petro8k10290710-1.htm


    
      

      
1

    


    ASSIGNMENT
      CONTRACT OF SHARE RIGHTS OF OMEGA ENERGY

    COLOMBIA
      IN THE CARBONERA CONTRACT SHARE AGREEMENT

    (ENTERED
      INTO BETWEEN WELL LOGGING LTDA and PETROLEUM

    EQUIPMENT
      INTERNATIONAL LTDA) and in consequence IN THE

    CARBONERA
      BLOCK IN FAVOR OF PETROSOUTH ENERGY

    CORPORATION
      – COLOMBIAN BRANCH

    


    


    Between
      the undersigning, namely:  on the one
      hand:OMAR LEAL QUIROZ, of legal age, domiciled and
      resident in the city of Bogotá D.C., identified with citizenship card No.
91.241.011 issued in Bucaramanga (Santander), who for purposes
      of this act is acting in his capacity of Manager and Legal Representative of
      OMEGA ENERGY COLOMBIA, a corporation legally organized through
      pubic deed No. two thousand nine hundred and sixty three (#2963) issued on
      November twenty ninth (29th) of two
      thousand
      (2000) under number 70154 of Book 06, a corporation with main domicile in the
      city of Bogota, D.C., identified with tax identification number (TIN)
      830.081.895-1, all of this certified in the Certificate of
      Incorporation and Legal Representation issued for said purpose by the Chamber
      of
      Commerce of the city of Bogota, which is attached to this contract to be part
      thereof (Schedule #1), duly entitled to enter into this Agreement, in accordance
      with its by-laws, and who hereinafter and for said purposes shall be called
      OMEGA or THE ASSIGNOR, and on the other
      hand:  PETROSOUTH ENERGY CORPORATION – COLOMBIAN BRANCH, a
      corporation legally organized through public deed No. Six hundred and fifty
      seven (#00657) of two thousand and seven (2007) issued by the Forty Fifth
      Notary’s Office (45th) of the
      Circle of
      Bogota, domiciled in the city of Bogota, D.C., identified with tax
      identification number (TIN) 900.140.614, legally represented by Mr.
FELIPE PIMIENTA BARROS, of legal age, domiciled and resident in
      the city of Bogota, D.C., identified with citizenship card No. 79.785.924 issued
      in Valledupar (Cesar), all of this certified in the Certificate of Incorporation
      and Legal Representation issued for said purpose by the Chamber of Commerce
      of
      the city of Bogota, which is attached to this contract to become part thereof
      (Schedule #2), duly entitled to enter into this Agreement by
      the Board of Directors of the Corporation, who hereinafter and for all purposes
      thereof shall be called PETROSOUTH or THE
      ASSIGNEE, have decided to enter into this Share Agreement,

    


    WHEREAS

    


    
      	
               

            	
              I.

            	
              WELL
                LOGGING LTDA. (hereinafter WELL LOGGIN), a commercial corporation
                duly organized under the laws of the Republic of Colombia, with Tax
                Identification Number
                (TIN)830.013.746-3, entered into with
                ANGENCIA NACIONAL DE HIDROCARBUROS (hereinafter the
                ANH) on December twenty eighth (28th)
                of two
                thousand and five (2005), the Carbonera Exploration and Exploitation
                Contract (hereinafter the Carbonera Contract), being it the Operator
                thereof.

            


    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2

    


    
      	
               

            	
              II.

            	
              WELL
                LOGGING currently has a Private Share Agreement fully in force
                with C&C ENERGIA BARBADOS SUCURSAL COLOMBIA, for
                which C&C has rights and oblications to contribute
                with costs and expenses and to receive Net Incomes that WELL
                LOGGING may obtain upon developing the Carbonera Contract by a
                twenty five per cent (25%).

            


    

    


    
      	
               

            	
              III.

            	
              WELL
                LOGGING bound itself as part of the Minimum Exploratory Program
                for the First Phase of the Carbonera Contract Exploration Period,
                which
                expired past April twenty eighth (28th)
                of 2007,
                to: (i) Acquisition, geological collection and
                interpretation of thirty eight (38) kms of 2D seismic, and
                (ii) execute the re-entry and assessment of the Cerro Gordo
                well
                and in the event of not being able to carry out the re-entry, to
                drill an
                exploratory well up to La Luna formation
                basis.

            


    

    


    
      	
               

            	
              IV.

            	
              After
                the expiration period on April twenty eighth (28th)
                of two
                thousand and seven (2007), the ANH provides an automatic
                term of two months as of the expiration date to comply with the obligation
                set forth in the immediate previous items as provided for in the
                Exploration and Exploitation Contract enter into
                therewith.

            


    

    


    
      	
               

            	
              V.

            	
              Up
                to date, WELL LOGGING has acquired, carried out the
                geological collection and interpretation of thirty eight (38) kms
                of 2D
                seismic.

            


    

    


    
      	
               

            	
              VI.

            	
              For
                compliance with the remaining obligation of the First Phase of the
                Carbonera Contract Exploration Period, WELL LOGGING has
                decided to carry out re-entry and assessment activities of Cerro
                Gordo -1 well, located in the Department of Norte de
                Santander.

            


    

    


    
      	
               

            	
              VII.

            	
              PEI
                Expressed its interest in participating in the execution of the Carbonera
                Contract as private investor in principle, with a contribution in
                kind of
                all of the activities needed to carry out the Re-entry and assessment
                activities of the Cerro Gordo Well -1.  Reason why, through
                private document of April twenty fifth (25th)
                of two
                thousand and seven (2007), it entered into with WELL
                LOGGING a share agreement over the sixty five per cent (65%) of
                the Carbonera Block (agreement which is attached to and is part of
                this
                agreement) through which it committed itself to execute before May
                twenty eighth (28th)
                of two
                thousand and seven (2007), by its own means and with is own
                personnel, independently and with full technical, directive,
                administrative and especially financial autonomy, the Re-entry activities
                of Cerro Gordo 1 well located in the Department of Norte de Santander,
                employing for said purpose, the equipment described in detail in
                Schedule
                V of the agreement signed as if it would be a Turn Key mode that
                shall
                encompass the obligation by PEI to carry out all of the
                activities required for the re-entry and assessment of the Cerro
                Gordo 1
                well, for which PEI shall bear all of the costs and all
                of the risks in said contract
                terms.

            


    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3

    


    
      	
            	
              VIII.

            	
              In
                the terms of the Share Agreement of April twenty fifth (25th)
                of two
                thousand and seven (2007) entered into between PEI
                and WELL LOGGING that sets forth as expiration
                date May twenty eighth (28th)
                of 2007 as
                aforementioned, said term is extended by virtue of the two month
                automatic
                extension granted by ANH until June twenty eighth (28th)
                of
                2007.

            


    

    


    
      	
               

            	
              IX.

            	
              Terms
                in item 2.1 of clause two (2) of the Share Agreement of
                April twenty fifth (25th)
                of two
                thousand and seven (2007), entered into between and by
                PEI and WELL LOGGING, set forth that
                “the obligation to do” under PEI’s responsibility, shall
                only be understood fully accomplished for all legal purposes (pursuant
                to
                the agreement entered into), once Agencia Nacional de
                Hidrocarburos (hereinafter ANH) issues a written
                communication to WELL LOGGING stating the compliance of the entire
                exploratory commitment corresponding to the First Phase of the Carbonera
                Contract Exploration Period, being this the essential condition that
                shall
                grant right to PEI to obtain a percentage of the “Share
                Interest” in said contract under those terms described
                hereinafter.

            


    

    


    
      	
               

            	
              X.

            	
              The
                terms in item 2.2 of Clause Two (2) of the Share
                Agreement of April twenty fifth (25th)
                of two
                thousand and seven (2007) entered into between
                PEI and WELL LOGGING, set forth that
                once the condition set forth in immediately above item has been
                accomplished, PEI may request WELL
                LOGGING to ask ANH authorization for the
                official assignment on its behalf of the rights and obligations in
                the
                Carbonera Contract in the percentage of the “Share Interests” gained for
                complying with the obligation set forth in the immediately previous
                item.

            


    

    


    
      	
               

            	
              XI.

            	
              PEI
                and TC OIL & SERVICES S.A., a corporation legally
                organized through public deed number two thousand four hundred and
                ninety
                twho (#2492) of October eleventh (11th)
                of two
                thousand and four (2004) issued by the Thirty Ninth (30th)
                Notary’s
                office, registered on December ninth (9th)
                of two
                thousand and four (2004) under number 00966026 of Book IX, a corporation
                with main domicile in the city of Bogota, D.C. identified with Tax
                Identification Number (TIN) 830.509.997-5, entered into
                on June 6th
                of 2007, an
                Share Rights Assignment Contract, corresponding to the 10% of PEI’s share
                in the Benefits derived from the Carbonera Contract, subject to compliance
                with its obligations set forth in the aforementioned
                Agreement.

            


    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4

    


    
      	
               

            	
              XII.

            	
              The
                corporation OMEGA ENERGY COLOMBIA, borne on behald of
                PEI, “the obligations to do” consisting in the re-entry and interpretation
                of the Cerro Gordo 1 well acquired by PEI by entering into the
                Agreement.

            


    

    


    
      	
            	
              XIII.

            	
              As
                compensation for the aforementioned works executed by OMEGA, PEI
                assigned
                in favor or Omega on June 20th
                of 2007, the
                percentage corresponding to its share in the Carbonera Contract equivalent
                to 53%.

            


    

    


    
      	
            	
              XIV.

            	
              In
                this way, PEI at that time, TC OIL,
                OMEGA and now PETROSOUTH state that they know,
                understand and accept the existence and effectiveness of the Share
                Agreement between WELL LOGGING and
                C&C.

            


    

    


    
      	
               

            	
              XV.

            	
              OMEGA
                and PETROSOUTH have decided to set forth the final terms
                and conditions in this document, which govern the share assignment
                of
                OMEGA to PETROSOUTH in the Carbonera Contract pursuant to provisions
                under
                this Agreement.

            


    

    


    
      	
               

            	
              CLAUSE
                ONE.-Definitions and
                Interpretation:  For clarity purposes in the
                interpretation of this document, terms used in wording of this contract
                shall be understood in the corresponding technical language or, otherwise,
                in their natural and obvious sense according to the general use thereof
                unless otherwise specify herein.  For purposes of this contract
                in particular, those terms defined in this Clause shall be understoon
                within the scope assigned there to
                below:

            


    

    


    
      
        	
              	
                ·

              	
                Definitions:

              


      

    

    


    “Agreement”:  means
      the documents so called “Share Agreement” of April twenty fifth (25th)
      of two thousand
      and seven (2007), entered into between PEI and
WELL LOGGING, which is part of this contract
(Schedule
      # 3).

    


    “Sole
      Payment Agreement”:  means the private document so called
      (Sole Payment Agreement” and its schedule signed on October twentieth (20th) of two
      thousand
      and six (2006), where the terms for payment, securities, interests and penalties
      to be cancelled by PEI and/or QUALITY to TC or TC OIL were set forth for both
      pure and simple obligations such as those subject to suspension condition that
      PEI and/or Quality (debtors) have up to date.  In this definition,
      amendment number 1 to the “Sole Payment Agreement” signed by the parties past
      April twenty third (23rd) of two
      thousand
      and seven and its schedule, is included.


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    5

    


     “ANH”:  means
      AGENCIA NACIONAL DE HIDROCARBUROS of Colombia, Special Administrative Units
      in
      charge of administrating hydrocarbons in Colombia.

    


    “Carbonera
      Contract”:  means the private document of December twenty
      eighth (28th)
      of two thousand and five (2005) entered into between WELL LOGGING
and ANH, through which the Carbonera Exploration
      and
      Exploitation, being WELL LOGGING its Operator.

    


    “PEI
      Equipment”:  means all of the pieces of equipment, materials,
      tools, spare parts and other elements, whether belonging to
PEI, or rented, leased or contracted on its account and
      responsibility under any mode legally accepted, all of which shall be used
      by
PEI for the execution of its obligations set forth in the
      AGREEMENT, as they are duly described in Schedule III thereto.  For
      all purposes, this definition includes in a special manner, the Workover rig
      duly equipped and available to carry our a Re-entry on a timely basis or
“PEI Equipment” such as it is described in Schedule V
      thereto.

    


    “Starting
      Date”:  means the date on which the Rig must be in conditions
      to star the Re-entry activities at the Cerro Gordo 1 Well by PEI.

    


    “Net
      Incomes”:  are the incomes that are actually received by
WELL LOGGING in its capacity of Operator o the Carbonera
      Contract (capacity which shall be subsequently taken over by
PEI), corresponding to the sales of the production of
      Hydrocarbons obtained after discounting the money amounts corresponding to
      :
(i) royalties, (ii) economic rights of ANH,
(iii) taxes inherent to the
      hydrocarbon sales applicable at all
      times (without including income tax), (iv) operating and
      maintenance costs previously approved by the competent body for decision making
      under the JOA, including the abandonment provision, and (v)
      costs generated for handling and transporting the hydrocarbon production to
      the
      location where it is traded.

    


    “Share
      Interest” means the share percentage in casts, expenses and Net Incomes
      of the Carbonera Contract, which in case of PEI, shall
      correspond to the sixty five per cent (65%) of said costs,
      expenses and Net Incomes, provided that, it has complied with its “obligation to
      do” pursuant to the terms of the AGREEMENT.

    


    “Joint
      Operating Agreement” or “JOA” means the operation agreement entered
      into between WELL LOGGING, C&C, PEI and TC Oil within the
      sixty (60) days following the date of the communication by ANH stating the
      compliance with the obligation of the First Phase of the Carbonera Contract
      Exploration Period in order to regulated the rules that shall govern thereafter
      the joint operation thereof.


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    6

    


     “Party”
      or “Parties”:  is each of the parties described in this
      contract heading, considered individually or collectively, and who shall enter
      into the contract.

    


    “Assigned
      Well”:  means the CERRO GORDO 1 well.

    


    “Re-Entry”:  means
      the re-intervention activities at the Cerro Gordo 1 well, which includes the
      use
      of a workover unit to drill the abandonment plugs of the well, completion with
      production piping and preliminary testing to the well productions potential,
      from all of which the corresponding report shall be issued.  The
      re-entry shall also include the assessment of the Cerro Gordo 1
      well.

    


    “Rig”:  means
      the Equipment and the Drilling Unit of the wells and the rest of associated
      equipment, which descriptions and specifications are included in Schedule III
      of
      the AGREEMENT or pursuant to any modification that may be included.

    


    
      
        	
              	
                ·

              	
                Interpretation:  The tems used in this
                  contract shall have the meaning assigned thereto in its text and
                  as such
                  must be understood at the time of construing it, being irrelevant
                  if they
                  are in capital letters or small letters, in singular or plural,
                  terms that
                  have full effect in respect of this contract, schedules and documents
                  that
                  so modify it and/or add
                  it.

              


      

    

    


    
      
        	
              	
                ·

              	
                Regulation References:  Any reference made
                  in this contract to any Law, Decree, Resolution, Administrative
                  Act,
                  Agreement, Circular, Statute and in general, any legal binding
                  regulation
                  for the Parties, shall include its modifications and/or subsequent
                  additions and new regulations and rules, so that as to the topic
                  specifically regulated in the Contract, must abide in every case
                  to the
                  applicable regulations in
                  force.

              


      

    

    


    CLAUSE
      TWO.-Purpose of the Contract:  THE ASSIGNOR
assignes in favor of THE ASSIGNEE, the six per
      cent (6%) over the fifty three per cent (53%) – pursuant to the table
      shown at the end of this clause – of the “Share Interests” acquired by virtue of
      entering into the “Agreement”, that is, the percentage mentioned on the
      percentage on which it is a holder in the Carbonera Block, provided that
THE ASSIGNOR proves fully compliance with the obligation
      related to Re-entry and assessment of the Cerro Gordo 1 well set forth in the
      aforementioned AGREEMENT.  The “Share Interests” of
      the Carbonera Contract shall remain as follows:

     

    
      	
              PEI

            	
              2%

            
	
              WELL
                LOGGING

            	
              25%

            
	
              C&C

            	
              10%

            
	
              TC
                OIL & Services S.A.

            	
              10%

            
	
              OMEGA
                ENERGY COLOMBIA

            	
              47%

            
	
              PETROSOUTH

            	
              6%

            
	
              TOTAL

            	
              100%

            


    

    



    
      
         

      

      
         

        
          

        

      

      
         

      

    

    7

    


    CLAUSE
      THREE.- Scope of the Assignment:  THE ASSIGNEE for the
      fact of assigning the six per cent (6%) out of the fifty three
      per cent (53%) of the “Share Interests” on its behalf, - as shown in the table
      at the end of the immediately previous clause - , it bears full right on said
      percentage, the rights corresponding to the 6% included in the aforementioned
      “Agreement” and that correspond to THE ASSIGNOR, likewise
      producing the assignment of shares, rights, privileges, obligations and legal
      benefits inherent to the nature and conditions foreseen in the
      contract.  In this way, one Phase 2 has started, the assignee starts
      to participate, in respect to its percentage, in every right and obligation
      derived therefrom.

    


    THE
      ASSIGNOR shall be responsible before THE ASIGNEE for
      the existence and validity of the “Share Agreement” of April twenty fifth
      (25th) of two
      thousand and seven (2007), entered into between PEI and
WELL LOGGING, which caused the assignment in its favor
      by PEI
      in the “Share Interests” and that for this act, the 6% is
      assigned.  THE ASSIGNOR shall also be responsible for
      the future compliance with the obligations of WELL LOGGING, for
      which THE ASSIGNEE shall notify the delay or the failure to
      comply of its obligations to THE ASSIGNOR, within the ten (10)
      days subsequent to the fact constituting the delay or the failure to
      comply.

    


    CLAUSE
      FOUR.  Statements and Effects of this
      contract:

    


    
      	
               

            	
              a)

            	
              THE
                ASSIGNOR expressly states that has not assigned the six
                per cent (6%) subject matter of this assignment, corresponding to
                the fifty three per cent (53%) of the “Share Interests” acquired in the
                Carbonera Block subject matter of this assignment – as shown in the table
                of the aforementioned Clause One.

            


    

    


    
      	
               

            	
              b)

            	
              THE
                ASSIGNEE expresses that it knows the “Share Agreement” of April
                twenty fifth (25th)
                of two
                thousand and seven (2007), entered into between PEI and
                WELL LOGGING.

            


    

    


    
      	
               

            	
              c)

            	
              The
                assignment of the six per cent (6%) of the fifty three
                percent (53%) of the “Share Interests” acquired by the Assignor by virtue
                of entering into the Assignement in its favor by PEI included in
                this
                document, implies that THE ASSIGNOR is substituted by
                THE ASSIGNEE in said share, which is subject matter of
                this assignment in the terms and conditions
                thereof.

            


    

    


    
      	
               

            	
              d)

            	
              The
                assignment included in this document implies that the shares, privileges
                and legal benefits inherent to the nature and conditions of the contract,
                but it does not transfer those related to cause not under its control
                or
                in the capacity or condition of the contractors’
                personnel.

            


    

    



    
      
         

      

      
         

        
          

        

      

      
         

      

    

    8

    


    
      	
               

            	
              e)

            	
              It
                is clear and expressly understood that this assignment refers solely
                and
                exclusively to the six per cent (6%) of the fifty
                three per cent (53%) of the “Share Interests” acquired by
                THE ASSIGNOR by virtue of entering into the assignment
                formerly mentioned herein in its
                favor.

            


    

    


    The
      foregoing means that THE ASSIGNEE shall acquire the six per
      cent (6%) in the Carbonera Block share derived from one part of the Carbonera
      Contract and the other part of the assignment, entered into in its favor by
      PEI,
      as compensation for the amount of four hundred and twenty thousand American
      dollars ((USD$420.000).  For said reason, the purpose
      of entering into this agreement is that THE ASSIGNEE acquires
      said share percentage and obtains the credits and debits generated by said
      percentage.

    


    CLAUSE
      FIVE.- Value and Way of Payment:  The total value agreed
      by the parties for the percentage subject matter of this assignment is
FOUR HUNDERED AND TWENTY THOUSAND AMERICAN DOLLARS
      (USD$420.000), being it the value corresponding to each point
      equivalent to seventy thousand American dollars
      (USD$70.000,00), in this way said value shall be cancelled in the way
      set forth in item 2 as a result of the following procedure:

    


    
      	
               

            	
              1.

            	
              The
                Assignee must cancel the amount corresponding to one million American
                dollars (USD$1.000.000,oo) on September 10th
                of 2007, to
                PETROLEUM EQUIPTMENT INTERNATIONAL LTDA., as set forth in
                the Memorandum or Understanding of the Buenavista Block, signed by
                the
                parties hereto on June 7 of 2007.

            


    

    


    
      	
               

            	
              1.1

            	
              However,
                since the payment corresponding to the aforementioned September 10th
                shall be
                cancelled on August 14 of 2007, (payable at a MRR of $2006
                pesos), a discount over this obligation corresponding to the
                amount of fifty thousand American dollars (USD$50.000,oo)
                shall proceed.

            


    

    


    
      	
               

            	
              1.2

            	
              In
                this way, the obligation set forth in Clause 2 Item (iii) of the
                Buenavista Block Memorandum or Understanding, referred to in item
                1, shall
                correspond to nine hundred and fifty thousand American dollars
                (USD$950.000,oo) once the discount for advance payment
                has been made.  The amount shall be allocated as
                follows:

            


    

    


    
      	
               

            	
              -

            	
              The
                assignee shall draw in favor of Bancolombia TIN
                890903938-8, the amount corresponding to one hundred thirty three
                million
                seventy eight thousand Colombian pesos
                ($133.078.000,oo).

            


    

    


    
      	
               

            	
              -

            	
              The
                assignee shall draw the remaining amount corresponding to one thousand
                eight hundred seventy two million nine hundred and twenty two thousand
                Colombian pesos ($1.872.922.000,oo) on a check in favor to OMEGA
                ENERGY
                COLOMBIA.

            


    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    9

    


    From
      this
      amount, the Assignor shall proceed to cancel the amount to cover the 60% of
      the
      80% of it Share Interests in the Talora Block for Seismic.

    


    
      	
               

            	
              2.

            	
              Way
                of Payment, corresponding to the 6% assigned in the Carbonera Block
                for
                the amount of (USD$420.000,oo) shall proceed as
                follows:

            


    

    


    
      	
               

            	
              2.1

            	
              The
                amount discounted from the Assignee’s obligation in the Buenavista Block
                equivalent to fifty thousand American dollars (USD$50.000,oo)
                shall be allocated as an advance to cancel the obligation
                of this
                contract “Carbonera Block” on August 14 of
                2007.

            


    

    


    
      	
               

            	
              2.2

            	
              The
                Assignee shall cancel ten thousand American dollars
                (USD$10.000,oo), to cover Petrophysics activities at the
                Carbonera Block.

            


    

    


    
      	
               

            	
              2.3

            	
              The
                remaining, equivalent to three hundred and sixty thousand American
                dollars
                (USD$360.000,oo), shall be cancelled once the
                communication by ANH through which compliance with the Obligation
                consisting in the Re-entry to the Cerro Gordo 1 has been delivered
                to the
                ASSIGNEE.

            


    

    


    CLAUSE
      SIX.- Suspension Condition:  As indicated, the assignment
      contract is subject to the compliance with the following Suspension
      Condition:

    


    On
      the
      one hand, OMEGA must deliver the next thirtieth (30th)
      of September of
      two thousand and seven (2007) at the latest, a copy of the communication by
      ANH
      with which it is understood the “re-entry obligation” referred to in the
      recitals herein has been complied with.

    


    In
      the
      even this condition is not complied with within the maximum periods set forth
      herein and/or the delivery of the aforementioned letter, it shall be then
      understood that the condition has failed and therefore, things shall go back
      to
      the previous status, meaning that things shall go back to their initial
      status.

    


    CLAUSE
      SEVEN.- Notice of the Assignment:  Both the
ASSIGNOR and the ASSIGNEE are responsible for
      obtaining the authorization of this assignment and signing of this document
      in
      sign of notification and acceptance thereof, upon compliance with the provisions
      set forth in clause thirty three (33) of the “Agreement”.

    


    CLAUSE
      EIGHT.- Assignment before ANH:  Under the terms of
2.2 of clause two (2) of the “Agreement”, once the condition
      referred to in item 2.1 of said clause is complied with, OMEGA
      binds itself to deliver and for said purpose, it shall request WELL
      LOGGING that through it and before ANH to authorize
      the official assignment in its favor and in favor of PETROSOUTH
      in the aforementioned percentage and that is subject matter of this contract,
      the assignment of rights and obligations are deemed of result
      nature.

    



    
      
         

      

      
         

        
          

        

      

      
         

      

    

    10

    


    CLAUSE
      NINE.- Responsibility as to Data, Reports and
      Inspections:  During the effectiveness of this contract and
      any of its extensions, OMEGA shall allow
PETROSOUTH and its employees duly authorized and
      authorized
      representatives to inspect every work carried our and related to the
      Agreement.  OMEGA shall keep and authentic and exact
      record of the progress of the activities and should inform
PETROSOUTH on the matter.

    


    CLAUSE
      TEN.- PEI’s Share in the Carbonera Contract:

    


    
      	
               

            	
              ·

            	
              Pursuant
                to the purpose of the Agreement, the initial investment of PEI in
                the
                Carbonera Project is represented in principle by the contribution
                in kind
                of all of the activities that in accordance with the purpose thereof
                it
                shall develop for the Re-entry as described in the previous clauses
                regulating this activity, included the Cerro Gordo 1 well assessment
                as
                set forth herein.

            


    

    


    
      	
               

            	
              ·

            	
              In
                the event that the Cerro Gordo 1 well does not provide the expected
                result, that is, to be declared non commercial, it shall be
                PEI’s obligation to proceed to the technical and legal
                abandonment of the well, activity that shall be deemed as part of
                the
                “obligation to do” pursuant to the Agreement, otherwise, that is, is the
                well is a hydrocarbon commercial producer, PEI’s
                obligation shall be until the well is under production
                activities.

            


    

    


    
      	
               

            	
              ·

            	
              As
                it was pointed out in Clause Two (2) of the Agreement, as soon as
                ANH has
                informed in writing to WELL LOGGING about the compliance
                with the obligation of First Phase of the Cabronera Contract Exploration
                Period, PEI shall immediately deem itself owner of the
                “Share Interests” equivalent to the duty and right to
                contribute with costs and expenses, as well as receiving net incomes
                that
                might be received for crude oil and/or gas sales from the Cerro Gordo
                1
                well and from all of the other wells that proportion to the sixty
                five
                (65%) of the entirety of the rights, interests and obligations of
                the
                Carbonera Contract

            


    

    


    
      	
               

            	
              ·

            	
              “Share
                Interests” constitiution in a percentage of sixty per cent (65%)
                shall be as follows:

            


    

    


    
      	
               

            	
              1.

            	
              A
                percentage equivalent to the 50% of the Carbonera Contract shares
                shall be
                discounted from the “Share Interest” of WELL LOGGING in favor of
                PEI.

            


    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    11

    


    
      	
               

            	
              2.

            	
              A
                percentage equivalent to the 15% of the Carbonera Contract shares
                shall be
                discounted from the “Share Interest” of C&C in favor of
                PEI.

            


    

    


    
      	
               

            	
              ·

            	
              Pursuant
                to the foregoing, and by virtue of this assignment, and once PEI
                has
                received the certificate issued by ANH through which full compliance
                with
                the “obligation to do” related to the Re-entry and assessment of Cerro
                Gordo 1 well by PEI is confirmed, the “Share Interests” of the Carbonera
                Contract shall be as follows:

            


    

    


    
      	
              PEI

            	
              2%

            
	
              WELL
                LOGGING

            	
              25%

            
	
              C&C

            	
              10%

            
	
              TC
                OIL & Services S.A.

            	
              10%

            
	
              OMEGA
                ENERGY COLOMBIA

            	
              47%

            
	
              PETROSOUTH

            	
              6%

            
	
              TOTAL

            	
              100%

            


    

    


    CLAUSE
      ELEVEN.- Penal Clause:  In the event the aforementioned
      suspension condition takes place, that is, that obligations derived from this
      contract fully operate, it is expressly agreed that in case of failure to comply
      with any of the obligations borne by OMEGA, PETROSOUTH shall be
      entitled to demand forthwith an amount equivalent to the TEN PER CENT (10%)
      of
      the this contract value, amount which may be charged by executive via, without
      needing any requirement or default condition, or judicial statement, without
      this meaning the exoneration of the main obligation and without any reduction
      in
      charging the damages that may be derived from the failure to
      comply.

    


    As
      a
      consequence of the aforementioned default, and without prejudice of charging
      the
      penal clause set forth in the previous item, the reversion foreseen in the
      previous clause six (6) shall apply, that is and in consequence, things shall
      go
      back to the previous status meaning this that the obligations derived from,
      which are responsibility of OMEGA and PETROSOUTH, shall continue as if they
      had
      never happened.

    


    CLAUSE
      TWELVE.- No recognition to oral
      provisions:  The parties by mutual agreement hereby express
      that they shall not recognize any validity whatsoever to oral provisions related
      to this contract, which shall constitutes a full and complete agreement that
      leaves without effect any other oral or written agreement entered into between
      them formerly.

    


    CLAUSE
      THIRTEEN.- Schedules:  THE ASSIGNOR
      delivers to THE ASSINEE, on the date the contract is signed, a
      simple copy of the following documents:


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    12

    


    
      	
               

            	
              1.

            	
              Certificate
                of Incorporation and Legal Representation of OMEGA ENERGY COLOMBIA
                issued
                for said purposes by the Chamber of Commerce of
                Bogota.

            


    

    


    
      	
               

            	
              2.

            	
              “Share
                Agreement” of April twenty fifth (25th)
                of two
                thousand and seven (2007), entered into between and by PEI and WELL
                LOGGING.

            


    

    


    
      	
               

            	
              3.

            	
              Exploration
                and Exploitation Carbonera Contract entered into between and by WELL
                LOGGING and AGENCIA NACIONAL DE HIDROCARBUROS of December twenty
                eighth
                (28th)
                of
                two thousand and five (2005).

            


    

    


    
      	
               

            	
              4.

            	
              “Share
                Agreement” of June six (6) of two thousand and seven (2007), entered into
                between and by PEI and TC OIL.

            


    

    


    
      	
               

            	
              5.

            	
              “Assignment
                Contract” of June twentieth (20th)
                of two
                thousand and seven (2007), entered into between and by PEI and
                OMEGA.

            


    

    


    CLAUSE
      FOURTEEN.- Notices:  For all purposes of this contract,
      the parties hereto shall receive notices at the following
      addresses:

    


    
      	
            	
              THE
                ASSIGNOR:

            	
              OMEGA
                ENERGY COLOMBIA

            


    

    Calle
      113
      No.7-21, OF.711.Bogota, D.C.

    Telephone
      Number: 6291705

    


    
      	
            	
              THE
                ASSIGNEE:

            	
              PETROSOUTH
                ENERGY CORPORATION

            


    

    Carrera
      7
      No.73-55 Piso 7

    Telephone
      Number: 3138337

    


    


    Notices
      or communications that might be required shall be given when such notices or
      communications are informed to the parties simultaneously by fax and which
      receipt is mentioned thereof, and through post paid mail to the addresses
      indicated in the previous clause or to any other address that may be
      subsequently informed as replacement or substitution thereof.  The
      foregoing does not hinder that such notices or communications to be delivered
      in
      person, provided that the deliveries are made at the addresses indicated and
      there is evidence of receipt by the incumbent.

    


    CLAUSE
      FIFTEEN.- Expenses and Taxes:  The entirety of the
      expenses and taxes derived from this assignment shall be in equal shares by
      THE ASSIGNOR and THE ASSIGNEE.

    


    This
      contract is understood in force as t of the first day (1st) of August
      of
      2007.

    


    IN
      WITNESS HEREOF, in respect of its contents and obligations derived from herein
      for each of the parties hereto, this contract is signed in two counter parts
      of
      the same tenor and delivered to each party with acknowledgement of signature
      and
      content before a Public Notary in Bogota, Department of Cundinamarca, Republic
      of Colombia, this thirteenth (13th) day of
      AUGUST of
      TWO THOUSAND AND SEVEN (2007).

    


    



    
      
         

      

      
         

        
          

        

      

      
         

      

    

    13

    


    


    
      	
               

            	
              By
                THE ASSIGNOR:

            


    

    
      	
               

            	
              Omar
                Leal Quiroz

            


    

    
      	
               

            	
              c.c.91.241.011
                issued in Bogota, D.C.

            


    

    
      	
               

            	
              Legal
                Representative

            


    

    
      	
               

            	
              OMEGA
                ENERGY COLOMBIA

            


    

    


    
      	
               

            	
              By
                THE ASSGINEE

            


    

    
      	
               

            	
              Felipe
                Pimienta Barros

            


    

    
      	
               

            	
              c.c.79.785.924
                issued in Valledupar (Cesar)

            


    

    
      	
               

            	
              Legal
                Representative

            


    

    
      	
               

            	
              PETROSOUTH
                COLOMBIAN BRANCH

            


    

    


    


    


    


    


    


    


    


    


    


    


    


    


    


    



    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1

    


    AMENDMENT
      No. 1

    


    TO
      THE ASSIGNMENT CONTRACT OF SHARE RIGHTS OF OMEGA

    ENERGY
      COLOMBIA IN THE CARBONERA CONTRACT SHARE

    AGREEMENT
      (ENTERED INTO BETWEEN WELL LOGGING LTDA and

    PETROLEUM
      EQUIPMENT INTERNATIONAL LTDA) and in consequence IN

    THE
      CARBONERA BLOCK IN FAVOR OF PETROSOUTH ENERGY

    CORPORATION
      – COLOMBIAN BRANCH

    


    Between
      the undersigning, namely:  OMAR LEAL QUIROZ, of legal
      age, domiciled and resident in the city of Bogota D.C., identified with
      citizenship card No. 91.241.011 issued in Bucaramanga (Santander), who for
      purposes of this act is acting in his capacity of Manager and Legal
      Representative of OMEGA ENERGY COLOMBIA, a corporation legally
      organized through pubic deed No. two thousand nine hundred and sixty three
      (#2963) issued on November twenty ninth (29th) of two
      thousand
      (2000) by the Forty Fifth Notary’s office (45th) of the
      Circle of
      Bogota registered on February fifth (5th) of who
      thousand
      (2000) under number 70154 of Book 06, a corporation with main domicile in the
      city of Bogota, D.D., identified with tax identification number (TIN)
      830.081.985-1, all of this certified in the Certificate of Incorporation and
      Legal Representation issued for said purpose by the Chamber of Commerce of
      the
      city of Bogota, which is attached to this contract to be part thereof
(Schedule #1), duly entitled to enter into this Agreement, in
      accordance with its by-laws, and who hereinafter and for said purposes shall
      be
      called OMEGA or THE ASSIGNOR, and on the other
      hand:  PETROSOUTH ENERGY CORPORATION – COLOMBIAN BRANCH, a
      corporation legally organized through public deed No. Six hundred and fifty
      seven (#00657) of two thousand and seven (2007) issued by the Forty Fifth
      Notary’s Office (45th) of the
      Circle of
      Bogota, domiciled in the city of Bogota, D.C., identified with tax
      identification number (TIN) 900.140.614, legally represented by
      Mr. FELIPE PIMIENTA BARROS, of legal age, domiciled and
      resident in the city of Bogota, D.C., identified with citizenship card No.
      79.785.924 issued in Valledupar (Cesar), all of this certified in the
      Certificate of Incorporation and Legal Representation issued for said purpose
      by
      the Chamber of Commerce of the city of Bogota, which is attached to this
      contract to become part thereof (Schedule #2), duly entitled to
      enter into this Agreement by the Board of Directors of the Corporation, who
      hereinafter and for all purposes thereof shall be called PETROSOUTH
or THE ASSIGNEE, have decided to enter into this Share
      Agreement,

    


    WHEREAS

    


    
      	
            	
              I.

            	
              WELL
                LOGGING LTDA. (hereinafter WELL LOGGIN), a commercial corporation
                duly organized under the laws of the Republic of Colombia, with Tax
                Identification Number (TIN) 830.013.746-3, entered into
                with ANGENCIA NACIONAL DE HIDROCARBUROS (hereinafter the
                ANH) on December twenty eighth (28th)
                of two
                thousand and five (2005), the Carbonera Exploration and Exploitation
                Contract (hereinafter the Carbonera Contract), being it the Operator
                thereof.

            


    

    



    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2

    


    
      	
               

            	
              II.

            	
              WELL
                LOGGING currently has a Private Share Agreement fully in force
                with C&C ENRGIA BARBADOS SUCURSAL COLOMBIA, for which
                C&C has rights and obligations to contribute with
                costs and expenses and to receive Net Incomes that WELL LOGGING
                may obtain upon developing the Carbonera Contract by a twenty
                five per cent (25%).

            


    

    


    
      	
               

            	
              III.

            	
              PEI
                and WELL LOGGING enter into the Share Agreement
                of April twenty fifth (25th)
                of 2007, through which it was set forth that the “obligation to
                do” by PEI shall only be understood fully complied with
                for all legal purposes (in accordance with the agreement entered
                into)
                once Agencia Nacional de Hidrocarburos (hereinafter so
                called ANH) has issued a written communication to WELL
                LOGGING where full compliance with the exploratory commitment
                corresponding to First Phase of the Carbonera Contract Exploration
                Period
                is confirmed, being this the essential condition that shall entitle
                PEI to obtain a percentage in the “Share Interest” in
                said contract under those terms described
                hereinafter.

            


    

    


    
      	
               

            	
              IV.

            	
              The
                terms in item 2.2 of clause Two (2) of the Share
                Agreement of April twenty fifth (25th)
                of two thousand and seven (2007) entered into between
                PEI and WELL LOGGING, set forth that
                once the condition set forth in the immediately above item has been
                accomplished, PEI may request WELL
                LOGGING to ask ANH authorization for the
                official assignment on its behalf of the rights and obligations in
                the
                Carbonera Contract in the percentage of the “Share Interest” gained for
                complying with the obligation set forth in the immediately previous
                item.

            


    

    


    
      	
               

            	
              V.

            	
              PEI
                assigned in favor of OMEGA, on June 20th
                of 2007, the
                percentage corresponding to its share in the Carbonera Contract equivalent
                to the 53% as compensation for the “obligations to do” consisting in the
                re-entry and assessment of the Cerro Gordo 1 well acquired by PEI
                by
                entering into the Agreement.

            


    

    


    
      	
               

            	
              VI.

            	
              OMEGA
                and PETROSOUTH entered into, on August 13th
                of 2007, the
                Assignment Contract of Share Rights in the Carbonera Contract share
                agreement (entered into between WELL LOGGING LTDA and PETROLEUM EQUIPTMENT
                INTERNATIONAL LTDA) and therefore, the Carbonera Block in favor of
                PETROSOUTH ENERGY CORPORATION – Colombian
                branch.

            


    

    



    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3

    


    
      	
               

            	
              VII.

            	
              Clause
                Five of the aforementioned Assignment Contract set forth the Value
                and Way
                of Payment corresponding to the 6% of the assignment as
                follows:

            


    

    


    “The
      total value agreed by the parties for the percentage subject matter of this
      assignment is FOUR HUNDRED AND TWENTY THOUSAND AMERICAN DOLLARS
      (USD$420.000), being it the value corresponding to each point
      equivalent to seventy thousand American dollars (USD70.000,oo),
      in this way said value shall be cancelled in the way set forth in item 2 as
      a
      result of the following procedure:

    


    
      	
               

            	
              1.

            	
              The
                Assignee must cancel the amount corresponding to one million American
                dollars (USD$1.000.000,oo) on September 10th
                of 2007, to
                PETROLEUM EQUIPMENT INTERNTIONAL LTDA., as set forth in
                the Memorandum of Understanding of the Buenavista Block, signed by
                the
                parties hereto on June 7 of 2007.

            


    

    


    
      	
               

            	
              1.1

            	
              However,
                since the payment corresponding to the aforementioned September 10th
                shall be
                cancelled on August 14 of 2007, (payable at a MRR of $2006
                pesos), a discount over this obligation corresponding to the
                amount of fifty thousand American dollars (USD$50.000,00)
                shall proceed.

            


    

    


    
      	
               

            	
              1.2

            	
              In
                this way, the obligation set forth in Clause 2 Item (iii) of the
                Buenavista Block Memorandum of Understanding, referred to in item
                1, shall
                correspond to nine hundred and fifty thousand American dollars
                (USD$950.000,oo) once the discount for advance payment
                has been made.  The amount shall be allocated as
                follows:

            


    

    


    
      	
               

            	
              -

            	
              The
                assignee shall draw in favor of Bancolombia TIN
                890903938-8, the amount corresponding to one hundred thirty three
                million
                seventy eight thousand Colombian pesos
                ($133.078.00,oo)

            


    

    


    
      	
               

            	
              -

            	
              The
                assignee shall draw the remiaing amount corresponding to one thousand
                eight hundred sevety two million nin hundred and twenty two thousand
                Colombian pesos ($1.872.922.000,oo) on a check in favor
                to OMEGA ENERGY COLOMBIA.

            


    

    


    From
      this
      amount, the Assignor must proceed to cancel the amount to cover the 60% of
      the
      80% of its Share Interests in the Talora Block for Seismic.

    


    
      	
               

            	
              2.

            	
              Way
                of Payment, corresponding to the 6% assigned in the Carbonera Block
                for
                the amount of (USD$420.00,oo) shall proceed as
                follows:

            


    

    



    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4

    


    
      	
            	
              2.1

            	
              The
                amount discounted from the Assignee’s obligation in the Buenavista Block
                equivalent to fifty thousand American dollars (USD$50.000,oo) shall
                be
                allocated as an advance to cancel the obligation of this contract
                “Carbonera Block” on August 14 of
                2007.

            


    

    


    
      	
            	
              2.2

            	
              The
                Assignee shall cancel ten thousand American dollars (USD$10.000,oo),
                to
                cover Petrophysics activities at the Carbonera
                Block.

            


    

    


    
      	
            	
              2.3

            	
              The
                remaining, equivalent to three hundred and sixty thousand American
                dollars
                (USD#360.00.oo), shall be cancelled once the communication by ANH
                through
                which compliance with the Obligation consisting in the Re-entry to
                the
                Cerro Gordo 1 has been delivered to the
                ASSIGNEE.

            


    

    


    After
      the
      above considerations, the “Assignment Contract of the Share Rights of OMEGA
      ENERGY COLOMBIA in the Carbonera Contract Share Agreement (entered into between
      WELL LOGGING LTDA and PETROLEUM EQUIPMENT INTERNATIONAL LTDA) and therefore
      in
      the Carbonera block in favor of PETROSOUTH ENERGY CORPORATION – COLOMBIAN
      BRANCH” is modified under the following terms:

    


    CLAUSE
      ONE.-The parties hereto agree to modify Clause Five in the
      Assignment Contract of OMEGA ENERGY COLOMBIA to PETROSOUTH ENERGY CORPORATION
–
COLOMBIAN BRANCH, of the Carbonera Block, for clarifying the following payments
      and allocations

    


    1.2...

    “The
      assignee shall draw the remaining amount corresponding to one thousand eight
      hundred seventy two million nine hundred and twenty two thousand Colombian
      pesos
($1.872.922.000,oo) on a check in favor to OMEGA ENERGY
      COLOMBIA.

    


    From
      this
      amount, the Assignor shall proceed to cancel the amount to cover the 60% of
      the
      80% of its Share Interests in the Talora Block for Seismic.

    


    The
      percentage which should have been allocated for seismic activities at the Talora
      Block by the ASSIGNOR, OMEGA ENERGY COLOMBIA, shall not be allocated for said
      purpose since it was determined that it was not convenient to carry out Seismic
      activities at the Talora Block

    


    
      	
               

            	
              2.3

            	
              The
                remaining equivalent to three hundred and sixty thousand American
                dollars
                (USD#360.000.oo), shall be cancelled once the
                communication by ANH through which compliance with the Obligation
                consisting in the Re-entry to the Cerro Gordo 1 has been delivered
                to the
                ASSIGNEE.

            


    

    


    The
      percentage equivalent to the amount of (USD$360.000), shall be
      cancelled by PETROSOUTH on October 8th of 2007,
      on behalf
      of OMEGA ENERGY COLOMBIA, to cancel the remaining payment corresponding to
      the
      6% of the share rights acquired by PETROSOUTH in the Carbonera Block with check
      No.4977803 of Citibank.

    



    
      
         

      

      
         

        
          

        

      

      
         

      

    

    5

    


    Accordingly,
      the percentage corresponding to the 6% of the share interest of OMEGA ENERGY
      COLOMBIA in the Carbonera Block acquired and fully cancelled by PETROSOUTH
      are
      clear of any encumbrance whatsoever.

    


    CLAUSE
      TWO.- CONTINUANCE:  The parties hereto express that the
      other clauses of the “Assignment Contract of Share Rights of OMEGA
      ENERGY COLOMBIA in the Carbonera Contract Share Agreement (entered into
      between WELL LOGGING LTDA and PETROLEUM EQUIPMENT
      INTERNATIONAL LTDA) and therefore in the Carbonera block in favor of
PETROSOUTH ENERGY CORPORATION – COLOMBIAN BRANCH” entered into
      on August 13th
      of 2007, continue in force in all their content.

    


    IN
      WITNESS HEREOF, in respect of its content and obligations derived from herein
      for each of the parties hereto, this contract is signed in two counter parts
      of
      the same tenor and delivered to each party in Bogota, Department of
      Cundinamarca, Republic of Colombia, this fourth day of October of
      2007

    


    By
      THE
      ASSIGNOR:

    Omar
      Leal
      Quiroz

    c.c.91.241.011
      issued in Bogota, D.C.

    Legal
      Representative

    OMEGA
      ENERGY COLOMBIA

    


    By
      THE
      ASSIGNEE

    Felipe
      Pimienta Barros

    c.c.79.785.924
      issued in Valledupar (Cesar)

    Legal
      Representative

    PETROSOUTH
      COLOMBIAN BRANCH