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Farm-In Agreement for Farm-in to UKCS Petroleum Production
Licences P.1211Block 14/14b and P.1288 Blocks 14/8a
and 14/9a

This Farm-In Agreement (FIA) dated7th June 2007 is by
and between;

1. Granby Enterprises Limited, a company incorporated in
England and Wales (registered number 4388397) with its registered office at
Antholin House, 71 Queen St, London EC4N 4TL (Granby); and

2. Atlantic Petroleum UK Limited a company incorporated
in England and Wales (registered number 4395761) and having its registered
office at 4th Floor, 15 - 16 New Burlington Street, London. W1S 3BJ
(Atlantic); and

3. Fox Energy Exploration Limited, a company
incorporated in England and Wales (registered number 6251095) and having its
registered office at 3rd Floor 15 Poland Street, London W1F 8QE (Fox),

(hereinafter Party or Parties as the context requires).

WHEREAS:

|A. | At the date hereof, Granby is the sole licensee of UK
      Petroleum Production Licences P.1211 and P.1288 and holds one hundred
      percent (100%) of the legal and beneficial right, title and interest in
      Blocks 14/14b, 14/8a and 14/9a as listed in Schedule 1 and Granby is the
      Operator of the same.                                                                       
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                    
|B. | Licences P.1211 and P.1288 are in the process of being
      merged by the Department of Trade and Industry (DTI) into one licence,
      being P.1211 as revised block 14/14b and 14/9a hereinafter being referred
      to as the Merged Licence with a revised Licence Area (with coordinates
      as listed in Schedule 5) and revised work obligations (as listed in clause
      2.3).
|   |                                                                                                                                                                                                                                                                                                                                                                                                    
|C. | Atlantic is in the process of acquiring a 50.00% interest
      in Licences P.1211 and P.1288 (Blocks 14/14b, 14/8a and 14/9a) from Granby
      (the Granby/Atlantic Assignment) which shall become a 50.00% interest in
      the Merged Licence after completion of the merger of Licences P.1211 and
      P.1288 by the DTI.                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                    
|D. | Fox wishes to farm-in and acquire from Granby and Granby
      wishes to farm-out and assign to Fox the Farm-In Interest (Granby) (as
      such term is defined below) in accordance with the terms and conditions
      contained in this FIA.                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                    
|E. | Subject to completion of the Granby/Atlantic Assignment,
      Fox wishes to farm-in and acquire from Atlantic and Atlantic wishes to
      farm-out and assign to Fox the                                                                                                                                                                                                                         

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|   | Farm-In Interest (Atlantic) (as such term is defined
      below) in accordance with the terms and conditions contained in this
      FIA.                                                                                                                    
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                               
|F. | Granby and, subject to completion of the Granby/Atlantic
      Assignment, Atlantic shall also grant to Fox an option to acquire a
      further 26.67% interest in the Merged Licence in accordance with the terms
      and conditions contained in this FIA

NOW IT IS THEREFORE AGREED AS FOLLOWS:

|1. | Definitions and Scope
|-- | ---------------------
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|   | 1.1                  
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interest) in Blocks 14/14b, 14/8a and
14/9a (as the same may be varied by reason of the merger of Licences P.1211 and
P.1288).

| |     | Licence means Licence P.1211, Licence P.1288 and/or the
      Merged Licence (as the case may be).                                                                                                                                                          
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                               
| | 1.2 | The scope of this FIA encompasses the transfer and
      assignment from Granby and Atlantic to Fox, respectively, of the Farm-In
      Interest (Granby) and, subject to completion of the Granby/Atlantic
      Assignment, the Farm-In Interest (Atlantic).

|2. | Farm-In Terms
|-- | -------------
|   |              
|   | 2.1          
|   |              
|   | 2.2          
|   |              
|   | 2.3          

(i)      Firm
commitment

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The shooting of sufficient High
Resolution 2D Seismic to cover the Licence as agreed with the DTI, and

(ii)   
 Contingent commitment

The drilling of a well (Contingent
Well) on the Licence to a depth of 2,500 metres or to 30 metres into the top
Pentland Formation, whichever is the shallower; unless the DTI confirms in
writing that that it would not be justified to drill the Contingent Well, having
regard to the technical information available at the time, and in particular the
results of the following technical studies (Contingent Well Terms):

| | • | The interpreted presence of Jurassic sand over the
      Anglesey structural culminations.                                                            
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------
| | • | The demonstration of 3-way dip closure back to the
      north-west along the tilted fault blocks.                                                    
| | • | The demonstration of some positive direct hydrocarbon
      indicator (being AVO, amplitude, rock physics) from the new high
      resolution dataset.

| | 2.4 | The high resolution 2D seismic work programme is
      scheduled to commence and be performed by Fugro Survey Ltd in the third
      quarter of 2007. The Seismic Costs shall comprise the costs of shooting
      a High Resolution 2D seismic survey and reprocessing using Geocube over
      the Licence in accordance with Schedule 6.                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | 2.5 | If under the terms of the Licence the Contingent Well
      Terms are not met (as determined by the DTI) after interpretation of the
      High Resolution 2D Seismic and there becomes no firm obligation under the
      Licence to drill the Contingent Well the Parties shall endeavour to reach
      unanimous agreement under the JOA (as defined below) on whether to
      voluntarily drill the Contingent Well. If any Party votes against drilling
      the Contingent Well then such Party shall withdraw from the Licence and
      shall assign its entire Percentage Interest in the Licence pro rata to the
      continuing Parties and if all Parties vote against drilling the Contingent
      Well the Licence shall be relinquished.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | 2.6 | The Contingent Well if drilled shall be drilled to a true
      vertical depth of no less than the deeper of the obligation depth under
      the Licence as listed in Schedule 4 or such sufficient depth to test the
      Anglesey Prospect whichever is the greater.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | 2.7 | Upon Completion, Foxs Farm-in Paying Interest Share
      (being 100%) of the Seismic Costs shall be due upon and in accordance with
      the invoice from Fugro Survey Ltd as a reimbursement of the Seismic Costs
      paid by Granby and Atlantic. Unless all the Parties hereto agree otherwise
      in writing, all costs incurred under the Licence from the Effective Date
      (save for (a) the                                                                                                                                                                                                                                                                                                                                               

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| |     | Seismic Costs which shall be borne 100% by Fox; and (b)
      the Contingent Well costs of which Fox shall bear a total of eighty (80%)
      percent in the event that it has validly exercised the Option and had the
      Option Interest assigned to it) shall, upon Completion, be borne by the
      Parties in accordance with their respective percentage interests in the
      Licence being, on Completion, Granby: 33.34%, Atlantic: 33.33% and Fox:
      33.33%.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 2.8 | The Parties agree to negotiate in good faith to agree the
      terms of a Joint Operating Agreement (JOA) after Completion, such JOA to
      be based upon the most recent United Kingdom Offshore Operators
      Association (UKOOA) industry standard
document.                                                                                                                                                                                                       

|3. | Third Party Farminees and Assignment of Licence
      Interest
|-- | --------------------------------------------------------------
|   |                                                               
|   | 3.1                                                           
|   |                                                               
|   | 3.2                                                           
|   |                                                               
|4. | Completion                                                    
|   |                                                               
|   | 4.1                                                           
|   |                                                               
|   | 4.2                                                           

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| |     | Party, subject always to each Partys obligation to use
      reasonable endeavours as aforesaid.                                                                                                         
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                           
| | 4.3 | The Parties agree that the assignment documentation
      (referred to in clause 4.1) shall be based on standard industry
      documentation but not under the Master Deed process.                      
| |     |                                                                                                                                                                                                           
| | 4.4 | Completion shall take place on the day which falls two
      (2) days after the date on which the last condition precedent is satisfied
      or waived (or on such other day as the Parties may
  agree).

|5. | Operatorship, Warranties and
    Liability
|-- | ------------------------------------------
|   |                                           
|   | 5.1                                       
|   |                                           
|   | 5.2                                       
|   |                                           
|   | 5.3                                       
|   |                                           
|   | 5.4                                       

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| |     | which it is a party and such representation and warranty
      shall be deemed to be repeated at Completion.                                                                                                             
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                          
| | 5.5 | Except in the event of fraud or wilful concealment, no
      Party shall be liable to any other Party for indirect or consequential
      loss including loss of profits or business opportunity howsoever
      arising.

|6. | Governing Law, Assignment and
  General
|-- | ---------------------------------------
|   |                                        
|   | 6.1                                    
|   |                                        
|   | 6.2                                    
|   |                                        
|   | 6.3                                    
|   |                                        
|   | 6.4                                    
|   |                                        
|   | 6.5                                    
|   |                                        
|   | 6.6                                    
|   |                                        
|   | 6.7                                    

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| | 6.8 | The illegality, invalidity or unenforceability of any
      provision of this FIA or any part thereof shall not affect the legality,
      validity or enforceability of any other part thereof or of any other
      provision.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                 
| | 6.9 | The terms and conditions of this FIA may only be varied
      by an agreement in writing signed by an authorised representative of each
      of the Parties and specifically referring to this
FIA.                            

|7. | Announcements and Confidentiality
|-- | ---------------------------------
|   |                                  
|   | 7.1                              
|   |                                  
|8. | Taxation                         
|   |                                  
|   | 8.1                              
|   |                                  
|   | 8.2                              
|   |                                  
|   | 8.3                              
|   |                                  
|   | 8.4                              

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| | 8.5 | If required, the Parties agree that the relevant seller
      shall make an application to the Commissioners of Revenue & Customs
      under section 49(1)(b) of the Value Added Tax Act 1994 for a direction
      that any records relating to the Licence(s) which under paragraph 6,
      Schedule 11 of the Value Added Tax Act 1994 have been maintained by the
      relevant seller or its affiliates should be preserved by the relevant
      seller or its affiliates. The relevant seller shall forthwith upon receipt
      thereof provide the relevant purchaser with a copy of any such direction,
      and the relevant purchaser shall retain access at all reasonable times
      during business hours to all books and records retained by the relevant
      seller or its affiliates in relation to VAT matters concerning the
      Licence(s), and the relevant seller covenants to retain such records as
      required by paragraph 6, Schedule 11 of the Value Added Tax Act
    1994.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Parties have all their required
corporate approvals to execute this FIA as a valid and binding understanding
between them effective on the date first written above.



Granby Enterprises Limited



By: /s/ Robert Moore



Atlantic Petroleum UK Limited



By: /s/ David Hill



Fox Energy Exploration Limited



By:/s/ Alexander Craven

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Schedule to Farm-In Agreement for UKCS Petroleum
Production Licences P.1211Block 14/14b and P.1288
Blocks 14/8a and 14/9b

Schedule 1  Initial Licence Percentage Interests prior to
farm-in by Fox

Licences
    Block
    Granbys Initial Interest
    Atlantics Initial InterestP.1211
    14/14b
    50.00%
    50.00%P.1288
    14/8a & 14/9a
    50.00%
    50.00%


Schedule 2  Foxs Farm-In Paying Interest Share for Seismic
Costs in Merged Licence

Licence after merger
    Blocks after merger of the
      Licences
    Foxs Farm-In Paying
      Interest ShareP.1211
    14/14b and 14/9a
    100.00%


Schedule 3 - Licence Percentage Interests after assignment
to Fox of the Farm-In Interest (Granby) and the Farm-In Interest
(Atlantic)

Merged Licence as reissued by the
      DTI
    Blocks after merger
      of theLicences
    Example Prospect Mapped by
      Granby
    Granby Interest
    Atlantic Interest
    Fox Farm-In
      InterestP.1211
    14/9a,
    Anglesey
    33.34%
    33.33%
    33.33%14/14b


Schedule 4  Minimum Licence Obligation Contingent Well
Drilling Depth (True Vertical Depth Sub Sea in Meters)

Merged Licence
    Blocks after merger of the
      Licences
    Contingent Well Licence
      Drilling Depth (mTVDSS)P.1211
    14/14b and 14/9a
    One contingent well to be drilled
      to the shallower of 2500mTVDSS or 30m into the top Pentland Formation


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Schedule 5- Coordinates for Licence after merger of P.1288
into P.1211



PDF from DTI of new Merged Licence coordinates to be inserted





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Schedule 6- Licence Seismic Programme

Acquisition of 1,545 line Kms High Resolution 2D Seismic and
processing using Geocube to be shot and processed by Fugro Survey Ltd.

Budgeted costs of GBP 956,620 including contingency.





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