FINAL OFFER OIL AND GAS LEASE FOR KISD:

OFFER TO KISD FOR RIGHTS FOR GAS STORAGE:

                        Western Gas Resources Storage, Inc.

                                    February 17, 1993

Hand Deliver

Stanley Thompson

President of the Board of Trustees

Katy Independent School District

 P.O. Box 159

Katy, Texas 77492-0159

RE:  FINAL OFFER

        OIL AND GAS LEASE (FOR GAS STORAGE) [the "Lease"]

        Tract 295-002 containing 6.528 acres, more or less, in the Morris Cummins Survey,

         A-295, more particularly described in Volume 1204 beginning at Page 495 of the Fort

         Bend County, Texas Records.

Dear Mr. Thompson,

Please refer to the September 18, 1992 letter offers from Western Gas Resources Storage, Inc. (WGRS) to you in connection with the efforts of WGRS to acquire from Katy Independent School District ("K.I.S.D.") by purchase certain rights for gas storage. Enclosed with this letter are the following:

A.  One original and one copy of the Leases describing the rights sought to be purchased by WGRS.

B.  Original and yellow copy of the Drafts as consideration in full for signing the Leases.

C.  Self-addressed, postage paid, envelope in which to return the documentation as provided in this letter.

This letter and enclosures are to supersede any previous letter, offer and leases sent to K.I.S.D. by WGRS.

WGRS has been negotiating with K.I.S.D. for the rights set forth in the Leases.  Previous negotiations with K.I.S.D by representatives of WGRS have been unsuccessful.

On behalf of WGRS I hereby submit a last and final offer of $3,437.60 to K.I.S.D. as full payment for K.I.S.D.'s interest in the rights sought.  We believe this offer exceeds the value of the rights sought but it is made in an effort to avoid further expense or litigation.

It is our earnest hope that the Board of trustees can give this matter their serious and favorable consideration and that the Board will determine that it can accept this offer, and thus avoid, for all concerned, the time, trouble and expense which will be incurred if eminent domain proceedings are instituted.

This offer will remain open until March 1, 1993, and shall be deemed to be refused at that time unless accepted theretofore in writing by executing and delivering by mail to the letterhead address, or in person, the Leases in duplicate and other documentation as outlined below:

1.  VERIFY INFORMATION.  Confirm the proper spelling of each name and address and contact one of our representatives with any discrepancies.

2.  SIGN.  In the presence of a Notary Public, sign of [sic] original the Leases on the reverse side exactly as each name is presented.

3.  TAX IDENTIFICATION NUMBER.   If not previously completed, insert the Tax I. D. Number on the line provided.

4.  NOTARY PUBLIC.  The Notary Public must complete all blanks on the acknowledgment (including County, Commission Expiration, date of acknowledgment, etc.), sign and seal the acknowledgment on each duplicate original of the Leases:

5.  DRAFT.  Sign the yellow copy of the Drafts on the line provided indicating K.I.S. D.'s receipt of the original Drafts as full payment;

6.  Complete the Resolution attached to the Leases and submit the Leases to the Commissioner of Education for the State of Texas for approval.

7.  RETURN.  Return (i) the properly executed notarized and approved original of the Leases and (ii) the signed copy of the Drafts in the self-addressed postage paid, envelope enclosed for K.I.S.D.' convenience and:

8.  COLLECTION. Endorse the original Drafts and present it to K.I.S.D.'s bank for collection.  "DO NOT" deposit the drafts since they are collection items, "not a check".  K.I.S.D.'s bank will collect the funds from the bank designated by WGRS for this account.

Please keep the copy of the Leases for K.I.S.D.'s records.

If the Board elects to reject this offer, Western Gas Resources Storage, Inc., will have no alternative other than to institute a condemnation suit in the appropriate court of the referenced county, to acquire the rights described in the Leases.

Thank you for your favorable consideration of this offer and request.

Very truly yours,

WESTERN GAS RESOURCES STORAGE, INC.

[Signed]

Daryl W. Gee

Land Consultant

DWG:gal

Enclosure