EXHIBIT 10.50

EXPLORATION AND DEVELOPMENT AGREEMENT

WITH AREA OF MUTUAL INTEREST

EAST NESSON PROJECT

MOUNTRAIL COUNTY, NORTH DAKOTA

This Exploration and Development Agreement with Area of Mutual Interest (this
“Agreement”) dated effective as of the 1st day of January, 2007 (the “Effective
Date”), is by and between Slawson Exploration Company, Inc., a Kansas
corporation, whose principal place of business is 727 North Waco, Suite 400,
Wichita, Kansas 67203 (hereafter “SECI”), and Chandler Energy, LLC, 475 17th
Street, Suite 1210, Denver, Colorado 80202 (hereafter “Participant”).

Whereas, SECI has acquired certain oil and gas leases and options covering lands
within the East Nesson Project Area located In Mountrail County, North Dakota
which is described on Exhibit “A” attached hereto, said Area being hereafter
referred to as the “Project Area”.

Whereas, Participant wishes to participate with SECI in the evaluation, leasing,
drilling, and development of the Project Area pursuant to the provisions of this
Agreement and the agreements through which SECI acquires leasehold rights within
the Project Area.

Now therefore, the parties hereto, for the mutual promises contained herein and
other good and valuable consideration, the sufficiency of which is hereby
acknowledged, do hereby contract and agree as follows:

1. Participation Interest: By execution of this Agreement, Participant agrees to
participate with a 10% working Interest ownership (“Participation Interest”) in
the exploration and development of the Project Area and agrees to pay Its
Participation Interest share of all costs Incurred In the Project Area pursuant
to the terms set out herein. Participant agrees that any Interest acquired from
SECI by Participant shall be specifically subject to the terms of the leases,
options, farm-in options, seismic options and other agreements by which
leasehold interests are acquired in the Project Area by SECI.

2. Advanced Expenses: Upon execution of this Agreement, Participant shall remit
its Participation Interest share, as calculated in Paragraph 6 below of Six
Million Dollars ($6.000.000) to be applied toward expenditures by SECI for the
acquisition of leasehold within the Project Area. In a like manner, SECI will
continue to request additional amounts to cover amounts it reasonably expects to
incur for ongoing leasehold acquisition expenditures within the Project Area.
SECI shall invoice Participant for its share of the advance, and Participant
will have fifteen (15) business days from receipt of such invoice in which to
remit payment of such invoice or notify SECI in writing of its election to
withdraw from participation in the Project Area. Failure to remit this advance
payment on or before the end of such fifteen-day period will be deemed an
election to withdraw from the Project Area and Participant shall not be entitled
to any further leasehold acquired unless the payment is made within five
(5) business days of a second and final notice of the advance payment.
Participant will be entitled to its Participation

 

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Interest share of any leases acquired with funds billed to and paid by
Participant pursuant to this paragraph.

As to leasehold costs other than bonus, brokerage or option payments incurred in
any month during which Participant was participating in leasehold expenditures,
for any portion of that month, Participant will be responsible for advancing its
share (as set for the Paragraph 6 hereof) of such costs, regardless of the
status of Participant at the time of billing. Upon Participant’s withdrawal from
future acquisitions within the Project Area, Participant will not be responsible
for such leasehold costs beginning with costs incurred in the month following
Participant’s withdrawal, unless such costs are attributable to leasehold
previously earned by Participant.

Participant’s participation under this Agreement is limited to Participant’s
expenditure of a net $750.000.00, inclusive of advanced expenses, for leasehold
acquisition (bonus, lease, maintenance and brokerage combined). After
Participant’s net expenditure of $750,000.00, Participant may withdraw from
future acreage acquisitions, but may only do so in writing by giving thirty
(30) days advance written notice to SECI of Participants intent to withdraw from
the acquisition of additional leasehold rights, otherwise Participant shall
continue and shall be responsible for Its proportionate share of costs up lo and
until the date said written notice is given to SECI.

3. Participation Following Withdrawal: Should Participant elect, or deemed to
have elected to withdraw from the Project Area, Participant will not be entitled
to participate in any future acquisitions of leasehold. However, Participant
will be entitled to participate in any lease extension, renewal or acquisition
of new leasehold interest covering only those leases in which Participant has
earned an interest hereunder, as well as participate in subsequent drilling with
its Participation Interest share of those earned leases. Participant will have
twenty (20) days from receipt of a notice of lease extension, renewal or new
acquisition to either: 1) participate in the acquisition as to its proportionate
share; or 2) elect not to participate in the acquisition. Failure to make a
written election within twenty (20) days shall be deemed an election to not
participate in the acquisition.

In the event Participant and SECI drill a well in a spacing unit in which leases
are owned by Participant, Participant shall be only entitled to participate in
any contractual agreements for the acquisition of leasehold interest covering
only those contracts entered into during the time in which Participant is
participating hereunder, as well as participate in subsequent drilling with its
Participation Interest share under those agreements. If Participant elects to
participate in such contracts or agreements under this paragraph, Participant
shall pay the leasehold and drilling costs associated with the provisions of the
contractual agreements in accordance with the terms of this Agreement.
Participant shall not be entitled to participate in any future contractual
agreements for the acquisition of leasehold Interests entered into after
Participant has elected or has been deemed to withdraw from this Agreement,
provided, however, if a third party gives support for the drilling of a well in
which Participant is participating and no acreage is being earned in the spacing
unit for the well being drilled, then Participant shall have the right to
participate in the support earned at the Participation Interest of Participant
in the earning well, subject to reduction as provided for herein.

 

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4. Reconciliation of Advanced Costs: SECI will reconcile advance payments made
by Participant with actual costs incurred for lease acquisitions made pursuant
to this Agreement on a semi-annual basis, if Participant withdraws or is deemed
to have withdrawn from participation in the Project Area, then a reconciliation
will be provided within ninety (90) days from the effective date of the
withdrawal, and any advanced funds which are not used for lease acquisition
expenses for leases earned by Participant will be refunded to Participant. The
Parties agree that at such time as lease acquisitions within the Project Area
are approximately ninety percent (90%) complete, SECI will no longer be required
to submit requests for advance funds, and Participant will be required to
participate with any future acquisitions within the Project Area in accordance
with the terms hereof.

5. Geophysical and Geological Data: Participant shall own in proportion to its
Participation Interest to the extent permitted under any data acquisition or
license agreement and shall have access to review all geophysical and
exploration data acquired by SECI within the Project Area and to the extent
permitted under any data acquisition or license agreement and upon request by
Participant, Participant may obtain copies and files at their own expense, for
use in its offices under terms of strict confidentiality for the benefit of
Participant. Participant agrees to participate for its proportionate interest
share of costs in any new seismic data acquisition operated by SECI plus an
amount equal to five percent 5% of Participant’s share of all costs. Geological
and geophysical data may be acquired if at least 65% working interest of the
total participants in the Project Area, whose interest is derived from SECI,
approve such acquisition program. Participant agrees to participate for its
proportionate interest in any new seismic data acquisition in which SECI is not
the operator. Participant shall not be charged for SECI Internal G&A for review,
acquisition and interpretation of geological or geophysical data. Upon request,
SECI will review with Participant any maps or data on the Project Area which
SECI develops relative to the exploration and development of the Project Area.
Any data made available to Participant shall be held by Participant on a
confidential basis and not sold, traded, or disclosed to any third party either
directly or indirectly, without the express written consent of SECI, which
consent shall not be unreasonably withheld but may be withheld to protect the
rights of SECI, Participant or other parties participating in the acquisition of
the data. Prior to the acquisition of new seismic data under this paragraph,
SECI shall proposed the program to Participant and the other parties who may be
involved in the acquisition, giving the particulars of the seismic program, cost
involved and the estimated time of expenditures to acquire the data. SECI shall
also, at Participants written request, furnish updates on the program and
related expenses.

6. Participation Terms:

a. Land and Lease costs. Participant agrees to pay its Participation Interest
share plus an amount equal to fifty percent (50%) of Participant’s share of all
costs incurred for the acquisition of the leases and lease options set out on
Exhibit “B” attached hereto, including, but not limited to lease bonus,
brokerage charges, acquisition title costs and other miscellaneous costs and
fees directly attributable to such leases, exclusive of drilling and division
order title opinions. It being the intention of the parties that Participant
shall pay for the continuing title costs on a promoted basis, only as to those
leases listed on Exhibit “B”. In the event of title failure or other reasons
that prevent SECI from acquiring a lease described on Exhibit “B”, Participant
will be credited for all charges inclusive of the promote. As to those leases
committed and acquired after

 

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February 16, 2007 and not included on Exhibit “B”, Participant agrees to pay its
Participation Interest share plus an amount equal to twenty-five percent
(25%) of Participant’s share of all costs incurred for the acquisition of leases
and lease options, (excluding those leases listed on Exhibit “B” hereto)
including, but not limited to lease bonus, brokerage charges, title costs and
other miscellaneous costs and fees directly attributable to the Project Area
exclusive of drilling and division order title opinions. Participant will pay
its Participation Interest share of all delay rental payments made on leases
earned by Participant within the Project Area.

For the purposes herein, committed leases are those leases that have been mailed
out but not acquired, with the verbal intent of SECI to acquire, and
confirmation of lessor to lease, the leasehold on specific lands in the Project
Area to SECI. Further, pursuant to Paragraph 2 herein, SECI has estimated the
cost of the leases on Exhibit “B” to be $550,000 inclusive of the promote for
Participant’s Participation Interest share of expenses associated with the
leasehold on Exhibit “B”. The remaining monies in the amount of $50,000 are
deemed to be an advance for ongoing leasing.

b. Other Costs. Except as otherwise stated herein, Participant shall pay, on an
actual cost basis, its Participation Interest share of operating expenses
incurred in the Project Area or chargeable under the applicable Joint Operating
Agreement to operations for wells within the Project Area in which Participant
elects to participate pursuant to the provisions of this Agreement, or in which
Participant is obligated to participate by the execution of this Agreement.

7. Backin: SECI hereby reserves unto itself a ten percent (10%) backin working
interest, proportionately reduced by Participant’s gross working interest in
each drillsite spacing unit, after payout of each “Well Package” drilled in the
Project Area. Upon payout of each Well Package, SECI shall have the right, but
not the obligation to receive from Participant a proportionate 10% backin
working interest in the drillsite spacing unit or pooled unit for each well in
the Well Package and the equipment appurtenant thereto. For the purposes of this
Paragraph 6, “Well Package” shall mean an accumulation of up to the first four
(4) consecutive wells drilled under the terms of this Agreement in which
Participant elects to participate. Should payout be reached as to the wells in a
Well Package prior to the spudding of the four wells being drilled in the Well
Package, then only the wells that have spudded will be included in the Well
Package at payout shall be deemed to comprise the Well Package. It being the
intention when payout occurs, only those wells in the package shall be counted
for payout and new Well Packages shall be formed for subsequent four (4) well
packages under the terms of this paragraph.

“Payout” as used herein shall mean the recovery by Participant from the proceeds
of the sale of production from wells in the Well Package drilled hereunder (less
applicable taxes, landowner’s royalty, overriding royalty, including the
overriding royalty granted herein, and other burdens, if any), of all costs
incurred by Participant in drilling, testing, completing and equipping the wells
through the tanks (including gas sales lines and all other surface equipment)
lease bonus costs, seismic costs allocated to a Well Package by the mutual
consent of SECI and Participant and all other costs incurred in operating said
wells during the recovery period, including the applicable promote.

 

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Upon recovery of such costs as provided above, SECI shall notify Participant in
writing of payout and in the event, SECI elects to receive an assignment of the
backin interest, the assignment shall be effective at 7:00 A.M. on the first day
of the month following the month in which payout occurred. SECI and Participant
agree to execute such formal assignments or other instruments as may be
reasonably necessary to evidence the terms of this provision.

8. Drilling Proposals: SECI will develop a drilling program focusing on a
logical development of the Project Area. SECI will generally be responsible for
initiating well proposals to Participant and other parties participating;
however, any party who/which owns an interest in the lease(s) within the unit on
which the well is to be proposed may recommend to SECI the drilling of a well.
If SECI receives a well recommendation from Participant relative to a proposed
location and SECI does not initiate a well proposal comparable to that received
from Participant for circulation to all participants within thirty (30) days of
receipt of Participant’s drilling recommendation, then Participant may initiate
a proposal relative to such proposed site.

A well shall be proposed by the Parties by mailing to all working interest
owners a proposal identifying the location of the well to be drilled, the
estimated spud date, the objective(s) to be tested, the geological and/or
geophysical basis for the proposed well, and an Authority for Expenditure
(“AFE”). Parties receiving this well proposal will have twenty (20) days from
the date of receipt to elect to either (1) participate as to their working
interest in the proposed drilling venture, or (2) elect not to participate in
the proposed drilling venture. Elections shall be made in writing to the party
proposing the well. Failure to timely elect shall be deemed to constitute an
election not to participate in the proposed drilling venture. Any Participant
electing not to participate in the well shall forfeit all rights within the
drill site section plus the 8 sections cornering or adjoining the drill site
section (as to acreage located outside the boundary of an existing spacing unit
on which a producing or drilling well is located, or on which a well has been
proposed hereunder, and in which Participant has elected to participate) and
shall reassign to SECI, all such leasehold working interest which it owns in the
drill site section plus the 8 sections cornering or adjoining the drill site
section at no cost to SECI. Notwithstanding the foregoing, however, in order for
any such forfeiture to occur and be binding on the non-participating
Participant, SECI must commence, or cause to be commenced and pursue with due
diligence the operation set out in proposal within a period of ninety (90) days
after the date of the expiration of the election period.

Except for participation elections and penalties resulting from those elections
on the well which are governed by the prior paragraph, the drilling of the well
and any subsequent well and well proposals on the same spacing unit shall be
governed by the Joint Operating Agreement, (“JOA”), attached hereto as Exhibit
“C”, with the Contract Area for such operating agreement being the spacing unit
in which the well is drilled. In the event of a conflict between the terms of
this Agreement and the JOA, the terms of this Agreement shall prevail.

9. Funding Obligation - Well Costs: As to each well in which Participant has
elected to participate pursuant to this Agreement, Participant agrees to pay its
proportionate share plus an amount equal to five percent (5%) of Participant’s
share of that amount of completed well costs or through a frac, whichever is the
latter. Participant shall make payment to SECI within fifteen (15) days of
receipt of such notice or five (5) days prior to the projected spud date of a
well,

 

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whichever is the latter, to assure prompt payment of the drilling contractor. In
the event the drilling contractor for a well requires that certain costs be
prepaid into the drilling contractor’s escrow account prior to spud, the above
said notice may require Participant and SECI to make the above said payment to
an escrow account. Failure to timely make such payment or to make payment within
fifteen (15) days following receipt of written notice of failure to make such
payment shall constitute, at the non-defaulting Party’s election, an election by
the defaulting Party not to participate in the well. The non-defaulting Party,
at its option, may either declare the defaulting Party to be a non-participating
Party in the well or require payment of the amount due from the defaulting Party
based upon the election on the well previously made by the defaulting party.

To the extent possible under any existing agreements, SECI shall offer to
Participant the right to participate for its proportionate Participation
Interest in any interest forfeited to SECI under this Paragraph 9 from other
participants in the spacing unit for a well. Participant’s participation shall
be on the terms contained in this Agreement.

10. Net Revenue Interest: Participant shall acquire from SECI a delivered net
revenue in all leasehold acquired in the Project Area equal to the delivered net
revenue acquired by SECI, less an overriding royalty Interest of 3%.
Notwithstanding the foregoing, Participant shall not receive a delivered net
revenue of less than 77% unless the delivered net revenue received by SECI is
less than 77%, in which case the leasehold will be assigned to Participant at
the same delivered net revenue received by SECI.

11. Leasehold: SECI shall be responsible for acquiring leases by direct purchase
and/or pursuant to option agreements or other contractual agreements and shall,
assign to Participant its Participation Interest in said lease(s) immediately
after the first sales from a producing well on the spacing unit for the leases
to be assigned unless otherwise requested in writing by Participant for good
cause. SECI shall be responsible for maintenance of leases within the Project
Area and shall timely remit lease payments, rental and option extensions when
due, and comply with the other obligations of the lease(s) and option agreements
on behalf of Participant. SECI shall not be liable for either direct or
consequential damages resulting from SECI’s failure to timely make lease
payment, rental or extension payment absent a showing of gross negligence,
willful misconduct or wanton disregard of responsibilities in the failure to
make such payment. In the event Participant elects to participate in the lease
payment, rental or option extension, Participant agrees to bear its
proportionate share of any such payment incurred by SECI in its behalf.

12. Billings: Except as otherwise provided above, billings attributable to
Participant’s interest in leases and operated wells shall be billed and payable
pursuant to the accounting provisions of the applicable JOA.

13. AMI: There will be no Area of Mutual Interest for this Agreement. Both
Participant and SECI agree that the leasehold acquisition and seismic data
acquisition, if any, shall be conducted within the Nesson play in Mountrail
County, North Dakota.

14. Term: The terms of this Agreement shall bind the Parties as to activities on
the leasehold acquired pursuant to this Agreement for a period of sixty
(60) months from the date of this

 

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Agreement, or so long as an applicable JOA remains in effect within the
boundaries of a spacing unit.

15. Notices: All notices required hereunder shall be considered given when
delivered personally, or when received by facsimile or US Mail, properly
addressed as follows:

Slawson Exploration Company, Inc.

727 North Waco. Suite 400

Wichita, KS 67203

Phone: (316) 263-3201

Fax: (316) 268-0702

Chandler Energy, LLC

475 17th Street, Suite 1210

Denver, CO 80202

Phone: 303-297-2028

Fax: 303-297-2196

Collis P. Chandler [Chandler@chandlerenergy.net]

16. Nature of Agreement: The liabilities of the parties shall be several and not
joint or collective and each party shall be responsible only for its share of
the costs and liabilities incurred as provided hereunder. It is not the purpose
or intention of this Agreement to create any partnership, mining partnership, or
association, and neither this Agreement nor the operations hereunder shall be
construed or considered as creating any such legal relationship.

17. Marketing: The Operator shall be responsible for marketing 100% of the
production from the wells drilled pursuant to this Agreement, and shall account
to Participant for its proportionate share thereof. Participant, however, shall
have the right to take and market its production in kind, but in doing so shall
also assume the obligations of disbursing revenue to royalty and any others
burden to its interest.

18. Operations: SECI will be the operator of the Project Area, including
drilling and production phases of spacing units. In the event multiple third
party working interest owners exist in a proposed spacing unit for a well,
Participant shall nominate SECI as operator for the spacing unit. If SECI shall
elect not to participate in a proposed well, then the parties in the spacing
unit for the well shall elect a new operator for the drilling of the well.

19. Miscellaneous Provisions:

a. Subject to the other provisions of this Agreement, this Agreement, and all
provisions hereof, shall inure to the benefit of, and be binding upon, not only
the parties hereto, but their respective heirs, successors, and assigns. The
leasehold rights and contractual rights acquired herein by Participant shall not
be transferred, sold or assigned without the express written consent of SECI,
which shall not be unreasonably withheld. If Participant, after receiving a
recorded leasehold assignment, encumbers, hypothecates, mortgages, or pledges
any or all interests so acquired from SECI, Participant nevertheless expressly
agrees that SECI has a first and prior right of lien and

 

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offset against any revenues payable to Participant to the extent of any
delinquent and unpaid expenses then and thereafter owned to SECI, and
Participant expressly agrees that such first and prior right of lien and offset
will be preserved in favor of SECI in any documents executed by Participant
which create an encumbrance.

b. The paragraph headings of this Agreement are inserted for convenience only,
and should not be considered a part of this Agreement or used in its
interpretation.

c. The parties hereto agree that all disputes between them arising out of, or in
connection with, this Agreement shall be resolved by arbitration as provided
herein. This agreement to arbitrate shall be conducted pursuant to the
Commercial Arbitration Rules of the American Arbitration Association. If
available, the panel used shall be selected from arbitrators having at least 10
years of oil and gas experience and employed by American Arbitration Association
and the decision of the arbitrators shall be the final and binding on all
parties. All arbitration shall be undertaken pursuant to the Federal Arbitration
Act, where applicable, and the decision of the arbitrators shall be enforceable
in any court of competent jurisdiction.

The parties involved in the arbitration agree that, within 30 days of the notice
of arbitration, each party shall submit to the arbitration panel, their
respective desired outcome of the arbitration, together with supporting data
that was used in developing the outcome. The arbitration panel will hold
hearings during which the parties may submit additional evidence. The
arbitration panel will then be required to adopt one parties’ desired outcomes
and the panel will not have discretion to alter the desired outcome selected.

This Agreement shall be governed by and construed in accordance with the laws of
the State of Kansas.

d. The provisions of this Agreement are intended to be severable. If any term or
provision hereof is illegal or invalid for any reason whatsoever, such
illegality or invalidity shall not affect the legality or validity of the
remainder of this Agreement.

e. This Agreement constitutes the entire understanding of the parties in respect
to the subject matter hereof, in lieu of any prior agreement, and no amendment,
modification, or alteration of the terms hereof shall be binding unless the same
be in writing and signed by the party(ies) for whom/which it is sought to be
enforced.

 

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Executed effective as of the day and year first above written.

 

Participant: Chandler Energy, LLC By:   /s/ Collis P. Chandler   Collis P.
Chandler Slawson Exploration Company, Inc. By:   /s/ Robert Todd Slawson  
Robert Todd Slawson

 

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EXHIBITS

 

Exhibit

  

Description

A    East Nesson Project Area B    Lease Schedule C    1) Vertical Joint
Operating Agreement    2) Horizontal Joint Operating Agreement

 

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LOGO [g137438ex10_50pg11.jpg]

East Nesson Project Area

Exhibit A

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EXHIBIT ‘B’

NORTH STANLEY TREND PROSPECT

MOUNTRAIL COUNTY, ND

 

No.

  

TWP RGE

   Sec.   

Legal Description

   Gross
Acres      Net
Acres      Mailout   001    T156N-90W    8    SW 1/4SE  1/4      655         *
            17    Lot 1(15.00), NW 1/4NE 1/4, S 1/2NE 1/4, SE 1/4, W 1/2      
   002    T157N-91W    17    E 1/2NE  1/4      616.3         *             19   
NE 1/4, NE 1/4SE 1/4, Lot 6(24.50)                20    NW 1/4, N 1/2SW 1/4, Lot
1(33.80), Lot 2(38.00)          003    T157N-91W    18    Lots 3(38.58)
4(38.70), E 1/2SW  1/4      557.28         *          T157N-92W    1    SE 1/4
               12    SE 1/4, S 1/2NE 1/4          004    T157N-91W    17    All
     1,277.74         *             18    E 1/2NE 1/4, SE 1/4                19
   Lots 1(38.81), 2(38.93), E 1/2NW  1/4                20    SE 1/4            
T157N-92W    24    E 1/2NE  1/4          005    T157N-91W    14    S 1/2     
1,120.00         *             15    S 1/2                20    NE 1/4         
      21    N 1/2          005A    T157N-91W    14    S 1/2         *         
   15    S 1/2                20    NE 1/4                21    N 1/2         
006    T157N-91W    1    S 1/2S  1/2      484.06         *             12   
W 1/2E  1/2                11    a 4.06 A Tract          006A    T157N-91W    1
   S 1/2S  1/2         *             12    W 1/2E 1/4, SW 1/4          006B   
T157N-91W    1    S 1/2S  1/2         *             12    W 1/2E 1/2, SW 1/4   
      007          Lost to competition          008          Lost to competition
         009    T156N-91W    2    SW 1/4      1,120.00         *         
T157N-90W    28    SW 1/4NE  1/4             T157N-91W    12    SE 1/4SE  1/4   
            13    N 1/2N 1/2, S 1/2NE 1/4, SW 1/4NW 1/4, N 1/2S 1/2            
   14    N 1/2             158N-91W    20    S 1/2NE  1/4                21   
SW 1/4SW  1/4          009A    157N-91W    12    SE 1/4SE  1/4         *      
      13    N 1/2N 1/2, S 1/2NE 1/4, SW 1/4NW 1/4, N 1/2S 1/2                14
   N 1/2          010    T157N-90W    30    Lot 4(39.47)      999.05         *
            31    Lot 1(39.58)             T157N-91W    23    NE 1/4NE 1/4,
SE 1/4, NW 1/4NE 1/4, S 1/2NE 1/4                24    SW 1/4NW 1/4, W 1/2SW 1/4
               25    SW 1/4, W 1/2NW 1/4, S 1/2SE 1/4                26   
NE 1/4          011    T157N-91W    21    SE 1/4      160         *       012   
T152N-91W    9    Lot 8(30.92), S 1/2SE 1/4 (Southern Play)      492.61        
*             10    Lots 5(30.88), 6(30.81), S 1/2SW  1/4                16   
N 1/2NE 1/4, NW 1/4          012A    T152N-91W    9    S 1/2SE 1/4 (Southern
Play)         *         Mailout          16    NW 1/4, N 1/2NE 1/4         

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EXHIBIT ‘B’

NORTH STANLEY TREND PROSPECT

MOUNTRAIL COUNTY, ND

 

No.

  

TWP RGE

   Sec.   

Legal Description

   Gross
Acres      Net
Acres      Mailout   013    T157N-91W    10    N 1/2SE  1/4      720         *
      013A    T157N-91W    10    N 1/2SE  1/4         *             11    S 1/2
               16    W 1/2          013B    T157N-91W    10    N 1/2SE  1/4   
     *             11    S 1/2                16    W 1/2          014   
T157N-91W    26    S 1/2      480         *             35    E 1/2NE 1/4,
NW 1/4SW 1/4, SW 1/4SE 1/4          015    T157N-90W    7    SE 1/4      160   
     *       016    T157N-90W    25    E 1/2SW  1/4      80         *       017
   T157N-90W    26    SE 1/4      160         *       018    T158N-90W    5   
W 1/2SW  1/4      80         *       019    T158N-90W    6    E 1/2SE  1/4     
80         *       020    T158N-90W    30    Lot 4(37.81)      37.81         *
      021    T158N-90W    31    Lots 1,2,3,4, NE 1/4SW  1/4      191.36        
*       022    T158N-91W    2    S 1/2      320         *       023    T158N-91W
   9    SE 1/4      160         *       024    T158N-91W    12    NE 1/4     
160         *       025    T158N-91W    20    SW 1/4      160         *      
026    T158N-91W    21    SW 1/4 less a tract of 16.75 acres      143.25        
*       027    T158N-91W    22    E 1/2SW 1/4, W 1/2SE 1/4      160         *   
   028    T158N-91W    25    S 1/2SE  1/4      80         *       029   
T158N-91W    26    S 1/2SE 1/4, SW 1/4      240         *       030    T158N-91W
   27    NW 1/4 less 6.25 acres      153.75         *       031    T158N-91W   
28    NW 1/4      160         *       032    T158N-91W    29    S 1/2      320
        *       033    T158N-91W    29    N 1/2      320         *       034   
T158N-91W    31    E 1/2      320         *       035    T158N-91W    34   
SE 1/4 less 6.35 acres      153.38         *       036    T158N-91W    35   
N 1/2NE 1/4, W 1/2      400         *       037    T155N-90W    35    All     
934.6         *          T156N-90W    9    W 1/2NW 1/4, NW 1/4SW 1/4, Lot
1(22.00)             T157N-91W    19    E 1/2SW 1/4, NW 1/4SE 1/4, Lot 5(32.60)
         038    T152N-91W    29    NW 1/4 (Southern Play)      160         *   
   039    T157N-91W    21    SW 1/4      320         *             22   
SW 1/4NE 1/4, SE 1/4NW 1/4, N 1/2NW 1/4          040    T152N-91W    28   
SE 1/4 (Southern Play)      160         *       040A    T152N-91W    28   
SE 1/4 (Southern Play)         *       041    T152N-91W    19    NE 1/4 less
Outlots 2,3, SE 1/4 less Outlot 1      483.27         *             20   
N 1/2NW 1/4, NW 1/4NE 1/4, SW 1/4NW 1/4 (Southern)                30   
E 1/2NE 1/4 less Outlot 1, E 1/2W 1/2NE 1/4,                   NW 1/4NW 
1/4NE 1/4, E 1/2NW  1/4SW 1/4NE 1/4,                   E 1/2SW  1/4NW 1/4NE 1/4
less Outlot 2          042    T152N-91W    21    SW 1/4 (Southern Play)      160
        *       042A    T152N-91W    21    SW 1/4 (Southern Play)         *   
   042B    T152-91W    21    SW 1/4 (Southern Play)         *       043   
T152N-91W    20    SE 1/4 (Southern Play)      640         *             28   
W 1/2                29    NE 1/4          043A    T152N-91W    20    SE 1/4
(Southern Play)         *       043B    T152N-91W    28    NW 1/4 (Southern
Play)         *       043C    T152N-91W    29    NE 1/4 (Southern Play)        
*       043D    T152N-91W    28    NW 1/4 (Southern Play)         *       043E
   T152N-91W    20    SE 1/4 (Southern Play)         *       043F    T152N-91W
   29    NE 1/4 (Southern Play)         *       043G    T152-91W    20    SE 1/4
(Southern Play)         *         Mailout          28    NW 1/4               
29    NE 1/4          043H    T152-91W    20    SE 1/4 (Southern Play)         *
        Mailout          28    NW 1/4         *             29    NE 1/4        
*       044    T152N-91W    7    Lots 7(26.18), 8(31.07), 9(31.07), 11(33.82)   
  496.5         *                SE 1/4SW 1/4, S 1/2SE 1/4 (Southern Play)      
         18    Lots 1(33.83), 2(33.76), E 1/2NW  1/4         

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

EXHIBIT ‘B’

NORTH STANLEY TREND PROSPECT

MOUNTRAIL COUNTY, ND

 

No.

  

TWP RGE

   Sec.   

Legal Description

   Gross
Acres      Net
Acres      Mailout       19    Lots 1(33.50), 33.28), NE 1/4NW  1/4          045
   T152N-91W    20    SW 1/4 (Southern Play)      160         *       045A   
T152N-91W    20    SW 1/4 (Southern Play)         *       046    T152-91W    21
   SW 1/4 (Southern Play)      320         *             28    NE 1/4         
047    T152-91W    16    SW 1/4 (Southern Play)      160         *       Mailout
047A    T152-91W    16    SW 1/4 (Southern Play)         *       Mailout 047B   
T152-91W    16    SW 1/4 (Southern Play)         *       Mailout 048    T152-91W
   9    Lots 2(14.58), 3(14.54), 4(14.50), (Southern Play)      216.46         *
               5(30.96), 6(30.94), 7(30.94), S 1/2SW 1/4          048A   
T152-91W    9    Lots 2(14.58), 3(14.54), 4(14.50), (Southern Play)         *   
   Mailout          5(30.96), 6(30.94), 7(30.94), S 1/2SW 1/4          048B   
T152N-91W    9    Lots 2(14.58), 3(14.54), 4(14.50), (Southern Play)         *
      Mailout          5(30.96), 6(30.94), 7(30.94), S 1/2SW 1/4          049   
T152-91W    27    W 1/2NW 1/4, NE 1/4NW 1/4, W 1/2SE 1/4NW 1/4 (Southern Play)
     780         *       Mailout       33    NE 1/4             T151-92W    7   
SE 1/4                17    N 1/2          050    T152N-91W    7    Lots
3(14.47), 4(14.45), 5(14.43), S 1/2NE 1/4      617.83         *       Mailout   
   8    Lot 4(14.48), NW 1/4 (Southern Play)                17    E 1/2         
050A    T152N-91W    7    Lots 3(14.47), 4(14.45), 5(14.43), S 1/2NE 1/4     
617.83         *       Mailout       8    Lot 4(14.48), NW 1/4 (Southern Play)
               17    E 1/2          050B    T152N-91W    7    Lots 3(14.47),
4(14.45), 5(14.43), S 1/2NE 1/4      617.83         *       Mailout       8   
Lot 4(14.48), NW 1/4                17    E 1/2 (Southern Play)         

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

EXHIBIT ‘B’ (Continued)

PARSHALL PROSPECT

MOUNTRAIL COUNTY, ND

 

Lease ID

  

Lessor

   Exp. Date      TWP RGE    

Sec.

  

Legal Description

   Gross
Acres      Net
Acres    

Mailout

MT 002    Waldock, James and Daniel Waldock, both married      *        
152N-89W      32    NW 1/4      1120.00         *        

men dealing in their sole and separate property

       
151N-90W
  
  25   

NE 1/4

                   29    S 1/2                    30    SE 1/4                 
  32    NW 1/4                    33    NW 1/4         MT 002A    Waldock,
Catherine      *         152N-89W      32    NW 1/4      717.48         *     
           151N-90W      25    NE 1/4, less a 2.52 acre ROW tract              
     29    SW 1/4                    30    SE 1/4                    32   
NW 1/4        

MT 002B

   Waldock, Jean      *         152N-89W     

32

  

NW 1/4

     717.48         *                 151N-90W      25    NE 1/4, less a 2.52
acre ROW tract                    29    SW 1/4                    30    SE 1/4
                   32    NW 1/4         MT 002C    Waldock, Richard      *      
  152N-89W      32    NW 1/4      717.48         *                 151N-90W     
25    NE 1/4, less a 2.52 acre ROW tract                    29   

SW 1/4

                   30   

SE 1/4

                   32   

NW 1/4

        MT 002D    Bjelland, Monica      *         152N-89W      32   

NW 1/4

     717.48         *                 151N-90W      25   

NE 1/4, less a 2.52 acre ROW tract

                   29    SW 1/4                    30   

SE 1/4

                   32   

NW 1/4

        MT 002E    Matsch, Rita      *         152N-89W      32   

NW 1/4

     717.48         *                 151N-90W      25    NE 1/4, less a 2.52
acre ROW tract                    29   

SW 1/4

                   30   

SE 1/4

                   32   

NW 1/4

        MT 002F    Waldock, John      *         152N-89W      32   

NW 1/4

     717.48         *                 151N-90W      25   

NE 1/4, less a 2.52 acre ROW tract

                   29   

SW 1/4

                   30   

SE 1/4

                   32   

NW 1/4

        MT 002G    Forrest, Mary E., and Harland Forrest,      *        
152N-89W      32    NW 1/4      160.00         *         wife and husband      
             MT 002H    Loan, Marilyn      *         152N-89W      32   

NW 1/4

     717.48         *                 151N-90W      25   

NE 1/4, less a 2.52 acre ROW tract

                   29   

 

SW 1/4

                   30   

SE 1/4

                   32   

NW 1/4

        MT 009    Bartelson, John O., a widower, John H. Bartleson, Jr.      *
        151N-89W      19    NE 1/4      1440.28         *         a single man,
and Janice B. Anderson aka Janice         151N-90W      2    Lot 1(40.13), Lot
2(40.15), S 1/2NE 1/4, SE 1/4            K. Anderson aka Janice Anderson a
married woman         13   

NW 1/4

                   14    All                    34    NW 1/4         MT 010   
Brendle, Ralph A. Revocable Living Trust dated      *         151N-91W      10
   S 1/2NE  1/4      1040.00         *         7/1/05. Ralph A. Brendle. Trustee
        11    N 1/2                    12    NE 1/4                    152N-80W
    

29

   NW 1/4                    32    S 1/2NE  1/4, NW 1/4, N 1/4SW  1/4        
MT 010A    Brendle, V. Gail. Revocable Living Trust dated      *        
151N-91W      10    S 1/2NE  1/4      80.00         *         7/1/05. V. Gail.
Brendle, Trustee                    MT 010B    Youlsos, Gail      *        
151N-91W      12    NE 1/4      160         *      mailout MT 014    Kuehn, Jon
E. a married man dealing in his sole      *         151N-90W      1   
Lot 2(40.05), SE 1/4, S 1/2NE 1/4, less a 3.80 acre tract, a 1.83 acre     
420.79         *         and separate property            tract, a 0.13 acre
tract, and a 12.13 acre tract, Lot 3(40.07)                       less a 1.77
acre tract, Lot 4(40.13), S 1/2NW 1/4        

MT 021

   Hoinzen, Robert, individually and as Trustee of the      *         152N-89W
        The N 1/2 of the following described tract:      96.48         *        
Margery I. Heinzon Trust dated March 8, 2008         5    S 1/2NE 1/4, Lots
1(58.44), 2(58.62)         MT 021A   

Ackerman, Kay L.

     *         152N-89W         The N 1/2 of the following described tract:     
96.48         *                 5    S 1/2NE 1/4 Lots 1(58.44), 2(58.52)        
MT 026    Braaflat, DuWayne and Dons V. Braaflat      *         152N-89W      2
   Lots 3(57.35), 4(57.26), S 1/2NW  1/4      983.4         *         husband
and wife         3    SW 1/4                    9    NW 1/4                   
10    NW 1/4                    13    NE 1/4                    152N-88W      6
   Lots 8(33.47), 7(33.63), E 1/4SW  1/4         MT 026A    Braaflat, Craig and
Joy R. Braaflat      *         152N-89W     

2

  

Lots 3(57.35), 4(57.25), S 1/2NW 1/4

     234.12         *         husband and wife         3    SW 1/2              
     8    NE 1/4                    10    NW 1/4                    19    Lot
1(34.12), NE 1/4NW  1/4                               MT 026B    Boe, Kenneth
and Bonnie Boe, husband and wife      *         152N-89W     

9

   NW 1/4      160.00         *         and Shirley Engeeden, a widow (heirs of
Bertha                       Johnson, deceased)                    MT 027   
Duff Family Trust UAD 8/20/97, Edwin Ramend      *         152N-89W      3   
Lots 1 & 2, S 1/2NE  1/4      194.26         *         Duff and Lillian Emily
Duff as Trustee                    MT 027A    Duff, Robert C., a married man
dealing in his sole      *         152N-89W      3    Lots 1 & 2, S 1/2NE  1/4
     194.28         *         and separate property                   

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

EXHIBIT ‘B’ (Continued)

PARSHALL PROSPECT

MOUNTRAIL COUNTY, ND

 

Lease ID

  

Lessor

   Exp. Date      TWP RGE    

Sec.

  

Legal Description

   Gross
Acres      Net
Acres    

Mailout

MT 027B    Duff. Dolphine Ann, Individually and as Trustee of the Richard M.
Duff Revocable Trust      *         152N-89W      3    Lots 1 & 2, S  1/2NE 1/4
     184.28         *      MT 027C    Duff, Donald R. and Shirley K. Duff,
husband and wife      *         152N-99W      3    Lots 1 & 2, S 1/2NE  1/4     
184.28         *     

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

EXHIBIT ‘B’ (Continued)

PARSHALL PROSPECT

MOUNTRAIL COUNTY, ND

 

 

Lease ID

  

Lessor

   Exp. Date      TWP RGE    

Sec.

  

Legal Description

   Gross
Acres      Net
Acres    

Mailout

MT 029

   Andes, Robert Jr. and Sharon Andes,      *         152N-89W      20    NW 1/4
     160.00         *         husband and wife                   

MT 030

  

Nelson, Wallace L and Mary Ann Nelson

     *         151N-90W      27    SE 1/4      639.52         *         husband
and wife        
151N-89W
  
 

4

   SW 1/4                    5    Lots 3(39.90), 4(39.88), S 1/2NW  1/4        
           8    Lots 1(39.86), 2(39.90), S 1/2NE  1/4        

MT 031

   Nelson, Wallace L And Mary Ann Nelson      *         152N-89W      1    Lots
1(57.81), 2(57.75), S 1/2NE  1/4,SE 1/4      570.94         *         husband
and wife         12    Lots 1(13.92), 2(13.82), NE 1/4, Lots 3(13.82), 4(13.82)
       

MT 032

   Nelson, Wallace L. Life Estate      *         152N-89W      14    NE 1/4     
180.00         *     

MT 033

   Williamson, Wade F. Aka Wade F. Williamson Jr.      *         151N-89W      6
   Lots 3(39.94), 4(34.89), 5(34.78), 6(34.62), 7(34.47)      925.23         *
        and Cynthia J. Williamson husband and wife            SE 1/4NW 1/4,
E 1/2SW 1/4            Helen H. WiIliamson Res, Trust         7    Lots
1(34.46), 2(34.80), less a 2.51 A Tr., E 1/2NW 1/4                    30   
SE 1/4                    32    NW 1/4                    33    NW 1/4        

MT 033B

   Anderson, Carol L. and Edward D. Andersen aka      *         151N-89W      6
   Lots 3(39.94), 4(34.89), 5(34.78).SE 1/4NW 1/4      149.61         *        
Edward Anderson, wife and husband                   

MT 033C

   Vorwerk, James A.      *         151N-89W      6    Lot 6(34.62), 7(34.47),
E 1/2SW  1/4      459.09         *                 30    SE 1/4                 
  32    NW 1/4        

MT 033D

   Vorwark, Nancy      *         151N-89W      6    Lot 6(34.62), 7(34.47),
E 1/2SW  1/4      469.09         *                 30    SE 1/4                 
  32    NW 1/4        

MT 033E

   Larson, Lots      *         151N-89W      6    Lot 6(34.62), 7(34.47),
E 1/2SW  1/4      469.09         *                 30    SE 1/4                 
  32    NW 1/4        

MT 033F

   Schroeder, Dorothv J.      *         151N-89W      6    Lot 6(34.62),
7(34.47), E 1/2SW  1/4      469.09         *                 30    SE 1/4      
             32    NW 1/4                              

MT 033G

   Vorwerk, Harold G,      *         151N-89W      6    Lot 6(34.62), 7(34.47),
E 1/2SW  1/4      469.09         *                

 

30

  

 

SE 1/4

                   32    NW 1/4        

MT 033H

   Vorwerk, Wesley      *         151N-88W      6    Lot 6(34.62), 7(34.47),
E 1/2SW  1/4      469.09         *      mailout            30    SE 1/4        
           32    NW 1/4        

MT 033I

   Zialicke, Esther      *         151N-89W      6    Lot 6(34.62), 7(34.47),
E 1/2SW  1/4      469.09         *      mailout            30    SE 1/4        
           32    NW 1/4        

MT 034

   Braaflat Craig and Joy R. Braaflat husband and wife      *         152N-89W
     18    E 1/2SW  1/4      80.00         *     

MT 035

   Waldock, Benedict Joseph, a widower      *         152N-89W      32    NW 1/4
     320.00         *                 151N-80W      20    SE 1/4        

MT 035A

   Schoepf, Valene, formerly Valene Waldock and      *         152N-89W      32
   NW 1/4      160.00         *         Michael Schoepf, wife and husband      
            

MT 038

   Bergemann, William G. as A-in-F for Olive      *         151N-89W      6   
SE 1/4      160.00         *         Bergermann, a widow                   

MT 038

   Risen Limited Partnership, a ND Limited Partnership      *         152N-89W
     30    Lots 1(34.28), 2(34.33), E 1/2NW 1/4, NE 1/4      308.81         *   
 

MT 039

   WaLdock, Tom and Joyce Waldock      *         151N-91W      23   
E 1/2W 1/2NW 1/4,SE 1/4      1152.10         *                 24    NE 1/4,E 
1/2NW 1/4,SW 1/4                    151N-90W      19    Lots 1(35.88), 2(36.12),
E 1/2NW, NW 1/4SE 1/4, NE 1/4, E 1/2SE 1/4, NE 1/4                    20   
W 1/2SE  1/4        

MT 039A

   Illene Msek      *         151N-91W      13    SE 1/4, E 1/2SW 1/4         *
                23    E 1/2W 1/2, E 1/2W 1/2NW 1/4, SE 1/4                    24
   E 1/2NW 1/4, SW 1/4        

MT 040

   Waldock, Joe      *         151N-91W      12    NW 1/4      1497.58         *
                13    E 1/4, E 1/2SW 1/4                    14   

W 1/2NE 1/4, SE 1/4

                   23   

E 1/2W 1/2

                   151N-90W     

18

  

NW 1/4

                   18    Lot 3(35.91), 4(35.92), E 1/2SW,  1/4                 
  19    Lot 3(38.24)                    20    W 1/2SE  1/4                    29
   NE 1/4        

MT 041

   Waldock, Benedict      *         151N-91W      13    NE 1/4      160        
*     

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

EXHIBIT ‘B’ (Continued)

SECI DIRECT LEASES

MOUNTRAIL COUNTY, ND

 

No.

  

TWP RGE

  

Sec.

  

Legal Description

   Gross
Acres      Net
Acres      Mailout     

T153N-88W

   9    SE/4      160         *      

[Confidential treatment has been requested with respect to the omitted portions
of this exhibit. This copy omits information subject to a confidentiality
request filed with the Securities and Exchange Commission. Omissions are
designated with the character [*]. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission along with the
request for confidential treatment.]