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THIS AGREEMENT RELATES TO AN OFFERING OF SECURITIES IN AN OFFSHORE TRANSACTION
TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATIONS UNDER THE 1933
ACT) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “1933 ACT”), NONE OF THE SECURITIES TO WHICH THIS AGREEMENT RELATES
HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND,
UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN
THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT IN ACCORDANCE
WITH THE PROVISJONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER TILE 1933 ACT, OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF TUE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS, IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE
SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933 ACT.

PURCHASE AGREEMENT

          THIS PURCHASE AGREEMENT (this “Agreement”) is made as of the 12th day
of May, 2006 by and between Terax Energy, Inc., a Nevada corporation (the
“Company”), and Paul A. Turner, Trustee (the “Investor”),

Recitals

                     A. The Company and the Investor are executing and
delivering this Agreement in reliance upon the exemption from securities
registration afforded by the provisions of Regulation S (“Regulation S”), as
promulgated by the U.S. Securities and Exchange Commission (the “SEC”) under the
Securities Act of 1933, as amended; and

                    B. The Investor wishes to purchase from the Company, and the
Company wishes to sell and issue to the Investor, upon the terms and conditions
stated in this Agreement, (i) a promissory note in the principal amount set
forth on signature page hereof (the “Principal Amount”), bearing interest at the
rate of 12.5% per annum in the form attached hereto as Exhibit A (the “Note”),
and (ii) 71,429 shares of the Company’s common stock (the “Common Stock”). The
Company is selling an aggregate of up to $2,500,000 principal amount of
promissory notes (the “Aggregate Offering”) of which the Note shall be a part.

                    In consideration of the mutual promises made herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

           I. Definitions. In addition to those terms defined above and
elsewhere in this Agreement, for the purposes of this Agreement, the following
terms shall have the meanings set forth below:

                     “Affiliate” means, with respect to any Person, any other
Person which directly or indirectly through one or more intermediaries Controls,
is controlled by, or is under common control with, such Person.

                    “Business Day” means a day, other than a Saturday or Sunday,
on which banks in New

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York City are open for the general transaction of business.

                     “Company’s Knowledge” means the actual knowledge of the
executive officers (as defined in Rule 405 under the 1933 Act) of the Company,
after due inquiry.

                    “Confidential Information” means trade secrets, confidential
information and know-how (including but not limited to ideas, formulae,
compositions, processes, procedures and techniques, research and development
information, computer program code, performance specifications, support
documentation, drawings, specifications, designs, business and marketing plans,
and customer and supplier lists and related information).

                    “Control” (including the terms “controlling”, “controlled
by” or “under common control with”) means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.

                    “Intellectual Property” means all of the following: (i)
patents, patent applications, patent disclosures and inventions (whether or not
patentable and whether or not reduced to practice); (ii) trademarks, service
marks, trade dress, trade names, corporate names, logos, slogans and Internet
domain names, together with all goodwill associated with each of the foregoing;
(iii) copyrights and copyrightable works; (iv) registrations, applications and
renewals for any of the foregoing; and (v) proprietary computer software
(including but not limited to data, data bases and documentation).

                    “Material Adverse Effect” means a material adverse effect on
(i) the assets, liabilities, results of operations, condition (financial or
otherwise), business, or prospects of the Company and its Subsidiaries taken as
a whole, or (ii) the ability of the Company to perform its obligations under the
Transaction Documents.

                    “Person” means an individual, corporation, partnership,
limited liability company, trust, business trust, association, joint stock
company, joint venture, sole proprietorship, unincorporated organization,
governmental authority or any other form of entity not specifically listed
herein,

                    “Purchase Price” means the price paid for the Note and
Common Stock set forth on the signature page hereof.

                    “SEC Filings” has the meaning set forth in Section 4.6.

                    “SEC” mean the United States Securities and Exchange
Commission.

                    “Securities” means the Note and the Investor Shares.

                    “Subsidiary” of any Person means another Person, an amount
of the voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
Person.

                    “Transaction Documents” means this Agreement and the Note.

                     “1933 Act” means the Securities Act of 1933, as amended, or
any successor statute, and the rules and regulations promulgated thereunder.

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                        “1934 Act” means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations promulgated
thereunder.

          2. Purchase and Sale of the Note and the Investor Shares: Security.
Subject to the terms and conditions of this Agreement, on the Closing Date, the
Company shall sell and issue to the Investor, a Note in the Principal Amount,
together with the Investor Shares in exchange for the Purchase Price. The
Investor shall be permitted to maintain a security interest in the oil, gas and
mineral leases owned by the Company and covering acreage in Erath County, Texas,
and all wells located on the acreage covered by said leases that are owned and
operated by the Company, right-of-ways and easements and the Company’s share of
production obtained from its wells in Erath County, Texas (the “Security
Interest”), as more fully set forth in Section 6.4 hereof.

          3. Closing. There shall be no formal closing ceremony with respect to
the transactions contemplated by this Agreement. Instead, the parties shall
execute and exchange the Transaction Documents by facsimile and email and the
closing o eh transactions contemplated by this Agreement shall be deemed to have
occurred (the “Closing”) on the date (the “closing Date”) that the Company
receives the Purchase Price in full.

          4. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investor that, except as set forth in the
schedules delivered herewith (collectively, the “Disclosure Schedules”):

                    4.1 Organization. Good Standing and Qualification. Each of
the Company and its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to carry on
its business as now conducted and to own its properties. Each of the Company and
its Subsidiaries is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property makes such qualification or leasing
necessary unless the failure to so qualify has not and could not reasonably be
expected to have a Material Adverse Effect.

                    4.2 Authorization. The Company has full power and authority
and, has taken all requisite action on the part of the Company, its officers,
directors and stockholders necessary for (i) the authorization, execution and
delivery of the Transaction Documents, (ii) authorization of the performance of
ail obligations of the Company hereunder or thereunder, and (iii) the
authorization, issuance (or reservation for issuance) and delivery of the
Securities. The Transaction Documents constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating
to or affecting creditors’ rights generally.

                    4.3 Capitalization. All of the issued and outstanding shares
of the Company’s capital stock have been duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights. All of’ the issued
and outstanding shares of capital stock of each Subsidiary have been duly
authorized and validly issued and are fully paid, nonassessable and free of
pre-emptive rights, were issued in full compliance with applicable state and
federal securities law and any rights of third parties and are owned by the
Company, beneficially and of record, subject to no lien, encumbrance or other
adverse claim.

                    4.4 Valid Issuance. The Notes have been duly and validly
authorized and, when issued and paid for pursuant to this Agreement, shall be
free and clear of all encumbrances and restrictions (other than those created by
the Investor~, except for restrictions on transfer set forth in the Transaction
Documents or imposed by applicable securities laws. The Investor Shares have
been duly and validly

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authorized, fully paid and non-assessable, free and clear of all encumbrances
and restrictions, except for restrictions on transfer set forth in the
Transaction Documents or imposed by applicable securities laws and except for
those created by the Investor.

                    4.5 Consents. The execution, delivery and performance by the
Company of the Transaction Documents, and the offer, issuance and sale of the
Securities require no consent of, action by or in respect of, or filing with,
any Person, governmental body, agency, or official other than filings that have
been made pursuant to applicable state securities laws, and post-sale filings
pursuant to applicable state and federal securities laws which the Company
undertakes to file within the applicable time periods.

                    4.6 SEC Filings; Business. The Company has made available to
the Investor through the EDGAR system, true and complete copies of the Company’s
most recent Annual Report on Form 10-KSB for its last fiscal year (the “1
0-KSB”), and all other reports filed by the Company pursuant to the 1934 Act
since the filing of the l0-KSB and prior to the date hereof (collectively, the
“SEC Filings”). The SEC Filings are the only filings required of the Company
pursuant to the 1934 Act for such period. The Company and its Subsidiaries are
engaged in all material respects only in the business described in the SEC
Filings and the SEC Filings contain a complete and accurate description in all
material respects of the business of the Company and its Subsidiaries, taken as
a whole.

                    4.7 Use of Proceeds. The net proceeds of the sale of the
Notes and the Investor Shares hereunder shall be used by the Company for
completion of gathering systems, well cost and working capital.

                    4.8 No Material Adverse Change. Since the date of the
financial statements contained in the most recent SEC Filings, and except as
identified and described in the SEC Filings, there has not been:

                              (i)              any change in the consolidated
assets, liabilities, financial condition or operating results o the Company from
that reflected in the financial statements included in the Company’s Quarterly
Report on Form 10-QS13 for the quarter ended December 31, 2005, except for
changes in the ordinary course of business which have not and could not
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate;

                              (ii)             any declaration or payment of any
dividend, or any authorization or payment of any distribution, on any of the
capital stock of the Company, or any redemption or repurchase of any securities
of the Company;

                              (iii)             any material damage, destruction
or loss, whether or not covered by insurance to any assets or properties of the
Company or its Subsidiaries;

                              (iv)             any waiver, not in the ordinary
course of business, by the Company or any Subsidiary of a material right or of a
material debt owed to it;

                              (v)             any satisfaction or discharge of
any lien, claim or encumbrance or payment of any obligation by the Company or a
Subsidiary, except in the ordinary course of business and which is not material
to the assets, properties, financial condition, operating results or business of
the Company and its Subsidiaries taken as a whole (as such business is presently
conducted and as it is proposed to be conducted);

                              (vi)             any change or amendment to the
Company’s Certificate of Incorporation or Bylaws, or material change to any
material contract or arrangement by which the Company or any Subsidiary is bound
or to which any of their respective assets or properties is subject;

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                              (vii)          any material labor difficulties or
labor union organizing activities with respect to employees of the Company or
any Subsidiary;

                              (viii)         any material transaction entered
into by the Company or a Subsidiary other than in the ordinary course of
business;

                              (ix)            the loss of the services of any
key employee, or material change in the composition or duties of the senior
management of the Company or any Subsidiary;

                              (x)             the loss or threatened loss of any
customer which has had or could reasonably be expected to have a Material
Adverse Effect; or

                              (xi)            any other event or condition of
any character that has had or could reasonably be expected to have a Material
Adverse Effect.

                    4.9 SEC Filings.

                              (a) At the time of filing thereof, the SEC Filings
complied as to form in all material respects with the requirements of the 1934
Act and did not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading,

                              (b) Each registration statement and any amendment
thereto filed by the Company since January 1, 2005 pursuant to the 1.933 Act and
the rules and regulations thereunder, as of the date such statement or amendment
became effective, complied as to form in all material respects with the 1933 Act
and did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein not misleading; and each prospectus filed pursuant to
Rule 424(b) under the 1933 Act, as of its issue date and as of the closing of
any sale of securities pursuant thereto did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.

                    4.10 No Conflict, Breach, Violation or Default. The
execution, delivery and performance of the Transaction Documents by the Company
and the issuance and sale of the Securities will not conflict with or result in
a breach or violation of any of the terms and provisions of, or constitute a
default under (i) the Company’s Certificate of Incorporation or the Company’s
Bylaws, both as in effect on the date hereof (true and complete copies of which
have been made available to the Investor through the EDGAR system), or (ii)(a)
any statute, rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company, any Subsidiary
or any of their respective assets or properties, or (b) any agreement or
instrument to which the Company or any Subsidiary is a party or by which the
Company or a Subsidiary is bound or to which any of their respective assets or
properties is subject.

                    4.11 Tax Matters. The Company and each Subsidiary has timely
prepared and filed all tax returns required to have been filed by the Company or
such Subsidiary with all appropriate governmental agencies and timely paid all
taxes shown thereon or otherwise owed by it. The charges, accruals and reserves
on the books of the Company in respect of taxes for all fiscal periods are
adequate

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in all material respects, and there are no material unpaid assessments against
the Company or any Subsidiary nor, to the Company’s Knowledge, any basis for the
assessment of any additional taxes, penalties or interest for any fiscal period
or audits by any federal, state or local taxing authority except for any
assessment which is not material to the Company and its Subsidiaries, taken as a
whole. All taxes and other assessments and levies that the Company or any
Subsidiary is required to withhold or to collect for payment have been duly
withheld and collected and paid to the proper governmental entity or third party
when due. There are no tax liens or claims pending or, to the Company’s
Knowledge, threatened against the Company or any Subsidiary or any of their
respective assets or property.

                    4.12 Title to Properties. Except as disclosed in the SEC
Filings, the Company and each Subsidiary has good and marketable title to all
real properties and all other properties and assets owned by it, in each case
free from liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or currently planned to be
made thereof by them; and except as disclosed in the SEC Filings, the Company
and each Subsidiary holds any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made or currently planned to be made thereof by them.

                    4.13 Certificates, Authorities and Permits. The Company and
each Subsidiary possess adequate certificates, authorities or permits issued by
appropriate governmental agencies or bodies necessary to conduct the business
now operated by it, and neither the Company nor any Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the Company or
such Subsidiary, could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.

                    4.14 No Labor Disputes. No material labor dispute with the
employees of the Company or any Subsidiary exists or, to the Company’s
Knowledge, is imminent.

                    4.15 Environmental Matters. Neither the Company nor any
Subsidiary is in violation of any statute, rule, regulation, decision or order
of any governmental agency or body or any court, domestic or foreign, relating
to the use, disposal or release of hazardous or toxic substances or relating to
the protection or restoration of the environment or human exposure to hazardous
or toxic substances (collectively, “Environmental Laws”), owns or operates any
real property contaminated with any substance that is subject to any
Environmental Laws, is liable for any off-site disposal or contamination
pursuant to any Environmental Laws, and is subject to any claim relating to any
Environmental Laws, which violation, contamination, liability or claim has had
or could reasonably be expected to have a Material Adverse Effect, individually
or in the aggregate; and there is no pending or, to the Company’s Knowledge,
threatened investigation that might lead to such a claim.

                    4.16 Litigation. Except as described in the SEC Filings,
there are no pending actions or suits against or affecting the Company, its
Subsidiaries or any of its or their properties; and to the Company’s Knowledge,
no such actions, suits or proceedings are threatened or contemplated.

                    4.17 Financial Statements. The financial statements included
in each SEC Filing present fairly, in all material respects, the consolidated
financial position of the Company as of the dates shown and its consolidated
results of operations and each flows for the periods shown, and such financial
statements have been prepared in conformity with United States generally
accepted accounting principles applied on a consistent basis (“GAAP”) (except as
may be disclosed therein or in the notes thereto, and, in the case of quarterly
financial statements, as permitted by Form l0-QSB under the 1934 Mt). Except as
set forth in the financial statements of the Company included in the SEC Filings
filed prior to the date hereof, neither the Company nor any of its, Subsidiaries
has incurred any liabilities, contingent or

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otherwise, except those incurred in the ordinary course of business, consistent
(as to amount and nature) with past practices since the date of such financial
statements, none of which, individually or in the aggregate, have had or could
reasonably be expected to have a Material Adverse Effect.

                    4.18 No Directed Selling Efforts or General Solicitation.
Neither the Company nor any Person acting on its behalf has conducted any
general solicitation or general advertising (as those terms are used in
Regulation S) in connection with the offer or sale of any of the Securities.

                    4.19 No Integrated Offering. Neither the Company nor any of
its Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any Company security or solicited any
offers to buy any security, under circumstances that would adversely affect
reliance by the Company on Regulation S for the exemption from registration for
the transactions contemplated hereby or would require registration of the
Securities under the 1933 Act.

                    4.20 Private Placement. The offer and sale of the Securities
to the Investor as contemplated hereby is exempt from the registration
requirements of the 1933 Act.

                    4.21 Questionable Payments. Neither the Company nor any of
its Subsidiaries nor, to the Company’s Knowledge, any of their respective
current or former stockholders, directors, officers, employees, agents or other
Persons acting on behalf of the Company or any Subsidiary, has on behalf of the
Company or any Subsidiary or in connection with their respective businesses: (a)
used any corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity; (b) made any direct or
indirect unlawful payments to any governmental officials or employees from
corporate funds; (c) established or maintained any unlawful or unrecorded fund
of corporate monies or other assets; (d) made any false or fictitious entries on
the books and records of the Company or any Subsidiary; or (e) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment of
any nature.

                    4.22 Disclosures. Neither the Company nor any Person acting
on its behalf has provided the Investor or their agents or counsel with any
information that constitutes or might constitute material, non-public
information. The written materials delivered to the Investor in connection with
the transactions contemplated by the Transaction Documents do not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein, in light of the circumstances
under which they were made, not misleading.

          5. Representations and Warranties of the Investor. The Investor hereby
represents and warrants to the Company that:

                    5.1 Organization and Existence. Such Investor is a validly
existing corporation, limited partnership or limited liability company and has
all requisite corporate, partnership or limited liability company power and
authority to invest in the Securities pursuant to this Agreement.

                    5.2 Authorization. The execution, delivery and performance
by such Investor of the Transaction Documents to which such Investor is a party
have been duly authorized and will each constitute the valid and legally binding
obligation of such Investor, enforceable against such Investor in accordance
with their respective terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability,
relating to or affecting creditors’ rights generally.

                    5.3 Purchase Entirely for Own Account. The Securities to be
received by such Investor hereunder will be acquired for such Investor’s own
account, not as nominee or agent, and not with a view

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to the resale or distribution of any part thereof in violation of the 1933 Act,
and such Investor has no present intention of selling, granting any
participation in, or otherwise distributing the same in violation of the 1933
Act without prejudice, however, to such Investor’s right at all times to sell or
otherwise dispose of all or any part of such Securities in compliance with
applicable federal and state securities laws. Nothing contained herein shall be
deemed a representation or warranty by such Investor to hold the Securities for
any period of time. Such Investor is not a broker-dealer registered with the SEC
under the 1934 Act or an entity engaged in a business that would require it to
be so registered.

                    5.4 Investment Experience. Such Investor acknowledges that
it can bear the economic risk and complete loss of its investment in the
Securities and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the investment
contemplated hereby.

                    5.5 Disclosure of Information. Such Investor has had an
opportunity to receive all information related to the Company requested by it
and to ask questions of and receive answers from the Company regarding the
Company, its business and the terms and conditions of the offering of the
Securities. Such Investor acknowledges receipt of copies of the SEC Filings.
Neither such inquiries nor any other due diligence investigation conducted by
such Investor shall modify, amend or affect such Investor’s right to rely on the
Company’s representations and warranties contained in this Agreement.

                    5.6 Restricted Securities. Such Investor understands that
the Securities are characterized as “restricted securities” under the U.S.
federal securities laws inasmuch as they are being acquired from the Company in
a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the 1933 Act only in certain limited circumstances.

                    5.7 The Investor further represents and acknowledges that:

                                (a) The Investor is located outside the United
States;

                                (b) The investor is not aware of any
advertisement of any of the Securities to be issued hereunder;

                                (c) The Investor will not acquire the Securities
as a result of, and will not itself engage in, any “directed selling efforts”
(as defined in Regulation S under the 1933 Act) in the United States in respect
of the Securities which would include any activities undertaken for the purpose
of, or that could reasonably be expected to have the effect of, conditioning the
market in the United States for the resale of the shares; provided, however,
that the Investor may sell or otherwise dispose of the Securities pursuant to
registration of the shares pursuant to the 1933 Act and any applicable state and
provincial securities laws or under an exemption from such registration
requirements and as otherwise provided herein;

                                (d) The Investor agrees that the Company will
refuse to register any transfer of the Securities not made in accordance with
the provisions of Regulation S, pursuant to an effective registration statement
under the 1933 Act or pursuant to an available exemption from the registration
requirements of the 1933 Act and in accordance with applicable state and
provincial securities laws; and

                                (e) The Investor understands and agrees that
offers and sales of any of the Securities prior to the expiration of a period of
one year after the date of transfer of the Securities (the “Distribution
Compliance Period”), shall only be made in compliance with the safe harbor
provisions set forth in Regulation 5, pursuant to the registration provisions of
the 1933 Act or an exemption therefrom, and that all offers and sales after the
Distribution Compliance Period shall be made only in compliance with the

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registration provisions of the 1933 Act or an exemption therefrom and in each
case only in accordance with all applicable securities laws;

                                (f) The Investor understands and agrees not to
engage in any hedging transactions involving the Securities prior to the end of
the Distribution Compliance Period unless such transactions are in compliance
with the provisions of the 1933 Act;

                                (g) The Investor hereby acknowledges and agrees
to the Company making a notation on its records or giving instructions to the
registrar and transfer agent of the Company in order to implement the
restrictions on transfer set forth and described herein.

                    5.7 Legends. It is understood that, except as provided
below, certificates evidencing the Securities may bear the following or any
similar legend:

                                (a) THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE “U.S. SECURITIES ACT”) OR OTHER APPLICABLE SECURITIES LAWS. THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION
OR RESALE AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
(1) IN ACCORDANCE WITH THE PROVISIONS OF REGULATIONS S, RULE 901 THROUGH RULE
905, AND PRELIMINARY NOTES UNDER THE U.S. SECURITIES ACT OR (2) PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES
ACT OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT. HEDGING TRANSACTIONS
INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
U.S. SECURITIES ACT.

                                (b) If required by the authorities of any state
in connection with the issuance of sale of the Securities, the legend required
by such state authority.

                    5.8 No General Solicitation. Such Investor did not learn of
the investment in the Securities as a result of any public advertising or
general solicitation.

                    5.9 Brokers and Finders. No Person will have, as a result of
the transactions contemplated by the Transaction Documents, any valid right,
interest or claim against or upon the Company, any Subsidiary or an Investor for
any commission, fee or other compensation pursuant to any agreement, arrangement
or understanding entered into by or on behalf of such Investor.

          6. Conditions to Closing.

                    6.1 Conditions to the Investor’s Obligations, The obligation
of the Investor to purchase the Notes and the Investor Shares at the Closing is
subject to the fulfillment to such Investor’s satisfaction, on or prior to the
Closing Date, of the following conditions, any of which may be waived by the
Investor:

                                (a) The representations and warranties made by
the Company in Section 4 hereof qualified as to materiality shall be true and
correct at all times prior to arid on the Closing Date, except to the extent any
such representation or warranty expressly speaks as of an earlier date, in which
case such representation or Warranty shall be true and correct as of such
earlier date, and, the representations and warranties made by the Company in
Section 4 hereof not qualified as to materiality shall be true and correct in
all material respects at all times prior to and on the Closing Date, except to
the extent any such representation or warranty expressly speaks as of an earlier
date, in which case such representation

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or warranty shall be true and correct in all material respects as of such
earlier date. The Company shall have performed in all material respects all
obligations and conditions herein required to be performed or observed by it on
or prior to the Closing Date.

                                (b) The Company shall have obtained any and all
consents, permits, approvals, registrations and waivers necessary or appropriate
for consummation of the purchase and sale of the Securities, and the
consummation of the other transactions contemplated by the Transaction
Documents, all of which shall be in full force and effect.

                                (c) No judgment, writ, order, injunction, award
or decree of or by any court, or judge, justice or magistrate, including any
bankruptcy court or judge, or any order of or by any governmental authority,
shall have been issued, and no action or proceeding shall have been instituted
by any governmental authority, enjoining or preventing the consummation of the
transactions contemplated hereby or in the other Transaction Documents.

                      6.2 Conditions to Obligations of the Company. The
Company’s obligation to sell and issue the Shares and the Investor Shares at the
Closing is subject to the fulfillment to the satisfaction of the Company on or
prior to the Closing Date of the following conditions, any of which may be
waived by the Company:

                                (a) The representations and warranties made by
the Investor in Section 5 hereof shall be true and correct in all respects on
the Closing Date with the same force and effect as if they bad been made on and
as of said date. The Investor shall have performed in all material respects all
obligations and conditions herein required to be performed or observed by them
on or prior t~ the Closing Date.

                                (b) The Investor shall have delivered the
Purchase Price to the Company.

                      6.3 Termination of Obligations to Effect Closing; Effects.

                                (a) The obligations of the Company, on the one
hand, and the Investor, on the other hand, to effect the Closing shall terminate
as follows:

                                          (i)Upon the mutual written consent of
the Company and the Investor;

                                          (ii) By the Company if any of the
conditions set forth in Section 6.2 shall have become incapable of fulfillment,
and shall not have been waived by the Company;

                                         (iii) By an Investor (with respect to
itself only) if any of the conditions set forth in Section 6,1 shall have become
incapable of fulfillment, and shall not have been waived by the Investor; or

                                          (iv) By either the Company or the
Investor if the Closing has not occurred on or prior to May 31, 2006;

provided, however, that, except in the case of clause (i) above, the party
seeking to terminate its obligation to effect the Closing shall not then be in
breach of any of its representations, warranties, covenants or agreements
contained in this Agreement or the other Transaction Documents if such breach

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has resulted in the circumstances giving rise to such party’s seeking to
terminate its obligation to effect the Closing.

          7. Covenants and Agreements of the Company.

                    7.1 Reports. The Company will furnish to the Investor and/or
their assignees such information relating to the Company and its Subsidiaries as
from time to time may reasonably be requested by the Investor and/or their
assignees; provided, however, that the Company shall not disclose material
nonpublic information to the Investor, or to advisors to or representatives of
the Investor, unless prior to disclosure of such information the Company
identifies such information as being material nonpublic information and provides
the Investor, such advisors and representatives with the opportunity to accept
or refuse to accept such material nonpublic information for review and the
Investor wishing to obtain such information enters into an appropriate
confidentiality agreement with the Company with respect thereto.

                    7.2 No Conflicting Agreements. The Company will not take any
action, enter into any agreement or make any commitment that would conflict or
interfere in any material respect with the Company’s obligations to the Investor
under the Transaction Documents.

                    7.3 Compliance with Laws. The Company will comply in all
material respects with all applicable laws, rules, regulations, orders and
decrees of all governmental authorities.

                    7.4 Security Interest. The Company shall cooperate with the
Investor in all reasonable respects in connection with the establishment and
maintenance of the Security interest. The Company agrees to execute such further
documents and instruments and to take such further actions as may be reasonably
necessary to carry out the purposes and intent of the Security Agreement. The
Company shall be responsible for the payment of all costs and expenses
reasonably incurred by Investor in connection with the preparation of any
documents, instruments or agreements required to create or perfect the Security
Interest and for all filing fees related thereto.

                    7.5 Termination of Covenants. The provisions of Sections 7.1
through 7.4 shall terminate and be of no further force and effect on the date on
which the Company’s obligations under the Note shall terminate.

          8. Survival and Indemnification.

                    8.1 Survival. The representations, warranties, covenants and
agreements contained in this Agreement shall survive the Closing of the
transactions contemplated by this Agreement until the repayment in full of the
Note.

                    8.2 Indemnification. The Company agrees to indenmify and
hold harmless each Investor and its Affiliates and their respective directors,
officers, employees and agents from and against any and all losses, claims,
damages, liabilities and expenses (including without limitation reasonable
attorney fees arid disbursements and other expenses incurred in connection with
investigating, preparing or defending any action, claim or proceeding, pending
or threatened and the costs of enforcement thereof) (collectively, “Losses”) to
which such Person may become subject as a result of any breach of
representation, warranty, covenant or agreement made by or to be performed on
the part of the Company under the Transaction Documents, and will reimburse any
such Person for all such amounts as they are incurred by such Person.

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                    8.3 Conduct of Indemnification Proceedings. Promptly after
receipt by ai~1y Person (the “Indemnified Person”) of notice of any demand,
claim or circumstances which would or might give rise to a claim or the
commencement of any action, proceeding or investigation in respect of which
indemnity may be sought pursuant to Section 8.2, such Indemnified Person shall
promptly notify the Company in writing and the Company shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to such
Indemnified Person, and shall assume the payment of all fees and expenses;
provided, however, that the failure of any Indemnified Person so to notify the
Company shall not relieve the Company of its obligations hereunder except to the
extent that the Company is materially prejudiced by such failure to notify. In
any such proceeding, any Indemnified Person shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Person unless: (i) the Company and the Indemnified Person
shall have mutually agreed to the retention of such counsel; or (ii) in the
reasonable judgment of counsel to such Indemnified Person representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. The Company shall not be liable for any
settlement of any proceeding effected without its written consent, which consent
shall not he unreasonably withheld, but if settled with such consent, or if
there be a final judgment for the plaintiff, the Company shall indemnify and
hold harmless such Indemnified Person from and against any loss or liability (to
the extent stated above) by reason of such settlement or judgment. Without the
prior written consent of the Indemnified Person, which consent shall not be
unreasonably withheld, the Company shall not effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Party, unless such settlement includes an unconditional release
of such Indemnified Person from all liability arising out of such proceeding.

          9. Miscellaneous.

                    9.1 Successors and Assigns. This Agreement may not be
assigned by a party hereto without the prior written consent of the Company or
the Investor, as applicable, provided, however, that an investor may assign its
rights and delegate its duties hereunder in whole or in part to an Affiliate or
to a third party acquiring some or all of its Securities in a private
transaction without the prior written consent of the Company, after notice duly
given by such Investor to the Company. The provisions of this Agreement shall
inure to the benefit of and be binding upon the respective permitted successors
and assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

                    9.2 Counterparts: Faxes. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Agreement may
also be executed via facsimile, which shall be deemed an original.

                    9.3 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

                    9.4 Notices. Unless otherwise provided, any notice required
or permitted under this Agreement shall be given in writing and shall be deemed
effectively given as hereinafter described (i) if given by personal delivery,
then such notice shall be deemed given upon such delivery, (ii) if given by
telex or telecopier, then such notice shall be deemed given upon receipt of
confirmation of complete

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transmittal, (iii) if given by mail, then such notice shall be deemed given upon
the earlier of (A) receipt of such notice by the recipient or (B) three days
after such notice is deposited in first class mail, postage prepaid, and (iv) if
given by an internationally recognized overnight air courier, then such notice
shall be deemed given one business day after delivery to such carrier. All
notices shall be addressed to the party to be notified at the address as
follows, or at such other address as such party may designate by ten days’
advance written notice to the other party:

If to the Company:

Mr. Lawrence Finn,
Interim Chief Executive Officer
Terax Energy, Inc.
13355 Noel Road
Suite 1370
Dallas, TX 75240
Fax: 972-503-0901

If to the Investor:

Mr. Paul A. Turner
3E-B 1 Lonsdale Gardens
25 Tai Hang Drive Jardine’s Lookout
Hong Kong, SAR
paul@turner.hk

                      9.5 Expenses. The parties hereto shall pay their own costs
and expenses in connection herewith. In the event that legal proceedings are
commenced by any party to this Agreement against another party to this Agreement
in connection with this Agreement or the other Transaction Documents, the party
or parties which do not prevail in such proceedings shall severally, but not
jointly, pay their pro rata share of the reasonable attorneys’ fees and other
reasonable out-of-pocket costs and expenses incurred by the prevailing party in
such proceedings.

                      9.6 Amendments and Waivers. Any term of this Agreement may
be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Investor.
Any amendment or waiver effected in accordance with this paragraph shall be
binding upon each holder of any Securities purchased under this Agreement at the
time outstanding, each future holder of all such Securities, and the Company.

                      9.7 Publicity. Except as set forth below, no public
release or announcement concerning the transactions contemplated hereby shall be
issued by the Company or the Investor without the prior consent of the Company
(in the case of a release or announcement by the Investor) or the Investor (in
the case of a release or announcement by the Company) (which consents shall not
be unreasonably withheld), except as such release or announcement may be
required by law or the applicable rules or regulations of any securities
exchange or securities market, in which case the Company or the Investor, as the
case may be, shall allow the Investor or the Company, as applicable, to the
extent reasonably practicable in the circumstances, reasonable time to comment
on such release or announcement in advance of such issuance.

                      9.8 Severability Any provision of this Agreement this is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or

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unenforceability without invalidating the remaining provisions hereof but shall
be interpreted as if it were written so as to be enforceable to the maximum
extent permitted by applicable law, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction. To the extent permitted by applicable law, the
parties hereby waive any provision of law which renders any provision hereof
prohibited or unenforceable in any respect.

                      9.9 Entire Agreement. This Agreement, including the
Exhibits and the Disclosure Schedules, and the other Transaction Documents
constitute the entire agreement among the parties hereof with respect to the
subject matter hereof and thereof and supersede all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject thatter hereof and thereof.

                      9.10 Further Assurances. The parties shall execute and
deliver all such further instruments and documents and take all such other
actions as may reasonably be required to carry out the transactions contemplated
hereby and to evidence the fulfillment of the agreements herein contained.

                      9.11 Governing Law: Consent to Jurisdiction; Waiver of
Jury Trial. This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Nevada without regard to the choice of
law principles thereof. Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of the courts of the State of Nevada and the United
States District Courts for the purpose of any suit, action, proceeding or
judgment relating to or arising out of this Agreement and the transactions
contemplated hereby. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the world by the
same methods as are specified for the giving of notices under this Agreement.
Each of the parties hereto irrevocably consents to the jurisdiction of any such
court in any such suit, action or proceeding and to the laying of venue in such
court. Each party hereto irrevocably waives any objection to the laying of venue
of any such suit, action or proceeding brought in such courts and irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO
WAIVES ANY RIGHT TO REQUEST A TIUAL BY JURY IN ANY LITIGATION WITH RESPECT TO
THIS AGREEMENT AND REPRESENTS TRAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO
THIS WAIVER.

[SIGNATURE PAGES FOLLOW]

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     IN WITNESS WFIERFOF, the parties have executed this Agreement or caused
their duly authorized officers to execute this Agreement as of the date first
above written.

  The Company:       TERAX ENERGY, INC.               By:  /s/ Lawrence Finn  
Name:Lawrence Finn   Title: President and Chief Executive Officer           The
Investor:               By:    /s/ Paul A. Turer   Name:Paul A. Turner  
Capacity: Trustee

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  NAME OF INVESTOR               By:
_____________________________________________________       Name:   Title:      
Principal Amount of Note purchased:$___________________________       Tax ID
No.:       ADDRESS FOR NOTICE       C/o:
_____________________________________________________       Street:
___________________________________________________       City/State/Zip:
_____________________________________________       Attention:
________________________________________________       Tel:
_____________________________________________________       Fax:
_____________________________________________________       DELIVERY
INSTRUCTIONS   (if different from above)       C/o:
_____________________________________________________       Street:
___________________________________________________       City/State/Zip:
_____________________________________________       Attention:
________________________________________________       Tel:
_____________________________________________________    

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