EXHIBIT 10.12


                          EXPLORATION AND DEVELOPMENT
                         AGREEMENT BLACK WARRIOR BASIN,
                                  MISSISSIPPI

     THIS  AGREEMENT  is  entered  into  this 23 day of May 2002, by and between
CLAYTON  WILLIAMS  ENERGY,  INC.  ("Williams"),  and  KNOX  MISS. PARTNERS, L.P.
("Knox").

     WHEREAS,  Williams  and Knox have acquired undivided leasehold interests in
approximately  42,000 acres covering lands in Clay, Chickasaw, Calhoun, Choctaw,
Lowndes,  Oktibbeha,  Noxubee,  Webster, and Winston Counties of Mississippi and
being  those  leases  described  on  Exhibit "A" attached hereto (the "Leases");

     WHEREAS,  the  Parties  have  identified  certain  prospects believed to be
prospective  for the development of oil and/or gas, which prospects are depicted
in  the  Blue  outlines  on  Exhibit  "B" attached hereto (the "Prospects"); and

     WHEREAS,  the  Parties desire to set forth the terms under which the Leases
will  be  jointly  developed  and  further desire to establish an area of mutual
interest  for the acquisition and development of additional interests in the oil
and  gas  rights  thereunder.

NOW, THEREFORE, for and in consideration of the mutual premises herein set forth
the parties agree as follows.

1.  AREA  OF  MUTUAL  INTEREST.  The Parties agree to an Area of Mutual Interest
("AMI")  comprising  all  of  the  following  Counties  in Mississippi: Calhoun,
Chickasaw,  Choctaw,  Clay,  Lowndes, Noxubee, Oktibbeha, and Webster; excluding
the  area identified as the "SKH Maben AMI" depicted in a red outline on Exhibit
"B".  Any Party acquiring an "oil and gas mineral interest" within the AMI shall
notify  the  other  Party  in  writing  of  such acquisition, which notice shall
include all pertinent terms of such acquisition (the "Notice"). For the purposes
of  this  Agreement  an  oil  and  gas mineral interest shall include, leasehold
working  interest,  overriding  royalty  interest,  mineral  interest,  royalty
interest,  farm-outs,  farm-ins, or any other oil and gas interest of any nature
or  kind. The non-acquiring Party may elect to participate for its fifty percent
50%  share  in  the  acquisition by giving written notice of its election to the
acquiring  party  within  ten  (10)  days  from  receipt  of the Notice. A Party
electing  to  participate  in  an  acquisition  shall  make  payment  of  its
proportionate  part  of  all  acquisition  costs  within twenty (20) days of its
election.  A  Party's  failure  to  timely  elect  or  make



its payment thereafter shall be deemed an election not to participate in the
acquisition. If subsequent hereto there are multiple Parties to this Agreement,
each Party participating in the acquisition shall have the option to participate
proportionately in any interest attributable to a nonparticipating Party. The
term of the AMI shall run from the date hereof and continue for a period of six
years.

2.  PROSPECTS.  For  purposes  of  this agreement, a Prospect shall include such
lands  to  the  nearest quarter section line or lines outside the lowest closing
contour  of  the structure to be tested, or in the case of a stratigraphic trap,
the Prospect shall be drawn to the nearest quarter section line or lines outside
the  stratigraphic  trapping  boundary or the t rapping fault plane. The Parties
have  identified  a  n  umber  of  geologic prospects based on the evaluation of
available  geologic  and  seismic information (the "PROSPECTS"), which Prospects
are  identified  on  Exhibit "B." It is contemplated that a number of additional
Prospects  will  be identified as additional data becomes available. Likewise as
additional  data  becomes  available,  an  existing  undrilled  Prospect  may be
modified  on the basis of such additional data. All such additional Prospects or
modification  of  existing  Prospects  shall be included on a mutually agreeable
revised  Exhibit  "B"  which will accurately reflect the defined Prospects under
this  Agreement.  In  the  event  of  a  dispute  between  the Parties as to the
existence  or  area  of  a  new  Prospect,  the Parties shall meet to attempt to
amicably resolve any such dispute, m the event the Parties are unable to resolve
the  dispute, a Party may require arbitration of the dispute by a panel of three
(3)  arbitrators.  The  Party  proposing  the new Prospect shall select a single
arbitrator  and  the  Party  or Parties objecting to the proposed Prospect shall
jointly  select a single arbitrator, and the two chosen arbitrators shall select
a  third  arbitrator.  The  dispute  shall be resolved by a majority vote of the
panel  of  arbitrators  and  such  decision  shall be binding on all Parties. An
arbitrator  shall  be  a  qualified geologist or geophysicist with experience in
Mississippi.  The Parties agree to pay the costs of its chosen arbitrator and to
share  proportionately  the  costs associated with the arbitration and the third
party  arbitrator.

3.  INITIAL WELLS ON A PROSPECT. A Party desiring to drill the initial well on a
Prospect  shall  give  notice  to  the  other  Parties  identifying the proposed
location, objective formation and an authority for expenditure ("AFE") depicting
the  anticipated  costs  of  the  proposed initial well. If the location is on a
Prospect  that is not identified on Exhibit "B", then the notice shall also give
the  boundaries  of  the  proposed Prospect. The P arties shall have thirty (30)
days  from  receipt  of  such  well proposal within which to notify the Operator
whether  they  elect  to  participate  in the drilling of such initial well (the
"Election  Period").  The initial well on each such Prospect shall be deemed the
Initial  Well under VI A. of the JOA, as the terms is hereinafter defined. As to
the participating parties, all operations on the initial well shall be conducted
under the terms on the JOA. If a party elects not to participate in the drilling
of  an  initial  well on a Prospect, upon the commencement of such initial well,
which  shall  be  no  more  than  ninety  (90)



days from the expiration of the Election Period, a non-participating Party shall
forfeit  all  of  its right, title and interest in and to the oil and gas leases
insofar  as  they  are  located  within the Prospect. Any such non-participating
Party  shall assign its interests to the participating Parties in the proportion
of  their  participation.

4.  JOINT  OPERATING AGREEMENT. The AMI shall be subject to the terms of a Joint
Operating Agreement (the "JOA"), the form of which is attached hereto as Exhibit
"C".  The  JOA  shall  designate Williams as Operator, and shall include Article
VIII. F. the Preferential Right to Purchase. The JOA shall also provide for 400%
non-consent  penalties  for  all  operations  subsequent  to  the drilling of an
initial well, except as to an "Obligation Well." An "Obligation Well" shall be a
well  in which the drilling or other proposed operation is necessary in order to
comply  with  any  express  or  implied covenants of a lease and/or leases or an
interest  subject  to  the JOA or any operation necessary to maintain a lease or
any  part  thereof  under  any agreement that will otherwise expire or terminate
unless  such  operations are conducted. The failure of a Party to participate in
an  operation  on  an  Obligation  Well  shall  result  in the forfeiture to the
participating  parties  of  all  the  non-participating Party's right, title and
interest in and to the Prospect upon which such Obligation Well is located, save
and except any interest in a well on the Prospect previously drilled or drilling
in  which  the  Party  is  then  participating.

5.  AMI  MANAGEMENT.   Williams  as  operator shall be responsible from the date
hereof  for  the  management  of  the  AMI,  including  the  future  leasing and
development  activities  and  where  applicable the design and implementation of
additional  seismic  programs  within  the  AMI.  The  Parties  have agreed that
Williams  shall initially retain Karl Kaufman and Ed Hollingsworth (the "Project
Managers")  to  implement these programs. Williams shall be authorized to charge
to  the joint account of the Parties a fee for management and professional time,
including  the  Project  Managers,  and  Knox  agrees  to  bear  and  pay  its
proportionate  amount  of  such  management fee, limited to $1,000,000.00, which
shall  be  payable  by  the  parties  hereto  in  twenty-four (24) equal monthly
payments,  for  in-house  supervision  of  (a)  land  matters  including  lease
acquisition,  administration  and  curative;  (b)  geologic  services  including
mapping,  geophysical  interpretations  and seismic acquisition; (c) engineering
services  including horizontal drilling and completion techniques; and (d) other
management  services.  Williams  shall  provide  Knox  with  copies  of all work
product resulting from the management of the AMI as set forth herein, including,
without  limiting the generality of the foregoing, oil and gas leases, title run
sheets,  title  curative, title opinions, engineering data, geologic and seismic
data,  and/or geologic and seismic interpretations. Williams agrees to give Knox
technical  presentations  on a quarterly basis, or as may be mutually agreed and
agrees  to  allow  Knox  reasonable  access  to all technical data maintained in
Williams  offices.  This fee is in addition to, and not in lieu of those charges
set  forth  in  the  COPAS  attached  to  the  JOA.




6. PREFERENTIAL RIGHTS. Should any party desire to sell all or any part of its
interests under this Agreement, it shall give written notice to the other
parties, with full information concerning its proposed disposition, which shall
include the name and address of the prospective transferee (who must be ready,
willing and able to purchase), the purchase price, a legal description
sufficient to identify the property, and all other terms of the offer. The other
parties shall then have an optional prior right, for a period often (10) days
after the notice is delivered, to purchase for the stated consideration on the
same terms and conditions the interest which the other party proposes to sell;
and, if this optional right is exercised, the purchasing parties s hall s hare t
he purchased interest in the proportions that the interest of each bears to the
total interest of all purchasing parties. However, there shall be no
preferential right to purchase in those cases where any party wishes to mortgage
its interests, or to transfer title to its interests to its mortgagee in lieu of
or pursuant to foreclosure of a mortgage of its interests, or to dispose of its
interests by merger, reorganization, consolidation, or by sale of all or
substantially all of its assets to any party, or by transfer of its interests to
a subsidiary or parent company or to a subsidiary of a parent company, or to any
company in which such party owns a majority of the stock.

7.  SEISMIC  PROGRAM. The Parties agree to conduct a seismic program which shall
include  the  shooting  or acquisition of an additional 40 to 60 linear miles of
seismic data and/or the reprocessing of existing seismic data. Each Party agrees
to  pay  its  proportionate part of the costs for any mutually agreeable seismic
program.  The  Parties  agree  to  participate in additional seismic operations,
including  3-D  as may be mutually agreed. Knox agrees to reimburse Williams for
its  proportionate part of all such mutually agreed seismic program costs within
(30)  days  from  the  date  of  the  receipt  of  an  invoice  from  Williams.

8.  LIMITATION  ON  DRILLING. The Parties agree that there shall be no more than
one  (1)  well being proposed and/or drilled (jointly by the Parties) at any one
time  within  the AMI without the consent of 75% or more of the working interest
in  the  Prospect for the proposed well. Provided, however, that this limitation
on  drilling  shall  not  apply  to  the  proposal  for  and  commencement of an
Obligation  Well  while  another  well  is  then  being  drilled.

9. CONFLICTS. In the event of a conflict between this Agreement and any of the
Exhibits hereto, the terms of this Agreement shall prevail.

10.  NOTICES.  All  notices  required  by  this Agreement shall be given and the
receipt  thereof shall be determined in accordance with the Notice provision set
forth  in  the  JOA.




11. LAWS. This Agreement and all exhibits subject hereto shall be interpreted in
accordance  with  laws  of  the State of Texas, and the Parties agree that venue
shall  be  the  State  of  Texas.

12.  BINDING  EFFECT.  This  agreement  shall  be  binding upon and inure to the
benefit  of  the  Parties,  their respective affiliates, successors and assigns.
Specifically,  an  affiliate  of a Party hereto acquiring an interest in the AMI
area shall be bound by the provisions of paragraph 1, and pursuant thereto shall
offer  to  the  non-affiliated  Party  the  right to participate in the interest
acquired. For the purposes of this agreement, an affiliate shall mean any person
or  entity  controlling, controlled by or under common control with any Party to
this  Agreement.

13. EXHIBITS.   All Exhibits attached to this Agreement are by this reference
incorporated herein for all purposes.


IN WITNESS WHEREOF, the Parties have entered into this agreement on the date
above written.

CLAYTON  WILLIAMS  ENERGY,  INC,


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KNOX MISS PARTNERS, L.P.


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