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Exhibit 10.1
July 11, 2007

Clarion Finance Pte Ltd.
80 Raffles Place #32-01
Uob Plaza, Singapore 048624
 
RE:
Powder River Basin Mowry Project Area   T45-48N, R68-71W, 6th PM   Campbell,
Crook, Johnson & Weston Counties, Wyoming

 
Gentlemen:

By virtue of that certain letter agreement with American Oil and Gas, Inc.
(“AOGI”), dated July 22, 2005, as amended by a letter agreement dated July 14,
2006 (as amended, the “AOGI Agreement”) attached hereto as Exhibit “A,” Tatonka
Oil and Gas, Inc. (“Tatonka”) is the owner of interests in certain oil and gas
leases described on Exhibit “B” attached hereto (collectively, the “Leases”)
covering or affecting the lands described in Exhibit “B” (collectively, the
“Lands”).  Clarion Finance Pte Ltd. (the “Company”) wishes to acquire a portion
of Tatonka’s interest in the Leases and Lands, and to participate with Tatonka
and with AOGI and North Finn, LLC (“North Finn”) in the exploration and
development of the Leases and Lands. This letter agreement (this “Agreement”),
when executed by the Company, shall evidence the agreement between the parties
by which the Company shall acquire from Tatonka the right to earn 50% of the
interests owned by Tatonka in the Leases and Lands, subject to the terms and
conditions set forth below.

1.             Acquisition of Interest in Leases.  At the Closing (as herein
defined), the Company will pay Tatonka, by certified funds or by wire transfer
to Tatonka’s designated account, the sum of $339,453.60 (the “Lease Acquisition
Fee”) and Tatonka shall execute and deliver to the Escrow Agent (as herein
defined) an assignment in the form of Assignment, Bill of Sale and Conveyance
attached hereto as Exhibit “C” (the “Assignment”) assigning to the Company 50%
of Tatonka’s right, title and interest in and to the Leases and Lands and to the
AOGI Agreement (which the Company shall ratify and confirm upon its receipt of
the Assignment).  The instructions for wiring the Lease Acquisition Fee to
Tatonka are as follows:

Credit to Tatonka Oil & Gas Company, Inc.
1515 Arapahoe Street, Tower 1, 10th Floor
Denver, CO 80202
(303) 476-4100

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TO:

Colorado Business Bank
821 17th Street
Denver, CO 80202
(303) 293-2265
Routing #102003206
Account # 3223787
 
2.             Escrow Agent.  The Assignment shall be delivered by Tatonka to
Kendor P. Jones (the “Escrow Agent”) of the law firm of Welborn Sullivan Meck &
Tooley, P.C., who shall hold such Assignment in escrow until he receives written
instructions to deliver such Assignment to the Company or to return the
Assignment to Tatonka pursuant to Section 5 below.
     
3.             Participation in Commitment Wells.  AOGI, North Finn and Tatonka
have agreed to spend $15,000,000 to drill vertical and horizontal wells on the
Leases and Lands with the target depth the Mowry formation (the “Commitment
Wells”).  The Company hereby agrees to pay to the operator that drills the
Commitment Wells (the “Operator”) $9,000,000, representing Tatonka’s 60% share
of the costs to drill and complete the Commitment Wells.  To the extent that
Tatonka’s 60% share of the costs to drill and complete the Commitment Wells
exceeds $9,000,000, the Company shall have no obligation to pay such excess
costs and Tatonka shall pay the Operator its share of such costs in excess of
$9,000,000.

4.             Closing.  The closing of the transaction between the parties (the
“Closing”) shall be held at Tatonka’s offices at 10:00 a.m., MDT, on July 11,
2007 (the “Closing Date”).  At the Closing, the Company shall pay Tatonka the
Lease Acquisition Fee and Tatonka shall deliver the Assignment to the Escrow
Agent.

5.             Release of the Assignment from Escrow.  If the Company satisfies
the requirements of Section 3 above, Tatonka shall instruct the Escrow Agent to
deliver the Assignment to the Company.  If the Company fails to satisfy the
requirements of Section 3, the Company shall instruct the Escrow Agent to return
the Assignment to Tatonka.

6.             Interests In Revenues From Commitment Wells Until Payout.  Until
Payout (as defined in Section 8 below) of the Commitment Wells, the Company
shall be entitled to receive 45% of the net revenues from the sale of production
from such Commitment Wells and Tatonka shall be entitled to receive 15% of the
net revenues from the sale of production from the Commitment Wells.

7.             Interests in Revenues From Commitment Wells After
Payout.  Following Payout of the Commitment Wells, the Company and Tatonka shall
each be entitled to receive 30% of the net revenues from the sale of production
from the Commitment Wells.  In addition, each party shall be responsible for 30%
of the operating costs of the Commitment Wells both before and after Payout and
shall be responsible for 30% of the costs and shall be entitled to 30% of the
net revenues attributable to drilling, completing and operating any other wells
drilled on the Leases and Lands pursuant to the Operating Agreement referred to
in Section 7.

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8.             Payout.  For all purposes hereunder, the term “Payout” shall mean
that time, if ever, when the Company shall have recovered from the proceeds of
45% of production from the Commitment Wells, after deducting the lessor’s
royalty and any overriding royalties and similar burdens on production with
respect to which the Leases and Lands are encumbered on the date of this
Agreement, and all applicable taxes, all of the costs of the Company incurred in
drilling, testing, completing and equipping the Commitment Wells.  Within sixty
(60) days following completion of the last of the Commitment Wells, the Company
shall furnish Tatonka with a detailed statement of the actual costs incurred in
the drilling, testing, completing and equipping of the Commitment Wells.

9.             Operating Agreement  In the AOGI Agreement, Tatonka and AOGI
agreed to enter into a mutually agreeable Joint Operating Agreement (the “JOA”)
covering the Leases and Lands.  The Company also agrees to enter into the JOA.

10.           Area of Mutual Interest.  In the AOGI Agreement, Tatonka and AOGI
created an area of mutual interest (the “AMI”) encompassing Townships 45-49
North, Ranges 68-71 West, 6th P.M., Campbell County, Wyoming.  The Company
hereby agrees to be bound by the terms and conditions governing the AMI as if it
were an original party to the AOGI Agreement.

11.           Notices.  Except as herein otherwise expressly provided, any
notice or other communication required or permitted hereunder shall be in
writing and shall be deemed given only when received by the party to whom the
same is directed as follows:

 
Tatonka Oil and Gas, Inc.
   
1515 Arapahoe Street
   
Tower 1, 10th Floor
   
Denver, CO 80202
   
Attn: Dirck E. Tromp
   
Telephone: (303) 476-4102
   
Fax: (303) 476-4101
   
E-Mail: DTromp@tatonkaorg.com 
       
Clarion Finance Pte Ltd.
   
80 Raffles Place #32-01
 
 
Uob Plaza, Singapore 048624
   
Attn: _____________________
   
Telephone: ________________
   
Fax: ______________________
   
E-Mail: ___________________
 

12.           Term.  The term of this Agreement (the “Term”) shall commence as
of the date hereof and it shall end the later of (i) the termination of the AOGI
Agreement, (ii) the termination of the JOA, or (iii) when one of the parties, or
its successors and assigns, no longer own an interest in the Leases and Lands.

13.           Amendments.  No amendments or other changes to this Agreement
shall be effective or binding on either of the parties unless the same shall be
in writing and signed by both parties.

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14.           Applicable Law; Venue.  This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Colorado, without
reference to its conflict of laws provisions.  Forum and venue shall be
exclusively in state or federal court in Denver, Colorado.

15.           Assignability; Binding on Successors.  Either party may assign its
rights and/or obligations under this Agreement, provided that it provides notice
of such assignment to the other party.  This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
assigns.

16.           Severability.  If a court of competent jurisdiction determines
that any clause or provision of this Agreement is void, illegal or
unenforceable, the other clauses and provisions of the Agreement shall remain in
full force and effect, and the clauses and provisions that are determined to be
void, illegal or unenforceable shall be limited so that they shall remain in
effect to the extent permissible by law.

17.           Counterparts.  This Agreement may be executed by the parties in
counterparts, each of which shall be deemed to be an original instrument, but
which together shall constitute one and the same instrument.  Execution may be
evidenced by faxed signatures with original signature pages to follow promptly.

18.           Relationship of Parties.  This Agreement shall not create, and
shall not be construed as creating, a mining or other partnership or
association, nor does this Agreement render the parties liable as partners.  The
liability of the parties shall be several and not joint or collective.

19.           No Third Party Beneficiaries.  Except for AOGI and North Finn,
this Agreement is not intended to accrue to the benefit of any third party.

20.           Entire Agreement.  This Agreement constitutes the entire agreement
and understanding between the parties with respect to the subject matter
hereof.  This Agreement supersedes all prior oral and written discussions,
agreements and understandings relating to such subject matter.

If you agree that the foregoing accurately reflects the agreement between the
parties, please so indicate by signing and returning to the attention of the
undersigned the enclosed duplicate original of this Agreement.
 

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Sincerely,  
        
TATONKA OIL & GAS, INC.  
                        By: /s/ DIRCK E. TROMP     
Dirck E. Tromp
    
President and Chief Executive Officer

 
 
AGREED TO AND
ACCEPTED this 12th
day of July, 2007
 
CLARION FINANCE PTE LTD.
   
By: /s/ DAVID DAWES
Name: David Dawes
Its:  Principal

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