HS RESOURCES INC, S-4/A, 1996-05-16

HS RESOURCES INC
S-4/A, 1996-05-16
DRILLING OIL & GAS WELLS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 16, 1996.

REGISTRATION NO. 333-01991
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

AMENDMENT NO. 4

TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
HS RESOURCES, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 1311 94-3036864
(State or other jurisdiction of (Primary standard industrial (I.R.S. Employer
incorporation or organization) classification code number) Identification No.)
</TABLE>

ONE MARITIME PLAZA
15TH FLOOR
SAN FRANCISCO, CALIFORNIA 94111
TELEPHONE: (415) 433-5795
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

NICHOLAS J. SUTTON
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
ONE MARITIME PLAZA
15TH FLOOR
SAN FRANCISCO, CALIFORNIA 94111
TELEPHONE: (415) 433-5795
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

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

Copies to:

<TABLE>
<S> <C>
MICHAEL E. DILLARD, P.C. ROBERT A. CURRY
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. CONNER & WINTERS,
1700 PACIFIC AVENUE, SUITE 4100 A PROFESSIONAL CORPORATION
DALLAS, TEXAS 75201-4618 2400 FIRST PLACE TOWER, 15 E. 5TH STREET
(214) 969-2800 TULSA, OKLAHOMA 74103-4391
(918) 586-5711
</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES
EFFECTIVE.

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

If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

================================================================================
<PAGE> 2

HS RESOURCES, INC.

CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K

<TABLE>
<CAPTION>
ITEM
NO. ITEM IN FORM S-4 LOCATION OR HEADING IN PROSPECTUS
----- ---------------------------------------- ---------------------------------------------
<S> <C> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and
Outside Front Cover Page of
Prospectus.............................. Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus..................... Available Information; Incorporation of
Documents by Reference; Inside Front Cover of
Prospectus; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information........... Outside Front Cover Page of Prospectus;
Prospectus Summary; Risk Factors; Special
Factors; Information About the Combining
Companies; Index to Unaudited Pro Forma
Financial Statements; Index to Unaudited Pro
Forma Quarterly Financial Statements
4. Terms of the Transaction................ Prospectus Summary; Special Factors; The
Merger Agreement and Related Agreements;
Description of HSR Capital Stock; Comparison
of Stockholder Rights
5. Pro Forma Financial Information......... Prospectus Summary; Information About the
Combining Companies; Index to Unaudited Pro
Forma Financial Statements; Index to
Unaudited Pro Forma Quarterly Financial
Statements
6. Material Contacts With the Company Being
Acquired................................ Risk Factors; Special Factors; The Merger
Agreement and Related Agreements; Information
About the Combining Companies
7. Additional Information Required For
Reoffering by Persons and Parties Deemed
to be Underwriters...................... Not Applicable
8. Interests of Named Experts and
Counsel................................. Prospectus Summary; Special Factors; Legal
Matters; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................. Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information With Respect to
S-3 Registrants......................... Outside Front Cover Page of Prospectus;
Prospectus Summary; Information About the
Combining Companies; Index to Unaudited Pro
Forma Financial Statements; Index to
Unaudited Pro Forma Quarterly Financial
Statements
11. Incorporation of Certain Information by
Reference............................... Inside Front Cover Page of Prospectus;
Incorporation of Documents by Reference
</TABLE>

<PAGE> 3

13. Incorporation of Certain Information by
Reference............................... Not Applicable

14. Information With Respect to Registrants
Other Than S-2 or S-3 Registrants....... Not Applicable

C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED

15. Information With Respect to
S-3 Companies........................... Not Applicable

16. Information With Respect to S-2 or S-3
Companies............................... Outside Front Cover Page of Prospectus;
Incorporation of Documents by Reference;
Prospectus Summary; Information About the
Combining Companies

17. Information With Respect to Companies
Other than S-2 or S-3 Companies......... Not Applicable

D. VOTING AND MANAGEMENT INFORMATION

18. Information if Proxies, Consents or
Authorizations Are to be Solicited...... Outside Front Cover Page of Prospectus;
Incorporation of Documents by Reference;
Prospectus Summary; Risk Factors; The
Meetings; Special Factors; The Merger
Agreement and Related Agreements; Comparison
of Stockholder Rights; Stockholders'
Proposals

19. Information if Proxies, Consents or
Authorizations Are Not to be Solicited
or in an Exchange Offer................. Not Applicable
</TABLE>
<PAGE> 4

HS RESOURCES, INC. TIDE WEST OIL COMPANY

May 16, 1996

Dear Stockholders of HS Resources, Inc. ("HSR") and Tide West Oil Company ("Tide
West"):

Attached is a Notice of Special Meeting of Stockholders for either HSR or
Tide West and an accompanying Joint Proxy Statement/Prospectus which describes
the matters to be acted upon at special meetings of the stockholders of HSR and
Tide West (together, the "Special Meetings"). At the respective meetings,
stockholders of HSR and Tide West will be asked to consider and vote upon
certain proposals related to the Agreement and Plan of Merger (the "Merger
Agreement"), dated as of February 25, 1996, and amended and restated as of April
29, 1996, by and among HSR, HSR Acquisition, Inc. (a wholly owned subsidiary of
HSR, hereafter "Merger Sub") and Tide West. The Merger Agreement provides for
the merger of Tide West with and into Merger Sub (the "Merger"). The separate
existence of Tide West will cease and Merger Sub will succeed to all of the
assets, rights, liabilities and obligations of Tide West. Stockholders are urged
to review carefully the accompanying Joint Proxy Statement/Prospectus. This
document contains a detailed description of the Merger.

Pursuant to the terms of voting agreements executed in connection with the
Merger Agreement, HSR has obtained agreements from affiliates of Tide West to
vote a majority of the outstanding shares of common stock of Tide West ("Tide
West Common Stock") in favor of the Merger.

In the Merger, each outstanding share of Tide West Common Stock will be
converted into .6295 of a share of common stock of HSR ("HSR Common Stock") and
the right to receive a cash payment of $8.75 less 3% of the amount by which the
average of the per share closing sales prices of HSR Common Stock for the 10
trading days ending five business days preceding the closing of the Merger
exceeds $10.50. The amount of HSR Common Stock to be issued and the amount of
cash to be paid per share of Tide West Common Stock in connection with the
Merger may be adjusted pursuant to a formula described in the accompanying Joint
Proxy Statement/Prospectus. If the amount of HSR Common Stock to be issued and
the amount of cash to be paid per share of Tide West Common Stock were
calculated treating the date of this Joint Proxy Statement/Prospectus as the
closing date of the Merger and assuming no holders of Tide West Common Stock
have perfected their dissenters' appraisal rights and assuming there is no
holder of 5% or more of the Tide West Common Stock that has not represented that
it has no intention, plan or arrangement to dispose of the HSR Common Stock to
be received in the Merger, each share of Tide West Common Stock would, as a
result of the Merger, be converted into .6295 of a share of HSR Common Stock and
$8.68 cash, and HSR would issue 6,161,312 shares of HSR Common Stock in the
aggregate in connection with the Merger. If such calculations were performed
under the same assumptions, and treating February 26, 1996 (the date of the
public announcement of the execution of the Merger Agreement), as the closing
date of the Merger, each share of Tide West Common Stock would, as a result of
the Merger, be converted into .6295 of a share of HSR Common Stock and $8.72
cash, and HSR would issue 6,161,312 shares of HSR Common Stock in the aggregate
in connection with the Merger. HSR AND TIDE WEST STOCKHOLDERS ARE REQUESTED TO
CALL 1-800-275-8966, EXTENSION 7, ON ANY DAY COMMENCING MAY 20, 1996, THROUGH
THE DAY OF THE SPECIAL MEETINGS TO BE ADVISED OF THE CONSIDERATION TO BE PAID TO
THE HOLDERS OF TIDE WEST COMMON STOCK PURSUANT TO THE TERMS OF THE MERGER
AGREEMENT.

The proposed Merger requires, among other conditions, the approval of the
matters described in the accompanying Joint Proxy Statement/Prospectus by the
stockholders of HSR and Tide West.

FOR THE REASONS DETAILED IN THE ACCOMPANYING JOINT PROXY STATEMENT/
PROSPECTUS, THE BOARDS OF DIRECTORS OF HSR AND TIDE WEST HAVE DETERMINED THAT
THE MERGER AGREEMENT AND THE MERGER ARE IN THE BEST INTERESTS OF HSR AND TIDE
WEST, RESPECTIVELY, AND THEIR RESPECTIVE STOCKHOLDERS. THE BOARD OF DIRECTORS OF
HSR HAS APPROVED THE MERGER AGREEMENT AND THE MERGER AND RECOMMENDS THAT HSR'S
STOCKHOLDERS VOTE FOR APPROVAL OF THE PROPOSAL TO BE CONSIDERED AT THE HSR
SPECIAL MEETING AS DESCRIBED IN THE ACCOMPANYING JOINT PROXY
STATEMENT/PROSPECTUS. THE BOARD OF DIRECTORS OF TIDE WEST HAS APPROVED THE
MERGER AGREEMENT AND THE MERGER AND RECOMMENDS THAT TIDE WEST'S STOCKHOLDERS
VOTE FOR APPROVAL OF THE PROPOSAL TO BE CONSIDERED AT THE TIDE WEST SPECIAL
MEETING AS DESCRIBED IN THE ACCOMPANYING JOINT PROXY STATEMENT/PROSPECTUS.

Your continued support of the new HSR is greatly appreciated. Because of
the significance to HSR and Tide West of the proposed Merger, your participation
at the special meetings of stockholders of HSR and Tide West, in person or by
proxy, is especially important. Even if you plan to attend the relevant meeting,
we hope you will complete, sign, date and return your proxy promptly in the
enclosed envelope that has been provided for your convenience. This will not
limit your right to vote in person or to attend the meeting. You may revoke your
proxy by following the procedures set forth in the accompanying Joint Proxy
Statement/Prospectus.

<TABLE>
<S> <C>
NICHOLAS J. SUTTON PHILIP B. SMITH
Chairman of the Board and President and Chief
Chief Executive Officer Executive Officer
HS Resources, Inc. Tide West Oil Company
</TABLE>
<PAGE> 5

HS RESOURCES, INC.

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD JUNE 17, 1996

To the Stockholders of HS Resources, Inc.:

NOTICE IS HEREBY GIVEN that a special meeting of stockholders (the "Special
Meeting") of HS Resources, Inc., a Delaware corporation ("HSR"), will be held on
June 17, 1996, commencing at 10:00 a.m., local time, at the Sheraton Palace
Hotel, 2 New Montgomery Street, San Francisco, California, to consider and act
upon the following matters which are described in more detail in the
accompanying Joint Proxy Statement/Prospectus:

1. To approve the issuance of up to 7,161,312 shares of common stock
of HSR ("HSR Common Stock") in accordance with the Agreement and Plan of
Merger, dated as of February 25, 1996, and amended and restated as of April
29, 1996 (the "Merger Agreement"), by and among HSR, HSR Acquisition, Inc.,
a Delaware corporation and wholly owned subsidiary of HSR, and Tide West
Oil Company, a Delaware corporation ("Tide West"), as required by the rules
of the New York Stock Exchange.

2. To consider and act upon such other business as may properly be
brought before the Special Meeting or any adjournment or postponement
thereof.

The Special Meeting will be held on the same day as the 1996 Annual Meeting
of Stockholders of HSR.

The close of business on May 8, 1996, has been fixed as the record date for
the determination of stockholders entitled to notice of, and to vote at, the
Special Meeting and any adjournment or postponement thereof. A complete list of
the stockholders entitled to vote at the Special Meeting will be open to the
examination of any stockholder, for any purpose germane to the Special Meeting,
during ordinary business hours for a period of 10 days prior to the date of the
Special Meeting at the offices of HSR at One Maritime Plaza, 15th Floor, San
Francisco, California 94111, and at the time and place of the Special Meeting.
Holders of HSR Common Stock are not entitled to dissenters' appraisal rights
under the Delaware General Corporation Law in respect of the merger contemplated
by the Merger Agreement. HSR'S STOCKHOLDERS ARE REQUESTED TO CALL
1-800-275-8966, EXTENSION 7, ON ANY DAY COMMENCING MAY 20, 1996, THROUGH THE DAY
OF THE SPECIAL MEETING, TO BE ADVISED OF THE CONSIDERATION TO BE PAID TO THE
HOLDERS OF TIDE WEST'S COMMON STOCK PURSUANT TO THE TERMS OF THE MERGER
AGREEMENT.

When the proxies are returned properly executed, the shares represented
thereby will be voted in accordance with the indicated instructions. However, if
no instructions have been specified on the returned proxy, the shares
represented thereby will be voted "FOR" the issuance of the HSR Common Stock
pursuant to the Merger Agreement. Any stockholder giving a proxy has the right
to revoke such proxy, at any time before it is voted, by filing with the
Secretary of HSR either an instrument revoking the proxy or a duly executed
proxy bearing a later date. Proxies also may be revoked by attending the Special
Meeting and voting in person.

By Order of the Board of Directors

HS RESOURCES, INC.

/s/ JAMES M. PICCONE
James M. Piccone
Secretary

San Francisco, California

May 16, 1996

YOUR VOTE IS IMPORTANT NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
TO ASSURE YOUR REPRESENTATION AT THE SPECIAL MEETING, PLEASE DATE THE ENCLOSED
GREEN STRIPED PROXY CARD, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS OF HS
RESOURCES, INC., SIGN EXACTLY AS YOUR NAME APPEARS THEREON AND RETURN
IMMEDIATELY.
<PAGE> 6

TIDE WEST OIL COMPANY

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD JUNE 17, 1996

To the Stockholders of Tide West Oil Company:

NOTICE IS HEREBY GIVEN that a special meeting of stockholders (the "Special
Meeting") of Tide West Oil Company, a Delaware corporation ("Tide West"), will
be held on June 17, 1996, commencing at 10:00 a.m., local time, at the offices
of Tide West at 6666 South Sheridan, Suite 250, Tulsa, Oklahoma, to consider and
act upon the following matters which are described in more detail in the
accompanying Joint Proxy Statement/Prospectus:

1. To approve and adopt the Agreement and Plan of Merger, dated as of
February 25, 1996, and amended and restated as of April 29, 1996 (the
"Merger Agreement"), by and among Tide West, HS Resources, Inc., a Delaware
corporation ("HSR"), and HSR Acquisition, Inc., a Delaware corporation and
wholly owned subsidiary of HSR ("Merger Sub"), and to approve the merger of
Tide West with and into Merger Sub pursuant thereto (the "Merger").

2. To consider and act upon such other business as may properly be
brought before the Special Meeting or any adjournment or postponement
thereof.

The close of business on May 8, 1996, has been fixed as the record date for
the determination of stockholders entitled to notice of, and to vote at, the
Special Meeting and any adjournment or postponement thereof. A complete list of
the stockholders entitled to vote at the Special Meeting will be open to the
examination of any stockholder, for any purpose germane to the Special Meeting,
during ordinary business hours for a period of 10 days prior to the date of the
Special Meeting at the offices of Tide West at 6666 South Sheridan, Suite 250,
Tulsa, Oklahoma 74133, and at the time and place of the Special Meeting. Holders
of common stock of Tide West are entitled to certain dissenters' appraisal
rights under the Delaware General Corporation Law in respect of the Merger. TIDE
WEST'S STOCKHOLDERS ARE REQUESTED TO CALL 1-800-275-8966, EXTENSION 7, ON ANY
DAY COMMENCING MAY 20, 1996, THROUGH THE DAY OF THE SPECIAL MEETING, TO BE
ADVISED OF THE CONSIDERATION TO BE PAID TO THE HOLDERS OF TIDE WEST'S COMMON
STOCK PURSUANT TO THE TERMS OF THE MERGER AGREEMENT.

When the proxies are returned properly executed, the shares represented
thereby will be voted in accordance with the indicated instructions. However, if
no instructions have been specified on the returned proxy, the shares
represented thereby will be voted "FOR" approval of the Merger and the Merger
Agreement. Any stockholder giving a proxy has the right to revoke such proxy, at
any time before it is voted, by filing with the Secretary of Tide West either an
instrument revoking the proxy or a duly executed proxy bearing a later date.
Proxies also may be revoked by attending the Special Meeting and voting in
person.

By Order of the Board of Directors

TIDE WEST OIL COMPANY

/s/ PEGGY E. GWARTNEY

Peggy E. Gwartney
Secretary

Tulsa, Oklahoma

May 16, 1996

YOUR VOTE IS IMPORTANT NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
TO ASSURE YOUR REPRESENTATION AT THE SPECIAL MEETING, PLEASE DATE THE ENCLOSED
PROXY CARD, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS OF TIDE WEST OIL
COMPANY, SIGN EXACTLY AS YOUR NAME APPEARS THEREON AND RETURN IMMEDIATELY.
<PAGE> 7

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED MAY 16, 1996

PROSPECTUS

HS RESOURCES, INC.

AND

TIDE WEST OIL COMPANY

JOINT PROXY STATEMENT
---------------------

This Joint Proxy Statement/Prospectus is being furnished to holders of
common stock, par value $0.001 per share ("HSR Common Stock"), of HS Resources,
Inc., a Delaware corporation ("HSR"), in connection with the solicitation of
proxies by the Board of Directors of HSR (the "HSR Board") for use at a special
meeting of stockholders of HSR (the "HSR Special Meeting") to be held on Monday,
June 17, 1996, at the Sheraton Palace Hotel, 2 New Montgomery Street, San
Francisco, California, commencing at 10:00 a.m., local time, and at any
adjournment or postponement thereof. At the HSR Special Meeting, the
stockholders of HSR will consider and vote upon the issuance of up to 7,161,312
shares of HSR Common Stock in accordance with the Agreement and Plan of Merger,
dated as of February 25, 1996, and amended and restated as of April 29, 1996
(the "Merger Agreement"), by and among HSR, HSR Acquisition, Inc., a Delaware
corporation and wholly owned subsidiary of HSR ("Merger Sub"), and Tide West Oil
Company, a Delaware corporation ("Tide West"), pursuant to which Tide West will
merge with and into Merger Sub (the "Merger").

This Joint Proxy Statement/Prospectus is also being furnished to holders of
common stock, par value $0.01 per share ("Tide West Common Stock"), of Tide West
in connection with the solicitation of proxies by the Board of Directors of Tide
West (the "Tide West Board") for use at a special meeting of stockholders of
Tide West (the "Tide West Special Meeting") to be held on Monday, June 17, 1996,
at the offices of Tide West at 6666 South Sheridan, Suite 250, Tulsa, Oklahoma,
commencing at 10:00 a.m., local time, and at any adjournment or postponement
thereof. At the Tide West Special Meeting, the stockholders of Tide West will
consider and vote upon the Merger Agreement and the Merger.

Holders of HSR Common Stock do not have dissenters' appraisal rights in
respect of the Merger. Holders of Tide West Common Stock do have dissenters'
appraisal rights in respect of the Merger. See "Special Factors -- Appraisal
Rights" and Section 262 of the Delaware General Corporation Law (the "Delaware
Act") attached hereto as Annex D.

This Joint Proxy Statement/Prospectus also constitutes a prospectus of HSR
with respect to shares of HSR Common Stock to be issued in the Merger in
exchange for outstanding shares of Tide West Common Stock.

Based upon the $12 3/8 closing sales price of HSR Common Stock, as reported
on the New York Stock Exchange, Inc. (the "NYSE") on May 15, 1996, the business
day immediately preceding the date of this Joint Proxy Statement/Prospectus, and
treating the date of this Joint Proxy Statement/Prospectus as the closing date
of the Merger, approximately 6,161,312 shares of HSR Common Stock would be
issued to holders of Tide West Common Stock upon consummation of the Merger
(assuming no holders of Tide West Common Stock had perfected their dissenters'
appraisal rights and assuming there is no holder of 5% or more of the Tide West
Common Stock that has not represented that it has no intention, plan or
arrangement to dispose of the HSR Common Stock to be received in the Merger).
The maximum number of shares of HSR Common Stock required to be issued under the
Merger Agreement is 7,161,312. HSR AND TIDE WEST STOCKHOLDERS ARE REQUESTED TO
CALL 1-800-275-8966, EXTENSION 7, ON ANY DAY COMMENCING MAY 20, 1996, THROUGH
THE DAY OF THE RESPECTIVE HSR SPECIAL MEETING AND THE TIDE WEST SPECIAL MEETING,
TO BE ADVISED OF THE CONSIDERATION TO BE PAID TO THE HOLDERS OF TIDE WEST COMMON
STOCK PURSUANT TO THE TERMS OF THE MERGER AGREEMENT.

APPLICATION HAS BEEN MADE FOR LISTING THE SHARES OF HSR COMMON STOCK
OFFERED HEREBY ON THE NYSE.

FOR A DISCUSSION OF CERTAIN CONSIDERATIONS REGARDING THE BUSINESSES AND
OPERATIONS OF HSR AND TIDE WEST THAT SHOULD BE EVALUATED BEFORE VOTING ON THE
PROPOSALS DESCRIBED HEREIN AT THE HSR SPECIAL MEETING OR THE TIDE WEST SPECIAL
MEETING, SEE "RISK FACTORS" BEGINNING ON PAGE 24.

THE SECURITIES TO BE ISSUED PURSUANT TO THIS JOINT PROXY STATEMENT/PROSPECTUS
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS JOINT PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------

This Joint Proxy Statement/Prospectus and accompanying forms of proxy are
first being mailed to stockholders of HSR and of Tide West on or about May 17,
1996.

The date of this Joint Proxy Statement/Prospectus is May , 1996.
<PAGE> 8

AVAILABLE INFORMATION

HSR and Tide West are each subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements, information statements and
other information with the Securities and Exchange Commission (the
"Commission"). The reports, proxy statements, information statements and other
information filed by HSR and by Tide West with the Commission can be inspected
and copied at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices at Seven World Trade Center, 13th Floor, New York,
New York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material also may be obtained by mail
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. HSR Common Stock is listed on the
NYSE. Reports, proxy and information statements and other information relating
to HSR can be inspected at the offices of the NYSE at 20 Broad Street, New York,
New York 10005. Reports, proxy statements and other information relating to Tide
West can be inspected at the offices of the National Association of Securities
Dealers, Inc., 1735 K Street, Washington, D.C. 20006.

HSR has filed with the Commission a Registration Statement on Form S-4
(together with any amendments thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
securities to be issued pursuant to the Merger Agreement. This Joint Proxy
Statement/Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Statements contained in this Joint
Proxy Statement/Prospectus or in any document incorporated by reference in this
Joint Proxy Statement/Prospectus as to the contents of any contract or other
document referred to herein or therein are summaries of the material terms
thereof and are not necessarily complete. In each instance reference is made to
the full text of such contract or other document filed as an exhibit to the
Registration Statement or such other document. The Registration Statement,
including exhibits filed as a part thereof, are available for inspection and
copying at the Commission's offices as described above.

INCORPORATION OF DOCUMENTS BY REFERENCE

The following documents, which have been filed by HSR with the Commission
pursuant to the Exchange Act (File No. 0-18886), are incorporated by reference
into this Joint Proxy Statement/Prospectus and are deemed to be a part hereof:
(a) HSR's Annual Report on Form 10-K for the year ended December 31, 1995 (the
"HSR 1995 Form 10-K"); (b) HSR's Annual Proxy Statement relating to its 1996
Annual Meeting; (c) HSR's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996 (the "HSR Form 10-Q"); (d) HSR's Current Report on Form 8-K,
dated February 28, 1996, as amended by HSR's Current Report on Form 8-K/A
(Amendment No. 1), dated March 12, 1996; (e) HSR's Current Report on Form 8-K,
dated March 11, 1996; and (f) the description of the HSR Common Stock contained
in HSR's Registration Statement on Form 10 declared effective by the Commission
on April 18, 1991.

The following documents, which have been filed by Tide West with the
Commission pursuant to the Exchange Act (File No. 0-10727), are incorporated by
reference into this Joint Proxy Statement/Prospectus and are deemed to be a part
hereof: (a) Tide West's Annual Report on Form 10-K for the year ended December
31, 1995 (the "Tide West 1995 Form 10-K") and (b) Tide West's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1996 (the "Tide West Form 10-Q").
Copies of the Tide West 1995 Form 10-K and the Tide West Form 10-Q are being
sent to HSR and Tide West stockholders along with this Joint Proxy
Statement/Prospectus.

All reports subsequently filed by HSR pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Joint Proxy
Statement/Prospectus and prior to the date of the HSR Special Meeting shall be
deemed to be incorporated by reference into this Joint Proxy
Statement/Prospectus and are deemed to be a part hereof from the date of filing
of such reports. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Joint Proxy Statement/Prospectus to the extent that a
statement contained herein or in any other

2
<PAGE> 9

subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Joint Proxy Statement/Prospectus.

THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN
EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE) ARE AVAILABLE TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM
THIS JOINT PROXY STATEMENT/PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL
REQUEST, WITHOUT CHARGE, DIRECTED, IN THE CASE OF DOCUMENTS RELATING TO HSR, TO
JAMES M. PICCONE, THE SECRETARY OF HS RESOURCES, INC., AT 1999 BROADWAY, SUITE
3600, DENVER, COLORADO 80202, TELEPHONE 303-296-3600, OR, IN THE CASE OF
DOCUMENTS RELATING TO TIDE WEST, TO PEGGY E. GWARTNEY, THE SECRETARY OF TIDE
WEST OIL COMPANY, AT 6666 S. SHERIDAN, SUITE 250, TULSA, OKLAHOMA 74133,
TELEPHONE 918-488-8962. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS
PRIOR TO THE RESPECTIVE SPECIAL MEETINGS, ANY REQUEST SHOULD BE MADE BY JUNE 10,
1996.

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

NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS IN CONNECTION WITH THE SOLICITATIONS OF PROXIES OR THE
OFFERING OF SECURITIES MADE HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY HSR, TIDE
WEST OR ANY OTHER PERSON. THIS JOINT PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY
SECURITIES, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS UNLAWFUL OR TO OR FROM ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION........................... 2
INCORPORATION OF DOCUMENTS BY REFERENCE......... 2
SUMMARY......................................... 5
General....................................... 5
HS Resources, Inc............................. 5
HSR Acquisition, Inc.......................... 5
Tide West Oil Company......................... 5
The Merger.................................... 6
Recent Acquisitions........................... 7
Financing..................................... 7
Tide West Stock Options....................... 8
Reasons for the Merger........................ 9
Recommendations of the Boards of Directors of
HSR and Tide West........................... 9
Opinions of Financial Advisors................ 9
Conversion Procedures......................... 10
Description of Other Terms of the
Merger Agreement............................ 10
Certain Federal Income Tax Consequences....... 11
Accounting Treatment.......................... 11
The Special Meetings.......................... 11
Appraisal Rights.............................. 12
Voting Agreements............................. 12
HSR Securities to be Issued................... 13
Comparative Market Price Information.......... 13
Comparative Per Share Information............. 14
Available Financial Information............... 15
Forward-Looking Statements or Information..... 15
Risk Factors.................................. 15
Selected Financial Information................ 16
Summary Selected Historical Operating Data.... 17
Summary Historical Oil and Gas Reserve
Information................................. 17
Selected Historical and Unaudited Pro Forma
Financial Data of HSR....................... 18
RISK FACTORS.................................... 24
Significantly Increased Operations............ 24
Determination of Conversion Number............ 24
Tax Risks..................................... 25
Increased Leverage............................ 25
Management Agreement Liabilities.............. 26
Existing Agreements to Vote for the Merger and
the Merger Agreement........................ 26
Interests of Certain Persons in the Merger.... 26
Differences in Rights of Common Stockholders
and Certain Anti-Takeover Matters........... 26
THE MEETINGS.................................... 27
Matters to be Considered at the Special
Meetings.................................... 27
Boards of Directors' Recommendations.......... 27
Voting at Meetings; Record Dates.............. 27
HSR Proxies................................... 28
Tide West Proxies............................. 28
Solicitation of Proxies....................... 29
SPECIAL FACTORS................................. 30
Background of the Merger...................... 30
Reasons for the Merger -- HSR................. 33
Reasons for the Merger -- Tide West........... 34
Recommendation of the HSR Board............... 35
Opinions of the HSR Financial Advisors........ 35

<CAPTION>
PAGE
----
<S> <C>
Recommendation of the Tide West Board......... 40
Opinion of the Tide West Financial Advisor.... 41
Effects of the Merger......................... 45
Interests of Certain Persons in the Merger.... 47
Accounting Treatment.......................... 49
Certain Federal Income Tax Consequences....... 49
Regulatory Matters............................ 52
Restrictions on Resales by Affiliates of Tide
West........................................ 52
Listing on the New York Stock Exchange........ 53
Appraisal Rights.............................. 53
THE MERGER AGREEMENT AND RELATED AGREEMENTS..... 56
The Merger.................................... 56
Effective Time of the Merger.................. 56
Manner and Basis of Converting Shares......... 56
Terms of the Merger Agreement................. 58
Registration Rights Agreement................. 63
Voting Agreements............................. 64
INFORMATION ABOUT THE COMBINING COMPANIES....... 65
HS Resources, Inc............................. 65
Tide West Oil Company......................... 70
Pro Forma Information for the Combined
Company..................................... 71
INDEX TO UNAUDITED PRO FORMA FINANCIAL
STATEMENTS.................................... 75
INDEX TO UNAUDITED PRO FORMA QUARTERLY FINANCIAL
STATEMENTS.................................... 95
DESCRIPTION OF HSR CAPITAL STOCK................ 105
Authorized and Outstanding Capital Stock...... 105
HSR Common Stock.............................. 105
HSR Preferred Stock........................... 105
DESCRIPTION OF TIDE WEST CAPITAL
STOCK......................................... 107
Authorized and Outstanding Capital Stock...... 107
Tide West Common Stock........................ 107
Tide West Preferred Stock..................... 107
COMPARISON OF STOCKHOLDER RIGHTS................ 108
LEGAL MATTERS................................... 113
EXPERTS......................................... 113
STOCKHOLDERS' PROPOSALS......................... 114
INDEX TO STATEMENTS OF REVENUES AND DIRECT
OPERATING EXPENSES............................ F-1
AMENDED AND RESTATED AGREEMENT AND
PLAN OF MERGER...............................Annex A
FAIRNESS OPINION OF
MERRILL LYNCH & CO...........................Annex B
FAIRNESS OPINION OF
LEHMAN BROTHERS, INC.........................Annex C
FAIRNESS OPINION OF PRUDENTIAL
SECURITIES INCORPORATED......................Annex D
SECTION 262 OF THE DELAWARE GENERAL
CORPORATION LAW CONCERNING
APPRAISAL RIGHTS OF DISSENTING
STOCKHOLDERS.................................Annex E
DEFINITIONS OF CERTAIN TERMS...................Annex F
</TABLE>

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<PAGE> 11

SUMMARY

The following is only a summary of certain information contained elsewhere
in this Joint Proxy Statement/Prospectus and does not purport to be complete.
Reference is made to, and this summary is qualified in its entirety by, the more
detailed information contained elsewhere in this Joint Proxy Statement/
Prospectus. As used in this Joint Proxy Statement/Prospectus, the term "HSR"
refers to such corporation and, except where the context otherwise requires, its
subsidiaries, and the term "Tide West" refers to such corporation and, except
where the context otherwise requires, its subsidiaries. All information
concerning HSR included in this Joint Proxy Statement/Prospectus has been
furnished by HSR and all information concerning Tide West included in this Joint
Proxy Statement/Prospectus has been furnished by Tide West. Definitions of
certain industry terms used in this Joint Proxy Statement/Prospectus are
included herein as Annex F. Stockholders are urged to read this Joint Proxy
Statement/Prospectus in its entirety.

GENERAL

At the HSR Special Meeting and the Tide West Special Meeting, holders of
HSR Common Stock and Tide West Common Stock will be asked to act upon proposals
related to the merger of Tide West with and into Merger Sub pursuant to the
terms of the Merger Agreement which are more particularly described herein. If
the Merger and related proposals are approved by the requisite votes of such
stockholders, Tide West will be merged into Merger Sub, a wholly owned
subsidiary of HSR, the separate existence of Tide West will cease and Merger Sub
will succeed to all of the assets, rights, liabilities and obligations of Tide
West. If the Merger and related proposals are not approved by the requisite
votes of such stockholders, HSR and Tide West intend to continue to operate
independently. For a description of certain important federal income tax
consequences of the Merger, see "Special Factors -- Certain Federal Income Tax
Consequences."

HS RESOURCES, INC.

HSR was organized in 1987 to consolidate interests owned and/or managed by
members of the current HSR management team. HSR is an independent oil and gas
company engaged in the acquisition, exploitation, development and exploration of
oil and natural gas properties. Although HSR's predecessors have operated in
many areas of the United States, including in the Mid-Continent region, HSR and
its predecessors have concentrated most of their activities since 1982 in the
Wattenberg Field area of the Denver-Julesburg Basin near Denver, Colorado (the
Denver-Julesburg Basin, inclusive of the Wattenberg Field area, being herein
referred to as the "D-J Basin" and that portion of the Denver-Julesburg Basin,
exclusive of the Wattenberg Field area, being herein referred to as the "Greater
D-J Basin"), and have grown rapidly as a result of certain significant leasehold
acquisitions and associated development drilling programs. The principal
executive offices of HSR are located at One Maritime Plaza, 15th Floor, San
Francisco, California 94111, and its telephone number is (415) 433-5795.

For additional information concerning HSR, see "Information About the
Combining Companies -- HS Resources, Inc." and "-- Pro Forma Information for the
Combined Company" and the Unaudited Pro Forma Financial Statements of HSR
referred to in "Index to Unaudited Pro Forma Financial Statements" and "Index to
Unaudited Pro Forma Quarterly Financial Statements."

HSR ACQUISITION, INC.

Merger Sub is a wholly owned subsidiary of HSR that was formed to
facilitate the consummation of the Merger and has conducted no activities other
than in connection with the Merger and the Merger Agreement. The principal
executive offices of Merger Sub are located at One Maritime Plaza, 15th Floor,
San Francisco, California 94111, and its telephone number is (415) 433-5795.

TIDE WEST OIL COMPANY

Tide West is an independent oil and gas company focused on the acquisition
and enhancement of producing oil and gas properties. All of Tide West's oil and
gas properties are located in the United States, with principal operations
conducted in portions of the Anadarko and Arkoma geologic basins located within
Oklahoma and Texas, as well as in portions of the Southern Oklahoma and
Texas/New Mexico regions. Over

5
<PAGE> 12

the last several years, Tide West has been successful in acquiring oil and gas
properties, principally in the Mid-Continent region of the United States
(primarily Oklahoma and Texas), where management is best able to exploit its
expertise and experience obtained through operating properties in that region.
The principal executive offices of Tide West are located at 6666 South Sheridan,
Suite 250, Tulsa, Oklahoma 74133, and its telephone number is (918) 488-8962.

For additional information concerning Tide West, see "Information About the
Combining Companies -- Tide West Oil Company."

THE MERGER

Pursuant to the Merger Agreement, and subject to certain conditions, Tide
West will be merged with and into Merger Sub, and Merger Sub will be the
surviving corporation. Upon consummation of the Merger, the separate existence
of Tide West will cease and Merger Sub will succeed to all of the assets,
rights, liabilities and obligations of Tide West. The surviving corporation of
the Merger is referred to herein as the "Surviving Corporation."

As a result of the Merger, the Tide West stockholders will receive shares
of HSR Common Stock in exchange for their shares of Tide West Common Stock, with
each share of Tide West Common Stock being exchanged for a fraction of a share
of HSR Common Stock equal to the Conversion Number and cash in the amount of the
Cash Consideration, each of which is subject to adjustment. If none of the
adjustments were triggered, each share of Tide West Common Stock would be
exchanged for .6295 of a share of HSR Common Stock and $8.75 cash as a result of
the Merger.

There are two adjustments. One affects the Cash Consideration by reducing
the amount of cash paid in the Merger for each share of Tide West Common Stock
if the market price (the "Market Price"), which is generally defined as the
average closing price per share of HSR Common Stock for the 10 trading days
ending five business days preceding the closing date (the "Closing Date") of the
Merger, exceeds $10.50. In such event, the Cash Consideration is reduced by 3%
of the amount by which the Market Price exceeds $10.50. The other adjustment
(the "Tax Adjustment") reduces the Cash Consideration and increases the fraction
of a share of HSR Common Stock to be exchanged for each share of Tide West
Common Stock (i.e., the Conversion Number) so that the aggregate HSR Common
Stock to be issued in the Merger (valued as of the closing sales price (the
"Final Price") on the date immediately preceding the Closing Date) represents at
least 40% of the aggregate consideration payable in the Merger. The effect of
the Tax Adjustment is to determine whether the aggregate HSR Common Stock to be
issued in the Merger is at least equal to 40% of the aggregate consideration
payable in the Merger and, if it is not, reduce the aggregate cash to be paid to
the Tide West stockholders in the Merger and increase the aggregate HSR Common
Stock to be issued in the Merger (in essence, by converting a portion of the
Cash Consideration into HSR Common Stock at the Final Price) until the aggregate
HSR Common Stock to be issued in the Merger valued at such price is equal to at
least 40% of the aggregate consideration payable in the Merger. The Merger
Agreement provides that the maximum number of shares of HSR Common Stock
required to be issued in connection with the Merger is 7,161,312 (which equates
to a Conversion Number of .7311, based on the number of shares of Tide West
Common Stock outstanding on the date of this Joint Proxy Statement/Prospectus)
and any further adjustments to the aggregate consideration to be paid to the
holders of Tide West Common Stock necessary to satisfy the foregoing formula
(herein referred to as the "Tax Adjustment Formula") would be solely from a
further reduction of the Cash Consideration. See "The Merger Agreement and
Related Agreements -- Terms of the Merger Agreement -- Adjustments to the
Conversion Number and Cash Consideration."

The Cash Consideration, which is dependent on both the Market Price and the
Conversion Number, cannot be determined at this time. The Market Price is to be
determined by reference to the closing sales price of the HSR Common Stock over
a period that has yet to begin. The Conversion Number is to be determined by
reference to the closing sales price of the HSR Common Stock on the date
immediately preceding the Closing Date and also cannot be determined at this
time. If the Conversion Number and the Cash Consideration were calculated
treating February 26, 1996 (the date of the public announcement of the execution
of the Merger Agreement), as the Closing Date, assuming no holders of Tide West
Common Stock

6
<PAGE> 13

had perfected their dissenters' appraisal rights and assuming there is no holder
of 5% or more of the Tide West Common Stock that has not represented that it has
no intention, plan or arrangement to dispose of the HSR Common Stock to be
received in the Merger, the Conversion Number would be .6295, the Cash
Consideration would be $8.72, and HSR would issue 6,161,312 shares of HSR Common
Stock in the aggregate in connection with the Merger. If such calculations were
performed under the same assumptions, and treating the date of this Joint Proxy
Statement/Prospectus as the Closing Date, the Conversion Number would be .6295,
the Cash Consideration would be $8.68, and HSR would issue 6,161,312 shares of
HSR Common Stock in the aggregate in connection with the Merger.

A condition to Tide West's obligation to effect the Merger is that the Tax
Adjustment Formula (disregarding the limit contained therein on the maximum
number of shares of HSR Common Stock required to be issued in the Merger) would
not require HSR to issue more than 7,161,312 shares of HSR Common Stock in
connection with the Merger. If this condition is not satisfied, Tide West may
(a) waive the condition and consummate the Merger pursuant to the terms of the
Merger Agreement (in which case HSR will issue the maximum of 7,161,312 shares
of HSR Common Stock, and any further adjustments to the consideration paid to
the holders of Tide West Common Stock to satisfy the Tax Adjustment Formula will
be solely from a further reduction of the Cash Consideration), (b) terminate the
Merger Agreement or (c) cause the Merger to be restructured. See "The Merger
Agreement and Related Agreements -- Terms of the Merger
Agreement -- Restructuring of the Merger." In addition, in the event that such
condition is not satisfied, HSR and Tide West will re-solicit proxies prior to a
vote of the stockholders of HSR and Tide West, respectively.

HSR and Tide West stockholders are requested to call 1-800-275-8966,
extension 7, on any day commencing May 20, 1996, through the day of the
respective HSR Special Meeting and the Tide West Special Meeting, to be advised
of the consideration to be paid to the holders of Tide West Common Stock
pursuant to the terms of the Merger Agreement.

RECENT ACQUISITIONS

On March 15, 1996, HSR completed an acquisition (the "Initial Basin
Acquisition") of certain oil and gas properties from Basin Exploration, Inc.
("Basin") in the D-J Basin. Concurrently with its approval of the Initial Basin
Acquisition, the HSR Board approved a second acquisition of additional oil and
gas properties from Basin. This additional acquisition (the "Second Basin
Acquisition" and, together with the Initial Basin Acquisition, the "Basin
Acquisitions") is subject to approval by the stockholders of Basin and is
expected to be completed by the end of the second quarter of 1996. Accordingly,
the pro forma financial information of HSR contained in this Joint Proxy
Statement/Prospectus reflects the Initial Basin Acquisition and the consummation
of the Merger, with and without the effect of the Second Basin Acquisition.
Unless otherwise indicated, all reserve and operating data concerning HSR
contained in this Joint Proxy Statement/Prospectus excludes the effects of the
Basin Acquisitions. See "Information About the Combining Companies -- HS
Resources, Inc. -- Recent Acquisitions" and "-- Pro Forma Information for the
Combined Company," the Unaudited Pro Forma Financial Statements of HSR referred
to in "Index to Unaudited Pro Forma Financial Statements" and "Index to
Unaudited Pro Forma Quarterly Financial Statements" and the Statements of
Revenues and Direct Operating Expenses referred to in "Index to Statements of
Revenues and Direct Operating Expenses." The Initial Basin Acquisition was
financed through HSR's bank facility on an interim basis pending completion of
documentation of permanent financing arrangements with respect to the Initial
Basin Acquisition. See "Information About the Combining Companies -- HS
Resources, Inc. -- Financing."

FINANCING

The aggregate cash consideration required and net liabilities assumed in
connection with consummating the Merger and the Basin Acquisitions are expected
to be $256.5 million, with $131 million for the Merger and $125.5 million for
the Basin Acquisitions. Through existing negotiated arrangements, HSR has
available to it a number of specific capital options with which to meet these
capital needs. In order to provide the senior bank debt capacity necessary to
effect the Merger and the Basin Acquisitions, HSR has entered into a letter of
intent with The Chase Manhattan Bank, N.A. ("Chase") indicating Chase's intent
to provide, on a syndicated

7
<PAGE> 14

basis, an unsecured revolving credit facility of up to $375 million. HSR
believes this facility will be sufficient to (a) finance the cash portion of the
consideration paid to Basin and to the holders of Tide West Common Stock, (b)
absorb HSR's current outstanding senior indebtedness ($78.9 million at March 31,
1996, following the Initial Basin Acquisition and excluding the Asset
Monetization Debt (as defined herein)) and the new debt to be assumed in
connection with the Merger ($39.6 million at March 31, 1996), (c) pay HSR's
transaction costs incurred with respect to the Merger and the Basin Acquisitions
and (d) provide HSR with additional financial flexibility.

On March 26, 1996, in a financing transaction facilitated by Chase, HSR
closed the sale to Wattenberg Resources Land, L.L.C. ("WRL"), a third party
entity created to facilitate the financing, of certain low-growth assets
acquired in the Initial Basin Acquisition, principally the producing and proved
developed non-producing wells (the "Chase Asset Monetization Arrangement"). HSR
reserved a production payment in such wells and retained an option to
repurchase, in whole or in part, the wells for fair market value at any time.
HSR also retained what it considers to be the high-growth assets, including the
proved and unproved drillsites, operations, the right to market production from
the wells, infill rights and proceeds from the monetization of Section 29 tax
credits. HSR will operate these properties under a fee agreement. As a result of
the Chase Asset Monetization Arrangement, WRL assumed approximately $23.1
million of debt which HSR had incurred in closing the Initial Basin Acquisition.
HSR intends to transfer to WRL a portion of the assets to be acquired in the
Second Basin Acquisition (such assets to be transferred to WRL in the Second
Basin Acquisition along with those transferred in the Initial Basin Acquisition,
being herein referred to as the "WRL Assets") in a similar transaction in which
WRL will assume approximately $58.9 million of indebtedness that HSR will incur
in closing the Second Basin Acquisition. HSR will have no obligation to repay
the approximately $82 million indebtedness (the "Asset Monetization Debt")
assumed and to be assumed by WRL in connection with its purchase from HSR of the
WRL Assets. The Asset Monetization Debt is secured only by the WRL Assets. The
financial statements of WRL are required to be consolidated with the financial
statements of HSR. Accordingly, the WRL Assets and the Asset Monetization Debt
must be included in the consolidated balance sheet of HSR and the operations
relating thereto must be reflected in HSR's consolidated statement of
operations.

On a pro forma basis, following the consummation of the Merger and the
Basin Acquisitions, and assuming the consolidation of HSR and WRL, HSR's
debt-to-total capital ratio at March 31, 1996, would be 67%. Following the
consummation of the Merger and the Basin Acquisitions, HSR's debt-to-total
capital ratio at March 31, 1996, excluding the Asset Monetization Debt and the
related assets, would be 62%. Despite the increase in the ratio of debt-to-total
capital, HSR believes it has sufficient financial capabilities to service its
indebtedness. For the quarter ended March 31, 1996, the ratio of HSR's
consolidated earnings before interest, taxes, depreciation and amortization to
interest expense was 3.29 to 1. HSR intends to reduce such leverage to a more
balanced level as soon as practicable by utilizing one or a combination of
options available to it, including asset monetization transactions, off-balance
sheet financings, sale and lease-back transactions, divestitures of
non-core/non-strategic assets, issuance of equity securities and certain other
negotiated financing options already in place. See "Information About the
Combining Companies -- HS Resources, Inc. -- Financing."

TIDE WEST STOCK OPTIONS

There are currently outstanding options to purchase 930,340 shares of Tide
West Common Stock, all of which are or will become fully vested prior to the
Closing Date. If not exercised prior to the Closing Date, each such option will
be cancelled and converted into the right to receive, for each share of Tide
West Common Stock with respect to which such option is exercisable, cash in an
amount equal to the amount by which the Merger Consideration exceeds the per
share exercise price of such option. "Merger Consideration" is the sum of (a)
the Cash Consideration and (b) the product of the Conversion Number and the
Market Price. The amounts so determined will be paid to the holders of such
options not later than three business days after the Closing Date. See "Special
Factors -- Effects of the Merger -- Conversion of Tide West Common Stock and
Other Securities -- Tide West Stock Options."

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<PAGE> 15

REASONS FOR THE MERGER

The HSR Board determined to approve the Merger Agreement and the
transactions contemplated thereby and to recommend that its stockholders vote
FOR the issuance of shares of HSR Common Stock in accordance with the Merger
Agreement for the following reasons: (a) the Merger provides geographic
diversification for HSR into attractive geographic regions; (b) the Tide West
properties offer significant upside potential through aggressive and
technologically oriented exploitation and exploration; (c) the Merger provides
advantageous synergies between HSR's gas marketing group and Tide West's trading
and transportation business; (d) the Tide West properties are relatively
concentrated and are primarily operated by Tide West; (e) the Merger brings HSR
to a size level that HSR's management believes will improve the liquidity of HSR
Common Stock and should help HSR achieve a wider market following; and (f) the
Merger offers the opportunity to create a combined company with greater
financial resources, competitive strength and business opportunities than would
be possible for HSR alone.

The Tide West Board determined to approve the Merger Agreement and the
transactions contemplated thereby and to recommend that its stockholders vote
FOR approval of the Merger Agreement and the Merger for the following reasons:
(a) under current market conditions, the Merger offers the best opportunity of
maximizing value for Tide West's stockholders; (b) the Merger presents a
significant opportunity for diversification and partial liquidation of the
investment of Tide West's stockholders by allowing them to receive cash for a
portion of their investment and to become stockholders in a larger publicly
traded independent oil and gas company whose stock, the Tide West Board
believes, has greater upside potential than the Tide West Common Stock; (c) the
Merger offers the opportunity to create a combined company with greater
financial resources, competitive strength and business opportunities than would
be possible for Tide West alone; (d) the Merger is expected to provide Tide
West's stockholders with enhanced liquidity with respect to the HSR Common Stock
received by them in the Merger; and (e) the Merger is expected to provide Tide
West's stockholders with the opportunity to receive a premium over the market
price of their shares of Tide West Common Stock immediately prior to the
announcement on February 26, 1996, of the proposed Merger and a premium over the
market price of their shares of Tide West Common Stock immediately prior to the
announcement on October 20, 1995, of the intention of the Tide West Board to
sell Tide West.

For a discussion of the reasons for the Merger and other factors considered
by the HSR Board and the Tide West Board, see "Special Factors -- Reasons for
the Merger -- HSR" and "-- Reasons for the Merger -- Tide West."

RECOMMENDATIONS OF THE BOARDS OF DIRECTORS OF HSR AND TIDE WEST

The HSR Board believes that the terms of the Merger and the issuance of
shares of HSR Common Stock pursuant to the Merger Agreement are fair to, and in
the best interests of, HSR and its stockholders. Accordingly, the HSR Board has
approved the Merger Agreement, the Merger, the issuance of HSR Common Stock and
payment of the aggregate Cash Consideration in accordance with the Merger
Agreement and recommends that holders of HSR Common Stock vote FOR the issuance
of HSR Common Stock in accordance with the Merger Agreement. See "Special
Factors -- Recommendation of the HSR Board."

The Tide West Board believes that the terms of the Merger are fair to, and
in the best interests of, Tide West and its stockholders. Accordingly, the Tide
West Board has approved the Merger Agreement and the Merger and recommends that
holders of shares of Tide West Common Stock vote FOR adoption and approval of
the Merger Agreement and the Merger. See "Special Factors -- Recommendation of
the Tide West Board."

OPINIONS OF FINANCIAL ADVISORS

HSR engaged Lehman Brothers, Inc. ("Lehman Brothers") and Prudential
Securities Incorporated ("Prudential Securities" and, together with Lehman
Brothers, the "HSR Financial Advisors") to act as financial advisors in
connection with the Merger and to render their opinions as to the fairness, from
a financial point of view, to HSR of the consideration to be paid by HSR in the
Merger. On February 24, 1996, Lehman

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<PAGE> 16

Brothers delivered its oral opinion, which opinion was subsequently confirmed in
writing, to the HSR Board, that, as of such date and subject to certain
assumptions, factors and limitations, the consideration to be paid by HSR for
the Tide West Common Stock in the Merger was fair, from a financial point of
view, to HSR. Each of the HSR Financial Advisors has provided its written
opinion dated March 26, 1996. A copy of the full text of each of the opinions of
the HSR Financial Advisors dated the date of this Joint Proxy
Statement/Prospectus, which sets forth the assumptions made, procedures
followed, matters considered and limitations on the review by the HSR Financial
Advisors in rendering their opinions, are attached as Annex C and Annex D to
this Joint Proxy Statement/Prospectus and are incorporated herein by reference.
This Joint Proxy Statement/Prospectus contains a summary of the material terms
of the opinions of Lehman Brothers and Prudential Securities. Reference is made
to the full text of the opinions attached as Annex C and Annex D hereto. The
March 26, 1996, opinions are substantially identical to the opinions attached as
Annex C and Annex D hereto. STOCKHOLDERS OF HSR ARE URGED TO READ CAREFULLY THE
OPINIONS OF THE HSR FINANCIAL ADVISORS IN THEIR ENTIRETY. For a more particular
description of the opinions, information regarding fees and expenses to be paid
to Lehman Brothers and Prudential Securities by HSR upon consummation of the
Merger and Lehman Brothers' and Prudential Securities' prior representation of
HSR, see "Special Factors -- Opinions of the HSR Financial Advisors."

Merrill Lynch & Co. ("Merrill Lynch") delivered its oral opinion,
subsequently confirmed in writing, dated February 24, 1996, that, as of such
date, the consideration to be received by the holders of the Tide West Common
Stock was fair to such holders, taken as a whole, from a financial point of
view. Merrill Lynch has confirmed such opinion in an opinion dated the date of
this Joint Proxy Statement/Prospectus. A copy of the full text of the opinion of
Merrill Lynch dated the date of this Joint Proxy Statement/Prospectus, which
sets forth the assumptions made, matters considered and limitations on the
review undertaken, is attached as Annex B to this Joint Proxy
Statement/Prospectus and is incorporated herein by reference. This Joint Proxy
Statement/Prospectus contains a summary of the material terms of the opinion of
Merrill Lynch set forth in this Joint Proxy Statement/Prospectus. Reference is
made to the full text of such opinion attached as Annex B hereto. The February
24, 1996, opinion is substantially identical to the opinion attached as Annex B
hereto. STOCKHOLDERS OF TIDE WEST ARE URGED TO READ CAREFULLY THE OPINION IN ITS
ENTIRETY. For a more particular description of this opinion and information
regarding fees and expenses payable to Merrill Lynch by Tide West, see "Special
Factors -- Opinion of the Tide West Financial Advisor."

CONVERSION PROCEDURES

As soon as practicable after the Closing Date, HSR will cause Harris
Savings and Trust, the transfer agent for shares of HSR Common Stock (the
"Exchange Agent"), to mail to each record holder of Tide West Common Stock as of
the Closing Date a letter of transmittal to be used to effect the exchange of
certificates representing Tide West Common Stock for certificates representing
HSR Common Stock and the Cash Consideration, along with instructions for using
such letter of transmittal to effect such exchange (collectively, the "Letter of
Transmittal"). TIDE WEST STOCKHOLDERS SHOULD NOT SURRENDER THEIR STOCK
CERTIFICATES UNTIL THE LETTER OF TRANSMITTAL IS RECEIVED AND THEN SHOULD
SURRENDER THEIR STOCK CERTIFICATES ONLY ACCOMPANIED BY A PROPERLY COMPLETED AND
EXECUTED LETTER OF TRANSMITTAL. See "The Merger Agreement and Related
Agreements -- Manner and Basis of Converting Shares."

DESCRIPTION OF OTHER TERMS OF THE MERGER AGREEMENT

The Merger Agreement contains various other terms and provisions, including
certain representations and warranties made by both HSR and Tide West, certain
covenants and agreements made by both HSR and Tide West (including agreements
relating to the conduct of Tide West's business pending consummation of the
Merger and agreements restricting Tide West's ability to solicit or enter into
an agreement with respect to an alternative transaction or furnish information
to or negotiate with another party with respect to an alternative transaction)
and certain conditions that must be satisfied or waived prior to consummation of
the Merger (including obtaining requisite stockholder approvals and making
certain governmental filings). Such provisions are summarized under "The Merger
Agreement and Related Agreements." In addition, a copy of the

10
<PAGE> 17

Merger Agreement is included as Annex A to this Joint Proxy
Statement/Prospectus, and reference should be made to such copy for the complete
text of such provisions.

The Merger Agreement is subject to termination at the option of either HSR
or Tide West if the Merger is not consummated on or before July 31, 1996, and
prior to such time upon the occurrence of certain specified events. The Merger
Agreement may be amended or supplemented at any time by agreement of HSR and
Tide West; provided, that, after any stockholder approval of the Merger, no
amendment may be made which adversely affects the rights of the holders of the
Tide West Common Stock or the HSR Common Stock without further stockholder
approval. It is anticipated that the Merger will become effective as promptly as
practicable after the requisite stockholder approvals have been obtained, all
other conditions to the Merger have been satisfied or waived and a certificate
of merger is accepted for filing by the Secretary of State of Delaware (the
"Effective Time"). At any time prior to the Effective Time, subject to certain
restrictions, the parties may waive any provision of the Merger Agreement. See
"The Merger Agreement and Related Agreements."

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

Under the terms of the Merger Agreement, Tide West will be merged into
Merger Sub, a subsidiary of HSR, which will be the Surviving Corporation. It is
expected that the Merger will constitute a reorganization within the meaning of
Section 368(a)(1)(A) of the Internal Revenue Code of 1986 (the "Code") by virtue
of the application of Section 368(a)(2)(D) of the Code. Each Tide West
stockholder will recognize the amount of gain, but not loss, realized in the
transaction, but only to the extent of cash received (excluding any cash
received in lieu of issuing fractional shares or in respect of the assertion of
appraisal rights). Generally, Tide West stockholders receiving cash in lieu of
fractional shares will be treated as receiving such cash in redemption of such
fractional shares. For a discussion of these and other federal income tax
considerations in connection with the Merger, see "Special Factors -- Certain
Federal Income Tax Consequences."

ACCOUNTING TREATMENT

The Merger will be accounted for as a purchase by HSR in accordance with
generally accepted accounting principles. For a discussion of the effect of the
application of purchase accounting to this transaction, see "Special
Factors -- Accounting Treatment."

THE SPECIAL MEETINGS

The HSR Special Meeting will be held on Monday, June 17, 1996, at the
Sheraton Palace Hotel, 2 New Montgomery Street, San Francisco, California, at
10:00 a.m., local time. The purpose of the HSR Special Meeting is to consider
and act upon (a) a proposal to approve the issuance of up to 7,161,312 shares of
HSR Common Stock in accordance with the Merger Agreement and (b) such other
business as may properly be brought before the HSR Special Meeting or any
adjournment or postponement thereof. Holders of record of shares of HSR Common
Stock at the close of business on May 8, 1996, are entitled to notice of, and to
vote at, the HSR Special Meeting. On such date, there were 10,892,862 shares of
HSR Common Stock outstanding, each of which will be entitled to vote on each
matter to be acted upon or which may properly be brought before the HSR Special
Meeting. The affirmative vote of the holders of a majority of the issued and
outstanding shares of HSR Common Stock that are present in person or represented
by proxy at the HSR Special Meeting at which a quorum is present will be
required to approve the issuance of the HSR Common Stock upon consummation of
the Merger. Approximately 10% of the outstanding shares of HSR Common Stock are
held by directors and executive officers of HSR and their affiliates.

The Tide West Special Meeting will be held on Monday, June 17, 1996, at the
offices of Tide West at 6666 South Sheridan, Suite 250, Tulsa, Oklahoma, at
10:00 a.m., local time. The purpose of the Tide West Special Meeting is to
consider and act upon (a) a proposal to approve and adopt the Merger Agreement
and to approve the Merger and (b) such other business as may properly be brought
before the Tide West Special Meeting or any adjournment or postponement thereof.
Holders of record of shares of Tide West Common Stock at the close of business
on May 8, 1996, are entitled to notice of, and to vote at, the Tide West Special

11
<PAGE> 18

Meeting. On such date, there were 9,795,128 shares of Tide West Common Stock
outstanding, each of which will be entitled to vote on each matter to be acted
upon or which may properly be brought before the Tide West Special Meeting. The
affirmative vote of the holders of a majority of the issued and outstanding
shares of Tide West Common Stock will be required to approve and adopt the
Merger Agreement and to approve the Merger. HSR has, pursuant to certain voting
and proxy agreements entered into between HSR and certain stockholders of Tide
West, acquired the right to vote a majority of the outstanding shares of Tide
West Common Stock in favor of the Merger and the Merger Agreement. Accordingly,
HSR has sufficient voting power to assure the approval of the Merger and the
Merger Agreement by the Tide West stockholders without the affirmative vote of
any other stockholder of Tide West. Approximately 53.2% of the outstanding
shares of Tide West Common Stock are held by directors and executive officers of
Tide West and their affiliates. For additional information concerning the
special meetings, see "The Meetings."

APPRAISAL RIGHTS

Under the Delaware Act, holders of HSR Common Stock are not entitled to
dissenters' appraisal rights in respect of the Merger. Holders of Tide West
Common Stock may demand an appraisal of the fair value of Tide West Common Stock
and payment of cash in lieu of accepting the Cash Consideration and shares of
HSR Common Stock issuable to them in connection with the Merger. Any holder of
Tide West Common Stock who desires to exercise appraisal rights (each, a
"Dissenting Stockholder") must: (a) hold shares of Tide West Common Stock on the
date of making a demand for appraisal; (b) continuously hold shares of Tide West
Common Stock through the Effective Time of the Merger; (c) deliver, prior to the
Tide West Special Meeting, a written demand for appraisal to Tide West at 6666
South Sheridan, Suite 250, Tulsa, Oklahoma 74133-1750, Attention: Secretary; and
(d) otherwise satisfy all of the requirements of Section 262 of the Delaware
Act. In order to preserve such stockholder's appraisal rights, a Tide West
stockholder must not vote in favor of the Merger. Voting against the Merger,
abstaining from voting or failing to vote, however, will not constitute a
written demand for appraisal. Any Tide West stockholder who fails to timely and
properly perfect such stockholder's appraisal rights will lose such right to
appraisal and will have such stockholder's Tide West Common Stock converted into
the right to receive the Cash Consideration and shares of HSR Common Stock in
accordance with the terms of the Merger Agreement, without any interest thereon.
See "Special Factors -- Appraisal Rights," "The Meetings" and Annex E hereto.

A condition to HSR's obligation to consummate the Merger is that holders of
no more than 3% of Tide West Common Stock shall have exercised their dissenters'
appraisal rights. See "The Merger Agreement and Related Agreements -- Terms of
the Merger Agreement -- Conditions to Consummation of the Merger." The amount of
Tide West Common Stock subject to perfected dissenters' appraisal rights as of
the Closing Date is used in the calculation of the Adjustment Formula to
determine the Conversion Number and the Cash Consideration. See "The Merger
Agreement and Related Agreements -- Terms of the Merger Agreement -- Adjustments
to the Conversion Number and Cash Consideration."

VOTING AGREEMENTS

On February 25, 1996, HSR and Natural Gas Partners, L.P., a Delaware
limited partnership ("NGP"), entered into an Agreement to Vote and Proxy (the
"NGP Voting Agreement") pursuant to which NGP agreed to vote, and granted to HSR
a proxy to vote, NGP's 4,550,000 shares of Tide West Common Stock, representing
approximately 46.45% of the Tide West Common Stock, in favor of the Merger and
the Merger Agreement. HSR and Philip B. Smith, President, a director and a
stockholder of Tide West ("Smith"), entered into an Agreement to Vote and Proxy
dated February 25, 1996, as amended (the "Smith Voting Agreement" and, together
with the NGP Voting Agreement, the "Voting Agreements") pursuant to which Smith
agreed to vote, and granted to HSR a proxy to vote, 344,000 shares of Tide West
Common Stock owned by him and 85,000 shares of Tide West Common Stock owned by
family trusts of which Smith is the trustee, representing an aggregate of an
additional 4.38% of the Tide West Common Stock, in favor of the Merger and the
Merger Agreement. Pursuant to the Voting Agreements, HSR has acquired the voting
rights to a majority of the outstanding shares of Tide West Common Stock.
Accordingly, HSR has sufficient voting

12
<PAGE> 19

power to assure the approval of the Merger and the Merger Agreement by the Tide
West stockholders without the affirmative vote of any other stockholder of Tide
West.

NGP and Smith each entered into the Voting Agreements in consideration of
HSR entering into the Merger Agreement and, in the case of NGP, HSR agreeing to
provide NGP with representation on the HSR Board. In addition, pursuant to the
Voting Agreements, NGP and Smith each agreed, among other things, that they
would not make any sale, transfer or other disposition of any shares of HSR
Common Stock received by them in the Merger for one year from the Effective
Time. NGP and Smith also agreed that they would not, among other things,
directly or indirectly, sell, transfer or encumber any of the Tide West Common
Stock subject to their respective Voting Agreements during the term of such
Voting Agreement, nor would they take any action which would, if taken by Tide
West, violate the provisions of the Merger Agreement relating to negotiations
with third parties regarding the acquisition of Tide West Common Stock or the
merger or other business combination of Tide West with or into any third party.
See "Special Factors -- Interests of Certain Persons in the Merger" and "The
Merger Agreement and Related Agreements -- Voting Agreements."

HSR SECURITIES TO BE ISSUED

In connection with the Merger, in addition to the aggregate Cash
Consideration to be paid in exchange for the outstanding shares of Tide West
Common Stock, HSR will issue up to 7,161,312 shares of HSR Common Stock. For a
description of the terms and relative rights of the HSR Common Stock, see
"Description of HSR Capital Stock." HSR Common Stock is listed for trading on
the NYSE. Application has been made for listing the HSR Common Stock to be
issued in connection with the Merger on the NYSE.

COMPARATIVE MARKET PRICE INFORMATION

HSR Common Stock is traded on the NYSE under the symbol "HSE." Tide West
Common Stock is traded on The Nasdaq Stock Market ("Nasdaq") under the symbol
"TIDE."

The following table shows, for each of February 23, 1996 (the last trading
day prior to the public announcement of the execution of the Merger Agreement),
and May 15, 1996 (the latest practicable date prior to the date of this Joint
Proxy Statement/Prospectus), (a) the last reported sales price of the HSR Common
Stock, as reported by the NYSE, (b) the last reported sales price of the Tide
West Common Stock, as reported by Nasdaq, and (c) the equivalent value for the
Tide West Common Stock assuming conversion of the Tide West Common Stock into
shares of HSR Common Stock and cash pursuant to the Merger.

<TABLE>
<CAPTION>
TIDE WEST
COMMON STOCK
-----------------------
HSR EQUIVALENT
COMMON STOCK HISTORICAL VALUE*
------------ ---------- ----------
<S> <C> <C> <C>
February 23, 1996............................................ $ 11.375 $13.00 $ 7.16
May 15, 1996................................................. $ 12.375 $16.00 $ 7.79
</TABLE>

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

* Calculated by multiplying the historical market price per share of the HSR
Common Stock on the indicated day by the Conversion Number, which represents
the fraction of a share of HSR Common Stock that would be issuable in the
Merger in exchange for each share of Tide West Common Stock if the Merger were
to be consummated on that day, but without adding the Cash Consideration of
$8.72 and $8.68 for February 23, 1996, and May 15, 1996, respectively. See
"The Merger Agreement and Related Agreements -- Terms of the Merger
Agreement -- Adjustments to the Conversion Number and Cash Consideration."

For information relating to market prices of and dividends on HSR Common
Stock and Tide West Common Stock, see "Information About the Combining
Companies -- HS Resources, Inc. -- Price Range of HSR Common Stock and
Dividends" and " -- Tide West Oil Company -- Price Range of Tide West Common
Stock and Dividends." STOCKHOLDERS OF TIDE WEST AND HSR ARE URGED TO OBTAIN
CURRENT QUOTATIONS FOR EACH OF THESE SECURITIES.

13
<PAGE> 20

Following the Merger, HSR Common Stock will continue to be traded on the
NYSE. Following the Merger, Tide West Common Stock will cease to be traded on
Nasdaq and there will be no further market for such stock.

COMPARATIVE PER SHARE INFORMATION

The following table sets forth certain comparative per share information
for HSR and Tide West. The "Prior to Merger" information for HSR is historical
and pro forma information, with the pro forma information giving effect to the
Initial Basin Acquisition, and for Tide West is historical information. The
"Assuming Merger" information is pro forma information of HSR giving effect to
the Merger presented on a per share basis, assuming the Conversion Number is
.6295 and the Cash Consideration is $8.68 (such Conversion Number and Cash
Consideration calculated treating the date of this Joint Proxy Statement/
Prospectus as the Closing Date of the Merger and assuming no holders of Tide
West Common Stock have perfected their dissenters' appraisal rights and assuming
there is no holder of 5% or more of the Tide West Common Stock that has not
represented that it has no intention, plan or arrangement to dispose of the HSR
Common Stock to be received in the Merger). See "The Merger Agreement and
Related Agreements -- Terms of the Merger Agreement -- Adjustments to the
Conversion Number and Cash Consideration." The "Assuming Merger" information is
pro forma, with the "With Second Basin Acquisition" information giving effect to
the Initial Basin Acquisition, the Merger and the Second Basin Acquisition and
the "Without Second Basin Acquisition" information giving effect to the Initial
Basin Acquisition and the Merger, in each case as if all of such transactions
had occurred on January 1, 1995.

<TABLE>
<CAPTION>
PRIOR TO MERGER
------------------------------------
ASSUMING MERGER
-----------------------------------------
HSR WITH WITHOUT
------------------------ SECOND BASIN SECOND BASIN
PRO ACQUISITION ACQUISITION
FORMA ------------------- -------------------
WITH PER PER
INITIAL TIDE WEST PER EQUIVALENT PER EQUIVALENT
BASIN --------- HSR TIDE WEST HSR TIDE WEST
HISTORICAL ACQUISITION HISTORICAL SHARE SHARE SHARE SHARE
---------- ----------- --------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Book value:
As of December 31, 1995................. $10.88 $ 10.88 $7.61 $17.47 $31.05 $17.47 $31.05
Income (loss) from continuing operations:
Year ended December 31, 1995............ 0.02 0.03 0.65 (0.17) (0.31) (0.22) (0.41)
Cash dividends:
Year ended December 31, 1995............ -- -- -- -- -- -- --
</TABLE>

14
<PAGE> 21

AVAILABLE FINANCIAL INFORMATION

Historical financial statements and other information for HSR and Tide West
are included in documents incorporated by reference into this Joint Proxy
Statement/Prospectus. For a list of such documents and instructions as to how to
obtain copies of such documents, see "Incorporation of Documents by Reference."

This Joint Proxy Statement/Prospectus also includes (a) pro forma financial
statements for HSR and certain pro forma oil and gas information, giving effect
to the Initial Basin Acquisition and the Merger, with and without giving effect
to the Second Basin Acquisition, and (b) statements of revenues and direct
operating expenses for properties acquired in the Initial Basin Acquisition and
properties to be acquired in the Second Basin Acquisition. See "Information
About the Combining Companies -- HS Resources, Inc. -- Recent Acquisitions" and
"-- Pro Forma Information for the Combined Company," the Unaudited Pro Forma
Financial Statements of HSR referred to in "Index to Unaudited Pro Forma
Financial Statements" and "Index to Unaudited Pro Forma Quarterly Financial
Statements" and the Statements of Revenues and Direct Operating Expenses
referred to in "Index to Statements of Revenues and Direct Operating Expenses."

FORWARD-LOOKING STATEMENTS OR INFORMATION

CERTAIN STATEMENTS CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS ARE
NOT BASED ON HISTORICAL FACTS, BUT ARE FORWARD-LOOKING STATEMENTS THAT ARE BASED
UPON NUMEROUS ASSUMPTIONS ABOUT FUTURE CONDITIONS THAT MAY ULTIMATELY PROVE TO
BE INACCURATE. ACTUAL EVENTS AND RESULTS MAY MATERIALLY DIFFER FROM ANTICIPATED
RESULTS DESCRIBED IN SUCH STATEMENTS. HSR'S ABILITY TO ACHIEVE SUCH RESULTS IS
SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES. SUCH RISKS AND UNCERTAINTIES
INCLUDE, BUT ARE NOT LIMITED TO, PRODUCT PRICES, CONTINUED AVAILABILITY OF
CAPITAL AND FINANCING, NUMBER OF SHARES OF HSR COMMON STOCK ISSUED IN CONNECTION
WITH THE MERGER, AMOUNT OF OTHER FINANCING AND OTHER FACTORS AFFECTING HSR'S
BUSINESS THAT MAY BE BEYOND HSR'S CONTROL, INCLUDING, BUT NOT LIMITED TO, THE
MATTERS DESCRIBED IN "RISK FACTORS."

RISK FACTORS

Stockholders of HSR and Tide West should refer to the information under
"Risk Factors" for a discussion of certain matters that should be considered in
connection with an evaluation of the proposals to be considered at the
respective stockholders meetings.

15
<PAGE> 22

SELECTED FINANCIAL INFORMATION

The following tables set forth certain selected historical consolidated
financial data for HSR and Tide West. It should be read in conjunction with the
historical financial statements of HSR and Tide West incorporated by reference
into this Joint Proxy Statement/Prospectus.

HS RESOURCES, INC.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, QUARTER ENDED
---------------------------------------------------- MARCH 31,
1991 1992 1993 1994 1995 1996
-------- -------- -------- -------- -------- -------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Financial Data:
Gross Revenues.......................... $ 13,136 $ 27,633 $ 47,477 $ 60,401 $ 55,340 $ 14,194
Total Expenses.......................... 12,163 20,066 31,232 50,290 54,890 13,885
-------- -------- -------- -------- -------- -----------
Income Before Provision for Income Taxes
and Extraordinary Item................ $ 973 $ 7,567 $ 16,245 $ 10,111 $ 450 $ 309
======== ======== ======== ======== ======== ===========
Net Income.............................. $ 584 $ 3,690 $ 10,056 $ 6,259 $ 274 $ 191
======== ======== ======== ======== ======== ===========
Net Income Per Share -- Fully Diluted... $ 0.11 $ 0.55 $ 0.92 $ 0.53 $ 0.02 $ 0.02
Other Financial Data:
Net Cash Provided by Operating
Activities............................ $ 3,051 $ 20,469 $ 33,745 $ 36,553 $ 31,179 $ 11,100
Net Cash Used in Investing Activities... (18,596) (45,607) (91,410) (85,793) (65,284) (47,020)
Net Cash Provided by Financing
Activities............................ 21,591 24,838 71,683 28,778 33,564 37,893
Balance Sheet Data (At Period End):
Total Assets............................ $ 83,026 $120,452 $228,260 $269,070 $302,089 $ 349,794
Long-term Debt (net of current
portion).............................. 36,303 20,640 74,420 103,478 125,537 153,452
Asset Monetization Debt................. -- -- -- -- -- 23,100
Stockholders' Equity.................... 28,901 78,731 113,299 119,358 119,174 118,658
</TABLE>

TIDE WEST OIL COMPANY

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,(5) QUARTER ENDED
--------------------------------------------------- MARCH 31,
1991(1) 1992(1) 1993(1) 1994(1) 1995 1996
------- -------- -------- -------- -------- -------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Financial Data:
Total Operating Revenues................. $ 5,030 $ 24,958 $ 96,028 $117,720 $119,435 $ 39,116
Total Operating Expenses................. 4,094 19,957 88,393 107,604 106,828 32,864
------- -------- -------- -------- -------- ---------
Operating Income......................... 936 5,001 7,635 10,116 12,607 6,252
Income Before Income Taxes and Cumulative
Effect of Change in Accounting
Principle(2)........................... $ 1,360 $ 4,375 $ 6,878 $ 7,998 $ 10,687 $ 5,453
======= ======== ======== ======== ======== =========
Net Income(3)............................ $ 1,360 $ 4,239 $ 4,030 $ 5,095 $ 6,671 $ 3,271
======= ======== ======== ======== ======== =========
Net Income Per Share -- Primary(2)....... $ 0.26 $ 0.80 $ 0.43 $ 0.52 $ 0.67 $ 0.32
Net Income Per Share -- Fully Diluted.... 0.26 0.80 0.43 0.52 0.65 0.32
Other Financial Data:
Net Cash Provided by Operating
Activities............................. $ 3,397 $ 4,614 $ 11,884 $ 17,683 $ 24,056 $ 6,344
Net Cash Used in Investing Activities.... (2,415) (27,956) (40,045) (27,760) (26,568) (2,076)
Net Cash (Used in) Provided by Financing
Activities............................. (210) 23,170 27,426 10,005 5,892 (1,200)
Balance Sheet Data (At Period End):
Total Assets............................. $14,771 $ 70,481 $106,606 $124,320 $144,397 $ 151,853
Long-Term Debt........................... -- 21,565 22,300 32,300 40,800 39,600
Partners' Capital........................ 13,550 -- -- -- -- --
Stockholders' Equity(4).................. -- 29,475 65,364 70,459 74,506 77,777
</TABLE>

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

(1) Certain reclassifications were made to conform to the presentation used in
1995.

(2) Effective January 1, 1993, Tide West changed its method of accounting for
income taxes. The cumulative effect of this change reduced 1993 net income
$300,000, or $0.05 per share.

(3) Tide West was a partnership until the reverse acquisition of Draco Gas
Partners, L.P. ("Draco"), effective December 1, 1992, and, therefore, was
not subject to income tax.

(4) No cash dividends have been paid. Draco, which was a partnership, paid a
$1.1 million cash distribution to its partners in January 1992.

(5) See Tide West 1995 Form 10-K, "Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations," Consolidated Statements
of Income and Notes to Consolidated Financial Statements and Quarterly
Financial Data for information relating to significant items affecting the
results of operations.

16
<PAGE> 23

SUMMARY SELECTED HISTORICAL OPERATING DATA

The following table sets forth summary information with respect to HSR's
and Tide West's operations for the periods indicated.

<TABLE>
<CAPTION>
HSR TIDE WEST
------------------------ HSR --------------------------- TIDE WEST
QUARTER QUARTER
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED DECEMBER 31, ENDED
------------------------ MARCH 31, --------------------------- MARCH 31,
1993 1994 1995 1996 1993 1994 1995 1996
------ ------ ------ --------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Production
Oil (MBbls)..................... 967 1,664 1,582 295 297 362 571 145
Natural gas (MMcf).............. 14,684 20,108 21,049 4,962 10,053 14,087 18,099 4,514
Oil equivalent (MBoe)........... 3,414 5,015 5,090 1,122 1,973 2,710 3,588 898
Average net sales price
Oil ($ per Bbl)................. $16.09 $14.83 $16.52 $ 18.80 $ 15.79 $ 15.39 $ 16.55 $ 18.52
Natural gas ($ per Mcf)......... $ 2.03 $ 1.70 $ 1.30 $ 1.64 $ 1.95 $ 1.66 $ 1.44 $ 1.83
Production and operating costs per
Boe(1).......................... $ 2.84 $ 2.68 $ 2.75 $ 3.47 $ 3.22 $ 2.54 $ 2.86 $ 3.15
</TABLE>

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

(1) Includes lease operating expenses plus production taxes per Boe and excludes
general and administrative expenses.

SUMMARY HISTORICAL OIL AND GAS RESERVE INFORMATION

The following table sets forth summary information with respect to HSR's
and Tide West's proved oil and gas reserves as of December 31, 1995. For pro
forma reserve information concerning HSR as of December 31, 1995, see
"Information About the Combining Companies -- Pro Forma Information for the
Combined Company -- Oil and Gas Properties -- Pro Forma Reserves."

<TABLE>
<CAPTION>
OIL
CRUDE OIL NATURAL GAS EQUIVALENT
(MBBLS) (MMCF) (MBOE)
--------- ----------- ----------
<S> <C> <C> <C>
Net Proved Reserves
HSR:
Developed.............................................. 11,557 219,262 48,101
Undeveloped............................................ 8,031 79,515 21,283
------ ------- ------
Total............................................. 19,588 298,777 69,384
Tide West:
Developed.............................................. 5,831 194,624 38,268
Undeveloped............................................ 1,154 42,863 8,298
------ ------- ------
Total............................................. 6,985 237,487 46,566
</TABLE>

17
<PAGE> 24

SELECTED HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA OF HSR

The following selected historical and unaudited pro forma balance sheet
data as of December 31, 1995, and as of March 31, 1996, and historical and
unaudited pro forma statements of operations data for the periods then ended
adjust the historical financial information of HSR and Tide West to reflect (a)
the consummation of the Merger and both the Initial and Second Basin
Acquisitions (with respect to the Selected Historical and Pro Forma Financial
Data With Second Basin Acquisition as of and for the Year Ended December 31,
1995, and the Quarter Ended March 31, 1996), (b) the Merger and the Initial
Basin Acquisition (with respect to the Selected Historical and Pro Forma
Financial Data Without Second Basin Acquisition as of and for the Year Ended
December 31, 1995, and the Quarter Ended March 31, 1996) and (c) only the
Initial Basin Acquisition (with respect to the Selected Historical and Pro Forma
Financial Data With Initial Basin Acquisition as of and for the Year Ended
December 31, 1995, and the Quarter Ended March 31, 1996). The pro forma balance
sheets and statements of operations as of and for the Year Ended December 31,
1995, and the Quarter Ended March 31, 1996, included elsewhere herein were
prepared as if the Merger and Basin Acquisitions were consummated, as the case
may be, on December 31, 1995, and January 1, 1995, or March 31, 1996, and
December 31, 1995, respectively. The pro forma adjustments are based on
estimates and assumptions explained in further detail in the notes accompanying
such pro forma financial statements. With respect to the Initial Basin
Acquisition, HSR has entered into the Chase Asset Monetization Arrangement
pursuant to which it sold at its cost certain of the interests that it had
acquired from Basin (see "Information About the Combining Companies -- HS
Resources, Inc. -- Financing"). The interests sold represent primarily proved
producing and proved non-producing wells, which HSR sold for cash and a retained
production payment. HSR will have no obligation to repay the approximately $23.1
million indebtedness assumed in connection with the Initial Basin Acquisition
and approximately $58.9 million indebtedness to be assumed in connection with
the Second Basin Acquisition by WRL in connection with its purchase from HSR of
the WRL Assets. Such indebtedness is secured only by the WRL Assets. The
financial statements of WRL are required to be consolidated with the financial
statements of HSR. Accordingly, the WRL Assets and the Asset Monetization Debt
must be included in the consolidated balance sheet of HSR and the operations
relating thereto must be reflected in HSR's consolidated statement of
operations.

The selected historical and unaudited pro forma financial data should be
read in conjunction with the related unaudited pro forma financial statements
and related notes and the related historical financial statements and related
notes included elsewhere herein. The pro forma information presented is not
necessarily indicative of the financial position or results that would have
actually occurred had the Merger and the Basin Acquisitions been consummated on
the dates indicated or which may occur in the future.

18
<PAGE> 25

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
WITH SECOND BASIN ACQUISITION

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
-------------------------------------------------------
(HISTORICAL)
--------------------- PRO FORMA UNAUDITED
HSR TIDE WEST ADJUSTMENTS PRO FORMA
-------- --------- ----------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
REVENUES:
Oil and gas sales......................... $ 53,394 $ 36,508 $ 25,277J $115,179
Other gas revenues........................ 1,782 -- 2,052E 3,834
Trading and transportation................ -- 82,927 -- 82,927
Interest and other income................. 164 1,266 37K 1,467
-------- -------- -------- --------
Total revenues.................... 55,340 120,701 27,366 203,407
-------- -------- -------- --------
EXPENSES:
Production taxes.......................... 4,050 2,517 1,929J 8,497
Lease operating........................... 9,936 7,747 4,260J 21,942
Depreciation, depletion and
amortization........................... 26,609 11,365 (11,365)F 61,303
34,694F
General and administrative................ 4,076 4,557 (1,060)G 7,573
Interest.................................. 10,219 3,186 13,999H 27,404
Trading and transportation................ -- 80,642 -- 80,642
-------- -------- -------- --------
Total expenses.................... 54,890 110,014 42,457 207,360
-------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME
TAXES..................................... 451 10,687 (15,090) (3,953)
PROVISION (BENEFIT) FOR INCOME TAXES........ 176 4,016 (5,698)I (1,506)
-------- -------- -------- --------
NET INCOME (LOSS)........................... $ 274 $ 6,671 $ (9,392) $ (2,447)
======== ======== ======== ========
EARNINGS (LOSS) PER SHARE:
Common and common equivalent shares....... $ 0.02 $ 0.67 $ (0.14)
======== ======== ========
Common and common equivalent shares --
assuming full dilution................. $ 0.02 $ 0.65 $ (0.14)
======== ======== ========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING:
Common and common equivalent shares....... 11,440 9,897 6,161C 17,601
======== ======== ======== ========
Common and common equivalent shares --
assuming full dilution................. 11,450 10,247 6,161C 17,611
======== ======== ======== ========
BALANCE SHEET DATA:
Current assets............................ $ 11,086 $ 24,708 $ (1,244) $ 34,550
Working capital (deficiency).............. (16,115) 4,370 (8,640) (20,385)
Oil and gas properties, net............... 278,811 117,550 279,267 675,628
Total assets.............................. 302,089 144,397 278,311 724,797
Long-term bank debt....................... 51,000 40,800 131,952 223,752
Asset monetization debt................... -- -- 82,300 82,300
9 7/8% senior subordinated notes.......... 74,537 -- -- 74,537
Stockholders' equity...................... 119,174 74,506 (2,409) 191,271
</TABLE>

See Notes to Unaudited Pro Forma Financial Statements beginning on page 78.

19
<PAGE> 26

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA

WITH SECOND BASIN ACQUISITION

<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31, 1996
----------------------------------------------------------
(HISTORICAL)
------------------------ PRO FORMA UNAUDITED
HSR TIDE WEST ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
REVENUES:
Oil and gas sales....................... $ 13,679 $ 11,772 $ 4,643J $ 30,094
Other gas revenues...................... 474 -- 505E 979
Trading and transportation.............. -- 27,344 -- 27,344
Interest and other income............... 41 (75) -- (34)
----------- ------------ ------------ ------------
Total revenues.................. 14,194 39,041 5,148 58,383
----------- ------------ ------------ ------------
EXPENSES:
Production taxes........................ 1,065 763 431J 2,259
Lease operating......................... 2,826 2,067 705J 5,598
Depreciation, depletion and
amortization......................... 6,107 2,876 (2,876)F 13,710
7,603F
General and administrative.............. 863 1,206 (398)G 1,671
Interest................................ 3,024 724 3,201H 6,949
Trading and transportation.............. -- 25,952 -- 25,952
----------- ------------ ------------ ------------
Total expenses.................. 13,885 33,588 8,666 56,139
----------- ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME
TAXES................................... 309 5,453 (3,518) 2,244
PROVISION (BENEFIT) FOR INCOME TAXES...... 118 2,182 (1,445)I 855
----------- ------------ ------------ ------------
NET INCOME (LOSS)......................... $ 191 $ 3,271 $ (2,073) $ 1,389
=========== ============ ============ ============
EARNINGS (LOSS) PER SHARE:
Common and common equivalent shares..... $ 0.02 $ 0.32 $ 0.08
=========== ============ ============
Common and common equivalent shares --
assuming full dilution............... $ 0.02 $ 0.32 $ 0.08
=========== ============ ============
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING:
Common and common equivalent shares..... 11,149 10,142 6,161C 17,310
=========== ============ ============ ============
Common and common equivalent shares --
assuming full dilution............... 11,149 10,199 6,161C 17,310
=========== ============ ============ ============
BALANCE SHEET DATA:
Current assets.......................... $ 13,920 $ 33,119 $ (6,812) $ 40,227
Working capital (deficiency)............ (8,017) 8,055 (14,209) (14,171)
Oil and gas properties, net............. 323,916 116,439 238,929 679,284
Total assets............................ 349,794 151,853 232,466 734,113
Long-term bank debt..................... 78,900 39,600 120,796 239,296
Asset monetization debt................. 23,100 -- 53,200 76,300
9 7/8% senior subordinated notes........ 74,552 -- -- 74,552
Stockholders' equity.................... 118,658 77,777 (5,680) 190,755
</TABLE>

See Notes to Unaudited Pro Forma Quarterly Financial Statements beginning on
page 98.

20
<PAGE> 27

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
WITHOUT SECOND BASIN ACQUISITION

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
-------------------------------------------------------
(HISTORICAL)
---------------------- PRO FORMA UNAUDITED
HSR TIDE WEST ADJUSTMENTS PRO FORMA
-------- --------- ----------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
REVENUES:
Oil and gas sales........................ $ 53,394 $ 36,508 $ 8,656J $ 98,558
Other gas revenues....................... 1,782 -- 378E 2,160
Trading and transportation............... -- 82,927 -- 82,927
Interest and other income................ 164 1,266 37K 1,467
-------- -------- -------- --------
Total revenues................... 55,340 120,701 9,071 185,112
-------- -------- -------- --------
EXPENSES:
Production taxes......................... 4,050 2,517 639J 7,206
Lease operating.......................... 9,936 7,747 1,908J 19,591
Depreciation, depletion and
amortization.......................... 26,609 11,365 (11,365)F 52,923
26,314F
General and administrative............... 4,076 4,557 (1,060)G 7,573
Interest................................. 10,219 3,186 7,859H 21,264
Trading and transportation............... -- 80,642 -- 80,642
-------- -------- -------- --------
Total expenses................... 54,890 110,014 24,295 189,199
-------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES.......... 450 10,687 (15,224) (4,087)
PROVISION (BENEFIT) FOR INCOME TAXES....... 176 4,016 (5,749)I (1,557)
-------- -------- -------- --------
NET INCOME (LOSS).......................... $ 274 $ 6,671 $ (9,475) $ (2,530)
======== ======== ======== ========
EARNINGS (LOSS) PER SHARE:
Common and common equivalent shares...... $ 0.02 $ 0.67 $ (0.14)
======== ======== ========
Common and common equivalent shares --
assuming full dilution................ $ 0.02 $ 0.65 $ (0.14)
======== ======== ========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING:
Common and common equivalent shares...... 11,440 9,897 6,161C 17,601
======== ======== ======== ========
Common and common equivalent shares --
assuming full dilution................ 11,450 10,247 6,161C 17,611
======== ======== ======== ========
BALANCE SHEET DATA:
Current assets........................... $ 11,086 $ 24,708 $ (1,244) $ 34,550
Working capital (deficiency)............. (16,115) 4,370 (8,640) (20,385)
Oil and gas properties, net.............. 278,811 117,550 190,287 586,648
Total assets............................. 302,089 144,397 189,331 635,817
Long-term bank debt...................... 51,000 40,800 101,971 193,771
Asset monetization debt.................. -- -- 24,900 24,900
9 7/8% senior subordinated notes......... 74,537 -- -- 74,537
Stockholders' equity..................... 119,174 74,506 (2,409) 191,271
</TABLE>

See Notes to Unaudited Pro Forma Financial Statements beginning on page 85.

21
<PAGE> 28

UNAUDITED SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA

WITHOUT SECOND BASIN ACQUISITION

<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31, 1996
----------------------------------------------------------
(HISTORICAL)
------------------------ PRO FORMA
HSR TIDE WEST ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
REVENUES:
Oil and gas sales....................... $ 13,679 $ 11,772 $ 1,170J $ 26,621
Other gas revenues...................... 474 -- 118E 592
Trading and transportation.............. -- 27,344 -- 27,344
Interest and other income............... 41 (75) -- (34)
----------- ------------ ------------ ------------
Total revenues.................. 14,194 39,041 1,288 54,523
----------- ------------ ------------ ------------
EXPENSES:
Production taxes........................ 1,065 763 100J 1,928
Lease operating......................... 2,826 2,067 275J 5,168
Depreciation, depletion and
amortization......................... 6,107 2,876 (2,876)F 12,109
6,002F
General and administrative.............. 863 1,206 (398)G 1,671
Interest................................ 3,024 724 1,801H 5,549
Trading and transportation.............. -- 25,952 -- 25,952
----------- ------------ ------------ ------------
Total expenses.................. 13,885 33,588 4,904 52,377
----------- ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME
TAXES................................... 309 5,453 (3,616) 2,146
PROVISION (BENEFIT) FOR INCOME TAXES...... 118 2,182 (1,482)I 818
----------- ------------ ------------ ------------
NET INCOME (LOSS)......................... $ 191 $ 3,271 $ (2,134) $ 1,328
=========== ============ ============ ============
EARNINGS (LOSS) PER SHARE:
Common and common equivalent shares..... $ 0.02 $ 0.32 $ 0.08
=========== ============ ============
Common and common equivalent shares --
assuming full dilution............... $ 0.02 $ 0.32 $ 0.08
=========== ============ ============
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING:
Common and common equivalent shares..... 11,149 10,142 6,161 17,310
=========== ============ ============ ============
Common and common equivalent shares --
assuming full dilution............... 11,149 10,199 6,161 17,310
=========== ============ ============ ============
BALANCE SHEET DATA:
Current assets.......................... $ 13,920 $ 33,119 $ (6,812) $ 40,227
Working capital (deficiency)............ (8,017) 8,055 (14,209) (14,171)
Oil and gas properties, net............. 323,916 116,439 149,949 590,304
Total assets............................ 349,794 151,853 143,486 645,133
Long-term bank debt..................... 78,900 39,600 86,616 205,116
Asset monetization debt................. 23,100 -- -- 23,100
9 7/8% senior subordinated notes........ 74,552 -- -- 74,522
Stockholders' equity.................... 118,658 77,777 (5,680) 190,755
</TABLE>

See Notes to Unaudited Pro Forma Quarterly Financial Statements beginning on
page 103.

22
<PAGE> 29

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA

WITH INITIAL BASIN ACQUISITION

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
--------------------------------------
HISTORICAL
-------- PRO FORMA UNAUDITED
HSR ADJUSTMENTS PRO FORMA
-------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
REVENUES:
Oil and gas sales....................................... $ 53,394 $ 8,656E $ 62,050
Other gas revenues...................................... 1,782 377B 2,159
Interest and other income............................... 164 -- 164
-------- ------- --------
Total revenues.................................. 55,340 9,033 64,373
-------- ------- --------
EXPENSES:
Production taxes........................................ 4,050 639E 4,689
Lease operating......................................... 9,936 1,908E 11,844
Depreciation, depletion and amortization................ 26,609 3,916F 30,525
General and administrative.............................. 4,076 -- 4,076
Interest................................................ 10,219 2,650C 12,869
-------- ------- --------
Total expenses.................................. 54,890 9,113 64,003
-------- ------- --------
INCOME (LOSS) BEFORE INCOME TAXES......................... 450 (80) 370
PROVISION (BENEFIT) FOR INCOME TAXES...................... 176 (35)D 141
-------- ------- --------
NET INCOME (LOSS)......................................... $ 274 $ (45) $ 229
======== ======= ========
EARNINGS (LOSS) PER SHARE:
Common and common equivalent shares..................... $ 0.02 $ 0.02
======== ========
Common and common equivalent shares -- assuming full
dilution............................................. $ 0.02 $ 0.02
======== ========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Common and common equivalent shares..................... 11,440 -- 11,440
======== ======= ========
Common and common equivalent shares -- assuming full
dilution............................................. 11,450 -- 11,450
======== ======= ========
BALANCE SHEET DATA:
Current assets.......................................... $ 11,086 $ -- $ 11,086
Working capital (deficiency)............................ (16,115) -- (16,115)
Oil and gas properties, net............................. 278,811 38,520 317,331
Total assets............................................ 302,089 38,520 340,609
Long-term bank debt..................................... 51,000 12,808 63,808
Asset monetization debt................................. -- 24,900 24,900
9 7/8% senior subordinated notes........................ 74,537 -- 74,537
Stockholders' equity.................................... 119,174 -- 119,174
</TABLE>

See Notes to Unaudited Pro Forma Financial Statements beginning on page 92.

23
<PAGE> 30

RISK FACTORS

The following matters should be considered carefully in connection with
evaluating the proposals to be considered at the Tide West Special Meeting and
the HSR Special Meeting.

SIGNIFICANTLY INCREASED OPERATIONS

As a result of the Merger and the Initial Basin Acquisition, HSR's
operations will be significantly increased by the addition of approximately 890
operated wells. The additional wells (both operated and non-operated) have
approximately 49.8 MMBoe of net proved reserves and approximately 12,900 Boe of
net daily production (net to HSR's interest, but not including the effect of the
Chase Asset Monetization Arrangement). Although HSR has conducted activities in
many areas of the United States, including the Mid-Continent region, in recent
years its activities have focused on the Rocky Mountain region, with particular
concentration in the D-J Basin. As a result of the Merger, HSR will own and
operate properties in areas where it has not had operations for many years,
including the Anadarko and Arkoma Basins, Southern Oklahoma, West Texas and New
Mexico. If the Second Basin Acquisition is consummated, HSR's operations will be
further increased by the addition of approximately 492 operated wells. The
additional wells (both operated and non-operated) have approximately 24.7 MMBoe
of net proved reserves and approximately 3,600 Boe of net daily production (net
to HSR's interest, but not including the effect of the Chase Asset Monetization
Arrangement). In addition to the ability of HSR's management to successfully
address the risks regularly associated with oil and gas exploration and
production companies, HSR's success depends on the ability of HSR's management
to successfully assimilate the properties acquired in these acquisitions, manage
a significantly larger organization, continue its business strategy and
assimilate and utilize Tide West's management and employees. Additionally, the
degree of success of the Tide West acquisition may be influenced by HSR's
ability to take advantage of perceived marketing strategies, and there can be no
assurance that HSR will be able to do so. Consequently, a Tide West stockholder
who receives HSR Common Stock in the Merger will own an investment in a company
with a different risk profile than that of Tide West. The respective businesses
of Tide West and HSR are described in the documents incorporated by reference
into this Joint Proxy Statement/Prospectus. See "Information About the Combining
Companies."

DETERMINATION OF CONVERSION NUMBER

The Cash Consideration is dependent on both the Market Price and the
Conversion Number and cannot be determined at this time. The Market Price is to
be determined by reference to the closing sales price of the HSR Common Stock
over a period that has yet to begin. The Conversion Number is to be determined
by reference to the closing sales price of the HSR Common Stock on the date
immediately preceding the Closing Date and also cannot be determined at this
time. The Merger Agreement provides that the Cash Consideration shall be
decreased and the Conversion Number shall be correspondingly increased so that
the value of the HSR Common Stock (based on the closing sales price on the date
immediately preceding the Closing Date) paid to the holders of Tide West Common
Stock in connection with the Merger is greater than or equal to 40% of the total
consideration paid to the holders of Tide West Common Stock; provided, however,
the maximum number of shares of HSR Common Stock required to be issued in
connection with the Merger is 7,161,312 (which equates to a Conversion Number of
.7311, based on the number of shares of Tide West Common Stock outstanding on
the date of this Joint Proxy Statement/Prospectus) and any further adjustments
to the consideration to be paid to the holders of Tide West Common Stock
necessary to satisfy the Tax Adjustment Formula would be solely from a further
reduction of the Cash Consideration. The effect of the Tax Adjustment Formula is
to reduce potentially the aggregate value of the consideration paid in the
Merger per share of Tide West Common Stock. The final calculation of the
Conversion Number and Cash Consideration pursuant to the Tax Adjustment Formula
is dependent on (a) the closing sales price of HSR Common Stock on the date
immediately preceding the Closing Date, (b) the amount of Tide West Common Stock
held by persons who individually hold more than 5% of the outstanding shares of
Tide West Common Stock as of the Closing Date and who have not represented as of
such date that they have no intention, plan or arrangement to dispose of the HSR
Common Stock received in the Merger, (c) the number of shares of Tide West
Common Stock the holders of which have perfected their dissenters' appraisal
rights as of the Closing

24
<PAGE> 31

Date and (d) the number of shares of Tide West Common Stock outstanding on the
date immediately preceding the Closing Date. Adjustments to the consideration
paid to the holders of Tide West Common Stock up to the point where HSR would be
required to issue 7,161,312 shares of HSR Common Stock affect both the holders
of Tide West Common Stock (through a reduction in the aggregate value of the
consideration paid in the Merger per share of Tide West Common Stock) and HSR
(through dilution resulting from the issuance of additional shares of HSR Common
Stock); however, further adjustments, where, but for the limit in the Tax
Adjustment Formula, HSR would be required to issue additional shares of HSR
Common Stock, are borne solely by the holders of Tide West Common Stock and may
adversely affect the value of the consideration paid to them in the Merger. See
"The Merger Agreement and Related Agreements -- Terms of the Merger
Agreement -- Adjustments to the Conversion Number and Cash Consideration."

A condition to Tide West effecting the Merger is that the Tax Adjustment
Formula (disregarding the limit contained therein on the maximum number of
shares of HSR Common Stock required to be issued in the Merger) would not
require HSR to issue more than 7,161,312 shares of HSR Common Stock in
connection with the Merger. If this condition is not satisfied, Tide West may
(a) waive the condition and consummate the Merger pursuant to the terms of the
Merger Agreement (in which case HSR will issue the maximum of 7,161,312 shares
of HSR Common Stock, and any further adjustments to the consideration paid to
the holders of Tide West Common Stock to satisfy the Tax Adjustment Formula
shall be solely from a further reduction of the Cash Consideration), (b)
terminate the Merger Agreement or (c) cause the Merger to be restructured. See
"The Merger Agreement and Related Agreements -- Terms of the Merger
Agreement -- Restructuring of the Merger."

TAX RISKS

If the Merger is consummated, but fails to qualify as a reorganization
within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code, (a)
Tide West would be treated as if it had sold its assets to Merger Sub for an
amount equal to the fair market value of the HSR Common Stock received plus the
amount of total cash (including the cash received in lieu of fractional shares)
in a taxable transaction and would recognize gain or loss upon such deemed sale,
(b) each Tide West stockholder would recognize gain or loss in an amount equal
to the difference between the fair market value of the HSR Common Stock plus the
amount of cash received by such stockholder and such stockholder's aggregate
adjusted basis in its Tide West Common Stock cancelled in the Merger, and (c)
Merger Sub would be treated as having sold the HSR Common Stock delivered in the
Merger and, therefore, would be treated as having recognized taxable gain in an
amount equal to the fair market value of the HSR Common Stock issued in
connection with the Merger. It is a condition to the consummation of the Merger
that both Tide West and HSR receive an opinion of counsel to the effect that the
Merger will qualify as a reorganization within the meaning of Section 368(a) of
the Code; however, HSR and Tide West will not obtain an Internal Revenue Service
("IRS") ruling to that effect. For a discussion of these and other federal
income tax considerations in connection with Merger, see "Special
Factors -- Certain Federal Income Tax Consequences."

INCREASED LEVERAGE

As of December 31, 1995, HSR's debt-to-total capital ratio was
approximately 51%. On a pro forma basis, HSR's debt-to-total capital ratio at
March 31, 1996, following the Merger and the Basin Acquisitions and assuming the
consolidation of HSR and WRL, would be approximately 67%. It is HSR's present
intention to use a combination of financing options and/or property dispositions
to reduce its debt-to-total capital ratio following completion of the Merger and
the Basin Acquisitions. While it is HSR's present intention to do so, there can
be no assurance that HSR will be able to reduce its debt-to-total capital ratio
as anticipated. Higher leverage increases the relative amount of interest
expense HSR pays compared to its revenue and other expenses. With all other
factors remaining the same, an increase in leverage would reduce the amount and
proportion of net income HSR would realize from its operations. Additionally,
because higher leverage is perceived to increase the risk of default, an
increase in leverage may reduce the availability of debt capital to HSR, or may
increase the interest rate or similar costs of such capital.

25
<PAGE> 32

MANAGEMENT AGREEMENT LIABILITIES

Under the Management Agreement (as defined herein) between HSR and WRL, HSR
operates the WRL Assets on a turnkey basis for a fixed fee. HSR is obligated to
pay all non-capital costs associated with the operation of such properties other
than production related taxes. The fee has been calculated on the basis of HSR's
extensive operating experience in operating wells in the D-J Basin, and is
expected to exceed HSR's direct and indirect costs associated with operating and
managing such properties. The actual costs associated with such operations,
however, could exceed HSR's fee and HSR could, therefore, incur a loss in
connection with its obligations under the Management Agreement. Additionally,
under the Management Agreement, HSR is obligated to indemnify WRL from
liabilities in connection with certain environmental matters, primarily those
for which HSR would otherwise be liable on account of its status as operator of
the WRL Assets. Although HSR is not aware of any condition or matter that could
give rise to environmental liabilities in connection with the WRL Assets in
excess of the fee under the Management Agreement, there can be no assurance that
such liabilities will not occur in the future.

EXISTING AGREEMENTS TO VOTE FOR THE MERGER AND THE MERGER AGREEMENT

Two Tide West stockholders (consisting of Tide West's largest stockholder
and one of Tide West's directors who is also an executive officer) beneficially
owning collectively a majority of the outstanding shares of Tide West Common
Stock have agreed to vote shares representing a majority of the outstanding
shares of Tide West Common Stock in favor of the Merger and the Merger
Agreement. Consequently, absent the occurrence of some event that would cause
the termination of one or both of the Voting Agreements, approval of the Merger
and the Merger Agreement by Tide West's stockholders (which requires the
affirmative vote of holders of a majority of the outstanding shares of Tide West
Common Stock) is assured.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

Certain members of the Tide West Board (which has recommended that Tide
West stockholders vote in favor of the proposal described in this Joint Proxy
Statement/Prospectus) have interests in the Merger that are separate from the
interests of the Tide West stockholders generally. NGP, which owns 46.45% of the
outstanding shares of Tide West Common Stock, is the beneficial owner of 6.4% of
the outstanding shares of HSR Common Stock, and Kenneth A. Hersh, a limited
partner in the general partner of NGP, serves as a director of both HSR and Tide
West. Philip B. Smith, President, a director and a stockholder of Tide West, is
the NGP Designee (as defined herein). See "Special Factors -- Interests of
Certain Persons in the Merger."

DIFFERENCES IN RIGHTS OF COMMON STOCKHOLDERS AND CERTAIN ANTI-TAKEOVER MATTERS

There are significant differences between the rights of holders of Tide
West Common Stock and the rights of holders of HSR Common Stock. The
differences, which are discussed under "Comparison of Stockholder Rights,"
generally relate to voting rights. The HSR Board can, without obtaining
stockholder approval, issue shares of HSR Preferred Stock (as defined herein),
having rights that could adversely affect the voting power of holders of the HSR
Common Stock. Also, a dividend distribution of HSR Rights (as defined herein)
was made by HSR as of March 14, 1996, to holders of HSR Common Stock. Each HSR
Right entitles the holder to purchase from HSR a fraction of a share of HSR
Preferred Stock at a predetermined price upon the occurrence of certain
specified events. HSR is subject to Section 203 (as defined herein), which
restricts certain business combinations with any "interested stockholders," as
defined in Section 203. In addition, the HSR Charter and HSR Bylaws (each as
defined herein) provide for (a) a classified board of directors, (b) limitations
on stockholder action by written consent, (c) limitations on the ability to call
a special meeting and (d) a 66 2/3% vote to approve certain business
combinations and changes to the HSR Charter. Any of the foregoing factors could
have an anti-takeover effect and may delay, defer or prevent a tender offer or
takeover attempt that might be considered by individual stockholders to be in
their best interests. See "Description of HSR Capital Stock" and "Comparison of
Stockholders Rights."

26
<PAGE> 33

THE MEETINGS

This Joint Proxy Statement/Prospectus is being furnished to the holders of
HSR Common Stock in connection with the solicitation of proxies by the HSR Board
for use at the HSR Special Meeting to be held on Monday, June 17, 1996, at the
Sheraton Palace Hotel, 2 New Montgomery Street, San Francisco, California,
commencing at 10:00 a.m., local time, and at any adjournment or postponement
thereof.

This Joint Proxy Statement/Prospectus is also being furnished to the
holders of Tide West Common Stock in connection with the solicitation of proxies
by the Tide West Board for use at the Tide West Special Meeting to be held on
Monday, June 17, 1996, at the offices of Tide West at 6666 South Sheridan, Suite
250, Tulsa, Oklahoma, commencing at 10:00 a.m., local time, and at any
adjournment or postponement thereof.

MATTERS TO BE CONSIDERED AT THE SPECIAL MEETINGS

At the HSR Special Meeting, the stockholders of HSR, as required by the
rules of the NYSE, will consider and vote upon a proposal to approve the
issuance of up to 7,161,312 shares of HSR Common Stock in accordance with the
Merger Agreement. The HSR stockholders will also transact such other business as
may properly be brought before the HSR Special Meeting.

At the Tide West Special Meeting, the stockholders of Tide West will
consider and vote upon a proposal to approve and adopt the Merger Agreement and
to approve the Merger. The Tide West stockholders will also transact such other
business as may properly be brought before the Tide West Special Meeting.

BOARDS OF DIRECTORS' RECOMMENDATIONS

THE HSR BOARD HAS APPROVED THE MERGER AND THE MERGER AGREEMENT AND THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY, AND RECOMMENDS THAT HSR'S
STOCKHOLDERS VOTE FOR APPROVAL OF THE PROPOSAL SUBMITTED TO HSR STOCKHOLDERS AS
DESCRIBED IN THIS JOINT PROXY STATEMENT/PROSPECTUS.

THE TIDE WEST BOARD HAS APPROVED THE MERGER, THE MERGER AGREEMENT AND THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY, AND RECOMMENDS THAT TIDE
WEST'S STOCKHOLDERS VOTE FOR APPROVAL OF THE PROPOSAL SUBMITTED TO THE TIDE WEST
STOCKHOLDERS AS DESCRIBED IN THIS JOINT PROXY STATEMENT/PROSPECTUS.

VOTING AT MEETINGS; RECORD DATES

HSR. HSR has established May 8, 1996, as the record date for the
determination of stockholders entitled to notice of and to vote at the HSR
Special Meeting. Only holders of record of HSR Common Stock at the close of
business on such date are entitled to vote at the HSR Special Meeting. On May 8,
1996, HSR had outstanding and entitled to vote 10,892,862 shares of HSR Common
Stock, each of which is entitled to one vote per share. On such date, there were
approximately 267 holders of record of HSR Common Stock.

The affirmative vote of the holders of a majority of the issued and
outstanding shares of HSR Common Stock that are present in person or represented
by proxy at the HSR Special Meeting at which a quorum is present will be
required to approve the matters described in this Joint Proxy
Statement/Prospectus, provided that the total vote cast represents in excess of
50% in interest of all securities entitled to vote on such matters.

TIDE WEST. Tide West has established May 8, 1996, as the record date for
the determination of stockholders entitled to notice of and to vote at the Tide
West Special Meeting. Only holders of record of Tide West Common Stock at the
close of business on such date are entitled to vote at the Tide West Special
Meeting. On May 8, 1996, Tide West had outstanding and entitled to vote
9,795,128 shares of Tide West Common Stock, each of which is entitled to one
vote per share. On such date, there were approximately 954 holders of record of
Tide West Common Stock.

The affirmative vote of the holders of a majority of the issued and
outstanding shares of Tide West Common Stock will be required to approve and
adopt the Merger Agreement and approve the Merger. Pursuant to the Voting
Agreements, HSR has obtained agreements to vote, and has been granted proxies to
vote, a majority of the outstanding shares of Tide West Common Stock in favor of
the Merger and the Merger

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Agreement. Accordingly, HSR has sufficient voting power to approve the Merger
and the Merger Agreement without the affirmative vote of any other stockholder
of Tide West.

HSR PROXIES

Shares of HSR Common Stock represented by properly executed proxies
received by HSR prior to or at the HSR Special Meeting will be voted in
accordance with the instructions contained therein. Shares of HSR Common Stock
represented by properly executed proxies for which no instruction is given will
be voted FOR the issuance of HSR Common Stock pursuant to the Merger Agreement.
An abstention has the same effect as a vote AGAINST the proposal described in
this Joint Proxy Statement/Prospectus, but any abstaining stockholder who is
present at the HSR Special Meeting, either in person or by proxy, will be
counted for purposes of determining whether a quorum exists.

Each holder of HSR Common Stock is requested to complete, sign, date and
return promptly the enclosed proxy card in the postage paid envelope provided
for this purpose in order to ensure that such holder's shares are voted.

Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is exercised. A proxy may be revoked by (a)
delivering to the Secretary of HSR, at or before the taking of the vote at the
HSR Special Meeting, a written notice of revocation bearing a later date than
the proxy, (b) duly executing a later-dated proxy relating to the same shares
and delivering it to the Secretary of HSR before the taking of the vote at the
HSR Special Meeting or (c) attending the HSR Special Meeting and voting in
person (although attendance at the HSR Special Meeting will not in and of itself
constitute a revocation of a proxy). Any written notice of revocation or
later-dated proxy should be sent or delivered to HS Resources, Inc., One
Maritime Plaza, 15th Floor, San Francisco, California 94111, Attn: Secretary. To
be effective, a notice of revocation or later-dated proxy must be received by
the Secretary of HSR before the taking of the vote at the HSR Special Meeting.

The HSR Board is aware of no matters to be presented at the HSR Special
Meeting other than those described in this Joint Proxy Statement/Prospectus. If
other matters are properly brought before the HSR Special Meeting, it is the
intention of the persons named in the proxies to vote the shares to which said
proxies relate in accordance with their judgment.

TIDE WEST PROXIES

Shares of Tide West Common Stock represented by properly executed proxies
received by Tide West prior to or at the Tide West Special Meeting will be voted
in accordance with the instructions contained therein. Shares of Tide West
Common Stock represented by properly executed proxies for which no instruction
is given will be voted FOR approval of the Merger Agreement and the Merger. An
abstention (or broker non-vote) has the same effect as a vote AGAINST the
proposal described in this Joint Proxy Statement/Prospectus, but any abstaining
stockholder who is present at the Tide West Special Meeting, either in person or
by proxy (including broker non-voting), will be counted for purposes of
determining whether a quorum exists.

Each holder of Tide West Common Stock is requested to complete, sign, date
and return promptly the enclosed proxy card in the postage paid envelope
provided for this purpose in order to ensure that such holder's shares are
voted.

Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is exercised. A proxy may be revoked by (a)
delivering to the Secretary of Tide West, at or before the taking of the vote at
the Tide West Special Meeting, a written notice of revocation bearing a later
date than the proxy, (b) duly executing a later-dated proxy relating to the same
shares and delivering it to the Secretary of Tide West before the taking of the
vote at the Tide West Special Meeting or (c) attending the Tide West Special
Meeting and voting in person (although attendance at the Tide West Special
Meeting will not in and of itself constitute a revocation of a proxy). Any
written notice of revocation or later-dated proxy should be sent or delivered to
Tide West Oil Company, 6666 South Sheridan, Suite 250, Tulsa, Oklahoma
74133-1750,

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Attn: Secretary. To be effective, a notice of revocation or later-dated proxy
must be received by the Secretary of Tide West before the taking of the vote at
the Tide West Special Meeting.

The Tide West Board is aware of no matters to be presented at the Tide West
Special Meeting other than those described in this Joint Proxy
Statement/Prospectus. If other matters are properly brought before the Tide West
Special Meeting, it is the intention of the persons named in the proxies to vote
the shares to which such proxies relate in accordance with their judgment.

SOLICITATION OF PROXIES

The cost and expenses associated with printing this Joint Proxy
Statement/Prospectus will be borne equally by HSR and Tide West. Corporate
Investors Communications, Inc. ("CIC") has been retained to solicit proxies on
behalf of HSR for an aggregate fee of $3,500 plus out-of-pocket expenses. In
addition to solicitation by CIC, directors, officers and employees of HSR and
Tide West may solicit proxies from stockholders of HSR and Tide West,
respectively, in person or by telephone, telegram or other means of
communication. Such persons will not be additionally compensated for such
solicitation but will be reimbursed for reasonable out-of-pocket expenses
incurred in connection therewith. Arrangements will be made with brokerage
firms, nominees, fiduciaries and other custodians for forwarding proxy
solicitation materials to the beneficial owners of shares held of record by such
persons. HSR and Tide West will reimburse such persons for their reasonable
expenses incurred in connection therewith. All costs of the solicitation of
proxies will be borne by HSR with respect to the holders of HSR Common Stock and
by Tide West with respect to the holders of Tide West Common Stock.

STOCKHOLDERS SHOULD NOT SEND THEIR STOCK CERTIFICATES WITH THEIR PROXY
CARDS. STOCK CERTIFICATES SHOULD NOT BE SUBMITTED FOR EXCHANGE BY TIDE WEST
STOCKHOLDERS UNTIL A LETTER OF TRANSMITTAL IS RECEIVED. See "The Merger
Agreement and Related Agreements -- Manner and Basis of Converting Shares."

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SPECIAL FACTORS

The Merger Agreement provides for a business combination between HSR and
Tide West in which Tide West will be merged with and into Merger Sub, a wholly
owned subsidiary of HSR. As a result of the Merger, Tide West's separate
existence will cease and Merger Sub, as the surviving corporation in the Merger,
will continue its corporate existence under the laws of the State of Delaware
and will succeed to all of the assets, rights, liabilities and obligations of
Tide West. The certificate of incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, will become the certificate of
incorporation of the Surviving Corporation and will be amended to change the
name of the Surviving Corporation to HSRTW, Inc. The bylaws of Merger Sub, as in
effect immediately prior to the Effective Time, will become the bylaws of the
Surviving Corporation. As a part of the Merger, the holders of Tide West Common
Stock will be issued shares of HSR Common Stock and cash in exchange for their
Tide West Common Stock. It is intended that the transaction be treated as a
purchase for accounting purposes and as a reorganization under Section
368(a)(1)(A) of the Code by reason of Section 368(a)(2)(D) of the Code for
federal income tax purposes. The discussion in this Joint Proxy
Statement/Prospectus of the Merger and the description of the principal terms
and conditions of the Merger are summaries of the material terms thereof.
Reference is made to the full text of the Merger Agreement, a copy of which is
included as Annex A to this Joint Proxy Statement/Prospectus and which is
incorporated into this Joint Proxy Statement/Prospectus by reference.

BACKGROUND OF THE MERGER

In September 1994, Tide West signed an agreement providing for a business
combination between Tide West and another company. In January 1995, as a result
of market price changes, this agreement was terminated by mutual agreement
between Tide West and the other company. At that time, the Tide West Board
decided that it was in the best interests of Tide West and its stockholders for
Tide West to remain independent for the time being and not to renew or initiate
discussions with any other company regarding a business combination.

During the next several months of 1995, management of Tide West continued
its previous strategy of seeking to acquire, operate and enhance producing oil
and gas properties. In the meantime, various members of the Tide West Board, in
informal discussions, continued to be concerned that Tide West, in its present
structure and at its present size, would not be able to successfully complete
the larger oil and gas property acquisitions necessary to grow Tide West at a
rate acceptable to the Tide West Board and the Tide West stockholders. At
special meetings on August 30, 1995, and September 15, 1995, the Tide West Board
continued to discuss Tide West's acquisition strategy and other methods by which
stockholder value might be enhanced, including the possible sale of Tide West.
Concerns were again expressed at these meetings over the difficulties in
continuing Tide West's acquisition program when taking into account the
competition for the available oil and gas properties and pricing concerns with
respect to such acquisitions, the belief that Tide West's value was not being
recognized in the marketplace, uncertainty with regard to future oil and gas
prices, growth prospects for Tide West and cohesiveness of management. At a
special meeting on September 19, 1995, the Tide West Board concluded that it was
in the best interests of the Tide West stockholders for Tide West to retain an
investment banking firm as financial advisor to advise the Tide West Board
regarding strategic alternatives for enhancing stockholder value, including the
possibility of selling the company.

During September and October 1995, members of the Tide West Board and
management met informally with representatives of several investment banking
firms. On October 12 and 13, 1995, three investment banking firms made detailed
presentations to the Tide West Board regarding their recommendations as to
maximizing value to Tide West stockholders. At a special meeting on October 12,
1995, the Tide West Board met to evaluate two of these investment banking firms
and their respective presentations to the Tide West Board. On October 13, 1995,
the Tide West Board held informal discussions to evaluate the third investment
banking firm and its presentation to the Tide West Board. At a special meeting
of the Tide West Board on October 19, 1995, it was decided that the course of
action which was in the best interests of the Tide West stockholders was an
orderly sale of the company. This course of action was consistent with the
recommendation made by each of the three investment banking firms that made
presentations to the Tide West Board.

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On October 19, 1995, Tide West entered into an engagement letter, dated as
of October 18, 1995, with Merrill Lynch to serve as Tide West's financial
advisor to assist with the sale of Tide West. On October 20, 1995, Tide West
issued a press release announcing the engagement of Merrill Lynch and the
intention of the Tide West Board to sell the company.

It was determined that one of the members of the Tide West Board, Kenneth
A. Hersh, might be interested in leading an effort to purchase Tide West.
Consequently, while Mr. Hersh did not resign from the Tide West Board, he was
excluded from all further meetings and discussions of the Tide West Board
relating to preparation for and decisions concerning the sale of Tide West,
including the Merger.

On October 23, 1995, an organizational meeting was held among Tide West
management and representatives of Merrill Lynch. During the next several weeks,
Tide West management and Merrill Lynch prepared a data room and offering
materials to help describe Tide West, including its property base and
exploitation potential, to potential purchasers. Merrill Lynch began contacting
potential purchasers in order to ascertain their interest in Tide West, and a
form of confidentiality agreement (containing a standstill provision) was
prepared.

On November 28, 1995, Merrill Lynch began mailing confidentiality
agreements to interested potential purchasers. A total of 73 confidentiality
agreements were mailed out and 44 were signed and returned. In some cases,
including HSR, changes were negotiated between the potential purchaser and
counsel for Tide West. On December 1, 1995, Merrill Lynch began distributing
offering materials, containing confidential information about Tide West, to
those potential purchasers who had signed confidentiality agreements with Tide
West, including HSR.

Between December 11, 1995, and February 1, 1996, 19 companies, including
HSR, sent representatives to the Tide West data room. On January 25, 1996,
Merrill Lynch mailed bid letters and forms of Agreement and Plan of Merger to
all companies who had sent representatives to the data room.

On February 9, 1996, Merrill Lynch received proposals from companies
desiring to enter into a business combination with Tide West, including HSR. A
total of nine proposals were received, including proposals for all cash, all
stock and combination cash/stock transactions. These proposals were described by
Merrill Lynch to the Tide West Board in two separate conference calls on
February 9, 1996.

On February 12, 1996, a special meeting of the Tide West Board was held in
Tulsa to consider the proposals which had been received. All directors, except
Mr. Hersh, were present in person. Also present were counsel to Tide West,
representatives of Merrill Lynch and outside counsel to Merrill Lynch. Merrill
Lynch presented to the Tide West Board an analysis of the proposals which had
been received. The Tide West Board discussed the relative advantages and
disadvantages of a business combination with each company, the strengths of each
company's indication of interest, the likelihood that each company would be able
to finance its proposal (in the case of cash and combination cash/stock
proposals), and the Tide West Board's perception of the value of the stock of
each company (in the case of proposals involving part or all stock). The Tide
West Board determined that four of the proposals, including HSR's, were
sufficiently attractive to warrant further discussions. Merrill Lynch, at the
request of the Tide West Board, scheduled meetings for the Tide West directors
with certain of these companies in order to enable the directors to better
evaluate their proposals.

During the next several days, meetings were held with three of the selected
potential purchasers, including HSR. The first meeting between representatives
of Tide West and Merrill Lynch and representatives of HSR and Lehman Brothers
was held in Denver on February 17, 1996. (Prior to this meeting, Tide West
signed a reciprocal confidentiality and standstill agreement with respect to
HSR.) This meeting, which was attended by all members of the Tide West Board
other than Mr. Hersh (Mr. Flint by telephone), was intended primarily to provide
Tide West and Merrill Lynch with information upon which to base an evaluation of
HSR Common Stock. On the same day, representatives of HSR began a due diligence
investigation with respect to Tide West in order to supplement information
previously learned from their evaluation of Tide West.

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On February 20, 1996, HSR advised Tide West about its pending discussions
with Basin (Tide West had executed an agreement to be bound by the HSR
confidentiality agreement regarding Basin). The Tide West Board determined that
the combination of cash and stock offered by HSR, including the fact that the
HSR Common Stock had upside potential equal to or greater than the stock of any
of the other companies offering stock, was such that the HSR proposal was of
greater value to the Tide West stockholders than any of the other proposals.

Accordingly, on February 21, 1996, representatives of Tide West and Merrill
Lynch began meeting with representatives of HSR in Denver to negotiate the terms
of the Merger Agreement. Negotiations continued until February 24, 1996. During
this process, the Tide West Board and the HSR Board were kept apprised of
developments through various meetings and telephone conversations. (Mr. Hersh,
who was at that time and still is a member of the board of directors of both
Tide West and HSR, was not informed of the discussions until February 22, 1996.)

On February 23, 1996, the HSR Board held a telephonic meeting with all
members, certain staff and HSR's legal advisors and representatives of Lehman
Brothers to consider the Merger and the Basin Acquisitions. Mr. Hersh was
present by telephone at the meeting. On February 24, 1996, the HSR Board
continued the telephonic meeting at which it further considered the proposed
Merger, Merger Agreement and the Basin Acquisitions, including the Cash
Consideration and the Conversion Number. Mr. Hersh did not participate in the
continuation of the meeting on February 24, 1996, and did not vote on any
matters.

On February 24, 1996, the Tide West Board, together with its legal and
financial advisors, met by telephone conference call to consider the proposed
Merger Agreement and the transactions contemplated thereby, including the Cash
Consideration and the Conversion Number. Mr. Hersh did not participate in the
Tide West Board meeting but was informed of the meeting and of the proposed
transaction.

At the meeting of the HSR Board, members of HSR senior management, together
with its legal and financial advisors, reviewed the background of the proposed
Merger, the strategic rationale for and the potential benefits of the Merger to
HSR, a summary of due diligence findings, financial and valuation analyses of
the transaction, and the terms of the Merger Agreement. Lehman Brothers
delivered to the HSR Board its oral opinion (subsequently confirmed in writing)
that, based on the matters presented to the HSR Board and as set forth in its
opinion, the transaction contemplated by the Merger Agreement was fair to HSR
and the holders of HSR Common Stock, taken as a whole, from a financial point of
view. After considering the presentation of HSR senior management and its legal
advisor and the presentation and opinion of Lehman Brothers, along with various
other factors, on February 24, 1996, the HSR Board (other than Mr. Hersh who was
not present for the February 24, 1996, continuation of the HSR Board meeting)
unanimously approved the Merger Agreement and the transactions contemplated
thereby, authorized the officers of HSR to execute the Merger Agreement on
behalf of HSR, and approved a recommendation that the stockholders of HSR vote
in favor of the issuance of HSR Common Stock pursuant to the terms of the Merger
Agreement.

At the meeting of the Tide West Board, members of Tide West's senior
management, together with its legal and financial advisors, reviewed the
background of the proposed Merger, the potential benefits of the Merger to the
stockholders of Tide West, financial and valuation analyses of the transaction,
and the terms of the Merger Agreement. Merrill Lynch delivered to the Tide West
Board its oral opinion (subsequently confirmed in writing) that, based on the
matters presented to the Tide West Board and as set forth in its opinion, the
consideration to be received by the holders of Tide West Common Stock pursuant
to the Merger Agreement was fair to such holders, taken as a whole, from a
financial point of view. After considering the presentation of Tide West's
senior management and its legal advisor and the presentation and opinion of
Merrill Lynch, along with various other factors, the Tide West Board (other than
Mr. Hersh who was not present for the meeting) unanimously approved the Merger
Agreement and the transactions contemplated thereby, authorized the officers of
Tide West to execute the Merger Agreement on behalf of Tide West, approved a
recommendation that the stockholders of Tide West vote in favor of the approval
of the Merger and the Merger Agreement and approved the Voting Agreements for
purposes of Section 203 of the Delaware Act.

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On February 25, 1996, officers of Tide West and HSR executed and delivered
the Merger Agreement and certain stockholders of Tide West (holding in the
aggregate in excess of a majority of the outstanding shares of Tide West Common
Stock) agreed, among other things, to vote their shares of Tide West Common
Stock in favor of the Merger and the Merger Agreement.

On April 29, 1996, officers of Tide West and HSR agreed to make certain
modifications to the original Merger Agreement relating to the timing of certain
calculations relating to the Market Price and of the Closing Date and executed
and delivered an amended and restated version of the Merger Agreement.

REASONS FOR THE MERGER -- HSR

The HSR Board believes that the terms of the Merger are fair to, and in the
best interests of, HSR and its stockholders. The HSR Board has approved, subject
to various conditions (including stockholder approval of the issuance of
additional HSR Common Stock), the Merger Agreement and the Merger, the issuance
of additional HSR Common Stock upon consummation of the Merger in accordance
with the Merger Agreement and the other transactions contemplated thereby, and
recommends that the holders of HSR Common Stock vote FOR approval of the
issuance of additional HSR Common Stock at the HSR Special Meeting.

The HSR Board believes that the Merger is desirable for a number of
reasons: (a) it provides geographic diversification of HSR into attractive
geographic regions; (b) the Tide West properties offer significant upside
potential through aggressive and technologically oriented exploitation and
exploration; (c) it provides advantageous synergies between HSR's current gas
marketing group and Tide West's trading and transportation business; (d) the
Tide West properties are relatively concentrated and are primarily operated by
Tide West; (e) the Merger brings HSR to a size level that HSR's management
believes will improve the liquidity of HSR Common Stock and should help HSR
achieve a wider market following; and (f) the Merger offers the opportunity to
create a combined company with greater financial resources, competitive strength
and business opportunities than would be possible for HSR alone. Each of these
factors is discussed in more detail below.

DIVERSIFICATION. One of HSR's strategic objectives is to diversify its
property base to include production outside of the Rocky Mountain region. The
HSR Board believes that Tide West's properties, which are primarily located in
the Mid-Continent area, are an excellent diversification balance to HSR's
approximately 1,350 wells in the D-J Basin and approximately 1,100,000 gross
undeveloped acres in the Rocky Mountain region.

From a stockholder's standpoint, diversification achieves a number of
important objectives. First, diversification is desirable in order to reduce
HSR's historically high reserve-to-production ratio. HSR's existing properties
have a ratio of approximately 14 to 1. While this provides excellent foundation
of stable, long-lived cash flow, HSR desires to blend the ratio in order to
increase cash flow and provide greater growth potential. Tide West's
reserve-to-production ratio of approximately 10 to 1 provides a counterbalance
to HSR's existing long-lived assets. Secondly, the geographical location of Tide
West's properties, and the proximity to Mid-Continent markets and Henry Hub,
provide product market and price diversification to HSR's Rocky Mountain
concentration of properties. Finally, Tide West's undrilled locations present a
complementary product profile to HSR's lower risk and proved undeveloped
locations in that they generally possess slightly higher potential but are
somewhat riskier.

EXPLOITATION AND EXPLORATION POTENTIAL. HSR believes that there are
extensive exploitation and exploration opportunities to be pursued on and around
the Tide West properties. In the process of acquiring proved developed producing
properties, Tide West has assembled a substantial inventory of exploitation
opportunities, ranging from low risk proved undeveloped drillsites to attractive
probable locations. HSR has identified almost 200 gross drillsites on the Tide
West properties. In addition, because Tide West has focused primarily on
acquisitions, it has not attempted to develop the exploratory potential of many
of its properties. Tide West and HSR have identified numerous areas with
exploration potential within the Tide West acreage inventory. HSR intends to use
its exploration staff, many of whom have experience in the areas where the Tide
West properties are located, to develop many of the exploitation and exploratory
opportunities held by Tide West.

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MARKETING SYNERGIES. The Merger also provides advantageous synergies
between HSR's gas marketing group and Tide West's trading and transportation
business. HSR has become one of the most active and successful natural gas
producer/marketers in the Colorado Front Range area. Tide West has established
itself as one of the most successful Mid-Continent traders and transporters. The
combination of the two groups creates exciting synergies and should present
opportunities to improve product prices and profit from market imbalances. HSR's
marketing group will be better able to move gas from the Colorado Front Range
and into the Mid-Continent, and vice-versa, when imbalances exist. The
Mid-Continent group will have the added flexibility of capitalizing on trading
differentials between the two regions, and could facilitate and benefit from
trading and marketing of gas HSR may produce as a result of its activities in
the Gulf Coast area.

OPERATIONS AND CONCENTRATION. HSR is one of the most efficient operators in
the United States with 1995 overhead of $0.80 per Boe and lease operating
expenses of $1.95 per Boe. Tide West is similarly efficient, with 1995 overhead
of $1.09 per Boe and lease operating expenses of $2.16 per Boe. The concentrated
nature of Tide West's properties and its historic efficiency will enable HSR to
continue its longstanding record of efficient operations. More than
three-fourths of Tide West's reserves are located in the Anadarko and Arkoma
Basins and in the Southern Oklahoma region. Additionally, Tide West operates 82%
of its wells. The concentration of properties and significant percentage of
operated wells provide operational efficiency and control which are fundamental
to realizing the expected value of these assets.

SIZE, STOCK LIQUIDITY AND MARKET FOLLOWING. HSR also believes the Merger is
attractive because it will increase the size of HSR's operations and property
base and potentially improve the trading characteristics of the HSR Common Stock
by increasing its stockholder base. Assuming the consummation of the Merger, HSR
would be one of the larger independent oil and gas companies in the United
States. In addition, following the Merger, the number of outstanding shares of
HSR Common Stock will increase, which should improve the liquidity of the HSR
Common Stock. Furthermore, there is very little overlap between HSR's and Tide
West's institutional stockholders. Thus, the Merger should create a broader base
of stockholders.

FINANCIAL ASPECTS. If the Merger is consummated, HSR will have increased
its asset base by more than 50%. HSR believes that this increase in size will
enable it to obtain better access to capital at a lower cost. HSR's size should
also result in it being exposed to a greater number of business opportunities,
and may allow it to better compete in capturing these opportunities.

REASONS FOR THE MERGER -- TIDE WEST

The Tide West Board believes that the terms of the Merger are fair to, and
in the best interests of, Tide West and its stockholders. The Tide West Board
has approved, subject to stockholder approval, the Merger Agreement, the Merger
and the transactions contemplated thereby and recommends that the holders of
Tide West Common Stock vote FOR approval of the Merger and the Merger Agreement
at the Tide West Special Meeting.

The Tide West Board believes that the Merger is desirable for the following
reasons: (a) under current market conditions, the Merger offers the best
opportunity of maximizing value for Tide West's stockholders; (b) the Merger
presents a significant opportunity for diversification and partial liquidation
of the investment of Tide West's stockholders by allowing them to receive cash
for a portion of their investment and to become stockholders in a larger
publicly traded independent oil and gas company whose stock, the Tide West Board
believes, has greater upside potential than the Tide West Common Stock; (c) the
Merger offers the opportunity to create a combined company with greater
financial resources, competitive strength and business opportunities than would
be possible for Tide West alone; (d) the Merger is expected to provide Tide
West's stockholders with enhanced liquidity with respect to the HSR Common Stock
received in the Merger because the number of shares outstanding and the trading
volume of the combined company will be significantly larger than the number of
shares outstanding and trading volume of the Tide West Common Stock; and (e) the
Merger is expected to provide Tide West's stockholders with the opportunity to
receive a premium over the market price of their shares of Tide West Common
Stock immediately prior to the announcement on February 26, 1996, of the
proposed Merger and a premium over the market price of their shares of Tide West

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Common Stock immediately prior to the announcement on October 20, 1995, of the
intention of the Tide West Board to sell Tide West.

For the reasons stated above, the Tide West Board determined that the
interests of Tide West's stockholders would best be served by pursuing the
Merger.

RECOMMENDATION OF THE HSR BOARD

For the reasons described under "--Reasons for the Merger--HSR," the HSR
Board believes that the Merger is in the best interests of the HSR stockholders
and that the consideration to be paid to the Tide West stockholders is fair to
the HSR stockholders. Accordingly, THE HSR BOARD RECOMMENDS THAT THE
STOCKHOLDERS OF HSR VOTE FOR THE ISSUANCE OF UP TO 7,161,312 SHARES OF HSR
COMMON STOCK IN ACCORDANCE WITH THE MERGER AGREEMENT.

In arriving at its recommendation, the HSR Board considered the following
factors without assigning relative weights to any: (a) HSR's internal detailed
engineering, geological and financial review and evaluation of Tide West; (b)
the diversification objectives of HSR; (c) the exploitation and exploration
potential of the Tide West properties and HSR's ability to implement
technology-based exploitation and exploration on these properties; (d) the
marketing synergies between HSR and Tide West; (e) the concentration of Tide
West properties and operational control over such properties; (f) the expected
effect on the liquidity of shares of HSR Common Stock and market following of
HSR; (g) the likely long term positive effect on the liquidity of HSR Common
Stock; (h) the likelihood that, for federal tax purposes, HSR would not be
adversely affected; (i) the effect of the issuance of the cash consideration,
assumption of debt and issuance of stock on the financial structure and position
of HSR; (j) the expected accretive effect on cash flow per share of HSR Common
Stock; (k) the expected increase in financial resources, competitive strength
and business opportunities from the creation of a combined company; (l) the
combined effect and synergies between the Merger and the Basin Acquisitions; and
(m) the advice of HSR's financial advisor, Lehman Brothers, summarized below,
including its opinion that the consideration to be paid for the shares of Tide
West Common Stock is fair to HSR from a financial point of view.

The HSR Board held a telephonic meeting on February 23, 1996, and
continuing on February 24, 1996, at which the full HSR Board was present (except
that Mr. Hersh was absent from the continuation of the meeting on February 24,
1996), during which the Merger and the Basin Acquisitions were discussed and
considered. Because Mr. Hersh is a limited partner in the general partner of
NGP, the major stockholder of Tide West, and a director of Tide West, Mr. Hersh
elected not to be present during the continuation of the meeting of the HSR
Board on February 24, 1996, at which the Merger and the Basin Acquisitions were
further discussed and considered and, accordingly, did not vote on any matter.
All voting members of the HSR Board voted in favor of the Merger and in favor of
recommending that the stockholders of HSR approve the issuance of additional
shares of HSR Common Stock to consummate the Merger. Prior to voting, the HSR
Board considered the matters discussed under "-- Reasons for the Merger -- HSR"
and "-- Interests of Certain Persons in the Merger."

OPINIONS OF THE HSR FINANCIAL ADVISORS

HSR engaged Lehman Brothers and Prudential Securities to act as financial
advisors in connection with the Merger and to render their opinions as to the
fairness, from a financial point of view, to HSR of the consideration to be paid
by HSR in the Merger.

On February 24, 1996, in connection with the evaluation of the Merger
Agreement and the transactions contemplated by the HSR Board, Lehman Brothers
delivered its oral opinion, which opinion was subsequently confirmed in writing,
that, as of such date and subject to certain assumptions, factors and
limitations as described below, the consideration to be paid by HSR for the Tide
West Common Stock in the Merger was fair, from a financial point of view, to
HSR. Each of the HSR Financial Advisors has provided its written opinion dated
March 26, 1996. A copy of each of the opinions of the HSR Financial Advisors
dated the date of this Joint Proxy Statement/Prospectus (the "Opinions"), which
set forth assumptions made, procedures followed, matters considered and
limitations on the review by the HSR Financial Advisors in rendering the

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Opinions, are attached as Annex C and Annex D to this Joint Proxy
Statement/Prospectus and are incorporated herein by reference. This Joint Proxy
Statement/Prospectus contains a summary of the material terms of the Opinions.
Reference is made to the full text of such Opinions attached as Annex C and
Annex D hereto. The March 26, 1996, opinions of the HSR Financial Advisors are
substantially identical to the Opinions.

No limitations were imposed by HSR on the scope of the investigation or the
procedures to be followed by the HSR Financial Advisors in rendering the
Opinions. The HSR Financial Advisors were not requested to and did not make any
recommendation to the HSR Board as to the form or amount of the consideration to
be paid for the Tide West Common Stock in the Merger, which was determined
through arm's length negotiations between HSR and Tide West. In arriving at the
Opinions, the HSR Financial Advisors did not ascribe a specific range of values
to Tide West, but made a determination as to the fairness, from a financial
point of view, to HSR of the consideration to be paid to the stockholders of
Tide West on the basis of the financial and comparative analyses summarized
below. The Opinions are for the use and benefit of the HSR Board in connection
with its consideration of the Merger and do not constitute a recommendation to
any stockholder of HSR as to how such stockholder should vote at the HSR Special
Meeting with respect to the issuance of HSR Common Stock pursuant to the Merger
Agreement. The HSR Financial Advisors were not requested to opine as to, and the
Opinions do not in any manner address, HSR's underlying business decision to
proceed with or effect the Merger.

In arriving at the Opinions, the HSR Financial Advisors reviewed and
analyzed: (a) the Merger Agreement and the specific terms of the Merger; (b)
publicly available information concerning HSR and Tide West which the HSR
Financial Advisors believed to be relevant to their inquiry; (c) financial and
operating information with respect to the business, operations and prospects
(including financial projections) of HSR and Tide West furnished to the HSR
Financial Advisors by HSR and Tide West; (d) the trading histories of the HSR
Common Stock and the Tide West Common Stock from January 1, 1994, to March 26,
1996, and a comparison of the trading histories with those of other companies
which the HSR Financial Advisors deemed relevant; (e) certain reserve and
reserve production estimates for Tide West prepared by Tide West, and an audit
performed by Netherland, Sewell & Associates, Inc. ("Netherland, Sewell") as of
July 1, 1995, of a portion of the Tide West reserve estimates; (f) certain
reserve and reserve production estimates for HSR prepared by HSR; (g) a
comparison of the historical financial results and present financial condition
of HSR and Tide West with those of other companies that the HSR Financial
Advisors deemed relevant; and (h) comparison of the financial terms of the
Merger with the terms of certain other recent transactions which the HSR
Financial Advisors deemed relevant. In addition, the HSR Financial Advisors had
discussions with the managements of HSR and Tide West concerning their
respective businesses, operations, assets, financial condition and prospects
(including financial projections) and undertook such other studies, analyses and
investigations as the HSR Financial Advisors deemed appropriate.

In arriving at the Opinions, the HSR Financial Advisors assumed and relied
upon the accuracy and completeness of the financial and other information used
by them in arriving at the Opinions without assuming any responsibility for
independent verification of such information and further relied upon the
assurances of the managements of HSR and Tide West that they were not aware of
any facts that would make such information inaccurate or misleading. With
respect to the financial forecasts of HSR and Tide West provided to the HSR
Financial Advisors by the managements of HSR and Tide West, respectively, upon
advice of HSR, the HSR Financial Advisors assumed that such forecasts were
reasonably prepared on a basis reflecting the best currently available estimates
and judgments of the managements of HSR and Tide West, as the case may be, as to
the future financial performance of HSR and Tide West and that HSR and Tide West
will perform substantially in accordance with such forecasts with respect to the
gas and oil reserve estimates and future natural gas and oil production volumes
for HSR and Tide West. With HSR's consent, the HSR Financial Advisors relied
upon a reserve audit for a portion of the Tide West properties prepared as of
July 1, 1995, by Netherland, Sewell, Tide West's independent petroleum
engineering consulting firm. In arriving at their Opinions, the HSR Financial
Advisors did not conduct a physical inspection of the properties or facilities
of HSR or Tide West and did not make or obtain any other evaluations or
appraisals of the assets or liabilities

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of HSR or Tide West. The Opinions were necessarily based upon market, economic
and other conditions as they existed on, and could be evaluated as of, the date
of their Opinions.

In connection with its presentation to the HSR Board on February 24, 1996,
and in advising the HSR Board of its opinion, Lehman Brothers, and in the case
of Prudential Securities with respect to its advising the HSR Board of its
opinion, performed a variety of financial and comparative analyses, as
summarized below. The preparation of a fairness opinion involves various
determinations as to the most appropriate and relevant methods of financial
analysis and the application of those methods to the particular circumstances
and, therefore, an opinion is not readily susceptible to summary description.
Furthermore, in arriving at the Opinions, the HSR Financial Advisors did not
attribute any particular weight to any analysis and factor considered by the HSR
Financial Advisors, but rather made qualitative judgments as to the significance
and relevance of each analysis and factor. Accordingly, the HSR Financial
Advisors believe that their analyses must be considered as a whole and that
considering any portion of such analyses and of the factors considered, without
considering all analyses and factors, could create a misleading or incomplete
view of the process underlying the Opinions. In their analyses, the HSR
Financial Advisors made numerous assumptions with respect to industry
performance, general business and economic conditions and other matters, many of
which are beyond the control of HSR and Tide West. Any estimates contained in
these analyses are not necessarily indicative of actual values or predictive of
future results or values, which may be significantly more or less favorable than
as set forth therein. In addition, analyses relating to the value of businesses
do not purport to be appraisals or to reflect the prices at which businesses may
actually be sold.

PURCHASE PRICE ANALYSIS AND STOCK PRICE PERFORMANCE. The HSR Financial
Advisors performed an analysis of the Merger which indicated an implied purchase
price pursuant to terms of the Merger for each share of Tide West Common Stock
of $15.36, based on an exchange ratio of .6295 shares of HSR Common Stock per
share of Tide West Common Stock, a $10.50 per share price for HSR Common Stock
and cash consideration of $8.75 per share of Tide West Common Stock. The HSR
Financial Advisors analysis indicated that the pro forma ownership percentage of
holders of Tide West Common Stock of the pro forma combined company would be
approximately 34% following the Merger. The HSR Financial Advisors also examined
the trading history of the Tide West Common Stock and the HSR Common Stock in
terms of both price and volume during the period from January 1, 1994 through
March 26, 1996.

DISCOUNTED CASH FLOW ANALYSIS OF TIDE WEST. Using a discounted cash flow
analysis, the HSR Financial Advisors estimated the present value of the future
cash flows that Tide West could be expected to generate from January 1, 1996,
and beyond. This analysis was performed using three cases which employed
different assumptions as to projected production volumes and oil and gas price
forecasts.

In Case I, reserve reports prepared by Tide West (containing both proved
and, in certain reports, probable reserve estimates), a report of Netherland,
Sewell setting forth its estimates for a portion of Tide West's proved reserves
at January 1, 1995, and the Netherland, Sewell audit as of July 1, 1995, of a
portion of the Tide West proved reserve estimates were used to project future
oil and gas production volumes. Additional reserve reports for property
acquisitions made subsequent to July 1, 1995, were also prepared by Tide West
and used to project future production volumes. Such Case I reserve forecast is
herein defined as the "Tide West Reserve Assessment." Projected production
volumes were risked by reserve category. The natural gas price forecast was
based on Lehman Brothers' research projections for spot market sales and on a
standard heating value of 1,000 British Thermal Units per cubic foot of gas.
Adjustments were made to the natural gas price forecast to reflect
transportation charges and quality differentials. Lehman Brothers' research
forecast for gas prices per Mcf for the years 1996 through 2000 were $2.35,
$2.05, $1.90, $1.85 and $2.10, respectively, and were assumed to escalate at 2%
per year thereafter. The oil price forecast was based on Lehman Brothers'
research projections for West Texas Intermediate ("WTI") equivalent crude oil on
the spot market and was then adjusted for transportation and quality
differentials. For the years 1996 through 2000, WTI oil prices per barrel were
assumed to be $16.75, $16.75, $17.09, $17.43 and $17.78, respectively, and were
assumed to escalate at 2% per year thereafter. The gas and oil price forecast
used in Case I is herein defined as the "Lehman Price Deck."

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In Case II, reserve reports prepared by HSR, defined as the "HSR Reserve
Assessment," based on due diligence by HSR on Tide West, including review of the
Tide West reserve reports and the Netherland, Sewell audit as of July 1, 1995,
of a portion of the Tide West reserve estimates, were used to project future
natural gas and oil production volumes. The natural gas price forecast was based
on NYMEX quotes for future delivery of natural gas at Henry Hub, Louisiana. Such
natural gas price forecasts per Mcf for the years 1996 through 2000 were $2.16,
$1.95, $1.96, $1.99 and $2.03, respectively, and were assumed to escalate at 2%
per year thereafter. The WTI oil price forecast per barrel for the years 1996
and 1997 was $16.75 and was assumed to escalate at 2% per year thereafter.
Adjustments were made to the natural gas and oil price forecasts to reflect
transportation and quality differentials. The gas and oil price projections used
in Case II are herein defined as the "HSR Price Deck."

In Case III, future natural gas and oil projections were based on the HSR
Reserve Assessment. Natural gas and oil price projections were based on the
Lehman Price Deck.

In Cases I, II and III, operating expenses necessary to lift and produce
the estimated reserves were assumed to increase at 2% per year. The cash flows
were discounted at 10% and 12%, which in the judgment of the HSR Financial
Advisors represent the appropriate discount rates for small and medium sized
exploration and production companies for valuing oil and gas properties.

By discounting the projected cash flows generated by Tide West, adding
assessed value for other assets, deducting the present value of estimated
general and administrative expenses and deducting net liabilities, the HSR
Financial Advisors arrived at a net asset reference value range per share for
Tide West Common Stock at $19.03 to $21.59 in Case I, $13.12 to $15.36 in Case
II and $13.31 to $15.46 in Case III. In each case, per share amounts were
determined using 9.79 million shares of Tide West Common Stock outstanding.

ANALYSIS OF SELECTED PUBLICLY TRADED COMPARABLE COMPANIES. Using publicly
available information, the HSR Financial Advisors compared selected financial
data of Tide West with similar data of selected publicly-traded companies
engaged in the businesses considered by the HSR Financial Advisors to be
comparable to those of HSR and Tide West. Specifically, the HSR Financial
Advisors included in their review Barrett Resources Corporation, Cabot Oil and
Gas Corporation, Cross Timbers Oil Company, Devon Energy Corporation, DLB Oil
and Gas Inc., Hugoton Energy Corporation, Louis Dreyfus Natural Gas Corp.,
Parker and Parsley Petroleum Co., United Meridian Corporation and Vintage
Petroleum, Inc. These companies were deemed by the HSR Financial Advisors to be
the most comparable to Tide West. An analysis of the ratio of total market
capitalization (defined as market value of equity plus debt and preferred stock
less available cash) at March 20, 1996, to estimated 1995 earnings before
interest, taxes, depreciation, depletion, amortization and exploration expense
(defined as EBITDE) yielded a multiple range of 4.7 times to 12.8 times, a mean
value of 8.8 times and a median value of 8.9 times. The ratio of total market
capitalization at March 20, 1996, to estimated 1996 EBITDE yielded a multiple
range of 2.4 times to 8.0 times, a mean value of 5.9 times, and a median value
of 6.0 times. Using an HSR Common Stock price of $10.50 per share, Tide West's
implied total market capitalization to estimated 1995 and 1996 EBITDE ratios
would be 7.8 times and 5.2 times, respectively. An analysis of the ratio of
equity market value at March 20, 1996, to estimated 1995 after-tax,
after-leverage cash flow from operations before changes in working capital
(defined as CFFO) yielded a multiple range of 3.8 times to 10.7 times, a mean
value of 7.3 times and a median value of 6.8 times. The ratio of equity market
value at March 20, 1996, to estimated 1996 CFFO yielded a multiple range of 2.8
times to 7.5 times, a mean value of 4.8 times and a median value of 4.3 times.
Using an HSR Common Stock price of $10.50 per share, Tide West's implied equity
market value to estimated 1995 and 1996 CFFO ratios would be 7.3 times and 5.2
times, respectively.

Because of the inherent differences between the businesses, operations and
prospects of Tide West and the businesses, operations and prospects of the
companies included in the comparable group, the HSR Financial Advisors believed
that a purely quantitative comparable company analysis would not be particularly
meaningful in the context of the Merger. The HSR Financial Advisors believed
that an appropriate use of a comparable company analysis in this instance would
involve qualitative judgments concerning differences between the financial and
operating characteristics of Tide West and the companies in the comparable group
that would affect the public trading values of HSR, Tide West and such other
companies.

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ANALYSES OF SELECTED COMPARABLE TRANSACTIONS. The HSR Financial Advisors
reviewed the prices paid, to the extent publicly available, of selected
acquisition transactions which involved certain oil and gas companies similar to
Tide West's operations which took place between June 1993 and February 1996.
Transactions reviewed by the HSR Financial Advisors include Enron Capital &
Trade Corporation/Coda Energy Company, National Energy Group/Alexander Energy
Corporation, Apache Corporation/Hadson Energy Resources, Tom Brown Inc./Presidio
Oil Company, Barrett Resources Corporation/Plains Petroleum Company and Cabot
Oil & Gas Corporation/Washington Energy Resources Corporation (the "Comparable
Transactions"). The HSR Financial Advisors reviewed the multiples paid in the
Comparable Transactions based on the total consideration for each of the
transactions to, among other things, such acquired companies' respective proved
reserves. In particular, the HSR Financial Advisors calculated offer values
expressed in terms of dollars per thousand cubic feet equivalent of proved
reserves ("$/Mcfe"). The calculations yielded a range of offer values per
thousand cubic feet of gas equivalent of $0.45/Mcfe to $1.21/Mcfe calculated on
a 6 to 1 gas to oil basis. Using an HSR Common Stock price of $10.50 per share
and the Tide West Reserve Assessment, the implied value expressed in terms of
$/Mcfe was $0.63. Using the HSR Reserve Assessment, the implied value in terms
of $/Mcfe was $0.83.

Because the market conditions, rationale and circumstances surrounding each
of the transactions analyzed were specific to each transaction and because of
the inherent differences between the businesses, operations and prospects of
Tide West and the acquired businesses analyzed, the HSR Financial Advisors
believed that it was inappropriate to, and therefore did not, rely solely on the
quantitative results of the analysis, and accordingly, also made qualitative
judgments concerning differences between the characteristics of these
transactions and the Merger that would affect the acquisition values of Tide
West and such acquired companies.

PRO FORMA MERGER ANALYSIS. The HSR Financial Advisors analyzed certain pro
forma effects which could result from the Merger. In connection with such
analyses, the HSR Financial Advisors reviewed the projections provided by the
management of Tide West with respect to the future financial performance of Tide
West for the years 1995, 1996 and 1997, and, after discussing such projections
with the managements of Tide West and HSR, made certain adjustments. In
addition, the HSR Financial Advisors utilized the HSR Price Deck for oil and gas
price forecasts and used the HSR Reserve Assessment of Tide West for projected
production volumes. The HSR Financial Advisors then developed their own analysis
of the pro forma effects of the Merger, after considering certain information
that they deemed relevant. This analysis indicated that the CFFO per share of
the combined company would be accretive to HSR (both with and without the Basin
Acquisitions) in all three years and the pro forma earnings per share (both with
and without the Basin Transactions) would be accretive in all three years. For
the purposes of such analysis, the HSR Financial Advisors defined CFFO per share
as (a) net income to common stock plus depletion, depreciation, amortization and
exploration expenses plus deferred taxes and other non-cash charges, but not
including changes in working capital, divided by (b) the pro forma shares
outstanding.

Lehman Brothers and Prudential Securities are internationally recognized
investment banking firms engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive bids, secondary distributions of listed and unlisted
securities, private placements and valuations for corporate and for other
purposes. HSR selected Lehman Brothers and Prudential Securities to act as its
financial advisors in connection with the Merger because of their reputation and
substantial experience in transactions similar to the Merger.

HSR FINANCIAL ADVISORS FEES. In connection with Lehman Brothers' services
as financial advisor to HSR, HSR has agreed to pay Lehman Brothers as
compensation for its services a fee, which is contingent upon the consummation
of the Merger, in the amount of 0.6% of the value of the aggregate consideration
to be paid by HSR in the Merger, including the assumption of net liabilities,
which fee is estimated to be approximately $1,260,000 (treating the date of this
Joint Proxy Statement/Prospectus as the Closing Date). HSR has also agreed to
reimburse Lehman Brothers for certain reasonable out-of-pocket expenses incurred
in connection with the Merger (including reasonable fees and expenses of its
legal counsel) and to indemnify Lehman Brothers and certain related persons
against certain liabilities and expenses in connection with the Merger,
including certain liabilities under the federal securities laws. HSR has paid an
aggregate of $113,000 to

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Lehman Brothers during the prior two years in connection with matters unrelated
to the Basin Acquisitions and the Merger.

In connection with Prudential Securities' services as financial advisor to
HSR, HSR has agreed to pay Prudential Securities as compensation for its
services a fee, which is contingent upon the consummation of the Merger, in the
amount of 0.4% of the value of the aggregate consideration to be paid by HSR in
the Merger, including the assumption of net liabilities, which fee is estimated
to be approximately $840,000 (treating the date of this Joint Proxy
Statement/Prospectus as the Closing Date). HSR has also agreed to reimburse
Prudential Securities for certain reasonable out-of-pocket expenses incurred in
connection with the Merger (including reasonable fees and expenses of its legal
counsel) and to indemnify Prudential Securities and certain related persons
against certain liabilities and expenses in connection with the Merger,
including certain liabilities under the federal securities laws.

Lehman Brothers has acted as an underwriter of HSR debt and equity
securities in the past. In the ordinary course of business, the HSR Financial
Advisors actively trade the securities of Tide West and HSR for their own
accounts and for the accounts of their customers and, accordingly, either Lehman
Brothers or Prudential Securities may at any time hold a long or short position
in such securities.

RECOMMENDATION OF THE TIDE WEST BOARD

For the reasons described under "-- Reasons for the Merger -- Tide West,"
the Tide West Board believes that the Merger is in the best interests of the
Tide West stockholders and that the consideration to be received in the Merger
by the Tide West stockholders is fair to the Tide West stockholders.
Accordingly, THE TIDE WEST BOARD RECOMMENDS THAT THE STOCKHOLDERS OF TIDE WEST
VOTE FOR THE APPROVAL OF THE MERGER AND THE MERGER AGREEMENT.

In arriving at its recommendation, the Tide West Board considered the
following factors without assigning relative weights to any: (a) Tide West's
strategic alternatives, including remaining a separate company; (b) the terms
and conditions of the proposed Merger, including the consideration to be
received by the Tide West stockholders; (c) the financial condition, results of
operations, business, market position, prospects and strategic objectives of
HSR; (d) the strength of HSR's management organization; (e) the likelihood that,
for federal income tax purposes, no gain or loss will be recognized by Tide West
stockholders with respect to the HSR Common Stock received in exchange for their
Tide West Common Stock; (f) the fairness opinion of Merrill Lynch discussed
below; (g) the fact that receiving the proposal from HSR was the result of a
lengthy and thorough process that included a number of other companies, several
of which made proposals, all of which were considered by the Tide West Board to
be less favorable to the Tide West stockholders than the HSR proposal; (h) the
fact that the terms and conditions of the proposed Merger were the result of
arms' length negotiations between HSR and the Tide West Board; (i) the fact that
the terms and conditions of the proposed Merger were acceptable to Tide West's
largest stockholder, who has the greatest financial interest in maximizing the
benefit to the Tide West stockholders; (j) the likelihood that the Tide West
stockholders will receive a premium over the market price of their shares of
Tide West Common Stock immediately prior to the announcement of the proposed
Merger and a premium over the market price of their shares of Tide West Common
Stock immediately prior to the announcement on October 20, 1995, of the
intention of the Tide West Board to sell Tide West; and (k) the Tide West
Board's conclusion that the terms of the Merger Agreement would not preclude
another bidder from offering to pay a higher price for Tide West.

All members of the Tide West Board (other than Mr. Hersh, who was informed
of the meeting but declined to participate because of his position as a director
of HSR) were present at the special meeting held on February 24, 1996, at which
the Tide West Board approved the Merger, authorized Tide West to enter into the
Merger Agreement and determined to recommend that the stockholders of Tide West
vote in favor of the approval of the Merger and the Merger Agreement. At that
special meeting, all directors present voted in favor of such matters. Prior to
voting, the Tide West Board considered the matters discussed under "-- Reasons
for the Merger -- Tide West" and "-- Interests of Certain Persons in the
Merger."

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OPINION OF THE TIDE WEST FINANCIAL ADVISOR

At the special meeting of the Tide West Board held on February 24, 1996, to
consider entering into the Merger Agreement, Merrill Lynch delivered its oral
opinion (subsequently confirmed in writing) dated February 24, 1996, that, as of
such date, the consideration to be received by the holders of the Tide West
Common Stock was fair to such holders, taken as a whole, from a financial point
of view. Merrill Lynch has confirmed its written opinion dated February 24,
1996, in an opinion dated the date of this Joint Proxy Statement/Prospectus. A
copy of the opinion of Merrill Lynch dated the date of this Joint Proxy
Statement/Prospectus, which sets forth the assumptions made, matters considered
and limitations on the review undertaken, is attached as Annex B to this Joint
Proxy Statement/Prospectus and is incorporated herein by reference. This Joint
Proxy Statement/Prospectus contains a summary of the material terms of such
opinion of Merrill Lynch. Reference is made to the full text of such opinion
attached as Annex B hereto. The February 24, 1996, opinion is substantially
identical to the opinion attached as Annex B hereto. STOCKHOLDERS OF TIDE WEST
ARE URGED TO READ CAREFULLY THE MERRILL LYNCH OPINION IN ITS ENTIRETY.

Merrill Lynch's opinion is directed only to the fairness from a financial
point of view of the consideration to be received by the holders of Tide West
Common Stock and does not constitute a recommendation to any stockholder as to
how such stockholder should vote at the Tide West Special Meeting. The
consideration to be received by the holders of the Tide West Common Stock was
determined through negotiations between Tide West and HSR and was unanimously
approved by the Tide West Board (except for Mr. Hersh, who did not participate).
Merrill Lynch provided advice during the course of such negotiations, but did
not make a recommendation with respect to the amount of the consideration to be
received by the holders of the Tide West Common Stock.

In arriving at its opinion dated the date of this Joint Proxy
Statement/Prospectus, Merrill Lynch, among other things: (a) reviewed Tide
West's annual reports, Forms 10-K and related financial information for the
three fiscal years ended December 31, 1995; Tide West's Forms 8-K dated November
20, 1992, and December 15, 1993; Tide West's Form 10-Q and the related unaudited
financial information for the quarterly period ended March 31, 1996; (b)
reviewed HSR's annual reports, Forms 10-K and related financial information for
the three fiscal years ended December 31, 1995; HSR's Forms 8-K dated July 9,
1992, and August 13, 1993; HSR's Form 10-Q and the related unaudited financial
information for the quarterly period ended March 31, 1996; (c) reviewed certain
information, including financial forecasts, relating to the business, earnings,
cash flow, assets and prospects of Tide West and HSR, furnished to Merrill Lynch
by Tide West and HSR, respectively; (d) reviewed certain reserve and reserve
production estimates for Tide West prepared by Tide West, a report of
Netherland, Sewell setting forth its estimates for a portion of Tide West's
reserves at January 1, 1995, and a reserve audit for a portion of the Tide West
properties prepared as of July 1, 1995, by Netherland, Sewell, and discussed
such reserve and reserve production estimates with Tide West and Netherland,
Sewell; (e) reviewed certain reserve and reserve production estimates for
December 31, 1995, for HSR prepared by HSR and reviewed by Williamson Petroleum
Consultants, Inc. ("Williamson") and discussed such reserve and reserve
production estimates with HSR; (f) reviewed certain reserve and reserve
production estimates for December 31, 1995, relating to the Basin Acquisitions,
prepared by Basin and audited by Netherland, Sewell and discussed such reserve
and reserve production estimates with HSR; (g) conducted discussions with
members of senior management of Tide West and HSR concerning their respective
businesses and prospects; (h) reviewed the historical market prices and trading
activity for the Tide West Common Stock and the HSR Common Stock and compared
them with that of certain publicly traded companies which Merrill Lynch deemed
to be reasonably similar to Tide West and HSR, respectively; (i) compared the
published reserve information, results of operations and similar financial
information of Tide West and HSR with that of certain companies which Merrill
Lynch deemed to be reasonably similar to Tide West and HSR, respectively; (j)
compared the financial terms of the transactions contemplated by the Merger
Agreement with the financial terms of certain other mergers and acquisitions
which Merrill Lynch deemed to be relevant; (k) considered the pro forma effect
of the Merger on HSR's capitalization ratios and earnings and cash flow with and
without the effect of the Basin Acquisitions; (l) reviewed the Merger Agreement;
(m) reviewed the NGP Voting Agreement and the Smith Voting Agreement; (n)
reviewed the Registration Rights Agreement; (o) reviewed the Asset Purchase and
Sale Agreement relating to the Basin Acquisitions

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dated February 23, 1996; and (p) reviewed such other financial studies and
analyses and performed such other investigations and took into account such
other matters as Merrill Lynch deemed necessary, including Merrill Lynch's
assessment of general economic, market and monetary conditions.

In preparing its opinion, Merrill Lynch relied on the accuracy and
completeness of all information supplied or otherwise made available to it by
Tide West and HSR, and Merrill Lynch did not independently verify such
information or undertake an independent appraisal of the assets or liabilities
of Tide West or HSR or certain assets of Basin. With respect to the reserve
related information furnished by Tide West and HSR, Merrill Lynch assumed that
they were reasonably prepared and reflected the best currently available
estimates and judgment of the managements of Tide West and HSR as to the
reserves of Tide West or HSR, as the case may be. With respect to the financial
forecasts furnished by Tide West and HSR, Merrill Lynch assumed that they were
reasonably prepared and reflected the best currently available estimates and
judgment of Tide West's or HSR's management as to the expected future financial
performance of Tide West and HSR, as the case may be.

Merrill Lynch's opinion was based upon market, economic, financial and
other conditions as they existed and could be evaluated as of the date of such
opinion.

In developing its opinion, Merrill Lynch relied heavily on Tide West as to
certain accounting aspects of the Merger and, as provided in the Merger
Agreement, Merrill Lynch also assumed that the Merger will be treated for
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code.

The following is a brief summary of the analyses performed by Merrill Lynch
in connection with its opinion dated February 24, 1996, which it discussed with
the Tide West Board at its meeting held on February 24, 1996. In connection with
its opinion dated as of the date of this Joint Proxy Statement/Prospectus,
Merrill Lynch performed certain procedures, including each of the financial
analyses described below, to update its analyses made in connection with the
delivery of its opinion dated February 24, 1996, and reviewed with the
managements of Tide West and HSR the financial information on which such
analyses were based and other factors, including the current financial results
of such companies and the future prospects for such companies.

DISCOUNTED CASH FLOW ANALYSIS OF TIDE WEST. Using a discounted cash flow
analysis, Merrill Lynch calculated the present value of the after-tax future
cash flows that Tide West could be expected to generate from January 1, 1996,
and beyond based upon (a) reserve reports prepared by Tide West (containing
proved and, in certain reports, probable and possible reserve estimates, and the
production profile relating to such reserves), a report of Netherland, Sewell
setting forth its estimates for a portion of Tide West's proved reserves at
January 1, 1995, and the Netherland, Sewell audit as of July 1, 1995, of a
portion of the Tide West proved reserve estimates, and (b) Merrill Lynch's oil
and gas price forecasts under two distinct pricing scenarios, Case I and Case
II.

The natural gas price forecasts were based on forecasts for spot market
sales and on a standard heating value of 1,000 British Thermal Units per cubic
foot of gas. Adjustments were made to the natural gas price forecasts to reflect
transportation charges and quality differentials. In Case I, gas prices per Mcf
for the years 1996 to 2000 were assumed to be $1.90, $1.90, $1.90, $2.00 and
$2.10, respectively, and were assumed to escalate at 4% per annum thereafter. In
Case II, gas prices per Mcf for the years 1996 to 2000 were assumed to be $2.00,
$2.05, $2.10, $2.20 and $2.30, respectively, and were assumed to escalate at 6%
per annum thereafter. In both pricing scenarios, the unadjusted natural gas
price was capped at $5.00 per Mcf in the later years.

The oil price forecasts were based on WTI equivalent crude oil on the spot
market and were then adjusted for the transportation and quality of Tide West's
crude oil. In Case I, unadjusted WTI oil prices per barrel for the years 1996 to
2000 were assumed to be $17.00, $18.00, $19.00, $20.00 and $21.00, respectively,
and were assumed to escalate at 4% per annum thereafter. In Case II, unadjusted
WTI oil prices per barrel for the years 1996 to 2000 were assumed to be $17.50,
$19.00, $21.00, $22.00 and $23.00, respectively, and were assumed to escalate at
6% per annum thereafter. In both pricing scenarios, the unadjusted oil price was
capped at $50.00 per barrel in the later years.

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Operating expenses and maintenance capital expenditures, necessary to lift
and produce the proved, probable and possible reserves estimated in the
engineering reports, were assumed to increase at a rate of 4% per annum. The
after-tax cash flows were discounted at rates from 10% to 15% for proved
developed reserves, from 12.5% to 17.5% for proved undeveloped reserves, from
12.5% to 15% for Horizon Gas Partners, L.P. ("Horizon") reserves (Tide West's
net interest in Horizon is approximately 93.7%), from 15% to 20% for probable
reserves and from 20% to 30% for possible reserves.

By discounting all the after-tax cash flows generated by Tide West's
proved, probable and possible reserves as of January 1, 1996, adding assessed
value for undeveloped acreage and other assets (including the Horizon reserves)
and deducting estimated net long-term debt and working capital, Merrill Lynch
arrived at a net asset reference value range per share for Tide West Common
Stock of $11.97 to $16.06 in Case I and $14.52 to $19.64 in Case II. In each
case, per share amounts were determined using 9.79 million shares of Tide West
Common Stock outstanding.

DISCOUNTED CASH FLOW ANALYSIS OF HSR. Using a discounted cash flow
analysis, Merrill Lynch calculated the present value of the after-tax future
cash flows that HSR could be expected to generate from January 1, 1996, and
beyond based upon (a) reserve reports prepared by HSR and reviewed annually by
Williamson (containing proved reserve estimates for HSR and the production
profiles relating to such reserves); (b) reserve reports prepared by Basin and
audited annually by Netherland, Sewell (containing proved reserve estimates for
Basin and the production profiles relating to such reserves); and (c) Merrill
Lynch's oil and gas price forecasts under the same two pricing scenarios that
were applied to Tide West's reserves, Case I and Case II. The after-tax cash
flows for HSR and Basin proved reserves were discounted at rates of 10% and
12.5%.

By discounting all the after-tax cash flows generated by HSR's and Basin's
proved reserves as of January 1, 1996, assessing the value of HSR's and Basin's
probable reserve base at 10% of the proved reserves, assessing the value of
Basin's tax credits at 70% of the discounted tax credit at 10%, assessing the
acreage and upside potential of HSR's undeveloped acreage at $25 to $30 per acre
and assessing the value of other assets as estimated by HSR at 1.0 to 1.5 times
book value, Merrill Lynch arrived at a total asset reference value range for
HSR, with and without the Basin Acquisitions. After deducting estimated net
long-term debt and working capital ($413 million with the Basin Acquisitions and
$288 million without the Basin Acquisitions), Merrill Lynch arrived at a net
asset reference value range per share for HSR Common Stock with the Basin
Acquisitions of $3.04 to $8.21 per share in Case I and $7.86 to $14.26 in Case
II. Without the Basin Acquisitions, the net asset reference value range per
share for HSR was $5.93 to $9.63 in Case I and $9.09 to $13.56 in Case II. In
each case, per share amounts were determined based on 11.4 million shares of HSR
Common Stock outstanding.

ANALYSIS OF SELECTED COMPARABLE ACQUISITION TRANSACTIONS. Merrill Lynch
reviewed publicly available information on certain acquisitions which involved
Mid-Continent oil and gas properties similar to Tide West's operations and
consideration in excess of $100 million and which took place between June 1993
and February 1996. Merrill Lynch considered the following oil and gas
acquisitions: Enron Capital & Trade Corporation/Coda Energy Company, National
Energy Group/Alexander Energy Corporation, Apache Corporation/Aquila Energy
Corporation, Amoco Corporation/Santa Fe Minerals Corporation (Mid-Continent
properties), Barrett Resources Corporation/Plains Petroleum Company and Samson
Energy Corporation/Grace Petroleum Corporation.

Merrill Lynch reviewed publicly available information on certain
acquisitions which involved Rocky Mountain region oil and gas properties similar
to HSR's operations and consideration in excess of $50 million and which took
place between June 1993 and February 1996. Merrill Lynch considered the
following oil and gas acquisitions: Devon Energy Corporation/Unocal Corporation,
Citation Oil & Gas Corporation/Apache Corporation, Tom Brown, Inc./Presidio Oil
Company, Cabot Oil & Gas Corporation/Washington Energy Resources Corporation,
and United Meridian Corporation/Norfolk Holdings, Inc.

Merrill Lynch examined multiples based on the total consideration for each
of the transactions to, among other things, such acquired companies' respective
proved reserves. In particular, Merrill Lynch calculated offer value expressed
in terms of dollars per Mcfe of proved reserves. The comparable Mid-Continent
oil and

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gas transactions had a range of offer values of $.62/Mcfe to $1.38/Mcfe
calculated on a 6 Mcf to 1 barrel basis, and $.57/Mcfe to $1.19/Mcfe calculated
on a 10 Mcf to 1 barrel basis. The comparable Rocky Mountain oil and gas
transactions had a range of offer values of $.50/Mcfe to $.86/Mcfe (6:1 basis)
and $.43/Mcfe to $.72/Mcfe (10:1 basis). Merrill Lynch then calculated the
aggregate and per share (assuming 9.79 million shares of Tide West Common Stock
and 11.4 million shares of HSR Common Stock outstanding) imputed equity values
for Tide West and HSR by applying Tide West's and HSR's proved reserves to the
multiples derived from its analysis of the comparable acquisition transactions.
These imputed equity values for Tide West ranged from $111.9 million, or $11.45
per share, to $151.9 million, or $15.55 per share. The imputed equity values for
HSR with the Basin Acquisitions ranged from $96.6 million, or $8.47 per share,
to $171.6 million, or $15.05 per share. No acquisition analysis was done for HSR
without the Basin Acquisitions.

No company utilized in the comparable acquisition transaction analyses was
identical to Tide West or HSR. Accordingly, an analysis of the results of the
foregoing is not purely mathematical. Rather, it involves complex considerations
and judgments concerning differences in financial and operating characteristics
of the comparable acquired companies and other factors, such as total
consideration paid in relation to a company's reserves, total oil and gas
reserves, reserve life index and location of the reserves acquired, that could
affect the acquisition value of such companies, Tide West and HSR.

ANALYSIS OF SELECTED PUBLICLY TRADED COMPARABLE COMPANIES. Merrill Lynch
compared selected historical stock, operating and financial ratios for Tide West
and HSR to the corresponding data and ratios of the following publicly traded
companies: Barrett Resources Corporation, Basin Exploration, Inc., Cabot Oil &
Gas Corporation, Cross Timbers Oil Company, Devon Energy Corporation, Hugoton
Energy Corporation, Louis Dreyfus Natural Gas Corp., Nuevo Energy Company and
Seagull Energy Corporation. An analysis of the ratio of adjusted market
capitalization (defined as market value of equity plus debt and preferred stock
less available cash) at February 6, 1996, to 1995 estimated pre-tax,
pre-leverage cash flow (defined as EBITDE or Earnings Before Interest, Taxes,
Depreciation, Depletion, Exploration Expense and Amortization) yielded a
multiple range of 4.9 times to 14.1 times, a mean value of 8.0 times and a
median value of 6.5 times. The application of Tide West's adjusted market
capitalization to EBITDE multiple as a low end limit and the comparable company
median ratio of 6.5 times as the upper end limit to Tide West's 1995 estimated
EBITDE, less net long-term debt and working capital, yielded a net asset
reference value range per share of $12.99 to $16.57 for Tide West Common Stock
(assuming 9.79 million shares outstanding) and $6.28 to $12.86 for HSR Common
Stock (assuming 11.4 million shares outstanding) with the Basin Acquisitions. No
trading company analysis was done for HSR without the Basin Acquisitions.

No company utilized in the above comparable companies analyses is identical
to either Tide West or HSR. Accordingly, an analysis of the results of the
foregoing is not purely mathematical. Rather, it involves complex considerations
and judgments concerning differences in financial and operating characteristics
of the comparable companies and other factors that could affect the public
trading value of the comparable companies or company to which they are being
compared.

PRO FORMA MERGER CONSEQUENCES ANALYSIS. Merrill Lynch analyzed certain pro
forma effects which could result from the Merger. In connection with such
analyses, Merrill Lynch reviewed the projections provided by members of
management of Tide West with respect to the future financial performance of Tide
West for the years 1995, 1996 and 1997, and, after discussing such projections
with members of management of Tide West, made certain adjustments. In addition,
Merrill Lynch utilized its own oil and gas price forecasts and made certain
adjustments to projected capital expenditures. Merrill Lynch then developed its
own analysis of the pro forma effects of the Merger, after considering publicly
available information that it deemed relevant. This analysis indicated that the
discretionary cash flow per share of the combined company would be accretive to
HSR (including the Basin Acquisitions) in all three years by 2.6%, 21.1% and
24.9%, respectively, although the pro forma earnings per share would be dilutive
in all three years. For the purposes of such analysis, Merrill Lynch defined
discretionary cash flow per share as (a) net income to common stock plus
depletion, depreciation, amortization and exploration expenses, plus deferred
taxes and other non-cash charges, but not including changes in working capital,
divided by (b) the pro forma shares outstanding.

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Merrill Lynch reviewed certain pro forma effects which could result from
the Merger. Merrill Lynch calculated the net asset reference value range per
share for the combination of HSR and Tide West, with and without the Basin
Acquisitions. With the Basin Acquisitions, the net asset reference value range
per share was $3.70 to $9.34 in Case I and $8.26 to $15.27 in Case II. Without
the Basin Acquisitions, such range per share was $5.58 to $10.26 in Case I and
$9.06 to $14.81 in Case II. With the Basin Acquisitions, the acquisition
analysis' net asset reference value range per share was $6.95 to $13.50 and the
trading analysis' range per share was $6.38 to $12.65.

The summary set forth above does not purport to be a complete description
of the analyses conducted by Merrill Lynch or Merrill Lynch's presentation to
the Tide West Board. Merrill Lynch believes that its analyses must be considered
as a whole and that selecting portions of its analyses and the factors
considered by it, without considering all factors and analyses, could create an
incomplete view of the process underlying its opinion. The preparation of a
fairness opinion is a complex process and is not necessarily susceptible to
partial analysis or summary description. In performing its analyses, Merrill
Lynch made numerous assumptions with respect to industry performance, general
business and economic conditions and other matters, many of which are beyond the
control of Tide West or HSR. Any estimates contained in the analyses performed
by Merrill Lynch are not necessarily indicative of actual values or actual
future results, which may be significantly more or less favorable than suggested
by such analyses. In addition, analyses relating to the value of the business do
not purport to be appraisals or to reflect the prices at which businesses may
actually be sold. Because such estimates are inherently subject to uncertainty,
neither Tide West, HSR, Merrill Lynch nor any other person assumes
responsibility for their accuracy.

Merrill Lynch is an internationally recognized investment banking firm
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions and for other purposes. Tide West selected Merrill
Lynch to act as its financial advisor in connection with the Merger because of
its international reputation and its substantial experience in transactions
similar to the Merger.

TIDE WEST FINANCIAL ADVISOR FEE. In connection with Merrill Lynch's
services as financial advisor to Tide West, Tide West has agreed to pay Merrill
Lynch, as compensation for its services, a fee in an amount equal to 1% of the
value of the aggregate consideration to be received by Tide West Stockholders in
the Merger and the amount of Tide West indebtedness, which fee is estimated to
be approximately $2.1 million (treating the date of this Joint Proxy
Statement/Prospectus as the Closing Date). Tide West has also agreed to
reimburse Merrill Lynch for certain reasonable out-of-pocket expenses incurred
in connection with the Merger (including reasonable fees and expenses of its
legal counsel) and to indemnify Merrill Lynch and certain related persons
against certain liabilities and expenses in connection with the Merger,
including certain liabilities under the federal securities laws.

In the ordinary course of Merrill Lynch's business, it may actively trade
the securities of Tide West and HSR for its own account and for the accounts of
its customers and, accordingly, may at any time hold a long or short position in
such securities.

EFFECTS OF THE MERGER

CONVERSION OF TIDE WEST COMMON STOCK AND OTHER SECURITIES

Tide West Common Stock. At the Effective Time, by virtue of the Merger and
without any action on the part of any holder thereof, but subject to the
treatment of fractional shares and other adjustments, each share of Tide West
Common Stock that is issued and outstanding immediately prior to the Effective
Time (other than shares of Tide West Common Stock held by Dissenting
Stockholders) will be converted into the right to receive (a) shares of HSR
Common Stock, with each such share of Tide West Common Stock being converted
into the fraction of a share of HSR Common Stock equal to the Conversion Number,
and (b) cash in the amount of the Cash Consideration. The Conversion Number is
defined as .6295, but is subject to adjustment upon the occurrence of certain
events as described below. The Cash Consideration is $8.75 less 3% of the amount
by which the Market Price exceeds $10.50, subject to adjustment upon the
occurrence of certain events as described below. The Closing Date will be the
day on which both the Tide West Special Meeting and the HSR Special Meeting have
been held (or such later date as is agreed upon by HSR and Tide

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West). See "The Merger Agreement and Related Agreements -- Terms of the Merger
Agreement -- Adjustments to the Conversion Number and Cash Consideration."

Each such share of Tide West Common Stock, when so converted, will
automatically be cancelled and retired, will cease to exist and will no longer
be outstanding, and the holder of any certificate representing any such shares
will cease to have any rights with respect thereto, except the right to receive
the shares of HSR Common Stock to be issued in exchange therefor and the Cash
Consideration (along with any cash in lieu of a fractional share of HSR Common
Stock and any unpaid dividends and distributions with respect to such shares of
HSR Common Stock, both as discussed below), without interest, upon the surrender
of such certificate in accordance with the terms of the Merger Agreement.

Tide West Treasury Stock. At the Effective Time, by virtue of the Merger,
all shares of Tide West Common Stock that are held as treasury stock shall be
cancelled and retired and shall cease to exist, and no shares of HSR Common
Stock, Cash Consideration or other consideration shall be paid or payable in
exchange therefor.

Tide West Stock Options. As of the date of this Joint Proxy
Statement/Prospectus, Tide West has outstanding options to acquire approximately
930,340 shares of Tide West Common Stock (the "Tide West Stock Options"). The
Tide West Stock Options have previously been granted to employees of Tide West
pursuant to Tide West's existing stock option plan. Each Tide West Stock Option
shall be or become fully vested prior to the Effective Time and, at the option
of the holder thereof, either (a) shall be exercised immediately prior to the
Effective Time or (b) at the Effective Time, by virtue of the Merger and without
any action on the part of the holder thereof, shall be cancelled and converted
into the right to receive, for each share of Tide West Common Stock with respect
to which such Tide West Stock Option is exercisable, cash in an amount equal to
the amount by which the Merger Consideration exceeds the per share exercise
price of such Tide West Stock Option. Merger Consideration is the sum of (i) the
Cash Consideration and (ii) the product of the Conversion Number and the Market
Price. The amounts so determined shall be paid to the holders of the Tide West
Stock Options not later than three business days after the Effective Time.

Tide West Warrants. As of the date of this Joint Proxy
Statement/Prospectus, Tide West had outstanding (a) approximately 2,796,600
common stock warrants, each entitling the holder to purchase one-tenth of one
share of Tide West Common Stock for an exercise price of $3.00 (the "Tide West
Common Stock Warrants"), and (b) 140,000 unit warrants, each entitling the
holder to purchase two-tenths of one share of Tide West Common Stock and two
Tide West Common Stock Warrants (each exercisable to purchase one-tenth of one
share of Tide West Common Stock for an exercise price of $3.00) for a total
exercise price of $5.10 (the "Tide West Unit Warrants" and, together with the
Tide West Common Stock Warrants, the "Tide West Warrants"). The Tide West
Warrants were issued by Tide West in connection with a public issuance of Tide
West Common Stock in 1991 and terminate on June 21, 1996.

All Tide West Warrants will remain outstanding following the Effective Time
and, at the Effective Time, without any action on the part of Tide West or any
holder thereof, will be assumed by HSR. Following such assumption, each Tide
West Warrant will be exercisable on the same terms and conditions as applied
immediately prior to the Effective Time, except as follows: (a) each Tide West
Common Stock Warrant will be exercisable for that number of shares of HSR Common
Stock and the amount of Cash Consideration into which the number of shares of
Tide West Common Stock subject to such Tide West Common Stock Warrant
immediately prior to the Effective Time would have been converted had they been
issued and outstanding immediately prior to the Effective Time; and (b) each
Tide West Unit Warrant will be exercisable for (i) that number of shares of HSR
Common Stock and the amount of Cash Consideration into which the number of
shares of Tide West Common Stock subject to such Tide West Unit Warrant
immediately prior to the Effective Time would have been converted if they had
been issued and outstanding immediately prior to the Effective Time plus (ii)
two Tide West Common Stock Warrants (with each such Tide West Common Stock
Warrant being exercisable as described in clause (a) above). The exercise price
of the Tide West Warrants is substantially greater than the current market price
of the shares of Tide West Common Stock into which they are exercisable.

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Net Operating Loss Carryforward. At December 31, 1995, Tide West had net
operating loss ("NOL") carryforwards totaling $3.4 million, which will expire
during the years 2004 through 2006. These NOLs will be available to the combined
company after the Merger, subject to the limitations described herein. Under
Section 382 of the Code, the taxable income of Merger Sub, by virtue of
succeeding to the assets and liabilities of Tide West, will be offset by
pre-ownership change NOL carryforwards subject to an annual limitation (the "382
Limitation") that applies when an "ownership change" occurs. Consistent with
administrative positions of the IRS, HSR and Tide West intend to take the
position that, upon the execution of the Merger Agreement, an ownership change
occurred for purposes of Section 382. As a result of this ownership change, the
total amount of Tide West's NOL carryforwards will not be affected, but a 382
Limitation will be calculated equal to the value of the Tide West Common Stock
immediately before the ownership change multiplied by the "long-term tax exempt
rate," as such term is defined in Section 382 of the Code, subject to adjustment
for certain built-in gains of Tide West. If it is determined that an ownership
change occurred on a different date, the 382 Limitation might be materially
higher or lower. Additionally, due to a prior ownership change, these losses are
currently subject to a 382 Limitation of $816,000 annually, subject to
adjustment for certain built-in gains.

To the extent the 382 Limitation exceeds the federal taxable income of the
post-merger company for a given year, the 382 Limitation for the subsequent year
will be increased by such excess. NOL carryforwards of Tide West will be
disallowed entirely if certain continuity of business enterprise requirements
are not met. It is expected these requirements will be met. The effect of the
382 Limitation may be to defer the use of Tide West's existing NOL
carryforwards. There can be no assurance that the combined company will be able
to use the Tide West NOL carryforwards in full before their expiration.

Consummation of the Merger in 1996 will result in a closing of Tide West's
1996 taxable year on the effective date of the Merger and would accelerate the
expiration period of the NOL carryforwards by one year. Tide West has no capital
loss carryforwards at the end of Tide West's first taxable year ending after
December 31, 1994, whether or not the Merger is consummated.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

In considering the recommendation of the Tide West Board with respect to
the Merger Agreement, the stockholders of Tide West should be aware that certain
members of Tide West's management and certain members of the Tide West Board
have certain interests in the Merger separate from the interests of the Tide
West stockholders generally. These separate interests are summarized below.

ADDITIONAL HSR DIRECTOR FOLLOWING THE MERGER. Immediately subsequent to the
Effective Time, for so long as NGP owns at least 50% of the shares of HSR Common
Stock acquired by NGP in the Merger, NGP will be entitled to designate one
person to be a member of the HSR Board (the "NGP Designee"). HSR will have the
right to approve any individual named as the NGP Designee, which approval will
not be unreasonably withheld. Immediately subsequent to the Effective Time, HSR
is required to take such action as is required under its certificate of
incorporation and bylaws to increase the size of the HSR Board by one and will
elect, or will cause to be elected, the NGP Designee to fill the vacancy so
created. The HSR Board has the authority to, and intends immediately subsequent
to the Effective Time to, increase the size of the HSR Board by one and fill the
vacancy with the NGP Designee. The initial NGP Designee is Philip B. Smith,
President, a director and a stockholder of Tide West.

VOTING AGREEMENTS. HSR and NGP have entered into the NGP Voting Agreement
pursuant to which NGP has agreed, among other things, (a) to vote the 4,550,000
shares of Tide West Common Stock owned by it in favor of the Merger (and has
granted a proxy to HSR in connection therewith), (b) not to sell any shares of
HSR Common Stock that it receives in the Merger for a period of one year
subsequent to the Merger and (c) not to sell, transfer or otherwise encumber any
shares of Tide West Common Stock subject to the NGP Voting Agreement for the
term of such Voting Agreement.

HSR and Smith have entered into the Smith Voting Agreement pursuant to
which Smith has agreed, among other things, (a) to vote 344,000 shares of Tide
West Common Stock owned by him and 85,000 shares of Tide West Common Stock owned
by family trusts of which Smith is the trustee in favor of the Merger (and

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has granted a proxy to HSR in connection therewith), (b) not to sell his shares
of HSR Common Stock received in the Merger for a period of one year subsequent
to the consummation of the Merger and (c) not to sell, transfer or otherwise
encumber any shares of Tide West Common Stock subject to the Smith Voting
Agreement for the term of such Voting Agreement.

The foregoing description of the NGP Voting Agreement and the Smith Voting
Agreement is subject to the provisions of such agreements which are included as
exhibits to, or incorporated by reference in, the Registration Statement of
which this Joint Proxy Statement/Prospectus is a part. See "Incorporation of
Documents by Reference" and "The Merger Agreement and Related
Agreements -- Voting Agreements." The Tide West Board approved the Voting
Agreements for purposes of Section 203 of the Delaware Act.

INDEMNIFICATION. HSR has agreed that, for a period of not less than one
year following the Effective Time, it will cause the director and officer
liability insurance coverage of Tide West to continue in effect. HSR has agreed
that, from and after the consummation of the Merger, it will indemnify each
person who is, has been at any time prior to the date of the Merger Agreement,
or becomes prior to the Effective Date, an officer or director of Tide West to
the extent such officers and directors are currently entitled to indemnity from
Tide West, subject to certain exceptions.

TREATMENT OF TIDE WEST EMPLOYEES. After the Effective Time, HSR may, in its
sole discretion, offer employment to, or cause the Surviving Corporation to
offer to continue the employment of, certain employees of Tide West (the
"Retained Employees"). HSR has agreed to provide the Retained Employees with the
same benefits that accrue to employees of HSR and its subsidiaries. In addition,
for a period of 12 months following the Effective Time, HSR has agreed to, or to
cause the Surviving Corporation to, either (a) maintain the effectiveness of the
Tide West employee benefit plans for the benefit of the Retained Employees or
(b) provide the Retained Employees with the rights and benefits of HSR's
employee benefit plans. With respect to employees of Tide West who are not
Retained Employees, HSR has agreed, for a period of 18 months following the
Effective Time, either (a) to maintain the Tide West health benefit plans for
the benefit of such persons, or (b) to provide such persons with the rights and
benefits of HSR's employee health benefit plans; provided, that HSR is not
required to pay the premiums for coverage under such plans for any such persons,
except to the extent provided in any severance agreement agreed to by Tide West
and HSR. In addition, HSR has agreed that the present employees of Tide West
will be credited for their service with Tide West and its predecessor entities
for purposes of determining eligibility and vesting in any employee benefit
plans provided by HSR, that their benefits under HSR's medical benefits plan
will not be subject to any exclusions for any pre-existing conditions and that
credit will be received for any deductibles or out-of-pocket amounts previously
paid. HSR has agreed to, or to cause the Surviving Corporation to, fulfill all
coverage continuation obligations imposed by Section 4980B of the Code and
Section 601 of the Employee Retirement Income Security Act of 1974, as amended,
for those employees of Tide West or its subsidiaries who are not Retained
Employees.

COMPLETION BONUSES. At the time the Tide West Board determined and publicly
announced that Tide West would be sold, the Tide West Board decided, and it was
announced to the employees of Tide West, that Tide West would pay to each Tide
West employee, who is still employed by Tide West at the Closing Date, a
completion bonus, payable immediately prior to the Closing Date (whether or not
the employee retains employment with the Surviving Corporation), in order to
provide such employees with an incentive to remain in the employ of Tide West
and to help prepare Tide West for sale. The amounts of such bonuses are, in the
case of certain employees, measured in part by the Market Price. The Tide West
Board also decided, for similar reasons, to pay to NGP (which acts as a
financial advisor to Tide West) a fixed completion bonus. The aggregate amount
of such completion bonuses to be paid immediately prior to the Closing Date (a)
treating the date of this Joint Proxy Statement/Prospectus as the Closing Date,
would be approximately $3,200,000, and (b) treating February 26, 1996 (the date
of the public announcement of the execution of the Merger Agreement), as the
Closing Date, would be approximately $2,872,000.

REGISTRATION RIGHTS AGREEMENT. HSR has agreed with NGP, Tide West's largest
stockholder (three representatives of which are members of the Tide West Board),
to prepare and file, under certain prescribed conditions, a registration
statement under the Securities Act covering the 2,864,225 shares of HSR Common

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Stock (assuming no adjustments to the Conversion Number) that NGP receives in
the Merger. Such registration will relieve NGP from certain restrictions to
which it would otherwise be subject with respect to resales of such HSR Common
Stock. See "-- Restrictions on Resales by Affiliates of Tide West" and "The
Merger Agreement and Related Agreements -- Registration Rights Agreement."

INTERESTS OF NGP AND KENNETH A. HERSH. NGP is Tide West's largest
stockholder having ownership of approximately 46.45% of the outstanding Tide
West Common Stock as of February 25, 1996. Three representatives of NGP are
current members of the Tide West Board, including Mr. Hersh, a limited partner
in the general partner of NGP, who has been a director of Tide West since 1992
and a director of HSR since 1990. Mr. Hersh currently holds 1,000 shares of HSR
Common Stock. In connection with certain loans made by NGP and/or its affiliates
to HSR in 1990 and 1991, HSR issued NGP warrants which are currently
exerciseable for an aggregate of 740,262 shares of HSR Common Stock at per share
exercise prices ranging from $6.67 to $9.00.

On October 21, 1993, HSR issued to Kenneth A. Hersh an option to purchase
7,500 shares of HSR Common Stock (the "Hersh Option") pursuant to HSR's 1993
Directors' Stock Option Plan (the "HSR Directors' Option Plan"). Pursuant to an
Assignment of Option Agreement, dated October 21, 1993, between Mr. Hersh and
NGP (the "Assignment of Option"), Mr. Hersh assigned the Hersh Option to NGP for
no consideration. In connection with this assignment, HSR has granted NGP rights
to have the shares of HSR Common Stock issuable upon exercise of the Hersh
Option registered under the Securities Act. Currently, 4,500 shares of HSR
Common Stock are exercisable pursuant to the Hersh Option and of the remaining
3,000 shares, one half will vest on October 21, 1996, and one half will vest on
October 21, 1997.

On April 25, 1996, Mr. Hersh received a vested option under the HSR
Directors' Option Plan to purchase 1,500 shares of HSR Common Stock (the
"Additional Option"). Mr. Hersh has assigned the Additional Option to NGP.

ACCOUNTING TREATMENT

The Merger will be accounted for as a purchase in accordance with generally
accepted accounting principles. The purchase method requires that the cost of
the acquisition (i.e., cash, stock and net liabilities assumed), plus deferred
taxes related thereto, be allocated among the assets and liabilities acquired
based upon their fair value. The purchase method, when applied to oil and gas
exploration and production companies, prohibits the allocation of the purchase
price to goodwill. This practice tends to overstate the amounts allocated to oil
and gas properties when intangibles of value are among the attributes considered
in determining the price to be paid. In considering the amount to be paid for
Tide West Common Stock, HSR recognized several intangible assets to which
purchase price cannot currently be allocated.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

GENERAL

This section is a summary of the material federal income tax consequences
which are expected to result from the Merger. It is impracticable to comment on
all aspects of federal, state, local and foreign laws that may affect the tax
consequences of the transactions contemplated hereby as they relate to the
particular circumstances of each stockholder or potential stockholder.
Therefore, the federal income tax discussion set forth below applies only to
holders of shares of Tide West Common Stock who hold such shares as capital
assets and, to the extent applicable, to the stockholders of HSR who hold shares
of HSR Common Stock as capital assets. The federal income tax consequences to
any particular stockholder may be affected by matters not discussed below. For
example, certain types of holders (including foreign persons, life insurance
companies, tax exempt organizations and taxpayers who may be subject to the
alternative minimum tax) may be subject to special rules not addressed herein.
Furthermore, the discussion may not be applicable with respect to shares
received pursuant to the exercise of employee stock options or otherwise as
compensation.

This summary is based on the current provisions of the Code, existing and
proposed regulations thereunder and current administrative rulings and court
decisions, all of which are subject to changes that may

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or may not be applied retroactively. Many provisions of the Code which have been
recently enacted or amended have not been interpreted by the courts or the IRS.

Conner & Winters, A Professional Corporation, counsel for Tide West, has
delivered an opinion to the effect that the description of the federal income
tax consequences to HSR, Merger Sub, Tide West and holders of Tide West Common
Stock contained under the headings "Summary -- Certain Federal Income Tax
Consequences" and "Special Factors -- Certain Federal Income Tax Consequences"
correctly sets forth the material Federal income tax consequences of the Merger
(other than the discussion concerning a transaction pursuant to Section 351 of
the Code). Such opinion is based upon, among other things, certain
representations made by Tide West and HSR and representation letters provided by
Tide West and HSR to counsel containing customary statements relating to planned
dispositions of shares of HSR Common Stock by the holders of Tide West Common
Stock or of Tide West assets or Merger Sub by Merger Sub or HSR. Based upon such
representation letters, which will be confirmed by Tide West and HSR prior to
the closing of the Merger, it is the opinion of Conner & Winters that the Merger
will be treated for Federal income tax purposes as a reorganization described in
Section 368(a) of the Code. It is a condition to the obligations of Tide West
and HSR to consummate the Merger that such opinion shall not have been withdrawn
prior to the Closing Date.

No ruling has been requested from the IRS with respect to any of the
matters discussed herein; thus, no assurance can be provided that the statements
set forth herein (which do not bind the IRS or the courts) will not be
challenged by the IRS or would be sustained by a court if so challenged.

THE DISCUSSION SET FORTH BELOW ADDRESSES THE MATERIAL FEDERAL INCOME TAX
CONSEQUENCES OF GENERAL APPLICABILITY WHICH ARE EXPECTED TO RESULT FROM THE
MERGER. STOCKHOLDERS SHOULD CONSULT THEIR TAX ADVISORS TO DETERMINE THE TAX
CONSEQUENCES OF THE MERGER AND THE ACQUISITION, HOLDING AND DISPOSITION OF THE
SECURITIES OFFERED HEREBY, INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL,
STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS WITH RESPECT TO THEIR OWN
PARTICULAR CIRCUMSTANCES.

The Merger should be treated as a reorganization within the meaning of
Section 368(a)(1)(A) of the Code by virtue of the application of Section
368(a)(2)(D) of the Code.

Generally, if the Merger constitutes a reorganization within the meaning of
Section 368(a) of the Code, Tide West stockholders receiving both HSR Common
Stock and cash will be required to recognize the amount of gain realized in the
Merger, if any, but only to the extent of the amount of cash received
(excluding, for purposes of this paragraph, cash received in lieu of fractional
shares, which is discussed below). For this purpose, the gain realized in the
Merger will be the value of the HSR Common Stock plus the amount of cash
received pursuant to the Merger, over such stockholder's collective basis in the
shares of Tide West Common Stock cancelled in the Merger. Such stockholder will
take a basis in the HSR Common Stock received pursuant to the Merger equal to
such stockholder's collective basis in the shares of Tide West Common Stock
cancelled in the Merger, plus the amount of gain recognized in the overall
transaction, less the amount of cash received. Solely for purposes of
determining the character of the gain recognized, each Tide West stockholder
will be deemed to have received solely HSR Common Stock, followed by a
redemption of a number of shares of HSR Common Stock equal (in value) to the
amount of the cash consideration received in the Merger. The character of the
gain recognized in the transaction will depend upon each Tide West stockholder's
personal situation. A Tide West stockholder that does not own HSR Common Stock
before the transaction will generally recognize capital gain.

EACH TIDE WEST STOCKHOLDER IS ENCOURAGED TO CONSULT ITS OWN TAX ADVISOR
REGARDING THE AMOUNT AND CHARACTER OF THE GAIN, IF ANY, THAT MAY BE RECOGNIZED
AS A RESULT OF THE MERGER.

Any holder of Tide West Common Stock that was received pursuant to the
exercise of an employee stock option immediately before the Effective Time may
realize different tax results in the Merger. Each such holder of Tide West
Common Stock is encouraged to consult his or her own tax advisor regarding the
amount

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and character of the income recognized, if any, from the acquisition of such
stock and the subsequent exchange of that stock for HSR Common Stock.

Each holder of Tide West Stock Warrants who receives cash for such warrants
will recognize gain to the extent the amount of cash received in exchange for
such warrants exceeds the holder's basis in the warrants.

If the Merger fails to qualify as a reorganization within the meaning of
Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code, Tide West will be treated as
if it had sold all of its assets to Merger Sub for an amount equal to the fair
market value, as of the Effective Time, of the HSR Common Stock received plus
the amount of total cash (including the cash received in lieu of fractional
shares) in a taxable transaction and will recognize gain or loss upon such
deemed sale. Further, if the Merger fails to qualify as a reorganization, Merger
Sub may be treated as having sold the HSR Common Stock delivered in the Merger
and, therefore, may be treated as having recognized taxable gain in an amount
equal to the fair market value of the HSR Common Stock so delivered. In
addition, if the Merger fails to qualify as a reorganization, the Merger will be
fully taxable to the Tide West stockholders. In such event, a Tide West
stockholder will recognize capital gain or loss on the receipt of HSR Common
Stock pursuant to the Merger. The measure of such gain or loss will be equal to
the difference between such Tide West stockholder's adjusted tax basis in such
holder's shares of Tide West Common Stock and the value of the consideration
received therefor (i.e., the value of the HSR Common Stock plus the amount of
cash, if any). The gain or loss recognized will be considered long-term capital
gain or loss if such Tide West stockholder held the shares of Tide West Common
Stock cancelled in the Merger for more than one year. Otherwise the gain will be
considered short-term capital gain. A Tide West stockholder will take a fair
market value basis in any HSR Common Stock received pursuant to the Merger, and
the holding period for such HSR Common Stock will begin on the day following the
Merger.

If the Merger is restructured as a "Horizontal Double Dummy" ("HDD")
transaction pursuant to Section 351 of the Code, the tax results to Tide West
stockholders and HSR stockholders could differ. If the transaction is
restructured as an HDD, each HSR stockholder will be deemed to have exchanged
its HSR Common Stock for Newco Common Stock (as defined herein). Generally, each
HSR stockholder will recognize no gain or loss on the exchange. Each HSR
stockholder will take a basis and holding period in the Newco Common Stock equal
to the basis and holding period of each stockholder in its HSR Common Stock.

If the transaction is restructured as an HDD, each Tide West stockholder
will be deemed to have exchanged its Tide West Common Stock for Newco Common
Stock and cash. Each Tide West stockholder will recognize the amount of gain,
but not loss, realized in the transaction to the extent of the amount of total
cash received (including the amount of cash received in lieu of fractional
shares). For this purpose, the amount of gain realized in the HDD transaction to
a Tide West stockholder is the amount of the consideration received (i.e., the
value of the Newco Common Stock plus the amount of total cash received pursuant
to the transaction, over such Tide West stockholder's collective basis in the
shares of Tide West Common Stock cancelled in the transaction). The character of
such gain will be long-term capital gain if such Tide West stockholder held its
Tide West Common Stock for more than one year. Otherwise the gain will be
considered short-term capital gain. Each Tide West stockholder will take a basis
in its Newco Common Stock equal to the aggregate basis in the Tide West Common
Stock it held plus the amount of gain recognized in the transaction, less the
amount of cash received. See "The Merger Agreement and Related Agreements --
Terms of the Merger Agreement -- Restructuring of the Merger."

RECEIPT OF CASH IN LIEU OF FRACTIONAL SHARES

Unless the transaction is treated as an HDD transaction, Tide West
stockholders receiving cash in lieu of fractional shares of HSR Common Stock
will be treated as receiving such cash in redemption of such fractional shares.
For federal income tax purposes a Tide West stockholder is treated as if it had
received the actual fractional share of HSR Common Stock followed by a
redemption of that fractional share by HSR. Generally, a Tide West stockholder
will recognize gain or loss in respect of such redemption measured by the
difference between such stockholder's basis in the fractional share surrendered
and the amount of cash received.

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BACKUP WITHHOLDING

Federal income tax law requires that a holder of Tide West Common Stock
provide the Exchange Agent with its correct taxpayer identification number,
which is, in the case of a Tide West stockholder who is an individual, his or
her social security number, or, in the alternative, establish a basis for
exemption from backup withholding. Exempt holders (including, among others,
corporations and certain foreign individuals) are not subject to the backup
withholding and reporting requirements. If the correct taxpayer identification
number or an adequate basis for exemption is not provided, a Tide West
stockholder will be subject to withholding of 31% of the cash received in
connection with the Merger.

To prevent backup withholding, each Tide West stockholder must complete the
Substitute Form W-9 which will be provided by the Exchange Agent with the
Transmittal Letter and certify under penalties of perjury (a) that the taxpayer
identification number provided is correct (or that such Tide West stockholder is
awaiting a taxpayer identification number) and (b) that the Tide West
stockholder is not subject to backup withholding because (i) such Tide West
stockholder is exempt from backup withholding, (ii) the Tide West stockholder
has not been notified by the IRS that such Tide West stockholder is subject to
backup withholding as a result of the failure to report all interest or
dividends or (iii) the IRS has notified such Tide West stockholder that it is no
longer subject to backup withholding. The Substitute Form W-9 should be
completed, signed, and returned to the Exchange Agent. In order for a foreign
individual to qualify as an exempt recipient, such Tide West stockholder must
submit a statement, signed under penalties of perjury, attesting to that
individual's exempt status. Such statements can be obtained from the Exchange
Agent.

REGULATORY MATTERS

At any time before or after consummation of the Merger, federal or state
officials could take such action under the federal or state antitrust laws as
they deem necessary or desirable in the public interest. Such action could
include seeking to enjoin the consummation of the Merger or seeking divestiture
of Tide West or the business of HSR or Tide West. Private parties may also seek
to take legal action under the antitrust laws under certain circumstances.

Based on information available to them, HSR and Tide West believe that the
Merger can be effected in compliance with federal and state antitrust laws.
However, there can be no assurance that a challenge to the consummation of the
Merger on antitrust grounds will not be made or that, if such a challenge were
made, HSR and Tide West would prevail or would not be required to accept certain
conditions possibly including certain divestitures in order to consummate the
Merger.

RESTRICTIONS ON RESALES BY AFFILIATES OF TIDE WEST

The shares of HSR Common Stock to be issued in the Merger have been
registered under the Securities Act and, when so issued, will be freely
transferable, except by persons who are deemed to be "affiliates" of Tide West
(as that term is defined in Rule 144 under the Securities Act). Affiliates of
Tide West will be subject to certain restrictions imposed by Rule 145 under the
Securities Act on their ability to resell any of the shares of HSR Common Stock
they receive in the Merger. Generally, those restrictions prohibit an affiliate
of Tide West from selling, within two years following the consummation of the
Merger, any of the shares of HSR Common Stock that such affiliate receives in
the Merger other than, within any three-month period, a number of shares that
does not exceed the greater of (a) 1% of the total number of shares of HSR
Common Stock then outstanding or (b) the average weekly trading volume of the
HSR Common Stock over a specified four-week period. An affiliate of Tide West
will be relieved from those resale restrictions if sales of the shares of HSR
Common Stock it receives in the Merger are registered under the Securities Act.

The Merger Agreement provides that, within 30 days prior to the
consummation of the Merger, Tide West will prepare and deliver to HSR a list
identifying all persons who, at the time of the Tide West Special Meeting, may
be deemed to be "affiliates" of Tide West (as that term is defined in Rule 144
under the Securities Act). Tide West is then required to use its best efforts to
cause each of such persons to execute and deliver to HSR a written agreement
acknowledging the applicability of the Rule 145 resale restrictions. HSR's

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obligation to consummate the Merger is conditioned on its receipt of such an
agreement from each affiliate of Tide West.

As of the date of this Joint Proxy Statement/Prospectus, NGP, which owns
approximately 46% of the outstanding shares of Tide West Common Stock, and the
directors and executive officers of Tide West are the only persons known to Tide
West to be "affiliates" of Tide West (as that term is defined in Rule 144 under
the Securities Act). Each of such persons has indicated an intention to execute
the written agreement referred to above. NGP and HSR have entered into an
agreement relating to the registration under the Securities Act of the sale of
shares of HSR Common Stock that NGP receives in the Merger. Such registration,
which is to become effective on or before the first anniversary of the Closing
Date, will relieve NGP of the resale restrictions imposed by Rule 145 with
respect to sales of HSR Common Stock so registered. See "The Merger Agreement
and Related Agreements -- Registration Rights Agreement."

LISTING ON THE NEW YORK STOCK EXCHANGE

HSR Common Stock is currently listed for trading on the NYSE and it is
anticipated that such stock will continue to be traded thereon immediately
following consummation of the Merger. Application has been made for listing the
HSR Common Stock to be issued as consideration in the Merger on the NYSE.

APPRAISAL RIGHTS

The following is a summary of the rights of holders of Tide West Common
Stock seeking appraisal under Section 262 of the Delaware Act ("Section 262").
Section 262 is reprinted in its entirety as Annex E to this Joint Proxy
Statement/Prospectus and is incorporated herein by reference. Holders of HSR
Common Stock will not have any statutory appraisal rights under the Delaware Act
in connection with, or as a result of, the matters to be acted upon at the HSR
Special Meeting.

ELIGIBLE STOCKHOLDERS. Under Section 262, holders of shares of Tide West
Common Stock ("Shares") may demand an appraisal of the fair value of their
Shares and payment of cash in lieu of accepting the shares of HSR Common Stock
issuable to them in connection with the Merger. All references in Section 262
and this summary thereof to a "stockholder" or "Dissenting Stockholder" are to
the record holder of the Shares as to which appraisal rights are asserted. A
person having a beneficial interest in Shares that are held of record in the
name of another person, such as a broker or nominee, and who desires to exercise
appraisal rights, must act promptly to cause the record holder to follow
properly the steps summarized below in a timely manner to perfect the appraisal
rights the beneficial owner may have.

EXERCISING PROCEDURES. Tide West must notify each Tide West stockholder,
not less than 20 days prior to the Tide West Special Meeting, that appraisal
rights are available and must provide each Tide West stockholder with a copy of
Section 262. This Joint Proxy Statement/Prospectus constitutes such notice.
Stockholders of record who desire to exercise their appraisal rights must: (a)
hold Shares on the date of making a demand for appraisal; (b) continuously hold
Shares through the Effective Time; (c) deliver, prior to the Tide West Special
Meeting, a written demand for appraisal to Tide West at 6666 South Sheridan,
Suite 250, Tulsa, Oklahoma 74133-1750, Attention: Secretary; and (d) otherwise
satisfy all of the following conditions. A request for appraisal rights need not
be made with respect to all Shares owned by a stockholder where such stockholder
holds shares of record as nominee for the beneficial owner thereof. It is not
clear, however, and the Delaware courts have not decided the question of whether
a single beneficial owner must request appraisal rights with regard to all
Shares owned by such stockholder in order to preserve appraisal rights or
whether an individual stockholder can seek an appraisal as to part, but not all,
of his or her holdings in all contexts. Although a stockholder must not have
voted in favor of the Merger, Section 262 does not require that a stockholder
vote against the Merger in order to preserve his or her appraisal rights. Voting
against the Merger, granting a proxy to vote against the Merger, abstaining from
voting or failing to vote, however, will not constitute a written demand for
appraisal. Within 10 days after the Effective Time, the Surviving Corporation is
required to notify each Dissenting Stockholder who has complied with Section
262, and has not voted in favor of or consented to the Merger, that the Merger
has become effective.

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Within 120 days after the Effective Time, the Surviving Corporation, or any
stockholder who has satisfied the foregoing conditions and is otherwise entitled
to appraisal rights under Section 262, may file a petition in the Delaware
Chancery Court demanding a determination of the value of the Shares. Merger Sub
does not intend to file a petition or initiate any negotiations with respect to
the fair value of these Shares. Accordingly, stockholders of Tide West who wish
to exercise appraisal rights should regard it as their obligation to initiate
all necessary action with respect to the perfection of their appraisal rights
within the time periods prescribed in Section 262. Notwithstanding the
foregoing, at any time within 60 days after the Effective Time or at any time
thereafter with written approval of the Surviving Corporation, any Dissenting
Stockholder has the right to withdraw its demand for appraisal and may accept
the terms offered pursuant to the Merger Agreement.

Only a holder of record of Shares is entitled to assert appraisal rights
for Shares registered in that holder's name. The demand should be executed by or
for the holder of record, fully and correctly, as the holder's name appears on
the holder's stock certificate. If the Shares are owned of record in a fiduciary
capacity, such as by a trustee, guardian or custodian, execution of the demand
should be made in that capacity, and if the Shares are owned of record by more
than one person, as in a joint tenancy or tenancy in common, the demand should
be executed by or for all joint owners. An authorized agent, including one of
two or more joint owners, may execute the demand for appraisal for a holder of
record; however, the agent must identify the record owner or owners and
expressly disclose the fact that, in executing the demand, the agent is acting
as authorized agent for the record owner.

A record holder, such as a broker, who holds Shares as nominee for the
beneficial owner thereof may exercise the holder's right of appraisal with
respect to such Shares. If such record holder holds Shares as nominee for more
than one beneficial owner, it may exercise the holder's right of appraisal with
respect to the Shares held for all or less than all of those beneficial owners.
In that case, the written demand should set forth the number of Shares covered
by it. Where no number of shares is expressly mentioned, the demand will be
presumed to cover all shares outstanding in the name of the applicable record
owner.

Within 120 days after the Effective Time, any Dissenting Stockholder who
has complied with the requirements for exercise of appraisal rights, as
discussed above, is entitled, upon written request, to receive from the
Surviving Corporation a statement setting forth the aggregate number of Shares
not voted in favor of the Merger and with respect to which demands for appraisal
have been received and the aggregate number of holders of those Shares. This
statement must be mailed to such Dissenting Stockholder within 10 days after the
written request therefor has been received by the Surviving Corporation or
within 10 days after the expiration of the period for delivery of demands for
appraisal, whichever is later.

A Dissenting Stockholder will fail to perfect, and will effectively lose
its right to appraisal, if no petition for appraisal is filed within 120 days
after the Effective Time, or if such stockholder delivers to HSR a written
withdrawal of its demand for an appraisal within 60 days after the Effective
Time or thereafter with the written approval of the Surviving Corporation. If
any Dissenting Stockholder fails to perfect or effectively withdraws or loses
its right to appraisal, the Shares of that holder will be converted into the
right to receive shares of HSR Common Stock and Cash Consideration in accordance
with the terms of the Merger Agreement, without any interest thereon.
Furthermore, no appraisal proceeding in the Delaware Chancery Court will be
dismissed as to any stockholder without the approval of the Court, which
approval may be conditioned upon such terms that the Court deems just.

FAIR VALUE DETERMINATION. If a petition for appraisal is timely filed, at a
hearing on the petition, the Delaware Chancery Court will determine the
Dissenting Stockholders entitled to appraisal rights and will appraise the
Shares owned by those stockholders, determining the Shares' "fair value"
exclusive of any element of value arising from the accomplishment or expectation
of the Merger, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. The judicial determination of the
"fair value" of the Shares is required to be based on all relevant factors
involving the value of a company, including market value, asset value,
dividends, earnings prospects, the nature of the enterprise and any other facts
which could be ascertained as of the date of the Merger which throw any light on
future prospects of the merged corporation. In Weinberger v. UOP, Inc., the
Delaware Supreme Court stated, among other things, that "proof of value by any
techniques or methods which are generally considered acceptable in the financial
community and otherwise admissible in court" should be considered in an
appraisal proceeding. In

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Weinberger, the Delaware Supreme Court held that "elements of future value,
including the nature of the enterprise, which are known or susceptible of proof
as of the date of the merger and not the product of speculation, may be
considered." The presiding Court shall direct payment of the fair value of the
Shares by the Surviving Corporation to the stockholders entitled thereto, and
such Court may direct that the interest paid be simple or compound. Tide West
stockholders considering exercising their dissenters' rights of appraisal should
bear in mind that the fair value of their Shares determined under Section 262
could be more than, the same as or less than the value of the shares of HSR
Common Stock they would receive if they did not seek appraisal of their shares.

COSTS. The cost of the appraisal proceeding may be determined by the
Delaware Chancery Court and taxed against the parties as such Court deems
equitable in the circumstances. Upon application of a Dissenting Stockholder,
the Delaware Chancery Court may order all or a portion of the expenses incurred
by any Dissenting Stockholder in connection with the appraisal proceeding,
including, without limitation, reasonable attorneys' fees and the fees and
expenses of experts, be charged pro rata against the value of all Shares
entitled to appraisal. Thus, the Delaware Chancery Court has the ability to
ensure that all Dissenting Stockholders who benefit from the appraisal action
share the expenses.

VOTING RIGHTS; DIVIDENDS, ETC. Any Dissenting Stockholder who has duly
demanded appraisal in compliance with Section 262 will not, after the Effective
Time, be entitled to vote the Shares subject to such demand for any purpose or
to receive payment of dividends or other distributions on such Shares, except
for dividends or distributions payable to stockholders of record at a date prior
to the Effective Time.

Dissenters who elect to receive cash for their Tide West Common Stock may
be subject to federal and/or state income tax on any gain resulting from the
transaction. See "-- Certain Federal Income Tax Consequences."

THE PROVISIONS OF SECTION 262 ARE TECHNICAL IN NATURE AND COMPLEX. IT IS
SUGGESTED THAT ANY STOCKHOLDER WHO DESIRES TO DISSENT CONSULT INDEPENDENT LEGAL
COUNSEL BECAUSE FAILURE TO COMPLY STRICTLY WITH THE PROVISIONS OF SECTION 262
MAY PRECLUDE THE EXERCISE OF APPRAISAL RIGHTS.

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THE MERGER AGREEMENT AND RELATED AGREEMENTS

The following is a brief summary of the material provisions of the Merger
Agreement, a copy of which is included in this Joint Proxy Statement/Prospectus
as Annex A, and other related agreements. The following discussion is qualified
in its entirety by reference to the Merger Agreement.

THE MERGER

The Merger Agreement provides that, subject to the terms and conditions
thereof, at the Effective Time, Tide West will be merged with and into Merger
Sub, and the separate corporate existence of Tide West will thereupon cease.
Merger Sub will be the Surviving Corporation in the Merger and will continue to
be governed by the Delaware Act, and the separate corporate existence of Merger
Sub with all of its rights, privileges, immunities, powers and franchises will
continue unaffected by the Merger, except as set forth in the Merger Agreement.

EFFECTIVE TIME OF THE MERGER

The Merger Agreement provides that the Merger will become effective
immediately when a certificate of merger is accepted for filing by the Secretary
of State of Delaware or at such time thereafter as is provided in such
certificate of merger. It is anticipated that, if the matters described in this
Joint Proxy Statement/ Prospectus are adopted and approved at the HSR Special
Meeting and at the Tide West Special Meeting and all other conditions to the
Merger have been satisfied or waived, the Effective Time will occur on the day
on which both such meetings have been held (or such later date as is agreed upon
by HSR and Tide West).

MANNER AND BASIS OF CONVERTING SHARES

GENERAL. Immediately after the Effective Time, HSR shall deposit with the
Exchange Agent, for the benefit of the holders of shares of Tide West Common
Stock and for exchange in accordance with the Merger Agreement, certificates
representing the shares of HSR Common Stock to be issued, and funds necessary to
pay the Cash Consideration, in exchange for shares of Tide West Common Stock.
Such shares of HSR Common Stock, together with any dividends or distributions
with respect thereto and such funds, are referred to as the "Exchange Fund."

As soon as reasonably practicable after the Effective Time, HSR will cause
the Exchange Agent to mail to each record holder of Tide West Common Stock as of
the Effective Time a Letter of Transmittal to be used to effect the exchange of
certificates representing Tide West Common Stock for certificates representing
HSR Common Stock and the Cash Consideration, including instructions for using
such Letter of Transmittal to effect such exchange. When a holder of Tide West
Common Stock surrenders a certificate representing shares of Tide West Common
Stock to the Exchange Agent, along with a properly completed and executed Letter
of Transmittal and any other required documents, such holder will be entitled to
receive a certificate representing the number of whole shares of HSR Common
Stock and cash in the amount of the Cash Consideration that such holder has the
right to receive as a result of the Merger, along with any cash in lieu of
fractional shares of HSR Common Stock to which he would otherwise be entitled
and any unpaid dividends and distributions that he has the right to receive. If
such holder is an "affiliate" of Tide West (as such term is defined in Rule 144
under the Securities Act), one of the required documents to effect the exchange
will be an executed agreement relating to certain resale restrictions (as
described under "Special Factors -- Restrictions on Resales by Affiliates of
Tide West"), unless previously delivered to HSR. TIDE WEST STOCKHOLDERS SHOULD
NOT SURRENDER THEIR STOCK CERTIFICATES UNTIL THE LETTER OF TRANSMITTAL IS
RECEIVED AND THEN SHOULD SURRENDER THEIR STOCK CERTIFICATES ONLY ACCOMPANIED BY
A PROPERLY COMPLETED AND EXECUTED LETTER OF TRANSMITTAL.

After the Effective Time, there will be no further registration of
transfers on the Surviving Corporation's stock transfer books of the shares of
Tide West Common Stock that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, a certificate representing Tide West Common
Stock is presented to the Surviving Corporation or Tide West's transfer agent
for any reason, it shall be cancelled and exchanged as described above. If a
holder of Tide West Common Stock has transferred ownership of such Tide West
Common Stock but such transfer is not registered in the transfer records of Tide
West as of the Effective

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Time, a certificate representing the appropriate number of shares of HSR Common
Stock (along with any cash in lieu of a fractional share and any unpaid
dividends and distributions that such holder has the right to receive) may be
issued or paid to the transferee if the certificate representing shares of Tide
West Common Stock, when presented for exchange, is accompanied by all documents
required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid.

TREATMENT OF FRACTIONAL SHARES. No fractional shares of HSR Common Stock
will be issued in the Merger. When a holder of Tide West Common Stock surrenders
a certificate representing shares of Tide West Common Stock in exchange for a
certificate representing shares of HSR Common Stock, such holder will also
receive an amount of cash (without interest) determined by multiplying (a) the
Market Price by (b) the fraction of a share of HSR Common Stock to which such
holder of Tide West Common Stock would otherwise be entitled. HSR will make
available to the Exchange Agent, in addition to cash necessary to fund the Cash
Consideration, the amount of cash necessary to make such payments.

DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or other
distributions with respect to HSR Common Stock issued in the Merger will be paid
until the holder of Tide West Common Stock entitled thereto surrenders his Tide
West certificate for exchange as described above. Upon such surrender, (a) the
surrendering holder will be paid, without interest, the amount of dividends or
other distributions (having a record date after the Effective Time but on or
prior to surrender and a payment date on or prior to surrender) theretofore paid
with respect to the number of whole shares of HSR Common Stock that such holder
is entitled to receive (less the amount of any withholding taxes that may be
required with respect thereto), and (b) at the appropriate payment date, the
surrendering holder will be paid, without interest, the amount of dividends or
other distributions (having a record date after the Effective Time but on or
prior to surrender and a payment date subsequent to surrender) payable with
respect to the number of whole shares of HSR Common Stock that such holder
receives (less the amount of any withholding taxes that may be required with
respect thereto).

TERMINATION OF EXCHANGE FUND. Any shares of HSR Common Stock, and any cash,
held by the Exchange Agent in accordance with the terms of the Merger Agreement
that remain unclaimed by the former stockholders of Tide West one year following
the Effective Time will be delivered to HSR upon demand. Thereafter, any former
stockholders of Tide West who have not theretofore complied with the exchange
procedures set forth in the Merger Agreement may look only to HSR for payment of
their claim for HSR Common Stock, the Cash Consideration, any cash in lieu of
fractional shares of HSR Common Stock and any dividends or distributions with
respect to HSR Common Stock (all without interest). Notwithstanding the above,
neither HSR, Tide West, the Surviving Corporation, the Exchange Agent nor any
other person will be liable to any former holders of Tide West Common Stock for
any amount properly delivered to any public official pursuant to any applicable
abandoned property, escheat or similar law. Any amounts remaining unclaimed by
former holders of Tide West Common Stock for a period of three years following
the Effective Time (or such earlier date immediately prior to the time at which
such amounts would otherwise escheat to or become property of any governmental
entity) will, to the extent permitted by applicable law, become the property of
HSR, free and clear of any claims or interest of any such holders or their
successors, assigns or personal representatives previously entitled thereto.

NO INTEREST. No interest will be payable under any circumstances by HSR,
the Exchange Agent or any other person with respect to any shares of HSR Common
Stock, the Cash Consideration, any cash in lieu of fractional shares or any cash
in payment of unpaid dividends or distributions.

LOST, STOLEN OR DESTROYED TIDE WEST CERTIFICATES. If any certificate
representing shares of Tide West Common Stock has been lost, stolen or
destroyed, the Exchange Agent will nevertheless issue in exchange therefor the
shares of HSR Common Stock and the Cash Consideration (along with any cash in
lieu of fractional shares and any unpaid dividends or distributions) deliverable
with respect thereto, so long as the person claiming that such certificate has
been lost, stolen or destroyed makes an affidavit of that fact and, if required
by HSR, posts a bond in such reasonable amount as HSR may direct as indemnity
against any claim that may be subsequently made against HSR with respect to such
lost, stolen or destroyed certificate.

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TERMS OF THE MERGER AGREEMENT

REPRESENTATIONS AND WARRANTIES

In the Merger Agreement, HSR and Tide West have made various
representations and warranties relating to, among other things, their respective
capital structure, businesses and financial condition, the accuracy of their
various filings with the Commission, the satisfaction of certain legal
requirements for the Merger and certain litigation matters. The representations
and warranties of each of the parties to the Merger Agreement will expire upon
consummation of the Merger.

CERTAIN COVENANTS AND AGREEMENTS

Conduct of Tide West's Business Pending the Merger. In the Merger
Agreement, Tide West agreed with HSR that, from the date of the Merger Agreement
until the Effective Time, Tide West will conduct its business only in the
ordinary and usual course consistent with past practices. In furtherance
thereof, Tide West made a number of specific agreements with respect to the
conduct of its business pending the consummation of the Merger. These agreements
addressed such matters as: the amendment or modification of its organizational
documents; the division, combination or reclassification of any of its
outstanding capital stock; the declaration, setting aside or payment of
dividends or other distributions with respect to its capital stock; the issuance
or sale of its capital stock or other securities; the purchase, cancellation,
retirement, redemption or acquisition of its capital stock or other securities;
mergers, consolidations or sales of all or substantially all of its assets; its
liquidation, winding-up or dissolution; the acquisition of any business entity
or any interest therein; the sale, lease, sublease, transfer, disposition or
encumbering of certain significant assets; the farming out of certain oil and
gas interests; the sale, transfer, disposition or encumbering of certain other
securities; the making of material loans, advances, capital contributions or
investments; the incurrence of certain indebtedness or other liabilities; the
entering into of certain contracts or agreements; its operating practices with
respect to certain oil and gas interests; the resignation, transfer or
relinquishment of certain rights relating to oil and gas interests; the entering
into of employee benefit plans, compensation plans or employee agreements; the
payment of bonuses; increases in compensation or other employee benefits; the
creation or incurrence of liens or other encumbrances on certain assets; the
payment of taxes, assessments or other governmental charges; the payment of all
claims; compliance with governmental laws, rules and regulations; the
maintenance of insurance; the entering into of contracts, agreements,
commitments or arrangements with respect to most of the foregoing; and various
other matters related to the operation of Tide West. It is not anticipated that
any of such agreements will have a material adverse effect on Tide West's
business or financial condition in the event that the Merger is not consummated.

Conduct of HSR's Business Pending the Merger. In the Merger Agreement, HSR
agreed with Tide West that, from the date of the Merger Agreement until the
Effective Time, except for transactions disclosed by HSR to Tide West prior to
the date of the Merger Agreement, HSR will conduct its business only in the
ordinary and usual course consistent with past practices. In furtherance
thereof, HSR made a number of specific agreements with respect to the conduct of
its business pending the consummation of the Merger. These agreements addressed
such matters as: the division, combination or reclassification of any of its
outstanding capital stock; the declaration, setting aside or payment of
dividends or other distributions with respect to its capital stock other than a
dividend of rights to holders of HSR Common Stock in connection with the
adoption and implementation of a shareholder rights plan; mergers,
consolidations, sales of all or substantially all of its assets; its
liquidating, winding-up or dissolution; and the entering into of contracts or
agreements with respect to any of the foregoing. It is not anticipated that any
of such agreements will have a material adverse effect on HSR's business or
financial condition in the event that the Merger is not consummated.

Access to Assets, Personnel and Information. Each of HSR and Tide West has
agreed that, from the date of the Merger Agreement until the consummation of the
Merger, it will allow the other party reasonable access to assets, personnel and
information in an effort to allow such other party to fully and adequately
investigate its properties, business and financial condition. In the case of
HSR, such investigation may include an environmental inspection of Tide West's
oil and gas properties. As of the date of this Joint Proxy

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Statement/Prospectus, each party has received the full cooperation of the other
party and neither party is aware of any facts or circumstances that would
constitute a breach of any representation or warranty contained in the Merger
Agreement.

Stock Exchange Listing. Application has been made for listing the shares of
HSR Common Stock offered hereby on the NYSE.

Additional Arrangements. Each of HSR and Tide West has agreed to take, or
cause to be taken, all action and do, or cause to be done, all things necessary,
appropriate or desirable under any applicable laws and regulations or under
applicable governing agreements to consummate the Merger and the transaction
contemplated by the Merger Agreement, including using its best efforts to obtain
all necessary waivers, consents and approvals and effecting all necessary
registrations and filings. Each of HSR and Tide West has agreed to take, or
cause to be taken, all action and do, or cause to be done, all things necessary,
appropriate or desirable to cause the covenants and conditions applicable to the
parties' respective obligations to effect the Merger to be performed or
satisfied as soon as practicable. In addition, each of HSR and Tide West has
agreed that, if any governmental authority issues any order, decree, ruling or
injunction or takes any other action that would have the effect of restraining,
enjoining or otherwise prohibiting or preventing the consummation of the Merger,
it will use its reasonable best efforts to have such order, decree, ruling or
injunction or other action declared ineffective as soon as practicable.

Agreements of Affiliates. At least 30 days prior to the Effective Time,
Tide West has agreed to cause to be prepared and delivered to HSR a list
identifying all persons who, at the time of the Tide West Special Meeting, may
be deemed to be "affiliates" of Tide West, as that term is used in paragraphs
(c) and (d) of Rule 145 under the Securities Act. Tide West has agreed to use
its best efforts to cause any such affiliates to execute and deliver to HSR, on
or prior to the Closing Date, a written agreement relating to certain resale
restrictions.

NO SOLICITATION OF ALTERNATIVE TRANSACTIONS

In the Merger Agreement, Tide West agreed to, and agreed to use its best
efforts to cause each of its representatives (including its employees, officers,
directors and financial and legal advisors) to, terminate any and all existing
activities, discussions and negotiations with third parties (other than HSR)
with respect to any alternative transaction involving the acquisition of Tide
West. Furthermore, Tide West and its representatives are prohibited by the terms
of the Merger Agreement from initiating, soliciting or knowingly encouraging the
submission of any offer or proposal in connection with an alternative
transaction unless such other party has submitted a bona fide proposal for an
alternative transaction and the Tide West Board determines that the failure to
furnish information to, negotiate with or assist such other party might
reasonably be expected to subject the directors of Tide West to liability for
breach of their fiduciary duties to the stockholders of Tide West. Tide West is
required to promptly communicate to HSR the terms and conditions of any proposal
relating to an alternative transaction and to keep HSR informed as to the status
of negotiations, actions or discussions. In the event that Tide West terminates
the Merger Agreement in order to pursue an alternative transaction, HSR will be
entitled to a fee of $5.0 million.

CONDITIONS TO CONSUMMATION OF THE MERGER

Consummation of the Merger is subject to the satisfaction or waiver of
various conditions on one or both parties' part, including: (a) approval and
adoption of the Merger and the Merger Agreement by the Tide West stockholders;
(b) approval of the issuance of HSR Common Stock pursuant to the Merger
Agreement by the HSR stockholders; (c) receipt of all consents, approvals,
permits and authorizations required to be obtained from any governmental
authority prior to the consummation of the Merger; (d) continued effectiveness
of the Registration Statement; (e) the absence of any court orders restraining,
enjoining or otherwise prohibiting the consummation of the Merger; and (f)
receipt of a letter from Arthur Andersen LLP immediately prior to the Effective
Time, in form and substance reasonably satisfactory to each of HSR and Tide
West.

In addition, HSR's obligation to consummate the Merger is subject to
satisfaction of the following conditions (unless waived by HSR): (a) continued
accuracy of all representations and warranties made by

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Tide West in the Merger Agreement; provided, however, that this condition will
be deemed to be satisfied so long as breaches of Tide West's representations and
warranties (in the aggregate) do not result in (i) damages or losses to HSR,
(ii) a net reduction in the aggregate value of the assets of Tide West and its
subsidiaries or (iii) a reduction in the aggregate net value of Tide West's and
its subsidiaries' assets, when added to any reduction resulting from certain
matters disclosed to HSR at the time of the execution of the Merger Agreement,
in an aggregate amount for clauses (i), (ii) and (iii) above (the "Failure
Amount") that exceeds $10 million; provided, that to the extent the Failure
Amount exceeds $5 million, the aggregate amount of Cash Consideration shall be
reduced by an amount (not to exceed $5 million) by which the Failure Amount
exceeds $5 million (and the Cash Consideration per share for Tide West Common
Stock shall be proportionately reduced); provided further, that to the extent
the Failure Amount exceeds $10 million, HSR may elect to close the Merger after
effecting the foregoing reduction; (b) material performance by Tide West of its
covenants and agreements under the Merger Agreement; (c) receipt by HSR of a
written agreement from each "affiliate" of Tide West (as such term is defined in
Rule 144 under the Securities Act) relating to certain resale restrictions (as
described under "Special Factors -- Restrictions on Resales by Affiliates of
Tide West"); (d) the absence of any material adverse change in the condition
(financial or otherwise), operations or business of Tide West (other than
changes, including changes in commodity prices, generally affecting the oil and
gas industry); (e) continued effectiveness of the fairness opinion from Lehman
Brothers referred to in "Special Factors -- Opinions of the HSR Financial
Advisors"; (f) continued effectiveness of an opinion from counsel regarding
certain tax issues as described in the Merger Agreement; (g) no more than 3% of
the holders of Tide West Common Stock shall have exercised their dissenters'
appraisal rights under the Delaware Act; and (h) receipt by HSR and Merger Sub
of a legal opinion by Tide West's counsel, in form and substance reasonably
acceptable to HSR.

Tide West's obligation to consummate the Merger is subject to satisfaction
of the following conditions (unless waived by Tide West): (a) continued accuracy
of all representations and warranties made by HSR in the Merger Agreement; (b)
material performance by HSR of its covenants and agreements under the Merger
Agreement; (c) continued effectiveness of the fairness opinion from Merrill
Lynch referred to in "Special Factors--Opinion of the Tide West Financial
Advisor"; (d) continued effectiveness of an opinion from its counsel regarding
certain tax issues as described in the Merger Agreement; (e) the absence of any
material adverse change in the condition (financial or otherwise), operations or
business of HSR (other than changes, including changes in commodity prices,
generally affecting the oil and gas industry); (f) the receipt by Tide West of
an opinion of the general counsel of HSR, in form and substance reasonably
acceptable to Tide West; and (g) the adjustments to Cash Consideration and the
Conversion Number referred to in clause (a) in the above paragraph would result
in the issuance of not more than 7,161,312 shares of HSR Common Stock in
connection with the Merger.

TERMINATION RIGHTS

The parties may terminate the Merger Agreement with no liability or
obligation to each other on account of such termination if they mutually consent
thereto. In addition, either party may terminate the Merger Agreement with no
liability or obligation to the other party on account of such termination if:
(a) the Merger has not been consummated by July 31, 1996 (provided, however,
that the right to terminate under this provision will not be available to a
party if its breach of the Merger Agreement has been the cause of or resulted in
the failure of the Merger to be consummated on or before such date); (b) a
governmental authority issues an order permanently restraining, enjoining or
otherwise prohibiting the consummation of the Merger and such order has become
final and nonappealable (provided, however, that the right to terminate under
this provision will not be available to a party until such party has used all
reasonable efforts to remove such order); or (c) the Tide West stockholders fail
to approve the Merger and the Merger Agreement at the Tide West Special Meeting
or the HSR stockholders fail to approve the issuance of HSR Common Stock
pursuant to the Merger Agreement at the HSR Special Meeting.

HSR may terminate the Merger Agreement with no liability or obligation to
Tide West on account of such termination if: (a) there has been a breach of any
of the representations and warranties made by Tide West in the Merger Agreement
(subject to the $10 million threshold discussed in the second paragraph under

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"-- Conditions to Consummation of the Merger") and Tide West has failed to cure
such breach within 30 days after receiving notice thereof; or (b) Tide West has
failed to comply in any material respect with any of its covenants and
agreements under the Merger Agreement and such failure has not been, or cannot
be, cured within a reasonable time after notice and demand for cure thereof. In
addition, HSR may terminate the Merger Agreement, and will be entitled to
receive from Tide West a fee of $5.0 million, if the Tide West Board amends or
withdraws its recommendation of the Merger to the Tide West stockholders, such
recommendation is not reinstated in full within five business days after such
amendment or withdrawal and the Tide West stockholders fail to approve the
Merger at the Tide West Special Meeting.

Tide West may terminate the Merger Agreement with no liability or
obligation to HSR on account of such termination if: (a) there has been a breach
of any of the representations and warranties made by HSR and Merger Sub in the
Merger Agreement, and HSR has failed to cure such breach within 30 days after
receiving notice thereof; or (b) either HSR or Merger Sub has failed to comply
in any material respect with any of its covenants and agreements under the
Merger Agreement and such failure has not been, or cannot be, cured within a
reasonable time after notice and demand for cure thereof. In addition, Tide West
may terminate the Merger Agreement, but only upon payment to HSR of a fee of
$5.0 million, if (a) it is prepared to enter into a binding agreement with
respect to an alternative transaction involving the acquisition of Tide West or
a material portion of its assets (so long as HSR has been given three days
notice of Tide West's intentions so that HSR may have the opportunity to amend
or modify the provisions of the Merger in response to such alternative
transaction) or (b) the Tide West Board determines that its fiduciary duty to
the stockholders of Tide West requires it to amend or withdraw its
recommendation of the matters described in this Joint Proxy
Statement/Prospectus.

If the Merger Agreement is terminated by either party pursuant to any of
the provisions described above, the Merger will be abandoned, the Merger
Agreement will become void and there will be no further obligation on either
party's part with respect to the Merger Agreement (with certain specified
exceptions). A termination of the Merger Agreement will not, however, relieve
either party from any liability for damages incurred as a result of its breach
of the Merger Agreement prior to such termination.

PAYMENT OF EXPENSES

Tide West and HSR will each pay its own expenses incident to preparing for,
entering into and carrying out the provisions of the Merger Agreement and the
consummation of the Merger, whether or not the Merger is consummated, except
that the fee for filing the Registration Statement with the Commission will be
borne by HSR, the costs and expenses associated with printing this Joint Proxy
Statement/Prospectus will be borne equally by HSR and Tide West and the costs
and expenses associated with mailing this Joint Proxy Statement/Prospectus and
related materials to (a) the stockholders of Tide West and soliciting the votes
of the stockholders of Tide West will be borne by Tide West and (b) the
stockholders of HSR and soliciting the votes of the stockholders of HSR will be
borne by HSR.

AMENDMENT AND WAIVER

The Merger Agreement may be amended by the parties at any time before or
after approval of the Merger by the Tide West stockholders; provided, however,
that after any such approval, the parties will not amend the Merger Agreement in
a manner that by law requires further approval by the Tide West stockholders
without first obtaining such further approval.

At any time prior to the Effective Time, the parties may, to the extent
legally allowed, extend the time for the performance of any of the obligations
under the Merger Agreement, waive any inaccuracies in the representations and
warranties contained in the Merger Agreement or waive performance of any
covenants or agreements contained in the Merger Agreement.

ADJUSTMENTS TO THE CONVERSION NUMBER AND CASH CONSIDERATION

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triggered, each share of Tide West Common Stock would be exchanged for .6295 of
a share of HSR Common Stock and $8.75 cash as a result of the Merger.

There are two adjustments. One affects the Cash Consideration by reducing
the amount of cash paid in the Merger for each share of Tide West Common Stock
if the Market Price exceeds $10.50. In such event, the Cash Consideration is
reduced by 3% of the amount by which the Market Price exceeds $10.50. The other
adjustment, referred to as the Tax Adjustment, reduces the Cash Consideration
and increases the fraction of a share of HSR Common Stock to be exchanged for
each share of Tide West Common Stock (i.e., the Conversion Number) so that the
aggregate HSR Common Stock to be issued in the Merger (valued at the Final
Price) represents at least 40% of the aggregate consideration payable in the
Merger. The effect of the Tax Adjustment is to determine whether the aggregate
HSR Common Stock to be issued in the Merger is at least equal to 40% of the
aggregate consideration payable in the Merger and, if it is not, to reduce the
aggregate cash to be paid to the Tide West stockholders in the Merger and
increase the aggregate HSR Common Stock to be issued in the Merger (in essence,
by converting a portion of the Cash Consideration into HSR Common Stock at the
Final Price) until the aggregate HSR Common Stock to be issued in the Merger
valued at such price is equal to at least 40% of the aggregate consideration
payable in the Merger. The Merger Agreement provides that the maximum number of
shares of HSR Common Stock required to be issued in connection with the Merger
is 7,161,312 (which equates to a Conversion Number of .7311, based on the number
of shares of Tide West Common Stock outstanding on the date of this Joint Proxy
Statement/Prospectus) and any further adjustments to the aggregate consideration
to be paid to the holders of Tide West Common Stock necessary to satisfy the Tax
Adjustment Formula would be solely from a further reduction of the Cash
Consideration. In making the calculations pursuant to the Tax Adjustment
Formula, (a) shares of HSR Common Stock issued to any 5% holder of Tide West
Common Stock as of the Closing Date who has not represented as of that date that
it has no intention, plan or arrangement to dispose of the HSR Common Stock
received in the Merger are treated as cash, and (b) the amount of consideration
paid to holders of Tide West Common Stock who have perfected their dissenters'
appraisal rights as of the Closing Date shall be assumed to be (on a per share
basis) the greater of (i) the sum of the value of a share of HSR Common Stock
(valued at the Final Price) and the Cash Consideration given per share of Tide
West Common Stock and (ii) $15.88.

The Cash Consideration is dependent on both the Market Price and the
Conversion Number and cannot be determined at this time. The Market Price is to
be determined by reference to the closing sales price of the HSR Common Stock
over a period that has yet to begin. The Conversion Number is to be determined
by reference to the closing sales price of the HSR Common Stock on the date
immediately preceding the Closing Date and also cannot be determined at this
time. If the Conversion Number and the Cash Consideration were calculated
treating February 26, 1996 (the date of the public announcement of the execution
of the Merger Agreement), as the Closing Date, assuming no holders of Tide West
Common Stock had perfected their dissenters' appraisal rights and assuming there
is no holder of 5% or more of the Tide West Common Stock that has not
represented that it has no intention, plan or arrangement to dispose of the HSR
Common Stock to be received in the Merger, the Conversion Number would be .6295,
the Cash Consideration would be $8.72 and HSR would issue 6,161,312 shares of
HSR Common Stock in the aggregate in connection with the Merger. If such
calculations were performed under the same assumptions, and treating the date of
this Joint Proxy Statement/Prospectus as the Closing Date, the Conversion Number
would be .6295, the Cash Consideration would be $8.68 and HSR would issue
6,161,312 shares of HSR Common Stock in the aggregate in connection with the
Merger. Because the Conversion Number (and, therefore, the aggregate number of
shares of HSR Common Stock to be issued in the Merger) is subject to adjustment,
the Merger Agreement provides that the maximum number of shares of HSR Common
Stock that HSR is required to issue in connection with the Merger is 7,161,312
shares, which is 1,000,000 shares more than HSR would have issued if the
Conversion Number and the Cash Consideration were calculated based on the
foregoing assumptions and treating February 26, 1996 (the date of the public
announcement of the execution of the Merger Agreement), as the Closing Date.

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RESTRUCTURING OF THE MERGER

A condition to the obligation of Tide West to effect the Merger is that the
Tax Adjustment Formula (disregarding the limit contained therein on the maximum
number of shares of HSR Common Stock required to be issued in the Merger) would
not require HSR to issue more than 7,161,312 shares of HSR Common Stock in
connection with the Merger. If this condition is not satisfied, Tide West can
either: (a) waive the condition and consummate the Merger pursuant to the terms
of the Merger Agreement (in which case HSR will issue the maximum of 7,161,312
shares of HSR Common Stock, and any further adjustments to the consideration
paid to the holders of Tide West Common Stock to satisfy the Tax Adjustment
Formula will be solely from a further reduction of the Cash Consideration); (b)
terminate the Merger Agreement; or (c) cause the Merger to be restructured. If
this last option is chosen by Tide West, upon written notice from Tide West
delivered to HSR within 15 days after the approval of the matters contained in
this Joint Proxy Statement/Prospectus at both the Tide West Special Meeting and
the HSR Special Meeting, the Merger shall be restructured under Section 351 of
the Code as a "Horizontal Double Dummy" transaction whereby (a) the holders of
HSR Common Stock would receive one share of common stock ("Newco Common Stock")
of a newly created holding company ("Newco") in exchange for each share of HSR
Common Stock as a result of a merger of a newly created subsidiary of Newco with
and into HSR, and (b) the holders of Tide West Common Stock would receive $8.75
and .6295 of a share of Newco Common Stock for each share of Tide West Common
Stock as a result of a merger of another newly created subsidiary of Newco with
and into Tide West. In such event, the Merger Agreement would be deemed to be
appropriately modified to reflect such restructuring and the parties thereto
would agree to use their reasonable best efforts to effect such restructured
transaction by, among other things, resoliciting the holders of HSR Common Stock
and the holders of Tide West Common Stock for their approval of such
transaction. In addition, in the event that such condition is not satisfied, HSR
and Tide West will re-solicit proxies prior to a vote of the stockholders of HSR
and Tide West, respectively.

REGISTRATION RIGHTS AGREEMENT

Contemporaneously with the consummation of the Merger, HSR and NGP will
enter into a Registration Rights Agreement (the "Registration Rights Agreement")
pursuant to which HSR will prepare and file with the Commission a "shelf"
registration statement under the Securities Act (a "Shelf Registration")
covering the 2,864,225 shares of HSR Common Stock (assuming no adjustments to
the Conversion Number) that NGP receives in the Merger ("Registrable
Securities"). Under the Registration Rights Agreement, HSR will use its best
efforts to have the Shelf Registration declared effective on or before the first
anniversary of the Effective Time, and HSR will keep the Shelf Registration
continuously effective for a period of at least three years.

At any time after the first anniversary of the Effective Time and during
the term of the Registration Rights Agreement, HSR is required, upon written
request of the holders of not less than 50% of the Registrable Securities, to
use its best efforts to effect the registration under the Securities Act of the
Registrable Securities for which such a request has been received (a "Demand
Registration"). HSR is obligated to effect no more than two Demand
Registrations.

In addition, if HSR proposes to register any of its equity securities under
the Securities Act, any holder of Registrable Securities may, by giving written
request to HSR thereof, request that HSR include in such registered offering any
or all of such holder's Registrable Securities (a "Piggyback Registration"). HSR
will use its best efforts to effect the Piggyback Registration unless HSR
determines for any reason not to register or to delay registration of the
securities in the underlying offering.

NGP has indicated that it has no present intention to sell or otherwise
dispose of its shares of HSR Common Stock received in the Merger and has agreed
not to do so for a period of one year. NGP will continue to evaluate its
investment in HSR following the Merger in light of market conditions and other
factors.

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VOTING AGREEMENTS

Pursuant to the Voting Agreements, HSR has sufficient voting power to
assure the approval of the Merger and the Merger Agreement by the Tide West
stockholders without the affirmative vote of any other stockholder of Tide West.
On February 25, 1996, HSR and NGP entered into the NGP Voting Agreement pursuant
to which NGP agreed to vote, and granted to HSR a proxy to vote, its 4,550,000
shares of Tide West Common Stock, representing approximately 46.45% of Tide West
Common Stock, in favor of the Merger and the Merger Agreement. HSR and Philip B.
Smith, President, a director and a stockholder of Tide West, entered into the
Smith Voting Agreement pursuant to which Smith agreed to vote, and granted to
HSR a proxy to vote, 344,000 shares of Tide West Common Stock owned by him and
85,000 shares of Tide West Common Stock owned by family trusts of which Smith is
the trustee, representing an aggregate of an additional 4.38% of the Tide West
Common Stock, in favor of the Merger and the Merger Agreement. NGP and Smith
each entered into the Voting Agreements in consideration of HSR entering into
the Merger Agreement and, in the case of NGP, HSR agreeing to provide NGP with
representation on the HSR Board. In addition, pursuant to the Voting Agreements,
NGP and Smith each agreed that they would not make any sale, transfer or other
disposition of any shares of HSR Common Stock for one year from the date such
shares are received by them pursuant to the Merger. NGP and Smith also agreed
that they would not, among other things, directly or indirectly, sell, transfer
or encumber any of the Tide West Common Stock subject to their respective Voting
Agreement during the term of the Voting Agreements, nor would they take any
action which would, if taken by Tide West, violate the provisions of the Merger
Agreement relating to negotiations with third parties regarding the acquisition
of Tide West Common Stock or the merger or other business combination of Tide
West into any third party or negotiations concerning an Alternative Proposal (as
defined in the Merger Agreement). See "Special Factors -- Interests of Certain
Persons in the Merger."

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INFORMATION ABOUT THE COMBINING COMPANIES

HS RESOURCES, INC.

Information about HSR is contained in various documents that have been
filed by HSR with the Commission and incorporated by reference into this Joint
Proxy Statement/Prospectus. Such information includes historical financial
statements, information about HSR's properties and oil and gas reserves and
information about the nature of HSR's business, its management and the HSR
Common Stock. Reference should be made to such documents for complete
information about HSR. For a list of such documents and instructions as to how
to obtain copies of such documents, see "Incorporation of Documents by
Reference."

HSR PROPERTIES

HSR currently owns interests in over 1,350 wells and approximately 500
proved undeveloped drillsites and more than 100 additional, unbooked potential
sites. In addition, HSR owns nearly 1,100,000 gross undeveloped acres in five
basins in the Rocky Mountain region, and owns rights (geophysical permits,
options to lease and leases) to 58,000 gross onshore acres in Louisiana and
Texas. Moreover, HSR has acquired over 376 miles of 3-D seismic in three
different areas.

Wattenberg Field area. HSR owns interests in more than 1,170 wells in the
Wattenberg Field area and operates 82% of such wells. It also has approximately
430 proved undeveloped drilling locations and hundreds of additional, potential
unbooked locations in the Wattenberg Field area, based on current spacing. Over
the last two years, HSR has conducted detailed technical analyses of the
drainage of certain reservoirs in the Wattenberg Field area and has concluded
that existing spacing may not be efficiently draining all reserves within the
spacing unit. Should infill drilling come to pass, HSR believes it may own
unbooked reserves associated with approximately 600 infill locations.

Greater D-J Basin. HSR owns interests in 150 wells in the Greater D-J Basin
and operates approximately 78% of such wells. It also has over 77 proved
undeveloped drilling locations and hundreds of additional, potential unbooked
locations in the Greater D-J Basin. HSR owns rights in over 270,000 gross
undeveloped acres in the Greater D-J Basin. Over the last two years it has
drilled 97 wells on the acreage, 70% of which have been successful. HSR
originally selected the Greater D-J Basin as a focus of activities because
management believed the operational and technical expertise it had developed in
the Wattenberg Field area could be applied to adjacent areas within the D-J
Basin, and because it felt the Greater D-J Basin had been underexploited with
advanced technologies. HSR has shot five 3-D seismic surveys in the Greater D-J
Basin, covering 70 square miles, and has discovered one new field and one
extension field based on those surveys. More recently, HSR used the new 3-D
coherence processing technology to help locate the channel system connecting two
producing fields. Although not yet tested by the drill bit in the area, this
emerging technology could further minimize the risk of dry holes.

Other Rocky Mountain Properties. HSR has assembled over 750,000 gross
undeveloped acres in the Rocky Mountain region outside the D-J Basin. In the
Williston Basin, HSR owns 347,000 gross undeveloped acres in two distinct
project areas, Daniels County and West Sioux Pass. HSR has shot 144 square miles
of 3-D seismic over the two project areas. To date, 10 wells have been drilled
in Daniels County, six of which have been completed as producers, including two
new field discoveries. Current activities include the evaluation of horizontal
drilling applications, deeper structures indicated on the West Sioux Pass
acreage and Lodgepole formation potential.

In the Greater Green River Basin, HSR has accumulated 237,000 gross
undeveloped acres, including 130,000 gross undeveloped acres in the Sand Wash
Basin, 55,000 gross undeveloped acres on the Rock Springs Uplift, 40,000 gross
undeveloped acres in a basin-centered gas play in the Green River Basin and
12,000 gross undeveloped acres in other areas. HSR has shot 108 miles of high
resolution 2-D seismic over the Sand Wash Basin acreage. An initial test well
has been drilled in each of the Sand Wash Basin and in the deeper portion of the
Rock Springs Uplift. Hydrocarbons were encountered in each of those tests,
although commercial production has not yet been established. Leasehold costs in
assembling the large position in the Greater Green River Basin were generally
low, and the leases are long term.

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In the Hugoton Embayment, HSR owns 129,000 gross undeveloped acres. The
acreage was acquired because of the potential for extending the shallower gas
production, and because it was believed to be on trend with deeper oil
discoveries. Tests of the shallower gas potential proved uneconomic, but seismic
analysis of the deeper potential is encouraging, and additional tests are
underway. As with its other large concentrated positions, the lease acquisition
costs were low and the leases are long term.

SouthTech. During 1995, HSR joined Aspect Resources Limited-Liability
Company to form SouthTech Exploration, L.L.C. ("SouthTech"), which will exploit
3-D seismic and coherence cube technologies to explore onshore Gulf Coast
prospects. SouthTech's targets are both shallow exploitation objectives and
deeper exploration reservoirs in the prolific salt dome regions of South
Louisiana and the Upper Texas Gulf Coast.

Through SouthTech, HSR owns various seismic rights, options and mineral
interests over 58,000 gross acres and is currently leasing in the area.
SouthTech is actively developing 10 prospect areas, and is conducting its fourth
3-D seismic shoot. Total 3-D seismic coverage for the four shoots is 132 square
miles. HSR has preliminarily identified 60-80 potential drillsites on the first
four of the 10 prospect areas. Initial drilling operations are expected to
commence by mid-year.

RECENT ACQUISITIONS

On March 15, 1996, HSR completed the Initial Basin Acquisition comprised of
certain oil and gas properties owned by Basin in the Wattenberg Field area near
Denver, Colorado, for approximately $38 million. This transaction was financed
through HSR's bank facility on an interim basis pending completion of
documentation of permanent financing arrangements with respect to the Initial
Basin Acquisition. Concurrently with its approval of the Initial Basin
Acquisition, the HSR Board approved the Second Basin Acquisition comprised of
the remainder of Basin's D-J Basin assets for $87.5 million. The Second Basin
Acquisition is subject to approval by the stockholders of Basin and is expected
to be completed by the end of the second quarter of 1996. The Basin Acquisitions
in aggregate cover approximately 850 wells, having approximately 35 MMBoe of net
proved reserves and approximately 5,500 Boe of net daily production, and include
certain undeveloped acreage. Approximately 72% of the reserves are natural gas
and 62% are developed. The properties are in the immediate vicinity of HSR's
existing D-J Basin operations, and HSR expects to realize significant operating
efficiencies and cost savings by integrating these assets into its existing
property base. The Basin Acquisitions also enhance HSR's position as one of the
most active producers/marketers in the D-J Basin and the remainder of the
Colorado Front Range.

HSR believes the Basin Acquisitions are an excellent strategic fit with the
Merger and are desirable for a number of reasons: (a) the properties and
production can be added with no material incremental overhead; (b) significant
reductions in lease operating costs should be achievable, along with production
enhancement; (c) the properties offer significant upside potential because of
the proved undeveloped locations and potential infill drilling; and (d) the
control of the gas associated with Basin's properties expands HSR's marketing
strength and leverage. Although HSR has entered into the Chase Asset
Monetization Arrangement covering the properties acquired in the Initial Basin
Acquisition, HSR retains operations, gas marketing rights, development locations
and an option to repurchase the producing wells subject to this arrangement.
Therefore, the strategic consideration discussed below apply notwithstanding the
consummation of the Chase Asset Monetization Arrangement, or any similar future
arrangement affecting the properties to be acquired in the Second Basin
Acquisition.

Consolidation Economics. The acquisition of Basin's properties demonstrate
the compelling economics of consolidation. In particular, because of the similar
nature of the properties and their geographical proximity, the Basin properties,
with production equal to about 40% of HSR's existing production (without giving
effect to the Chase Asset Monetization Arrangement), can be added at little
incremental overhead.

Operating Efficiencies and Enhancements. The Basin properties are
interspersed with HSR's core Wattenberg Field properties, frequently sharing
lease lines. As a result, HSR's management believes it should be able to effect
meaningful reductions in lease operating costs on a per-well and a per-unit of
production basis. In addition, because of the extent of its activities in the
area (HSR has operated in the area for more

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than 14 years and participated in over 1,350 wells), HSR has developed
significant technical expertise which it believes can be used to enhance
production from the Basin properties.

Increased Development Inventory. The Basin properties add significant
upside potential by increasing HSR's inventory of proved undeveloped and
potential drillsites, along with expanding the possible application of infill
drilling opportunities. The Basin properties contain approximately 250 proved
undeveloped drilling locations. In addition, the Basin properties have
potentially hundreds of unbooked locations which can be economic with cost,
price or technological enhancements, which, assuming the consummation of the
Second Basin Acquisition, would increase HSR's inventory in the D-J Basin to
over 750 proved undeveloped locations, significantly expanding HSR's existing
inventory of hundreds of unbooked potential sites.

In addition, the Second Basin Acquisition expands HSR's infill potential.
Over the last two years, HSR has conducted a series of engineering and geologic
analyses and evaluations which indicate that significant reserves remain in the
Wattenberg Field area and that some type of infill drilling may be appropriate.
Should infill become economic, HSR's position is significantly expanded as a
result of the Second Basin Acquisition.

Marketing Leverage. Basin's daily gross D-J Basin gas production amounts to
approximately 26 MMcf. HSR's daily gross D-J Basin gas production amounts to
approximately 95 MMcf. Combined, they account for about 26% of the Wattenberg
Field area production and 13% of the total daily gas consumption in Colorado,
most of which consumption occurs in the Colorado Front Range. Although some of
Basin's gas is subject to marketing by a third party, the additional volumes of
gas will add significant leverage in HSR's ability to obtain premium markets and
prices.

Additional value from the Basin Acquisitions may be realized as a result of
recent developments in D-J Basin gas prices. Historically, D-J Basin prices were
tied to the Colorado Interstate Gas Index (the "CIG Index"). Beginning in late
1995, the D-J Basin prices began to separate from the CIG Index. As a result,
gas prices in the D-J Basin have rebounded significantly in recent months and
appear to be no longer linked to the historical CIG Index. From January 1, 1996,
through March 14, 1996, D-J Basin gas prices have averaged approximately $0.88
per Mcf above traditional CIG Index prices. The separation is a result of a
number of factors, including a recent tariff change for D-J Basin producers that
significantly reduces the cost of transporting the product to local markets and
significant pipeline constraints in Wyoming. HSR's management does not believe
that these developments are temporary. These factors should result in higher
product prices for D-J Basin gas than would have been otherwise obtainable.

FINANCING

HSR has articulated and implemented a four-part corporate strategy designed
to enhance stockholder value. The components of this strategy are (1) geographic
and product diversification, (2) consolidation to achieve operational
efficiencies, (3) enhancement of downstream value and (4) sophisticated,
value-creating financial transactions. The financing activities of HSR are
designed to efficiently support these strategies. As an active part of its
financing activities, HSR will review periodically a wide range of capital
financing options available to it. These may include senior bank credit
facilities, asset monetization transactions, off-balance sheet financings, sale
and leaseback transactions, divestitures of non-core/non-strategic assets,
issuance of new debt and equity securities and other financings

HSR's primary activities involve the acquisition, development and
exploitation of oil and gas properties. Whenever possible, HSR seeks to maximize
its operational and financial flexibility in order to be able to respond to
perceived opportunities or changes in cash flow. One element of HSR's overall
financial strategy is to maintain an efficient balance of debt and equity
capital. As a general guideline, HSR believes that to maintain such a balance, a
debt-to-total capital ratio of less than 50% is appropriate. As HSR pursues its
opportunities, it anticipates that its approach to meeting its capital
requirements will change, as will the mix of financing tools employed and the
resulting capital structure. HSR prefers to maintain a capital structure that
provides the flexibility to increase its leverage, as necessary and prudent, to
accomplish its strategic objectives, including acquisition transactions. It will
generally not be efficient to perpetually maintain a high level of equity
capital in anticipation of such transactions. This is true both because the
timing of strategic transactions cannot be controlled and because the dilutive
effect of excess equity does not serve the best interests of its

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stockholders or minimize its cost of capital. If, as in connection with the
Merger and the Basin Acquisitions, leverage is increased to capture attractive
opportunities, it will be HSR's goal to reduce such leverage following the
transaction by means of a wide range of capital financing options available to
it, including, but not limited to, those mentioned above.

The aggregate cash consideration required and net liabilities to be assumed
in connection with consummating the Merger and the Basin Acquisitions are
expected to be $256.5 million, $131 million for the Merger and $125.5 million
for the Basin Acquisitions. Through existing negotiated arrangements, HSR has
available a number of specific capital options with which to meet these capital
needs. In order to provide the senior bank debt capacity necessary to effect the
Merger and the Basin Acquisitions, HSR has entered into a letter of intent with
Chase indicating Chase's intent to provide, on a syndicated basis, an unsecured
revolving credit facility of up to $375 million. HSR believes this facility will
be sufficient to (a) finance the payment of the cash portion of the
consideration to Basin and to the Tide West shareholders, (b) absorb HSR's
current outstanding senior indebtedness ($78.9 million at March 31, 1996,
following the Initial Basin Acquisition and excluding Asset Monetization Debt)
and the new debt to be assumed in connection with the Merger ($39.6 million at
March 31, 1996), (c) pay HSR's transaction costs incurred with respect to the
Merger and the Basin Acquisitions and (d) provide HSR with additional financial
flexibility. This senior credit facility is subject to due diligence, final
engineering, negotiation of definitive documentation and other conditions, and
there can be no assurance that the financing will be completed.

On a pro forma basis, following the consummation of the Merger and the
Basin Acquisitions, and assuming the consolidation of HSR and WRL, HSR's
debt-to-total capital ratio at March 31, 1996 would be approximately 67%. HSR
intends to reduce such leverage as soon as practicable through an efficient
combination of options available to it. In addition to the options discussed
above, HSR may utilize its other financing alternatives currently available. HSR
has extended the arrangement it has in place with Trust Company of the West for
a $90 million non-recourse, volumetric overriding royalty monetization facility.
This facility may be used by HSR for a variety of corporate purposes, including
acquisitions of new properties, exploration and development drilling, or the
monetization of existing corporate properties, with the proceeds being used
substantially at HSR's discretion, including repayment of bank debt. HSR also
has entered into a letter agreement with Chase providing for a $25 million
sale-leaseback financing arrangement pursuant to which HSR may sell certain
production equipment and surface facilities to a Chase affiliate and enter into
a lease agreement for the continued use of such equipment. The arrangement is
subject to various conditions prior to closing. If such a financing arrangement
is ultimately consummated, enabling HSR to effectively monetize certain
undervalued assets, HSR contemplates that the lease would be treated as an
operating lease for financial reporting purposes.

HSR intends to use the foregoing capital options, and others that may
become available to it, to facilitate in an efficient manner the achievement of
its corporate and financial flexibility goals.

Chase Asset Monetization. Subsequent to the closing of the Initial Basin
Acquisition, HSR determined that it could best accomplish its corporate and
capital strategic goals through the Chase Asset Monetization Arrangement
consisting of a sale by HSR to WRL, a third party entity formed to facilitate
the transaction, of certain low-growth assets acquired in the Initial Basin
Acquisition, principally the producing and proved developed non-producing wells.
HSR reserved a production payment (the "Retained Production Payment") in such
wells and retained an option to repurchase (the "Option"), in whole or in part,
the wells for fair market value at any time. HSR retained what it considers to
be the high-growth assets, including the proved and unproved drillsites,
operations, the right to market production from the wells, infill rights, and
proceeds from the monetization of Section 29 tax credits. HSR will operate these
properties under a management agreement (the "Management Agreement") whereby HSR
receives a fee and pays all non-capital costs associated with the properties. As
a result of the transaction, WRL assumed approximately $23.1 million of debt
which HSR had incurred in closing the Initial Basin Acquisition. HSR intends to
transfer to WRL a portion of the assets to be acquired in the Second Basin
Acquisition in a similar transaction in which WRL will assume approximately
$58.9 million of indebtedness that HSR will incur in closing the Second Basin
Acquisition. HSR will have no obligation to repay the Asset Monetization Debt
assumed and to be assumed by WRL in connection with its purchase from HSR of the
WRL Assets. The Asset Monetization Debt is

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secured only by the WRL Assets. The financial statements of HSR are required to
be consolidated with the financial statements of WRL. Accordingly, the WRL
Assets and the Asset Monetization Debt must be included in the consolidated
balance sheet of HSR and the operations relating thereto must be reflected in
HSR's consolidated statement of operations.

The Retained Production Payment was reserved in the conveyance from HSR to
WRL (the "Conveyance") of the properties acquired in the Initial Basin
Acquisition. In general, the Retained Production Payment provides that HSR will
receive net cash flow generated from the conveyed properties of $17.5 million.
HSR estimates that approximately 20% of the economically recoverable reserves
attributable to the transferred properties will remain at the time the Retained
Production Payment terminates. Net cash flow generally consists of revenue
generated from the transferred properties and payments received under hedging
arrangements in excess of payments for: (a) senior debt; (b) the management fee
under the Management Agreement; (c) costs (other than capital costs) associated
with the transferred properties not paid by HSR as manager under the Management
Agreement; (d) taxes; and (e) payments made under hedging arrangements.

Under the Management Agreement, HSR is obligated and has broad authority to
operate and manage the conveyed properties, to market production therefrom, and
to pay all costs (other than capital costs and production related taxes)
associated with the properties. HSR has agreed to perform such services and to
pay all such costs on a turnkey basis whereby it initially receives $1.6 million
per year. This amount was calculated on the basis of HSR's extensive operating
experience in operating wells in the D-J Basin, and is expected to exceed HSR's
direct and indirect costs associated with operating and managing such
properties. Not unlike any turnkey agreement, there can be no assurance that
HSR's costs associated with the Management Agreement will not exceed the fee it
receives under the agreement. The base term of the Management Agreement extends
until the Option expires or is exercised. The Retained Production Payment and
the management fee under the Management Agreement are subordinate on an annual
basis to the senior debt incurred by WRL in acquiring the properties from HSR
and to any hedging arrangements entered into by WRL.

Under the Option, HSR has the right until March 29, 2006, to purchase the
conveyed properties at the appraised fair market value of the properties as of
the time of exercise. In determining fair market value, future prices of
hydrocarbons will be estimated by reference to actual or index prices as
provided in the agreement. The value of the future revenues will be discounted
to present value at the time of exercise in accordance with a stated formula.

HSR's current estimate of the total volume of economically producible
reserves associated with the transferred properties is 6.9 MMBoe. HSR also
retained a reversionary interest equal to 75% of production, if any, in excess
of the 6.9 MMBoe. HSR does not attribute any present value to this reversion.

WRL is a Delaware limited liability company formed for the purpose of the
transaction and owned by a Delaware grantor trust established for the benefit of
a Colorado non-profit educational institution. The capital structure of WRL was
designed to ensure that WRL would be treated for tax purposes as the owner of
the economic interest in the properties, and to meet lending requirements
established by Chase. The effect of the structure is to vest in WRL a
significant portion of the reward associated with the upside of increased
production and higher product prices attributable to the PDP and PDNP
properties, while allowing HSR to retain the remaining attributes of the Basin
assets. WRL was capitalized through a gift of $500 made to WRL for the benefit
of the beneficiary, and a loan from HSR to WRL in the amount of $750,000. The
loan is subordinate to the obligations of WRL to the senior lender and its
obligations under any hedging agreements. HSR has also made a gift in the amount
of $5,000 directly to the beneficiary.

HSR believes that the rights and benefits that it retained in the Chase
Asset Monetization Arrangement and the rights and benefits that it intends to
retain in the contemplated asset monetization arrangement affecting the
properties purchased in the Second Basin Acquisition will be significant. The
combined Basin Acquisitions include approximately 250 proved undeveloped
drillsites and a similar number of unproved

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locations. Since these will be retained by HSR, HSR will have the opportunity to
drill and produce these properties and realize the return thereon. HSR has also
retained the right to market gas and oil production from the properties.
Although some of the gas subject to the Basin Acquisitions is subject to
marketing rights held by the gas processor, HSR is currently negotiating a
release of all such gas from these commitments. HSR believes that its expected
ability to control the marketing of the 26 MMcf of gas produced per day from the
Basin properties will significantly enhance HSR's marketing strength in the
Colorado Front Range market. Additionally, HSR anticipates that its retention of
operations will enable it to continue to improve the economies of scale
associated with its operations and, therefore, to reduce the per well and
production unit costs of operating the HSR wells.

PRICE RANGE OF HSR COMMON STOCK AND DIVIDENDS

The HSR Common Stock is quoted on the NYSE under the symbol "HSE." The
following table sets forth certain information as to the last sale prices per
share of HSR Common Stock as quoted on the NYSE. HSR has never paid dividends on
the HSR Common Stock. HSR's fiscal year ends on December 31 of each year. On
February 23, 1996, the last full trading day prior to the public announcement of
the signing of the Merger Agreement, the last sales price per share of HSR
Common Stock, as quoted on the NYSE, was $11.375. On May 15, 1996, the last full
trading day for which quotations were available at the time of printing of this
Joint Proxy Statement/Prospectus, the last sales price per share of HSR Common
Stock, as quoted on the NYSE, was $12.375. STOCKHOLDERS ARE URGED TO OBTAIN
CURRENT QUOTATIONS FOR HSR COMMON STOCK.

<TABLE>
<CAPTION>
HSR COMMON
STOCK
-------------
CALENDAR YEAR LOW HIGH
------------------------------------------------------------ ---- ----
<S> <C> <C>
1994
First Quarter............................................. $18 3/4 $24 3/4
Second Quarter............................................ $18 $22 5/8
Third Quarter............................................. $19 1/4 $22 7/8
Fourth Quarter............................................ $17 1/8 $21 1/2
1995
First Quarter............................................. $13 3/4 $17 1/2
Second Quarter............................................ $13 3/4 $16 7/8
Third Quarter............................................. $13 1/8 $15 1/8
Fourth Quarter............................................ $12 5/8 $14 7/8
1996
First Quarter............................................. $9 1/2 $13 1/8
Second Quarter (through May 15, 1996)..................... $9 1/2 $13
</TABLE>

Certain additional information about the HSR Common Stock and the rights of
stockholders with respect thereto is set forth under "Description of HSR Capital
Stock" and "Comparison of Stockholder Rights."

TIDE WEST OIL COMPANY

Information about Tide West is contained in various documents that have
been filed by Tide West with the Commission and incorporated by reference into
this Joint Proxy Statement/Prospectus. Such information includes historical
financial statements, information about Tide West's properties and oil and gas
reserves and information about the nature of Tide West's business, its
management and the Tide West Common Stock. Reference should be made to such
documents for complete information about Tide West. For a list of such documents
and instructions as to how to obtain copies of such documents, see
"Incorporation of Documents by Reference."

PRICE RANGE OF TIDE WEST COMMON STOCK AND DIVIDENDS

Tide West Common Stock is quoted on Nasdaq under the symbol "TIDE." The
following table sets forth certain information as to the last sale prices per
share of Tide West Common Stock as quoted on Nasdaq. Tide West's fiscal year
ends on December 31 of each year. Tide West did not pay any dividends on the
Tide West Common Stock during any of the periods described below, and Tide West
does not presently intend to pay cash dividends on the Tide West Common Stock.
Furthermore, Tide West is currently restricted from paying

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cash dividends on the Tide West Common Stock under its existing bank credit
facility. On February 23, 1996, the last full trading day prior to the public
announcement of the signing of the Merger Agreement, the last sales price per
share of Tide West Common Stock, as quoted on Nasdaq, was $13.00. On May 15,
1996, the last full trading day for which quotations were available at the time
of printing of this Joint Proxy Statement/Prospectus, the last sales price per
share of Tide West Common Stock as quoted on Nasdaq, was $16.00. STOCKHOLDERS
ARE URGED TO OBTAIN CURRENT QUOTATIONS FOR TIDE WEST COMMON STOCK.

<TABLE>
<CAPTION>
TIDE WEST
COMMON STOCK
-------------
CALENDAR YEAR LOW HIGH
------------------------------------------------------------ ---- ----
<S> <C> <C>
1994
First Quarter............................................. $9 1/4 $12 3/4
Second Quarter............................................ $10 3/4 $12 1/2
Third Quarter............................................. $11 $15 1/2
Fourth Quarter............................................ $9 3/4 $13
1995
First Quarter............................................. $8 1/4 $10 5/8
Second Quarter............................................ $9 7/8 $11 3/4
Third Quarter............................................. $10 $11 1/2
Fourth Quarter............................................ $10 1/8 $14
1996
First Quarter............................................. $12 $15 1/4
Second Quarter (through May 15, 1996)..................... $14 1/2 $16 3/4
</TABLE>

Certain additional information about the Tide West Common Stock and the
rights of stockholders with respect thereto is set forth under "Description of
Tide West Capital Stock" and "Comparison of Stockholder Rights."

PRO FORMA INFORMATION FOR THE COMBINED COMPANY

Pro forma financial information showing the effect of the Merger and the
Second Basin Acquisition on the financial statements of HSR (in the case of
historical financial statements of HSR, as adjusted to reflect the Initial Basin
Acquisition) are contained in this Joint Proxy Statement/Prospectus. See "Index
to Unaudited Pro Forma Financial Statements" and "Index to Unaudited Pro Forma
Quarterly Financial Statements." The following is certain additional pro forma
information about HSR giving effect to the consummation of the Merger and the
Basin Acquisitions.

OIL AND GAS PROPERTIES

HSR is an independent oil and gas company engaged in the acquisition,
exploitation, development and exploration of oil and natural gas properties.
Although HSR and its predecessors have operated in various places throughout the
United States, HSR has recently concentrated most of its activities in the
Wattenberg Field area of the D-J Basin near Denver, Colorado.

71
<PAGE> 78

Growth Opportunities. Following the Merger and the Basin Acquisitions, HSR
will have a substantial inventory of "growth options" ranging from development
and infill opportunities to significant exploitation and exploration exposure.
On a pro forma basis, assuming consummation of the Merger and the Second Basin
Acquisition, HSR will have access to:

- Approximately 1.1 million gross undeveloped acres in seven producing
basins.

- Over 376 miles of 3-D seismic surveys, including active projects in five
separate areas (Southern Louisiana, Texas, Oklahoma, Colorado,
Montana/North Dakota).

- Over 750 proved development drilling locations in the D-J Basin, and
hundreds of additional potential locations.

- Approximately 800 potential infill sites in the Wattenberg Field area,
should infill drilling occur.

- Over 200 proved and probable exploitation opportunities in the
Mid-Continent region, with additional unbooked exploration potential.

- Ten existing project areas and rights to 58,000 gross acres in the
prolific salt dome region of the Gulf Coast with 60-80 current potential
drillsites.

Pro Forma Reserves. The following table provides information regarding
HSR's pro forma reserves as of December 31, 1995, assuming (a) consummation of
the Initial Basin Acquisition, (b) consummation of the Initial Basin Acquisition
and the Merger and (c) consummation of the Basin Acquisitions and the Merger.

<TABLE>
<CAPTION>
PRO FORMA PROVED RESERVES AS OF DECEMBER 31, 1995(1)
------------------------------------------------------------
WITH INITIAL WITH
WITH INITIAL BASIN ACQUISITION BASIN ACQUISITIONS
BASIN ACQUISITION AND MERGER(2) AND MERGER(2)
----------------- ----------------- ------------------
<S> <C> <C> <C>
Oil (MBbls)............................. 23,478 29,120 35,332
Natural gas (MMcf)...................... 339,752 540,578 651,498
Equivalent barrels (MBoe)............... 80,103 119,216 143,915
Pre-tax SEC 10 value (in thousands)..... $ 298,620 $ 479,890 $559,460
SEC 10 value (in thousands)............. $ 230,517 $ 369,334 $440,613
</TABLE>

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

(1) On a pro forma basis, HSR's proved developed reserves as of December 31,
1995, are 13,578 MBbls and 248,167 MMcf (with the Initial Basin
Acquisition), 19,001 MBbls and 420,407 MMcf (with the Initial Basin
Acquisition and the Merger) and 21,948 MBbls and 494,413 MMcf (with the
Basin Acquisitions and the Merger).

(2) Reserves attributable to the Merger reflect HSR's engineering estimate of
39.1 MMBoe, which estimate is lower than Tide West's engineering estimate.

WELLS AND ACREAGE

Pro Forma with and without Second Basin Acquisition. On a pro forma basis
(assuming consummation of the Merger), with and without the Second Basin
Acquisition, HSR's properties at March 31, 1996, include interests in 1,385
productive oil wells (1,132 net wells) and 1,204 productive gas wells (574 net
wells), approximately 65% of which are operated by HSR. Such properties also
include approximately 1.1 million total net mineral acres with the Second Basin
Acquisition and approximately 1.07 million total net mineral acres without the
Second Basin Acquisition.

72
<PAGE> 79

1996 Capital Expenditure Budget

HSR's capital expenditure budget for 1996 is anticipated to be
approximately $70 million with the Second Basin Acquisition and approximately
$63.5 million without the Second Basin Acquisition. This budget will be funded
primarily by internally-generated cash flow, bank borrowings, dispositions of
non-strategic assets and joint venture financings. The following table outlines
HSR's estimated capital expenditure budget for 1996 (assuming consummation of
the Merger) (a) with the Second Basin Acquisition, assuming HSR's anticipated
sale of a portion of the assets to be acquired in the Second Basin Acquisition
in a facility similar to the Chase Asset Monetization Arrangement, and, in the
alternative, (b) without the Second Basin Acquisition.

<TABLE>
<CAPTION>
PRO FORMA BUDGET FOR 1996
-------------------------------------------
WITH SECOND WITHOUT SECOND
BASIN ACQUISITION BASIN ACQUISITION
----------------- -----------------
BUDGETED BUDGETED
EXPENDITURES EXPENDITURES
----------------- -----------------
(IN THOUSANDS)
<S> <C> <C>
Tide West properties............................. $17,000 $17,000
D-J Basin........................................ 46,500 41,000
Louisiana........................................ 3,000 3,000
Other............................................ 3,500 2,500
----------------- -----------------
Total.................................. $70,000 $63,500
============ ============
</TABLE>

Management of HSR continually reevaluates capital expenditures in light of
market conditions, opportunities presented (including acquisition opportunities)
and other factors, and may increase or decrease capital spending, or reallocate
amounts between areas or projects, if deemed necessary or desirable, including
in the event the Merger and/or the Second Basin Acquisition is not consummated.

73
<PAGE> 80

CAPITALIZATION

The following table sets forth the capitalization of HSR and its
subsidiaries at December 31, 1995, and at March 31, 1996, on a pro forma basis
(assuming consummation of the Merger) as adjusted (a) with the Second Basin
Acquisition, assuming HSR's anticipated sale of a portion of the assets to be
acquired in the Second Basin Acquisition in a facility similar to the Chase
Asset Monetization Arrangement, and, in the alternative, (b) without the Second
Basin Acquisition:

<TABLE>
<CAPTION>
PRO FORMA CAPITALIZATION
AS OF DECEMBER 31, 1995
-----------------------------
WITH WITHOUT
SECOND BASIN SECOND BASIN
ACQUISITION ACQUISITION
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Long-term bank debt.......................................... $223,752 $193,771
Senior subordinated notes.................................... 74,537 74,537
Asset monetization debt...................................... 82,300 24,900
Stockholders' equity......................................... 191,271 191,271
-------- --------
Total capitalization............................... $571,860 $480,479
======== ========
</TABLE>

<TABLE>
<CAPTION>
PRO FORMA CAPITALIZATION
AS OF MARCH 31, 1996
-----------------------------
WITH WITHOUT
SECOND BASIN SECOND BASIN
ACQUISITION ACQUISITION
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Long-term bank debt.......................................... $239,376 $204,596
Senior subordinated notes.................................... 74,552 74,552
Asset monetization debt...................................... 76,300 23,100
Stockholders' equity......................................... 190,755 190,755
-------- --------
Total capitalization............................... $580,983 $493,003
======== ========
</TABLE>

74
<PAGE> 81

INDEX TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS

The following is a list of the unaudited pro forma financial statements
included in this Joint Proxy Statement/Prospectus as of and for the year ended
December 31, 1995. Other financial statements are included in this Joint Proxy
Statement/Prospectus and in various other documents that are incorporated into
this Joint Proxy Statement/Prospectus by reference. See "Incorporation of
Documents by Reference."

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF HSR

HSR, TIDE WEST, INITIAL BASIN ACQUISITION, SECOND BASIN ACQUISITION AND PRO
FORMA ADJUSTMENTS

<TABLE>
<S> <C>
Pro Forma Balance Sheet with Second Basin Acquisition as of December 31, 1995... 76
Pro Forma Statement of Operations with Second Basin Acquisition for the Year
Ended December 31, 1995....................................................... 77
Notes to Pro Forma Financial Statements......................................... 78
</TABLE>

HSR, TIDE WEST, INITIAL BASIN ACQUISITION AND PRO FORMA ADJUSTMENTS

<TABLE>
<S> <C>
Pro Forma Balance Sheet without Second Basin Acquisition as of December 31,
1995.......................................................................... 83
Pro Forma Statement of Operations without Second Basin Acquisition for the Year
Ended December 31, 1995....................................................... 84
Notes to Pro Forma Financial Statements......................................... 85
</TABLE>

HSR, INITIAL BASIN ACQUISITION AND PRO FORMA ADJUSTMENTS

<TABLE>
<S> <C>
Pro Forma Balance Sheet with Initial Basin Acquisition as of December 31,
1995.......................................................................... 90
Pro Forma Statement of Operations with Initial Basin Acquisition for the Year
Ended December 31, 1995....................................................... 91
Notes to Pro Forma Financial Statements......................................... 92
</TABLE>

PRO FORMA FINANCIAL STATEMENTS WITH SECOND BASIN ACQUISITION

The following unaudited pro forma condensed consolidated balance sheet as
of December 31, 1995, and pro forma condensed consolidated statement of
operations for the year then ended adjust the historical financial information
of HSR and Tide West to reflect the consummation of the Merger and the Basin
Acquisitions. The pro forma balance sheet and statement of operations were
prepared as if the Merger and Basin Acquisitions were consummated on December
31, 1995 and January 1, 1996, respectively. The pro forma adjustments are based
on estimates and assumptions explained in further detail in the accompanying
notes. With respect to the Initial Basin Acquisition, HSR has entered into the
Chase Asset Monetization Arrangement pursuant to which it sold at its cost
certain of the interests that it had acquired from Basin (see "Information About
the Combining Companies -- HS Resources, Inc. -- Financing"). The interests sold
represent primarily proved producing and proved non-producing wells, which HSR
sold for cash and a retained production payment. HSR will have no obligation to
repay the approximately $23.1 million indebtedness assumed in connection with
the Initial Basin Acquisition and approximately $58.9 million indebtedness to be
assumed in connection with the Second Basin Acquisition by WRL in connection
with its purchase from HSR of the WRL Assets. Such indebtedness is secured only
by the WRL Assets. The financial statements of WRL are required to be
consolidated with the financial statements of HSR. Accordingly the WRL Assets
and the Asset Monetization Debt must be included in the consolidated balance
sheet of HSR and the operations relating thereto must be reflected in HSR's
consolidated statement of operations.

The unaudited pro forma financial statements should be read in conjunction
with the related historical financial statements and related notes. The pro
forma information presented is not necessarily indicative of the financial
position or results that would have actually occurred had the Merger and Basin
Acquisitions been consummated on the dates indicated or which may occur in the
future.

75
<PAGE> 82

HS RESOURCES, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
WITH SECOND BASIN ACQUISITION
DECEMBER 31, 1995

<TABLE>
<CAPTION>
(HISTORICAL)
--------------------------- PRO FORMA UNAUDITED
HSR TIDE WEST ADJUSTMENTS PRO FORMA
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS...................... $ 11,085,645 $ 24,708,000 $ (1,244,000)D $ 34,549,645
------------ ------------ ------------ ------------
OIL AND GAS PROPERTIES, at cost,
using the full cost method:
Undeveloped acreage............... 26,778,702 -- 26,749,747A 53,528,449
Costs subject to depreciation,
depletion and amortization..... 341,382,375 149,734,000 220,333,700A 711,450,075
Less -- accumulated
depreciation, depletion and
amortization................. (89,350,067) (32,184,000) 32,184,000F (89,350,067)
------------ ------------ ------------ ------------
Net oil and gas properties..... 278,811,010 117,550,000 279,267,447 675,628,457
------------ ------------ ------------ ------------
Gas gathering and other, net...... 12,192,610 2,139,000 287,300A 14,618,910
------------ ------------ ------------ ------------
TOTAL ASSETS........................ $302,089,265 $144,397,000 $278,310,747 $724,797,012
============ ============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES................. $ 27,200,319 $ 20,338,000 $ 7,396,657A $ 54,934,976
------------ ------------ ------------ ------------
ACCRUED AD VALOREM
TAXES............................. 6,574,405 -- 2,412,153A 8,986,558
MINORITY INTEREST................... -- 117,000 -- 117,000
LONG-TERM BANK DEBT, net of current
portion........................... 51,000,000 40,800,000 131,951,520A/D 223,751,520
ASSET MONETIZATION DEBT............. -- -- 82,300,000A 82,300,000
9 7/8% SENIOR SUBORDINATED NOTES,
net of unamortized discount....... 74,536,875 -- -- 74,536,875
DEFERRED INCOME TAXES............... 23,603,540 8,636,000 56,659,361B 88,898,901
------------ ------------ ------------ ------------
STOCKHOLDERS' EQUITY................ 119,174,126 74,506,000 (2,408,944)C 191,271,182
------------ ------------ ------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY............................ $302,089,265 $144,397,000 $278,310,747 $724,797,012
============ ============ ============ ============
</TABLE>

The accompanying Notes are an integral part of these Statements.

76
<PAGE> 83

HS RESOURCES, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
WITH SECOND BASIN ACQUISITION
FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
(HISTORICAL)
------------------------- PRO FORMA UNAUDITED
HSR TIDE WEST ADJUSTMENTS PRO FORMA
---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales................ $53,394,029 $36,508,000 $25,277,214J $115,179,243
Other gas revenues............... 1,782,349 -- 2,051,944E 3,834,293
Trading and transportation....... -- 82,927,000 -- 82,927,000
Interest and other income........ 163,510 1,266,000 37,125K 1,466,635
----------- ------------ ------------ ------------
Total revenues........... 55,339,888 120,701,000 27,366,283 203,407,171
----------- ------------ ------------ ------------
EXPENSES:
Production taxes................. 4,050,483 2,517,000 1,929,195J 8,496,678
Lease operating.................. 9,935,809 7,747,000 4,259,531J 21,942,340
Depreciation, depletion and
amortization.................. 26,608,885 11,365,000 (11,365,000)F 61,302,536
34,693,651F
General and administrative....... 4,075,581 4,557,000 (1,060,000)G 7,572,581
Interest......................... 10,218,555 3,186,000 13,999,191H 27,403,746
Trading and transportation....... 80,642,000 80,642,000
----------- ------------ ------------ ------------
Total expenses........... 54,889,313 110,014,000 42,456,568 207,359,881
----------- ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME
TAXES............................ 450,575 10,687,000 (15,090,285) (3,952,710)
PROVISION (BENEFIT) FOR INCOME
TAXES............................ 176,419 4,016,000 (5,698,402)I (1,505,983)
----------- ------------ ------------ ------------
NET INCOME (LOSS).................. $ 274,156 $ 6,671,000 $(9,391,883) $ (2,446,727)
=========== ============ ============ ============
EARNINGS (LOSS) PER SHARE:
Common and common equivalent
shares........................ $ 0.02 $ 0.67 $ (0.14)
=========== ============ ============
Common and common equivalent
shares -- assuming full
dilution...................... $ 0.02 $ 0.65 $ (0.14)
=========== ============ ============
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING:
Common and common equivalent
shares........................ 11,440,000 9,897,000 6,161,312C 17,601,312
=========== ============ ============ ============
Common and common equivalent
shares -- assuming full
dilution...................... 11,450,000 10,247,000 6,161,312C 17,611,312
=========== ============ ============ ============
</TABLE>

The accompanying Notes are an integral part of these Statements.

77
<PAGE> 84

HS RESOURCES, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS WITH SECOND BASIN ACQUISITION

(A) Record cost of the oil and gas properties, production tax liability
assumed, additional bank debt incurred by HSR in connection with the Basin
Acquisitions and Merger and the Asset Monetization Debt, as follows:

<TABLE>
<CAPTION>
INITIAL SECOND TOTAL
BASIN BASIN TIDE WEST PRO FORMA
ACQUISITION ACQUISITION MERGER ADJUSTMENTS
----------- ----------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Acquisition Costs
Purchase price including liabilities
assumed........................... $ 38,000 $ 87,500 $ 229,913(*) $ 355,413
Transaction costs.................... 520 1,480 8,000 10,000
-------- -------- --------- ---------
38,520 88,980 237,913 365,413
Deferred tax gross-up (see note B)... -- -- 65,295 65,295
Transaction costs charged to
stockholders' equity.............. -- -- (8,000) (8,000)
Less: Tide West assets
(historical)...................... -- -- (144,397) (144,397)
-------- -------- --------- ---------
Total pro forma adjustment........... $ 38,520 $ 88,980 $ 150,811 $ 278,311
======== ======== ========= =========
Allocation of Acquisition Costs
Current assets....................... $ -- $ -- $ (1,244) $ (1,244)
Oil and gas properties -- undeveloped
properties........................ 1,500 3,500 21,750 26,750
Oil and gas properties -- developed
properties........................ 37,020 85,480 97,834 220,334
Accumulated DD&A -- Tide West
historical........................ -- -- 32,184 32,184
Gas gathering and other, net......... -- -- 287 287
-------- -------- --------- ---------
Total pro forma adjustment........... $ 38,520 $ 88,980 $ 150,811 $ 278,311
======== ======== ========= =========
Acquisition Funding and Liabilities
Assumed
Current liabilities.................. $ -- $ -- $ 7,397 $ 7,397
Accrued ad valorem taxes............. 812 1,600 -- 2,412
Long term bank debt.................. 12,808 29,980 89,164 131,952
Asset monetization debt.............. 24,900 57,400 -- 82,300
Deferred income taxes................ -- -- 56,659 56,659
Stockholders' equity -- common
stock............................. -- -- 6 6
Stockholders' equity -- net paid in
capital........................... -- -- (2,415) (2,415)
-------- -------- --------- ---------
Total pro forma adjustment........... $ 38,520 $ 88,980 $ 150,811 $ 278,311
======== ======== ========= =========
</TABLE>

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

(*) The purchase price including liabilities assumed for the Merger is comprised
of (i) cash consideration of $84,907,673, assuming no dissenters, (ii) HSR
Common Stock value of $80,097,056 for the issuance of 6,161,312 shares
valued at $13.00 per share and (iii) assumed Tide West liabilities of
$64,908,000.

(B) Record additional deferred taxes resulting from the Merger. The gross
up of the property costs and deferred tax liability are required due to the
difference between the purchase price of the properties acquired and the tax
basis of those properties.

78
<PAGE> 85

(C) Adjustment to eliminate the historical cost of Tide West's
Stockholders' Equity of $74,506,000 and to record the issuance of 6,161,312
additional HSR shares valued at $13.00 per share less related transaction costs
of $8,000,000.

(D) Record reduction in long-term debt repaid with Tide West cash.

(E) Record estimated income from the monetization of Section 29 tax credits
generated from the assets acquired in the Basin Acquisitions. The annual
estimated qualifying production is approximately 869,000 Mcf for the Initial
Basin Acquisition and 3,856,000 Mcf for the Second Basin Acquisition. No tax
credits are anticipated from Tide West production. The adjustment is based on
the monetization of the Section 29 tax credits available from the Basin
Acquisitions pursuant to arrangements the Company has with two financial
institutions under the same terms as currently apply to the monetization of the
Company's other Section 29 tax credits. Tax credit income is accrued monthly
based on production sold. Cash payments are made quarterly as stipulated in the
applicable agreement.

(F) Record the elimination of Tide West's accumulated depreciation,
depletion and amortization ("DD&A") and record consolidated DD&A expense on the
assets acquired. Pro forma DD&A expense on proved oil and gas properties is
computed by combining HSR's net unamortized costs of proved properties plus the
portion of the purchase price and transaction costs allocated to proved
properties and using the units-of-production amortization method based on
estimates of total pro forma proved reserves. The combined DD&A rate per Boe for
the assets acquired is $5.70. The depreciation expense recorded for the Tide
West corporate fixed assets is $332,000.

(G) General and administrative expenses have been adjusted to reflect
savings in salary and bonus expense that would have occurred if the Merger had
taken place at the beginning of the period. The adjustment reflects the salary
and bonuses paid to three senior executives of Tide West who will be terminated
effective upon the closing of the Merger and who will not be replaced.

(H) Record elimination of Tide West interest expense and record interest
expense related to debt necessary to finance the Merger and Basin Acquisitions,
using HSR's average LIBOR rate during 1995 of 7.32%. Interest was calculated on
new debt of approximately $218,000,000 which is composed of $37,800,000 for the
Initial Basin Acquisition, $87,300,000 for the Second Basin Acquisition and
$92,900,000 for the Merger. Interest was capitalized on undeveloped property
costs as appropriate.

(I) Record the tax effect of the acquisition assuming a combined federal
and state effective tax rate of 38.1%.

(J) Record revenues and expenses attributable to the Basin Acquisitions.

(K) Adjust for Tide West successful efforts expenses capitalized under full
cost accounting.

SUPPLEMENTAL OIL AND GAS RESERVE INFORMATION (UNAUDITED)

Supplemental oil and gas reserve information related to the Pro Forma
Financial Statements With Second Basin Acquisition is reported in compliance
with FASB Statement No. 69, "Disclosures about Oil and Gas Producing
Activities." Net proved oil and gas reserves and the discounted future net cash
flows related to those reserves were estimated by HSR's petroleum engineers as
of January 1, 1996, the effective date of the acquisition. Information presented
in that report was the basis for the net proved oil and gas reserve and
standardized measure disclosures presented below. Since reserve evaluations for
other periods had not been prepared, it was necessary to make certain
assumptions and adjustments to prepare the following disclosures. However, HSR
believes that the disclosures presented are adequate and are not misleading.

79
<PAGE> 86

The following tables set forth information for the year ended December 31,
1995, with respect to changes in the proved reserves. Quantities of natural gas
are expressed in this report in terms of thousand cubic feet (Mcf). Oil is
quantified in terms of barrels (Bbls).

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
-------------------
OIL GAS
BBLS MCF
------ -------
(IN THOUSANDS)
<S> <C> <C>
Total proved reserves:
Beginning of year........................................................ 31,956 592,975
Production............................................................... (2,807) (49,858)
Consolidation of limited partnership..................................... 419 15,964
Revisions of previous estimates.......................................... (1,965) (16,604)
Extensions, discoveries and other additions.............................. 2,012 51,804
Purchases of reserves in place........................................... 5,828 59,103
Sale of reserves in place................................................ (111) (1,886)
------ -------
End of year.............................................................. 35,332 651,498
====== =======
</TABLE>

At December 31, 1995, proved developed reserves were estimated to be 21,948
MBbls and 494,413 MMcf.

Information with respect to the estimated discounted future net cash flows
for the Pro Forma Financial Statements With Second Basin Acquisition for the
year ended December 31, 1995 is as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
--------------
(IN THOUSANDS)
<S> <C>
Future cash inflows............................................................ $1,781,412
Future production costs........................................................ (497,382)
Future development costs....................................................... (194,326)
----------
Future pre-tax cash flows...................................................... 1,089,704
Future income tax expense...................................................... (231,488)
----------
After-tax future net cash flows................................................ 858,216
10% annual discount............................................................ (417,603)
----------
Discounted future net cash flows............................................... $ 440,613
==========
</TABLE>

As of December 31, 1995 the oil and gas prices used in the determination of
future cash flows were $18.68 and $1.72 per Bbl and per Mcf, respectively.

For standardized measure purposes, future income taxes are estimated using
the "year-by-year" method. However, for ceiling test purposes, future income
taxes are estimated using the "short-cut" method.

80
<PAGE> 87

Principal changes for the Pro Forma Financial Statements With Second Basin
Acquisition estimated discounted future net cash flows for the year ended
December 31, 1995 are as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
-----------------
(IN THOUSANDS)
<S> <C>
Beginning of year............................................................ $ 400,137
Oil and gas sales, net of production costs................................. (83,003)
Sales of reserves in place, net............................................ (1,850)
Net change in prices and production costs.................................. 29,549
Extensions and discoveries less related costs.............................. 61,128
Change in future development costs......................................... (19,037)
Development costs incurred during the year that reduce future development
costs................................................................... 33,402
Revision of previous quantity estimates.................................... (38,555)
Purchases of reserves in place, net........................................ 70,926
Accretion of discount...................................................... 50,184
Net change in income taxes................................................. (13,051)
Changes in production rates and other...................................... (49,217)
--------
End of year.................................................................. $ 440,613
========
</TABLE>

81
<PAGE> 88

PRO FORMA FINANCIAL STATEMENTS WITHOUT
SECOND BASIN ACQUISITION

The following unaudited pro forma condensed consolidated balance sheet as
of December 31, 1995, and pro forma condensed consolidated statement of
operations for the year then ended adjust the historical financial information
of HSR and Tide West to reflect the Merger and the Initial Basin Acquisition.
The pro forma balance sheet and statement of operations were prepared as if the
Merger and Initial Basin Acquisition were consummated on December 31, 1995 and
January 1, 1995, respectively. The pro forma adjustments are based on estimates
and assumptions explained in further detail in the accompanying notes. With
respect to the Initial Basin Acquisition, HSR has entered into the Chase Asset
Monetization Arrangement pursuant to which it sold at its cost certain of the
interest that it had acquired from Basin (see "Information About the Combining
Companies -- HS Resources, Inc. -- Financing"). The interests sold represent
primarily proved producing and proved non-producing wells, which HSR sold for
cash and a retained production payment. HSR will have no obligation to repay the
approximately $23.1 million indebtedness assumed in connection with the Initial
Basin Acquisition by WRL in connection with its purchase from HSR of that
portion of the WRL Assets relating to the Initial Basin Acquisition. Such
indebtedness is secured only by assets so acquired by WRL. The financial
statements of HSR are required to be consolidated with the financial statements
of WRL. Accordingly, such assets and such indebtedness must be included in the
consolidated balance sheet of HSR and the operations relating thereto must be
reflected in HSR's consolidated statement of operations.

The unaudited pro forma financial statements should be read in conjunction
with the related historical financial statements and related notes. The pro
forma information presented is not necessarily indicative of the financial
position or results that would have actually occurred had the Merger and Initial
Basin Acquisition been consummated on the dates indicated or which may occur in
the future.

82
<PAGE> 89

HS RESOURCES, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
WITHOUT SECOND BASIN ACQUISITION
DECEMBER 31, 1995

<TABLE>
<CAPTION>
(HISTORICAL)
--------------------------- PRO FORMA
HSR TIDE WEST ADJUSTMENTS PRO FORMA
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS....................... $ 11,085,645 $ 24,708,000 $ (1,244,000)D $ 34,549,645
------------ ------------ ------------ ------------
OIL AND GAS PROPERTIES, at cost,
using the full cost method:
Undeveloped acreage................ 26,778,702 -- 23,249,747A 50,028,449
Costs subject to depreciation,
depletion and amortization...... 341,382,375 149,734,000 134,853,700A 625,970,075
Less -- accumulated
depreciation, depletion and
amortization.................. (89,350,067) (32,184,000) 32,184,000F (89,350,067)
------------ ------------ ------------ ------------
Net oil and gas properties...... 278,811,010 117,550,000 190,287,447 586,648,457
------------ ------------ ------------ ------------
Gas gathering and other, net....... 12,192,610 2,139,000 287,300A 14,618,910
------------ ------------ ------------ ------------
TOTAL ASSETS......................... $302,089,265 $144,397,000 $189,330,747 $635,817,012
============ ============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES.................. $ 27,200,319 $ 20,338,000 $ 7,396,657A $ 54,934,976
------------ ------------ ------------ ------------
ACCRUED AD VALOREM TAXES............. 6,574,405 -- 812,326A 7,386,731
MINORITY INTEREST.................... -- 117,000 -- 117,000
LONG-TERM BANK DEBT, net of current
portion............................ 51,000,000 40,800,000 101,971,347D/A 193,771,347
ASSET MONETIZATION DEBT.............. -- -- 24,900,000A 24,900,000
9 7/8% SENIOR SUBORDINATED NOTES, net
of unamortized discount............ 74,536,875 -- -- 74,536,875
DEFERRED INCOME TAXES................ 23,603,540 8,636,000 56,659,361B 88,898,901
------------ ------------ ------------ ------------
STOCKHOLDERS' EQUITY................. 119,174,126 74,506,000 (2,408,944)C 191,271,182
------------ ------------ ------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY............................. $302,089,265 $144,397,000 $189,330,747 $635,817,012
============ ============ ============ ============
</TABLE>

The accompanying Notes are an integral part of these Statements.

83
<PAGE> 90

HS RESOURCES, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
WITHOUT SECOND BASIN ACQUISITION
FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
(HISTORICAL)
------------------------- PRO FORMA
HSR TIDE WEST ADJUSTMENTS PRO FORMA
---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales................ $53,394,029 $36,508,000 $ 8,656,214J $ 98,558,243
Other gas revenues............... 1,782,349 -- 377,304E 2,159,653
Trading and transportation....... -- 82,927,000 -- 82,927,000
Interest and other income........ 163,510 1,266,000 37,125K 1,466,635
----------- ------------ ------------ ------------
Total revenues........... 55,339,888 120,701,000 9,070,643 185,111,531
----------- ------------ ------------ ------------
EXPENSES:
Production taxes................. 4,050,483 2,517,000 639,195J 7,206,678
Lease operating.................. 9,935,809 7,747,000 1,907,531J 19,590,340
Depreciation, depletion and
amortization.................. 26,608,885 11,365,000 (11,365,000)F 52,922,791
26,313,906F
General and administrative....... 4,075,581 4,557,000 (1,060,000)G 7,572,581
Interest......................... 10,218,555 3,186,000 7,859,162H 21,263,717
Trading and transportation....... -- 80,642,000 -- 80,642,000
----------- ------------ ------------ ------------
Total expenses........... 54,889,313 110,014,000 24,294,794 189,198,107
----------- ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME
TAXES............................ 450,575 10,687,000 (15,224,151) (4,086,576)
PROVISION (BENEFIT) FOR INCOME
TAXES............................ 176,419 4,016,000 (5,749,405)I (1,556,986)
----------- ------------ ------------ ------------
NET INCOME (LOSS).................. $ 274,156 $ 6,671,000 $(9,474,746) $ (2,529,590)
=========== ============ ============ ============
EARNINGS (LOSS) PER SHARE:
Common and common equivalent
shares........................ $ 0.02 $ 0.67 $ (0.14)
=========== ============ ============
Common and common equivalent
shares -- assuming full
dilution...................... $ 0.02 $ 0.65 $ (0.14)
=========== ============ ============
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING:
Common and common equivalent
shares........................ 11,440,000 9,897,000 6,161,312C 17,601,312
=========== ============ ============ ============
Common and common equivalent
shares -- assuming full
dilution...................... 11,450,000 10,247,000 6,161,312C 17,611,312
=========== ============ ============ ============
</TABLE>

The accompanying Notes are an integral part of these Statements.

84
<PAGE> 91

HS RESOURCES, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS WITHOUT
SECOND BASIN ACQUISITION

(A) Record cost of the oil and gas properties, production tax liability
assumed, additional bank debt incurred by HSR in connection with the Initial
Basin Acquisition and Merger and the Asset Monetization Debt, as follows:

<TABLE>
<CAPTION>
INITIAL TOTAL PRO
BASIN TIDE WEST FORMA
ACQUISITION MERGER ADJUSTMENTS
----------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Acquisition Costs
Purchase price including liabilities assumed.... $ 38,000 $ 229,913(*) $ 267,913
Transaction costs............................... 520 8,000 8,520
-------- --------- ---------
Net Purchase Price........................... 38,520 237,913 276,433
Deferred tax gross-up (see note B).............. -- 65,295 65,295
Transaction costs charged to stockholders'
equity....................................... -- (8,000) (8,000)
Less: Tide West assets (historical)............. -- (144,397) (144,397)
-------- --------- ---------
Total pro forma adjustment...................... $ 38,520 $ 150,811 $ 189,331
======== ========= =========
Allocation of Acquisition Costs
Current assets.................................. $ -- $ (1,244) $ (1,244)
Oil and gas properties -- undeveloped
properties................................... 1,500 21,750 23,250
Oil and gas properties -- developed
properties................................... 37,020 97,834 134,854
Accumulated DD&A -- Tide West historical........ -- 32,184 32,184
Gas gathering and other, net.................... -- 287 287
-------- --------- ---------
Total pro forma adjustment...................... $ 38,520 $ 150,811 $ 189,331
======== ========= =========
Acquisition Funding and Liabilities Assumed
Current liabilities............................. $ -- $ 7,397 $ 7,397
Accrued ad valorem taxes........................ 812 -- 812
Long term bank debt............................. 12,808 89,164 101,972
Asset monetization debt......................... 24,900 -- 24,900
Deferred income taxes........................... -- 56,659 56,659
Stockholders' equity -- common stock............ -- 6 6
Stockholders' equity -- net paid in capital..... -- (2,415) (2,415)
-------- --------- ---------
Total pro forma adjustment...................... $ 38,520 $ 150,811 $ 189,331
======== ========= =========
</TABLE>

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

(D) Record reduction in long-term debt repaid with Tide West cash.

(E) Record estimated income from the monetization of Section 29 tax credits
generated from the assets acquired in the Basin Acquisition. The annual
estimated qualifying production is approximately 869,000 Mcf for the Initial
Basin Acquisition. No tax credits are anticipated from Tide West production. The
adjustment is based on the monetization of the Section 29 tax credits available
from the Initial Basin Acquisition pursuant to arrangements the Company has with
two financial institutions under the same terms as currently apply to

85
<PAGE> 92

the monetization of the Company's other Section 29 tax credits. Tax credit
income is accrued monthly based on production sold. Cash payments are made
quarterly as stipulated in the applicable agreement.

(F) Record the elimination of Tide West's accumulated depreciation,
depletion and amortization (DD&A) and record consolidated DD&A expense on the
assets acquired. Pro forma DD&A expense on proved oil and gas properties is
computed by combining HSR's net unamortized costs of proved properties plus the
portion of the purchase price and transaction costs allocated to proved
properties and using the units-of-production amortization method based on
estimates of total pro forma proved reserves. The combined DD&A rate per Boe for
the assets acquired is $5.91. The depreciation expense recorded for the Tide
West fixed assets is $332,000.

(H) Record elimination of Tide West interest expense and record interest
expense related to debt necessary to finance the Merger and Initial Basin
Acquisition, using HSR's average LIBOR rate during 1995 of 7.32%. Interest was
calculated on new debt of approximately $130,700,000 which was composed of
$37,800,000 for the Initial Basin Acquisition and $92,900,000 for the Merger.
Interest was capitalized on undeveloped property costs as appropriate.

(I) Record the tax effect of the acquisition assuming a combined federal
and state effective tax rate of 38.1%.

(J) Record revenues and expenses attributable to the Initial Basin
Acquisition.

(K) Adjust for Tide West successful efforts expenses capitalized under full
cost accounting.

86
<PAGE> 93

SUPPLEMENTAL OIL AND GAS RESERVE INFORMATION (UNAUDITED)

Supplemental oil and gas reserve information related to the Pro Forma
Financial Statements Without Second Basin Acquisition is reported in compliance
with FASB Statement No. 69, "Disclosures about Oil and Gas Producing
Activities." Net proved oil and gas reserves and the discounted future net cash
flows related to those reserves were estimated by HSR's petroleum engineers as
of January 1, 1996, the effective date of the acquisition. Information presented
in that report was the basis for the net proved oil and gas reserve and
standardized measure disclosures presented below. Since reserve evaluations for
other periods had not been prepared, it was necessary to make certain
assumptions and adjustments to prepare the following disclosures. However, HSR
believes that the disclosures presented are adequate and are not misleading.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
------------------
OIL GAS
BBLS MCF
------ -------
(IN THOUSANDS)
<S> <C> <C>
Total proved reserves:
Beginning of year......................................................... 25,363 474,556
Production................................................................ (2,426) (42,359)
Consolidation of limited partnership...................................... 419 15,964
Revisions of previous estimates........................................... (1,965) (16,604)
Extensions, discoveries and other additions............................... 2,012 51,804
Purchases of reserves in place............................................ 5,828 59,103
Sale of reserves in place................................................. (111) (1,886)
------ -------
End of year............................................................... 29,120 540,578
====== =======
</TABLE>

At December 31, 1995, proved developed reserves were estimated to be 19,001
MBbls and 420,407 MMcf.

Information with respect to the estimated discounted future net cash flows
for the Pro Forma Financial Statements Without Second Basin Acquisition for the
year ended December 31, 1995 is as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
--------------
(IN THOUSANDS)
<S> <C>
Future cash inflows.................................................... $1,470,305
Future production costs................................................ (409,644)
Future development costs............................................... (140,989)
----------
Future pre-tax cash flows.............................................. 919,672
Future income tax expense.............................................. (211,872)
----------
After-tax future net cash flows........................................ 707,800
10% annual discount.................................................... (338,466)
----------
Discounted future net cash flows....................................... $ 369,334
==========
</TABLE>

As of December 31, 1995 the oil and gas prices used in the determination of
future cash flows were $18.60 and $1.72 per Bbl and Mcf, respectively.

87
<PAGE> 94

Principal changes for the Pro Forma Financial Statements Without Second
Basin Acquisition estimated discounted future net cash flows for the year ended
December 31, 1995 are as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
--------------
(IN THOUSANDS)
<S> <C>
Beginning of year...................................................... $327,478
Oil and gas sales, net of production costs........................... (70,023)
Sales of reserves in place, net...................................... (1,850)
Net change in prices and production costs............................ 15,383
Extensions and discoveries less related costs........................ 61,128
Change in future development costs................................... (19,037)
Development costs incurred during the year that reduce future
development costs................................................. 33,402
Revision of previous quantity estimates.............................. (38,555)
Purchases of reserves in place, net.................................. 70,926
Accretion of discount................................................ 41,452
Net change in income taxes........................................... (18,840)
Changes in production rates and other................................ (32,130)
----------
End of year............................................................ $369,334
==========
</TABLE>

88
<PAGE> 95

PRO FORMA FINANCIAL STATEMENTS
WITH INITIAL BASIN ACQUISITION

The following unaudited pro forma condensed consolidated balance sheet as
of December 31, 1995, and pro forma condensed consolidated statement of
operations for the year then ended adjust the historical financial information
of HSR to reflect the Initial Basin Acquisition. The pro forma balance sheet and
statement of operations were prepared as if the Initial Basin Acquisition was
consummated on December 31, 1995 and January 1, 1995, respectively. The pro
forma adjustments are based on estimates and assumptions explained in further
detail in the accompanying notes. With respect to the Initial Basin Acquisition,
HSR has entered into the Chase Asset Monetization Arrangement pursuant to which
it sold at its cost certain of the interests that it had acquired from Basin
(see "Information About the Combining Companies -- HS Resources,
Inc. -- Financing"). The interests sold represent primarily proved producing and
proved non-producing wells, which HSR sold for cash and a retained production
payment. HSR will have no obligation to repay the approximately $23.1 million
indebtedness assumed in connection with the Initial Basin Acquisition by WRL in
connection with its purchase from HSR of that portion of the WRL Assets relating
to the Initial Basin Acquisition. Such indebtedness is secured only by assets so
acquired by WRL. The financial statements of HSR are required to be consolidated
with the financial statements of WRL. Accordingly, such assets and such
indebtedness must be included in the consolidated balance sheet of HSR, and the
operations relating thereto must be reflected in HSR's consolidated statement of
operations.

The unaudited pro forma financial statements should be read in conjunction
with the related historical financial statements and related notes. The pro
forma information presented is not necessarily indicative of the financial
position or results that would have actually occurred had the Initial Basin
Acquisition been consummated on the dates indicated or which may occur in the
future.

89
<PAGE> 96

HS RESOURCES, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
WITH INITIAL BASIN ACQUISITION
DECEMBER 31, 1995

<TABLE>
<CAPTION>
(HISTORICAL)
------------ PRO FORMA
HSR ADJUSTMENTS PRO FORMA
------------ ----------- ------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS..................................... $ 11,085,645 $ -- $ 11,085,645
------------ ----------- ------------
OIL AND GAS PROPERTIES, at cost, using the full
cost method:
Undeveloped acreage.............................. 26,778,702 1,500,000A 28,278,702
Costs subject to depreciation, depletion and
amortization.................................. 341,382,375 37,020,000A 378,402,375
Less -- accumulated depreciation, depletion
and amortization............................ (89,350,067) -- (89,350,067)
------------ ----------- ------------
Net oil and gas properties.................... 278,811,010 38,520,000 317,331,010
------------ ----------- ------------
Gas gathering and other, net..................... 12,192,610 -- 12,192,610
------------ ----------- ------------
TOTAL ASSETS....................................... $302,089,265 $38,520,000 $340,609,265
============ =========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES................................ $ 27,200,319 $ -- $ 27,200,319
------------ ----------- ------------
ACCRUED AD VALOREM TAXES........................... 6,574,405 812,326A 7,386,731
MINORITY INTEREST..................................
LONG-TERM BANK DEBT, net of current portion........ 51,000,000 12,807,674A 63,807,674
ASSET MONETIZATION DEBT............................ -- 24,900,000A 24,900,000
9 7/8% SENIOR SUBORDINATED NOTES, net of
unamortized discount............................. 74,536,875 -- 74,536,875
DEFERRED INCOME TAXES.............................. 23,603,540 -- 23,603,540
------------ ----------- ------------
STOCKHOLDERS' EQUITY............................... 119,174,126 -- 119,174,126
------------ ----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY......... $302,089,265 $38,520,000 $340,609,265
============ =========== ============
</TABLE>

The accompanying Notes are an integral part of these Statements.

90
<PAGE> 97

HS RESOURCES, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
WITH INITIAL BASIN ACQUISITION
FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
HISTORICAL
---------- PRO FORMA
HSR ADJUSTMENTS PRO FORMA
---------- ----------- -----------
<S> <C> <C> <C>
REVENUES:
Oil and gas sales.................................. $53,394,029 $ 8,656,214E $62,050,243
Other gas revenues................................. 1,782,349 377,304B 2,159,653
Interest and other income.......................... 163,510 -- 163,510
----------- -------- -----------
Total revenues............................. 55,339,888 9,033,518 64,373,406
----------- -------- -----------
EXPENSES:
Production taxes................................... 4,050,483 639,195E 4,689,678
Lease operating.................................... 9,935,809 1,907,531E 11,843,340
Depreciation, depletion and amortization........... 26,608,885 3,916,101F 30,524,986
General and administrative......................... 4,075,581 -- 4,075,581
Interest........................................... 10,218,555 2,650,402C 12,868,957
----------- -------- -----------
Total expenses............................. 54,889,313 9,113,229 64,002,542
----------- -------- -----------
INCOME (LOSS) BEFORE INCOME TAXES.................... 450,575 (79,711) 370,864
PROVISION (BENEFIT) FOR INCOME TAXES................. 176,419 (35,120)D 141,299
----------- -------- -----------
NET INCOME (LOSS).................................... $ 274,156 $ (44,591) $ 229,565
=========== ======== ===========
EARNINGS (LOSS) PER SHARE:
Common and common equivalent shares................ $ 0.02 $ 0.02
=========== ===========
Common and common equivalent shares -- assuming
full dilution................................... $ 0.02 $ 0.02
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Common and common equivalent shares................ 11,440,000 -- 11,440,000
=========== ======== ===========
Common and common equivalent shares -- assuming
full dilution................................... 11,450,000 -- 11,450,000
=========== ======== ===========
</TABLE>

The accompanying Notes are an integral part of these Statements.

91
<PAGE> 98

HS RESOURCES, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS WITH
INITIAL BASIN ACQUISITION

(A) Record cost of the oil and gas properties, production tax liability
assumed, additional bank debt incurred by HSR in connection with the Initial
Basin Acquisition and the Asset Monetization Debt, as follows:

<TABLE>
<CAPTION>
TOTAL
PRO FORMA
ADJUSTMENTS
--------------
(IN THOUSANDS)
<S> <C>
Acquisition Costs
Purchase price including liabilities assumed......................... $ 38,000
Transaction costs.................................................... 520
--------
Purchase price.................................................... $ 38,520
--------
Allocation of Acquisition Costs
Oil and gas properties -- undeveloped properties..................... $ 1,500
Oil and gas properties -- developed properties....................... 37,020
--------
Total pro forma adjustment........................................... $ 38,520
========
Acquisition Funding and Liabilities Assumed
Accrued ad valorem taxes............................................. $ 812
Long-term bank debt.................................................. 12,808
Asset monetization debt.............................................. 24,900
--------
Total pro forma adjustment........................................... $ 38,520
========
</TABLE>

(B) Record estimated income from the monetization of Section 29 tax credits
generated from the assets acquired in the Initial Basin Acquisition. The annual
estimated qualifying production is approximately 869,000 Mcf for the Initial
Basin Acquisition. The adjustment is based on the monetization of the Section 29
tax credits available from the Initial Basin Acquisition pursuant to
arrangements the Company has with two financial institutions under the same
terms as currently apply to the monetization of the Company's other Section 29
tax credits.

(C) Record interest expense related to debt necessary to finance the
Initial Basin Acquisition, using HSR's average LIBOR rate during 1995 of 7.32%.
Interest was calculated on new debt of approximately $37,800,000 for the Initial
Basin Acquisition. Interest was capitalized on undeveloped property costs as
appropriate.

(D) Record the tax effect of the acquisition assuming a combined federal
and state effective tax rate of 38.1%.

(E) Record revenues and expenses attributable to the Initial Basin
Acquisition.

(F) Record consolidated DD&A expense on the assets acquired. Pro forma DD&A
expense on proved oil and gas properties is computed by combining HSR's net
unamortized costs of proved properties plus the portion of the purchase price
and transaction costs allocated to proved properties and using the units-of-
production amortization method based on estimates of total pro forma proved
reserves. The combined DD&A rate per Boe for the assets acquired is $4.85.

92
<PAGE> 99

SUPPLEMENTAL OIL AND GAS RESERVE INFORMATION (UNAUDITED)

Supplemental oil and gas reserve information related to the Pro Forma
Financial Statements With Initial Basin Acquisition is reported in compliance
with FASB Statement No. 69, "Disclosures about Oil and Gas Producing
Activities." Net proved oil and gas reserves and the discounted future net cash
flows related to those reserves were estimated by HSR's petroleum engineers as
of January 1, 1996, the effective date of the acquisition. Information presented
in that report was the basis for the net proved oil and gas reserve and
standardized measure disclosures presented below. Since reserve evaluations for
other periods had not been prepared, it was necessary to make certain
assumptions and adjustments to prepare the following disclosures. However, HSR
believes that the disclosures presented are adequate and are not misleading.

The following tables set forth information for the year ended December 31,
1995, with respect to changes in proved reserves. Quantities of natural gas are
expressed in this report in terms of thousand cubic feet (Mcf). Oil is
quantified in terms of barrels (Bbls).

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
-------------------
OIL GAS
BBLS MCF
------ -------
(IN THOUSANDS)
<S> <C> <C>
Total proved reserves:
Beginning of year........................................................ 22,465 309,463
Production............................................................... (1,855) (24,260)
Revisions of previous estimates.......................................... (1,294) (1,364)
Extensions, discoveries and other additions.............................. 1,127 11,851
Purchases of reserves in place........................................... 3,124 45,354
Sale of reserves in place................................................ (89) (1,292)
------ -------
End of year.............................................................. 23,478 339,752
====== =======
</TABLE>

At December 31, 1995, proved developed reserves were estimated to be 13,578
MBbls and 248,167 MMcf.

Information with respect to the estimated discounted future net cash flows
for the Pro Forma Financial Statements With Initial Basin Acquisition for the
year ended December 31, 1995 is as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
--------------
(IN THOUSANDS)
<S> <C>
Future cash inflows............................................................ $ 996,121
Future production costs........................................................ (264,844)
Future development costs....................................................... (123,888)
---------
Future pre-tax cash flows...................................................... 607,389
Future income tax expense...................................................... (138,520)
---------
After-tax future net cash flows................................................ 468,869
10% annual discount............................................................ (238,352)
---------
Discounted future net cash flows............................................... $ 230,517
=========
</TABLE>

As of December 31, 1995 the oil and gas prices used in the determination of
future cash flows were $18.68 and $1.64 per Bbl and per Mcf, respectively.

93
<PAGE> 100

Principal changes in estimated discounted future net cash flows for the Pro
Forma Financial Statements With Initial Basin Acquisition for the year ended
December 31, 1995 are as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
-----------------
(IN THOUSANDS)
<S> <C>
Beginning of year............................................................ $ 232,153
Oil and gas sales, net of production costs................................. (44,638)
Sales of reserves in place, net............................................ (1,339)
Net change in prices and production costs.................................. 12,403
Extensions and discoveries less related costs.............................. 11,195
Change in future development costs......................................... (14,745)
Development costs incurred during the year that reduce future development
costs................................................................... 33,402
Revision of previous quantity estimates.................................... (6,919)
Purchases of reserves in place, net........................................ 36,213
Accretion of discount...................................................... 27,440
Net change in income taxes................................................. (19,518)
Changes in production rates and other...................................... (35,130)
--------
End of year.................................................................. $ 230,517
========
</TABLE>

94
<PAGE> 101

INDEX TO UNAUDITED PRO FORMA QUARTERLY FINANCIAL STATEMENTS

The following is a list of the unaudited pro forma financial statements for
the quarter ended and as of March 31, 1996, included in this Joint Proxy
Statement/Prospectus. Other financial statements are included in this Joint
Proxy Statement/Prospectus and in various other documents that are incorporated
into this Joint Proxy Statement/Prospectus by reference. See "Incorporation of
Documents by Reference."

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF HSR

HSR, TIDE WEST, INITIAL BASIN ACQUISITION, SECOND BASIN ACQUISITION AND PRO
FORMA ADJUSTMENTS

<TABLE>
<S> <C>
Pro Forma Balance Sheet with Second Basin Acquisition as of March 31, 1996...... 96
Pro Forma Statement of Operations with Second Basin Acquisition for the Quarter
Ended March 31, 1996.......................................................... 97
Notes to Pro Forma Financial Statements......................................... 98
</TABLE>

HSR, TIDE WEST, INITIAL BASIN ACQUISITION AND PRO FORMA ADJUSTMENTS

<TABLE>
<S> <C>
Pro Forma Balance Sheet without Second Basin Acquisition as of March 31,
1996......................................................................... 101
Pro Forma Statement of Operations without Second Basin Acquisition for the
Quarter Ended March 31, 1996................................................. 102
Notes to Pro Forma Financial Statements........................................ 103
</TABLE>

PRO FORMA FINANCIAL STATEMENTS WITH SECOND BASIN ACQUISITION

The following unaudited pro forma condensed consolidated balance sheet as
of March 31, 1996, and pro forma condensed consolidated statement of operations
for the quarter then ended adjust the historical financial information of HSR
and Tide West to reflect the consummation of the Merger and the Basin
Acquisitions. The pro forma balance sheet and statement of operations were
prepared as if the Merger and Basin Acquisitions were consummated on March 31,
1996 and January 1, 1996, respectively. The pro forma adjustments are based on
estimates and assumptions explained in further detail in the accompanying notes.
With respect to the Initial Basin Acquisition, HSR has entered into the Chase
Asset Monetization Arrangement pursuant to which it sold at its cost the WRL
Assets to WRL (see "Information About the Combining Companies -- HS Resources,
Inc. -- Financing"). The interests sold represent primarily proved producing and
proved non-producing wells, which HSR sold for cash and a retained production
payment. HSR will have no obligation to repay the approximately $23.1 million
indebtedness assumed in connection with the Initial Basin Acquisition and
approximately $58.9 million indebtedness to be assumed in connection with the
Second Basin Acquisition by WRL in connection with its purchase from HSR of the
WRL Assets. Such indebtedness is secured only by the WRL Assets. The financial
statements of WRL are required to be consolidated with the financial statements
of HSR. Accordingly, the WRL Assets and the Asset Monetization Debt must be
included in the consolidated balance sheet of HSR and the operations relating
thereto must be reflected in HSR's consolidated statement of operations.

95
<PAGE> 102

HS RESOURCES, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
WITH SECOND BASIN ACQUISITION

MARCH 31, 1996

(IN THOUSANDS)

<TABLE>
<CAPTION>
(HISTORICAL)
-------------------- PRO FORMA UNAUDITED
HSR TIDE WEST ADJUSTMENTS PRO FORMA
-------- --------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS................................. $ 13,920 $ 33,119 $ (6,812)D $ 40,227
-------- -------- --------- ---------
-- -- -- --
OIL AND GAS PROPERTIES, at cost, using the full
cost method:
Undeveloped acreage.......................... 31,011 -- 25,259A 56,270
Costs subject to depreciation, depletion and
amortization.............................. 388,030 151,560 178,549A 718,139
Less -- accumulated depreciation,
depletion and amortization.............. (95,125) (35,121) 35,121F (95,125)
-------- -------- --------- ---------
-- -- -- --
Net oil and gas properties................ 323,916 116,439 238,929 679,284
-------- -------- --------- ---------
-- -- -- --
Gas gathering and other, net................. 11,958 2,295 349A 14,602
-------- -------- --------- ---------
-- -- -- --
TOTAL ASSETS................................... $349,794 $151,853 $ 232,466 $ 734,113
======== ======== ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES............................ $ 21,937 $ 25,064 $ 7,397A $ 54,398
-------- -------- --------- ---------
-- -- -- --
ACCRUED AD VALOREM
TAXES........................................ 8,926 -- 1,600A 10,526
MINORITY INTEREST.............................. -- (45) (45)
LONG-TERM BANK DEBT, net of current portion.... 78,900 39,600 120,796D/A 239,296
ASSET MONETIZATION DEBT........................ 23,100 -- 53,200A 76,300
9 7/8% SENIOR SUBORDINATED NOTES, net of
unamortized discount......................... 74,552 -- -- 74,552
DEFERRED INCOME TAXES.......................... 23,721 9,457 55,153B 88,331
-------- -------- --------- ---------
-- -- -- --
STOCKHOLDERS' EQUITY........................... 118,658 77,777 (5,680)C 190,755
-------- -------- --------- ---------
-- -- -- --
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..... $349,794 $151,853 $ 232,466 $ 734,113
======== ======== ========= ===========
</TABLE>

The accompanying Notes are an integral part of these Statements.

96
<PAGE> 103

HS RESOURCES, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
WITH SECOND BASIN ACQUISITION

FOR THE QUARTER ENDED MARCH 31, 1996

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
(HISTORICAL)
-------------------------- PRO FORMA UNAUDITED
HSR TIDE WEST ADJUSTMENTS PRO FORMA
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales.................... $ 13,679 $ 11,772 $ 4,643J $ 30,094
Other gas revenues................... 474 -- 505E 979
Trading and transportation........... -- 27,344 -- 27,344
Interest and other income............ 41 (75) -- (34)
----------- ----------- ---------- -----------
Total revenues............... 14,194 39,041 5,148 58,383
----------- ----------- ---------- -----------
EXPENSES:
Production taxes..................... 1,065 763 431J 2,259
Lease operating...................... 2,826 2,067 705J 5,598
Depreciation, depletion and
amortization...................... 6,107 2,876 (2,876)F 13,710
7,603F
General and administrative........... 863 1,206 (398)G 1,671
Interest............................. 3,024 724 3,201H 6,949
Trading and transportation........... -- 25,952 -- 25,952
----------- ----------- ---------- -----------
Total expenses............... 13,885 33,588 8,666 56,139
----------- ----------- ---------- -----------
INCOME (LOSS) BEFORE INCOME TAXES...... 309 5,453 (3,518) 2,244
PROVISION (BENEFIT) FOR INCOME TAXES... 118 2,182 (1,445)I 855
----------- ----------- ---------- -----------
NET INCOME (LOSS)...................... $ 191 $ 3,271 $ (2,073) $ 1,389
=========== =========== ========== ===========
EARNINGS (LOSS) PER SHARE:
Common and common equivalent shares.. $ 0.02 $ 0.32 $ 0.08
=========== =========== ===========
Common and common equivalent
shares -- assuming full
dilution.......................... $ 0.02 $ 0.32 $ 0.08
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING:
Common and common equivalent shares.. 11,149,000 10,142,000 6,161,312C 17,310,312
=========== =========== ========== ===========
Common and common equivalent
shares -- assuming full
dilution.......................... 11,149,000 10,199,000 6,161,312C 17,310,312
=========== =========== ========== ===========
</TABLE>

The accompanying Notes are an integral part of these Statements.

97
<PAGE> 104

HS RESOURCES, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED

CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS WITH SECOND BASIN ACQUISITION

(A) Record cost of the oil and gas properties, additional bank debt
incurred by HSR in connection with the Basin Acquisitions and Merger and the
Asset Monetization Debt, as follows:

<TABLE>
<CAPTION>
INITIAL SECOND TOTAL
BASIN BASIN TIDE WEST PRO FORMA
ACQUISITION ACQUISITION MERGER ADJUSTMENTS
----------- ----------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Acquisition Costs
Purchase price including liabilities
assumed........................... $ -- $87,500 $ 230,209(*) $ 317,709
Transaction costs.................... 520 1,480 8,000 10,000
-------- -------- --------- ---------
Net purchase price................ 520 88,980 238,209 327,709
Deferred tax gross-up (see note B)... -- -- 64,610 64,610
Transaction costs charged to
stockholders' equity.............. -- -- (8,000) (8,000)
Less: Tide West assets
(historical)...................... -- -- (151,853) (151,853)
-------- -------- --------- ---------
Total pro forma adjustment........... $ 520 $88,980 $ 142,966 $ 232,466
======== ======== ========= =========
Allocation of Acquisition Costs
Current assets....................... $ -- $ -- $ (6,812) $ (6,812)
Oil and gas properties -- undeveloped
properties........................ -- 3,500 21,759 25,259
Oil and gas properties -- developed
properties........................ 520 85,480 92,549 178,549
Accumulated DD&A -- Tide West
historical........................ -- -- 35,121 35,121
Gas gathering and other, net......... -- -- 349 349
-------- -------- --------- ---------
Total pro forma adjustment........... $ 520 $88,980 $ 142,966 $ 232,466
======== ======== ========= =========
Acquisition Funding and Liabilities
Assumed
Current liabilities.................. $ -- $ -- $ 7,397 $ 7,397
Accrued ad valorem taxes............. -- 1,600 -- 1,600
Long term bank debt.................. 520 34,180 86,096 120,796
Asset monetization debt.............. -- 53,200 -- 53,200
Deferred income taxes................ -- -- 55,153 55,153
Stockholders' equity -- common
stock............................. -- -- 6 6
Stockholders' equity -- net paid in
capital........................... -- -- (5,686) (5,686)
-------- -------- --------- ---------
Total pro forma adjustment........... $ 520 $88,980 $ 142,966 $ 232,466
======== ======== ========= =========
</TABLE>

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

98
<PAGE> 105

(C) Adjustment to eliminate the historical cost of Tide West's
Stockholders' Equity of $77,777,000 and to record the issuance of 6,161,312
additional HSR shares valued at $13.00 per share less related transaction costs
of $8,000,000.

(D) Record reduction in long-term debt repaid with Tide West cash.

(E) Record estimated income from the monetization of Section 29 tax credits
generated from the assets acquired in the Basin Acquisitions. The estimated
qualifying production is approximately 271,357 Mcf for the Initial Basin
Acquisition and 891,124 Mcf for the Second Basin Acquisition. No tax credits are
anticipated from Tide West production. The adjustment is based on the
monetization of the Section 29 tax credits available from the Basin Acquisitions
pursuant to arrangements the Company has with two financial institutions under
the same terms as currently apply to the monetization of the Company's other
Section 29 tax credits. Tax credit income is accrued monthly based on production
sold. Cash payments are made quarterly as stipulated in the applicable
agreement.

(H) Record elimination of Tide West interest expense and record interest
expense related to debt necessary to finance the Merger and Basin Acquisitions,
using HSR's average LIBOR rate during 1996 of 6.88%. Interest was calculated on
new debt of approximately $174,000,000 which is composed of $87,900,000 for the
Second Basin Acquisition and $86,100,000 for the Merger. Interest was
capitalized on undeveloped property costs as appropriate.

(I) Record the tax effect of the acquisition assuming a combined federal
and state effective tax rate of 38.1%.

(J) Record revenues and expenses attributable to the Basin Acquisitions.

99
<PAGE> 106

PRO FORMA QUARTERLY FINANCIAL STATEMENTS WITHOUT

SECOND BASIN ACQUISITION

The following unaudited pro forma condensed consolidated balance sheet as
of March 31, 1996, and pro forma condensed consolidated statement of operations
for the year then ended adjust the historical financial information of HSR and
Tide West to reflect the Merger and the Initial Basin Acquisition. The pro forma
balance sheet and statement of operations were prepared as if the Merger and
Initial Basin Acquisition were consummated on March 31, 1996 and January 1,
1996, respectively. The pro forma adjustments are based on estimates and
assumptions explained in further detail in the accompanying notes. With respect
to the Initial Basin Acquisition, HSR has entered into the Chase Asset
Monetization Arrangement pursuant to which it sold at its cost certain of the
interest that it had acquired from Basin (see "Information About the Combining
Companies -- HS Resources, Inc. -- Financing"). The interests sold represent
primarily proved producing and proved non-producing wells, which HSR sold for
cash and a retained production payment. HSR will have no obligation, to repay
the approximately $23.1 million indebtedness assumed in connection with the
Initial Basin Acquisition by WRL in connection with its purchase from HSR of
that portion of the WRL Assets relating to the Initial Basin Acquisition. Such
indebtedness is secured only by the assets so acquired by WRL. The financial
statements of WRL are required to be consolidated with the financial statements
of HSR. Accordingly, such assets and such indebtedness must be included in the
consolidated balance sheet of HSR and the operations relating thereto must be
reflected in HSR's consolidated statement of operations.

The unaudited pro forma financial statements should be read in conjunction
with the related historical financial statements and related notes. The pro
forma information presented is not necessarily indicative of the financial
position or results that would have actually occurred had the Merger and Initial
Basin Acquisition been consummated on the dates indicated or which may occur in
the future.

100
<PAGE> 107

HS RESOURCES, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

WITHOUT SECOND BASIN ACQUISITION

MARCH 31, 1996

(IN THOUSANDS)

<TABLE>
<CAPTION>
(HISTORICAL)
-------------------- PRO FORMA UNAUDITED
HSR TIDE WEST ADJUSTMENTS PRO FORMA
-------- --------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS................................. $ 13,920 $ 33,119 $ (6,812)D $ 40,227
---------- ---------- ---------- ----------
-- -- -- --
OIL AND GAS PROPERTIES, at cost, using the full
cost method:
Undeveloped acreage.......................... 31,011 -- 21,759A 52,770
Costs subject to depreciation, depletion and
amortization.............................. 388,030 151,560 93,069A 632,659
Less -- accumulated depreciation,
depletion and amortization.............. (95,125) (35,121) 35,121F (95,125)
---------- ---------- ---------- ----------
-- -- -- --
Net oil and gas properties................ 323,916 116,439 149,949 590,304
---------- ---------- ---------- ----------
-- -- -- --
Gas gathering and other, net................. 11,958 2,295 349A 14,602
---------- ---------- ---------- ----------
-- -- -- --
TOTAL ASSETS................................... $349,794 $151,853 $ 143,486 $ 645,133
============ ============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES............................ $ 21,937 $ 25,064 $ 7,397A $ 54,398
---------- ---------- ---------- ----------
-- -- -- --
ACCRUED AD VALOREM
TAXES........................................ 8,926 -- -- 8,926
MINORITY INTEREST.............................. -- (45) -- (45)
LONG-TERM BANK DEBT, net of current portion.... 78,900 39,600 86,616D/A 205,116
ASSET MONETIZATION DEBT........................ 23,100 -- -- 23,100
9 7/8% SENIOR SUBORDINATED NOTES, net of
unamortized discount......................... 74,552 -- -- 74,552
DEFERRED INCOME TAXES.......................... 23,721 9,457 55,153B 88,331
---------- ---------- ---------- ----------
-- -- -- --
STOCKHOLDERS' EQUITY........................... 118,658 77,777 (5,680)C 190,755
---------- ---------- ---------- ----------
-- -- -- --
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..... $349,794 $151,853 $ 143,486 $ 645,133
============ ============ ============ ============
</TABLE>

The accompanying Notes are an integral part of these Statements.

101
<PAGE> 108

HS RESOURCES, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

WITHOUT SECOND BASIN ACQUISITION

FOR THE QUARTER ENDED MARCH 31, 1996

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
(HISTORICAL)
------------------------- PRO FORMA UNAUDITED
HSR TIDE WEST ADJUSTMENTS PRO FORMA
---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales................ $ 13,679 $ 11,772 $ 1,170J $ 26,621
Other gas revenues............... 474 -- 118E 592
Trading and transportation....... -- 27,344 -- 27,344
Interest and other income........ 41 (75) -- (34)
----------- ------------ ------------ ------------
Total revenues........... 14,194 39,041 1,288 54,523
----------- ------------ ------------ ------------
EXPENSES:
Production taxes................. 1,065 763 100J 1,928
Lease operating.................. 2,826 2,067 275J 5,168
Depreciation, depletion and
amortization.................. 6,107 2,876 (2,876)F 12,109
6,002F
General and administrative....... 863 1,206 (398)G 1,671
Interest......................... 3,024 724 1,801H 5,549
Trading and transportation....... -- 25,952 -- 25,952
----------- ------------ ------------ ------------
Total expenses........... 13,885 33,588 4,904 52,377
----------- ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME
TAXES............................ 309 5,453 (3,616) 2,146
PROVISION (BENEFIT) FOR INCOME
TAXES............................ 118 2,182 (1,482)I (818)
----------- ------------ ------------ ------------
NET INCOME (LOSS).................. $ 191 $ 3,271 $ (2,134) $ 1,328
=========== ============ ============ ============
EARNINGS (LOSS) PER SHARE:
Common and common equivalent
shares........................ $ 0.02 $ 0.32 $ 0.08
=========== ============ ============
Common and common equivalent
shares -- assuming full
dilution...................... $ 0.02 $ 0.32 $ 0.08
=========== ============ ============
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING:
Common and common equivalent
shares........................ 11,149,000 10,142,000 6,161,312C 17,310,312
=========== ============ ============ ============
Common and common equivalent
shares -- assuming full
dilution...................... 11,149,000 10,199,000 6,161,312C 17,310,312
=========== ============ ============ ============
</TABLE>

The accompanying Notes are an integral part of these Statements.

102
<PAGE> 109

HS RESOURCES, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED

CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS WITHOUT

SECOND BASIN ACQUISITION

<TABLE>
<CAPTION>
INITIAL TOTAL PRO
BASIN TIDE WEST FORMA
ACQUISITION MERGER ADJUSTMENTS
----------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Acquisition Costs
Purchase price including liabilities assumed.... $ -- $ 230,209(*) $ 230,209
Transaction costs............................... 520 8,000 8,520
-------- --------- ---------
Net purchase price........................... 520 238,209 238,729
Deferred tax gross-up (see note B).............. -- 64,610 64,610
Transaction costs charged to stockholders'
equity....................................... -- (8,000) (8,000)
Less: Tide West assets (historical)............. -- (151,853) (151,853)
-------- --------- ---------
Total pro forma adjustment...................... $ 520 $ 142,966 $ 143,486
======== ========= =========
Allocation of Acquisition Costs
Current assets.................................. $ -- $ (6,812) $ (6,812)
Oil and gas properties -- undeveloped
properties................................... -- 21,759 21,759
Oil and gas properties -- developed
properties................................... 520 92,549 93,069
Accumulated DD&A -- Tide West historical........ -- 35,121 35,121
Gas gathering and other, net.................... -- 349 349
-------- --------- ---------
Total pro forma adjustment...................... $ 520 $ 142,966 $ 143,486
======== ========= =========
Acquisition Funding and Liabilities Assumed
Current liabilities............................. $ -- $ 7,397 $ 7,397
Accrued ad valorem taxes........................ -- -- --
Long term bank debt............................. 520 86,096 86,616
Asset monetization debt......................... -- -- --
Deferred income taxes........................... -- 55,153 55,153
Stockholders' equity -- common stock............ -- 6 6
Stockholders' equity -- net paid in capital..... -- (5,686) (5,686)
-------- --------- ---------
Total pro forma adjustment...................... $ 520 $ 142,966 $ 143,486
======== ========= =========
</TABLE>

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

(D) Record reduction in long-term debt repaid with Tide West cash.

(E) Record estimated income from the monetization of Section 29 tax credits
generated from the assets acquired in the Basin Acquisition. The annual
estimated qualifying production is approximately 271,357 Mcf for the Initial
Basin Acquisition. No tax credits are anticipated from Tide West production. The
adjustment is based on the monetization of the Section 29 tax credits available
from the Initial Basin Acquisition pursuant to arrangements the Company has with
two financial institutions under the same terms as currently apply to

103
<PAGE> 110

(H) Record elimination of Tide West interest expense and record interest
expense related to debt necessary to finance the Merger and Initial Basin
Acquisition, using HSR's average LIBOR rate during 1996 of 6.88%. Interest was
calculated on new debt of approximately $123,900,000, which is comprised of
$37,800,000 for the Initial Basin Acquisition and $86,100,000 for the Merger.
Interest was capitalized on undeveloped property costs as appropriate.

(I) Record the tax effect of the acquisition assuming a combined federal
and state effective tax rate of 38.1%.

(J) Record revenues and expenses attributable to the Initial Basin
Acquisition.

104
<PAGE> 111

DESCRIPTION OF HSR CAPITAL STOCK

AUTHORIZED AND OUTSTANDING CAPITAL STOCK

The authorized capital stock of HSR consists of (a) 30,000,000 shares of
HSR Common Stock and (b) 15,000,000 shares of preferred stock, par value $.001
per share, issuable in series ("HSR Preferred Stock"). No class of capital stock
of HSR entitles the holder thereof to any preemptive rights to purchase or
subscribe for shares of any class or any other securities.

The following description of the material terms of the capital stock of HSR
is subject to the detailed provisions of HSR's Amended and Restated Certificate
of Incorporation, as amended (the "HSR Charter"), and bylaws as currently in
effect (the "HSR Bylaws"). This description does not purport to be complete or
to give full effect to the terms of the provisions of statutory or common law.
Reference is made to the HSR Charter filed as an exhibit to HSR's Registration
Statement on Form S-1, filed October 2, 1992, the HSR Bylaws, filed as an
exhibit to HSR's Annual Report on Form 10-K for the fiscal year ended December
31, 1992, and the Rights Agreement, dated as of February 28, 1996, between HSR
and Harris Trust Company of California (the "HSR Rights Agreement"), filed as an
exhibit to HSR's Registration Statement on Form 8-A, dated February 28, 1996,
all of which are incorporated herein by reference.

HSR COMMON STOCK

All issued and outstanding shares of HSR Common Stock are validly issued,
fully paid and nonassessable, and all shares of HSR Common Stock issued in
connection with the Merger will likewise be validly issued, fully paid and
nonassessable. The holders of HSR Common Stock are entitled to one vote for each
share held on all matters submitted to a vote of common stockholders. The HSR
Common Stock does not have cumulative voting rights. Each share of HSR Common
Stock is entitled to participate equally in dividends, as and when declared by
the HSR Board, and in the distribution of assets in the event of liquidation,
subject in all cases to any prior rights of outstanding shares of HSR Preferred
Stock. The shares of HSR Common Stock have no preemptive or conversion rights,
redemption rights or sinking fund provisions.

The outstanding shares of HSR Common Stock are listed on the NYSE and trade
under the symbol "HSE." Harris Savings and Trust is the transfer agent,
registrar and dividend disbursing agent for the HSR Common Stock.

HSR PREFERRED STOCK

Under the HSR Charter, the HSR Board is authorized, without further
stockholder action, to provide for the issuance of up to 15,000,000 shares of
HSR Preferred Stock in one or more series. The rights, preferences, privileges
and restrictions, including dividend rights, voting rights, conversion rights,
terms of redemption and liquidation preferences, of the HSR Preferred Stock of
each series will be fixed or designated by the HSR Board pursuant to a
certificate of designations without stockholder approval. As of the date of this
Joint Proxy Statement/Prospectus, no shares of HSR Preferred Stock have been
issued.

On February 28, 1996, the HSR Board declared a dividend distribution of one
Preferred Stock Purchase Right (an "HSR Right") for each outstanding share of
HSR Common Stock. The description and terms of the HSR Rights are set forth in
the HSR Rights Agreement. The distribution was made as of March 14, 1996, to
stockholders of record on that date. Each HSR Right entitles the registered
holder of HSR Common Stock to purchase from HSR one one-hundredth ( 1/100) of a
share of HSR Preferred Stock, designated as Series A Junior Preferred Stock, at
a price of $60.00 per one one-hundredth ( 1/100) of a share. The HSR Rights will
expire at the close of business on March 14, 2006, unless earlier redeemed by
HSR, as described in the HSR Rights Agreement.

Initially, the HSR Rights will not be exercisable or represented by a
separate certificate but will trade together with the HSR Common Stock. The HSR
Rights, unless redeemed prior thereto, become exercisable only upon the close of
business on the day which is the earlier of (a) the tenth day after a public
announcement that a person or group of affiliated or associated persons, with
certain exceptions as noted in the

105
<PAGE> 112

HSR Rights Agreement, has acquired beneficial ownership of 15% or more of HSR's
voting stock (an "Acquiring Person") or (b) the tenth business day (or such
later date as may be determined by the HSR Board prior to such time as any
person or group of affiliated persons becomes an Acquiring Person) after the
commencement or announcement of an intention to commence a tender or exchange
offer, the consummation of which would result in the ownership of 30% or more of
HSR's voting stock (even if no stock is actually purchased pursuant to such
offer). An Acquiring Person does not include, among others, NGP upon its
acquisition of beneficial ownership of 20.193% of the voting stock of HSR
pursuant to the Merger Agreement; provided, that NGP will thereafter become an
Acquiring Person upon the acquisition of additional voting stock of HSR so that
NGP, together with its affiliates and associates, is the beneficial owner of
22.193% or more of the voting stock of HSR; provided, further, that in the event
NGP does not acquire voting stock of HSR pursuant to the Merger Agreement, NGP
will nonetheless become an Acquiring Person if it, together with its affiliates
and associates, will be the beneficial owner of 15% or more of the voting stock
of HSR. All further issuances of HSR Common Stock (including the HSR Common
Stock to be issued in connection with the Merger) will include HSR Rights.

For as long as the HSR Rights are redeemable pursuant to the terms of the
HSR Rights Agreement, HSR may, except with respect to the redemption price or
date of expiration of the HSR Rights, amend the HSR Rights in any manner,
including an amendment to extend the time period in which the HSR Rights may be
redeemed. At any time when the HSR Rights are not then redeemable, HSR may amend
the HSR Rights in any manner that does not materially adversely affect the
interests of holders of the HSR Rights as such. Amendments to the HSR Rights
Agreement from and after the time that any Person (as defined in the HSR Rights
Agreement) becomes an Acquiring Person requires the approval of a majority of
the Continuing Directors (as defined in the HSR Rights Agreement).

A copy of the HSR Rights Agreement has been filed with the Commission as an
exhibit to a Registration Statement on Form 8-A, dated February 28, 1996. A copy
of the HSR Rights Agreement is available from the Commission. This is a summary
description of the material terms of the HSR Rights. Reference is made to the
full text of the HSR Rights Agreement. See "Incorporation of Documents by
Reference."

106
<PAGE> 113

DESCRIPTION OF TIDE WEST CAPITAL STOCK

AUTHORIZED AND OUTSTANDING CAPITAL STOCK

The authorized capital stock of Tide West consists of (a) 20,000,000 shares
of Tide West Common Stock and (b) 20,000,000 shares of preferred stock, par
value $.01 per share, issuable in series ("Tide West Preferred Stock"). No class
of capital stock of Tide West entitles the holder thereof to any preemptive
rights to purchase or subscribe for shares of any class or any other securities,
other than as the Tide West Board may determine.

The following description of the material terms of the capital stock of
Tide West is subject to the detailed provisions of Tide West's Certificate of
Incorporation, as amended (the "Tide West Charter"), and bylaws as currently in
effect (the "Tide West Bylaws"). This description does not purport to be
complete or to give full effect to the terms of the provisions of statutory or
common law. Reference is made to the Tide West Charter and the Tide West Bylaws,
which are filed as exhibits to the Tide West 1995 Form 10-K, which is
incorporated into this Joint Proxy Statement/Prospectus by reference.

TIDE WEST COMMON STOCK

All issued and outstanding shares of Tide West Common stock are validly
issued, fully paid and nonassessable. The holders of Tide West Common Stock are
entitled to one vote for each share held on all matters submitted to a vote of
common stockholders. The Tide West Common Stock does not have cumulative voting
rights. Each share of Tide West Common Stock is entitled to participate equally
in dividends, as and when declared by the Tide West Board, and in the
distribution of assets in the event of liquidation, subject in all cases to any
prior rights of outstanding shares of Tide West Preferred Stock. The shares of
Tide West Common Stock have no preemptive or conversion rights, redemption
rights or sinking fund provisions.

The outstanding shares of Tide West Common Stock are listed on Nasdaq and
trade under the symbol "TIDE." The First National Bank of Boston is the transfer
agent, registrar and dividend disbursing agent for the Tide West Common Stock.

TIDE WEST PREFERRED STOCK

Pursuant to the Tide West Charter, Tide West is authorized to issue up to
20,000,000 shares of Tide West Preferred Stock, and the Tide West Board by
resolution may establish one or more classes or series of Tide West Preferred
Stock having the number of shares, designations, relative voting rights,
dividend rights, liquidation and other rights, preferences and limitations that
the Tide West Board fixes without any stockholder approval. As of the date of
this Joint Proxy Statement/Prospectus, no shares of Tide West Preferred Stock
have been issued and no series of Tide West Preferred Stock has been designated
by the Tide West Board.

107
<PAGE> 114

COMPARISON OF STOCKHOLDER RIGHTS

As a result of the Merger, holders of Tide West Common Stock (other than
Dissenting Stockholders) will become stockholders of HSR, and the rights of all
such former Tide West stockholders will thereafter be governed by the HSR
Charter, the HSR Bylaws and the HSR Rights Agreement. The following is a summary
comparison of the material differences between the rights of holders of HSR
Common Stock and holders of Tide West Common Stock. Because both Tide West and
HSR are organized and exist under Delaware law and are subject to the corporate
laws of Delaware, these differences arise from various provisions of the
certificates of incorporation and bylaws of the two companies. Reference is made
to the full text of the HSR Charter, the HSR Bylaws, the HSR Rights Agreement,
the Tide West Charter and the Tide West Bylaws. For information as to how to
obtain copies of such documents, see "Incorporation of Documents by Reference."

CLASSIFICATION OF BOARD OF DIRECTORS

<TABLE>
<S> <C>
HSR. The HSR Board is divided into Tide West. Tide West does not have a
three classes. The directors of each class classified board of directors. Rather, all
are elected for three-year terms, with the of the members of the Tide West Board are
terms of the three classes staggered so that elected to serve one-year terms, at each
directors from a single class are elected at annual meeting of stockholders.
each annual meeting of stockholders.
</TABLE>

Classification of directors has the effect of making it more difficult for
stockholders to change the composition of the board of directors. At least two
annual meetings of stockholders, instead of one, will generally be required to
effect a change in the majority of the HSR Board. Such a delay may help ensure
that the HSR directors, if confronted by a stockholder attempting to force a
proxy contest, a tender or exchange offer or other extraordinary corporate
transaction, would have sufficient time to review the proposal as well as any
available alternatives to the proposal and to act in what they believe to be the
best interests of the stockholders. The classification provisions could also
have the effect of discouraging a third party from initiating a proxy contest,
making a tender offer or otherwise attempting to gain control of HSR even though
such a transaction could be beneficial to HSR and its stockholders. The
classification of the HSR Board might also increase the likelihood that
incumbent directors will retain their positions.

NUMBER OF DIRECTORS; REMOVAL OF DIRECTORS; FILLING VACANCIES

<TABLE>
<S> <C>
HSR. The HSR Bylaws provide that, Tide West. The Tide West Bylaws provide that
subject to any rights of holders of HSR the number of directors of Tide West shall
Preferred Stock, the number of directors of be fixed from time to time by the Tide West
HSR will be fixed from time to time by Board pursuant to a resolution adopted by
action of not less than a majority of the not less than a majority of the Tide West
HSR Board then in office, but in no event directors present at any meeting at which a
may the number of directors be less than quorum is present, but in no event may the
five nor more than nine. The HSR Board number of directors be less than one nor
currently consists of five members, three of more than twelve. The Tide West Board
whom are officers of HSR and the remaining currently consists of seven members, three
two of whom are independent directors, one of whom are officers of Tide West and the
of whom is a limited partner in the general remaining four of whom are independent
partner of NGP. directors. Of the independent directors, two
are limited partners and one is the general
partner in the general partner of NGP.

The HSR Charter provides that The Tide West Bylaws provide that
stockholders may remove a director of HSR stockholders may remove a director of Tide
with or without cause at any time upon the West, with or without cause, at any time
affirmative vote of one or more stockholders upon the affirmative vote of holders of a
holding not less than 50% of the voting majority of all the then outstanding shares
power of all the then outstanding shares of of stock entitled to vote generally in the
stock entitled to vote generally in the election of directors.
election of directors (the "HSR Voting
Stock").
</TABLE>

108
<PAGE> 115
<TABLE>
<S> <C>
Any vacancies (including newly-created The Tide West Bylaws provide that vacancies
directorships) will be filled only by the (including newly-created directorships) may
affirmative vote of a majority of the be filled by the vote of a majority of the
remaining directors. A director appointed to directors then in office, though less than a
fill a vacancy created by the resignation or quorum, or by a sole remaining director.
termination of a director will serve the Each director so elected shall hold office
remainder of the term of the resigning or until the next annual meeting of the
terminated director. stockholders and until his or her successor
shall have been duly elected and shall
qualify.
</TABLE>

The effect of the foregoing provisions could be to increase the likelihood
that incumbent directors of HSR will retain their positions. In addition, the
HSR Board, because of the provisions relating to the fixing of the number of
directors and the filling of vacancies, could prevent any stockholder or group
of stockholders from enlarging the HSR Board and filling the new directorships
with such stockholder's or group's own nominees.

STOCKHOLDER ACTION BY WRITTEN CONSENT; SPECIAL MEETINGS

<TABLE>
<S> <C>
HSR. Action by stockholders of HSR may Tide West. Action by stockholders of Tide
be taken without a meeting of stockholders West may be taken without a meeting of the
by written consent so long as one or more stockholders by written consent so long as
stockholders holding at least 75% of the the stock ownership represented by those
outstanding stock entitled to vote on such consenting in writing to the action amounts
action at a meeting of stockholders consent at least to the number of votes that would
in writing to such action. Special meetings have been necessary to approve such action
of the stockholders may be called at any at a meeting of stockholders. Special
time by HSR's President or Chairman of the meetings of the stockholders may be called
Board, by a majority of the HSR Board or by at any time by Tide West's President or
one or more stockholders holding not less Chairman of the Board, a majority of the
than 50% of all of the outstanding stock Tide West Board or one or more stockholders
entitled to vote on the business to be holding not less than one-tenth of all of
transacted at such meeting, for any purpose the outstanding stock entitled to vote on
or purposes for which meetings may be the business to be transacted at such
lawfully held. special meeting, for any purpose or purposes
for which meetings may be lawfully called.
</TABLE>

The HSR provisions limiting stockholder action by written consent and
limiting the ability to call special meetings could have the effect of delaying
consideration of a stockholder proposal until the next annual meeting of
stockholders. These provisions could also limit the ability of the holders of
HSR Common Stock from unilaterally using the written consent procedure to take
stockholder action.

BUSINESS AT ANNUAL MEETINGS

<TABLE>
<S> <C>
HSR. Any business properly brought Tide West. The Tide West Bylaws contain
before an annual meeting of HSR substantially similar provisions.
stockholders may be considered at such
meeting.
</TABLE>

"FAIR PRICE" PROVISIONS

<TABLE>
<S> <C>
HSR. The HSR Charter contains a "fair Tide West. The Tide West Charter does not
price" provision that requires the have a provision similar or comparable to
affirmative vote of the holders of at least the fair price provision of the HSR Charter.
66 2/3% of the HSR Voting Stock and the
affirmative vote of at least a majority of
the HSR Common Stock to approve any merger,
consolidation, sale or lease of all or
substantially all of HSR's assets or certain
other transactions
</TABLE>

109
<PAGE> 116
<TABLE>
<S> <C>
involving a Related Person (as defined
below). For purposes of this fair price
provision, a "Related Person" is any person
beneficially owning 5% or more of the HSR
Voting Stock who is a party to the
transaction at issue, or an affiliate of HSR
who was the beneficial owner of more than 5%
of the HSR Voting Stock within the past two
years and is a party to the transaction at
issue. The approval of 66 2/3% of the HSR
Voting Stock is not applicable to certain
transactions, including those that are
approved by at least two-thirds of HSR
Disinterested Directors (defined generally
as those members of the HSR Board who are
not affiliates or associates of the Related
Person and who were members of the HSR Board
prior to the time that the Related Person
became such) or that meet certain "fair
price" criteria contained in the HSR
Charter.
</TABLE>

The "fair price" provision is intended to ensure that all stockholders
receive equal treatment in the event of a tender or exchange offer and to
protect stockholders against coercive or two-tiered takeover bids.
Notwithstanding the foregoing, the provision could also have the effect of
discouraging a third party from making a tender or exchange offer for HSR, even
though such an offer might be beneficial to HSR and its stockholders.

"BLANK CHECK" PREFERRED STOCK

<TABLE>
<S> <C>
HSR. Subject to certain limitations Tide West. The Tide West Charter contains
prescribed by law and the rules of the substantially similar provisions relating to
NYSE, the HSR Board is authorized by the HSR Tide West Preferred Stock. See "Description
Charter, without any approval or other of Tide West Capital Stock -- Tide West
action by the HSR stockholders, to provide Preferred Stock."
for the issuance of shares of HSR Preferred
Stock in one or more series, to establish
the number of shares of each such series and
to fix the designations, powers, preferences
and rights of the shares of each such series
and any qualifications, limitation or
restrictions thereof. See "Description of
HSR Capital Stock -- HSR Preferred Stock."
</TABLE>

Management of HSR believes that the ability of the HSR Board to issue one
or more series of HSR Preferred Stock provides HSR with flexibility in
structuring possible future financing and acquisitions and in meeting other
corporate needs that might arise. Although the HSR Board has no intention at the
present time of doing so, it could issue additional series of HSR Preferred
Stock that could, depending on the terms of such series, further impede the
completion of a merger, tender offer or other takeover attempt. The HSR Board
will make any determination to issue such additional shares based on its
judgment as to the best interests of HSR and its stockholders. The HSR Board, in
so acting, could issue shares of HSR Preferred Stock having additional terms
that discourage an acquisition attempt through which an acquiror may be able to
change the composition of the HSR Board, including a tender offer or other
transaction that some of the HSR stockholders might believe to be in their best
interests or in which stockholders might receive a premium for the stock over
the then current market price of such stock.

110
<PAGE> 117

AMENDMENTS TO CERTIFICATE OF INCORPORATION

<TABLE>
<S> <C>
HSR. The HSR Charter provides that Tide West. Approval by the holders of a
approval by the holders of at least majority of the outstanding Tide West stock
two-thirds of the outstanding HSR Voting entitled to vote is required to amend the
Stock is required to amend the HSR Charter. Tide West Charter.
In addition, (a) approval by the holders of
at least 66 2/3% of the outstanding HSR
Voting Stock, together with approval by the
holders of at least 66 2/3% of the
outstanding HSR Common Stock or (b) approval
of at least two-thirds of all directors then
in office is required to amend the fair
price provisions described above.
</TABLE>

The provisions requiring the approval of holders of more than a majority of
the outstanding HSR Voting Stock make it more difficult for stockholders to make
changes in the HSR Charter, including changes designed to facilitate the
exercise of control over HSR.

PREFERRED STOCK PURCHASE RIGHTS

<TABLE>
<S> <C>
HSR. Pursuant to the HSR Rights Tide West. Tide West does not have a rights
Agreement, each HSR Right entitles a agreement or other agreement or provisions
registered holder of HSR Common Stock to similar to the HSR Rights Agreement.
purchase from HSR one one- hundredth (1/100)
of a share of HSR Preferred Stock,
designated as Series A Junior Preferred
Stock, at a price of $60.00 per one
one-hundredth (1/100) of a share. The HSR
Rights were issued to the HSR stockholders
of record on March 14, 1996.
The HSR Rights, unless earlier redeemed
by the HSR Board, become exercisable upon
the close of business on the day which is
the earlier of (a) the tenth day following a
public announcement that a person or group
of affiliated or associated persons, with
certain exceptions set forth in the HSR
Rights Agreement, has become an Acquiring
Person, and (b) the tenth business day,
subject to certain restrictions, after a
tender or exchange offer has been announced
or commenced. Prior to this time, the HSR
Rights would not be exercisable, would not
be represented by a separate certificate and
would not be transferable apart from the HSR
Common Stock. NGP, subject to certain
conditions, is not an Acquiring Person. See
"Description of HSR Capital Stock -- HSR
Preferred Stock."
</TABLE>

The HSR Rights Agreement is designed to protect the stockholders of HSR in
the event of an attempt to acquire control of HSR by discouraging transactions
which are not on terms which deal fairly with all of its stockholders. The HSR
Rights Agreement accomplishes this objective by encouraging anyone wishing to
acquire control of HSR to negotiate with the HSR Board. The HSR Rights Agreement
was implemented in February 1996 because HSR could be vulnerable to certain
coercive takeover attempts that may deprive HSR stockholders of the opportunity
to realize full value on their investment. Moreover, since numerous other
publicly-owned U.S. companies have adopted similar protective measures, it is
appropriate that HSR's stockholders be afforded similar protection. The
distribution of the HSR Rights is not intended to prevent a

111
<PAGE> 118

takeover of HSR on terms beneficial to its stockholders and, in fact, will not
do so. It may, however, deter an attempt to acquire HSR in a manner or on terms
that the HSR Board determines not to be in the best interests of its
stockholders, and it may render a change in control of HSR more difficult. The
HSR Rights also are intended to protect HSR and its stockholders against unfair
takeover tactics which often unfairly pressure stockholders to sell their
investments at less than full value.

DELAWARE ANTI-TAKEOVER STATUTE

<TABLE>
<S> <C>
HSR. HSR is a Delaware corporation and Tide West. Tide West is also a Delaware
is subject to Section 203 of the Delaware corporation and is also subject to Section
Act ("Section 203"). In general, Section 203 203 of the Delaware Act, with generally the
prevents an "interested stockholder" same effect as that described for HSR. The
(defined generally as a person owning 15% or provisions of Section 203 will not apply to
more of the HSR Voting Stock) from engaging the Merger because the Merger has been
in a "business combination" (as defined in approved by the Tide West Board.
Section 203) with HSR for three years
following the date that person becomes an
interested stockholder unless (a) before
that person became an interested
stockholder, the HSR Board approved the
transaction in which the interested
stockholder became an interested stockholder
or approved the business combination, (b)
upon completion of the transaction that
resulted in the interested stockholder's
becoming an interested stockholder, the
interested stockholder owns at least 85% of
the HSR Voting Stock outstanding at the time
the transaction commenced (excluding stock
held by directors who are also officers of
HSR and by employee stock plans that do not
provide employees with the right to
determine confidentially whether shares held
subject to the plan will be tendered in a
tender or exchange offer) or (c) following
the transaction in which that person became
an interested stockholder, the business
combination is approved by the HSR Board and
authorized at a meeting of stockholders by
the affirmative vote of the holders of at
least two-thirds of the HSR Voting Stock not
owned by the interested stockholder.
Under Section 203, these restrictions
also do not apply to certain business
combinations proposed by an interested
stockholder following the announcement or
notification of one of certain extraordinary
transactions involving HSR and a person who
was not an interested stockholder during the
previous three years or who became an
interested stockholder with the approval of
a majority of HSR's directors, if that
extraordinary transaction is approved or not
opposed by a majority of the directors who
were directors before any person became an
interested stockholder in the previous three
years or who were recommended for election
</TABLE>

112
<PAGE> 119
<TABLE>
<S> <C>
or elected to succeed such directors by a
majority of such directors then in office.
Upon consummation of the Merger, NGP
will be an "interested stockholder" for
purposes of Section 203.
</TABLE>

Under certain circumstances, Section 203, as described above, may make it
more difficult for a person who would be an "interested stockholder" to effect
various business combinations with a corporation for a three-year period. The
provision of Section 203 may encourage companies interested in acquiring HSR to
negotiate in advance with the HSR Board, since the stockholder approval
requirement would be avoided if a majority of the directors then in office
approve either the business combination or the transaction that results in the
stockholder becoming an interested stockholder.

LIMITATION OF LIABILITY OF DIRECTORS

<TABLE>
<S> <C>
HSR. As permitted by Delaware law, the Tide West. The Tide West Charter contains a
HSR Charter provides that a director will similar limitation on director liability.
not be personally liable to HSR or its
stockholders for monetary damages for breach
of fiduciary duty as a director, except for
liability (a) for any breach of the
director's duty of loyalty to HSR or its
stockholders, (b) for acts or omissions not
in good faith or that involve intentional
misconduct or a knowing violation of law,
(c) under Section 174 of the Delaware Act
(which concerns unlawful payments of
dividends, stock purchases or redemptions)
or (d) for any transaction from which the
director derived an improper personal
benefit.
</TABLE>

While these provisions provide directors with protection from awards for
monetary damages for breaches of their duty of care, they do not eliminate such
duty. Accordingly, these provisions will have no effect on the availability of
equitable remedies, such as an injunction or rescission based on a director's
breach of his duty of care. The provisions described above apply to an officer
of the corporation only if he is a director of the corporation and is acting in
his capacity as a director and do not apply to officers who are not also
directors.

LEGAL MATTERS

The validity of the securities to be issued in connection with the Merger
will be passed upon for HSR by Akin, Gump, Strauss, Hauer & Feld, L.L.P.,
Dallas, Texas. The federal income tax consequences in connection with the Merger
will be passed upon by Conner & Winters, a Professional Corporation, Tulsa,
Oklahoma. Robert A. Curry, a shareholder and director of Conner & Winters, is
also a director of Tide West.

EXPERTS

The consolidated financial statements of Tide West incorporated in this
Joint Proxy Statement/Prospectus by reference from the Tide West 1995 Form 10-K,
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report (which report expresses an unqualified opinion and includes an
explanatory paragraph referring to the 1993 change in the method of accounting
for income taxes), which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.

The consolidated financial statements of HSR as of December 31, 1995 and
1994, and for each of the three years in the period ended December 31, 1995,
incorporated herein by reference from the HSR 1995

113
<PAGE> 120

Form 10-K, have been audited by Arthur Andersen LLP, independent public
accountants, as stated in their report (which report expresses an unqualified
opinion), which is incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.

The Statements of Revenues and Direct Operating Expenses for the Basin
Acquisition Properties as of December 31, 1995 and 1994, and for each of the two
years in the period ended December 31, 1995, included in this Joint Proxy
Statement/Prospectus have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing.

The estimated reserve evaluations and related calculations of Netherland,
Sewell set forth in this Joint Proxy Statement/Prospectus, and incorporated
herein by reference from the Tide West 1995 Form 10-K, have been included
herein, and have been so incorporated, in reliance upon the authority of such
firm as experts in petroleum engineering.

The estimated reserve evaluations prepared by HSR and reviewed by
Williamson set forth in this Joint Proxy Statement/Prospectus, and incorporated
herein by reference from the HSR 1995 Form 10-K, have been included herein, and
have been so incorporated, in reliance upon the authority of such firm as
experts in petroleum engineering.

STOCKHOLDERS' PROPOSALS

HSR has scheduled its 1996 Annual Meeting of Stockholders for June 17,
1996, whether or not the Merger is consummated. Stockholder proposals intended
to be presented at that meeting must have been submitted by December 29, 1995,
for consideration by HSR for possible inclusion in the proxy materials for that
meeting.

If the Merger is not consummated and the 1996 Annual Meeting of
Stockholders of Tide West is to be held, the only Tide West stockholder
proposals eligible to be considered for inclusion in the proxy materials for
that meeting will be those that were duly submitted to Tide West by December 9,
1995, as provided in the 1995 Annual Meeting Proxy Statement of Tide West.

114
<PAGE> 121

INDEX TO STATEMENTS OF REVENUES AND
DIRECT OPERATING EXPENSES

INITIAL BASIN ACQUISITION

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.............................................. F-2
Statements of Revenues and Direct Operating Expenses for the Initial Basin Acquisition
Properties.......................................................................... F-3
Notes to Statements of Revenues and Direct Operating Expenses for the Initial Basin
Acquisition Properties.............................................................. F-4
SECOND BASIN ACQUISITION
Report of Independent Public Accountants.............................................. F-6
Statements of Revenues and Direct Operating Expenses for the Second Basin Acquisition
Properties.......................................................................... F-7
Notes to Statements of Revenues and Direct Operating Expenses for the Second Basin
Acquisition Properties.............................................................. F-8
</TABLE>

F-1
<PAGE> 122

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To HS Resources, Inc.:

We have audited the accompanying statements of revenues and direct
operating expenses for the oil and gas properties acquired from Basin
Exploration, Inc. ("Initial Basin Acquisition Properties") for each of the two
years in the period ended December 31, 1995. These statements are the
responsibility of HS Resources, Inc.'s management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

The statements of revenues and direct operating expenses for the Initial
Basin Acquisition Properties were prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission as described in
Note 1, and are not intended to be a complete presentation of revenues and
expenses.

In our opinion, the statements referred to above present fairly, in all
material respects, the revenues and direct operating expenses for the Initial
Basin Acquisition Properties for each of the two years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Denver, Colorado
March 15, 1996

F-2
<PAGE> 123

STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
FOR THE INITIAL BASIN ACQUISITION PROPERTIES
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------
1995 1994
------ -------
<S> <C> <C>
Oil and Gas Revenues...................................................... $8,656 $11,445
------ -------
Production Taxes.......................................................... 639 805
Lease Operating Expenses.................................................. 1,908 2,315
------ -------
Total Direct Operating Expenses........................................... 2,547 3,120
------ -------
Revenues in Excess of Direct Operating Expenses........................... $6,109 $ 8,325
====== =======
</TABLE>

The accompanying Notes are an integral part of these Statements.

F-3
<PAGE> 124

NOTES TO STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES FOR
THE INITIAL BASIN ACQUISITION PROPERTIES

1. BASIS OF PRESENTATION

On March 15, 1996, HS Resources, Inc. (the "Company") completed the initial
acquisition of Basin Exploration, Inc.'s interest in approximately 330 oil and
gas properties located in the Denver-Julesburg Basin of Colorado. The Initial
Basin Acquisition had a January 1, 1996 effective date.

The accompanying statements of revenues and direct operating expenses were
derived from the historical accounting records of the acquired properties. The
statements do not include depreciation, depletion and amortization, general and
administrative, income tax or interest expenses as these costs may not be
comparable to the expenses expected to be incurred.

2. SUPPLEMENTAL OIL AND GAS RESERVE INFORMATION (UNAUDITED)

Supplemental oil and gas reserve information related to the Initial Basin
Acquisition Properties is reported in compliance with FASB Statement No. 69,
"Disclosures about Oil and Gas Producing Activities." Net proved oil and gas
reserves and the discounted future net cash flows related to those reserves were
estimated by the Company's petroleum engineers as of January 1, 1996, the
effective date of the acquisition. Information presented in that report was the
basis for the net proved oil and gas reserve and standardized measure
disclosures presented below. Since reserve evaluations for other periods had not
been prepared, it was necessary to make certain assumptions and adjustments to
prepare the following disclosures. However, the Company believes that the
disclosures presented are adequate and are not misleading.

The following tables set forth information for the years ended December 31,
1995 and 1994, with respect to changes in the proved reserves for the Initial
Basin Acquisition Properties. Quantities of natural gas are expressed in this
report in terms of thousand cubic feet (Mcf). Oil is quantified in terms of
barrels (Bbls).

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1994
--------------- ---------------
OIL GAS OIL GAS
BBLS MCF BBLS MCF
----- ------ ----- ------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Total proved reserves:
Beginning of year............................................ 4,164 44,185 4,542 47,859
Production................................................... (273) (3,211) (378) (3,674)
Revisions of previous estimates.............................. 0 0 0 0
Extensions, discoveries and other additions.................. 0 0 0 0
Purchases of reserves in place............................... 0 0 0 0
Sale of reserves in place.................................... 0 0 0 0
----- ------ ----- ------
End of year.................................................. 3,891 40,974 4,164 44,185
===== ====== ===== ======
</TABLE>

At December 31, 1995 and 1994, proved developed reserves were estimated to
be 2,021,000 and 2,163,000, respectively, barrels of oil and 28,905,000 and
31,170,000, respectively, mcf of gas.

F-4
<PAGE> 125

Information with respect to the estimated discounted future net cash flows
for the Initial Basin Acquisition Properties for the years ended December 31,
1995 and 1994 is as follows:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1994
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Future cash inflows................................................. $139,046 $134,798
Future production costs............................................. (45,767) (48,314)
Future development costs............................................ (18,844) (18,844)
-------- --------
Future pre-tax cash flows........................................... 74,435 67,640
Future income tax expense........................................... (8,743) (6,167)
-------- --------
After-tax future net cash flows..................................... 65,692 61,473
10% annual discount................................................. (34,433) (23,573)
-------- --------
Discounted future net cash flows.................................... $ 31,259 $ 37,900
======== ========
</TABLE>

As of December 31, 1995 and 1994, the oil and gas prices used in the
determination of future cash flows were $19.10 and $1.659, and $15.592 and
$1.809, per barrel and per Mcf, respectively.

Principal changes in the estimated discounted future net cash flows for the
Initial Basin Acquisition Properties for the years ended December 31, 1995 and
1994 are as follows:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
(IN THOUSANDS)
<S> <C> <C>
Beginning of year.......................................... $ 37,900 $29,146
Oil and gas sales, net of production costs............... (6,109) (8,325)
Sales of reserves in place, net.......................... 0 0
Net change in prices and production costs................ 8,407 (1,432)
Extensions and discoveries less related costs............ 0 0
Change in future development costs....................... 0 2,966
Revision of previous quantity estimates.................. 0 0
Purchases of reserves in place, net...................... 0 0
Accretion of discount.................................... 4,407 3,722
Net change in income taxes............................... 2,190 4,790
Changes in production rates and other.................... (15,536) 7,033
-------- -------
End of year................................................ $ 31,259 $37,900
======== =======
</TABLE>

F-5
<PAGE> 126

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To HS Resources, Inc.:

We have audited the accompanying statements of revenues and direct
operating expenses for the oil and gas properties to be acquired from Basin
Exploration, Inc. ("Second Basin Acquisition Properties") for each of the two
years in the period ended December 31, 1995. These statements are the
responsibility of HS Resources, Inc.'s management. Our responsibility is to
express an opinion on these financial statements based on our audits.

The statements of revenues and direct operating expenses for the Second
Basin Acquisition Properties were prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission as described in
Note 1, and are not intended to be a complete presentation of revenues and
expenses.

In our opinion, the statements referred to above present fairly, in all
material respects, the revenues and direct operating expenses for the Second
Basin Acquisition Properties for each of the two years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Denver, Colorado
March 15, 1996

F-6
<PAGE> 127

STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
FOR THE SECOND BASIN ACQUISITION PROPERTIES
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
-------------------
1995 1994
------- -------
<S> <C> <C>
Oil and Gas Revenues..................................................... $16,621 $18,995
------- -------
Production Taxes......................................................... 1,290 1,421
Lease Operating Expenses................................................. 2,352 2,040
------- -------
Total Direct Operating Expenses.......................................... 3,642 3,461
------- -------
Revenues in Excess of Direct Operating Expenses.......................... $12,979 $15,534
======= =======
</TABLE>

The accompanying Notes are an integral part of these Statements.

F-7
<PAGE> 128

NOTES TO STATEMENT OF REVENUES AND
DIRECT OPERATING EXPENSES FOR THE SECOND BASIN ACQUISITION PROPERTIES

1. BASIS OF PRESENTATION

In February, 1996 HS Resources, Inc. (the "Company") entered into an
agreement with Basin Exploration, Inc. ("Basin") to acquire the remainder of
Basin's oil and gas properties in the Denver-Julesburg Basin of Colorado,
subject to approval by the stockholders of Basin. If consummated, the Second
Basin Acquisition will have an effective date of January 1, 1996.

The accompanying statement of revenues and direct operating expenses was
derived from the historical accounting records of the acquired properties. The
statements do not include depreciation, depletion and amortization, general and
administrative, income tax or interest expenses as these costs may not be
comparable to the expenses expected to be incurred.

2. SUPPLEMENTAL OIL AND GAS RESERVE INFORMATION (UNAUDITED)

Supplemental oil and gas reserve information related to the Second Basin
Acquisition Properties is reported in compliance with FASB Statement No. 69,
"Disclosures about Oil and Gas Producing Activities." Net proved oil and gas
reserves and the discounted future net cash flows related to those reserves were
estimated by the Company's petroleum engineers as of January 1, 1996, the
effective date of the acquisition. Information presented in that report was the
basis for the net proved oil and gas reserve and standardized measure
disclosures presented below. Since reserve evaluations for other periods had not
been prepared, it was necessary to make certain assumptions and adjustments to
prepare the following disclosures. However, the Company believes that the
disclosures presented are adequate and are not misleading.

The following tables set forth information for the years ended December 31,
1995 and 1994, with respect to changes in the proved reserves for the Second
Basin Acquisition Properties. Quantities of natural gas are expressed in this
report in terms of thousand cubic feet (Mcf). Oil is quantified in terms of
barrels (Bbls).

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
------------------- -------------------
OIL BBLS GAS MCF OIL BBLS GAS MCF
-------- ------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Total proved reserves:
Beginning of year.................................... 6,593 118,419 6,990 126,099
Production........................................... (381) (7,499) (396) (7,680)
Revisions of previous estimates...................... 0 0 0 0
Extensions, discoveries and other additions.......... 0 0 0 0
Purchases of reserves in place....................... 0 0 0 0
Sale of reserves in place............................ 0 0 0 0
----- ------- ----- -------
End of year.......................................... 6,212 110,920 6,594 118,419
===== ======= ===== =======
</TABLE>

At December 31, 1995 and 1994, proved developed reserves were estimated to
be 2,947,000 and 3,128,000, respectively, barrels of oil and 74,006,000 and
79,010,000, respectively, Mcf of gas.

F-8
<PAGE> 129

Information with respect to the estimated discounted future net cash flows
for the Second Basin Acquisition Properties for the years ended December 31,
1995 and 1994 is as follows:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1994
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Future cash inflows................................................. $311,107 $297,533
Future production costs............................................. (87,738) (86,729)
Future development costs............................................ (53,337) (53,337)
-------- --------
Future pre-tax cash inflows......................................... 170,032 157,467
Future income tax expense........................................... (19,616) (14,666)
-------- --------
Future net cash flows............................................... 150,416 142,801
10% annual discount................................................. (79,135) (70,142)
-------- --------
Discounted future net cash flows.................................... $ 71,281 $ 72,659
======== ========
</TABLE>

As of December 31, 1995 and 1994, the oil and gas prices used in the
determination of future cash flows were $19.10 and $1.735, and $15.59 and
$1.809, per barrel and per mcf, respectively.

Principal changes in the estimated discounted future net cash flows for the
Second Basin Acquisition Properties for the years ended December 31, 1995 and
1994 are as follows:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1994
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Beginning of year.................................................. $ 72,659 $ 63,938
Oil and gas sales, net of production costs....................... (12,979) (15,534)
Sales of reserves in place, net.................................. 0 0
Net change in prices and production costs........................ 14,166 165
Extensions and discoveries less related costs.................... 0 0
Change in future development costs............................... 0 0
Revision of previous quantity estimates.......................... 0 0
Purchases of reserves in place, net.............................. 0 0
Accretion of discount............................................ 8,732 8,161
Net change in income taxes....................................... 5,789 10,054
Changes in production rates and other............................ (17,086) 5,875
------- -------
End of year........................................................ $ 71,281 $ 72,659
======= =======
</TABLE>

F-9
<PAGE> 130

ANNEX A

AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER

This Amended and Restated Agreement and Plan of Merger (this "Agreement")
is made and entered into as of the 29th day of April, 1996, by and among HS
RESOURCES, INC. ("Parent"), a Delaware corporation; HSR ACQUISITION, INC.
("Merger Sub"), a Delaware corporation; and Tide West Oil Company ("Tide West"),
a Delaware corporation.

RECITALS

A. The board of directors of each of Parent and Tide West determined that
it was in the best interests of its respective stockholders to approve the
strategic alliance of Parent and Tide West by means of the merger of Tide West
with and into Merger Sub upon the terms and subject to the conditions set forth
in an Agreement and Plan of Merger (the "Original Agreement") made and entered
into as of the 25th day of February, 1996, by and among Parent, Merger Sub and
Tide West.

B. For federal income tax purposes, it is intended that such merger qualify
as a "reorganization" within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended.

C. Parent, Merger Sub, and Tide West desire to make certain modifications
to the terms of the Original Agreement relating to the timing of certain
calculations relating to the Market Price and of the Closing Date (each as
defined herein).

NOW, THEREFORE, for and in consideration of the recitals and the mutual
covenants and agreements set forth in this Agreement, the parties to this
Agreement hereby agree as follows:

ARTICLE 1

DEFINITIONS

1.1 DEFINED TERMS. As used in this Agreement, each of the following terms
has the meaning given in this Section 1.1 or in the Sections referred to below:

"AFFILIATE" means, with respect to any Person, each other Person that
directly or indirectly (through one or more intermediaries or otherwise)
controls, is controlled by, or is under common control with such Person.

"AGREEMENT" means this Agreement and Plan of Merger, as amended,
supplemented or modified from time to time.

"ALLOCATED VALUES" means the allocation of values shown on SCHEDULE 1.1(A).

"ALTERNATIVE PROPOSAL" has the meaning specified in Section 5.4(b).

"ALTERNATIVE TRANSACTION" has the meaning specified in Section 5.4(d).

"BANK CREDIT AGREEMENT" means (a) the Second Amended and Restated Credit
Agreement, dated as of June 15, 1995, between Tide West, as borrower, and Union
Bank, Den norske Bank AS, Colorado National Bank, and Texas Commerce Bank,
National Association, as lenders (as amended and supplemented as of the date of
the Original Agreement), and/or (b) the Credit Agreement, dated as of December
20, 1993, between TWTT, as borrower, and Union Bank, Den norske Bank AS, and
Colorado National Bank, as lenders (as amended and supplemented as of the date
of the Original Agreement).

"CASH CONSIDERATION" means $8.75 less three percent of the amount by which
the Market Price exceeds $10.50.

"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, or any successor statutes and any regulations
promulgated thereunder.

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<PAGE> 131

"CERCLIS" means the Comprehensive Environmental Response, Compensation and
Liability Information System List.

"CERTIFICATE OF MERGER" means the certificate of merger, prepared and
executed in accordance with the applicable provisions of the DGCL, filed with
the Secretary of State of Delaware to reflect the consummation of the Merger.

"CLOSING" means the closing of the Merger and the consummation of the other
transactions contemplated by this Agreement.

"CLOSING DATE" means the date on which the Closing occurs, which date shall
be the day on which both the Tide West Meeting and the Parent Meeting have been
held (or such later date as is agreed upon by the parties).

"CODE" means the Internal Revenue Code of 1986, as amended.

"CONFIDENTIALITY AGREEMENT" means, collectively, the letter agreements
dated November 28, 1995, and February 17, 1996, between Tide West and Parent
relating to Tide West's furnishing of information to Parent and Parent's
furnishing of information to Tide West in connection with Parent's and Tide
West's evaluation of the possibility of the Merger.

"CONVERSION NUMBER" means 0.6295.

"DGCL" means the Delaware General Corporation Law.

"DEFENSIBLE TITLE" means such right, title and interest that is (a)
evidenced by an instrument or instruments filed of record in accordance with the
conveyance and recording laws of the applicable jurisdiction to the extent
necessary to prevail against competing claims of bona fide purchasers for value
without notice and (b) subject to Permitted Encumbrances, free and clear of all
Liens, claims, infringements, burdens or other defects.

"DISCLOSURE SCHEDULE" means the DISCLOSURE SCHEDULE attached hereto and any
documents listed on such DISCLOSURE SCHEDULE and expressly incorporated therein
by reference.

"DISSENTING STOCKHOLDER(S)" means holder(s) of Tide West Common Stock who
have validly perfected appraisal rights under Section 262 of the DGCL.

"DRACO" means Draco Petroleum, Inc., an Oklahoma corporation and a
wholly-owned subsidiary of Tide West.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

"EFFECTIVE TIME" has the meaning specified in Section 2.7.

"ENVIRONMENTAL LAW" means any federal, state, local or foreign statute,
code, ordinance, rule, regulation, policy, guideline, permit, consent, approval,
license, judgment, order, writ, decree, common law, injunction or other
authorization in effect on the date of the Original Agreement or at a previous
time applicable to Tide West's operations relating to (a) emissions, discharges,
releases or threatened releases of Hazardous Materials into the natural
environment, including into ambient air, soil, sediments, land surface or
subsurface, buildings or facilities, surface water, groundwater, publicly-owned
treatment works, septic systems or land; (b) the generation, treatment, storage,
disposal, use, handling, manufacturing, transportation or shipment of Hazardous
Materials; (c) occupational health and safety; or (d) otherwise relating to the
pollution of the environment, solid waste handling treatment or disposal, or
operation or reclamation of oil and gas operations or mines.

"EXCHANGE AGENT" means Harris Savings and Trust, the transfer agent for
shares of Parent Common Stock.

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

"EXCHANGE FUND" has the meaning specified in Section 2.5(a).

"FAILURE AMOUNT" has the meaning specified in Section 6.2(a).

A-2
<PAGE> 132

"GAAP" means generally accepted accounting principles, as recognized by the
U.S. Financial Accounting Standards Board (or any generally recognized
successor).

"GOVERNMENTAL ACTION" means any authorization, application, approval,
consent, exemption, filing, license, notice, registration, permit or other
requirement of, to or with any Governmental Authority.

"GOVERNMENTAL AUTHORITY" means any national, state, county or municipal
government, domestic or foreign, any agency, board, bureau, commission, court,
department or other instrumentality of any such government, or any arbitrator in
any case that has jurisdiction over any of the Tide West Companies, Parent or
Merger Sub or any of their respective properties or assets.

"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.

"HAZARDOUS MATERIAL" means (a) any "hazardous substance," as defined by
CERCLA; (b) any "hazardous waste" or "solid waste," in either case as defined by
the Resource Conservation and Recovery Act, as amended; (c) any solid,
hazardous, dangerous or toxic chemical, material, waste or substance, within the
meaning of and regulated by any Environmental Law; (d) any radioactive material,
including any naturally occurring radioactive material, and any source, special
or byproduct material as defined in 42 U.S.C. 2011 et seq. and any amendments or
authorizations thereof; (e) any asbestos-containing materials in any form or
condition; (f) any polychlorinated biphenyls in any form or condition; or (g)
petroleum, petroleum hydrocarbons, or any fraction or byproducts thereof.

"HORIZON" means Horizon Gas Partners, L.P., a Delaware limited partnership.

"HYDROCARBON AGREEMENT" means any of the Hydrocarbon Sales Agreements, the
Hydrocarbon Purchase Agreements and the Hydrocarbon Support Agreements.

"HYDROCARBON PURCHASE AGREEMENT" means any sales agreement, purchase
contract or marketing agreement that is currently in effect and under which any
of the Tide West Companies is a buyer of Hydrocarbons for resale (other than
purchase agreements entered into in the ordinary course of business with a term
of three months or less, terminable without penalty on 30 days' notice or less,
which provide for a price not greater than the market value price that would be
paid pursuant to an arm's-length contract for the same term with an unaffiliated
third party seller, and which do not obligate the purchaser to take any
specified quantity of Hydrocarbons or to pay for any deficiencies in quantities
of Hydrocarbons not taken).

"HYDROCARBON SALES AGREEMENT" means any sales agreement, purchase contract
or marketing agreement that is currently in effect and under which any of the
Tide West Companies is a seller of Hydrocarbons (other than "spot" sales
agreements entered into in the ordinary course of business with a term of three
months or less, terminable without penalty on 30 days' notice or less, and which
provide for a price not less than the market value price that would be received
pursuant to an arms'-length contract for the same term with an unaffiliated
third party purchaser).

"HYDROCARBON SUPPORT AGREEMENT" means any gathering, transportation,
treatment, compression, processing or similar agreement that is currently in
effect and to which any of the Tide West Companies is a party (other than
gathering, transportation, treatment, compression, processing and similar
agreements that have been entered into in the ordinary course of business and
which contain market value prices and terms of the type found in gathering,
transportation, treatment, compression, processing and similar agreements
entered into between unaffiliated parties in arm's-length transactions).

"HYDROCARBONS" means oil, condensate, gas, casinghead gas and other liquid
or gaseous hydrocarbons.

"INDEMNIFIED PARTIES" has the meaning specified in Section 5.15.

"LIEN" means any lien, mortgage, security interest, pledge, deposit,
production payment, restriction, burden, encumbrance, rights of a vendor under
any title retention or conditional sale agreement, or lease or other arrangement
substantially equivalent thereto.

"MAJOR TIDE WEST STOCKHOLDER" means Natural Gas Partners, L.P., a Delaware
limited partnership.

"MARKET PRICE" means the average of the per share closing sales prices of
the Parent Common Stock on the NYSE (as reported by The Wall Street Journal, or
if not so reported, by another authoritative source) over the 10 trading days
ending five business days preceding the Closing Date.

A-3
<PAGE> 133

"MATERIAL" or "MATERIALLY" (whether or not capitalized) means circumstances
or results having an economic effect in excess of $500,000, except as otherwise
specified.

"MATERIAL ADVERSE EFFECT" means (a) when used with respect to Tide West, a
result or consequence that would materially adversely affect the condition
(financial or otherwise), results of operations or business of the Tide West
Companies (taken as a whole) or the aggregate value of their assets, would
materially impair the ability of the Tide West Companies (taken as a whole) to
own, hold, develop and operate their assets, or would impair Tide West's ability
to perform its obligations hereunder or consummate the transactions contemplated
hereby; and (b) when used with respect to Parent, a result or consequence that
would materially adversely affect the condition (financial or otherwise),
results of operations or business of Parent and the Parent Material Subsidiaries
(taken as a whole) or the aggregate value of their assets, would materially
impair the ability of Parent and the Parent Material Subsidiaries (taken as a
whole) to own, hold, develop and operate their assets, or would impair Parent's
or Merger Sub's ability to perform its respective obligations hereunder or
consummate the transactions contemplated hereby.

"MERGER" has the meaning specified in Section 2.1.

"MERGER CONSIDERATION" means the sum of (a) the Cash Consideration plus (b)
the product of the Conversion Number and the Market Price.

"MERGER SUB" means HSR Acquisition, Inc., a Delaware corporation and a
wholly-owned subsidiary of Parent.

"MERGER SUB COMMON STOCK" means the common stock, par value $.001 per
share, of Merger Sub.

"MERRILL LYNCH" means Merrill Lynch, Pierce, Fenner & Smith Incorporated.

"NYSE" means The New York Stock Exchange, Inc.

"OIL AND GAS INTEREST(S)" means (a) direct and indirect interests in and
rights with respect to oil, gas, mineral and related properties and assets of
any kind and nature, direct or indirect, including working, royalty and
overriding royalty interests, production payments, operating rights, net profits
interests, other non-working interests and non-operating interests; (b)
interests in and rights with respect to Hydrocarbons and other minerals or
revenues therefrom and contracts in connection therewith and claims and rights
thereto (including oil and gas leases, operating agreements, unitization and
pooling agreements and orders, division orders, transfer orders, mineral deeds,
royalty deeds, oil and gas sales, exchange and processing contracts and
agreements and, in each case, interests thereunder), surface interests, fee
interests, reversionary interests, reservations and concessions; (c) easements,
rights of way, licenses, permits, leases, and other interests associated with,
appurtenant to, or necessary for the operation of any of the foregoing; and (d)
interests in equipment and machinery (including well equipment and machinery),
oil and gas production, gathering, transmission, compression, treating,
processing and storage facilities (including tanks, tank batteries, pipelines
and gathering systems), pumps, water plants, electric plants, gasoline and gas
processing plants, refineries and other tangible personal property and fixtures
associated with, appurtenant to, or necessary for the operation of any of the
foregoing. References in this Agreement to the "OIL AND GAS INTERESTS OF TIDE
WEST" or "TIDE WEST'S OIL AND GAS INTERESTS" mean the collective Oil and Gas
Interests of the Tide West Companies.

"OWNERSHIP INTERESTS" means the ownership interests of Tide West in its
assets, as set forth on Schedule 1.1(b).

"PARENT" means HS Resources, Inc., a Delaware corporation.

"PARENT CERTIFICATE" means a certificate representing shares of Parent
Common Stock.

"PARENT COMMON STOCK" means the common stock, par value $.001 per share, of
Parent.

"PARENT FINANCIAL STATEMENTS" means the audited and unaudited consolidated
financial statements of Parent and its subsidiaries (including the related
notes) included (or incorporated by reference) in Parent's Annual Report on Form
10-K for the year ended December 31, 1994, and Quarterly Report on Form 10-Q for
the quarter ended September 30, 1995, in each case as filed with the SEC.

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<PAGE> 134

"PARENT MATERIAL SUBSIDIARY(IES)" means Resource Gathering Systems, Inc.,
Resolute Resources, Inc., Elk Exploration, Inc. and HS Partners, Inc.

"PARENT MEETING" means the meeting of the stockholders of Parent called for
the purpose of voting on the Tide West Proposal.

"PARENT PREFERRED STOCK" means the preferred stock, par value $.001 per
share, of Parent.

"PARENT REPRESENTATIVE" means any director, officer, employee, agent,
advisor (including legal, accounting and financial advisors), Affiliate or other
representative of Parent or its subsidiaries.

"PARENT SEC DOCUMENTS" has the meaning specified in Section 4.5.

"PAYOUT BALANCES" has the meaning specified in Section 3.36.

"PERMITTED ENCUMBRANCES" means (a) Liens for Taxes, assessments or other
governmental charges or levies if the same shall not at the particular time in
question be due and delinquent or (if foreclosure, distraint, sale or other
similar proceedings shall not have been commenced or, if commenced, shall have
been stayed) are being contested in good faith by appropriate proceedings and if
any of the Tide West Companies shall have set aside on its books such reserves
(segregated to the extent required by sound accounting practices) as may be
required by or consistent with GAAP and, whether reserves are set aside or not,
are listed on the DISCLOSURE SCHEDULE; (b) Liens of carriers, warehousemen,
mechanics, laborers, materialmen, landlords, vendors, workmen and operators
arising by operation of law in the ordinary course of business or by a written
agreement existing as of the date of the Original Agreement and necessary or
incident to the exploration, development, operation and maintenance of
Hydrocarbon properties and related facilities and assets for sums not yet due or
being contested in good faith by appropriate proceedings, if any of the Tide
West Companies shall have set aside on its books such reserves (segregated to
the extent required by sound accounting practices) as may be required by or
consistent with GAAP and, whether reserves are set aside or not, are listed on
the DISCLOSURE SCHEDULE; (c) Liens incurred in the ordinary course of business
in connection with worker's compensation, unemployment insurance and other
social security legislation (other than ERISA) which would not, individually or
in the aggregate, result in a Material Adverse Effect on the Tide West
Companies; (d) Liens incurred in the ordinary course of business to secure the
performance of bids, tenders, trade contracts, leases, statutory obligations,
surety and appeal bonds, performance and repayment bonds and other obligations
of a like nature; (e) Liens, easements, rights-of-way, restrictions, servitudes,
permits, conditions, covenants, exceptions, reservations and other similar
encumbrances incurred in the ordinary course of business or existing on property
and not materially impairing the value of the assets of any of Tide West
Companies or interfering with the ordinary conduct of the business of any of the
Tide West Companies or rights to any of their assets; (f) Liens arising pursuant
to Section 9.319 of the Texas Business and Commerce Code and all other similar
Liens created or arising by operation of law to secure a party's obligations as
a purchaser of oil and gas; (g) all rights to consent by, required notices to,
filings with, or other actions by Governmental Authorities to the extent
customarily obtained subsequent to closing; (h) farmout, carried working
interest, joint operating, unitization, royalty, overriding royalty, sales and
similar agreements relating to the exploration or development of, or production
from, Hydrocarbon properties entered into in the ordinary course of business and
not in violation of Section 5.1(c), provided the effect thereof on the working
and net revenue interest of Tide West has been properly reflected in the
Ownership Interests; (i) any defects, irregularities or deficiencies in title to
easements, rights-of-way or other surface use agreements that do not materially
adversely affect the value of any asset of any of the Tide West Companies by an
amount in excess of $10,000; (j) preferential rights to purchase and Third-Party
Consents; (k) Liens arising under or created pursuant to either Bank Credit
Agreement; and (l) Liens described on the DISCLOSURE SCHEDULE.

"PERSON" means any natural person, corporation, company, limited or general
partnership, joint stock company, joint venture, association, limited liability
company, trust, bank, trust company, land trust, business trust or other entity
or organization, whether or not a Governmental Authority.

"PROXY STATEMENT/PROSPECTUS" means a joint proxy statement in definitive
form relating to the Tide West Meeting and the Parent Meeting, which proxy
statement will be included as a prospectus in the Registration Statement.

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<PAGE> 135

"REGISTRATION STATEMENT" means the Registration Statement on Form S-4 to be
filed by Parent in connection with the issuance of Parent Common Stock pursuant
to the Merger.

"RESERVE DATA VALUE" means the 10% present value of the proved reserves
contained in Tide West's Oil and Gas Interests, as shown on the October 1, 1995,
reserve report of Tide West.

"RESPONSIBLE OFFICER" means, with respect to any corporation, the Chief
Executive Officer, President or any Vice President of such corporation.

"RETAINED EMPLOYEES" has the meaning specified in Section 5.16.

"RODEN" means Roden Participants, Ltd., a Texas limited partnership.

"SEC" means the Securities and Exchange Commission.

"SECURITIES ACT" means the Securities Act of 1933, as amended.

"SHARE PRICE" means the per share closing sales price of the Parent Common
Stock on the NYSE (as reported by The Wall Street Journal, or if not so
reported, by another authoritative source) on the day immediately preceding the
Closing Date.

"SURVIVING CORPORATION" has the meaning specified in Section 2.2.

"TAX RETURNS" has the meaning specified in Section 3.16(a).

"TAXES" means taxes of any kind, levies or other like assessments, customs,
duties, imposts, charges or fees, including income, gross receipts, ad valorem,
value added, excise, real or personal property, asset, sales, use, federal
royalty, license, payroll, transaction, capital, net worth and franchise taxes,
estimated taxes, withholding, employment, social security, workers compensation,
utility, severance, production, unemployment compensation, occupation, premium,
windfall profits, transfer and gains taxes or other governmental taxes imposed
or payable to the United States or any state, local or foreign governmental
subdivision or agency thereof, and in each instance such term shall include any
interest, penalties or additions to tax attributable to any such Tax, including
penalties for the failure to file any Tax Return or report.

"THIRD-PARTY CONSENT" means the consent or approval of any Person other
than Tide West, Parent or any Governmental Authority.

"TIDE WEST" means Tide West Oil Company, a Delaware corporation.

"TIDE WEST CERTIFICATE" means a certificate representing shares of Tide
West Common Stock.

"TIDE WEST COMMON STOCK" means the common stock, par value $.01 per share,
of Tide West.

"TIDE WEST COMMON STOCK WARRANT" means a common stock purchase warrant
(issued and outstanding on the date of the Original Agreement and at the
Effective Time or subject to a Tide West Unit Warrant issued and outstanding on
the date of the Original Agreement and at the Effective Time) representing the
right to purchase one-tenth of a share of Tide West Common Stock for an exercise
price of $3.00, whether issued pursuant to the Warrant Agreement, dated as of
June 21, 1991, between Tide West and American Securities Transfer, Incorporated
(as amended or supplemented as of the date of the Original Agreement) or upon
exercise of a Tide West Unit Warrant.

"TIDE WEST COMPANIES" means Tide West, TWTT and Draco.

"TIDE WEST EMPLOYEE BENEFIT PLANS" has the meaning specified in Section
3.17(a).

"TIDE WEST FINANCIAL STATEMENTS" means the audited and unaudited
consolidated financial statements of Tide West and its subsidiaries (including
the related notes) included (or incorporated by reference) in Tide West's Annual
Report on Form 10-K for the year ended December 31, 1994, and Quarterly Report
on Form 10-Q for the quarter ended September 30, 1995, in each case as filed
with the SEC.

"TIDE WEST GUARANTY" means a guarantee by Tide West of TWTT's obligations
under any Hydrocarbon Agreement or other natural gas purchase agreement.

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<PAGE> 136

"TIDE WEST MATERIAL AGREEMENT(S)" means (a) any written or oral agreement,
contract, commitment or understanding to which any of the Tide West Companies is
a party, by which any of the Tide West Companies is directly or indirectly
bound, or to which any asset of any of the Tide West Companies may be subject,
involving total value or consideration in excess of $500,000, (b) either Bank
Credit Agreement, and/or (c) the partnership agreement of Horizon, in each case
as amended and supplemented as of the date of the Original Agreement.

"TIDE WEST MEETING" means the meeting of the stockholders of Tide West
called for the purpose of voting on the Tide West Proposal.

"TIDE WEST PERMITS" has the meaning specified in Section 3.11.

"TIDE WEST PROPOSAL" means the proposal to approve this Agreement and the
Merger, which proposal is to be presented to the stockholders of Tide West and
Parent in the Proxy Statement/Prospectus.

"TIDE WEST REPRESENTATIVE" means any director, officer, employee, agent,
advisor (including legal, accounting and financial advisors), Affiliate or other
representative of any of the Tide West Companies.

"TIDE WEST SEC DOCUMENTS" has the meaning specified in Section 3.6.

"TIDE WEST STOCK OPTION" means an option (issued and outstanding on the
date of the Original Agreement and immediately prior to the Effective Time) to
acquire shares of Tide West Common Stock granted pursuant to the Tide West Oil
Company 1991 Stock Option Plan.

"TIDE WEST UNIT WARRANT" means a purchase warrant (issued and outstanding
on the date of the Original Agreement and at the Effective Time) representing
the right to purchase a unit for an exercise price of $5.10, with each such unit
consisting of two-tenths of a share of Tide West Common Stock and two Tide West
Common Stock Warrants.

"TIDE WEST WARRANT" means a Tide West Common Stock Warrant or a Tide West
Unit Warrant.

"TWTT" means Tide West Trading & Transport Company, an Oklahoma corporation
and a wholly-owned subsidiary of Tide West.

1.2 REFERENCES AND TITLES. All references in this Agreement to Exhibits,
Schedules, Articles, Sections, subsections and other subdivisions refer to the
corresponding Exhibits, Schedules, Articles, Sections, subsections and other
subdivisions of or to this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any Articles, Sections, subsections or other
subdivisions of this Agreement are for convenience only, do not constitute any
part of this Agreement, and shall be disregarded in construing the language
hereof. The words "THIS AGREEMENT," "HEREIN," "HEREBY," "HEREUNDER" and
"HEREOF," and words of similar import, refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. The words "THIS
ARTICLE," "THIS SECTION" and "THIS SUBSECTION," and words of similar import,
refer only to the Article, Section or subsection hereof in which such words
occur. The word "OR" is not exclusive, and the word "INCLUDING" (in its various
forms) means "INCLUDING WITHOUT LIMITATION." Pronouns in masculine, feminine or
neuter genders shall be construed to state and include any other gender, and
words, terms and titles (including terms defined herein) in the singular form
shall be construed to include the plural and vice versa, unless the context
otherwise requires.

As used in the representations and warranties contained in this Agreement,
the phrase "TO THE KNOWLEDGE" of the representing party shall mean that
Responsible Officers of such representing party, individually or collectively,
either (a) know that the matter being represented and warranted is true and
accurate or (b) have no reason, after reasonable inquiry, to believe that the
matter being represented and warranted is not true and accurate.

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ARTICLE 2

THE MERGER

2.1 THE MERGER. Subject to the terms and conditions set forth in this
Agreement, at the Effective Time, Tide West shall be merged with and into Merger
Sub in accordance with the provisions of this Agreement. Such merger is referred
to herein as the "MERGER."

2.2 EFFECT OF THE MERGER. Upon the effectiveness of the Merger, the
separate existence of Tide West shall cease and Merger Sub, as the surviving
corporation in the Merger (the "SURVIVING CORPORATION"), shall continue its
corporate existence under the laws of the State of Delaware. The Merger shall
have the effects specified in this Agreement and the DGCL.

2.3 GOVERNING INSTRUMENTS, DIRECTORS AND OFFICERS OF THE SURVIVING
CORPORATION.

(a) The certificate of incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until duly amended in accordance with
its terms and applicable law; provided, however, that Article I thereof shall be
amended and restated to read in its entirety as follows: "Article I: The name of
the corporation is HSRTW, Inc."

(b) The by-laws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the by-laws of the Surviving Corporation until duly
amended in accordance with their terms and applicable law.

(c) The directors and officers of Merger Sub at the Effective Time shall be
the directors and officers, respectively, of the Surviving Corporation from the
Effective Time until their respective successors have been duly elected or
appointed in accordance with the certificate of incorporation and by-laws of the
Surviving Corporation and applicable law.

2.4 EFFECT ON SECURITIES.

(a) MERGER SUB STOCK. At the Effective Time, by virtue of the Merger and
without any action on the part of any holder thereof, each share of Merger Sub
Common Stock outstanding immediately prior to the Effective Time shall remain
outstanding and continue as one share of capital stock of the Surviving
Corporation and each certificate evidencing ownership of any such shares shall
continue to evidence ownership of the same number of shares of the capital stock
of the Surviving Corporation.

(b) TIDE WEST SECURITIES.

(i) TIDE WEST COMMON STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of any holder thereof (but
subject to the provisions of Section 2.5(e)), each share of Tide West
Common Stock that is issued and outstanding immediately prior to the
Effective Time (other than shares of Tide West Common Stock held by
Dissenting Stockholders) shall be converted into the right to receive (A)
shares of validly issued, fully paid and nonassessable Parent Common Stock,
with each such share of Tide West Common Stock being converted into the
fraction of a share of Parent Common Stock equal to the Conversion Number;
and (B) cash in the amount of the Cash Consideration. Each share of Tide
West Common Stock, when so converted, shall automatically be cancelled and
retired, shall cease to exist and shall no longer be outstanding; and the
holder of any certificate representing any such shares shall cease to have
any rights with respect thereto, except the right to receive the shares of
Parent Common Stock to be issued in exchange therefor and the Cash
Consideration (along with any cash in lieu of fractional shares of Parent
Common Stock as provided in Section 2.5(e) and any unpaid dividends and
distributions with respect to such shares of Parent Common Stock as
provided in Section 2.5(c)), without interest, upon the surrender of such
certificate in accordance with Section 2.5. The Cash Consideration shall be
decreased in increments of $.01 and the Conversion Number shall be
correspondingly increased for each such increment by an amount equal to
$.01 divided by the Share Price (with the aggregate increase in the
Conversion Number rounded to the fourth decimal point) to the extent
necessary to cause "(A)" to be equal to or greater than 40 percent of "(B)"
where (A) is the product of the Share Price and the number of shares of
Parent Common Stock issued in the Merger (excluding those shares issued to
any 5 percent shareholder of Tide West Common

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Stock as of the Closing Date that has not represented that as of such date
it has no intention, plan or arrangement to dispose of any Parent Common
Stock received in the Merger), and (B) is the sum of (i) the product
determined in clause (A) (without applying the parenthetical exclusion in
clause (A)), (ii) the amount of cash to be paid to holders of Tide West
Common Stock pursuant to Section 2.4(b)(i) as Cash Consideration, and (iii)
the amount of cash or other property to be paid to holders of Tide West
Common Stock that exercise dissenter's rights as contemplated under Section
2.4(b)(v) which shall be assumed to be (on a per share basis) the greater
of (I) the sum of the value of the Parent Common Stock (valued at the Share
Price) and the Cash Consideration given per share of Tide West Common Stock
and (II) the sum of $8.75 and the product of .6295 and the Share Price
determined as if the date of the Original Agreement were the Closing Date;
provided, however, if the adjustments to the Cash Consideration and the
Conversion Number pursuant to the foregoing formulas would result in the
issuance of more than 7,161,312 shares of Parent Common Stock under this
Section 2.4(b)(i), then (i) adjustments to the Cash Consideration and the
Conversion Number pursuant to the foregoing formulas shall first be
determined so as to result in an issuance of 7,161,312 shares of Parent
Common Stock, and (ii) based on the Conversion Number so determined, the
Cash Consideration shall thereafter be reduced to the extent necessary so
as to cause "(A)" to be equal to 40 percent of "(B)" using the actual Share
Price.

(ii) TIDE WEST TREASURY STOCK. At the Effective Time, by virtue of
the Merger, all shares of Tide West Common Stock that are issued and held
as treasury stock shall be cancelled and retired and shall cease to exist,
and no shares of Parent Common Stock, Cash Consideration or other
consideration shall be paid or payable in exchange therefor.

(iii) TIDE WEST STOCK OPTIONS. Each Tide West Stock Option shall be
or become fully vested prior to the Effective Time and, at the option of
the holder thereof, either (A) shall be exercised immediately prior to the
Effective Time; or (b) at the Effective Time, by virtue of the Merger and
without any action on the part of the holder thereof, shall be cancelled
and converted into the right to receive, for each share of Tide West Common
Stock with respect to which such Tide West Stock Option is exercisable,
cash in an amount equal to the amount by which the Merger Consideration
exceeds the per share exercise price of such Tide West Stock Option. The
amounts so determined shall be paid to the holders of the Tide West Stock
Options not later than three business days after the Effective Time.

(iv) TIDE WEST WARRANTS. All Tide West Warrants shall remain
outstanding following the Effective Time. At the Effective Time, by virtue
of the Merger and without any action on the part of Tide West or any holder
thereof, each Tide West Warrant shall be assumed by Parent and shall be
exercisable on the same terms and conditions as apply immediately prior to
the Effective Time, except as follows:

(A) Each Tide West Common Stock Warrant shall be exercisable for
that number of shares of Parent Common Stock and the amount of Cash
Consideration into which the number of shares of Tide West Common Stock
subject to such Tide West Common Stock Warrant immediately prior to the
Effective Time would be converted under Section 2.4(b)(i); and

(B) Each Tide West Unit Warrant shall be exercisable for (1) that
number of shares of Parent Common Stock and the amount of Cash
Consideration into which the number of shares of Tide West Common Stock
subject to such Tide West Unit Warrant immediately prior to the
Effective Time would be converted under Section 2.4(b)(i), plus (2) two
Tide West Common Stock Warrants (with each such Tide West Common Stock
Warrant representing the right to purchase that number of shares of
Parent Common Stock and to receive that amount of Cash Consideration
into which the number of shares of Tide West Common Stock subject to
such Tide West Common Stock Warrant immediately prior to the Effective
Time would be converted under Section 2.4(b)(i)).

(v) Except as provided in this Section 2.4(b) or as otherwise agreed
to by the parties, (A) the provisions of any other plan, program or
arrangement providing for the issuance or grant of any other interest in
respect of the capital stock of the Tide West Companies shall become null
and void, and (B) the Tide West Companies shall use all reasonable efforts
to ensure that, following the Effective

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Time, no holder of options or rights or any participant in any plan,
program or arrangement shall have any right thereunder to acquire any
equity securities of the Tide West Companies, Merger Sub, Parent or any
direct or indirect subsidiary thereof.

(vi) SHARES OF DISSENTING STOCKHOLDERS. Any issued and outstanding
shares of Tide West Common Stock held by a Dissenting Stockholder shall be
converted into the right to receive such consideration as may be determined
to be due to such Dissenting Stockholder pursuant to the DGCL; provided,
however, shares of Tide West Common Stock outstanding at the Effective Time
and held by a Dissenting Stockholder who shall, after the Effective Time,
withdraw his demand for appraisal or lose his right of appraisal as
provided in the DGCL, shall be deemed to be converted, as of the Effective
Time, into the right to receive the shares of Parent Common Stock and the
amount of cash (without interest) specified in Section 2.4(b)(i) in
accordance with the procedures specified in Section 2.5(b). Tide West shall
give Parent (A) prompt notice of any written demands for appraisal,
withdrawals of demands for appraisal and any other instruments served
pursuant to the DGCL received by Tide West, and (B) the opportunity to
direct all negotiations and proceedings with respect to demands for
appraisal under the DGCL. Tide West will not voluntarily make any payment
with respect to any demands for appraisal and will not, except with the
prior written consent of Parent, settle or offer to settle any such
demands.

2.5 EXCHANGE OF CERTIFICATES.

(a) EXCHANGE FUND. Immediately after the Effective Time, Parent shall
deposit with the Exchange Agent, for the benefit of the holders of shares of
Tide West Common Stock and for exchange in accordance with this Agreement,
certificates representing the shares of Parent Common Stock to be issued, and
funds necessary to pay the Cash Consideration, in exchange for shares of Tide
West Common Stock pursuant to Section 2.4(b)(i). Such shares of Parent Common
Stock, together with any dividends or distributions with respect thereto (as
provided in Section 2.5(c)) and such funds, are referred to herein as the
"EXCHANGE FUND." The Exchange Agent, pursuant to irrevocable instructions
consistent with the terms of this Agreement, shall deliver the Parent Common
Stock and the Cash Consideration to be issued or paid pursuant to Section
2.4(b)(i) out of the Exchange Fund, and the Exchange Fund shall not be used for
any other purpose whatsoever. The Exchange Agent shall not be entitled to vote
or exercise any rights of ownership with respect to the Parent Common Stock held
by it from time to time hereunder, except that it shall receive and hold all
dividends or other distributions paid or distributed with respect thereto for
the account of Persons entitled thereto.

(b) EXCHANGE PROCEDURES.

(i) As soon as reasonably practicable after the Effective Time, Parent
shall cause the Exchange Agent to mail to each holder of record of a Tide
West Certificate that, immediately prior to the Effective Time, represented
shares of Tide West Common Stock, which was converted into the right to
receive Parent Common Stock and Cash Consideration pursuant to Section
2.4(b)(i), a letter of transmittal to be used to effect the exchange of
such Tide West Certificate for a Parent Certificate (and cash in lieu of
fractional shares) and the Cash Consideration, along with instructions for
using such letter of transmittal to effect such exchange. The letter of
transmittal (or the instructions thereto) shall specify that delivery of
any Tide West Certificate shall be effected, and risk of loss and title
thereto shall pass, only upon delivery of such Tide West Certificate to the
Exchange Agent and shall be in such form and have such other provisions as
Parent may reasonably specify.

(ii) Upon surrender to the Exchange Agent of a Tide West Certificate
for cancellation, together with a duly completed and executed letter of
transmittal and any other required documents (including, in the case of any
Person constituting an "affiliate" of Tide West for purposes of Rule 145(c)
and (d) under the Securities Act, a written agreement from such Person as
described in Section 5.10, if not theretofore delivered to Parent), (A) the
holder of such Tide West Certificate shall be entitled to receive in
exchange therefor a Parent Certificate representing the number of whole
shares of Parent Common Stock and Cash Consideration that such holder has
the right to receive pursuant to Section 2.4(b)(i), any cash in lieu of
fractional shares of Parent Common Stock as provided in Section 2.5(e), and
any unpaid dividends and distributions that such holder has the right to
receive pursuant to Section 2.5(c) (after

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giving effect to any required withholding of taxes); and (B) the Tide West
Certificate so surrendered shall forthwith be cancelled. No interest shall
be paid or accrued on the Cash Consideration, cash in lieu of fractional
shares and unpaid dividends and distributions, if any, payable to holders
of Tide West Certificates.

(iii) In the event of a transfer of ownership of Tide West Common
Stock that is not registered in the transfer records of Tide West, a Parent
Certificate representing the appropriate number of shares of Parent Common
Stock and the appropriate Cash Consideration (along with any cash in lieu
of fractional shares and any unpaid dividends and distributions that such
holder has the right to receive) may be issued or paid to a transferee if
the Tide West Certificate representing such shares of Tide West Common
Stock is presented to the Exchange Agent accompanied by all documents
required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid.

(iv) Until surrendered as contemplated by this Section 2.5(b), each
Tide West Certificate shall be deemed at any time after the Effective Time
to represent only the right to receive upon such surrender a Parent
Certificate representing shares of Parent Common Stock and Cash
Consideration as provided in Section 2.4(b)(i) (along with any cash in lieu
of fractional shares and any unpaid dividends and distributions).

(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions with respect to Parent Common Stock declared or made after
the Effective Time with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Tide West Certificate. Subject to the effect of
applicable laws, (i) at the time of the surrender of a Tide West Certificate for
exchange in accordance with the provisions of this Section 2.5, there shall be
paid to the surrendering holder, without interest, the amount of dividends or
other distributions (having a record date after the Effective Time but on or
prior to surrender and a payment date on or prior to surrender) theretofore paid
with respect to the number of whole shares of Parent Common Stock that such
holder is entitled to receive (less the amount of any withholding taxes that may
be required with respect thereto); and (ii) at the appropriate payment date,
there shall be paid to the surrendering holder, without interest, the amount of
dividends or other distributions (having a record date after the Effective Time
but on or prior to surrender and a payment date subsequent to surrender) payable
with respect to the number of whole shares of Parent Common Stock that such
holder receives (less the amount of any withholding taxes that may be required
with respect thereto).

(d) NO FURTHER OWNERSHIP RIGHTS IN TIDE WEST COMMON STOCK. All shares of
Parent Common Stock issued, and the Cash Consideration paid, upon the surrender
for exchange of shares of Tide West Common Stock in accordance with the terms
hereof (including any cash paid pursuant to Section 2.5(c) or (e)) shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
shares of Tide West Common Stock. After the Effective Time, there shall be no
further registration of transfers on the Surviving Corporation's stock transfer
books of the shares of Tide West Common Stock that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, a Tide West
Certificate is presented to the Surviving Corporation for any reason, it shall
be cancelled and exchanged as provided in this Section 2.5.

(e) TREATMENT OF FRACTIONAL SHARES. No Parent Certificates or scrip
representing fractional shares of Parent Common Stock shall be issued in the
Merger and, except as provided in this Section 2.5(e), no dividend or other
distribution, stock split or interest shall relate to any such fractional share,
and such fractional share shall not entitle the owner thereof to vote or to any
other rights of a stockholder of Parent. In lieu of any fractional share of
Parent Common Stock to which a holder of Tide West Common Stock would otherwise
be entitled, such holder, upon surrender of a Tide West Certificate as described
in this Section, shall be paid an amount in cash (without interest) determined
by multiplying (i) the Market Price by (ii) the fraction of a share of Parent
Common Stock to which such holder would otherwise be entitled, in which case
Parent shall make available to the Exchange Agent, without regard to any other
cash being provided to the Exchange Agent, the amount of cash necessary to make
such payments.

(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund and
cash held by the Exchange Agent in accordance with the terms of this Section 2.5
that remains unclaimed by the former stockholders of Tide West for a period of
one year following the Effective Time shall be delivered to Parent,

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upon demand. Thereafter, any former stockholders of Tide West who have not
theretofore complied with the provisions of this Section 2.5 shall look only to
Parent for payment of their claim for Parent Common Stock, the Cash
Consideration, any cash in lieu of fractional shares of Parent Common Stock and
any dividends or distributions with respect to Parent Common Stock (all without
interest).

(g) NO LIABILITY. Neither Parent, Tide West, the Surviving Corporation,
the Exchange Agent nor any other Person shall be liable to any former holder of
shares of Tide West Common Stock for any amount properly delivered to any public
official pursuant to any applicable abandoned property, escheat or similar law.
Any amounts remaining unclaimed by former holders of Tide West Common Stock for
a period of three years following the Effective Time (or such earlier date
immediately prior to the time at which such amounts would otherwise escheat to
or become property of any governmental entity) shall, to the extent permitted by
applicable law, become the property of Parent, free and clear of any claims or
interest of any such holders or their successors, assigns or personal
representatives previously entitled thereto.

(h) LOST, STOLEN, OR DESTROYED TIDE WEST CERTIFICATES. If any Tide West
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Tide West Certificate to be
lost, stolen or destroyed and, if required by Parent, the posting by such Person
of a bond, in such reasonable amount as Parent may direct, as indemnity against
any claim that may be made against it with respect to such Tide West
Certificate, the Exchange Agent shall issue in exchange for such lost, stolen or
destroyed Tide West Certificate the shares of Parent Common Stock and the Cash
Consideration (along with any cash in lieu of fractional shares pursuant to
Section 2.5(e) and any unpaid dividends and distributions pursuant to Section
2.5(c)) deliverable with respect thereto pursuant to this Agreement.

2.6 CLOSING. The Closing shall take place on the Closing Date at such
time and place as is agreed upon by Parent and Tide West.

2.7 EFFECTIVE TIME OF THE MERGER. The Merger shall become effective
immediately when the Certificate of Merger is accepted for filing by the
Secretary of State of Delaware or at such time thereafter as is provided in the
Certificate of Merger (the "EFFECTIVE TIME"). As soon as practicable after the
Closing, the Certificate of Merger shall be filed, and the Effective Time shall
occur, on the Closing Date; provided, however, that the Certificate of Merger
may be filed prior to the Closing Date or prior to the Closing so long as it
provides for an effective time that occurs on the Closing Date immediately after
the Closing.

2.8 TAKING OF NECESSARY ACTION; FURTHER ACTION. Each of Parent, Merger
Sub, and Tide West shall use all reasonable efforts to take all such actions as
may be necessary or appropriate in order to effectuate the Merger under the DGCL
as promptly as commercially practicable. If, at any time after the Effective
Time, any further action is necessary or desirable to carry out the purposes of
this Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and franchises of
either of Merger Sub or Tide West, the officers and directors of the Surviving
Corporation are fully authorized, in the name of the Surviving Corporation or
otherwise to take, and shall take, all such lawful and necessary action.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF TIDE WEST

Tide West hereby represents and warrants to Parent and Merger Sub as
follows:

3.1 ORGANIZATION. Each of the Tide West Companies (a) is a corporation
duly organized, validly existing and in good standing under the laws of its
state of incorporation, (b) has the requisite power and authority to own, lease
and operate its properties and to conduct its business as it is presently being
conducted, and (c) is duly qualified to do business as a foreign corporation,
and is in good standing, in each jurisdiction where the character of the
properties owned or leased by it or the nature of its activities makes such
qualification necessary (except where any failure to be so qualified as a
foreign corporation or to be in good standing would not, individually or in the
aggregate, have a Material Adverse Effect on Tide West). Copies of the
certificate or articles of incorporation and by-laws of each of the Tide West
Companies have heretofore

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been delivered to Parent, and such copies are accurate and complete as of the
date of the Original Agreement. Tide West has no corporate subsidiaries other
than TWTT and Draco.

3.2 PARTNERSHIPS. Tide West owns a limited partner interest in Horizon,
such limited partner interest representing a "pre-payout" interest in the
capital of Horizon of 95% and a "pre-payout" interest in the distributions,
profits and losses of Horizon of 93%. Draco owns a limited partner interest in
Roden, such limited partner interest representing a "pre-payout" interest in the
capital and in the profits and losses of Roden of 17.93%. None of the Tide West
Companies owns any general or limited partner interest in any general or limited
partnership other than Horizon or Roden (other than joint venture, joint
operating or ownership arrangements or tax partnerships entered into in the
ordinary course of business or other partnerships that, individually or in the
aggregate, are not material to the operations or business of the Tide West
Companies, taken as a whole).

3.3 AUTHORITY AND ENFORCEABILITY. Tide West has the requisite corporate
power and authority to enter into and deliver this Agreement and (with respect
to consummation of the Merger, subject to the valid approval of the Tide West
Proposal by the stockholders of Tide West) to consummate the transactions
contemplated hereby. The Board of Directors of Tide West has taken all necessary
action to approve the transactions contemplated by the Agreement to Vote and
Proxy dated as of the date of the Original Agreement between Parent and the
Major Tide West Stockholder pursuant to Section 203(a) of the DGCL. The
execution and delivery of this Agreement and (with respect to consummation of
the Merger, subject to the valid approval of the Tide West Proposal by the
stockholders of Tide West) the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of Tide West, including approval by the board of directors of Tide
West, and no other corporate proceedings on the part of Tide West are necessary
to authorize the execution or delivery of this Agreement or (with respect to
consummation of the Merger, subject to the valid approval of the Tide West
Proposal by the stockholders of Tide West) to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Tide West and (with respect to the Merger, subject to the valid
approval of the Tide West Proposal by the stockholders of Tide West and assuming
that this Agreement constitutes a valid and binding obligation of Parent and
Merger Sub) constitutes a valid and binding obligation of Tide West enforceable
against Tide West in accordance with its terms.

3.4 NO VIOLATIONS. The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated hereby and compliance by
Tide West with the provisions hereof will not, conflict with, result in any
violation of or default (with or without notice or lapse of time or both) under,
give rise to a right of termination, cancellation or acceleration of any
obligation or to the loss of a material benefit under, or result in the creation
of any Lien on any of the properties or assets of any of the Tide West Companies
under, any provision of (a) the certificate or articles of incorporation or
by-laws of any of the Tide West Companies, (b) any loan or credit agreement,
note, bond, mortgage, indenture, lease, permit, concession, franchise, license
or other agreement or instrument applicable to any of the Tide West Companies,
or (c) assuming the consents, approvals, authorizations or permits and filings
or notifications referred to in Section 3.5 are duly and timely obtained or
made, any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to any of the Tide West Companies or any of their respective
properties or assets, other than (y) in the case of clause (b) above, any such
conflict, violation, default, right, loss or Lien that may arise under either
Bank Credit Agreement or any Tide West Guaranty disclosed on the DISCLOSURE
SCHEDULE, and (z) in the case of clause (b) or (c) above, any such conflict,
violation, default, right, loss or Lien that, individually or in the aggregate,
would not have a Material Adverse Effect on Tide West.

3.5 CONSENTS AND APPROVALS. No consent, approval, order or authorization
of, registration, declaration or filing with, or permit from, any Governmental
Authority is required by or with respect to any of the Tide West Companies in
connection with the execution and delivery of this Agreement by Tide West or the
consummation by Tide West of the transactions contemplated hereby, except for
the following: (a) any such consent, approval, order, authorization,
registration, declaration, filing or permit which the failure to obtain or make
would not, individually or in the aggregate, have a Material Adverse Effect on
Tide West; (b) the filing of the Certificate of Merger with the Secretary of
State of Delaware pursuant to the provisions of the DGCL; (c) the filing of a
pre-merger notification report by Tide West under the HSR Act and the expiration
or

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termination of the applicable waiting period; (d) the filing with the SEC of the
Proxy Statement/Prospectus and such reports under Section 13(a) of the Exchange
Act and such other compliance with the Exchange Act and the Securities Act and
the rules and regulations of the SEC thereunder as may be required in connection
with this Agreement and the transactions contemplated hereby and the obtaining
from the SEC of such orders as may be so required; (e) such filings and
approvals as may be required by any applicable state securities, "blue sky" or
takeover laws or Environmental Laws; and (f) such filings and approvals as may
be required by any foreign pre-merger notification, securities, corporate or
other law, rule or regulation. No Third-Party Consent is required by or with
respect to any of the Tide West Companies in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby, except for (w) any such Third-Party Consent which the failure to obtain
would not, individually or in the aggregate, have a Material Adverse Effect on
Tide West, (x) the valid approval of the Tide West Proposal by the stockholders
of Tide West, (y) any consent, approval or waiver required by the terms of
either Bank Credit Agreement, and (z) any consent, approval or waiver required
by the terms of any Tide West Guaranty disclosed on the DISCLOSURE SCHEDULE.

3.6 SEC DOCUMENTS. Tide West has made available to Parent a true and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by Tide West with the SEC since December 31, 1993, and
prior to the date of the Original Agreement (the "TIDE WEST SEC DOCUMENTS"),
which are all the documents (other than preliminary material) that Tide West was
required to file with the SEC since such date. As of their respective dates, the
Tide West SEC Documents complied in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Tide West SEC Documents,
and none of the Tide West SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.

3.7 FINANCIAL STATEMENTS. The Tide West Financial Statements were
prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Rule 10-01 of Regulation S-X of
the SEC) and fairly present, in accordance with applicable requirements of GAAP
(in the case of the unaudited statements, subject to normal, recurring
adjustments), the consolidated financial position of Tide West and its
subsidiaries as of their respective dates and the consolidated results of
operations and the consolidated cash flows of Tide West and its subsidiaries for
the periods presented therein.

3.8 CAPITAL STRUCTURE.

(a) The authorized capital stock of Tide West consists of 20,000,000 shares
of Tide West Common Stock and 20,000,000 shares of preferred stock, par value
$.01 per share.

(b) There are issued and outstanding (i) 9,787,628 shares of Tide West
Common Stock, (ii) Tide West Stock Options relating to 937,840 shares of Tide
West Common Stock, (iii) 2,796,600 Tide West Common Stock Warrants relating to
279,660 shares of Tide West Common Stock, and (iv) 140,000 Tide West Unit
Warrants relating to 28,000 shares of Tide West Common Stock and 280,000 Tide
West Common Stock Warrants (which, in turn, relate to 28,000 shares of Tide West
Common Stock). No shares of Tide West Common Stock are held by Tide West as
treasury stock.

(c) Except as set forth in Section 3.8(b), there are outstanding (i) no
shares of capital stock or other voting securities of Tide West, (ii) no
securities of Tide West or any other Person convertible into or exchangeable or
exercisable for shares of capital stock or other voting securities of Tide West,
and (iii) no subscriptions, options, warrants, calls, rights (including
preemptive rights), commitments, understandings or agreements to which Tide West
is a party or by which it is bound obligating Tide West to issue, deliver, sell,
purchase, redeem or acquire shares of capital stock or other voting securities
of Tide West (or securities convertible into or exchangeable or exercisable for
shares of capital stock or other voting securities of Tide West) or obligating
Tide West to grant, extend or enter into any such subscription, option, warrant,
call, right, commitment, understanding or agreement.

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(d) All outstanding shares of Tide West capital stock are validly issued,
fully paid and nonassessable and not subject to any preemptive right.

(e) All outstanding shares of capital stock and other voting securities of
each of TWTT and Draco are owned by Tide West, free and clear of all Liens,
claims and options of any nature (except for Permitted Encumbrances). There are
outstanding (i) no securities of TWTT, Draco or any other Person convertible
into or exchangeable or exercisable for shares of capital stock or other voting
securities of TWTT or Draco, and (ii) no subscriptions, options, warrants,
calls, rights (including preemptive rights), commitments, understandings or
agreements to which either TWTT or Draco is a party or by which it is bound
obligating TWTT or Draco to issue, deliver, sell, purchase, redeem or acquire
shares of capital stock or other voting securities of TWTT or Draco (or
securities convertible into or exchangeable or exercisable for shares of capital
stock or other voting securities of TWTT or Draco) or obligating TWTT or Draco
to grant, extend or enter into any such subscription, option, warrant, call,
right, commitment, understanding or agreement.

(f) Except as otherwise set forth in the DISCLOSURE SCHEDULE, there is no
stockholder agreement, voting trust or other agreement or understanding to which
Tide West is a party or by which it is bound relating to the voting of any
shares of the capital stock of any of the Tide West Companies.

3.9 NO UNDISCLOSED LIABILITIES. There are no liabilities of any of the
Tide West Companies of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, that are reasonably likely to
have a Material Adverse Effect on Tide West, other than (a) liabilities
adequately provided for in the Tide West Financial Statements, (b) liabilities
incurred in the ordinary course of business subsequent to September 30, 1995,
and (c) liabilities under this Agreement.

3.10 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as otherwise set forth
in the DISCLOSURE SCHEDULE or as contemplated by this Agreement, to the
knowledge of Tide West, since September 30, 1995, none of the Tide West
Companies has done any of the following:

(a) Discharged or satisfied any Lien or paid any obligation or liability,
absolute or contingent, other than current liabilities incurred and paid in the
ordinary course of business and consistent with past practices;

(b) Paid or declared any dividends or distributions, purchased, redeemed,
acquired or retired any indebtedness, stock or other securities from its
stockholders or other securityholders, made any loans or advances or guaranteed
any loans or advances to any Person (other than loans, advances or guaranties
made in the ordinary course of business and consistent with past practices), or
otherwise incurred or suffered to exist any liabilities (other than current
liabilities incurred in the ordinary course of business and consistent with past
practices);

(c) Except for Permitted Encumbrances, suffered or permitted any Lien to
arise or be granted or created against or upon any of its assets;

(d) Cancelled, waived or released any rights or claims against, or
indebtedness owed by, third parties;

(e) Amended its certificate or articles of incorporation or by-laws;

(f) Made or permitted any amendment, supplement, modification or
termination of any Tide West Material Agreement;

(g) Sold, leased, transferred, assigned or otherwise disposed of (i) any
Oil and Gas Interests of Tide West that, individually or in the aggregate, were
assigned a value in the Reserve Data Value of $100,000 or more, or (ii) any
other assets that, individually or in the aggregate, had a value at the time of
such lease, transfer, assignment or disposition of $50,000 or more (and, in each
case where a sale, lease, transfer, assignment or other disposition was made, it
was made for fair consideration in the ordinary course of business); provided,
however, that this Section 3.10(g) shall not apply to Hydrocarbons sold in the
ordinary course of business and consistent with past practices;

(h) Made any investment in or contribution, payment, advance or loan to any
Person (other than investments, contributions, payments or advances, or
commitments with respect thereto, less than $100,000 in the aggregate, made in
the ordinary course of business and consistent with past practices);

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(i) Paid, loaned or advanced (other than the payment, advance or
reimbursement of expenses in the ordinary course of business) any amounts to, or
sold, transferred or leased any of its assets to, or entered into any other
transactions with, any of its Affiliates;

(j) Made any material change in any of the accounting principles followed
by it or the method of applying such principles;

(k) Entered into any material transactions (other than this Agreement)
except in the ordinary course of business and consistent with past practices;

(l) Increased benefits or benefit plan costs or changed bonus, insurance,
pension, compensation or other benefit plans or arrangements or granted any
bonus or increase in wages, salary or other compensation or made any other
change in employment terms to any officers, directors or employees of the Tide
West Companies (except in the ordinary course of business and consistent with
past practices);

(m) Accelerated, terminated, modified, or cancelled any agreement,
contract, lease, or license (or series of related agreements, contracts, leases,
and licenses) involving more than $100,000 to which any of the Tide West
Companies is a party or by which any of them is bound;

(n) Issued any note, bond, or other debt security or created, incurred,
assumed, or guaranteed any indebtedness for borrowed money or capitalized lease
obligations involving more than $100,000 in the aggregate (other than pursuant
to the Bank Credit Agreement);

(o) Delayed or postponed the payment of accounts payable and other
liabilities outside the ordinary course of business;

(p) Cancelled, compromised, waived, or released any right or claim (or
series of related rights and claims) either involving more than $100,000 or
outside the ordinary course of business;

(q) Issued, sold, or otherwise disposed of any of its capital stock or
granted any options, warrants, or other rights to purchase or obtain (including
upon conversion, exchange, or exercise) any of its capital stock;

(r) Made any loan to, or entered into any other transaction with, any of
its directors, officers, or employees outside the ordinary course of business;

(s) Made or pledged to make any charitable or other capital contribution
outside the ordinary course of business;

(t) Expended or committed to expend capital in excess of $9,000,000;

(u) Made any change in tax elections or the manner taxes are reported;

(v) Entered into any Hydrocarbon sales or call arrangements not cancelable
on 60 days' notice;

(w) Entered into any swap, hedging or similar arrangements which remain
open on the date of the Original Agreement except as disclosed on the DISCLOSURE
SCHEDULE;

(x) Accelerated the vesting period of any option or warrant;

(y) Otherwise been involved in any other material occurrence, event,
incident, action, failure to act, or transaction outside the ordinary course of
business involving any of the Tide West Companies;

(z) Agreed, whether in writing or otherwise, to do any of the foregoing; or

(aa) Suffered any Material Adverse Effect (other than changes or trends,
including changes or trends in commodity prices, generally prevalent in or
affecting the oil and gas industry).

3.11 COMPLIANCE WITH LAWS, MATERIAL AGREEMENTS AND PERMITS. None of the
Tide West Companies is in violation of, or in default in any material respect
under, and no event has occurred that (with notice or the lapse of time or both)
would constitute a violation of or default under, (a) its certificate or
articles of incorporation or by-laws, (b) any applicable law, rule, regulation,
order, writ, decree or judgment of any Governmental Authority, or (c) any Tide
West Material Agreement, except (in the case of clause (b) or (c)

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above) for any violation or default that would not, individually or in the
aggregate, have a Material Adverse Effect on Tide West. Each of the Tide West
Companies has obtained and holds all permits, licenses, variances, exemptions,
orders, franchises, approvals and authorizations of all Governmental Authorities
necessary for the lawful conduct of its business or the lawful ownership, use
and operation of its assets ("TIDE WEST PERMITS"), except for Tide West Permits
which the failure to obtain or hold would not, individually or in the aggregate,
have a Material Adverse Effect on Tide West. Each of the Tide West Companies is
in compliance with the terms of its Tide West Permits, except where the failure
to comply would not, individually or in the aggregate, have a Material Adverse
Effect on Tide West. No investigation or review by any Governmental Authority
with respect to any of the Tide West Companies is pending or, to the knowledge
of Tide West, threatened, other than those the outcome of which would not,
individually or in the aggregate, have a Material Adverse Effect on Tide West.
To the knowledge of Tide West, no party to any Tide West Material Agreement is
in material breach of the terms, provisions and conditions of such Tide West
Material Agreement.

3.12 GOVERNMENTAL REGULATION. Neither Tide West nor any subsidiary of
Tide West is subject to regulation under the Public Utility Holding Company Act
of 1935, the Federal Power Act, the Interstate Commerce Act, the Investment
Company Act of 1940 or any state public utilities laws.

3.13 LITIGATION. Except as otherwise set forth in the DISCLOSURE
SCHEDULE, (a) no litigation, arbitration, investigation or other proceeding of
any Governmental Authority is pending or, to the knowledge of Tide West,
threatened against any of the Tide West Companies or their respective assets
which, if adversely determined, could reasonably be expected to have a Material
Adverse Effect on Tide West; (b) Tide West has no knowledge of any facts that
are likely to give rise to any litigation, arbitration, investigation or other
proceeding of any Governmental Authority which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on Tide West;
and (c) no Tide West Company is subject to any outstanding injunction, judgment,
order, decree or ruling (other than routine oil and gas field regulatory
orders). There is no litigation, proceeding or investigation pending or, to the
knowledge of Tide West, threatened against or affecting any of the Tide West
Companies that questions the validity or enforceability of this Agreement or any
other document, instrument or agreement to be executed and delivered by Tide
West in connection with the transactions contemplated hereby.

3.14 NO RESTRICTIONS. Except as otherwise set forth in the DISCLOSURE
SCHEDULE, none of the Tide West Companies is a party to (a) any agreement,
indenture or other instrument that contains restrictions with respect to the
payment of dividends or other distributions with respect to its capital, (b) any
financial arrangement with respect to or creating any indebtedness to any Person
(other than indebtedness reflected in the Tide West Financial Statements or
indebtedness incurred in the ordinary course of business), (c) any agreement,
contract or commitment relating to the making of any advance to, or investment
in, any Person (other than advances in the ordinary course of business), (d) any
guaranty or other contingent liability with respect to any indebtedness or
obligation of any Person (other than guaranties undertaken in the ordinary
course of business and other than the endorsement of negotiable instruments for
collection in the ordinary course of business), or (e) any agreement, contract
or commitment limiting in any respect its ability to compete with any Person or
otherwise conduct business of any line or nature.

3.15 TAX AUDITS AND SETTLEMENTS. Except as otherwise set forth in the
DISCLOSURE SCHEDULE, none of the Tide West Companies is a party or subject to
any unresolved or incomplete tax audit settlement.

3.16 TAXES.

(a) Each of the Tide West Companies and any affiliated, combined or unitary
group of which any such corporation is or was a member has (i) timely filed all
federal and all state, local and foreign returns, declarations, reports,
estimates, information returns and statements ("TAX RETURNS") required to be
filed by it with respect to any Taxes, (ii) timely paid all Taxes that are due
and payable (except for Taxes that are being contested in good faith by
appropriate proceedings and for which sufficient reserves have been established)
for which any of the Tide West Companies may be liable, and (iii) complied with
all applicable laws, rules and regulations relating to the payment and
withholding of Taxes, and has timely withheld from employee wages and paid over
to the proper governmental authorities all amounts required to be so withheld
and paid over.

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(b) Except as otherwise set forth in the DISCLOSURE SCHEDULE, (i) no audits
or other administrative or court proceedings are presently pending with regard
to any federal, state or local income or franchise Taxes for which any of the
Tide West Companies would be liable, and (ii) there are no pending requests for
rulings from any taxing authority, no outstanding subpoenas or requests for
information by any taxing authority with respect to any Taxes, no proposed
reassessments by any taxing authority of any property owned or leased, and no
agreements in effect to extend the time to file any material Tax Return or the
period of limitations for the assessment or collection of any material Taxes for
which any of the Tide West Companies, as the case may be, would be liable.

(c) Except as otherwise set forth in the DISCLOSURE SCHEDULE, (i) there are
no liens on any of the assets of the Tide West Companies for unpaid taxes, other
than liens for Taxes not yet due and payable, (ii) no Tide West Company has any
liability under Treasury Regulation sec. 1.1502-6 or any analogous state, local
or foreign law by reason of having been a member of any consolidated, combined
or unitary group, other than the affiliated group of which Tide West is the
common parent corporation, (iii) no Tide West Company has ever been included in
an affiliated group of corporations within the meaning of Section 1504 of the
Code other than the current affiliated group of which Tide West is the common
parent corporation, and (iv) no Tide West Company is or has been a party to any
tax sharing agreement between related corporations.

(d) The amount of liability for unpaid Taxes of the Tide West Companies
does not, in the aggregate, materially exceed the amount of the liability
accruals for Taxes reflected on the Tide West Financial Statements. The deferred
tax accounts are properly reflected in the Tide West Financial Statements.

(e) Tide West has made available to Parent complete copies of all Tax
Returns filed by the Tide West Companies with respect to any Taxes and all tax
audit reports, work papers, statements of deficiencies, and closing or other
agreements with respect thereto with respect to tax years 1993 and 1994.

(f) Except as otherwise set forth in the DISCLOSURE SCHEDULE, (i) no Tide
West Company is required to treat any of its assets as owned by another person
for federal income tax purposes or as tax-exempt bond financed property or
tax-exempt use property within the meaning of Section 168 of the Code, (ii) no
Tide West Company has entered into any compensatory agreements which would
result in a nondeductible expense pursuant to Section 280G of the Code, (iii) no
election has been made under Section 338 of the Code and no events have occurred
which would result in a deemed election under Section 338 of the Code with
respect to any Tide West Company, (iv) no election has been made under Section
341(f) of the Code with respect to any Tide West Company, (v) no Tide West
Company has participated in any international boycott as defined in Code Section
999, (vi) there are no outstanding balances of deferred gain or loss accounts
with respect to any Tide West Company under Treas. Reg. sec.sec. 1.1502-13 or
1.1502-13T, (vii) no Tide West Company has made or will make any election under
Treas. Reg. sec. 1.502-20(g)(1) with respect to the reattribution of net
operating losses, (viii) no Tide West Company is subject to any arrangement
treated as a partnership for federal income tax purposes, and (ix) no Tide West
Company has or has ever conducted branch operations in any foreign country
within the meaning of Treas. Reg.sec. 1.367(a)-6T.

(g) The books and records of Tide West, including the Tax Returns made
available to Parent, contain accurate and complete information with respect to:
(i) all material tax elections in effect with respect to the Tide West
Companies, (ii) the current tax basis of the assets of the Tide West Companies,
(iii) any excess loss accounts of any Tide West Company (iv) the current and
accumulated earnings and profits of Tide West, (v) the net operating losses and
net capital losses of the Tide West Companies, the years that such net operating
and net capital losses expire, and any restrictions to which such net operating
and net capital losses are subject under any provision of the Code or
consolidated return regulations, (vi) tax credit carryovers of the Tide West
Companies, and (vii) any overall foreign losses to the Tide West Companies under
Section 904(f) of the Code.

(h) The management of the Tide West Companies is unaware of any intention,
plan or arrangement on behalf of any holder of Tide West Common Stock to make
any disposition of the Parent Common Stock following the Effective Time.

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(i) No shareholder of Tide West that is a foreign corporation or a
nonresident alien individual has owned as much as 5% of the outstanding stock of
Tide West at any time during the five year period ending on the date of the
Original Agreement.

3.17 EMPLOYEE BENEFIT PLANS.

(a) The DISCLOSURE SCHEDULE sets forth a complete and accurate list of all
"employee benefit plans," as defined in Section 3(3) of ERISA, including
severance pay, sick leave, vacation pay, salary continuation for disability,
compensation agreements, retirement, deferred compensation, bonus, long-term
incentive, stock option, stock purchase, hospitalization, medical insurance,
life insurance and scholarship programs maintained by any of the Tide West
Companies or to which any of the Tide West Companies contributed or is obligated
to contribute (the "TIDE WEST EMPLOYEE BENEFIT PLANS"). Except for the Tide West
Employee Benefit Plans, none of the Tide West Companies maintains, or has any
fixed or contingent liability with respect to, any employee benefit, pension or
other plan that is subject to ERISA.

(b) There is no material violation of ERISA with respect to the filing of
applicable reports, documents and notices regarding any Tide West Employee
Benefit Plan with any Governmental Authority or the furnishing of such documents
to the participants or beneficiaries of the Tide West Employee Benefit Plans.
With respect to the Tide West Employee Benefit Plans, there exists no condition
or set of circumstances in connection with the Tide West Companies that could be
expected to result in liability reasonably likely to have a Material Adverse
Effect on the Tide West Companies under ERISA, the Code or any applicable law.
With respect to the Tide West Employee Benefit Plans, individually and in the
aggregate, there are no unfunded benefit obligations which have not been
accounted for by reserves, or otherwise properly footnoted in accordance with
GAAP, on the financial statements of the Tide West Companies, which obligations
are reasonably likely to have a Material Adverse Effect on the Tide West
Companies.

(c) The Tide West Employee Benefit Plans have been maintained, in all
material respects, in accordance with their terms and in accordance with all
applicable federal and state laws, and neither Tide West, TWTT, Draco, nor any
"party in interest" or "disqualified person" with respect to the Tide West
Employee Benefit Plans, has engaged in any "prohibited transaction" within the
meaning of Section 4975 of the Code.

(d) Except as otherwise set forth in the DISCLOSURE SCHEDULE, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in any payment becoming due to any
employee or group of employees of any of the Tide West Companies.

3.18 EMPLOYMENT CONTRACTS AND BENEFITS. Except as otherwise set forth in
the DISCLOSURE SCHEDULE or otherwise provided for in any Tide West Employee
Benefit Plan, (a) none of the Tide West Companies is subject to or obligated
under any consulting, employment, severance, termination or similar arrangement,
any employee benefit, incentive or deferred compensation plan with respect to
any Person, or any bonus, profit sharing, pension, stock option, stock purchase
or similar plan or other arrangement or other fringe benefit plan entered into
or maintained for the benefit of employees or any other Person, and (b) no
employee of any of the Tide West Companies or any other Person owns, or has any
right granted by any of the Tide West Companies to acquire, any interest in any
of the assets or business of any of the Tide West Companies.

3.19 LABOR MATTERS.

(a) No employees of any of the Tide West Companies are represented by any
labor organization. No labor organization or group of employees of any of the
Tide West Companies has made a demand for recognition or certification as a
union or other labor organization, and there are no representation or
certification proceedings or petitions seeking a representation proceeding
presently pending or threatened in writing to be brought or filed with the
National Labor Relations Board or any other labor relations tribunal or
authority. There are no organizing activities involving any of the Tide West
Companies pending with any labor organization or group of employees of any of
the Tide West Companies.

(b) Each of the Tide West Companies is in material compliance with all
laws, rules, regulations and orders relating to the employment of labor,
including all such laws, rules, regulations and orders relating to wages, hours,
collective bargaining, discrimination, civil rights, safety and health, workers'
compensation and

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the collection and payment of withholding or Social Security Taxes and similar
Taxes, except where the failure to comply would not, individually or in the
aggregate, have a Material Adverse Effect on Tide West.

3.20 ACCOUNTS RECEIVABLE. Except as otherwise set forth in the Disclosure
Schedule, (a) all of the accounts, notes and loans receivable that have been
recorded on the books of the Tide West Companies are bona fide and represent
accounts, notes and loans receivable validly due for goods sold or services
rendered and are reasonably expected to be collected in full within 90 days
after the applicable invoice or note maturity date (other than such accounts,
notes and loans receivable that, individually or in the aggregate, do not have a
book value as of the date of the Original Agreement in excess of $500,000); (b)
except for Permitted Encumbrances, all of such accounts, notes and loans
receivable are free and clear of any and all Liens and other adverse claims and
charges, and none of such accounts, notes or loans receivable is subject to any
offsets or claims of offset; and (c) none of the obligors on such accounts,
notes or loans receivable has given notice to any of the Tide West Companies
that it will or may refuse to pay the full amount or any portion thereof.

3.21 INSURANCE. Each of the Tide West Companies maintains, and through
the Closing Date will maintain, insurance with reputable insurers (or pursuant
to prudent self-insurance programs) in such amounts and covering such risks as
are in accordance with normal industry practice for companies engaged in
businesses similar to those of the Tide West Companies and owning properties in
the same general area in which the Tide West Companies conduct their businesses.
Each of the Tide West Companies may terminate each of its insurance policies or
binders at or after the Closing and will incur no penalties or other material
costs in doing so. None of such policies or binders was obtained through the use
of false or misleading information or the failure to provide the insurer with
all information requested in order to evaluate the liabilities and risks
insured. There is no material default with respect to any provision contained in
any such policy or binder, nor has any of the Tide West Companies failed to give
any notice or present any claim under any such policy or binder in due and
timely fashion. There are no billed but unpaid premiums past due under any such
policy or binder. Except as otherwise set forth in the DISCLOSURE SCHEDULE, (a)
there are no outstanding claims under any such policies or binders and, to the
knowledge of Tide West, there has not occurred any event that might reasonably
form the basis of any claim against or relating to any of the Tide West
Companies that is not covered by any of such policies or binders; (b) no notice
of cancellation or non-renewal of any such policies or binders has been
received; and (c) there are no performance bonds outstanding with respect to any
of the Tide West Companies.

3.22 INTANGIBLE PROPERTY. There are no material trademarks, trade names,
patents, service marks, brand names, computer programs, databases, industrial
designs, copyrights or other intangible property that are necessary for the
operation, or continued operation, of the business of any of the Tide West
Companies or for the ownership and operation, or continued ownership and
operation, of any of their assets, for which the Tide West Companies do not hold
valid and continuing authority in connection with the use thereof.

3.23 TITLE TO ASSETS. The Tide West Companies (individually or
collectively) have Defensible Title to all Oil and Gas Interests of Tide West
included or reflected in the Ownership Interests and all of their other assets.
Each Oil and Gas Interest included or reflected in the Ownership Interests
entitles the Tide West Companies (individually or collectively) to receive not
less than the undivided interest set forth in (or derived from) the Ownership
Interests of all Hydrocarbons produced, saved and sold from or attributable to
such Oil and Gas Interest, and the portion of the costs and expenses of
operation and development of such Oil and Gas Interest that is borne or to be
borne by the Tide West Companies (individually or collectively) is not greater
than the undivided interest set forth in (or derived from) the Ownership
Interests.

3.24 OIL AND GAS OPERATIONS. Except as otherwise set forth in the
DISCLOSURE SCHEDULE:

(a) All wells included in the Oil and Gas Interests of Tide West have been
drilled and (if completed) completed, operated and produced in accordance with
generally accepted oil and gas field practices and in compliance in all material
respects with applicable oil and gas leases and applicable laws, rules and
regulations, except where any failure or violation could not reasonably be
expected to have a Material Adverse Effect on Tide West; and

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(b) Proceeds from the sale of Hydrocarbons produced from Tide West's Oil
and Gas Interests are being received by the Tide West Companies in a timely
manner and are not being held in suspense for any reason (except for amounts,
individually or in the aggregate, not in excess of $100,000 and held in suspense
in the ordinary course of business).

3.25 HYDROCARBON SALES AND PURCHASE AGREEMENTS. The DISCLOSURE SCHEDULE
contains a complete list of the Hydrocarbon Agreements to which any of the Tide
West Companies is a party involving total value or consideration in excess of
$500,000. Except as otherwise set forth in the DISCLOSURE SCHEDULE, to the
knowledge of Tide West, each of the Hydrocarbon Agreements is valid, binding and
in full force and effect, and no party is in material breach or default of any
Hydrocarbon Agreement, and no event has occurred that with notice or lapse of
time (or both) would constitute a material breach or default or permit
termination, modification or acceleration under any Hydrocarbon Agreement.

3.26 FINANCIAL AND COMMODITY HEDGING. The DISCLOSURE SCHEDULE accurately
summarizes the outstanding Hydrocarbon and financial hedging positions of the
Tide West Companies (including fixed price controls, collars, swaps, caps,
hedges and puts) as of the date reflected on the DISCLOSURE SCHEDULE.

3.27 ENVIRONMENTAL MATTERS. Except as set forth in the Disclosure
Schedule, to the knowledge of Tide West:

(a) Each of the Tide West Companies has conducted its business and operated
its assets, and is conducting its business and operating its assets, in material
compliance with all Environmental Laws;

(b) None of the Tide West Companies has been notified by any Governmental
Authority or other third party that any of the operations or assets of any of
the Tide West Companies is the subject of any investigation or inquiry by any
Governmental Authority or other third party evaluating whether any material
remedial action is needed to respond to a release or threatened release of any
Hazardous Material or to the improper storage or disposal (including storage or
disposal at offsite locations) of any Hazardous Material;

(c) None of the Tide West Companies and no other Person has filed any
notice under any federal, state or local law indicating that (i) any of the Tide
West Companies is responsible for the improper release into the environment, or
the improper storage or disposal, of any Hazardous Material, or (ii) any
Hazardous Material is improperly stored or disposed of upon any property of any
of the Tide West Companies;

(d) None of the Tide West Companies has any material contingent liability
in connection with (i) the release or threatened release into the environment
at, beneath or on any property now or previously owned or leased by any of the
Tide West Companies, or (ii) the storage or disposal of any Hazardous Material;

(e) None of the Tide West Companies has received any claim, complaint,
notice, inquiry or request for information involving any matter which remains
unresolved as of the date of the Original Agreement with respect to any alleged
violation of any Environmental Law or regarding potential liability under any
Environmental Law relating to operations or conditions of any facilities or
property (including off-site storage or disposal of any Hazardous Material from
such facilities or property) currently or formerly owned, leased or operated by
any of the Tide West Companies;

(f) No property now or previously owned, leased or operated by any of the
Tide West Companies is listed on the National Priorities List pursuant to CERCLA
or on the CERCLIS or on any other federal or state list as sites requiring
investigation or cleanup;

(g) None of the Tide West Companies is directly transporting, has directly
transported, is directly arranging for the transportation of, or has directly
transported, any Hazardous Material to any location which is listed on the
National Priorities List pursuant to CERCLA, on the CERCLIS, or on any similar
federal or state list or which is the subject of federal, state or local
enforcement actions or other investigations that may lead to material claims
against such company for remedial work, damage to natural resources or personal
injury, including claims under CERCLA;

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(h) There are no sites, locations or operations at which any of the Tide
West Companies is currently undertaking, or has completed, any remedial or
response action relating to any such disposal or release, as required by
Environmental Laws; and

(i) All underground storage tanks and solid waste disposal facilities owned
or operated by the Tide West Companies are used and operated in material
compliance with Environmental Laws.

3.28 BOOKS AND RECORDS. All books, records and files of the Tide West
Companies (including those pertaining to Tide West's Oil and Gas Interests,
wells and other assets, those pertaining to the production, gathering,
transportation and sale of Hydrocarbons, and corporate, accounting, financial
and employee records) (a) have been prepared, assembled and maintained in
accordance with usual and customary policies and procedures and (b) fairly and
accurately reflect the ownership, use, enjoyment and operation by the Tide West
Companies of their respective assets.

3.29 BROKERS. Except as set forth on the DISCLOSURE SCHEDULE, no broker,
finder, investment banker or other Person is or will be, in connection with the
transactions contemplated by this Agreement, entitled to any brokerage, finder's
or other fee or compensation based on any arrangement or agreement made by or on
behalf of Tide West and for which Parent, or any of the Tide West Companies will
have any obligation or liability.

3.30 VOTE REQUIRED. The affirmative vote of the holders of a majority of
the outstanding shares of Tide West Common Stock is the only vote of the holders
of any class or series of Tide West capital stock or other voting securities
necessary to approve this Agreement, the Merger and the transactions
contemplated hereby.

3.31 MAINTENANCE OF MACHINERY. All equipment and machinery owned by any
of the Tide West Companies has had reasonable and prudent maintenance, upkeep
and repair since the date it was acquired by the Tide West Companies.

3.32 GAS IMBALANCES. To the knowledge of Tide West, except as is
reflected on the Disclosure Schedule, Tide West has received no deficiency
payments under gas contracts for which any party has a right to take deficiency
gas from Tide West, nor has Tide West received any payments for production which
are subject to refund or recoupment out of future production.

3.33 CALLS ON PRODUCTION. Except as reflected on the DISCLOSURE SCHEDULE,
no party has a call or preferential right to purchase production from any of
Tide West's Oil and Gas Interests.

3.34 SECTION 29 CREDITS. Tide West is entitled to tax credits under
Section 29 of the Code. The approximate amount of such credits is accurately
reflected in the materials and information provided by Tide West to Parent.

3.35 ROYALTIES. To the knowledge of Tide West as to wells not operated by
Tide West, and without qualification as to knowledge as to all wells operated by
Tide West, all royalties, overriding royalties, compensatory royalties and other
payments due from or in respect of production with respect to the Tide West's
Oil and Gas Interests, have been or will be, prior to the Effective Time,
properly and correctly paid or provided for in all material respects, except for
those for which Tide West has a valid right to suspend.

3.36 PAYOUT BALANCES. To the knowledge of Tide West, and based on
information given to Tide West by third-party operators for all wells not
operated by Tide West, the Payout Balance for any well owned by Tide West is
properly reflected in the DISCLOSURE SCHEDULE as of the respective dates shown
thereon. "PAYOUT BALANCE(S)" means the status, as of the dates of Tide West's
calculations, of the recovery by Tide West or a third party of a cost amount
specified in the contract relating to a well out of the revenue from such well
where the net revenue interest of Tide West therein will be reduced when such
amount has been recovered.

3.37 PLUGGING AND ABANDONMENT LIABILITIES. Except to the extent expressly
set forth in the DISCLOSURE SCHEDULE, Tide West has no obligation as of the date
of the Original Agreement under applicable statutes and regulations to plug and
abandon any well.

3.38 PREPAYMENTS. Except as reflected in the DISCLOSURE SCHEDULE, no
prepayment for Hydrocarbon sales has been received by Tide West for Hydrocarbons
which have not been delivered as of the date of the Original Agreement.

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3.39 DISCLOSURE AND INVESTIGATION. No representation or warranty of Tide
West set forth in this Agreement contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein not misleading.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Parent and Merger Sub hereby jointly and severally represent and warrant to
Tide West as follows:

4.1 ORGANIZATION. Each of Parent and Merger Sub (a) is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation, (b) has the requisite power and authority to own, lease and
operate its properties and to conduct its business as it is presently being
conducted, and (c) is duly qualified to do business as a foreign corporation,
and is in good standing, in each jurisdiction where the character of the
properties owned or leased by it or the nature of its activities makes such
qualification necessary (except where any failure to be so qualified as a
foreign corporation or to be in good standing would not, individually or in the
aggregate, have a Material Adverse Effect on Parent). Copies of the certificate
of incorporation and by-laws of each of Parent and Merger Sub have heretofore
been delivered to Tide West, and such copies are accurate and complete as of the
date of the Original Agreement.

4.2 AUTHORITY AND ENFORCEABILITY. Each of Parent and Merger Sub has the
requisite corporate power and authority to enter into and deliver this Agreement
and (with respect to consummation of the Tide West Proposal, subject to the
approval by the stockholders of Parent) to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and (with
respect to consummation of the Tide West Proposal, subject to the approval by
the stockholders of Parent) the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of Parent and Merger Sub, including approval by the board of
directors of Parent and the board of directors and stockholders of Merger Sub,
and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize the execution or delivery of this Agreement or (with
respect to consummation of the Tide West Proposal, subject to the approval by
the stockholders of Parent) to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Parent and
Merger Sub and (with respect to consummation of the Tide West Proposal, subject
to the approval by the stockholders of Parent, and assuming that this Agreement
constitutes a valid and binding obligation of Tide West) constitutes a valid and
binding obligation of each of Parent and Merger Sub enforceable against each of
them in accordance with its terms.

4.3 NO VIOLATIONS. The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated hereby and compliance by
Parent and Merger Sub with the provisions hereof will not, conflict with, result
in any violation of or default (with or without notice or lapse of time or both)
under, give rise to a right of termination, cancellation or acceleration of any
obligation or to the loss of a material benefit under, or result in the creation
of any Lien on any of the properties or assets of Parent or any Parent Material
Subsidiary under, any provision of (a) the certificate of incorporation or
by-laws of Parent or Merger Sub or any provision of the comparable charter or
organizational documents of any Parent Material Subsidiary, (b) any loan or
credit agreement, note, bond, mortgage, indenture, lease, permit, concession,
franchise, license or other agreement or instrument applicable to Parent, Merger
Sub or any Parent Material Subsidiary, or (c) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in Section
4.4 are duly and timely obtained or made, any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Parent, Merger Sub or any
Parent Material Subsidiary or any of their respective properties or assets,
other than, in the case of clause (b) or (c) above, any such conflict,
violation, default, right, loss or Lien that, individually or in the aggregate,
would not have a Material Adverse Effect on Parent.

4.4 CONSENTS AND APPROVALS. No consent, approval, order or authorization
of, registration, declaration or filing with, or permit from, any Governmental
Authority is required by or with respect to Parent or Merger Sub in connection
with the execution and delivery of this Agreement by Parent and Merger Sub or
the

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consummation by Parent and Merger Sub of the transactions contemplated hereby,
except for the following: (a) any such consent, approval, order, authorization,
registration, declaration, filing or permit which the failure to obtain or make
would not, individually or in the aggregate, have a Material Adverse Effect on
Parent; (b) the filing of the Certificate of Merger with the Secretary of State
of Delaware pursuant to the provisions of the DGCL; (c) the filing of a
pre-merger notification report by Parent under the HSR Act and the expiration or
termination of the applicable waiting period; (d) the filing with the SEC of the
Registration Statement and such reports under Section 13(a) of the Exchange Act
and such other compliance with the Exchange Act and the Securities Act and the
rules and regulations of the SEC thereunder as may be required in connection
with this Agreement and the transactions contemplated hereby and the obtaining
from the SEC of such orders as may be so required; (e) the filing with the NYSE
of a listing application relating to the shares of Parent Common Stock to be
issued pursuant to the Merger and the obtaining from the NYSE of its approvals
thereof; (f) such filings and approvals as may be required by any applicable
state securities, "blue sky" or takeover laws or Environmental Laws; and (g)
such filings and approvals as may be required by any foreign pre-merger
notification, securities, corporate or other law, rule or regulation. No
Third-Party Consent is required by or with respect to Parent, Merger Sub or any
Parent Material Subsidiary in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, except
for (x) any such Third-Party Consent which the failure to obtain would not,
individually or in the aggregate, have a Material Adverse Effect on Parent, and
(y) the valid approval of the Tide West Proposal by the stockholders of Parent.

4.5 SEC DOCUMENTS. Parent has made available to Tide West a true and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by Parent with the SEC since December 31, 1994, and prior
to the date of the Original Agreement (the "PARENT SEC DOCUMENTS"), which are
all the documents (other than preliminary material) that Parent was required to
file with the SEC since such date. As of their respective dates, the Parent SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Parent SEC Documents, and
none of the Parent SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.

4.6 FINANCIAL STATEMENTS. The Parent Financial Statements were prepared
in accordance with GAAP applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC)
and fairly present, in accordance with applicable requirements of GAAP (in the
case of the unaudited statements, subject to normal, recurring adjustments), the
consolidated financial position of Parent and its subsidiaries as of their
respective dates and the consolidated results of operations and the consolidated
cash flows of Parent and its subsidiaries for the periods presented therein.

4.7 CAPITAL STRUCTURE.

(a) The authorized capital stock of Parent consists of 30,000,000 shares of
Parent Common Stock and 15,000,000 shares of Parent Preferred Stock. The
authorized capital stock of Merger Sub consists of 1,000 shares of Merger Sub
Common Stock.

(b) There are issued and outstanding 10,948,513 shares of Parent Common
Stock and no shares of Parent Preferred Stock. 1,490,699 shares of Parent Common
Stock are issuable upon exercise of outstanding stock options and warrants.
22,718 shares of Parent Common Stock and no shares of Parent Preferred Stock are
held by Parent as treasury stock.

(c) Except as set forth in Section 4.7(b), there are outstanding (i) no
shares of capital stock or other voting securities of Parent, (ii) no securities
of Parent or any other Person convertible into or exchangeable or exercisable
for shares of capital stock or other voting securities of Parent, and (iii) no
subscriptions, options, warrants, calls, rights (including *preemptive rights,
commitments, understandings or agreements to which Parent is a party or by which
it is bound) obligating Parent to issue, deliver, sell, purchase, redeem or
acquire shares of capital stock or other voting securities of Parent (or
securities convertible into or exchangeable or

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exercisable for shares of capital stock or other voting securities of Parent) or
obligating Parent to grant, extend or enter into any such subscription, option,
warrant, call, right, commitment, understanding or agreement.

(d) All outstanding shares of Parent capital stock are, and (when issued)
the shares of Parent Common Stock to be issued pursuant to the Merger and upon
exercise of the Tide West Stock Options or Tide West Warrants will be, validly
issued, fully paid and nonassessable and not subject to any preemptive right.

(e) 1,000 shares of Merger Sub Common Stock are issued and outstanding, all
of which are owned by Parent. All outstanding shares of Merger Sub Common Stock
are validly issued, fully paid and nonassessable and not subject to any
preemptive right.

(f) As of the date of the Original Agreement there is no, and at the
Effective Time there will not be any, stockholder agreement, voting trust or
other agreement or understanding to which Parent is a party or by which it is
bound relating to the voting of any shares of the capital stock of Parent.

4.8 GOVERNMENTAL REGULATION. Neither Parent nor any of its subsidiaries
is subject to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act, the Interstate Commerce Act, the Investment Company Act
of 1940 or any state public utilities laws.

4.9 LITIGATION. There is no litigation, proceeding or investigation
pending or, to the knowledge of Parent, threatened against or affecting Parent
or Merger Sub that questions the validity or enforceability of this Agreement or
any other document, instrument or agreement to be executed and delivered by
Parent or Merger Sub in connection with the transactions contemplated hereby.

4.10 INTERIM OPERATIONS OF MERGER SUB. Merger Sub was formed solely for
the purpose of engaging in the transactions contemplated by this Agreement and
has not engaged in any business or activity (or conducted any operations) of any
kind, entered into any agreement or arrangement with any person or entity, or
incurred, directly or indirectly, any material liabilities or obligations,
except in connection with its incorporation, the negotiation of this Agreement,
the Merger and the transactions contemplated hereby.

4.11 FUNDING. Parent has available adequate funds in an aggregate amount
sufficient to pay (a) all amounts required to be paid to the stockholders of
Tide West upon consummation of the Merger, (b) all amounts required to be paid
in respect of all Tide West Stock Options and Tide West Warrants upon exercise
thereof, and (c) all expenses incurred by Parent and Merger Sub in connection
with this Agreement and the transactions contemplated hereby.

4.12 BROKERS. Except as has been disclosed in writing to Tide West
concerning Parent's arrangement with Lehman Brothers, no broker, finder,
investment banker or other Person is or will be, in connection with the
transactions contemplated by this Agreement, entitled to any brokerage, finder's
or other fee or compensation based on any arrangement or agreement made by or on
behalf of Parent or Merger Sub and for which Parent, Merger Sub or any of the
Tide West Companies will have any obligation or liability.

4.13 DISCLOSURE AND INVESTIGATION. No representation or warranty of
Parent or Merger Sub set forth in this Agreement contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements contained herein not misleading.

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ARTICLE 5

COVENANTS

5.1 CONDUCT OF BUSINESS BY TIDE WEST PENDING CLOSING. Tide West covenants
and agrees with Parent and Merger Sub that, from the date of the Original
Agreement until the Effective Time, each of the Tide West Companies will conduct
its business only in the ordinary and usual course consistent with past
practices. Notwithstanding the preceding sentence, Tide West covenants and
agrees with Parent and Merger Sub that, except as specifically contemplated in
this Agreement, from the date of the Original Agreement until the Effective
Time, without the prior written consent of Parent:

(a) None of the Tide West Companies will (i) amend its certificate or
articles of incorporation or by-laws; (ii) split, combine or reclassify any of
its outstanding capital stock; (iii) declare, set aside or pay any dividends or
other distributions (whether payable in cash, property or securities) with
respect to its capital stock; (iv) issue, sell or agree to issue or sell any
securities, including its capital stock, any rights, options or warrants to
acquire its capital stock, or securities convertible into or exchangeable or
exercisable for its capital stock (other than shares of Tide West Common Stock
issued pursuant to the exercise of any Tide West Stock Option, shares of Tide
West Common Stock issued pursuant to the exercise of any Tide West Common Stock
Warrant or shares of Tide West Common Stock and Tide West Common Stock Warrants
issued pursuant to the exercise of any Tide West Unit Warrant, each as
outstanding on the date of the Original Agreement); (v) purchase, cancel,
retire, redeem or otherwise acquire any of its outstanding capital stock or
other securities; (vi) merge or consolidate with, or transfer all or
substantially all of its assets to, another corporation or other business
entity; (vii) liquidate, wind-up or dissolve (or suffer any liquidation or
dissolution); or (viii) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing.

(b) None of the Tide West Companies will (i) acquire any corporation,
partnership or other business entity or any interest therein (other than
interests in joint ventures, joint operation or ownership arrangements or tax
partnerships acquired in the ordinary course of business); (ii) sell, lease or
sublease, transfer or otherwise dispose of or mortgage, pledge or otherwise
encumber any Oil and Gas Interests of Tide West that were assigned a value in
the Reserve Data Value in excess of $50,000, individually, or $250,000, in the
aggregate, or any other assets that have a value at the time of such sale,
lease, sublease, transfer or disposition in excess of $50,000, individually, or
$250,000, in the aggregate, (except that this clause shall not apply to the sale
of Hydrocarbons in the ordinary course of business or to encumbrances under
either of the Bank Credit Agreements); (iii) farm-out any Oil and Gas Interest
of Tide West or interest therein; (iv) sell, transfer or otherwise dispose of or
mortgage, pledge or otherwise encumber any securities of any other Person
(including any capital stock or other securities in TWTT or Draco or any
partnership interest in Horizon or Roden); (v) make any material loans, advances
or capital contributions to, or investments in, any Person (other than loans or
advances in the ordinary course of business and consistent with past practices
or capital contributions to either Horizon or Roden required by the terms of its
partnership agreement); (vi) enter into any Tide West Material Agreement or any
other agreement not terminable by any of the Tide West Companies upon notice of
30 days or less and without penalty or other obligation (other than Hydrocarbon
Agreements entered into in the ordinary course of business and consistent with
past practices); or (vii) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing.

(c) None of the Tide West Companies will (i) permit to be outstanding at
any time under the Bank Credit Agreement indebtedness for borrowed money in
excess of $45,000,000; (ii) incur any indebtedness for borrowed money other than
under the Bank Credit Agreement; (iii) incur any other obligation or liability
(other than liabilities incurred in the ordinary course of business and
consistent with past practices); (iv) assume, endorse (other than endorsements
of negotiable instruments in the ordinary course of business), guarantee or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the liabilities or obligations of any Person (other than Parent
Guaranties entered into in the ordinary course of business and consistent with
past practices); or (v) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing.

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(d) The Tide West Companies will operate, maintain and otherwise deal with
the Oil and Gas Interests of Tide West in accordance with good and prudent oil
and gas field practices and in accordance with all applicable oil and gas leases
and other contracts or agreements and all applicable laws, rules and
regulations.

(e) None of the Tide West Companies shall resign, transfer or otherwise
voluntarily relinquish any right it has as of the date of the Original
Agreement, as operator of any Oil and Gas Interest of Tide West.

(f) None of the Tide West Companies will (i) enter into, or otherwise
become liable or obligated under or pursuant to, (1) any employee benefit,
pension or other plan (whether or nor subject to ERISA), (2) any other stock
option, stock purchase, incentive or deferred compensation plans or arrangements
or other fringe benefit plan, or (3) any consulting, employment, severance,
termination or similar agreement with any Person, or amend or extend any such
plan, arrangement or agreement; (ii) except for payments made pursuant to any
Tide West Employee Benefit Plan or any plan, agreement or arrangement described
in the DISCLOSURE SCHEDULE, grant, or otherwise become liable for or obligated
to pay, any severance or termination payments, bonuses or increases in
compensation or benefits (other than payments, bonuses or increases that are
mandated by the terms of agreements existing as of the date of the Original
Agreement or that are paid in the ordinary course of business, consistent with
past practices, and not individually or in the aggregate material in amount) to,
or forgive any indebtedness of, any employee or consultant; or (iii) enter into
any contract, agreement, commitment or arrangement to do any of the foregoing.

(g) The Tide West Companies will keep and maintain accurate books, records
and accounts in accordance with GAAP.

(h) None of the Tide West Companies will create, incur, assume or permit to
exist any Lien on any of its assets, except for Permitted Encumbrances.

(i) The Tide West Companies will (i) pay all Taxes, assessments and other
governmental charges imposed upon any of their assets or with respect to their
franchises, business, income or assets before any penalty or interest accrues
thereon; (ii) pay all claims (including claims for labor, services, materials
and supplies) that have become due and payable and which by law have or may
become a Lien upon any of their assets prior to the time when any penalty or
fine shall be incurred with respect thereto or any such Lien shall be imposed
thereon; and (iii) comply in all material respects with the requirements of all
applicable laws, rules, regulations and orders of any Governmental Authority,
obtain or take all Governmental Actions necessary in the operation of their
businesses, and comply with and enforce the provisions of all Tide West Material
Agreements, including paying when due all rentals, royalties, expenses and other
liabilities relating to their businesses or assets; provided, however, Tide West
will not be in violation of this Section 5.1(i) if any of the Tide West
Companies incur obligations for penalties and interest in connection with gross
production tax reporting in the ordinary course of business; and provided
further, that the Tide West Companies may contest the imposition of any such
Taxes, assessments and other governmental charges, any such claim, or the
requirements of any applicable law, rule, regulation or order or any Tide West
Material Agreement if done so in good faith by appropriate proceedings and if
adequate reserves are established in accordance with GAAP or as may be
determined as sufficient by Tide West's board of directors.

(j) The Tide West Companies will maintain in full force and effect the
policies or binders of insurance described in Section 3.21.

(k) The Tide West Companies will at all times preserve and keep in full
force and effect their corporate existence and rights and franchises material to
their performance under this Agreement.

(l) Tide West will not engage in any practice, take any action or permit by
inaction any of the representations and warranties contained in Section 3.1,
3.2, 3.4, 3.5, 3.8, 3.11, 3.12, 3.14, 3.17, 3.18, 3.19, 3.27, 3.28, 3.29, 3.31,
3.33, 3.35 or 3.39 to become untrue.

(m) Tide West will not engage in any practice, take any action, or permit
by inaction any of the representations and warranties contained in Section 3.10
(other than clause (n) thereof) to become untrue, except (i) Tide West may pay
successful deal bonuses to its employees as disclosed in the DISCLOSURE
SCHEDULE, (ii) all currently outstanding Tide West Stock Options will become
fully vested prior to the

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Effective Time, (iii) Tide West may make or commit to make capital expenditures
as described in the Disclosure Schedule, not to exceed $3,000,000 in the
aggregate, (iv) the Tide West Companies may enter into fully covered commodity
swap, hedging and similar arrangements; and (v) Tide West may pay, to marketers
and executives, bonuses relating to marketing during the first quarter,
consistent with past practices.

5.2 CONDUCT OF BUSINESS BY PARENT PENDING CLOSING. Parent covenants and
agrees with Tide West that, from the date of the Original Agreement until the
Effective Time, except for transactions disclosed by Parent to Tide West prior
to the date of the Original Agreement, Parent will conduct its business only in
the ordinary and usual course consistent with past practices. Notwithstanding
the preceding sentence, Parent covenants and agrees with Tide West that, from
the date of the Original Agreement until the Effective Time, without the prior
written consent of Tide West:

(a) Parent will not (i) split, combine or reclassify any of its outstanding
capital stock; (ii) declare, set aside or pay any dividends or other
distributions (whether payable in cash, property or securities) with respect to
its capital stock other than a dividend of rights to holders of Parent Common
Stock in connection with the adoption and implementation of a shareholder rights
plan; (iii) merge or consolidate with, or transfer all or substantially all of
its assets to, another corporation or other business entity; (iv) liquidate,
wind-up or dissolve (or suffer any liquidation or dissolution); or (v) enter
into any contract, agreement, commitment or arrangement with respect to any of
the foregoing.

(b) Parent will at all times preserve and keep in full force and effect its
corporate existence and rights and franchises material to its performance under
this Agreement.

(c) Parent will not engage in any practice, take any action or permit by
inaction, any of the representations and warranties contained in Section 4.1,
4.3, 4.4, 4.7, 4.8, 4.10, 4.11, 4.12 or 4.13 to become untrue.

5.3 ACCESS TO ASSETS, PERSONNEL AND INFORMATION.

(a) From the date of the Original Agreement until the Effective Time, Tide
West shall afford to Parent and the Parent Representatives, at Parent's sole
risk and expense, reasonable access to any of the assets, books and records,
contracts, employees, representatives, agents and facilities of the Tide West
Companies and shall, upon request, furnish promptly to Parent (at Parent's
expense) a copy of any file, book, record, contract, permit, correspondence, or
other written information, document or data concerning any of the Tide West
Companies (or any of their respective assets) that is within the possession or
control of Tide West. During such period, Tide West will make available to a
reasonable number of Parent Representatives adequate office space and facilities
at the principal office facility of Tide West in Tulsa, Oklahoma, and will
permit a reasonable number of Parent Representatives to observe, but not
participate in, staff meetings at those facilities and other facilities of any
of the Tide West Companies.

(b) Parent and the Parent Representatives shall have the right to make an
environmental and physical assessment of the assets of the Tide West Companies
and, in connection therewith, shall have the right to enter and inspect such
assets and all buildings and improvements thereon, conduct soil and water tests
and borings and generally conduct such tests, examinations, investigations and
studies as Parent deems necessary, desirable or appropriate for the preparation
of engineering or other reports relating to such assets, their condition and the
presence of Hazardous Materials. Tide West shall be provided 24 hours prior
notice of such activities, and Tide West Representatives shall have the right to
witness all such tests and investigations. Parent shall (and shall cause the
Parent Representatives to) keep any data or information acquired by any such
examinations and the results of any analyses of such data and information
strictly confidential and will not (and will cause the Parent Representatives
not to) disclose any of such data, information or results to any Person unless
otherwise required by law or regulation and then only after written notice to
Tide West of the determination of the need for disclosure. Parent shall
indemnify, defend and hold the Tide West Companies and the Tide West
Representatives harmless from and against any and all claims to the extent
arising out of or as a result of the activities of Parent and the Parent
Representatives on the assets of the Tide West Companies in connection with
conducting such environmental and physical assessment, except to the extent of
and

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limited by the negligence or willful misconduct of any of the Tide West
Companies or any Tide West Representative.

(c) From the date of the Original Agreement until the Effective Time,
Parent shall afford to Tide West and the Tide West Representatives, at Tide
West's sole risk and expense, reasonable access to any of the assets, books and
records, contracts, employees, representatives, agents and facilities of Parent
and the Parent Material Subsidiaries and shall, upon request, furnish promptly
to Tide West (at Tide West's expense) a copy of any file, book, record,
contract, permit, correspondence, or other written information, document or data
concerning Parent or any of the Parent Material Subsidiaries (or any of their
respective assets) that is within the possession or control of Parent.

(d) From the date of the Original Agreement until the Effective Time, Tide
West will fully and accurately disclose, and will cause each of TWTT and Draco
to fully and accurately disclose, to Parent and the Parent Representatives all
information that is (i) reasonably requested by Parent or any of the Parent
Representatives, (ii) known to any of the Tide West Companies, and (iii)
relevant in any manner or degree to the value, ownership, use, operation,
development or transferability of the assets of any of the Tide West Companies.

(e) From the date of the Original Agreement until the Effective Time,
Parent will fully and accurately disclose, and will cause each of the Parent
Material Subsidiaries to fully and accurately disclose, to Tide West and the
Tide West Representatives all information that is (i) reasonably requested by
Tide West or any of the Tide West Representatives, (ii) known to Parent or any
Parent Material Subsidiary, and (iii) relevant in any manner or degree to the
value, ownership, use, operation, development or transferability of the assets
of Parent or any Parent Material Subsidiary.

(f) From the date of the Original Agreement until the Effective Time, each
of Parent and Tide West shall (i) furnish to the other, promptly upon receipt or
filing (as the case may be), a copy of each communication between such party and
the SEC after the date of the Original Agreement relating to the Merger or the
Registration Statement and each report, schedule, registration statement or
other document filed by such party with the SEC after the date of the Original
Agreement relating to the Merger, and (ii) promptly advise the other of the
substance of any oral communications between such party and the SEC relating to
the Merger or the Registration Statement.

(g) Tide West will (and will cause TWTT, Draco and the Tide West
Representatives to) fully cooperate in all reasonable respects with Parent and
the Parent Representatives in connection with Parent's examinations, evaluations
and investigations described in this Section 5.3, and Parent will (and will
cause the Parent Representatives to) fully cooperate in all reasonable respects
with Tide West and the Tide West Representatives in connection with Tide West's
examinations, evaluations and investigations described in this Section 5.3.

(h) Tide West agrees that it will not (and will cause the Tide West
Representatives not to), and Parent agrees that it will not (and will cause the
Parent Representatives not to), use any information obtained pursuant to this
Section 5.3 for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement.

(i) Notwithstanding anything in this Section 5.3 to the contrary, (i) Tide
West shall not be obligated under the terms of this Section 5.3 to disclose to
Parent or the Parent Representatives, or grant Parent or the Parent
Representatives access to, information that is within Tide West's possession or
control but subject to a valid and binding confidentiality agreement with a
third party without first obtaining the consent of such third party, and Tide
West, to the extent reasonably requested by Parent, will use its best efforts to
obtain any such consent; and (ii) Parent shall not be obligated under the terms
of this Section 5.3 to disclose to Tide West or the Tide West Representatives,
or grant Tide West or the Tide West Representatives access to, information that
is within Parent's possession or control but subject to a valid and binding
confidentiality agreement with a third party without first obtaining the consent
of such third party, and Parent, to the extent reasonably requested by Tide
West, will use its best efforts to obtain any such consent.

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5.4 NO SOLICITATION.

(a) Immediately following the execution of this Agreement, Tide West will
(and will use its best efforts to cause each of the Tide West Representatives
to) terminate any and all existing activities, discussions and negotiations with
third parties (other than Parent) with respect to any possible transaction
involving the acquisition of the Tide West Common Stock or the merger or other
business combination of Tide West with or into any such third party.

(b) Tide West will not (and will use its best efforts to cause the Tide
West Representatives not to) solicit, initiate or knowingly encourage the
submission of, any offer or proposal to acquire all or any part of the Tide West
Common Stock or all or any material portion of the assets or business of Tide
West (other than the transactions contemplated by this Agreement), whether by
merger, purchase of assets, tender offer, exchange offer or otherwise (an
"ALTERNATIVE PROPOSAL"); provided, however, that, if Tide West or any Tide West
Representative shall receive an Alternative Proposal, then Tide West
Representatives may discuss such Alternative Proposal with the Person presenting
such Alternative Proposal and provide information to such Person if the board of
directors of Tide West determines in good faith, after considering the advice of
its legal counsel, that it is required to do so in order to discharge properly
its fiduciary duty to Tide West's stockholders.

(c) Tide West will promptly communicate to Parent the terms and conditions
of any Alternative Proposal that it may receive and will keep Parent informed as
to the status of any actions, including any discussions, taken pursuant to such
Alternative Proposal.

(d) If Tide West or any Tide West Representative receives an Alternative
Proposal and the board of directors of Tide West determines in good faith, after
considering the advice of its legal counsel, that it is required to do so in
order to discharge properly its fiduciary duty to Tide West's stockholders, then
Tide West Representatives may negotiate the terms of such Alternative Proposal
and a binding definitive agreement with such Person with respect thereto (an
"Alternative Transaction").

(e) Nothing in this Section 5.4 shall permit Tide West to terminate this
Agreement except as specifically provided in Section 7.1.

5.5 TIDE WEST STOCKHOLDERS MEETING. Tide West shall take all action
necessary in accordance with applicable law and its certificate of incorporation
and by-laws to convene a meeting of its stockholders as promptly as practicable
after the date of the Original Agreement for the purpose of voting on the Tide
West Proposal. The board of directors of Tide West shall recommend approval of
the Tide West Proposal and shall take all lawful action to solicit such
approval, including timely mailing the Proxy Statement/Prospectus to the
stockholders of Tide West. Notwithstanding the above, however, the following
shall be conditions to the mailing of the Proxy Statement/Prospectus:

(a) Tide West shall have received an opinion from Merrill Lynch or another
firm of investment bankers or financial advisors selected by Tide West (which
opinion shall be acceptable in form and substance to Tide West) to the effect
that the consideration to be received in the Merger by the holders of shares of
Tide West Common Stock is fair to such holders from a financial point of view,
and such opinion shall not have been withdrawn, revoked or modified.

(b) Tide West shall have received an opinion (reasonably acceptable in form
and substance to Tide West) from Conner & Winters, A Professional Corporation
(or such other firm as is reasonably acceptable to Tide West) to the effect that
(i) the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, (ii) each of
Parent, Tide West and Merger Sub will be a party to such reorganization within
the meaning of Section 368(b) of the Code, (iii) no gain or loss will be
recognized by Parent, Tide West or Merger Sub as a result of the Merger, and
(iv) no gain or loss, except with respect to the amount of Cash Consideration
received, will be recognized by a stockholder of Tide West as a result of the
Merger with respect to the shares of Tide West Common Stock converted into
shares of Parent Common Stock by such stockholder, and such opinion shall not
have been withdrawn, revoked or modified. Such opinion may be based upon
representations of the parties and shareholders of the parties.

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(c) Tide West shall have received a letter from Arthur Andersen & Co.,
independent public accountants, addressed to Parent and Tide West, dated as of
the date the Proxy Statement/Prospectus is first mailed to Tide West's
stockholders, in form and substance reasonably satisfactory to Tide West, in
connection with such accountants' review of certain financial and accounting
matters contained in the Proxy Statement/Prospectus and the Registration
Statement.

5.6 PARENT STOCKHOLDERS MEETING. Parent shall take all action necessary
in accordance with applicable law and its certificate of incorporation and
bylaws to convene a meeting of its stockholders as promptly as practicable after
the date of the Original Agreement for the purpose of voting on the Tide West
Proposal. The Board of Directors of Parent shall recommend approval of the Tide
West Proposal and shall take all lawful action to solicit such approval,
including timely mailing the Proxy Statement/Prospectus to the stockholders of
Parent. Notwithstanding the above, however, the following shall be conditions to
the mailing of the Proxy Statement/Prospectus:

(a) Parent shall have received an opinion from Lehman Brothers or another
firm of investment bankers or financial advisors selected by Parent (which
opinion shall be acceptable in form and substance to Parent) to the effect that
the Merger is fair to the Parent from a financial point of view, and such
opinion shall not have been withdrawn, revoked or modified.

(b) Parent shall have received an opinion of the type described in Section
5.5(b), from counsel as is reasonably acceptable to Parent and such opinion
shall not have been withdrawn, revoked or modified.

(c) Parent shall have received a letter from Arthur Andersen & Co.,
independent public accountants, addressed to Parent and Tide West, dated as of
the date the Proxy Statement/Prospectus is first mailed to Parent's
stockholders, in form and substance reasonably satisfactory to Parent, in
connection with such accountants' review of certain financial and accounting
matters contained in the Proxy Statement/Prospectus and the Registration
Statement.

5.7 REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS.

(a) Parent and Tide West shall cooperate and promptly prepare the
Registration Statement, and Parent shall file the Registration Statement with
the SEC as soon as practicable after the date of the Original Agreement and in
any event not later than 45 days after the date of the Original Agreement.
Parent shall use its best efforts, and Tide West shall cooperate with Parent
(including furnishing all information concerning Tide West and the holders of
Tide West Common Stock as may be reasonably requested by Parent), to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing. Parent shall use its best efforts, and Tide
West shall cooperate with Parent, to obtain all necessary state securities laws
or "blue sky" permits, approvals and registrations in connection with the
issuance of Parent Common Stock pursuant to the Merger.

(b) Parent and Tide West will cause the Registration Statement (including
the Proxy Statement/ Prospectus), at the time it becomes effective under the
Securities Act, to comply as to form in all material respects with the
applicable provisions of the Securities Act, the Exchange Act and the rules and
regulations of the SEC thereunder.

(c) Tide West hereby covenants and agrees with Parent that (i) the
Registration Statement (at the time it becomes effective under the Securities
Act and at the Effective Time) will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading (provided, however, that
this clause (i) shall apply only to information contained in the Registration
Statement that was supplied by Tide West specifically for inclusion therein);
and (ii) the Proxy Statement/Prospectus (at the time it is first mailed to
stockholders of Tide West and Parent, at the time of the Tide West Meeting and
the Parent Meeting, and at the Effective Time) will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading (provided, however,
that this clause (ii) shall not apply to any information contained in the Proxy
Statement/ Prospectus that was supplied by Parent specifically for inclusion
therein). If, at any time prior to the Effective Time, any event with respect to
Tide West, or with respect to other information supplied by Tide West

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specifically for inclusion in the Registration Statement, occurs and such event
is required to be described in an amendment to the Registration Statement, Tide
West shall promptly notify Parent of such occurrence and shall cooperate with
Parent in the preparation and filing of such amendment. If, at any time prior to
the Effective Time, any event with respect to Tide West, or with respect to
other information included in the Proxy Statement/Prospectus, occurs and such
event is required to be described in a supplement to the Proxy
Statement/Prospectus, such event shall be so described and such supplement shall
be promptly prepared, filed and disseminated.

(d) Parent hereby covenants and agrees with Tide West that (i) the
Registration Statement (at the time it becomes effective under the Securities
Act and at the Effective Time) will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading (provided, however, that
this clause (i) shall not apply to any information contained in the Registration
Statement that was supplied by Tide West specifically for inclusion therein);
and (ii) the Proxy Statement/Prospectus (at the time it is first mailed to
stockholders of Tide West and Parent, at the time of the Tide West Meeting and
the Parent Meeting, and at the Effective Time) will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading (provided, however,
that this clause (ii) shall apply only to information contained in the Proxy
Statement/ Prospectus that was supplied by Parent specifically for inclusion
therein). If, at any time prior to the Effective Time, any event with respect to
Parent, or with respect to other information included in the Registration
Statement, occurs and such event is required to be described in an amendment to
the Registration Statement, such event shall be so described and such amendment
shall be promptly prepared and filed. If, at any time prior to the Effective
Time, any event with respect to Parent, or with respect to other information
supplied by Parent specifically for inclusion in the Proxy Statement/Prospectus,
occurs and such event is required to be described in a supplement to the Proxy
Statement/Prospectus, Parent shall promptly notify Tide West of such occurrence
and shall cooperate with Tide West in the preparation, filing and dissemination
of such supplement.

(e) Neither the Registration Statement nor the Proxy Statement/Prospectus
nor any amendment or supplement thereto will be filed or disseminated to the
stockholders of Tide West or Parent without the approval of both Parent and Tide
West. Parent shall advise Tide West, promptly after it receives notice thereof,
of the time when the Registration Statement has become effective under the
Securities Act, the issuance of any stop order with respect to the Registration
Statement, the suspension of the qualification of the Parent Common Stock
issuable in connection with the Merger for offering or sale in any jurisdiction,
or any comments or requests for additional information by the SEC with respect
to the Registration Statement.

5.8 STOCK EXCHANGE LISTING. Parent shall cause the shares of Parent
Common Stock to be issued in the Merger to be approved for listing on the NYSE,
subject to official notice of issuance, prior to the Closing Date.

5.9 ADDITIONAL ARRANGEMENTS. Subject to the terms and conditions herein
provided, each of Tide West and Parent shall take, or cause to be taken, all
action and shall do, or cause to be done, all things necessary, appropriate or
desirable under the HSR Act and any other applicable laws and regulations or
under applicable governing agreements to consummate and make effective the
transactions contemplated by this Agreement, including using its best efforts to
obtain all necessary waivers, consents and approvals and effecting all necessary
registrations and filings. Each of Tide West and Parent shall take, or cause to
be taken, all action or shall do, or cause to be done, all things necessary,
appropriate or desirable to cause the covenants and conditions applicable to the
transactions contemplated hereby to be performed or satisfied as soon as
practicable. In addition, if any Governmental Authority shall have issued any
order, decree, ruling or injunction, or taken any other action that would have
the effect of restraining, enjoining or otherwise prohibiting or preventing the
consummation of the transactions contemplated hereby, each of Tide West and
Parent shall use its reasonable efforts to have such order, decree, ruling or
injunction or other action declared ineffective as soon as practicable.

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5.10 AGREEMENTS OF AFFILIATES. At least 30 days prior to the Effective
Time, Tide West shall cause to be prepared and delivered to Parent a list
identifying all Persons who, at the time of the Tide West Meeting, may be deemed
to be "affiliates" of Tide West as that term is used in paragraphs (c) and (d)
of Rule 145 under the Securities Act. Tide West shall use its best efforts to
cause each Person who is identified as an affiliate of Tide West in such list to
execute and deliver to Parent, on or prior to the Closing Date, a written
agreement, in the form attached hereto as EXHIBIT 5.10 (if such Person has not
executed and delivered an agreement substantially to the same effect
contemporaneously with the execution of this Agreement). Parent shall be
entitled to place legends as specified in such agreements on the Parent
Certificates representing any Parent Common Stock to be issued to such Persons
in the Merger.

5.11 PUBLIC ANNOUNCEMENTS. Prior to the Closing, Tide West and Parent
will consult with each other before issuing any press release or otherwise
making any public statements with respect to the transactions contemplated by
this Agreement and shall not issue any press release or make any such public
statement prior to obtaining the approval of the other party; provided, however,
that such approval shall not be required where such release or announcement is
required by applicable law; and provided further, that either Tide West or
Parent may respond to inquiries by the press or others regarding the
transactions contemplated by this Agreement, so long as such responses are
consistent with such party's previously issued press releases.

5.12 NOTIFICATION OF CERTAIN MATTERS. Tide West shall give prompt notice
to Parent of (a) any representation or warranty contained in Article 3 being
untrue or inaccurate when made, (b) the occurrence of any event or development
that would cause (or could reasonably be expected to cause) any representation
or warranty contained in Article 3 to be untrue or inaccurate on the Closing
Date, or (c) any failure of Tide West to comply with or satisfy any covenant,
condition, or agreement to be complied with or satisfied by it hereunder. Parent
shall give prompt notice to Tide West of (x) any representation or warranty
contained in Article 4 being untrue or inaccurate when made, (y) the occurrence
of any event or development that would cause (or could reasonably be expected to
cause) any representation or warranty contained in Article 4 to be untrue or
inaccurate on the Closing Date, or (z) any failure of Parent to comply with or
satisfy any covenant, condition, or agreement to be complied with or satisfied
by it hereunder.

5.13 PAYMENT OF EXPENSES. Each party hereto shall pay its own expenses
incident to preparing for, entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby, whether or not the Merger
shall be consummated, except that (a) the fee for filing the Registration
Statement with the SEC shall be borne by Parent; (b) the costs and expenses
associated with printing the Proxy Statement/Prospectus shall be borne equally
by Parent and Tide West; and (c) the costs and expenses associated with mailing
the Proxy Statement/Prospectus to the stockholders of (i) Tide West, and
soliciting the votes of the stockholders of Tide West, shall be borne by Tide
West, and (ii) Parent, and soliciting the votes of the stockholders of Parent,
shall be borne by Parent.

5.14 REGISTRATION RIGHTS. Parent and the Major Tide West Stockholder
shall enter into a Registration Rights Agreement, in the form attached hereto as
EXHIBIT 5.14, at the Closing.

5.15 INSURANCE; INDEMNIFICATION. The Parent shall cause the Director and
Officer Liability Insurance coverage currently maintained by Tide West to
continue in effect for a period of not less than one year following the
Effective Time. From and after the Effective Time, Parent shall indemnify and
hold harmless each person who is, has been at any time prior to the date of the
Original Agreement, or becomes prior to the Effective Time, an officer or
director of any of the Tide West Companies (collectively, the "INDEMNIFIED
PARTIES") against all losses, claims, damages, liabilities, costs or expenses
(including attorneys' fees), judgments and amounts paid in settlement in
connection with any claim, action, suit, proceeding or investigation arising out
of or pertaining to acts or omissions, or alleged acts or omissions, by him in
his capacity as an officer or director of any of the Tide West Companies, which
acts or omissions occurred prior to the Effective Time; provided, however, that
Parent shall be under no obligation to indemnify any Indemnified Party pursuant
to this Section 5.15 except to the extent that such Indemnified Party was
entitled to indemnification from any of the Tide West Companies (pursuant to
applicable law or contract) immediately prior to the Effective Time. The
procedures associated with such indemnification shall be the same as those
associated with the Indemnified Parties' indemnification from any of the Tide
West Companies, as the case

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may be, immediately prior to the Effective Time (provided, however, that Parent
shall be under no obligation to deposit trust funds pursuant to any
"change-in-control" or similar provisions). Tide West hereby agrees that, from
and after the date of the Original Agreement until the Effective Time, it will
not (and it will cause each of TWTT and Draco not to) amend, modify or otherwise
alter any contractual provision under which any Indemnified Party is entitled to
indemnification from any of the Tide West Companies at the time of the execution
of this Agreement. The provisions of this Section 5.15 are intended to be for
the benefit of, and shall be enforceable by, the parties hereto and each
Indemnified Party and their respective heirs and representatives.

5.16 TIDE WEST EMPLOYEES. After the Effective Time, it is expected that
Parent may, in its sole discretion, offer employment to, or cause the Tide West
Companies to continue the employment of, certain employees of the Tide West
Companies (the "RETAINED EMPLOYEES"). Parent shall provide the Retained
Employees with the same benefits that accrue to employees of Parent and its
subsidiaries. In addition, for a period of 12 months following the Effective
Time, Parent shall, or shall cause the Surviving Corporation to, either (a)
maintain the effectiveness of the Tide West Employee Benefit Plans for the
benefit of the Retained Employees or (b) provide the Retained Employees with the
rights and benefits of Parent's employee benefit plans. With respect to
employees of the Tide West Companies who are not Retained Employees, Parent
shall, for a period of 18 months following the Effective Time, either (a)
maintain the Tide West health benefit plans for the benefit of such persons, or
(b) provide such persons with the rights and benefits of Parent's employee
health benefit plans; provided, that Parent shall not be required to pay the
premiums for coverage under such plans for any such persons, except to the
extent provided in any severance agreement agreed to by the Tide West Companies
and Parent. Parent further agrees that the Retained Employees shall be credited
for their service with the Tide West Companies, and their respective predecessor
entities, for purposes of eligibility and vesting in the employee plans provided
by Parent. The Retained Employees' benefits under Parent's medical benefit plan
shall not be subject to any exclusions for any pre-existing conditions, and
credit shall be received for any deductibles or out-of-pocket amounts previously
paid. Parent shall, or shall cause the Surviving Corporation to, fulfill all
coverage continuation obligations imposed by Section 4980B of the Code and
Section 601 of ERISA for those employees of the Tide West Companies who are not
Retained Employees. The provisions of this Section 5.16 are intended to be for
the benefit of, and shall be enforceable by, the parties hereto and the
employees of the Tide West Companies covered by the Tide West Employee Benefit
Plans at the Effective Time and their respective heirs and representatives.

5.17 RESTRUCTURING OF MERGER. If the condition to Closing set forth in
Section 6.3(g) is not either satisfied or waived by Tide West, upon written
notice from Tide West delivered to Parent within 15 days after the approval of
the Tide West Proposal at both the Tide West Meeting and the Parent Meeting, the
Merger shall be restructured under Section 351 of the Code as a "Horizontal
Double Dummy" transaction whereby (a) the holders of Parent Common Stock would
receive one share of common stock ("Newco Common Stock") of a newly created
holding company ("Newco") in exchange for each share of Parent Common Stock as a
result of a merger of a newly created subsidiary of Newco with and into Parent,
and (b) the holders of Tide West Common Stock would receive $8.75 and .6295 of a
share of Newco Common Stock for each share of Tide West Common Stock as a result
of a merger of another newly created subsidiary of Newco with and into Tide
West. In such event, this Agreement shall be deemed to be appropriately modified
to reflect such restructuring and the parties hereto shall use their reasonable
best efforts to effect such restructured transaction.

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ARTICLE 6

CONDITIONS

6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction, at or prior to the Closing Date, of the following conditions:

(a) STOCKHOLDER APPROVAL. The Tide West Proposal shall have been duly and
validly approved and adopted by the stockholders of Tide West and Parent, all as
required by the DGCL and the charter and bylaws of Tide West and Parent.

(b) OTHER APPROVALS. The waiting period applicable to the consummation of
the Merger under the HSR Act shall have expired or been terminated and all
filings required to be made prior to the Effective Time with, and all consents,
approvals, permits and authorizations required to be obtained prior to the
Effective Time from, any Governmental Authority or other person in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by Tide West, Parent and Merger Sub shall have
been made or obtained (as the case may be), except where the failure to obtain
such consents, approvals, permits and authorizations would not be reasonably
likely to result in a Material Adverse Effect on Parent (assuming the Merger has
taken place) or to materially adversely affect the consummation of the Merger.

(c) SECURITIES LAW MATTERS. The Registration Statement shall have been
declared effective by the SEC under the Securities Act and shall be effective at
the Effective Time, and no stop order suspending such effectiveness shall have
been issued, no action, suit, proceeding or investigation by the SEC to suspend
such effectiveness shall have been initiated and be continuing, and all
necessary approvals under state securities laws relating to the issuance or
trading of the Parent Common Stock to be issued in the Merger shall have been
received.

(d) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that prior to
invoking this condition, each party shall have complied fully with its
obligations under Section 5.9 and, in addition, shall use all reasonable efforts
to have any such decree, ruling, injunction or order vacated, except as
otherwise contemplated by this Agreement.

(e) ACCOUNTANTS' LETTER. Parent and Tide West shall have received a letter
from Arthur Andersen & Co., immediately prior to the Effective Date, in form and
substance reasonably satisfactory to each of Parent and Tide West, dated as of
the Effective Date, which letter shall address matters as are customary for
transactions similar to those contemplated in this Agreement.

(f) NYSE LISTING. The shares of Parent Common Stock issuable pursuant to
the Merger shall have been authorized for listing on the NYSE, subject to
official notice of issuance.

6.2 CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB. The obligations
of Parent and Merger Sub to effect the Merger are subject to the satisfaction of
the following conditions, any or all of which may be waived in whole or in part
by Parent and Merger Sub:

(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Tide West set forth in Article 3 shall be true and correct in all material
respects as of the Closing Date as though made on and as of that time, and
Parent shall have received a certificate signed by the chief executive officer
of Tide West to such effect; provided, however, that the condition set forth in
this Section 6.2(a) shall be deemed to be satisfied even if one or more of such
representations and warranties (without giving effect to the individual
materiality thresholds otherwise included as a part of such representations and
warranties) are not true and correct, so long as the failure of such
representations and warranties (without giving effect to the individual
materiality thresholds otherwise included as a part of such representations and
warranties) to be true and correct (in the aggregate) does not result in (i)
damages or losses to Parent, (ii) a net reduction in the aggregate value of the
assets of the Tide West Companies (with respect to Ownership Interests, as
determined

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by reference to the Allocated Values) or (iii) reduction in the aggregate net
value of the assets of the Tide West Companies resulting from the items and
matters set forth in Section 3.13 of the DISCLOSURE SCHEDULE, in an aggregate
amount for clauses (i), (ii) and (iii) (the "FAILURE AMOUNT") that exceeds
$10,000,000; provided, that to the extent the Failure Amount exceeds $5,000,000,
the aggregate cash portion of the consideration to be paid to the holders of
shares of Tide West Common Stock in connection with the Merger shall be reduced
by an amount (not to exceed $5,000,000) by which the Failure Amount exceeds
$5,000,000 (and the Cash Consideration per share of Tide West Common Stock shall
be proportionately reduced); provided further, that to the extent the Failure
Amount exceeds $10,000,000, Parent may elect to close the Merger after effecting
the reduction contained in the immediately preceding proviso.

(b) PERFORMANCE OF COVENANTS AND AGREEMENTS BY TIDE WEST. Tide West shall
have performed in all material respects all covenants and agreements required to
be performed by it under this Agreement at or prior to the Closing Date, and
Parent shall have received a certificate signed by the chief executive officer
of Tide West to such effect.

(c) LETTERS FROM TIDE WEST AFFILIATES. Parent shall have received from
each Person named in the list referred to in Section 5.10 an executed copy of
the agreement described in Section 5.10.

(d) NO ADVERSE CHANGE. From the date of the Original Agreement through the
Closing, there shall not have occurred any change in the condition (financial or
otherwise), operations or business of any of the Tide West Companies that would
have or would be reasonably likely to have a Material Adverse Effect on Tide
West (other than changes, including changes in commodity prices, generally
affecting the oil and gas industry).

(e) FAIRNESS OPINION. The fairness opinion described in Section 5.6(a)
shall not have been withdrawn, revoked, or modified.

(f) TAX OPINION. The tax opinion described in Section 5.6(b) shall not
have been withdrawn, revoked or modified.

(g) DISSENTING STOCKHOLDERS. The holders of no more than three percent of
the Tide West Common Stock shall have exercised their right to dissent from the
Merger under the DGCL.

(h) LEGAL OPINION. Parent and Merger Sub shall have received an opinion of
Conner & Winters, a Professional Corporation, counsel for Tide West, dated the
Closing Date, in form and substance reasonably acceptable to Parent, covering
the subjects set forth in Sections 3.1, 3.2, 3.3, 3.4 and 3.5.

6.3 CONDITIONS TO OBLIGATION OF TIDE WEST. The obligation of Tide West to
effect the Merger is subject to the satisfaction of the following conditions,
any or all of which may be waived in whole or in part by Tide West:

(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Parent and Merger Sub set forth in Article 4 shall be true and correct in all
material respects as of the Closing Date as though made on and as of that time,
and Tide West shall have received a certificate signed by the chief executive
officer or the chief financial officer of Parent to such effect.

(b) PERFORMANCE OF COVENANTS AND AGREEMENTS BY PARENT AND MERGER
SUB. Parent and Merger Sub shall have performed in all material respects all
covenants and agreements required to be performed by them under this Agreement
at or prior to the Closing Date, and Tide West shall have received a certificate
signed by the chief executive officer or the chief financial officer of Parent
to such effect.

(c) FAIRNESS OPINION. The fairness opinion described in Section 5.5(a)
shall not have been withdrawn, revoked, or modified.

(d) TAX OPINION. The tax opinion described in Section 5.5(b) shall not
have been withdrawn, revoked, or modified.

(e) NO ADVERSE CHANGE. From the date of the Original Agreement through the
Closing, there shall not have occurred any change in the condition (financial or
otherwise), operations or business of Parent and its

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subsidiaries that would have or would be reasonably likely to have a Material
Adverse Effect on Parent (other than changes, including changes in commodity
prices, generally affecting the oil and gas industry).

(f) LEGAL OPINION. Tide West shall have received an opinion of the general
counsel of Parent, dated the Closing Date, in form and substance reasonably
acceptable to Tide West, covering the subjects set forth in Sections 4.1, 4.2,
4.3 and 4.4.

(g) MAXIMUM NUMBER OF SHARES. The adjustments to the Cash Consideration
and the Conversion Number pursuant to the formulas set forth in Section
2.4(b)(i) (other than the last proviso thereof) would result in the issuance of
not more than 7,161,312 shares of Parent Common Stock in connection with the
Merger.

ARTICLE 7

TERMINATION

7.1 TERMINATION RIGHTS. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, whether before or
after approval of the Tide West Proposal by the stockholders of Tide West:

(a) By mutual written consent of Parent and Tide West;

(b) By either Tide West or Parent if (i) the Merger has not been
consummated by July 31, 1996 (provided, however, that the right to terminate
this Agreement pursuant to this clause (i) shall not be available to any party
whose breach of any representation or warranty or failure to perform any
covenant or agreement under this Agreement has been the cause of or resulted in
the failure of the Merger to occur on or before such date); (ii) any
Governmental Authority shall have issued an order, decree or ruling or taken any
other action permanently restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have become final
and nonappealable (provided, however, that the right to terminate this Agreement
pursuant to this clause (ii) shall not be available to any party until such
party has used all reasonable efforts to remove such injunction, order or
decree); or (iii) the Tide West Proposal shall not have been approved by the
required vote of (A) the Tide West stockholders at the Tide West Meeting or at
any adjournment thereof, or (B) the Parent stockholders at the Parent Meeting or
at any adjournment thereof;

(c) By Parent if (i) there has been a breach of the representations and
warranties made by Tide West in Article 3 of this Agreement (provided, however,
that Parent shall not be entitled to terminate this Agreement pursuant to this
clause (i) unless Parent has given Tide West at least 30 days prior notice of
such breach, Tide West has failed to cure such breach within such 30-day period,
and the condition described in Section 6.2(a), other than the provision thereof
relating to the certificate signed by the chief executive officer of Tide West,
would not be satisfied if the Closing were to occur on the day on which Parent
gives Tide West notice of such termination); or (ii) Tide West has failed to
comply in any material respect with any of its covenants or agreements contained
in this Agreement and such failure has not been, or cannot be, cured within a
reasonable time after notice and demand for cure thereof;

(d) By Tide West if (i) there has been a breach of the representations and
warranties made by Parent and Merger Sub in Article 4 of this Agreement
(provided, however, that Tide West shall not be entitled to terminate this
Agreement pursuant to this clause (i) unless Tide West has given Parent at least
30 days prior notice of such breach, Parent has failed to cure such breach
within such 30-day period, and the condition described in Section 6.3(a), other
than the provision thereof relating to the certificate signed by the chief
executive officer of Parent, would not be satisfied if the Closing were to occur
on the day on which Tide West gives Parent notice of such termination); or (ii)
Parent or Merger Sub has failed to comply in any material respect with any of
its respective covenants or agreements contained in this Agreement, and, in
either such case, such breach or failure has not been, or cannot be, cured
within a reasonable time after notice and a demand for cure thereof;

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(e) By Tide West if (i) Tide West is prepared to enter into a binding
definitive agreement to effect an Alternative Transaction; and (ii) Tide West
has given Parent at least three business days' prior notice of its intention to
terminate this Agreement pursuant to this Section 7.1(e) (along with a
description of all relevant terms and conditions of such Alternative
Transaction), during which period Parent shall have the opportunity to propose
amendments or modifications to the terms of the Merger; or

(f) By Parent if the board of directors of Tide West shall have failed to
recommend adoption of the Tide West Proposal at the time the Proxy
Statement/Prospectus is first mailed to stockholders of Tide West or shall have
amended or withdrawn any such recommendation and such recommendation is not
reinstated in its prior form within five business days after such amendment or
withdrawal.

7.2 EFFECT OF TERMINATION. If this Agreement is terminated by either Tide
West or Parent pursuant to the provisions of Section 7.1, this Agreement shall
forthwith become void except for, and there shall be no further obligation on
the part of any party hereto or its respective Affiliates, directors, officers,
or stockholders except pursuant to, the provisions of Sections 5.3(c) (but only
to the extent of the confidentiality and indemnification provisions contained
therein), 5.7(c), 5.7(d), 5.13 and 7.3, Article 8 and the Confidentiality
Agreement (which shall continue pursuant to their terms); provided, however,
that a termination of this Agreement shall not relieve any party hereto from any
liability for damages incurred as a result of a breach by such party of its
representations, warranties, covenants, agreements or other obligations
hereunder occurring prior to such termination.

7.3 FEES AND EXPENSES. If this Agreement is terminated pursuant to
Section 7.1(e) or (f), Tide West shall promptly, but in no event later than one
business day after termination of this Agreement, pay to Parent a fee equal to
$5,000,000 in same day funds, plus interest on such amount from the date payable
until paid at a rate of eight percent per annum.

ARTICLE 8

MISCELLANEOUS

8.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations or warranties contained in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the consummation of the
Merger.

8.2 AMENDMENT. This Agreement may be amended by the parties hereto at any
time before or after approval of the Tide West Proposal by the stockholders of
Tide West; provided, however, that after any such approval, no amendment shall
be made that by law requires further approval by such stockholders without such
further approval. This Agreement may not be amended except by a written
instrument signed on behalf of each of the parties hereto.

8.3 NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and either delivered personally, by facsimile
transmission or by registered or certified mail (postage prepaid and return
receipt requested) and shall be deemed given when received (or, if mailed, five
business days after the date of mailing) at the following addresses or facsimile
transmission numbers (or at such other address or facsimile transmission number
for a party as shall be specified by like notice):

(a) If to Parent or Merger Sub: HS Resources, Inc., One Maritime Plaza,
15th Floor, San Francisco, CA 94111, Attention: Chief Executive Officer
(facsimile transmission number: 415-433-5811), with a copy (which shall not
constitute notice) to HS Resources, Inc., 1999 Broadway, Suite 3600, Denver, CO
80202, Attention: General Counsel (facsimile transmission number: 303-296-3601).

(b) If to Tide West: Tide West Oil Company, 6666 South Sheridan, Suite 250,
Tulsa, Oklahoma 74133-1750, Attention: Philip B. Smith, President (facsimile
transmission number: 918-481-0992), with a copy (which shall not constitute
notice) to Robert A. Curry, Conner & Winters, 2400 First Place Tower, 15 East
5th Street, Tulsa, Oklahoma 74103 (facsimile transmission number: 918-586-8548).

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8.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.

8.5 SEVERABILITY. Any term or provision of this Agreement that is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.

8.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
(together with the Confidentiality Agreement and the documents and instruments
delivered by the parties in connection with this Agreement) (a) constitutes the
entire agreement and supersedes all other prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof; and (b) except as provided in Article 2 or Section 5.3(c), 5.15 or 5.16,
is solely for the benefit of the parties hereto and their respective successors,
legal representatives and assigns and does not confer on any other person any
rights or remedies hereunder.

8.7 APPLICABLE LAW. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.

8.8 NO REMEDY IN CERTAIN CIRCUMSTANCES. Each party agrees that, should
any court or other competent authority hold any provision of this Agreement or
part hereof to be null, void or unenforceable, or order any party to take any
action inconsistent herewith or not to take an action consistent herewith or
required hereby, the validity, legality and enforceability of the remaining
provisions and obligations contained or set forth herein shall not in any way be
affected or impaired thereby, unless the foregoing inconsistent action or the
failure to take an action constitutes a material breach of this Agreement or
makes this Agreement impossible to perform, in which case this Agreement shall
terminate pursuant to Article 7. Except as otherwise contemplated by this
Agreement, to the extent that a party hereto took an action inconsistent
herewith or failed to take action consistent herewith or required hereby
pursuant to an order or judgment of a court or other competent Governmental
Authority, such party shall not incur any liability or obligation unless such
party breached its obligations under Section 5.9 or did not in good faith seek
to resist or object to the imposition or entering of such order or judgment.

8.9 ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties, except that Merger Sub may assign, in its sole discretion, any or all
of its rights, interests and obligations hereunder to any newly-formed direct or
indirect wholly-owned corporate subsidiary of Parent. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.

8.10 WAIVERS. At any time prior to the Effective Time, the parties hereto
may, to the extent legally allowed, (a) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive performance of any of the
covenants or agreements, or satisfaction of any of the conditions, contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party. Except as provided in this Agreement, no action taken pursuant to
this Agreement, including any investigation by or on behalf of any party, shall
be deemed to constitute a waiver by the party taking such action of compliance
with any representations, warranties, covenants or agreements contained in this
Agreement. The waiver by any party hereto of a breach of any provision hereof
shall not operate or be construed as a waiver of any prior or subsequent breach
of the same or any other provisions hereof.

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8.11 CONFIDENTIALITY AGREEMENT. Parent agrees to be bound by the terms of
the Confidentiality Agreement as if it were a party thereto. The Confidentiality
Agreement shall remain in full force and effect following the execution of this
Agreement until terminated as described in Section 7.2, is hereby incorporated
herein by reference and shall constitute a part of this Agreement for all
purposes; provided, however, that any standstill provisions contained therein
will, effective as of the Closing, be deemed to have been waived to the extent
necessary for the parties to consummate the Merger in accordance with the terms
of this Agreement. Any and all information received by Parent pursuant to the
terms and provisions of this Agreement shall be governed by the applicable terms
and provisions of the Confidentiality Agreement.

8.12 INCORPORATION. Exhibits and Schedules referred to herein are
attached to and by this reference incorporated herein for all purposes.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives, on the date first written above.

"Tide West" "Parent"
TIDE WEST OIL COMPANY HS RESOURCES, INC.

By: /s/ ROBERT H. MASE By: /s/ P. MICHAEL HIGHUM
----------------------------------- -----------------------------------
Robert H. Mase P. Michael Highum
Vice President President

"Merger Sub"

HSR ACQUISITION, INC.

By: /s/ P. MICHAEL HIGHUM
-----------------------------------
P. Michael Highum
President

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<PAGE> 170

ANNEX B

FAIRNESS OPINION
OF MERRILL LYNCH & CO.

LOGO LOGO

May 16, 1996

Board of Directors
Tide West Oil Company
6666 S. Sheridan Road, Suite 250
Tulsa, OK 74133

Gentlemen:

Tide West Oil Company (the "Company") and a wholly-owned subsidiary of HS
Resources, Inc. ("HS"), HSR Acquisition, Inc. ("HSR"), have entered into an
Amended and Restated Agreement and Plan of Merger, dated as of April 29, 1996
(the "Agreement"), pursuant to which the Company will be merged with HSR in a
transaction (the "Merger") in which each outstanding share of the Company's
common stock, par value $0.01 per share (the "Shares"), will be converted into
the right to receive $8.75 in cash, less three percent of the amount by which
HS' market price, defined as the average stock price for the ten trading days
ending five business days before the Merger, exceeds $10.50, and 0.6295 shares
of common stock, par value $0.01 per share, of HS (the "HS Shares"). The cash
consideration may be decreased, and the conversion rates for the HS Shares may
be correspondingly increased, in accordance with the Agreement if necessary to
assure the tax-free nature of the Merger to the Company's shareholders. The
Merger is expected to be considered by the shareholders of the Company and HS at
special shareholders' meetings to be held on June 17, 1996, and consummated
shortly after the date of such meetings.

You have asked us whether, in our opinion, the proposed consideration to be
received by the holders of the Shares in the Merger is fair to such
shareholders, taken as a whole, from a financial point of view.

In arriving at the opinion set forth below, we have, among other things:

(1) Reviewed the Company's Annual Reports, Forms 10-K and related
financial information for the three fiscal years ended December 31, 1995;
the Company's Forms 8-K dated November 20, 1992 and December 15, 1993; the
Company's Form 10-Q and the related unaudited financial information for the
quarterly period ended March 31, 1996;

(2) Reviewed HS' Annual Reports, Forms 10-K and related financial
information for the three fiscal years ended December 31, 1995; HS' Forms
8-K dated July 9, 1992 and August 13, 1993; HS' Form 10-Q and the related
unaudited financial information for the quarterly period ended March 31,
1996;

(3) Reviewed certain information, including financial forecasts,
relating to the business, earnings, cash flow, assets and prospects of the
Company and HS, furnished to us by the Company and HS, respectively;

(4) Reviewed for January 1, 1995, July 1, 1995, October 1, 1995, and
December 31, 1995, certain reserve and reserve production estimates for the
Company prepared by the Company, a report of

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LOGO

Netherland, Sewell & Associates, Inc. setting forth its estimates for a
portion of the Company's reserves at January 1, 1995, and a reserve audit
for a portion of the Company's properties prepared as of July 1, 1995, by
Netherland, Sewell & Associates, Inc., and discussed such reserve and
reserve production estimates with the Company and Netherland, Sewell &
Associates, Inc.;

(5) Reviewed certain reserve and reserve production estimates for
December 31, 1995 for HS prepared by HS and reviewed by Williamson
Petroleum Consultants, Inc. and discussed such reserve and reserve
production estimates with HS;

(6) Reviewed certain reserve and reserve production estimates for
December 31, 1995, relating to the acquisition of certain assets from Basin
Exploration, Inc., prepared by Basin Exploration, Inc. and audited by
Netherland, Sewell & Associates, Inc. and discussed such reserve and
reserve production estimates with HS;

(7) Conducted discussions with members of senior management of the
Company and HS concerning their respective business and prospects;

(8) Reviewed the historical market prices and trading activity for the
Shares and HS Shares and compared them with that of certain publicly traded
companies which we deemed to be reasonably similar to the Company and HS,
respectively;

(9) Compared the published reserve information, results of operations
and similar financial information of the Company and HS with that of
certain companies which we deemed to be reasonably similar to the Company
and HS, respectively;

(10) Compared the financial terms of the transactions contemplated by
the Agreement with the financial terms of certain other mergers and
acquisitions which we deemed to be relevant;

(11) Considered the proforma effect of the Merger on HS'
capitalization ratios and earnings and cash flow, with and without the
effect of the acquisition of certain assets from Basin Exploration, Inc.;

(12) Reviewed the Amended and Restated Agreement and Plan of Merger;

(13) Reviewed the Agreement to Vote and Proxy Agreements, of Natural
Gas Partners, L.P. and Philip B. Smith;

(14) Reviewed the Registration Rights Agreement;

(15) Reviewed the Asset Purchase and Sale Agreement relating to the
Basin Exploration, Inc. properties; and

(16) Reviewed such other financial studies and analyses and performed
such other investigations and took into account such other matters as we
deemed necessary, including our assessment of general economic, market and
monetary conditions.

In preparing our opinion, we have relied on the accuracy and completeness
of all information supplied or otherwise made available to us by the Company and
HS, and we have not independently verified such information or undertaken an
independent appraisal of the assets or liabilities of the Company, HS or certain
assets of Basin Exploration, Inc. With respect to the financial forecasts and
internal reserve reports furnished by the Company and HS, we have assumed that
they have been reasonably prepared and reflect the best currently available
estimates and judgment of the Company's or HS' management as to the expected
future financial performance of the Company, HS or certain assets of Basin
Exploration, Inc., as the case may be.

In developing our opinion, we have relied heavily on the Company and HS as
to certain accounting aspects of the Merger and, as provided in the Amended and
Restated Agreement and Plan of Merger, we have

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LOGO

also assumed that the Merger will be treated for federal income tax purposes as
a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code.

On the basis of, and subject to the foregoing, we are of the opinion that
the proposed consideration to be received by the holders of the Shares pursuant
to the Merger is fair to such shareholders, taken as a whole, from a financial
point of view.

Very truly yours,

MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED

B-3
<PAGE> 173

ANNEX C

FAIRNESS OPINION

OF LEHMAN BROTHERS, INC.

LOGO

May 16, 1996

Board of Directors
HS Resources, Inc.
One Maritime Plaza
San Francisco, CA 94111

Members of the Board:

We understand that HS Resources ("HSR" or the "Company") has entered into
an agreement to acquire Tide West Oil Company ("Tide West") pursuant to a merger
for stock and cash, with Tide West merging with and into HSR Acquisition Inc., a
newly formed, wholly-owned subsidiary of the Company ("Merger Sub"). We further
understand that, as consideration in the merger, Tide West shareholders will
receive $8.75 in cash and 0.6295 shares of HSR common stock for each share of
Tide West common stock, subject to adjustment, and that Merger Sub will assume
net liabilities of Tide West of approximately $38.7 million (the "Proposed
Transaction"). The terms and conditions of the Proposed Transaction, including
with respect to the potential adjustment of the cash and common stock
proportions of the consideration to be paid to holders of Tide West common
stock, are set forth in more detail in the Agreement and Plan of Merger dated as
of February 25, 1996, and amended and restated as of April 29, 1996, by and
among HSR, Merger Sub and Tide West (the "Agreement").

We have been requested by the Board of Directors of the Company to render
our opinion with respect to the fairness, from a financial point of view, to the
Company of the consideration to be paid by the Company in the Proposed
Transaction. We have not been requested to opine as to, and our opinion does not
in any manner address, the Company's underlying business decision to proceed
with or effect the Proposed Transaction.

In arriving at our opinion, we have reviewed and analyzed: (1) the
Agreement and the specific terms of the Proposed Transaction, (2) publicly
available and such other information concerning the Company and Tide West which
we believe to be relevant to our inquiry including Tide West's Annual Reports;
Forms 10-K and related financial information for the three fiscal years ended
December 31, 1994; Tide West's Forms 8-K dated November 20, 1992 and December
15, 1993; Tide West's Forms 10-Q and the related unaudited financial information
for the quarterly periods ended March 31, 1995, June 30, 1995, and September 30,
1995; and Tide West's unaudited financial information for the year ended
December 31, 1995; and HSR's Annual Reports; Forms 10-K and related financial
information for the three fiscal years ended December 31, 1994; HSR's Forms 8-K
dated July 9, 1992, and August 13, 1993; HSR's Forms 10-Q and the related
unaudited financial information for the quarterly periods ended March 31, 1995,
June 30, 1995, and September 30, 1995; and HSR's unaudited financial information
for the year ended December 31, 1995, (3) financial and operating information
with respect to the business, operations and prospects (including financial
projections) of the Company and Tide West furnished to us by the Company and
Tide West, (4) the trading histories of the common stock of the Company and Tide
West from January 1, 1994 to March 26, 1996 and a comparison of the trading
histories with those of other companies that we deemed relevant, (5) certain
reserve and reserve production estimates for Tide West prepared by Tide West,
and an audit performed by Netherland, Sewell & Associates, Inc., as of July 1,
1995, of a portion of the Tide West reserve estimates, (6) certain reserve and
reserve production estimates for HSR prepared by HSR, (7) a comparison of the
historical financial results and present financial condition of the Company and
Tide West with those of other companies that we deemed
<PAGE> 174

HS Resources, Inc.
May 16, 1996

relevant, and (8) a comparison of the financial terms of the Proposed
Transaction with the terms of certain other recent transactions which we deemed
relevant. In addition, we have had discussions with the managements of the
Company and Tide West concerning their respective businesses, operations,
assets, financial conditions and prospects and undertook such other studies,
analyses and investigations as we deemed appropriate.

In arriving at our opinion, we have assumed and relied upon the accuracy
and completeness of the financial and other information used by us without
assuming any responsibility for independent verification of such information and
have further relied upon the assurances of the managements of the Company and
Tide West that they are not aware of any facts that would make such information
inaccurate or misleading. With respect to the financial projections of the
Company and Tide West provided to us by management of the Company and Tide West
respectively, upon advice of the Company we have assumed that such projections
have been reasonably prepared on a basis reflecting the best currently available
estimates and judgments of the managements of the Company and Tide West, as the
case may be, as to the future financial performance of the Company and Tide West
and that the Company and Tide West will perform substantially in accordance with
such projections. With respect to oil and gas reserve estimates and future
natural gas and oil production volumes for Tide West, with your consent we have
relied upon partial reserve audits performed by Netherland, Sewell & Associates,
Inc., Tide West's independent reserve engineer. In arriving at our opinion, we
have not conducted a physical inspection of the properties and facilities of
Tide West and have not made or obtained any other evaluations or appraisals of
the assets or liabilities of Tide West. Our opinion necessarily is based upon
market, economic and other conditions as they exist on, and can be evaluated as
of, the date of this letter.

Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the consideration to be paid
by the Company in the Proposed Transaction is fair to the Company.

We have acted as financial advisor to the Company in connection with the
Proposed Transaction and will receive a fee for our services which is contingent
upon the consummation of the Proposed Transaction. In addition, the company has
agreed to indemnify us for certain liabilities that may arise out of the
rendering of this opinion. We also have performed various investment banking
services for the Company in the past and have received customary fees for such
services. In the ordinary course of our business, we actively trade in the debt
and equity securities of the Company and Tide West for our own account and for
the accounts of our customers and, accordingly, may at any time hold a long or
short position in such securities.

This opinion is for the use and benefit of the Board of Directors of the
Company and is rendered to the Board of Directors in connection with its
consideration of the Proposed Transaction. This opinion is not intended to be
and does not constitute a recommendation to any stockholder of the Company as to
how such stockholder should vote with respect to the Proposed Transaction.

Very truly yours,

LEHMAN BROTHERS, INC.

LOGO
By: /s/ GRANT A. PORTER
------------------------------------
Grant A. Porter
Managing Director

Page 2
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HS Resources, Inc.
May 16, 1996

Page 3

ANNEX D

FAIRNESS OPINION

OF PRUDENTIAL SECURITIES INCORPORATED

LOGO
- --------------------------------------------------------------------------------

May 16, 1996

Board of Directors
HS Resources, Inc.
One Maritime Plaza
San Francisco, CA 94111

Members of the Board:

We understand that HS Resources, ("HSR" or the "Company"), HSR Acquisition
(the "Merger Sub"), a wholly-owned subsidiary of HSR and Tide West Oil Company
("Tide West"), have entered into an Agreement and Plan of Merger (the "Merger
Agreement"), dated February 25, 1996, and amended and restated as of April 29,
1996, pursuant to which Tide West will be merged with and into Merger Sub (the
"Merger"). At the Merger, Tide West will cease to exist and Merger Sub will
succeed to all of the assets, rights, liabilities and obligations of Tide West.
We further understand that in the Merger, each outstanding share of Tide West
common stock will be converted into 0.6295 of one share of Common Stock of HSR
and the right to receive in cash $8.75 (the "Merger Consideration"), subject to
modification under certain circumstances.

You have requested our opinion as to the fairness from a financial point of
view to the Company of the Merger Consideration to be paid by the Company in the
Merger.

In conducting our analysis and arriving at the opinion expressed herein, we
have:

(1) read the Merger Agreement and reviewed the terms of the Merger;

(2) reviewed historical audited financial information for both the
Company and Tide West for each of the three fiscal years ending December
31, 1994 and the unaudited Company and Tide West financial information for
the year ending December 31, 1995;

(3) analyzed certain operating and financial information with respect
to the business, operations and prospects of the Company and Tide West
including financial forecasts furnished to us by the Company and Tide West;

(4) analyzed the trading history of Tide West and HSR common stock
from January 1, 1994 to March 26, 1996 and compared those trading histories
with those of other companies that we deemed comparable;

(5) reviewed certain reserve and reserve production estimates for Tide
West prepared by Tide West, an audit performed by Netherland, Sewell &
Associates, Inc. as of July 1, 1995 of a portion of the Tide West reserve
estimates, and certain reserve and reserve production estimates for HSR and
prepared by HSR;

(6) compared the historical financial results and present financial
condition of Tide West with other companies we deemed comparable;

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

(7) compared the financial terms of the Merger with the financial
terms of certain other transactions that we deemed relevant;

(8) reviewed such other financial studies and analyses and performed
such other investigations as we deemed necessary, including our assessment
of economic and market conditions generally and with respect to the
exploration and development industry; and

(9) conducted discussions with the management of Tide West concerning
its business, operations, assets, financial condition and prospects
including financial forecasts and undertaken such other studies, analyses
and investigations as we deemed appropriate.

In arriving at our opinion, we have assumed and relied upon the accuracy
and completeness of the financial and other information used by us without
assuming any responsibility for independent verification of such information and
have further relied upon the assurances of management of the Company that they
are not aware of any facts that would make such information inaccurate or
misleading. With respect to the financial projections of the Company and Tide
West, upon advice of the Company, we have assumed that such projections have
been reasonably prepared on a basis reflecting the best currently available
estimates and judgments of the managements of the Company and Tide West, as the
case may be, as to the future financial performance of the Company and Tide West
and that the Company and Tide West will perform substantially in accordance with
such projections. In arriving at our opinion, we have not conducted a physical
inspection of the properties and facilities of the Company or Tide West and have
not made or obtained any evaluations or appraisals of the assets or liabilities
of the Company or Tide West. Our opinion necessarily is based upon market,
economic and other conditions as they exist, and can be evaluated as of the date
of this letter.

Based upon and subject to the foregoing, we are of the opinion that as of
the date hereof, the consideration to be offered in the Merger is fair to the
Company from a financial point of view.

We have acted as financial advisor to the Company in connection with the
Merger and will receive a fee for our services which is contingent upon the
consummation of the Merger. In addition, the Company has agreed to indemnify us
for certain liabilities that may arise out of the rendering of this opinion. In
the ordinary course of our business, we may trade in the debt and/or equity
securities of the Company for our own account and for the accounts of our
customers and, accordingly, may at any time hold a long or short position in
such securities.

This opinion is prepared for the Board of Directors and is not a
recommendation to the Company's shareholders as to how such shareholders should
vote with respect to the Merger.

Very truly yours,

PRUDENTIAL SECURITIES INCORPORATED

By: /s/ PRUDENTIAL SECURITIES INCORPORATED
----------------------------------------

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<PAGE> 177
ANNEX E

DELAWARE GENERAL CORPORATION LAW

SEC. 262. APPRAISAL RIGHTS.

(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to sec. 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of his shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.

(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec. 251, sec. 252, sec. 254, sec. 257, sec. 258, sec. 263
or sec. 264 of this title:

(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsections (f) or (g) of sec. 251 of this title.

(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sec.sec. 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:

a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;

b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock or depository receipts at the
effective date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or held of record by more than 2,000
holders;

c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or

d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.

(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec. 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.

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(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.

(d) Appraisal rights shall be perfected as follows:

(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or

(2) If the merger or consolidation was approved pursuant to sec. 228
or 253 of this title, the surviving or resulting corporation, either before
the effective date of the merger or consolidation or within 10 days
thereafter, shall notify each of the stockholders entitled to appraisal
rights of the effective date of the merger or consolidation and that
appraisal rights are available for any or all of the shares of the
constituent corporation, and shall include in such notice a copy of this
section. The notice shall be sent by certified or registered mail, return
receipt requested, addressed to the stockholder at his address as it
appears on the records of the corporation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of the
notice, demand in writing from the surviving or resulting corporation the
appraisal of his shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of his shares.

(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.

(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their

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shares have not been reached by the surviving or resulting corporation. If the
petition shall be filed by the surviving or resulting corporation, the petition
shall be accompanied by such a duly verified list. The Register in Chancery, if
so ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.

(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.

(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.

(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.

(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.

(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall

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be dismissed as to any stockholder without the approval of the Court, and such
approval may be conditioned upon such terms as the Court deems just.

(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.

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ANNEX F

DEFINITIONS OF CERTAIN TERMS

When used in this Joint Proxy Statement/Prospectus, the following terms
have the meanings indicated below.

"Bbl" means a standard barrel of 42 U.S. gallons and represents the basic
unit for measuring the production of crude oil and condensate.

"Bcf" means one billion cubic feet.

"Boe" means a barrel-of-oil-equivalent and is a customary convention used
in the United States to express oil and gas volumes on a comparable basis. It is
determined on the basis of the estimated relative energy content of natural gas
to oil, being approximately 6 Mcf of natural gas per barrel of oil.

"gross" acre or well means an acre or well in which a working interest is
owned.

"MBbl" means one thousand Bbls.

"MBoe" means one thousand Boes.

"Mcf" means one thousand cubic feet under prescribed conditions of pressure
and temperature and represents the basic unit for measuring the production of
natural gas.

"Mcfe" means a thousand cubic feet equivalent, which is determined using
the ratio of one barrel of crude oil, condensate or natural gas liquids to six
Mcf of natural gas so that 1/6 of a barrel of crude oil, condensate or natural
gas liquids is referred to as one thousand cubic feet of natural gas equivalent
or one Mcfe.

"MMBoe" means one million Boes.

"MMcf" means one million cubic feet.

"net" acres or wells are determined by multiplying the gross acres or
wells, as the case may be, by the applicable working interest in those gross
acres or wells.

"proved reserves" means those estimated quantities of crude oil and natural
gas that geological and engineering data demonstrate with reasonable certainty
to be recoverable in future years from known oil and gas reservoirs under
existing economic and operating conditions. Proved reserves are limited to those
quantities of oil and gas that can be expected to be recoverable commercially at
current prices and costs, under existing regulatory practices and with existing
conventional equipment and operating methods.

"SEC 10 value" means the present value of estimated future net revenues,
before income taxes, of proved reserves, determined in all material respects in
accordance with the rules and regulations of the Commission (generally using
prices and costs in effect on the specified date and a 10% discount rate).
<PAGE> 182
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's board of directors to grant, indemnity to directors
and officers under certain circumstances for liabilities incurred in connection
with their activities in such capacities (including reimbursement for expenses
incurred). The Registrant's Amended and Restated Certificate of Incorporation,
provides for indemnification of officers and directors to the fullest extent
permitted by the Delaware General Corporation Law. The Registrant's Bylaws also
provide that the Registrant shall indemnify directors and officers under certain
circumstances for liabilities and expenses incurred by reason of their
activities in such capacities. In addition, the Registrant has insurance
policies that provide liability coverage to directors and officers while acting
in that capacity. HSR maintains a $20 million policy of officers and directors
liability insurance.

Section 102(b)(7) of the Delaware General Corporation Law provides that a
certificate of incorporation may contain a provision eliminating or limiting the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit.

Article 11 of the Registrant's Amended and Restated Certificate of
Incorporation (the "Certificate") and Article VI, Section 1 of the Registrant's
Second Amended and Restated Bylaws (the "Bylaws") state that: "To the fullest
extent permitted by the General Corporation Law of Delaware, a director of the
corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director."

Article 12(a) of the Certificate and Article VI, Section 2(a) of the Bylaws
state that: "The corporation shall indemnify each person who was or is made a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative by reason of the fact that he, or a person of whom he is the legal
representative, is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the corporation to the fullest extent
authorized by the General Corporation Law of Delaware."

Article 12(b) of the Certificate and Article VI, Section 2(b) of the Bylaws
state that: "The corporation may purchase and maintain insurance, at its
expense, on behalf of any person who is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify such person
against such liability under the General Corporation Law of Delaware."

Finally, individual Indemnification Agreements have been entered into
between HSR and each officer and director of HSR which contractually obligate
HSR to provide the officers and directors (i) indemnification, (ii) insurance or
self-insurance in lieu thereof and (iii) additional indemnification.

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<PAGE> 183

ITEM 21. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES.

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NO. TITLE
- ---------------------------------------------------------------------------------------------
<C> <S>
2.1 -- Amended and Restated Agreement and Plan of Merger, dated as of April
29, 1996, among HSR, Merger Sub and Tide West (attached as Annex A to
the Joint Proxy Statement/Prospectus forming a part of this
Registration Statement).
3.1 -- Amended and Restated Certificate of Incorporation of HSR
(incorporated by reference to Exhibit 3.1 to HSR's Form S-1, No.
33-52774, filed on October 2, 1992 (the "HSR 1992 Form S-1").
3.2 -- Second Amended and Restated By-Laws of HSR (incorporated by reference
to Exhibit 3.2 to the HSR 1992 Form S-1).
3.3 -- Certificate of Incorporation of Tide West (incorporated by reference
to Exhibit 4.1 to Tide West's Current Report on Form 8-K dated
November 20, 1992).
3.4 -- Amendment to Certificate of Incorporation of Tide West, dated January
29, 1993 (effective February 1, 1993) (incorporated by reference to
Exhibit 3.2 to Tide West's Registration Statement on Form S-1, No.
33-57058 (the "Tide West Form S-1")).
3.5 -- Restated By-laws of Tide West (incorporated by reference to Exhibit
3.3 to the Tide West Form S-1).
#4.1 -- Form of Registration Rights Agreement, by and between HSR and NGP, to
be executed at Closing.
4.2 -- Rights Agreement, dated as of February 28, 1996, between HSR and
Harris Trust Company of California, as rights agent (incorporated by
reference to Exhibit 1 to HSR's Form 8-A, dated February 28, 1996, as
amended by HSR's Form 8-A/A (Amendment No. 1), dated March 12, 1996).
#5.1 -- Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P. regarding
legality of the securities to be registered.
#8.1 -- Opinion of Conner & Winters, A Professional Corporation, regarding
tax matters.
#11 -- Statement Regarding Computation of Per Share Earnings.
13.1 -- Tide West's Annual Report on Form 10-K for the year ended December
31, 1995 (filed on March 26, 1996 pursuant to Regulation S-T
promulgated under the Exchange Act, File No. 0-10727, and
incorporated by reference herein).
13.2 -- Tide West's Quarterly Report on Form 10-Q for the quarter ended March
31, 1996 (filed on May 15, 1996 pursuant to Regulation S-T
promulgated under the Exchange Act, File No. 0-10727, and
incorporated by reference herein).
#23.1 -- Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P. (included in the
opinion filed as Exhibit 5.1 to this Registration Statement).
#23.2 -- Consent of Conner & Winters, A Professional Corporation (included in
the opinion filed as Exhibit 8.1 to this Registration Statement).
*23.3 -- Consent of Arthur Andersen LLP.
*23.4 -- Consent of Deloitte & Touche LLP.
#23.5 -- Consent of Lehman Brothers, Inc.
#23.6 -- Consent of Prudential Securities Incorporated.
#23.7 -- Consent of Merrill Lynch & Co.
#23.8 -- Consent of Williamson Petroleum Consultants, Inc.
#23.9 -- Consent of Netherland, Sewell & Associates, Inc.
#23.10 -- Consent of Philip B. Smith, the NGP board nominee.
</TABLE>

II-2
<PAGE> 184

<TABLE>
<CAPTION>
EXHIBIT
NO. TITLE
- ---------------------------------------------------------------------------------------------
<C> <S>
#24.1 -- Power of Attorney of Registrant.
#27.1 -- Financial Data Schedule.
99.1 -- Opinion of Lehman Brothers, Inc. (attached as Annex C to the Joint
Proxy Statement/Prospectus forming a part of this Registration
Statement).
99.2 -- Opinion of Prudential Securities Incorporated (attached as Annex D to
the Joint Proxy Statement/Prospectus forming a part of this
Registration Statement).
99.3 -- Opinion of Merrill Lynch & Co. (attached as Annex B to the Joint
Proxy Statement/Prospectus forming a part of this Registration
Statement).
#99.4 -- Form of Proxy for Special Meeting of Stockholders of HSR.
#99.5 -- Form of Proxy for Special Meeting of Stockholders of Tide West.
99.6 -- Agreement to Vote and Proxy, dated as of February 25, 1996, between
HSR and NGP (incorporated by reference to Exhibit B to HSR's Schedule
13D filed on March 6, 1996).
99.7 -- Agreement to Vote and Proxy, dated as of February 25, 1996, between
HSR and Smith (incorporated by reference to Exhibit C to HSR's
Schedule 13D filed on March 6, 1996).
*99.8 -- Amendment No. 1 to Agreement to Vote and Proxy, dated as of May 7,
1996, between HSR and Smith.
*99.9 -- Purchase and Sale Agreement, dated as of March 26, 1996, between HSR,
Orion Acquisition, Inc., a Delaware corporation and wholly owned
subsidiary of HSR ("Orion"), and WRL.
*99.10 -- Wellbore Assignment of Oil and Gas Leases with Reservations of
Production Payment and Reversion Interest, dated March 26, 1996, and
effective as of March 29, 1996, by and between HSR, Orion and WRL.
*99.11 -- Management Agreement, dated March 26, 1996, and effective as of March
29, 1996, by and between WRL and HSR (the "Management Agreement").
99.12 -- Memorandum of Management Agreement and Power of Attorney, dated as of
March 26, 1996, and effective as of March 29, 1996, by and between
WRL and HSR (incorporated by reference to Schedule 1 to the
Management Agreement).
*99.13 -- Option Agreement, effective as of March 29, 1996, granted by WRL and
the WRL Trust to HSR.
*99.14 -- Credit Agreement, dated as of March 26, 1996, among WRL and Chase,
individually and as Agent for the banks signatory thereto (the
"Credit Agreement") (excluding exhibits and schedules thereto).
*99.15 -- Mortgage, Assignment of Production, Security Agreement and Financing
Statement, effective as of March 26, 1996, by and between WRL and
Chase, individually and as Agent for the banks signatory to the
Credit Agreement.
*99.16 -- Subordinated Promissory Note, dated March 26, 1996, and effective as
of March 29, 1996, executed by WRL in favor of HSR in the principal
sum of $750,000.
</TABLE>

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

* Filed herewith.

# Previously filed.

II-3
<PAGE> 185
ITEM 22. UNDERTAKINGS.

512(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(i) to include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in this effective Registration Statement;

(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;

provided, however, that clauses (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those
clauses is contained in periodic reports filed by the registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as
amended, that are incorporated by reference into this Registration
Statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

512(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

512(g)(1) The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.

512(g)(2) The undersigned registrant undertakes that every prospectus (i)
that is filed pursuant to paragraph (1) immediately preceding, or (ii) that
purports to meet the requirements of section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment

II-4
<PAGE> 186

shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

512(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

Item 22(b) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the Joint Proxy
Statement/Prospectus pursuant to Items 4, 10(b), 11, or 13 herein, within one
business day of receipt of such request, and to send the incorporated documents
by first class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.

Item 22(c) The undersigned registrant hereby undertakes to supply by means
of a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.

II-5
<PAGE> 187

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 4 to this Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of San Francisco, State of California, on May 15, 1996.

HS RESOURCES, INC.

By: /s/ JAMES E. DUFFY

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

James E. Duffy

Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 4 to this Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------ ----------------
<C> <S> <C>
* Chairman of the Board, Chief May 15, 1996
- --------------------------------------------- Executive Officer and
Nicholas J. Sutton Director (Principal
Executive Officer)

* President and Director May 15, 1996
- ---------------------------------------------
P. Michael Highum

/s/ JAMES E. DUFFY Chief Financial Officer and May 15, 1996
- --------------------------------------------- Director (Principal
James E. Duffy Financial and Accounting
Officer)

* Director May 15, 1996
- ---------------------------------------------
Kenneth A. Hersh

* Director May 15, 1996
- ---------------------------------------------
Michael J. Savage

*By: /s/ JAMES M. PICCONE
- ---------------------------------------------
James M. Piccone
Attorney-In-Fact
</TABLE>

II-6
<PAGE> 188

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. TITLE PAGE
- ----------------------------------------------------------------------------------------------
<C> <S> <C>
2.1 -- Amended and Restated Agreement and Plan of Merger, dated as of April
29, 1996, among HSR, Merger Sub and Tide West (attached as Annex A to
the Joint Proxy Statement/Prospectus forming a part of this
Registration Statement).
3.1 -- Amended and Restated Certificate of Incorporation of HSR
(incorporated by reference to Exhibit 3.1 to HSR's Form S-1, No.
33-52774, filed on October 2, 1992 (the "HSR 1992 Form S-1").
3.2 -- Second Amended and Restated By-Laws of HSR (incorporated by reference
to Exhibit 3.2 to the HSR 1992 Form S-1).
3.3 -- Certificate of Incorporation of Tide West (incorporated by reference
to Exhibit 4.1 to Tide West's Current Report on Form 8-K dated
November 20, 1992).
3.4 -- Amendment to Certificate of Incorporation of Tide West, dated January
29, 1993 (effective February 1, 1993) (incorporated by reference to
Exhibit 3.2 to Tide West's Registration Statement on Form S-1, No.
33-57058 (the "Tide West Form S-1")).
3.5 -- Restated By-laws of Tide West (incorporated by reference to Exhibit
3.3 to the Tide West Form S-1).
#4.1 -- Form of Registration Rights Agreement, by and between HSR and NGP, to
be executed at Closing.
4.2 -- Rights Agreement, dated as of February 28, 1996, between HSR and
Harris Trust Company of California, as rights agent (incorporated by
reference to Exhibit 1 to HSR's Form 8-A, dated February 28, 1996, as
amended by HSR's Form 8-A/A (Amendment No. 1), dated March 12, 1996).
#5.1 -- Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P. regarding
legality of the securities to be registered.
#8.1 -- Opinion of Conner & Winters, A Professional Corporation, regarding
tax matters.
#11 -- Statement Regarding Computation of Per Share Earnings.
13.1 -- Tide West's Annual Report on Form 10-K for the year ended December
31, 1995 (filed on March 26, 1996 pursuant to Regulation S-T
promulgated under the Exchange Act, File No. 0-10727, and
incorporated by reference herein).
13.2 -- Tide West's Quarterly Report on Form 10-Q for the quarter ended March
31, 1996 (filed on May 15, 1996 pursuant to Regulation S-T
promulgated under the Exchange Act, File No. 0-10727, and
incorporated by reference herein).
#23.1 -- Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P. (included in the
opinion filed as Exhibit 5.1 to this Registration Statement).
#23.2 -- Consent of Conner & Winters, A Professional Corporation (included in
the opinion filed as Exhibit 8.1 to this Registration Statement).
*23.3 -- Consent of Arthur Andersen LLP.
*23.4 -- Consent of Deloitte & Touche LLP.
#23.5 -- Consent of Lehman Brothers, Inc.
#23.6 -- Consent of Prudential Securities Incorporated.
#23.7 -- Consent of Merrill Lynch & Co.
#23.8 -- Consent of Williamson Petroleum Consultants, Inc.
#23.9 -- Consent of Netherland, Sewell & Associates, Inc.
#23.10 -- Consent of Philip B. Smith, the NGP board nominee.
</TABLE>

<PAGE> 189

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. TITLE PAGE
- ----------------------------------------------------------------------------------------------
<C> <S> <C>
#24.1 -- Power of Attorney of Registrant.
#27.1 -- Financial Data Schedule.
99.1 -- Opinion of Lehman Brothers, Inc. (attached as Annex C to the Joint
Proxy Statement/Prospectus forming a part of this Registration
Statement).
99.2 -- Opinion of Prudential Securities Incorporated (attached as Annex D to
the Joint Proxy Statement/Prospectus forming a part of this
Registration Statement).
99.3 -- Opinion of Merrill Lynch & Co. (attached as Annex B to the Joint
Proxy Statement/Prospectus forming a part of this Registration
Statement).
#99.4 -- Form of Proxy for Special Meeting of Stockholders of HSR.
#99.5 -- Form of Proxy for Special Meeting of Stockholders of Tide West.
99.6 -- Agreement to Vote and Proxy, dated as of February 25, 1996, between
HSR and NGP (incorporated by reference to Exhibit B to HSR's Schedule
13D filed on March 6, 1996).
99.7 -- Agreement to Vote and Proxy, dated as of February 25, 1996, between
HSR and Smith (incorporated by reference to Exhibit C to HSR's
Schedule 13D filed on March 6, 1996).
*99.8 -- Amendment No. 1 to Agreement to Vote and Proxy, dated as of May 7,
1996, between HSR and Smith.
*99.9 -- Purchase and Sale Agreement, dated as of March 26, 1996, between HSR,
Orion Acquisition, Inc., a Delaware corporation and wholly owned
subsidiary of HSR ("Orion"), and WRL.
*99.10 -- Wellbore Assignment of Oil and Gas Leases with Reservations of
Production Payment and Reversion Interest, dated March 26, 1996, and
effective as of March 29, 1996, by and between HSR, Orion and WRL.
*99.11 -- Management Agreement, dated March 26, 1996, and effective as of March
29, 1996, by and between WRL and HSR (the "Management Agreement").
99.12 -- Memorandum of Management Agreement and Power of Attorney, dated as of
March 26, 1996, and effective as of March 29, 1996, by and between
WRL and HSR (incorporated by reference to Schedule 1 to the
Management Agreement).
*99.13 -- Option Agreement, effective as of March 29, 1996, granted by WRL and
the WRL Trust to HSR.
*99.14 -- Credit Agreement, dated as of March 26, 1996, among WRL and Chase,
individually and as Agent for the banks signatory thereto (the
"Credit Agreement") (excluding exhibits and schedules thereto).
*99.15 -- Mortgage, Assignment of Production, Security Agreement and Financing
Statement, effective as of March 26, 1996, by and between WRL and
Chase, individually and as Agent for the banks signatory to the
Credit Agreement.
*99.16 -- Subordinated Promissory Note, dated March 26, 1996, and effective as
of March 29, 1996, executed by WRL in favor of HSR in the principal
sum of $750,000.
</TABLE>

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

* Filed herewith.

# Previously filed.

<PAGE> 1

EXHIBIT 23.3

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation
by reference in this Amendment No. 4 to Registration Statement No. 333-01991 of
our report dated February 29, 1996 included in HS Resources, Inc.'s Form 10-K
for the year ended December 31, 1995 and to inclusion of our reports dated March
15, 1996 on the Statements of Revenues and Direct Operating Expenses for the
Initial Basin Acquisition Properties and the Second Basin Acquisition Properties
and to all other references to our Firm included in this registration statement.

ARTHUR ANDERSEN LLP

Denver, Colorado

May 15, 1996

<PAGE> 1

EXHIBIT 23.4

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Amendment No. 4 to
Registration Statement No. 333-01991 of HS Resources, Inc. on Form S-4 of our
report dated February 26, 1996 (which report expresses an unqualified opinion
and includes an explanatory paragraph referring to the 1993 change in the method
of accounting for income taxes) appearing in the Annual Report on Form 10-K of
Tide West Oil Company for the year ended December 31, 1995 and to the reference
to us under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.

DELOITTE & TOUCHE LLP

May 15, 1996

Tulsa, Oklahoma

<PAGE> 1
EXHIBIT 99.8

AMENDMENT NO. 1 TO AGREEMENT TO VOTE AND PROXY

THIS AMENDMENT NO. 1 TO AGREEMENT TO VOTE AND PROXY (this "Amendment"),
dated as of May 7, 1996, is by and between Philip B. Smith (both in his
individual capacity and as trustee of the Trusts (as defined herein), the
"Stockholder") and HS Resources, Inc., a Delaware corporation ("Purchaser").

RECITALS

A. In connection with the merger of Tide West Oil Company, a Delaware
corporation ("Tide West") with and into HSR Acquisition, Inc., a Delaware
corporation and wholly owned subsidiary of the Purchaser, Purchaser and
Stockholder (in his individual capacity) entered into that certain Agreement to
Vote and Proxy, dated as of February 25, 1996 (the "Agreement"), pursuant to
which Stockholder, among other things, agreed to vote, and granted to Purchaser
a proxy to vote, 344,000 shares of the outstanding common stock, par value $0.01
per share, of Tide West ("Tide West Common Stock") owned directly by
Stockholder.

B. As of the date hereof, Stockholder is the trustee of The Scott C.
Smith Irrevocable Trust 1-15-96 and The Laura E. Smith Irrevocable Trust
1-15-96 (together, the "Trusts") which own an aggregate of 85,000 shares of
Tide West Common Stock (such shares of Tide West Common Stock being herein
referred to as the "Trust Shares").

C. Purchaser and Stockholder desire to amend the Agreement to make the
Trust Shares subject to the Agreement for the purposes set forth in, and in
accordance with, this Amendment.

STATEMENT OF AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Amendment and the Agreement and for other good and valuable
consideration, and intending to be legally bound hereby, the parties agree as
follows:

1. Recital B. of the Agreement is deleted in its entirety and
replaced with the following:

"B. As of the date hereof, Stockholder owns in excess of 344,000
shares (the "Smith Shares") and is the trustee of The Scott C.
Smith Irrevocable Trust 1-15-96 and The Laura E. Smith
Irrevocable Trust 1-15-96 (together, the "Trusts") which own an
aggregate of 85,000 shares (the "Trust Shares" and, together with
the Smith Shares, the "Shares"), or approximately 3.51% and 0.87%,
respectively, of the outstanding common stock, par value $.01 per
share (the "Common Stock"), of the Company."

2. Paragraph 8.3 of the Agreement is deleted in its entirety and
replaced with the following:

-1-
<PAGE> 2
"8.3. Lock Up of the Purchaser's Common Stock.

(a) Stockholder agrees not to make any sale, transfer or
other disposition of any of the shares of Purchaser's
Common Stock for one year from the date such shares are
received by Stockholder pursuant to the Merger.

(b) Paragraph 8.3(a) shall not apply to any shares of the
Purchaser's Common Stock that are received by
Stockholder, directly or indirectly, from the conversion
of the Trust Shares to shares of the Purchaser's Common
Stock pursuant to the Merger."

3. Paragraph 4.1 of the Agreement is deleted in its entirety and
replaced with the following:

"4.1 Ownership of Shares. Until the termination of this
Agreement, Stockholder shall not sell or otherwise transfer any
of the Shares. Stockholder, in his individual capacity, has good,
valid and marketable title to the Smith Shares, and each of the
Trusts have good, valid and marketable title to their respective
Trust Shares, free and clear of all liens, encumbrances,
restrictions, options, warrants, rights to purchase and claims of
every kind (other than the encumbrances created by this
Agreement, the respective trust agreements relating to each of
the Trusts, bona fide loan transactions, restrictions on transfer
under applicable Federal and state securities laws and a
Stockholder's Agreement dated November 19, 1992, among
Stockholder and certain senior executives and stockholders of the
Company)."

4. Except as, and solely to the extent that, the Agreement is
amended by the above, all other terms and provisions thereof shall remain
in full force and effect.

[The remainder of this page is intentionally left blank]

-2-
<PAGE> 3
IN WITNESS WHEREOF, Purchaser and Stockholder have each executed or
caused this Amendment to be executed by their duly authorized officers as of
the date and year first above written.

Purchaser:

HS RESOURCES, INC.

By: /s/ JAMES E. DUFFY
-------------------------------
Name: James E. Duffy
Title: Vice President

Stockholder:

/s/ PHILIP B. SMITH
-------------------------------------
Philip B. Smith
(individually, and as Trustee
of the Trusts)

-3-

<PAGE> 1
EXHIBIT 99.9

PURCHASE AND SALE AGREEMENT

BETWEEN

ORION ACQUISITION, INC.

AND

HS RESOURCES, INC.
(COLLECTIVELY, "SELLER")

AND

WATTENBERG RESOURCES LAND, L.L.C.
("BUYER")

DATED: MARCH 26, 1996
<PAGE> 2
TABLE OF CONTENTS

1. Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2. The Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Leases, Mineral Interests, Overrides and Wells . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Incidental Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

3. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

4. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

5. Apportionment of Production, Revenues, Taxes and other Expenses . . . . . . . . . . . . . . . . . . . . . 2

6. Buyer's Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6.1 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6.2 Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6.3 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6.4 Execution and Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6.5 Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6.6 Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

7. Seller's Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.1 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.2 Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.3 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.4 Execution and Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.5 Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7.6 Reserve Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7.7 SEC Reports and Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7.8 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7.9 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7.10 Preferential Purchase Rights and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7.11 No Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.12 Gas Balancing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.13 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.14 Operations in Progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.15 Hydrocarbon Sales Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.16 Proceeds of Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
7.17 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.18 Bills in the Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.19 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.20 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.21 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

</TABLE>

(i)
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>

7.22 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.23 Tax Partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.24 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

8. Certain Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.1 Treatment of Production Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

9. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.1 Cooperation and Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.2 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

10. Closing Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10.1 Seller's Closing Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10.2 Buyer's Closing Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

11. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11.1 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11.2 Section 15.2 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11.3 Notice of Preferential Rights and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11.4 Assignment; Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11.5 Non-Foreign Ownership Affidavits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
11.6 Gas Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
11.7 Evidence of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
11.8 Seller's Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
11.9 Opinion of Seller's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
11.10 Buyer's Manager's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
11.11 Opinions on Behalf of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
11.12 Management Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
11.13 Additional Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

12. Post-Closing Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
12.1 Files and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
12.2 Sales Taxes and Recording Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
12.3 Purchase Price Rebates for Defective Interests . . . . . . . . . . . . . . . . . . . . . . . . . 14
12.4 Purchase Price and Other Rebates for Exercised Preferential Purchase Rights, Failure to
Obtain Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
12.5 Allocation of Commingled Production and Costs . . . . . . . . . . . . . . . . . . . . . . . . . 14
12.6 Performance of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

13. Apportionment of Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
13.1 Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
13.2 Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>

(ii)
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
14. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
14.1 Buyer's Indemnification of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
14.2 Seller's Indemnification of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
14.3 Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

15. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
15.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
15.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
15.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
15.4 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
15.5 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
15.6 Assignment; Rights of Lender under Credit Agreement . . . . . . . . . . . . . . . . . . . . . . 18
15.7 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
15.8 Complete Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
15.9 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
15.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
15.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

</TABLE>

(iii)
<PAGE> 5
LIST OF EXHIBITS

<TABLE>
<S> <C>
Exhibit A Leases
Exhibit B Wells (showing WI and NRI)
Exhibit C Form of Wellbore Assignment of Oil and Gas Leases with Reservations of Production Payment and
Reversion Interest
Exhibit D Form of Option Agreement
Exhibit E Reserve Report
Exhibit F Preferential Purchase Rights and Consents
Exhibit G Prepayments
Exhibit H Gas Imbalances
Exhibit I Operations in Progress
Exhibit J Hydrocarbon Sales Contracts
Exhibit K Legal Proceedings
Exhibit L Tax Partnerships [RESERVED FOR POST-CLOSING DELIVERY AS PER Section 8.2]
Exhibit M Form of Non-Foreign Ownership Affidavits
Exhibit N [Reserved]
Exhibit O Form of Seller's Officer's Certificate
Exhibit P Forms of Opinion of Seller's Counsel
Exhibit Q Form of Buyer's Manager's Certificate
Exhibit R Forms of Opinions on Behalf of Buyer
Exhibit S Form of Management Agreement
Exhibit T Form of Subordinated Note
</TABLE>

(iv)
<PAGE> 6
PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement ("AGREEMENT"), dated March
26, 1996, is between HS Resources, Inc., a Delaware corporation ("HS") and its
wholly-owned subsidiary, Orion Acquisition, Inc. (collectively, "SELLER") and
Wattenberg Resources Land, L.L.C., a Delaware limited liability company
("BUYER").

RECITALS

Seller is the owner of certain oil and gas leasehold
interests, mineral interests and overriding royalty interests, as more
specifically described below in Section 2, which Seller desires to sell and
Buyer desires to purchase pursuant to the terms and conditions of this
Agreement.

AGREEMENT

IN CONSIDERATION of the Purchase Price set forth below in
Section 4, the reservations of the "PRODUCTION PAYMENT" and the "REVERSION
INTEREST" and the grant of the "OPTION" (as such terms are defined below), and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Seller and Buyer agree as follows:

1. PURCHASE AND SALE. Seller agrees to convey the
Assets to Buyer and Buyer agrees to purchase the Assets from Seller, all
pursuant to the terms and conditions of this Agreement. Seller will convey the
Assets subject to (i) a production payment (the "PRODUCTION PAYMENT"), a
reversionary interest (the "REVERSION INTEREST"), and other reservations and
obligations as specifically set forth in the Wellbore Assignment of Oil and Gas
Leases With Reservations of Production Payment and Reversion Interest in a form
substantially similar to Exhibit C (the "ASSIGNMENT"), and (ii) the Option
Agreement to be granted to Seller in a form substantially similar to Exhibit D
(the "OPTION").

2. THE ASSETS. The "ASSETS" shall be all of the
following, subject to the interests covered by clauses (i) and (ii) under
Section 1 above:

2.1 LEASES, MINERAL INTERESTS, OVERRIDES AND
WELLS. Seller's right, title and interest in and to the oil and gas leases and
mineral interests described in Exhibit A, including any and all overriding
royalty interests owned by Seller in such leases, but insofar and only insofar
as said leases and mineral interests cover the right to produce the wells
described in Exhibit B from the intervals identified in Exhibit B in such wells
as of the Effective Date (the above described interest in such leases being
herein called the "LEASES" and the above described interest in such wells being
herein called the "WELLS"), and subject to any restrictions,

<PAGE> 7
exceptions, reservations, conditions, limitations, burdens, contracts,
agreements and other matters applicable to such Leases and Wells as set forth
herein;

2.2 INCIDENTAL RIGHTS. All of Seller's right,
title and interest in and to the following insofar and only insofar as same are
attributable to the Leases and the Wells:

(a) UNITIZATION AND POOLING AGREEMENTS.
All presently existing and valid oil, gas or mineral unitization, pooling,
operating and communitization agreements, declarations and orders affecting the
Leases and Wells, and in and to the properties covered and the units created
thereby;

(b) PERSONAL PROPERTY. The personal
property and fixtures that are appurtenant to the Wells, including all wells,
casing, tubing, pumps, separators, tanks, lines and other personal property and
oil field equipment appurtenant to such Wells;

(c) AGREEMENTS. All presently existing
and valid oil and gas sales, purchase, gathering and processing contracts and
operating agreements, joint venture agreements, partnership agreements, rights-
of-way, easements, permits, surface leases and other contracts, agreements and
instruments, but specifically excluding the "OPERATIVE DOCUMENTS" (as defined
to collectively refer to this Agreement, the Assignment, the Management
Agreement (defined in Section 11.12), and the Option (defined in Section 11.4).

Seller shall remain co-owner of any "AGREEMENTS," "PERSONAL PROPERTY" and
"UNITIZATION AND POOLING AGREEMENTS" to the extent they pertain to any property
or formation subject to the Reversion Interest, reacquired by the Seller
pursuant to the Option or other otherwise owned by Seller that is not
exclusively part of the Assets.

The interests in the Leases and the Wells set forth in Section
2.1 and the incidental rights set forth in Section 2.2, to the extent
associated with the Leases and the Wells, shall collectively be referred to as
the "INTERESTS."

3. EFFECTIVE DATE. The purchase and sale of the Assets
shall be effective, for all purposes, including allocation of revenue, expenses
and taxes, as of March 29, 1996 at 7:00 a.m. local time at the site of the
Assets (the "EFFECTIVE DATE").

4. PURCHASE PRICE. The purchase price for the Assets
shall be $23,850,000 (the "PURCHASE PRICE"). Buyer shall pay the Purchase
Price to Seller by assuming $23,100,000 of debt under HS's Credit Agreement
with The Chase Manhattan Bank, N.A., as agent for itself and the banks as are
signatory thereto (the "HS/CHASE CREDIT AGREEMENT"), and by issuing to Seller a
$750,000 promissory note in substantially the form of Exhibit T (the
"Subordinated Note"), which Note is subordinate to the Superior Obligations and
the Production Payment.

5. APPORTIONMENT OF PRODUCTION, REVENUES, TAXES AND
OTHER EXPENSES. Buyer shall be entitled to revenue from the sale of
hydrocarbons produced from the Assets on or after the Effective Date. Buyer
shall pay for costs and expenses incurred with respect to the Assets on or
after the Effective Date. Seller shall be entitled to revenue from the sale of

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<PAGE> 8
hydrocarbons produced from the Assets before the Effective Date, and shall pay
for costs and expenses incurred with respect to the Assets prior to the
Effective Date. Taxes relating to the Assets, including ad valorem, property,
production, severance and other taxes (other than income taxes) shall be
allocated in the same manner as other expenses. Taxes that are measured by or
that relate to production shall be treated as expenses in connection with such
production regardless of the period for which such taxes are assessed.

6. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer makes
the following representations and warranties as of the date of this Agreement:

6.1 EXISTENCE. Buyer is a limited liability
company, duly organized, validly existing and formed under the laws of the
State of Delaware, and Buyer is duly qualified to carry on its business, and is
duly qualified and in good standing, in each of the states in which the nature
of its business and activities requires it to be so qualified.

6.2 POWER AND AUTHORITY. Buyer has all requisite
power and authority to carry on its business as presently conducted, to enter
into this Agreement and each of the documents contemplated to be executed by
Buyer at Closing, and to perform its obligations under this Agreement and under
such documents. The consummation of the transactions contemplated by this
Agreement and each of the documents contemplated to be executed by Buyer at
Closing will not violate, nor be in conflict with, (i) any provision of Buyer's
organizational or governing documents, (ii) any agreement or instrument to
which Buyer is a party or is bound, or (iii) any judgment, decree, order,
statute, rule or regulation applicable to Buyer.

6.3 AUTHORIZATION. The execution, delivery and
performance of this Agreement and each of the documents contemplated to be
executed by Buyer at Closing and the transactions contemplated hereby and
thereby have been duly and validly authorized by all requisite action on the
part of Buyer.

6.4 EXECUTION AND DELIVERY. This Agreement has
been duly executed and delivered on behalf of Buyer, and at the Closing all
documents and instruments required hereunder to be executed and delivered by
Buyer shall have been duly executed and delivered. This Agreement does, and
such documents and instruments shall, constitute legal, valid and binding
obligations of Buyer enforceable in accordance with their terms, subject to (i)
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws of general application with respect to creditors, (ii) general principles
of equity and (iii) the power of a court to deny enforcement of remedies
generally based upon public policy.

6.5 SECURITIES LAWS. Buyer is purchasing the
Assets for Buyer's own account, not for public distribution thereof, and Buyer
shall not sell or transfer all or any part of, or any interest in, the Assets
in violation of the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or the securities laws of any state.

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<PAGE> 9
6.6 BROKERS' FEES. Buyer has incurred no
liability, contingent or otherwise, for brokers' or finders' fees relating to
the transactions contemplated by this Agreement for which Seller shall have any
responsibility whatsoever.

7. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller
makes the following representations and warranties as of the date of this
Agreement:

7.1 EXISTENCE. Seller is a corporation duly
organized and validly existing under the laws of the State of Delaware, and
Seller is duly qualified to carry on its business, and is in good standing in
the States of Colorado and California and in each jurisdiction in which the
failure to so qualify would have a material adverse impact on the Assets or the
transaction contemplated by this Agreement.

7.2 POWER AND AUTHORITY. Seller has all
requisite corporate power and authority to carry on its business as presently
conducted, to enter into this Agreement and each of the documents contemplated
to be executed by Seller at Closing, and to perform its obligations under this
Agreement and under such documents. The consummation of the transactions
contemplated by this Agreement and each of the documents contemplated to be
executed by Seller at Closing will not violate, nor be in conflict with, (i)
any provision of Seller's certificate of incorporation, bylaws or governing
documents, (ii) any material agreement or instrument to which Seller is a party
or is bound, or (iii) any judgment, decree, order, statute, rule or regulation
applicable to Seller; provided that, the representations and warranties
contained in clauses (ii) and (iii) of this Section 7.2 are subject to (a)
consents of or filings with the United States Department of Interior or the
applicable state agencies or authorities in connection with the assignment of
any federal or state leases or any interest therein to the extent such consents
are typically received or filings typically made subsequent to such assignment
("GOVERNMENTAL CONSENTS"), (b) preferential rights to purchase all or any
portion of the Assets and consent to or notices of assignment necessary to
convey all or any portion of the Assets which are not Governmental Consents,
and (c) any violation of any maintenance of uniform interest provision in any
applicable operating agreement.

7.3 AUTHORIZATION. The execution, delivery and
performance of this Agreement and each of the documents contemplated to be
executed by Seller at Closing and the transactions contemplated hereby and
thereby have been duly and validly authorized by all requisite corporate action
on the part of Seller.

7.4 EXECUTION AND DELIVERY. This Agreement has
been duly executed and delivered on behalf of Seller, and all documents,
instruments and schedules required hereunder to be executed and delivered by
Seller have been, where appropriate, duly executed and will be delivered on the
Effective Date. This Agreement does, and such documents and instruments shall,
constitute legal, valid and binding obligations of Seller enforceable in
accordance with their terms, subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general application with
respect to creditors, (ii) general principles of equity and (iii) the power of
a court to deny enforcement of remedies generally based upon public policy.

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<PAGE> 10
7.5 BROKERS' FEES. Seller has incurred no
liability, contingent or otherwise, for brokers' or finders' fees relating to
the transactions contemplated by this Agreement for which Buyer shall have any
responsibility whatsoever.

7.6 RESERVE REPORT. The term "RESERVE REPORT"
shall mean the reserve report prepared by Seller and dated as of the Effective
Date, which is based on reserves as of December 31, 1995, as adjusted by
estimated production from January 1, 1996 through the Effective Date, and
attached hereto as Exhibit E. To Seller's best knowledge, the average price
for sales of hydrocarbons (based on contract prices for existing effective
contracts, adjusted for regional transportation costs), historical costs of
operations, production volumes, and payout data used by Seller in the
preparation of the Reserve Report were, on the dates so used, accurate in all
material respects.

7.7 SEC REPORTS AND FINANCIAL INFORMATION. To
the best of Seller's knowledge, HS Resources, Inc. has filed with the
Securities and Exchange Commission ("SEC") all required forms, reports,
schedules and proxy statements ("SEC REPORTS"). To the best of Seller's
knowledge, as of their respective dates, the SEC Reports complied in all
material respects with applicable securities laws and the rules and regulations
promulgated thereunder. To the best of Seller's knowledge, none of the SEC
Reports contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statement
made therein, in the light of the circumstances under which they were made, not
misleading. The statements contained in the SEC Reports regarding Seller's
financial status (collectively, the "FINANCIAL STATEMENTS") have been prepared
from, and are in accordance with, the books and records of Seller and the
Financial Statements represent fairly the financial position of Seller as of
the dates or for the periods presented in conformity with generally accepted
accounting principles applied on a consistent basis during the periods
involved, except as noted therein (due to changes in accounting).

7.8 LIENS. Except for the burdens and
obligations created by or arising under the Leases and except for Permitted
Encumbrances, the Assets are free and clear of all Encumbrances. As used
herein, the term "ENCUMBRANCES" shall mean all royalties, overriding royalties,
production payments, debts, liens, mortgages, security interests, and
encumbrances. As used herein, the term "PERMITTED ENCUMBRANCES" shall mean the
following:

(i) the burdens, encumbrances and
obligations attributable to mortgages and liens held on or
against the Assets, or any portion thereof, as of the
Effective Date arising under or created pursuant to that
certain Credit Agreement dated as of March 25, 1996 between
Buyer and The Chase Manhattan Bank, N.A., for itself and as
agent on behalf of those banks that are or become a party
thereto (as it may be amended or supplemented from time to
time, the "CREDIT AGREEMENT");

(ii) the burdens, encumbrances and
obligations created by or arising under the Wells and other
agreements affecting the Assets, and all royalties, overriding
royalties, net profits interests, carried interests,
reversionary interests, back-in rights and other burdens taken
into account in computing the net

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<PAGE> 11
revenue interests ("NRI") and working interests ("WI") set
forth on Exhibit B for the Wells;

(iii) all rights to consent by, required
notices to, filings with, or other actions by governmental
entities in connection with the sale or conveyance of the
Assets if the same are customarily obtained subsequent to such
sale or conveyance;

(iv) rights of reassignment upon
surrender of the Leases held by predecessors in interest to
Seller;

(v) easements, rights-of-way,
servitudes, permits, licenses, surface leases and other rights
in respect of surface use to the extent these do not
materially interfere with operations or production on or from
the Assets;

(vi) rights and regulatory powers
reserved to or vested in any municipality or governmental,
statutory or public authority;

(vii) all Material Contracts to the extent
same do not reduce Seller's interest in the production from
the Wells to less than the NRI set forth on Exhibit B or
increase the Seller's obligations in respect of costs to
greater than the WI set forth on Exhibit B;

(viii) any (x) undetermined or inchoate
liens or charges constituting or securing the payment of
expenses which were incurred incidental to maintenance,
development, production or operation of the Assets or for the
purpose of developing, producing or processing oil, gas or
other hydrocarbons therefrom or therein and (y) materialman's,
mechanics', repairman's, employees', contractors', operators'
or other similar liens, security interests or charges for
liquidated amounts arising in the ordinary course of business
incidental to construction, maintenance, development,
production or operation of the Assets or the production or
processing of oil, gas or other hydrocarbons therefrom, that
are not delinquent and that will be paid in the ordinary
course of business or, if delinquent, that are being contested
in good faith;

(ix) any liens for taxes not yet
delinquent or, if delinquent, that are being contested in good
faith in the ordinary course of business;

(x) any liens or security interests
created by law or reserved in Leases for royalty, bonus or
rental or for compliance with the terms of the Leases;

(xi) any prohibitions or restrictions
similar to the Maintenance of Uniform Interest Provisions
contained in Article VIII.D. of the A.A.P.L. Form 610-1982
Model Form Operating Agreement and any contribution

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<PAGE> 12
obligations under provisions similar to Article VII.B of such
Model Form Operating Agreement;

(xii) all preferential rights to purchase
all or any portion of the Assets and consents to or notices of
assignment necessary to convey all or any portion of the
Assets set forth on Exhibit F or which are not described in
item (iii) of this definition of Permitted Encumbrances;

(xiii) all agreements and obligations set
forth on Exhibit H relating to imbalances with respect to the
production, transportation or processing of gas or calls or
purchase options on oil or gas production;

(xiv) all agreements and obligations
relating to gathering, transportation or processing of gas or
oil production;

(xv) all treating, processing, sales or
marketing agreements set forth on Exhibit J which have a fee
based on a percentage of proceeds or an obligation to transfer
certain volumes of gas or oil production in-kind;

(xvi) all obligations set forth on Exhibit
G by virtue of a prepayment, advance payment or similar
arrangement under any contract for the sale of gas production,
including by virtue of "take or pay" or similar provisions, to
deliver gas produced from or attributable to the Assets after
the Effective Date without then or thereafter being entitled
to receive full payment therefor;

(xvii) all liens, charges, encumbrances,
contracts, agreements, instruments, obligations, defects,
irregularities and other matters affecting any Asset which
individually or in the aggregate will not interfere materially
with the operation, value or use of such Asset;

(xviii) the burdens, encumbrances and
obligations created by or arising under this Agreement, the
Assignment, Option, Management Agreement or Gas Purchase
Agreement.

7.9 TITLE. Seller has Defensible Title to the
Interests. The term "DEFENSIBLE TITLE" means such title of Seller in the
Leases that, subject to and except for the Permitted Encumbrances, entitles
Seller to receive an interest in production from the Wells not less than the
respective NRIs in the Wells as set forth on Exhibit B, and entitles Seller to
own the respective WIs in the Wells as set forth on Exhibit B under applicable
state law and for federal income tax purposes. Any Well or Lease for which
Seller has less than Defensible Title as of the date of this Agreement shall be
called a "DEFECTIVE INTEREST." Buyer's exclusive remedy for Seller's breach of
this representation and warranty is set forth in Section 12.3.

7.10 PREFERENTIAL PURCHASE RIGHTS AND CONSENTS.
To Seller's best knowledge, except as set forth in Exhibit F, there do not
exist any preferential rights to purchase all or any portion of the Assets. To
Seller's best knowledge, except for consents from its lender

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<PAGE> 13
banks, Governmental Consents and other matters as set forth in Exhibit F, there
are no consents or waivers necessary to convey any material portion of the
Assets pursuant to this Agreement. Buyer's exclusive remedy for Seller's
breach of this representation and warranty (other than for consents from the
lender banks) is set forth in Section 12.4.

7.11 NO PREPAYMENTS. To Seller's best knowledge,
except as set forth in Exhibit G, Seller is not obligated, by virtue of a
prepayment arrangement, a "take or pay" arrangement, a production payment,
hedging or any other arrangement, to deliver any material portion of
hydrocarbons produced from the Wells at some future time without then or
thereafter receiving full payment therefor. Buyer's exclusive remedy for
Seller's breach of this representation and warranty shall be treated the same
as a Defective Interest as set forth in Section 12.13.

7.12 GAS BALANCING. To Seller's best knowledge,
except as set forth in Exhibit H, no material portion of hydrocarbons produced
from the Wells are subject to a gas imbalance or other arrangement requiring
delivery of hydrocarbons after the Effective Date without receiving full
payment therefor. Buyer's exclusive remedy for Seller's breach of this
representation and warranty shall be treated the same as a Defective Interest
as set forth in Section 12.13.

7.13 LEASES. To Seller's best knowledge, all
royalties, rentals and other payments due by Seller under the Leases have been
properly and timely paid except where the failure to pay same will not have a
material adverse effect on the value of the particular Asset. To Seller's best
knowledge, all Leases are presently in full force and effect. To Seller's best
knowledge, Seller has not received a written notice of material default under
any Lease that could result in cancellation of the Lease. Any Lease which is
not presently in full force and effect, or for which Seller has not paid all
royalties, rentals or other payments due by Seller, or for which Seller is in
material default as of the date of this Agreement shall be treated as a
Defective Interest. Buyer's exclusive remedy for Seller's breach of this
representation and warranty is set forth in Section 12.3.

7.14 OPERATIONS IN PROGRESS. Except for
operations disclosed on Exhibit I and normal daily operating expenses, as of
the date of this Agreement there are no operations in progress with respect to
the Assets which are reasonably expected to exceed $35,000 in cost net to
Seller's interest and which shall be payable in whole or in part on or after
the Effective Date.

7.15 HYDROCARBON SALES CONTRACTS. Except as
specifically indicated in Exhibit J and for calls on production, options to
purchase or similar rights with respect to production from the Wells, no
material portion of the hydrocarbons produced from the Wells is subject to a
sales contract or other agreement relating to the production, gathering,
transporting, processing, treating or marketing of hydrocarbons except those
which can be terminated by Seller upon not more than three months notice.

7.16 PROCEEDS OF PRODUCTION. To Seller's best
knowledge, Seller is currently receiving from all purchasers of production from
the Wells at least the NRI set forth

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<PAGE> 14
in Exhibit B without suspense or any indemnity other than the normal division
order warranty of title, except where the failure to receive same would not
have a material adverse effect on the value of the Well in question.

7.17 MATERIAL CONTRACTS. To Seller's best
knowledge, and subject to the execution of new contracts in the ordinary course
of business if a contract has expired or has been terminated, all contracts
material to the Assets are in full force and effect (the "MATERIAL CONTRACTS").
Seller has not received written notices of material default under the Material
Contracts that remain uncured.

7.18 BILLS IN THE ORDINARY COURSE. In the
ordinary course of business and to Seller's best knowledge, Seller is current
on its payments for all costs and expenses pertaining to the Assets, except
where such payments are being contested in good faith.

7.19 LEGAL PROCEEDINGS. Except as set forth on
Exhibit K, no suit, action or other proceeding is pending against Seller or, to
Seller's best knowledge, threatened in writing against Seller before any court,
governmental agency, arbitrator or other panel that relates to the Assets or
the transaction contemplated by this Agreement that might (i) impair Seller's
ability to consummate the transaction contemplated by this Agreement or (ii)
cause the impairment or loss of Seller's title to any material portion of the
Assets or the value thereof or (iii) hinder or impede the operation or
enjoyment of the Leases in any material respect insofar as they relate to the
Assets.

7.20 COMPLIANCE WITH LAWS. To Seller's best
knowledge, all laws, rules, regulations, ordinances and orders (of all
governmental and regulatory bodies having authority over the Assets) material
to the operation of the Assets have been complied with in all material
respects.

7.21 ENVIRONMENTAL MATTERS. To Seller's best
knowledge, no conditions exist on the Assets that would subject Seller or Buyer
to any damages, remedial action, injunctive relief or other liability under any
Environmental Laws, including without limitation, all costs associated directly
or indirectly with cleanup, removal, closure or other response actions;
provided that Seller or Buyer may be subject to such matters which are (i)
routine in the operation of the Assets and (ii) in the aggregate not material
to the value of the Assets as a whole. Seller and its predecessors have
obtained and are in material compliance with all material permits, licenses and
approvals affecting the Assets and required under Environmental Laws.

As used herein, the term "ENVIRONMENTAL LAWS" shall
mean any and all laws, statutes, ordinances, rules, regulations, orders, or
determinations of any governmental authority pertaining to health or the
environment in effect in any and all jurisdictions where the Assets are
located, or where any hazardous substances generated by or disposed of by
Seller are located, including without limitation, the Oil Pollution Act of 1990
("OPA"), the Clean Air Act, as amended, the Comprehensive Environmental,
Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the
Federal Water Pollution Control Act, as amended, the Occupational Safety and
Health Act of 1970, as amended, the Resource Conservation and

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<PAGE> 15
Recovery Act of 1976 ("RCRA"), as amended, the Safe Drinking Water Act, as
amended, the Toxic Substances Control Act, as amended, the Superfund Amendments
and Reauthorization Act of 1986, as amended, and other environmental
conservation or protection laws. The terms "HAZARDOUS SUBSTANCE," "RELEASE"
and "THREATENED RELEASE" have the meanings specified in CERCLA, and the terms
"SOLID WASTE" and "DISPOSAL" (or "DISPOSED") have the meanings specified in
RCRA and the term "OIL" shall have the meaning specified in OPA; provided,
however, in the event either CERCLA, RCRA or OPA is amended so as to broaden
the meaning of any term defined thereby, such broader meaning shall apply
subsequent to the effective date of such amendment with respect to all
provisions of this Agreement, and provided further that, to the extent the laws
of the state in which any Asset is located established a meaning for "HAZARDOUS
SUBSTANCE," "RELEASE," "SOLID WASTE" or "DISPOSAL" which is broader than that
specified in either CERCLA, RCRA, or OPA, such broader meaning shall apply.

7.22 PAYMENT OF TAXES. To Seller's best
knowledge, all ad valorem, property, production, severance, excise and similar
taxes and assessments based on or measured by the ownership of property or the
production of hydrocarbons or the receipt of proceeds therefrom on the Assets
which are currently due and payable have been properly and timely paid, except
to the extent such taxes are being contested in good faith in the ordinary
course of business.

7.23 TAX PARTNERSHIPS. Within 60 days from the
Effective Date, Seller will prepare and deliver to Buyer an Exhibit L, setting
forth the extent to which any portion of the Assets (i) has been contributed to
and is currently owned by a tax partnership; (ii) is subject to any form of
agreement (whether formal or informal, written or oral) deemed by any state or
federal tax statute, rule or regulation to be or to have created a tax
partnership; or (iii) otherwise constitutes "PARTNERSHIP PROPERTY" (as that
term is used throughout Subchapter K of Chapter 1 of Subtitle A of the Internal
Revenue Code of 1986, as amended (the "CODE")) of a tax partnership. In
addition to all other remedies available to Buyer, Seller agrees to indemnify
Buyer for all costs, losses, damages, penalties or expenses incurred by Buyer
as a result of any of the Assets having been contributed to or currently owned
by a tax partnership, and Buyer may elect, with a proportionate rebate in the
Purchase Price in accordance with the procedures of Section 12.3 and the
provisions of Section 12.4, to reassign such Assets to Seller. For purposes of
this Section 7.23, a "TAX PARTNERSHIP" is any entity, organization or group
deemed to be a partnership within the meaning of Section 761 of the Code or any
similar state or federal statute, rule or regulation, and that is not excluded
from the application of the partnership provisions of Subchapter K of Chapter 1
of Subtitle A of the Code and of all similar provisions of state tax statutes
or regulations by reason of elections made, pursuant to Section 761(a) of the
Code and all such similar state or federal statutes, rules and regulations, to
be excluded from the application of all such partnership provisions. With
respect to any tax partnership that may be identified on Exhibit L, Seller and
Buyer shall cooperate to ensure that they elect a basis adjustment under
Section 754 of the Code in connection with the transaction contemplated by this
Agreement, and to the effect that the consummation of the transaction
contemplated by this Agreement will not result in a termination of such tax
partnership.

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<PAGE> 16
7.24 HSR ACT. Seller has determined in good faith
that the conveyance of the Assets to Buyer pursuant to this Agreement and the
Assignment does not require disclosure under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.

8. CERTAIN TAX MATTERS.

8.1 TREATMENT OF PRODUCTION PAYMENT. Seller and
Buyer intend that the Production Payment reserved by Seller in the Assignment
will be treated as a mortgage loan under Section 636 of the Code and not as an
"ECONOMIC INTEREST" in the Assets.

9. COVENANTS.

9.1 COOPERATION AND ACCESS. Seller shall fully
cooperate with Buyer's post-Closing due diligence efforts, both at Seller's
offices and at the site of the Assets.

9.2 INSURANCE. At or prior to the Closing Date,
Seller shall cause Buyer to be named as an additional insured on all insurance
policies Seller has that pertain in any way to the ownership and operation of
the Assets. On the Closing Date, Seller will provide Buyer with Certificates
of Insurance naming Buyer as an additional insured, or other evidence,
satisfactory to Buyer, of compliance with this Section 9.2.

10. CLOSING CONDITIONS.

10.1 SELLER'S CLOSING CONDITIONS. The obligation
of Seller to consummate the transactions contemplated hereby is subject, at the
option of Seller, to the satisfaction on or prior to the Closing Date of all of
the following conditions:

(a) REPRESENTATIONS, WARRANTIES AND
COVENANTS. The (1) representations and warranties of Buyer contained in this
Agreement shall be true and correct in all respects on and as of the Closing
Date, and (2) covenants and agreements of Buyer to be performed on or before
the Closing Date in accordance with this Agreement shall have been duly
performed in all respects.

(b) CLOSING DOCUMENTS. Buyer shall have
executed and delivered the documents which are contemplated to be executed and
delivered by it pursuant to Section 11 hereof prior to or on the Closing Date.

(c) NO ACTION. On the Closing Date, no
suit, action or other proceeding (excluding any such matter initiated by Seller
or any of its affiliates) shall be pending or threatened before any court or
governmental agency or body of competent jurisdiction seeking to enjoin or
restrain the consummation of this Agreement or recover damages from Seller
resulting therefrom.

10.2 BUYER'S CLOSING CONDITIONS. The obligation
of Buyer to consummate the transactions contemplated hereby is subject, at the
option of Buyer, to the satisfaction on or prior to the Closing Date of all of
the following conditions:

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<PAGE> 17
(a) REPRESENTATIONS, WARRANTIES AND
COVENANTS. The (1) representations and warranties of Seller contained in this
Agreement shall be true and correct in all respects on and as of the Closing
Date, and (2) covenants and agreements of Seller to be performed on or before
the Closing Date in accordance with this Agreement shall have been duly
performed in all respects.

(b) CLOSING DOCUMENTS. Seller shall
have executed and delivered the documents which are contemplated to be executed
and delivered by it pursuant to Section 11 hereof prior to or on the Closing
Date.

(c) NO ACTION. On the Closing Date, no
suit, action or other proceeding (excluding any such matter initiated by Buyer
or any of its affiliates) shall be pending or threatened before any court or
governmental agency or body of competent jurisdiction seeking to enjoin or
restrain the consummation of this Agreement or recover damages from Buyer
resulting therefrom.

11. CLOSING. The consummation of the transactions
contemplated hereby (the "CLOSING") shall occur, either in person or by
facsimile, at the offices of Davis, Graham & Stubbs LLP on or before March 26,
1996 (the "CLOSING DATE") or at such other time and place as the parties may
agree to in writing. At Closing, the following events shall occur, each being
a condition precedent to the others and each being deemed to have occurred
simultaneously with the others (except where the documents involved indicate
otherwise):

11.1 PAYMENT OF PURCHASE PRICE. Buyer (i) does
hereby assume, pursuant to this Agreement, $23,100,000 of debt under the
HS/Chase Credit Agreement; (ii) shall execute and deliver to Seller the
Subordinated Note in the principal amount of $750,000.

11.2 SECTION 15.2 PAYMENT. Seller shall pay to
Buyer, in cash or its equivalent, the amount due pursuant to Section 15.2, if
any, as reimbursement for the expenses incurred in connection with this
transaction.

11.3 NOTICE OF PREFERENTIAL RIGHTS AND CONSENTS.
Seller shall deliver to Buyer a copy of the notices sent to third parties
regarding preferential rights to purchase and consents affecting the Assets
with respect to the transactions contemplated by this Agreement.

11.4 ASSIGNMENT; OPTION. Seller and Buyer shall
execute and deliver the Assignment and the Option. In addition, Seller shall
prepare and Seller and Buyer shall execute such other conveyances on official
forms and related documentation necessary to transfer the Assets to Buyer in
accordance with requirements of governmental regulations; provided, however,
that any such separate or additional conveyances required pursuant to this
Section 11.4 or pursuant to Section 15.1 shall evidence the conveyance and
assignment of the Assets made or intended to be made in the Assignment, (ii)
shall not modify or be deemed to modify any of the terms, reservations,
covenants and conditions set forth in the Assignment, and (iii) shall be deemed
to contain all of the terms, reservations and provisions of the Assignment, as
though the same were set forth at length in such separate or additional
conveyance.

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<PAGE> 18
11.5 NON-FOREIGN OWNERSHIP AFFIDAVITS. Seller
shall deliver to Buyer the affidavits of non-foreign ownership substantially in
the form of Exhibit M, one stating that Seller is a non-foreign entity for
federal income tax purposes, and the other stating that there is no obligation
for Colorado withholding tax under C.R.S. Section 39-22-604.5.

11.6 [RESERVED]

11.7 EVIDENCE OF INSURANCE. Seller shall provide
Buyer with certificates from Seller's insurers or other evidence that Buyer has
been named an additional insured on Seller's policies affecting the Assets.

11.8 SELLER'S OFFICER'S CERTIFICATE. Seller shall
execute and deliver to Buyer the Officer's Certificate, substantially in the
form attached as Exhibit O.

11.9 OPINION OF SELLER'S COUNSEL. Seller shall
deliver to Buyer the opinion of Seller's counsel, Davis, Graham & Stubbs LLP,
substantially in the form of opinion set forth in Exhibit P.

11.10 BUYER'S MANAGER'S CERTIFICATE. Buyer shall
execute and deliver to Seller the Manager's Certificate substantially in the
form attached as Exhibit Q.

11.11 OPINIONS ON BEHALF OF BUYER. Buyer shall
deliver to Seller the opinion of Richards, Layton & Finger (regarding existence
and authority under Delaware law), substantially in the form set forth in
Exhibit R:

11.12 MANAGEMENT AGREEMENT. Seller and Buyer shall
execute and deliver the Management Agreement (the "MANAGEMENT AGREEMENT") and
Memorandum of Management Agreement and Power of Attorney substantially in the
forms set forth in Exhibit S.

11.13 ADDITIONAL INSTRUMENTS. Seller and Buyer
shall execute, acknowledge and deliver to each other such additional
instruments as are reasonable and customary to accomplish the purposes of this
Agreement.

12. POST-CLOSING MATTERS.

12.1 FILES AND RECORDS. Following Closing, Seller
shall retain physical possession of all lease files, land files, division order
files, production marketing files and production records in Seller's possession
relating to the Assets (the "RECORDS"). However, except to the extent that
Buyer's inspection thereof would violate legal constraints or legal
obligations, Buyer shall have the right to inspect the Records in Seller's
offices at any reasonable time. At Buyer's request in writing (which written
request may be delivered by facsimile), to the extent that Seller's delivery
thereof would not violate legal constraints or legal obligations, Seller shall
make copies of the Records or materials in the Records at Seller's expense and
shall deliver said copies to Buyer at Seller's expense.

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<PAGE> 19
12.2 SALES TAXES AND RECORDING FEES. Seller shall
be responsible for making the payment to the proper authorities of all taxes
and fees occasioned by the sale of the Assets, including without limitation,
any transfer fees and sales taxes and any documentary, filing and recording
fees required in connection with the filing and recording of any assignments or
conveyances delivered hereunder in the appropriate county, federal and/or state
records.

12.3 PURCHASE PRICE REBATES FOR DEFECTIVE
INTERESTS. At any time and from time to time if Buyer discovers that Seller
breached the representation and warranty set forth in Section 7.9, 7.11, 7.12
or 7.13, Buyer may give Seller a Notice of Defective Interests, which notice
shall describe the Defective Interest and the basis for the Defective Interest.
Buyer shall be entitled to rebate in the Purchase Price for a Defective
Interest which shall equal the difference between the Purchase Price and the
product of the Purchase Price multiplied by a fraction, the numerator of which
is the volume of reserves (net to Buyer) allocated to the Wells not affected by
the Defective Interest and the denominator of which is the total volume of
reserves (net to Buyer) allocated to all of the Wells in the Reserve Report;
provided, however, that if the Defective Interest does not remain in effect
during the entire productive life of the subject Well, such fact shall be taken
into account in determining the amount of the rebate in the Purchase Price.

The rebate of the Purchase Price calculated above
shall be paid from Seller to Buyer. In addition to rebating a portion of the
Purchase Price on account of Defective Interests, Buyer and Seller agree that
all express gas volumes set forth in the Assignment shall each be decreased, as
appropriate, by multiplying such volume by a fraction, the numerator of which
is the aggregate volume of reserves associated with the Assets without such
Defective Interest and the denominator of which is the total volume of reserves
allocated to all of the Assets.

12.4 PURCHASE PRICE AND OTHER REBATES FOR
EXERCISED PREFERENTIAL PURCHASE RIGHTS, FAILURE TO OBTAIN CONSENTS. If the
holder of any preferential purchase right exercises such right and Seller
cannot validly convey the affected Asset to Buyer, or if a required consent
(except for Governmental Consents) to assign is not obtained or deemed obtained
on or before the Closing Date and the affected Asset cannot be validly conveyed
to Buyer, a portion of the Purchase Price shall be rebated for the value of
such affected Asset and such affected Asset shall be excluded from the Assets
conveyed to Buyer pursuant to the terms hereof (collectively the "EXCLUDED
ASSETS"). The amount of the rebate in the Purchase Price for an Excluded Asset
shall be determined in accordance with the provisions of Section 12.3. In
addition to rebating a portion of the Purchase Price on account of Excluded
Assets, Buyer and Seller agree that all express gas volumes set forth in the
Assignment shall each be decreased, as appropriate, for the Excluded Assets in
accordance with the provisions of Section 12.3. Upon written request from
Seller, Buyer shall reconvey to Seller all Excluded Assets, free and clear of
any burdens, liens and encumbrances created by, through or under Buyer.

12.5 ALLOCATION OF COMMINGLED PRODUCTION AND COSTS
AND EXPENSES. Whether by the Seller's exercise of the Option or otherwise,
Seller may have interests in the lands covered by the Leases that are not part
of the Assets ("SELLER'S INTERESTS"), which are producing hydrocarbons into a
Well and such hydrocarbons are commingled with the

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<PAGE> 20
hydrocarbons produced from the Assets. Seller shall use reasonable efforts to
ensure that hydrocarbon production from the Wells is allocated between Seller's
Interests and the Assets on a reasonable basis, consistent with industry
standards and in accordance with procedures, if any, that have been approved by
appropriate state and federal agencies. Costs and expenses shall be allocated
between the Seller's Interests and the Assets in accordance with the allocation
of production between the Seller's Interests and the Assets; provided that
costs and expenses directly attributable to Seller's Interests shall be
allocated to such Seller's Interests, and costs and expenses directly
attributable to the Assets shall be allocated to and debited against the Net
Profits Account under the Assignment.

12.6 PERFORMANCE OF BUYER. Each party shall be
entitled to the remedy of specific performance of the other party's obligations
under this Agreement in order to be assured of the benefits contemplated under
the Operative Documents.

13. APPORTIONMENT OF LIABILITIES AND OBLIGATIONS.

13.1 BUYER. Subject to Seller's exercise of the
Option and to the terms of the Management Agreement and the Reversion Interest,
Buyer shall assume and pay for all costs, expenses, liabilities and obligations
accruing or relating to the owning, operating or maintaining of the Assets or
the producing, transporting and marketing of hydrocarbons from the Assets,
relating to periods on and after the Effective Date, including without
limitation, environmental obligations and liabilities, off-site liabilities
associated with the Assets, the obligation to plug and abandon all Wells and
reclaim all Well sites and all obligations arising under agreements covering or
relating to the Assets (collectively, the "BUYER'S LIABILITIES").

13.2 SELLER. Seller shall retain, assume and pay
for all costs, expenses, liabilities and obligations accruing or relating to
the owning, operating or maintaining of the Assets or the producing,
transporting and marketing of hydrocarbons from the Assets, relating to periods
before the Effective Date, with respect to any Assets repurchased pursuant to
the Option, relating to periods after such repurchase, and with respect to the
Reversion Interests, relating to the period after the effective date of such
reversion, including without limitation, environmental obligations and
liabilities, the obligation to plug and abandon wells (to the extent relating
to periods prior to the Effective Date), off site liabilities associated with
the Assets, and all obligations arising under agreements covering or relating
to the Assets (collectively, the "SELLER'S LIABILITIES").

14. INDEMNIFICATION. For the purposes of this Agreement,
"LOSSES" shall mean any actual loss, cost and expense (including reasonable
fees and expenses of attorneys, technical experts and expert witnesses),
liability, and damage (including those arising out of demands, suits, sanctions
of every kind and character); provided, however, that in no event shall
"LOSSES" be deemed to include consequential damages of a party to this
Agreement.

14.1 BUYER'S INDEMNIFICATION OF SELLER. Subject
to the terms of and the indemnification obligations contained in the Management
Agreement, Buyer shall indemnify and hold harmless Seller, its officers,
directors, shareholders, employees, representatives, agents, successors and
assigns, forever, from and against all Losses and interest thereon which

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<PAGE> 21
arise from or in connection with (i) the Buyer's Liabilities, and (ii) Buyer's
breach of its representations, warranties and covenants in this Agreement.

14.2 SELLER'S INDEMNIFICATION OF BUYER. Subject
to the terms of and the indemnification obligations contained in the Management
Agreement, Seller shall indemnify and hold harmless Buyer; its officers;
directors; members; employees; representatives; agents; successors and assigns;
and the employees, representatives, agents, successors and assigns of such
members forever, from and against all Losses and interest thereon which arise
from or in connection with (i) the Seller's Liabilities, and (ii) Seller's
breach of its representations, warranties and covenants in this Agreement
regardless of Seller's knowledge if such representations or warranties are
knowledge qualified; provided that the matters contemplated in (ii) above shall
not apply to the representations set forth in Section 7.6.

14.3 THIRD PARTY CLAIMS. If a claim by a third
party is made against Seller or Buyer (an "INDEMNIFIED PARTY"), and if such
party intends to seek indemnity with respect thereto under this Section 14,
such Indemnified Party shall promptly notify Buyer or Seller, as the case may
be (the "INDEMNITOR"), of such claims. The Indemnitor shall have 30 days after
receipt of such notice to undertake, conduct and control, through counsel of
its own choosing and at its own expense, the settlement or defense thereof, and
the Indemnified Party shall cooperate with it in connection therewith; provided
that the Indemnitor shall permit the Indemnified Party to participate in such
settlement or defense through counsel chosen by such Indemnified Party,
however, the fees and expenses of such counsel shall be borne by such
Indemnified Party. So long as the Indemnitor, at Indemnitor's cost and
expense, (1) has undertaken the defense of, and assumed full responsibility for
all Losses with respect to, such claim, and (2) is reasonably contesting such
claim in good faith, by appropriate proceedings, the Indemnified Party shall
not pay or settle any such claim. Notwithstanding compliance by the Indemnitor
with the preceding sentence, the Indemnified Party shall have the right to pay
or settle any such claim, provided that in such event it shall waive any right
to indemnity therefor by the Indemnitor for such claim. If, within 30 days
after the receipt of the Indemnified Party's notice of a claim of indemnity
hereunder, the Indemnitor does not notify the Indemnified Party that it elects,
at Indemnitor's cost and expense, to undertake the defense thereof and assume
full responsibility for all Losses with respect thereto, or gives such notice
and thereafter fails to contest such claim in good faith, the Indemnified Party
shall have the right to contest, settle or compromise the claim but shall not
thereby waive any right to indemnity therefor pursuant to this Agreement.

15. MISCELLANEOUS.

15.1 FURTHER ASSURANCES. Seller and Buyer shall
execute, acknowledge and deliver or cause to be executed, acknowledged and
delivered such instruments and take such other action as may be reasonably
necessary or advisable to carry out the purposes and intents of this Agreement
and any document, certificate or other instrument delivered pursuant hereto.

15.2 EXPENSES. Seller shall pay the costs, taxes
and fees associated with the negotiation and closing of the transaction
contemplated by this Agreement. Seller agrees to

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<PAGE> 22
pay the reasonable costs and expenses of Williamson Petroleum Consultants, Inc.
incurred in connection with this transaction.

15.3 NOTICES. All notices under this Agreement
shall be in writing and addressed as set forth below. Any communication or
delivery hereunder shall be deemed to have been duly made and the receiving
party charged with notice (i) if personally delivered or telecopied, when
received, (ii) if mailed, three business days after mailing, certified mail,
return receipt requested, or (iii) if sent by overnight courier, one day after
sending. All notices shall be addressed as follows:

If to Seller:

HS Resources, Inc.
1 Maritime Plaza, 15th Floor
San Francisco, California 94111
Attn: Chief Financial Officer
Telephone: (415) 433-5795
Fax: (415) 433-5811

with a copy to:

HS Resources, Inc.
1999 Broadway, Suite 3600
Denver, Colorado 80202
Attn: General Counsel
Telephone: (303) 296-3600
Fax: (303) 296-3601

If to Buyer:

Wattenberg Resources Land, L.L.C.
c/o David G. Stolfa, Manager
3300 South Columbia Circle
Englewood, Colorado 80110
Telephone: (303) 762-9990
Fax: (303) 762-9992

with a copy to:

The Chase Manhattan Bank
1 Chase Manhattan Plaza
New York, New York 10081
Attention: Rick Betz
Telephone: (212) 552-2680
Fax: (212) 552-1687

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<PAGE> 23
Any party may, by written notice so delivered to the other party, change the
address or individual to which delivery shall thereafter be made.

15.4 SURVIVAL. The representations, warranties,
covenants, agreements and indemnities included or provided in this Agreement
shall survive the Effective Date. The doctrine of merger shall not cause any
representation, warranty, covenant, agreement or indemnity under this Agreement
to terminate as a result of Buyer and Seller entering into the Assignment,
Option or any other instrument contemplated hereunder.

15.5 CONFIDENTIALITY. Buyer and Seller shall keep
this Agreement confidential except to the extent each may be required to
disclose the contents hereof by recording the Assignment, Option, and
Memorandum of Management Agreement and Power of Attorney in the real property
records in the counties where the Assets are located or filing the official
forms of conveyances covering the Assets with appropriate governmental
authorities, the IRS or to the extent required in the operation of the Assets,
pursuant to the Management Agreement, by law, regulation or order, in
connection with obtaining third party consents and waivers of preferential
purchase rights and other matters, or in connection with any public
announcement issued in accordance with Section 15.6 hereof.

15.6 ASSIGNMENT; RIGHTS OF LENDER UNDER CREDIT
AGREEMENT. Neither Buyer nor Seller may assign its rights or delegate its
duties or obligations under the terms of this Agreement without the prior
written consent of the other party; provided, however, that Buyer may grant an
interest in the Operative Documents to secure its obligations under any Credit
Agreement it enters into in order to refinance the debt assumed by Buyer
pursuant to this Agreement (the "LLC CREDIT AGREEMENT"). Seller and Buyer
agree that Buyer's right to take any action, grant any consent or waiver in
connection with any Operative Document may be subject to the prior consent of
the lender banks under such LLC Credit Agreement.

15.7 BINDING EFFECT. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
successors and, subject to Section 15.7 hereof, their assigns.

15.8 COMPLETE AGREEMENT. When executed by the
authorized representative of Seller and Buyer, this Agreement, the Exhibits
hereto and the documents to be delivered pursuant hereto shall constitute the
complete agreement between the parties. This Agreement may be amended only by
a writing signed by both parties.

15.9 KNOWLEDGE. As used in this Agreement, the
term "KNOWLEDGE," "BEST KNOWLEDGE" or any variations thereof shall mean the
actual knowledge of any fact, circumstance or condition by the officers or
employees at a manager or higher level of the party involved as such knowledge
has been obtained in the performance of their duties in the ordinary course of
business after making reasonable and appropriate inquiries.

15.10 GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF

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<PAGE> 24
COLORADO WITHOUT REFERENCE TO THE CONFLICT OF LAWS PROVISIONS THEREOF.

15.11 COUNTERPARTS. This Agreement may be executed
in one or more counterparts, all of which shall be considered one and the same
instrument, and shall become effective when one or more counterparts have been
signed by each party and delivered to the other party.

[THIS SPACE INTENTIONALLY LEFT BLANK]

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<PAGE> 25
EXECUTED as of the date first above mentioned.

BUYER:

WATTENBERG RESOURCES LAND, L.L.C.

By: Its Manager, David G. Stolfa

By: /s/ DAVID G. STOLFA
-------------------------
David G. Stolfa, Manager

SELLER:

HS RESOURCES, INC.

By: /s/ NAME: JAMES E. DUFFY
-------------------------------
Name: James E. Duffy
Title: Vice President

ORION ACQUISITION, INC.

By: /s/ NAME: JAMES E. DUFFY
-------------------------------
Name: James E. Duffy
Title: Vice President

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<PAGE> 26
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )

The foregoing instrument was acknowledged before me this 26th
day of March, 1996 by David G. Stolfa in his capacity as Manager of Wattenberg
Resources Land, L.L.C., a Delaware limited liability company on behalf of the
company.

Witness my hand and official seal.

My commission expires: 3-26-98

[SEAL]
/s/ COLLEEN RICHARDS
---------------------
Notary Public

STATE OF COLORADO )
) ss.
COUNTY OF DENVER )

The foregoing instrument was acknowledged before me this 26th
day of March, 1996 by James E. Duffy, as Vice President of HS Resources, Inc.,
a Delaware corporation on behalf of the corporation.

Witness my hand and official seal.

My commission expires: 3-26-98

[SEAL]
/s/ COLLEEN RICHARDS
---------------------
Notary Public

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<PAGE> 27
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )

The foregoing instrument was acknowledged before me this 26th
day of March, 1996 by James E. Duffy, as Vice President of Orion Acquisition,
Inc., a Delaware corporation on behalf of the corporation.

Witness my hand and official seal.

My commission expires: 3-26-98

[SEAL]
/s/ COLLEEN RICHARDS
---------------------
Notary Public

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<PAGE> 1
EXHIBIT 99.10

WELLBORE ASSIGNMENT OF OIL AND GAS LEASES
WITH RESERVATIONS OF PRODUCTION PAYMENT
AND REVERSION INTEREST

THIS WELLBORE ASSIGNMENT OF OIL AND GAS LEASES WITH
RESERVATIONS OF PRODUCTION PAYMENT AND REVERSION INTEREST (this "ASSIGNMENT")
is entered into on March 26, 1996, but is effective as of 7:00 a.m. (M.S.T.) on
March 29, 1996 (the "EFFECTIVE DATE") by and between HS Resources, Inc., a
Delaware corporation, and its wholly-owned subsidiary, Orion Acquisition, Inc.,
a Delaware corporation both with an address of 1999 Broadway, Suite 3600,
Denver, Colorado 80202 (herein collectively called "GRANTOR"), and Wattenberg
Resources Land, L.L.C., a Delaware limited liability company, c/o David G.
Stolfa, Manager, 3300 South Columbine Circle, Englewood, Colorado 80110 (herein
called "GRANTEE").

ARTICLE 1
CERTAIN DEFINITIONS AND REFERENCES

1.1 CERTAIN DEFINED TERMS. When used in this Assignment,
the following terms shall have the respective meanings assigned to them in this
Section 1.1 or in the sections and subsections referred to below:

"AFFILIATE" shall mean (a) any person directly or indirectly
owning, controlling or holding with power to vote 50% or more of the
outstanding voting securities of Grantee, (b) any person 50% or more of whose
outstanding voting securities are directly or indirectly owned, controlled or
held with power to vote by Grantee, (c) any person directly or indirectly
controlling, controlled by or under common control with Grantee, and (d) any
officer, director or partner or member of Grantee or any person described in
clause (c) of this definition.

"AGENT" shall have the meaning assigned in the Credit
Agreement.

"ASSIGNMENT" is defined in the first paragraph above.

"BANK" shall have the meaning assigned in the Credit
Agreement.

"BUSINESS DAY" shall mean a day on which commercial banks are
open for business in both the State of New York and the State of Colorado.

"CREDIT AGREEMENT" shall mean the Credit Agreement dated
effective as of the Effective Date among Grantee, The Chase Manhattan Bank,
N.A., as agent, and the lenders which are party thereto, as the same may be
amended, modified or restated from time to time.

"EFFECTIVE DATE" is defined in the first paragraph.
<PAGE> 2
"FULL PRODUCTION DATE" shall mean the date on which the total
volume of gas attributable to the Subject Hydrocarbons produced, saved and sold
from and after the Effective Date equals a volume equivalent to 6,868,886 BCOE
(net of royalty and net to Grantee); provided that such volume shall be
decreased by an amount, if any, equal to the aggregate volume of reserves
allocated to properties on which Grantor has exercised the Option.

"GRANTEE" shall mean Grantee as defined in the first paragraph
of this Assignment, and its successors and assigns and, unless the context in
which used shall otherwise require, such term shall mean any successor-owner at
the time in question of any or all of the Subject Interests.

"GRANTOR" shall mean Grantor as defined in the first paragraph
and its successors and assigns; and, unless the context in which used shall
otherwise require, such term shall mean any successor-owner at the time in
question of any or all of the Production Payment.

"GROSS PROCEEDS" shall have the meaning assigned to it in
Section 4.2(a).

"HEDGING OBLIGATION" shall be any obligation of Grantee to
make settlement payments, margin payments or any other payments including
premiums, purchase prices, fees, option prices, interest and expense under any
Hedging Agreements as defined in and permitted by the terms of the Credit
Agreement.

"IRC" means the Internal Revenue Code of 1986, as amended, and
any successor statute.

"LEASES" is defined in Section 2.1(a).

"LOAN DOCUMENTS" shall have the meaning assigned in the Credit
Agreement.

"MANAGEMENT AGREEMENT" means that certain Management Agreement
dated effective as of the Effective Date between Grantor and Grantee, and
providing for the Grantor's management of the Subject Interests and for certain
other matters as provided therein.

"MEASUREMENT AMOUNT" is defined in Section 4.5.

"MORTGAGE" shall mean that certain Mortgage, Assignment of
Production, Security Agreement and Financing Statement dated as of the
Effective Date between Grantee and the Agent, and securing, among other things,
the obligations of Grantee to the Agent and Banks under the Credit Agreement.

"NET PROFITS" for any Payment Period shall mean the net
balance, positive or negative, resulting after application of the credits and
debits as provided in Sections 4.2 and 4.3 for such period.

"NET PROFITS ACCOUNT" shall have the meaning assigned to it in
Section 4.1.

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<PAGE> 3
"NON-AFFILIATE" shall mean any Person who is not an Affiliate.

"OPERATIVE DOCUMENTS" means the Purchase Agreement, this
Assignment, the Management Agreement, and the Option.

"OPTION" shall mean that certain Option Agreement dated
effective as of the Effective Date between Grantee and Grantor, and providing
for an option in favor of Grantor to repurchase the Subject Interests on the
terms and subject to the conditions provided for therein.

"OTHER INCOME" is defined in Section 4.2(b).

"PAYMENT PERIOD" shall mean a calendar quarter, provided that
the first Payment Period shall mean the period from the Effective Date until
June 30, 1996, and the last Payment Period shall mean the portion of the
calendar quarter during which the Termination Date occurs from the beginning of
such calendar quarter until and including the Termination Date.

"PERSON" shall mean any natural person, association, trust,
partnership, limited liability company, corporation or other legal entity.

"PRODUCTION PAYMENT" is defined in Section 3.1.

"PRODUCTION PAYMENT PERIOD" shall mean the period from the
Effective Date until and including the Termination Date.

"PRODUCTION SALES CONTRACTS" shall mean all contracts,
agreements and arrangements for the sale or disposition of Subject Hydrocarbons
that may be produced from or attributable to the Subject Interests, whether
presently existing or hereafter created.

"PURCHASE AGREEMENT" means that certain Purchase and Sale
Agreement dated as of the Effective Date between Grantor and Grantee, and
providing for Grantee's purchase and the Grantor's sale of the Subject
Interests and pursuant to which this Assignment is being executed and
delivered.

"REVERSION INTEREST" is defined in Section 3.3.

"SECTION 29 CREDITS" is defined in Section 3.2.

"SUBJECT HYDROCARBONS" shall mean that portion of the oil, gas
and other minerals in and under and that may be produced, from and after the
Effective Date, from or attributable to the Subject Interests and after
deducting the appropriate share of all royalties and any overriding royalties
(other than those overriding royalties conveyed herein), production payments
(except the Production Payment) and other similar charges burdening the Subject
Interests on the Effective Date or additional burdens created under the
Management Agreement. There shall not be included in the Subject Hydrocarbons
any oil, gas or other minerals unavoidably lost in production or used by
Grantee in conformity with good oil field practices

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<PAGE> 4
for production operations (including without limitation, fuel, secondary or
tertiary recovery) conducted solely for the purpose of producing Subject
Hydrocarbons from the Subject Interests, but only so long as such Subject
Hydrocarbons are so used.

"SUBJECT INTERESTS" is defined in Section 2.1.

"SUBORDINATED NOTE" shall mean the $750,000 Subordinated
Promissory Note issued by Grantee to Grantor pursuant to the Purchase
Agreement.

"SUPERIOR OBLIGATIONS" shall mean the indebtedness,
obligations and liabilities of Grantee under the Credit Agreement and the
Hedging Obligations, and to which certain of Grantor's interests under this
Assignment are subordinated pursuant to Article 8.

"TERMINATION DATE" shall mean the day on which an aggregate
amount of $17,510,640.00 has been paid to Grantor under the Production Payment
and attributable to Subject Hydrocarbons produced, saved and sold from and
after the Effective Date.

"WELLS" is defined in Section 2.1(a).

1.2 REFERENCES AND TITLES. All references in this
Assignment to articles, sections, subsections and other subdivisions refer to
corresponding articles, sections, subsections and other subdivisions of this
Assignment unless expressly provided otherwise. Titles appearing at the
beginning of any of such subdivisions are for convenience only and shall not
constitute part of such subdivisions and shall be disregarded in construing the
language contained in such subdivisions. The words "this Assignment", "this
instrument", "herein", "hereof", "hereby", "hereunder" and words of similar
import refer to this Assignment (and reservation of Production Payment) as a
whole and not to any particular subdivision unless expressly so limited. Words
in the singular form shall be construed to include the plural and vice versa,
unless the context otherwise requires. All references in this Assignment to
Exhibits or Schedules refer to exhibits or schedules to this Assignment unless
expressly provided otherwise, and all such Exhibits or Schedules are hereby
incorporated herein by reference and made a part hereof for all purposes.

ARTICLE 2
ASSIGNMENT

2.1 For and in consideration of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Grantor does hereby GRANT, BARGAIN, SELL, TRANSFER,
ASSIGN, and CONVEY unto Grantee, its successors and assigns, all of the
following (the "SUBJECT INTERESTS"):

(a) The right, title and interest of Grantor in
and to the oil and gas leases and mineral interests described in Exhibit A
(attached hereto and made a part hereof for all purposes) insofar and only
insofar as said leases cover the right to produce from the wellbores of the
wells described in Exhibit B (attached hereto and made a part hereof for all
purposes) from the intervals in such wells identified in Exhibit B as of the
Effective Date (the

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<PAGE> 5
above described interest in such leases being herein called the "LEASES" and
the above described interest in such wells being herein called the "WELLS"),
subject to any restrictions, exceptions, reservations, conditions, limitations,
burdens, contracts, agreements and other matters applicable to the Leases and
the Wells as set forth in the Purchase Agreement, and excluding such portion of
the Leases and the Wells which are not conveyed to Grantee because of Defective
Interests or which were determined to be Excluded Assets (as such terms are
defined in the Purchase Agreement);

(b) The right, title and interest of Grantor in
and to overriding royalty interests and mineral interests in the Leases insofar
and only insofar as the Leases cover the wellbores associated with the Wells
from the producing intervals identified in Exhibit B;

(c) To the extent affected, the right, title and
interest of Grantor in and to, or derived from, the following insofar and only
insofar as same are attributable to the Leases and the Wells:

(i) The presently existing and valid
oil, gas or mineral unitization, pooling, operating and
communitization agreements, declarations and orders affecting
the Leases and Wells, and in and to the properties covered and
the units created thereby;

(ii) The personal property and fixtures
that are appurtenant to the Wells, including all wells,
casing, tubing, pumps, separators, tanks, lines and other
personal property and oil field equipment appurtenant to such
Wells; provided, however, that Grantor shall remain co-owner
of any personal property appurtenant to any property owned by
Grantor that is not exclusively part of the Wells;

(iii) The presently existing and valid gas
sales, purchase, gathering and processing contracts and
operating agreements, joint venture agreements, partnership
agreements, rights-of-way, easements, permits and surface
leases and other contracts, agreements and instruments (but
specifically excluding Grantor's rights under the Operative
Documents), only in relevant part to the extent and insofar as
the same are appurtenant to the Leases, Wells and the units
referred to in (c)(i) above; provided, however, that Grantor
shall remain co-owner of any agreements, including unitization
and pooling agreements, if they pertain to any property owned
by Grantor that is not exclusively part of the Leases and
Wells;

reserving to Grantor, however, the Production Payment, the Reversion Interest
and the other rights reserved herein, all as provided in Article 3 below; to
have and to hold the Subject Interests forever.

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<PAGE> 6
ARTICLE 3
RESERVATIONS

3.1 PRODUCTION PAYMENT. Grantor reserves unto itself,
and its successors and assigns, from this Assignment a production payment
payable out of and only from Subject Hydrocarbons equal to 100% of the Net
Profits derived from the Subject Hydrocarbons; such production payment to be
effective during the Production Payment Period and such payment, in any Payment
Period, not to exceed the Gross Proceeds during such Payment Period, (the
"PRODUCTION PAYMENT"); and subject to the terms and conditions contained
herein.

3.2 SURFACE AND OTHER USE. Grantee hereby grants unto
Grantor, and its successors and assigns, the right to use as much of the
surface of the acreage covered by the Leases as well as the Wells conveyed
hereunder as may be necessary in the conduct of operations under the Management
Agreement and in those zones, formations and depths not assigned to Grantee
herein and on any other property owned or leased by Grantor that is either not
part of the Subject Interests being conveyed hereby or subsequently reacquired
by Grantor through its exercise of the Option. Grantor further reserves the
right to drill through the depths, zones and formations herein assigned to
Grantee in conducting any operations in the depths, zones and formations not
assigned herein or on any other property owned or leased by Grantor that is
either not part of the Subject Interests being conveyed hereby or subsequently
reacquired by Grantor through its exercise of the Option. Grantor further
reserves the right to drill infill wells as permitted by regulatory agencies
having jurisdiction over such matters. Grantor reserves the right to jointly
use any easements and rights-of-way for its operations on the land covered
hereby or on other lands in the area.

3.3 REVERSION INTEREST AFTER FULL PRODUCTION DATE.
Grantor reserves unto itself, and its successors and assigns, 75% of the
Subject Interests from and after the Full Production Date (the "REVERSION
INTEREST"); provided, however, that this reservation will not take effect if
the estimated net cash flow from operations and production of the Subject
Hydrocarbons remaining after the Full Production Date, when taken as a whole,
is not reasonably expected by Grantor in good faith to exceed the estimated
cost to plug and abandon the Wells. If the Full Production Date is reached and
this reversion becomes effective, Grantor and Grantee agree to enter into a
mutually acceptable Joint Operating Agreement to govern operation of the
Subject Interests after the Full Production Date, in form and substance similar
to the Model Form Operating Agreement typically used by Grantor at the Full
Production Date, naming Grantor as Operator. For the purposes of this Section
3.3, net cash flow from operations and production means the excess of revenue
from production of Subject Hydrocarbons over the aggregate of operating
expenses, overhead costs and capital costs required to produce such Subject
Hydrocarbons.

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<PAGE> 7
ARTICLE 4
PRODUCTION PAYMENT ACCOUNTING AND PAYMENT

4.1 ESTABLISHMENT OF NET PROFITS ACCOUNT. Grantee shall
establish and maintain a Net Profits Account (herein called the "NET PROFITS
ACCOUNT") in accordance with the various provisions of this Assignment and at
all times during the Production Payment Period shall keep true and correct
books and records with respect thereto. Such books and records shall be open
for inspection, copying and audit by Grantor and its accountants and
representatives.

4.2 CREDITS TO NET PROFITS ACCOUNT. Except as otherwise
provided herein, the Net Profits Account shall be credited with an amount equal
to the sum of Gross Proceeds and Other Income.

(a) "GROSS PROCEEDS" shall mean, on an accrual
accounting basis, all consideration received, directly or indirectly, for sales
of Subject Hydrocarbons, subject to the following:

(i) If a controversy exists (whether by
reason of any statute, order, decree, rule, regulation,
contract, or otherwise) as to the correct or lawful sales
price of any Subject Hydrocarbons, then at Grantee's sole
election, Grantee may choose to treat amounts received by
Grantee and affected by such controversy (A) as Gross Proceeds
received by Grantee, or (B) not as Gross Proceeds received by
Grantee and deposit such amounts with an escrow agent pending
settlement of such controversy, provided that all amounts,
including any interest or other income, thereafter paid to
Grantor by such escrow agent out of or on account of such
escrow shall be considered to be amounts received from the
sale of Subject Hydrocarbons. Amounts received by Grantor and
not deposited with an escrow agent shall be considered to be
received for purposes of this definition of Gross Proceeds;

(ii) Gross Proceeds relating to any
non-consent operations conducted with respect to all or any
part of the Subject Hydrocarbons after the Effective Date
shall be subject to Section 5.8;

(iii) Gross Proceeds shall not include any
amount which Grantee shall receive as a bonus for any lease or
payments made to Grantor in connection with adjustment of the
cost of any Well and leasehold equipment upon unitization or
revision of participating areas under federal divided-type
units covering any of the Subject Hydrocarbons;

(iv) Cash settlements and cash make-ups
received by Grantee with respect to the Subject Hydrocarbons
under gas balancing or similar agreements shall be considered
derived from the sale of Subject Hydrocarbons;

(v) The proceeds from (A) all insurance
and (B) all judgments, claims and settlements, received by
Grantee which are applicable to remedy or

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<PAGE> 8
repair losses or damages actually incurred, to the extent such
proceeds relate to the production of Subject Hydrocarbons; and

(vi) Gross Proceeds shall not include
Other Income.

(b) "OTHER INCOME" shall mean, on an accrual accounting
basis, the following:

(i) The proceeds received by Grantee
after the Effective Date from (A) the sale of any materials,
supplies, equipment and other personal property or fixtures,
or any part thereof or interest therein, used in connection
with the Subject Hydrocarbons, (B) delay rentals, (C) lease
bonuses, and (iv) rentals from reservoir use or storage;
including without limitation all amounts attributable thereto
which are received by Grantee by way of conformance of
investment in personal property and equipment if the Subject
Hydrocarbons or any part or parts thereof are hereafter from
time to time unitized or are affected by the revision of a
participating area in a federal divided-type unit;

(ii) The proceeds of all insurance
received by Grantee, other than to remedy or repair losses or
damages actually incurred, to the extent such proceeds relate
to the production of Subject Hydrocarbons, (A) the cost of
which is charged to the Net Profits Account, directly or
indirectly, and/or (B) that accrue to Grantee as a consequence
of the loss or damage to any one or more of the following
which occurs after the Effective Date: the Subject
Hydrocarbons, or any part thereof or interest therein, the
interest of Grantee in any materials, supplies, equipment or
other personal property or fixtures used in connection with
any of the Subject Hydrocarbons; except to the extent such
amounts are used to repair or replace the items damaged or
lost giving rise to the receipt of such amounts;

(iii) Except to the extent subject to the
allowance for depletion under the IRC, amounts received by
Grantee from a purchaser of Subject Hydrocarbons (A) as a
prepayment of any portion of the sales price for such Subject
Hydrocarbons, (B) as advance gas payments or (C) as payments
pursuant to contractual provisions providing for "take-or-pay"
payments (including amounts awarded by a court or agreed to by
the parties in any settlement of a claim (net of costs and
attorneys' fees incurred in connection therewith) as damages
for the failure or refusal of the purchaser to take Subject
Hydrocarbons pursuant to the contract which contains such
provisions) shall be considered to be received from the sale
of Subject Hydrocarbons; provided that such amounts shall not
be considered received from the sale of Subject Hydrocarbons
at a later date when Subject Hydrocarbons are delivered in
respect of any such payments under "make-up" or similar
provisions;

(iv) The proceeds of all judgments,
claims and settlements received by Grantee for damages to one
or more of the following which occurs after the Effective
Date: to the extent such proceeds relate to the production of

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<PAGE> 9
Subject Hydrocarbons, or any part thereof or interest therein;
any materials, supplies, equipment or other personal property
or fixtures; or any part thereof or interest therein, used in
connection with any of the Subject Hydrocarbons; except to the
extent such amounts are used to repair or replace the items
damaged or lost giving rise to the receipt of such amounts;

(v) Any interest, penalty or other
amounts received by Grantee which are attributable to the
Subject Hydrocarbons and are not derived from the sale of
Subject Hydrocarbons; and

(vi) All other monies and things of value
which are received by Grantee by virtue of the ownership after
the Effective Date of the Subject Hydrocarbons and the
materials, supplies, equipment and other personal property and
fixtures used in connection with the Subject Hydrocarbons.

4.3 DEBITS TO NET PROFITS ACCOUNT. Except as otherwise
provided herein, the Net Profits Account shall be debited (without duplication
and taking into account the costs and expenses assumed by Grantor under the
Management Agreement), on an accrual accounting basis, with the following
amounts:

(a) All direct costs which are attributable to
production of the Subject Hydrocarbons (i) for all direct labor (including
fringe benefits), other services and expenses necessary for developing,
operating, producing, reworking (including recompleting) and maintaining the
Subject Hydrocarbons after the Effective Date, (ii) for dehydration,
compression, separation, gathering, transportation and marketing of the Subject
Hydrocarbons after the Effective Date, and (iii) for all materials, supplies,
equipment and other personal property and fixtures purchased for use in
connection with the Subject Hydrocarbons after the Effective Date (including
without limitation (A) all amounts paid by Grantee for conformance of
investment if the Subject Hydrocarbons or any part or parts thereof are
hereafter from time to time unitized or if any participating area in a federal
divided-type unit is changed, and (B) the cost of secondary recovery, pressure
maintenance, repressuring, recycling and other operations conducted for the
purpose of enhancing production);

(b) Costs (including without limitation outside
legal, accounting and engineering services) attributable to the Subject
Hydrocarbons and allocated in accordance with revenues therefrom of (i)
handling, investigating and/or settling litigation, administrative proceedings
and claims (including without limitation lien claims other than liens for
borrowed funds) and (ii) payment of judgments, penalties and other liabilities
(including interest thereon), paid by Grantee (and not reimbursed under
insurance maintained by Grantee or others) and involving any of the Subject
Hydrocarbons, or incident to the development, operation or maintenance of the
Subject Hydrocarbons after the Effective Date, or requiring the payment or
restitution of any proceeds of Subject Hydrocarbons, or arising from tax or
royalty audits;

(c) All taxes (except income, transfer,
inheritance, estate, franchise and like taxes) paid by Grantee with respect to
the ownership of the Subject Hydrocarbons or the extraction of the Subject
Hydrocarbons after the Effective Date, including without limitation

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<PAGE> 10
production, severance, and/or excise and other similar taxes assessed against,
and/or measured by, the production of (or the proceeds or value of production
of) Subject Hydrocarbons (without regard to the period of ownership for which
such taxes are assessed), occupation taxes, sales and use taxes, and ad valorem
taxes assessed against or attributable to the Subject Hydrocarbons or any
equipment located on any of the Subject Interests, as such equipment is
required for the production of Subject Hydrocarbons;

(d) Insurance premiums attributable to the
ownership or operation of the Subject Hydrocarbons paid by Grantee for
insurance actually carried for periods after the Effective Date, or any
equipment located on any of the Subject Interests, as such equipment is
required for the production of Subject Hydrocarbons, or incident to the
development, operation or maintenance of the Subject Hydrocarbons after the
Effective Date;

(e) All amounts attributable to the Subject
Hydrocarbons (to the extent attributable to periods after the Effective Date)
and consisting of (i) rent and other consideration paid for the use or damage
to the surface and (ii) delay rentals, shut-in well payments, minimum royalties
and similar payments paid pursuant to the provisions of agreements in force and
effect before the Effective Date;

(f) Amounts attributable to the Subject
Hydrocarbons (to the extent attributable to periods after the Effective Date)
and charged by the relevant operator as overhead charges specified in
applicable operating agreements (including applicable COPAS charges) now or
hereafter covering Subject Hydrocarbons;

(g) If as a result of the occurrence of the
bankruptcy or insolvency or similar occurrence of the purchaser of Subject
Hydrocarbons any amounts previously included in Gross Proceeds or Other Income
are reclaimed from Grantee or its representative, then the amounts reclaimed as
promptly as practicable following Grantee's payment thereof;

(h) The Management Fee (as defined in the
Management Agreement) paid to Grantor pursuant to the Management Agreement;

(i) All payments and prepayments made by Grantee
to the Agent and Banks with respect to the Superior Obligations (other than
with respect to the Hedging Obligations, which are covered by subparagraph (j)
below) pursuant to the terms of the Loan Documents (and specifically in
accordance with the provisions of Section 8.09 of the Credit Agreement),
including without limitation, principal, interest, fees, expenses and
indemnities (including interest that accrues subsequent to the commencement of
any bankruptcy, insolvency or similar proceeding with respect to Grantee,
whether or not a claim for post-filing interest is allowed in such proceeding);

(j) All payments made by Grantee of any Hedging
Obligations in accordance with the provisions of Section 8.09 of the Credit
Agreement;

(k) If Grantee shall be a party as to any
non-consent operations conducted with respect to all or any of the Subject
Hydrocarbons after the Effective Date, all

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<PAGE> 11
costs to be debited to the Net Profits Account with respect thereto shall be
governed by Section 5.8;

(l) Except as otherwise provided elsewhere in
this Assignment, all other direct expenditures attributable to the Subject
Hydrocarbons paid by Grantee after the Effective Date for the necessary or
proper development, operation, maintenance and administration, after the
Effective Date, of the Subject Hydrocarbons, if reasonably incurred; provided,
however, that notwithstanding anything herein provided to the contrary, the Net
Profits Account shall not be debited with any cost or expense which is deducted
or taken into account in determining Gross Proceeds or Other Income, including,
without limitation, the value of any component of Gross Proceeds or Other
Income.

4.4 ACCOUNTING FOR NET PROFITS. All debits to the Net
Profits Account calculated pursuant to Section 4.3 which are attributable to
costs and expenses incurred during a Payment Period, up to and including the
last day of such Payment Period, shall be debited against the Net Profits
Account as of the last day of such period. All credits to the Net Profits
Account calculated pursuant to Section 4.2 which are attributable to the sale
of Subject Hydrocarbons during a Payment Period, shall be credited to the Net
Profits Account as of the last day of such Payment Period.

4.5 MEASUREMENT AMOUNT AND PAYMENT. As of the end of
each Payment Period, Grantee shall calculate an amount (the "MEASUREMENT
AMOUNT"), equal to the sum of (a) any Measurement Amount carried forward from a
prior Payment Period and (b) the Net Profits for the then current Payment
Period. Not more than 75 days following a Payment Period, Grantee shall pay
Grantor the lesser of (i) the Measurement Amount for such Payment Period or
(ii) Gross Proceeds for the Payment Period in question. If the Measurement
Amount for a Payment Period is a negative amount, no payment shall be due and
payable by Grantee to Grantor hereunder for such Payment Period, and the
negative amount shall be carried forward for the next and succeeding Payment
Periods until such deficit is wiped out and liquidated. If the Measurement
Amount for the Payment Period is a positive amount and exceeds Gross Proceeds
for the Payment Period, the excess Measurement Amount shall be carried forward
to the next Payment Period.

Grantee shall send to Grantor at the same time set for the
payment a statement showing the calculation of the Measurement Amount, the
reason for any nonpayment, the condition of the Net Profits Account as of the
close of business on the last day of the relevant Payment Period and clearly
showing (with sufficient description so that Grantor can identify such items
and the particular Subject Hydrocarbons involved) those items which gave rise
to debits and credits to the Net Profits Account during such Payment Period and
clearly showing for each Subject Interest the quantities of Subject
Hydrocarbons produced therefrom during the Payment Period covered by such
statement, the volumes of such production sold, the prices at which such
volumes were sold, and the taxes paid with respect to such sales.

Although the books for the Net Profits Account shall be kept
on an accrual basis, for purposes of this Section 4.5, Net Profits will be
tentatively computed and paid in accordance with Grantor's standard billing and
disbursement procedures, which shall be consistent with

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standard industry practices, until the Termination Date. Within 90 days
following the Termination Date, the Net Profits Account shall be reconciled to
the accrual method and Grantor and Grantee shall make such payments or refunds
to each other as are necessary to effect such reconciliation.

4.6 OVERPAYMENTS. If at any time Grantee is determined
to have paid Grantor more than the amount then due with respect to the
Production Payment, Grantor shall be obligated to return any such overpayment,
limited to amounts actually paid to Grantor by Grantee, after Grantee notifies
Grantor of the amount of such overpayment and provides Grantor substantiation
thereof. Alternatively, Grantee may elect to offset future Production Payments
for the amount of any such overpayment.

4.7 ACCOUNTING FOR INTEREST EXPENSE. For federal income
tax purposes, interest with respect to payments under the Production Payment
shall be taken into account under the noncontingent bond method of Prop. Treas.
Reg. Section 1.1275-4(b)(2) (or any successor provision of final Treasury
Regulations) in accordance with the projected payment schedule attached as
Schedule 1.

4.8 ALLOCATION OF COMMINGLED PRODUCTION AND COSTS AND
EXPENSES. If Grantor exercises the Option or otherwise acquires any interest
in the lands covered by the Leases that are no longer or are not part of the
Subject Interest, the allocation of commingled production and costs and
expenses shall be allocated in accordance with Section 12.5 of the Purchase
Agreement, if applicable.

ARTICLE 5
OPERATION OF SUBJECT INTERESTS

5.1 RIGHTS AND DUTIES OF GRANTEE. Grantee (subject to
the terms and provisions of any applicable operating agreements and subject to
the other provisions of the Operative Documents) as between Grantor and
Grantee, has exclusive charge, management and control of all operations to be
conducted on the Subject Interests and may take any and all actions which a
reasonably prudent operator would deem necessary or advisable in the
management, operation and control thereof. Grantee shall promptly (and, unless
the same are being contested in good faith and by appropriate proceedings,
before the same are delinquent) pay all costs and expenses (including without
limitation all taxes and all costs, expenses and liabilities for labor,
materials and equipment incurred in connection with the Subject Interests and
all obligations to the holders of royalty interests and other interests
affecting the Subject Interests) incurred from and after the Effective Date in
developing, operating and maintaining the Subject Interests. Grantee shall be
obligated to operate and maintain the Subject Interests as would a reasonable
and prudent operator under similar circumstances in accordance with good oil
field practices. For the Subject Interests which Grantee does not operate,
Grantee shall take all such action and exercise all such rights and remedies as
are reasonably available to it to cause the operator to so maintain and operate
such Subject Interests. Grantee shall be deemed to have fully discharged all
of its obligations under

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this Section 5.1, and shall have no liability to Grantor under this Section 5.1
during any period when the Management Agreement is in effect.

5.2 SALES OF SUBJECT HYDROCARBONS. Grantee shall have
the obligation to market or cause to be marketed the Subject Hydrocarbons in
accordance with its good faith business judgment and sound oil field practices.
Grantee shall fully discharge its obligations to Grantor under this Section 5.2
during any period when the Management Agreement is in effect. As to any third
parties, all acts of Grantee in marketing the Subject Hydrocarbons and all
Production Sales Contracts executed by Grantee shall be binding on Grantor and
the Production Payment; it being understood that the right and obligation to
market the Subject Hydrocarbons is at all times vested in Grantee and Grantor
does not have any such right or obligation or any possessory interest in all or
part of the Subject Hydrocarbons, except as may be granted by separate
agreement or instrument. Accordingly, it shall not be necessary for Grantor to
join in any new Production Sales Contracts or any amendments to existing
Production Sales Contracts.

5.3 INSURANCE. Grantee shall obtain or cause to be
obtained (and maintain or cause to be maintained during the economic life of
the Subject Interests) the types of insurance as in its reasonable good faith
business judgment a reasonable and prudent operator would carry under similar
circumstances. Grantee shall fully discharge all of its obligations under this
Section 5.3, and shall have no liability to Grantor under this Section 5.3
during any period when the Management Agreement is in effect.

5.4 CONTRACTS WITH AFFILIATES. To the extent not
provided for in any applicable operating agreement, Grantee may perform
services and furnish supplies and equipment with respect to the Subject
Interests, provided that the amount of compensation, price or rental that can
be charged to the Net Profits Account therefor must be no less favorable than
those available from Non-Affiliates in the area engaged in the business of
rendering comparable services or selling or leasing comparable equipment and
supplies which could reasonably be made available to the Subject Interests.

5.5 GOVERNMENT REGULATION. All obligations of Grantee
hereunder shall be subject to and limited by all applicable federal, state and
local laws, rules, regulations and orders (including those of any applicable
agency, board, official or commission having jurisdiction).

5.6 ABANDONMENTS. Prior to releasing, surrendering or
abandoning any portion of the Subject Interests, Grantee shall first offer in
writing to reassign such interest to Grantor, with Grantor assuming all
liability and obligations for such interest after such assignment. If Grantor
does not accept the offer to reassign within 60 days from such offer, Grantee
shall have the right without the joinder of Grantor to release, surrender
and/or abandon its interest in the Subject Interests, or any part thereof, or
interest therein even though the effect of such release, surrender or
abandonment will be to release, surrender or abandon the Production Payment the
same as though Grantor had joined therein insofar as the Production Payment
covers the Subject Interests, or any part thereof or interest therein, so
released, surrendered or abandoned by Grantee.

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<PAGE> 14
5.7 POOLING AND UNITIZATION.

(a) Certain of the Subject Interests may have
been pooled or unitized for the production of oil, gas and/or minerals prior to
the Effective Date or, after the Effective Date, may be so pooled or unitized
pursuant to Section 5.7(b). Such Subject Interests are and shall be subject to
the terms and provisions of such pooling and unitization agreements, and the
Production Payment in each such Subject Interest shall apply to (and the term
"SUBJECT HYDROCARBONS" shall include) the production from such units which is
attributable to such Subject Interest (and the Net Profits Account shall be
computed giving consideration to such production and costs, expenses, charges
and credits attributable to such Subject Interest) under and by virtue of the
applicable pooling and unitization agreements.

(b) Grantee shall have the right and power to
unitize, pool or combine the lands covered by the Subject Interests, or any
portion or portions thereof, with any other land or lease or leases so as to
create one or more unitized areas (or, with respect to unitized or pooled areas
theretofore created, to dissolve the same or to amend and/or reconfigure the
same to include additional acreage or substances or to exclude acreage or
substances). If pursuant to any law, rule, regulation or order of any
governmental body or official, any of the Subject Interests are pooled or
unitized in any manner, the Production Payment insofar as it affects such
Subject Interest shall also be deemed pooled and unitized, and in any such
event the Production Payment shall apply to (and the term "SUBJECT
HYDROCARBONS" shall include) the production which accrues to such Subject
Interest under and by virtue of such pooling and unitization arrangements and
the Net Profits Account shall be computed giving consideration to such
production and costs, expenses, charges and credits attributable to such
Subject Interest under and by virtue of such pooling and unitization
arrangement. Notwithstanding the foregoing provisions of this Section 5.7(b),
Grantee shall have no right or interest in any well that is not specifically
described on Exhibit B or in the production from any such well.

5.8 NON-CONSENT OPERATIONS.

(a) If Grantee elects (subject to Section 5.1) to
be a non-participating party (whether pursuant to an operating agreement or
other agreement or arrangement, including without limitation, non-consent
rights and obligations imposed by statute or regulatory agency) with respect to
any operation on any Subject Interest or elects to be an abandoning party with
respect to a Well located on any Subject Interest, the consequence of which
election is that Grantee's interest in such Subject Interest or part thereof is
temporarily (i.e., during a recoupment period) or permanently forfeited to the
parties participating in such operations, or electing not to abandon such Well,
then the costs and proceeds attributable to such forfeited interest shall not,
for the period of such forfeiture (which may be a continuous and permanent
period), be debited or credited to the Net Profits Account and such forfeited
interest shall not, for the period of such forfeiture, be subject to the
Production Payment.

(b) If Grantee elects (subject to Section 5.1) to
be a participating party to such an operation, or elects to be a non-abandoning
party with respect to such a Well, and any other party or parties have elected
not to participate in such operation (or have elected to abandon such Well)
with the result that (pursuant to an operating agreement or other agreement

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<PAGE> 15
or arrangement, including without limitation, non-consent rights and
obligations imposed by statute and/or regulatory agency) Grantee becomes
entitled to receive, either temporarily (i.e., through a period of recoupment)
or permanently, interests belonging to such other party or parties, then the
costs and proceeds attributable to such non-participating parties' interests to
which Grantee becomes so obligated and entitled shall be debited and credited
to the Net Profits Account as though such interests were part of the Subject
Interests.

5.9 RENEWALS AND EXTENSIONS OF LEASES. The Production
Payment and the Reversion Interest shall apply to all renewals, extensions and
other similar arrangements (and/or interests therein) of or with respect to any
Lease which is included in the Subject Interests, whether or not such renewals,
extensions or arrangements have heretofore been obtained by Grantor, or
Grantor's predecessors in title, or are hereafter obtained by Grantee as well
as to each new lease covering any minerals covered by one or more of the Leases
if same are taken or acquired while the relevant Lease is in force and effect
or within one year after the lapse thereof.

ARTICLE 6
GRANTOR LIABILITY AND EQUIPMENT

6.1 NO PERSONAL LIABILITY OF GRANTOR. NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED IN THIS ASSIGNMENT, BUT SUBJECT TO THE
MANAGEMENT AGREEMENT, GRANTOR SHALL NOT, BY VIRTUE OF THE PRODUCTION PAYMENT
OR, PRIOR TO REVERSION, THE REVERSION INTEREST RESERVED IN THIS ASSIGNMENT,
PERSONALLY BE RESPONSIBLE FOR PAYMENT OF ANY PART OF THE COSTS, EXPENSES OR
LIABILITIES INCURRED IN CONNECTION WITH EXPLORING, DEVELOPING, OPERATING,
OWNING AND/OR MAINTAINING THE SUBJECT INTERESTS; PROVIDED, HOWEVER, ALL SUCH
COSTS, EXPENSES AND LIABILITIES SHALL, TO THE EXTENT THE SAME RELATE TO PERIODS
AFTER THE EFFECTIVE DATE, NEVERTHELESS BE CHARGED AGAINST THE NET PROFITS
ACCOUNT AS AND TO THE EXTENT HEREIN PERMITTED.

6.2 OWNERSHIP OF EQUIPMENT. The Production Payment does
not include any right, title or interest in and to any of the personal
property, fixtures, structures or equipment now or hereafter placed on, or used
in connection with, the Subject Interests.

ARTICLE 7
TRANSFERS

7.1 ASSIGNMENTS BY GRANTEE. No party may assign or
transfer any right, title or interest in this Assignment, the Subject
Interests, or in any rights or obligations hereunder, without the prior written
consent of the other party; provided, however, that the foregoing shall not
prevent the Grantee from transferring, pledging or mortgaging the Grantee's
interests in the Subject Interests pursuant to and as provided in the Credit
Agreement; and provided, further,

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<PAGE> 16
however, that Grantor shall have the right to transfer, pledge, or mortgage at
any time and from time to time all or any portion of the Production Payment or
Reversion Interest.

ARTICLE 8
SUBORDINATION

8.1 SUBORDINATION. The payment of any and all Production
Payments is expressly subordinated to the extent and in the manner set forth in
this Article 8 to the Superior Obligations. If for any reason any of the
Superior Obligations are not paid when due or are not paid on or before the
maturity thereof, or if there shall occur and be continuing any event which
with the giving of notice or lapse of time or both would constitute a default
or event of default under any instrument or agreement now or hereafter executed
evidencing, in connection with, as security for or providing for the issuance
of any of the Superior Obligations, including, without limitation, a Default or
Event of Default under and as defined in the Credit Agreement, then, unless and
until such event of default or default shall have been cured, or unless and
until the Superior Obligations shall be paid in full, Grantor will not ask for,
sue for, take, demand, receive or accept from Grantee, by set-off or in any
other manner, any payment or distribution on account of the Production Payments
nor present any instrument evidencing the Production Payments for payment
(other than such presentment as may be necessary to prevent discharge of other
liable parties on such instrument). In the event Grantor shall receive any
payment or distribution on account of the Production Payments which Grantor is
not entitled to receive under the provisions of this Article 8, Grantor will
hold any amount so received in trust for the holders of the Superior
Obligations and will forthwith turn over such payment to the holders of the
Superior Obligations in the form received by Grantor (together with any
necessary endorsement) to be applied on the Superior Obligations. Grantor will
not commence any action or proceeding against Grantee to recover all or any
part of the Production Payments or join with any other creditor, unless the
holders of the Superior Obligations shall also join, in bringing any
proceedings against Grantee under any bankruptcy, reorganization, readjustment
of debt, arrangement of debt, receivership, liquidation or insolvency law or
statute of the federal or any state government unless and until all Superior
Obligations shall have been paid in full.

8.2 INSOLVENCY PROCEEDINGS. In the event of any
receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization or arrangement with creditors, adjustment of debt, whether or
not pursuant to bankruptcy laws, the sale of all or substantially all of the
assets, dissolution, liquidation, or any other marshaling of the assets and
liabilities of Grantee, Grantor will at the request of the holders of the
Superior Obligations file any claim, proof of claim, proof of interest or other
instrument of similar character necessary to enforce the obligations of Grantee
in respect of the Production Payments and will hold in trust for the holders of
the Superior Obligations and pay over to the holders of the Superior
Obligations, in the form received (together with any necessary endorsement), to
be applied on the Superior Obligations, any and all monies, dividends or other
assets received in any such proceedings on account of the Production Payments
unless and until the Superior Obligations shall be paid in full. In the event
that Grantor shall fail to take any such action requested by the holders of the
Superior Obligations, the holders of the Superior Obligations, may, as
attorney-in-fact for Grantor take such action on behalf of Grantor, and Grantor
hereby appoints the holders

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<PAGE> 17
of the Superior Obligations as attorney-in-fact for Grantor to demand, sue for,
collect and receive any and all such monies, dividends or other assets and give
acquittance therefor and to file any claim, proof of claim, proof of interest
or other instrument of similar character and to take such other proceedings in
the holders of the Superior Obligations own name or in the name of Grantor as
the holders of the Superior Obligations may deem necessary or advisable for the
enforcement of the provisions of this Article 8; and Grantor will execute and
deliver to the holders of the Superior Obligations such other and further
powers of attorney or other instruments as the holders of the Superior
Obligations may request in order to accomplish the foregoing.

8.3 NO IMPROVEMENTS. None of the obligations,
liabilities, agreements and duties of Grantor under this Article 8 shall be
released, diminished, impaired, reduced or affected by the occurrence of any of
the following at any time or from time to time, even if occurring without
notice to or without the consent of Grantor (any right of Grantor to be so
notified or to require such consent being hereby waived):

(a) any increase or decrease in the amount, or
any change in the manner, place or terms of payment, or any change or extension
for any period, the time of payment of, or renewal or modification of, the
Superior Obligations or any instrument or agreement now or hereafter executed
evidencing, in connection with, as security for, or providing for the issuance
of, any of the Superior Obligations in any manner, or amendment of any other
agreement relating to the Superior Obligations (including provisions
restricting or further restricting payments of the Production Payments);

(b) the sale, exchange or release of all or any
part of any property by whomsoever at any time pledged or mortgaged to secure,
howsoever securing, the Superior Obligations;

(d) exercise or refrain from exercising any
rights against Grantee or others (including Grantor);

(e) any invalidity, deficiency, illegality or
unenforceability of any Superior Obligations or the documents and instruments
evidencing, governing or securing any Superior Obligations, in whole or in
part, any bar by any statute of limitations or other law to recovery on any
Superior Obligations, or any defense or excuse for failure to perform on
account of force majeure, act of God, casualty, impracticability or other
defense or excuse with respect to any Superior Obligations whatsoever;

(f) the taking or accepting by the holders of the
Superior Obligations of any additional security for or subordination to any or
all of the Superior Obligations;

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<PAGE> 18
(g) the insolvency, bankruptcy or disability of
Grantor or Grantee or the filing or commencement of any insolvency proceeding
involving Grantor or Grantee or other proceeding with respect thereto;

(h) any modification of, or waiver of compliance
with, any terms of this Assignment with respect to any part hereto; or

(i) any neglect, delay, omission, failure or
refusal of the holders of the Superior Obligations to take or prosecute any
action against any party in connection with this Article 8.

8.4 FURTHER ASSURANCE. Grantor agrees to execute any and
all other instruments necessary as required by the holders of the Superior
Obligations to subordinate the Production Payment to the Superior Obligations
as herein provided.

8.5 RIGHTS OF MORTGAGEE TO FORCE SALE OF PRODUCTION
PAYMENT. Grantor hereby agrees that in the event an Event of Default has
occurred and is continuing under the Credit Agreement, and the Agent (as
defined in the Credit Agreement) has elected to pursue its remedies thereunder
and is foreclosing upon the Subject Interests owned by the Grantee, Grantor
shall allow the Agent, on Grantor's behalf, to arrange to sell and to sell the
Production Payment concurrently with such of the Subject Interests as are
subject to the foreclosure sale. The proceeds of any such (combined) sale
shall be applied first to repayment of the Superior Obligations until same are
paid in full; second to payment of the Production Payment until same has been
paid in full; third to payment of the Subordinated Note; and, to the extent
there are any excess proceeds of such sale after the foregoing application of
the proceeds, to the owner of the Subject Interests or as otherwise provided by
applicable law.

8.6 ACCEPTANCE. Notice of acceptance of this Article 8
is waived, acceptance on the part of the holders of the Superior Obligations
being conclusively presumed by their request for this Article 8 and delivery of
the same to it.

8.7 ASSIGNMENT OF SUPERIOR OBLIGATIONS. The rights under
this Article 8 may be assigned by the holders of the Superior Obligations in
connection with any assignment or transfer of any or all of the Superior
Obligations.

ARTICLE 9
MISCELLANEOUS

9.1 GOVERNING LAW. The validity, effect and construction
of this Assignment shall be governed by the law of the State of Colorado,
exclusive of the conflict of laws provisions thereof.

9.2 INTENTIONS OF THE PARTIES. Nothing herein contained
shall be construed to constitute either party hereto (under state law or for
tax purposes) the agent of, or in partnership with, the other party. If,
however, the parties hereto are deemed to constitute a

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<PAGE> 19
partnership for federal income tax purposes, the parties elect to be excluded
from the application of Subchapter K, Chapter 1, Subtitle A of the IRC, and
agree not to take any position inconsistent with such election. In addition,
the parties hereto intend that the Production Payment reserved hereby by
Grantor shall at all times be treated as an incorporeal (i.e., a
non-possessory) interest in real property or land and as a production payment
under Section 636 of the IRC, payable out of Gross Proceeds (rather than as a
working or any other interest).

9.3 NOTICES. All notices and other communications
required or permitted under this Assignment shall be in writing and, unless
otherwise specifically provided, shall be delivered personally, by prepaid
telecopy or similar means (with signed confirmed copy to follow by mail in the
manner provided below), or (except for quarterly statements provided for under
Section 4.5 above which may be sent by regular mail) by registered or certified
mail, postage prepaid, or by delivery service for which a receipt is obtained,
at the following addresses for Grantor and Grantee, and shall be deemed
delivered on the date of receipt.

If to Grantor:

HS Resources, Inc.
1 Maritime Plaza, 15th Floor
San Francisco, California 94111
Attention: Chief Financial Officer
Telephone: (415) 433-5795
Fax: (415) 433-5811

with a copy to:

HS Resources, Inc.
1999 Broadway, Suite 3600
Denver, Colorado 80202
Attention: General Counsel
Telephone: (303) 296-3600
Fax: (303) 296-3601

If to Grantee:

Wattenberg Resources Land, L.L.C.
c/o David G. Stolfa, Manager
3300 South Columbine Circle
Englewood, Colorado 80110
Telephone: (303) 762-9990
Fax: (303) 762-9992

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<PAGE> 20
with a copy to:

The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
New York, New York 10081
Attention: Rick Betz
Telephone: (212) 552-2680
Fax: (212) 552-1687

Either party may specify an alternative address by giving notice to the other
party, in the manner provided in this Section 9.3.

9.4 FURTHER ASSURANCES. Grantor and Grantee agree to
execute and deliver to the other all such other and additional instruments,
notices, division orders, transfer orders and other documents and to do all
such other and further acts and things as may be necessary to more fully and
effectively grant, convey and assign to Grantee and to reserve to Grantor the
rights, titles, interests and estates conveyed to Grantee and reserved by
Grantor hereby or intended to be so conveyed and reserved.

9.5 COUNTERPARTS. This Assignment may be executed in
multiple originals, all of which are identical except that, for the convenience
of recording, counterparts hereof which are being recorded include only those
certain portions of Exhibit A and Exhibit B which include descriptions of
properties located in the recording jurisdiction in which the particular
counterpart is being recorded. All of such counterparts together shall
constitute one and the same instrument.

9.6 BINDING EFFECT. All the covenants and agreements of
Grantor and Grantee herein contained shall be deemed to be covenants running
with Grantor's and Grantee's interest in the Subject Interests and the lands
affected thereby. All of the provisions hereof shall inure to the benefit of,
and shall be binding upon, each of the parties hereto and their respective
successors and, subject to the provisions of this Section 9.6, their assigns.
Any sale, conveyance, assignment, sublease or other transfer of the Subject
Interests, or any interest therein or any part thereof, shall provide that the
assignee assume all of the obligations of the assignor with respect to the
interest so transferred, and unless the non-assigning party otherwise expressly
consents in writing, the assigning party shall also remain liable for the
discharge of its obligations.

9.7 PARTITION. Grantor and Grantee acknowledge that
Grantor and Grantee have no right or interest that would permit either to
partition any portion of the Subject Interests, and Grantor and Grantee waive
any such right.

9.8 SPECIFIC PERFORMANCE. In addition to any other
remedy which Grantor or Grantee may enjoy under this Agreement, at law or in
equity, Grantor and Grantee shall each have the right to seek and enforce the
remedy of specific performance by the other party of its obligations under this
Agreement.

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<PAGE> 21
9.9 REPRESENTATIONS. Each of Grantee and Grantor
represent and warrant to the other that: (i) it has all necessary power and
authority to execute, deliver and perform its obligations under this Assignment
and that its execution, delivery and performance of this Assignment have been
duly authorized by all necessary action on its part and this Assignment
constitutes its legal, valid and binding obligation, enforceable in accordance
with its terms; (ii) neither the execution and delivery of this Assignment, nor
compliance with the terms and provisions hereof will conflict or result in a
breach of, or require any consent under, its respective charter or bylaws or
company agreement, or any applicable law or regulation, or any order, writ,
injunction or decree of any court or governmental authority or agency, or any
agreement or instrument by which it is bound, or to which it is subject, or
constitute a default under any such agreement or instrument, or result in the
creation or imposition of any lien or security interest upon any of its
revenues or assets; and (iii) no authorizations, approvals or consents of, and
no filings or registrations with, any governmental or regulatory authority or
agency are necessary for its execution, delivery or performance of this
Assignment, or for the validity or the enforceability hereof, except for the
recording and filing of the Assignment in the appropriate county records.

9.10 EFFECTIVE DATE. This Assignment shall become
effective for all purposes as of 7:00 a.m. (at the respective locations of the
Subject Interests) on March 29, 1996 (the "EFFECTIVE DATE").

[THIS SPACE INTENTIONALLY LEFT BLANK]

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<PAGE> 22
IN WITNESS WHEREOF, the parties have executed this Assignment
effective as of the Effective Date.

GRANTOR:

HS RESOURCES, INC.
Attest:

By: /s/ JAMES M. PICCONE By:/s/ JAMES E. DUFFY
Name: James M. Piccone Name: James E. Duffy
Title: Secretary Title: Vice President

GRANTEE:

WATTENBERG RESOURCES LAND, L.L.C.
By its Manager, David G. Stolfa

By: /s/ DAVID G. STOLFA
David G. Stolfa, Manager

This Assignment was prepared by:

J. Hovey Kemp
Davis, Graham & Stubbs LLP
Suite 1200
1225 New York Avenue, N.W.
Washington, DC 20005

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<PAGE> 23
STATE OF COLORADO )
CITY AND ) ss.
COUNTY OF DENVER )

The foregoing instrument was acknowledged before me this 26th
day of March, 1996, by James E. Duffy, as Vice President of HS Resources, Inc.,
a Delaware corporation, on behalf of the corporation.

Witness my hand and official seal.

/s/ COLLEEN RICHARDS
------------------------------------------
Notary Public

My commission expires: 3-26-98
-------------------
(SEAL)

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

The foregoing instrument was acknowledged before me this 26th
day of March, 1996 by David G. Stolfa, in his capacity as Manager of Wattenberg
Resources Land, L.L.C., a Delaware limited liability company, on behalf of the
company.

Witness my hand and official seal.

/s/ COLLEEN RICHARDS
------------------------------------------
Notary Public

My commission expires: 3-26-98
-------------------
(SEAL)

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<PAGE> 24
SCHEDULE 1

PAYMENT SCHEDULE OF THE PRODUCTION PAYMENT

Implicit issue price = $7,200,000.00

Interest rate = 8.5%

<PAGE> 1
EXHIBIT 99.11

MANAGEMENT AGREEMENT

This Management Agreement (the "AGREEMENT"), dated March 26,
1996, but effective as of 7:00 a.m. (M.S.T.) on March 29, 1996 (the "EFFECTIVE
DATE"), is by and between Wattenberg Resources Land, L.L.C., a Delaware limited
liability company (the "COMPANY") and HS Resources, Inc., a Delaware
corporation ("HS" or "MANAGER") (collectively, the "PARTIES").

RECITALS

A. The Company owns certain working interests and
overriding royalty interests in oil and gas leases and wells, all as identified
on the attached Exhibits A and B, respectively (collectively, the "ASSETS");

B. HS has the resources and expertise necessary to
operate and manage the Assets and to provide management services to the Company
as set forth in this Agreement (collectively, the "SERVICES" as defined in
Article 2 below); and

C. The Company desires to retain Manager to provide such
Services and Manager desires to provide such Services, all pursuant to the
terms of this Agreement.

AGREEMENT

In consideration for the Parties entering other agreements
concurrently herewith and the mutual promises hereunder, the Parties agree as
follows:

ARTICLE 1
DEFINITIONS

All capitalized terms used herein without definition shall
have the meaning given in the (i) Wellbore Assignment of Oil and Gas Leases
with Reservations of Production Payment and Reversion Interest dated as of the
Effective Date, between HS, its wholly-owned subsidiary, Orion Acquisition,
Inc. ("ORION") and the Company (the "ASSIGNMENT"), (ii) Purchase and Sale
Agreement dated as of the Effective Date, by and between HS, Orion and the
Company (the "Purchase Agreement"), or (iii) Credit Agreement dated as of the
Effective Date, by and between the Company (as Borrower) and The Chase
Manhattan Bank, N.A., as agent (the "AGENT") and the banks signatory thereto
(the "BANKS") (the "CREDIT AGREEMENT"), as appropriate.
<PAGE> 2
ARTICLE 2
SERVICES

2.1 SERVICES. Subject to Section 2.2 hereof, the
constraints of applicable operating and other agreements to which all or any
portion of the Assets are now or hereafter subject and the other terms of this
Agreement, Manager agrees to and shall have the exclusive right and authority
to manage the Assets for and on behalf of the Company, such management to
include, without limitation, performance of the following management functions
(the "SERVICES"):

(a) GENERAL. Operate, manage, and maintain the
Assets.

(b) GATHERING, TRANSPORTATION AND MARKETING.
Gather, process, condition, market, deliver, transport or sell (or cause to be
gathered, processed, conditioned, marketed, delivered, transported or sold)
gas, oil and related hydrocarbons produced by the Company from the Assets, and
pay or cause to be paid all royalties, production payments (including, without
limitation, the Production Payment), net profits interests and all other such
payment obligations arising in connection with the Assets or the production of
hydrocarbons therefrom; provided, however, that Manager shall obtain the
approval of the Company to enter into any sales or marketing agreements which
have terms of one year or greater.

(c) COMPLIANCE WITH LAWS. Operate the Assets in
compliance in all material respects with all federal, state (including any duly
constituted federal or state regulatory body), and local laws, ordinances,
rules, regulations and orders applicable to the Assets.

(d) COMPLIANCE WITH ENVIRONMENTAL LAWS. Operate
the Assets in material compliance with all environmental laws and to implement
and complete, or cause to be implemented and completed, any remedial, removal
or other response action required on the Assets under applicable environmental
laws, with such actions to be implemented and completed in accordance with
customary industry practices and in compliance with applicable environmental
laws.

(e) NOTICE OF INVESTIGATIONS. Inform the Company
of any pending or threatened action or investigation of which Manager receives
written notice and which Manager believes in good faith could have a material
adverse effect on the Assets, including all actions initiated or investigations
threatened by a third party or governmental authority under applicable
environmental laws.

(f) HAZARDOUS WASTES. Manage and dispose of all
solid and/or hazardous wastes generated in connection with the operation of the
Assets in material compliance with applicable environmental laws and to
initiate and complete any remedial, removal or other response actions required
under applicable environmental laws in response to any release of a hazardous
substance on the Assets.

(g) THIRD PARTY SERVICES. Employ or contract for
the services of any Person required by Manager, in its reasonable discretion,
to assist Manager in the performance

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<PAGE> 3
of any of its duties and responsibilities under this Agreement, including,
without limitation, any legal, accounting, geological, geophysical,
engineering, operating and other services and advice as Manager deems
advisable, in its reasonable discretion, from any Person.

(h) PAYMENT OF OBLIGATIONS. Pay and perform all
obligations of the Company which relate to the Assets, including, without
limitation, the Production Payment, the Management Fee, the payment to HS, on
behalf of the Company, of working interest expenses attributable to the Assets
and of all money to which it becomes entitled pursuant to the Assignment, and
payment to third parties, on behalf of the Company, of working interest
expenses attributable to the Assets.

(i) INSURANCE. Maintain insurance with respect
to the Assets as is reasonable and customary in the industry, and with respect
to all such insurance, cause the Company to be named as an additional insured
party on all such insurance policies.

(j) FILINGS; TAX RETURNS. Prepare, execute and
file and record, when appropriate or required, all tax returns relating to the
LLC, and all assignments and other instruments, permits, applications, requests
or regulatory documents or instruments relating to the Assets.

(k) ACCOUNTS. Establish and maintain all bank
accounts, books and records, capital accounts, the Net Profits Account and
other accounts as are required or convenient to operate the Assets (including
any accounts required under the Credit Agreement, which the Manager will
maintain on the Company's behalf).

(l) REPORTING.

(i) Perform all accounting and reporting
as required by the Assignment, the Purchase Agreement, the Credit Agreement,
the Limited Liability Company Agreement for the Company dated effective as of
the Effective Date, and any other agreement relating to the Assets and to which
the Company is subject; provided, however, that Manager shall not adopt an
entitlement accounting method for gas imbalances that causes the parties
subject to the imbalance to be treated as a partnership for federal income tax
purposes.

(ii) All accounting and reporting shall be
performed in accordance with the provisions of this Agreement, consistently
applied. Such accounting and reporting may initially be performed based on
estimated figures, and subsequently based on actual figures. Beginning with
the partial calendar quarter commencing on the Effective Date, and every
applicable calendar quarter thereafter, Manager shall prepare and furnish to
the Company within 60 days after the end of each calendar quarter a Quarterly
Report. "QUARTERLY REPORT" shall mean a report detailing gas production and
sales from the Assets attributable to the Wells for the most recent calendar
quarter. Such Quarterly Report shall include (1) an accounting of the Net
Profits Account, including a summary of all credits and debits, (2) an
accounting of the Company's share of total gas sales and production
attributable to the Assets and produced from the Wells, and (3) all other
information necessary and sufficient for the

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<PAGE> 4
Company to calculate and verify Expense Amounts determined in accordance with
this Agreement.

(iii) On or before March 15th of each year,
Manager shall furnish to the Company a report (referred to herein as the
"ANNUAL REPORT"), based upon mutually agreeable procedures, of (1) the Net
Profits Account, including all credits and debits, (2) the Company's share of
total gas sales and production attributable to the Assets and produced from the
Wells, and (3) all other information necessary and sufficient for the Company
to calculate and prepare its tax return for the preceding calendar year.

(m) [RESERVED]

(n) CONTRACTS.

(i) Manage all contracts relating to the
Assets to which the Company is or becomes a party (except for the Purchase
Agreement).

(ii) Negotiate, execute and deliver all
contracts and agreements and amendments to existing contracts and agreements
affecting the Assets which Manager believes are necessary or desirable in
connection with the ownership, development, operation, production and
maintenance of the Assets or to perform any of the Services hereunder;
provided, however, that Manager shall obtain the approval of the Company to
enter into any such contract or agreement which has a cost exceeding $25,000
per well (or per separately owned formation within a well), net to the interest
of the Company. Unless Manager obtains the prior approval of the Company,
Manager shall not intentionally undertake or approve any of the Services
described in this Section 2.1(n)(ii) if any such Services will exceed by more
than 10% the cost levels or estimates upon which the Company's approval was
based; provided that if Manager should decide to conduct such Services in
excess of permitted cost levels, in circumstances other than to remedy an
emergency situation, Manager shall be personally responsible for all
expenditures in excess of the permitted levels.

(iii) Negotiate, execute and deliver all
contracts and agreements relating to arrangements to monetize any available tax
credits pertaining to the Assets under Section 29 of the Internal Revenue Code
of 1986, as amended, including without limitation arrangements whereby Manager
conveys on behalf of the Company (or acquires from the Company then reconveys)
to a third party purchaser such portion of the Subject Interests as may be
necessary to consummate any such arrangement, similar to those transactions
which Manager has previously entered into with affiliates of FMR Corporation
and State Street Bank and Trust Company; it being understood that the cash
proceeds generated as a result of any such monetization arrangements (cash
proceeds other than from the sale of the oil and gas properties) shall not be
considered cash flow pursuant to Sections 8.09 and 9.20 of the Credit
Agreement, but rather shall belong to the Manager.

(o) REVENUES. Receive and collect all revenues
and income attributable to the Assets, including, without limitation, all Gross
Proceeds and Other Income.

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<PAGE> 5
(p) DEFENSE OF CLAIMS. Assume the defense of,
handle, investigate and/or settle all claims, demands, causes of action,
lawsuits, mediations, arbitrations and other forms of dispute resolutions and
other proceedings which relate in any way to the Assets or the Services
performed pursuant to this Agreement; provided, however, that Manager shall
obtain the approval of the Company to settle any claim, demand, cause of action
or other proceeding if the cost exceeds $25,000 per well, net to the interest
of the Company.

(q) CREDIT AGREEMENT AND HEDGING ARRANGEMENTS.
Negotiate, support (in accordance with the terms of Section 5.1 hereof) and
perform on behalf of the Company the covenants and agreements contained in the
Loan Documents (as same may be amended from time to time) or in any agreement
relating to any Hedging Obligation; provided, however, that consistent with
Section 5.1, Manager shall have no personal liability whatsoever for any
payment, repayment or indemnification obligations of the Company under the Loan
Documents or any Hedging Obligation.

(r) OTHER ACTS. All other acts and things as are
necessary to carry out Manager's responsibilities under this Agreement.

If Manager is not at any time the operator of a particular portion of the
Assets, the obligations of Manager under this Agreement with respect to such
portion of the Assets shall be construed to require only that Manager use
reasonable best efforts to cause the operator of such portion of the Assets to
take such actions or render such performance within the constraints of the
applicable contracts.

2.2 [RESERVED]

2.3 OTHER AGREEMENTS. The Company hereby covenants and
agrees with Manager as follows:

(a) All revenues and income collected by Manager
pursuant to Section 2.1(o) and amounts payable by the Company pursuant to
Section 2.2(b) shall be used by Manager to pay the items specified and in the
order set forth in Section 8.09 of the Credit Agreement.

(b) Any Person is entitled to rely on this
Agreement as granting to Manager the power and authority to manage the Assets
and to perform the Services on behalf of the Company. In order to allow
Manager to carry out its duties and to exercise its powers hereunder, the
Company has executed a Memorandum of Management Agreement and Power of Attorney
(the "POWER OF ATTORNEY") in the form set forth on Schedule 1. The Company
shall execute such counterparts of the Power of Attorney as are necessary to
carry out the purpose of this Agreement and to evidence that Manager has the
power and authority to manage the Assets and to perform the Services on behalf
of the Company. The Company and Manager acknowledge that, for purposes of
administrative convenience, certain limitations on the authority of Manager
which are set forth in this Agreement are not set forth in the Power of
Attorney, and that this circumstance shall not result in any expansion in the
authority of Manager. The

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<PAGE> 6
Company shall, for all purposes of this Agreement, be deemed to have elected to
participate in any actions properly taken by Manager in accordance with the
Power of Attorney.

ARTICLE 3
PERFORMANCE OF SERVICES

Manager agrees to use reasonable best efforts to perform all
of the Services in a reasonable prudent and timely manner consistent with good
oil field and business practices and with any and all agreements to which the
Assets are subject.

ARTICLE 4
FEES AND EXPENSES

4.1 MANAGEMENT FEE. Commencing on the Effective Date and
continuing during the term of this Agreement for a period of ten years from the
Effective Date (and thereafter subject to the mutual agreement of the parties),
the Company shall pay Manager a turnkey fee of $1,600,000 per year (subject to
a pro rata downward reversion to reflect Wells no longer owned by the Company)
(the "MANAGEMENT FEE"), payable $400,000 per quarter in arrears on each
Quarterly Date as provided in Section 8.09 of the Credit Agreement. The
Management Fee is intended to (i) reimburse Manager for all of its corporate
level internal administrative expenses incurred in managing the Assets, (ii)
cover all COPAS overhead charges payable to Manager (and any third-party
operator of a Well) with respect to the Assets under any applicable operating
or other agreements (any such third-party COPAS charges to be made in
accordance with Section 2.1(h) as part of the Company's obligations relating to
the Assets), (iii) pay, with respect to any Well which is not covered by an
operating agreement, overhead charges pertaining to any such Well, (iv) pay all
other operating costs (exclusive of production related taxes) attributable to
the Wells, and (v) reimburse Manager for all cost and expenses in performing
the Services other than capital expenditures set forth in the Budget delivered
pursuant to the Credit Agreement or otherwise approved by the Company ("CAPITAL
EXPENDITURES"). If the Company does not have sufficient proceeds to pay the
Management Fee in the order provided in Section 8.09 of the Credit Agreement on
any Quarterly Date, the Management Fee will be deferred until such Quarterly
Date in which there are sufficient proceeds to pay it pursuant to the terms of
Section 8.09 of the Credit Agreement. Manager agrees to subordinate its
Management Fee to the Superior Obligations (as defined in the Assignment) to
the same extent as the terms of the subordination of the Production Payment
contained in the Assignment and such provisions are incorporated herein by
reference.

4.2 EXPENSES ATTRIBUTABLE TO THE ASSETS. As the owner of
the Assets, the Company is obligated to pay the expenses associated with the
Assets and it is recognized and agreed that Manager, in consideration of the
Management Fee, hereby assumes such obligations and agrees to pay them except
for the Capital Expenditures and production related taxes. During each Payment
Period the Company may be required to fund the Expense Amount. In connection
with providing the Services, if and to the extent that Manager pays or advances
expenses associated with the Assets on behalf of the Company for Capital
Expenditures, the Company

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<PAGE> 7
agrees to reimburse Manager for such expenses as follows: Within 60 days
following the end of each Payment Period, HS shall invoice the Company for that
portion of the Expense Amount paid by Manager on behalf of the Company (the
"REIMBURSABLE EXPENSE AMOUNT").

(a) The Company agrees to pay each Reimbursable
Expense Amount to HS within 15 days following its receipt of an invoice
therefor from HS. On any past due Reimbursable Expense Amount, the Company
agrees to pay interest at the Agreed Rate (defined below) from the date on
which such Reimbursable Expense Amount is due until the date on which such
Reimbursable Expense Amount is paid. The term "AGREED RATE" shall mean the
annual rate of interest equal to the lesser of (i) the prime rate in effect at
The Chase Manhattan Bank, N.A. (or its successor, or if such bank no longer
exists, the U.S. prime rate generally recognized in the financial media from
time to time) and (ii) the maximum rate of interest allowed by applicable law.

(b) Each invoice delivered by HS to the Company
pursuant to this Section 4.2 shall include the calculation of the expenses
which are the subject thereof, together with supporting documentation.

ARTICLE 5
SUPPORT AND INDEMNIFICATION

5.1 SUPPORT AND NON-PAYMENT OBLIGATIONS UNDER CREDIT
AGREEMENT. Consistent with the obligation of Manager to provide the Services
(and specifically those Services covered by Section 2.1(r)), Manager agrees to
perform, on behalf of the Company, all of the covenants and agreements of the
Company under the Credit Agreement and any agreement pertaining to any Hedging
Obligation; provided, however, that Manager shall not be personally liable in
any way for the Company's payment or repayment of any principal, interest, fees
or expenses due to the Agent or the Banks under the Credit Agreement or for the
Company's indemnification obligations thereunder except as provided in the
Agency Agreement of even date among Manager, the Company and others. It is
specifically acknowledged by the Parties that, subject to the foregoing
proviso, the intent of this Section 5.1 is that the Agent and the Banks shall
receive the benefits and are third-party beneficiaries of the foregoing
contractual commitments.

5.2 INDEMNIFICATIONS RELATING TO THIS AGREEMENT. Manager
shall defend, indemnify and hold harmless the Company, and its members;
officers; partners; directors; employees; agents; administrators and
representatives; including the officers, employees, agents, administrators and
representatives of such members; from and against all Losses which arise
directly or indirectly from or in connection with Manager's breach of its
duties or obligations under this Agreement; provided Manager's indemnity
obligations under the terms of this Agreement shall not extend to any Losses
which arise or result directly or indirectly from or in connection with the
Company's gross negligence or willful misconduct.

5.3 INDEMNIFICATION RELATING TO ENVIRONMENTAL MATTERS.
Manager shall defend, indemnify and hold harmless the Company, and its members;
officers; partners;

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<PAGE> 8
directors; employees; agents; administrators and representatives; including the
officers, employees, agents, administrators and representatives of such
members; from and against all Losses which arise directly or indirectly from or
in connection with liabilities involving environmental matters, to the extent
that HS, or its successors and assigns, is jointly liable with the Company and
such environmental matters are attributable to the period of time during which
this Agreement is in force and effect. HS shall be responsible for and liable
for all costs, expenses, liabilities and obligations accruing or relating to
the owning, operating, or maintaining of the Assets or the producing,
transporting and marketing of hydrocarbons from the Assets relating to periods
before the Effective Date.

5.4 CERTAIN TAX MATTERS. During the term of this
Management Agreement, should the Company become liable for any income tax that
cannot be paid out of available cash flow from the Assets attributable to the
Company's interests therein, Manager shall make a loan to the Company in an
amount sufficient to satisfy such tax obligation and on such terms as are
satisfactory to the Manager, the Agent and the Banks; provided, however, that
such loan shall be subordinated to the Superior Obligations and the Production
Payment.

ARTICLE 6
ASSIGNMENT

This Agreement and the rights, authority, duties and
obligations of the parties hereto may not be assigned by either party without
the prior written consent of the other party, except that the Company may grant
a security interest in this Agreement to secure its obligations under the
Credit Agreement.

ARTICLE 7
TERM / TERMINATION

7.1 TERM. This Agreement shall be effective for the
period from the Effective Date until the Option Effective Date under the
Option; provided, however, that the Company may terminate this Agreement at any
time after December 31, 1996 upon 90 days prior written notice to Manager.
After the Option Effective Date (assuming it has not been previously
terminated), this Agreement shall continue on a year to year basis, but may be
terminated by either party upon 90 days prior written notice to the other
party.

7.2 TERMINATION. If Manager is in breach of its
obligations set forth in Article 3, and the Company is materially damaged as a
result of such breach, the Company shall so inform Manager in writing of such
breach (an "EVENT OF DEFAULT"). Thereafter, Manager shall have 30 days in
which to cure the Event of Default or such longer period of time as is
reasonably necessary under the circumstances so long as Manager undertakes to
commence the cure of such Event of Default within such 30-day period and such
cure is diligently prosecuted thereafter. If Manager does not cure the Event
of Default within that time frame, the Company, at its sole option and
discretion, may terminate this Agreement, and retain any legal and equitable
rights and remedies it may have against Manager on account of such breach.

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<PAGE> 9

ARTICLE 8
MISCELLANEOUS

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

8.2 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the law of the State of Colorado without
reference to the conflict of laws provisions thereof.

8.3 NOTICES. All notices hereunder shall be sufficiently
given for all purposes hereunder if in writing and delivered personally, sent
by documented overnight delivery service or, to the extent receipt is
confirmed, by United States mail, telecopy, telefax or other electronic
transmission service to the appropriate address as set forth below.

If to Manager:

HS Resources, Inc.
1 Maritime Plaza, 15th Floor
San Francisco, California 94111
Attention: Chief Financial Officer
Telephone: (415) 433-5795
Fax: (415) 433-5811

with a copy to:

HS Resources, Inc.
1999 Broadway, Suite 3600
Denver, Colorado 80202
Attention: General Counsel
Telephone: (303) 296-3600
Fax: (303) 296-3601

If to Company:

Wattenberg Resources Land, L.L.C.
c/o David G. Stolfa, Manager
3300 South Columbia Circle
Englewood, Colorado 80110
Telephone: (303) 762-9990
Fax: (303) 762-9992

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<PAGE> 10
with a copy to:

The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
New York, New York 10081
Attention: Rick Betz
Telephone: (212) 552-2680
Fax: (212) 552-1687

or at such other address and to the attention of such other person as such
Party may designate by written notice to the other Party.

8.4 APPROVALS. Notwithstanding anything herein provided
to the contrary, the Company shall be deemed to have given its approval to
Manager for any matter requiring the Company's approval if the Company fails to
deny its approval to Manager within 7 days of receipt from Manager of a request
for approval under this Agreement, or within such shorter time period if the
situation requires Manager to act before the 7-day period has expired and
Manager notifies Company of such shorter time frame.

8.5 BINDING EFFECT. Subject to Article 6 hereof, this
Agreement shall be binding upon and inure to the benefit of the Parties and
their respective successors and assigns. Further, this Agreement, and the
rights and obligations hereunder, shall be a covenant running with the lands
attributable to the Assets.

8.6 AMENDMENTS. This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by the
Parties. Any party hereto may, only by an instrument in writing, waive
compliance by another Party with any term or provision of this Agreement on the
part of such other Party to be performed or complied with. The waiver by any
Party of a breach of any term or provision of this Agreement shall not be
construed as a waiver of any subsequent breach.

8.7 FULFILLMENT OF INTENT. If any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced
by any rule of law or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so long as
the economic or legal substance of the transactions contemplated hereby is not
affected in any adverse manner to any Party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
Parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the Parties as closely as possible in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to
the extent possible.

8.8 REMEDIES. In addition to any other remedy which the
parties may enjoy under this Agreement, at law or in equity, the parties shall
have the right to seek and enforce the remedy of specific performance by the
other party of its obligations under this Agreement.

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<PAGE> 11
8.9 SURVIVAL. The provisions of Section 2.2(b) and of
Article 5 shall survive the termination of this Agreement for any reason.

8.10 NO PARTNERSHIP. This Agreement is not intended to
create, and shall not be construed to create, a relationship of partnership or
an association for profit between Manager and the Company.

8.11 RECORDATION. The Parties agree not to record this
Management Agreement.

[THIS SPACE INTENTIONALLY LEFT BLANK]

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<PAGE> 12
IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date first above written, but effective as of the Effective Date.

WATTENBERG RESOURCES LAND, L.L.C.

By: Its Manager, David G. Stolfa

By: /s/ DAVID G. STOLFA
David G. Stolfa, Manager

HS Resources, Inc.

By: /s/ JAMES E. DUFFY
Name: James E. Duffy
Title: Vice President

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<PAGE> 13
SCHEDULE 1

MEMORANDUM OF MANAGEMENT AGREEMENT AND POWER OF ATTORNEY

This MEMORANDUM OF MANAGEMENT AGREEMENT AND POWER OF ATTORNEY
(this "POWER OF ATTORNEY") is dated as of March 26, 1996 and is effective as of
7:00 a.m. (M.S.T.) on March 29, 1996 (the "EFFECTIVE DATE"), and is executed by
and between Wattenberg Resources Land, L.L.C., a Delaware limited liability
company having an office c/o David G. Stolfa, Manager, 3300 South Columbia
Circle, Englewood, Colorado 80110 (the "COMPANY") and HS Resources, Inc., a
Delaware corporation having an office at 1999 Broadway, Suite 3600, Denver,
Colorado 80202 (the "MANAGER") (collectively, the "PARTIES").

The Parties hereby give notice that they entered into a
Management Agreement dated as of the Effective Date (the "AGREEMENT"), whereby
the Company contracted with Manager for Manager to perform certain operating
and management services relative to the lands and leases identified on Exhibit
A and to the wells identified on Exhibit B (collectively, the "ASSETS" as
further defined in that Purchase and Sale Agreement dated as of the Effective
Date between the Parties (the "PURCHASE AGREEMENT")).

Manager has agreed to manage the Assets for and on behalf of
the Company, by performing certain management services, as limited and
described in more detail in the Agreement (the "SERVICES").

Effective as of the Effective Date, the Company does hereby
revoke all prior powers of attorney granted in connection with the following
matters and does hereby appoint and constitute Manager as its duly authorized
Attorney-in-Fact with power and authority for the Company and in its name,
place and stead to execute, acknowledge and deliver such instruments as Manager
deems necessary or convenient in connection with the following matters relating
to real or personal property constituting the Assets:

(a) Operate, manage, and maintain the Assets.

(b) Gather, process, condition, market, deliver,
transport or sell (or cause to be gathered, processed,
conditioned, marketed, delivered, transported or sold) gas,
oil and related hydrocarbons produced by the Company from the
Assets, and pay or cause to be paid all royalties, production
payments (including, without limitation, the Production
Payment), net profits interests and all other such payment
obligations arising in connection with the Assets or the
production of hydrocarbons therefrom; provided, however, that
Manager shall obtain the approval of the Company to enter into
any sales or marketing agreements which have terms of one year
or greater.

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<PAGE> 14
(c) Operate the Assets in compliance in all
material respects with all federal, state (including any duly
constituted federal or state regulatory body), and local laws,
ordinances, rules, regulations and orders applicable to the
Assets.

(d) Operate the Assets in material compliance
with all environmental laws and to implement and complete, or
cause to be implemented and completed, any remedial, removal
or other response action required on the Assets under
applicable environmental laws, with such actions to be
implemented and completed in accordance with customary
industry practices and in compliance with applicable
environmental laws.

(e) Inform the Company of any pending or
threatened action or investigation of which Manager receives
written notice and which Manager believes in good faith could
have a material adverse effect on the Assets, including all
actions initiated or investigations threatened by a third
party or governmental authority under applicable environmental
laws.

(f) Manage and dispose of all solid and/or
hazardous wastes generated in connection with the operation of
the Assets in material compliance with applicable
environmental laws and to initiate and complete any remedial,
removal or other response actions required under applicable
environmental laws in response to any release of a hazardous
substance on the Assets.

(g) Employ or contract for the services of any
Person required by Manager, in its reasonable discretion, to
assist Manager in the performance of any of its duties and
responsibilities under this Agreement, including, without
limitation, any legal, accounting, geological, geophysical,
engineering, operating and other services and advice as
Manager deems advisable, in its reasonable discretion, from
any Person.

(h) Pay and perform all obligations of the
Company which relate to the Assets, including, without
limitation, the Production Payment, the Management Fee, the
payment to HS, on behalf of the Company, of working interest
expenses attributable to the Assets and of all money to which
it becomes entitled pursuant to the Assignment, and payment to
third parties, on behalf of the Company, of working interest
expenses attributable to the Assets.

(i) Maintain insurance with respect to the Assets
as is reasonable and customary in the industry, and with
respect to all such insurance, cause the Company to be named
as an additional insured party on all such insurance policies.

(j) Prepare, execute and file and record, when
appropriate or required, all tax returns relating to the
Company, and all assignments and other instruments, permits,
applications, requests or regulatory documents or instruments
relating to the Assets.

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<PAGE> 15

(k) Establish and maintain all bank accounts,
books and records, capital accounts, the Net Profits Account
and other accounts as are required or convenient to operate
the Assets (including any accounts required under the Credit
Agreement, which the Manager will maintain on the Company's
behalf).

(l) (i) Perform all accounting and reporting
as required by the Assignment, the Purchase Agreement,
the Credit Agreement, the Operating Agreement for the
Company dated effective as of the Effective Date, and
any other agreement relating to the Assets and to
which the Company is subject; provided, however, that
Manager shall not adopt an entitlement accounting
method for gas imbalances that causes the parties
subject to the imbalance to be treated as a
partnership for federal income tax purposes.

(ii) All accounting and reporting shall be
performed in accordance with the provisions of this
Agreement, consistently applied. Such accounting and
reporting may initially be performed based on
estimated figures, and subsequently based on actual
figures. Beginning with the partial calendar quarter
commencing on the Effective Date, and every applicable
calendar quarter thereafter, Manager shall prepare and
furnish to the Company within 60 days after the end of
each calendar quarter a Quarterly Report. "QUARTERLY
REPORT" shall mean a report detailing gas production
and sales from the Assets attributable to the Wells
for the most recent calendar quarter. Such Quarterly
Report shall include (1) an accounting of the Net
Profits Account, including a summary of all credits
and debits, (2) an accounting of the Company's share
of total gas sales and production attributable to the
Assets and produced from the Wells, and (3) all other
information necessary and sufficient for the Company
to calculate and verify Expense Amounts determined in
accordance with this Agreement.

(iii) On or before March 15th of each year,
Manager shall furnish to the Company a report
(referred to herein as the "ANNUAL REPORT"), based
upon mutually agreeable procedures, of (1) the Net
Profits Account, including all credits and debits, (2)
the Company's share of total gas sales and production
attributable to the Assets and produced from the
Wells, and (3) all other information necessary and
sufficient for the Company to calculate and prepare
its tax return for the preceding calendar year.

(m) [Reserved]

(n) (i) Manage all contracts relating to the
Assets to which the Company is or becomes a party
(except for the Purchase Agreement).

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<PAGE> 16
(ii) Negotiate, execute and deliver all
contracts and agreements and amendments to existing
contracts and agreements affecting the Assets which
Manager believes are necessary or desirable in
connection with the ownership, development, operation,
production and maintenance of the Assets or to perform
any of the Services hereunder; provided, however, that
Manager shall obtain the approval of the Company to
enter into any such contract or agreement which has a
cost exceeding $25,000 per well (or per separately
owned formation within a well), net to the interest of
the Company. Unless Manager obtains the prior
approval of the Company, Manager shall not
intentionally undertake or approve any of the Services
described in this Section 2.1(n)(ii) if any such
Services will exceed by more than 10% the cost levels
or estimates upon which the Company's approval was
based; provided that if Manager should decide to
conduct such Services in excess of permitted cost
levels, in circumstances other than to remedy an
emergency situation, Manager shall be personally
responsible for all expenditures in excess of the
permitted levels.

(iii) Negotiate, execute and deliver all
contracts and agreements relating to arrangements to
monetize any available tax credits pertaining to the
Assets under Section 29 of the Internal Revenue Code
of 1986, as amended, including without limitation
arrangements whereby Manager conveys on behalf of the
Company (or acquires from the Company then reconveys)
to a third party purchaser similar to those
transactions which Manager has previously entered into
with affiliates of FMR Corporation and State Street
Bank and Trust Company; it being understood that the
cash proceeds generated as a result of any such
monetization arrangements (other than cash proceeds
from the sale of the oil and gas properties) shall not
be considered cash flow pursuant to Sections 8.09 and
9.20 of the Credit Agreement, but rather shall belong
to the Manager.

(o) Receive and collect all revenues and income
attributable to the Assets, including, without limitation, all
Gross Proceeds and Other Income, income attributable to the
Assets for the purposes of this Section 2.1(o), however,
submitting invoices and sufficient supporting documentation to
the Company for the Expense Amounts is a required obligation
of Manager under this Agreement.

(p) Assume the defense of, handle, investigate
and/or settle all claims, demands, causes of action, lawsuits,
mediations, arbitrations and other forms of dispute
resolutions and other proceedings which relate in any way to
the Assets or the Services performed pursuant to this
Agreement; provided, however, that Manager shall obtain the
approval of the Company to settle any claim, demand, cause of
action or other proceeding if the cost exceeds $25,000 per
well, net to the interest of the Company.

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<PAGE> 17
(q) Negotiate, support (in accordance with the
terms of Section 5.1 hereof) and perform on behalf of the
Company the covenants and agreements contained in the Loan
Documents (as same may be amended from time to time) or in any
agreement relating to any Hedging Obligation; provided,
however, that consistent with Section 5.1, Manager shall have
no personal liability whatsoever for any payment, repayment or
indemnification obligations of the Company under the Loan
Documents or any Hedging Obligation.

(r) All other acts and things as are necessary to
carry out Manager's responsibilities under this Agreement.

The powers herein conferred shall extend to all acts and
transactions described in (a) - (r) above affecting the Assets and extend to
all forms of interests in the Assets. This Power of Attorney is irrevocable by
the Company and is coupled with an interest in the lands covered by the Assets
for the period from the Effective Date until the Agreement is terminated. If
Manager should elect to exercise its rights under the Option to Purchase Oil
and Gas Interests dated as of the Effective Date between the Parties (the
"OPTION"), this Power of Attorney shall terminate and no longer be effective as
to the Assets.

If Manager is not at any time the operator of a particular
portion of the Assets, the obligations of Manager under the Agreement with
respect to such portion of the Assets shall be construed to require only that
Manager use reasonable best efforts to cause the operator of such portion of
the Assets to take such actions or render such performance within the
constraints of the applicable contracts.

Manager shall use reasonable best efforts to perform the
Services in a reasonable and prudent manner consistent with good oil field and
business practices.

[THIS SPACE INTENTIONALLY LEFT BLANK]

-5-
<PAGE> 18
Any person is entitled to rely on this Power of Attorney as
notice that Manager has been given the power and authority to manage the Assets
and to perform the Services on behalf of the Company.

By: Its Manager, David G. Stolfa

By: /s/ DAVID G. STOLFA
David G. Stolfa, Manager

HS RESOURCES, INC.

By: /s/ JAMES E. DUFFY
Name: James E. Duffy
Title: Vice President

-6-
<PAGE> 19
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )

The foregoing instrument was acknowledged before me this 26th
day of March, 1996, by David G. Stolfa, in his capacity as Manager of
Wattenberg Resources Land, L.L.C., a Delaware limited liability company, on
behalf of such company.

Witness my hand and official seal.

Notary Public

My commission expires:
(SEAL)

STATE OF COLORADO )
) ss.
COUNTY OF DENVER )

The foregoing instrument was acknowledged before me this 26th
day of March, 1996, by James E. Duffy, as Vice President of HS Resources,
Inc., a Delaware corporation, on behalf of the corporation.

Witness my hand and official seal.

Notary Public

My commission expires:

(SEAL)

-7-

<PAGE> 1

EXHIBIT 99.13

OPTION AGREEMENT

This Option Agreement (this "OPTION") is granted effective as of March
26, 1996 but effective as of March 29, 1996 at 7:00 a.m. (M.S.T.) (the
"EFFECTIVE DATE") by Wattenberg Resources Land, L.L.C. ("WRL"), a Delaware
limited liability company, c/o David G. Stolfa, Manager, 3300 South Columbia
Circle, Englewood, Colorado 80110, and the WRL Trust, in its capacity as member
of WRL (the "MEMBER") (collectively, WRL and the Member will be referred to as
the "GRANTOR") to HS Resources, Inc., a Delaware corporation, 1999 Broadway,
Suite 3600, Denver, Colorado 80202 ("GRANTEE").

1. OPTION. WRL acquired its right, title and interest in and to
certain oil and gas interests (defined below as the "SUBJECT INTERESTS")
pursuant to that certain Wellbore Assignment of Oil and Gas Leases with
Reservations of Production Payment and Reversion Interest dated as of the
Effective Date between WRL (as Grantee therein) and Grantee (as Grantor
therein) (the "ASSIGNMENT").

For $10.00 and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Grantor grants and conveys to
Grantee the exclusive and irrevocable option to purchase from time to time the
following upon the terms and conditions set forth herein:

A. WRL hereby grants and conveys to Grantee the
exclusive and irrevocable option to purchase from time to time all or
any portion of WRL's right, title and interest in and to the following
("SUBJECT INTERESTS):

(i) all oil and gas leases and mineral interests
described in Exhibit A, insofar and only as said leases cover
the right to produce the wells described in Exhibit B from the
intervals in such wells identified in Exhibit B as of the
Option Effective Date (the above described interests in such
leases being herein called the "LEASES" and the above
described interest in such wells being herein called the
"WELLS"), subject to any restrictions, exceptions,
reservations, conditions, limitations, burdens, contracts,
agreements and other matters applicable to the Leases and the
Wells, and excluding such portion of the Leases and the Wells
which were not conveyed to Grantor because of Defective
Interests or which were determined to be Excluded Assets (as
such terms are defined in the Purchase and Sale Agreement
between WRL, Grantee and Grantee's wholly-owned subsidiary,
Orion Acquisition, Inc., dated as of the Effective Date (the
"PURCHASE AGREEMENT"), and such exclusions being referred to
herein as the "RESERVE REDUCTIONS");

(ii) all overriding royalty interests in the
Leases insofar and only insofar as the Leases cover the
wellbores associated with the Wells
<PAGE> 2
from the producing intervals identified in Exhibit B and Wells
conveyed to Grantor pursuant to the Assignment;

(iii) to the extent affected, presently existing
and valid oil, gas and mineral unitization, pooling, operating
and communitization agreements, declarations and orders
affecting the Leases and Wells, and in and to the properties
covered and the units created thereby;

(iv) to the extent affected, personal property and
fixtures that are appurtenant to the Wells, including all
wells, casing, tubing, pumps, separators, tanks, lines and
other personal property and oil field equipment appurtenant to
such Wells;

(v) to the extent affected, presently existing
and valid gas sales, purchase, gathering and processing
contracts and operating agreements, joint venture agreements,
partnership agreements, rights-of-way, easements, permits and
surface leases and other contracts, agreements and instruments
(but specifically excluding any management agreements), only
in relevant part to the extent and insofar as the same are
appurtenant to the Leases, Wells and the units referred to in
clause (ii) above; and

(vi) any other property (whether real or personal)
that was acquired by WRL pursuant to the Purchase Agreement or
the Assignment and is still owned by WRL as of the Option
Effective Date.

B. The Member hereby grants and conveys to Grantee the
exclusive and irrevocable option to purchase from time to time, in
whole but not in part, all of the Member's right, title and interest
in and to WRL (the "LLC INTERESTS");

At the time of any exercise thereof, the options described above under Sections
1.A and 1.B (collectively, the "OPTION") may only be exercised in the
alternative.

2. EXERCISE OF THE OPTION. The Option may be exercised at any
time from the Effective Date until the end of the Option Term (as defined below
in Section 3).

3. OPTION TERM. The Option shall terminate on the tenth
anniversary of the Effective Date (the "OPTION TERM").

4. METHOD OF EXERCISE. To exercise the Option within the Option
Term, Grantee must deliver written notice of such exercise, indicating which of
the two alternatives (Section 1.A or 1.B) is being exercised, which notice
shall be indicated in the case of Section 1.A whether all or just a portion of
the Subject Interests are to be purchased (and, if so, which portion) delivered
personally, by prepaid telecopy or similar means (with signed confirmed copy to
follow by mail in the manner provided below), or by registered or certified
mail, postage

-2-
<PAGE> 3
prepaid, or by delivery service for which a receipt is obtained, at the
addresses set forth below, and shall be deemed delivered on the date of
receipt.

Wattenberg Resources Land, L.L.C.
c/o David G. Stolfa, Manager
3300 South Columbia Circle
Englewood, Colorado 80110
Telephone: (303) 762-9990
Fax: (303) 762-9992

with a copy to:

The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
New York, New York 10081
Attention: Rick Betz
Telephone: (212) 552-2680
Fax: (212) 552-1687

Grantor may specify an alternative address by giving written notice to Grantee
of such change.

5. OPTION EFFECTIVE DATE. The effective date of the purchase of
the Subject Interests or the LLC Interests (as appropriate) pursuant to the
Option (the "OPTION EFFECTIVE DATE") shall be the first day of the month
following the date Grantor receives the notice of exercise of the Option.

6. OPTION PRICE. The purchase price (the "OPTION PRICE") for the
Subject Interests, or any portion thereof, or of the LLC Interests (as
appropriate), shall be the greater of (i) the total aggregate amount of all
outstanding Superior Obligations (as defined in the Assignment) pertaining to
the relevant Subject Interests as determined in the sole discretion by the
holders of the Superior Obligations, or (ii) the appraised current fair market
value of the relevant Subject Interests as of the Option Effective Date;
provided, however, that if Grantee exercises the Option granted in Section 1.B
above, the purchase price will be adjusted to reflect Grantee's assumption of
liabilities pursuant to Section 7.B below. Unless Grantor and Grantee agree
otherwise, the appraised fair market value of the relevant Subject Interests
shall be the present value as of the Option Effective Date of the future net
revenue estimated to be received therefrom, determined in accordance with
generally accepted engineering principles in effect at the time, by Williamson
Petroleum Consultants, Inc. or some other nationally recognized petroleum
engineering firm agreed upon by Grantor and Grantee (the "INDEPENDENT
ENGINEER"); provided, however, that the Independent Engineer has provided a
reserve report for any annual period just ended, the determination of the
present value as of the Option Effective Date of the future net revenue
estimated to be received from the Subject Interests shall be pursuant to the
Independent Engineer's report as of the prior annual period, adjusted for
actual production to the Option Effective Date. The price of natural gas used
in the forecast shall be based on an unescalated average gas price for the most
recent 12-month period, as quoted in the first monthly publication of Inside
FERC's Gas Market Report for the Colorado Interstate Gas Co. ("CIG")

-3-
<PAGE> 4
Index (or a mutually agreeable substitute index if such index is no longer
published), less an unescalated average gathering and transportation cost from
wellhead to the CIG mainline for the most recent 12-month period, multiplied by
a BTU/SCF factor appropriate to the affected properties; the price of
hydrocarbon liquids used in the forecast shall be based on the unescalated
actual price received on the relevant Subject Interests during the most recent
12-month period; and the costs used in the forecast shall be the unescalated
average of the monthly costs attributable to the relevant Subject Interests
during the most recent 12-month period preceding the Option Effective Date.
The discount rate to be applied shall be the Prime Rate, as defined in the
Credit Agreement and in effect on the date on which the fair market value
determination is made, plus 6%.

7. TERMS OF PURCHASE.

A. Upon the closing of the purchase of all or any
portion of the Subject Interests pursuant to the exercise of the
Option granted by WRL in Section 1.A above, Grantee shall be entitled
to receive the proceeds, accounts receivable, income, revenues, monies
and other items attributable to the relevant Subject Interests from
and after the Option Effective Date and same shall be paid over to
Grantee, and Grantee shall be liable to pay the expenses attributable
to the relevant Subject Interests from and after the Option Effective
Date. Subject to the terms of the Assignment, Grantor shall be
entitled to receive the production from the relevant Subject Interests
prior to the Option Effective Date (subject to amounts owing under the
Production Payment, if any) and shall be liable to pay the expenses
attributable to the relevant Subject Interests prior to the Option
Effective Date (subject to the provisions of the Management
Agreement). Upon the closing of the purchase of the relevant Subject
Interests pursuant to the exercise of the Option, Grantee shall assume
all obligations and liabilities attributable to the ownership or
operation of the relevant Subject Interests on and after the Option
Effective Date, including the contractual and regulatory obligations
in connection with the relevant Subject Interests, and Grantee shall
defend, indemnify and hold harmless Grantor (and its successors,
assigns, members, officers, managers (including the employees,
representatives, agents, successors and assigns of such members),
employees, representatives, agents and consultants) from and against
all claims, demands, actions, obligations, liabilities and expenses
(including reasonable attorney, consultant and expert witness fees)
arising from such obligations and liabilities assumed by Grantee
hereunder.

B. Upon the closing of the purchase of the LLC Interests
pursuant to the exercise of the Option granted by the Members in
Section 1.B above, Grantee shall assume all obligations and
liabilities attributable to the ownership of the LLC Interests on and
after the Option Effective Date and the Option Price paid for the LLC
Interests pursuant to Section 6 above shall be adjusted to reflect
same (such that the Option Price shall be net of any such assumed
liabilities), and Grantee shall defend, indemnify and hold harmless
Grantor (and its successors, assigns, members, officers, managers
(including the employees, representatives, agents, successors and
assigns of such members), employees, representatives,

-4-
<PAGE> 5
agents and consultants) from and against all claims, demands, actions,
obligations, liabilities and expenses (including reasonable attorney,
consultant and expert witness fees) arising from such obligations and
liabilities assumed by Grantee hereunder.

8. PAYMENT AND CLOSING. The closing of any purchase pursuant to
the exercise of the Option shall occur at the offices of Grantee at 9:00 a.m.,
on a mutually agreed upon business day no later than 30 days from the date
Grantor receives the notice of the exercise of the Option. At the closing,
Grantee shall deliver by wire transfer of immediately available U.S. funds, to
the account designated by Grantor, the Option Price for the Subject Interests
in question or the LLC Interests (as appropriate). If Grantor has exercised
the Option in respect of any or all of the Subject Interests, WRL shall deliver
to Grantee an assignment fully executed and in recordable form of such Subject
Interests dated effective as of the Option Effective Date in question and in
form and substance reasonably satisfactory to Grantee with warranty of title as
to all matters arising by, through or under WRL, but not otherwise. If, on the
other hand, Grantor has exercised the Option in respect of the LLC Interests,
the Members shall execute and deliver to Grantee a purchase and sale agreement
and such other conveyancing or assignment and assumption documents as are
necessary to effect the transfer, dated effective as of the Option Effective
Date in question and in form and substance reasonably satisfactory to Grantee
with such representations and warranties as are reasonably customary in
transactions involving the transfer of interests in limited liability
companies.

9. GOVERNING LAW. The validity, effect and construction of this
Option shall be governed by the law of the State of Colorado, without reference
to its conflict of laws provisions.

10. SPECIFIC PERFORMANCE. In addition to any other remedy which
Grantee may enjoy under this Option, at law or in equity, Grantee shall have
the right to seek and enforce the remedy of specific performance by Grantor of
its obligations under this Option.

11. NO AMENDMENT OF LLC AGREEMENT; FURTHER ASSURANCES. The
Members agree that during the Option Period they will not amend the Operating
Agreement in respect of WRL without Grantee's prior written consent. Grantor
and Grantee agree to execute and deliver to the other all such other and
additional instruments, notices, division orders, transfer orders and other
documents and to do all such other and further acts and things as may be
necessary to more fully and effectively grant, convey and assign to Grantee the
rights, titles, interests and estates conveyed to Grantee hereby or intended to
be so conveyed.

12. COUNTERPARTS. This Option may be executed in multiple
originals, all of which are identical except that, for the convenience of
recording, counterparts hereof which are being recorded include only those
certain portions of Exhibit A which include descriptions of properties located
in the recording jurisdiction in which the particular counterpart is being
recorded. All of such counterparts together shall constitute one and the same
instrument.
[THIS SPACE INTENTIONALLY LEFT BLANK]

-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Option on the day
first above written, but effective as of the Effective Date.

GRANTOR:

WATTENBERG RESOURCES LAND, L.L.C.
By its Manager, David G. Stolfa

By: /s/ DAVID G. STOLFA
------------------------------
David G. Stolfa

WRL TRUST

By: Wilmington Trust Company, not in its
individual capacity but solely as
Trustee

By: /s/ JAMES P. LAWLER
----------------------------
Name: James P. Lawler
Title: Vice President

GRANTEE:

HS RESOURCES, INC.

By: /s/ JAMES E. DUFFY
-------------------------
Name: James E. Duffy
Title: Vice President

-6-
<PAGE> 7
STATE OF COLORADO )
CITY AND ) ss.
COUNTY OF DENVER )

The foregoing instrument was acknowledged before me this 26th
day of March, 1996, by James E. Duffy, as Vice President of HS Resources, Inc.,
a Delaware corporation, on behalf of the corporation.

Witness my hand and official seal.

/s/ COLLEEN K. RICHARDS
-------------------------
Notary Public

My commission expires: 4-26-98
--------------
(SEAL)

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

Witness my hand and official seal.

/s/ COLLEEN K. RICHARDS
-------------------------
Notary Public

My commission expires: 4-26-98
--------------
(SEAL)

-7-
<PAGE> 8
STATE OF COLORADO )
CITY AND ) ss.
COUNTY OF DENVER )

The foregoing instrument was acknowledged before me this 26th
day of March, 1996, by James P. Lawler as Vice President of Wilmington Trust
Company, a Delaware banking corporation, as Trustee of the WRL Trust, on behalf
of the trust.

Witness my hand and official seal.

/s/ COLLEEN K. RICHARDS
-------------------------
Notary Public

My commission expires: 4-26-98
--------------
(SEAL)

-8-

<PAGE> 1

EXHIBIT 99.14

________________________________________________________________________________

CREDIT AGREEMENT

Dated as of March 26, 1996

Among

WATTENBERG RESOURCES LAND, L.L.C.
as the Company,

and

THE CHASE MANHATTAN BANK, N.A.
as Agent

and

THE BANKS SIGNATORY HERETO

________________________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS

Section 1. Definitions and Accounting Matters
1.01 Terms Defined Above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.03 Accounting Terms and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Section 2. Commitments
2.01 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.02 Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.03 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.04 Several Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.06 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.07 Continuation Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.08 Conversion Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Section 3. Payments of Principal and Interest
3.01 Repayment of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.02 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Section 4. Payments; Pro Rata Treatment; Commutations; Etc.
4.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.02 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.03 Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.04 Non-receipt of Funds by the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.05 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.06 Disposition of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Section 5. Yield Protection and Illegality
5.01 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.02 Limitation on Eurodollar Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.03 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.04 Base Rate Loans Pursuant to Sections 5.01, 5.02 and 5.03 . . . . . . . . . . . . . . . . . . . 18
5.05 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Section 6. Conditions Precedent
6.01 Initial Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.02 Additional Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Section 7. Representations and Warranties
7.01 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.02 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.03 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.04 No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

</TABLE>

-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
7.05 Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.06 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.07 Use of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.08 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.09 Titles, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.10 No Material Misstatements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.11 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.12 Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.13 Location of Business and Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.14 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.15 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.16 Compliance with the Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.17 Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Section 8. Affirmative Covenants
8.01 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.02 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.03 Corporate Existence, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.04 Reserve Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.05 Mortgaged Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.06 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.07 Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.08 Hedging Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.09 Use of Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Section 9. Negative Covenants
9.01 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.02 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.03 Investments, Loans and Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.04 Dividends, Distributions and Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.05 Sales and Leasebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.06 Nature of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.07 Limitation on Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.08 Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.09 Proceeds of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.10 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.11 Sale or Discount of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.12 Sale of Oil and Gas Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.13 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.14 Subsidiaries and Partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.15 Hydrocarbon Sales Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.16 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.17 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.18 Operative Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.19 Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.20 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

</TABLE>

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<PAGE> 4
<TABLE>
<S> <C> <C>
Section 10. Events of Default; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Section 11. The Agent
11.01 Appointment, Powers and Immunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.02 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.03 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.04 Rights as a Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.05 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.06 Non-Reliance on Agent and other Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.07 Failure to Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.08 Resignation or Removal of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Section 12. Miscellaneous
12.01 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
12.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
12.03 Payment of Expenses, Indemnities, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
12.04 Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.05 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.06 Assignments and Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.07 Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.08 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.09 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.10 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.11 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.12 No Oral Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.13 Governing Law; Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.14 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
12.15 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
12.16 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12.17 Copies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12.18 No Recourse to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

</TABLE>

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<PAGE> 5
Exhibit A - Form of Note
Exhibit B - List of Commitments
Exhibit C - Form of Assignment Agreement
Exhibit D - List of Security Instruments

Schedule 1 - Installments

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<PAGE> 6
THIS CREDIT AGREEMENT (as the same may be amended or supplemented from
time to time, the "Agreement") dated as of March 26, 1996 is among: WATTENBERG
RESOURCES LAND, LLC, a limited liability company duly organized and validly
existing under the laws of the State of Delaware, (the "Company"); each of the
banks that is a party hereto or becomes a party hereto as provided in Section
12.06 (individually together with its successors and assigns, a "Bank" and,
collectively together with their successors and assigns, the "Banks"); and THE
CHASE MANHATTAN BANK, N.A., as agent for the Banks (in such capacity, together
with its successors in such capacity, the "Agent").

RECITALS

A. The Company has requested that the Banks provide a loan for
the purpose of refinancing a loan assumed by the Company in acquiring certain
oil and gas properties;

B. The Banks have agreed to make such loan subject to the terms
and conditions of this Agreement.

C. In consideration of the mutual covenants and agreements herein
contained and of the loans hereinafter referred to, the parties hereto agree as
follows:

Section 1. Definitions and Accounting Matters.

1.01 Terms Defined Above. As used in this Agreement, the
terms "Agent", "Agreement" "Bank", "Banks", and "Company" shall have the
meanings indicated above.

1.02 Certain Defined Terms. As used herein, the following
terms shall have the following meanings (all terms defined in this Section 1 or
in other provisions of this Agreement in the singular to have the same meanings
when used in the plural and vice versa):

"Additional Costs" shall have the meaning assigned to that
term in Section 5.01(a).

"Advance Notice" shall mean in connection with any borrowing,
continuation or conversion of any Loan the written notice to be
received by the Agent not later than 12:00 noon New York time not less
than two Business Days for Base Rate Loans and three Business Days for
Eurodollar Loans before the requested date of the borrowing, conversion
or continuation, and when any Eurodollar Loan is involved in a
continuation or conversion request the time period shall always be 3
Business Days.

"Affected Loans" shall have the meaning assigned to that term
in Section 5.04.

"Affiliate" of any person shall mean (i) any Person directly
or indirectly controlled by, controlling or under common control with
such first Person and (ii) any director or officer of such first Person
or of any Person referred to in clause (i) above.

"Applicable Lending Office" shall mean, for each Bank and for
each type of Loan, the lending office of such Bank (or an affiliate of
such Bank) designated for such

<PAGE> 7
type of Loan on the signature pages hereof or such other offices of
such Bank (or of an affiliate of such Bank) as such Bank may from time
to time specify to the Agent and the Company as the office by which its
Loans of such type are to be made and maintained.

"Applicable Margin" shall mean (i) with respect to Base Rate
Loans, 1/2% per annum through 1996 and 3/4% per annum thereafter and
(ii) with respect to Eurodollar Loans, 1 1/2% per annum through 1996
and 1 3/4% per annum thereafter.

"Assignment" shall mean the Assignment of Oil and Gas Leases
with Reservation of Production Payment and Reversion Interest dated
effective as of March 31, 1996 from HSR to the Company.

"Base Rate" shall mean, with respect to any Loan, for any day,
the higher of (a) the highest Federal Funds Rate for such day plus 1/2
of 1% or (b) the Prime Rate for such day. Each change in any interest
rate provided for herein based upon the Base Rate resulting from a
change in the Base Rate shall take effect at the time of such change in
the Base Rate.

"Base Rate Loans" shall mean Loans which bear interest at
rates based upon the Base Rate.

"Budget" shall have the meaning assigned in Section 8.01(g).

"Business Day" shall mean any day on which commercial banks
are not authorized or required to close in New York City and when used
in connection with Eurodollar Loans shall exclude any day that the
London interbank market is closed.

"Chase" shall mean The Chase Manhattan Bank, N.A.

"Closing Date" shall mean March 26, 1996.

"Code" shall mean the Internal Revenue Code of 1986, as
amended and any successor statute.

"Company Agreement" shall mean the Limited Liability Company
Agreement of the Company.

"Debt" shall mean, for any Person the sum of the following
(without duplication): (a) all obligations of such Person for borrowed
money or evidenced by bonds, debentures, notes or other similar
instruments; (b) all obligations of such Person (whether contingent or
otherwise) in respect of bankers' acceptances, surety or other bonds
and similar instruments; (c) all obligations of such Person to pay the
deferred purchase price of Property or services, (other than for
borrowed money) arising in the ordinary course of business of such
Person; (d) all obligations under leases which shall have been, or
should have been, in accordance with GAAP in effect on the date of this
Agreement, recorded as capital leases in respect of which such Person
is liable, contingently or otherwise, as

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<PAGE> 8
obligor, guarantor or otherwise, or in respect of which obligations
such Person otherwise assures a creditor against loss; (e) all Debt and
other obligations of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person; (f) all
Debt and other obligations of others guaranteed by such Person; (g) all
obligations or undertakings of such Person to maintain or cause to be
maintained the financial position or covenants of other Persons; (h)
with respect to payments received in consideration of oil, gas, or
other minerals yet to be acquired or produced at the time of payment
(including without limitation obligations under "take-or-pay" contracts
to deliver gas in return for payments already received and the
undischarged balance of any production payment created by such Person
or for the creation of which such Person directly or indirectly
received payment) or with respect to other obligations to deliver goods
or services in consideration of advance payments therefor; (i) the
marked to market value of all obligations arising under Hedging
Agreements; (j) obligations arising with respect to letters of credit
or applications or reimbursement agreements therefor; and (k)
obligations or commitments by a Person to purchase or redeem its
equity, warrants or options or similar securities.

"Default" shall mean an Event of Default or an event which
with notice or lapse of time or both would become an Event of Default.

"Dollars" and shall mean lawful money of the United States of
America.

"Effective Date" shall mean March 29, 1996.

"Environmental Laws" shall mean any and all laws, statutes,
ordinances, rules, regulations, orders, or determinations of any
Governmental Authority pertaining to health or the environment in
effect in any and all jurisdictions in which the Company is conducting
or at any time has conducted business, or where any Property of the
Company is located, or where any hazardous substances generated by or
disposed of by the Company are located, including without limitation,
the Oil Pollution Act of 1990 ("OPA"), the Clean Air Act, as amended,
the Comprehensive Environmental, Response, Compensation, and Liability
Act of 1980 ("CERCLA"), as amended, the Federal Water Pollution Control
Act, as amended, the Occupational Safety and Health Act of 1970, as
amended, the Resource Conservation and Recovery Act of 1976 ("RCRA"),
as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and
Reauthorization Act of 1986, as amended, and other environmental
conservation or protection laws. The terms "hazardous substance,"
"release" and "threatened release" have the meanings specified in
CERCLA, and the terms "solid waste" and "disposal" (or "disposed") have
the meanings specified in RCRA and the term "oil" shall have the
meaning specified in OPA; provided, however, in the event either
CERCLA, RCRA or OPA is amended so as to broaden the meaning of any term
defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment with respect to all provisions of this
Agreement other than Section 7 hereof, and provided further that, to
the extent the laws of the state in which any Property of the Company
is located establish a meaning for "hazardous substance," "release,"
"solid waste" or "disposal" which is broader than that specified in
either CERCLA, RCRA, or OPA such broader meaning shall apply.

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<PAGE> 9
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute.

"ERISA Affiliate" shall mean each trade or business (whether
or not incorporated) which together with the Company or any Subsidiary
would be deemed to be a "single employer" within the meaning of section
4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of section 414
of the Code.

"ERISA Event" shall mean (i) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder, (ii) the
withdrawal of the Company or any ERISA Affiliate from a plan during a
plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA, (iii) the filing of a notice of intent to
terminate a Plan or the treatment of a plan amendment as a termination
under Section 4041 of ERISA, (iv) the institution of proceedings to
terminate a plan by the PBGC or (v) any other event or condition which
might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any
plan.

"Eurodollar Loans" shall mean Loans the interest rates on
which are determined on the basis of rates referred to in the
definition of "Fixed Base Rate" in this Section 1.02.

"Evaluated Properties" shall have the meaning assigned to that
term in Section 8.04(b).

"Event of Default" shall have the meaning assigned to that
term in Section 10.

"Excepted Liens" shall mean: (i) Liens for taxes, assessments
or other governmental charges or levies not yet due or which are being
contested in good faith by appropriate action and for which appropriate
reserves have been maintained; (ii) Liens in connection with workmen's
compensation, unemployment insurance or other social security, old age
pension or public liability obligations not yet due or which are being
contested in good faith by appropriate action and for which appropriate
reserves have been maintained; (iii) operator's, vendors', carriers',
warehousemen's, repairmen's, mechanics', workmen's, materialmen's,
construction or other like Liens arising by operation of law in the
ordinary course of business or incident to the exploration,
development, operation and maintenance of Oil and Gas Properties and
statutory landlord's liens in respect of obligations none of which
shall have been outstanding more than 90 days or which are being
contested in good faith by appropriate proceedings and for which
appropriate reserves have been maintained; (iv) any Liens reserved in
leases for rent and for compliance with the terms of the leases in the
case of leasehold estates, to the extent that any such Lien referred to
in this clause does not materially impair the use of the Property
covered by such Lien for the purposes for which such Property is held
by the Company or materially impair the value of such Property subject
thereto; and (v) encumbrances (other than to secure the payment of
borrowed money or the deferred purchase price of Property or services),
easements, restrictions, servitudes, permits, conditions, covenants,
exceptions or reservations in any rights of way or other Property

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<PAGE> 10
of the Company for the purpose of roads, pipelines, transmission lines,
transportation lines, distribution lines for the removal of gas, oil,
coal or other minerals or timber, and other like purposes, or for the
joint or common use of real estate, rights of way, facilities and
equipment, and defects, irregularities and deficiencies in title of any
rights of way or other Property which in the aggregate do not
materially impair the use of such rights of way or other Property for
the purposes of which such rights of way and other Property are held by
the Company or materially impair the value of such Property subject
thereto.

"Federal Funds Rate" shall mean, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal
to the weighted average of the rates on overnight Federal funds
transactions with a member of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day, provided
that (i) if the date for which such rate is to be determined is not a
Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day as so published on
the next succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the
average rate charged to Chase on such day on such transactions as
determined by the Agent.

"Fee Letter" shall mean the letter from Chase to the Company
dated March 26, 1996, concerning certain fees in connection with this
Agreement.

"Fixed Base Rate" shall mean, with respect to a Eurodollar
Loan, the rate per annum (rounded upwards, if necessary, to the nearest
1/16 of 1%) quoted by Chase at approximately 11:00 a.m. London time (or
as soon thereafter as practicable) two Business Days prior to the first
day of the Interest Period for such Loan for the offering by Chase to
leading banks in the London interbank market of Dollar deposits having
a term comparable to such Interest Period and in an amount comparable
to the principal amount of the Eurodollar Loan to be made by the Banks
for such Interest Period.

"Fixed Rate" shall mean, for any Eurodollar Loan, a rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined by the Agent to be equal to the Fixed Base Rate for such
Loan for the Interest Period for such Loan divided by 1 minus the
Reserve Requirement for such Loan for such Interest Period.

"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.

"Governmental Authority" shall include the United States, the
state, county, city and political subdivisions in which any Property of
the Company is located or which exercises valid jurisdiction over any
such Property, and any agency, department, commission, board, bureau or
instrumentality of any of them which exercises valid jurisdiction over
any such Property.

"Governmental Requirement" shall mean any law, statute, code,
ordinance, order, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other
direction or requirement (including, without limitation,

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<PAGE> 11
Environmental Laws, energy regulations and occupational, safety and
health standards or controls) of any (domestic or foreign) federal,
state, county, municipal or other government, department, commission,
board, court, agency or any other instrumentality of any of them.

"Hedging Agreements" shall mean any commodity, interest rate
or currency swap, rate cap, rate floor, rate collar, forward agreement
or other exchange or rate protection agreements or any option with
respect to any such transaction.

"Highest Lawful Rate" shall mean, with respect to each Bank,
the maximum nonusurious interest rate, if any, that at any time or from
time to time may be contracted for, taken, reserved, charged or
received on the Notes or on other Indebtedness under laws applicable to
such Bank which are presently in effect or, to the extent allowed by
law, under such applicable laws which may hereafter be in effect and
which allow a higher maximum nonusurious interest rate than applicable
laws now allow.

"HSR" shall mean HS Resources, Inc., a Delaware Corporation.

"HSR Credit Agreement" shall mean the Credit Agreement dated
as of July 15, 1994, among HSR, Chase, as Agent, and the Banks party
thereto, as the same may be amended, modified or restated from time to
time.

"Hydrocarbon Interests" shall mean all rights, titles,
interests and estates now owned or hereafter acquired in and to oil and
gas leases, oil, gas and mineral leases, or other liquid or gaseous
hydrocarbon leases, mineral fee interests, overriding royalty and
royalty interests, net profit interest and production payment
interests, including any reserved or residual interest of whatever
nature.

"Hydrocarbons" shall mean oil, gas, casinghead gas, drip
gasoline, natural gasoline, condensate, distillate, liquid
hydrocarbons, gaseous hydrocarbons and all products refined or
separated therefrom.

"Indebtedness" shall mean any and all amounts owing or to be
owing by the Company to the Banks in connection with the Notes or any
Security Instrument, including this Agreement, and all renewals,
extensions and/or rearrangements thereof.

"Indemnity Matters" shall have the meaning assigned to that
term in Section 12.03(c).

"Initial Loans" shall mean the Loans made pursuant to Section
2.01 on the Effective Date.

"Interest Period" shall mean with respect to any Eurodollar
Loan, the period commencing on the date such Eurodollar Loan is made
and ending on the numerically corresponding day in the first, second,
third or sixth calendar month thereafter, as the Company may select as
provided in Section 2.02 (or such longer period as may be requested by
the Company and agreed to by the Majority Banks), except that each
Interest

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<PAGE> 12
Period which commences on the last Business Day of a calendar month (or
on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business
Day of the appropriate subsequent calendar month.

"Liens" shall mean, with respect to any asset, any mortgage,
lien, pledge, charge (including, without limitation, production
payments and the like payable out of Oil and Gas Properties), security
interest or encumbrance of any kind in respect of such asset. For the
purposes of this Agreement, the Company shall be deemed to own subject
to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such
asset.

"Loan Documents" shall mean this Agreement, the Note, the
Security Instruments, and any Hedging Agreement between the Company and
any Bank.

"Loans" shall mean Base Rate Loans or Eurodollar Loans or any
or all of them.

"Majority Banks" shall mean, at any time, Banks holding at
least sixty-six and two-thirds percent (66-2/3%) of the outstanding
aggregate principal amount of the Loans (without regard to any sale by
a Bank of a participation in any Loan under Section 12.06(b)).

"Management Agreement" means the Management Agreement dated
effective March 29, 1996, between the Company and HSR, and any
amendments thereto permitted hereunder.

"Material Adverse Effect" shall mean any material and adverse
effect on (i) the assets, liabilities, financial condition, business,
operations, affairs or circumstances of the Company from the facts
represented or warranted in this Agreement or any other Security
Instrument, or (ii) the ability of the Company to carry out its
business as at the date of this Agreement or as proposed at the date of
this Agreement to be conducted or meet its obligations under the Notes,
this Agreement or the other Security Instruments on a timely basis.

"Mortgaged Property" shall mean the Property owned by or in
which the Company owns an undivided interest and which is subject to
the Liens, privileges, priorities and security interests existing and
to exist under the terms of the Security Instruments.

"Multiemployer Plan" shall mean a Plan which is a
multiemployer plan as defined in Section 3(37) or 4001(a)(3) of ERISA.

"Notes" shall mean the promissory notes of the Company
provided for in Section 2.06 and being in the form of Exhibit A hereto,
together with any and all renewals, extensions for any period,
increases, rearrangements, substitutions or modifications thereof.

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<PAGE> 13
"Oil and Gas Properties" shall mean Hydrocarbon Interests; the
Properties now or hereafter pooled or unitized with Hydrocarbon
Interests; all presently existing or future unitization, pooling
agreements and declarations of pooled units and the units created
thereby (including without limitation all units created under orders,
regulations and rules of any governmental body or agency having
jurisdiction) which may affect all or any portion of the Hydrocarbon
Interests; all operating agreements, contracts and other agreements
which relate to any of the Hydrocarbon Interests or the production,
sale, purchase, exchange or processing of Hydrocarbons from or
attributable to such Hydrocarbon Interests; all Hydrocarbons in and
under and which may be produced and saved or attributable to the
Hydrocarbon Interests, the lands covered thereby and all oil in tanks
and all rents, issues, profits, proceeds, products, revenues and other
incomes from or attributable to the Hydrocarbon Interests; all
tenements, hereditaments, appurtenances and Properties in anywise
appertaining, belonging, affixed or incidental to the Hydrocarbon
Interests, Properties, rights, titles, interests and estates described
or referred to above, including any and all Property, real or personal,
now owned or hereinafter acquired and situated upon, used, held for use
or useful in connection with the operating, working or development of
any of such Hydrocarbon Interests or Property (excluding drilling rigs,
automotive equipment or other personal property which may be on such
premises for the purpose of drilling a well or for other similar
temporary uses) and including any and all oil wells, gas wells,
injection wells or other wells, buildings, structures, fuel separators,
liquid extraction plants, plant compressors, pumps, pumping units,
field gathering systems, tanks and tank batteries, fixtures, valves,
fittings, machinery and parts, engines, boilers, meters, apparatus,
equipment, appliances, tools, implements, cables, wires, towers,
casing, tubing and rods, surface leases, rights-of-way, easements and
servitudes together with all additions, substitutions, replacements,
accessions and attachments to any and all of the foregoing.

"Operative Documents" shall mean the Loan Documents, the
Purchase and Sale Agreement, the Assignment, the Management Agreement,
the Option, and any other documents executed in connection with any
such documents.

"Option" shall mean the Option to Purchase Oil and Gas
Interests dated effective March 29, 1996, between the Company and HSR
and any amendments thereto permitted hereunder.

"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any successor thereto.

"Percentage Share" shall mean the percentage of the Loans
outstanding by a Bank under this Agreement.

"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust,
unincorporated organization or government or any agency,
instrumentality or political subdivision thereof, or any other form of
entity.

"Plan" shall mean any employee pension benefit plan, as
defined in Section 3(2) of ERISA, which (a) is currently or hereafter
sponsored, maintained or contributed to by

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<PAGE> 14
the Company, any Subsidiary or an ERISA Affiliate or (b) was at any
time during the six calendar years preceding the date of this
Agreement, sponsored, maintained or contributed to, by the Company, any
Subsidiary or an ERISA Affiliate.

"Post-Default Rate" shall mean, in respect of any principal of
any Loan or any other amount payable by the Company under this
Agreement, the Security Instruments, any Note which is not paid when
due (whether at stated maturity, by acceleration or otherwise), a rate
per annum during the period commencing on the due date until such
amount is paid in full equal to 2% per annum above the Base Rate as in
effect from time to time plus the Applicable Margin (if any), but in no
event to exceed the Highest Lawful Rate (provided that, if such amount
in default is principal of a Eurodollar Loan and the due date is a day
other than the last day of the Interest Period therefor, the
"Post-Default Rate" for such principal shall be, for the period
commencing on the due date and ending on the last day of the Interest
Period therefor, 2% per annum above the interest rate for such Loan as
provided in Section 3.02(b), but in no event to exceed the Highest
Lawful Rate, and thereafter, the rate provided for above in this
definition).

"Prime Rate" shall mean the rate of interest from time to time
announced publicly by Chase at the Principal Office as its prime
commercial lending rate. Such rate is set by Chase as a general
reference rate of interest, taking into account such factors as Chase
may deem appropriate, it being understood that many of Chase's
commercial or other loans are priced in relation to such rate, that it
is not necessarily the lowest or best rate actually charged to any
customer and that Chase may make various commercial or other loans at
rates of interest having no relationship to such rate.

"Principal Office" shall mean the principal office of the
Agent, presently located at 1 Chase Manhattan Plaza, New York, New York
10005.

"Production Payment" shall mean the Production Payment
reserved by HSR in the Assignment, and any amendments thereto permitted
hereunder.

"Property" shall mean any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.

"Proved Reserves" shall mean collectively, proved oil and gas
reserves, proved developed oil and gas reserves and proved undeveloped
oil and gas reserves, as such terms are defined by the Securities and
Exchange Commission under its standards and guidelines.

"Purchase and Sale Agreement" shall mean the Purchase and Sale
Agreement between HSR and the Company dated effective March 29, 1996.

"Quarterly Dates" shall mean the last day of each March, June,
September and December in each year, the first of which shall be June
30, 1996.

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<PAGE> 15
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System (or any successor), as the same
may be amended or supplemented from time to time.

"Regulatory Change" shall mean, with respect to any Bank, any
change after the date of this Agreement in United States Federal, state
or foreign law or regulations (including Regulation D) or the adoption
or making after such date of any interpretations, directives or
requests applying to a class of banks (including such Bank or its
Applicable Lending Office) of or under any United States Federal, state
or foreign law or regulations (whether or not having the force of law)
by any court or governmental or monetary authority charged with the
interpretation or administration thereof.

"Reporting Date" shall have the meaning assigned to it in
Section 8.04(a).

"Required Payment" shall have the meaning assigned to that
term in Section 4.04.

"Requirement of Law" shall mean as to any Person, the
certificate of incorporation and by-laws, partnership agreement or
other organizational or governing documents of such Person, and any
law, treaty, rule or regulation or determination of any arbitrator or a
court or other Governmental Authority, in each case applicable to or
binding upon such Person or any of its Property or to which such Person
or any of its Property is subject.

"Reserve Report" shall have the meaning assigned to that term
in Section 8.04(a).

"Reserve Requirement" shall mean, for any Interest Period for
any Eurodollar Loan, the average maximum rate at which reserves
(including any marginal, supplemental or emergency reserves) are
required to be maintained during such Interest Period under Regulation
D by member banks of the Federal Reserve System in New York City with
deposits exceeding one billion Dollars against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting
the effect of the foregoing, the Reserve Requirement shall reflect any
other reserves required to be maintained by such member banks by reason
of any Regulatory Change against (i) any category of liabilities which
includes deposits by reference to which the Fixed Base Rate for
Eurodollar Loans is to be determined as provided in the definition of
"Fixed Base Rate" in this Section 1.02 or (ii) any category of
extensions of credit or other assets which include a Eurodollar Loan.

"Responsible Officer" shall mean as to any Person, the Chief
Executive Officer, the President or any Vice President of such Person
or, with respect to financial matters, the Chief Financial Officer of
such Person. Unless otherwise specified, all references to a
Responsible Officer herein shall mean a Responsible Officer of HSR
acting on behalf of the Company pursuant to the Management Agreement.

"Security Instruments" shall mean this Agreement, the Fee
Letter, the agreements or instruments described or referred to in
Exhibit D, and any and all other agreements or instruments now or
hereafter executed and delivered by the Company or any other Person
(other than participation or similar agreements between any Bank and
any other bank or

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<PAGE> 16
creditor with respect to any Indebtedness pursuant to this Agreement)
in connection with, or as security for the payment or performance of,
the Notes or this Agreement, as such agreements may be amended or
supplemented from time to time.

"Subordinated Note" shall mean the Subordinated Promissory
Note of even date herewith from the Company to HSR in the original
principal amount of $750,000.

"Subsidiary" shall mean any corporation of which at least 50%
of the outstanding shares of stock having by the terms thereof ordinary
voting power to elect a majority of the board of directors of such
corporation (irrespective of whether or not at the time stock of any
other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by the Company or one
or more of the Subsidiaries or by the Company and one or more of the
Subsidiaries. "Wholly-Owned Subsidiary" shall mean any such
corporation of which all of such shares, other than directors,
qualifying shares, are so owned or controlled.

"Termination Date" shall mean March 31, 2004.

"Trust" shall mean the WRL Trust, the member of the Company.

"Trustee" shall mean Wilmington Trust Company, not in its
individual capacity, but solely as trustee of the Trust and any
successors in such capacity.

"Wilmington" shall mean Wilmington Trust Company in its
individual capacity.

1.03 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Agent or the Banks hereunder shall be prepared,
in accordance with GAAP as in effect on the date hereof (except for changes
concurred with by the Company's independent public accountants).

Section 2. Commitments.

2.01 Loans.

(a) Each Bank severally agrees, on the terms of this
Agreement, to make Loans to the Company on the Effective Date in an
aggregate principal amount up to but not exceeding the amount for such
Bank set forth under Commitments on Exhibit B; provided, however, that
the aggregate principal amount of all such Loans by all Banks hereunder
at any one time outstanding shall not exceed $23,500,000. This is a
term loan facility and if the Company borrows less than $23,500,000 on
the Effective Date, it will have no right to borrow the remaining
balance at a later date, and no payments or prepayments of principal
may be reborrowed.

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<PAGE> 17
(b) The Loans may be Base Rate Loans or Eurodollar Loans
(each a "type" of Loan), provided that no more than three (3)
Eurodollar Loans may be outstanding from any Bank at any time.

2.02 Borrowings.

(a) The amount and type and Interest Period of the
Initial Loans to be made under Section 2.01(a) on the Closing Date are
to be set forth in a borrowing request to be delivered at least three
Business Days prior to the Closing Date or such shorter period of time
as allowed by the Agent.

(b) All Base Rate Loan borrowings under clause (a) above
shall be in amounts of at least $1,000,000, (or the remaining balance
of the Aggregate Commitments, if less), or any whole multiple of
$1,000,000 in excess thereof and all Eurodollar Loans resulting from
borrowings under clause (a) above shall be in amounts of at least
$1,000,000 or any whole multiple of $1,000,000 in excess thereof.

2.03 Fees. The Company shall pay to Chase for the account of
Chase such other fees as are set forth in the Fee Letter on the dates specified
therein to the extent not paid prior to the date of this Agreement, or as may
be mutually agreed upon in writing by the Company and Chase.

2.04 Several Obligations. The failure of any Bank to make
any Loan to be made by it on the Closing Date shall not relieve any other Bank
of its obligation to make its Loan on such date, but no Bank shall be
responsible for the failure of any other Bank to make a Loan to be made by such
other Bank.

2.05 Notes. The Loans made by each Bank shall be evidenced
by a single promissory note of the Company in substantially the form of Exhibit
A hereto, dated the date of such Bank's execution of this Agreement or an
Assignment Agreement as provided in Section 12.06(e), payable to the order of
such Bank in a principal amount equal to its principal amount outstanding on
the date of issuance and otherwise duly completed. The date and amount of each
Loan made by each Bank, and all payments made on account of the principal
thereof, shall be recorded by such Bank on its books for its Note, and, prior
to any transfer of its Note, endorsed by such Bank on the schedule attached to
such Note or any continuation thereof.

2.06 Prepayments.

(a) The Company may voluntarily prepay the Base Rate
Loans upon not less than one (1) Business Day prior notice to the Agent
(which shall promptly notify the Banks), which notice shall specify the
prepayment date (which shall be a Business Day) and the amount of the
prepayment (which shall be at least $1,000,000 or the remaining
aggregate principal balance outstanding on the Notes) and shall be
irrevocable and effective only upon receipt by the Agent, provided that
interest on the principal prepaid, accrued to the prepayment date,
shall be paid on the prepayment date. The Company may not voluntarily
prepay any Eurodollar Loan (provided that this sentence shall not
affect

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<PAGE> 18
the Company's obligation to prepay Loans pursuant to Section 2.06(b) or
Section 10 hereof).

(b) On each Quarterly Date the Company shall prepay the
principal on the Notes as required by Section 9.20.

(c) Prepayments permitted or required under this Section
2.06 shall be without premium or penalty, except as required by Section
5.05. Prepayments permitted or required under this Section 2.06 shall
be applied to installments on the Notes in the inverse order of their
maturity.

2.07 Continuation Options.

(a) The Company may elect to continue all or any part of
any Eurodollar Loan beyond the expiration of the then current Interest
Period relating thereto by giving Advance Notice to the Agent of such
election, specifying the amount of such Loan to be continued. In the
absence of such a timely and proper election, the Company shall be
deemed to have elected to convert such Eurodollar Loan to a Base Rate
Loan.

(b) All or any part of any Eurodollar Loan may be
continued as provided herein, provided that (i) any continuation of any
such Loan shall be (as to each Loan as continued for an applicable
Interest Period) in the principal amount not other than any whole
multiples of $1,000,000 and (ii) no Default shall have occurred and be
continuing. If a Default shall have occurred and be continuing, each
Eurodollar Loan shall be converted to a Base Rate Loan on the last day
of the Interest Period applicable thereto.

2.08 Conversion Options.

(a) The Company may elect to convert any Eurodollar Loan
on the last day of the then current Interest Period relating thereto to
a Base Rate Loan by giving Advance Notice to the Agent of such
election.

(b) The Company may elect to convert a Base Rate Loan at
any time and from time to time to a Eurodollar Loan by giving Advance
Notice to the Agent of such election.

(c) All or any part of any outstanding Loan may be
converted as provided herein, provided that any conversion of any Base
Rate Loan into a Eurodollar Loan shall be (as to each such Loan into
which there is a conversion for an applicable Interest Period) in the
principal amount not other than any whole multiples of $1,000,000. If
no Default shall have occurred and be continuing, each Loan may be
converted as provided in this Section. If a Default shall have
occurred and be continuing, no Loan may be converted into a Eurodollar
Loan.

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<PAGE> 19
Section 3. Payments of Principal and Interest.

3.01 Repayment of Loans. The Company will pay to the Agent
for the pro rata account of each Bank the principal payment required by this
Section 3.01. On each successive Quarterly Date commencing on the Quarterly
Date immediately following the Closing Date, the aggregate principal amount of
the Notes shall be payable in installments as provided in Schedule 1 with the
aggregate principal amount outstanding on the Notes to be paid in full on or
before the Termination Date.

3.02 Interest. The Company will pay to the Agent for account
of each Bank interest on the unpaid principal amount of each Loan made by such
Bank for the period commencing on the date of such Loan to but excluding the
date such Loan shall be paid in full, at the following rates per annum:

(a) if such Loan is a Base Rate Loan, the Base Rate (as
in effect from time to time) plus the Applicable Margin, but in no
event to exceed the Highest Lawful Rate; and

(b) if such Loan is a Eurodollar Loan, for each Interest
Period relating thereto, the Fixed Rate for such Loan plus the
Applicable Margin, but in no event to exceed the Highest Lawful Rate.

Notwithstanding the foregoing, the Company will pay to the Agent for the
account of each Bank interest at the applicable Post-Default Rate on any
principal of any Loan made by such Bank, and (to the fullest extent permitted
by law) on any other amount payable by the Company hereunder or under any Note
held by such Bank to or for account of such Bank, which shall not be paid in
full when due (whether at stated maturity, by acceleration or otherwise), for
the period commencing on the due date thereof until the same is paid in full.
Accrued interest on each Eurodollar Loan shall be payable on the last day of
the Interest Period therefor and, if such Interest Period is longer than three
months at three-month intervals following the first day of such Interest
Period, except that interest payable at the Post-Default Rate shall be payable
from time to time on demand and interest on any Eurodollar Loan that is
converted into a Base Rate Loan (pursuant to Section 5.04) shall be payable on
the date of conversion (but only to the extent so converted). Interest on Base
Rate Loans shall be payable on the Quarterly Dates commencing on June 27, 1996
and at the maturity of the Notes. Promptly after the determination of any
interest rate provided for herein or any change therein, the Agent shall notify
the Banks to which such interest is payable and the Company thereof.

Section 4. Payments; Pro Rata Treatment; Commutations; Etc.

4.01 Payments. Except to the extent otherwise provided
herein, all payments of principal, interest and other amounts to be made by the
Company under this Agreement and the Notes shall be made in Dollars, in
immediately available funds, to the Agent at such account as the Agent shall
specify by notice to the Company from time to time, not later than 2:00 p.m.
New York time on the date on which such payments shall become due (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day). Each payment received by the Agent under
this Agreement or any Note for

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<PAGE> 20
account of a Bank shall be paid promptly to such Bank, in immediately available
funds. If the due date of any payment under this Agreement or any Note would
otherwise fall on a day which is not a Business Day such date shall be extended
to the next succeeding Business Day and interest shall be payable for any
principal so extended for the period of such extension.

4.02 Pro Rata Treatment. Except to the extent otherwise
provided herein: (a) each payment of principal of Loans by the Company shall
be made for account of the Banks pro rata in accordance with the respective
unpaid principal amount of the Loans held by the Banks and (b) each payment of
interest on Loans by the Company shall be made for account of the Banks pro
rata in accordance with the amounts of interest due and payable to the
respective Banks.

4.03 Computations. Interest on Eurodollar Loans shall be
computed on the basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last day) occurring in the period for which
payable, unless such calculation would result in a usurious rate, in which case
interest shall be calculated on the per annum basis of a year of 365 or 366
days, as the case may be. Interest on Base Rate Loans shall be computed on the
basis of a year of 365 or 366 days, as the case may be, and actual days elapsed
(including the first day but excluding the last day) occurring in the period
for which payable.

4.04 Non-receipt of Funds by the Agent. Unless the Agent
shall have been notified by a Bank or the Company prior to the date on which
such notifying party is scheduled to make payment to the Agent of (in the case
of a Bank) the proceeds of a Loan to be made by it hereunder or (in the case of
the Company) a payment to the Agent for account of one or more of the Banks
hereunder (such payment being herein called the "Required Payment"), which
notice shall be effective upon receipt, that it does not intend to make the
Required Payment to the Agent, the Agent may assume that the Required Payment
has been made and may, in reliance upon such assumption (but shall not be
required to), make the amount thereof available to the intended recipient(s) on
such date and, if such Bank or the Company (as the case may be) has not in fact
made the Required Payment to the Agent, the recipient(s) of such payment shall,
on demand, repay to the Agent the amount so made available together with
interest thereon in respect of each day during the period commencing on the
date such amount was so made available by the Agent until but excluding the
date the Agent recovers such amount at a rate per annum which, for any Bank
will be equal to the Federal Funds Rate and for the Company, will be equal to
the rate then in effect for such Loan.

4.05 Sharing of Payments, Etc. The Company agrees that, in
addition to (and without limitation of) any right of set-off, bankers' lien or
counterclaim a Bank may otherwise have, each Bank shall be entitled (after
consultation with the Agent), at its option, to offset balances held by it for
account of the Company at any of its offices, in Dollars or in any other
currency, against any principal of or interest on any of such Bank's Loans, or
any other amount payable to such Bank hereunder, which is not paid when due
(regardless of whether such balances are then due to the Company), in which
case it shall promptly notify the Company and the Agent thereof, provided that
such Bank's failure to give such notice shall not affect the validity thereof.
If any Bank shall obtain payment of any principal of or interest on any Loan
made by it to the Company under this Agreement through the exercise of any
right of set-off, banker's lien or counterclaim or similar right or otherwise,
and, as a result of such payment,

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<PAGE> 21
such Bank shall have received a greater percentage of the principal or interest
then due hereunder by the Company to such Bank than the percentage received by
any other Banks, it shall promptly purchase from such other Banks
participations in (or, if and to the extent specified by such Bank, direct
interests in) the Loans made by such other Banks (or in interest due thereon,
as the case may be) in such amounts, and make such other adjustments from time
to time as shall be equitable, to the end that all the Banks shall share the
benefit of such excess payment (net of any expenses which may be incurred by
such Bank in obtaining or preserving such excess payment) pro rata in
accordance with the unpaid principal and/or interest on the Loans held by each
of the Banks. To such end all the Banks shall make appropriate adjustments
among themselves (by the resale of participations sold or otherwise) if such
payment is rescinded or must otherwise be restored. The Company agrees that
any Bank so purchasing a participation (or direct interest) in the Loans made
by other Banks (or in interest due thereon, as the case may be) may exercise
all rights of set-off, bankers' lien, counterclaim or similar rights with
respect to such participation as fully as if such Bank were a direct holder of
Loans in the amount of such participation. Nothing contained herein shall
require any Bank to exercise any such right or shall affect the right of any
Bank to exercise, and retain the benefits of exercising, any such right with
respect to any other indebtedness or obligation of the Company. If under any
applicable bankruptcy, insolvency or other similar law, any Bank receives a
secured claim in lieu of a set-off to which this Section 4.05 applies, such
Bank shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Banks entitled
under this Section 4.05 to share the benefits of any recovery on such secured
claim.

4.06 Disposition of Proceeds. The Security Instruments
contain an assignment unto and in favor of the Banks by the Company of all
production and all proceeds attributable thereto which may be produced from or
allocated to the Mortgaged Property, and the Security Instruments further
provide in general for the application of such proceeds to the satisfaction of
the indebtedness described therein and secured thereby. Notwithstanding the
assignment contained in such Security Instruments, however, and unless and
until the Majority Banks direct the Agent to notify the Company that the Banks
are requesting such proceeds to be delivered to the Agent, the Banks agree that
they will not notify the purchaser or purchasers of such production nor will
the Banks take any other action to cause such proceeds to be remitted to the
Banks, but the Banks will instead permit such proceeds to be paid to the
Company.

Section 5. Yield Protection and Illegality.

5.01 Additional Costs.

(a) The Company shall pay directly to each Bank from time
to time such amounts as such Bank may determine to be necessary to
compensate such Bank for any costs which it determines are attributable
to its making or maintaining of any Eurodollar Loans hereunder or its
obligation to make any Eurodollar Loans hereunder, or any reduction in
any amount receivable by such Bank hereunder in respect of any of such
Eurodollar Loans or such obligation (such increases in costs and
reductions in amounts receivable being herein called "Additional
Costs"), resulting from any Regulatory Change which: (i) changes the
basis of taxation of any amounts payable to such Bank under this
Agreement or any Note in respect of any of such Eurodollar Loans (other
than taxes imposed on the overall net income of such Bank or of its
Applicable Lending Office for

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<PAGE> 22
any of such Eurodollar Loans by the jurisdiction in which such Bank has
its principal office or Applicable Lending Office); or (ii) imposes or
modifies any reserve, special deposit, minimum capital, capital ratio
or similar requirements (other than the Reserve Requirement utilized in
the determination of the Fixed Rate for such Loan) relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of such Bank (including any of such Eurodollar Loans or any
deposits referred to in the definition of "Fixed Base Rate" in Section
1.02 hereof), or (iii) imposes any other condition affecting this
Agreement or any Note (or any of such extensions of credit or
liabilities). Each Bank will notify the Agent and the Company of any
event occurring after the date of this Agreement which will entitle
such Bank to compensation pursuant to this Section 5.01(a) as promptly
as practicable after it obtains knowledge thereof and determines to
request such compensation, and will designate a different Applicable
Lending Office for the Loans of such Bank affected by such event if
such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the sole opinion of such Bank, be
disadvantageous to such Bank, provided that such Bank shall have no
obligation to so designate an Applicable Lending Office located in the
United States. Each Bank will furnish the Company with a certificate
setting forth the basis and amount of each request by such Bank for
compensation under this Section 5.01(a). If any Bank requests
compensation from the Company under this Section 5.01(a), the Company
may, by notice to such Bank suspend the obligation of such Bank to make
additional Loans of the type with respect to which such compensation is
requested until the Regulatory Change giving rise to such request
ceases to be in effect (in which case the provisions of Section 5.04
shall be applicable).

(b) Without limiting the effect of the provisions of
Section 5.01(a), in the event that, by reason of any Regulatory Change,
any Bank either (i) incurs Additional Costs based on or measured by the
excess above a specified level of the amount of a category of deposits
or other liabilities of such Bank which includes deposits by reference
to which the interest rate on Eurodollar Loans is determined as
provided in this Agreement or a category of extensions of credit or
other assets of such Bank which includes Eurodollar Loans or (ii)
becomes subject to restrictions on the amount of such a category of
liabilities or assets which it may hold, then, if such Bank so elects
by notice to the Company, the obligation of such Bank to make
additional Eurodollar Loans shall be suspended until such Regulatory
Change ceases to be in effect (in which case the provisions of Section
5.04 shall be applicable).

(c) Without limiting the effect of the foregoing
provisions of this Section 5.01 (but without duplication), the Company
shall pay directly to any Bank from time to time on request such
amounts as such Bank may determine to be necessary to compensate such
Bank or its parent or holding company for any costs which it determines
are attributable to the maintenance by such Bank or its parent or
holding company (or any Applicable Lending Office), pursuant to any law
or regulation or any interpretation, directive or request (whether or
not having the force of law) of any court or governmental or monetary
authority following any Regulatory Change, of capital in respect of its
Loans (such compensation to include, without limitation, an amount
equal to any reduction of the rate of return on assets or equity of
such Bank or its parent or holding company (or any Applicable Lending
Office) to a level below that which such Bank or its parent or

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<PAGE> 23
holding company (or any Applicable Lending Office) could have achieved
but for such law, regulation, interpretation, directive or request).
Such Bank will notify the Company that it is entitled to compensation
pursuant to this Section 5.01(c) as promptly as practicable after it
determines to request such compensation.

(d) Determinations and allocations by each Bank for
purposes of this Section 5.01 of the effect of any Regulatory Change
pursuant to Section 5.01(a) or (b), or of the effect of capital
maintained pursuant to Section 5.01(c), on its costs or rate of return
of maintaining Loans or its obligation to make Loans, or on amounts
receivable by it in respect of Loans, and of the amounts required to
compensate such Bank under this Section 5.01, shall be conclusive,
provided that such determinations and allocations are made on a
reasonable basis.

5.02 Limitation on Eurodollar Loans. Anything herein to the
contrary notwithstanding, if, on or prior to the determination of any Fixed
Base Rate for any Interest Period:

(a) the Agent determines (which determination shall be
conclusive) that quotations of interest rates for the relevant deposits
referred to in the definition of "Fixed Base Rate" in Section 1.02 are
not being provided in the relevant amounts or for the relevant
maturities for purposes of determining rates of interest for Eurodollar
Loans as provided herein; or

(b) the Agent determines (which determination shall be
conclusive) that the relevant rates of interest referred to in the
definition of "Fixed Base Rate" in Section 1.02 upon the basis of which
the rate of interest for Eurodollar Loans for such Interest Period is
to be determined are not likely to adequately cover the cost to the
Banks of making or maintaining Eurodollar Loans;

then the Agent shall give the Company prompt notice thereof, and so long as
such condition remains in effect, the Banks shall be under no obligation to
make additional Eurodollar Loans.

5.03 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to honor its obligation to make or maintain Eurodollar Loans
hereunder, then such Bank shall promptly notify the Company thereof and such
Bank's obligation to make Eurodollar Loans shall be suspended until such time
as such Bank may again make and maintain Eurodollar Loans (in which case the
provisions of Section 5.04 shall be applicable).

5.04 Base Rate Loans Pursuant to Sections 5.01, 5.02 and
5.03. If the obligation of any Bank to make Eurodollar Loans shall be
suspended pursuant to Sections 5.01, 5.02 or 5.03 ("Affected Loans"), all
Affected Loans which would otherwise be made by such Bank shall be made instead
as Base Rate Loans (and, if an event referred to in Section 5.01(b) or Section
5.03 has occurred and such Bank so requests by notice to the Company, all
Affected Loans of such Bank then outstanding shall be automatically converted
into Base Rate Loans on the date specified by such Bank in such notice) and, to
the extent that Affected Loans are so

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<PAGE> 24
made as (or converted into) Base Rate Loans, all payments of principal which
would otherwise be applied to such Bank's Affected Loans shall be applied
instead to its Base Rate Loans.

5.05 Compensation. The Company shall pay to each Bank upon
request of such Bank, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Bank) to compensate it for any loss, cost or expense
which such Bank determines are attributable to:

(a) any payment or conversion of a Eurodollar Loan
properly made by such Bank for any reason (including, without
limitation, the acceleration of the Loans pursuant to Section 10) on a
date other than the last day of the Interest Period for such Loan; or

(b) any failure by the Company for any reason (including
but not limited to, the failure of any of the conditions precedent
specified in Section 6 to be satisfied) to borrow a Eurodollar Loan
from such Bank on the date for such borrowing specified in the relevant
notice of borrowing given pursuant to Section 2.02.

Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so paid, prepaid or
converted or not borrowed for the period from the date of such payment,
prepayment or conversion or failure to borrow to the last day of the Interest
Period for such Loan (or, in the case of a failure to borrow, the Interest
Period for such Loan which would have commenced on the date specified for such
borrowing) at the applicable rate of interest for such Loan provided for herein
over (ii) the interest component of the amount such Bank would have bid in the
London interbank market for Dollar deposits of leading banks in amounts
comparable to such principal amount and with maturities comparable to such
period (as reasonably determined by such Bank).

Section 6. Conditions Precedent.

6.01 Initial Conditions. A condition to the effectiveness of
this Agreement is the receipt by the Agent of the following documents and
satisfaction of the other conditions provided in this Section 6.01 on or before
the Effective Date, each of which shall be satisfactory to the Agent in form
and substance:

(a) Certificate of HSR. A certificate of the Secretary
or Assistant Secretary of HSR setting forth (i) resolutions of its
board of directors authorizing the execution, delivery and performance
by HSR of the Operative Documents to which it is a party; (ii) the
officers of HSR specified in such Secretary's Certificate that are
authorized to sign the Operative Documents to which it is a party, and,
who, until replaced by another officer or officers duly authorized for
that purpose, are authorized to act as its respective representative
for the purposes of signing documents and giving notices and other
communications in connection with the Operative Documents; and (iii)
true and correct copies of its articles or certificate of incorporation
and bylaws and all amendments thereto. The parties to the Operative
Documents may conclusively rely on such certificate until the Agent
(who shall promptly notify all other parties) receives notice in
writing from HSR to the contrary.

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(b) Certificate of Trustee. A certificate of the
Secretary or Assistant Secretary of the Trustee acting in its capacity
as trustee of the initial member of the Company, setting forth (i)
resolutions of its board of directors authorizing the execution,
delivery and performance by the Company of the Company Agreement and
the other Operative Documents to which it is a party; (ii) the officers
of the Trustee specified in such Secretary's Certificate that are
authorized to sign the Company Agreement and the other Operative
Documents to which it is a party and, who, until replaced by another
officer or officers duly authorized for that purpose, are authorized to
act as its representative for the purposes of signing documents and
giving notices and other communications in connection with this
Agreement and the Operative Documents; and (iii) true and correct
copies of articles or certificate of incorporation and the bylaws of
the Trustee and all amendments thereto. The parties to this Agreement
may conclusively rely on such certificate until the Agent (who shall
promptly notify all other parties) receives notice in writing from the
Trustee to the contrary.

(c) Certificates of Governmental Authorities.
Certificates of the appropriate Governmental Authorities with respect
to the existence, qualification and good standing of the Trustee in the
State of Delaware, and of HSR and the Company in the States of Delaware
and Colorado.

(d) Execution of Notes. The Notes payable to the Banks
duly completed and executed.

(e) Execution and Delivery of Operative Documents. Each
of the other Operative Documents by all parties thereto, duly completed
and executed, including the Security Instruments listed on Exhibit D.

(f) Opinions. The following: (i) An opinion of Davis,
Graham & Stubbs, counsel to HSR and the Company; and (ii) an opinion of
Richards, Layton & Finger, special counsel to the Trustee.

(g) Evidence of Other Transactions. Evidence that the
following transactions (which shall be in form and substance
satisfactory to the Agent) shall be consummated contemporaneously with
the funding of the Initial Loans: (i) the purchase by the Company of
all Oil and Gas Properties evaluated by the Lenders in connection with
the Agreement and the assignment of such Properties to the Company; and
(ii) a capital contribution of $500 to the Company by its members.

(h) Recording. The Assignment and Security Instruments,
which are to be recorded or filed to perfect the Banks' Lien, shall
have been duly executed, delivered and recorded or filed in the
appropriate offices and, to the fullest extent allowed by applicable
law, all costs and taxes associated with such filing and recording
shall have been paid or provided for by the Company. All Oil and Gas
Properties of the Company shall have been adequately and accurately
described in such Security Instruments.

(i) Insurance. A certificate of insurance for the
Company.

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<PAGE> 26
(j) Consents. A waiver or consent by the banks under the
HSR Credit Agreement to the extent necessary to permit the transaction
contemplated by he Operative Documents.

(k) Hedging Agreements. The Company shall have entered
Hedging Agreements covering such portion of its oil and gas production
as are acceptable to the Majority Banks.

(l) Other items. Such other items as the Agent may
reasonably request.

Section 6.02 Additional Conditions Precedent. The obligation
of the Banks to fund the Initial Loans on the Effective Date is subject to the
further conditions precedent that, as of the Closing Date: (i) no Default
shall have occurred and be continuing; and (ii) the representations and
warranties made in the Operative Documents shall be true on and as of the
Closing Date.

Section 7. Representations and Warranties. The Company
represents and warrants to the Banks that:

7.01 Existence. The Company: (a) is a limited liability
company, duly organized, legally existing and, in good standing under the laws
of the State of Delaware; (b) has all requisite power, and has all material
governmental licenses, authorizations, consents and approvals necessary to own
its assets and carry on its business as now being or as proposed to be
conducted; and (c) is qualified to do business in all jurisdictions in which
the nature of the business conducted by it makes such qualification necessary
and where failure so to qualify would have a Material Adverse Effect.

7.02 Financial Condition. Immediately before the funding of
the Initial Loans and the granting of the Assignment, the Company has no assets
or liabilities other than the equity contribution of $1,000,000 from its
members.

7.03 Litigation. At the date of this Agreement there is no
litigation, legal, administrative or arbitral proceeding, investigation or
other action of any nature pending or, to the knowledge of the Company,
threatened against or affecting the Company.

7.04 No Breach. Neither the execution and delivery of the
Operative Documents, nor compliance with the terms and provisions thereof will
conflict with or result in a breach of, or require any consent under, the
Company Agreement of the Company, or any applicable law or regulation, or any
order, writ, injunction or decree of any court or governmental authority or
agency, or any agreement or instrument to which the Company, is a party or by
which it is bound or to which it is subject, or constitute a default under any
such agreement or instrument, or result in the creation or imposition of any
Lien upon any of the revenues or assets of the Company, pursuant to the terms
of any such agreement or instrument other than the Liens created by the
Security Instruments and the Production Payment.

7.05 Action. The Company has all necessary power and
authority to execute, deliver and perform its obligations under the Operative
Documents to which it is a party; and

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<PAGE> 27
the execution, delivery and performance by the Company, have been duly
authorized by all necessary action on its part; and constitute the legal, valid
and binding obligation of the Company, enforceable in accordance with their
terms.

7.06 Approvals. No authorizations, approvals or consents of,
and no filings or registrations with, any governmental or regulatory authority
or agency are necessary for the execution, delivery or performance by the
Company of the Operative Documents, or for the validity or enforceability
thereof, except for the recording and filing of the Operative Documents as
required by this Agreement.

7.07 Use of Loans. The proceeds of the Loan shall be used to
refinance Debt assumed by the Company to acquire the Mortgaged Properties. The
Company is not engaged principally, or as one of its important activities, in
the business of extending credit for the purpose, whether immediate, incidental
or ultimate, of buying or carrying margin stock (within the meaning of
Regulation U or X of the Board of Governors of the Federal Reserve System) and
no part of the proceeds of any Loan hereunder will be used to buy or carry any
margin stock.

7.08 ERISA. The Company has no Plans.

7.09 Titles, etc.

(a) Except as set out in Schedules to the Purchase and
Sale Agreement, the Company has good and defensible title to the
Mortgaged Properties, free and clear of all Liens except Liens
permitted by Section 9.02. Except as set forth in Schedules to the
Purchase and Sale Agreement, after giving full effect to the Liens
permitted by Section 9.02, the Company owns the net interests in
production attributable to the lands and leases reflected in the most
recent Reserve Report and the ownership of such Properties shall not in
any material respect obligate the Company to bear the costs and
expenses relating to the maintenance, development and operations of
each such Property in an amount in excess of the working interest of
each Property set forth in the most recent Reserve Report. Further,
upon delivery of each subsequent Reserve Report the statements made in
the preceding sentence shall be true with respect to such furnished
Reserve Reports including the ownership of the units and wells set
forth therein. All information contained in each Reserve Report is
true and correct in all material respects as of the date thereof,
except that the Company does not warrant quantity of reserves, rate of
recovery, productive capacity, future prices or other similar matters
that cannot be determined with certainty.

(b) All material assets and properties of the Company
which are reasonably necessary for the operation of its business are in
good working condition and are maintained in accordance with prudent
business standards.

7.10 No Material Misstatements. Except as qualified by this
Agreement or the Schedules hereto or the Security Instruments, no written
information, statement, exhibit, certificate, document or report furnished to
the Agent by the Company in connection with the negotiation of this Agreement
contained any material misstatement of fact or omitted to state a

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<PAGE> 28
material fact or any fact necessary to make the statement contained therein not
materially misleading in light of the circumstances in which made and with
respect to the Company taken as a whole.

7.11 Investment Company Act. The Company is not an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.

7.12 Public Utility Holding Company Act. The Company is not
a "holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," or a "public utility" within the meaning of the Public Utility
Holding Company Act of 1935, as amended.

7.13 Location of Business and Offices. The Company's
principal place of business and chief executive offices are located at the
address stated on the signature page of this Agreement.

7.14 Environmental Matters. Except (i) as provided in
Schedules to the Purchase and Sale Agreement, (ii) as would not have a Material
Adverse Effect (or with respect to (c) , (d) , and (e) below, where the failure
to take such actions would not have such a Material Adverse Effect) and (iii)
as to the operations of any Person, with respect to formations in which the
Company does not own an interest:

(a) No Properties owned by the Company nor the
operations conducted thereon violate any Environmental Laws or order of
any court or Governmental Authority with respect to Environmental Laws;

(b) Without limitation of clause (a) above, no Properties
owned by the Company nor the operations currently conducted thereon or
by any prior owner or operator of such Property or operation, are
subject to any existing, pending or (to the knowledge of the Company)
threatened action, suit, investigation, inquiry or proceeding by or
before any court or Governmental Authority with respect to
Environmental Laws or to any remedial obligations under Environmental
Laws;

(c) All notices, permits, licenses or similar
authorizations, if any, required to be obtained or filed in connection
with the operation or use of any and all Property of the Company,
including without limitation past or present treatment, storage,
disposal or release of a hazardous substance or solid waste into the
environment, have been duly obtained or filed;

(d) All hazardous substances generated at any and all
Property of the Company, have in the past been transported, treated and
disposed of only by carriers maintaining valid permits under RCRA and
any other Environmental Law and only at treatment, storage and disposal
facilities maintaining valid permits under RCRA and any other
Environmental Law, which carriers and facilities have been and are
operating in compliance with such permits;

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<PAGE> 29
(e) The Company has taken all steps reasonably necessary
to determine and has determined that no hazardous substances or solid
waste have been disposed of or otherwise released and there has been no
threatened release of any hazardous substances on Property of the
Company, except in compliance with Environmental Laws;

(f) The Company has no material contingent liability in
connection with any release or threatened release of any hazardous
substance or solid waste into the environment; and

(g) To the extent applicable, the Properties owned by the
Company currently satisfy all design, operation and equipment
requirements imposed by OPA or scheduled to be imposed by OPA during
the term of the Loans to be provided by the Banks pursuant to this
Agreement, and the Company has no reason to believe such Properties
will not be able to maintain compliance with OPA requirements during
the term of the Loans.

7.15 Defaults. The Company is not in default nor has any
event or circumstance occurred which, but for the passage of time or the giving
of notice, or both, would constitute a default under any agreement or other
instrument to which the Company, is a party or by which the Company or any
Subsidiary is bound. No Default hereunder has occurred and is continuing.

7.16 Compliance with the Law. The Company has not violated
any Governmental Requirement nor failed to obtain any license, permit,
franchise or other governmental authorization necessary for the ownership of
any of its Properties or the conduct of its business, which violation or
failure would have (in the event such violation or failure were asserted by any
Person through appropriate action) a Material Adverse Effect.

7.17 Contracts and Commitments. Except as set forth in
Schedules to the Purchase and Sale Agreement:

(a) The Company is not a party to any contract or
agreements other than the Operative Documents and other than entered
into in the ordinary course of business in connection with its Oil and
Gas Properties.

(b) There exist no agreements or arrangements for the
sale, transportation, gathering, processing or refining of production
from the Oil and Gas Properties of the Company (including without
limitation, calls on, or other rights to purchase, production, whether
or not the same are currently being exercised) other than (i) those
disclosed on Schedules to the Purchase and Sale Agreement; (ii)
agreements or arrangements which are cancelable on 60 days' notice or
less without penalty or detriment; and (iii) calls on, or other rights
to purchase production which neither (i) individually, or in the
aggregate, affect a material part of the production of oil or gas from
the Oil and Gas Properties of the Company; nor (ii) grant an option to
purchase production at a price other than a price that is the market
price from time to time existing in the areas where such Oil and Gas
Properties subject to such call (or other right to purchase) are
located. Except as shown on Schedules to the Purchase and Sale
Agreement, the Company is presently receiving a price for all
production from (or attributable to) each of its Oil and Gas Properties
covered by a production sales contract disclosed on Schedules to the
Purchase and Sale

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<PAGE> 30
Agreement, as computed in accordance with the terms of such contract,
and deliveries of gas from such Oil and Gas Property subject to such a
contract are not being curtailed substantially below such property's
delivery capacity.

(c) As of the date of this Agreement, except as set forth
on Schedules to the Purchase and Sale Agreement, on a net basis there
are no gas imbalances, take-or-pay or other prepayments with respect to
any Oil and Gas Property of the Company, which would require the
Company to deliver Hydrocarbons produced from its Oil and Gas
Properties at some future time without then or thereafter receiving
full payment therefor, and which would exceed $10,000 in the aggregate
for the Company.

Section 8. Affirmative Covenants. The Company agrees that,
until payment in full of all Loans hereunder, all interest thereon and all
other amounts payable by the Company hereunder:

8.01 Financial Statements. The Company shall deliver, or
shall cause to be delivered, to the Agent with enough copies of each for the
Banks:

(a) As soon as available and in any event within 90 days
after the end of each fiscal year of the Company, the audited
statements of income, members' equity and cash flows of the Company for
such fiscal year, and the related consolidated balance sheet of the
Company as at the end of such fiscal year, and setting forth in each
case in comparative form the corresponding figures for the preceding
fiscal year, and accompanied by the related opinion of independent
public accountants of recognized national standing acceptable to the
Agent which opinion shall state that said financial statements fairly
present the financial condition and results of operations of the
Company as at the end of, and for, such fiscal year and that such
financial statements have been prepared in accordance with GAAP
consistently followed throughout the period indicated except for such
changes in such principles with which the independent public
accountants shall have concurred and such opinion shall not contain a
"going concern" or like qualification or exception.

(b) As soon as available and in any event within 45 days
after the end of each fiscal quarterly period of each fiscal year of
the Company, statements of income, members' equity and cash flows of
the Company, for such period and for the period from the beginning of
the respective fiscal year to the end of such period, and the related
balance sheet as at the end of such period, and setting forth in each
case in comparative form the corresponding figures for the
corresponding period in the preceding fiscal year, accompanied by the
certificate of a Responsible Officer, which certificate shall state
that said consolidated financial statements fairly present the
financial condition and results of operations of the Company in
accordance with GAAP, consistently applied, as at the end of, and for,
such period (subject to normal year-end audit adjustments).

(c) Promptly after the Company knows that any Default or
any Material Adverse Effect has occurred, a notice of such Default or
Material Adverse Effect, describing the same in reasonable detail and
the action the Company proposes to take with respect thereto.

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<PAGE> 31
(d) Prompt notice of receipt by the Company of any claim
for taxes against the Company if the amount involved is more than
$10,000.

(e) On or immediately before the date of payment of any
Production Payment, a detailed calculation of such Production Payment
in form satisfactory to the Agent.

(f) All reports, notices and other information received
by the Company pursuant to the Operative Documents other than the Loan
Documents.

(g) As soon as available but prior to December 31 of any
year, a budget ("Budget") of all projected expenditures to be made for
exploration, development, workovers, recompletions, deepenings and for
other capital expenditures by the Company in the following calendar
year; provided that for 1996 the Budget shall be delivered on or before
April 30, 1996.

(h) On each Quarterly Date the Company shall deliver to
the Banks a report showing in detail the cash revenues received for
such quarter and the payments made as provided in Section 9.20.

(i) From time to time such other information regarding
the business, affairs or financial condition of the Company as any Bank
or the Agent may reasonably request.

8.02 Litigation. The Company shall promptly give to each
Bank notice of all legal or arbitral proceedings, and of all proceedings before
any Governmental Authority, to which the Company has knowledge affecting the
Company.

8.03 Corporate Existence, Etc.

(a) The Company shall: preserve and maintain its existence
and all of its material rights, privileges and franchises except for
such as are released, surrendered or disposed of in the ordinary course
of business and by such release, surrender or disposal does not cause a
Material Adverse Effect; comply with the requirements of all applicable
laws, rules, regulations and orders of governmental or regulatory
authorities if failure to comply with such requirements would have a
Material Adverse Effect; pay and discharge all taxes, assessments and
governmental charges or levies imposed on it or on its income or
profits or on any of its Property prior to the date on which penalties
attach thereto, except for any such tax, assessment, charge or levy the
payment of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being maintained;
permit representatives of any Bank or the Agent, during normal business
hours, to examine, copy and make extracts from its books and records,
to inspect its Properties, and to discuss its business and affairs with
its officers, agents or representatives, all to the extent reasonably
requested by such Bank or the Agent (as the case may be); keep insured
by financially sound and reputable insurers all property of a character
usually insured by persons engaged in the same or similar business
similarly situated against loss or damage of the kinds and in the
amounts customarily insured against by such companies, and carry such
other insurance as is usually carried by such companies; and from time
to time at any Bank's request, promptly furnish or cause to be

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<PAGE> 32
furnished to the Banks evidence, in form and substance satisfactory to
the Majority Banks, of the maintenance of all insurance required to be
maintained by this paragraph, including, but not limited to, such
copies as any Bank may request of policies, certificates of insurance,
riders and endorsements relating to such insurance and proof of premium
payments.

(b) The Company will at its own expense to do or cause to
be done all things reasonably necessary to preserve and keep in good
repair, working order and efficiency all of its Oil and Gas Properties
including, without limitation, all equipment, machinery and facilities,
and from time to time will make all the reasonably necessary repairs,
renewals and replacements so that at all times the state and condition
of its Oil and Gas Properties will be fully preserved and maintained,
except to the extent a portion of such Oil and Gas Properties is no
longer capable of producing Hydrocarbons in sufficient aggregate value
to cover the direct cost of operating the well located on such
Property; provided, that in no case shall abandonment occur due to
curtailment of production or failure of it to operate such well in a
prudent manner. The Company will promptly pay and discharge or cause
to be paid and discharged all delay rentals, royalties, expenses and
indebtedness accruing under, and perform or cause to be performed each
and every act, matter or thing required by, each and all of the
assignments, deeds, leases, sub-leases, contracts and agreements
affecting its interests in its Oil and Gas Properties and will do all
other things necessary to keep unimpaired its rights with respect
thereto and prevent any forfeiture thereof or a default thereunder,
except to the extent a portion of such Oil and Gas Properties may be
abandoned for uneconomical production as provided above in this Section
8.03(b). The Company will operate its Oil and Gas Properties or cause
or use its best efforts to cause such Oil and Gas Properties to be
operated in a careful and efficient manner in accordance with the
practices of the industry and in compliance with all applicable
contracts and agreements and in compliance in all material respects
with all Governmental Requirements.

8.04 Reserve Reports.

(a) As soon as available and in any event within 90 days
after each December 31 of each fiscal year of the Company commencing
with December 31, 1995, the Company shall furnish to the Banks a report
(the "Reserve Report") in form and substance satisfactory to the
Majority Banks which may be prepared by or under the supervision of a
qualified engineer who shall be an employee of HSR and certified by the
chief engineer of HSR as to its truth and accuracy, which shall
evaluate as of the end of such December 31 ("Reporting Date") the
proved oil and gas reserves of the Company, and which shall, together
with any other information reasonably requested by the Majority Banks,
set forth the proved oil and gas reserves attributable to such Property
as of such Reporting Date, together with a projection of the rate of
production and net future income, taxes, operating expenses and capital
expenditures with respect thereto as of such date, based upon the
pricing assumptions consistent with Securities and Exchange Commission
reporting requirements at the time. The December 31 Reserve Report
shall provide a list of the oil and/or gas wells evaluated in
descending order of net discounted present value for each well
evaluated. An independent petroleum consultant acceptable to the
Majority Banks shall have reviewed or audited all of the top valued oil
and/or gas

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<PAGE> 33
wells on such list starting from the most valuable well on such list
and evaluating all of the wells in descending order until such
consultant shall have audited at least 85% of the net discounted
present value of proved oil and gas reserves covered by such Reserve
Report. The independent consultant shall certify that such Reserve
Report shall have been prepared using customary engineering
disciplines.

(b) With the delivery of each Reserve Report, the Company
shall provide to the Banks, a certificate from the Responsible Officer
of HSR that, to the best of his knowledge and in all material respects,
(i) the information contained in the Reserve Report is true and
correct; (ii) the Company owns good and defensible title to the Oil and
Gas Properties evaluated by such Reserve Report ("Evaluated
Properties") free of all Liens except for Liens permitted by Section
9.02 and that the Agent has a first and prior Lien on all of the net
discounted present value of the Evaluated Properties pursuant to the
Security Instruments subject only to Liens permitted by Section 9.02;
(iii) except as set forth on an exhibit to the certificate, on a net
basis there are no gas imbalances, take-or-pay or other prepayments
with respect to the Evaluated Properties which would require the
Company to deliver Hydrocarbons produced from the Evaluated Properties
at some future time without then or thereafter receiving full payment
therefor and which would exceed $10,000 in the aggregate for the
Company; (iv) attached to the certificate is a list of all Persons
disbursing proceeds to the Company from the Evaluated Properties; and
(v) all of the Evaluated Properties are Mortgaged Properties.

8.05 Mortgaged Properties. The Company shall maintain a
first priority Lien subject only to Liens permitted by Section 9.02 pursuant to
Security Instruments securing the Indebtedness on all of its Oil and Gas
Properties.

8.06 Further Assurances. The Company will promptly cure any
defects in the creation and issuance of the Loan Documents. The Company at its
expense will promptly execute and deliver to the Agent upon request all such
other and further documents, agreements and instruments in compliance with or
accomplishment of the covenants and agreements of the Company in the Loan
Documents, or to further evidence and more fully describe the collateral
intended as security for the Notes, or to correct any omissions in the Loan
Documents, or more fully state the security obligations set out herein or in
any of the Loan Documents, or to perfect, protect or preserve any Liens created
pursuant to any of the Loan Documents, or to make any recordings, to file any
notices, or obtain any consents, all as may be necessary or appropriate in
connection therewith.

8.07 Performance of Obligations. The Company will pay the
Notes according to the reading, tenor and effect thereof; and the Company will
do and perform every act and discharge all of the obligations provided to be
performed and discharged by the Company under the Loan Documents, at the time
or times and in the manner specified.

8.08 Hedging Arrangements. The Company shall at all times
maintain Hedging Agreements satisfactory to the Majority Banks covering a
quantity of its oil and gas production acceptable to the Banks.

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<PAGE> 34
8.09 Use of Cash Flow. On each Quarterly Date commencing on
June 27, 1996 the Company shall use all cash revenues received by the Company
from whatever source other than as agreed in connection with Section 29
transactions and exclusive of payments for production related taxes which may
be paid when due ("Net Proceeds") to make payments in the following order and
payments under any subsection may only be made if all preceding subsections
have been satisfied in full:

(a) To scheduled payments of principal and accrued
interest on the Notes.

(b) To all obligations due and owing under the Hedging
Agreements permitted by Section 9.01(e).

(c) To all other amounts due and owing under the Loan
Documents and the Hedging Agreements permitted by Section 9.01(e),
including without limitation, for fees, expenses and indemnities.

(d) To the Management Fee due on such date and any unpaid
Management Fees from prior periods.

(e) To scheduled expenditures for such period as set
forth in the Budget to the extent expended in such period or prior
periods and not previously paid.

(f) 100% of remaining Net Proceeds to a prepayment of the
principal outstanding on the Notes until $2,000,000 of principal has
been prepaid under this Section 8.09(f) in any 12-month period ending
on the anniversary date of the Effective Date ("Payment Year").

(g) (i) 50% of remaining Net Proceeds to payments on
the Production Payment but not to exceed $1,000,000 in any
Payment Year.

(ii) 50% of remaining Net Proceeds, plus any
amounts remaining under Section 8.09(g)(i) after the
$1,000,000 has been paid to the Production Payment, to a
prepayment of the principal outstanding on the Notes.

(h) To a payment on the Production Payment as provided by
the terms of the Production Payment.

(i) To a prepayment of the principal and accrued interest
outstanding on the Subordinated Note.

(j) The Company to retain any balance after all such
payments.

Section 9. Negative Covenants. The Company agrees that until
payment in full of Loans hereunder, all interest thereon and all other amounts
payable by the Company hereunder, without the prior written consent of the
Majority Banks:

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<PAGE> 35
9.01 Debt. The Company will not incur, create, assume or
suffer to exist any Debt, except:

(a) the Notes or other Indebtedness;

(b) Bonds or surety obligations required by government
agencies in connection with the operation of Oil and Gas Properties;

(d) the Production Payment; and

(e) obligations under Hedging Agreements with a Bank
approved by the Majority Banks or such other party as approved by the
Agent.

9.02 Liens. The Company will not create, incur, assume or
permit to exist any Lien on any of its Properties (now owned or hereafter
acquired), except:

(a) Liens securing the payment of any Indebtedness;

(b) Liens securing Debt allowed by Section 9.01(e);

(d) the Production Payment.

9.03 Investments, Loans and Advances. The Company will not
make or permit to remain outstanding any loans or advances to or investments in
any Person, except that the foregoing restriction shall not apply to:

(a) accounts receivable arising out of the sale of
Hydrocarbons in the ordinary course of business;

(b) direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any agency
thereof, in each case maturing within one year from the date of
creation thereof;

(c) commercial paper maturing within one year from the
date of creation thereof rated in the highest grade by Standard & Poors
Corporation or Moody's Investors Service, Inc.;

(d) deposits maturing within one year from the date of
creation thereof with, including certificates of deposit issued by, any
bank or any office located in the United States of any other bank or
trust company which is organized under the laws of the United States or
any state thereof and has capital, surplus and undivided profits
aggregating at least $100,000,000 (as of the date of such Bank's or
bank or trust company's most recent financial reports); and

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<PAGE> 36
(e) repurchase agreements of any commercial banks in the
United States and Canada, if the commercial paper of such bank or of
the bank holding company of which such bank is a wholly owned
subsidiary is rated in the highest rating categories of Standard &
Poors Corporation, Moody's Investors Service, Inc., or any other rating
agency satisfactory to the Majority Banks, that are fully secured by
securities described in Section 9.03(b).

9.04 Dividends, Distributions and Redemptions. The Company
will not declare or pay any dividend, purchase, redeem or otherwise acquire for
value any of its membership units now or hereafter outstanding, return any
capital to its members or make any distribution of its assets to its members.

9.05 Sales and Leasebacks. The Company will not enter into
any arrangement, directly or indirectly, with any Person whereby the Company
shall sell or transfer any Property, whether now owned or hereafter acquired,
and whereby the Company shall then or thereafter rent or lease as lessee such
Property or any part thereof.

9.06 Nature of Business. The Company will not allow any
material change to be made in the character of its business.

9.07 Limitation on Leases. The Company will not create,
incur, assume or suffer to exist any obligation for the payment of rent or hire
of Property of any kind whatsoever (real or personal except for leases of
Hydrocarbon Interests).

9.08 Mergers. The Company will not merge into or with or
consolidate with any other Person.

9.09 Proceeds of Notes. The Company will not permit the
proceeds of the Notes to be used for any purpose other than those permitted by
Section 7.07.

9.10 ERISA Compliance. The Company will not maintain any
Plans.

9.11 Sale or Discount of Receivables. The Company shall not
discount or sell with recourse, or sell for less than the market value thereof,
any of its notes receivable or account receivable unless the Company determines
in its reasonable judgment that such course of action is the only means of
collection with respect to any such note receivable or account receivable and
provided that such discounted receivables do not constitute a material portion
of the Company's notes receivable or accounts receivable outstanding at such
time. expense.

9.12 Sale of Oil and Gas Properties. Except for Hydrocarbons
sold in the ordinary course of business as and when produced, the Company will
not sell, assign, transfer, farm-out or convey any interest in any of its
Properties, except pursuant to the Option.

9.13 Environmental Matters. The Company will not cause or
permit or, if it or HSR is not the operator thereof, will use its best efforts
to prevent the operator from causing or permitting any of its Property to be in
violation of, or do anything or permit anything to be

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<PAGE> 37
done which will subject any such Property to any remedial obligations under any
Environmental Laws that would (individually or in the aggregate) have a
Material Adverse Effect, assuming disclosure to the applicable Governmental
Authority of all relevant facts, conditions and circumstances, if any,
pertaining to such Property. The Company will promptly notify the Agent in
writing of any existing, pending or threatened (of which the Company has
knowledge) action or investigation by any Governmental Authority in connection
with any Environmental Laws, except for any such violations or remedial
obligations (individually or in the aggregate) which would not have a Material
Adverse Effect. The Company will or, if it or HSR is not the operator, will
use its best efforts to cause the operator to establish and implement such
procedures as may be necessary to continuously determine and assure that (i) no
solid wastes are disposed of on any Property owned by the Company in quantities
or locations that would require remedial action under any Environmental Laws in
effect on the date of such action, (ii) no hazardous substance will be released
on or to any such Property in a quantity equal to or exceeding that quantity
which requires reporting pursuant to Section 103 of CERCLA, and (iii) no
hazardous substance is released on or to any such Property so as to pose an
imminent and substantial endangerment to public health or welfare or the
environment. The Company will or, if it or HSR is not the operator, will use
its best efforts to cause the operator to not use any of its Property in a
manner which will result in (i) the disposal of any solid waste on or to any
such Property in quantities or locations that would require remedial action
under any Environmental Laws in effect on the date of such action, (ii) a
release of a hazardous substance on or to any such Property in a quantity equal
to or exceeding that quantity which requires reporting pursuant to Section 103
of CERCLA, or (iii) the release of any hazardous substance on or to any such
Property so as to pose an imminent and substantial endangerment to public
health or welfare or the environment. The Company covenants and agrees to keep
or cause all of its Property to be kept free of any hazardous waste or
contaminants and to remove the same (or if removal is prohibited by law, to
take whatever action is required by law) promptly upon discovery at its sole
expense to the extent the failure to do so would have a Material Adverse
Effect.

9.14 Subsidiaries and Partnerships. The Company shall not
create or invest in any subsidiaries, partnerships or Persons, except for tax
law partnerships which are not partnerships under state law, and as except as
permitted in Section 9.03.

9.15 Hydrocarbon Sales Contract. The Company will not enter
into any take-or-pay contracts for the sale of Hydrocarbons produced from its
Oil and Gas Properties or warranty contracts for the sale of Hydrocarbons
produced from any of its Oil and Gas Properties,

9.16 Public Announcements. Except to the extent required by
Governmental Requirement, the Company will not make any public announcements
and filings relating to this loan transaction which refer to any of the Banks
without the prior written consent of the Banks (which approval shall not be
unreasonably withheld).

9.17 Capital Expenditures. The Company will not make any
capital expenditure, including, without limitation, for acquisition,
exploration and development of Oil and Gas Properties in any year until the
budget for that year delivered pursuant to Section 8.01(g) has

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been approved by the Majority Banks and therefore will not make any
expenditures not set forth on such budget.

9.18 Operative Documents. The Company will not modify or
amend the terms of the Operative Documents as in existence on the Closing Date
without the consent of the Majority Banks.

9.19 Address. The Company will not change the location of
its principal place of business or chief executive offices without giving the
Banks at least 30 days written notice before such change.

9.20 Payments. The Company shall not make any payments to
any Person other than as set forth in Section 8.09.

Section 10. Events of Default; Remedies. If one or more of
the following events (herein called "Events of Default") shall occur and be
continuing:

(a) The Company shall default in the payment or
prepayment when due of any principal of or interest on any Loan or any
fees or other amount payable by it hereunder or under any Security
Instrument and such default shall continue unremedied for a period of 3
days; or

(b) The Company shall default in the payment when due of
any principal of or interest on any of its other Debt in an amount in
excess of $50,000.00; or any event specified in any note, agreement,
indenture or other document evidencing or relating to any such Debt
shall occur if the effect of such event is to cause, or (with the
giving of any notice or the lapse of time or both) to permit the holder
or holders of such Debt (or a trustee or agent on behalf of such holder
or holders) to cause, such Debt to become due prior to its stated
maturity; or

(c) Any representation, warranty or certification made or
deemed made in any Operative Document by the Company or HSR or any
certificate furnished to any Bank or the Agent pursuant to the
provisions hereof or any other Operative Document shall prove to have
been false or misleading as of the time made or furnished in any
material respect and the factors which caused such representation,
warranty or certification to have been false as of the time made or
furnished, if correctable, shall not have been corrected to make such
representation, warranty or certification true within 30 days of the
earlier of (i) notice thereof to the Company and HSR by the Agent or
any Bank (through the Agent) or (ii) such default otherwise becoming
known to the Company or HSR; or

(d) The Company shall default in the performance of any
covenant under Section 9 and, to the extent such default is curable,
such default shall continue unremedied for a period of 30 days after
the earlier of (i) notice thereof to the Company by the Agent or any
Bank (through the Agent) or (ii) such default otherwise becoming known
to the Company; or

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(e) The Company shall default in the performance of any
of the other covenants in this Agreement, other than the covenants
under Section 9 or the Company's obligation to make any payments or
prepayments, and such default shall continue unremedied for a period of
30 days after the earlier of (i) notice thereof to the Company by the
Agent or any Bank (through the Agent) or (ii) such default otherwise
becoming known to the Company; or

(f) The Company shall admit in writing its inability to,
or be generally unable to, pay its debts as such debts become due; or

(g) The Company shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of its
creditors, (iii) commence a voluntary case under the Federal Bankruptcy
Code (as now or hereafter in effect), (iv) file a petition seeking to
take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of debts,
(v) fail to controvert in a timely and appropriate manner, or acquiesce
in writing to, any petition filed against it in an involuntary case
under the Federal Bankruptcy Code, or (vi) take any action for the
purpose of effecting any of the foregoing; or

(h) A proceeding or case shall be commenced, without the
application or consent of the Company, in any court of competent
jurisdiction, seeking (i) its liquidation, reorganization, dissolution
or winding-up, or the composition or readjustment of its debts, (ii)
the appointment of a trustee, receiver, custodian, liquidator or the
like of the Company or of all or any substantial part of its assets, or
(iii) similar relief in respect of the Company under any law relating
to bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any
of the foregoing shall be entered and continue unstayed and in effect,
for a period of 60 days; or an order for relief against the Company
shall be entered in an involuntary case under the Federal Bankruptcy
Code; or

(i) A judgment or judgments for the payment of money in
excess of $50,000.00 in the aggregate shall be rendered by a court or
courts against the Company and the same shall not be discharged (or
provision shall not be made for such discharge), or a stay of execution
thereof shall not be procured, within 30 days from the date of entry
thereof and the Company shall not, within said period of 30 days, or
such longer period during which execution of the same shall have been
stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal; or

(j) The Company shall incur or in the opinion of the
Majority Banks shall be reasonably likely to incur a liability to a
Plan, a Multiemployer Plan or PBGC (or any combination of the
foregoing);

(k) The Company or HSR shall default in the due
observance or performance of any of the covenants or agreements
contained in any Operative Document other than

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this Agreement, and such default continues unremedied beyond the
expiration of the earlier of 30 days after the earlier of (A) notice
thereof to the Company and HSR by the Agent or any Bank (through the
Agent) or (B) such default otherwise becoming known to the Company or
HSR; or

(l) Any Event of Default shall exist and be continuing as
set forth in the HSR Credit Agreement or the HSR Credit Agreement shall
cease to represent the principal bank facility of HSR.

(m) An Event of Default under any Hedging Agreement of
the Company.

THEREUPON: (i) in the case of an Event of Default other than one referred to
in clause (f), (g) or (h) of this Section 10, the Agent may and, upon request
of the Majority Banks, shall, by notice to the Company, declare the principal
amount then outstanding of and the accrued interest on the Loans and all other
amounts payable by the Company hereunder and under the Notes to be forthwith
due and payable, whereupon such amounts shall be immediately due and payable
without presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other formalities of any kind, all of which are hereby
expressly waived by the Company; and (ii) in the case of the occurrence of an
Event of Default referred to in clause (f), (g) or (h) of this Section 10, the
principal amount then outstanding of, and the accrued interest on, the Loans
and all other amounts payable by the Company hereunder and under the Notes
shall become automatically immediately due and payable without presentment,
demand, protest, notice of intent to accelerate, notice of acceleration or
other formalities of any kind, all of which are hereby expressly waived by the
Company. All proceeds received after maturity of the Notes, whether by
acceleration or otherwise shall be applied first to reimbursement of expenses
and indemnities provided for in this Agreement and the Security Instruments;
second to accrued interest on the Notes pro rata in accordance with the amount
of interest due and payable on the Notes; third to fees and other Indebtedness
pro rata in accordance with the amounts owing; fourth to principal outstanding
on the Notes pro rata in accordance with the respective unpaid amounts owing on
the Notes; and last to the Company or as required by Governmental Requirements.

Section 11. The Agent.

11.01 Appointment, Powers and Immunities. Each Bank hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder
with such powers as are specifically delegated to the Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. The Agent (which term as used in this sentence and in Section 11.05
and the first sentence of Section 11.06 shall include reference to its
affiliates and its own and its affiliates' officers, directors, employees and
agents): (a) shall have no duties or responsibilities except those expressly
set forth in this Agreement and the Security Instruments, and shall not by
reason of this Agreement be a trustee for any Bank; (b) shall not be
responsible to the Banks for any recitals, statements, representations or
warranties contained in this Agreement and the Security Instruments, or in any
certificate or other document referred to or provided for in, or received by
any of them under, this Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement, any Note, any
Security Instrument or any other document referred to or provided for herein or
for any

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<PAGE> 41
failure by the Company or any other Person to perform any of its obligations
hereunder or thereunder; (c) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder; and (d) shall not be
responsible for any action taken or omitted to be taken by it hereunder or
under any other document or instrument referred to or provided for herein or in
connection herewith including its own negligence, except for its own gross
negligence or willful misconduct. The Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such agents or attorneys-in-fact selected by it in good faith. The
Agent may deem and treat the payee of any Note as the holder thereof for all
purposes hereof unless and until a written notice of the assignment or transfer
thereof permitted hereunder shall have been filed with the Agent.

11.02 Reliance by Agent. The Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof by
telephone, telex, telecopier, telegram or cable) believed by it to be genuine
and correct and to have been signed or sent by or on behalf of the proper
Person or Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent. As to any matters not
expressly provided for by this Agreement or the Security Instruments, the Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder in accordance with instructions signed by the Majority Banks, and
such instructions of the Majority Banks and any action taken or failure to act
pursuant thereto shall be binding on all of the Banks.

11.03 Defaults. The Agent shall not be deemed to have
knowledge of the occurrence of a Default (other than the non-payment of
principal of or interest on Loans or of fees) unless the Agent has received
notice from a Bank or the Company specifying such Default and stating that such
notice is a "Notice of Default." In the event, that the Agent receives such a
notice of the occurrence of a Default, the Agent shall give prompt notice
thereof to the Banks (and shall give each Bank prompt notice of each such
non-payment). The Agent shall (subject to Section 11.07) take such action with
respect to such Default as shall be directed by the Majority Banks, provided
that, unless and until the Agent shall have received such directions, the Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default as it shall deem advisable in the
best interest of the Banks.

11.04 Rights as a Bank. With respect to its Commitments and
the Loans made by it, The Chase Manhattan Bank, N.A. (and any successor acting
as Agent) in its capacity as a Bank hereunder shall have the same rights and
powers hereunder as any other Bank and may exercise the same as though it were
not acting as the Agent, and the term "Bank" or "Banks" shall, unless the
context otherwise indicates, include the Agent in its individual capacity. The
Chase Manhattan Bank, N.A. (and any successor acting as Agent) and its
affiliates may (without having to account therefor to any Bank) accept deposits
from, lend money to and generally engage in any kind of banking, trust or other
business with the Company (any and of its affiliates) as if it were not acting
as the Agent, and The Chase Manhattan Bank, N.A. and its affiliates may accept
fees and other consideration from the Company for services in connection with
this Agreement or otherwise without having to account for the same to the
Banks.

11.05 Indemnification. The Banks agree to indemnify the
Agent (to the extent not reimbursed under Section 12.03, but without limiting
the obligations of the Company under said Section 12.03 or any other indemnity
provision contained in the Security Instruments),

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ratably in accordance with the aggregate principal amount of the Loans made by
the Banks (or, if no Loans are at the time outstanding, ratably in accordance
with their respective Commitments), for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of this Agreement or any other documents contemplated by or referred to herein
or the transactions contemplated hereby (including, without limitation, the
costs and expenses which the Company is obligated to pay under Section 12.03
but excluding, unless a Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder) or the enforcement of any of the terms hereof or of any such
other documents including any of the foregoing to the extent they arise from
the negligence of the party to be indemnified, provided that no Bank shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the party to be indemnified.

11.06 Non-Reliance on Agent and other Banks. Each Bank
agrees that it has, independently and without reliance on the Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Company and decision to enter
into this Agreement and that it will, independently and without reliance upon
the Agent or any other Bank, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement. The Agent shall
not be required to keep itself informed as to the performance or observance by
the Company of this Agreement or any other document referred to or provided for
herein or to inspect the properties or books of the Company. Except for
notices, reports and other documents and information expressly required to be
furnished to the Banks by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of the Company (or any
of its Affiliates) which may come into the possession of the Agent or any of
its affiliates.

11.07 Failure to Act. Except for action expressly required
of the Agent hereunder the Agent shall in all cases be fully justified in
failing or refusing to act hereunder unless it shall be indemnified to its
satisfaction by the Banks against any and all liability and expenses which may
be incurred by it by reason of taking or continuing to take any such action.

11.08 Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent
may resign at any time by giving notice thereof to the Banks and the Company
and the Agent may be removed at any time with or without cause by the Majority
Banks. Upon any such resignation or removal, the Majority Banks shall have the
right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Majority Banks and shall have accepted such appointment within
30 days after the retiring Agent's giving of notice of resignation or the
Majority Banks' removal of the retiring Agent, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
resignation or removal hereunder

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as Agent, the provisions of this Section 11 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as the Agent.

Section 12. Miscellaneous.

12.01 Waiver. No failure on the part of the Agent or any
Bank to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under this Agreement or any Note
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege under this Agreement or any Note preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The remedies provided herein are cumulative and not exclusive of
any remedies provided by law.

12.02 Notices. All notices and other communications provided
for herein and in the other Security Instruments (including, without
limitation, any modifications of, or waivers or consents under, this Agreement
or the other Security Instruments) shall be given or made by telex, telecopy,
telegraph, cable, courier or U.S. Mail or in writing and telexed, telecopied,
telegraphed, cabled, mailed or delivered to the intended recipient at the
"Address for Notices" specified below its name on the signature pages hereof or
in the other Security Instruments; or, as to any party, at such other address
as shall be designated by such party in a notice to each other party. Except
as otherwise provided in this Agreement or in the other Security Instruments,
all such communications shall be deemed to have been duly given upon receipt.

12.03 Payment of Expenses, Indemnities, etc. The Company
agrees to:

(a) whether or not the transactions hereby contemplated
are consummated, pay all reasonable out- of-pocket expenses of the
Agent in the administration (both before and after the execution hereof
and including advice of counsel as to the rights and duties of the
Agent and the Banks with respect thereto) of, and in connection with
the negotiation, investigation, preparation, execution and delivery of,
recording or filing of, preservation of rights under, enforcement of,
and refinancing, renegotiation or restructuring of, this Agreement, the
Notes and the other Security Instruments and any amendment, waiver or
consent relating thereto (including, without limitation, the reasonable
fees and disbursements of counsel for the Agent and in the case of
enforcement for any of the Banks); and promptly reimburse the Agent for
all amounts expended, advanced or incurred by the Agent or the Banks to
satisfy any obligation of the Company under this Agreement or any
Security Instrument;

(b) pay and hold each of the Banks harmless from and
against any and all present and future stamp and other similar taxes
with respect to the Notes, Indebtedness and Security Instruments and
save each Bank harmless from and against any and all liabilities with
respect to or resulting from any delay or omission to pay such taxes;
and

(c) indemnify the Agent and each Bank, its officers,
directors, employees, representatives, agents and affiliates from, hold
each of them harmless against and promptly upon demand pay or reimburse
each of them for, any and all actions, suits, proceedings (including
any investigations, litigation or inquiries), claims, demands and
causes of action, and, in connection therewith, all costs, losses,
liabilities, damages or

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expenses of any kind or nature whatsoever (collectively the "Indemnity
Matters") which may be incurred by or asserted against or involve any
of them (whether or not any of them is designated a party thereto) as a
result of, arising out of or in any way related to (i) any actual or
proposed use by the Company of the proceeds of any of the Loans, (ii)
any other aspect of the Operative Documents, (iii) the operations of
the business of the Company or (iv) the failure of the Company to
comply with any Governmental Requirement including, without limitation,
the reasonable fees and disbursements of counsel and all other expenses
incurred in connection with investigating, defending or preparing to
defend any such action, suit, proceeding (including any investigations,
litigation or inquiries) or claim and including all Indemnity Matters
arising by reason of the negligence of any indemnitee, but excluding
herefrom all Indemnity Matters arising solely by reason of claims
between the Banks or any Bank and the Agent or a Bank shareholder
against the Agent or Bank or solely by reason of the sole gross
negligence or sole willful misconduct on the part of the Agent or a
Bank; and

(d) indemnify and hold the Agent and each Bank, its
officers, directors, employees, representatives, agents and affiliates
harmless against, promptly to pay on demand or reimburse each of them
with respect to, any and all claims, demands, causes of action, loss,
damage, liabilities, costs and expenses of any and every kind or nature
whatsoever asserted against or incurred by any of them by reason of or
arising out of or in any way related to (i) the breach of any
representation or warranty as set forth herein regarding Environmental
Laws, or (ii) the failure of the Company to perform any obligation
herein required to be performed pursuant to Environmental Laws. The
foregoing indemnity shall apply with respect to matters caused by or
arising out of the negligence of the indemnitee but shall not apply
with respect to matters caused by or arising out of the sole gross
negligence or sole willful misconduct of the Agent and the Banks.

(e) In the case of any indemnification hereunder, the
Agent or Bank, as appropriate shall give notice to the Company of any
such claim or demand being made against the Agent or such Bank and the
Company shall have the non-exclusive right to join in the defense
against any such claim or demand provided that if the Company provides
a defense, the indemnitee shall bear its own cost of defense unless
there is a conflict between the Company and such indemnitee. The
provisions of this paragraph shall survive the final payment of all
Indebtedness and the termination of this Agreement and shall continue
thereafter in full force and effect.

(f) No indemnitee may settle any claim to be indemnified
without the consent of the indemnitor, such consent not to be
unreasonably withheld; provided, that the indemnitor may not reasonably
withhold consent to any settlement that an indemnitee proposes, if the
indemnitor does not have the financial ability to pay all its
obligations outstanding and asserted against the indemnitee at that
time, including the maximum potential claims against the indemnitee to
be indemnified pursuant to this Section 12.03.

(g) This Section 12.03 shall not apply to actions, suits,
proceedings, investigations, demands, losses, liabilities, claims,
damages, deficiencies, interest,

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judgments, costs or expenses arising from actions of the Agent or any
Bank with respect to the Property of the Company after the foreclosure
of the Lien on any such Property.

The Company's obligations under this Section 12.03 shall survive any
termination of this Agreement and the payment of the Notes.

12.04 Amendments, Etc. Any provision of this Agreement or
any other Security Instruments may be amended, modified or waived with the
Majority Banks' consent; provided that no amendment, modification or waiver
which extends the maturity of the Loans, releases all or substantially all of
the collateral, or reduces the interest rate applicable to the Loans shall be
effective without the consent of all Banks.

12.05 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.

12.06 Assignments and Participations.

(a) The Company may not assign its rights or obligations
hereunder or under the Notes without the prior consent of all of the
Banks and the Agent.

(b) Any Bank may assign its rights and delegate its
obligations hereunder to any Person, and further, may sell
participations in, all or any part of the Notes, this Agreement or the
other Security Instruments or its Commitments or any other interest
herein or therein to another Person, in which event (i) in the case of
an assignment, upon notice thereof by such Bank to the Company and the
Agent and the consent of the Company, which consent shall not be
unreasonably withheld, the assignee shall have, to the extent of such
assignment (unless otherwise provided therein), the same rights and
benefits as it would have if it were a Bank hereunder and thereunder,
and further upon the assumption by such assignee of such Bank's
obligations hereunder and thereunder and notice thereof by such Bank to
the Company and the Agent and the consent of the Company, which consent
shall not be unreasonably withheld, the Bank shall be fully released
from its obligations hereunder and thereunder to the extent of such
assumption, and (ii) in the case of a participation, the participant
shall not have any rights under this Agreement, the Notes or any other
Security Instrument (the participant's rights against such Bank in
respect of such participation to be those set forth in the agreement
executed by such Bank in favor of the participant relating thereto) and
all amounts payable by the Company under Section 5 shall be determined
as if the Bank had not sold such participation.

(c) The Banks may furnish any information concerning the
Company in the possession of the Banks from time to time to assignees
and participants (including prospective assignees and participants).

(d) Each Bank will pay to the Agent $1,500 for each
participation or assignment to another Person made by such Bank.

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(e) Each assignee of a Bank allowed by Section 12.06(b)
that completes and executes an Assignment Agreement substantially in
the form of Exhibit C shall become a Bank for all purposes hereunder
and under the other Security Instruments. The Company shall issue to
each such Bank and the Assigning Bank a Note in the amount of its Loans
then outstanding being assigned and replaced.

(f) Anything in this Section 12.06 to the contrary
notwithstanding, any Bank may assign and pledge all or any of its Notes
to any Federal Reserve Bank or the United States Treasury as collateral
security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such
Federal Reserve System and/or such Federal Reserve Bank. No such
assignment and/or pledge shall release the assignee and/or pledging
lender from its obligations hereunder.

(g) Notwithstanding any other provision of this Agreement
or any other Security Instrument, neither the Company nor any of its
Affiliates shall acquire any of the Notes unless the Company or such
Affiliate acquires all the Notes in a single transaction.

12.07 Invalidity. In the event that any one or more of the
provisions contained in the Notes, this Agreement or in any other Security
Instrument shall, for any reason, be held invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of the Notes, this Agreement or any other Security
Instrument.

12.08 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.

12.09 References. The words "herein," "hereof," "hereunder"
and other words of similar import when used in this Agreement refer to this
Agreement as a whole, and not to any particular article, section or subsection.
Any reference herein to a Section or shall be deemed to refer to the applicable
Section or this Agreement unless otherwise stated herein. Any reference herein
to an exhibit or schedule shall be deemed to refer to the applicable exhibit or
schedule attached hereto unless otherwise stated herein.

12.10 Survival. The obligations of the parties under
Sections 5, 12.03, 12.04 and 12.15 shall survive the repayment of the Loans and
the termination of the Commitments.

12.11 Captions. Captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.

12.12 No Oral Agreements. This written Agreement, the Notes,
and the other Security Instruments represent the final agreement between the
parties and may not be contradicted by evidence of prior, contemporaneous, or
subsequent oral agreements of the parties. There are no unwritten oral
agreements among the parties.

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12.13 Governing Law; Submission to Jurisdiction.

(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT, THE NOTES OR THE OTHER SECURITY INSTRUMENTS MAY BE BROUGHT
IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, THE COMPANY HEREBY ACCEPTS FOR ITSELF AND
(TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE
COMPANY HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS NONEXCLUSIVE AND
DOES NOT PRECLUDE THE AGENT OR ANY BANK FROM OBTAINING JURISDICTION
OVER THE COMPANY IN ANY COURT OTHERWISE HAVING JURISDICTION.

(c) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR
ANY BANK OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE COMPANY IN ANY OTHER JURISDICTION.

(d) EACH OF THE COMPANY AND EACH BANK HEREBY (A)
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (B) IRREVOCABLY WAIVE, TO
THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES; (C) CERTIFY THAT NO PARTY HERETO NOR ANY
REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS,
AND (D) ACKNOWLEDGE THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, THE OTHER SECURITY INSTRUMENTS AND THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION.

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<PAGE> 48
12.14 Interest. It is the intention of the parties hereto
that each Bank shall conform strictly to usury laws applicable to it.
Accordingly, if the transactions contemplated hereby would be usurious as to
any Bank under laws applicable to it (including the laws of the United States
of America and the State of New York or any other jurisdiction whose laws may
be mandatorily applicable to such Bank notwithstanding the other provisions of
this Agreement), then, in that event, notwithstanding anything to the contrary
in the Notes, this Agreement or in any other Security Instrument or agreement
entered into in connection with or as security for the Notes, it is agreed as
follows: (i) the aggregate of all consideration which constitutes interest
under law applicable to any Bank that is contracted for, taken, reserved,
charged or received by such Bank under the Notes, this Agreement or under any
of the other aforesaid Security Instruments or agreements or otherwise in
connection with the Notes shall under no circumstances exceed the maximum
amount allowed by such applicable law, and any excess shall be canceled
automatically and if theretofore paid shall be credited by such Bank on the
principal amount of the Indebtedness (or, to the extent that the principal
amount of the Indebtedness shall have been or would thereby be paid in full,
refunded by such Bank to the Company); and (ii) in the event that the maturity
of the Notes is accelerated by reason of an election of the holder thereof
resulting from any Event of Default under this Agreement or otherwise, or in
the event of any required or permitted prepayment, then such consideration that
constitutes interest under law applicable to any Bank may never include more
than the maximum amount allowed by such applicable law, and excess interest, if
any, provided for in this Agreement or otherwise shall be canceled
automatically by such Bank as of the date of such acceleration or prepayment
and, if theretofore paid, shall be credited by such Bank on the principal
amount of the Indebtedness (or, to the extent that the principal amount of the
Indebtedness shall have been or would thereby be paid in full, refunded by such
Bank to the Company). All sums paid or agreed to be paid to any Bank for the
use, forbearance or detention of sums due hereunder shall, to the extent
permitted by law applicable to such Bank, be amortized, prorated, allocated and
spread in equal parts throughout the full term of the Loans evidenced by the
Notes until payment in full so that the rate or amount of interest on account
of any Loans hereunder does not exceed the maximum amount allowed by such
applicable law. If at any time and from time to time (i) the amount of
interest payable to any Bank on any date shall be computed at the Highest
Lawful Rate applicable to such Bank pursuant to this Section 12.14 and (ii) in
respect of any subsequent interest computation period the amount of interest
otherwise payable to such Bank would be less than the amount of interest
payable to such Bank computed at the Highest Lawful Rate applicable to such
Bank, then the amount of interest payable to such Bank in respect of such
subsequent interest computation period shall continue to be computed at the
Highest Lawful Rate applicable to such Bank until the total amount of interest
payable to such Bank shall equal the total amount of interest which would have
been payable to such Bank if the total amount of interest had been computed
without giving effect to this Section.

12.15 Confidentiality. In the event that the Company or HSR
provides to the Agent or the Banks written confidential information belonging
to the Company or HSR, if the Company or HSR shall denominate such information
in writing as "confidential", the Agent and the Banks shall thereafter maintain
such information in confidence in accordance with the standards of care and
diligence that each utilizes in maintaining its own confidential information.
This obligation of confidence shall not apply to such portions of the
information which (i) are in the public domain, (ii) hereafter become part of
the public domain without the Agent or the Banks breaching their obligation of
confidence to the Company or HSR, (iii) are previously

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<PAGE> 49
known by the Agent or the Banks from some source other than the Company or HSR,
(iv) are hereafter developed by the Agent or the Banks without using the
Company's or HSR's information, (v) are hereafter obtained by the Agent or the
Banks from a third party who owes no obligation of confidence to the Company or
HSR with respect to such information, (vi) must be disclosed to persons
regulating the activities of the Agent or the Banks to the extent of disclosure
to such persons, or (vii) as may be required by law or regulation or order of
any court or governmental authority in any judicial, arbitration or
governmental proceeding. Further, the Agent or a Bank may disclose any such
information to any independent petroleum engineers or consultants, any
independent certified public accountants, any legal counsel employed by such
Person in connection with this Agreement, or any assignee, or participant in
the Loan; provided, however, that the Agent or Bank imposes on the Person to
whom such information is disclosed the same obligation to maintain the
confidentiality of such information as is imposed upon it hereunder.
Notwithstanding anything to the contrary provided herein, this obligation of
confidence shall cease three (3) years from the termination date of the
Agreement. Each of the Company and HSR, by executing the Management Agreement,
waives any and all other rights it may have to enforce any obligations of
confidentiality on the Agent and the Banks arising by contract, agreement,
statute or law except as expressly stated in this Section.

12.16 Publicity. The Agent and the Banks shall consult with,
and obtain the approval of, the Company and HSR prior to issuing any press
releases or tombstone advertisements with respect to entering into this
Agreement, but as to any other publicity concerning the relationship with the
Company and HSR, the Agent and the Banks shall not need the prior approval of
the Company, provided Section 12.15 has been complied with in connection with
such publicity.

12.17 Copies. When the Company is to provide a copy of any
report or notice to the Agent under this Agreement or any Security Instrument,
it shall also provide enough copies of such report or notice to the Agent for
the Agent to provide a copy to each Bank.

12.18 No Recourse to Trustee. It is expressly understood and
agreed by the parties that (a) this Agreement and the other Operative Documents
to which the Trustee is a party are executed and delivered by Wilmington, not
individually or personally, but solely as trustee of the Trust under the
Declaration of Trust of such Trust in the exercise of the powers and authority
conferred and vested in it, (b) each of the representations, undertakings and
agreements herein made on the part of the Trustee is made and intended not as
personal representations, undertakings and agreements by Wilmington, but is
made and intended solely for the purpose of binding the estate of the Trust,
(c) nothing herein contained shall be construed as creating any liability on
Wilmington, individually or personally, to perform any covenant, either
expressed or implied herein, all such liability, if any, being expressly waived
by the parties hereto and by any Person claiming by, through or under the
parties hereto and (d) under no circumstances shall Wilmington be personally
liable for the payment of any amount due under the Notes or the expenses of the
Trustee or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Trust or the
Trustee under this Agreement or the other Operative Documents, except for its
own willful misconduct or gross negligence.

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<PAGE> 50
The parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.

WATTENBERG RESOURCES LAND, L.L.C.

/s/ DAVID G. STOLFA
By its Manager, David G. Stolfa

Address: 3300 South Columbia Circle
Englewood, Colorado 80110

Telecopier No.: (303) 762-9992
Telephone No.: (303) 762-9990

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<PAGE> 51
THE CHASE MANHATTAN BANK, N.A.,
individually and as Agent

By: /s/ RICHARD F. BETZ
Name: Richard F. Betz
Title: Vice President

Address for Notices and Lending Office:
The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
New York, New York 10005

Telecopier No.: (212) 552-1687
Telephone No.: (212) 552-4755
Attention: Global Energy Group

-46-

<PAGE> 1
EXHIBIT 99.15

MORTGAGE, ASSIGNMENT OF PRODUCTION,
SECURITY AGREEMENT AND FINANCING STATEMENT

THIS MORTGAGE, ASSIGNMENT OF PRODUCTION, SECURITY AGREEMENT AND FINANCING
STATEMENT (this "MORTGAGE") entered into as of the effective time and date
hereinafter stated the (the "EFFECTIVE DATE") by and between WATTENBERG
RESOURCES LAND, L.L.C., a Delaware limited liability company with an address for
notice hereunder of c/o David G. Stolfa, 3300 South Columbine Circle, Englewood,
Colorado 80110 ("MORTGAGOR") and THE CHASE MANHATTAN BANK, N.A., a national
banking association with offices and banking quarters at 1 Chase Manhattan
Plaza, New York, New York 10005, ("CHASE") individually and as agent ("AGENT")
for the banks now or hereafter signatory to the Credit Agreement hereinafter
defined and their successors and assigns (each bank individually called "BANK"
and collectively called the "BANKS", with the Agent acting on behalf of the
Banks hereunder referred to as "MORTGAGEE").

W I T N E S S E T H:

To secure payment of the Indebtedness (as hereinafter defined) and the
performance of the covenants and obligations herein contained and in
consideration of the sum of Ten Dollars ($10.00) and other valuable
consideration in hand paid by Mortgagee to Mortgagor and in consideration of the
debts and trusts hereinafter mentioned, the receipt and sufficiency of all of
which is hereby acknowledged, Mortgagor does by these presents hereby GRANT,
BARGAIN, SELL, ASSIGN, MORTGAGE, TRANSFER and CONVEY unto Mortgagee and its
successors and assigns, for the use and benefit of the Banks, the following
described real and personal property, rights, titles, interests and estates
(collectively called the "MORTGAGED PROPERTY"), to-wit:

(a) All rights, titles, interests and estates now owned or hereafter
acquired by Mortgagor in and to the oil and gas leases and/or oil, gas and
other mineral leases and other interests and estates which are described on
Exhibit A attached hereto or are otherwise described herein (collectively
called the "HYDROCARBON PROPERTY") and specifically but without limitation
the undivided interests of Mortgagor which are more particularly described
on Exhibit B.

(b) All rights, titles, interests and estates now owned or hereafter
acquired by Mortgagor in and to (i) the properties now or hereafter pooled
or unitized with the Hydrocarbon Property; (ii) all presently existing or
future unitization, communitization, pooling agreements and declarations of
pooled units and the units created thereby (including, without limitation,
all units created under orders, regulations, rules or other official acts
of any Federal, State or other governmental body or agency having
jurisdiction and any units created solely among working interest owners
pursuant to operating agreements or otherwise) which may affect all or any
portion of the Hydrocarbon Property; (iii) all operating agreements,
production sales or other contracts, farmout agreements, farm-in
agreements, area of mutual interest agreements, equipment leases and other
agreements described or referred to in this Mortgage and on Exhibit C or
which relate to any of the Hydrocarbon Property or interests in the
Hydrocarbon Property described or referred to herein or on Exhibits A or B
or to the production, sale, purchase, exchange, processing, transporting or
marketing of the Hydrocarbons (hereinafter defined) from or attributable to
such Hydrocarbon Property or interests; and (iv) the Hydrocarbon Property
described on Exhibit A and covered by this Mortgage even though Mortgagor's
interests therein be incorrectly described or a description of a part or
all of such Hydrocarbon Property or Mortgagor's interests therein be
omitted; it being intended by Mortgagor and Banks herein to cover and
affect hereby all interests which Mortgagor may now own or may hereafter
acquire in and to the Hydrocarbon Property and lands described on Exhibit A
notwithstanding that the interests as specified on Exhibit B may be limited
to particular lands, specified depths or particular types of property
interests.

(c) All rights, titles, interests and estates now owned or hereafter
acquired by Mortgagor in and to all oil, gas, casinghead gas, condensate,
distillate, liquid hydrocarbons, gaseous hydrocarbons and all products
refined therefrom and all other minerals (collectively called the
"HYDROCARBONS") in and under
<PAGE> 2

and which may be produced and saved from or attributable to the Hydrocarbon
Property, the lands covered thereby and Mortgagor's interests therein,
including all oil in tanks and all rents, issues, profits, proceeds,
products, revenues and other income from or attributable to the Hydrocarbon
Property, the lands covered thereby and Mortgagor's interests therein which
are subjected or required to be subjected to the liens and security
interests of this Mortgage and including specifically but without
limitation all liens and security interests in such Hydrocarbons securing
payment of proceeds resulting from the sale of Hydrocarbons.

(d) All tenements, hereditaments, appurtenances and properties in
anywise appertaining, belonging, affixed or incidental to the Hydrocarbon
Property, rights, titles, interests and estates described or referred to in
paragraphs (a) and (b) above, which are now owned or which may hereafter be
acquired by Mortgagor.

(e) Any property that may from time to time hereafter, by delivery or
by writing of any kind, be subjected to the lien and security interest
hereof by Mortgagor or by anyone on Mortgagor's behalf; and the Mortgagee
is hereby authorized to receive the same at any time as additional security
hereunder.

(f) All of the rights, titles and interests of every nature whatsoever
now owned or hereafter acquired by Mortgagor in and to the Hydrocarbon
Property rights, titles, interests and estates and every part and parcel
thereof, including, without limitation, the Hydrocarbon Property rights,
titles, interests and estates as the same may be enlarged by the discharge
of any payments out of production or by the removal of any charges or
Encumbrances (as hereinafter defined) to which any of the Hydrocarbon
Property rights, titles, interests or estates are subject, or otherwise;
together with any and all renewals and extensions of any of the Hydrocarbon
Property rights, titles, interests or estates; all contracts and agreements
supplemental to or amendatory of or in substitution for the contracts and
agreements described or mentioned above; and any and all additional
interests of any kind hereafter acquired by Mortgagor in and to the
Hydrocarbon Property rights, titles, interests or estates.

(g) All accounts, contract rights, inventory and general intangibles
constituting a part of, relating to or arising out of those portions of the
Mortgaged Property which are described in paragraphs (a) through (f) above
and all proceeds and products of all such portions of the Mortgaged
Property.

Any fractions or percentages specified on Exhibit B in referring to
Mortgagor's interests are solely for purposes of the warranties made by
Mortgagor pursuant to paragraph (a) of Section III hereof and shall in no manner
limit the quantum of interest affected by this Section I with respect to any
Hydrocarbon Property or with respect to any unit or well identified on said
Exhibit B.

TO HAVE AND TO HOLD the Mortgaged Property unto the Mortgagee and to its
successors and assigns forever to secure the payment of the Indebtedness
(hereinafter defined) and to secure the performance of the covenants,
agreements, and obligations of the Mortgagor herein contained.

This Mortgage is executed and delivered by Mortgagor to secure and enforce
the Indebtedness described below:

(a) any and all indebtedness, obligations and liabilities incurred by
Mortgagor pursuant to the Credit Agreement dated as of March 26, 1996,
(such Credit Agreement, together with all amendments thereto from time to
time entered into, collectively called the "CREDIT AGREEMENT"), including
without limitation, those certain promissory notes which have been or may
be executed by Mortgagor payable to the order of the Banks and being in the
aggregate principal amount of $24,000,000 with final maturity on or before
June 30, 2004 and all other notes given in substitution therefor or in
modification, renewal or extension thereof, in whole or in part (such
notes, as from time to time supplemented, amended or modified and all other
notes given in substitution therefor or in modification, renewal or
extension thereof, in whole or in part, being hereafter called the
"NOTES").

-2-
<PAGE> 3

(b) payment of and performance of any and all present or future
obligations of Mortgagor according to the terms of any present or future
interest or currency rate swap, rate cap, rate floor, rate collar, exchange
transaction, forward rate agreement or other exchange or rate protection
agreements or any option with respect to any such transaction now existing
or hereafter entered into between Mortgagor and Mortgagee or any of the
Banks.

(c) payment of and performance of any and all present or future
obligations of Mortgagor according to the terms of any present or future
swap agreements, cap, floor, collar, exchange transaction, forward
agreement or other exchange or protection agreements relating to crude oil,
natural gas or other hydrocarbons or any option with respect to any such
transaction now existing or hereafter entered into between Mortgagor and
Mortgagee or any of the Banks.

The term "INDEBTEDNESS" as used herein shall mean and include the Notes and
all other indebtedness described, referred to or mentioned in paragraphs (a)
through (c), inclusive, of this Section II.

III

Mortgagor hereby represents, warrants and covenants as follows:

(a) To the extent of the undivided interests specified on Exhibit B,
Mortgagor has good and marketable title to and is possessed of the
Mortgaged Property; the Mortgaged Property is free of any and all liens,
encumbrances, security interests, contracts, agreements, preferential
purchase rights, unitization agreements or unitization orders or other
restrictions or limitations of any nature or kind (collectively called the
"ENCUMBRANCES") except those Encumbrances which may be permitted by the
Credit Agreement or specified herein or on Exhibit A; that Mortgagor's
ownership of the Hydrocarbon Property and the undivided interests therein
as specified on Exhibit B will, after giving full effect to all
Encumbrances, afford Mortgagor not less than those net interests in the
production from or which is allocated to such Hydrocarbon Property as
specified on Exhibit B; Mortgagor has full power and lawful authority to
bargain, grant, sell, mortgage, assign, transfer, convey and grant a
security interest in all of the Mortgaged Property all in the manner and
form herein provided and without obtaining the waiver, consent or approval
of any lessor, sublessor, governmental agency or entity or person
whomsoever or whatsoever; all rentals and royalties due and payable in
accordance with the terms of any leases or subleases comprising a part of
the Hydrocarbon Property have been duly paid or provided for and all leases
or subleases comprising a part of the Hydrocarbon Property are in full
force and effect; none of the Encumbrances include any "take or pay," gas
balancing or other similar provisions in accordance with which Hydrocarbons
have been or may be produced and delivered without Mortgagor then or
thereafter receiving full payment therefor and no gas imbalances presently
exist; except as otherwise disclosed by Mortgagor to Mortgagee in writing,
none of the Mortgaged Property is subject to any contractual or other
arrangement whereby payment for production therefrom is to be deferred for
a substantial period of time after the month in which such production is
delivered (i.e., in the case of oil, not in excess of 60 days, and in the
case of gas, not in excess of 90 days); none of the Mortgaged Property is
subject to a contractual or other arrangement for the sale of oil
production which cannot be canceled on 90 days (or less) notice; none of
the Mortgaged Property is subject to a gas sales contract which contains
terms which are not customary in the industry; none of the Mortgaged
Property is subject at present to any regulatory refund obligation and no
facts exist which might cause the same to be imposed.

(b) Mortgagor will warrant and defend the title to the Mortgaged
Property against the claims and demands of all other persons whomsoever and
will maintain and preserve the lien created hereby so long as any of the
Indebtedness secured hereby remains unpaid. Should an adverse claim be made
against or a cloud develop upon the title to any part of the Mortgaged
Property, Mortgagor agrees it will immediately defend against such adverse
claim or take appropriate action to remove such cloud at Mortgagor's cost
and expense, and Mortgagor further agrees that the Mortgagee may take such
other action as they deem advisable to protect and preserve its interests
in the Mortgaged Property, and in such event Mortgagor will indemnify the
Mortgagee against any and all cost, attorney's fees and other expenses
which they may incur in defending against any such adverse claim or taking
action to remove any such cloud. Such

-3-
<PAGE> 4

obligation of Mortgagor shall be payable on demand and shall bear interest
from the date of demand until paid at the POST-DEFAULT RATE as defined in
the Credit Agreement. Except for sales of Hydrocarbons as and when produced
and in the ordinary course of Mortgagor's business or as may be otherwise
provided for in writing, Mortgagor will not sell, convey or in any manner
dispose of the Mortgaged Property or any portion thereof without first
securing the written consent of the Mortgagee. Mortgagor will not enter
into any arrangement with any gas pipeline company or other consumer of
Hydrocarbons comprising a part of the Mortgaged Property pursuant to which
such gas pipeline company or consumer may setoff any claim against
Mortgagor by withholding payment for Hydrocarbons actually delivered.

(c) This Mortgage is, and always will be kept, a direct first lien and
security interest upon the Mortgaged Property subject only to the
Encumbrances permitted by the Credit Agreement or specified herein or on
Exhibit A and Mortgagor will not create or suffer to be created or permit
to exist any lien, security interest or charge prior or junior to or on a
parity with the lien and security interest of this Mortgage upon the
Mortgaged Property or any part thereof or upon the rents, issues, revenues,
profits and other income therefrom, except as permitted in the Credit
Agreement, and Mortgagor will, from time to time, pay or cause to be paid
as they become due and payable all taxes, assessments and governmental
charges lawfully levied or assessed upon the Mortgaged Property or any part
thereof, or upon or arising from any of the rents, issues, revenues,
profits and other income from the Mortgaged Property, or incident to or in
connection with the production of Hydrocarbons or other minerals therefrom,
or the operation and development thereof; provided, that the foregoing
covenant shall be suspended so long as the amount, applicability or
validity of any such charges is being diligently contested in good faith by
appropriate proceedings and if Mortgagor shall have set up reserves
therefor which are adequate under generally accepted accounting principles.
Mortgagor will not change its name or identity or change the location of
its chief executive office or its chief place of business or the place
where it keeps its books and records concerning the Mortgaged Property
(including, particularly, the proceeds from the sale of Hydrocarbons)
without notifying Mortgagee of such change in writing at least (30) days
prior to the effective date of such change.

(d) Mortgagor will at its own expense do or cause to be done all
things necessary to preserve and keep in full repair, working order and
efficiency all of the Mortgaged Property, including, without limitation,
all equipment, machinery and facilities, and from time to time will make
all the needful and proper repairs, renewals and replacements so that at
all times the state and condition of the Mortgaged Property will be fully
preserved and maintained.

(e) Mortgagor will promptly pay and discharge all rentals, delay
rentals, royalties and indebtedness accruing under, and perform or cause to
be performed each and every act, matter or thing required by, each and all
of the assignments, deeds, leases, subleases, contracts and agreements
described or referred to herein or affecting Mortgagor's interests in the
Mortgaged Property, and will do all other things necessary to keep
unimpaired Mortgagor's rights with respect thereto and prevent any
forfeiture thereof or default thereunder. The Mortgaged Property (and
properties unitized therewith) has been maintained, operated and developed
in a good and workmanlike manner and in conformity with all applicable laws
and all rules, regulations and orders of all duly constituted authorities
having jurisdiction and in conformity with the provisions of all leases,
subleases or other contracts comprising a part of the Hydrocarbon Property
and other contracts and agreements forming a part of the Mortgaged
Property; specifically in this connection, (i) after the Effective Date no
Mortgaged property is subject to having allowable production reduced below
the full and regular allowable (including the maximum permissible
tolerance) because of any overproduction (whether or not the same was
permissible at the time) prior to the Effective Date and (ii) none of the
wells comprising a part of the Mortgaged Property (or properties unitized
therewith) are deviated from the vertical more than the maximum permitted
by applicable laws, regulations, rules and orders, and such wells are, in
fact, bottomed under and are producing from, and the well bores are wholly
within, the Mortgaged Property (or, in the case of wells located on
properties unitized therewith, such unitized properties). Mortgagor will
operate the Mortgaged Property in a careful and efficient manner in
accordance with the practices of the industry and in compliance with all
applicable contracts and agreements and in compliance with all applicable
proration and conservation

-4-
<PAGE> 5

laws of the jurisdiction in which the Mortgaged Property is situated, and
all applicable laws, rules and regulations of every other agency and
authority from time to time constituted to regulate the development and
operation of the Mortgaged Property and the production and sale of
Hydrocarbons and other minerals therefrom. Mortgagor will do or cause to be
done such development work as may be reasonably necessary to the prudent
and economical operation of the Mortgaged Property in accordance with the
practices of prudent operators in the Denver-Julesberg Basin, including all
to be done that may be appropriate to protect from diminution the
productive capacity of the Mortgaged Property and each producing well
thereon including, without limitation, cleaning out and reconditioning each
well from time to time, plugging and completing at a different level each
such well, drilling a substitute well to conform to changed spacing
regulations an to protect the Mortgaged Property against drainage whenever
and as often as is necessary.

(f) Mortgagor will maintain insurance pursuant to Section 8.03 of the
Credit Agreement.

(g) Mortgagor will permit the Mortgagee and its agents to visit and
inspect any of the Mortgaged Property, to examine the books of account of
Mortgagor and to discuss the affairs, finances or accounts of Mortgagor,
and to be advised as to the same by any officer or employee or Mortgagor,
all at such reasonable times or intervals the Mortgagee may desire.

(h) Mortgagor will execute and deliver such further instruments and do
such further acts as may be necessary or desirable or as may be reasonably
requested by the Mortgagee to carry out more effectively the purposes of
this Mortgage and to subject to the lien created hereby any properties,
rights and interests covered or intended to be covered hereby.

(i) Mortgagor will maintain its existence as a limited liability
company and will maintain and procure all necessary franchises and permits
to the end that it shall be and will continue to be a limited liability
company in good standing in the State of Delaware and duly qualified to do
business in any other state in which the Mortgaged Property is situated
with full power and authority to own and operate the Mortgaged Property as
contemplated herein until this Mortgage shall have been fully satisfied.

(j) If any tax is levied or assessed against the Indebtedness
described herein or any part thereof, or against this Mortgage, or against
the Banks with respect to the Indebtedness or any part thereof or this
Mortgage, Mortgagor shall promptly pay the same.

(k) All or portions of the Mortgaged Property may be comprised of
interests in the Hydrocarbon Property which are other than working
interests or which may be operated by a party or parties other than
Mortgagor and with respect to all or any such Hydrocarbon Property as may
be comprised of interests other than working interests or which may be
operated by parties other than Mortgagor, Mortgagor's covenants as
expressed in this Section III are modified to require that Mortgagor use
its best efforts to obtain compliance with such covenants by the working
interest owners or the operator or operators of such Hydrocarbon Property.

(l) Mortgagor agrees to indemnify the Mortgagee and the Banks against
all claims, actions, liabilities, judgments, costs, attorneys' fees or
other charges of whatsoever kind or nature (all hereinafter in this
paragraph (l) being called the "claims") made against or incurred by the
Mortgagee or the Banks or any of them as a consequence of the assertion
either before or after the payment in full of all Indebtedness, that they
or any of them received Hydrocarbons or the proceeds thereof claimed by
third persons, and the Mortgagee and the Banks shall have the right to
defend against any such claims, employing attorneys therefor, and unless
furnished with a reasonably indemnity, they or any of them shall have the
right to pay or compromise and adjust all such claims. Mortgagor will
indemnify and pay to the Mortgagee or the Banks any and all such amounts as
may be paid in respect thereof or as may be successfully adjudged against
the Mortgagee or the Banks or any to them. The obligations of the Mortgagor
as hereinabove set forth in this paragraph (l) shall survive the release of
this Mortgage. After receipt by an indemnified party under this paragraph
of notice of the commencement of any action, such indemnified party will,
if indemnification in respect thereof by the Mortgagor is to be required
under this paragraph, notify the Mortgagor of the commencement thereof, but
the omission so to notify the

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<PAGE> 6

Mortgagor will not relieve it from any liability which it may have to any
indemnified party hereunder or otherwise. In case any such action is
brought against any indemnified party and the indemnified party notifies
the Mortgagor of the commencement thereof, the Mortgagor will be entitled
to participate therein and to the extent that the Mortgagor may wish, to
assume the defense thereof, with counsel satisfactory to such indemnified
party (who shall not, except with the consent of such indemnified party, be
counsel to the Mortgagor).

(m) Mortgagor agrees that if Mortgagor fails to perform any act or to
take any action which Mortgagor is required to perform or take hereunder or
pay any money which Mortgagor is required to pay hereunder, the Mortgagee
in Mortgagor's name or its own name may, but shall not be obligated to,
perform or cause to perform such act or take such action or pay such money,
and any expenses so incurred by the Mortgagee and any money so paid by the
Mortgagee shall be a demand obligation owing by Mortgagor to the Mortgagee
and the Mortgagee, upon making such payment, shall be subrogated to all of
the rights of the person, corporation or body politic receiving such
payment. Each amount due and owing by Mortgagor to holders of the
Indebtedness and/or the Mortgagee pursuant to this Mortgage shall bear
interest from the date of such expenditure or payment or other occurrence,
which gives rise to such amount being owed to the Mortgagee until paid at
the Post-Default Rate, and all such amounts together with such interest
thereon shall be a part of the Indebtedness and shall be secured by this
Mortgage.

(n) To the best of its knowledge, Mortgagor has not violated any
provisions of any Federal or State law or any of the regulations thereunder
(including those of the respective Conservation Commission and Land Offices
of the various jurisdictions having authority over the Mortgaged Property)
with respect to the Mortgaged Property, and all necessary rate filings,
certificate applications, well category filings, interim collection filings
and notices, and any other filings or certifications have been made with
respect to the Mortgaged Property, and all necessary regulatory
authorizations (including without limitation necessary authorizations, if
any, with respect to any processing arrangements conducted by Mortgagor or
others respecting said Mortgaged Property or production therefrom) required
under said laws and regulations with respect to all of the Mortgaged
Property or production therefrom have been received by Mortgagor or any
other appropriate Person. Said rate filings, certificate applications, well
category filings, interim collection filings and notices, and other filings
and certification contain no untrue statements of material facts nor do
they omit any statements of material facts necessary in said filings.

(a) An EVENT OF DEFAULT as defined in Section 10 of the Credit Agreement
shall be an Event of Default hereunder. Upon the occurrence of any such Event of
Default, Mortgagee may, by written notice mailed to Mortgagor, postage prepaid,
addressed to Mortgagor at its address set forth in the recitals hereof or at
such other address as Mortgagor may furnish to Mortgagee in writing, declare the
Indebtedness to be due and payable whereupon the Indebtedness shall become
immediately due and payable without notice of any kind. All costs and expenses
(including attorneys' fees) incurred by the Mortgagee or the Banks in protecting
and enforcing their rights hereunder shall constitute a demand obligation owing
by Mortgagor and shall draw interest at the Post-Default Rate and shall
constitute a portion of the indebtedness secured hereby and shall have the
benefit of the lien hereby created.

(b) If the Notes or any of the Indebtedness shall become due and payable,
and Mortgagor shall not promptly pay the same, the Mortgagee shall have the
right and option to proceed with foreclosure and to sell, to the extent
permitted by law, all or any portion of the Mortgaged Property at one or more
sales, as an entirety or in parcels, at such place or places and otherwise in
such manner and upon such notice as may be required by the provisions of
Articles 37, 38 and 39 of Title 38, Colo. Rev. Stat., as such Articles may be
amended from time to time, or as otherwise required by law, or, in the absence
of requirements, as the Mortgagee may deem appropriate, and to make conveyance
to the purchaser or purchasers. Where any part of the Mortgaged Property located
in the State of Colorado is situated in more than one county, notices as above
provided shall be posted and filed in all such counties, and all such Mortgaged
Property may be sold in any such county and such notice shall designate the
county where such Mortgaged Property is to be sold. The affidavit of any

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<PAGE> 7

person having knowledge of the facts to the effect that such notice was
completed shall be prima facie evidence of the fact of notice. In the event any
sale hereunder is not completed or is defective in the opinion of the Mortgagee,
such sale shall not exhaust the power of sale hereunder, and the Mortgagee shall
have the right to cause a subsequent sale or sales to be made. Upon receipt of
the sale price in the case of a third party purchase or upon the crediting of
the Indebtedness to the sales price if the purchaser is one of the Banks, the
Mortgagee is hereby authorized, empowered and directed to make due conveyance to
the purchaser or purchasers, with general warranty binding upon Mortgagor and
the heirs, successors and assigns of Mortgagor. The right of sale hereunder
shall not be exhausted by one or more such sales, and the Mortgagee may make
other and successive sales until all of the Mortgaged Property be legally sold
or the Notes and all of the Indebtedness shall have been paid. Mortgagor hereby
irrevocably appoints the Mortgagee to be the attorney-in-fact of Mortgagor and
in the name and on behalf of Mortgagor to execute and deliver any deeds,
transfers, conveyances, assignments, assurances and notices which Mortgagor
ought to execute and deliver and do and perform any and all such acts and things
which Mortgagor ought to do and perform under the covenants herein contained and
generally, to use the name of Mortgagor in the exercise of all or any of the
powers hereby conferred on the Mortgagee. Upon any sale, whether under the power
of sale hereby given or by virtue of judicial proceedings, it shall not be
necessary for the Mortgagee or any public officer acting under execution or
order of court to have physically present or constructively in his possession
any of the Mortgaged Property, and Mortgagor hereby agrees to deliver all of
such personal property to the purchasers at such sale on the date of sale, and
if it should be impossible or impracticable to make actual delivery of such
property, then the title and right of possession to such property shall pass to
the purchaser at such sale as completely as if the same had been actually
present and delivered. Recitals contained in any conveyance made by the
Mortgagee to any purchaser at any sale made pursuant hereto shall conclusively
establish the truth and accuracy of the matters therein treated, including,
without limiting the generality of the foregoing, nonpayment of the unpaid
principal sum of, or the interest accrued on, the Notes or any of the
Indebtedness after the same has become due and payable, advertisement and
conduct of such sale in the manner provided herein and appointment of any
successor trustee hereunder. Upon any sale, whether made under the power of sale
hereby given or by virtue of judicial proceedings, the receipt of the Mortgagee,
or of the officer making a sale under judicial proceedings, shall be a
sufficient discharge to the purchaser or purchasers at any sale for its or their
purchase money, and such purchaser or purchasers, its or their assigns or
personal representatives, shall not, after paying such purchase money and
receiving such receipt of the Mortgagee or of such officer therefor, be obliged
to see to the application of such purchase money, or be in anywise answerable
for any loss, misapplication or nonapplication thereof. The Mortgagee or its
successor or substitute may appoint or delegate any one or more persons as agent
to perform any act or acts necessary to incident to any sale held by Mortgagee,
including the posting of notices and the conduct of sale, but in the name and on
behalf of Mortgagee, its successor or substitute. If Mortgagee or its successor
or substitute shall have given notice of sale hereunder, any successor or
substitute trustee thereafter appointed may complete the sale and the conveyance
of the property pursuant thereto as if such notice had been given by the
successor or substitute conducting the sale.

(c) If the Notes or any of the Indebtedness shall become due and payable
and shall not be promptly paid, the Mortgagee shall have the right and power to
proceed by a suit or suits in equity or at law, whether for the specific
performance of any covenant or agreement herein contained or in aid of the
execution of any power herein granted, or for any foreclosure hereunder or for
the sale of the Mortgaged Property under the judgment or decree of any court or
courts of competent jurisdiction, or for the appointment of a receiver pending
any foreclosure hereunder or the sale of the Mortgaged Property under the order
of a court or courts of competent jurisdiction or under executory or other legal
process, or for the enforcement of any other appropriate legal or equitable
remedy. Any money advanced by the Mortgagee in connection with any such
receivership shall be a demand obligation (which obligation Mortgagor hereby
expressly promises to pay) owing by Mortgagor to the Mortgagee and shall bear
interest from the date of making such advance by the Mortgagee until paid at the
Post-Default Rate. Mortgagor agrees to the full extent that it lawfully may,
that, in case one or more of the Events of Default shall have occurred and shall
not have been remedied, then, and in every such case, the Mortgagee shall have
the right and power to enter into and upon and take possession of all or any
part of the Mortgaged Property in the possession of Mortgagor, its successors or
assigns, or its or their agents or servants, and may exclude Mortgagor, its
successors or assigns, and all persons claiming under Mortgagor, and its or

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<PAGE> 8

their agents or servants wholly or partly therefrom; and, holding the same, the
Mortgagee may use, administer, manage, operate and control the Mortgaged
Property and conduct the business thereof to the same extent as Mortgagor, its
successors or assigns, might at the time do and may exercise all rights and
powers of Mortgagor, in the name, place and stead of Mortgagor, or otherwise as
the Mortgagee shall deem best. All costs, expenses and liabilities of every
character incurred by the Mortgagee in administering, managing, operating, and
controlling the Mortgaged Property shall constitute a demand obligation (which
obligation Mortgagor hereby expressly promises to pay) owing by Mortgagor to the
Mortgagee and shall bear interest from date of expenditure until paid at the
Post-Default Rate, all of which shall constitute a portion of the Indebtedness
and shall be secured by this Mortgage and by any other instrument securing the
Indebtedness. In connection with any action taken by the Mortgagee pursuant to
this paragraph (c), the Mortgagee shall not be liable for any loss sustained by
Mortgagor resulting from any act or omission of the Mortgagee in administering,
managing, operating or controlling the Mortgaged Property unless such loss is
caused by its own willful misconduct, bad faith or gross negligence, nor shall
the Mortgagee be obligated to perform or discharge any obligation, duty or
liability of Mortgagor. Mortgagor shall and does hereby agree to indemnify the
Mortgagee for, and to hold the Mortgagee harmless from, any and all liability,
loss or damage which may or might be incurred by the Mortgagee by reason of this
Mortgage or the exercise of rights or remedies hereunder; should the Mortgagee
make any expenditure on account of any such liability, loss or damage, the
amount thereof, including costs, expenses and reasonable attorneys' fees, shall
be a demand obligation (which obligation Mortgagor hereby expressly promises to
pay) owing by Mortgagor to the Mortgagee and shall bear interest from the date
expended until paid at the Post-Default Rate, shall be a part of the
Indebtedness and shall be secured by this Mortgage and any other instrument
securing the secured indebtedness. Mortgagor hereby assents to, ratifies and
confirms any and all actions of the Mortgagee with respect to the Mortgaged
Property taken under this paragraph (c).

(d) Every right, power and remedy herein given to the Mortgagee shall be
cumulative and in addition to every other right, power and remedy herein
specifically given or now or hereafter existing in equity, at law or by statute;
and each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time and so often and in such
order as may be deemed expedient by the Mortgagee, and the exercise, or the
beginning of the exercise, of any such right, power or remedy shall not be
deemed a waiver of the right to exercise, at the same time or thereafter any
other right, power or remedy. No delay or omission by the Mortgagee in the
exercise of any right, power or remedy shall impair any such right, power or
remedy or operate as a waiver thereof or of any other right, power or remedy
then or thereafter existing.

(e) Any sale or sales of the Mortgaged Property or any part thereof,
whether under the power of sale herein granted and conferred or under and by
virtue of judicial proceedings, shall operate to divest all right, title,
interest, claim and demand whatsoever, either at law or in equity, of Mortgagor
of, in and to the premises and the property sold, and shall be a perpetual bar,
both at law and in equity, against Mortgagor, its successors and assigns, and
against any and all persons claiming or who shall thereafter claim all or any of
the property sold from, through or under Mortgagor, its successors and assigns;
and Mortgagor, if requested by the Mortgagee so to do, shall join in the
execution and delivery of all proper conveyances, assignments and transfers of
the properties so sold. The proceeds of any sale of the Mortgaged Property or
any part thereof and all other moneys received by the Mortgagee in any
proceedings for the enforcement hereof, whose application has not elsewhere
herein been specifically provided for, shall be applied as provided in the
Credit Agreement. The Mortgagee may resort to any security given by this
Mortgage or to any other security now existing or hereafter given to secure the
payment of any of the Indebtedness secured hereby, in whole or in part, and in
such portions and in such order as may seem best to the Mortgagee in its sole
and uncontrolled discretion, and any such action shall not in anywise be
considered as a waiver of any of the rights, benefits or liens created by this
Mortgage. Mortgagor agrees, to the full extent that it may lawfully so agree,
that it will not at any time insist upon or plead or in any manner whatever
claim or take the benefit or advantage of any appraisement, valuation, stay,
extension or redemption law now or hereafter in force, in order to prevent or
hinder the enforcement or foreclosure of this Mortgage or the absolute sale of
the Mortgaged Property or the possession thereof by any purchaser at any sale
made pursuant to any provision hereof, or pursuant to the decree of any court of
competent jurisdiction; but Mortgagor, for itself and all who may claim through
or under it, so far as it

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<PAGE> 9

or they now or hereafter lawfully may, hereby waives the benefit of all such
laws. Mortgagor, for itself and all who may claim through or under it, waives to
the extent that it may lawfully do so, any and all right to have the property
included in the Mortgaged Property marshaled upon any foreclosure of the lien
hereof, and agrees that the Mortgagee or any court having jurisdiction to
foreclose such lien may sell the Mortgaged Property as an entirety or in
parcels. If any law referred to herein and now in force, of which Mortgagor or
its successor or successors might take advantage despite the provisions hereof,
shall hereafter be repealed or cease to be in force, such law shall not
thereafter be deemed to constitute any part of the contract herein contained or
to preclude the operation or application of the provisions hereof.

(a) Mortgagor has absolutely and unconditionally assigned, transferred, and
conveyed, and does hereby absolutely and unconditionally assign, transfer and
convey unto Mortgagee, its successors and assigns, for the benefit of the Banks,
all of the revenues and proceeds now and hereafter attributable to the
Hydrocarbons and said products and all payments in lieu of the Hydrocarbons such
as "take or pay" payments or settlements. The Hydrocarbons and products are to
be delivered into pipe lines connected with the Mortgaged Property, or to the
purchaser thereof, to the credit of the Banks, free and clear to the Banks of
all taxes (other than production taxes), charges, costs, and expenses; and all
such revenues and proceeds shall be paid directly to the Mortgagee, at its
banking quarters in New York, New York with no duty or obligation of any party
paying the same to inquire into the rights of the Mortgagee to receive the same,
what application is made thereof, or as to any other matter. Mortgagor agrees to
perform all such acts, and to execute all such further assignments, transfers
and division orders, and other instruments as may be required or desired by the
Mortgagee or any party in order to have said proceeds and revenues so paid to
the Mortgagee. The Mortgagee is fully authorized to receive and receipt for said
revenues and proceeds; to endorse and cash any and all checks and drafts payable
to the order of Mortgagor or the Mortgagee for the account of Mortgagor received
from or in connection with said revenues or proceeds and apply the proceeds
thereof to the payment of the Indebtedness, when received, regardless of the
maturity of any of the Indebtedness, or any installment thereof; and to execute
transfer and division orders in the name of Mortgagor, or otherwise, with
warranties binding Mortgagor. The Mortgagee shall not be liable for any delay,
neglect, or failure to effect collection of any proceeds or to take any other
action in connection therewith or hereunder; but the Mortgagee shall have the
right, at the Bank's election, in the name of Mortgagor or otherwise, to
prosecute and defend any and all actions or legal proceedings deemed advisable
by the Mortgagee in order to collect such funds and to protect the interests of
the Banks, and/or Mortgagor, with all costs, expenses and attorneys' fees
incurred in connection therewith being paid by Mortgagor. Mortgagor hereby
agrees to indemnify the Banks against all claims, actions, liabilities,
judgments, costs, charges and attorneys' fees made against or incurred by them
based on the assertion that the Banks have received funds from the production of
Hydrocarbons claimed by third persons either before or after the payment in full
of the Indebtedness. The Banks shall have the right to defend against any such
claims, actions and judgments, employing its attorneys therefor, and if the
Banks are not furnished with reasonable indemnity, they shall have the right to
compromise and adjust any such claims, actions and judgments. Mortgagor agrees
to indemnify and pay to the Banks any and all such claims, judgments, costs,
charges and attorney's fees as may be paid in any judgments, release or
discharge thereof or as may be adjudged against the Banks. Such obligation shall
be payable on demand and shall bear interest from the date of demand therefor
until paid at the Post-Default Rate. Mortgagor hereby appoints Mortgagee as its
attorney-in-fact to pursue any and all rights of Mortgagor to liens on and
security interests in the Hydrocarbons securing payment of proceeds of runs
attributable to the Hydrocarbons. In addition to the rights granted to Mortgagee
and/or Mortgagee in Section I(c) of this Mortgage, Mortgagor hereby further
transfers and assigns to Mortgagee any and all such liens, security interests,
financing statements or similar interests of Mortgagor attributable to its
interest in the Hydrocarbons and proceeds of runs therefrom arising under or
created by said statutory provision, judicial decision or otherwise. The power
of attorney granted to Mortgagee in this paragraph, being coupled with an
interest, shall be irrevocable so long as the Indebtedness or any part thereof
remains unpaid.

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<PAGE> 10

(b) Nothing herein contained shall modify or otherwise alter the obligation
of Mortgagor to make prompt payment of all principal and interest owing on the
Notes and all other Indebtedness when and as the same become due regardless of
whether the proceeds of the Hydrocarbons are sufficient to pay the same and the
rights provided in accordance with the foregoing assignment provision shall be
cumulative of all other security of any and every character now or hereafter
existing to secure payment of the Indebtedness.

(c) To further secure the Indebtedness, Mortgagor hereby grants to the
Mortgagee for the benefit of the Banks a security interest in and to the
Mortgaged Property insofar as the Mortgaged Property consists of equipment,
accounts, contract rights, general intangibles, inventory, Hydrocarbons,
fixtures and any and all other personal property of any kind or character
defined in and subject to the provisions of the applicable Uniform Commercial
Code, including the proceeds and products from any and all of such personal
property. Upon the happening of any of the Events of Default, the Banks are and
shall be entitled to all of the rights, powers and remedies afforded a secured
party by the applicable Uniform Commercial Code with reference to the personal
property and fixtures in which the Banks have been granted a security interest
herein, or the Mortgagee may proceed as to both the real and personal property
covered hereby in accordance with rights and remedies granted under this
Mortgage in respect of the real property covered hereby. Such rights, powers and
remedies shall be cumulative and in addition to those granted to the Mortgagee
or the Banks under any other provision of this Mortgage or under any other
instrument executed in connection with or as security for the Notes or any of
the Indebtedness. Written notice mailed to Mortgagor as provided herein at least
five (5) days prior to the date of public sale of any part of the Mortgaged
Property which is personal property subject to the provisions of the Uniform
Commercial Code, or prior to the date after which private sale of any such part
of the Mortgaged property will be made, shall constitute reasonable notice.

(d) Without in any manner limiting the generality of any of the other
provisions of this Mortgage: (i) some portions of the goods described or to
which reference is made herein are or are to become fixtures on the land
described or to which reference is made herein or on Exhibit A; (ii) the
security interests created hereby under applicable provisions of the Uniform
Commercial Code or one or more of the jurisdictions in which the Mortgaged
Property is situated will attach to Hydrocarbons (minerals including oil and
gas) or the accounts resulting from the sale thereof at the wellhead or minehead
located on the land described or to which reference is made herein; (iii) this
Mortgage is to be filed or record in the real estate records as a financing
statement, and (iv) Mortgagor is the record owner of the real estate or
interests in the real estate comprised of the Mortgaged Property.

(a) If all Indebtedness secured hereby shall be paid and the commitments of
the Banks under the Credit Agreement canceled, this Mortgage shall become null
and void and the Mortgaged Property shall revert to Mortgagor, and the Mortgagee
shall forthwith cause satisfaction and discharge of this Mortgage to be entered
upon the record at the expense of Mortgagor and shall execute and deliver or
cause to be executed and delivered such instruments of satisfaction and
reassignment as may be appropriate. Otherwise, this Mortgage shall remain and
continue in full force and effect.

(b) If any provision hereof is invalid or unenforceable in any
jurisdiction, the other provisions hereof shall remain in full force and effect
in such jurisdiction and the remaining provisions hereof shall be liberally
construed in favor of the Mortgagee and the Banks in order to effectuate the
provisions hereof, and the invalidity or unenforceability of any provisions
hereof in any jurisdiction shall not affect the validity or enforceability of
any such provision in any other jurisdiction.

(c) This Mortgage may be construed as a mortgage, chattel mortgage,
conveyance, assignment, security agreement, pledge, financing statement,
hypothecation or contract, or any one or more of them, in order to fully
effectuate the lien hereof and the purposes and agreements herein set forth.

(d) The term "Mortgagor" as used herein shall mean and include all and each
of the individuals, partnerships, corporations or other legal entities or
persons executing this Mortgage. The number and gender of pronouns used in
referring to Mortgagor shall be construed to mean and correspond with the number
and

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<PAGE> 11

gender of the individuals, partnerships, corporations or other legal entities or
persons executing this Mortgage as Mortgagor. The term "Bank" as used herein
shall mean and include any legal owner, holder, assignee or pledgee of any of
the Indebtedness secured hereby. The terms used to designate Mortgagee, Bank(s)
and Mortgagor shall be deemed to include the respective heirs, legal
representatives, successors and assigns of such parties.

(e) To the extent that proceeds of the Notes are used to pay indebtedness
secured by any outstanding lien, security interest, charge or prior encumbrance
against the Mortgaged Property, such proceeds have been advanced by the Banks at
Mortgagor's request, and the Banks shall be subrogated to any and all rights,
security interests and liens owned by any owner or holder of such outstanding
liens, security interests, charges or encumbrances, irrespective of whether said
liens, security interests, charges or encumbrances are released, and it is
expressly understood that, in consideration of the payment of such other
indebtedness by the Banks, Mortgagor hereby waives and releases all demands and
causes of action for offsets and payments to, upon and in connection with the
said indebtedness.

(f) This Mortgage is made with full substitution and subrogation of the
Mortgagee and its successors and assigns in and to all covenants and warranties
by others heretofore given or made in respect of the Mortgaged Property or any
part thereof.

(g) The covenants and agreements herein contained shall constitute
covenants running with the land and interests covered or affected hereby and
shall be binding upon the heirs, legal representatives, successors and assigns
of the parties hereto.

(h) If any of the terms or provisions hereof or of any note or other
evidence of the Indebtedness secured hereby is susceptible of being construed as
binding or obligating Mortgagor or any other person or concern obligated, either
primarily or conditionally, for the payment of any Indebtedness secured hereby,
under any circumstances or contingencies whatsoever, to pay interest in excess
of that authorized by law, it is agreed that such terms or provisions are a
mistake in calculation or wording and, notwithstanding the same, it is expressly
agreed that neither Mortgagor nor any other person or concern obligated in any
manner on any such Indebtedness shall ever be required or obligated under the
terms hereof or under the terms of any such note, or other evidence of any of
the Indebtedness or otherwise, to pay interest in excess of that authorized by
law. It is the intention of the parties hereto to conform strictly to the usury
laws now in force in the State of New York, applicable Federal law and the law
of any other jurisdiction which may be applicable. In furtherance thereof, such
persons stipulate and agree that none of the terms and provisions hereof or any
note or other evidence of the Indebtedness secured hereby shall ever be
construed to create a contract to pay, for the use, forbearance or detention of
money, interest in excess of the maximum amount of interest permitted to be
charged by applicable law from time to time in effect. The Banks expressly
disavow any intention to charge or collect unearned interest or finance charges
in the event the maturity of any Indebtedness is accelerated. If (a) the
maturity of any Indebtedness is accelerated for any reason, (b) any Indebtedness
is prepaid and as a result any amounts held to constitute interest are
determined to be in excess of the legal maximum, or (c) any holder of any or all
of the Indebtedness shall otherwise collect moneys which are determined to
constitute interest which would otherwise increase the interest on any or all of
the Indebtedness to an amount in excess of that permitted to be charged by
applicable law then in effect, then all such sums determined to constitute
interest in excess of such legal limit shall, without penalty, be promptly
applied to reduce the then outstanding principal of the related Indebtedness or,
at such holder's option, promptly returned to the Mortgagor or the other payor
thereof upon such determination. In determining whether or not the interest paid
or payable, under any specific circumstance, exceeds the maximum amount
permitted under applicable law, Banks and Mortgagor (and any other payors
thereof) shall to the greatest extent permitted under applicable law, (i)
characterize any nonprincipal payment as an expense, fee or premium rather than
as interest, (ii) exclude voluntary prepayments and the effects thereof, and
(iii) amortize, prorate, allocate, and spread the total amount of interest
throughout the entire contemplated term of the instruments evidencing the
Indebtedness in accordance with the amounts outstanding from time to time
thereunder and the maximum legal rate of interest from time to time in effect
under applicable law in order to lawfully charge the maximum amount of interest
permitted under applicable law.

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<PAGE> 12

(i) In the event there is a foreclosure sale hereunder and at the time of
such sale Mortgagor or Mortgagor's heirs, devisees, representatives, successors
or assigns or any other person claiming any interest in the Mortgaged Property
by, through or under Mortgagor, are occupying or using the Mortgaged Property or
any part thereof, each and all shall immediately become the tenant of the
purchaser at such sale, which tenancy shall be a tenancy from day to day,
terminable at the will of either the landlord or tenant, at a reasonable rental
per day based upon the value of the property occupied, such rental to be due
daily to the purchaser; to the extent permitted by applicable law, the purchaser
at such sale shall, notwithstanding any language herein apparently to the
contrary, have the sole option to demand immediate possession following the sale
or to permit the occupants to remain as tenants at will. In the event the tenant
fails to surrender possession of said property upon demand, the purchaser shall
be entitled to institute and maintain a summary action for possession of the
Mortgaged Property (such as an action for forcible entry and detainer) in any
court having jurisdiction. The purchaser or purchasers at foreclosure shall have
the right to affirm or disaffirm any lease of the Mortgaged Property or any part
thereof.

(j) This Mortgage may be executed in several counterparts, all of which are
to be identical. Each of such counterparts shall for all purposes be deemed to
be an original and all such counterparts shall together constitute but one and
the same instrument.

WITNESS THE EXECUTION HEREOF, as of this 26th day of March, 1996 (the
"EFFECTIVE DATE").

MORTGAGOR:

WATTENBERG RESOURCES LAND, L.L.C.

By its Manager, David G. Stolfa

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

The name and address of the Debtor
(Mortgagor) is:

WATTENBERG RESOURCES LAND,
L.L.C.
3300 South Columbine Circle
Englewood, Colorado 80110
Federal I.D. No. 84-1338601

The name and address of the Secured
Party
(Mortgagee) is:
THE CHASE MANHATTAN BANK, N.A.,
as Agent
1 Chase Manhattan Plaza
New York, New York 10005
Federal I.D. No. 13-2633613

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<PAGE> 13
THE STATE OF COLORADO )
COUNTY OF DENVER )

The foregoing instrument was acknowledged before me on March 26, 1996 by
David G. Stolfa, Manager of Wattenberg Resources Land, L.L.C., a Delaware
limited liability company, on behalf of such company.

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Notary Public in and for the State
of Colorado

Printed Name:
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My Commission Expires:

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EXHIBIT C

1. Purchase and Sale Agreement dated effective March 29, 1996 among HS
Resources, Inc. ("HSR"), Orion Acquisition, Inc. and Mortgagor.

2. Wellbore Assignment of Oil and Gas Leases with Reservation of Production
Payment and Reversion Interest dated effective March 29, 1996 from HSR to
Mortgagor.

3. Management Agreement dated effective March 29, 1996 between HSR and
Mortgagor.

4. Option Agreement dated effective March 29, 1996 between HSR and Mortgagor.

5. [Swap Agreement]

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EXHIBIT 99.16

SUBORDINATED
PROMISSORY NOTE

$750,000.00
March 26, 1996

FOR VALUE RECEIVED, the undersigned, WATTENBERG RESOURCES LAND,
L.L.C., a Delaware limited liability company ("Maker"), whose Manager's office
is at 3300 South Columbine Circle, Englewood, Colorado 80110, hereby promises
to pay to HS RESOURCES, INC., a Delaware corporation having offices at 1999
Broadway, Suite 3600, Denver, Colorado 80202 ("Holder"), the principal sum of
SEVEN HUNDRED AND FIFTY THOUSAND DOLLARS ($750,000.00) together with interest
on the principal amount which is outstanding at an interest rate equal to 8.5%
per annum. The effective date of this Note shall be March 29, 1996 (the
"Effective Date"). Interest shall accrue from the Effective Date quarterly in
arrears on the last day of each calendar quarter commencing July 1, 1996, and
payable as indicated below. This Note is issued and delivered in accordance
with that certain Purchase and Sale Agreement of date even herewith between
Maker, Holder and Holder's wholly-owned subsidiary, Orion Acquisition, Inc.,
and is the "Subordinated Note" as referred to and defined therein.

Payments to Holder by Maker under this Note may be made quarterly in
any amount desired by Maker, provided that any such payment shall be applied
first to accrued interest and then to the outstanding principal amount under
this Note. In recognition of the subordinated nature of this Note and the
restrictions on payments hereunder as may be applicable under that certain
Credit Agreement of even date herewith between Maker and The Chase Manhattan
Bank, N.A., as Agent for itself and the signatory banks thereto (the "Credit
Agreement"), Maker shall be under no obligation to make quarterly payments
under this Note, and in such event, interest shall accrue on the unpaid
interest from all prior quarters and on the outstanding principal amount. This
Note shall be due and payable in full, together with all accrued interest, on
June 30, 2004 (the "Maturity Date"). This Note may be prepaid prior to the
Maturity Date at any time in whole or in part without penalty. Maker shall pay
on demand all costs and expenses (including reasonable attorneys' fees and
disbursements) paid or incurred by Holder in enforcing this Note on default.

Maker waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default, or enforcement of this Note, and assent to any extension or
postponement of the time of payment or any other indulgence under this Note.

No delay or omission on the part of Holder in exercising any right
hereunder shall operate as a waiver of such right or any other right under this
Note. No waiver of any right shall be effective unless in writing and signed
by Holder. Nor shall a waiver on one occasion be construed as a bar or waiver
of any such right on any future occasion.

The repayment of this Note and any and all payments made hereunder is
expressly subordinated to the indebtedness, obligations and liabilities of
Maker under the Credit Agreement and under any Hedging Agreements of the
Company as defined in and permitted by the Credit
<PAGE> 2
Agreement (the "Superior Obligations"). If for any reason any of the Superior
Obligations are not paid when due or are not paid on or before the maturity
thereof, or if there shall occur and be continuing any event which with the
giving of notice or lapse of time or both would constitute a default or event
of default under any instrument or agreement now or hereafter executed
evidencing, in connection with, as security for or providing for the issuance
of any of the Superior Obligations, including, without limitation, a Default or
Event of Default under and as defined in the Credit Agreement, then, unless and
until such event of default or default shall have been cured, or unless and
until the Superior Obligations shall be paid in full, Holder will not ask for,
sue for, take, demand, receive or accept from Maker any payment under this
Note. In the event Holder shall receive any payment under this Note which
Holder is not entitled to receive under the provisions of this Note, Holder
will hold any amount so received in trust for the holders of the Superior
Obligations and will forthwith turn over such payment to the holders of the
Superior Obligations in the form received by Holder (together with any
necessary endorsement) to be applied on the Superior Obligations. Holder will
not commence any action or proceeding against Maker to recover all or any part
of the amounts due under this Note or join with any other creditor, unless the
holders of the Superior Obligations shall also join, in bringing any
proceedings against Maker under any bankruptcy, reorganization, readjustment of
debt, arrangement of debt, receivership, liquidation or insolvency law or
statute of the federal or any state government unless and until all Superior
Obligations shall have been paid in full.

In the event of any receivership, insolvency, bankruptcy, assignment
for the benefit of creditors, reorganization or arrangement with creditors,
adjustment of debt, whether or not pursuant to bankruptcy laws, the sale of all
or substantially all of the assets, dissolution, liquidation, or any other
marshaling of the assets and liabilities of Maker, Holder will at the request
of the holders of the Superior Obligations file any claim, proof of claim,
proof of interest or other instrument of similar character necessary to enforce
the obligations of Maker in respect of this Note and will hold in trust for the
holders of the Superior Obligations and pay over to the holders of the Superior
Obligations, in the form received (together with any necessary endorsement), to
be applied on the Superior Obligations, any and all monies received under this
Note unless and until the Superior Obligations shall be paid in full. In the
event that Holder shall fail to take any such action requested by the holders
of the Superior Obligations, the holders of the Superior Obligations, may, as
attorney-in-fact for Holder take such action on behalf of Holder, and Holder
hereby appoints the holders of the Superior Obligations as attorney-in-fact for
Holder to demand, sue for, collect and receive any and all such monies and give
acquittance therefor and to file any claim, proof of claim, proof of interest
or other instrument of similar character and to take such other proceedings in
the holders of the Superior Obligations own name or in the name of Holder as
the holders of the Superior Obligations may deem necessary or advisable for the
enforcement of the provisions of this Note; and Holder will execute and deliver
to the holders of the Superior Obligations such other and further powers of
attorney or other instruments as the holders of the Superior Obligations may
request in order to accomplish the foregoing.

None of the obligations, liabilities, agreements and duties of Holder
under this Note shall be released, diminished, impaired, reduced or affected by
the occurrence of any of the following at any time or from time to time, even
if occurring without notice to or without the consent of Holder (any right of
Holder to be so notified or to require such consent being hereby waived):

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(i) any increase or decrease in the amount, or any change in
the manner, place or terms of payment, or any change or extension for
any period, the time of payment of, or renewal or modification of, the
Superior Obligations or any instrument or agreement now or hereafter
executed evidencing, in connection with, as security for, or providing
for the issuance of, any of the Superior Obligations in any manner, or
amendment of any other agreement relating to the Superior Obligations
(including provisions restricting or further restricting payments
under this Note);

(ii) the sale, exchange or release of all or any part of any
property by whomsoever at any time pledged or mortgaged to secure,
howsoever securing, the Superior Obligations;

(iii) the release of anyone liable in any manner for payment
or collection of the Superior Obligations;

(iv) exercise or refrain from exercising any rights against
Maker or others (including Holder);

(v) any invalidity, deficiency, illegality or unenforceability
of any Superior Obligations or the documents and instruments
evidencing, governing or securing any Superior Obligations, in whole
or in part, any bar by any statute of limitations or other law to
recovery on any Superior Obligations, or any defense or excuse for
failure to perform on account of force majeure, act of God, casualty,
impracticability or other defense or excuse with respect to any
Superior Obligations whatsoever;

(vi) the taking or accepting by the holders of the Superior
Obligations of any additional security for or subordination to any or
all of the Superior Obligations;

(vii) the insolvency, bankruptcy or disability of Holder or
Maker or the filing or commencement of any insolvency proceeding
involving Holder or Maker or other proceeding with respect thereto;

(viii) any modification of, or waiver of compliance with, any
terms of this Note with respect to any part hereto; or

(ix) any neglect, delay, omission, failure or refusal of the
holders of the Superior Obligations to take or prosecute any action
against any party in connection with this Note.

Notice of acceptance of this Note is waived, acceptance on the part of
the holders of the Superior Obligations being conclusively presumed by their
request for this Note and delivery of the same to it.

The rights under this Note may be assigned by the holders of the
Superior Obligations in connection with any assignment or transfer of any or
all of the Superior Obligations.

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IN WITNESS WHEREOF, Maker has caused this Note to be duly executed as
of the date first above written.

MAKER:

WATTENBERG RESOURCES LAND, L.L.C.

By: /s/ DAVID G. STOLFA
Name: David G. Stolfa
Title: Manager

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