capital Contribution of any Partner or
decreasing the relative Partnership Interest of any Partner may become effective
unless affirmatively approved by the Partners who are adversely affected
thereby. Additionally, any amendment which would indirectly amend any provisions
concerning consents required for calls of the remainder of the Commitments or to
amend the amount of the Commitment required by Partners must be agreed to by any
Partner that has previously not consented to the additional Capital
Contribution, and no amendment regarding the consent provisions may be enforced
against a Partner that has voted against that amendment. In the event of a
written vote whereby less than unanimous consent of the Limited Partners is
received, and the amendment is adopted, prompt written notice of the amendment
shall be sent by the General Partner to those Partners who have not consented in
writing to the amendment.

10.3 Amendments After Change of Law. The Agreement and any other Partnership
documents may be amended and refiled, if necessary, by the General Partner
without the consent of the Limited Partners if there occurs any change
(including the adoption of any amendments to the limited partnership law for the
State of Texas) that permits or requires an amendment of this Agreement or of
any other Partnership document under applicable law, so long as no Partner is
adversely affected (or consent is given by such adversely affected Partner).

10.4 Mergers and Conversions. The Partnership may agree to enter into a written
agreement of consolidation, merger or conversion with one or more domestic or
foreign limited partnerships or any other entity (as may be necessary) upon
approval of such agreement by Majority Vote of the Limited Partners (including
the Partnership Interests held by the General Partner as a Limited Partner),
provided that the laws of the state governing any other entity with which the
Partnership may merge or convert, expressly permit such a merger or conversion.
The written agreement of consolidation, merger or conversion may contain such
terms concerning rights of dissenting partners, appraisal rights and other
matters concerning the transaction as the General Partner may deem necessary or
desirable. Such Majority Vote of Limited Partners (including the Partnership
Interests held by the General Partner as a Limited Partner) may be obtained by
written vote or by a meeting of the Partners at which meeting Partners may vote
in person or by proxy. Any such meeting shall be conducted according to Article
XII hereof. If the agreement of merger or conversion is approved by written vote
of fewer than all of the Partners, the General Partner shall send prompt notice
of the approval of the agreement of merger to the nonconsenting Partners.



                                       26
<PAGE>

                      ARTICLE XI - DURATION AND TERMINATION

11.1     Dissolution of Partnership.  The Partnership shall be dissolved by:

         11.1.1 except as otherwise provided herein, the occurrence of any event
         that under the laws of the State of Texas, causes the dissolution of a
         limited partnership;

         11.1.2 the expiration of the term of the Partnership as set forth in
         Section 1.6 hereof;

         11.1.3 the Majority Vote of the Limited Partners (including the
         Partnership Interests held by the General Partner as a Limited Partner)
         to dissolve and wind up the affairs of the Partnership;

         11.1.4 the disposition of all or substantially all (being 80% of the
         book value based on the most recent financial statements of the
         partnership) of Partnership Property, provided there has been the
         consent of the General Partner and the Majority Vote of the Limited
         Partners (including the Partnership Interests held by the General
         Partner as a Limited Partner) expressly provided that the drag along
         provisions of Section 7.4 shall expressly supercede this provision; or

         11.1.5 as provided herein, the General Partner's written election to
         withdraw from the Partnership or the removal of the General Partner,
         unless a substitute general partner is elected as provided in Section
         6.4 hereof.

11.2 Distribution of Assets Upon Dissolution. Upon the dissolution of the
Partnership, it shall be wound up and the Partnership Property shall be
distributed in the order provided herein. The timing of the process of winding
up shall be as provided by the General Partner, as in the best interests of the
Partnership. Partnership Property shall be sold at a price deemed reasonable by
the General Partner, whether the consideration should be payable in cash,
promissory notes, securities, other property or any other form or any
combination of forms which may be obtained and the proceeds thereof, as well as
all other cash and properties of the Partnership, shall be distributed, after
all items of income, gain, loss, deduction or credit are allocated as provided
in Article IV hereof, as follows:

         11.2.1 all of the Partnership's debts and liabilities to persons other
         than Partners shall be paid and discharged or an adequate reserve to so
         pay and discharge shall be established;

         11.2.2 all of the Partnership's debts and liabilities to the Limited
         Partners, if any, shall be paid and discharged;

         11.2.3 all of the Partnership's debts and liabilities to the General
         Partner, if any, shall be paid and discharged; and

         11.2.4 all subsequent distributions shall be made to the Partners in
         accordance with their Capital Accounts.

11.3 General Partner's Authority to Conduct Dissolution. The winding up of the
affairs of the Partnership and the liquidation and distribution of its assets
shall be conducted exclusively by the General Partner, who is authorized to do
any and all acts and things authorized by law for these purposes. In the event
the General Partner determines to distribute Partnership Property in kind, each
item of Partnership Property, including interests in other entities in which the
Partnership may invest, shall be distributed by the General Partner in kind pro
rata to the Partners in accordance with Article V or Article XI, as applicable,
subject to the terms and conditions of Section 8.2 hereof, unless otherwise
expressly agreed by all of the Partners.



                                       27
<PAGE>

11.4 Return of Capital Contribution. Each Limited Partner shall look solely to
the assets of the Partnership for the return of its Capital Contribution. If
Partnership Property remaining after the payment or discharge of the debts and
liabilities of the Partnership to third party creditors and to Partners is
insufficient to return the Capital Contribution of a Limited Partner, it shall
have no recourse against the General Partner or any other Limited Partner.

11.5 Deficit Capital Account. Notwithstanding anything to the contrary contained
in this Agreement, and notwithstanding any custom or rule of law to the
contrary, to the extent that there is any deficit in the Capital Account of any
Partner resulting from or attributable to deductions and losses of the
Partnership, including non-cash items such as depreciation, or distributions of
net cash available or assets in kind to all Partners, upon dissolution of the
Partnership, such deficit or deficits shall not be an asset of the Partnership,
and no Partner shall be obligated to contribute such amount to the Partnership
to bring the balance of that Partner's capital account to zero.

                    ARTICLE XII - MEETINGS AND VOTING RIGHTS

12.1 Notice and Call of Meetings. The General Partner may at any time call a
meeting or a vote of the Limited Partners and shall call for such meeting or
vote and give written notice thereof within ten (10) days following receipt of
written request of Limited Partners holding more than twenty percent (20%) of
the Partnership Interests then held by Limited Partners (not including any
Partnership Interests held by the General Partner as a Limited Partner). The
General Partner shall within thirty (30) days mail, postage-paid, written notice
of any such meeting or vote to all Partners of record as of the date of mailing,
which date of mailing shall serve as a record date for all purposes of this
Article XII, to the most recent addresses shown on the records of the
Partnership, which notice shall state the purpose or requested purpose of such
meeting or vote. Any such meeting or vote shall be held not fewer than 15 nor
more than 60 days following mailing of the notice. All expenses of the meeting
or vote and of notice thereof shall be borne by the Partnership.

12.2 One Vote Per One Percent of Partnership Interest. A Partner shall be
entitled to cast one vote (or fraction thereof) for each one percent of
Partnership Interest (or fraction thereof) which it owns: (a) at a meeting, in
person, by written proxy or by a signed writing directing the manner in which it
desires that its vote be cast, which writing must be received by the General
Partner prior to such meeting; or (b) without a meeting, by a signed writing
directing the manner in which it desires that its vote be cast, which writing
must be received by the General Partner prior to the date upon which the votes
of Partners are to be counted. Only the votes of Partners of record as of the
date of mailing the notice of such meeting or vote shall be counted. There shall
be a quorum sufficient to hold a meeting if a sufficient percentage of interests
is represented in person or by proxy to adopt the proposal at issue under the
terms of this Agreement. The laws of the State of Texas pertaining to the
conduct of meetings of shareholders and validity and use of corporate proxies
shall govern the conduct of the meeting and the validity and use of proxies
given by Partners. Partners may expressly waive written notice of any meeting or
vote.



                                       28
<PAGE>

12.3 Consents. Any action which may be taken by Partners at a meeting may be
taken without a meeting if a consent in writing, setting forth the action so
taken, is signed by the holders of Partnership Interests having not less than
the minimum interests that would be necessary to authorize or take that action
at a meeting. Any such consent may be signed in counterpart. Prompt notice of
the taking of any action with less than unanimous consent must be sent to those
Partners who have not consented in writing to the taking of the action.

                          ARTICLE XIII - MISCELLANEOUS

13.1 Notice. Any notice, request or demand required or permitted under this
Agreement shall be deemed to have been duly given or made if delivered or sent
by receipted delivery service or postage prepaid by registered or certified mail
(i) in the case of the General Partner, to the address specified in Section 1.4
hereof, and (ii) in the case of a Limited Partner, to such Limited Partner's
address as it appears on the records of the Partnership. All notices required
under this Agreement must be sent in a manner such that receipt is documented
and notices hereunder are only effective upon receipt as so documented. In all
events, written consents of Limited Partners as may be requested by the General
Partner may be sent to the General Partner by facsimile at the number set forth
in Section 1.4 hereto. Any Limited Partner may change all or any part of its
address by giving notice in writing stating such change to the General Partner
and the General Partner may change all or any part of its address by giving
notice in writing stating the new address to all other Partners, and, if
necessary, by making any amendments to the Certificate of Limited Partnership
that may be required as a result of the change of address by the General
Partner. Commencing on the l5th day after the giving of such notice such newly
designated address shall be such Partner's address for the purpose of all
notices or other communications required or permitted to be given pursuant to
this Agreement.

13.2 Waiver. The failure of any party to seek redress for violation of or to
insist upon the strict performance of any covenant or condition of this
Agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of a violation.

13.3 Captions. The captions in the Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define or
limit the scope, extent or intent of the Agreement or any provisions hereof.

13.4 Severability. Every provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the validity of the
remainder hereof.

13.5 Governing Law. This Agreement, and the application or interpretation
thereof shall be governed exclusively by its terms and by the local, internal
law of the State of Texas, and specifically shall be governed by the Texas
Revised Limited Partnership Act, as same may be amended from time to time. The
venue of any suits arising out of this Agreement or brought by any Limited
Partner against the General Partner shall lie in Harris County, Texas.

13.6 Cumulative Rights and Remedies. The rights and remedies set forth in this
Agreement are cumulative and the exercise of any one right or remedy by any
party shall not preclude or waive its rights to use any or all other remedies.
Said rights and remedies are given in addition to any other rights the parties
may have by law, statute, ordinance or otherwise.



                                       29
<PAGE>

13.7 Counterparts. This Agreement may be executed in any number of counterparts
with the same effect as if all parties hereunder had signed the same document.
All counterparts shall be construed together and shall constitute one agreement.

13.8 Construction. Whenever the singular number is used herein, the same shall
include the plural; neuter, masculine and feminine genders shall include each
other. If any language is stricken or deleted from the Agreement, such language
shall be deemed never to have appeared herein and no other implication shall be
drawn from it.

13.9 Entire Agreement. This Agreement constitutes the entire agreement of the
parties. All prior agreements among the parties, whether written or oral, are
merged herein and shall be of no force or effect. The Agreement cannot be
changed, modified or discharged orally but only by an agreement in writing.
There are no representations, warranties, or agreements other than those set
forth in this Agreement.

13.10 Creditors. None of the provisions of this Agreement shall be for the
benefit of or enforceable by any of the creditors of the Partnership or of the
Partners.

13.11 Authority. Each individual executing the Agreement on behalf of a
partnership, corporation, or other entity warrants that he is authorized to do
so and that the Agreement will constitute the legally binding obligation of the
entity that the individual represents.

13.12 Signatures. The signature of the authorized representative of the General
Partner shall be sufficient to bind the Partnership to any agreement or any
document, including, but not limited to, documents or agreements executed in
connection with the acquisition or disposition of any Partnership Property.

13.13 Successors and Assigns. Each and all of the covenants, terms, provisions
and agreements herein contained shall be binding upon and inure to the benefit
of the parties hereto and, to the extent permitted by the Agreement, their
respective successors and assigns.

13.14 Mediation. The Partners agree that, in lieu of the institution of any
litigation among Partners over a provision of this Agreement, the Partner
seeking mediation (the "Plaintiff") will submit such claim to mediation. The
Plaintiff shall notify in writing the Partner or Partners against whom such
mediation is sought (the "Defendants"), describe the nature of such claim, the
provision of this Agreement which has been violated by the Defendants, and the
material facts surrounding such claim. If the parties are unable to agree on a
mediator, the Plaintiff shall appoint one mediator and the Defendants shall
appoint one mediator. Such mediators shall be appointed within thirty (30) days
of the date of the foregoing described notice. Within thirty (30) days of
appointment, such mediators shall appoint a third mediator. Each party
appointing a mediator shall bear all cost and expenses associated with such
mediator, and the costs and expenses associated with the third mediator (or the
first mediator if one (1) is agreed upon) shall be borne equally by the parties.
Within thirty (30) days of the appointment of the foregoing described
mediator(s), the Plaintiff and Defendant shall hold a mediation hearing before
such mediator(s) at such time and place as the Plaintiff and Defendant may
agree. At such mediation hearing, the Alternative Dispute Resolutions provisions
of the Revised Civil Statutes of Texas shall apply.



                                       30
<PAGE>



         IN WITNESS WHEREOF, the undersigned have executed this Partnership
Agreement of Touchstone Resources - 2001 Hackberry Drilling Fund, L.P. this 30th
day of November, 2001.

                                   GENERAL PARTNER:

                                   Touchstone Resources Ventures, LLC
                                   a Texas limited liability company



                                   By:
                                       -----------------------------
                                         Mark A. Bush, President



STATE OF TEXAS           )
                         )
COUNTY OF HARRIS         )

         BEFORE ME, the undersigned, a Notary Public in and for the State of
Texas, on this day personally appeared Mark A. Bush, known to me to be the
person whose name is subscribed to the foregoing instrument and who, being by me
first duly sworn, declared that he is the President of Touchstone Resources
Ventures, L.L.C., a Texas limited liability company, which is the General
Partner of Touchstone Resources -2001 Hackberry Drilling Fund, L. P., a Texas
limited partnership, and that he executed said instrument as the act and deed of
such corporation for the purposes and consideration therein expressed, in the
capacity therein stated.



                             -------------------------------------------
                             Notary Public in and for the State of Texas




                                       31
<PAGE>



         IN WITNESS WHEREOF, the undersigned has executed this Partnership
Agreement of Touchstone Resources - 2001 Hackberry Drilling Fund, Ltd. this
________ day of ________, 2002.

                                LIMITED PARTNER



                                ------------------------------------
                                Name:
                                Address:


</TEXT>
</DOCUMENT>
