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                                                                     EXHIBIT 2.1


                       DEFINITIVE ASSET PURCHASE AGREEMENT


        THIS DEFINITIVE ASSET PURCHASE AGREEMENT (the "Agreement") is made and
entered into on the _____ day of ___________, 2004, by and between Atkins
Production, Inc., a Louisiana corporation, and Monty Wayne Atkins and Margaret
A. McCartney Atkins (together "Sellers"), and NGS Sub. Corp., a foreign
corporation domiciled in the State of Delaware, ("Buyer").

        Sellers are the owners of oil, gas and mineral interests and wells;
equipment; and improvements located in the Tullos Urania Field, LaSalle Parish,
Louisiana (the "Facility"). Sellers desire to sell to Buyer, and Buyer desires
to purchase from Sellers, all property and assets of Sellers situated at the
Facility.

        Accordingly, in consideration of the foregoing and of the mutual
promises, covenants, and subject to the terms and conditions set forth below,
the parties agree as follows:

        SECTION 1. ASSETS TO BE CONVEYED. On the Closing Date (as defined in
Section 9.1), Sellers shall sell, assign, transfer and deliver to Buyer, or its
designee, and Buyer or its designee shall purchase from Sellers, all of Sellers'
right, title and interest in and to the following (collectively, the "Assets"):

        1.1 Leases. The interests in the oil, gas and mineral leases, leasehold
interests, operating interests, servitudes, working interests, royalty
interests, overriding royalty interests, operating rights and/or mineral rights
in oil, natural gas, petroleum, hydrocarbons, and other minerals as described in
EXHIBIT "A" attached hereto and made a part hereof as to all depths (the
"MINERAL INTERESTS"). Said Mineral Interests include all oil, gas and mineral
interests owned by Sellers in the Facility except as provided in paragraph 1.10
below.

        1.2 Wells. Subject to the provisions of subparts 1.2.1 and 1.2.2, below,
all oil and gas wells described on EXHIBITS "B-1" , "B-2" and "B-3" attached
hereto and made a part hereof (the "WELLS"). Sellers hereby warrant that they
are conveying to Buyer at not less than the net revenue interest set out for
each well on EXHIBITS "B-1", "B-2" and "B-3".

               1.2.1 The records of the Louisiana Office of Conservation reflect
        breaks in production from the Wells described on EXHIBIT "B-2" which
        would result in the expiration of the leases on which said Wells were
        drilled in the absence of any other production or development activity
        on those Leases or on any units of which said leased lands formed a
        part. Sellers represent and warrant to Buyer that those Wells described
        on EXHIBIT "B-2" or other lease and/or unit wells have produced in
        sufficient quantities and with sufficient regularity to maintain the
        Leases in force and effect in accordance with their terms insofar as
        Sellers' right to produce the Wells described on EXHIBIT "B-2" and
        retain said production. Sellers covenant and



                                  Page 1 of 18


        agree that, prior to closing, at their sole cost they will furnish to
        Buyer information satisfactory to Buyer, in its sole and uncontrolled
        discretion, establishing the maintenance of the Leases to the extent
        necessary to entitle the owner of Sellers' net reserve interest in the
        Wells described on EXHIBIT "B-2" to retain the oil and gas produced from
        said Wells (the "Lease Maintenance Information"). As to each Well
        described on EXHIBIT "B-2" for which Sellers are unable to provide Buyer
        with satisfactory Lease Maintenance Information, Buyer may, in its sole
        discretion a) waive any objection to the validity of Sellers' net
        reserve interest and purchase the Sellers' interest in the well; or b)
        exclude the well from the sale, in which case the purchase price as set
        out in paragraph 3.1 shall be reduced pro rata.

               1.2.2 The records of the Louisiana Office of Conservation
        indicate that those Wells listed on EXHIBIT "B-3" are not producing, are
        not in compliance with state regulations, or do not have valid leases.
        Prior to closing, Sellers shall plug and abandon certain of the wells as
        described on EXHIBIT "B-3" assist Buyer in curing title to each of the
        remaining Wells by, in Buyer's sole and uncontrolled discretion,
        obtaining a valid new lease or top lease from the record mineral owner
        on such terms and conditions as Buyer in its sole and uncontrolled
        discretion deems appropriate and/or restoring production from the
        subject well and/or obtaining a statement of compliance from the
        Louisiana Office of Conservation. As to each well on EXHIBIT "B-3" for
        which title is not satisfactorily cured for Buyer, Buyer may, in its
        sole and uncontrolled discretion, a) waive any objection to the title to
        the well and purchase Sellers' interest in accordance with the terms of
        this agreement; or b) exclude the well from the sale, in which case the
        purchase price as set out in paragraph 3.1 shall be reduced pro rata.

               1.2.3 In the event that Buyer is not furnished with satisfactory
        Lease Maintenance Information and/or title is not satisfactorily cured
        on thirty (30) or more of the Wells set out on EXHIBITS "B-2" and "B-3"
        prior to Closing, Buyer may, in its sole and uncontrolled discretion,
        give Sellers written notice of the termination of this agreement in
        which event the parties shall have no obligations one to the other and
        this Agreement shall terminate.

        1.3 Real Property. All real property/immovables owned, used or held for
use in the Facility (the "REAL PROPERTY), including, but not limited to, that
tract of land described on EXHIBIT "C" attached hereto and made a part hereof,
all rights-of-way described on EXHIBIT "D" attached hereto and made a part
hereof, and all surface leases, all easements and all servitudes described on
EXHIBIT "E" attached hereto and made a part hereof.

        1.4 Personal Property. All tangible personal property, accessories,
fixtures, appurtenances, and equipment located on, used in connection with or
attached to the Mineral Interests and Wells described in Paragraphs 1 and 2
above and having to do with production of oil, gas or other minerals in the
Tullos Urania Field, including, but not limited to, fixtures, tanks, jacks,
pumps, equipment, pipe, tubing, equipment in repair, pipelines, attached
gathering systems, (whether on location or off site in storage or in repair)




                                  Page 2 of 18


depending upon or used in connection with the Mineral Interests and Wells
described in Paragraphs 1 and 2 above described on EXHIBIT "F" attached hereto
and made a part hereof (the "EQUIPMENT"); all oil, gas, casinghead gas,
condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons, products
refined and manufactured therefrom, other minerals, and the accounts and
proceeds from the sale of all of the foregoing; (the "HYDROCARBONS") (the
"SEVERED HYDROCARBONS"); all contracts and agreements that benefit or burden the
Leasehold Interests and production therefrom described in the foregoing
paragraph and located in or having to do with the Tullos Urania Field,
including, but not limited to, operating agreements, unitization agreements,
pooling agreements, declarations of pooling or unitization, farmout agreements,
rights-of-way, easements, surface agreements, assignments, and oil, gas,
liquids, condensate, casinghead gas and gas sales, purchase, exchange,
gathering, transportation and processing contracts (the "CONTRACTS"); and the
pipelines and all equipment associated therewith (collectively the "PERSONAL
PROPERTY").

        1.5 Miscellaneous Interests. All permits, licenses, escrow accounts,
presently valid pooling, unitization and communitization agreements and all
other contracts relating to the Facility including, but not by way of
limitation, those matters described on EXHIBIT "G" attached hereto and made a
part hereof.

        1.6 Any causes of action against others that are assignable and not
specifically dealt with herein, but that are attributable to the rights and
properties described in Paragraphs 1.1, 1.2, 1.3, 1.4 and 1.5, above.

        1.7 All records, files, engineering data, accounting records, production
records, geologic and geophysical data (including all licenses and ownership
rights, tapes, interpretations, and maps), well files and all other documentary
information owned and maintained by Sellers pertaining to the Assets, and any
other documents pertaining to or in any way dealing with the Leases, Wells,
Equipment, Hydrocarbons, Severed Hydrocarbons, Surface Leases, Contracts and
Gathering System as described hereinabove.

        1.8 It is understood that Sellers shall continue to operate Atkins
Production, Inc. and/or Atkins Well Service as contract operators and well
service providers in the Tullos Urania Field and, as such, shall retain and own
trucks, vehicles, workover equipment, spare parts, pipe, tubing, pumps, jacks,
downhole equipment and other miscellaneous equipment normal to that operation
and not included in the Personal Property (for example, a pump or jack removed
from a shut-in well included in the Leasehold Interests shall be included in the
Personal Property, whereas a pump or jack in inventory of Atkins Production,
Inc. or Atkins Well Service for general use of its customers shall not be
included in the Personal Property). It is the intention of this Agreement that
Buyer shall acquire all accessories, fixtures, equipment and appurtenances to
any and all Assets, but shall not acquire any spare parts, pipe, tubing, pumps,
jacks, downhole equipment and other personal property not derived from the
Assets and used in the business of Atkins Production, Inc. or Atkins Well
Service in their contract operations business.



                                  Page 3 of 18


        1.9 It is Sellers' intent to convey to Buyer all of Sellers' interest of
every nature and kind as to all depths in and to the Assets whether or not same
are described with particularity in this Agreement. Sellers will execute such
additional documents as Buyer may reasonably require to confirm title in Buyer
to all Assets.

        1.10 It is acknowledged that there is a pending dispute between Sellers
and the State of Louisiana regarding expropriation of all or a portion of the
Urania LBR B lease and the wells located thereon, a dispute that is expected to
result in litigation in the 28th Judicial District Court for the Parish of
LaSalle, State of Louisiana. It is agreed that Sellers will retain title in and
to said lease and wells located thereon to fully and completely prosecute that
action. Upon termination of said lawsuit Sellers will convey to Buyer all of
Sellers' interest in said lease and wells, together with one-third (1/3) of the
net compensation received therein after payment of related direct costs of
litigation including attorney's fees.

        1.11 Sellers shall convey to Buyer all of Sellers' interest in and to
the tangible personal property, accessories, fixtures, appurtenances and
equipment located on, used in connection with or attached to those wells
described on EXHIBIT "H" attached hereto and made a part hereof, including but
not limited to, fixtures, tanks, jacks, pumps, equipment, pipe, tubing,
equipment in repair, pipelines, and attached gathering systems depending upon or
used in connection with the wells described on EXHIBIT "H". The price and
consideration for this conveyance is Buyer's agreement to plug the wells
described on EXHIBIT "H" at Buyer's sole cost and expense; provided, the
obligation of Buyer to plug each of the wells shall be contingent on Buyer's
ability, without objection or opposition from the landowner, mineral owner, or
any other third party with an alleged interest therein, to salvage and remove
the tangible personal property associated with each such wells as described
hereinabove.

        SECTION 2. ASSUMPTION OF LIABILITIES. Buyer shall assume any and all
obligations of Sellers under the Leases and Contracts being acquired herein and
which are specifically and individually described on Exhibits "A" through "F"
attached hereto and made a part hereof, but Sellers shall remain obligated for
the liability, cost of defense, and other expenses related to any breach of said
obligations or violations of any laws, rules or regulations of any governmental
entity which occur or relate to periods occurring (i) prior to closing or (ii)
post-closing but prior to Buyer's being advised in writing of the existence of
any leases and contracts which are not, but should have been, specifically and
individually described on Exhibits "A" through "F" attached hereto and made a
part hereof and Sellers shall, indemnify, defend and hold Buyer harmless from
any claims or losses incurred by Buyer as a result thereof, including reasonable
attorney's fees, reasonable costs of investigation and other reasonable costs
incurred by Buyer in litigating same.

        SECTION 3. PURCHASE.

        3.1 Price and Allocation. The total purchase price for the Assets is
SEVEN HUNDRED TWENTY-FIVE THOUSAND AND NO/100 ($725,000.00) DOLLARS (the
"PURCHASE PRICE") payable at closing. Within ninety (90) days following the
Closing, Buyer



                                  Page 4 of 18


and Sellers shall mutually agree upon an allocation of the Purchase Price among
the Assets, and each party shall prepare and file with their respective income
tax returns for the tax year in which the Closing occurs, IRS Form 8594
allocating the Purchase Price (including any adjustments pursuant to Section 4
or elsewhere in this Agreement) in accordance with Section 1060 of the Internal
Revenue Code of 1986, as amended and in accordance with the Asset Allocation.
Notwithstanding anything to the contrary in this Agreement, this Section 3 shall
survive the Closing without limitation.

        3.2 Operation. Sellers agree to provide temporary contract field
operations of, and ongoing well services for, the Assets subsequent to the
Closing date until such time as Buyer can enter into an acceptable contract with
an operator. The terms and conditions upon which Sellers shall provide temporary
operations of and well services for the Assets shall be mutually agreed between
the parties in accordance with standard industry and local practices and shall
be reduced to writing and signed by both Sellers and Buyer or Buyer's designee.

        SECTION 4. INSPECTION

        4.1 Inspection Period. At the sole expense of Buyer, Buyer shall have
until the Closing Date, hereinafter referred to as the "INSPECTION PERIOD" to
inspect the Facility in an effort to determine the acceptability of the title
and condition of the Assets as well as other due diligence deemed necessary by
Buyer in Buyer's sole discretion. If Buyer is not satisfied with the results of
such inspections, in Buyer's sole discretion, then Buyer reserves the right to
unilaterally cancel this Agreement during the Inspection Period by providing
Sellers with written notice of such cancellation before the expiration of the
Inspection Period. In the event that Buyer is not satisfied with the title or
the condition of the Assets, Sellers and Buyer may agree (a) to extend the
Inspection Period to a mutually acceptable date, or, as to those Mineral
Interests the title to which Buyer finds unacceptable, those Mineral Interests
may, in Buyer's sole and uncontrolled discretion, be excluded from the
transaction and the purchase price reduced pro rata, or (b) Buyer may, in its
sole discretion (i) accept the Assets and Sellers' title subject to the
objections, or (ii) terminate this Agreement in which event Buyer and Sellers
shall have no further obligations to each other under this Agreement.

        SECTION 5. REPRESENTATIONS AND WARRANTIES OF SELLERS. Sellers, jointly
and severally, make the following representations and warranties, all of which
have been relied upon by Buyer in entering into this Agreement, all of which are
true and correct as of the date hereof, and, except as otherwise provided, all
of which shall be true and correct at the Closing Date.

        5.1 Organization. Atkins Production, Inc. is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Louisiana, and has full power and authority to enter into and perform this
Agreement.

        5.2 Authorization; Binding Agreement. The execution and delivery of this
Agreement by Sellers has been duly authorized by Atkins Production, Inc.'s Board
of



                                  Page 5 of 18


Directors, and, if necessary, its shareholders, and this Agreement constitutes a
valid and binding agreement of Atkins Production, Inc., enforceable in
accordance with its terms. At closing the execution and delivery of the Warranty
Deed and any other documents requiring Atkins Production, Inc.'s signature will
have been duly authorized by all necessary corporate and shareholder action and
shall constitute the legal, valid and binding obligations of Atkins Production,
Inc.

        5.3 No Breach. The execution, delivery and performance of this Agreement
by Sellers will not result in the breach of, or constitute a default under, the
provisions of any agreement or other instrument to which Sellers are parties or
by which they or their property is bound or affected including any of the Assets
being transferred hereunder.

        5.4 Title to Assets. Sellers shall convey to Buyer at Closing Date, by
Warranty Deed, title to the Assets, in each case free and clear of all liens,
security interests, mortgages, deeds of trust, pledges, judgments, leases,
rights of refusal or other encumbrances whatever ("LIENS").

        5.5 Litigation and Governmental Regulation. There is no judgment
outstanding and no litigation, proceeding, claim or investigation of any nature
pending or threatened against Sellers or the Assets that might adversely affect
the conveyance of the Facility or materially impair the value of the Assets.
Sellers are not parties to or subject to the provisions of any judgment, order,
writ, injunction, decree or award of any court, arbitrator or governmental or
regulatory official, body or authority that could adversely affect the Facility
or any of the Assets.

        5.6 Payment of Taxes. Sellers have duly and timely filed all returns for
personal property, severance, ad valorem and other taxes and charges due as of
the Effective Date of this Agreement and have paid all applicable taxes and
charges. All severance, ad valorem, and other taxes and charges based on
production attributable to the Assets shall be the obligation of the party
entitled to the production on which such tax or charge is based. All other taxes
against the Assets shall be prorated between Sellers and Buyer as of the
Effective Date in accordance with generally accepted accounting practices.

        5.7 Insolvency Proceedings. No insolvency proceedings of any character,
affecting Sellers or the Assets are pending or threatened. Sellers have not made
an assignment for the benefit of creditors or taken any action with a view to or
that would constitute a valid basis for the institution of any such insolvency
proceedings or which transfer would constitute a fraudulent conveyance or
preference.

        5.8 Compliance with Law. Sellers have complied with each, and are not in
violation of any, law, rule or regulation, and has not failed to obtain or to
adhere to the requirements of any license, permit or authorization necessary to
the ownership of the Assets and Facility or to the utilization of same in the
ordinary course of business, which noncompliance, violation or failure to obtain
or adhere might reasonably be expected to have a material adverse effect on any
of the Assets or the Facility, including the timely and proper preparation and
filing of all state, local and federal reports.



                                  Page 6 of 18


        5.9 Validity of Contemplated Transactions; etc. (a) The execution,
delivery and performance of this Agreement and the Warranty Deed by Sellers will
not contravene or violate (i) any law, rule or regulation to which Sellers are
subject, (ii) any judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental or regulatory official, body or authority
which is applicable to Sellers, or (iii) the Articles of Incorporation, or
By-laws of Atkins Production, Inc.

        (b) Such execution, delivery or performance will not violate, be in
conflict with or result in the breach (with or without giving notice or lapse of
time, or both) of any term, condition, or provision of, or require the consent
of any other party to any indenture, agreement, contract, commitment, lease,
plan, license, permit, authorization or other instrument or document to which
Sellers are parties, by which the Sellers have rights or by which any of the
Assets or Facility may be bound or affected, other than those consents obtained
prior to the Closing, or give any party with rights thereunder the right to
terminate, modify, accelerate or otherwise change the existing rights or
obligations of Sellers.

        5.10 No Third Party Options. There are no existing agreements, options,
commitments, Liens or rights with, to or in any person to acquire any of the
Assets or Facility.

        5.11 Conditions Affecting Assets. There are no conditions existing with
respect to Sellers' markets, products, clients, customers, facilities, personnel
or suppliers which could reasonably be expected to have a material adverse
effect on the Assets and Facilities other than conditions that may affect the
industry in which Sellers operate as a whole.

        5.12 Environmental Matters.

        (a) Definitions. For the purposes of this Section 5.12, the following
terms shall have the meanings indicated:

               (i) "ENVIRONMENT" shall mean soil, land surface or subsurface
strata, surface waters (including navigable waters, ocean waters, streams,
ponds, drainage basins, and wetlands), groundwater, drinking water supply,
stream sediments, ambient air (including indoor air), plant and animal life, and
any other environmental medium or natural resource.

               (ii) "ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES" shall mean
any cost, damages, expense, liability, obligation, or other responsibility
arising from or under Environmental Law or Occupational Safety and Health Law
and consisting of or relating to:

               (A) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products);

               (B) fines, penalties, judgments, awards, settlements, legal or




                                  Page 7 of 18


administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;

               (C) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective action,
including any investigation, cleanup, removal, containment, or other remediation
or response actions required by applicable Environmental Law or Occupational
Safety and Health Law (whether or not such cleanup has been required or
requested by any governmental body or any other person or entity) and for any
natural resource damages; or

               (D) any other compliance, corrective, investigative, or remedial
measures required under Environmental Law or Occupational Safety and Health Law.

        The terms "removal," "remedial," and "response action," include the
types of activities covered by the United States Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as
amended ("CERCLA").

        (iii) "Environmental Law" shall mean the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et seq., the Resource Conservation
and Recovery Act ("RCRA"), 42 U.S.C.Section 6901 et seq., the Clean Water Act,
33 U.S.C.Section 1251 et, the Clean Air Act, 42 U.S.C.Section 7401 et seq., the
Toxic Substances Control Act, 15 U.S.C.Section 2601 et seq., the Oil Pollution
Act of 1990, 33 U.S.C.Section 2701 et seq., the Occupational Safety and Health
Act, 29 U.S.C.Section 651 et seq, the Universal Waste Rule (40 CFR Part 273) and
all other legal requirements that relate --- to:

               (A) advising appropriate authorities, employees, and the public
of intended or actual releases of pollutants or hazardous substances or
materials, violations of discharge limits, or other prohibitions and of the
commencements of activities, such as resource extraction or construction, that
could have significant impact on the environment;

               (B) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the environment;

               (C) reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are generated;

               (D) assuring that products are designed, formulated, packaged,
and used so that they do not present unreasonable risks to human health or the
environment when used or disposed of;

               (E) protecting resources, species, or ecological amenities;

               (F) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other potentially
harmful substances;




                                  Page 8 of 18


               (G) cleaning up pollutants that have been released, preventing
the threat of release, or paying the costs of such clean up or prevention; or

               (H) making responsible parties pay private parties, or groups of
them, for damages done to their health or the environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.

               (iv) "Hazardous Materials" shall mean any waste or other
substance that is listed, defined, designated, or classified as, or otherwise
determined to be, hazardous, corrosive, ignitable, radioactive, or toxic or a
pollutant or a contaminant under or pursuant to any Environmental Law, including
any admixture or solution thereof, and specifically including, but in no way
limited to, petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos-containing materials.

               (v) "Occupational Safety and Health Law" shall mean any legal
requirement designed to provide safe and healthful working conditions and to
reduce occupational safety and health hazards.

        (b) Environmental Compliance.

               (i) With the exception of those matters set out on EXHIBIT "I"
attached hereto and made a part hereof, insofar as the Mineral Interests, Wells
and Facility in general, Sellers are not now and will not be at Closing in
violation of any Environmental Law.

               (ii) Sellers have no basis to expect, nor have Sellers, or, any
other person or entity for whose conduct they are or may be held responsible,
received any citation, directive, inquiry, notice, order, summons, warning, or
other communication that relates to any alleged, actual, or potential violation
or failure to comply with any Environmental Law, or of any alleged, actual, or
potential obligation to undertake or bear the cost of any Environmental, Health,
and Safety Liabilities with respect to any of the Assets of Facility.

               (iii) Except for normal use of the Assets and Facility and normal
operations in conformance with customary industry standards and not in violation
of any Environmental Law, there are no Hazardous Materials present on or in the
Assets or the Facility, including any Hazardous Materials contained in barrels,
above or underground storage tanks, landfills, land deposits, land, water,
dumps, equipment (whether moveable or fixed) or other containers, either
temporary or permanent or incorporated into any structure therein or thereon,
except for minerals that are naturally present in their original geological
formation.

               (iv) Sellers have delivered to Buyer true and complete copies and
results of any reports, studies, analyses, tests, or monitoring possessed or
initiated by Sellers pertaining to Hazardous Materials in, on, or under the
Facilities and the Assets, or concerning compliance by Sellers or any other
person or entity for whose conduct they are



                                  Page 9 of 18


or may be held responsible, with Environmental Laws.

        5.13 Quality of Assets. The Assets were acquired and have been
maintained in accordance with regular business practices of Sellers. The Assets
are substantially all of the inventory, equipment, mineral interests, wells,
contracts and real property used by Sellers in conducting their business in the
Facility during the twelve-month period immediately preceding the Closing
contemplated by this Agreement.

        5.14 Completeness of Disclosure. No representation or warranty made in
this agreement by or on behalf of Sellers and in any list, certificate, Exhibit,
Schedule or other instrument, document, agreement or writing made a part hereof
or delivered hereunder or in connection with the transactions contemplated
hereby contains or will contain any untrue statement of a material fact or omits
or will omit to state any fact necessary to make any statement herein or therein
not materially misleading.

        SECTION 6. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer makes the
following representations and warranties, all of which have been relied upon by
Sellers in entering into this Agreement, all of which are true and correct as of
the date hereof, and, except as otherwise provided, all of which shall be true
and correct as of the Effective Date and the Closing Date.

        6.1 Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, is qualified to do business in and is in good standing under the
laws of the State of Louisiana, and has full power and authority to enter into
and perform this Agreement.

        6.2 Authorization. The Board of Directors of Buyer has duly authorized
the execution and delivery of this Agreement and this Agreement constitutes a
valid and binding agreement of Buyer, enforceable in accordance with its terms.

        6.3 No Breach. The execution, delivery and performance of this Agreement
by Buyer will not result in the breach of, or constitute default under, the
provisions of any agreement or other instrument to which Buyer is a party or by
which Buyer is bound.

        6.4 Litigation. There is no action, suit, investigation or other
proceedings pending or threatened which may adversely affect Buyer's ability to
perform this Agreement in accordance with its terms, and Buyer is not aware of
any facts which could reasonably result in any such proceeding.

        6.5 Employees. Buyer reserves the right to interview any employees
currently working at the Facility for the purposes of continued employment with
Buyer. If an offer of employment is tendered and accepted, Buyer assumes no
prior obligation regarding said employees, including but not limited to
employment contracts, accrued and unpaid leave, workman compensation claims, or
any claims regarding employment benefits.

        SECTION 7. PRE-CLOSING OBLIGATIONS. The parties covenant and agree as



                                 Page 10 of 18


follows with respect to the period prior to the Closing Date:

        7.1 Confidentiality. Each party agrees that any and all information
learned or obtained by it from the other shall be confidential and agrees not to
disclose any such information to any person other than such party's attorneys,
agents, representatives, lenders, or existing or potential investors who have
executed a Confidentiality Agreement materially in the same form and term as to
that between the parties hereto, as is necessary for the purpose of effecting
the transactions contemplated by this Agreement. This Confidentiality Provision
shall remain in force and be binding on all parties for a period of two years
after the Closing Date.

        7.2 Access. Prior to the Closing Date, Sellers shall give Buyer or
representatives of Buyer reasonable access to the Facility for purposes of
inspection, appraisal, testing, surveying, and other activities that may be
necessary in the course of the Inspection Period. The Buyer shall be given, or
has been given, sufficient time to perform a Due Diligence Examination on the
Facility, including, but not limited to, a thorough inventory of the land,
buildings, and equipment to be purchased; verification of historical production,
revenues, operating expenses and historical capital expenditures; satisfactory
completion of a third party Phase I Environmental audit; and verification of
current production, flowing pressures, remaining reserves, product prices,
gathering and processing agreements and costs and applicable product sales
agreements. Buyer hereby agrees to indemnify and hold Sellers harmless from any
loss, claim or liability arising out of or related to Buyer performing its Due
Diligence Examination at the Facility or activities associated therewith.

        7.3 Additional Covenant. Buyer and Sellers shall take all commercially
reasonable efforts to cause the consummation of the transaction contemplated by
this Agreement and shall not take any action that is inconsistent with their
obligations under this Agreement in any material respect.

        SECTION 8. CONDITIONS PRECEDENT.

        8.1 Conditions to Buyer's Obligation. The obligation of Buyer to
consummate the transaction contemplated by this Agreement is subject to the
satisfaction of each of the following conditions (unless otherwise waived by
Buyer):

               8.1.1 Representations and Warranties. The representations and
        warranties of Sellers shall be true, complete, and correct in all
        material respects as of the Closing Date with the same force and effect
        as if then made.

               8.1.2 Compliance with Conditions. All of the terms, conditions
        and covenants to be complied with or performed by Sellers on or before
        the Closing Date shall have been duly complied with and performed in all
        material respects.

               8.1.3 Title to Assets. On the Closing Date, the Assets will be
        delivered to Buyer free and clear of all Liens.



                                 Page 11 of 18


               8.1.4 Closing Documents. Sellers shall deliver to Buyer all of
        the closing documents specified in Section 9.2.1, all of which documents
        shall be dated as of the Closing Date, duly executed, and in a form
        reasonably acceptable to Buyer.

        8.2 Conditions to Sellers' Obligation. The obligation of Sellers to
consummate the transaction contemplated by this Agreement is subject to
satisfaction of each of the following conditions (unless otherwise waived by
Sellers):

               8.2.1 Representations and Warranties. The representations and
        warranties of Buyer to Sellers shall be true, complete and correct in
        all material respects as of the Closing Date with the same force and
        effect as if then made.

               8.2.2 Compliance with Conditions. All of the terms, conditions
        and covenants to be complied with or performed by Buyer on or before the
        Closing Date shall have been duly complied with and performed in all
        material respects.

               8.2.3 Payment. Buyer shall pay Sellers the Purchase Price as
        provided in Section 3 of this Agreement.

               8.2.4 Closing Documents. Buyer shall deliver to Sellers all the
        closing documents specified in Section 9.2.2, all of which documents
        shall be dated as of the Closing Date, as applicable, duly executed, and
        in a form reasonably satisfactory to Sellers.

        SECTION 9. CLOSING. With regard to all dates and time periods set forth
or referred to in this Agreement, it is understood and agreed that time is of
the essence.

        9.1 Closing Date. The Closing shall occur as soon as commercially
possible, but no later than August 15, 2004. However, it shall have an effective
date of July 1, 2004, at 12:01 a.m. (the "Effective Date"). The Closing shall
occur at a place and time mutually agreed upon by the parties.

        9.2 Performance at Closing. The following documents shall be executed
and delivered at Closing:

               9.2.1 By Sellers. Sellers shall deliver to Buyer (i) Warranty
        Deed conveying to Buyer title to the Assets with full warranty and with
        full substitution and subrogation to any and all rights of warranty
        against Sellers' predecessors in title; (ii) certificate of good
        standing of Atkins Production, Inc., issued as of a recent date by
        Secretary of State of the State of Louisiana; (iii) an officer's
        certificate attesting to Atkins Production, Inc.'s compliance with the
        matters set forth in Sections 8.1 and certifying the resolutions of
        Sellers' board of directors and shareholders (if applicable) authorizing
        the execution and delivery of this Agreement and the transactions
        contemplated hereby; (iv) a certificate of non-foreign status on Atkins
        Production Company Inc.; and (v) originals or copies, as applicable of
        all documents and records which Sellers are obligated to provide Buyer
        under the terms of this Agreement.


                                 Page 12 of 18


               9.2.2 By Buyer. Buyer shall deliver to Sellers (i) a copy of the
        articles of incorporation of Buyer, certified as of a recent date by the
        Secretary of State of the state of Buyer's formation; (ii) certificate
        of good standing of Buyer, issued as of a recent date by the Secretary
        of State of the State of Texas; (iii) certificate of good standing of
        Buyer, issued as of a recent date, by the Secretary of State of the
        State of Louisiana showing Buyer is authorized to do business in the
        State of Louisiana; (iv) certificates of Buyer which show Buyer is
        qualified to own and operate the assets being conveyed herein, issued as
        of a recent date by the Louisiana Department of Conservation and any and
        all other Louisiana governmental agencies which may require said
        qualification; (v) an officer's certificate attesting to Buyer's
        compliance with the matters set forth in Sections 8.2.1 and 8.2.2, and
        certifying the resolutions of the board of directors of Buyer
        authorizing the execution and delivery of this Agreement and the
        transactions contemplated hereby, and (vi) the Purchase Price.

               9.2.3 Other Documents and Acts. The parties will also execute
        such other documents, and perform such other acts, before and after
        Closing, as may be necessary for the complete implementation and
        consummation of this Agreement, including the execution by Sellers of
        any documents reasonably required by any purchaser of production to
        effectuate payment of proceeds attributable to production from the
        Facility to Buyer.

        SECTION 10. POST-CLOSING OBLIGATIONS. The parties covenant and agree as
follows with respect to the period subsequent to Closing:

        10.1 Indemnification. Sellers, jointly and severally, undertake and
agree to indemnify and hold Buyer harmless against any and all losses, costs,
liabilities, claims, obligations, assessments, damages, fines and expenses,
including reasonable attorney's fees and investigation costs (together,
"Claims"), incurred or suffered by Buyer arising from (i) the ownership and
operation of the Facility or ownership of the Assets during Sellers' period of
ownership prior to the Closing Date, and (ii) a breach, misrepresentation, or
other violation of any of Sellers' covenants, warranties or representations
contained in this Agreement specifically, but not limited to Sections 5.2, 5.3,
5.4, 5.5, 5.6, 5.7, 5.8, 5.9, 5.10, 5.11, 5.12, 5.13, 5.14, and 10.2. Buyer
undertakes and agrees to indemnify and hold Sellers harmless against any and all
Claims incurred or suffered by Sellers arising from (a) the ownership and
operation of the Facility or ownership of the Assets after the Closing Date; (b)
a breach, misrepresentation, or other violation of any of Buyer's covenants,
warranties and representations contained in this Agreement specifically, but not
limited to, Sections 6.2 and 6.4. The foregoing indemnities are intended by
Sellers and Buyer, respectively, to cover all acts, suits, proceedings, claims,
demands, assessments, adjustments, costs, and expenses with respect to any and
all of the specific matters in these indemnities, respectively, set forth and
shall be without limitation as to amount.

        10.2 Agreement Not to Compete. Neither Seller shall acquire any interest
in any



                                 Page 13 of 18


of the property intended to be included in the Assets, including, but not
by way of limitation, by mineral deed, mineral lease, assignment, farmout,
operating agreement or servitude, whether directly or through subsidiaries or
parties interposed, so long as Buyer claims any ownership in or right to said
Assets.

        10.3 Agreement by Seller to Remediate Certain Areas. Seller shall,
within thirty (30) days after the Closing Date, complete the remediation to full
compliance with state regulations of the sites listed on EXHIBIT "I", as
generally described on such Exhibit.

        10.4 Change of Operator. With sixty (60) days of the Closing Date Buyer
shall make all necessary filings with the Louisiana Office of Conservation to
change the operator on all wells acquired by Buyer to Buyer or Buyer's
designated contract operator.

        SECTION 11. GENERAL PROVISIONS.

        11.1 Risk of Loss. The risk of loss or damage to the Assets shall be
upon Sellers at all times prior to Closing and Sellers shall keep all of the
Assets fully insured through the date of Closing in accordance with Sellers'
usual business practice during the twelve (12) months preceding the Closing
Date. In the event of loss or damage, Sellers shall promptly notify Buyer
thereof and may, at their option, attempt to repair, replace or restore the lost
or damaged property to its former condition. If such repair, replacement, or
restoration has not been completed prior to the scheduled Closing Date, Buyer
may terminate this Agreement or, in Buyer's sole and uncontrolled discretion,
accept assignment of all insurance proceeds attributable to the loss and proceed
with Closing in accordance with the terms and provisions of this Agreement.

        11.2 Expenses; Legal Fees. Except as otherwise provided herein, all
expenses involved in the preparation and consummation of this Agreement shall be
borne by the party incurring the same whether or not the transaction
contemplated herein is consummated. If legal action is necessary to enforce any
of the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees and costs incurred thereby.

        11.3 Survival of Representations and Warranties. The several
representations, warranties, and covenants of the parties contained herein shall
survive for a period of four (4) years from the Closing Date.

        11.4 Exclusive Dealings. For so long as this Agreement remains in
effect, neither Sellers nor any person acting on Sellers' behalf shall, directly
or indirectly, solicit or initiate any offer or negotiations with any person
concerning the acquisition of the Facility and Assets by any party other than
Buyer.

        11.5 Brokerage. Any commission or broker's or finder's fee due any
broker or agent shall be paid by the party who retained said broker or agent in
connection with the transaction contemplated by this Agreement and the party
incurring such fee shall indemnify and hold harmless the other party from any
such fee.




                                 Page 14 of 18


        11.6 Control. In the event a conflict occurs between the provisions of
this Agreement and the provisions of the Act of Sale and Assignment to be
executed in connection with this transaction, the terms and provisions of the
Act of Sale and Assignment shall control except in case of a conflict with
respect to Sellers' representations and warranties to Buyer in this Agreement,
which, in such event, shall be governed by the representations and warranties
contained in this Agreement.

        11.7 Notices. All notices and other communications pertaining to this
Agreement shall be in writing and shall be deemed duly given when delivered
personally (which shall include delivery by facsimile that issues a receipt or
other confirmation of delivery) to the party for whom such communication is
intended, or three (3) business days after the date mailed by certified mail,
return receipt requested, postage prepaid, addressed as follows:

        If to Sellers, to:                           With a mandatory copy to:

        Atkins Production, Inc.                      Donald R. Wilson
        1315 Hebert Street                           Gaharan & Wilson
        Tullos, Louisiana 71479                      P. O. Box 1346
                                                     Jena, Louisiana 71342-1346
                                                     Facsimile: 318-992-5110

        If to Buyer, to:                             With a mandatory copy to:

        Natural Gas Systems, Inc.                    Walter C. Dunn
        Two Memorial City Plaza                      The Boles Law Firm
        820 Gessner, Suite 1340                      P. O. Box 2065
        Houston, TX 77024                            Monroe, LA 71207-2065
        Attn: Robert S. Herlin                       Facsimile:  318-361-3371
        Facsimile:  713-935-0199

Either party may change its address for notices by written notice to the other.

        11.8 Waiver. Unless otherwise specifically agreed in writing to the
contrary: (i) the failure of either party at any time to require performance by
the other of any provision of this Agreement shall not affect such party's right
thereafter to enforce the same; (ii) no waiver by either party of any default by
the other shall be taken or held to be a waiver by such party of any other
preceding or subsequent default; and (iii) no extension of time granted by
either party for the performance of any obligation or act by the other party
shall be deemed to be an extension of time for the performance of any other
obligation or act hereunder.

        11.9 Miscellaneous. This Agreement and the agreements referenced herein
supersede and terminate any prior agreements between the parties and contain all
of the terms agreed upon with respect to the subject matter hereof. This
Agreement may not be altered or amended except by an instrument in writing
signed by Sellers and Buyer. This



                                 Page 15 of 18


Agreement may be signed in any number of counterparts with the same effect as if
the signatures on each such counterpart were on the same instrument. The
headings of the paragraphs of this Agreement are for convenience only and in no
way modify, interpret or construe the meaning of specific provisions of the
Agreement. In case any one or more of the provisions contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality, and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby. This Agreement may not be
assigned without the prior written consent of Sellers and Buyer except that
Buyer may designate a third party to take title to the Assets. This Agreement
shall be binding upon and shall inure to the benefit of and be enforceable to
the parties' successors and assigns.

        11.10 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Louisiana, without regard to conflicts-of-laws
principles that would require the application of any other law.

        11.11 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof, or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties to this Agreement hereby acknowledge and agree that
the court making the determination of invalidity or unenforceability shall have
the power (i) to reduce the scope, duration, and/or area of the term or
provision, (ii) to delete specific words or phrases, or (iii) to amend and
replace any invalid or unenforceable term or provision, so that the provision as
amended by said court is valid and enforceable and comes as close as is legally
possible to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment of said court may be appealed.

        11.12 Construction. The headings of Sections in this Agreement are
provided for convenience only and will not affect its construction or
interpretation. All references to "Sections" and "Parts" refer to the
corresponding Sections and Parts of this Agreement.

        11.13 Time Is Of The Essence. Both Parties understand and agree that
time is of the essence and, as such, will work diligently to consummate this
transaction as quickly as is reasonably possible.

        IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed individually or by their respective duly authorized officer as of the
date first written above.

ATKINS PRODUCTION, INC.


By:
   ------------------------------------
Name: Monty Wayne Atkins



                                 Page 16 of 18


Title:   President

By:
   ------------------------------------
Name: Monty Wayne Atkins, Individually

By:
   ------------------------------------
      Margaret A. McCartney Atkins



                                 Page 17 of 18

NATURAL GAS SYSTEMS, INC.


By:
   ----------------------------------
Name: Robert S. Herlin
      -------------------------------
Title: President
       ------------------------------



                                 Page 18 of 18

                                                                    EXHIBIT 99.1



                        [NATURAL GAS SYSTEMS LETTERHEAD]



NEWS RELEASE

SEPTEMBER 7, 2004

NATURAL GAS SYSTEMS, INC. ANNOUNCES PROPERTY ACQUISITION AND APPROVAL FOR
LISTING IN MERGENT MANUAL AND NEWS REPORTS(TM)

(Houston, Texas) NATURAL GAS SYSTEMS, INC. (OTC: NGSY) announced today the
completion of the acquisition of 100% of the working interest in 129 wells and
associated equipment and water disposal systems from a private seller. The
assets acquired are located in central Louisiana and currently produce revenues,
net of royalties, at the approximate annualized rate of $750,000 based on
current oil prices. Forty of the wells are currently shut-in and believed to be
capable of being returned to production following various repairs and
maintenance.

Robert Herlin, President of Natural Gas Systems, stated "We are very pleased to
close this transaction, the price for which was set early in 2004 based upon a
much lower oil price. This property is an excellent fit with our strategy of
acquiring and redeveloping established fields and is expected to be accretive to
NGS in operating cash flows."

The Company has initiated a program of returning wells to production, increasing
water disposal capacity to allow higher production rates, utilizing currently
vented gas production to replace purchased power and other operational
improvements. Operation of the property will be combined with the Company's
nearby Delhi Field operations.

The Company further announced today that Mergent's Editorial Board has approved
Natural Gas Systems for a listing in Mergent Manuals and News Reports(TM). The
Company's corporate profile, published on August 27, 2004, includes descriptive
text data as well as news and financial statements, and is accessible via
Mergent's online and print products, says the Company's President, Robert
Herlin.

As part of Mergent's listing services, the new description will be highlighted
separately on www.mergent.com with an active hyperlink back to the Company's
website.

The Mergent Industrial Manual and News Reports(TM) is a recognized securities
manual in 38 states for purposes of Blue Sky Manual Exemption. First published
in 1918, and formerly known as Moody's(TM) Manuals and News Reports, the
publication was rebranded as Mergent Manuals and News Reports when Mergent, Inc.
acquired Moody's(TM) Financial Information Services division in 1998. Natural
Gas System's listing will aid the brokerage community in making a market for the
Company's stock. However, it is recommended that brokers confirm with their
compliance/legal department concerning "Blue Sky" laws in specific states and
other regulatory laws that might affect them.

Natural Gas Systems, Inc. is a development stage company formed to acquire and
develop oil and gas fields and apply both conventional and specialized
technology to accelerate production and




develop incremental reserves, particularly in low permeability reservoirs
amenable to lateral drilling technology.

SAFE HARBOR STATEMENT

This press release includes certain "Forward-Looking Statements" within the
meaning of section 21E of the United States Securities Exchange Act of 1934, as
amended. All statements regarding potential results and future plans and
objectives of the company, are forward-looking statements that involve various
risks and uncertainties. There can be no assurance that such statements will
prove to be accurate and actual results and future events could differ
materially from those anticipated in such statements. Important factors that
could cause actual results to differ materially from our expectations include,
but are not limited to, those factors that are disclosed under the heading "Risk
Factors" and elsewhere in our documents filed from time to time with the United
States Securities and Exchange Commission and other regulatory authorities.
Other risk factors may include, but are not limited to, our ability to obtain
financing on acceptable terms, or at all, a potential severe worldwide slowdown
in the energy services sector, working capital constraints, completion of
incremental purchases of properties, fluctuation in quarterly results due to the
timing of acquisitions and resulting re-development and our capacity to
effectively manage the new properties and complete re-development, continuing
availability of additional opportunities, continued access to oil and natural
gas markets at attractive prices, the continued availability and success of
lateral drilling technology, and increased competition for the fields targeted
by NGS. Further, the company operates in an industry sector where securities
values are highly volatile and may be influenced by economic and other factors
beyond the company's control, such as announcements by competitors and service
providers.

For additional information contact:

Investor Contact:    John Liviakis, Liviakis Financial Communications, Inc.
                     (415)389-4670

Company Contacts:    Sterling McDonald, CFO
                     (713)935-0122

                                                                    EXHIBIT 99.2


                            SECURED PROMISSORY NOTE


$475,000                                                         August 10, 2004
                                                                 Houston, TX

        For value received, Natural Gas Systems, Inc., a Nevada corporation (the
"Company"), promises to pay to Laird Q. Cagan (the "Holder"), the principal sum
of Four Hundred Seventy Five Thousand Dollars ($475,000), pursuant to the terms
of this secured promissory note agreement ("Note"). Interest shall accrue from
the date of this Note on the unpaid principal amount at a rate equal to Ten
Percent (10%) per annum, compounded annually. This Note is subject to the
following terms and conditions:

        1. Maturity. This Note will automatically mature and be due and payable
on February 10, 2005 (the "Maturity Date"). Interest shall accrue on this Note
but shall not be due and payable until the Maturity Date. Notwithstanding the
foregoing, the entire unpaid principal sum of this Note, together with accrued
and unpaid interest thereon, shall become immediately due and payable upon: (i)
the Company's failure to make any Mandatory Prepayment Amount under Section 2(b)
hereof; (ii) the commission of any act of bankruptcy by the Company; (iii) the
execution by the Company of a general assignment for the benefit of creditors;
(iv) the filing by or against the Company of a petition in bankruptcy or any
petition for relief under the federal bankruptcy act or the continuation of such
petition without dismissal for a period of 90 days or more; or (v) the
appointment of a receiver or trustee to take possession of the property or
assets of the Company.

        2. Prepayment of Note. The Note provides for both optional and mandatory
prepayment on the following terms and conditions:

               (a) Optional Prepayment. The Company may at it option, at any
time, prepay this Note, in whole or in part, without premium or penalty. All
payments shall be made in lawful money of the United States of America at such
place as the Holder hereof may from time to time designate in writing to the
Company. Payment shall be credited first to the accrued interest then due and
payable and the remainder applied to principal.

               (b) Mandatory Prepayment. The parties agree that until the
principal under this Note and all accrued but unpaid interest has been repaid to
Holder in full, the Company shall prepay the Holder an amount equal to: (i) One
Hundred Percent (100%) of all net revenues of any kind derived from the Tullos
oil field less the sum of direct Tullos operating expenses and capital
expenditures; and (ii) Fifty Percent (50%) of the net proceeds of any unrelated
third party financings of any kind conducted by the Company, whether through the
issuance of debt or equity after the date of this Note (collectively (i) and
(ii) shall be referred hereinafter as the "Mandatory Prepayment Amount"). The
Mandatory Prepayment Amount shall be payable by the Company to the Holder or his
assignees as a mandatory prepayment of principal of the Note immediately upon
receipt of such Mandatory Prepayment Amount by the Company. Notwithstanding the
foregoing, no mandatory prepayment of the Notes shall be required in respect of
(A) any short-term (less than six months) debt, or (B) any compensation-related
equity issuance.



                                     1 of 4

        3. Transfers and Assigns. Neither party to this Note may transfer or
assign any of his rights or delegate any of its duties under this Note without
the prior written consent of the other party to this Note, except that Holder
may transfer this Note to his successors or assigns or without consent of the
Company. Despite such consent, no transfer or assignment shall release the
assignor of any of its obligations or alter any of its primary obligations to be
performed under this Note.

        4. Governing Law. Any controversy or claim arising out of or relating to
this Note or a breach hereof shall be finally settled by arbitration in Santa
Clara County, California, under the commercial rules then in effect of the
American Arbitration Association, and shall be determined in accordance with the
laws of the State of California applicable to contracts to be wholly performed
therein, without regard to principles of conflict of laws.

        5. Notices. Any notice required or permitted by this Note shall be in
writing and shall be deemed sufficient upon receipt, when delivered personally
or by courier, overnight delivery service or confirmed facsimile, or 48 hours
after being deposited in the U.S. mail as certified or registered mail with
postage prepaid, if such notice is addressed to the party to be notified at such
party's address or facsimile number as set forth below or as subsequently
modified by written notice.

        6. Amendments and Waivers. Any term of this Note may be amended only
with the written consent of the Company and the Holder. Any amendment or waiver
effected in accordance with this Section 6 shall be binding upon the Company,
the Holder and each transferee of any Note.

        7. Stockholders, Officers and Directors Not Liable. In no event shall
any stockholder, officer or director of the Company be liable for any amounts
due or payable pursuant to this Note.

        8. Security Interest. The Company grants the Holder a continuing
security interest in all presently existing Collateral (defined below) to secure
payment and performance of the obligations of the Company to the Holder under
this Note. Any security interest will be a first priority security interest in
the Collateral, except as it relates to any pre-existing security interest in
the Collateral, in which case it shall be a second priority security interest.
Notwithstanding the foregoing, the security interest granted herein does not
extend to and the term "Collateral" does not include any license or contract
rights to the extent the granting of a security interest in it would be contrary
to applicable law. The Holder's lien and security interest in the Collateral
will continue until the Company fully satisfies its obligations under this Note.
At the request of the Holder, the Company agrees and covenants to procure,
execute and deliver from time to time any endorsements, assignments, financial
statements and other writings deemed necessary or appropriate by the Holder to
perfect, maintain and protect its security interest and the priority thereof.
The "Collateral" shall consist of all of the Company's right, title and interest
in and to all assets, wherever located, including the assets of any the
Company's wholly-owned subsidiaries. Upon the Company's repayment of the
outstanding principal balance of this Note and all interest accrued thereon, the
Holder agrees


                                     2 of 4

and covenants that it will execute and deliver any agreement, financing
statement termination or other writings necessary to release the security
interest granted pursuant to this Section 8.

        9. Counterparts. This Note may be executed in any number of
counterparts, each of which will be deemed to be an original and all of which
together will constitute a single agreement.

        10. Action to Collect on Note. If action or arbitration is instituted to
collect on this Note, the Company promises to pay all costs and expenses,
including reasonable attorney's fees, incurred in connection with such action.

        11. Loss of Note. Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, destruction or mutilation of this Note or any Note
exchanged for it, and indemnity satisfactory to the Company (in case of loss,
theft or destruction) or surrender and cancellation of such Note (in the case of
mutilation), the Company will make and deliver in lieu of such Note a new Note
of like tenor.

        12. Holder's Representations. Holder acknowledges that Holder has had
full access to information about the Company, and that Holder has such knowledge
and experience in financial and business matters that Holder is capable of
evaluating the merits and risks of this transaction. Holder also represents to
the Company that Holder is purchasing the Note for his own account for
investment and with no present intention of distributing the Note.

        13. Use of Note Proceeds. The Company represents and warrants to Holder
that the use of the proceeds of funds made hereunder shall be to acquire the
Tullos oil field.

        14. Severability. In the event any one or more of the provisions
contained in this Note shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this, but this Note shall be construed
as if such invalid, illegal or unenforceable provision had never been contained
herein or therein.

        15. Confidentiality. Holder agrees that he will use his best efforts to
keep confidential and not disclose any non-public information received in
connection with the Note from the Company or any of its affiliates or
principals, except that Holder may disclose such information (i) with the
written consent of Company, (ii) to Holder's affiliates and legal counsel for
Holder and his affiliates, (iii) to auditors, accounting firms or accountants of
Holder and his affiliates as may be required in connection with any audit or
other review of the books and records of any such entity, and (iv) to any
parties as may be required by law, government regulation or order (including
without limitation, any regulation or order of an insurance regulatory agency or
body), by subpoena or by any other legal, administrative or legislative process.
Holder also acknowledges and agrees that Holder is prohibited from any buying or
selling of the Company's securities on the basis of this material non-public
information until after the information either becomes publicly available by the
Company (such as in an Amended Report on Form 8-K or in the Company's 10-KSB) or
ceases to be material, and in no event for at least thirty (30) days from the
date hereof.



                                     3 of 4

        IN WITNESS WHEREOF, the parties have executed this Note as of the date
above written,



                                    NATURAL GAS SYSTEMS, INC.


                                    By:
                                       -----------------------------------------
                                    Robert S. Herlin, CEO and President
                                    Natural Gas Systems, Inc.
                                    Two Memorial City Plaza
                                    820 Gessner, Suite 1340
                                    Houston, TX 77024
                                    Fax: 713-935-0199



AGREED TO AND ACCEPTED this 10th day of August, 2004.

LAIRD Q. CAGAN


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

10600 N. De Anza Blvd., Suite 250
Cupertino, CA 95014
Fax: 408-904-6085



          [SIGNATURE PAGE TO CAGAN NATURAL GAS SYSTEMS NOTE AGREEMENT]



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