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Exhibit 10.1

ABRASIVE FLUID JET TECHNOLOGY
PURCHASE AGREEMENT

THIS AGREEMENT (herein the “Agreement”) is made and entered into as of this 25th
day of August, 2005, by and between Alberta Energy Partners, a general
partnership organized in the State of Texas and consisting of Mark McAfee and
Mark Alley as its two partners, and having its principal office in Montgomery
County, Texas (herein “Alberta”), and Blast Energy Services, Inc., f/k/a
Verdisys, Inc., a corporation incorporated in the State of California and having
its principal office at 14550 Torrey Chase Boulevard, Suite 330, Houston, Texas
77014 (herein “Blast”) (collectively referred to as the “Parties” or
individually as “Party”).

WHEREAS, Alberta owns the Abrasive Fluid Jet Technology (or “Technology” as more
particularly defined herein), and is willing to grant to Blast a one-half
interest therein as set forth in this Agreement; and

WHEREAS, Blast desires to own a one-half interest in such Technology as a
co-owner, and to use such Technology and to license the Technology to others;
and

WHEREAS, the Parties entered into a licensing agreement on or about October 27,
2004, which they now desire to replace in its entirety by substituting in
replacement thereof this Agreement;

NOW, THEREFORE, FOR AND IN CONSIDERATION of the mutual promises and covenants
contained herein, and for other good and valuable consideration, the adequacy
and sufficiency of which is hereby acknowledged, the Parties agree as follows:

DEFINITIONS

1.  
For purposes of this Agreement, the terms “Confidential Technical Information”
and “Technology” shall mean any and all technical information of Alberta
relating to a process for a coherent abrasive jet cutting of steel, rock, and
other formation materials in a well bore, and a formation access tool, abrasive
nozzles, and conductor, for utilization of the process, and shall include, but
not be limited to, the following:

a.  
descriptions, designs, drawings, and specifications of the Technology, all
materials utilized in the Technology, and including, but not by way of
limitation of the extent of the definition of the Technology, applied reference
number US 60/627,308;

b.  
methods, know-how, specifications, and procedures employed or to be employed in
the design, manufacture, fabrication, transportation, installation, storage,
usage, sales, marketing or licensing of the Technology, and including all
techniques, methodologies, procedures, tolerances, and sales, marketing and
licensing information, related thereto; and

c.  
all information, acquired technology, developments, improvements, or other
information which become available to Alberta relating to the Technology, and
all enhancements of the Technology by either Party, during the term of this
Agreement.

2.  
The terms “Confidential Technical Information” and “Technology” shall not mean:

a.  
information which at the time of disclosure to Blast by Alberta is in the public
domain;

b.  
information which Blast can show was in its possession at the time of disclosure
of such information to it by Alberta and not acquired directly or indirectly
from Alberta; and

c.  
information acquired by Blast from a third party, after the disclosure of
information to it by Alberta, and which the third party did not receive from
Alberta or from any other party under an obligation of confidence.

3.  
The term “Royalty Payment” shall be defined as a share of non-License Payment
revenues received from the use of the Technology.

4.  
The term “Licensing Payments” shall include all up front or annual fees from
third party licensing activities plus any allocation of the ongoing share of
revenues from licensing arrangements.

5.  
The term “Revenue” shall be defined as gross cash receipts or gross sales before
any deductions.

OWNERSHIP RIGHTS

6.
Alberta hereby conveys, transfers and assigns to Blast (as a co-owner with
Alberta) a 50% undivided interest in all of Alberta’s rights, title and interest
in the Technology. Either party may hold or may sell, convey or assign their
respective interests in the Technology, subject to all rights, terms,
obligations and liabilities of this Agreement. Such sale, conveyance or
assignment shall be subject to the approval of the other Party, which shall not
be unreasonably withheld. This Agreement shall be assigned by either Party to
any other Party owned or under the effective control of the assigning Party (or
its shareholders) without the approval of the other Party.

7.
In the event of a potential sale by one of the Parties of an ownership interest
in the Technology, such sale terms shall be offered by the selling Party to the
other Party in writing, with a written copy of the offer and the non-selling
Party will have a right of first refusal to match said offered terms within
twenty one (21) calendar days of written notice by the selling Party. A failure
to accept the terms and conditions in writing as offered to the third party,
within twenty one (21) calendar days of first notice shall be an act of
declining.

8.
Should Blast decide to sell or merge the company in its entirety with or into a
third party, Alberta shall have no rights to participate in the proceeds from
such sale (except as rights otherwise become available by virtue of its
shareholdings in Blast arising from this Agreement or otherwise), but such third
party shall agree in writing to all of the terms, obligations, and
responsibilities of this Agreement.

TERMS AND CONSIDERATION

9.  
Alberta hereby sells, grants and conveys to Blast a 50% co-ownership interest in
the Technology, which includes the unrestricted right to use the Technology as
defined in paragraph 1, and to license such use to others, world-wide,
consistent with the License Approval provisions in 15, 16 and 17 below, upon
execution of this Agreement, in consideration for which, Blast promises to pay
the consideration for such ownership, including terms for sharing revenues as
part payment of such consideration, and restrictions upon ownership pending
payment of certain consideration as follows:

a.  
Upon execution of this Agreement and as part of the purchase price
consideration, Blast will convey to Alberta three million (3,000,000) restricted
shares of its common stock. Blast will file a registration pursuant to
requirements of the Securities and Exchange Commission within ninety (90) days
of execution and use its best efforts to obtain effectiveness from the SEC, so
that such stock may become unrestricted and trade publicly. Blast does not
guaranty that the Securities and Exchange Commission will approve such filing.
Alberta’s shares of Blast’s common stock shall be of the same class and type as
other Blast common stock without any variance in voting or other rights.

b.  
Upon execution of this Agreement and as part of the purchase price
consideration, Blast will issue to Alberta seven hundred fifty thousand
(750,000) warrants for the purchase of shares of common stock of Blast,
exercisable at forty five cents ($ .45) per share, and exercisable at such time
as a minimum of $225,000 revenue has been received by operation of Blast’s first
rig using the Technology. Such warrants will expire three (3) years from date of
issuance. These warrants will be subject to dilution (reset) adjustment, in
whole or in part, at the time they are exercised. Said warrants therefore shall
be increased to offset any dilution that would occur by the issuance of
additional shares of common stock by Blast from this date forward. (This
issuance of warrants is in addition to the issuance of two hundred fifty
thousand (250,000) warrants previously issued to Alberta’s affiliate, Albert
Energy Holding, Inc., pursuant to a prior separate agreement.)

c.  
Following the execution of this Agreement and as part of the purchase price
consideration, Blast shall pay to Alberta one-half of Blast’s 50% share of the
gross revenue from licensing the use of the Technology, (i.e., seventy-five
percent (75%) of such gross revenue being paid to Alberta, and twenty-five
percent (25%) to Blast) in addition to its own one-half, until Alberta has
received two million dollars ($2,000,000) from the extra 50% of Blast’s portion,
in addition to Alberta’s own one-half interest in such revenue. Following the
payment of the two million dollars ($2,000,000), the Parties shall share all
future licensing revenue equally. It is not intended that any form of corporate
guarantee or debt obligation shall arise requiring disclosure within the
published financial statements of Blast as a result of the disproportionate
license revenue sharing provisions contained herein.

 
d.
As part of the consideration to enter the agreement, Blast shall pay to Alberta
a Royalty Payment of two thousand dollars ($2,000) per well bore, or two percent
(2%) of the gross revenue received, whichever is greater, for each well bore in
which Blast utilizes the Technology, with payment and an accounting at the close
of each calendar month forty five days (45) after the close of said month.
Services requested by Blast customers from third party vendors (e.g. pumping
services) and invoiced by Blast as a pass through billing to the customer are
not subject to Royalty Payments.

 
e.
Alberta shall have the option (but not the obligation) to build each drilling
rig utilizing the Technology and in consideration Blast shall pay Alberta all of
the actual invoice costs of the items used, plus fifty thousand dollars
($50,000) for each drilling rig (with the exception of the initial drilling rig
now under construction, which is the subject of a separate agreement). The fifty
thousand dollars ($50,000) shall be paid half at the time construction of the
rig begins and the balance when the rig is completed. Drilling rig cost invoices
will be paid by Blast based upon their due dates. Blast will notify Alberta, in
writing, of its intention to build each new rig together with any special
requirements, specifications, and contractual provisions that Blast may require.
Within fourteen (14) calendar days of receipt of the notice, Alberta shall
either agree to commit or decline to build the rig(s), in writing. If Alberta
commits to accept the engagement, it will also provide an estimated completion
time and cost. Alberta’s failure to formally agree to accept the terms and
conditions of the construction within the fourteen (14) calendar days of the
notice shall be considered a rejection to exercising the option.

 
f.
Alberta shall provide use of any of its leases to Blast for the purpose of
testing its abrasive jetting services, while the initial rig is being
commissioned. Any out of pocket costs incurred by Alberta in such field testing
shall be borne by Blast.

 
g.
The Parties shall memorialize the 50% transfer of ownership with executed
assignment documents and filings with the US Patent and Trademark Office.

INDEMNITY

10.
Alberta shall indemnify, defend and hold harmless Blast and its representatives
from and against all claims, losses, settlements, liabilities, damages, costs or
expenses (including reasonable attorney’s fees and disbursements) made against
or incurred by Blast or its representatives of any nature whatsoever based upon,
arising out of, or in connection with, any use by Alberta of the Technology.

11.
Blast shall indemnify, defend and hold harmless Alberta and its representatives
from and against all claims, losses, settlements, liabilities, damages, costs or
expenses (including reasonable attorney’s fees and disbursements) made against
or incurred by Alberta or its representatives of any nature whatsoever based
upon, arising out of, or in connection with, any use by Blast of the Technology.

RIGHT OF USE OF TECHNOLOGY BY ALBERTA

12.
Alberta retains the right to use the Technology, or any adaptation of the
Technology, on oil, gas or mineral lease-holds where Alberta holds a lease
interest. Alberta’s use of the Technology, in such a case, shall be without
obligation to pay Royalty Payments to Blast.

13.
Alberta shall not offer abrasive jetting services for oil, gas or mineral
applications for monetary or other valuable consideration paid by third parties,
exclusive of section 12.

14.
In the event the Parties shall intend to use the Technology in a new business
application with a third party, that Party shall offer a right of first refusal
to the other Party to enter into such operation on the same terms as those
contemplated with the third party. In such circumstance, the offering Party
shall fully disclose to the other Party the financial and other details of the
proposed operation, and the other Party shall have twenty-one (21) calendar days
in which to agree to participate on the same basis and conditions or to decline.
A failure to formally agree to accept the terms and conditions of the third
party within twenty-one (21) days of first notice shall be considered a
rejection of the offer. The offering Party shall thereafter be free to proceed
without obligation to the rejecting Party except that the offering Party shall
pay to the rejecting Party, the same Royalty Payment terms described in 8. e
herein with payment and an accounting pursuant to the accounting and payment
terms described below.

LICENSE APPROVAL AND JOINT MANAGEMENT

15.
The Parties hereby agree to develop a joint strategy and business plan, designed
to maximize Licensing Payments and deployment of the Technology. Blast shall be
responsible for the License Contract activities with oversight by Alberta.

16.
Each party’s approval is required for any license or grant of use of such
Technology to third parties, by either Party, which approval shall not be
unreasonably withheld. Each Party shall have ten (10) calendar days following a
request for approval to state its position and if no response is provided within
the ten (10) day period, the non-responding party shall be deemed to have
provided its approval. In the event either Party reasonably disapproves of the
license or grant of use of the Technology, the license or grant of use shall not
be undertaken.

17.
The management of the Technology shall be jointly held between the Parties and
in the event of a deadlock in a decision (other than the approval process in
paragraph 16 above), then the Parties shall use their best efforts to reach
consensus. In the absence of a consensus between the Parties to change the
management of the Technology, no decisions shall be made to change the
arrangements that previously existed.

CONSULTING

18.
Alberta agrees to make available to Blast personnel necessary for training on
the use of Technology for a reasonable fee to be determined in light of the
requirements and circumstances at such time. No obligation to use such training
is created hereby.

19.
Alberta agrees to continue the provision of consulting services to Blast and
Blast agrees to continue to pay for such services at the rate of $10,000 per
month until such consulting term expires on December 31, 2005.

PAYMENTS AND REPORTS

20.
The Parties shall keep or cause to be kept, in accordance with good accounting
practices, books, records, and accounts of operations, relating to use and
licensing of the Technology, as may be necessary for determining the Royalty
Payments and Licensing Payments that may become due.

21.
An accounting and all Royalty Payments shall be provided fifteen (15) days
following the close of each month for cash received in the preceding month.
Payment shall be by check or wire transfer in US dollars to the bank account
designated in writing by the Party receiving payment. Licensing Payments from
third parties shall be paid within seven (7) calendar days of receipt.

22.
In the event of any dispute with respect to accounting or payments under this
Agreement, pursuant to the request of either Party, the Parties shall select an
independent Certified Public Accountant to examine the books and records and to
report the results of such examination to both parties promptly. In the event
such examination shows that payments to either Party have been understated by
five percent (5%) or more, the other Party shall pay the cost of the
examination; otherwise, the cost of the examination shall be paid by the
requesting party.

TERM

23.
The Agreement shall remain in effect for the duration of the co-ownership of the
Technology.

BUY-OUT RIGHTS

24.
In the event either of the Parties decides to liquidate its assets, including
its ownership in the Technology; or if a Party is dissolved other than in a
reorganization; then the other Party shall have the first right of refusal to
purchase that Party’s ownership interest in the Technology as set forth below.

25.  
If one of the Parties decides to make an offer for the other party’s 50%
interest, such offer should be made on the same or similar basis that the Party
would be willing to sell its own 50% interest on the same terms and conditions
offered. The Buy-Out Price shall be determined on the basis of arms length
negotiations between the two Parties and shall be reached by consensus in a
reasonable time frame. If a third party shall make an offer to purchase the
Technology owner within six calendar months of a sale of the 50% interest
between the Parties, then the buying party shall offer the selling party the
right to participate in the third party sale on the same terms and conditions as
if they were still a 50% owner. If the third party sale has not closed after six
calendar months from the time of sale of the 50% share, such right to
participate in the third party sale shall cease to exist.

26.
Upon payment of the purchase price, the Party making the purchase shall become
the owner of one hundred percent (100%) of the Technology (including the patent
and trademark rights related to such Technology) effective with the date of the
event giving rise to the buy-out rights. Such buy-out (whether exercised or not)
shall not affect the obligation of either Party to the other that may have
accrued prior to such buy-out rights coming into existence. Upon payment of the
purchase price, the selling party shall execute all documents necessary to
transfer ownership to the buying party. The selling party hereby appoints the
other party its attorney-in-fact to execute all such documents in the event the
selling party fails, refuses or otherwise cannot execute such documents.
Following the buy-out, the Party making the purchase shall assume all of the
rights and obligations of the selling Party with respect to any existing license
or other agreements or arrangements which grant rights to third parties to use
the Technology.

27.
Notwithstanding the foregoing buy-out provisions, no buy-out rights shall arise
against Blast as long as Blast pays to Alberta or otherwise causes Alberta to
receive no less than twenty five thousand dollars ($25,000) during each calendar
year following an event described in paragraph 24 above.

CONFIDENTIALITY

28.
Subject to the terms of this Agreement, the Parties agree to use their best
reasonable efforts to maintain the Confidential Technical Information in
confidence and to use their best efforts to prevent the disclosure thereof to
others. Notwithstanding the foregoing, Blast may, to the extent necessary for
its daily operations, including for marketing purposes, such as but not limited
to presentations to clients and prospective clients, press releases,
presentations to conferences, business forums, SEC filings, Stock Exchange
requirements and the like, disclose the Confidential Technical Information to
the extent previously agreed upon by Alberta. Otherwise, third parties receiving
any part of the Confidential Technical Information must have signed
confidentiality or non-disclosure agreements essentially in the form attached
hereto.

29.
When Confidential Technical Information is required to be disclosed by either
party by law, regulation or judicial or administrative process, such Party will
promptly give notice to the other Party of the existence, terms and
circumstances surrounding such required disclosure in order that the other Party
may have an opportunity to intervene to contest such disclosure.

30.
The Parties’ obligations to maintain Confidential Technical Information in
confidence shall continue throughout the commercial life of the Technology.

 
REPRESENTATIONS AND WARRANTIES
 

31.
The Parties agree that this Agreement constitutes a legal, valid and binding
obligation for each Party, enforceable against such Party in accordance with its
terms (subject always to applicable bankruptcy, insolvency, receivership and
other similar laws relating to or affecting the enforcement of creditor’s rights
generally and to general principles of equity).

32.
The Parties warrant and represent to each other: that each (i) is duly formed
and organized and validly existing under the laws of the jurisdiction of its
formation, (ii) is properly qualified to do business and is in good standing
under the laws of each jurisdiction in which it does business, (iii) has all
necessary corporate or similar power and authority to execute and deliver this
Agreement and to consummate the transaction contemplated hereby; and that this
Agreement, its execution and the fulfillment and compliance with the terms and
conditions hereof, do not violate or conflict with any provision of or result in
any breach of or default under any (i) organizational documents of each Party,
(ii) law or judicial, award, or similar decree, or (iii) agreement, to
which parties are bound for their representations and warranties.

33.
Alberta makes the following representations and warranties, and acknowledges
that such representations and warranties are material and that Blast has relied
upon them in entering into this Agreement:

a.  
Alberta is the sole and absolute owner of the Technology and has an absolute
right to enter into the transaction represented by this Agreement;

b.  
Alberta is under no legal restriction and is free to disclose the Technology and
all other technical information related to the Technology to Blast;

c.  
Alberta is not aware of any prior art that would invalidate its patent
application;

d.  
Alberta owns the Technology free and clear of any liens, licenses, or known
enforceable claims of others;

FORCE MAJEURE

34.
If performance of this Agreement by either Party is prevented, restricted or
interfered with by reason of war, revolution, civil commotion, acts of public
enemies, blockage, embargo, strikes, or any law, order, proclamation,
regulation, ordinance, demand or requirement having a legal effect of any
government or any judicial authority or representative of any such government,
beyond the reasonable control of the Party affected, then such affected Party
shall upon giving written notice to the other Party be excused from such
performance to the extent of such prevention, restriction or interference; but
provided, however, that the affected Party shall use its best efforts to avoid
or remove such cause or causes of nonperformance and shall continue performance
hereunder to the utmost of its ability whenever such causes are removed.

ARBITRATION

35.
All claims, disputes or controversies arising out of, in connection with or in
relation to this Agreement shall be decided by arbitration in accordance with
the Commercial Rules of the American Arbitration Association then in force and,
to the maximum extent applicable, the Texas Arbitration Act (Texas Civil
Practice & Remedies Code, '172.031 et. seq.). For claims, disputes or
controversies which either Party may have in excess of $1,000,000, exclusive of
claims for interest, attorneys fees and costs, three (3) neutral arbitrators
shall be used. Otherwise a single arbitrator shall be used. For purposes of
determining the number of arbitrators, the Parties’ claims and counterclaims
shall not be additive. The arbitration shall be conducted in Harris County,
Texas. The decision of the arbitrator(s) shall be final, binding and enforceable
in any court of competent jurisdiction, and the Parties agree that there shall
be no appeal from the arbitrator(s)’ decision except as provided by applicable
law. All statutes of limitation that would otherwise be applicable shall apply
to any arbitration proceeding. The right to arbitrate shall survive the
termination of this Agreement. The Parties acknowledge and agree that this
Agreement includes activities in interstate commerce and that the Federal
Arbitration Act shall control and apply to all arbitrations conducted hereunder,
notwithstanding any state law provisions to the contrary.

36.
The Parties irrevocably agree to be joined as parties in any arbitration
proceeding which involves claims, disputes or controversies which either Party
may have with other parties not a Party this Agreement and which involve issues
which are otherwise subject to arbitration under this Agreement.

37.
The Parties irrevocably waive any objection to the joinder of other parties who
are not parties to this Agreement to any arbitration commenced pursuant to this
Agreement.

MISCELLANEOUS PROVISIONS

38.
This Agreement was negotiated, consummated and entered into in Harris County,
Texas. The Parties agree that the validity and interpretation of this Agreement
shall be governed by the laws of the State of Texas, and that venue and
jurisdiction of any disputes relating to this Agreement shall lie in Harris
County, Texas.

39.
This Agreement contains the entire and only agreement of the Parties relating to
the Technology, but does not supersede or interfere with an agreement of the
Parties co-existent with this Agreement relating to construction of a drilling
rig which utilizes the Technology. Any prior representation, agreement, or
promise, of either party, including the License Agreement of on or about October
27, 2004 (which is superseded and replaced by this Agreement), not incorporated
in this Agreement, is null and void, except that that Parties acknowledge and
agree that the License Agreement was intended to be executed between Blast and
Alberta Energy Partners and that all warrants delivered or deliverable through
that License Agreement should be to Alberta Energy Partners. Any amendment of
this Agreement shall be in writing and executed by both Parties.

40.
If any provision of this Agreement is found to be unenforceable under applicable
law, the unenforceable provision shall be amended to conform to that which is
enforceable, and any lack of enforceability of any provision shall not affect
the continued effect and enforceability of the remainder of the Agreement if
continued compliance of the Parties with the remainder of the Agreement is
commercially reasonable of attainment and consistent with the over-all intent
and purpose of the Agreement.

41.
The failure of either Party to exercise any of its rights under this Agreement
shall neither constitute a waiver of those rights nor excuse the other Party of
its obligations under this Agreement.

42.
Any notice given or required to be given under this Agreement shall be in
writing and addressed to the Party executing this Agreement at the address shown
below. Any notice given by United States certified mail or by courier service
shall be effective upon receipt.

43.
Neither Blast nor Alberta shall be responsible for the other Party's federal,
state or other taxes arising out of monies or other consideration provided
between the Parties under this Agreement.

44.
This Agreement shall be executed in four sets of counterparts and any duly
executed copy thereof shall be considered an original for these purposes.

45.
Nothing shall be construed herein to suggest that the Parties are entering into
a Joint Venture, Partnership, Agency, or other such form of relationship between
them. As co-owners of the Technology, the Parties do not intend to file a tax
return as partners and will take the actions necessary to elect out of
subchapter K of the Internal Revenue Code.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized representatives and effective as of the date first above
written.
 

ALBERTA ENERGY PARTNERS
43 Brookgreen Circle North
Montgomery, Texas 77356

By: ___s/Mark McAfee__________
 
Mark McAfee, General Partner
 

By: __s/Mark Alley_____________
Mark Alley, General Partner
 

BLAST ENERGY SERVICES, INC. (f/k/a Verdisys, Inc.)
14550 Torrey Chase Boulevard, Suite 330
Houston, Texas 77014

By: s/David Adams _
 
David M. Adams
President & Co-Chief Executive Officer

WITNESS
 
WITNESS
         
By:
s/ Mark Alley
 
By:
s/ John O’Keefe
 
Mark Alley
 
John O’Keefe
 

  
 
 

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SCHEDULE A
MODEL CONFIDENTIALITY AGREEMENT

THIS AGREEMENT, entered into this _____________, by and between Blast Energy
Services, Inc. a corporation organized and existing under the laws of the State
of California., ("Disclosing Party"), and_____________, a corporation organized
and existing under the laws of the State of_____________ ("Receiving Party").
Disclosing Party and Receiving Party are sometimes herein individually called a
“Party” and collectively called the “Parties”.

1. Disclosure of Confidential Information. The Disclosing Party is willing, in
accordance with the terms and conditions of this Agreement, to disclose to the
Receiving Party certain confidential information, which is proprietary, relating
to the abrasive fluid jetting technology (“Technology”) which may be in
tangible, intangible or electronic form, together with any notes, memoranda,
analyses, evaluations, charts, drawings or summaries derived therefrom. The
foregoing is herein referred to, individually or collectively as the context may
require, as the "Confidential Information". The obligation of Disclosing Party
to disclose Confidential Information to Receiving Party is subject to applicable
provisions of agreements that Disclosing Party has with third parties.

2. Confidentiality Obligation and Non-Competition.  In consideration of the
disclosure of Confidential Information referred to in Paragraph 1 hereof, the
Receiving Party agrees that the Confidential Information shall be kept strictly
confidential and shall not be sold, traded, published or otherwise disclosed to
anyone in any manner whatsoever, including by means of photocopy or
reproduction, without the Disclosing Party's prior written consent, except as
provided in Paragraphs 3, 4 and 5 below.

3. Confidentiality Exceptions. The Receiving Party may disclose the Confidential
Information without the Disclosing Party's prior written consent only to the
extent such information:

 
(A)
is already known to the Receiving Party as of the date of disclosure hereunder;

 
(B)
is already in possession of the public or becomes available to the public other
than through the act or omission of the Receiving Party;

 
(C)
is required to be disclosed under applicable law or by a governmental order,
decree, regulation or rule (provided that the Receiving Party shall give written
notice to the Disclosing Party prior to such disclosure); or

 
(D)
is acquired independently from a third party that represents that it has the
right to disclose such information at the time it is acquired by the Receiving
Party.

4. Disclosure to Affiliated Companies. The Receiving Party may disclose the
Confidential Information without the Disclosing Party's prior written consent to
an Affiliated Company (as hereinafter defined), provided that the Receiving
Party guarantees the adherence of such Affiliated Company to the terms of this
Agreement. "Affiliated Company" shall mean any company or legal entity which (a)
controls either directly or indirectly a Party, or (b) which is controlled
directly or indirectly by such Party, or (c) is directly or indirectly
controlled by a company or entity that directly or indirectly controls such
Party. "Control" means the right to exercise more than 50% or more of the voting
rights of such company.

5. Other Permitted Disclosures. The Receiving Party shall be entitled to
disclose the Confidential Information without the Disclosing Party's prior
written consent to such of the following persons who have a clear need to know
in order to evaluate the Area of Operations:

(A) employees, officers and directors of the Receiving Party;

(B) employees, officers and directors of an Affiliated Company;

 
(C)
any professional consultant or agent retained by the Receiving Party for the
purpose of evaluating the Confidential Information; or

(D)  
any bank, financial institution or person that finances the participation by
Receiving Party or an Affiliate of Receiving Party of the Technology, including
any professional consultant retained by such entity for the purpose of
evaluating the Confidential Information.

Prior to making any such disclosures to persons under subparagraphs (C) and (D)
above, however, the Receiving Party shall obtain from each such person an
undertaking of confidentiality, with substantially the same content as this
Agreement.
 
6. Use of Confidential Information by Receiving Party. The Receiving Party and
its Affiliated Companies, if any, shall use or permit the use of the
Confidential Information disclosed under Paragraphs 4 or 5 above to evaluate the
Area of Operations and determine whether to enter into a transaction with
Disclosing Party or one of its Affiliates for evaluation of the Technology.

7. Responsibility to Ensure Confidentiality. The Receiving Party shall be
responsible for ensuring that all persons to whom the Confidential Information
is disclosed under this Agreement shall keep such information confidential and
shall not disclose or divulge the same to any unauthorized person. Neither Party
shall be liable in an action initiated by one against the other for special,
indirect or consequential damages resulting from or arising out of this
Agreement, including, without limitation, loss of profit or business
interruptions, however it may be caused.

8. Ownership of Confidential Information. The Confidential Information shall
remain the property of the Disclosing Party, and the Disclosing Party may demand
the return thereof at any time upon giving written notice to the Receiving
Party. Within 10 days of receipt of such notice, the Receiving Party shall
return all of the original Confidential Information and shall destroy all copies
and reproductions (both written and electronic) in its possession and in the
possession of persons to whom it was disclosed pursuant to Paragraphs 4 and 5
hereof. .

9. Further Agreements. If the Parties agree to participate in further
agreements, which include confidentiality provisions, then this Agreement shall
terminate automatically on the date the Receiving Party enters into a further
agreement with Disclosing Party or one of its Affiliates that contains
provisions covering the confidentiality of data for the Technology. Unless
earlier terminated under the preceding sentence, the confidentiality obligations
set forth in this Agreement shall terminate two (2) years after the date of this
Agreement.

10. Right to Disclose Confidential Information. The Disclosing Party hereby
represents and warrants that it has the right and authority to disclose the
Confidential Information to the Receiving Party, subject to the terms of
agreements of Disclosing Party with third parties relating to the Confidential
Information. The Disclosing Party, however, makes no representations or
warranties, express or implied, as to the quality, accuracy and completeness of
the Confidential Information disclosed hereunder, and the Receiving Party
expressly acknowledges the inherent risk of error in the acquisition, processing
and interpretation of technical data. The Disclosing Party, its Affiliated
Companies, their officers, directors and employees shall have no liability
whatsoever with respect to the use of or reliance upon the Confidential
Information by the Receiving Party.

11 General Provisions. 

(A) Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Texas, without regard to principles of
conflicts of law that would refer the matter to the laws of another
jurisdiction.

(B) Dispute Resolution. 
All claims, disputes or controversies arising out of, in connection with or in
relation to this Agreement shall be decided by arbitration in accordance with
the Commercial Rules of the American Arbitration Association then in force and,
to the maximum extent applicable, the Texas Arbitration Act (Texas Civil
Practice & Remedies Code, '172.031 et. seq.). For claims, disputes or
controversies which either Party may have in excess of $1,000,000, exclusive of
claims for interest, attorneys fees and costs, three (3) neutral arbitrators
shall be used. Otherwise a single arbitrator shall be used. For purposes of
determining the number of arbitrators, the Parties’ claims and counterclaims
shall not be additive. The arbitration shall be conducted in Harris County,
Texas. The decision of the arbitrator(s) shall be final, binding and enforceable
in any court of competent jurisdiction, and the Parties agree that there shall
be no appeal from the arbitrator(s)’ decision except as provided by applicable
law. All statutes of limitation that would otherwise be applicable shall apply
to any arbitration proceeding. The right to arbitrate shall survive the
termination of this Agreement. The Parties acknowledge and agree that this
Agreement includes activities in interstate commerce and that the Federal
Arbitration Act shall control and apply to all arbitrations conducted hereunder,
notwithstanding any state law provisions to the contrary. 

(C) Approval of Offers. Unless otherwise expressly stated in writing, any prior
or future proposals or offers made in the course of the Parties’ discussions are
implicitly subject to all necessary management and government approvals and may
be withdrawn by either Party at any time. Nothing contained herein is intended
to confer upon Receiving Party any right whatsoever to Disclosing Party’s
interests. Receiving Party agrees with Disclosing Party that neither the review
of Confidential Information nor the granting of access thereto creates any
obligation on Receiving Party or Disclosing Party to acquire or dispose of,
respectively, any interest in their operations.

(D). Further Agreements. Unless otherwise expressly stated in writing, any prior
or future proposals or offers made in the course of the Parties' discussions are
implicitly subject to all necessary management and other approvals and may be
withdrawn by either Party at any time. Nothing contained herein is intended to
confer upon the Receiving Party any right whatsoever to the Disclosing Party's
interest in their operations.

(E). Amendments to Agreement. No amendments, changes or modifications to this
Agreement shall be valid except if the same are in writing and signed by a duly
authorized representative of each of the Parties hereto.

(F) Entire Agreement. This Agreement comprises the full and complete agreement
of the Parties hereto with respect to the disclosure of the Confidential
Information and supersedes and cancels all prior communications, understandings
and agreements between the Parties hereto, whether written or oral, expressed or
implied.

(G) Notices. Any notice given hereunder by either Party shall be given in
writing and shall be delivered in person, or sent by facsimile, or mailed by
first class or registered mail, postage prepaid, and shall be considered to have
been well and sufficiently given when received by the Party to whom it is
addressed as follows. Each Party shall have the right to change its address at
any time and/or designate that copies of all notices be directed to another
person at another address, by giving written notice thereof to the other Party.

 

IN WITNESS WHEREOF, the duly authorized representatives of the Parties have
caused this Agreement to be executed on the date first written above.

BLAST ENERGY SERVICES, INC.

By:___________________________

RECEIVING PARTY

By:__________________________