EXHIBIT 10.2

FARMOUT AGREEMENT

THIS AGREEMENT, made and entered into as of the ______ day of            , 2007,
by and between ALTAMONT OIL & GAS, INC., P.O. Box 488, Cut Bank, MT 59427 and
NUMBERS, INC., 1500 Manulife Place, 10180 - 202 Street, Edmonton, AB T5J 4K1,
referred to as “FARMOR”, and MAJESTIC OIL & GAS, INC., CBM Building, Cut Bank,
MT 59427, hereafter referred to as “FARMEE”,

WITNESSETH:

WHEREAS, Farmor is the owner and holder of undivided interests in certain Oil
and Gas Leases covering lands situated in Pondera County-, Montana, more
particularly described on Exhibit “A” attached hereto, which lands are
hereinafter referred to as the “Subject Lands”; and

WHEREAS, Farmee has proposed the drilling of test wells to explore for oil or
gas at locations on the Subject Lands, which wells are hereinafter referred to
as “Test Wells”; and

WHEREAS, Farmor is interested in seeing the Test Wells drilled, and, if drilled
in accordance with the terms and condi-tions hereof, Farmee shall have earned
interests in the Subject Lands to the extent hereinafter provided;

NOW, THEREFORE, in consideration of the mutual covenants, agreements, conditions
and obligations herein contained, it is agreed as follows:

ARTICLE I.

Titles

1.1 Farmor makes no representations and warranties, either express or implied,
as to the title or ownership of the Subject Lands. Farmor will furnish Farmee a
copy of any title opinions, leases, assignments, rental receipts or other title
data which Farmor may have in its files concerning the Subject Lands. In the
event that Farmee desires to obtain and examine any other title data or to have
performed any title curative work, it may do so but at no cost or expense to
Farmor.

ARTICLE II.

Initial Test Well
 
2.1 Farmee, at its sole cost, risk and expense, shall commence or cause to be
commenced, the actual drilling of a Test Well at a location of its choice on the
Subject Lands or on lands pooled or communitized therewith on or before  , 2007,
and shall thereafter drill the Test Well with due diligence and in a workmanlike
manner and in accordance with good oil field practices to a depth sufficient to
penetrate the 4th Bow Island formation and shall complete the Test Well as a
producing well, shut-in gas well, or dry hole within a reasonable time after
commence-ment. In the event Farmee should fail to timely commence the drilling
of Test Well or complete the Test Well as specified herein, then the only
consequence of such failure to perform shall be the forfeiture of any

 
 

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

 

interest to be earned by Farmee in the Subject Lands and the automatic
termination of this Agreement and all rights and privileges of Farmee hereunder.

2.2 In the Event Farmee is unable to reach the objective depth -in drilling any
Test Well due to conditions beyond Farmee's control encountered subsurface,
Farmee may commence a substitute Test Well within thirty (30) days from the
cessation of drilling on the abandoned Test Well on a location of Farmee's
choice on the Subject Lands and such substitute Test Well shall take the place
of the abandoned Test Well for all purposes hereof.

2.3 Notwithstanding the foregoing, Farmee shall remain liable for and indemnify
Farmor from any and all damages, liabili-ties or cause of action resulting from
Farmee's actions relating to the Subject Lands.

ARTICLE III.

Subsequent Test Wells

3.1 If Farmee timely and properly drills the Initial Test Well provided for in
Article II hereof, whether completed as a producer of oil or gas, or plugged and
abandoned as a dry hole, Farmee shall have the exclusive right to drill
additional test wells on the Subject Lands, or on lands pooled or communitized
therewith, at locations of Farmee’s choice in the same manner as provided for
drilling the Initial Test Well, provided, however, that Farmee shall drill at
least two additional test wells per calendar year.

3.2 Farmee shall have the continuing option to drill and earn interests in the
Subject Lands by drilling a minimum of two test wells per calendar year. In the
event Farmee fails to drill two wells in any year, the only consequence shall be
the forfeiture of any interest to be earned by Farmee in the Subject Lands
remaining undrilled by Farmee, but Farmee shall have and be entitled to all
interests theretofore earned under the terms of this Agreement.

ARTICLE IV.

Assignments of Interest
 
4.1 If and when any Test Well is completed as a well capable of production, at
Farmee’s request, Farmor shall execute and deliver to Farmee the following
assignments as may be appropriate, to wit:
 
4.1.1 Subject to Paragraphs 4.1.2 and 4.1.3 below, if any Test Well is completed
as a well capable of producing oil or gas in paying quantities, Farmor shall
assign to Farmee fifty percent (50%) of Farmor’s leasehold working interest in
the production spacing unit applicable to said well as established by the
appropriate regulatory authority from the surface to the base of the lowest
stratigraphic horizon penetrated by drilling. In default of a production spacing
unit, said assignment shall cover the 40 acres upon which the well was drilled.

 
-2-

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

 

4.1.2 Each Test Well shall earn the interest set forth in Paragraph 4.1.1 only
in zones which do not have a produc-ible well existing in the Test Well’s
spacing unit or 40 acre tract at the time the Test Well is drilled. Farmor shall
exclude any such zones containing a producible well in the assignment made to
Farmee hereunder.

4.1.3 The leasehold working interest assigned from Farmor to Farmee pursuant to
Paragraph 4.1.1 hereof shall be made subject to landowner’s royalty and
overriding royalty burdens existing of record and as may be additionally created
to convey to Farmee its interests in an eighty percent (80%) net revenue
interest lease. - Such assignment shall be in recordable form and/or on a form
approved for assignment by the State of Montana Department of Natural Resources
and Conservation and/or the U. S. Bureau of Land Management as and when
applicable.

4.2 With respect to any assignment made by Farmor to Farmee pursuant to
Paragraph 4.1.1 hereof relative to a producing oil or gas well, then, as to each
such well, and its permanent production spacing unit (as defined hereinafter),
Farmor shall be deemed to have relinquished to Farmee, effective as of the date
of first production from such well, all of Farmor’s retained working interest
and to such well, the operating rights therein, and all equipment associated
therewith, and all working interest production from said well, until such Test
Well reaches payout (as hereinafter defined). For purposes of this Agreement,
“permanent production spacing unit” shall be the spacing unit established by the
Montana Board of Oil and Gas Conservation or the participating area established
by the federal government, whichever of the foregoing tracts is applicable.
Provided however, not withstanding anything contained herein, when the payout is
achieved on any well, the Working Interest in such well shall be 50% to the
Farmee and 50% to the Farmor (25% to Altamont Oil & Gas, Inc and 25% to Numbers,
Inc).
 
4.3 “Payout” shall be defined as that point in time, at the close of a calendar
month, in which the total costs and expenses of drilling, testing, completing,
equipping and operating the Test Well shall have been fully recovered by Farmee
from the net revenue interest production accruing from such well to Farmee.
However, in computing the net revenue interest production accruing to Farmee, no
additional burdens against Farmee’s working interest shall be included except
for pre-existing landowner’s royalty and overriding royalty burdens, it being
agreed that all net revenue interest calculations shall be made on the basis of
an eighty percent (80%) net revenue interest lease.

4.4 Farmee shall maintain complete and accurate records of oil, gas, casing head
gas, and other associated hydrocarbon substances produced, saved and marketed
from each such Test Well and shall furnish Farmor quarterly statements with
sufficient details to enable Farmor at all times to be currently informed as to
the status of the recovery of Farmee’s costs of drilling, testing, equipping,
completing and operating such Test Well.

ARTICLE V.

Operating Provisions

5.1 In the event Farmee earns an assignment of interest in the Subject Lands,
the parties hereto shall enter into an Operating Agreement providing for
operations and sharing of costs and benefits on the Subject Lands within the
production spacing unit on which the Test Well is located or upon which future
wells are drilled. Such Operating Agreement shall be effective as to each Test
Well and its production spacing unit from and after the date of first production
from such well Such Operating Agreement shall be the AAPL-610 Model Form
Operating agreement attached hereto as Schedule I.

 
-3-

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

 
 
5.2 Altamont Oil & Gas, Inc. shall be designated as the Operator under the
Operating Agreement adopted by the parties hereto for operations on the Subject
Lands. It is understood and agreed, however, that said Operating Agreement shall
be subject to the terms and provisions of this Agreement and whenever this
Agreement is inconsistent with the terms and provisions of said Operating
Agreement, then this Agreement shall prevail.

ARTICLE VI.

Well Information
 
6.1 At all times during the drilling of any Test Well, Farmor, or its duly
authorized representatives shall, at Farmor's sole risk, have access to the
derrick floor and shall be entitled to receive all information during such
operation, including daily drilling reports showing the progress made in the
Well and such other information as may be obtained in the conduct of any and all
operations on the Well. Farmee shall furnish Farmor, at Farmee's cost and
expense, copies of all logs run on the Well. Farmee shall take such cores and
make such tests as would a reasonable and prudent operator under the same or
similar circumstances, and shall give Farmor hereto reasonable notice and
sufficient time to have a representative present before any testing, coring or
logging of a prospective oil or gas zone. All such geological information shall
be kept confidential.

ARTICLE VII.

Rentals

7.1 Farmee shall reimburse Farmor of one hundred percent (100%) of all rental
payments, if any, coming due and payable by Farmor as to the Subject Lands
during the time this Agreement is in force and effect. Upon Farmee earning an
interest in the Subject Lands, subsequent rental or shut-in royalties will be
paid by Farmee and shared in propor-tion to the parties respective working
interests therein.

7.2 The party hereto responsible for payment of rentals shall diligently attempt
to make proper payment, but shall not be liable to the other parties in damages
for the loss of any lease or interest therein if, through mistake or oversight,
any rental payment is not paid or is erroneously paid.

ARTICLE VIII.

Liability of the Parties

8.1 Farmee shall, and does hereby indemnify and hold Farmor harmless from and
against any and all liens, encumbrances or claims for property damage, personal
injury or other damages to third parties resulting from or arising out of the
drilling, testing and completing of any Test Well. Farmee shall carry on all
operations hereunder as a prudent operator in accordance with good oil field
practices in strict compliance with all applicable laws, rules and regulations
of any governmental body or board having jurisdiction in the area of operation.

8.2 The liabilities of the parties hereto shall be separate and not joint or
collective, and each party shall be responsible for its obligations as set out
herein. This Agreement does not create or

 
-4-

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

 

evidence any sort of a partnership, mining partnership, association or joint
enterprise. Each Party hereto elects to be excluded from the application of all
provisions of SubChapter K of Chapter 1, Subtitle A of the Internal Revenue Code
of 1986 as amended and makes the same election with respect to any state income
tax laws where such election is permitted.

ARTICLE IX.

Insurance
 
9.1 At all times during the drilling, testing and completing of any Test Well,
Farmee shall comply and cause subcontractors to comply, with the provisions of
the applicable workmen’s compensa-tion laws and shall carry and cause
subcontractors to carry insurance with reputable insurance companies meeting the
following minimum requirements.

9.1.1 Employer liability insurance covering each employee to the extent of
$300,000.00 for each employee not covered by Workmen’s Compensation.

9.1.2 Public liability and property damage insurance or comprehensive general
liability insurance to the extent of $300,000.00 for injuries or death to one
person; $500,000.00 for injuries or death in any one accident; and $300,000.00
for property damage.

9.1.3 Automobile and public liability and property damage insurance covering all
automotive units to the extent of $300,000.00 for injuries or death to one
person; $500,000.00 for injuries or death in any one accident; and $300,000.00
for property damage.

ARTICLE X.

Notices

19.1 All notices, reports, information, data and other communications required
or permitted by the provisions of this Agreement to be given or sent by any
party hereto shall be deemed properly given or sent when delivered personally or
by telephone, or if required to be in writing, mailed by certified or registered
mail, postage prepaid or given by telegram addressed to the party or parties
intended to receive the same at the respective addresses as follows:

Altamont Oil & Gas, Inc.
Majestic Oil & Gas, Inc.
P. O. Box 488
CBM Building
Cut Bank, MT 59427
Cut Bank, MT 59427
Telephone: (406) 873-9000
Telephone: (406) 873-5580

ARTICLE XI.

General Provisions

11.1 The article headings in this Agreement are for the purpose of convenience
and reference only and shall not be construed as interpretations of the text.

 
-5-

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

 

11.2 No waiver on behalf of any of the parties hereto of any breach of the
covenants, conditions and provisions herein contained shall be effective or
binding upon such party unless the same be expressed in writing. Any waiver so
expressed shall not limit or affect such party's rights with respect to any
other or future breach.
 
11.3 Time shall be of the essence hereof.

11.4 All of the terms and conditions of this Agreement shall be construed as and
shall constitute covenants running with the oil and gas leasehold estate in the
subject lands and shall be binding upon and enure to the benefit of the parties
hereto and their respective successors and assignees.

IN WITNESS WHEREOF, this Agreement is executed by the parties herein as of the
day and year first above written.

FARMOR   FARMEE           ALTAMONT OIL & GAS, INC.   MAJESTIC OIL & GAS, INC.  
                  By:      By:                                     NUMBERS, INC.
                          By:         

 
 
-6-

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