CREDIT AGREEMENT PENN WEST PETROLEUM LTD. as Borrower - and - CANADIAN IMPERIAL BANK OF COMMERCE, BANK OF MONTREAL, THE BANK OF NOVA SCOTIA, THE TORONTO- DOMINION BANK, ROYAL BANK OF CANADA, SOCIETE GENERALE (CANADA BRANCH), HSBC BANK CANADA,...

Exhibit 99.1

Execution Copy

CREDIT AGREEMENT

PENN WEST PETROLEUM LTD.

as Borrower

- and -

CANADIAN IMPERIAL BANK OF COMMERCE,

BANK OF MONTREAL,

THE BANK OF NOVA SCOTIA,

THE TORONTO-DOMINION BANK,

ROYAL BANK OF CANADA,

SOCIETE GENERALE (CANADA BRANCH),

HSBC BANK CANADA,

CITIBANK, N.A., CANADIAN BRANCH,

BNP PARIBAS (CANADA),

BANK OF AMERICA, N.A., CANADA BRANCH,

FORTIS CAPITAL (CANADA) LTD.,

BANK OF TOKYO-MITSUBISHI UFJ (CANADA),

SUMITOMO MITSUI BANKING CORPORATION ▇▇ ▇▇▇▇▇▇,

▇▇▇▇ ▇▇ ▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,

▇▇▇▇▇▇▇ TREASURY BRANCHES,

NATIONAL BANK OF CANADA,

UNION BANK OF CALIFORNIA, CANADA BRANCH, and

CAISSE CENTRALE ▇▇▇▇▇▇▇▇▇▇

as Lenders

- and -

THOSE OTHER FINANCIAL INSTITUTIONS WHICH ARE OR

HEREAFTER BECOME LENDERS UNDER THIS AGREEMENT

- and -

CANADIAN IMPERIAL BANK OF COMMERCE

as Administrative Agent

- with -

CIBC WORLD MARKETS and BMO CAPITAL MARKETS

as Co-Lead Arrangers and Joint Bookrunners

- and -

BANK OF MONTREAL and THE BANK OF NOVA SCOTIA

as Co- Syndication Agents

- and -

THE TORONTO-DOMINION BANK and ROYAL BANK OF CANADA

as Co- Documentation Agents

January 11, 2008

TABLE OF CONTENTS

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CREDIT AGREEMENT

THIS AGREEMENT made effective the 11^th day of January, 2008,

BETWEEN:

PENN WEST PETROLEUM LTD.

as Borrower

- and -

CANADIAN IMPERIAL BANK OF COMMERCE

BANK OF MONTREAL

THE BANK OF NOVA SCOTIA

THE ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇

▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇

SOCIETE GENERALE (CANADA BRANCH)

HSBC BANK CANADA

CITIBANK, N.A., CANADIAN BRANCH

BNP PARIBAS (CANADA)

BANK OF AMERICA, N.A., CANADA BRANCH

FORTIS CAPITAL (CANADA) LTD.

BANK OF TOKYO-MITSUBISHI UFJ (CANADA)

SUMITOMO MITSUI BANKING CORPORATION ▇▇ ▇▇▇▇▇▇

▇▇▇▇ ▇▇ ▇▇, ▇▇▇▇▇▇▇ BRANCH

ALBERTA TREASURY BRANCHES

NATIONAL BANK OF CANADA,

UNION BANK OF CALIFORNIA, CANADA BRANCH, and

CAISSE CENTRALE ▇▇▇▇▇▇▇▇▇▇

as Lenders

- and -

THOSE OTHER FINANCIAL INSTITUTIONS WHICH

ARE OR HEREAFTER BECOME LENDERS

UNDER THIS AGREEMENT

- and -

CANADIAN IMPERIAL BANK OF COMMERCE

as Administrative Agent

CIBC WORLD MARKETS and BMO CAPITAL MARKETS

as Co-Lead Arrangers and Joint Bookrunners

- and -

BANK OF MONTREAL and THE BANK OF NOVA SCOTIA

as Co- Syndication Agents

- and -

THE TORONTO-DOMINION BANK and ROYAL BANK OF CANADA

as Co- Documentation Agents

PREAMBLE:

The Borrower has requested and the Lenders have agreed to establish a senior, unsecured credit facility and CIBC has agreed to act as Agent for the Lenders, all on the terms and conditions and for the purposes set out in this Agreement.

AGREEMENT:

In consideration of the covenants and agreements between the Parties contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE 1
INTERPRETATION

1.1          Definitions.  Capitalized words and phrases used in the Documents, the Schedules hereto and in all notices and communications expressed to be made pursuant to this Agreement will have the meanings set out in Schedule A, unless otherwise defined in any of the Documents.

1.2          Headings.  Headings, subheadings and the table of contents contained in any of the Documents are inserted for convenience of reference only and will not affect the construction or interpretation of any of the Documents.

1.3          Subdivisions.  Unless otherwise stated, reference herein to a Schedule or to an Article, Section, paragraph or other subdivision is a reference to such Schedule to this Agreement or such Article, Section, paragraph or other subdivision of this Agreement.  Reference in Schedule A to a Schedule or to an Article, Section, paragraph or other subdivision of “this Agreement” is a reference to such Schedule or Article, Section, paragraph or other subdivision of this Agreement.

1.4          Number.  Wherever the context in any of the Documents so requires, a term used herein importing the singular will also include the plural and vice versa.

1.5          Statutes, Regulations and Rules.  Any reference in any of the Documents to all or any section or paragraph or any other subdivision of any Law will, unless otherwise expressly stated, be a reference to that Law or the relevant section or paragraph or other subdivision thereof, as amended, substituted, replaced or re-enacted from time to time.

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1.6          Monetary References.  Whenever an amount of money is referred to in any of the Documents, such amount will, unless otherwise expressly stated, be in Canadian Dollars.

1.7          Time.  Time will be of the essence of the Documents.

1.8          Governing Law.  The Documents will be governed by and construed in accordance with the Laws in force in the Province of Alberta from time to time.

1.9          Enurement.  The Documents will be binding upon and will enure to the benefit of the Parties and their respective successors and permitted assigns.

1.10        Amendments.  No Document may be amended orally and, subject to Sections 1.11(a), 21.16 and 22.1(e) any amendment may only be made by way of an instrument in writing signed by the Parties.

1.11        No Waiver.

(a)                                  Subject to Sections 1.11(c) and 21.16(a), no waiver by a Party of any provision or of the breach of any provision of any of the Documents will be effective unless it is contained in a written instrument duly executed by an authorized officer or representative of such Party.  Such written waiver will affect only the matter specifically identified in the instrument granting the waiver and will not extend to any other matter, provision or breach.

(b)                                 The failure of a Party to take any steps in exercising any right in respect of the breach or non-fulfilment of any provision of any of the Documents will not operate as a waiver of that right, breach or provision, nor will any single or partial exercise of any right preclude any other or future exercise of that right or the exercise of any other right, whether in Law or otherwise.

(c)                                  Acceptance of payment by a Party after a breach or non-fulfilment of any provision of any of the Documents requiring a payment to such Party will constitute a waiver of such provision if cured by such payment, but will not constitute a waiver or cure of any other provision of any of the Documents.

1.12        Severability.  If the whole or any portion of the Documents or the application thereof to any circumstance is found to be invalid or unenforceable to an extent that does not affect the operation of the Document in question in a fundamental way, the remainder of the provision in question, or its application to any circumstance other than that to which it has been held invalid or unenforceable, and the remainder of the Document in question, will not be affected thereby and will be valid and enforceable to the fullest extent permitted by Law.

1.13        Inconsistency.  To the extent that there is any inconsistency or ambiguity between the provisions of this Agreement and any other Document, the provisions of this Agreement will govern to the extent necessary to eliminate such inconsistency or ambiguity.

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1.14        Accounting Terms and Principles.  Except as otherwise expressly provided, all accounting terms, principles and calculations applicable to the Credit Facility will be interpreted, applied and calculated, as the case may be, in accordance with GAAP published from time to time in the Handbook.  The basis of accounting and all calculations set out in this Agreement will be applied and made on a consistent basis and will not be changed for the purposes of this Agreement unless agreed to by the Agent in writing, such agreement not to be unreasonably withheld.  It will be reasonable for the Agent to withhold its consent if a proposed change could adversely affect the obligations of the Borrower or the rights of the Agent and the Lenders hereunder. Notwithstanding the foregoing or the definitions of Unitholders’ Equity and Consolidated Total Debt, if GAAP is changed such that unitholders’ equity of the Trust as shown on the consolidated balance sheet of the Trust as at the date hereof is re-characterized as a non-equity item, Unitholders’ Equity will be determined on the basis of GAAP as in effect immediately prior to such re-characterization and, for certainty, such unitholders’ equity as so re-characterized shall not be included as part of the calculation of Consolidated Total Debt or any component thereof.

1.15        Schedules.  The following are the Schedules which form part of this Agreement:

ARTICLE 2
CONDITIONS PRECEDENT TO EFFECTIVENESS

2.1          Conditions Precedent to Effectiveness.  This Agreement will become effective upon the following conditions being met (unless waived in writing by all Lenders) including the receipt by the Agent, for and on behalf of the Lenders, of the following:

(a)                                  a duly executed copy of this Agreement;

(b)                                 a certificate of status or other similar type evidence from its jurisdiction of formation for each Loan Party that is a corporation or a partnership;

(c)                                  duly executed copies of the Closing Certificates from or on behalf of each Loan Party;

(d)                                 a duly executed copy of the Guarantee Agreement by each Loan Party other than the Borrower, in form and substance satisfactory to the Agent, acting reasonably;

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(e)                                  a duly executed copy of a guarantee from the Borrower in favour of the Agent on behalf of the Hedge Providers, in form and substance satisfactory to the Agent, acting reasonably;

(f)                                    a duly executed copy of the Closing Opinion;

(g)                                 a duly executed copy of a legal opinion from Lenders’ counsel;

(h)                                 an executed copy of a confirmation of subordination agreement in respect of each indenture governing the Canetic Convertible Debentures, the Vault Convertible Debentures and any other Convertible Debentures or Subordinated Debt between the applicable trustee under each such indenture and the Agent;

(i)                                     a Notice of Borrowing for an amount sufficient to repay in full the Existing Credit Facilities;

(j)                                     evidence satisfactory to the Agent that arrangements have been made for the repayment and termination of the Existing Credit Facilities;

(k)                                  receipt of a certified copy of the Final Order; and

(l)                                     the payment of all fees and expenses which are payable by the Borrower to the Agent and Lenders on or prior to the Closing Date.

ARTICLE 3
CREDIT FACILITY

3.1          The Credit Facility.  Subject to the terms and conditions hereof and effective on the Closing Date, the Lenders, on a several basis, hereby establish the Credit Facility in favour of the Borrower in the Aggregate Commitment Amount set forth in Schedule B, which may be drawn by the Borrower in Canadian Dollars or the Canadian Dollar Exchange Equivalent thereof in U.S. Dollars, or any combination thereof, all in accordance with the terms of this Agreement. The Credit Facility is available to the Borrower by way of the following two separate Tranches:

(a)                                  Tranche 1.  The Tranche 1 Lenders, on a several basis, hereby establish Tranche 1 in favour of the Borrower in an amount of up to the Tranche 1 Commitment Amount as set forth in Schedule B, which may be drawn by the Borrower in Canadian Dollars or the Canadian Dollar Exchange Equivalent thereof in U.S. Dollars, or any combination thereof, until the Tranche 1 Termination Date.  The Individual Tranche 1 Commitment Amount of each Tranche 1 Lender is set out in Schedule B.

(b)                                 Tranche 2.  The Tranche 2 Lenders, on a several basis, hereby establish Tranche 2 in favour of the Borrower in an amount of up to the Tranche 2 Commitment Amount as set forth in Schedule B, which may be drawn by the Borrower in Canadian Dollars or the Canadian Dollar Exchange Equivalent thereof in U.S.

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Dollars, or any combination thereof, until the Tranche 2 Termination Date.  The Individual Tranche 2 Commitment Amount of each Tranche 2 Lender is set out in Schedule B.

3.2          Increase in Tranche 1 Commitment Amount.  The Borrower may at any time and from time to time add additional financial institutions hereunder, as Tranche 1 Lenders or, with the consent of the applicable Lender, increase the Individual Tranche 1 Commitment Amount of a Tranche 1 Lender, and, in each case, thereby increase the Tranche 1 Commitment Amount provided that at the time of any such addition:

(a)                                  no Default or Event of Default has occurred and is continuing:

(b)                                 prior to such time or contemporaneously with the first such increase, the Tranche 2 Commitment Amount shall have been permanently cancelled;

(c)                                  the Tranche 1 Commitment Amount (as increased) does not at any time exceed Cdn. $3,750,000,000;

(d)                                 the Agent, the Swing Line Lender and each Fronting Lender have each consented to such financial institution becoming a Lender or, in the case of an existing Lender, increasing its Individual Tranche 1 Commitment Amount, such consent not to be unreasonably withheld;

(e)                                  the Individual Tranche 1 Commitment Amount of a new financial institution being added as a Lender pursuant to this Section 3.2 shall be no less than $50,000,000;

(f)                                    concurrently with the addition of a financial institution as an additional Lender or the increase of a Lender’s Individual Tranche 1 Commitment Amount, such financial institution or Lender, as the case may be, shall purchase from each Lender, such portion of the Aggregate Principal Amount owed to each Lender as is necessary to ensure that the Aggregate Principal Amount owed to all Lenders and including therein such additional financial institution and the increased Individual Tranche 1 Commitment Amount of any Lender, are in accordance with the Lender’s Rateable Portions of all such Lenders (including the new financial institution and the increased Individual Tranche 1 Commitment Amount of any Lender) and such financial institution shall execute such documentation as is required by the Agent, acting reasonably, to novate such financial institution as a Lender hereunder; provided that with respect to any portion of such Aggregate Principal Amount which is outstanding by way of Bankers’ Acceptance, the new financial institution or such Lender shall provide an indemnity to the other Lenders in order to ensure such Bankers’ Acceptances are outstanding in accordance with the new Rateable Portions; and

(g)                                 the Borrower has provided to the Agent a certified copy of a directors’ resolution of the Borrower authorizing any such increase in the Tranche 1 Commitment

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Amount (which may be the original directors’ resolution authorizing the credit facility hereunder) together with a legal opinion with respect thereto in substantially the same form as the Closing Opinion.

3.3          Outstanding Obligations as at the Closing Date.

(a)                                  Outstanding Letters of Credit as at the Closing Date.  It is acknowledged that (i) Penn West Petroleum Ltd. (amalgamation predecessor to the Borrower) has obligations to the Existing Penn West Lenders under the Existing Penn West Facilities in the principal amount of Cdn.$989,130 in connection with the Outstanding Penn West LCs, and (ii) Canetic Resources Inc. (amalgamation predecessor to the Borrower) has obligations to the Existing Canetic Lenders under the Existing Canetic Facilities in the aggregate principal amount of Cdn.$1,580,000 and US $1,222,500 in connection with the Outstanding Canetic LCs.  All of the Outstanding Penn West LCs shall be deemed to be Swing Line Letters of Credit (which will reduce the availability under the Swing Line by the amount thereof (based, in the case of letters of credit, on the undrawn amount thereof) and will be subject to the terms of this Agreement).  All of the Outstanding Canetic LCs shall be deemed to be Letters of Credit (which will be subject to the terms of this Agreement).  Notwithstanding anything else set forth herein, for purposes of this Agreement Bank of Montreal, solely in its capacity as issuer of the Outstanding Canetic LCs, shall be deemed to be an “LC Issuer” in respect of such Outstanding Canetic LCs until the maturity date thereof.  All fees and other customary charges related to the Outstanding Canetic LCs as well as the liabilities related thereto will be for the sole account of Bank of Montreal until the maturity date thereof.  The Outstanding Canetic LCs may not be renewed upon their maturity, but the Borrower may request that new Letters of Credit (either Swing Line Letters of Credit or Fronted Letters of Credit, at the Borrower’s discretion) be issued to replace the same in accordance with the terms of this Agreement.  For purposes of each Syndicated Advance, until the Outstanding Canetic LCs are cancelled or otherwise replaced with Letters of Credit issued hereunder, the Individual Tranche 1 Commitment Amount of Bank of Montreal will be deemed to be reduced by the Canadian Dollar Exchange Equivalent of the undrawn amount of the Outstanding Canetic LCs and will increase by the Canadian Dollar Exchange Equivalent of the undrawn amount of each Outstanding Canetic LC upon the maturity thereof.

(b)                                 Outstanding Overdraft.  It is acknowledged that Canetic Resources Inc. (amalgamation predecessor to the Borrower) has outstanding obligations to Bank of Montreal in connection with overdraft credit facilities made available to Canetic Resources Inc. which obligations have been assumed by the Borrower.  The Outstanding BMO Overdraft will be deemed to form part of the Aggregate Principal Amount under Tranche 1 and the fees and liabilities related thereto will be for the sole account of Bank of Montreal and Bank of Montreal will be responsible for the administration and collection of the same.  The Outstanding

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BMO Overdraft will be repaid in full and availability thereunder permanently cancelled no later than eight months after the Closing Date.  For purposes of each Syndicated Advance, until the Outstanding BMO Overdraft obligations have been paid in full and the availability thereof has been cancelled, the Individual Tranche 1 Commitment Amount of Bank of Montreal will be deemed to be reduced by the maximum amount of the Outstanding BMO Overdraft and will increase each time any portion of such maximum amount is cancelled by the Borrower by the amount cancelled and each of Bank of Montreal and the Borrower agree to provide notice to the Agent upon each such cancellation.

It is further acknowledged that on the Closing Date the Borrower may have outstanding certain overdraft obligations to CIBC as the swing line lender under the Existing Penn West Facilities.  For purposes hereof, any such outstanding overdraft obligations will be deemed to be outstanding as Swing Line Loans hereunder.

3.4          Extension of the Credit Facility.

(a)                                  Notice by Borrower.  The Borrower may, at its option, request (an “Extension Request”) that the Tranche 1 Termination Date be extended from the then applicable Tranche 1 Termination Date (an “Extension”) at any time after the date that annual audited consolidated financial statements of the Trust are delivered under Section 14.1(h) until six months thereafter (the “Request Period”), provided that following the granting of such Extension, the term to maturity of Tranche 1 shall not exceed three years from the date of the Extension Notice in respect of the applicable Extension Request.  The Agent will promptly after receipt thereof, provide a copy of the Extension Request to each of the Tranche 1 Lenders.  If the Borrower fails to make an Extension Request during the Request Period, the Credit Facility will no longer be capable of being extended as herein provided until the next Request Period.

(b)                                 Electing and Non-Electing Lenders.  Each Tranche 1 Lender which has not previously become a Non-Electing Lender, may in its sole discretion, pursuant to an Extension Request, elect to extend the current Tranche 1 Termination Date with respect to its Individual Tranche 1 Commitment Amount, subject however to such conditions and amendments respecting Tranche 1 and the Credit Facility, if any, as the Electing Lenders unanimously agree upon and are acceptable to the Borrower.  Each Tranche 1 Lender will make its election by notice to the Agent on or before 30 days from the date of the Extension Request (the “Election Period”).  Each Tranche 1 Lender which grants an Extension is referred to herein as an “Electing Lender”, and each Tranche 1 Lender which elects not to grant an Extension, or fails to make such election within the Election Period, is referred to herein as a “Non-Electing Lender”.

(c)                                  No Extension.  No Extension shall occur unless those Tranche 1 Lenders who wish to grant an Extension pursuant to an Extension Request represent at least 66

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2/3% of the aggregate Individual Tranche 1 Commitment Amount of all Tranche 1 Lenders who are not Non-Electing Lenders at the time of such Extension Request.  If no Extension occurs, the then current Tranche 1 Termination Date of the Lenders who are not already Non-Electing Lenders will, subject to Section 3.4(e), continue for each such Tranche 1 Lender and each such Lender’s Individual Tranche 1 Commitment Amount will remain available for Drawdown in accordance with Section 6.6 until the Tranche 1 Termination Date; provided that the Borrower may again make an Extension Request during the next calendar year in accordance with Section 3.4(a).

(d)                                 Extension Notice.  Promptly after the expiry of the Election Period, the Agent will notify the Borrower of the decision of the Tranche 1 Lenders with respect to its Extension Request (the “Extension Notice”).  The Extension Notice will identify the Electing Lenders and Non-Electing Lenders, the term of the Extension, if granted, and a list the conditions or amendments, if any, respecting Tranche 1 and the Credit Facility as the Electing Lenders have unanimously agreed upon as a condition to the granting of the Extension.  The Borrower will, within 20 days of receipt of the Extension Notice from the Agent, notify the Agent as to its acceptance or rejection of the conditions or amendments, if any, stipulated by the Electing Lenders respecting Tranche 1 and the Credit Facility.  If the Borrower accepts all such conditions or amendments requested by the Electing Lenders, the Tranche 1 Termination Date with respect to the Electing Lenders will be deemed to have been extended for that period of time set out in the Extension Notice and, subject to Section 3.4(e), the Tranche 1 Termination Date with respect to the Non-Electing Lenders shall not be extended.  If the Borrower notifies the Agent that it does not accept such conditions or amendments or fails to notify the Agent within the time provided above for acceptance, the Tranche 1 Termination Date will not be extended as herein provided and will continue until the Tranche 1 Termination Date with each Lenders’ Individual Tranche 1 Commitment Amount remaining available for Drawdown until the Tranche 1 Termination Date; provided that the Borrower may again make an Extension Request during the next Request Period.

(e)                                  Replacement of Non-Electing Lender.  Notwithstanding Section 3.7(b), and provided that Tranche 1 Lenders representing more than 66 2/3% of the aggregate Individual Tranche 1 Commitment Amounts of all Electing Lenders have elected to grant an Extension, the Borrower will be entitled to exercise one of the following options, with respect to any Tranche 1 Lender who has become a Non-Electing Lender, prior to the Termination Date applicable to such Non-Electing Lender:

(i)                                     so long as no Default or Event of Default has occurred and is continuing, the Borrower may repay in full the Principal Amount under Tranche 1 owing to such Non-Electing Lender, together with all accrued but unpaid interest and fees thereon and any expenses and breakage and other costs

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determined in accordance with Section 9.2, provided that a Bankers’ Acceptance will not be paid prior to its Maturity Date (but provided that the Borrower may provide Escrow Funds in respect thereof to the Agent on behalf of such Lender in accordance with Section 10.6), and upon such payment such Lender’s Individual Tranche 1 Commitment Amount will be permanently cancelled (subject to Section 3.10(i)); or

(ii)                                  the Borrower may replace the Non-Electing Lender with one or more financial institutions with the consent of the Agent, the Swing Line Lender and each Fronting Lender, such consent not to be unreasonably be withheld, who purchase such Lender’s entire Individual Tranche 1 Commitment Amount in accordance with Section 20.2.

(f)                                    Tranche 2.  The Tranche 2 Termination Date is not extendible.

3.5          Maturity Date.  The Borrower will not be entitled to request an Advance under a Tranche from a Lender which has a Maturity Date after the Termination Date in respect of such Tranche applicable to such Lender.  If, at any time, there are Tranche 1 Lenders with different Tranche 1 Termination Dates, all applicable Tranche 1 Lenders will share in Accommodations on the basis of their Rateable Portions under Tranche 1 except to the extent the particular Accommodation requested has a Maturity Date after the Tranche 1 Termination Date of a Tranche 1 Lender, in which case the Borrower shall request a similar Accommodation to the extent permitted hereunder from such other Tranche 1 Lenders with a Maturity Date occurring on or before the Tranche 1 Termination Date of such other Tranche 1 Lenders.  Each such determination by the Agent shall be prima facie evidence of such Rateable Portion or share.

3.6          Repayment of Credit Facility.  The Principal Amount owing to a Lender under a Tranche, if any, on the Termination Date applicable to such Lender in respect of such Tranche will be paid by the Borrower to the Agent on behalf of such Lender in full, together with all accrued but unpaid interest and fees thereon and all other amounts owing to such Lender in respect of such Tranche, if any, on such date.

3.7          Revolving Facility.

(a)                                  Revolving Nature.  The Borrower may borrow, repay and re-borrow any amount of the Individual Commitment Amount of each Lender under each Tranche based on the Rateable Portion of such Lender’s Individual Commitment Amount under such Tranche until the Termination Date applicable to such Lender under the applicable Tranche.

(b)                                 General Right to Prepay.  Subject to Section 3.4(e), Section 3.7(c) and Section 9.2 and with the same notice required when the Advance to be prepaid was made, the Borrower may at any time prepay, without premium, bonus or penalty, any or all of the Aggregate Principal Amount (including under one Tranche and not the other), except that a Bankers’ Acceptance will not be paid prior to its Maturity Date and an unexpired Letter of Credit will not be prepaid

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prior to its Maturity Date (except by the return of the original thereof to the LC Issuer for cancellation or by the collateralization thereof in the manner set forth in Section 11.1(e) with the consent of the LC Issuer and the Agent).

(c)                                  General Right to Cancel.  Subject to Section 3.4(e), the Borrower may also at any time, upon the Borrower giving the Agent not less than 3 Banking Days prior notice, cancel in whole or in part any undrawn portion of the Tranche 1 Commitment Amount or the Tranche 2 Commitment Amount, provided that any such cancellation of the Tranche 1 Commitment Amount or the Tranche 2 Commitment Amount, as applicable, will be made pro rata to all Lenders under such Tranche on the basis of each such Lender’s Rateable Portion thereof and will result in a permanent reduction of the Tranche 1 Commitment Amount or the Tranche 2 Commitment Amount, as applicable, and further provided that the Tranche 2 Commitment Amount must be permanently repaid and cancelled in its entirety prior to any cancellation of any portion of the Tranche 1 Commitment Amount.

3.8          Payments to Agent.  Other than as expressly provided herein, all payments of amounts owing by the Borrower to the Lenders under the Documents will be made by the Borrower to the Agent for the account of the Lenders in accordance with their respective Rateable Portions.

3.9          Use of Proceeds.  The Borrower will be entitled, subject to Section 7.2, to use Advances for general corporate purposes, including acquisitions and the repayment and cancellation of the Existing Credit Facilities.

3.10        Swing Line Loans.

(a)                                  Availability.  Notwithstanding Sections 6.2, 6.4, 6.6 and 21.2(a), the Borrower may obtain Swing Line Loans under Tranche 1 in the following manner:

(i)                                     in the case of Canadian Prime Rate Loans and U.S. Base Rate Loans, on an overdraft basis or by delivering a duly executed Notice of Borrowing to the Swing Line Lender not later than noon (Toronto time) on the proposed Drawdown Date;

(ii)                                  in the case of Bankers’ Acceptances, by delivering a duly executed Notice of Borrowing to the Swing Line Lender not later than 11:00 a.m. (Toronto time) on the proposed Drawdown Date; and

(iii)                               in the case of Swing Line Letters of Credit and subject to Section 3.10(j), by delivering a duly executed Notice of Borrowing to the Swing Line Lender at least 3 Banking Days prior to the proposed Drawdown Date (or such shorter or longer period as may be determined by the Swing Line Lender, acting reasonably).

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Swing Line Loans shall be made solely by the Swing Line Lender, without assignment to or participation by other Lenders (except as provided in this Section 3.10 and Section 18.3).  The making of each Swing Line Loan shall constitute a Drawdown hereunder and shall reduce the availability of Tranche 1 by the Principal Amount of such Swing Line Loan.

(b)                                 Individual Limits.  Subject to Section 6.7, at no time shall (i) the Aggregate Principal Amount of all Swing Line Loans owing to the Swing Line Lender exceed the Swing Line Loan Limit or (ii) the Aggregate Principal Amount of all Swing Line Loans owing to the Swing Line Lender plus such Lender’s Rateable Portion of the Aggregate Principal Amount of all Syndicated Advances exceed such Lender’s Individual Tranche 1 Commitment Amount; provided that the Agent may, in its discretion, acting reasonably, adjust each Tranche 1 Lender’s (including the Swing Line Lender’s) Rateable Portion of Syndicated Advances in accordance with its customary practice if and to the extent required to ensure that, subject to Section 3.10(c), any undrawn availability of Swing Line Loans or Syndicated Advances, as applicable, is capable of being fully drawn, including deeming all or any portion of the Swing Line Loan Limit to be drawn for purposes of determining the Rateable Portion of the Swing Line Lender for each Syndicated Advance.  If at any time for whatever reason the Aggregate Principal Amount of all Swing Line Loans owing to the Swing Line Lender exceeds the Swing Line Loan Limit, the amount of such excess shall be immediately repaid by the Borrower to the Swing Line Lender either directly or by way of a conversion of such excess amount into a Syndicated Advance in accordance with Section 3.10(h).

(c)                                  Aggregate Limit.  Subject to Section 6.7, at no time shall the Aggregate Principal Amount of all Swing Line Loans plus the Aggregate Principal Amount of all Syndicated Advances exceed the Tranche 1 Commitment Amount.

(d)                                 Repayment.  Each Swing Line Loan (other than a Swing Line Letter of Credit) shall be repaid by the Borrower (or converted into a Syndicated Advance in accordance with Section 3.10(h)) within 30 days after the relevant Drawdown Date (in the case of a Canadian Prime Rate Loan or a U.S. Base Rate Loan) or on the maturity date (not to exceed 30 days after the relevant Drawdown Date) selected by the Borrower in the Notice of Borrowing requesting such Swing Line Loan (in the case of Bankers’ Acceptances).  No notice of repayment shall be required to be given by the Borrower in respect of any such repayment of any Swing Line Loan nor shall Swing Line Loans be Rolled Over or Converted except for conversions into Syndicated Advances in accordance with Section 3.10(h).

(e)                                  Mandatory Repayment.  If the Borrower requests a Syndicated Advance and the Swing Line Lender’s Rateable Portion of such Syndicated Advance would cause its Rateable Portion of all Syndicated Advances then outstanding together with the Aggregate Principal Amount of all Swing Line Loans to exceed the Swing

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Line Lender’s Individual Tranche 1 Commitment Amount, then the Borrower shall be required to repay such Swing Line Loans (or to Convert some into a Syndicated Advance in accordance with Section 3.10(h)) to the extent of such excess on or before the requested date of such Syndicated Advance.

(f)                                    Prepayments.  The Borrower may make prepayments of Swing Line Loans at any time and from time to time without notice or penalty; provided that: (i) any Swing Line Loan by way of Bankers’ Acceptances cannot be prepaid prior to its Maturity Date, and (ii) any Swing Line Letter of Credit may only be prepaid if the original of such Letter of Credit is returned to the Swing Line Lender for cancellation or collateralized in accordance with Section 11.1(e), subject to the consent of the Swing Line Lender and the Agent.

(g)                                 Sole Account.  All interest payments, acceptance fees and principal repayments of or in respect of Swing Line Loans shall be solely for the account of the Swing Line Lender.  Subject to Section 3.10(h), all costs and expenses relating to the Swing Line Loans shall be solely for the account of the Swing Line Lender.

(h)                                 Conversion to Syndicated Advances.  Notwithstanding anything to the contrary herein contained, (i) at any time at the option of the Borrower or (ii) if an Event of Default occurs, if the Aggregate Principal Amount of all Swing Line Loans owing to the Swing Line Lender exceeds the Swing Line Loan Limit or if any Swing Line Loan is not repaid on its Maturity Date, then (in the case of clause (i) above) the Borrower shall give notice to the Swing Line Lender and the Agent, or (in the case of clause (ii) above) the Swing Line Lender shall give notice to the Borrower and the Agent (which notice shall in each case direct a conversion of such Swing Line Loan into a Syndicated Advance and shall specify the particulars of such Swing Line Loans), and the Agent shall forthwith provide a copy of such notice to the other Tranche 1 Lenders and, effective on the effective date of such notice, the Borrower shall be deemed to have requested a conversion of such Swing Line Loan into a Syndicated Advance, in the same type of Accommodation as the relevant Swing Line Loan (which in the case of a maturing Bankers’ Acceptance, shall be a Canadian Prime Rate Loan), and in an amount sufficient to repay the relevant Swing Line Loan and accrued and unpaid interest in respect thereof.  Subject to the same notice period set out in Section 6.2, and excluding any Swing Line Letters of Credit which are to be converted into Fronted Letters of Credit, such other Tranche 1 Lenders shall disburse to the Agent for payment to the Swing Line Lender their respective Rateable Portions of such amounts and such amounts shall thereupon be deemed to have been advanced by such other Tranche 1 Lenders to the Borrower and to constitute Syndicated Advances by way of Canadian Prime Rate Loans (if the relevant Swing Line Loan was denominated in Canadian Dollars) or U.S. Base Rate Loans (if the relevant Swing Line Loan was denominated in U.S. Dollars).  Such Syndicated Advances shall be deemed to be comprised of principal and accrued and unpaid interest in the same proportions as the corresponding Swing Line Loans.

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(i)                                     Unconditional Obligation.  For certainty, it is hereby acknowledged and agreed that the Tranche 1 Lenders shall be obligated to disburse to the Agent for payment to the Swing Line Lender their respective Rateable Portions of any Syndicated Advances contemplated by Section 3.10(h) regardless of:

(i)                                   whether a Default or Event of Default has occurred or is then continuing or whether any other condition in Section 7.1 is met;

(ii)                                whether or not the Borrower has, in fact, actually requested such conversion (by delivery of a Notice of Conversion or otherwise); and

(iii)                             whether or not a Person was a Tranche 1 Lender at the time the applicable Swing Line Loan was made.

(j)                                     Swing Line Letters of Credit.  The Swing Line Lender may also, at the request of the Borrower, issue Letters of Credit as a Swing Line Loan in Canadian Dollars or U.S. Dollars (each, a “Swing Line Letter of Credit”) in accordance with the terms set forth in Section 11.1  The Parties acknowledge that the Outstanding Penn West LCs will for all purposes hereof be deemed to be Swing Line Letters of Credit, will reduce the availability under the Swing Line Loan Limit by the undrawn amount thereof and will be subject to the terms of this Agreement.

ARTICLE 4
ADVANCES

4.1          Types of Accommodation.  The Borrower may from time to time obtain under the Credit Facility all or one or more of the following types of Accommodation:

(a)                                  Canadian Dollar Advances.  For Advances in Canadian Dollars:

(i)                                   Canadian Prime Rate Loans in minimum amounts of not less than Cdn. $25,000,000 and in multiples of Cdn. $100,000 (except no such minimum shall apply to Swing Line Cdn. $ Loans or when Swing Line Cdn. $ Loans are converted into Syndicated Advances);

(ii)                                Bankers’ Acceptances;

(iii)                             Fronted Letters of Credit, subject to Section 11.1(a)(i); and

(iv)                            Swing Line Letters of Credit, subject to Section 11.1(a)(ii);

provided that Swing Line Loans and Fronted Letters of Credit are only available under Tranche 1.

(b)                                 U.S. Dollar Advances.  For Advances in U.S. Dollars:

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(i)                                   U.S. Base Rate Loans in minimum amounts of not less than U.S. $25,000,000 and in multiples of U.S. $100,000 (except no such minimum shall apply to Swing Line U.S. $ Loans or when Swing Line U.S. $ Loans are converted into Syndicated Advances);

(ii)                                LIBOR Based Loans;

(iii)                             Fronted Letters of Credit, subject to Section 11.1(a)(i); and

(iv)                            Swing Line Letters of Credit, subject to Section 11.1(a)(ii);

provided that Swing Line Loans and Fronted Letters of Credit are only available under Tranche 1.

4.2          Interest and Fees.

(a)                                  Canadian Prime Rate Loans.  Each Advance of a Canadian Prime Rate Loan will bear interest at a variable rate of interest per annum equal to the Canadian Prime Rate plus the applicable margin as indicated in the table set forth in Section 4.2(j).

(b)                                 U.S. Base Rate Loans.  Each Advance of a U.S. Base Rate Loan will bear interest at a variable rate per annum equal to the U.S. Base Rate plus the applicable margin as indicated in the table set forth in Section 4.2(j).

(c)                                  LIBOR Based Loans.  Each Advance of a LIBOR Based Loan will bear interest at a rate per annum equal to LIBOR plus the applicable margin as indicated in the table set forth in Section 4.2(j).

(d)                                 Stamping Fees on Bankers’ Acceptances.  For each Advance by way of a Bankers’ Acceptance, the stamping fee payable by the Borrower will be calculated on the face amount of the Bankers’ Acceptance and adjusted for the term to maturity thereof, and will be the applicable margin as indicated in the table set forth in Section 4.2(j) (expressed as a rate per annum).

(e)                                  Issuance Fees for Letters of Credit.  For each Letter of Credit, the Issuance Fee in respect thereof will be calculated based on the face amount of such Letter of Credit and the term thereof, such Issuance Fee to be equal to the applicable margin for Letters of Credit (expressed as a rate per annum) as indicated in the table set forth in Section 4.2(j), subject to a minimum fee to be charged by the applicable LC Issuer on each issuance or renewal of a Letter of Credit as determined in accordance with such LC Issuer’s usual and customary practices.  The Borrower will also pay to the LC Issuer its customary administrative charges in respect of such Letter of Credit, and each drawing made under such Letter of Credit.

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(f)                                    Fronting Fee.  The Borrower will pay to the Agent for distribution to the Fronting Lender, in respect of each Fronted Letter of Credit issued, to be issued or renewed by the Fronting Lender and as a condition of such issuance or renewal, a non-refundable fronting fee (“Fronting Fee”) for the account of the Fronting Lender, in the currency of the Fronted Letter of Credit calculated, on a basis of the face amount and term of the Fronted Letter of Credit at a rate per annum equal to 12.5 Basis Points or such lesser amount as is agreed between the Borrower and the Fronting Lender.

(g)                                 Standby Fee.  The Borrower will, effective from and including the Closing Date, pay to the Agent for the benefit of each Lender a standby fee equal to the Basis Points indicated in the table set forth in Section 4.2(j), calculated on the basis of a 365 day year, multiplied by an amount equal to the Individual Commitment Amount of such Lender under the Credit Facility less the Canadian Dollar Exchange Equivalent of the Principal Amount owing to such Lender under the Credit Facility.

(h)                                 Agency Fee.  The Borrower will pay to the Agent on an annual basis commencing on the Closing Date and on each anniversary thereof, the agency fee agreed upon between the Borrower and the Agent.

(i)                                     Tranche 2 Fee.  Until the Tranche 2 Commitment Amount has been permanently cancelled in its entirety, the Borrower shall pay to the Agent on behalf of each Tranche 2 Lender (i) on the first anniversary of the Closing Date, a fee equal to 10 Basis Points multiplied by the Individual Tranche 2 Commitment Amount of each such Tranche 2 Lender on such date, and (ii) on the second anniversary of the Closing Date, a fee equal to 15 Basis Points multiplied by the Individual Tranche 2 Commitment Amount of each such Tranche 2 Lender on such date.

(j)                                     Applicable Margins.  (in Basis Points)

(k)                                Change in Rates Due to Change in Ratio. The effective date on which any change in interest rates on Canadian Prime Rate Loans, U.S. Base Rate Loans and LIBOR Based Loans, standby fees, stamping fees or Issuance Fees occurs will be

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the earlier of (i) the date of receipt by the Agent of a Compliance Certificate which evidences a change in the Consolidated Senior Debt to EBITDA Ratio and (ii) the date such Compliance Certificate is due in accordance with Section 14.1(g).  If the Borrower fails to deliver a Compliance Certificate in accordance with Section 14.1(g), then the applicable margins indicated in the table set forth in Section 4.2(j) shall be deemed to be at level 6 in such table until such time as the applicable Compliance Certificate is delivered (and notwithstanding the Event of Default which arises from such failure to so deliver such Compliance Certificate).  Any increase or decrease in the interest rates on LIBOR Based Loans or Issuance Fees on Letters of Credit outstanding on the effective date of a change in such ratio will apply proportionately to each such LIBOR Based Loan or Letter of Credit outstanding on the basis of the number of days remaining in the term to maturity thereof.  Any increase or decrease in the stamping fees on Bankers’ Acceptances outstanding on the effective date of such a change will apply for new Bankers’ Acceptances issued after such effective date or on any Rollover of an existing Bankers’ Acceptance but otherwise the stamping fees on any Bankers’ Acceptance existing on such effective date will not change until the maturity date thereof.

(l)                                     Event of Default.  Effective immediately following receipt by the Borrower of a notice of an Event of Default (the “Effective Date”), the interest rates then applicable to Canadian Prime Rate Loans, LIBOR Based Loans and U.S. Base Rate Loans, Issuance Fees on outstanding Letters of Credit and stamping fees on Bankers’ Acceptances hereunder will each increase by 1.0% per annum and such increase will remain in effect for as long as such Event of Default subsists.  An increase in stamping fees on Bankers’ Acceptances hereunder and in interest rates on LIBOR Based Loans hereunder as aforesaid arising from an Event of Default will on the Effective Date apply proportionately to each such Advance outstanding on the basis of the number of days remaining in the term to maturity of each such Advance.  The Borrower will pay to the Agent for the benefit of the applicable Lenders any resulting increase in stamping fees with respect to outstanding Bankers’ Acceptances and Issuance Fees on outstanding Letters of Credit on or prior to the third Banking Day following the Effective Date.  In the event that the Event of Default no longer subsists and the Borrower has paid in advance the increased rate for the term to maturity of a particular Advance, the Lenders will provide a credit to the Borrower for the amount of the increase for the remaining term to maturity of such Advance.

(m)                               Restatement of Ratio.  If the Borrower has delivered a Compliance Certificate certifying financial results that are subsequently found to be inaccurate in any way as a result of the Trust’s financial results having to be restated or if the Trust’s financial results were inaccurately reflected in the original financial results on which such Compliance Certificate was based or for any other reason and the result thereof is that the reported Consolidated Senior Debt to EBITDA Ratio was lower than it otherwise would have been in the absence of such inaccuracy or

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prior to such restatement, then the Borrower will, immediately upon the correction of such inaccuracy or upon such restatement, pay to the Agent for the benefit of the applicable Lenders an amount equal to the interest, stamping fees, Issuance Fees and standby fees that the Lenders should have received, but did not receive, over the applicable period had the originally reported Consolidated Senior Debt to EBITDA Ratio, and the underlying components thereof, been reported correctly in the first instance.

4.3          Applicable Margins on Closing Date.  On the Closing Date, the Consolidated Senior Debt to EBITDA Ratio will be determined by reference to the Borrower’s Closing Certificate delivered pursuant to Section 2.1(c).

ARTICLE 5
UNSECURED CREDIT FACILITY

5.1          Unsecured Credit Facility.  The Credit Facility (including each Tranche thereof) will be unsecured and all present and future Indebtedness of the Borrower to the Agent and the Lenders under the Credit Facility will constitute at all times senior, unsecured Indebtedness of the Borrower ranking pari passu with all other senior, unsecured Indebtedness of the Borrower.

ARTICLE 6
FUNDING AND OTHER MECHANICS APPLICABLE TO
THE CREDIT FACILITY

6.1          Funding of Accommodations.  Subject to Section 6.2 and Article 9 and Article 10, all Advances (other than Letters of Credit) will be made available by deposit of the applicable funds (which in the case of Bankers’ Acceptances will be the Net Proceeds) into the appropriate Borrower’s Account for value on the Banking Day or the LIBOR Banking Day, as the case may be, on which the Advance is to take place.

6.2          Notice Provisions.  Subject to Section 3.10, Drawdowns will be made available to the Borrower and the Borrower will be entitled to Rollover or Convert Accommodations under the Credit Facility where permitted hereunder, provided a Notice of Borrowing or a Notice of Rollover or Notice of Conversion, as applicable, is received from the Borrower by the Agent, as follows:

(a)                                  with respect to Advances, other than by way of LIBOR Based Loans or Letters of Credit, at least 1 Banking Day prior to such Advance provided notice is received by the Agent no later than 11:00 a.m. Calgary, Alberta time on the Banking Day immediately preceding the requested Drawdown Date or the date of Rollover or Conversion, as applicable;

(b)                                 with respect to a Drawdown, Rollover or Conversion of or into a LIBOR Based Loan, at least 3 LIBOR Banking Days prior to such Advance, provided notice is received by the Agent no later than 10:00 a.m. Calgary, Alberta time on the third

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LIBOR Banking Day immediately preceding the Drawdown Date or the date of Rollover or Conversion, as applicable; and

(c)                                with respect to Letters of Credit, at least 3 Banking Days prior to such Advance (or such shorter or longer period as may be determined by the LC Issuer, acting reasonably).

Any of the notices referred to in the foregoing paragraphs may, subject to Section 22.2, be given by the Borrower, at its sole risk, to the Agent by telephone and in such case will be followed by the Borrower delivering to the Agent on the same day the notice required hereunder confirming such instructions.

Notwithstanding the foregoing, for the initial Drawdown to be made in connection with the repayment of the Existing Credit Facilities, no prior notice is required provided that a Notice of Borrowing is delivered to the Agent on the Closing Date at a time acceptable to the Agent.

6.3          Irrevocability.  A Notice of Borrowing, Notice of Rollover or Notice of Conversion when given by the Borrower will be irrevocable and will oblige the Borrower, the Agent and the Lenders under the Credit Facility to take the action contemplated herein and therein on the date specified therein, provided that any such notice will not be binding on any Lender who makes a determination under Section 12.2.

6.4          Rollover or Conversion of Accommodations.

(a)                                  Subject to Sections 3.10(d) and 6.2, Article 9 and Article 10, the Borrower will be entitled to Rollover one type of Accommodation (other than Letters of Credit) into the same type of Accommodation under the same Tranche or Convert one type of Accommodation into another type of Accommodation under the same Tranche on the terms herein provided.

(b)                                 If the Borrower fails to give the Agent a duly completed Notice of Rollover or Notice of Conversion if and as required by Section 6.2, or if in giving such notice the Borrower fails to provide for the Rollover or Conversion of all of the Advances under a Tranche then maturing, the Borrower will be deemed to have irrevocably elected to Convert such maturing Advances, or that part of such maturing Advances which the Borrower has failed to provide for in such notice, as the case may be, into a Canadian Prime Rate Loan under such Tranche with respect to a Cdn. Dollar Advance or a U.S. Base Rate Loan under such Tranche with respect to a U.S. Dollar Advance, except for Letters of Credit which will expire in accordance with the terms thereof.

(c)                                  No Conversion of a Bankers’ Acceptance will be made prior to the Maturity Date thereof and no Rollover of a Bankers Acceptance or a LIBOR Based Loan may be made if a Default or Event of Default exists on the Maturity Date thereof.

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(d)                                 Subject to Section 9.2, the Borrower may elect to Convert a LIBOR Based Loan prior to the Maturity Date thereof into another type of Accommodation under the same Tranche.

6.5          Agent’s Obligations.  Upon receipt of a Notice of Borrowing, Notice of Rollover or Notice of Conversion with respect to a proposed Advance (other than by way of Bankers’ Acceptances), the Agent will forthwith notify the Lenders under the applicable Tranche of the proposed date on which such Advance is to take place, of each Lender’s Rateable Portion of such Advance and if applicable, of the account of the Agent to which each Lender’s Rateable Portion thereof is to be credited.

6.6          Lenders’ Obligations.  Each Lender under the applicable Tranche will, prior to 10:00 a.m. Calgary, Alberta time on the proposed date on which an Advance is to take place (other than by way of Bankers’ Acceptances), credit the account of the Agent specified in the Agent’s notice given pursuant to Section 6.5 with such Lender’s Rateable Portion of such Advance, and by 11:00 a.m. Calgary, Alberta time on the same date, the Agent will make available to the Borrower the amount so credited.

6.7          Currency Fluctuation.  If as a result of currency fluctuation the Canadian Dollar Exchange Equivalent of the Aggregate Principal Amount under a Tranche exceeds the Commitment Amount under such Tranche (the “Excess”), the Borrower will pay the Excess to the Agent as a principal repayment for the benefit of the Lenders under such Tranche.  If the amount of the Excess with respect to such Tranche is equal to or greater than 1% of the Commitment Amount under such Tranche, then the repayment of the Excess to the Agent on behalf of the Lenders will be made by the Borrower within 3 Banking Days after demand therefore by the Agent.  If the amount of the Excess is less than 1% of the Commitment Amount under such Tranche, then the repayment of the Excess will be made on the earliest of the next Drawdown Date, date of Rollover, date of Conversion (in each case under such Tranche) or the first Banking Day of the next following month.  The Agent will request repayment of any Excess forthwith upon request therefore by any Lender, provided that the Agent will not otherwise be required to monitor the Excess or to request repayment thereof.

6.8          Excess Relating to LIBOR, LCs and BAs.  If to pay an Excess, it is necessary to repay a LIBOR Based Loan or an Advance by way of Bankers’ Acceptances or a Letter of Credit prior to the Maturity Date thereof, the Borrower will not be required to repay such Advances until the Maturity Date thereof, provided, however, that at the request of the Agent, the Borrower will forthwith pay to the Agent for deposit into an escrow account maintained by and in the name of the Agent for the benefit of the Lenders the Excess, to be held by the Agent for set-off against future amounts owing by the Borrower to the Lenders under the Credit Facility in respect of such Excess and, pending such application, will bear interest for the Borrower’s account at the rate declared by the Agent from time to time as that payable by it in respect of deposits for such amount and for the period from the date of deposit to the Maturity Date of such Advance.

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ARTICLE 7
DRAWDOWN UNDER THE CREDIT FACILITY

7.1          Conditions Precedent to all Drawdowns.  The Lenders’ obligation to provide Advances under the Credit Facility will be subject to the following conditions precedent being met, unless waived in writing by the Lenders:

(a)                                  the appropriate Notice of Borrowing, Notice of Rollover or Notice of Conversion will have been delivered in accordance with the notice provisions provided in Section 6.2, but subject to Section 3.10;

(b)                                 no Default or Event of Default will have occurred and be continuing and no Default or Event of Default shall occur as a result of the making of the applicable Advance;

(c)                                  subject to Section 13.2, each of the representations and warranties set out in Article 13 will be true and correct with the same effect as if such representations and warranties had been made on the date of such Advance; and

(d)                                 the notice with respect to a Hostile Acquisition if required to be given pursuant to Section 7.2 will have been provided by the Borrower and the other provisions of Section 7.2, if applicable, will have been complied with.

7.2          Hostile Acquisitions.  If the Borrower wishes to utilize, whether directly or indirectly, Drawdowns to facilitate, assist or participate in a Hostile Acquisition by one or more of the Penn West Parties or any Affiliate thereof:

(a)                                  at least 10 Banking Days prior to the delivery to the Agent of a Notice of Borrowing made in connection with a Hostile Acquisition, the chairman, chief executive officer, president or a senior financial officer of the Borrower will notify the Agent (who will then notify the Lenders) of the particulars of the Hostile Acquisition in sufficient detail to enable each Lender to determine, in each Lender’s sole discretion, whether it will participate in a Drawdown to be utilized for such Hostile Acquisition;

(b)                                 if a Lender decides not to fund an Advance to be utilized for such Hostile Acquisition, then upon such Lender so notifying the Agent and the Borrower, such Lender will have no obligation to fund such Advance notwithstanding any other provision of this Agreement to the contrary; and

(c)                                  each Lender will use reasonable commercial efforts to notify the Agent as soon as practicable (and in any event within 4 Banking Days of receipt of the particulars thereof from the Agent) of its decision whether or not to fund a proposed Hostile Acquisition.

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7.3          Adjustment of Rateable Portion.  If a Lender under a Tranche elects not to participate in a Drawdown under such Tranche for a Hostile Acquisition (a “Non-Participating Lender”), such Drawdown will be reduced by the Non-Participating Lenders’ Rateable Portion thereof and the allocation among all Lenders under such Tranche of interest and other fees payable by the Borrower hereunder, including standby fees, will be adjusted so as to reflect the reduction in such Drawdown, and thereafter the Rateable Portion of each Lender under such Tranche, for such purposes only, will reflect the Aggregate Principal Amount then funded by each Lender under such Tranche based on the Aggregate Principal Amount of all Lenders under such Tranche after taking into account the amount of the requested Drawdown not funded by the Non-Participating Lender. Notwithstanding the adjustment of the Rateable Portion pursuant to this Section 7.3, there will be no reduction in the Individual Commitment Amount of each Lender.

7.4          Subsequent Drawdowns.  If a Lender becomes a Non-Participating Lender, subsequent Drawdowns under the applicable Tranche will be funded first by the Non-Participating Lender rateably based on each Non-Participating Lender’s Individual Commitment Amount under such Tranche, until the Principal Amounts owed to the Lenders under such Tranche are again in proportion to their respective Rateable Portions prior to the Hostile Acquisition.

7.5          Prepayment.  As an alternative to the provisions of Section 7.4, the Borrower will also be entitled, subject to the prepayment provisions herein contained but without obligation to make prepayments to all Lenders, to reduce the Principal Amount owing to the Lenders under the applicable Tranche who are not Non-Participating Lenders so that the Principal Amounts of the Lenders are again in proportion to their respective Rateable Portions prior to the Hostile Acquisition.

ARTICLE 8
CALCULATION OF INTEREST AND FEES

8.1          Records.  The Agent will maintain records, in written or electronic form, evidencing all Advances and all other Indebtedness owing by the Borrower to the Agent and each Lender under each Tranche and this Agreement.  The Agent will enter in such records details of all amounts from time to time owing, paid or prepaid by the Borrower to it hereunder.  In addition, each Lender will maintain records, in written and electronic form, evidencing all Advances and other Indebtedness owing by the Borrower to such Lender under each Tranche and this Agreement.  The information entered in such records will constitute prima facie evidence of the Indebtedness of the Borrower to the Agent and each Lender under each Tranche and this Agreement.  In the event of a conflict between the records of the Agent and a Lender maintained pursuant to this Section 8.1, the records of the Agent will prevail, absent manifest error.

8.2          Payment of Interest and Fees.

(a)                                  Interest.  Except as expressly stated otherwise herein, all Canadian Prime Rate Loans, U.S. Base Rate Loans and LIBOR Based Loans from time to time outstanding under the Credit Facility will bear interest, as well after as before maturity, default and judgment, with interest on overdue interest, at the applicable rates as prescribed under Sections 4.2 and 22.9, as applicable.  Interest payable at

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a variable rate will be adjusted automatically without notice to the Borrower whenever there is a variation in such rate.

(b)                                 Calculation of Interest.  Interest under the Credit Facility on Canadian Prime Rate Loans and U.S. Base Rate Loans will accrue and be calculated daily and be payable monthly in arrears on the first Banking Day of each month for the immediately preceding month, or, after notice to the Borrower, on such other Banking Day as is customary for the Agent having regard to its then existing practice.  Interest under the Credit Facility on Canadian Prime Rate Loans and U.S. Base Rate Loans, stamping fees under the Credit Facility on Bankers’ Acceptances and Issuance Fees and Fronting Fees will be calculated on the basis of a 365 day year.

(c)                                  Interest Act (Canada).  For the purposes of the Interest Act (Canada) and all other applicable Laws which may hereafter regulate the calculation or computation of interest on borrowed funds, the annual rates of interest and fees applicable under the Credit Facility to Canadian Prime Rate Loans, U.S. Base Rate Loans, Bankers’ Acceptances and Letters of Credit, respectively, are the rates as determined hereunder multiplied by the actual number of days in a period of one year commencing on the first day of the period for which such interest or such fee is payable and divided by 365.

(d)                                 LIBOR Based Loans.  Interest on LIBOR Based Loans under the Credit Facility will accrue and be calculated daily and be payable at the end of each applicable LIBOR Period, provided that, where the LIBOR Period exceeds 90 days, interest will be calculated and payable every 90 days during the term of the LIBOR Period and on the last day of the applicable LIBOR Period.  Interest on LIBOR Based Loans will be calculated on the basis of the actual number of days in each LIBOR Period divided by 360.  For the purposes of the Interest Act (Canada) and other applicable Laws which may hereafter regulate the calculation or computation of interest on borrowed funds, the annual rates of interest applicable to LIBOR Based Loans under the Credit Facility are the rates as determined hereunder multiplied by the actual number of days in a period of one year commencing on the first day of the period for which such interest is payable and divided by 360.

8.3          Payment of Stamping Fee.  The Borrower will pay to the Agent for the account of the Lenders under the applicable Tranche the applicable stamping fee under Section 4.2(d) with respect to Bankers’ Acceptances on the date of acceptance thereof by the applicable Lenders.  Subject to Section 8.5, payment of the stamping fee may be made by way of set-off as provided in Section 10.3.

8.4          Calculation and Payment of Issuance Fees and Fronting Fees.  Issuance Fees and Fronting Fees will be calculated on the basis of a year of 365 days and for such period of time as the applicable Letter of Credit remains outstanding.  The Issuance Fees and Fronting Fees will accrue and be calculated daily on the face amount of the applicable Letter of Credit and be payable quarterly in arrears on the first Banking Day of each calendar quarter for the

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immediately preceding calendar quarter, or, after notice to the Borrower, on such other Banking Day following any such preceding fiscal quarter as is customary for the Agent or the Fronting Lender having regard to its then existing practice.  Notwithstanding the foregoing, the minimum Issuance Fee shall be not less than the minimum flat rate issuance fee set by the LC Issuer from time to time in accordance with its customary practice for letters of credit issued on behalf of comparable borrowers and, if the minimum issuance fee applies, the Issuance Fee shall be payable in advance at the time of issuance of the applicable Letter of Credit.

8.5          Standby Fees.  The standby fees payable in accordance with Section 4.2(g) will be calculated daily and will be payable in Canadian Dollars quarterly in arrears on the first Banking Day of each calendar quarter for the previous quarter and otherwise in the same manner as interest on Canadian Prime Rate Loans.

8.6          Debit Authorization.  The Borrower authorizes and directs the Agent and the Swing Line Lender, in its discretion, to automatically debit, by mechanical, electronic or manual means, the bank accounts of the Borrower maintained by it for any amounts (including principal, interest or fees) that are due and payable under this Agreement.

8.7          Conversion to Another Currency.  A Conversion of an Advance from one currency to another currency may be made only by the repayment of an existing Advance in the same currency as the existing Advance and the request of a new Advance in another currency.

8.8          Maximum Rate of Return.  Notwithstanding any provision herein to the contrary, in no event will the aggregate “interest” (as defined in section 347 of the Criminal Code (Canada)) payable under this Agreement exceed the maximum effective annual rate of interest on the “credit advanced” (as defined in that section) permitted under that section and, if any payment, collection or demand pursuant to this Agreement in respect of “interest” (as defined in that section) is determined to be contrary to the provisions of that section, such payment, collection or demand will be deemed to have been made by mutual mistake of the Borrower and the applicable Lenders and the amount of such payment or collection will be refunded to the Borrower.  For purposes of this Agreement, the effective annual rate of interest will be determined in accordance with generally accepted actuarial practices and principles over the term of the Credit Facility on the basis of annual compounding of the lawfully permitted rate of interest and, in the event of dispute, a certificate of a Fellow of the Canadian Institute of Actuaries appointed by the Agent will be prima facie evidence, for the purposes of such determination.

8.9          Waiver of Judgment Interest Act (Alberta).  To the extent permitted by applicable Law, the provisions of the Judgment Interest Act (Alberta) will not apply to the Documents and are hereby expressly waived by the Borrower.

8.10        Deemed Reinvestment Not Applicable.  For the purposes of the Interest Act (Canada), the principle of deemed reinvestment of interest will not apply to any interest calculation under the Documents, and the rates of interest stipulated in this Agreement are intended to be nominal rates and not effective rates or yields.

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ARTICLE 9
GENERAL PROVISIONS RELATING TO LIBOR BASED LOANS

9.1          General.

(a)                                 The aggregate amount of each Advance by way of a LIBOR Based Loan will be at least U.S. $25,000,000 and in multiples of U.S. $100,000 for any amount in excess thereof.

(b)                                 If the Borrower requests a Drawdown by way of a LIBOR Based Loan, to Rollover a LIBOR Based Loan or to Convert an Accommodation into a LIBOR Based Loan, the Borrower will specify in its Notice of Borrowing, Notice of Rollover or Notice of Conversion, as applicable, the LIBOR Period (which will begin and end on a LIBOR Banking Day) applicable to such LIBOR Based Loan.  Subject to Section 6.4(b), if the Borrower fails, as required hereunder, to select a LIBOR Period for any proposed LIBOR Based Loan, then the applicable LIBOR Period will be approximately one month as determined by the Agent.

(c)                                  Any amounts owing by the Borrower in respect of any LIBOR Based Loan which is not paid at its Maturity Date in accordance with this Agreement will, as and from its Maturity Date, be deemed to be outstanding as a U.S. Base Rate Loan.

9.2          Early Termination of LIBOR Periods.  If the Borrower requests, as herein permitted, that a Lender arrange for early termination of any LIBOR Based Loan, the Borrower will pay to the affected Lenders all expenses and out-of-pocket costs incurred by such Lenders as a result of the early termination of the LIBOR Based Loan, including expenses and out-of-pocket costs incurred due to early redemption of offsetting deposits.  If in the sole discretion of such Lenders, acting reasonably, any such early termination cannot be effected, the LIBOR Based Loan will not be terminated and the Borrower will continue to pay interest to such Lenders, at the rate per annum applicable to such LIBOR Based Loan for the remainder of the applicable LIBOR Period.  A written statement of the Agent as to the amount and nature of such expenses and out-of-pocket costs will be prima facie evidence of the amount thereof.

9.3          Inability to Make LIBOR Based Loans.  If, on any date, a Lender determines in good faith (which determination will be conclusive as between the Parties), that its ability to make a requested LIBOR Based Loan has become impracticable, impossible or unlawful, or has been materially adversely affected, because:

(a)                                  of any change in applicable Laws, or in the interpretation or administration thereof by authorities having jurisdiction in the matter, whether or not having the force of Law;

(b)                                 of any material adverse change in, or the termination of, the London Interbank Eurodollar Market for Eurodollars; or

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(c)                                  there exists no adequate or fair measure to ascertain LIBOR for any LIBOR Period for the LIBOR Based Loan,

then the Lender will give the Borrower and the other Lenders notice thereof and thereupon the Lender will have no further obligation with respect to such LIBOR Based Loan, provided that, the Borrower may elect to Drawdown, Rollover or Convert the amount originally requested by way of such LIBOR Based Loan, into some other type of Accommodation upon compliance with the applicable notice requirements set out herein.

ARTICLE 10
BANKERS’ ACCEPTANCES

10.1        General.  Each bankers’ acceptance draft tendered by the Borrower under the Credit Facility for acceptance by a Lender will be a form acceptable to the accepting Lender and the Advance in respect thereof will be in a principal amount of not less than Cdn. $25,000,000 and in multiples of Cdn. $100,000 for any amounts in excess thereof and will, in each case, have a term of not less than seven days and not more than six months, unless otherwise agreed to by the accepting Lenders, except in the case of Swing Line Loans where the term thereof will not exceed one month.

10.2        Terms of Acceptance by the Lenders.

(a)                                  Power of Attorney.  To facilitate the procedures contemplated in this Agreement, the Borrower appoints each Lender from time to time as the attorney-in-fact of the Borrower to execute, endorse and deliver on behalf of the Borrower drafts or depository bills in the form or forms prescribed by such Lender for Bankers’ Acceptances denominated in Canadian Dollars (each such executed draft or depository ▇▇▇▇ which has not yet been accepted by a Lender being referred to as a “Draft”).  Each Bankers’ Acceptance executed and delivered by a Lender on behalf of the Borrower will be as binding upon the Borrower as if it had been executed and delivered by a duly authorized officer of the Borrower.  The foregoing appointment will cease to be effective, in respect of any Lender, three Banking Days following receipt by such Lender of a notice from the Borrower revoking such appointment (which notice will be copied to the Agent); provided that any such revocation will not affect Bankers’ Acceptances previously executed and delivered by a Lender pursuant to such appointment.

(b)                                 Payment.  The Borrower will provide for payment to the Agent for the benefit of the Lenders of each Bankers’ Acceptance issued on its behalf at its maturity, either by payment of the face amount thereof or, subject to Section 8.5, through the utilization of an Accommodation in accordance with this Agreement, or through a combination thereof.  The Borrower waives presentment for payment of Bankers’ Acceptances by the Lenders and will not claim from the applicable Lenders any days of grace for the payment at maturity of Bankers’ Acceptances.  Any amount owing by the Borrower in respect of any Bankers’ Acceptance  issued under a Tranche which is not paid at maturity in accordance with this

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Agreement, will, as and from its maturity date, be deemed to be outstanding as a Canadian Prime Rate Loan under the same Tranche.

(c)                                  No Liability.  The Lenders will not be liable for any damage, loss or improper use of any bankers’ acceptance draft endorsed in blank except for any loss arising by reason of such Lender failing to use the same standard of care in the custody of such bankers’ acceptance drafts as such Lender uses in the custody of its own property of a similar nature.

(d)                                 Bankers’ Acceptances Purchased by Lenders.  Where the Borrower so elects in the Notice of Borrowing, Notice of Rollover or Notice of Conversion, all Lenders, or those Lenders distinguished as either Schedule I, Schedule II or Schedule III banks (as listed in the Bank Act (Canada)), or any combination thereof, will purchase Bankers’ Acceptances accepted by it for an amount equal to the Discount Proceeds having regard to the Discount Rate applicable to such Lender.

(e)                                  Marketing of BAs.  Subject to Section 10.2(d), the Borrower will be responsible for, and will make its own arrangements with respect to, the sale of Bankers’ Acceptances in the market place.  Notwithstanding the foregoing, a Lender may purchase from the Borrower for its own account any Bankers’ Acceptance issued by it at the applicable Discount Rate or as otherwise agreed by the Borrower or the applicable Lender.

(f)                                    Depository Bills.  It is the intention of the Parties that pursuant to the DBNA, all Bankers’ Acceptances accepted by the Lenders under this Agreement will be issued in the form of a “depository ▇▇▇▇” (as defined in the DBNA), deposited with a “clearing house” (as defined in the DBNA), including The Canadian Depository for Securities Ltd. or its nominee CDS & Co.  In order to give effect to the foregoing, the Agent will, subject to the approval of the Borrower and the Lenders, establish and notify the Borrower and the Lenders of any additional procedures, consistent with the terms of this Agreement, as are reasonably necessary to accomplish such intention, including:

(i)                                   any instrument held by the Agent for purposes of Bankers’ Acceptances will have marked prominently and legibly on its face and within its text, at or before the time of issue, the words “This is a depository ▇▇▇▇ subject to the Depository Bills and Notes Act (Canada)”;

(ii)                                any reference to the authentication of the Bankers’ Acceptance will be removed; and

(iii)                             any reference to the “bearer” will be removed and such Bankers’ Acceptances will not be marked with any words prohibiting negotiation, transfer or assignment of it or of an interest in it.

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10.3        General Mechanics.

(a)                                  Notice.  The Borrower may in the Notice of Borrowing, Notice of Rollover or Notice of Conversion requesting an Accommodation by way of Bankers’ Acceptances or by subsequent notice to the Agent, provide the Agent with information as to the Discount Proceeds payable by the purchasers of the Bankers’ Acceptances and the party to whom delivery of the Bankers’ Acceptances is to be made against delivery of such Discount Proceeds to the Agent for the credit of the Borrower subject to Section 10.3(c), but if it does not do so, the Borrower will initiate a telephone call to the Agent by 11:00 a.m. (Toronto, Ontario time) on the Drawdown Date or the date of the Rollover or Conversion, as applicable, and provide such information to the Agent.  Any such telephone advice will be at the risk of the Borrower pursuant to Section 22.2 and will be confirmed by a notice of the Borrower to the Agent prior to 3:00 p.m. (Toronto, Ontario time) on the same day.

(b)                                 Rollovers.  In the case of a Rollover of maturing Bankers’ Acceptances, each Lender under the applicable Tranche, in order to satisfy the continuing liability of the Borrower to the Lender for the face amount of the maturing Bankers’ Acceptances, will retain for its own account the Net Proceeds of each new Bankers’ Acceptance issued by it in connection with such Rollover and the Borrower will, on the Maturity Date of the maturing Bankers’ Acceptances, pay to the Agent for the benefit of the Lenders under the applicable Tranche an amount equal to the difference between the face amount of the maturing Bankers’ Acceptances and the aggregate Net Proceeds of the new Bankers’ Acceptances.

(c)                                  Conversion from Canadian Dollar Accommodation.  In the case of a Conversion from a Canadian Prime Rate Loan into an Accommodation by way of Bankers’ Acceptances, each Lender under the applicable Tranche, in order to satisfy the continuing liability of the Borrower to each such Lender for the principal amount of the Canadian Prime Rate Loan being Converted, will retain for its own account the Net Proceeds of each new Bankers’ Acceptance issued by it in connection with such Conversion and the Borrower will, on the date of issuance of the Bankers’ Acceptances pay to the Agent for the benefit of the Lenders under the applicable Tranche an amount equal to the difference between the principal amount of the Canadian Prime Rate Loan being Converted, including any accrued interest thereon, owing to the Lenders and the aggregate Net Proceeds of such Bankers’ Acceptances.

(d)                                 Conversion to Canadian Dollar Accommodation.  In the case of a Conversion of an Accommodation by way of Bankers’ Acceptances into a Canadian Prime Rate Loan, in order to satisfy the liability of the Borrower to each Lender under the applicable Tranche for the face amount of the maturing Bankers’ Acceptances, the Agent and each applicable Lender will record the obligation of the Borrower to it as a Canadian Prime Rate Loan under the applicable Tranche unless the

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Borrower provides for payment to the Agent for the benefit of the Lenders under the applicable Tranche of the face amount of the maturing Bankers’ Acceptance in some other manner acceptable to the Lenders.

(e)                                  Authorization.  The Borrower hereby authorizes each Lender under the Credit Facility to complete, stamp, hold, sell, rediscount or otherwise dispose of all Bankers’ Acceptances accepted by it pursuant to this Section 10.3 in accordance with the instructions provided by the Borrower pursuant to Section 6.3 or Section 6.4, as applicable.

10.4        BA Equivalent Advance.  Each Non-BA Lender under the applicable Tranche, in lieu of accepting bankers acceptance drafts on any Drawdown Date or date of any Conversion or Rollover, will make a BA Equivalent Advance.  Any BA Equivalent Advance will be made on the relevant Drawdown Date, or any date of Rollover or Conversion, as applicable, and its Maturity Date will be the Maturity Date of the corresponding Bankers’ Acceptances.  The amount of each BA Equivalent Advance will be equal to the Discount Proceeds (with reference to the applicable Discount Rate) which would be realized from a hypothetical sale of those Bankers’ Acceptances which, but for this Section 10.4, such Lender would otherwise be required to accept (as though such Lender was listed on Schedule II or Schedule III of the Bank Act (Canada)).  Any BA Equivalent Advance will be made on the relevant Drawdown Date or date of any Conversion or Rollover, and will remain outstanding for the term of the corresponding Bankers’ Acceptances.  On its Maturity Date, such BA Equivalent Advance will be repaid in an amount equal to the face amount of a Draft that would have been accepted by such Non-BA Lender if it was a BA Lender.  All provisions of this Agreement with respect to Bankers’ Acceptances will apply to BA Equivalent Advances provided that stamping fees with respect to a BA Equivalent Advances will be calculated on the basis of the amount with respect to such BA Equivalent Advances which the Borrower is required to pay on the applicable Maturity Date.

10.5        Execution of Bankers’ Acceptances.  Subject to Section 10.2(a), the signatures of any authorized signatory on Bankers’ Acceptances may, at the option of the Borrower, be reproduced in facsimile and such Bankers’ Acceptances bearing such facsimile signatures will be binding on the Borrower as if they had been manually signed by such authorized signatory.  Notwithstanding that any person whose signature appears on any Bankers’ Acceptance as a signatory may no longer be an authorized signatory of the Borrower at the date of issuance of a  Bankers’ Acceptance, and notwithstanding that the signature affixed may be a reproduction only, such signature will nevertheless be valid and sufficient for all purposes as if such authority had remained in force at the time of such issuance and as if such signature had been manually applied, and any such Bankers’ Acceptance so signed will, subject to Section 10.2(c), be binding on and at the risk of the Borrower.

10.6        Escrowed Funds.  Upon the occurrence of an Event of Default, the Borrower will forthwith pay to the Agent for deposit into an escrow account maintained by and in the name of the Agent for the benefit of the applicable Lenders, an amount equal to such Lenders’ maximum potential liability under then outstanding Bankers’ Acceptances (the “Escrow Funds”).  The Escrow Funds will be held by the Agent for set-off against future Indebtedness owing by the

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Borrower to the applicable Lenders in respect of such Bankers’ Acceptances and pending such application will bear interest for the Borrower’s account at the rate declared by the Agent from time to time as that payable by it in respect of deposits for similar amounts and for similar periods of time.  If such Event of Default is either waived or cured in compliance with the terms of this Agreement, then the remaining Escrow Funds if any, together with any accrued interest to the date of release, will be released to the Borrower.  The deposit of the Escrow Funds by the Borrower with the Agent as herein provided will not operate as a repayment of the Aggregate Principal Amount until such time as the Escrow Funds are actually paid to the Lenders as a principal repayment.

ARTICLE 11
LETTERS OF CREDIT

11.1        General.

(a)                                 Each Letter of Credit will be made available by the applicable LC Issuer and each Letter of Credit (including all documents and instruments required to be presented thereunder) will be satisfactory in form and substance to such LC Issuer, acting reasonably.  No Letter of Credit will be issued (or will be renewable at the option of the beneficiary thereunder) for a term in excess of one year, will have an expiration date after the Tranche 1 Termination Date, or will require payment in any currency other than Canadian Dollars or U.S. Dollars.  In addition to the Outstanding Canetic LCs, Letters of Credit shall be issued under Tranche 1 by way of, as selected by the Borrower, either:

(i)                                     Letters of Credit (a “Fronted Letter of Credit”) issued by the Fronting Lender on behalf of the Lenders on a “fronted” basis as contemplated by Section 11.1(i); provided that the Aggregate Principal Amount of all Fronted Letters of Credit will at no time exceed Cdn.$100,000,000 or the Canadian Dollar Exchange Equivalent thereof as determined at the time of issuance of any Fronted Letter of Credit (the “Fronted LC Commitment”); or

(ii)                                  a Swing Line Letter of Credit issued by the Swing Line Lender pursuant to Section 3.10; provided that the Aggregate Principal Amount of all Swing Line Letters of Credit will at no time exceed Cdn.$10,000,000 or the Canadian Dollar Exchange Equivalent thereof as determined at the time of issuance of any Swing Line Letter of Credit.

(b)                                 As a condition of the issuance or renewal of any Letter of Credit, the Borrower will pay to the LC Issuer the Issuance Fee, and, if applicable, the Fronting Fee, indicated in Section 4.2.  The Borrower will also pay to the LC Issuer its customary administrative charges in respect of the issue of such Letter of Credit, the amendment or transfer of such Letter of Credit, and each drawing made under such Letter of Credit.

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(c)                                  The LC Issuer shall only issue a Letter of Credit if the following conditions have been satisfied:

(i)                                   the LC Issuer shall have received a Notice of Borrowing requesting that a Letter of Credit be issued, such Notice of Borrowing to be accompanied by an originally executed LC Application, satisfactory to the LC Issuer, acting reasonably, specifying:

(A)                              the proposed date of issuance (which shall be a Banking Day at least 3 Banking Days following the date of such request);

(B)                                the expiry date thereof;

(C)                                the name and address of the beneficiary thereof;

(D)                               whether the Letter of Credit is a Financial LC or a Non-Financial LC; provided that in the case of any dispute, the LC Issuer shall determine whether a Letter of Credit is a Financial LC or a Non-Financial LC in accordance with its usual and customary practices;

(E)                                 the face amount and currency thereof; and

(F)                                 the terms and conditions of the requested Letter of Credit and other relevant details; and

(ii)                                the LC Issuer shall have received such other customary administrative documents as it shall have reasonably requested as a condition to the issuance of such Letter of Credit.

In the event of any conflict or inconsistency between the terms of an LC Application and such other documents and this Agreement, the terms of this Agreement shall prevail and any liability of the Borrower in respect of Letters of Credit shall be governed by this Agreement irrespective of the provisions of any LC Application or such other documents.

(d)                                 If the Borrower does not pay to the LC Issuer sufficient funds in the applicable currency immediately on demand by the LC Issuer as a reimbursement to the LC Issuer for any payment made by it pursuant to such Letter of Credit, the LC Issuer, on behalf of the applicable Lenders, shall without receipt of a Notice of Borrowing and irrespective of whether any other applicable conditions precedent specified herein have been satisfied, make a Canadian Prime Rate Loan or U.S. Base Rate Loan, as applicable depending on the currency of the Letter of Credit, to the Borrower in the amount of such required payment and in the case of Fronted Letters of Credit shall forthwith make a demand for reimbursement from the other Lenders for the amount so paid pursuant to Section 11.1(k)(i) (provided that in the case of the Outstanding Canetic LCs, such Canadian Prime Rate Loan

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or U.S. Base Rate Loan will be made as a Swing Line Loan or solely by Bank of Montreal under Tranche 1, in the Agent’s discretion).  The Borrower agrees to accept each such Canadian Prime Rate Loan or U.S. Base Rate Loan, as applicable, and hereby irrevocably authorizes and directs the LC Issuer to apply the proceeds thereof in payment of the liability of the Borrower with respect to such required payment.

(e)                                  If any Letter of Credit is outstanding at any time that an Event of Default occurs, a demand for repayment is made hereunder, or a domestic or foreign court issues any judgment or order restricting or prohibiting payment by the LC Issuer under such Letter of Credit or extending the liability of the LC Issuer to make payment under such Letter of Credit beyond the expiry date specified therein, the Borrower will forthwith upon demand by the LC Issuer pay to the LC Issuer funds in the applicable currency in the amount of the Advance constituted by such Letter of Credit and such funds (together with interest thereon) will be held by the LC Issuer for payment of the liability of the Borrower pursuant to this Article 11 or otherwise in respect of such Letter of Credit so long as the LC Issuer has or may in any circumstance have any liability under such Letter of Credit, and shall bear interest at the LC Issuer’s then prevailing rate in respect of deposits of similar amounts and of similar periods of time.  Any balance of such funds and interest remaining at such time as the LC Issuer does not have and may never have any liability under such Letter of Credit will nevertheless continue to be held by the LC Issuer, if and so long as any Default or Event of Default is continuing or after a demand for repayment is made or both, as security for the remaining liabilities of the Borrower hereunder.

(f)                                    The Borrower agrees that neither the LC Issuers, the Lenders nor their respective officers, directors, employees or agents will assume liability for, or be responsible for, and the Borrower hereby indemnifies and holds harmless any such Person from any losses or Claims resulting from, the following: the use which may be made of any Letter of Credit; any acts or omissions of the beneficiary of any Letter of Credit including the application of any payment made to such beneficiary; the form, validity, sufficiency, correctness, genuineness or legal effect of any document or instrument relating to any Letter of Credit which on its face complies with requirements of the Letter of Credit, even if such document or instrument should in fact prove to be in any respect invalid, insufficient, inaccurate, fraudulent or forged; the failure of any document or instrument to bear any reference or adequate reference to any Letter of Credit; any failure to note the amount of any draft on any Letter of Credit or on any related document or instrument; any failure of the beneficiary of any Letter of Credit to meet the obligations of such beneficiary to the Borrower or any other Person other than the LC Issuer; any errors, inaccuracies, omissions, interruptions or delays in transmission or delivery of any messages, directions or correspondence by mail, facsimile or otherwise, whether or not they are in cipher; any inaccuracies in the translation of any messages, directions or correspondence or for errors in the

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interpretation of any technical terms; any failure by the LC Issuer to make payment under any Letter of Credit as a result of any Law, control or restriction rightfully or wrongfully exercised or imposed by any domestic or foreign court or government or government instrumentality; or as a result of any other cause beyond the control of the LC Issuer or its officers, directors or correspondents; or any action to compel payment by a LC Issuer under a Letter of Credit (but only to the extent that the LC Issuer was in fact not required to make such payment) or to restrain a LC Issuer from making payment under a Letter of Credit; provided that nothing in this Agreement shall exonerate the LC Issuer for its own gross negligence or wilful misconduct.

(g)                                 The obligations of the Borrower under this Article 11 with respect to any Letter of Credit will be absolute, unconditional and irrevocable, and will be performed strictly in accordance with the terms hereof under all circumstances including: any matter referred to in Section 11.1(e); any invalidity of any obligation secured by any Letter of Credit; any incapacity, disability or lack or limitation of status or of power of the Borrower or the beneficiary of any Letter of Credit; any lack of validity or enforceability of any Letter of Credit; the existence of any claim, set-off, defence or other right which the Borrower may have at any time against any Lender or the LC Issuer, the beneficiary of any Letter of Credit or any other Person (provided that the provisions hereof shall not be considered to be a waiver of such claim, set-off, defence or other right); or any breach of contract or other dispute between the Borrower and any Lender or the LC Issuer, the beneficiary of any Letter of Credit or any other Person.

(h)                                 The LC Issuer may accept as complying with the terms of any Letter of Credit any document or instrument required by such Letter of Credit to be completed, signed, presented or delivered by or on behalf of any beneficiary thereunder which has been completed, signed, presented or delivered by a receiver, trustee in bankruptcy, assignee for the benefit of creditors, secured party or other like Person believed in good faith by the LC Issuer to be lawfully entitled to the property of such beneficiary, and the LC Issuer may make payments under such Letter of Credit to such Person.  The provisions of this Article 11 are for the sole benefit of the LC Issuer and may not be relied on by any other Person.

(i)                                     Subject to the other terms and conditions of this Agreement, the Borrower may request that the Fronting Lender issue Fronted Letters of Credit; provided that at no time will the Fronting Lender be required to issue a Fronted Letter of Credit if the Canadian Dollar Exchange Equivalent of the undrawn amount all Fronted Letters of Credit issued by it (including the one requested to be issued) would exceed the Fronted LC Commitment.

(j)                                     The Fronting Lender will exercise and give the same care and attention to each Fronted Letter of Credit issued by it hereunder as it gives to its other letters of credit and similar obligations, and the Fronting Lender’s sole liability to each

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Lender shall be to promptly return to the Agent for the account of the Lenders, each Lender’s Rateable Portion of any payments made to the Fronting Lender by the Borrower hereunder where the Borrower has made a payment to the Fronting Lender hereunder.  Each Lender agrees that, in paying any drawing under a Fronted Letter of Credit, the Fronting Lender shall not have any responsibility to obtain any document (other than as expressly required by such Fronted Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of any Person delivering any such document.  Neither the Fronting Lender nor any of its representatives, officers, employees or agents shall be liable to any Lender for:

(i)                                   any action taken or omitted to be taken in connection herewith at the request or with the approval of the Majority Lenders;

(ii)                                any action taken or omitted to be taken in connection with any Fronted Letter of Credit in the absence of gross negligence or wilful misconduct; or

(iii)                             the execution, effectiveness, genuineness, validity, or enforceability of any Fronted Letter of Credit, or any other document contemplated thereby.

(k)

(i)                                   Effective on the date of issuance of each Fronted Letter of Credit, the Fronting Lender irrevocably agrees to grant and hereby grants to each Lender, and each such Lender irrevocably agrees to accept and purchase and hereby accepts and purchases from the Fronting Lender, on the terms and conditions hereinafter stated and for such Lender’s own account and risk, an undivided interest equal to such Lender’s Rateable Portion in the Fronting Lender’s obligations and rights under each Fronted Letter of Credit issued by the Fronting Lender and the amount of each draft paid by the Fronting Lender thereunder.  Each such Lender unconditionally and irrevocably agrees with the Fronting Lender that, if an amount is paid under any Fronted Letter of Credit for which such Fronting Lender is not reimbursed in full by the Borrower in accordance with the terms of this Agreement, such Lender will pay upon demand to the Agent, for the account of the Fronting Lender, an amount equal to such Lender’s Rateable Portion of such amount, or any part thereof, which is not so reimbursed.  On the date that any assignee becomes a Lender under this Agreement in accordance with Section 20.2, participating interests in any outstanding Fronted Letter of Credit, held by the assignor Lender from which such assignee acquired its interest hereunder will be proportionately reallocated between such assignee and such assignor Lender.  Each Lender hereby agrees that its obligation to participate in each Fronted Letter of Credit, and to pay or to reimburse the Fronting Lender for its participating share of the amounts drawn or amounts otherwise paid thereunder, is

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absolute, irrevocable and unconditional and will not be affected by any circumstances whatsoever (including the occurrence or continuance of any Default or Event of Default), and that each such payment will be made without offset, abatement, withholding or other reduction whatsoever.

(ii)                                If any amount required to be paid by any Lender to the Fronting Lender pursuant to clause (i) above in respect of any unreimbursed portion of any amount paid by the Fronting Lender under any Fronted Letter of Credit is paid to the Fronting Lender within three Banking Days after the date such amount is due, such Lender will pay upon demand to the Agent, for the account of the Fronting Lender, an amount equal to the product of (A) such amount multiplied by (B) the rate of interest applicable to such amount incurred by the Fronting Lender during the period from and including the date such amount payable under any Fronted Letter of Credit should have been paid to but excluding the date it is paid by the Lender to the Fronting Lender, multiplied by (C) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 365.  If any such amount required to be paid by any Lender pursuant to clause (i) above is not in fact made available to the Agent, for the account of the Fronting Lender, by such Lender within three Banking Days after the date such payment is due, the Fronting Lender will be entitled to recover from such Lender, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to Canadian Prime Rate Loans or U.S. Base Rate Loans hereunder, as the case may be, depending on the currency of such Fronted Letter of Credit.  A certificate of the Fronting Lender submitted to any Lender with respect to any amounts owing under clause (i) above will be conclusive in the absence of manifest error.

(iii)                             Whenever, at any time after the Fronting Lender has paid an amount under any Fronted Letter of Credit and has received from any Lender that Lender’s Rateable Portion of such payment in accordance with clause (i) above, the Fronting Lender receives any reimbursement on account of such unreimbursed portion, or any payment of interest on account thereof, the Fronting Lender will pay to the Agent, for the account of such Lender that Lender’s Rateable Portion thereof; provided, however, that in the event that any such a payment received by the Fronting Lender is required to be returned by the Fronting Lender, such Lender will return to the Agent for the account of the Fronting Lender the portion thereof previously distributed to it.

The foregoing provisions shall apply irrespective of whether any condition precedent to an Advance has been specified, whether any Default or Event of Default has occurred or is continuing or whether any acceleration or any enforcement action (including any termination of the Commitment Amount) has

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occurred or commenced under the Documents or otherwise or whether the Tranche 1 Termination Date has occurred.  The Borrower and the Lenders acknowledge that the foregoing arrangements are to be settled by the Lenders among themselves, and the Borrower consents to the foregoing arrangements among such Lenders.

(l)                                     No LC Issuer shall incur any liability by acting in reliance upon any notice, consent, certificate, statement or other writing (which may be a bank wire, telex or similar writing) appearing on its face to be in compliance with the terms and conditions of the Letter of Credit.

(m)                               Each Letter of Credit, except as specifically provided therein, and subject to any provision hereof to the contrary, will be subject to the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce current at the time of issuance or renewal of such Letter of Credit.

(n)                                 For the purpose of calculating the Aggregate Principal Amount and for any other relevant provision of this Agreement, the amount of Accommodation constituted by any Letter of Credit at any time, will be the maximum amount which the LC Issuer may in all circumstances be required to pay pursuant to the terms thereof at such time.

ARTICLE 12
INCREASED COSTS

12.1        Changes in Law.

(a)                                  If, after the date hereof, due to either:

(i)                                     the introduction of, or any change in, or in the interpretation of any Law, whether having the force of law or not, resulting in the imposition or increase of reserves, deposits or similar requirements by any central bank or other Administrative Body charged with the administration thereof; or

(ii)                                  the compliance with any guideline or request from any central bank or other Administrative Body which a Lender, acting reasonably, determines that it is required to comply with,

there will be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining the Credit Facility, or there will be any reduction in the effective return to such Lender thereunder, then, subject to Section 12.1(b), the Borrower will, within 5 Banking Days after being notified by such Lender of such event, pay to such Lender quarterly in arrears, that amount (the “Additional Compensation”) which such Lender, acting reasonably, determines will compensate it, after taking into account all applicable Taxes, for any such increased costs or reduced returns incurred or suffered by such Lender.

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(b)                                 If Additional Compensation is payable pursuant to Section 12.1(a), the Borrower will have the option to prepay any amount of the Credit Facility owed to the Lender entitled to receive the Additional Compensation, subject always to Sections 9.2 and 10.6, without obligation to make a corresponding prepayment to any other Lender.  If the Additional Compensation relates to outstanding Bankers’ Acceptances under the Credit Facility, such Lender may require the Borrower to deposit in an interest bearing cash collateral account with such Lender such amount as may be necessary to fully satisfy the contingent obligations of such Lender for all outstanding Bankers’ Acceptances in accordance with the arrangements set out in Section 10.6.

12.2        Changes in Circumstances.  Notwithstanding anything to the contrary herein or in any of the other Documents, if on any date a Lender determines in good faith, which determination will be conclusive and binding on the Parties, and provided notice is given to the other Lenders and to the Borrower that its ability to maintain, or continue to offer any Accommodation has become unlawful or impossible due to:

(a)                                  any change in applicable Laws, or in the interpretation or administration thereof by authorities having jurisdiction in the matter;

(b)                                 any material adverse change in or the termination of the London Interbank Eurodollar Market for Eurodollars; or

(c)                                  the imposition of any condition, restriction or limitation upon such Lender which is outside of its control,

then in any such case, the Borrower will forthwith repay to such Lender all principal amounts affected thereby, together with all unpaid interest accrued thereon to the date of repayment and all other expenses incurred in connection with the termination of any such Accommodation, including any expenses resulting from the early termination of any LIBOR Period relating thereto in accordance with Section 9.2, without any obligation to make a corresponding prepayment to any other Lender.  The Borrower may utilize other forms of Accommodations not so affected in order to make any required repayment and after any such repayment, the Borrower may elect to re-borrow the amount repaid by way of some other Accommodation upon complying with applicable requirements thereof.

12.3        Application of Sections 12.1 and 12.2.  If a Lender exercises its discretion under either Section 12.1 or 12.2, then concurrently with a notice from such Lender to the Lenders and the Borrower requiring compliance with the applicable Section, such Lender will provide the Borrower (with a copy to the Lenders) with a certificate in reasonable detail outlining the particulars giving rise to such notice, confirming that its actions are consistent with actions concurrently taken by such Lender with respect to similar type provisions affecting other borrowers of such Lender in comparable circumstances and certifying (with reasonable supporting detail) the increased costs, if any, payable by the Borrower thereunder, which will be prima facie proof thereof and binding on the Parties.

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12.4        Limitations on Additional Compensation.  Sections 12.1 and 12.2 will not apply to a Lender with respect to any event, circumstance or change of the nature and kind of which such Lender had actual knowledge on the Closing Date.  A Lender will not be entitled to Additional Compensation to the extent such increase in costs or reduction in return is reflected in or recovered by an increase in the interest or other amounts payable hereunder (other than pursuant to Section 12.1) or relates to any period which is more than three months prior to such Lender becoming aware such Additional Compensation was owing or if such Lender is not generally collecting amounts which are the equivalent to Additional Compensation from other borrowers in similar circumstances to the Borrower where it is contractually entitled to do so.

ARTICLE 13
REPRESENTATIONS AND WARRANTIES OF THE BORROWER

13.1        Representations and Warranties.  The Borrower hereby represents and warrants to the Lenders as of the Closing Date that:

(a)                                  Incorporation, Organization and Power.  Each of the Penn West Parties, other than the Trust Parties and the Partnership Parties, has been duly incorporated or amalgamated, as applicable, and is validly existing under the Laws of Alberta and is duly registered to carry on business in each jurisdiction in Canada in which the nature of any material business carried on by it or the character of any property owned or leased by it makes such registration necessary, and it has full corporate power and capacity to enter into and perform its obligations under the Documents to which it is a party, and to carry on its business as currently conducted.  Each of the Partnership Parties has been duly organized as a general partnership or a limited partnership, as applicable, and is validly existing under the Laws of Alberta and is duly registered to carry on business in each jurisdiction in Canada in which the nature of any material business carried on by it or the character of any property owned or leased by it make such registration necessary, and it has full power and capacity to enter into and perform its obligations under the Documents to which it is a party, and to carry on its business as currently conducted.  Each of the Trust Parties has been duly constituted and organized under the Laws of the Province of Alberta and is a valid and subsisting trust under such Laws and it has full power and capacity to enter into and perform its obligation under the Documents to which it is a party, and to carry on its business as currently conducted.  The Trust is a mutual fund trust within the meaning of the Income Tax Act (Canada).

(b)                                 Authorization and Status of Agreements.  Each Document has been duly authorized, executed and delivered by the Loan Party that is a party thereto and the execution and delivery thereof and the performance of its obligations thereunder does not conflict with or contravene or constitute a default or create an encumbrance, other than a Permitted Encumbrance, under:

(i)                                     the constating documents or by-laws of, or any resolution of the directors, the trustee or partners, as the case may be, of any Loan Party;

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(ii)                                the Material Contracts or any other material agreement or document to which any Loan Party is a party or by which any Loan Party’s property is bound; or

(iii)                             any applicable Law.

(c)                                  Enforceability.  Each of the Documents to which a Loan Party is a party constitutes legal, valid and binding obligations of such party and is enforceable against it in accordance with the terms thereof, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, or similar statutes affecting the enforcement of creditors’ rights generally and by general principles of equity.

(d)                                 Litigation.  There are no actions, suits or proceedings at Law or before or by any Administrative Body existing or pending, or to the Borrower’s knowledge threatened, to which any of the Penn West Parties is, or to the Borrower’s knowledge is pending or threatened to be made, a party, the result of which could reasonably be expected, if successful against such party, to have a Material Adverse Effect.

(e)                                  Environmental Laws.  Each of the Penn West Parties has (i) obtained all permits, licenses and other authorizations which are required under Environmental Laws; and (ii) is in full compliance with Environmental Laws and with the terms and conditions of all such permits, licenses and authorizations; all except to the extent that failure to so obtain or so comply could not reasonably be expected to have a Material Adverse Effect.

(f)                                    Environmental Condition of Property.  The property or any part thereof owned, operated or controlled by any of the Penn West Parties:

(i)                                   is not, to the knowledge of the Borrower, the subject of any outstanding claim, charge or order from an Administrative Body alleging violation of Environmental Laws or, if subject to any such claim, charge or order, the Borrower is taking or causing to be taken, all such remedial, corrective or other action required under the claim, charge or order or is diligently and in good faith contesting or causing the Penn West Parties, as applicable, to contest the validity thereof; and

(ii)                                complies, with respect to each of its use and operation, in all respects with Environmental Laws and with the terms and conditions of all permits, licenses and other authorizations which are required to be obtained by each of them under applicable Environmental Laws, except to the extent that failure to so comply could not reasonably be expected to have a Material Adverse Effect.

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(g)                                 Title to Properties.  Each of the Penn West Parties has good and valid title to its properties, subject only to Permitted Encumbrances and to minor defects of title which in the aggregate do not materially affect the rights of ownership therein taken as a whole among all Penn West Parties.

(h)                                 Operation of Properties.  To the best of the Borrower’s knowledge, information and belief, after due enquiry, all of the oil, gas and other ▇▇▇▇▇ of the Penn West Parties have been drilled, completed, shut-in and abandoned (and they have abandoned such ▇▇▇▇▇ if they were required by applicable Law to have been abandoned), and all property owned or operated by the Penn West Parties has been and will continue to be owned, operated and maintained, as the case may be, in a good and workmanlike manner in accordance with sound industry practice and in accordance with all applicable Laws, except to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect.

(i)                                     No Adverse Change.  The audited consolidated financial statements of the Trust for its most recent fiscal year end (commencing with financial statements for the fiscal year ending December 31, 2006) provided to the Lenders were prepared in accordance with GAAP and such financial statements present fairly in all material respects the Trust’s consolidated financial position as at the date thereof and since that date there has been no occurrence of any event or circumstance which could reasonably be expected to have a Material Adverse Effect, other than as previously disclosed in writing to the Agent.

(j)                                     Information.  All factual information heretofore or contemporaneously furnished by or on behalf of the Penn West Parties to the Agent in connection with the Credit Facility, the Plan of Arrangement (except the projections related thereto) or the Penn West Parties was true and accurate in all material respects at the time given and the Borrower is not aware of any omission of any material fact which renders such factual information incomplete or misleading in any material way at the time given.  All projections prepared by or on behalf of the Penn West Parties related to the Plan of Arrangement and delivered to the Agent or the Lenders in connection herewith were prepared in good faith based on assumptions believed to be reasonable when made.

(k)                                  No Breach of Orders, Licences or Statutes.  None of the Penn West Parties is in breach of:

(i)                                     any order, approval or mandatory requirement or directive of any Administrative Body;

(ii)                                  any governmental licence or permit; or

(iii)                               any applicable Law,

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the breach of which could reasonably be expected to have a Material Adverse Effect.

(l)                                     No Default.  No Default or Event of Default has occurred and is continuing.

(m)                               Approvals.  All regulatory authorizations, consents, approvals, permits and licenses necessary for each of the Penn West Parties to carry on their respective business, as currently carried on, and all authorizations, consents and approvals necessary for each of them to enter into the Documents and perform their respective obligations thereunder have, in each case, been obtained and are in good standing, except to the extent that failure to so obtain could not reasonably be expected to have a Material Adverse Effect.

(n)                                 Subsidiaries.  As of the Closing Date, (i) the only Subsidiaries of the Trust are set forth in Schedule F and all of the issued shares, trust interests or partnership interests of such Subsidiaries have been validly issued, are outstanding as fully paid and non assessable securities and are, directly or indirectly, owned by the Trust as set forth in Schedule F, and (ii) the legal name, the jurisdiction of formation and its designation as a Restricted Subsidiary or a Non-Restricted Subsidiary of each of the Trust’s Subsidiaries is as set out in Schedule F.

(o)                                 Pension.  Each Penn West Party has in all respects complied with the contractual provisions and applicable Laws relating to each Pension Plan to which it is a party or by which it is otherwise bound, except to the extent failure to comply could not reasonably be expected to have a Material Adverse Effect.  All amounts due and owing under any such Pension Plan have been paid in full, and to the knowledge of the Borrower, no deficiency exists (whether or not waived) under any such Pension Plan that could reasonably be expected to have a Material Adverse Effect.  No ERISA Event has occurred or is reasonably expected to occur with respect to any Plan which could be reasonably expected to have a Material Adverse Effect.  Since the most recent financial statement with respect to a Plan, there has been no change in the funding status of such Plan which could be reasonably expected to have a Material Adverse Effect.  Neither any Penn West Party nor any ERISA Affiliate has incurred or is reasonably expected to incur any Withdrawal Liability to any Multiemployer Plan which could be reasonably expected to have a Material Adverse Effect.  Neither any Loan Party nor any ERISA Affiliate has been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or has been terminated, within the meaning of Title IV of ERISA, and no such Multiemployer Plan is reasonably expected to be in reorganization or to be terminated, within the meaning of Title IV of ERISA which could be reasonably expected to have a Material Adverse Effect.

(p)                                 Insurance.  Each Penn West Party has in full force and effect such policies of insurance in such amounts issued by such insurers of recognized standing

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covering the property of the Penn West Parties in accordance with prudent industry standards and Section 14.1(m).

(q)                                 Taxes.  Except for circumstances which, individually or in the aggregate, do not have and would not reasonably be expected to have a Material Adverse Effect:

(i)                                   all tax returns required to be filed by the Penn West Parties in any jurisdiction have been filed;

(ii)                                all Taxes upon the Penn West Parties or any of their property, which are due and payable, have been paid on a timely basis or within appropriate extension periods or are being contested in good faith by appropriate proceedings (and in respect of which adequate provision has been made on its books);

(iii)                             the Penn West Parties have collected, deducted, withheld and remitted to the proper taxing authorities when due all Taxes, worker’s compensation assessments, employment insurance assessments and other similar amounts required to be collected, deducted, withheld and remitted; and

(iv)                            as at the Closing Date, the Borrower does not know of any proposed additional tax assessments against them for which adequate provision has not been made on their books which have a reasonable likelihood of being adversely determined.

(r)                                    Pari Passu Ranking.  The Indebtedness of the Loan Parties under this Agreement and each other Document to which they are a party rank at least pari passu in right of payment with all of their other senior unsecured and unsubordinated indebtedness.

13.2        Acknowledgement.  The Borrower acknowledges that the Lenders are relying upon the representations and warranties in this Article 13 in making the Credit Facility available to the Borrower and that each such representation and warranty (other than that made in Sections 13.1(n) and 13.1(q)(iv)) will be deemed to be restated in every respect effective on the date each and every Advance is made under the Credit Facility except for Advances which are Rollovers or Conversions in which case only Section 13.1(l) will be deemed to be restated.

13.3        Survival and Inclusion.  The representations and warranties in this Article 13 shall survive until all Indebtedness of the Borrower hereunder has been repaid and this Agreement has been terminated.  All statements, representations and warranties contained in any Compliance Certificate and the other Documents shall constitute statements, representations and warranties made by the Borrower to the Agent and the Lenders under this Agreement.

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ARTICLE 14
COVENANTS OF THE BORROWER

14.1        Affirmative Covenants.  While any Indebtedness under the Credit Facility is outstanding or while the Credit Facility remains available to the Borrower, the Borrower covenants with the Lenders that:

(a)                                  Punctual Payment.  The Borrower will pay or cause to be paid all Indebtedness and other amounts payable under the Documents punctually when due.

(b)                                 Legal Existence.  Except as permitted by Section 17.1, the Borrower will do or will cause to be done all things necessary to preserve and keep in full force and effect the Borrower’s and each other Penn West Parties’ legal existence in good standing under the Laws of its governing jurisdiction.

(c)                                  Notice of Default.  The Borrower will notify the Agent of the occurrence of any Default or Event of Default forthwith upon becoming aware thereof and specify in such notice the nature of the event and the steps taken or proposed to be taken to remedy the same.

(d)                                 Notice of Legal Proceedings.  The Borrower will, forthwith upon becoming aware thereof, notify the Agent of the commencement of any legal or administrative proceedings against any Penn West Party which, if adversely determined against the applicable Penn West Party, could reasonably be expected to have a Material Adverse Effect.

(e)                                  Notice of Environmental Damage.  The Borrower will, forthwith upon becoming aware thereof, notify the Agent of the discovery of any Contaminant or of any Release of a Contaminant into the Environment from or upon the land or property owned, operated or controlled by any of the Penn West Parties which could reasonably be expected to have a Material Adverse Effect.

(f)                                    Compliance with Law.  The Borrower will, and will cause each other Penn West Party to, comply with all applicable Laws, including Environmental Laws, except to the extent that the failure to so comply could not reasonably be expected to have a Material Adverse Effect.

(g)                                 Quarterly Compliance Certificate.  Within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Trust and within 90 days after the end of each fiscal year of the Trust, the Borrower will deliver to the Agent a Compliance Certificate.

(h)                                 Financial Statements.  Within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Trust and within 90 days after the end of each fiscal year of the Trust, the Borrower will deliver to the Agent a copy of the Trust’s quarterly unaudited consolidated financial statements and with respect to

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its fiscal year end, its annual audited consolidated financial statements; provided that the requirement to deliver the foregoing financial statements may be satisfied by posting such financial statements or other information on ▇▇▇.▇▇▇▇▇.▇▇▇ or on a website, as applicable, within the time periods referred to above and forthwith advising the Agent that such financial statements and other information have been so posted and the details of any website on which the same have been posted.

(i)                                     Performance.  The Borrower will, and will cause each other Penn West Party to, observe the terms of and perform its obligations under each of the Documents to which it is a party.

(j)                                     Inspection of Property; Books and Records; Discussions.  The Borrower will, and will cause each other Penn West Party to, maintain books and records of account in accordance with GAAP and all applicable Laws; and permit representatives of the Agent no more than once a year while no Default or Event of Default exists (at the Lenders’ expense) and at any time while a Default or Event of Default exists (at the Borrower’s expense), subject to the Borrower’s health and safety requirements, to visit and inspect any property of any Penn West Party, including with respect to environmental matters related thereto, and to examine and make abstracts from any books and records of any Penn West Party at any reasonable time during normal business hours and upon reasonable request and notice and to discuss the business, property, condition (financial or otherwise) and prospects of any Penn West Party with their senior officers and (in the presence of such representatives, if any, as it may designate) with its auditors.

(k)                                  Operation of Properties.  The Borrower will, and will cause each other Penn West Party to, manage, maintain and operate their respective property, or, if it is not the operator, use reasonable efforts to ensure that such property is managed, maintained and operated, in accordance with (i) sound industry practice and (ii) all applicable Laws, except, in any case, to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect.

(l)                                     Performance of Leases.  The Borrower will, and will cause each other Penn West Party to, perform or cause to be performed all obligations under all leases relating to its property, including payment of rentals, royalties, taxes or other charges in respect thereof which are necessary to maintain all such leases in good standing in all material respects, provided that this covenant will not restrict their right to surrender leases which are uneconomic to maintain.

(m)                               Insurance.  The Borrower will maintain or cause to be maintained with insurers of recognized standing adequate insurance (including deductibles which are customary and prudent for the industry) in respect of the property of the Penn West Parties, including all wellhead equipment and other plant and equipment according to prudent industry standards, and will provide the Agent with copies of all insurance policies relating thereto if so requested.

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(n)                                 Pensions.  Except as could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, (i) maintain the registered status of each Plan, Multiemployer Plan and Pension Plan and all other applicable Laws which require registration, (ii) pay or cause to be paid all material obligations of each Penn West Party (including fiduciary, funding, investment and administration obligations) required to be performed in connection with each Plan, Multiemployer Plan and Pension Plan in a timely fashion, (iii) properly withhold all employee contributions to each Plan, Multiemployer Plan and Pension Plan by way of authorized payroll deduction or otherwise and pay into those plans in a timely manner, and (iv) cause all material reports and disclosures relating to each Plan, Multiemployer Plan, and Pension Plan required by those plans and any applicable Laws to be filed or distributed in a timely manner.

(o)                                 Information.  The Borrower will promptly provide (or provide access to) any other documentation and information relating to the Penn West Parties and their respective properties (including related to compliance with ERISA) as the Agent on behalf of the Lenders may reasonably request subject to any contractual restrictions regarding confidentiality, provided that the Borrower shall use reasonable commercial efforts to overcome such restrictions.

(p)                                 Payment of Taxes.  The Borrower will, and will cause each other Penn West Party to, file all tax returns which are required to be filed and pay all Taxes (including interest and penalties) which are due and payable, unless such payment is being disputed in good faith, and the applicable Penn West Party has made all appropriate provision in respect thereof in accordance with GAAP, except, in either case, to the extent that a failure to do so could not reasonably be expected to have a Material Adverse Effect.

(q)                                 Remittances.  The Borrower will, and will cause each other Penn West Party to, make all of the remittances required to be made by each Penn West Party to the applicable federal, provincial, municipal or state governments and keep such remittances up to date, except to the extent that a failure to do so could not reasonably be expected to have a Material Adverse Effect.

(r)                                    Partnership.  The partners in the Partnership Parties will consist only of the Borrower and one or more Restricted Subsidiaries.

(s)                                  Wholly-Owned Status.  The Borrower and the Restricted Subsidiaries will be direct or indirect wholly-owned Subsidiaries of the Trust.

(t)                                    Guarantee Joinders.  Within 10 Banking Days of a Subsidiary becoming a Material Restricted Subsidiary (or concurrently with a Subsidiary becoming a Material Restricted Subsidiary in accordance with a reorganization under Section 17.1), the Borrower will cause such Material Restricted Subsidiary to execute and deliver in favour of the Agent a Guarantee Joinder together with a certificate of a senior officer of such Material Restricted Subsidiary confirming that all

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authorizations and actions have been taken by such Material Restricted Subsidiary to authorize, execute and deliver the Guarantee Joinder and that such Material Restricted Subsidiary is at the time of granting of the Guarantee Joinder a direct or indirect wholly-owned Subsidiary of the Trust.  The Borrower will also deliver or cause to be delivered such other documentation pertained thereto, including legal opinions of Borrower’s Counsel, all in form and content acceptable to the Agent, acting reasonably.

(u)                                 Pari Passu Ranking.  The Borrower will, and will cause each Penn West Party to, ensure that all Indebtedness of the Loan Parties under the Documents ranks at least pari passu with all other senior, unsecured Indebtedness of the Loan Parties.

(v)                                 Ownership of Assets.  The Borrower will ensure at all times that the Borrower and the Restricted Subsidiaries own not less than 90% of the Consolidated Tangible Assets.

(w)                               Further Notices.  The Borrower will notify the Agent of (i) the incurrence by any Penn West Party of any Subordinated Debt forthwith upon incurrence thereof; (ii) any Penn West Party having a corporate or long term debt rating from any rating agency and any future change in any such rating; and (iii) any Material Adverse Effect.

14.2        Financial Covenants.  While any Indebtedness under the Credit Facility is outstanding or while the Credit Facility remains available to the Borrower, the Borrower covenants with the Lenders that:

(a)                                  the Consolidated Senior Debt to EBITDA Ratio of the Trust will not exceed 3:1, except that upon the consummation of a Material Acquisition and for a period extending to and including the end of the second full fiscal quarter of the Trust after the completion of the applicable Material Acquisition, the Consolidated Senior Debt to EBITDA Ratio of the Trust will not exceed 3.5:1;

(b)                                 the Consolidated Total Debt to EBITDA Ratio of the Trust will not exceed 4:1; and

(c)                                  the Consolidated Senior Debt to Capitalization of the Trust will not exceed 50%, except that upon the consummation of a Material Acquisition and for a period extending to and including the end of the second full fiscal quarter of the Trust after the completion of the applicable Material Acquisition, the Consolidated Senior Debt to Capitalization of the Trust will not exceed 55%,

provided that, in the case of any Material Acquisition, (i) the Trust would have continued to comply with the base level covenant threshold set out in paragraphs (a) and (c) of this Section 14.2 as though such Material Acquisition had not been made during such period, (ii) any Consolidated Total Debt incurred to finance such Material Acquisition had not been incurred and (iii) any Unitholders’ Equity issued in connection with such Material Acquisition had not been

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issued, and the Borrower provides evidence of such compliance in its Compliance Certificate relating to each applicable fiscal quarter.

14.3        Negative Covenants.  While any Indebtedness under the Credit Facility is outstanding or while the Credit Facility remains available to the Borrower:

(a)                                  Limitation on Liens.  The Borrower will not, and will not permit the other Penn West Parties to, provide or permit a Security Interest to exist over its property, except for Permitted Encumbrances.

(b)                                 Limitation on Distributions.  The Borrower will not, and will not permit the other Penn West Parties to:

(i)                                     make any Distribution or other payment to the Trust or to the holders of Trust Units if a Default or Event of Default has occurred and is continuing, except that (A) regularly scheduled cash distributions by the Penn West Parties (other than the Trust) to the Trust and (B) regularly scheduled monthly cash distributions by the Trust to the holders of Trust Units may in each case be made while a Default is subsisting but prior to an Event of Default occurring, provided in any such case, that no new Default or Event of Default could reasonably be expected to occur as a result of making such Distribution or other payment; or

(ii)                                  make any payment in respect of Subordinated Debt and Convertible Debentures during a Default or Event of Default or if such payment could reasonably be expected to cause a Default or Event of Default to occur.

(c)                                  Limitation on Hedging Agreements.  The Borrower and the other Penn West Parties shall not enter into or maintain Hedging Agreements unless the same are entered into in accordance with the then applicable hedging policies approved by the board of directors of the Borrower, provided that notwithstanding the foregoing, the Borrower and the other Penn West Parties may not enter into or maintain Hedging Agreements for speculative purposes.

(d)                                 Mergers, Amalgamations and Consolidations.  The Borrower will not, and will not permit the other Penn West Parties to, merge, amalgamate or consolidate with another Person (other than the Borrower or wholly-owned Subsidiaries of the Trust), except as otherwise permitted under Section 17.1.

(e)                                  Financial Assistance or Capital Contributions.  The Borrower will not, and will not permit any other Penn West Party to:

(i)                                     provide any guarantee, loan or other financial assistance to any Person, other than to another Penn West Party; or

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(ii)                                make any contributions of capital or any other forms of equity investment in any Person that is not a Penn West Party;

which in aggregate exceeds $50,000,000.

(f)                                    Transactions with Affiliates.  The Borrower will not, and will not permit any Penn West Party to, except as specifically permitted hereunder, enter into any transaction, including the purchase, sale or exchange of any property or the rendering of any services, with any of its shareholders, partners or with any Affiliate, or with any of its or their directors or officers, or enter into, assume or suffer to exist any employment, consulting or analogous agreement or arrangement with any such shareholder, partner or Affiliate or with any of its directors or officers, except a transaction or agreement or arrangement which is in the ordinary course of business of the applicable Penn West Party and which is upon fair and reasonable terms not less favourable to the applicable Penn West Party that it would obtain in comparable arms-length transaction; provided that such restriction will not apply to any transaction among the Penn West Parties.

(g)                                 Change in Business.  The Borrower will not, and will not permit the other Penn West Parties to, make any material change in the nature of its business as carried on at the Closing Date.

(h)                                 Asset Dispositions.  The Borrower will not, and will not permit the other Penn West Parties to, directly or indirectly, make any sale, exchange, lease, transfer or other disposition of (i) any of its right, title and interest in the Material Contracts other than to another Penn West Party, or (ii) any of its properties or assets to any Person if such sale, exchange, lease, transfer or other disposition could reasonably be expected to have a Material Adverse Effect.

(i)                                     Restricted Subsidiary Debt.  The Borrower will not permit the Restricted Subsidiaries who are not Material Restricted Subsidiaries and party to the Guarantee Agreement to incur, assume or otherwise become liable for Consolidated Total Debt which in aggregate exceeds $100,000,000.

(j)                                     Material Contracts.  The Borrower will not, and will not permit the other Penn West Parties to, terminate, make any amendment to or waive any provision of any of the Material Contracts if to do so could reasonably be expected to have a Material Adverse Effect.  The Borrower will provide copies of all amendments, supplements or replacements of any Material Contract to the Agent with sufficient copies for the Lenders.  Notwithstanding the foregoing, the Borrower will not permit any amendment to the terms of the Material Contracts as they relate to the determination and calculation of Distributions that can be distributed by any of the Penn West Parties without the prior consent of the Majority Lenders if such amendment would materially change the determination and method of calculation of such Distributions.

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ARTICLE 15
DESIGNATION OF RESTRICTED SUBSIDIARIES

15.1        Designation of Non-Restricted/Restricted Subsidiaries.

(a)                                  The Borrower from time to time, by notice to the Agent in the form of Schedule H, shall be entitled to designate (and re-designate) that either:

(i)                                     a Restricted Subsidiary will be a Non-Restricted Subsidiary; or

(ii)                                  a Non-Restricted Subsidiary will be a Restricted Subsidiary,

provided that, the Borrower will not be entitled to designate a Restricted Subsidiary to be a Non-Restricted Subsidiary if:

(iii)                               a Default or an Event of Default has occurred and is continuing unless the exercise of the Borrower’s discretion under paragraph (i) or (ii) above would cause such Default or Event of Default to be cured; or

(iv)                              a Default or an Event of Default would result from or exist immediately after such a designation.

(b)                                 As at the Closing Date, the Restricted Subsidiaries and Non-Restricted Subsidiaries are as set out in Schedule F.  Unless otherwise designated in accordance with Section 15.1(a), all Subsidiaries of the Trust will be deemed to be Restricted Subsidiaries.

ARTICLE 16
INDEMNITIES OF BORROWER

16.1        Indemnity of Borrower.  The Borrower hereby indemnifies and holds harmless each of the Agent and the Lenders, including their respective directors, officers, shareholders, employees, consultants and agents (collectively the “Indemnified Parties”), for any costs, losses, damages, expenses, judgments, suits, claims, awards, fines, sanctions and liabilities whatsoever (including any reasonable costs or expenses of defending or denying the same and including the reasonable costs or expenses of preparing any environmental assessment report or other such reports) suffered or incurred by an Indemnified Party (collectively a “Claim”), by reason of being a Lender or the Agent under this Agreement, including:

(a)                                  the Release of any Contaminant into the Environment; and

(b)                                 the remedial action, if any, required to be taken by the Agent or the Lenders in respect of any such Release,

except in such cases where and to the extent that any such Claim arises from the gross negligence or wilful misconduct of such Indemnified Party.  This indemnity will survive repayment or cancellation of the Credit Facility or any part thereof, including any termination of

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the other provisions of this Agreement.  Other than for costs and expenses incurred by the Indemnified Parties for investigating, defending or denying a Claim or preparing any necessary environmental assessment report or other reports in connection with any Claim (the reasonable costs thereof to be paid forthwith by the Borrower on demand therefore), the Indemnified Parties will not request indemnification from the Borrower unless an Indemnified Party is required by Law, based on the advice of such Indemnified Party’s counsel, to honour a Claim or any part thereof.  The Indemnified Parties will be entitled, but not obligated, to negotiate any settlement of a Claim in consultation with the Borrower, and any such settlement will be binding on the Parties.

16.2        General Indemnity.  In addition to any liability of the Borrower to the Lenders under any other provision hereof, the Borrower will and does hereby indemnify each of the Indemnified Parties and holds each of the Indemnified Parties harmless against any Claims (including reasonable out-of-pocket expenses and reasonable legal fees on a solicitor and his own client full indemnity basis) incurred by the same as a result of or in connection with: (a) any cost or expense incurred by reason of the liquidation or re-deployment in whole or in part of deposits or other funds required by any Lender to fund any Bankers’ Acceptance or to fund or maintain any Advance as a result of the Borrower’s failure to complete a Drawdown or to make any payment, repayment or prepayment on the date required hereunder or specified by it in any notice given hereunder; (b) subject to permitted or deemed Rollovers and Conversions, the Borrower’s failure to provide for the payment to the Agent for the account of the Lenders of the full principal amount of each Bankers’ Acceptance on its maturity date; (c) the Borrower’s failure to pay any other amount, including any interest or fees, due hereunder on its due date after the expiration of any applicable grace or notice periods; (d) the prepayment of any outstanding Bankers’ Acceptance before the maturity date of such Bankers’ Acceptance; (e) the Borrower’s repayment or prepayment of a LIBOR Based Loan otherwise than on the last day of its LIBOR Period; (f) the Borrower’s failure to give any notice required to be given by it to the Agent or the Lenders hereunder; (g) the failure of the Borrower or any other Penn West Party to make any other payment due hereunder or under any of the other Documents; (h) any inaccuracy of the Borrower’s or any other Penn West Party’s representations and warranties contained in any Document; (i) any failure of the Borrower or any other Penn West Party to observe or fulfil its covenants under any Document; (j) the occurrence of any Default or Event of Default; or (k) the use of the proceeds of the Credit Facility; provided that this Section 16.2 will not apply to any losses, claims, costs, damages or liabilities that arise by reason of the gross negligence or wilful misconduct of such Indemnified Party.  The provisions of this Section 16.2 shall survive repayment of the Indebtedness of the Penn West Parties under the Documents.

16.3        Right to Defend.  The Borrower will have the right, through the appointment of counsel, to participate in and/or control any action, suit or proceeding for which it is liable as an indemnitor under Section 16.1 or 16.2; provided that:

(a)                                  the Borrower will not have the right to participate in or control such action, suit or proceeding if it involves potential imposition of criminal liability upon the Indemnified Party or a conflict of interest between the Borrower and the Indemnified Party; and

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(b)                                 the Indemnified Party, at the Borrower’s expense, will have the right to retain its own counsel in the event of inconsistent defences, conflicts of interest, the Borrower not assuming the defence of the action within a reasonable period of time or there being defences available to the Indemnified Party which are different from or in addition to those available to the Borrower, and such participation by the Indemnified Party in defence will not release the Borrower from any liability that it may have to such Indemnified Party.

ARTICLE 17
REORGANIZATION

17.1        Successor Entity.  The Borrower will not, and it will not permit any Penn West Party to, enter into any transaction whereby all or substantially all of the undertaking, property and assets of the Borrower or of such Penn West Party would become the property of any other Person (a “successor entity”) whether by way of reconstruction, reorganization, recapitalization, consolidation, amalgamation, merger, transfer, sale or otherwise (other than any such transaction solely among the Penn West Parties) unless:

(a)                                  such transaction takes place in accordance with the applicable Laws;

(b)                                 prior to or contemporaneously with the consummation of such transaction, such Penn West Party, and the successor entity, as applicable, shall have executed such instruments and done such things as in the opinion of the Agent are necessary or advisable to establish that upon the consummation of such transaction:

(i)                                   the successor entity shall have assumed all the covenants and obligations of such Penn West Party under the Documents to which it is a party;

(ii)                                the Documents, as applicable, shall be a valid and binding obligation of the successor entity entitling the Agent and the Lenders, as against the successor entity, to exercise all their rights thereunder;

(iii)                             the rights and benefits afforded or intended to be afforded the Agent and the Lenders under the Documents to which such Penn West Party is a party are not adversely affected in any material respect; and

(iv)                            legal opinions satisfactory to the Agent confirming the matters set forth in Sections 17.1(b)(i) and (ii) above are provided by Borrower’s Counsel;

(c)                                  no Default or Event of Default is subsisting or would occur after giving effect to such transaction; and

(d)                                 the Lenders, acting reasonably, are satisfied with the creditworthiness of the successor entity, provided that the Lenders shall be deemed to be satisfied with the creditworthiness of the successor entity or, where the successor entity remains a Restricted Subsidiary, the Borrower or the Trust, if the senior unsecured long

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term debt of the successor entity, the Borrower or the Trust, as applicable, is rated equal to or above Investment Grade immediately prior to the effective date of the transaction and the Lenders have received satisfactory evidence that the applicable rating agencies have concluded that such rating will be equal to or above Investment Grade after giving effect to the transaction.

Notwithstanding the foregoing, the Trust will be permitted to reorganize itself and its Subsidiaries in response to ▇▇▇▇ C-52 regarding the taxation of flow through entities, if (i) each of the conditions set out above are satisfied, (ii) the resulting organizational structure is acceptable to all of the Lenders, acting reasonably, and (iii) all other terms of such a reorganization are acceptable to all of the Lenders, acting reasonably, (a “▇▇▇▇ C-52 Reorganization”).  The Parties agree to act in good faith to make any necessary amendments to this Agreement to the extent necessary to give effect to a ▇▇▇▇ C-52 Reorganization.

ARTICLE 18
EVENTS OF DEFAULT

18.1        Event of Default.  Each of the following events will constitute an Event of Default:

(a)                                  Failure to Pay.  If the Borrower defaults in the due and punctual payment of any principal amounts owing under the Documents as and when the same becomes due and payable, whether at maturity or otherwise; or if the Borrower defaults in the payment of any interest, fees or other amounts owing under the Documents as and when the same become due and payable and such default continues for a period of 3 Banking Days.

(b)                                 Incorrect Representations.  If any representation or warranty made or deemed to be made by a Penn West Party in the Documents will prove to have been incorrect when so made or deemed to have been made as herein provided, and such default continues for a period of 30 days after notice thereof being given to the Borrower by the Agent.

(c)                                  Breach of Financial Covenants.  If there is a breach in the performance or observance of any of the covenants or agreements in Section 14.2 or Section 14.3(h).

(d)                                 Breach of Covenants.  Except for an Event of Default set out elsewhere in this Section 18.1, if the Borrower or another Penn West Party defaults in the performance or observance of any covenant, obligation or condition to be observed or performed by it pursuant to any of the Documents or any other agreement now or hereafter made by the Borrower or another Penn West Party with the Agent and the Lenders and such default continues for a period of 30 days after notice thereof being given to the Borrower by the Agent.

(e)                                  Insolvency.  If a judgment, decree or order of a court of competent jurisdiction is entered against any of the Penn West Parties, (i) adjudging such party bankrupt or

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insolvent, or approving a petition seeking its reorganization or winding-up under the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada), Title 11 of the United States Code entitled “Bankruptcy”, or any other bankruptcy, insolvency or analogous Law, or (ii) appointing a receiver, trustee, liquidator, or other person with like powers, over all, or substantially all, of the property of such party, or (iii) ordering the involuntary winding up or liquidation of the affairs of such party, or (iv) if any receiver or other person with like powers is appointed over all, or substantially all, of the property of such party, unless such appointment is stayed and of no effect against the rights of the Lenders thereunder.

(f)                                    Winding Up.  If, (i) except as permitted by Section 17.1, an order or a resolution is passed for the dissolution, winding-up, reorganization or liquidation of any of the Penn West Parties, pursuant to applicable Laws, including the Business Corporations Act (Alberta), or (ii) if any of the Penn West Parties institutes proceedings to be adjudicated bankrupt or insolvent, or consents to the institution of bankruptcy or insolvency proceedings against it under the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada) or any other bankruptcy, insolvency or analogous Law, or (iii) any of the Penn West Parties consents to the filing of any petition under any such Law or to the appointment of a receiver, or other person with like powers, over all, or substantially all, of such party’s property, or (iv) any of the Penn West Parties makes a general assignment for the benefit of creditors, or becomes unable to pay its debts generally as they become due, or (v) any of the Penn West Parties takes or consents to any action in furtherance of any of the aforesaid purposes.

(g)                                 Other Indebtedness.  Any default shall have occurred and is continuing in respect of any Indebtedness of one or more Penn West Parties (other than Non-Recourse Debt or Indebtedness arising under the Credit Facility) which results in the acceleration of the payment of such Indebtedness or which permits the holder thereof to accelerate the payment of such Indebtedness and if there is a grace period applicable thereto arising under contract or otherwise, such default continues beyond the expiry of such grace period or if any lender shall demand repayment of any Indebtedness owed to it by any Penn West Party which is repayable on demand, and the aggregate principal amount of all such Indebtedness is at least the Threshold Amount.

(h)                                 Final Judgments.  A final judgment or judgments or any order is entered against one or more Penn West Parties (other than in respect of Non-Recourse Debt permitted hereunder) in an aggregate amount equal to or greater than the Threshold Amount, which remains unsatisfied or undischarged for a period of 30 days during which such judgment shall not be an appeal or execution thereof will not be effectively stayed.

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(i)            Cessation of Business.  Except as permitted by Section 17.1, any of the Penn West Parties ceases or proposes to cease carrying on business, or a substantial part thereof, or makes or threatens to make a bulk sale of its property.

(j)            Seizure of Property.  The property of any one or more of the Penn West Parties (other than any such property which secures Non-Recourse Debt permitted hereunder) having a fair market value in excess of the Threshold Amount, in the aggregate, shall be seized (including by way of execution, attachment, garnishment or distraint) or any Security Interest thereon shall be enforced, or such property shall become subject to any charging order or equitable execution of a court, or any writ of enforcement, writ of execution or distress warrant with respect to obligations in excess of the Threshold Amount shall exist in respect of any one or more of the Penn West Parties or such property, or any sheriff, civil enforcement agent or other Person shall become lawfully entitled to seize or distrain upon any such property under the Civil Enforcement Act (Alberta), the Workers’ Compensation Act (Alberta), the Personal Property Security Act (Alberta) or any other applicable Laws whereunder similar remedies are provided, and in any case such seizure, execution, attachment, garnishment, distraint, charging order or equitable execution, or other seizure or right, shall continue in effect and not released or discharged for more than 30 days.

(k)           Change of Control.  If a Change of Control occurs which is not otherwise consented to by the Majority Lenders or if the Trust or any other Penn West Party ceases to own and control all of the issued and outstanding Voting Securities or other shares of the Borrower.

(l)            Trust.  The Trust ceases to be a mutual fund trust within the meaning of the Income Tax Act (Canada) except in connection with a ▇▇▇▇ C-52 Reorganization.

(m)          Securities Exchange.  The Trust Units cease to be listed or posted for trading on a recognized North American stock exchange except in connection with a ▇▇▇▇ C-52 Reorganization and provided that the Voting Securities of the Penn West Party which is the successor public entity to the Trust resulting from such reorganization are listed on a recognized North American stock exchange.

(n)           Enforceability of Documents.  If any material provision of any Document shall at any time cease to be in full force and effect, be declared to be void or voidable or shall be repudiated, or the validity or enforceability thereof shall at any time be contested by any Penn West Party.

(o)           Qualified Auditor Report.  If the audited financial statements of the Trust that are required to be delivered by the Borrower pursuant to Section 14.1(h) contain a qualification that is not acceptable to the Majority Lenders, acting reasonably, and within a period of 30 days after the delivery of such financial statements by the Borrower hereunder either (i) such qualification is not rectified or otherwise dealt with to the satisfaction of the Majority Lenders; or (ii) the Borrower has not

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delivered a plan to the Agent as to how the Borrower plans to rectify or otherwise deal with such qualification (such plan to include the time frame within which the Borrower proposes to rectify or otherwise deal with such qualification) and such plan is not satisfactory to the Majority Lenders, acting reasonably, and following delivery and acceptance of such plan, the Borrower fails to diligently pursue the same and rectify or otherwise deal with the qualification in accordance with the plan and within the proposed time frame.

18.2                        Remedies.  Upon the occurrence of an Event of Default, the Agent may forthwith (on the direction of the Majority Lenders, or in the case of an Event of Default under Section 18.1(e) or 18.1(f) automatically) terminate any further obligation to make Advances and may declare all Indebtedness owing under the Credit Facility together with unpaid accrued interest thereon and any other amounts owing under the Documents, contingent or otherwise, to be immediately due and payable, whereupon the Borrower will be obligated without any further grace period to forthwith pay such amounts and the Agent and the Lenders, may exercise any and all rights, remedies, powers and privileges afforded by applicable Law (including any rights of set-off) or under any and all other instruments, documents and agreements made to assure payment and performance of the obligations of the Borrower under the Documents.

18.3                        Adjustments.  Upon the occurrence and any time during the continuance of an Event of Default, adjustments shall be made among the Lenders as set forth in this Section 18.3.  The Lenders shall make such adjusting payments amongst themselves in any manner as may be required to ensure their respective participations in outstanding Advances under each Tranche reflect their respective Rateable Portion under the applicable Tranche 1 including the following:

(a)                                  If any Swing Line Loans are outstanding, the Swing Line Lender may at any time in its sole and absolute discretion, on behalf of the Borrower (which hereby irrevocably directs and authorizes the Swing Line Lender to make such request on its behalf), request that each Tranche 1 Lender, through the Agent, make a Canadian Prime Rate Loan or a U.S. Base Rate Loan (or a combination thereof) to the Borrower in an amount equal to the Lender’s Rateable Portion under Tranche 1 of the principal amount of such Swing Line Loan outstanding on the date such notice is given (the “Refunded Swing Line Loans”), provided that the provisions of this paragraph shall not affect the Borrower’s obligation to repay the Swing Line Loans to the extent they remain outstanding.  Each Lender will make the proceeds of any such Canadian Prime Rate Loan or U.S. Base Rate Loan available to the Swing Line Lender on the Banking Day next following the date such notice is given in immediately available funds.  The proceeds of such Canadian Prime Rate Loan or such U.S. Base Rate Loan shall be applied by the Swing Line Lender to the payment in full of the Refunded Swing Line Loans.

(b)                                 If any Bankers’ Acceptances are outstanding under Tranche 1 as a Swing Line Loan, each Tranche 1 Lender agrees to indemnify and save harmless the Swing Line Lender, based on its Rateable Portion under Tranche 1, from any liability the Swing Line Lender may incur or suffer with respect to the such outstanding

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Bankers’ Acceptance.  On the maturity date thereof, the Swing Line Lender may in its sole and absolute discretion give written notice to the Agent that, as of the date such notice is given, such Bankers’ Acceptance will be converted into a Syndicated Advance in the form of a Canadian Prime Rate Loan.

(c)                                  If any Swing Line Letters of Credit are outstanding, the Swing Line Lender may at any time in its sole and absolute discretion give written notice to the Agent that, as of the date such notice is given, the Swing Line Letters of Credit shall constitute Fronted Letters of Credit for all purposes of this Agreement, with the Swing Line Lender being the Fronting Lender with respect to the Fronted Letters of Credit which were previously Swing Line Letters of Credit.

(d)                                 If a Fronted Letter of Credit is drawn upon which results in a payment by the Fronting Lender thereunder (in this Section 18.3, an “LC Payment”), the Fronting Lender will promptly request the Agent on behalf of the Borrower (and for this purpose the Fronting Lender is irrevocably authorized by the Borrower to do so) for an Advance by way of a Canadian Prime Rate Loan or a U.S. Base Rate Loan, as applicable, from the Tranche 1 Lenders pursuant to Article 11 to reimburse the Fronting Lender for such LC Payment.  The Tranche 1 Lenders are irrevocably directed by the Borrower to make any Canadian Prime Rate Loan or U.S. Base Rate Loan, as applicable, if so requested by the Fronting Lender and pay the proceeds thereof directly to the Agent for the account of the Fronting Lender.  Each Tranche 1 Lender unconditionally agrees to pay to the Agent for the account of the Fronting Lender such Tranche 1 Lender’s Rateable Portion under Tranche 1 of each Advance requested by the Fronting Lender on behalf of the Borrower to repay LC Payments made by the Fronting Lender.

(e)                                  The obligations of each Lender under this Section 18.3 are unconditional, shall not be subject to any qualification or exception whatsoever and shall be performed in accordance with the terms and conditions of this Agreement under all circumstances including:

(i)            any lack of validity or enforceability of the Borrower’s obligations under Section 3.10;

(ii)           the occurrence of any Default or Event of Default or the exercise of any rights by the Agent under Section 18.2; and

(iii)          the absence of any demand for payment being made, any proof of claim being filed, any proceeding being commenced or any judgment being obtained by a Lender or the LC Issuer against the Borrower.

(f)                                    If a Lender (a “Defaulting Lender”) fails to make payment on the due date therefor of any amount due from it for the account of another Lender or the LC Issuer pursuant to this Section 18.3 (the balance thereof for the time being unpaid being referred to in this Section 18.3 as an “overdue amount”), then, until such

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other Lender or the LC Issuer has received payment of that amount (plus interest as provided below) in full (and without in any way limiting the rights of such other Lender or the LC Issuer in respect of such failure):

(i)            such other Lender or the LC Issuer shall be entitled to receive any payment which the Defaulting Lender would otherwise have been entitled to receive in respect of the Credit Facility or otherwise in respect of any Loan Document; and

(ii)           the overdue amount shall bear interest payable by the Defaulting Lender to such other Lender or the LC Issuer at the rate payable by the Borrower in respect of the obligations which gave rise to such overdue amount.

(g)           If for any reason an Advance may not be made pursuant to this Section 18.3 to reimburse the LC Issuer as contemplated thereby, then promptly upon receipt of notification of such fact from the Agent, each relevant Tranche 1 Lender shall deliver to the Agent for the account of the LC Issuer in immediately available funds the purchase price for such Tranche 1 Lender’s participation interest in the relevant unreimbursed LC Payments (including interest then accrued thereon and unpaid by the Borrower).  Without duplication, each Tranche 1 Lender shall, upon demand by the LC Issuer made to the Agent, deliver to the Agent for the account of the LC Issuer interest on such Tranche 1 Lender’s Rateable Portion under Tranche 1 from the date of payment by the LC Issuer of such unreimbursed LC Payments until the date of delivery of such funds to the LC Issuer by such Tranche 1 Lender at a rate per annum equal to the one month CDOR Rate for such period.  Such payment shall only, however, be made by the Tranche 1 Lenders in the event and to the extent the LC Issuer has not been reimbursed in full by the Borrower for interest on the amount of such unreimbursed LC Payments.

(h)           The LC Issuer shall, forthwith upon its receipt of any reimbursement (in whole or in part) by the Borrower for any unreimbursed LC Payments in relation to which other Tranche 1 Lenders have purchased a participation interest pursuant to this Section  18.3, or of any other amount from the Borrower or any other Person in respect of such payment (other than pursuant to Section 3.10), transfer to such other Tranche 1 Lender such other Tranche 1 Lender’s Rateable Portion under Tranche 1 of such reimbursement or other amount.  In the event that any receipt by the LC Issuer of any reimbursement or other amount is found to have been a transfer in fraud of creditors or a preferential payment under any applicable insolvency legislation or is otherwise required to be returned, such Tranche 1 Lender shall promptly return to the LC Issuer any portion thereof previously transferred to it by the LC Issuer, without interest to the extent that interest is not payable by the LC Issuer in connection therewith.

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18.4                        Waivers.  An Event of Default may only be waived by the Majority Lenders, other than an Event of Default set forth in Sections 18.1(e), (f), (i) or (l) which may only be waived by all of the Lenders.

18.5                        Set-off.  The Borrower agrees that, upon the occurrence of an Event of Default, in addition to and without limitation of any right of set-off, bankers’ lien, counterclaim or other right or remedy that the Agent and the Lenders may otherwise have, the Agent and each Lender will be entitled, at its option, to offset any and all balances and deposits held by it for the account of the Borrower at any of its offices or branches, in any currency, against any and all amounts owed by the Borrower to the Agent or such Lender hereunder (regardless of whether any such balances are then due or payable to the Borrower), including all claims of any nature or

description arising out of or connected with this Agreement, including contingent obligations of the Lenders in respect of unmatured Bankers’ Acceptances, in which case the Agent or such Lender will promptly notify the Borrower thereof after the occurrence thereof; provided that the Agent’s or such Lender’s failure to give any such notice will not affect the validity thereof.  Nothing contained in the Documents will require the Agent or a Lender to exercise any right, or will affect the right of the Agent or a Lender to exercise and retain the benefits of exercising any right, with respect to any Indebtedness or other obligation of the Borrower existing otherwise than pursuant to the Documents.

18.6                        Application of Proceeds.  Except as otherwise agreed to by the Majority Lenders in their sole discretion and as otherwise expressly provided hereunder, all payments made by or on behalf of the Borrower under the Documents, after acceleration pursuant to Section 18.2, will be applied by the Agent in the following order:

(a)                                  in payment of any amounts due and payable by way of recoverable expenses;

(b)                                 in payment of any amounts by way of any fees (other than standby fees, stamping fees, Issuance Fees and Fronting Fees);

(c)                                  in payment of any amounts due and payable as and by way of interest or standby fees, stamping fees, Issuance Fees and Fronting Fees, including any interest on overdue amounts; and

(d)                                 in payment of the Aggregate Principal Amount under the Credit Facility and all other amounts under the Documents and the obligations of the Penn West Parties under any Hedging Agreement with a Hedge Provider to the extent crystallized at such time on a pro rata basis.

ARTICLE 19
CONFIDENTIALITY

19.1                        Non-Disclosure.  All information, including any information relating to a Hostile Acquisition, other than information that is required by applicable Law to be disclosed by the Party receiving the confidential information to any Administrative Body of competent jurisdiction, including any central bank or other banking regulatory authority and any official

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bank examiners or regulators, will be held by the Parties in the strictest confidence and will not be disclosed to any Person, except as provided in Sections 19.2 and 19.3, provided that the confidential nature of the information is made known or ought to have been known to the disclosing Party.

19.2                        Exceptions.  Section 19.1 does not apply to confidential information:

(a)                                  of a Party where that Party consents to its disclosure;

(b)                                 which becomes part of the public domain without breach of Section 19.1;

(c)                                  received from a third party without restriction on further disclosure and without breach of Section 19.1; or

(d)                                 developed independently without breach of Section 19.1.

19.3                        Permitted Disclosures by Agent and Lenders.  Confidential information received by the Agent or a Lender may be disclosed to the Agent or any other Lender, any Affiliate thereof (including a Hedge Provider), any Participant, any financial institution which desires to become a Lender hereunder or any actual or prospective counterparty to any securitization, swap or derivative transaction relating to the Penn West Parties (provided that in the case of any Participant, prospective lender or actual or prospective counterparty any such Person has entered into confidentiality covenants with the Agent and the Borrower substantially the same as those contained in this Article 19) and to their respective employees, auditors, accountants, legal counsel, geologists, engineers and other consultants and financial advisors retained by the Agent, such Lender, such Affiliate or such financial institution on a need to know basis.

19.4                        Survival.  The obligations of the Parties under this Article 19 will survive the termination of this Agreement.

ARTICLE 20
ASSIGNMENT

20.1                        Assignment of Interests.  Except as expressly permitted under this Article 20 and subject to Article 17, this Agreement and the rights and obligations hereunder will not be assignable, in whole or in part, by the Borrower without the prior consent of all of the Lenders.

20.2                        Assignment by the Lenders.  Each Lender will have the right to sell or assign, in minimum portions of $5,000,000, such Lender’s Individual Tranche 1 Commitment Amount or Individual Tranche 2 Commitment Amount to one or more financial institutions with the consent of the Agent, the Swing Line Lender and the Fronting Lender and, if no Event of Default has occurred and is continuing, the consent of the Borrower, each such consent not to be unreasonably withheld or delayed, and further provided that at and after the time of the assignment, the Borrower will not be under any obligation to pay, by way of withholding tax or otherwise, any greater amount (other than the Discount Rate for Bankers’ Acceptances) than it would have been obliged to pay if the Lender had not made an assignment and provided further,

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that each remaining Lender will at all times maintain an Individual Tranche 1 Commitment Amount or Individual Tranche 2 Commitment Amount, as the case may be, in an aggregate principal amount at least equal to $5,000,000, except to the extent the assignment is of a Lender’s entire Individual Tranche 1 Commitment Amount or Individual Tranche 2 Commitment Amount, as the case may be.  Notwithstanding the foregoing, a Lender may sell or assign its Individual Commitment Amount to an Affiliate thereof without the consent of the Agent, the Swing Line Lender, the Fronting Lender or the Borrower if (a) such Lender remains liable for its obligations under the Documents notwithstanding such sale or assignment, and (b) the Borrower will not be under any obligation to pay, by way of withholding tax or otherwise, any greater amount than it would have been obliged to pay if the Lender had not made such sale or assignment.  An assignment fee of $3,500 for each such assignment (other than to an Affiliate) will be payable to the Agent by the assignor Lender, other than in respect of an assignment by the Agent.  In the event of such sale or assignment, the Borrower will execute and deliver all such agreements, documents and instruments as the Agent or Lender may reasonably request to effect and recognize such syndication, participation, sale or assignment.

20.3                        Effect of Assignment.  To the extent that any Lender assigns any portion of its Individual Commitment Amount pursuant to Section 20.2 and such new Lender or new Lenders, as the case may be, has executed and delivered to the Borrower and the Agent an Assignment, such Lender will be relieved and forever discharged of any and all of its covenants and obligations under the Documents in respect of that portion of its Individual Commitment Amount so sold or assigned from and after the effective date of the Assignment and the Borrower’s recourse under the Documents in respect of such portion so sold or assigned from and after the effective date of the Assignment will be to such new Lender or new Lenders, as the case may be, only and their successors and permitted assigns.

20.4                        Participations.  Any Lender may at any time sell to one or more financial institutions or other Persons (each of such financial institutions and other Persons being herein called a “Participant”) participating interests in any of the Advances, commitments, or other interests of such Lender hereunder, provided, however, that:

(a)                                  no participation contemplated in this Section 20.4 will relieve such Lender from its commitments or its other obligations hereunder or under any other Document;

(b)                                 such Lender will remain solely responsible for the performance of its commitments and such other obligations as if such participation had not taken place;

(c)                                  the Agent and the Borrower will continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and each of the other Documents;

(d)                                 no Participant will have any right (through a right of consent or approval or otherwise) to require such Lender to take or refrain from taking any action hereunder or under any other Document; and

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(e)                                  the Borrower will not be required to pay any amount hereunder that is greater than the amount which it would have been required to pay had no participating interest been sold.

ARTICLE 21
ADMINISTRATION OF THE CREDIT FACILITY

21.1                        Authorization and Action.

(a)                                  Authorization and Action.  Each Lender hereby irrevocably appoints and authorizes the Agent to be its agent in its name and on its behalf and to exercise such rights or powers granted to the Agent or the Lenders under the Documents to the extent specifically provided therein and on the terms thereof, together with such powers and authority as are reasonably incidental thereto.  As to any matters not expressly provided for by the Documents, the Agent will not be required to exercise any discretion or take any action, but will be required to act or to refrain from acting (and will be fully indemnified and protected by the Lenders to the greatest extent permitted by applicable Law in so acting or refraining from acting) upon the instructions of the Majority Lenders, and such instructions will be binding upon all Lenders, provided however that the Agent will not be required to take any action which, in the opinion of the Agent, might expose the Agent to liability in such capacity, which could result in the Agent incurring any costs and expenses, or which is contrary to the spirit and intent of this Agreement.

(b)                                 Lenders’ Determination.  Where the provisions of this Agreement provide that any waiver of or any amendment to any provision of the Documents may be made or any action, consent or other determination in connection with the Documents may be taken or given, with the consent or agreement of the Majority Lenders, then any such waiver, amendment, action, consent or determination so made, so taken or so given with the consent or agreement of the Majority Lenders will be binding on all of the Lenders and all of the Lenders will cooperate in all ways necessary or desirable to implement and effect such waiver, amendment, action, consent or determination.

(c)                                  Deemed Non-Consent.  If the Agent delivers a notice to a Lender requesting advice from such Lender as to whether it consents or objects to any matter in connection with the Documents, then, except as otherwise expressly provided herein, if such Lender does not deliver to the Agent its consent or objection to such matter within the time period referenced in such notice, or if no such period is referenced therein, within 10 Banking Days of the delivery of such notice by the Agent to such Lender, such Lender will be deemed not to have consented thereto upon the expiry of such period.

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21.2                        Procedure for Making Advances.

(a)                                  Pro Rata Advances.  Subject to Sections 3.3, 3.5, 3.10, 7.2, 7.3, 7.4 and 11.1(d) all Advances made by the Lenders will be made in accordance with each Lender’s Rateable Portion of such Advance, except to the extent that the Agent deems any variations therefrom to be immaterial.  The Agent shall determine all adjustments to the amounts required to be advanced by the Lenders to reflect as nearly as practicable the respective Rateable Portions of the Lenders under the Credit Facility.

(b)                                 Instructions from Borrower.  Subject to Article 10, the Lenders, through the Agent, will make Advances available to the Borrower as required hereunder by debiting the account of the Agent to which each Lender’s Rateable Portion of such Advances have been credited in accordance with Section 6.6 (or causing such account to be debited) and, in the absence of other arrangements agreed to by the Agent and the Borrower in writing, by transferring (or causing to be transferred) like funds in accordance with the instructions of the Borrower as set forth in the Notice of Borrowing, Notice of Rollover or Notice of Conversion, as the case may be, in respect of each Advance under the Credit Facility, provided that the obligation of the Agent hereunder will be limited to taking such steps as are in keeping with its normal banking practice commercially reasonable in the circumstances to implement such instructions, and the Agent will not be liable for any damages, claims or costs which may be suffered by the Borrower or any of the Lenders and occasioned by the failure of such funds to reach their designated destination, unless such failure is due to the gross negligence or wilful misconduct of the Agent.

(c)                                  Assumption Respecting Availability.  Unless the Agent has been notified by a Lender within 2 Banking Days prior to an anticipated Advance that such Lender will not make available to the Agent its Rateable Portion of such Advance, the Agent may assume, without any enquiry required on its part, that such Lender has made or will make such portion of the Advance available to the Agent on the date such Advance is to take place, in accordance with the provisions hereof and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount.  If and to the extent such Lender will not have so made its Rateable Portion of an Advance available to the Agent, such Lender agrees to pay to the Agent, forthwith on demand, such Lender’s Rateable Portion of the Advance and all reasonable costs and expenses incurred by the Agent in connection therewith together with interest thereon (at the rate payable thereunder by the Borrower in respect of such Advance) for each day from the date such amount is made available to the Borrower until the date such amount is paid to the Agent, provided however, that if such Lender fails to so pay, the Borrower covenants and agrees that without prejudice to any rights the Borrower may have against such Lender, it will repay the amount of such Lender’s Rateable Portion of the Advance (without duplication) to the Agent for the account of the Agent after

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receipt of the certificate referred to below and forthwith after demand therefor by the Agent.  The amount payable to the Agent pursuant hereto will be as set forth in a certificate delivered by the Agent to such non-paying Lender and the Borrower (which certificate will contain reasonable details of how the amount payable is calculated) and will be conclusive and binding, for all purposes, in the absence of manifest error.  If such Lender makes the payment to the Agent as required herein, the amount so paid will constitute such Lender’s Rateable Portion of the Advance for purposes of this Agreement.  The failure of any Lender to make its Rateable Portion of the Advance will not relieve any other Lender of its obligation, if any, hereunder to make its Rateable Portion of the Advance on the date that such Advance is to take place, but no Lender will be responsible for the failure of any other Lender to provide its Rateable Portion of any Advance under the Credit Facility.

21.3                        Remittance of Payments.  Forthwith after receipt of any payment by the Borrower hereunder, the Agent, if and to the extent a Lender is entitled thereto, will remit to such Lender its Rateable Portion of such payment, provided that, if the Agent, on the assumption that it will receive on any particular date a payment of principal, interest or fees hereunder, remits to a

Lender its Rateable Portion of such payment and the Borrower fails to make such payment, each such Lender agrees to repay to the Agent forthwith on demand such Lender’s Rateable Portion of any such payment, together with all reasonable costs and expenses incurred by the Agent in connection therewith and interest thereon at the rate and calculated in the manner customarily applicable to interbank payments for each day from the date such amount is remitted to such Lender.  The exact amount of the repayment required to be made by a Lender pursuant hereto will be set forth in a certificate delivered by the Agent to such Lender, which certificate will be conclusive and binding for all purposes in the absence of manifest error.

21.4                        Redistribution of Payment.  Each Lender agrees that:

(a)           If it exercises any right of counter-claim, set off, bankers’ lien or similar right with respect to any property of the Borrower or if under applicable Law it receives a secured claim, the security for which is a debt owed by it to the Borrower, it will apportion the amount thereof proportionately between:

(i)            amounts outstanding at such time owed by the Borrower to such Lender under this Agreement, which amounts will be applied in accordance with this Section 21.4; and

(ii)           amounts otherwise owed to it by the Borrower, provided that any cash collateral account held by such Lender as collateral for a letter of credit or bankers’ acceptance (including a Bankers’ Acceptance) issued or accepted by such Lender on behalf of the Borrower may be applied by such Lender to such amounts owed by the Borrower to such Lender pursuant to such letter of credit or in respect of any such bankers’ acceptance without apportionment.

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(b)           If it receives, through the exercise of a right or the receipt of a secured claim described in paragraph (a) above or otherwise, payment of a proportion of the aggregate amount of principal, interest and fees due to it hereunder which is greater than the proportion received by any other Lender in respect of the aggregate amount of principal, interest and fees due in respect of the Credit Facility (having regard to the respective proportionate amounts advanced as Advances by each of the Lenders), the Lender receiving such proportionately greater payment will purchase a participation (which will be deemed to have been done simultaneously with receipt of such payment) in that portion of the Credit Facility of the other Lenders so that their respective receipts will be pro rata to their respective Rateable Portions, provided however that, if all or part of such proportionately greater payment received by such purchasing Lender will be recovered, such purchase will be rescinded and the purchase price for such participation will be returned to the extent of such recovery, but without interest.  Such Lender will exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders entitled under this Section 21.4 to share in the benefits of any recovery on such secured claims.

(c)           If it does any act or thing permitted by paragraphs (a) or (b) above, it will promptly provide full particulars thereof to the Agent.

(d)           Except as permitted under paragraphs (a), (b) and (c) above, no Lender will be entitled to exercise any right of counter-claim, set off, bankers’ lien or similar right without the prior consent of the other Lenders.

21.5        Duties and Obligations.  The Agent and any of its directors, officers, agents or employees (and, for purposes hereof, the Agent will be deemed to be contracting as agent for and on behalf of such Persons) will not be liable to any Lender for any action taken or omitted to be taken by it under or in connection with the Documents, except for its gross negligence or wilful misconduct.  Without limiting the generality of the foregoing, the Agent:

(a)           may assume that there has been no assignment or transfer by the Lenders of their rights under the Documents, unless and until the Agent receives a duly executed Assignment from such Lender;

(b)           may consult with counsel (including counsel for the Borrower), independent public accountants and other experts selected by it and will not be liable for any action taken or omitted to be taken in good faith by it in accordance with or reliance upon the advice of such counsel, accountants or experts;

(c)           will incur no liability under or in respect of the Documents by acting upon any notice, consent, certificate or other instrument or writing believed by it to be genuine and signed or sent by the apparently proper Person or by acting upon any representation or warranty of any Penn West Party made or deemed to be made hereunder;

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(d)           may assume that no Default or Event of Default has occurred and is continuing unless it has actual knowledge to the contrary; and

(e)           may rely, as to any matter of fact which might reasonably be expected to be within the knowledge of any Person, upon a certificate signed by or on behalf of such Person.

Further, the Agent (i) does not make any warranty or representation to any Lender nor will it be responsible to any Lender for the accuracy or completeness of the data made available to any of the Lenders in connection with the Credit Facility, or for any statements, warranties or representations (whether written or oral) made in connection with the Credit Facility, (ii) will not have any duty to ascertain or to enquire as to the performance or observance of any of the terms, covenants or conditions of the Documents on the part of the Borrower or to inspect the property (including books and records) of the Borrower, and (iii) will not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of the Documents or any other instrument or document furnished pursuant hereto or thereto.

21.6                        Prompt Notice to the Lenders.  Notwithstanding any other provision herein, the Agent agrees to provide to the Lenders, with copies where appropriate, all information, notices and reports required to be given to the Agent by the Borrower hereunder, promptly upon receipt of same, excepting therefrom information and notices relating solely to the role of the Agent hereunder.

21.7                        Agent and Agent Authority.  With respect to its Rateable Portion of Aggregate Commitment Amount and the Advances made by it as a Lender under the Credit Facility, as applicable, the Agent will have the same rights and powers under the Documents as any other Lender and may exercise the same as though it were not the Agent.  The Agent may accept deposits from, lend money to, and generally engage in any kind of business with the Penn West Parties, their shareholders or unitholders or any Person owned or controlled by any of them and any Person which may do business with any of them, all as if the Agent was not serving as Agent, and without any duty or obligation to account therefor to the Lenders.

21.8                        Lenders’ Credit Decisions.  It is understood and agreed by each Lender that it has itself been, and will continue to be, solely responsible for making its own independent appraisal of and investigations into the financial condition, creditworthiness, condition, affairs, status and nature of the Borrower.  Accordingly, each Lender confirms with the Agent that it has not relied, and will not hereafter rely, on the Agent (a) to check or enquire on its behalf into the adequacy, accuracy or completeness of any information provided by the Penn West Parties or any other Person under or in connection with the Credit Facility, the Plan of Arrangement or the Penn West Parties (whether or not such information has been or is hereafter distributed to such Lender by the Agent) or (b) to assess or keep under review on its behalf the financial condition, creditworthiness, condition, affairs, status or nature of the Penn West Parties.  Each Lender acknowledges that copies of the Documents have been made available to it for review and each Lender acknowledges that it is satisfied with the form and substance of the Documents.  A Lender will not make any independent arrangement with the Penn West Parties for the

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satisfaction of any Indebtedness owing to it under the Documents without the consent of the other Lenders.

21.9                        Indemnification.  The Lenders hereby agree to indemnify the Agent and its directors, officers, agents and employees (to the extent not reimbursed by the Borrower) in accordance with their respective Rateable Portions, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent or its directors, officers, agents and employees in any way relating to or arising out of the Documents or any action taken or omitted by the Agent under or in respect of the Documents in its capacity as Agent, provided that no Lender will be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent’s gross negligence or wilful misconduct.  Without limiting the generality of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its Rateable Portion of any reasonable out-of-pocket expenses (including legal fees, on a solicitor and his own client full indemnity basis) incurred by the Agent in connection with the preservation of any right of the Agent or the Lenders under, or the enforcement of, or legal advice in respect of rights or responsibilities under, the Documents, to the extent that the  Agent is not reimbursed for such expenses by the Borrower.  This indemnity will survive the termination of the other provisions of this Agreement as a separate and continuing covenant of the Lenders.

21.10                 Successor Agent.  The Agent may, as hereinafter provided, resign at any time by giving 30 days’ prior notice (the “Resignation Notice”) thereof to the Lenders and the Borrower.  The Majority Lenders, with the consent of the Borrower, provided no Event of Default is subsisting, such consent not to be unreasonably withheld, will forthwith upon receipt of the Resignation Notice appoint a successor agent (the “Successor Agent”) to assume the duties hereunder of the resigning Agent.  Upon the acceptance of any appointment as agent hereunder by a Successor Agent, such Successor Agent will thereupon succeed to and become vested with all the rights, powers, privileges and duties as agent under the Documents of the resigning Agent.  Upon such acceptance, the resigning Agent will be discharged from its further duties and obligations as agent under the Documents, but any such resignation will not affect such resigning Agent’s obligations hereunder as a Lender, including for its Rateable Portion of the Aggregate Commitment Amount.  After the resignation of the Agent as agent hereunder, the provisions of this Article 21 will continue to enure to its benefit as to any actions taken or omitted to be taken by it while it was the agent of the Lenders hereunder.  Notwithstanding the foregoing, if the Majority Lenders fail to appoint a Successor Agent within 30 days of receipt of the Resignation Notice, the resigning Agent may appoint a Successor Agent from among the Lenders, with the consent of the Borrower, provided no Event of Default is subsisting, such consent not to be unreasonably withheld.

21.11                 Taking and Enforcement of Remedies.  Except as otherwise provided herein, each Lender hereby acknowledges that, to the extent permitted by applicable Law, rights and remedies provided under the Documents to the Lenders are for the benefit of the Lenders collectively and not severally and further acknowledges that its rights and remedies thereunder are to be exercised

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not severally but collectively through the Agent upon the decision of the Lenders (with the required majority or unanimity as herein provided), regardless of whether acceleration of Indebtedness hereunder was made, and accordingly, notwithstanding any of the provisions contained herein, each of the Lenders hereby covenants and agrees that it will not be entitled to take any action with respect to the Credit Facility, including any acceleration of Indebtedness thereunder, but that any such action will be taken only by the Agent with the prior direction of the Lenders (with the required majority or unanimity as herein provided).  Notwithstanding the foregoing, in the absence of written instructions from the Lenders, and where in the sole opinion of the Agent the exigencies of the situation warrant such action, the Agent may without notice to or consent of the Lenders take such action on behalf of the Lenders as it deems appropriate or desirable in the circumstances.  Each of the Lenders hereby covenants and agrees that it has not heretofore and will not seek, take, accept or receive any security for any of the Indebtedness of the Penn West Parties under the Documents and will not enter into any agreement with any of the Parties relating in any manner whatsoever to the Credit Facility, unless all of the Lenders will at the same time obtain the benefit of any such security or agreement, as the case may be.

21.12                 Reliance Upon Agent.  The Borrower will be entitled to rely upon any certificate, notice or other document or other advice, statement or instruction provided to it by the Agent pursuant to the Documents, and the Borrower will be entitled to deal with the Agent with respect to matters under the Documents which the Agent is authorized hereunder to deal with, without any obligation whatsoever to satisfy itself as to the authority of the Agent to act on behalf of the Lenders and without any liability whatsoever to the Lenders for relying upon any certificate, notice or other document or other advice, statement or instruction provided to them by the Agent, notwithstanding any lack of authority of the Agent to provide the same.

21.13                 Agent May Perform Covenants.  If the Borrower fails to perform any covenant on its part herein contained, the Agent may give notice to the Borrower of such failure and if, within 10 days of such notice (or after the expiry of such other time or cure period as may be required in this Agreement), such covenant remains unperformed, the Agent on behalf of the Lenders may, in its sole discretion but need not, perform any such covenant capable of being performed by it and, if the covenant requires the payment or expenditure of money, the Agent may make such payment or expenditure and all sums so expended will be forthwith payable by the Borrower to the Agent on behalf of the Lenders and will bear interest at the Canadian Prime Rate plus 2%.

21.14                 No Liability of Agent.  The Agent, in its capacity as agent of the Lenders under the Credit Facility, will have no responsibility or liability to the Borrower or the Lenders on account of the failure of any Lender to perform its obligations hereunder, or to any Lender on account of the failure of the Borrower to perform its obligations under the Documents.

21.15                 Nature of Obligations under this Agreement.

(a)           Obligations Separate.  The obligations of each Lender and the Agent under this Agreement are separate.  The failure of any Lender to carry out its obligations hereunder will not relieve the other Lenders, the Agent or the Borrower of any of their respective obligations hereunder.

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(b)           No Liability for Failure by other Lenders.  Neither the Agent nor any Lender will be liable or otherwise responsible for the obligations of any other Lender hereunder.

21.16      Lender Consent.

(a)           Unanimity.  Notwithstanding anything herein to the contrary and without limiting in any way the context of any provision in this Agreement requiring the consent, approval or action of all Lenders under the Credit Facility, the following matters will require the approval, consent or agreement, as the context requires, of all Lenders under the Credit Facility:

(i)            the reduction or forgiveness of any Indebtedness payable by the Borrower to the Lenders under the Credit Facility or under any of the Documents pertaining to the Credit Facility;

(ii)           any increase of the Aggregate Commitment Amount, the Tranche 1 Commitment Amount or the Tranche 2 Commitment Amount (except as permitted by Section 3.2);

(iii)          the postponement of any maturity date of any Indebtedness of the Borrower to the Lenders under the Credit Facility or under any of the Documents pertaining to the Credit Facility;

(iv)          subject to Article 17, the requirement for delivery of, or any waiver or material amendment under, or release of the Guarantee Agreement other than as a result of a Restricted Subsidiary being designated as a Non-Restricted Subsidiary in accordance with Section 15.1;

(v)           any change in the nature of Advances under the Credit Facility or any change to the covenants referred to in Sections 3.9, 4.2, 14.3(h) and 18.4;

(vi)          any amendment to Section 2.1, 18.4 or 20.1 or this Section 21.16(a); and

(vii)         any change to the definition of “Majority Lenders”;

provided that any change to Section 3.10 or 18.3 will also require the consent of the Swing Line Lender and the Agent, any change to Article 11 will require the consent of the LC Issuer and the Agent and any change to this Article 21 will require the consent of the Agent.  In addition, any change to the Individual Commitment Amount of a Lender can only be made with the consent of such Lender.

(b)           Majority Consent.  Subject to Section 21.16(a), any waiver of or any amendment to any provision of the Documents as they pertain to the Credit Facility and any action, consent or other determination in connection with the Documents as they

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pertain to the Credit Facility will bind all of the Lenders under the Credit Facility if such waiver, amendment, action, consent or other determination is agreed to in writing by the Majority Lenders.

ARTICLE 22
MISCELLANEOUS

22.1                        Notices.  Unless otherwise provided in the Documents, any notice, consent, direction, approval, request, agreement, determination, demand or other communication required or permitted to be given or made thereunder, will be in writing and will be sufficiently given or made if:

(a)                                  left at the relevant address set forth below or in Schedule B, as applicable; or

(b)                                 telecopied or sent by other means of recorded electronic communication; and

(i)                                     if to the Agent, addressed to the Agent at:

Canadian Imperial Bank of Commerce

BCE Place

▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇^▇▇ ▇▇▇▇▇

▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇

▇▇▇ ▇▇▇

(ii)                                  if to any of Penn West Parties, addressed to any of them at:

Penn West Petroleum Ltd.

▇▇▇▇, ▇▇▇ – ▇^▇▇ ▇▇▇▇▇▇ ▇.▇.

▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇

▇▇▇ ▇▇▇

(iii)                               if to any Lender, addressed to such Lender at the address set forth opposite such Lender’s name in Schedule B.

(c)                                  The Parties each covenant to accept service of judicial proceedings arising under the Documents at its respective address set forth herein.

(d)                                 Any notice or other communication given or made in accordance with this Section 22.1 will be deemed to have been received on the day of delivery if delivered as aforesaid or on the day of receipt of same by telecopy or other recorded means of electronic communication, as the case may be, provided such

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day is a Banking Day and that such notice is received prior to 12:00 noon local time and, if such day is not a Banking Day or if notice is received after 12:00 noon local time, on the first Banking Day thereafter.

(e)                                Each Party may change its address and telecopier number for purposes of this Section 22.1 by notice given in the manner provided in this Section 22.1 to the other Parties.

(f)                                  Any notice given under any of the Documents to the Agent will be deemed to also be given to and received by the Agent in its capacity as Lender.

22.2                        Telephone Instructions.  Any verbal instructions given by the Borrower in relation to this Agreement will be at the risk of the Borrower and neither the Agent nor the Lenders will have any liability for any error or omission in such verbal instructions or in the interpretation or execution thereof by the Agent or a Lender, as the case may be, provided the Agent or Lender, as the case may be, acted without gross negligence in the circumstances.  The Agent will notify the Borrower of any conflict or inconsistency between any written confirmation of such verbal instructions received from the Borrower and the said verbal advice as soon as practicable after the conflict or inconsistency becomes apparent to the Agent.

22.3                        No Partnership, Joint Venture or Agency.  Except as expressly provided for herein, the Parties agree that nothing contained in this Agreement nor the conduct of any Party will in any manner whatsoever constitute or be intended to constitute any Party as the agent or representative or fiduciary of any other Party nor constitute or be intended to constitute a partnership or joint venture among the Parties or any of them, but rather each Party will be separately responsible, liable and accountable for its own obligations under the Documents, or any conduct arising therefrom and for all claims, demands, actions and causes of action arising therefrom.  The Parties agree that no Party will have the authority or represent that it has, or hold itself out as having, the authority to act for or assume any obligation or responsibility on behalf of any other Party, save and except as may be expressly provided for in this Agreement.

22.4                        Judgment Currency.

(a)                                Deficiency.  If, for the purposes of obtaining judgment in any court or any other related purpose hereunder, it is necessary to convert an amount due hereunder in the currency in which it is due (the “Original Currency”) into another currency (the “Second Currency”), the rate of exchange applicable will be the daily noon day rate quoted by the Bank of Canada on the relevant date to purchase in Toronto, Ontario the Original Currency with the Second Currency and includes any premium and costs of exchange payable by the purchaser in connection with such purchase.  Each Party (the “First Party”) agrees that its obligation in respect of any Original Currency due from it to the another Party hereunder will, notwithstanding any judgment or payment in the Second Currency, be discharged only to the extent that on the Banking Day following the receipt of any sum so paid in the Second Currency, the other Parties may, in accordance with normal banking procedures, purchase in the Toronto, Ontario foreign exchange market

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the Original Currency with the amount of the Second Currency so paid; and if the amount of the Original Currency so purchased is less than the amount originally due in the Original Currency, the First Party agrees that the deficiency will be a separate and continuing obligation of it, independent from its obligations under this Agreement, and will constitute in favour of the other Parties a cause of action which will continue in full force and effect notwithstanding any such judgment, or order to the contrary, and the First Party agrees, notwithstanding any such payment or judgment, to indemnify the other Parties against any such loss or deficiency.

(b)                                 Excess.  The Lenders through the Agent will pay to the Borrower the amount, if any, after netting out all amounts due by the Borrower under Section 22.4(a), which the Lenders may realize in excess of what is owed to them by virtue of the conversion of the Original Currency into the Second Currency.

22.5                        Further Assurances.  The Borrower will, from time to time forthwith at the Agent’s request and at the Borrower’s own cost and expense, do, make, execute and deliver, or cause to be done, made, executed and delivered, all such further documents, acts, matters and things which may be reasonably required by the Agent with respect to the Credit Facility, the Penn West Party Guarantees or any part thereof and to give effect to any provision of the Documents.

22.6                        Expenses.  The Borrower will pay or reimburse the Agent and the Lenders, as applicable, for the out-of-pocket expenses, including environmental risk assessments, reasonable legal fees (on a solicitor and his own client fully indemnity basis) and disbursements, and enforcement costs, incurred by the Agent and the Lenders, as applicable, in connection with the negotiation, preparation, execution, syndication, maintenance of the Documents and the enforcement of their rights and remedies under the Documents.  The Borrower will not, however, be liable for the wages or salaries of employees of the Agent or the Lenders employed to administer the Credit Facility.

22.7                        Waiver of Laws.  To the extent legally permitted, the Borrower hereby irrevocably and absolutely waives the provisions of any applicable Law which may be inconsistent at any time with, or which may delay or limit in any way, the enforcement of the Documents in accordance with their terms.

22.8                        Attornment and Waiver of Jury Trial.  The Parties hereto do hereby irrevocably:

(a)                                  submit and attorn to the non-exclusive jurisdiction of the courts of the Province of Alberta for all matters arising out of or relating to the Documents or any of the transactions contemplated thereby; and

(b)                                 waive any right they may have to, or to apply for, trial by jury in connection with any matter, action, proceeding, claim or counterclaim arising out of or relating to the Documents or any of the transactions contemplated thereby.

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22.9                        Interest on Payments in Arrears.

(a)                                  Except as otherwise provided in this Agreement, interest will be paid by the Parties as follows:

(i)            on amounts for which any Party has actually incurred an out-of-pocket expense and for which another Party has an obligation under the Documents to reimburse such amounts to the Party incurring the expenses, interest will be payable on such amount at the Canadian Prime Rate plus 2% from and including the day on which the amount was incurred to but excluding the day on which the amount is reimbursed if, commencing on the date which is 3 Banking Days following a demand for payment of the amount in accordance with the terms of the Documents, such expense has not been paid; and

(ii)           on amounts payable by one Party to another Party under the Documents where such payment is in default but the non-payment of such amount has not required an actual out-of-pocket expense by the Party to whom such payment is due, at the Canadian Prime Rate plus 2% from and including the day on which the payment was due to, but excluding the day on which the payment is made whether before or after judgment, but if such payment is a reimbursement by the Lenders to the Borrower for overpayment by it to the Lenders or is in respect of an inadvertent underpayment by the Agent, the Lenders or the Borrower to another Party (based on information provided by such other Party), such interest will only be calculated from the date which is 3 Banking Days following a demand for payment by the Party entitled to it.

(b)                                 All interest referred to in this Section 22.9 will be simple interest calculated daily on the basis of a 365 or 366 day year, as applicable.  For the purposes of the Interest Act (Canada), the annual rates of interest to which such rates are equivalent are the rates so determined multiplied by the actual number of days in a period of one year commencing on the first day of the period for which such interest is payable and divided by 365 or 366, as applicable.

22.10                 Payments Due on Banking Day.  Whenever any payment hereunder will be due on a day other than a Banking Day, or in the case of LIBOR Based Loans a LIBOR Banking Day, such payment will be made on the next succeeding Banking Day, or LIBOR Banking Day, as applicable, and such extension of time will in such case be included in the computation of payment of interest thereunder.

22.11                 Whole Agreement.  This Agreement and the other Documents constitute the entire agreement between the Agent and the Lenders on one hand and the Penn West Parties on the other hand, and cancels and supersedes any other agreements, undertakings, declarations, representations and warranties, written or verbal among all such Parties in respect of the subject matter of this Agreement.

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22.12                 Counterparts.  The Documents may be executed in any number of counterparts (including by facsimile transmission or other electronic means) and by different Parties in separate counterparts, each of which when so executed will be deemed to be an original and all of which taken together will constitute one and the same instrument.

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THIS AGREEMENT has been executed effective as of the date first written above.

PENN WEST PETROLEUM LTD.,

as Borrower

S-1

CANADIAN IMPERIAL BANK OF COMMERCE,

as Agent and as Lender

S-2

BANK OF MONTREAL,

as Lender

▇-▇

▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇,

as Lender

S-4

THE TORONTO-DOMINION BANK,

as Lender

S-5

ROYAL BANK OF CANADA,

as Lender

S-6

SOCIETE GENERALE (CANADA BRANCH),

as Lender

S-7

HSBC BANK CANADA,

as Lender

S-8

CITIBANK, N.A., CANADIAN BRANCH,

as Lender

▇-▇

▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇▇▇),

as Lender

▇-▇▇

▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇ BRANCH,

as Lender

S-11

FORTIS CAPITAL (CANADA) LTD.,

as Lender

S-12

BANK OF TOKYO-MITSUBISHI UFJ (CANADA),

as Lender

S-13

SUMITOMO MITSUI BANKING CORPORATION OF CANADA,

as Lender

▇-▇▇

▇▇▇▇ ▇▇ ▇▇, ▇▇▇▇▇▇▇ BRANCH,

as Lender

S-15

ALBERTA TREASURY BRANCHES,

as Lender