AMENDMENT TO OPERATING AGREEMENT

 

This Amendment (this “Amendment”) to the Operating Agreement dated as of August
2, 2011 (as it has been amended, the “Agreement”) is entered into effective as
of March 14, 2013 (“Effective Date”), by and among INDEPENDENCE DRILLING, LLC, a
Nevada limited liability company (“Operator”), DESERT DISCOVERIES, LLC, a Nevada
limited liability company (“Desert Discoveries”), CORTEZ EXPLORATION LLC, a
Nevada limited liability company (“Cortez”), PUNTO DE LUZ, LLC, a Nevada limited
liability company (“Punto”), EDWARD TRAUB, an individual (“Traub”), and AMERICAN
LIBERTY PETROLEUM CORP., a Nevada corporation (“ALP”). Operator, Desert
Discoveries, Cortez, Punto, Traub and ALP are at times singly referred to herein
as a “Party” and collectively as the “Parties.”

 

BACKGROUND:

 

A.           The Parties entered into the Agreement relating to, amongst other
things, joint operations of BLM Lease Serial No. NVN-55901 (the “Lease”).

 

B.           ALP has agreed to assign all of its rights, titles and interests in
and to the Lease to Desert Discoveries, but reserving unto ALP, and excepting
from said assignment, a two percent (2%) overriding royalty interest in and to
the Lease (the “Assigned Interests”). The Parties have agreed to amend the
Agreement to reflect the assignment of ALP’s working interest and the withdrawal
of ALP as a Party (as that term is defined in the Agreement) to the Agreement.

 

C.           Except as otherwise expressly defined in this Amendment,
capitalized terms used herein shall have the same meaning as set forth in the
Agreement.

 

AGREEMENT

 

For good and valuable consideration, including the mutual covenants and
agreements contained herein, the receipt and sufficiency of which are hereby
acknowledged by the Parties, the Parties agree as follows:

 

1.          Amendments.

 

(a)   Withdrawal. ALP hereby withdraws as a Party to the Agreement. Section 3 of
Exhibit A to the Agreement is hereby amended to delete ALP as “Party 2” to the
Agreement. Furthermore, all other references to ALP shall be removed from the
Agreement.

 

(b)   Percentages. Section 4 of Exhibit A to the Agreement is hereby amended and
restated to read in its entirety as follows:

 

“4. Percentages or Fractions of Parties to this Agreement (after BLM’s 1/8th
royalty interest):

 

Independence Drilling, LLC: 0% of 7/8 Cortez Exploration LLC: 31% of 7/8 Desert
Discoveries, LLC: 66% of 7/8 Punto de Luz, LLC: 2% of 7/8 Edward Traub: 1% of
7/8”

 

(c) ORRI. Section 6 of Exhibit A to the Agreement is hereby amended to add the
following:

 

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“2% overriding royalty in Leases in favor of American Liberty Petroleum Corp.”

 

2.          Effect of Amendment. Except as expressly amended hereby, all terms,
covenants and provisions of the Agreement are and shall remain in full force and
effect, and all, for avoidance of doubt, all references therein to the
“Agreement” shall henceforth refer to the Agreement as amended by this
Amendment. This Amendment is hereby deemed incorporated into, and made a part
of, the Agreement.

 

3.          Asset Purchase Agreement. This Amendment is executed in connection
with an Asset Purchase and Sale Agreement dated as of March 14, 2013 (the “APA”)
executed by and between Desert Discoveries and ALP, whereby, among other things
ALP is assigning its interest in the Lease to Desert Discoveries, but reserving
unto ALP, and excepting from such assignment, a 2% ORRI on the Lease for the
benefit of ALP. The execution of this Amendment is a condition to closing under
the APA. By executing this Amendment, Desert Discoveries, Independence, Punto,
Cortez and Traub consent to the withdrawal of ALP as a Party to the Agreement
and the transfer of ALP’s interest in the Lease to Desert Discoveries, as well
as the above-described reservation of overriding royalty interests, and waive
any rights of first refusal or similar rights to purchase or acquire said
interests.

 

4.          Release. Independence, Desert Discoveries, Punto, Cortez and Traub
(the “Remaining Parties”) confirm that ALP has satisfied all of its obligations
to each of the Remaining Parties under the Agreement. The Remaining Parties
hereby release, discharge and covenant not to sue or file any charges or claims
against ALP, its legal representatives, successor and assigns under any common
or statutory local, state, or federal law, for any type of claim, demand or
action whatsoever arising out of or connected with the Agreement, the Lease, or
any transactions connected with the Agreement or the Lease, including but not
limited to ALP’s obligations for its proportionate share of the costs of
developing and operating the Contract Area under Article VI, Paragraph A of the
Agreement. The Remaining Parties agree not to amend the indemnification
provisions that are set forth in the Agreement, except as required by applicable
law or with the prior written consent of ALP. Desert Discoveries hereby agrees
to assume all of the obligations of ALP under the Agreement with respect to the
Assigned Interests accruing on and after the Effective Date of this Amendment.

 

5.          Binding Effect. This Amendment shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.

 

6.          Applicable Law. THIS AMENDMENT, AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HERETO, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
SUBSTANTIVE LAWS OF THE STATE OF NEVADA, WITHOUT GIVING EFFECT TO THE CONFLICTS
OF LAW PRINCIPLES THEREOF.

 

7.          Descriptive Headings; Language Interpretation. The descriptive
headings of this Amendment are inserted for convenience only and do not
constitute a part of this Amendment. In the interpretation of this Amendment,
unless the context otherwise requires, (a) words importing the singular shall be
deemed to import the plural and vice versa, (b) words denoting gender shall
include all genders, and (c) references to parties, articles, sections,
schedules, paragraphs and exhibits shall mean the parties, articles, sections,
schedules, paragraphs and exhibits of and to this Amendment.

 

8.          Integration. This Amendment, the APA and the documents referred to
herein contain the entire understanding of the parties with respect to the
subject matter hereof. There are no restrictions, agreements, promises,
representations, warranties, covenants or undertakings with respect to the
subject matter hereof other than those expressly set forth or referred to
herein. This Amendment supersedes all prior agreements and understandings
between the parties with respect to the subject matter hereof.

 

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9.          Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument, and it shall not be necessary in making
proof of this Amendment to produce or account for more than one such
counterpart.

 

The undersigned have executed this Amendment as of the Effective Date.

 

INDEPENDENCE DRILLING, LLC   DESERT DISCOVERIES, LLC           By: /s/ Patrick
Fagen   By: /s/ Patrick Fagen Name: Patrick Fagen   Name:  Patrick Fagen Title:
Manager   Title: Manager, High Sierra Exploration,       LLC, Manager of Desert
Discovery, LLC

 

EDWARD TRAUB   AMERICAN LIBERTY PETROLEUM CORP.         /s/ Edward Traub   By:
/s/ Alvaro Vollmers       Name:  Alvaro Vollmers       Title: President        
        CORTEZ EXPLORATION LLC,       a Nevada limited liability company        
        By: /s/ O.F. Duffield                 O. F. Duffield       (Type or
Print Name)                 Title: Manager                 Date: 3/14/13        
        PUNTO DE LUZ, LLC,       a Nevada limited liability company            
    By: /s/ William Michael Fagen                   William Michael Fagen      
(Type or Print Name)                 Title: Manager                 Date:
3/14/13

  

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