Asset Purchase and Sale Agreement - St. Martinville Partners Ltd., Bargo Energy Co., Harken Energy Corp. and Harken Exploration Co.


                        ASSET PURCHASE AND SALE AGREEMENT

                                      AMONG

                       ST. MARTINVILLE PARTNERS, LTD. AND

                BARGO ENERGY COMPANY, COLLECTIVELY AS SELLER, AND

                          HARKEN ENERGY CORPORATION AND

                HARKEN EXPLORATION COMPANY, COLLECTIVELY AS BUYER

                               DATED MAY 19, 1998


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                        ASSET PURCHASE AND SALE AGREEMENT


         This Asset Purchase and Sale Agreement ("Agreement") is entered into
this 19th day of May, 1998, among St. Martinville Partners, Ltd., a Texas
limited partnership ("SMPL"), and Bargo Energy Company, a Texas general
partnership ("Bargo"), and Harken Energy Corporation, a Delaware corporation
("Harken Energy") and Harken Exploration Company, a Delaware corporation
("Exploration"). SMPL and Bargo are called herein collectively "Seller". Harken
Energy and Exploration are called herein collectively "Buyer". Buyer and Seller
are called herein collectively the "Parties."

                                   WITNESSETH:

         WHEREAS, Seller desires to sell to Buyer certain producing,
nonproducing and undeveloped oil and gas properties and other related assets and
Buyer desires to purchase such properties and assets upon and subject to the
terms and conditions hereinafter provided.

         NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         Capitalized terms used in this Agreement have the meanings given such
terms in this Article 1 or elsewhere in this Agreement.

         "Additional Shares" has the meaning set forth in Article 13.02.

         "Affiliate"means (i) with respect to the Seller, any corporation,
limited liability company, association, partnership or person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
under common control with, the Seller, and (ii) any Seller's officers, directors
and shareholders.

         "Assets" means Seller's right, title and interest in and to the
following (except to the extent constituting Excluded Assets):

         (i)      All of the stated working interests in the Wells described on
                  Exhibit "A" hereto, an equal undivided interest in the
                  Equipment used in producing, operating and maintaining each
                  Well respectively, and an equal undivided interest in the
                  Units described or referred to on Exhibit "A";


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         (ii)     75% of Seller's interests in the Mineral Interests described
                  on Exhibit "A-1" (St. Martinville Prospect Area) hereto and
                  the Lands covered thereby from the surface down to the base of
                  the Discorbis 4 Sand and an equal undivided interest in the
                  Equipment located thereon and used in connection therewith to
                  the extent such Equipment is not described in (i) above;

         (iii)    75% of Seller's interests in all of the Mineral Interests
                  described on Exhibit "A-2" (S. Bayou Boeuf Prospect Area)
                  hereto and the Lands covered thereby and an equal undivided
                  interest in the Equipment located thereon and used in
                  connection therewith to the extent such Equipment is not
                  described in (i) above;

         (iv)     50% of Seller's interests in all of the Mineral Interests
                  described on Exhibit "A-3" (Bol Mex Prospect Area) hereto and
                  the lands covered thereby and an equal undivided interest in
                  the Equipment located thereon and used in connection therewith
                  to the extent such Equipment is not described in (i) above;

         (v)      To the extent the following relate to any of the property
                  described in (i), (ii), (iii) or (iv), the same undivided
                  interest as specified for the related property above: All of
                  the licenses, permits, contracts, agreements and other
                  instruments owned by Seller (other than bonds posted by
                  Seller) which concern and relate to any of the Wells, Mineral
                  Interests, Lands, and/or Equipment insofar as same concern or
                  relate to the Wells, Mineral Interests, Lands, and/or
                  Equipment, or the operation thereof, including, without
                  limitation, oil, gas and condensate purchase and sale
                  contracts; permits; rights-of-way; easements; licenses;
                  servitudes; estates; surface leases; farmin and farmout
                  agreements; division orders and transfer orders; bottomhole
                  agreements; dry hole agreements; area-of-mutual interest
                  agreements; salt water disposal agreements; geologic and
                  geophysical agreements; acreage contribution agreements;
                  operating agreements; balancing agreements; and unit
                  agreements; pooling agreements; pooling orders;
                  communitization agreements; processing, gathering, compression
                  and transportation agreements; facilities or equipment leases
                  relating thereto or used or held for use in connection with
                  the ownership or operation thereof or with the production,
                  treatment, sale or disposal of Hydrocarbons; and all other
                  contracts and agreements related to the Wells, Mineral
                  Interests, Lands, and/or Equipment;

         (vi)     To the extent the following relate to any of the property
                  described in (i), (ii), (iii) or (iv), an undivided interest
                  that corresponds to the interest in such property to be
                  conveyed hereunder: All Records and, to the extent
                  transferable, all other contract rights, intangible rights
                  (excluding Seller's trademarks and service marks), inchoate
                  rights, choses in action, rights under warranties made by
                  prior owners, manufacturers, vendors or other third parties,
                  and rights accruing under applicable statutes of limitation or
                  prescription; and




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         (vii)    To the extent the following relate to any of the property
                  described in (i), (ii), (iii) or (iv), an undivided interest
                  that corresponds to the interest in such property to be
                  conveyed hereunder: All payments, and all rights to receive
                  payments, with respect to the ownership of the production of
                  Hydrocarbons from, or the conduct of operations on, the Assets
                  and the interests to be conveyed to Buyer hereunder accruing
                  after the Effective Date.

         "Bol Mex Prospect Area" shall mean the area described on Exhibit "A-3".

         "Buyer" has the meaning set forth in the preface to this Agreement.

         "Buyer Indemnified Party" has the meaning provided in Article 7.03.

         "Closing" has the meaning set forth in Article 3.04 hereof.

         "Closing Date" has the meaning set forth in Article 3.04 hereof.

         "Closing Shares" has the meaning set forth in Article 3.01(a) hereof.

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

         "Commission" means the Securities and Exchange Commission (or any 
successor body thereto).

         "Conveyance Documents" means the Assignment, Bill of Sale and
Conveyance in the form attached hereto as Exhibit "B", together with those other
forms of assignments, bills of sale, deeds and other instruments the Parties
agree are necessary or appropriate to convey title to the Assets or Option
Assets from Seller to Buyer.

         "Easement Agreement" has the meaning set forth in Article 8.04.

         "Effective Date" means 7:00 a.m. local time with respect to each of the
Assets on January 1, 1998.

         "Equipment" means all the tangible personal property, tools, machinery,
materials, pipelines, gas plants, gathering systems, equipment, fixtures and
improvements, which are incident or attributable to the Wells, Mineral
Interests, Lands and/or Units or with the production, treatment, sale or
disposal of Hydrocarbons or water produced therefrom or attributable thereto, on
the Effective Date, including the personal property, materials and equipment
listed on Exhibit "C" hereto.

         "Examination Period" has the meaning set forth in Article 6.02.




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         "Excluded Assets" has the meaning set forth in Article 2.01(b) hereof.

         "Expiring Leases" has the meaning set forth in Article 8.03(b).

         "Fee Tract" has the meaning set forth in Article 2.01(b).

         "Final Settlement Date" has the meaning set forth in Article 9(h).

         "Final Settlement Statement" has the meaning set forth in Article 9(h).

         "Governmental Approvals" has the meaning set forth in Article 14.

         "Hydrocarbons" means crude oil, natural gas, casinghead gas, coalbed
methane, condensate, helium, sulphur, S02, C02, natural gas liquids and other
gaseous and liquid hydrocarbons or any combination thereof.

         "Imbalances" has the meaning set forth in Article 9(f).

         "Indemnifying Party" has the meaning set forth in Article 7.04(a) 
hereof.

         "Lands" means the lands covered by the Mineral Interests.

         "Leases" means the oil and gas leases or oil, gas, and mineral leases
shown in Exhibits "A- 1", "A-2" and "A-3" hereto or that cover any portion of
the area described in such Exhibits.

         "Loss" or "Losses" means all damages, payments, penalties, fines,
assessments, costs, amounts paid in settlement, obligations, taxes, losses
(including reductions in the value of Assets), liabilities, expenses and fees
incurred, including court costs and attorneys' fees and expenses and costs of
investigating, preparing or defending any action or proceeding, provided,
however, that Buyer shall be deemed to have incurred a Loss or Losses only if,
and only to the extent that, the cumulative aggregate of all such Loss or Losses
attributable to or arising in connection with the portion of the Assets acquired
from SMPL exceeds $74,000 or the cumulative aggregate of all such Loss or Losses
attributable to or arising in connection with the portion of the Assets acquired
from Bargo exceeds $126,000.

         "Mineral Interests" means the Leases and any mineral interest owned by
Seller in and to the lands described on Exhibits "A-1", "A-2" and "A-3".

         "NRI" means a fractional or percentage interest in and to all
Hydrocarbons produced from or allocated to a Well or Unit described on Exhibit
"A" after deduction of all lessors' royalties, overriding royalties, and other
burdens and payments out of production that burden such fractional or percentage
interest in such Well or Unit.




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         "Operating Agreement" has the meaning set forth in Article 2.01(b).

         "Option Assets" has the meaning set forth in Article 13.01.

         "Option Closing" has the meaning set forth in Article 13.02.

         "Parties" has the meaning set forth in the preface above.

         "Permitted Encumbrances" means, with respect to the Assets, the 
following:

         (i)      liens for taxes not yet due or, if due, being challenged in 
                  good faith by appropriate proceedings;

         (ii)     materialmen's, mechanics' and other similar liens or charges
                  arising in the ordinary course of business for obligations
                  that are not delinquent and that will be paid or discharged in
                  the ordinary course of business or, if delinquent, that are
                  being contested in good faith in the ordinary course of
                  business;

         (iii)    easements, rights-of-way, servitudes, permits, surface leases,
                  and other rights granted to or reserved for third parties in
                  respect of surface operations (including without limitation
                  those rights set forth in Exhibit "D" attached hereto and made
                  a part hereof for all purposes) that do not materially
                  interfere with the operation of the portion of the Assets
                  burdened thereby;

         (iv)     rights reserved to or vested in any governmental authority to
                  control or regulate any of the Wells or Units and all
                  applicable laws, rules, regulations and orders of such
                  authorities so long as the same:

                  (a)      do not decrease Seller's NRI below the NRI shown in
                           Exhibit "A" or increase Seller's WI above the WI
                           shown in Exhibit "A" without at least a proportion
                           ate increase in Seller's NRI, or

                  (b)      do not create any liens in respect of such Wells or 
                           Units;

         (v)      liens arising under operating agreements, unitization and
                  pooling agreements, orders and statutes and production sales
                  contracts securing amounts not yet due or, if due, being
                  contested in good faith in the ordinary course of business as
                  set forth in Exhibit "E" attached hereto and made a part
                  hereof for all purposes;

         (vi)     the terms and conditions of all contracts and agreements
                  relating to the Leases and Wells, including, without
                  limitation, exploration agreements, gas sales contracts,
                  processing agreements, farmins, farmouts, operating
                  agreements, and right-of-way agreements, to the extent such
                  terms and conditions:



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                  (a)      do not decrease Seller's NRI below the NRI shown in
                           Exhibit "A" or increase Seller's WI above the WI
                           shown in Exhibit "A" without at least a proportion
                           ate increase in Seller's NRI,

                  (b)      are normal and customary in the oil and gas industry
                           in the area in which the affected Assets are located,
                           and

                  (c)      would not conflict with any other portion of this
                           definition of Permitted Encumbrances;

         (vii)    royalties, overriding royalties, net profits interests,
                  production payments, reversionary interests, and similar
                  interests that do not decrease Seller's NRI below the NRI
                  shown in Exhibit "A" or increase Seller's WI above the WI
                  shown in Exhibit "A" without at least a proportionate increase
                  in Seller's NRI;

         (viii)   conventional rights of reassignment requiring notice to the
                  holders of the rights prior to surrendering or releasing a
                  leasehold interest; and

         (ix)     calls on production exercisable only at prices substantially
                  equivalent to then current fair market value.

         (x)      the absence of Governmental Approvals other than Governmental
                  Approvals that were applicable to a previous transaction
                  involving the transfer of all or any portion of the Assets but
                  were not complied with at the time of the consummation of such
                  transaction.

         "Phase I Environmental Audit" means an assessment of Seller's
compliance with Environmental Laws relative to the Assets consisting of
examination of Seller's files and public documents, interviews of personnel of
Seller and of other appropriate persons and visual inspection of the Assets.

         "Preference Right" means any preemptive right, option or preferential
right to purchase any portion of the Assets held by any person or entity other
than Buyer.

         "Product Contracts" has the meaning given set forth in Article 4.01(m).

         "Purchase Price" has the meaning given set forth in Article 3.01.

         "Records" means all originals, copies, computer tapes and discs, files,
records, information or data relating to the Assets in the possession of Seller,
or in the possession of any agent for the Seller, including, without limitation,
title records (including abstracts of title, title opinions, certificates of
title and title curative documents), accounting records and files, contracts,
correspondence, production records, electric logs, core data, pressure data,
decline curves, graphical



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production curves, geologic and geophysical information, drilling reports, well
completion reports, drill stem test charts and reports, engineering reports,
regulatory reports, and all related materials, insofar as the foregoing items
constitute materials that may be lawfully conveyed to Buyer (i.e. the materials
are not subject to a proprietary agreement precluding their transfer to Buyer).

         "Records Delivery Date" has the meaning given set forth in Article
13.03(a).

         "Registration Rights Agreement" has the meaning set forth in Article
11.01(c).

         "Related Agreements" means the Conveyance Documents, the Easement
Agreement and the Registration Rights Agreement.

         "Remaining Purchase Price" means $4,000,000, subject to adjustment in
accordance with Article 8.03(b) and Article 6.02.

         "Reserve Shares" has the meaning set forth in Article 3.01(b).

         "S. Bayou Boeuf Prospect Area" shall mean the area described on Exhibit
"A-2".

         "Seller" has the meaning set forth in the preface to this Agreement.

         "Seller Indemnified Party" has the meaning given to it in Article 7.02.

         "Shares" means shares of the common stock, $0.01 par value per share,
of Harken Energy.

         "St. Martinville Prospect Area" shall mean the area described on
Exhibit "A-1".

         "Survival Period" has the meaning set forth in Article 7.01 hereof.

         "Taxes" has the meaning set forth in Article 9.

         "Third Party Claim" has the meaning set forth in Article 7.04(a)
hereof.

         "Transfer Requirements" means all consents, approvals, authorizations
or permits of, or filings with or notifications to, any third party which must
be obtained, made or complied with for or in connection with the transactions
contemplated by this Agreement in order (a) for such transactions to be
effective, (b) to prevent any termination, cancellation, default, acceleration
or change in terms (or any right arising therefrom) under any terms, conditions
or provisions of any Asset (or of any agreement, instrument or obligation
relating to or burdening any Asset or any interest therein or portion thereof)
as a result of such transactions, or (c) to prevent the creation or imposition
of any lien, charge, penalty, restriction, security interest or encumbrance on
or with respect to any Asset or any interest therein or portion thereof (or any
right arising therefrom) as a result of such transactions.



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         "Units" means all unitization, communitization, pooling agreements,
working interest units created by operating agreements, and orders covering the
lands subject to the Leases, or any portion thereof, and the units and pooled or
communitized areas created thereby.

         "Wells" means wells for the production of Hydrocarbons which are listed
in Exhibit "A" or which are located on the Lands.

         "WI" means a fraction or percentage of the costs and expenses
associated with the maintenance, exploration, development, operation and
abandonment of a Well or Unit described on Exhibit "A".

                                    ARTICLE 2
                      SALE AND PURCHASE; OPTION TO PURCHASE

         2.01     Sale and Purchase.

         (a)      INCLUDED ASSETS. Subject to the terms and conditions of this
                  Agreement and in consideration of Buyer's payment to Seller of
                  the Purchase Price as provided in this Agreement, the Buyer
                  agrees to purchase from the Seller, and the Seller agrees to
                  sell and convey to Buyer, the Assets.

         (b)      EXCLUDED ASSETS. Notwithstanding anything herein provided to
                  the contrary, the term "Assets" as used in this Agreement
                  shall not include, and there is excepted, reserved and
                  excluded from the sale contemplated hereby the following
                  ("Excluded Assets"): (i) all cash, deposits, checks, funds,
                  accounts receivable, notes receivable, or similar items
                  attributable to the Assets with respect to any period of time
                  prior to the Effective Date, except for those funds in
                  suspense accounts to be delivered to Buyer pursuant to Article
                  8.01(b) hereof and (ii) all Hydrocarbon production from or
                  attributable to the Assets with respect to all periods prior
                  to the Effective Date and all proceeds attributable thereto,
                  and all Hydrocarbons that, at the Effective Date, are owned by
                  Seller and are in storage or otherwise held in inventory and
                  all proceeds attributable thereto, and those listed in Exhibit
                  "H" and the following:

                           (i)      the surface estate in and to the tract in
                                    the St. Martinville Prospect Area described
                                    under Lease No. R133-000 on Exhibit "A-1"
                                    (the "Fee Tract");

                           (ii)     25% of the Seller's interest in the St.
                                    Martinville Prospect Area, and the right to
                                    act as operator for the St. Martinville
                                    Prospect Area;

                           (iii)    25% of the Seller's interest in the S. Bayou
                                    Boeuf Prospect Area, and the right to act as
                                    operator for the S. Bayou Boeuf Prospect
                                    Area;




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                           (iv)     50% of the Seller's interest in the Bol Mex
                                    Prospect Area, and the right to act as
                                    operator for the Bol Mex Prospect Area.

         Subsequent to the Effective Date, the form of Operating Agreement
attached hereto as Exhibit "K" (the "Operating Agreement") will govern
operations on the the St. Martinville Prospect Area and the Bol Mex Prospect
Area. At the Closing, the Parties will execute separate Operating Agreements
covering each of those prospect areas.

         (c)      OPTION TO PURCHASE. The Buyer will have, and the Seller hereby
                  grants to Buyer, a continuing option, on the terms set forth
                  in Article 13.01 below, for a period of one (1) year following
                  the Closing Date to purchase from Seller all of Seller's
                  remaining interest in the St. Martinville Prospect Area and in
                  the S. Bayou Boeuf Prospect Area (including the right to
                  operate both areas).


                                    ARTICLE 3
                                 PURCHASE PRICE

         3.01 Purchase Price. In consideration for the sale and conveyance to
Buyer of the Assets, subject to the terms and conditions hereof, the Buyer
agrees to tender and deliver to the Seller in the manner hereinafter provided
shares of its capital stock as consideration (the "Purchase Price"), that is of
an aggregate value, which the Parties agree is equal to Twenty Million Two
Hundred Fifty Thousand Dollars ($20,250,000):

         (a)      Harken Energy will issue and deliver to the Seller following
                  Closing, at the time, in the amount, and in the manner
                  described in Article 8.03(a), the number of Shares equal in
                  value to Sixteen Million Two Hundred Fifty Thousand Dollars
                  ($16,250,000) which the parties hereto have calculated to be
                  2,716,483 (the "Closing Shares").

         (b)      Harken Energy will withhold from the Purchase Price that
                  number of shares (the "Reserve Shares") which are equal in
                  value to $4 million as a contingency against Seller obtaining
                  new or renewal leases under St. Martinville Prospect Area as
                  described in Article 8.03(b) and the need for environmental
                  compliance operations under Article 6.02.

         3.02 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of the Buyer, 5605
North MacArthur, Suite 400, Irving, Texas 75038, simultaneously with the
execution of this Agreement on May 19, 1998, or at such other place, date and
time as the Buyer and the Seller may mutually determine (the "Closing Date").




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         3.03 Allocation of Purchase Price. The Closing Shares and the Reserve
Shares shall be allocated and deliverable in the proportion of thirty-seven
percent (37%) to SMPL and sixty-three percent (63%) to Bargo.

         3.04 Deliveries at the Closing. At the Closing or as otherwise set
forth in Article 11, (i) the Seller will deliver to the Buyer the documents
referred to in Article 11.01 below, and (ii) the Buyer will deliver to the
Seller the documents referred to in Article 11.02 below.


                                    ARTICLE 4
                         REPRESENTATIONS AND WARRANTIES

         4.01 Representations and Warranties of Seller. Seller represents and
warrants to Buyer that the statements contained in this Article 4.01 are true
and correct as of the Closing Date:

         (a)      SMPL is a limited partnership and Bargo is a general
                  partnership, each of which is duly organized, validly existing
                  and in good standing under the laws of the State of Texas, and
                  is qualified to do business and in good standing under the
                  laws of the State of Louisiana.

         (b)      Each Seller has all requisite power and authority, limited
                  partnership or corporate and otherwise, to carry on its
                  business as presently conducted, to enter into this Agreement
                  and the Related Agreements, to perform its obligations under
                  this Agreement and the Related Agreements.

         (c)      The execution and delivery of this Agreement and the Related
                  Agreements have been, and the execution and delivery of all
                  certificates, documents and instruments required to be
                  executed and delivered by the Seller at Closing, and the
                  consummation of the transactions contemplated hereby and
                  thereby as of the Closing Date shall have been duly authorized
                  by all necessary limited partnership action on the part of the
                  Seller. No further authorization is required by any law,
                  statute, regulation, court order or judgment applicable to the
                  Seller. This Agreement and the Related Agreements constitute
                  the legal, valid and binding obligations the Seller
                  enforceable in accordance with their respective terms, subject
                  however, to the effects of bankruptcy, insolvency,
                  reorganization, moratorium and similar laws, as well as to
                  principles of equity (regardless of whether such
                  enforceability is considered in a proceeding in equity or at
                  law). After Closing, the Seller will have the ability to
                  continue in its same business without a fundamental change in
                  the nature or scope of its business.

         (d)      The execution and delivery of the Agreement and the Related
                  Agreements and the consummation of the transactions
                  contemplated hereby and thereby will not (i) violate, or be in
                  conflict with, any provisions of the Seller's agreement of
                  limited



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                  partnership or other governing documents, (ii) constitute a
                  breach of, or any event of default under, any contract or
                  agreement to which the Seller is a party or by which it or its
                  assets are bound, or constitute the happening of an event or
                  condition upon which any other party to such a contract or
                  agreement may exercise any right or option which will
                  materially adversely affect any of the Assets, (iii) violate
                  any judgment, decree, order, statute, rule or regulation
                  applicable to Seller, or (iv) result in any material liability
                  to Buyer under the terms of any contracts or agreements.

         (e)      Except as set forth on Exhibit "J" hereto, no suit, action or
                  other proceeding is pending before any court or any
                  governmental agency as of the date of this Agreement to which
                  the Seller is a party or which involves the Assets and which
                  might result in a material impairment or loss of the Seller's
                  title to the Assets or that might materially hinder or impede
                  the operation of the Assets or the ability of the Seller to
                  perform its obligations under this Agreement or under the
                  Related Agreements. Seller will promptly give the Buyer notice
                  of any such proceeding arising prior to or after the Closing
                  with respect to which it has notice. The Seller has received
                  no notice of any pending or threatened action, suit,
                  proceeding, inquiry or investigation, at law or in equity,
                  before or by any court, governmental agency, public board or
                  body against or affecting the Seller or the Assets that
                  questions the powers and authority of the Seller to enter into
                  or perform its obligations under this Agreement or the Related
                  Documents or to carry out the transactions on its part
                  described in this Agreement or the Related Documents or the
                  power of the Borrower to own and dispose of the Assets.

         (f)      Seller has no knowledge of material defects or breakage in the
                  Equipment to be conveyed in whole or in part to Buyer pursuant
                  to the terms hereof, and to the best of Sellers knowledge, all
                  the Equipment is in working order as of the Closing Date. As
                  used in this Article 4.01(f), a material defect or breakage
                  means any defect that requires repair or replacement of any
                  personal property or fixtures conveyed herein to Buyer
                  requiring an expenditure by Buyer in excess of $50,000 per
                  defect, or $100,000 in the aggregate for all defects and
                  breakage.

         (g)      All royalties, rentals and other payments due with respect to
                  the Mineral Interests have been properly and timely paid as
                  prescribed by the Leases governing them. All conditions
                  necessary to keep the Leases in force have been fully
                  performed no notices have been received by Seller of any claim
                  to the contrary and all of the Leases are in full force and
                  effect.

         (h)      Prior to the Closing Date, (i) Seller is not obligated by
                  virtue of any prepayment arrangement under any contract for
                  the sale of hydrocarbons and containing a "take or pay" or
                  similar provision to deliver Hydrocarbons produced from the
                  Assets at some future time without then or thereafter
                  receiving full payment therefor, and (ii) Seller has not
                  produced a share of gas materially greater than its ownership



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                  percentage and Seller is under no obligation to reduce its
                  share of production under any gas balancing agreement or
                  similar contract to allow under-produced parties to come back
                  into balance.

         (i)      All ad valorem, property, production, severance and similar
                  taxes and assessments based an or measured by the ownership of
                  property or the production of Hydrocarbons or the receipt of
                  proceeds therefrom on the Assets have been properly paid and
                  all such taxes and assessments which become due and payable
                  prior to the Closing Date shall have been properly paid by
                  Seller.

         (j)      All laws, regulations and orders of all governmental agencies
                  having jurisdiction over the Assets or operations conducted
                  thereon have, to Seller's knowledge, been and shall continue
                  to be complied with in all material respects until the Closing
                  Date. Seller has obtained all material necessary permits from
                  governmental agencies having jurisdiction in connection with
                  the Assets, including, without limitation, the injection and
                  disposal of salt water, or operations conducted thereon and
                  have timely, properly and accurately made and will continue to
                  timely, properly and accurately make all filings required by
                  all governmental agencies with respect to the Assets or
                  operations conducted thereon.

         (k)      Seller has not incurred liability, contingent or otherwise,
                  for brokers' or finders' fees relating to the transactions
                  contemplated by this Agreement or the Related Agreements for
                  which Buyer shall have any responsibility whatsoever.

         (l)      With respect to the Basic Documents (defined below), in all
                  material respects (i) the Basic Documents all are in full
                  force and effect and are the valid and legally binding
                  obligations of the parties thereto and are enforceable in
                  accordance with their respective terms; (ii) Seller is not in
                  breach or default with respect to any of its material
                  obligations pursuant to any such Basic Document or any
                  regulations incorporated therein or governing same; (iii) all
                  material payments (including, without limitation, royalties,
                  delay rentals, shut-in royalties, or payments, fees for salt
                  water disposal or injection, and joint interest or other
                  billings under unit or operating agreements) due from Seller
                  thereunder have been made by Seller; (iv) to Seller's
                  knowledge no other party to any Basic Document (or any
                  successor in interest thereto) is in breach or default with
                  respect to any of their material obligations thereunder; (v)
                  neither the Seller nor, to Seller's knowledge, any other party
                  to any Basic Document has given or threatened to give notice
                  of any action to terminate, cancel, rescind or procure a
                  judicial determination of any Basic Document or any provision
                  thereof; and (vi) the execution and delivery of this Agreement
                  and the Related Agreements and the consummation of the
                  transactions contemplated hereby and thereby will not result
                  in a breach of, constitute a default under, or result in a
                  violation of the material provisions of any Basic Document and
                  none of the Basic Documents will require, after the Effective
                  Date, that any advance payments be made



                                     12

   14



                  to any party other than those required under operating
                  agreements. As used herein the term "Basic Documents" shall
                  mean the Leases, the Product Contracts (defined below),
                  partnership, joint venture, limited partnership, farmout, dry
                  hole, bottom hole, operating agreements, acreage contribution,
                  purchase and acquisition agreements, area of mutual interest
                  agreements and salt water disposal and/or injection
                  agreements, servicing contracts, casement and/or right-of-way
                  agreements, surface leases, surface use agreements,
                  unitization or pooling agreements and all other material
                  executory contracts and agreements relating to the Assets,
                  including, without limitation, those contracts and agreements
                  described in Article 4.01(m) hereto.

         (m)      Other than agreements which are cancellable on 90 days notice
                  or less without material penalty or detriment, all product
                  purchase agreements and all agreements relating to or
                  affecting the purchase, sale, gathering, delivery,
                  compressing, transporting, processing, marketing or any other
                  disposition of the gas and condensate produced from or
                  attributable to the Assets are described on Exhibit "F"
                  attached hereto and made a part hereof under the heading
                  "Product Contracts," and are herein referred to as the
                  "Product Contracts".

         (n)      Seller has good and valid title to the Assets subject to
                  Permitted Encumbrances. Exhibit "A-1", "A-2" and "A-3"
                  contains a list of all Mineral Interests and other mineral
                  estates and interests within the Lands owned by Seller and is
                  true and correct, except as otherwise noted therein; provided,
                  however, that title to the Leases shall be assigned to Buyer
                  with warranties of title by, through and under Seller and its
                  Affiliates who are predecessors to Seller's title, but not
                  otherwise.

         (o)      The Mineral Interests entitle Seller to receive not less than
                  the undivided interest set forth in Exhibit "A" as NRI of all
                  indicated hydrocarbons produced, saved and marketed from or
                  attributable to the Wells, including any non-producing, behind
                  the pipe, or proved undeveloped reserves, through plugging,
                  abandonment and salvage of such Wells. Seller's obligation to
                  bear costs and expenses relating to the development of and
                  operations on the Wells is not, and, through the plugging,
                  abandonment and salvage of such Wells, shall not be greater
                  than the WI set forth in Exhibit "A."

         (p)      Seller is currently receiving from all purchasers of
                  production from the Mineral Interests at least the NRI set
                  forth in Exhibit "A" without suspense or any indemnity other
                  than standard division order warranties. Seller is currently
                  bearing, as Operator, or paying to operators of the Leases,
                  for the development and operation thereof no more than the WI
                  set forth in "Exhibit A," and the Seller is current for all
                  costs and expenses pertinent to the development and operation
                  of the Leases.




                                     13

   15



         (q)      No portion of the Mineral Interests (1) has been contributed
                  to and is currently held by a tax partnership; (2) 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 have created a tax partnership; or (3)
                  otherwise constitutes "partnership property" (as that term is
                  used in Subchapter K of Chapter 1 of Subtitle A of the Code)
                  of a tax partnership. For the purpose of this Article 4.01(s)
                  a "tax partnership" is an entity deemed to be a partnership
                  within the meaning of Section 761 of the Internal Revenue Code
                  or any similar state or federal statute, rule or regulation,
                  by reason of elections made not to be excluded from the
                  application of such partnership provisions.

         (r)      The Seller represents that it has been furnished with such
                  information as Seller may have requested from the Buyer
                  concerning the Buyer, Harken Energy's common stock and the
                  Shares being delivered hereunder. The Seller further
                  represents that (A) it is an "accredited investor," as defined
                  in Rule 501(a) of the Securities Act of 1933, as amended (the
                  "Securities Act"), and (B) it has had the opportunity to ask
                  questions of and receive satisfactory answers from management
                  of Harken Energy concerning Harken Energy, its operations, the
                  matters set forth in the Harken SEC Documents and an other
                  matters. The Seller acknowledges and agrees that the Shares
                  may not be sold or transferred following the Closing unless
                  either (a) such Shares have been registered under the
                  Securities Act and applicable state securities laws, or (b)
                  the transfer is exempt from the registration requirements of
                  the Securities Act and applicable state securities laws and
                  Harken Energy shall have been furnished with a written opinion
                  of legal counsel reasonably satisfactory to Harken Energy to
                  the effect that such sale or transfer is exempt from the
                  registration requirements of the Securities Act and applicable
                  state securities laws; provided, however, that Bargo may
                  freely sell or transfer all or any number of Shares to SMPL
                  and SMPL may freely sell or transfer a portion of its Shares
                  to EnCap Equity 1996 Limited Partnership or Energy Capital
                  Investment Company PLC (limited partners of SMPL), so long as
                  all such sale or transfers are accomplished in a manner
                  consistent with the Securities Act and applicable state
                  securities laws; provided, however, no legal opinion shall be
                  required in connection with sales or transfers of Shares to
                  SMPL or to limited partners of SMPL as provided above. The
                  Seller agrees that the certificates representing the Shares
                  issued pursuant to this Agreement will contain the following
                  restrictive legend: THE SHARES OF STOCK REPRESENTED BY THIS
                  CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
                  OF 1933, AS AMENDED, OR ANY STATE SECURITIES ACT AND CANNOT BE
                  SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF UNLESS REGISTERED
                  UNDER SUCH ACTS OR EXEMPTIONS FROM REGISTRATION ARE AVAILABLE.
                  THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
                  RESTRICTED UNDER THE PURCHASE AND SALE AGREEMENT DATED AS OF
                  MAY 19, 1998, AMONG HARKEN ENERGY CORPORATION, HARKEN
                  EXPLORATION COMPANY,



                                     14

   16



                  ST. MARTINVILLE PARTNERS, LTD. AND BARGO ENERGY COMPANY.  A
                  COPY OF THE PURCHASE AND SALE AGREEMENT MAY BE OBTAINED
                  AT NO COST BY WRITTEN REQUEST MADE BY THE RECORD HOLDER OF
                  THE CERTIFICATE TO HARKEN ENERGY CORPORATION.

         (s)      Seller has provided Buyer with complete and accurate
                  information relating to the Leases and Assets, including
                  without limitation, all applicable agreements relating,
                  appertaining or incidental to the Leases, production history
                  and characteristics. Seller has also provided Buyer with
                  copies of all land and well files heretofore maintained and
                  belonging to Seller.

         (t)      Prior to Closing, Seller shall have made available to Buyer
                  for examination at Seller's office in Houston, Texas, all
                  title and other information relating to the Assets insofar as
                  the same are in Seller's possession and after Closing will
                  cooperate with Buyer in Buyer's efforts to obtain such
                  additional information relating to the Assets as Buyer may
                  reasonably require, to the extent in each case that Seller may
                  do so without violating legal constraints or any obligation of
                  confidence or other contractual commitment of Seller to a
                  third party. After Closing, Seller shall cooperate with Buyer
                  in Buyer's efforts to obtain, at Buyers' expense, such
                  additional title information as Buyer may reasonably deem
                  prudent.

         (u)      Seller has caused the Assets to be produced, operated and
                  maintained in a good and workmanlike manner consistent with
                  good oilfield practices, has maintained insurance now in force
                  with respect to the Assets, has paid or caused to be paid all
                  costs and expenses in connection therewith, has kept the
                  Leases in full force and effect and has performed and, to the
                  best knowledge of Seller, complied with all the covenants and
                  conditions contained in the Leases and all agreements relating
                  to the Assets.

         (v)      During the period between the Effective Date and the Closing,
                  Seller has not entered into any agreements or commitments with
                  respect to the Assets, has not modified or terminated any of
                  the agreements relating to the Assets, including, without
                  limitation, the Basic Documents and the Product Contracts, has
                  not encumbered, sold or otherwise disposed of any of the
                  Assets other than personal property which has been replaced by
                  equivalent property or consumed in the operation of the
                  Assets, and has not voluntarily compromised any amounts
                  payable to the Seller due to casualty loss or any pending or
                  threatened taking related to the Assets.

         (w)      Seller has exercised reasonable efforts in safeguarding and
                  maintaining all engineering, geological and geophysical data,
                  reports and maps, contract rights and like information
                  relating to the Assets.




                                     15

   17



         (x)      In the event that as of the Closing Date the Assets are
                  subject to outstanding Governmental Approvals, Seller agrees
                  to indemnify the Buyer Indemnified Party against any Loss or
                  Losses arising by reason of the failure to obtain such
                  Governmental Approvals. Seller represents that it will
                  exercise reasonable efforts to obtain such Governmental
                  Approvals. The indemnity herein provided shall survive the
                  Closing until the required Governmental Approvals have been
                  obtained.

         (y)      Seller has permitted Buyers' authorized representatives to (i)
                  consult with Seller's and/or any third-party contract
                  operator's agents and employees during reasonable business
                  hours and to conduct on-site inspections, reasonable tests and
                  inventories with respect to the Assets and inspect and examine
                  all production and related data, well logs and geological and
                  geophysical data relating to the Assets, and (ii) inspect and
                  make copies of all orders, proceedings and evidence with
                  respect to the Assets of the Louisiana Conservation
                  Commission.

         (z)      Prior to the Closing Date, Seller has used reasonable efforts
                  to maintain its relationships with all suppliers, customers
                  and others having business relationships with Seller with
                  respect to the Assets so that such relationships will be
                  preserved for Buyer on and after the Closing Date.

         (aa)     All Wells, whether producing or not, located on the Lands,
                  other than Wells which have been previously plugged and
                  abandoned in compliance with applicable rules and regulations,
                  are set forth in Exhibit "A" hereto.

         (bb)     There are no underground storage tanks located on any of 
                  Lands.

         (cc)     Since the Effective Date, Seller has purchased new Leases for
                  the St. Martinville Prospect Area, S. Bayou Boeuf Prospect
                  Area and Bol Mex Prospect Area as set forth on Exhibits "A-1",
                  "A-2" and "A-3", respectively, under the heading "Post
                  Effective Date Leases." Seller paid the bonus amount set forth
                  in the description of such Post Effective Date leases on such
                  Exhibits.

         (dd)     Exhibit "I" sets forth each "authority for expenditure" issued
                  or received by Seller since the Effective Date along with an
                  indication of the Prospect Area which the authorization
                  relates to, the amount of the authorization and specifically
                  states whether Seller has approved that authorization.

         4.02 Representations and Warranties of Buyer. Each of Harken Energy and
Exploration jointly and severally represents and warrants to Seller that the
statements contained in this Article 4.02 are true and correct as of the Closing
Date:




                                     16

   18



         (a)      Each of Harken Energy and Exploration is a corporation duly
                  organized, validly existing and in good standing under the
                  laws of the State of Delaware, and is duly qualified to do
                  business and in good standing in the State of Texas.

         (b)      Each Buyer has all requisite power and authority, corporate
                  and otherwise, to carry on its business as presently
                  conducted, to enter into this Agreement and Related Agreements
                  to which it is a party, and to perform its obligations under
                  this Agreement and such Related Agreements.

         (c)      The execution and delivery of this Agreement and the Related
                  Agreements have been, and the execution and delivery of all
                  certificates, documents and instruments required to be
                  executed and delivered by each Buyer at Closing, and the
                  consummation of the transactions contemplated hereby as of
                  the Closing Date shall have been duly authorized by all
                  necessary corporate action on the part of each Buyer and no
                  further authorization is required by any law, statute,
                  regulation, court order or judgment applicable to either
                  Buyer. This Agreement constitutes a legal, valid and binding
                  obligation of each Buyer enforceable in accordance with its
                  terms, subject however, to the effects of bankruptcy,
                  insolvency, reorganization, moratorium and similar laws, as
                  well as to principles of equity (regardless of whether such
                  enforceability is considered in a proceeding in equity or at
                  law).

         (d)      The execution and delivery of the Agreement and the
                  consummation of the transactions contemplated hereby will not
                  (i) violate, or be in conflict with any provisions of either
                  Buyer's certificate of incorporation, bylaws or governing
                  documents, (ii) constitute a material breach of, or any event
                  of default under, any contract or agreement to which either
                  Buyer is a party or by which it or its assets are bound, or
                  constitute the happening of an event or condition upon which
                  any other party to such a contract or agreement may exercise
                  any right or option which will materially adversely affect the
                  ability of either Buyer to perform its obligations hereunder,
                  or (iii) violate any judgment, decree, order, statute, rule or
                  regulation applicable to either Buyer.

         (e)      No suit, action or other proceeding is pending before any
                  court or governmental agency as of the date of this Agreement
                  to which either Buyer is a party and which might materially
                  hinder or impede the ability of either Buyer to perform its
                  obligations hereunder. Harken Energy shall promptly notify
                  Seller of any such proceeding arising prior to the Closing
                  with respect to which its receives actual notice.

         (f)      Neither Buyer has incurred any 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.




                                     17

   19



         (g)      Harken Energy is current with respect to all required reports,
                  schedules, forms, statements and other documents with the
                  Commission. The consolidated financial statements of Harken
                  Energy filed with the Commission for the year ended December
                  31, 1997, comply as to form in all material respects with
                  applicable accounting requirements and the published rules and
                  regulations of the SEC with respect thereto, have been
                  prepared in accordance with generally accepted accounting
                  principles (except, in the case of unaudited statements, as
                  permitted by Form 10-Q of the SEC) applied on a consistent
                  basis during the periods involved (except as may be indicated
                  in the notes thereto) and fairly present the consolidated
                  financial position of Harken Energy and its consolidated
                  subsidiaries as of the dates thereof and the consolidated
                  results of their operations and cash flows for the periods
                  then ended (subject, in the case of unaudited statements, to
                  normal year-end audit adjustments and other adjustments
                  described therein).

         (h)      The Closing Shares to be received by Seller (i) have been duly
                  authorized, and (ii) at the time of their issuance, will be
                  validly issued, fully paid, nonassessable, and not issued in
                  violation of any preemptive rights or any applicable laws,
                  rules or regulations. Such Shares will, upon delivery thereof,
                  be free and clear of all liens, charges, pledges,
                  encumbrances, equities and claims whatsoever other than those
                  created by Seller.

         (i)      The Reserve Shares and Additional Shares which may be received
                  by Seller will when so issued and received (i) have been duly
                  authorized, and (ii) at the time of their issuance, will be
                  validly issued, fully paid, nonassessable, and not issued in
                  violation of any preemptive rights or any applicable laws,
                  rules or regulations. Such shares will, upon delivery thereof,
                  be free and clear of all liens, charges, pledges,
                  encumbrances, equities and claims whatsoever other than those
                  created by Seller.

         (j)      Set forth on Exhibit "4.02(j)" attached hereto and made a part
                  hereof for all purposes is the authorized capitalization of
                  Harken Energy and Exploration and the number of shares of
                  their respective capital stock (or other equity interests)
                  issued and outstanding as of the date hereof.


                                    ARTICLE 5
                  ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES

         5.01 Definitions. As used in this Article 5.01:

                  (a)      "Contaminated Site List" means any list, registry, or
                           other compilation established by any Governmental
                           Entity of sites that require or potentially require
                           investigation, removal actions, remedial actions, or
                           any other response under any Environmental Laws or
                           treaty covering environmental



                                     18

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                           matters, as the result of the Release or threatened 
                           Release of any Hazardous
                           Materials.

                  (b)      "Environmental Laws" means all laws, rules,
                           regulations, statutes, ordinances or orders of any
                           Governmental Entity relating to (A) the control of
                           any potential pollutant or protection of the air,
                           water or land, (B) solid, gaseous or liquid waste
                           generation, handling, treatment, storage, disposal or
                           transportation, and (C) exposure to hazardous, toxic
                           or other substances alleged to be harmful, and
                           includes without limitation, the terms and conditions
                           of any license, permit, approval, or other
                           authorization by any Governmental Entity, and
                           judicial, administrative, or other regulatory
                           decrees, judgments, and orders of any Governmental
                           Entity. The term "Environmental Laws" shall include,
                           but not be limited to, the Clean Air Act, 42
                           U.S.C.ss.7401 et seq., the Clean Water Act, 33
                           U.S.C.ss.1251 et seq., the Resource Conservation
                           Recovery Act ("RCRA"), 42 U.S.C.ss.6901 et seq., the
                           Superfund Amendments and Reauthorization Act, 42
                           U.S.C.ss.11011 et seq., the Toxic Substances Control
                           Act, 15 U.S.C.ss.2601 et seq., the Water Pollution
                           Control Act, 33 U.S.C.ss.1251, et seq., the Safe
                           Drinking Water Act, 42 U.S.C.ss.300f et seq., the
                           Comprehensive Environment Response, Compensation, and
                           Liability Act ("CERCLA"), 42 U.S.C.ss.9601 et seq.,
                           the Oil Pollution Act of 1990, 33 U.S.C.A.ss.2701 et
                           seq.; the Louisiana Environmental Quality Act, La.
                           R.S. 30:2001 et seq.; the Louisiana Conservation Act,
                           La. R.S. 30:1 et seq.; the Louisiana Oilfield Site
                           Restoration Law, La. R.S. 30:80 et seq.; the
                           Louisiana Coastal Zone Management Program, La. R.S.
                           49:214.21 et seq.; the Louisiana-Coastal Wetlands
                           Conservation and Restoration Act, La. R.S. 49:214.1
                           et seq.

                  (c)      "Environmental Liabilities" shall mean any and all
                           liabilities, responsibilities, claims, suits, losses,
                           costs (including remediation, removal, response,
                           abatement, cleanup, investigative, and/or monitoring
                           costs and any other related costs and expenses),
                           damages, settlements, expenses, charges, assessments,
                           liens, penalties, fines, prejudgment and postjudgment
                           interest, attorney fees and other legal fees (A)
                           pursuant to any agreement, order, notice, or
                           responsibility, (including directives embodied in
                           Environmental Laws), injunction, judgment, or similar
                           documents (including settlements), or (B) pursuant to
                           any claim by a Governmental Entity or other person
                           for personal injury, property damage, damage to
                           natural resources, remediation, or similar costs or
                           expenses incurred by such Governmental Entity or
                           person pursuant to common law, statute, rule or
                           regulation.

                  (d)      "Environmental Remediation Costs" means all costs and
                           expenses of actions or activities to (A) cleanup or
                           remove Hazardous Materials from the environment, (B)
                           to prevent or minimize the further movement, leaching
                           or



                                     19

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                           migration of Hazardous Materials in the environment,
                           (C) prevent, minimize or mitigate the Release or
                           threatened Release of Hazardous Materials into the
                           environment, or injury or damage from such Release,
                           and (D) comply with the requirements of any
                           Environmental Laws. Environmental Remediation Costs
                           include, without limitation, costs and expenses
                           payable in connection with the foregoing for legal,
                           engineering or other consultant services, for
                           investigation, testing, sampling, and monitoring, for
                           boring, excavation, and construction, for removal,
                           modification or replacement of equipment or
                           facilities, for labor and material, and for proper
                           storage, treatment, and disposal of Hazardous
                           Materials.

                  (e)      "Governmental Entity" means any court, administrative
                           agency or commission or other governmental authority
                           or agency, domestic or foreign, including local
                           authorities.

                  (f)      "Hazardous Materials" means any toxic or hazardous
                           materials or substances, or solid wastes, including
                           asbestos, buried contaminants, chemicals, flammable
                           or explosive. materials, radioactive, materials,
                           petroleum and petroleum products, and any other
                           chemical, pollutant, contaminants substance or waste
                           that is regulated by any Governmental Entity under
                           any Environmental Law.

                  (g)      "Material" or "Material Adverse Effect" for purposes
                           of this Article 5.01 means any matter, response,
                           action, remediation, or other item calling for the
                           payment or expenditure by any Seller or Buyer after
                           the Closing of funds in excess of $50,000 per
                           occurrence, or $500,000 in the aggregate.

                  (h)      "Release" means any spilling, leaking, pumping,
                           pouring, emitting, emptying, discharging, injecting,
                           escaping, leaching, dumping, or disposing into the
                           environment of any Hazardous Materials.

         5.02 Representations and Warranties. With respect to the Assets, the
Seller represents and warrants to Buyer that, to the best of its knowledge:

         (a)      With respect to permits and licenses relating to the Assets,
                  (A) all Material licenses, permits, consents, or other
                  approvals required under Environmental Laws that are necessary
                  to the operations the Assets have been obtained and are in
                  full force and effect, and Seller is unaware of any basis for
                  revocation or suspension of any such licenses, permits,
                  consents or other approvals, (B) no declaration, environmental
                  impact statement, or other filing or notice to any
                  Governmental Entity is required under Environmental Laws as a
                  condition or in connection with the transactions contemplated
                  by this Agreement, and (C) no Environmental Laws impose any
                  obligation upon any Seller, as a result of any transaction
                  contemplated hereby,



                                     20

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                  requiring prior notification to any Governmental Entity of the
                  transfer of any permit, license, consent, or other approval
                  which materially is necessary to the operations of the Assets.

         (b)      No Governmental Entity has given notice to the Seller of any
                  claim or investigation under or violation of any Environmental
                  Law with respect to the Assets or of any intent to encumber or
                  place a lien under any Environmental Laws upon the Assets. No
                  Material notice or Material restriction has been, or is
                  required to be placed in any deed or other public real
                  property record pursuant to any Environmental Laws with
                  respect to the Assets.

         (c)      Except as would not have a Material Adverse Effect and with
                  respect to the Assets or any of the Lands, (A) no oral or
                  written notification of any Release of any Hazardous Materials
                  has been given to any Governmental Entity by or on behalf of
                  Seller, (B) none of the Assets is on (nor has any Seller
                  received any notice from any Governmental Entity that any of
                  the Assets is being considered or proposed for listing on) any
                  Contaminated Site List, (C) none of the Assets is the subject
                  of any judgment, decree or order of any Governmental Entity
                  requiring any investigation, removal, remediation or similar
                  action, or other response under any Environmental Laws, (D)
                  the Seller has not received any notice from any Governmental
                  Entity that it is liable or responsible, or potentially liable
                  or responsible, in any material respect for any removal,
                  remedial, or other similar type action under any Environmental
                  Laws as the result of the Release or threatened Release of
                  Hazardous Materials with respect to the Assets and (E) there
                  is no claim, complaint, investigation, litigation, or
                  administrative proceeding threatened before any Governmental
                  Entity (and to the best of its information and belief, Seller
                  knows of no threatened claim, complaint, investigation,
                  litigation, or administrative proceeding) in which it is
                  asserted by any Governmental Entity or any other person that
                  Seller (x) has violated or is not in compliance with any
                  Environmental Laws with respect to the Assets, (y) is liable
                  for or should be ordered or compelled to undertake any
                  removal, remediation, or other response action as the result
                  of the Release or threatened Release of any Hazardous
                  Materials with respect to the Assets or (z) is liable for
                  damages (including without limitation, damages to natural
                  resources), fines, penalties, or other relief as the result of
                  the violation or noncompliance of any Environmental Laws or as
                  the result of the Release or threatened Release of any
                  Hazardous Materials with respect to the Assets.


         (d)      Except where the failure to have such permits and
                  authorizations would not have a Material Adverse Effect, all
                  Hazardous Materials, garbage, refuse, and similar waste
                  materials with respect to the Assets have been transported by
                  Seller only to sites which have proper permits or other
                  authorization from Governmental Entities for the disposal of
                  such materials. To the best knowledge of Seller, no such site
                  to which



                                     21

   23



                  Hazardous Materials, garbage, refuse, or similar waste
                  materials have been transported for disposal Seller are on any
                  Contaminated Site List.

         (e)      Except as would not have a Material Adverse Effect, all
                  operations of Seller with respect to the Assets are in
                  compliance with all Environmental Laws.

         (f)      Except as would not have a Material Adverse Effect, no facts
                  or circumstances exist which could reasonably be expected to
                  result in any Environmental Liabilities to Seller or the Buyer
                  following the Closing with respect to the Assets.

         (g)      Seller does not now own, lease or otherwise operate any
                  disposal sites on the Assets, other than the saltwater
                  disposal wells which are listed on Exhibit "A", for which the
                  Seller has obtained necessary permits from any Governmental
                  Entity and which wells are in material compliance with all
                  Environmental Laws and other applicable laws and regulations.


                                    ARTICLE 6
                             ENVIRONMENTAL COVENANT

         6.01 Availability of Data to Buyer; Phase I Environmental Audit. Prior
to the date hereof, Seller has made available to Buyer information which is in
the possession or control of Seller or to which Seller has access (other than
publicly available information to which Buyer has equal access) and which
relates to the environmental condition of the Assets, which information
includes, without limitation, information regarding crude oil and produced water
that may have been spilled or disposed of on-site and the locations thereof;
onsite pits and pit closures; on-site burial; land farming; land spreading;
underground injection; and on-site solid waste disposal sites. Seller has
further delivered to Buyer true and correct copies of its Phase 1 Environmental
Report for the St. Martinville Prospect Area dated February 10, 1997 and its
Phase 1 Environmental Report for the S. Bayou Boeuf Prospect Area dated
December, 1997. No material environmental events have occurred since the dates
of these reports.

         6.02 Environmental Assessment. Buyer shall have the right to make an
environmental assessment of the Assets during the period beginning on the date
of execution of this Agreement and ending ninety (90) days after the Closing
Date ("Examination Period"). If during the Examination Period, Buyer determines
that operations of Seller or its affiliates with respect to the Assets are not
in compliance with all Environmental Laws, without regard to whether Seller has
been previously notified of such matter by an applicable authority, then Buyer
shall give Seller notice thereof together with an explanation of the
environmental problem. Seller shall have five (5) days following such notice to
notify Buyer whether Seller elects to (x) remediate, dispose of, restore, or
otherwise resolve such environmental problem or lack of compliance in accordance
with all applicable laws, rules, and regulations, and to Buyer's reasonable
satisfaction, or (y) reduce the consideration to be paid under



                                     22

   24



Article 8.03 (b) by $750,000.00. Buyer and Seller agree to cooperate with each
other in connection with all activities to be conducted hereunder.


                                    ARTICLE 7
                          SURVIVAL AND INDEMNIFICATION

         7.01 Survival of Representations and Warranties. The representations
and warranties of (i) the Seller contained in Article 4.01 and Article 5 hereof
shall survive the Closing for a period of one year from the Closing Date and
(ii) the representations and warranties of the Buyer contained in Article 4.02
hereof shall survive the Closing for one year from the Closing Date (the
"Survival Period").

         7.02 Indemnification Provision for the Benefit of the Seller. In the
event the Buyer breaches any of its representations and warranties contained in
Article 4.02 hereof, then the Buyer agrees to indemnify and hold harmless the
Seller, any current, former, and future director, officer, manager, member,
partner, shareholder, employee and agent of Seller, and any successor, assign,
heir, and executor of any of the foregoing (the "Seller Indemnified Party"),
from and against the entirety of any Losses resulting from or related or
attributable to the breach which the Seller, or any such Affiliate (or any such
other indemnified person in such person's capacity set forth above) shall
suffer, provided such claim for indemnification is brought within the Survival
Period; and further provided that "Losses", as used in this sentence, shall not
include, and Buyer shall not be responsible or liable for, any death, personal
injury, or consequential damages in respect of such breach. Further, subject to
the limitations of the immediately preceding sentence, the Buyer indemnifies,
defends and holds the Seller Indemnified Parties harmless from and against any
and all Losses directly or indirectly arising out of or resulting from any
Hazardous Materials being present or released in, on or around any part of the
surface of the Fee Tract, or in the soil, groundwater or soil vapor on or under
the surface of the Fee Tract subsequent to the Closing Date that is caused by
the Buyer or its agents and employees.

         7.03 Indemnification Provision for the Benefit of the Buyer In the
event the Seller breaches any of its representations and warranties contained in
Article 4.01 and Article 5 hereof, then the Seller agrees to indemnify and hold
harmless the Buyer, any current, former, and future director, officer, manager,
member, partner, shareholder, employee and agent of Buyer, and any successor,
assign, heir, and executor of any of the foregoing (the "Buyer Indemnified
Party"), from and against the entirety of any Losses resulting from or related
or attributable to the breach which the Buyer, or any such Affiliate (or any
such other indemnified person in such person's capacity set forth above) shall
suffer, provided such claim for indemnification is brought within the Survival
Period; and further provided that "Losses", as used in this sentence, shall not
include, and Seller shall not be responsible or liable for, any death, personal
injury, or consequential damages in respect of such breach. Further, subject to
the limitations of the immediately preceding sentence, the Seller



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indemnifies, defends and holds the Buyer Indemnified Parties harmless from and
against any and all Losses directly or indirectly arising out of or resulting
from any Hazardous Materials being present or released in, on or around any part
of the surface of the Fee Tract, or in the soil, groundwater or soil vapor on or
under the surface of the Fee Tract prior to the Closing date and thereafter,
except for the presence of such Hazardous Materials that is caused by the Buyer
or its agents and employees.

         7.04     Matters Involving Third Parties.

         (a)      If any third party shall notify a Seller Indemnified or Buyer
                  Indemnified Party with respect to any matter which may give
                  rise to a claim for indemnification against Seller or Buyer,
                  as the case may be (the "Indemnifying Party") under this
                  Article 7 or otherwise pursuant to this Agreement, then the
                  Indemnified Party shall promptly (and in any event within ten
                  (10) business days after receiving service of process in a
                  lawsuit, administrative proceeding or arbitration proceeding
                  with respect to the Third Party Claim) notify each
                  Indemnifying Party thereof in writing. Each of the matters
                  described in this Article 7.04(a) shall be referred to in this
                  Agreement as a "Third Party Claim".

         (b)      Any Indemnifying Party will have the right to assume and
                  thereafter conduct the defense of the Third Party Claim with
                  counsel of its choice reasonably satisfactory to the
                  Indemnified Party; provided, however, that the Indemnifying
                  Party will not consent to the entry of any judgment or enter
                  into any settlement with respect to the Third Party Claim
                  without the prior written consent of the Indemnified Party
                  (not to be withheld unreasonably) unless the judgment or
                  proposed settlement involves only the payment of money damages
                  and does not impose an injunction or other equitable relief
                  upon (or constitute an admission of guilt, liability, fault or
                  responsibility for) the Indemnified Party. The Indemnified
                  Party shall have the right to employ separate counsel in any
                  such action and to participate in the defense thereof, but the
                  fees and expenses of such counsel shall be at the expense of
                  the Indemnified Party unless (i) the employment thereof has
                  been specifically authorized in writing by the Indemnifying
                  Party or (ii) the Indemnifying Party failed to assume the
                  defense and employ counsel.

         (c)      Unless and until an Indemnifying Party assumes the defense of
                  the Third Party Claim as provided in Article 7.04(b) above,
                  however, the Indemnified Party may defend against the Third
                  Party Claim in any manner it reasonably may deem appropriate
                  with such reasonable costs and expenses associated therewith
                  to be borne for the account of the Indemnifying Party.

         (d)      In no event will the Indemnified Party consent to the entry of
                  any judgment or enter into any settlement with respect to the
                  Third Party Claim without the prior written consent of the
                  Indemnifying Party (not to be withheld unreasonably), unless
                  the



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                  Indemnified Party waives indemnification with respect to the
                  Third Party Claim so settled and adjudicated.

         (e)      The indemnification obligations of Seller and Buyer,
                  respectively under this Agreement shall include court costs
                  and attorney's fees and expenses and costs of investigating,
                  preparing or defending any action or proceeding with respect
                  to any Third Party Claim.


                                    ARTICLE 8
                             POST CLOSING COVENANTS

         8.01 Certain Obligations of Seller. Seller agrees that, with respect to
the period following the Closing:

         (a)      RECORDS. On or before five (5) business days after Closing,
                  Seller shall, at Seller's cost, deliver to Buyer, at Buyer's
                  offices in Irving, Texas, copies of all Records.

         (b)      SUSPENSE FUNDS. As soon as practicable after Closing, Seller
                  shall provide Buyer with a list showing all proceeds from
                  production attributable to the Assets which are currently held
                  in suspense. Seller shall remain responsible for distribution
                  of such proceeds to the parties lawfully entitled thereto, and
                  agrees to indemnify, defend and hold harmless Buyer from and
                  against any and all Losses arising out of or relating to such
                  proceeds.

         (c)      RETAINED LIABILITIES. Seller retains and shall remain liable
                  and responsible for, and Buyer specifically does not assume,
                  any liabilities and obligations of Seller not related to or
                  arising out of the ownership, use, maintenance and operation
                  of the Assets, whether known or unknown, accrued or contingent
                  and not otherwise specifically set forth in this Agreement.

         (d)      BOL MEX PROSPECT. The Seller will continue its best efforts to
                  bring partners in on a promoted basis to drill the Bol Mex
                  Prospect Area and the depths below the base of the Discorbis 4
                  Sand in the St. Martinville Prospect Area. Buyer will have the
                  right to participate in any well drilled to the Discorbis 4
                  Sand or below for its interest or to participate with Seller
                  in the promote, including cash, carried interest on other
                  value, consideration or interest to be received in any such
                  transaction by Seller.

         8.02 Certain Obligations of Buyer. Each Buyer agrees that within (30)
days following Closing, Buyer shall record those Conveyance Documents necessary
to evidence in the public record that Buyer has acquired the Assets and within a
reasonable time thereafter, Buyer shall supply Seller with a true and accurate
photocopy of the recorded and filed Conveyance Documents. In the event Buyer
fails to record any such Conveyance Document within such time period, Seller
may, but shall



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not be obligated to, record such Conveyance Document on Buyer's behalf and at
Buyer's cost (for which Buyer will promptly reimburse Seller upon demand).


         8.03     Agreements Regarding the Issuance of Closing Shares or Cash

         (a)      CLOSING SHARES. Harken will issue and deliver to the Seller,
                  within thirty (30) days of the Closing Date, the Closing
                  Shares equal in value to Sixteen Million Two Hundred Fifty
                  Thousand Dollars ($16,250,000), which number of Closing Shares
                  will be determined by dividing such value by the Average
                  Closing Price of the Shares for the thirty (30) consecutive
                  calendar days immediately preceding the Closing Date.

         (b)      RESERVE SHARES. Exhibit 8.03(b) attached hereto contains a 
                  list of Leases (the "Expiring Leases") covering depths above
                  the base of the Discorbis 4 Sand in the St. Martinville
                  Prospect Area, the primary terms of which have or will expire
                  on or before December 31, 1998. At any time, and from time to
                  time, from and after forty- five (45) days following the
                  Closing Date until the close of business one hundred twenty
                  (120) days following the Closing Date (or if such day is not
                  a business day, the next following business day) Seller may
                  notify Buyer that Seller has acquired new or renewal leases
                  covering all or portions of the lands and depths covered by
                  the Expiring Leases, providing for at least a three-year
                  primary term and landowners' royalty interests comparable to
                  those contained in the Expiring Leases. Such notice shall
                  include (i) Seller's proposed form of assignment of such new
                  or renewal leases to Harken Exploration, such assignment to
                  be substantially in the form attached as Exhibit "B" hereto,
                  (ii) a statement of how many net mineral acres are covered by
                  each lease, and (iii) the abstracts, title opinions or
                  whatever other title information Seller used in determining
                  what interests are leased and the net mineral acres covered
                  by each lease. Buyer shall have a period of not more than
                  forty-five (45) days following notice and tender in which to
                  notify Seller of Buyer's approval of title to the new or
                  renewal leases or to make objections to title with regard to
                  all or any part of the renewal leases included in the subject
                  notice (the date of such notice or, if no notice is given,
                  the date of the expiration of such forty-five-day period, is
                  herein called the "Approval Date"). In the absence of timely
                  notice, Buyer will be deemed to have approved title to all of
                  the new or renewal leases. Those leases subject to Buyer's
                  good faith title objections shall be excluded from the
                  assignment. Upon tender of the assignment by Seller at any
                  time subsequent to the Approval Date, Harken Energy will, at
                  its option, either: (i) tender cash to Seller in the amount
                  of the Remaining Purchase Price, subject to adjustment as set
                  forth below; or (ii) deliver to Seller Reserve Shares equal
                  in value to the Remaining Purchase Price, subject to
                  adjustment as set forth below. The number of Reserve Shares
                  to be delivered will be determined by dividing the Remaining
                  Purchase Price, as adjusted, by the Average 
        


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                  Closing Price. In the event the new or renewal leases to be
                  assigned by Seller cover less than the number of net mineral
                  acres set forth on Exhibit 8.03(b) attached hereto, the
                  Remaining Purchase Price payable after the deduction, if any,
                  required for environmental compliance under Article 6.02,
                  shall be reduced in the proportion that the number of net
                  mineral acres covered by the new or renewal leases bears to
                  the number of net mineral acres set forth on Exhibit 8.03(b).
        
         (c)      As used in this Agreement:

                  "Approval Date" has the meaning set forth in Article 8.03(b).

                  "Average Closing Price" means, when used in Article 8.03(a),
                  the average of the last reported Sales Price for the Shares
                  for the 30 consecutive calendar days immediately preceding the
                  Closing Date, when used in Article 8.03(b) means the average
                  of the last reported Sales Price for the Shares for the 30
                  consecutive calendar days immediately preceding the Approval
                  Date.

                  "Sales Price" means, when used with respect to a calendar day,
                  (i) the last reported sales price of the Shares on such day on
                  the exchange where the Shares are primarily traded, (ii) if
                  the Shares are not traded on an exchange, the last reported
                  sale price of the Shares on such day on the NASDAQ National
                  Market System, or (iii) if the Shares are not reported on the
                  NASDAQ National Market System, the closing bid price for the
                  Shares last quoted on such day as reported by an established
                  quotation service for over-the-counter securities.

         8.04 Agreement In Regard to an Easement. The Seller is not selling the
surface with respect to the Assets in the St. Martinville Area. However, the
Seller and the Buyer agree to enter into an Easement Agreement substantially in
the form of Exhibit "G" attached hereto in regard to the use by the Buyer of
such surface for its operations. Such Agreement shall comply with Louisiana law
and will include the granting of the following rights: (i) the right of ingress
and egress to and from the Assets over and across all present, future and
designated roads and highways situated on the Lands, this right of ingress and
egress being for persons, vehicles, and equipment necessary or convenient for
use in the Buyers' exercise of their rights to explore for, produce, maintain ,
sell, and transport oil and gas in the Assets; the right to install, maintain,
and use gates in any fences, which now or will cross any easement tracts; the
right to mark the location of any easement tracts by suitable markers set in the
ground, provided, however, these markers may be placed in fences or other
locations that will not interfere with any reasonable use of the Seller may make
of the easements; and the right to cut and trim trees and shrubbery that may
encroach on any easement area.

         8.05 Agreement Concerning Prescriptive Rights. Sellers agree to execute
the form of Act of Acknowledgment of Mineral Servitude for Purpose of
Interruption of Liberative Prescription attached hereto as Exhibit "L" upon the
request of Buyer, or Buyer's successors, not more frequently than annually,
acknowledging the interruption of liberative prescription on the Fee Tract. Any
sale 


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or other disposition of Seller's interest in such surface rights shall be made
expressly subject to the covenant to execute future acts on the form attached
as Exhibit "L". In the event that any portion of the mineral servitude estate
under the Fee Tract shall revert to ownership of the surface holder, then
Seller covenants for itself, its heirs and assigns forever to reconvey all such
minerals that may have so reverted to Harken Energy or its nominee. If the
preceding provisions of this Article 8.05 are not effective or are held to be
invalid or unenforceable as against public policy, then Seller shall be deemed
to have leased all of the minerals under the Fee Tract to Buyer for a term of
99 years without any royalties, or rental or other consideration deemed payable
other than the Purchase Price.
        

                                    ARTICLE 9
                                EFFECT OF CLOSING

         The following terms, provisions and prorations shall be effective at
the Closing:

         (a)      REVENUES. All proceeds from production, accounts receivables,
                  notes receivable, income, revenues, monies and other items
                  attributable to the Assets with respect to any period of time
                  prior to the Effective Date shall belong to and be retained by
                  or paid over to Seller and all necessary reports with respect
                  to such proceeds shall be filed by Seller. All proceeds from
                  production, accounts receivables, notes receivables, income,
                  revenues, monies and other items attributable to the Assets
                  with respect to any period of time from and after the
                  Effective Date shall belong to and be retained by or paid over
                  to Buyer, except for Hydrocarbons that, at the Effective Date,
                  are attributable to the Assets and are in storage or are
                  otherwise held in inventory and all proceeds attributable
                  thereto.

         (b)      EXPENSES. All accounts payable and accrued liabilities for
                  costs and expenses attributable to the Assets with respect to
                  any period of time prior to the Effective Date, including
                  excise, severance, and similar taxes based on production or
                  royalties, shall be the obligation of and paid by the Seller,
                  and all necessary reports with respect to such costs and
                  expenses shall be filed by Seller. All accounts payable and
                  accrued liabilities for direct costs and expenses attributable
                  to the Assets (but not including Seller's overhead costs) with
                  respect to any period of time from and after the Effective
                  Date shall be the obligation of and be paid by the Buyer.

         (c)      AD VALOREM AND PROPERTY TAXES. All ad valorem taxes, real
                  property taxes, personal property taxes and similar
                  obligations (the "Taxes") shall be apportioned as of the
                  Effective Date between Buyer and Seller. All such Taxes
                  allocable to periods prior to the Effective Date shall be paid
                  by Seller, and all such Taxes allocable to the Effective Date
                  and after shall be paid by Buyer. Any refunds of Taxes
                  allocable to periods prior to the Effective Date shall be the
                  property of Seller. Any refunds of Taxes allocable to periods
                  after the Effective Date shall be the property of Buyer. Buyer
                  shall file or cause to be filed all required reports and
                  returns incident to such 



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                  Taxes which are due on or after the Effective Date, and shall
                  pay or cause to be paid to the taxing authorities all such
                  Taxes reflected on such reports and returns; provided,
                  however, Seller shall promptly reimburse Buyer for any
                  amounts owing by Seller with respect thereto pursuant to this
                  paragraph.
        
         (d)      SALES TAXES, FILING FEES, ETC. Buyer shall be liable for any
                  sales taxes or other transfer taxes, as well as any applicable
                  conveyance, transfer and recording fees, and real estate,
                  transfer, stamp or other taxes imposed upon the sale of the
                  Assets. Seller agrees to use its reasonable best efforts to
                  assist Buyer in obtaining any applicable exemptions to any
                  applicable state sales tax. If Seller is required by
                  applicable state law to report and pay these taxes or fees,
                  Buyer shall promptly deliver a check to Seller in full
                  payment, and Seller shall deliver said check to the
                  appropriate taxing authorities and shall bear any and all
                  penalties, costs and expenses associated with the failure of
                  Seller to deliver said check.

         (e)      OTHER TAXES. All production, severance or excise taxes,
                  conservation fees and other similar such taxes or fees (other
                  than income taxes) relating to production attributable to the
                  Assets prior to the Effective Date shall be paid by Seller and
                  all such taxes and fees relating to such production
                  attributable to the Assets on and after the Effective Date
                  shall be paid by Buyer.

         (f)      GAS IMBALANCES. Buyer has not included in its engineering
                  pertaining to the Assets the effect of any Imbalances (as
                  hereinafter defined) with respect to shares of production
                  taken or marketed from or attributable to working interests
                  comprising the Assets. Attached hereto as Exhibit 9(f) and
                  made a part hereof for all purposes is a listing of all
                  Imbalances (including working interest imbalances and pipeline
                  imbalances) affecting the Assets as of the Effective Date. For
                  purposes of this Agreement, "Imbalances" means any situation
                  in which any party entitled, including Seller, to produce gas
                  from a Well in which Seller owns a working interest has
                  produced such gas in excess of its pro rata share and thereby
                  has incurred a future liability or makeup obligation.

         (g)      PAYMENTS; SHARED OBLIGATIONS. If amounts are received by
                  either Party hereto which, under the terms of this Article 9
                  belong to the other Party, such amount shall immediately be
                  paid over to the proper Party. If an invoice or other evidence
                  of an obligation is received which under the terms of this
                  Article 9 is partially the obligation of Seller and partially
                  the obligation of Buyer, then the Parties shall consult each
                  other and each shall promptly pay its portion of such
                  obligation to the obligee.

         (h)      POST-CLOSING ADJUSTMENTS. Within ninety (90) days after
                  Closing, each Seller shall prepare and deliver to Buyer, in
                  accordance with this Agreement and generally accepted
                  accounting principles, a statement (herein called the "Final
                  Settlement 



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                  Statement"), setting forth each adjustment or payment that
                  was not finally determined as of the Closing or in accordance
                  with Articles 9(a)-(e) and 9(g), above, and showing the
                  calculation of such adjustments. As soon as practicable after
                  receipt of the Final Settlement Statement, Buyer shall
                  deliver to each Seller a written report containing any
                  changes that Buyer proposes be made to the Final Settlement
                  Statement. The Parties shall undertake to agree with respect
                  to the amounts due pursuant to such post-Closing adjustment
                  no later than thirty (30) days after Buyer's receipt of the
                  Final Settlement Statement. The date upon which such
                  agreement is reached shall be herein called the "Final
                  Settlement Date." In the event, as a result of the Final
                  Settlement Statement (I) Buyer owes either Seller additional
                  monies, Buyer shall pay such Seller or to such Seller's
                  account (as designated by such Seller) in immediately
                  available federal funds such amount; or (ii) either Seller
                  owes Buyer monies, such Seller shall pay Buyer or to Buyer's
                  account (as designated by Buyer) in immediately available
                  federal funds such amount. Payment by Buyer or either Seller
                  shall be made within five (5) days after the Final Settlement
                  Date.
        

                                   ARTICLE 10
                            CONFIDENTIALITY AGREEMENT

         Each Party, its Affiliates and its and their directors, officers,
employees, agents, representatives, consultants, investors and lenders, agree to
keep the terms and conditions of this Agreement and all proprietary and
confidential information exchanged between Buyer and Seller in connection with
this Agreement, confidential, and to not disclose the existence of this
Agreement without the prior written consent of the other Party, which consent
may be withheld at either Party's sole discretion, for a period not to exceed
one year from the Closing Date. The foregoing restriction shall not apply to
disclosures and information which (i) are required to comply with applicable
statutes and regulations; (ii) are required to enforce this Agreement; (iii) are
required to obtain financing related to the transactions contemplated hereby;
(iv) enter the public domain through a third party who does not thereby breach
an obligation of confidentiality; or (v) are made in association with press
releases issued in accordance with Article 14.01 hereof.


                                   ARTICLE 11
                                     CLOSING

         11.01    Seller's Closing Obligations.  At Closing, Seller shall 
deliver or cause to be delivered to Buyer the following:

         (a)      CONVEYANCE DOCUMENTS.  The Conveyance Documents;

         (b)      OPINION OF COUNSEL. An opinion of counsel to the Seller
                  substantially in the form of Exhibit "11.01(b)" attached
                  hereto and made a part hereof for all purposes; and




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         (c)      REGISTRATION RIGHTS AGREEMENT. The Registration Rights
                  Agreement dated the Closing Date, substantially in the form of
                  Exhibit 11.01(c) .

         11.02 Buyer's Closing Obligations. Buyer shall deliver to Seller at
Closing with respect to items (a) and (c) listed below and within thirty (30)
days after Closing with respect to item (b) hereinbelow the following:

         (a)      OPINION OF COUNSEL. The opinion of counsel to the Buyer
                  substantially in the form of Exhibit "11.02(a)" attached
                  hereto and made a part hereof for all purposes;

         (b)      SHARES. A certificate or certificates in definitive form
                  representing the Shares to be issued pursuant to Article
                  3.01(b); and

         (c)      REGISTRATION RIGHTS AGREEMENT AND OTHER RELATED AGREEMENTS.
                  The Registration Rights Agreement substantially in the form of
                  Exhibit 11.01(c) ( and the other Related Agreements in
                  substantially in the forms of Exhibits G and H.


                                   ARTICLE 12
                         CASUALTY LOSS AND CONDEMNATION

         If, prior to the Closing Date, all or any portion of the Assets are
destroyed by fire or other casualty or are taken in condemnation or under right
of eminent domain or proceedings for such purpose are pending or threatened in
writing, Buyer may elect to purchase such Assets or portions thereof
notwithstanding any such destruction, taking or pending or threatened taking
(without reduction in the Purchase Price with respect thereto), in which case
Seller shall, at the Closing, pay to Buyer all sums paid to Seller by third
parties (including insurers) by reason of the destruction or taking of such
Assets, and shall assign, transfer and set over unto Buyer all of Seller's
right, title and interest in and to any unpaid awards or other amounts due from
third parties (including insurers) arising out of the destruction, taking or
pending or threatened taking of such Assets or portions thereof. Prior to
Closing, Seller shall not voluntarily compromise, settle or adjust any amounts
payable by reason of any destruction, taking or pending or threatened taking as
to the Assets or portions thereof without first obtaining the written consent of
Buyer.


                                   ARTICLE 13
                                 BUYER'S OPTION

         13.01 Grant of Option. As stated in Article 2.01(c) above, Buyer shall
have an ongoing option for one year from and after the Closing Date to purchase
all of Seller's remaining 25% interest in the St. Martinville Prospect Area and
the S. Bayou Boeuf Prospect Area, and a like undivided interest in all wells and
Equipment located thereon (the "Option Assets"). Seller shall not sell or



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dispose of any portion of the Option Assets during this option period and any
encumbrances created by, through or under Seller shall be made expressly subject
to Buyer's option.

         13.02 Option Closing. In order to exercise the option, Buyer will give
Seller written notice of its exercise. The closing ("Option Closing") of the
purchase under the option shall occur 10 business days thereafter, and at the
Option Closing Seller shall deliver Conveyance Documents, with only the changes
that may be necessary, including the naming of Buyer's nominee or assignee, if
applicable, as the grantee in such instruments conveying and transferring the
Option Assets to Buyer. The price payable at the Option Closing shall be
$5,750,000, less an amount equal to 25% of the value of any of the Reserve
Shares that Seller was not entitled to receive for acquiring renewal leases
under Article 8.03(b). The fact that the Reserve Shares due under Article
8.03(b) constitute a component of the amount due under the option purchase price
shall not diminish the amount that may be due under Article 8.03(b). Buyer may
pay for the interests purchased through the exercise of this option by
delivering Shares ("Additional Shares") or by cash, at Buyer's option. If the
Additional Shares are delivered, the number shall be determined by dividing the
appropriate value by the average of the last reported Sales Price for the Shares
for the thirty (30) consecutive calendar days immediately preceding the Option
Closing. Buyer shall give two (2) business day's notice of whether Buyer will
pay with cash or Additional Shares. Any Additional Shares delivered under this
Article 13.02 shall be registered under the same procedures as contained in the
Registration Rights Agreement. At the Option Closing, Buyer and Seller will
execute and deliver certificates through which Seller makes the representations
and warranties contained in Article 4.01 and Article 5, and Buyer makes the
representations and warranties contained in Article 4.02, with any references in
such provisions to the Assets being modified to refer to the Option Assets;
references to Effective Date being the date of Buyer's exercise of the Option;
references to the Closing being the Option Closing; and references to Shares
being the Additional Shares. Further, the Parties agree that, if Buyer exercises
the option, the provisions of Article 7, Article 8 and Article 9 shall also
pertain to the Option Closing and the Option Assets, with the appropriate
changes noted in the preceding sentence being effectuated for the proper
construction of these provisions with regard to the Option Closing; provided,
however, with regard to the Option closing and Option Assets, the
representations and warranties contained in Article 4.01, Article 4.02 and
Article 5 and the indemnities contained in Article 7 shall only survive for six
(6) months following the Option Closing.

         13.03 Obligations of Seller at Option Closing. Seller agrees that, with
respect to the period following the Option Closing:

         (a)      RECORDS. On or before five (5) business days after Option
                  Closing (the "Records Delivery Date"), Seller shall deliver to
                  Buyer, at Buyer's offices in Irving, Texas, the originals of
                  all Records. Seller shall be entitled to retain, or to obtain
                  from Buyer at Seller's cost, one copy of all such information
                  for its records as may be reasonably necessary for Seller to
                  address matters relative to its ownership and operation of the
                  Assets, including, without limitation, the preparation of
                  accounting and financial information, the filing of tax
                  returns and the pursuing or defending of litigation.




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         (b)      SUSPENSE FUNDS. As soon as practicable after Closing, Seller
                  shall provide Buyer with a list showing all proceeds from
                  production attributable to the Option Assets which are
                  currently held in suspense and, except as to funds in suspense
                  for the account of Gregg Production Company, transfer to Buyer
                  all such proceeds. Buyer shall be responsible for distribution
                  of such proceeds to the parties lawfully entitled thereto, and
                  agrees to indemnify, defend and hold harmless Seller from and
                  against any and all Losses arising out of or relating to the
                  proceeds so transferred, except for any Losses caused by
                  Seller's negligence or willful misconduct.

         (c)      RETAINED LIABILITIES. Seller retains and shall remain liable
                  and responsible for, and Buyer specifically does not assume,
                  any liabilities and obligations of Seller not related to or
                  arising out of the ownership, use, maintenance and operation
                  of the Option Assets, whether known or unknown, accrued or
                  contingent and not otherwise specifically set forth in this
                  Agreement.

         13.04 Certain Obligations of Buyer. Each Buyer agrees that, with
respect to the period following the Option Closing:

         (a)      RECORDING. Within (30) days following Option Closing, Buyer
                  shall record those Conveyance Documents necessary to evidence
                  in the public record that Buyer has acquired the Option Assets
                  and within a reasonable time thereafter, Buyer shall supply
                  Seller with a true and accurate photocopy of the recorded and
                  filed Conveyance Documents covering the Option Assets. In the
                  event Buyer fails to record any such Conveyance Document
                  within such time period, Seller may, but shall not be
                  obligated to, record such Conveyance Document on Buyer's
                  behalf and at Buyer's cost (for which Buyer will promptly
                  reimburse Seller upon demand).

         (b)      REMOVAL OF NAMES. As soon as reasonably practicable after
                  Option Closing, Buyer shall cause to be removed the names and
                  marks of Seller and any variations and derivations thereof and
                  logos relating thereto from any of the Assets, and will not
                  thereafter make any use whatsoever of such names, marks, and
                  logos; provided, however, that the Buyer shall have no
                  obligation to remove such names or marks from any lease site
                  or well until such time as such names or marks are removed in
                  the ordinary course of the Buyer's business. Buyer shall
                  indemnify Seller for any Losses it suffers as a result of the
                  Buyer's non-removal of such names or marks after the Option
                  Closing.


                                   ARTICLE 14
                              GOVERNMENTAL CONSENTS

         At the Closing and Option Closing, if any, Seller shall execute and
deliver to Buyer such assignments of federal, state and Indian leases as require
consent to assignment, on the forms



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required by the governmental or tribal agency having jurisdiction thereof. Buyer
shall promptly file for and obtain the necessary approvals for such assignments.
Until such approvals (the "Govern mental Approvals") are obtained, Seller shall
continue to hold governmental title to such leases as nominee for Buyer.


                                   ARTICLE 15
                                  MISCELLANEOUS

         15.01 Press Releases and Public Announcements. Neither Party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing or Option Closing, if any, without
the prior approval of the other Party, which approval shall not be unreasonably
withheld; provided, however, that either Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly traded securities (in which case the
disclosing Party will use its reasonable best efforts to advise the other Party
prior to making the disclosure).

         15.02 Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior agreements, or representations by or between the Parties,
written or oral, to the extent they have related in any way to the subject
matter hereof.

         15.03 Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors and
permitted assigns. Neither Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party, which approval shall not be unreasonably withheld.

         15.04 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.

         15.05 Headings. The section or Article headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.

         15.06 Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Texas without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Texas or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of Texas.

         15.07 Legal Fees. The prevailing party in any legal proceeding brought
under or to enforce this Agreement shall be additionally entitled to recover
court costs and reasonable attorney's fees from the nonprevailing party. Each
Party shall pay their respective legal costs associated with the negotiation and
drafting of this Agreement.



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         15.08 Exhibits. All exhibits and schedules hereto which are referred to
herein are hereby made a part hereof and incorporated herein by such reference.

         15.09 Waiver. Any of the terms, provisions, covenants, representations,
warranties or conditions hereof may be waived only by written instrument
executed by the Party waiving the compliance. The failure of either Party at any
time or times to require performance of any provisions hereof shall in no manner
affect such Party's right to enforce the same. No waiver by either Party of any
condition or of the breach of any term, provision, covenant, representation or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be construed as a further or
continuing waiver of any such condition or breach, or a waiver of any other
condition or of the breach of any other term, provision, covenant,
representation or warranty.

         15.10 Further Assurances. After the Closing and Option Closing, if any,
each of the Parties will execute, acknowledge, and deliver to the other such
further instruments, and take such other actions, as may be reasonably requested
in order to more effectively assure to said Party all of the respective
properties, rights, titles, interests, estates, and privileges intended to be
assigned, delivered, or inuring to the benefit of such Party in consummation of
the transactions contemplated hereby.

         15.11 Resignation as Operator, etc. At the Option Closing, Seller shall
execute and deliver to Buyer appropriate letters resigning as the Operator of
any of the Assets or Option Assets that Seller is operating and other
appropriate documents concerning transfer of operations. Buyer acknowledges and
agrees that Seller cannot and does not covenant or warrant that Buyer shall
become successor operator of all or any portion of the Assets or Option Assets,
since the Assets or Option Assets or portions thereof may be subject to unit,
pooling, communitization, operating or other agreements which control the
appointment of a successor operator; provided, however, that Seller agrees to
use its reasonable best efforts to assist Buyer in becoming successor operator.

         15.12 Notices. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:

                  IF TO SELLER:

                  Bargo Energy Company
                  700 Louisiana, Suite 3700
                  Houston, Texas 77002
                  Attention:  Mr. Tim J. Goff, President
                  Telephone:  (713) 236- 9792
                  Fax:        (713) 236-9799




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                  with a copy to:

                  EnCap Investments L.C.
                  1100 Louisiana, Suite 3150
                  Houston, Texas  77002
                  Attention: Mr. D. Martin Phillips
                  Telephone: (713) 659-6100
                  Fax:       (713) 659-6130

                  IF TO BUYER:

                  Harken Energy Corporation
                  Harken Exploration Company
                  5605 North MacArthur, Suite 400
                  Irving, Texas 75038
                  Attention: Mr. Larry Cummings, Vice President and Secretary
                  Telephone: (972) 753-6932
                  Fax:       (972) 753-6963

Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.

         15.13 Disclaimer of Representations and Warranties. Except as expressly
set forth in this Agreement and in Conveyance Documents delivered pursuant to
Article 11.01(a) and Article 13.02, the Parties hereto make no, and disclaim
any, representation or warranty whatsoever, whether express or implied. Each
Party hereto disclaims all liability and responsibility for any other
representation, warranty, statement, or communication (orally or in writing) to
the other Party (including, but not limited to, any information contained in any
opinion, information, or advice that may have been provided to any such Party by
any officer, stockholder, director, partner, member, manager, employee, agent,
consultant, representative, or contractor of such disclaiming Party or its
Affiliates or any engineer or engineering firm, or other agent, consultant, or
representative) wherever and however made. Without limiting the generality of
the foregoing, Seller makes no representation or warranty as to (a) the amount,
value, quality, or deliverability of petroleum, natural gas, or other reserves
attributable to the Assets or any portion thereof, or (b) any geological,
engineering, or other interpretations or economic evaluations. EXCEPT AS
EXPRESSLY PROVIDED IN ARTICLE 4.01(F), ALL TANGIBLE PERSONAL PROPERTY,
EQUIPMENT, FIXTURES AND APPURTENANCES CONSTITUTING A PART OF THE ASSETS ARE SOLD
"AS IS, WHERE IS," AND SELLER MAKES NO, AND DISCLAIMS ANY, REPRESENTATION



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OR WARRANTY, WHETHER EXPRESS OR IMPLIED, AND WHETHER BY COMMON LAW, STATUTE, OR
OTHERWISE, AS TO (I) MERCHANTABILITY, (II) FITNESS FOR ANY PARTICULAR PURPOSE,
(III) CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, AND/OR (IV) CONDITION. The
Parties agree that the preceding disclaimers of warranty are "conspicuous"
disclaimers for purposes of any applicable law, rule, or order.

         15.14 Seller's Liabilities Several and Not Joint. Notwithstanding
anything herein contained to the contrary, it is understood and agreed that the
obligations and liabilities of Seller hereunder are several, and not joint or
joint and several, with respect to that portion of the Assets owned by SMPL and
Bargo, respectively. More specifically, it is understood and agreed that:

                  (a) The representations and warranties set forth in Article
         4.01, the environmental representations and warranties set forth in
         Article 5.01, the environmental covenant set forth in Article 6.01, the
         indemnification provision for the benefit of Buyer set forth in Article
         7.03 and the post-closing covenants set forth in Article 8.01 shall
         bind SMPL insofar and only insofar as the same pertain to the St.
         Martinville Prospect Area, the Bol Mex Prospect Area and that part or
         portion of the Assets included therein, and SMPL shall have no
         liability or obligation whatsoever under the above-referenced or any
         other provisions hereof with respect to the S. Bayou Boeuf Prospect
         Area or that part or portion of the Assets included therein; and

                  (b) The representations and warranties set forth in Article
         4.01, the environmental representations and warranties set forth in
         Article 5.01, the environmental covenant set forth in Article 6.01, the
         indemnification provision for the benefit of Buyer set forth in Article
         7.03 and the post-closing covenants set forth in Article 8.01 shall
         bind Bargo insofar and only insofar as the same pertain to the S. Bayou
         Boeuf Prospect Area and that part or portion of the Assets included
         therein, and Bargo shall have no liability or obligation whatsoever
         under the above-referenced or any other provisions hereof with respect
         to the St. Martinville Prospect Area, the Bol Mex Prospect Area or that
         part or portion of the Assets included therein.

Furthermore, no default by one Seller under this Agreement shall affect in any
way the right of a non-defaulting Seller to enforce this Agreement by
appropriate proceedings at law or in equity.

         15.15 Severability. Any term or provision of this Agreement that is
invalid or unenforce able in any situation and in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.

         15.16 Texas Deceptive Trade Practices Act Waiver. Buyer (a) represents
and warrants to Seller that it (i) is acquiring the Assets for commercial or
business use, (ii) has assets in excess of $25,000,000 and (iii) has knowledge
and experience in financial and business matters such that enable it to evaluate
the merits and risks of the transactions contemplated by this Agreement and is



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not in a significantly disparate bargaining position with respect to Seller; and
(b) hereby unconditionally and irrevocably waives any and all rights or remedies
it may have under the Deceptive Trade Practices - Consumer Protection Act of the
State of Texas, Tex. Bus. & Com. Code ss. 17.41 et seq., other than any of the
provisions of ss. 17.555 of such Act, if such Act would for any reason be deemed
applicable to the transactions contemplated hereby.

         15.17 No Third Party Beneficiaries. Except as provided for in Article 7
hereof with respect to the rights of an Indemnified Party, this Agreement shall
not confer any rights or remedies upon any person other than the Parties and
their respective successors and permitted assigns, and other persons given
rights of indemnification hereunder.

         15.18 Construction. The Parties have participated jointly in the
negotiating and drafting of this Agreement. In the event ambiguity or question
of intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring either Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law should be deemed also to refer to all rules and
regulations promulgated thereunder, unless the contexts requires otherwise. The
word "including" shall mean including, without limitation. If the date specified
in this Agreement for giving any notice or taking any action is not a business
day (or if the period during which any notices required to be given or any
action taken expires on a date which is not a business day) then the date for
giving such notice or taking such action (and the expiration date for such
period during which notice is required to be given or action taken) shall be the
next day which is a business day.





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         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written, but effective for all purposes as of the
Effective Date.

                             SELLER:

                             ST. MARTINVILLE PARTNERS, LTD.

                             By:      Bargo Energy Partners, Ltd., General 
                                      Partner

                             By:      Bargo Energy Corporation


                             By:      /s/ Tim J. Goff
                                ---------------------------------------
                                      Tim J. Goff, President

                             BARGO ENERGY COMPANY


                             By:      /s/ Tim J. Goff
                                ---------------------------------------
                                      Tim J. Goff, Manager


                             BUYER:

                             HARKEN ENERGY CORPORATION


                             By:      /s/ Larry E. Cummings
                                ---------------------------------------
                                      Larry E. Cummings, Vice President


                             HARKEN EXPLORATION COMPANY


                             By:      /s/ Larry E. Cummings
                                ---------------------------------------
                                      Larry E. Cummings, Vice President





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                                LIST OF EXHIBITS


Exhibit A         Well List with Working Interest and Net Revenue Decimals
Exhibit A-1       St. Martinville Prospect Area
Exhibit A-2       S. Bayou Beouf Prospect Area
Exhibit A-3       Bol Mex Prospect Area
Exhibit B         Assignment, Bill of Sale and Conveyance
Exhibit C         Equipment
Exhibit D         Easements
Exhibit E         Contests of Liens
Exhibit F         Product Contracts
Exhibit G         Easement Agreement
Exhibit H         Excluded Assets
Exhibit I         Authorization for Expenditures
Exhibit J         Disclosure under Article 4.01
Exhibit K         Operating Agreement
Exhibit L         Act of Acknowledgment of Mineral Servitude
Exhibit 4.02(j)   Capitalization Schedule
Exhibit 9(f)      Gas Imbalances
Exhibit 8.03(b)   Expiring Leases
Exhibit 11.01(b)  Opinion of Seller's Counsel
Exhibit 11.01(c)  Registration Rights Agreement
Exhibit 11.02(a)  Opinion of Buyers' Counsel



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