EXHIBIT 10.3

                     AMENDED AND RESTATED GUARANTY AGREEMENT


                                       by


                           NANCE PETROLEUM CORPORATION


                                   in favor of


                      WACHOVIA BANK, NATIONAL ASSOCIATION,
                             AS ADMINISTRATIVE AGENT



                                  April 7, 2005





                                TABLE OF CONTENTS

                                                                            Page

ARTICLE 1 General Terms........................................................2
  Section 1.1       Terms Defined Above........................................2
  Section 1.2       Certain Definitions........................................2
  Section 1.3       Credit Agreement Definitions...............................3

ARTICLE 2 The Guaranty.........................................................3
  Section 2.1       Liabilities Guaranteed.....................................3
  Section 2.2       Nature of Guaranty.........................................4
  Section 2.3       Administrative Agent's Rights..............................4
  Section 2.4       Guarantor's Waivers........................................4
  Section 2.5       Maturity of Liabilities; Payment...........................5
  Section 2.6       Administrative Agent's Expenses............................5
  Section 2.7       Liability..................................................5
  Section 2.8       Events and Circumstances Not Reducing or Discharging
                    Guarantor's Obligations....................................5
  Section 2.9       Right of Subrogation and Contribution......................7

ARTICLE 3 Representations and Warranties.......................................8
  Section 3.1       By Guarantor...............................................8
  Section 3.2       No Representation by Lenders...............................8

ARTICLE 4 Subordination of Indebtedness........................................9
  Section 4.1       Subordination of All Guarantor Claims......................9
  Section 4.2       Claims in Bankruptcy.......................................9
  Section 4.3       Payments Held in Trust.....................................9
  Section 4.4       Liens Subordinate..........................................9
  Section 4.5       Notation of Records.......................................10

ARTICLE 5 Miscellaneous.......................................................10
  Section 5.1       Successors and Assigns....................................10
  Section 5.2       Notices...................................................10
  Section 5.3       Business and Financial Information........................10
  Section 5.4       Choice of Law.............................................10
  Section 5.5       Invalidity................................................10
  SECTION 5.6       ENTIRE AGREEMENT..........................................10

                                      -i-



                     AMENDED AND RESTATED GUARANTY AGREEMENT
                     ---------------------------------------

         THIS AMENDED AND RESTATED GUARANTY AGREEMENT (this "Guaranty
                                                             --------
Agreement") made by the undersigned guarantor (hereinafter called "Guarantor"),
- ---------                                                          ---------
is in favor of Wachovia Bank, National Association, as Administrative Agent (the
"Administrative Agent") for the lenders (the "Lenders") signatory to the Credit
 --------------------
Agreement defined below.

                                R E C I T A L S:
                                ----------------

         A. Pursuant to that certain Credit Agreement dated as of January 27,
2003, among St. Mary Land & Exploration Company, a Delaware corporation
(hereinafter called the "Borrower"), the Administrative Agent, and the lenders
                         --------
party thereto (the "Existing Lenders") (such Credit Agreement, as amended and
                    ----------------
supplemented, the "Existing Credit Agreement"), the Borrower received certain
                   -------------------------
loans and extensions of credit under a revolving credit facility made available
to the Borrower under the Existing Credit Agreement, up to the aggregate
principal amount of $300,000,000.

         B. The Existing Lenders conditioned their obligations under the
Existing Credit Agreement upon the execution and delivery by Guarantor of that
certain Guaranty Agreement dated as of January 27, 2003 (the "Existing Guaranty
                                                              -----------------
Agreement").
- ---------

         C. The Borrower, the Administrative Agent, and the Lenders have amended
and restated the Existing Credit Agreement by entering into that certain Amended
and Restated Credit Agreement dated of even date herewith (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
                                                           ----------------
whereby, pursuant to which, the Lenders have agreed to make certain loans to and
extend certain credit for the account of the Borrower subject to the limitations
set forth in the Credit Agreement. The initial loans under the Credit Agreement
have been used by the Borrower to renew, rearrange, modify and extend all
amounts outstanding under the Existing Credit Agreement.

         D. The Administrative Agent and the Lenders have conditioned their
obligations under the Credit Agreement upon the execution and delivery by
Guarantor of this Amended and Restated Guaranty Agreement, and Guarantor has
agreed to execute and deliver this Amended and Restated Guaranty Agreement.

         NOW, THEREFORE, (i) in order to comply with the terms and conditions of
the Credit Agreement, (ii) to induce the Lenders, at any time or from time to
time, to loan monies and extend credit, with or without security, to or for the
account of Borrower in accordance with the terms of the Credit Agreement, (iii)
at the special insistence and request of the Lenders, and (iv) for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Guarantor and the Administrative Agent hereby agree that the
Existing Guaranty Agreement is hereby amended and restated in its entirety to
read as follows:

                                      -1-



                                   ARTICLE 1
                                   ---------
                                  General Terms
                                  -------------

         Section 1.1 Terms Defined Above. As used in this Amended and Restated
                     -------------------
Guaranty Agreement, the terms "Administrative Agent", "Borrower", "Credit
Agreement", "Guarantor" and "Lenders" shall have the meanings indicated above.

         Section 1.2 Certain Definitions. As used in this Amended and Restated
                     -------------------
Guaranty Agreement, the following terms shall have the following meanings,
unless the context otherwise requires (terms defined in the singular shall have
the same meanings when used in the plural and vice versa):

         "Contribution Obligation" shall mean an amount equal, at any time and
          -----------------------
from time to time and for each respective Subsidiary Guarantor, to the product
of (i) its Contribution Percentage times (ii) the sum of all payments made
previous to or at the time of calculation by all Subsidiary Guarantors in
respect of the Liabilities, as a Subsidiary Guarantor (less the amount of any
such payments previously returned to any Subsidiary Guarantor by operation of
law or otherwise, but not including payments received by any Subsidiary
Guarantor by way of its rights of subrogation and contribution under Section 2.9
of any other Guaranty Agreements); provided, however, such Contribution
Obligation for any Subsidiary Guarantor shall in no event exceed such Subsidiary
Guarantor's Maximum Guaranteed Amount, as defined in the respective Guaranty
Agreement of such Subsidiary Guarantor.

         "Contribution Percentage" shall mean for any Subsidiary Guarantor for
          -----------------------
any applicable date as of which such percentage is being determined, an amount
equal to the quotient of (i) the Net Worth of such Subsidiary Guarantor as of
such date, divided by (ii) the sum of the Net Worth of all the Subsidiary
Guarantors as of such date.

         "Guarantor Claims" shall have the meaning indicated in Section 4.1
          ----------------
hereof.

         "Guaranty Agreement" shall mean this Amended and Restated Guaranty
          ------------------
Agreement, and where the context indicates, the "Guaranty Agreement" (as defined
in the Credit Agreement) of any other Subsidiary Guarantor, as the same may from
time to time be amended, modified or supplemented.

         "Liabilities" shall mean (a) any and all Indebtedness, obligations and
          -----------
liabilities of the Borrower pursuant to the Credit Agreement and any other Loan
Document, including without limitation, the unpaid principal of and interest on
the Notes, including without limitation, interest accruing subsequent to the
filing of a petition or other action concerning bankruptcy or other similar
proceeding; (b) any additional loans made by the Lenders to the Borrower; (c)
payment of and performance of any and all present or future obligations of the
Borrower to any Lender or any Affiliate of such Lender under any Swap Agreement
between the Borrower and any Lender or any Affiliate of such Lender; (d) any and
all other indebtedness, obligations and liabilities of any kind of the Borrower
to the Lenders, now or hereafter existing, arising directly between the Borrower
and the Lenders or acquired outright, as a participation, conditionally or as
collateral security from another by the Lenders, absolute or contingent, joint
and/or several, secured or unsecured, due or not due, arising by operation of
law or otherwise, or direct or indirect, including indebtedness, obligations and

                                      -2-



liabilities to the Lenders of the Borrower as a member of any partnership,
syndicate, association or other group, and whether incurred by the Borrower as
principal, surety, endorser, guarantor, accommodation party or otherwise; and
(e) all renewals, rearrangements, increases, extensions for any period,
replacements, amendments or supplements in whole or in part of the Notes or any
documents evidencing the above

         "Maximum Guaranteed Amount" shall mean, for the Guarantor, the greater
          -------------------------
of (i) the "reasonably equivalent value" or "fair consideration" (or equivalent
concept) received by the Guarantor in exchange for the obligation incurred
hereunder, within the meaning of any applicable state or federal fraudulent
conveyance or transfer laws; or (ii) the lesser of (A) the maximum amount that
will not render the Guarantor insolvent, or (B) the maximum amount that will not
leave the Guarantor with any property deemed an unreasonably small capital.
Clauses (A) and (B) are and shall be determined pursuant to and as of the
appropriate date mandated by such applicable state or federal fraudulent
conveyance or transfer laws and to the extent allowed by law take into account
the rights to contribution and subrogation under Section 2.9 in each Guaranty
Agreement so as to provide for the largest Maximum Guaranteed Amount possible.

         "Net Payments" shall mean an amount equal, at any time and from time to
          ------------
time and for each respective Subsidiary Guarantor, to the difference of (i) the
sum of all payments made previous to or at the time of calculation by such
Subsidiary Guarantor in respect of the Liabilities, as a Subsidiary Guarantor,
and in respect of its obligations contained in this Guaranty Agreement, less
(ii) the sum of all such payments previously returned to such Subsidiary
Guarantor by operation of law or otherwise and including payments received by
such Subsidiary Guarantor by way of its rights of subrogation and contribution
under Section 2.9 of any other Guaranty Agreements.

         "Net Worth" shall mean for any Subsidiary Guarantor, determined in
          ---------
accordance with GAAP and calculated on and as of any applicable date on which
such amount is being determined, the difference between (i) the sum of all such
Subsidiary Guarantor's property, at a fair valuation and as of such date, minus
(ii) the sum of all such Subsidiary Guarantor's debts, at a fair valuation and
as of such date, excluding the Liabilities.

         "Subsidiary Guarantors" shall mean the Subsidiaries or other Persons
          ---------------------
party to a Guaranty Agreement, including the Guarantor.

         Section 1.3 Credit Agreement Definitions. Unless otherwise defined
                     ----------------------------
herein, all terms beginning with a capital letter which are defined in the
Credit Agreement shall have the same meanings herein as therein.

                                    ARTICLE 2
                                    ---------
                                  The Guaranty
                                  ------------

         Section 2.1 Liabilities Guaranteed. Guarantor hereby irrevocably and
                     ----------------------
unconditionally guarantees the prompt payment of the Liabilities when due,
whether at maturity or otherwise; provided, however, that, notwithstanding
anything herein or in any other Loan Document to the contrary, the maximum
liability of Guarantor hereunder shall in no event exceed the Maximum Guaranteed
Amount.

                                      -3-



         Section 2.2 Nature of Guaranty. This Guaranty Agreement is an absolute,
                     ------------------
irrevocable, completed and continuing guaranty of payment and not a guaranty of
collection, and no notice of the Liabilities or any extension of credit already
or hereafter contracted by or extended to Borrower need be given to Guarantor.
This Guaranty Agreement may not be revoked by Guarantor and shall continue to be
effective with respect to debt under the Liabilities arising or created after
any attempted revocation by Guarantor and shall remain in full force and effect
until the Liabilities are paid in full and the Commitments are terminated,
notwithstanding that from time to time prior thereto no Liabilities may be
outstanding. Borrower and the Lenders may modify, alter, rearrange, extend for
any period and/or renew from time to time, the Liabilities, and the Lenders may
waive any Default or Events of Default without notice to the Guarantor and in
such event Guarantor will remain fully bound hereunder on the Liabilities. This
Guaranty Agreement shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of the Liabilities is rescinded or must
otherwise be returned by any of the Lenders upon the insolvency, bankruptcy or
reorganization of Borrower or otherwise, all as though such payment had not been
made. This Guaranty Agreement may be enforced by the Administrative Agent and
any subsequent holder of any of the Liabilities and shall not be discharged by
the assignment or negotiation of all or part of the Liabilities. Guarantor
hereby expressly waives presentment, demand, notice of non-payment, protest and
notice of protest and dishonor, notice of Default or Event of Default, notice of
intent to accelerate the maturity and notice of acceleration of the maturity and
any other notice in connection with the Liabilities, and also notice of
acceptance of this Guaranty Agreement, acceptance on the part of the Lenders
being conclusively presumed by the Lenders' request for this Guaranty Agreement
and delivery of the same to the Administrative Agent.

         Section 2.3 Administrative Agent's Rights. Guarantor authorizes the
                     -----------------------------
Administrative Agent, without notice or demand and without affecting Guarantor's
liability hereunder, to obtain a guaranty of the Liabilities from any one or
more Persons and at any time or times to enforce, waive, rearrange, modify,
limit or release any of such other Persons from their obligations under such
guaranties.

         Section 2.4 Guarantor's Waivers.
                     -------------------

                  (a) General. Guarantor waives any right to require any of the
                      -------
Lenders to (i) proceed against Borrower or any other person liable on the
Liabilities, (ii) enforce any of their rights against any other guarantor of the
Liabilities including but not limited to the Subsidiary Guarantors (iii) proceed
or enforce any of their rights against or exhaust any security given to secure
the Liabilities (iv) have Borrower joined with Guarantor in any suit arising out
of this Guaranty Agreement and/or the Liabilities, or (v) pursue any other
remedy in the Lenders' powers whatsoever. The Lenders shall not be required to
mitigate damages or take any action to reduce, collect or enforce the
Liabilities. Guarantor waives any defense arising by reason of any disability,
lack of corporate authority or power, or other defense of Borrower or any other
guarantor of the Liabilities, and shall remain liable hereon regardless of
whether Borrower or any other guarantor be found not liable thereon for any
reason. Whether and when to exercise any of the remedies of the Lenders under
any of the Loan Documents shall be in the sole and absolute discretion of the
Administrative Agent, and no delay by the Administrative Agent in enforcing any
remedy, including delay in conducting a foreclosure sale, shall be a defense to
the Guarantor's liability under this Guaranty Agreement. To the extent allowed

                                      -4-



by applicable law, the Guarantor hereby waives any good faith duty on the part
of the Administrative Agent in exercising any remedies provided in the Loan
Documents.

                  (b) Subrogation. Until the Liabilities have been paid in full,
                      -----------
the Guarantor waives all rights of subrogation or reimbursement against the
Borrower, whether arising by contract or operation of law (including, without
limitation, any such right arising under any federal or state bankruptcy or
insolvency laws) and waives any right to enforce any remedy which the Lenders
now have or may hereafter have against the Borrower, and waives any benefit or
any right to participate in any security now or hereafter held by the
Administrative Agent or any Lender.

         Section 2.5 Maturity of Liabilities; Payment. Guarantor agrees that if
                     --------------------------------
the maturity of any of the Liabilities is accelerated by bankruptcy or
otherwise, such maturity shall also be deemed accelerated for the purpose of
this Guaranty Agreement without demand or notice to Guarantor. Guarantor will,
forthwith upon notice from the Administrative Agent, pay to the Administrative
Agent the amount due and unpaid by Borrower and guaranteed hereby. The failure
of the Administrative Agent to give this notice shall not in any way release
Guarantor hereunder.

         Section 2.6 Administrative Agent's Expenses. If Guarantor fails to pay
                     -------------------------------
the Liabilities after notice from the Administrative Agent of Borrower's failure
to pay any Liabilities when due, and if the Administrative Agent obtains the
services of an attorney for collection of amounts owing by Guarantor hereunder,
or obtaining advice of counsel in respect of any aspect of this Guaranty
Agreement, or if suit is filed to enforce this Guaranty Agreement, or if
proceedings are had in any bankruptcy, probate, receivership or other judicial
proceedings for the establishment or collection of any amount owing by Guarantor
hereunder, or if any amount owing by Guarantor hereunder is collected through
such proceedings, Guarantor agrees to pay to the Administrative Agent the
Administrative Agent's reasonable attorneys' fees.

         Section 2.7 Liability. It is expressly agreed that the liability of the
                     ---------
Guarantor for the payment of the Liabilities guaranteed hereby shall be primary
and not secondary.

         Section 2.8 Events and Circumstances Not Reducing or Discharging
                     ----------------------------------------------------
Guarantor's Obligations. Guarantor hereby consents and agrees to each of the
- -----------------------
following to the fullest extent permitted by law, and agrees that Guarantor's
obligations under this Guaranty Agreement shall not be released, diminished,
impaired, reduced or adversely affected by any of the following, and waives any
rights (including without limitation rights to notice) which Guarantor might
otherwise have as a result of or in connection with any of the following:

                  (a) Modifications, etc. Any renewal, extension, modification,
                      ------------------
increase, decrease, alteration or rearrangement of all or any part of the
Liabilities, or of the Notes, any Loan Document or the Credit Agreement or any
instrument executed in connection therewith, or any contract or understanding
between Borrower and any of the Lenders, or any other Person, pertaining to the
Liabilities.

                                      -5-



                  (b) Adjustment, etc. Any adjustment, indulgence, forbearance
                      ---------------
or compromise that might be granted or given by any of the Lenders to Borrower
or Guarantor or any Person liable on the Liabilities.

                  (c) Condition of Borrower or Guarantor. The insolvency,
                      ----------------------------------
bankruptcy arrangement, adjustment, composition, liquidation, disability,
dissolution, death or lack of power of Borrower or Guarantor or any other Person
at any time liable for the payment of all or part of the Liabilities; or any
dissolution of Borrower or Guarantor, or any sale, lease or transfer of any or
all of the assets of Borrower or Guarantor, or any changes in the shareholders,
partners, or members of Borrower or Guarantor; or any reorganization of Borrower
or Guarantor.

                  (d) Invalidity of Liabilities. The invalidity, illegality or
                      -------------------------
unenforceability of all or any part of the Liabilities, or any document or
agreement executed in connection with the Liabilities, for any reason
whatsoever, including without limitation the fact that the Liabilities, or any
part thereof, exceed the amount permitted by law, the act of creating the
Liabilities or any part thereof is ultra vires, the officers or representatives
                                   ----- -----
executing the documents or otherwise creating the Liabilities acted in excess of
their authority, the Liabilities violate applicable usury laws, the Borrower has
valid defenses, claims or offsets (whether at law, in equity or by agreement)
which render the Liabilities wholly or partially uncollectible from Borrower,
the creation, performance or repayment of the Liabilities (or the execution,
delivery and performance of any document or instrument representing part of the
Liabilities or executed in connection with the Liabilities, or given to secure
the repayment of the Liabilities) is illegal, uncollectible, legally impossible
or unenforceable, or the Credit Agreement or other documents or instruments
pertaining to the Liabilities have been forged or otherwise are irregular or not
genuine or authentic.

                  (e) Release of Obligors. Any full or partial release of the
                      -------------------
liability of Borrower on the Liabilities or any part thereof, of any
co-guarantors, or any other Person now or hereafter liable, whether directly or
indirectly, jointly, severally, or jointly and severally, to pay, perform,
guarantee or assure the payment of the Liabilities or any part thereof, it being
recognized, acknowledged and agreed by Guarantor that Guarantor may be required
to pay the Liabilities in full without assistance or support of any other
Person, and Guarantor has not been induced to enter into this Guaranty Agreement
on the basis of a contemplation, belief, understanding or agreement that other
parties other than the Borrower will be liable to perform the Liabilities, or
the Lenders will look to other parties to perform the Liabilities.

                  (f) Other Security. The taking or accepting of any other
                      --------------
security, collateral or guaranty, or other assurance of payment, for all or any
part of the Liabilities.

                  (g) Release of Collateral, etc. Any release, surrender,
                      --------------------------
exchange, subordination, deterioration, waste, loss or impairment (including
without limitation negligent, willful, unreasonable or unjustifiable impairment)
of any collateral, property or security, at any time existing in connection
with, or assuring or securing payment of, all or any part of the Liabilities.

                  (h) Care and Diligence. The failure of the Lenders or any
                      ------------------
other Person to exercise diligence or reasonable care in the preservation,
protection, enforcement, sale or other handling or treatment of all or any part

                                      -6-



of such collateral, property or security; provided, however, that Lenders shall
                                          --------  -------
act in a "commercially reasonable" manner as required by applicable provisions
of Article 9 of the Uniform Commercial Code as presently in effect in the State
of Texas when exercising their rights under that certain Pledge and Security
Agreement by and between Borrower and Administrative Agent of even date
herewith.

                  (i) Status of Liens. The fact that any collateral, security,
                      ---------------
security interest or lien contemplated or intended to be given, created or
granted as security for the repayment of the Liabilities shall not be properly
perfected or created, or shall prove to be unenforceable or subordinate to any
other security interest or lien, it being recognized and agreed by Guarantor
that Guarantor is not entering into this Guaranty Agreement in reliance on, or
in contemplation of the benefits of, the validity, enforceability,
collectability or value of any of the collateral for the Liabilities.

                  (j) Payments Rescinded. Any payment by Borrower to the Lenders
                      ------------------
is held to constitute a preference under the bankruptcy laws, or for any reason
the Lenders are required to refund such payment or pay such amount to Borrower
or someone else.

                  (k) Other Actions Taken or Omitted. Any other action taken or
                      ------------------------------
omitted to be taken with respect to the Credit Agreement, the Liabilities, or
the security and collateral therefor, whether or not such action or omission
prejudices Guarantor or increases the likelihood that Guarantor will be required
to pay the Liabilities pursuant to the terms hereof; it being the unambiguous
and unequivocal intention of Guarantor that Guarantor shall be obligated to pay
the Liabilities when due, notwithstanding any occurrence, circumstance, event,
action, or omission whatsoever, whether contemplated or uncontemplated, and
whether or not otherwise or particularly described herein, except for the full
and final payment and satisfaction of the Liabilities.

         Section 2.9 Right of Subrogation and Contribution. If Guarantor makes a
                     -------------------------------------
payment in respect of the Liabilities, it shall be subrogated to the rights of
the Lenders against the Borrower with respect to such payment and shall have the
rights of contribution against the other Subsidiary Guarantors set forth in
Section 2.9 of any other Guaranty Agreements; provided that Guarantor shall not
enforce its rights to any payment by way of subrogation or by exercising its
rights of contribution or reimbursement or the right to participate in any
security now or hereafter held by or for the benefit of the Lenders until all of
the Liabilities have been paid in full. The Guarantor agrees that after all the
Liabilities have been paid in full if its then current Net Payments are less
than the amount of its then current Contribution Obligation, Guarantor shall pay
to any other Subsidiary Guarantors an amount (together with any payments
required of the other Subsidiary Guarantors by Section 2.9 of each other
Guaranty Agreement) such that the Net Payments made by all Subsidiary Guarantors
in respect of the Liabilities shall be shared among all of the Subsidiary
Guarantors in a proportion equal to their respective Contribution Percentage;
provided, however, Guarantor need not make any such payment if at the time such
- --------  -------
payment is to be made Guarantor is illiquid and not making such payment will not
render any other Subsidiary Guarantor insolvent.

                                      -7-



                                   ARTICLE 3
                                   ---------
                         Representations and Warranties
                         ------------------------------

         Section 3.1 By Guarantor. In order to induce the Lenders to accept this
                     ------------
Guaranty Agreement, Guarantor represents and warrants to the Lenders (which
representations and warranties will survive the creation of the Liabilities and
any extension of credit thereunder) that:

                  (a) Benefit to Guarantor. Guarantor's guaranty pursuant to
                      --------------------
this Guaranty Agreement reasonably may be expected to benefit, directly or
indirectly, Guarantor.

                  (b) Existence. Guarantor is a corporation duly organized,
                      ---------
validly existing and in good standing under the laws of the State of Montana.

                  (c) Power and Authorization. Guarantor is duly authorized and
                      -----------------------
empowered to execute, deliver and perform this Guaranty Agreement and all
necessary action on Guarantor's part requisite for the due execution, delivery
and performance of this Guaranty Agreement has been duly and effectively taken.

                  (d) Binding Obligations. This Guaranty Agreement constitutes
                      -------------------
valid and binding obligations of Guarantor, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally and subject to general
principals of equity, regardless of whether considered in a proceeding in equity
or at law.

                  (e) Governmental Approvals; No Conflicts. This Guaranty
                      ------------------------------------
Agreement (a) does not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except such as
have been obtained or made and are in full force and effect, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Guarantor or any order of any Governmental
Authority, (c) will not violate or result in a default under any indenture,
agreement or other instrument binding upon the Guarantor or its assets, or give
rise to a right thereunder to require any payment to be made by the Guarantor,
and (d) will not result in the creation or imposition of any Lien on any asset
of the Guarantor.

                  (f) Solvency. The Guarantor hereby represents that (i) it is
                      --------
not insolvent as of the date hereof and will not be rendered insolvent as a
result of this Guaranty Agreement, (ii) it is not engaged in a business or a
transaction, or about to engage in a business or a transaction, for which any
property or assets remaining with such Guarantor thereafter is unreasonably
small capital, and (iii) it does not intend to incur, or believe it will incur,
debts that will be beyond its ability to pay as such debts mature.

         Section 3.2 No Representation by Lenders. Neither the Lenders nor any
                     ----------------------------
other Person has made any representation, warranty or statement to the Guarantor
in order to induce the Guarantor to execute this Guaranty Agreement.

                                      -8-



                                    ARTICLE 4
                                    ---------
                          Subordination of Indebtedness
                          -----------------------------

         Section 4.1 Subordination of All Guarantor Claims. As used herein, the
                     -------------------------------------
term "Guarantor Claims" shall mean all debts and liabilities of Borrower to
Guarantor, whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligation of Borrower thereon be direct,
contingent, primary, secondary, several, joint and several, or otherwise, and
irrespective of whether such debts or liabilities be evidenced by note,
contract, open account, or otherwise, and irrespective of the person or persons
in whose favor such debts or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may hereafter
be acquired by Guarantor. The Guarantor Claims shall include without limitation
all rights and claims of Guarantor against Borrower arising as a result of
subrogation or otherwise as a result of Guarantor's payment of all or a portion
of the Liabilities. During the continuance of any Event of Default, Guarantor
shall not receive or collect, directly or indirectly, from Borrower or any other
party any amount upon the Guarantor Claims.

         Section 4.2 Claims in Bankruptcy. In the event of receivership,
                     --------------------
bankruptcy, reorganization, arrangement, debtor's relief, or other insolvency
proceedings involving Borrower as debtor, the Lenders shall have the right to
prove their claim in any proceeding, so as to establish their rights hereunder
and receive directly from the receiver, trustee or other court custodian,
dividends and payments which would otherwise be payable upon Guarantor Claims.
In such event, Guarantor hereby assigns such dividends and payments to the
Lenders. Should the Administrative Agent or any Lender receive, for application
upon the Liabilities, any such dividend or payment which is otherwise payable to
Guarantor, and which, as between Borrower and Guarantor, shall constitute a
credit upon the Guarantor Claims, then upon payment in full of the Liabilities,
Guarantor shall become subrogated to the rights of the Lenders to the extent
that such payments to the Lenders on the Guarantor Claims have contributed
toward the liquidation of the Liabilities, and such subrogation shall be with
respect to that portion of the Liabilities which would have been unpaid if the
Administrative Agent or a Lender had not received dividends or payments upon the
Guarantor Claims.

         Section 4.3 Payments Held in Trust. In the event that notwithstanding
                     ----------------------
Sections 4.1 and 4.2 above, Guarantor should receive any funds, payments, claims
or distributions which is prohibited by such Sections, Guarantor agrees to hold
in trust for the Lenders an amount equal to the amount of all funds, payments,
claims or distributions so received, and agrees that it shall have absolutely no
dominion over the amount of such funds, payments, claims or distributions except
to pay them promptly to the Administrative Agent, and Guarantor covenants
promptly to pay the same to the Administrative Agent.

         Section 4.4 Liens Subordinate. Guarantor agrees that any liens,
                     -----------------
security interests, judgment liens, charges or other encumbrances upon
Borrower's assets securing payment of the Guarantor Claims shall be and remain
inferior and subordinate to any liens, security interests, judgment liens,
charges or other encumbrances upon Borrower's assets securing payment of the
Liabilities, regardless of whether such encumbrances in favor of Guarantor, the
Administrative Agent or the Lenders presently exist or are hereafter created or
attach. Without the prior written consent of the Lenders, Guarantor shall not
(a) exercise or enforce any creditor's right it may have against the Borrower,

                                      -9-



or (b) foreclose, repossess, sequester or otherwise take steps or institute any
action or proceeding (judicial or otherwise, including without limitation the
commencement of or joinder in any liquidation, bankruptcy, rearrangement,
debtor's relief or insolvency proceeding) to enforce any lien, mortgages, deeds
of trust, security interest, collateral rights, judgments or other encumbrances
on assets of Borrower held by Guarantor.

         Section 4.5 Notation of Records. All promissory notes, or other
                     -------------------
instruments evidencing the Guarantor Claims accepted by or held by Guarantor (if
any) shall contain a specific written notice thereon that the indebtedness
evidenced thereby is subordinated under the terms of this Guaranty Agreement.

                                    ARTICLE 5
                                    ---------
                                  Miscellaneous
                                  -------------

         Section 5.1 Successors and Assigns. This Guaranty Agreement is and
                     ----------------------
shall be in every particular available to the successors and assigns of the
Lenders and is and shall always be fully binding upon the legal representatives,
heirs, successors and assigns of Guarantor, notwithstanding that some or all of
the monies, the repayment of which this Guaranty Agreement applies, may be
actually advanced after any bankruptcy, receivership, reorganization, death,
disability or other event affecting Guarantor.

         Section 5.2 Notices. Any notice or demand to Guarantor under or in
                     -------
connection with this Guaranty Agreement may be given and shall conclusively be
deemed and considered to have been given and received in accordance with Section
12.02 of the Credit Agreement, addressed to Guarantor at the address on the
signature page hereof or at such other address provided to the Administrative
Agent in writing.

         Section 5.3 Business and Financial Information. The Guarantor will
                     ----------------------------------
promptly furnish to the Administrative Agent and the Lenders from time to time
upon request such information regarding the business and affairs and financial
condition of the Guarantor and its subsidiaries as the Administrative Agent and
the Lenders may reasonably request.

         Section 5.4 Choice of Law. This Guaranty Agreement (including, but not
                     -------------
limited to, the validity and enforceability hereof) shall be governed by, and
construed in accordance with, the laws of the State of Texas.

         Section 5.5 Invalidity. In the event that any one or more of the
                     ----------
provisions contained in this Guaranty Agreement shall, for any reason, be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Guaranty
Agreement.

         SECTION 5.6 ENTIRE AGREEMENT. THIS WRITTEN GUARANTY AGREEMENT EMBODIES
                     ----------------
THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE LENDERS AND THE GUARANTOR AND
SUPERSEDES ALL OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING
TO THE SUBJECT MATTER HEREOF AND THEREOF. THIS WRITTEN GUARANTY AGREEMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE

                                      -10-



PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.



                         [SIGNATURES BEGIN ON NEXT PAGE]

                                      -11-





         WITNESS THE EXECUTION HEREOF, effective as of the 7th day of April,
2005.


GUARANTOR:                   NANCE PETROLEUM CORPORATION
- ---------


                             By:   /S/ DAVID W. HONEYFIELD
                                   -----------------------
                                   David W. Honeyfield
                                   Vice President - Finance

                             Address: 550 N. 31st Street, Suite 500
                                      Billings, MT  59103

                                          with copy to:

                                      1776 Lincoln Street, Suite 700
                                      Denver, CO  80203


ADMINISTRATIVE AGENT:        WACHOVIA BANK, NATIONAL
- --------------------         ASSOCIATION, as Administrative Agent


                             By:    /S/ PHILIP J. TRINDER
                                    ---------------------
                             Name:  Philip J. Trinder
                             Title: Vice President

                                      -12-