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<SEC-DOCUMENT>0001140361-09-002361.txt : 20090511
<SEC-HEADER>0001140361-09-002361.hdr.sgml : 20090511
<ACCEPTANCE-DATETIME>20090202155920
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001140361-09-002361
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20090202

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PRIMEENERGY CORP
		CENTRAL INDEX KEY:			0000056868
		STANDARD INDUSTRIAL CLASSIFICATION:	CRUDE PETROLEUM & NATURAL GAS [1311]
		IRS NUMBER:				840637348
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		ONE LANDMARK SQ
		CITY:			STAMFORD
		STATE:			CT
		ZIP:			06901
		BUSINESS PHONE:		2033585700

	MAIL ADDRESS:	
		STREET 1:		ONE LANDMARK SQ
		CITY:			STAMFORD
		STATE:			CT
		ZIP:			06901

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	KRM PETROLEUM CORP
		DATE OF NAME CHANGE:	19900614
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<html>
  <head>
    <title>secresponse.htm</title>
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</head>
    <body bgcolor="#ffffff" style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">February
2, 2009</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">Karl
Hiller</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">Branch
Chief</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">Securities
and Exchange Commission</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">Washington,
DC 20549-7010</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">PrimeEnergy
Corporation Form 10-K for Fiscal Year Ended December 31, 2007</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">Filed
March 27, 2008</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">Response
Letter Dated October 16, 2008</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">File No.
000-07406</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">Dear Mr.
Hiller:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">In
response to your letter dated October 16, 2008 regarding PrimeEnergy Corporation
(Registrant), the following reply has been prepared to address your
comments.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Form
10-K for the year ended December 31, 2007</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Consolidated
Statements of Operations, page F-5</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">Comment
      1:</font></div>
            </td>
            <td colspan="3" valign="top" width="68%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">We
      note your response to prior comment 1, indicating that you do not have
      full control over your 20% interest in the properties since all property
      decisions require the approval of your limited partner FWOE Partners LP
      (Partners).&#160;&#160;However, since you owned the properties PRIOR to
      their transfer to Partners, the guidance outlined in EITF 01-2 does
      apply.&#160;&#160;We reissue our prior comment 1 and request that you
      restate your financial statements to recognize only 80% of the gain on the
      sale of assets.&#160;&#160;If you do not believe restatement is required,
      please provide a materiality analysis considering both quantitative and
      qualitative factors that support your belief, based on the guidance in SAB
      Topics 1: M and N.</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="2" valign="top" width="46%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="23%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">Response:</font></div>
            </td>
            <td align="left" colspan="2" valign="top" width="46%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">The
      Registrant will restate the related financial statements.</font></div>
            </td>
            <td valign="top" width="23%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="2" valign="top" width="46%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="23%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr>
            <td valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">Comment
      2:</font></div>
            </td>
            <td colspan="3" valign="top" width="68%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">We
      note your response to prior comment 3, indicating that you will revise
      disclosure in future filings to clarify that you fully consolidate your
      subsidiaries and proportionately consolidate your limited partnerships
      (LPs).&#160;&#160;You further indicate that you analogize your use of the
      proportionate consolidation method of the accounting for oil and gas
      interests governed by joint operating agreements.&#160;&#160;Please
      further expand your accounting policy note disclosure relating to your
      application of the proportionate consolidation method to address the
      following:</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="2" valign="top" width="46%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="23%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">a.</font></div>
            </td>
            <td colspan="2" valign="top" width="63%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">Identify
      the types of entities that you proportionately consolidate (i.e. (i)
      undivided interests in oil and gas properties owned and/or (ii) interests
      held in unincorporated legal entities engaged in oil and gas exploration
      and production such as limited partnerships).</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="2" valign="top" width="46%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="23%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">b.</font></div>
            </td>
            <td colspan="2" valign="top" width="63%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">Clarify
      whether you aggregate your interests in these entities for purposes of
      computing DD&amp;A and evaluating the associated properties for
      impairment, such as on a field basis.</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="2" valign="top" width="46%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="23%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">c.</font></div>
            </td>
            <td colspan="2" valign="top" width="63%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">Explain
      how you estimate reserves associated with such interests, clarifying the
      extent to which you estimated reserves based on your own assumptions,
      considering your own costs and views about the economic viability of the
      properties, which may differ from those utilized by the LP
      investees.</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="2" valign="top" width="46%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="23%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="3" valign="top" width="68%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">If
      you estimate reserves based on your own assumptions instead of based on
      your ownership percentages applied to reserves reported by the LP&#8217;s, tell
      us your rationale for such basis and quantify the estimated reserves
      difference between the two approaches to the extent
  known.</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="2" valign="top" width="46%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="23%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">Response:</font></div>
            </td>
            <td align="left" colspan="3" valign="top" width="68%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">The
      Registrant will expand its accounting policy note disclosure related to
      the proportionate consolidation method to address the points noted in
      Comment 2.</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="2" valign="top" width="46%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="23%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr>
            <td valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">Comment
      3:</font></div>
            </td>
            <td colspan="3" valign="top" width="68%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">We
      have read your responses to prior comments 2 and 3; however, you have not
      provided the necessary detail for us to understand how you as the general
      partner overcame the presumption of control of the limited
      partnerships.&#160;&#160;The guidance of EITF 04-5 states that the general
      partner does not control a limited partnership if the limited partners
      have either (a) the substantive ability to dissolve the limited
      partnership or otherwise remove the general partner without cause or (b)
      substantive participating rights.&#160;&#160;Please provide further detail
      of the rights of the limited partnerships to support your position that
      you do not control these entities.&#160;&#160;Within your response, please
      refer us to the location of the specific terms within the partnership
      agreements, which provide the limited partners these rights.&#160;&#160;To
      the extent the limited partners have kick out rights, please tell us how
      you have overcome each of the barriers outlined in paragraph 7b of EITF
      04-5 in reaching your conclusion that substantive kick out rights exist
      and that the application of the proportionate consolidation method is
      appropriate.</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="2" valign="top" width="46%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="23%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr>
            <td valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">Response:</font></div>
            </td>
            <td colspan="3" valign="top" width="68%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">The
      Registrant as general partner overcame the presumption of control of the
      limited partnership because the limited partner has the substantive
      ability to liquidate the limited partnership by compelling the general
      partner to sell all the partnership assets and also has substantive
      participating rights by virtue of the restrictions on the general
      partner's powers and authority. Specifically these rights are provided for
      in Section VI and VII of the Limited Partnership Agreement (excerpt
      attached as Exhibit 1).</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="2" valign="top" width="46%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="23%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr>
            <td valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">Comment
      4:</font></div>
            </td>
            <td colspan="3" valign="top" width="68%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">We
      note in response to our prior comments you provided a detailed list of the
      partnerships and trusts in which you are the general
      partner.&#160;&#160;Please tell us any instances where your interests in
      the limited partnerships or trusts have exceeded 50%, whereas you would
      not otherwise qualify for equity method accounting, a condition for the
      use of proportionate consolidation of unincorporated legal entities under
      EITF 00-1.</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="2" valign="top" width="46%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="23%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr>
            <td valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">Response:</font></div>
            </td>
            <td colspan="3" valign="top" width="68%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">The
      Registrant will restate its financial statements to reflect the full
      consolidation method rather than the proportionate consolidation method
      for any partnership or trust where our ownership exceeds 50% or we
      otherwise control by virtue of our position as general
      partner.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">Please do
not hesitate to contact me at (203) 358-5702 if you have any
questions.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">Sincerely,</font></div>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">Beverly
A. Cummings</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">Chief
Financial Officer</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div><br>
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</font></div>
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</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">Exhibit
1</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">In
general, from the inception of this Partnership until the Limited Partner
receives cash distributions equal to its initial contributions (approximately
$75 million) plus a cumulative annual yield of 16% (&#8220;Payout&#8221;), the Limited
Partner has an 80% sharing interest in the Partnership and the General Partner
has the remaining 20% interest share.&#160;&#160;Once Payout is achieved,
referred to as &#8220;the Phase III Period&#8221; in the Agreement, the Limited Partner
reverts to a 20% sharing interest.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">While
the term General Partner in a partnership usually refers to the partner holding
and exercising control of the partnership, in the FWOE Partners Partnership
Agreement the General Partner is tightly restricted in its powers and authority,
without the prior written consent of the Limited Partner, to generally just
operating the properties and reporting on the accounts on behalf of the
Partnership.&#160;&#160;Following is an excerpt from the Amended and Restated
Agreement of Limited Partnership for FWOE Partners L.P., a Texas Limited
Partnership dated August 22, 2005 illustrating these restrictions on the General
Partner;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">ARTICLE
VI</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">MANAGEMENT</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">Section
6.1.</font>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Power
and Authority of General Partner.</font></font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">&#160;&#160;Except
as provided in <font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Section&#160;6.2</font>
and elsewhere in this Agreement and except as otherwise provided by applicable
law, the General Partner shall have full and exclusive power and authority on
behalf of the Partnership to manage, control, administer and operate the
properties, business and affairs of the Partnership in accordance with this
Agreement and to do or cause to be done any and all acts deemed by the General
Partner to be necessary or appropriate thereto.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">Section
6.2.</font>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Certain
Restrictions on General Partner's Power and
Authority.</font></font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Notwithstanding
any other provisions of this Agreement to the contrary, the General Partner
shall not do, perform or authorize any of the following (x)&#160;prior to the
commencement of the Phase III Period, without the prior written consent of the
Limited Partner, and (y)&#160;after the commencement of the Phase III Period, as
provided in <font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Section&#160;6.2(b)</font>:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">(i)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;To
borrow any money in the name or on behalf of the Partnership, or otherwise draw,
make, execute and issue promissory notes and other negotiable or non-negotiable
instruments and evidences of indebtedness, except that the General Partner may
borrow money in the name and on behalf of the Partnership in such amounts as the
General Partner shall reasonably determine are necessary to preserve and protect
Partnership property upon the occurrence of an accident (<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">e.g.</font>,
a blowout), catastrophe or similar event or to comply with all applicable
Environmental Laws;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">(ii)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;To
mortgage, pledge, assign in trust or otherwise encumber any Partnership
property, or to assign any monies owing or to be owing to the Partnership,
except to secure the payment of any borrowing permitted in <font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Section&#160;6.2(a)</font>
and except for customary liens contained in or arising under any operating
agreements, construction contracts and similar agreements executed by or binding
on the Partnership with respect to amounts not yet due or not yet delinquent
(or, if delinquent, that are being contested by the General Partner in good
faith) or except for statutory liens for amounts not yet due or not yet
delinquent (or, if delinquent, that are being contested by the General Partner
in good faith), provided that in no event shall the General Partner mortgage,
pledge, assign in trust or otherwise encumber the Partnership's right to receive
Capital Contributions from the Limited Partner</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">(iii)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;To
sell, assign, farm-out, abandon or otherwise dispose of any Partnership Lease or
Class&#160;B Asset except (i)&#160;as provided in <font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Sections&#160;3.3(d)(2)</font>
and <font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">3.3(d)(3)</font>,
(ii)&#160;with respect to any given calendar year, for sales or other
dispositions by the Partnership during such year up to (but not to exceed) an
aggregate (non-cumulative) amount equal to $25,000 in proceeds received by the
Partnership, or (iii)&#160;for such Leases or interests therein as the General
Partner shall reasonably determine to be necessary to raise funds to pay
Partnership liabilities and expenses (other than Catastrophe Costs) upon the
occurrence of an accident, catastrophe or similar event (and, in connection
therewith, to restore, preserve and protect Partnership property) or to comply
with all applicable Environmental Laws or other laws, ordinances, rules and
regulations;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">(iv)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;To
guarantee in the name or on behalf of the Partnership the payment of money or
the performance of any contract or other obligation of any person other than the
Partnership;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">(v)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;To
make any advance payments of compensation or other consideration to the General
Partner or any of its Affiliates, except as provided in the applicable operating
agreement under which the General Partner or any of its Affiliates serves as
operator of any Partnership Lease;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">(vi)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;To
bind or obligate the Partnership with respect to any matter outside the scope of
the Partnership business;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">(vii)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;To
merge or consolidate the Partnership with any partnership or other person or
entity, convert the Partnership to a general partnership or other entity or
agree to an exchange of interests with any other person;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">(viii)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;To
use the Partnership name, credit or property for other than Partnership
purposes;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">(ix)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;To
loan any Partnership funds to the General Partner or any of its Affiliates,
except to the extent that any advance under any operating agreement pursuant to
which the General Partner or any of its Affiliates serves as operator of any
Partnership Lease constitutes a loan;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">(x)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;To
enter into a Hedging Transaction, except as provided in <font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Section&#160;5.7</font>,
and to amend or terminate any agreements or other document evidencing a Hedging
Transaction or waive any material rights of the Partnership
thereunder;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">(xi)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;To
acquire any Lease in violation of the terms of this Agreement;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">(xii)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;To
alter, supplement, modify or amend the Purchase and Sale Agreement or the
Contribution Agreement or any other document or instrument executed in
connection therewith in any material respect, waive any of the Partnership's
rights or any of seller's duties and obligations thereunder in any material
respect, or make any material election, determination or agreement
thereunder;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">(xiii)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;To
compromise or settle any lawsuit, administrative matter or other dispute where
the amount the Partnership may recover or might be obligated to pay, as
applicable, is in excess of $25,000;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">(xiv)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;To
cause the Partnership to incur any fee or similar charge payable to the General
Partner or its Affiliates with respect to the marketing of the Partnership's gas
production; or</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">(xv)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Except
as expressly provided herein, to take any action with respect to the assets or
property of the Partnership which benefits the General Partner or any of its
Affiliates to the detriment of the Limited Partner or the Partnership,
including, among other things, utilization of funds of the Partnership as
compensating balances for its own benefit.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;After
commencement of the Phase III Period, the General
Partner:&#160;&#160;(i)&#160;shall have the power and authority to do, perform
or authorize the actions described in <font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Section&#160;6.2(iii)</font>
or <font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Section&#160;6.2(xiii)</font>
without the need to obtain the prior written consent or other approval of the
Limited Partner; and (ii)&#160;shall not have the power or authority to, and
shall not, do, perform or authorize any of the actions described in <font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Sections&#160;6.2(a)(i)</font>,
<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">(ii)</font>,
<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">(iv)</font>,
<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">(v)</font>,
<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">(vi)</font>,
<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">(vii)</font>,
<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">(viii)</font>,
<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">(ix)</font>,
<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">(x)</font>,
<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">(xi)</font>,
<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">(xii)</font>,
<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">(xiv)</font>
or <font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">(xv)</font>,
without the prior written consent of the Limited Partner, which consent shall
not be unreasonably withheld or delayed.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Likewise,
under the Partnership Agreement, the Limited Partner is provided specific
controlling rights, including the sole right to force the Partnership to sell
all properties and effectively liquidate and terminate the
Partnership.&#160;&#160;Following is an excerpt from the Amended and Restated
Agreement of Limited Partnership for FWOE Partners L.P., a Texas Limited
Partnership dated August 22, 2005 illustrating these rights of the Limited
Partner;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">ARTICLE
VII</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">RIGHTS
AND OBLIGATIONS OF LIMITED PARTNER</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">Section
7.1.</font>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Rights
of Limited Partner.</font></font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">&#160;&#160;In
addition to the other rights specifically set forth herein, the Limited Partner
shall have the right to:&#160;&#160;(a)&#160;have the Partnership books and
records (including those required in Section&#160;1.07 of the Act) kept at the
principal United States office of the Partnership and at all reasonable times to
inspect and copy any of them, (b)&#160;upon written request, have an accounting
of the Partnership's business to the extent permitted by the Act, (c)&#160;have
dissolution and winding up by decree of court as provided for in the Act,
(d)&#160;consult with or advise the General Partner, and (e)&#160;exercise all
rights of a limited partner under the Act (except to the extent otherwise
specifically provided for herein).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">Section
7.2.</font>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Right
of Limited Partner to Compel Sale.</font></font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Subject
to the terms and provisions of this <font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Section&#160;7.2</font>,
the Limited Partner shall have the right, upon written notice to the General
Partner and the Partnership, to request that the Partnership (i)&#160;sell all
the Class&#160;A Assets and any additional Leases acquired pursuant to the terms
hereof, (ii)&#160;sell all the Class&#160;B Assets, (iii)&#160;sell all the
Class&#160;A Assets, any additional Leases acquired pursuant to the terms
hereof, and all the Class&#160;B Assets, (iv)&#160;contribute all the
Class&#160;A Assets and any additional Leases acquired pursuant to the terms
hereof to a wholly-owned subsidiary of the Partnership and sell the equity
interests in such subsidiary, (v)&#160;contribute all the Class&#160;B Assets to
a wholly-owned subsidiary of the Partnership and sell the equity interests in
such subsidiary, or (vi)&#160;contribute all the Class&#160;A Assets, any
additional Leases acquired pursuant to the terms hereof, and the Class&#160;B
Assets to a wholly-owned subsidiary of the Partnership and sell the equity
interests in such subsidiary.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font size="+0"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The
Limited Partner's rights under this <font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Section&#160;7.2</font>
shall arise and be operative only after the third anniversary date of the
Acquisition Closing Date and provided the Phase III Period has not </font><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">theretofore
commenced.&#160;&#160;Further, the Limited Partner's rights under this <font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Section&#160;7.2</font>
shall extend only to the Class&#160;A Assets (and not the Class&#160;B Assets)
after the expiration of the Phase I Period.</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">(c)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;If
the Limited Partner submits a request to the General Partner and the Partnership
to take any of the actions described in <font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Section&#160;7.2(a)</font>
(and provided that the Limited Partner rights to submit such request are
operative under <font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Section&#160;7.2(b)</font>),
the General Partner shall thereupon be obligated to promptly take all steps
reasonably necessary to market and sell the subject assets or interests (as
applicable).&#160;&#160;Notwithstanding the foregoing, if, within ten business
days of receipt by the General Partner of a request under <font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Section&#160;7.2(a)</font>,
the General Partner makes a Capital Contribution to the Partnership which, when
distributed to the Limited Partner, will cause the Phase III Period to commence
(and such amount is distributed to the Limited Partner within such ten-business
day period), the Limited Partner's rights under this <font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Section&#160;7.2</font>
shall immediately expire.</font></div>
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