ex10_1.htm


    
      

    

    Exhibit
      10.1

    July
      11,
      2007

    


    


    Clarion
      Finance Pte Ltd.

    80
      Raffles Place #32-01

    Uob
      Plaza, Singapore 048624

     

    
      	
              RE:

            	Powder
              River Basin Mowry Project Area
	 	T45-48N,
              R68-71W, 6th
              PM
	 	Campbell,
              Crook, Johnson & Weston Counties,
              Wyoming


    

     

    Gentlemen:

    


    By
      virtue
      of that certain letter agreement with American Oil and Gas, Inc. (“AOGI”), dated
      July 22, 2005, as amended by a letter agreement dated July 14, 2006 (as amended,
      the “AOGI Agreement”) attached hereto as Exhibit “A,” Tatonka Oil and Gas, Inc.
      (“Tatonka”) is the owner of interests in certain oil and gas leases described on
      Exhibit “B” attached hereto (collectively, the “Leases”) covering or affecting
      the lands described in Exhibit “B” (collectively, the
“Lands”).  Clarion Finance Pte Ltd. (the “Company”) wishes to acquire
      a portion of Tatonka’s interest in the Leases and Lands, and to participate with
      Tatonka and with AOGI and North Finn, LLC (“North Finn”) in the exploration and
      development of the Leases and Lands. This letter agreement (this “Agreement”),
      when executed by the Company, shall evidence the agreement between the parties
      by which the Company shall acquire from Tatonka the right to earn 50% of the
      interests owned by Tatonka in the Leases and Lands, subject to the terms and
      conditions set forth below.

    


    1.            
      Acquisition of Interest in Leases.  At the Closing (as herein
      defined), the Company will pay Tatonka, by certified funds or by wire transfer
      to Tatonka’s designated account, the sum of $339,453.60 (the “Lease Acquisition
      Fee”) and Tatonka shall execute and deliver to the Escrow Agent (as herein
      defined) an assignment in the form of Assignment, Bill of Sale and Conveyance
      attached hereto as Exhibit “C” (the “Assignment”) assigning to the Company 50%
      of Tatonka’s right, title and interest in and to the Leases and Lands and to the
      AOGI Agreement (which the Company shall ratify and confirm upon its receipt
      of
      the Assignment).  The instructions for wiring the Lease Acquisition
      Fee to Tatonka are as follows:

    


    Credit
      to
      Tatonka Oil & Gas Company, Inc.

    1515
      Arapahoe Street, Tower 1, 10th Floor

    Denver,
      CO 80202

    (303)
      476-4100

    

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    TO:

    


    Colorado
      Business Bank

    821
      17th
      Street

    Denver,
      CO 80202

    (303)
      293-2265

    Routing
      #102003206

    Account
      #
      3223787

     

    
      2.           
         Escrow Agent.  The Assignment shall be delivered by
        Tatonka to Kendor P. Jones (the “Escrow Agent”) of the law firm of Welborn
        Sullivan Meck & Tooley, P.C., who shall hold such Assignment in escrow until
        he receives written instructions to deliver such Assignment to the Company
        or to
        return the Assignment to Tatonka pursuant to Section 5
        below.
     

    

    3.          
        Participation in Commitment Wells.  AOGI, North
      Finn and Tatonka have agreed to spend $15,000,000 to drill vertical and
      horizontal wells on the Leases and Lands with the target depth the Mowry
      formation (the “Commitment Wells”).  The Company hereby agrees to pay
      to the operator that drills the Commitment Wells (the “Operator”) $9,000,000,
      representing Tatonka’s 60% share of the costs to drill and complete the
      Commitment Wells.  To the extent that Tatonka’s 60% share of the costs
      to drill and complete the Commitment Wells exceeds $9,000,000, the Company
      shall
      have no obligation to pay such excess costs and Tatonka shall pay the Operator
      its share of such costs in excess of $9,000,000.

    


    4.           
       Closing.  The closing of the transaction between the
      parties (the “Closing”) shall be held at Tatonka’s offices at 10:00 a.m., MDT,
      on July 11, 2007 (the “Closing Date”).  At the Closing, the Company
      shall pay Tatonka the Lease Acquisition Fee and Tatonka shall deliver the
      Assignment to the Escrow Agent.

    


    5.            
      Release of the Assignment from Escrow.  If the Company
      satisfies the requirements of Section 3 above, Tatonka shall instruct the Escrow
      Agent to deliver the Assignment to the Company.  If the Company fails
      to satisfy the requirements of Section 3, the Company shall instruct the Escrow
      Agent to return the Assignment to Tatonka.

    


    6.            
      Interests In Revenues From Commitment Wells Until
      Payout.  Until Payout (as defined in Section 8 below) of the
      Commitment Wells, the Company shall be entitled to receive 45% of the net
      revenues from the sale of production from such Commitment Wells and Tatonka
      shall be entitled to receive 15% of the net revenues from the sale of production
      from the Commitment Wells.

    


    7.           
       Interests in Revenues From Commitment Wells After
      Payout.  Following Payout of the Commitment Wells, the Company and
      Tatonka shall each be entitled to receive 30% of the net revenues from the
      sale
      of production from the Commitment Wells.  In addition, each party
      shall be responsible for 30% of the operating costs of the Commitment Wells
      both
      before and after Payout and shall be responsible for 30% of the costs and shall
      be entitled to 30% of the net revenues attributable to drilling, completing
      and
      operating any other wells drilled on the Leases and Lands pursuant to the
      Operating Agreement referred to in Section 7.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    8.            
      Payout.  For all purposes hereunder, the term “Payout” shall
      mean that time, if ever, when the Company shall have recovered from the proceeds
      of 45% of production from the Commitment Wells, after deducting the lessor’s
      royalty and any overriding royalties and similar burdens on production with
      respect to which the Leases and Lands are encumbered on the date of this
      Agreement, and all applicable taxes, all of the costs of the Company incurred
      in
      drilling, testing, completing and equipping the Commitment
      Wells.  Within sixty (60) days following completion of the last of the
      Commitment Wells, the Company shall furnish Tatonka with a detailed statement
      of
      the actual costs incurred in the drilling, testing, completing and equipping
      of
      the Commitment Wells.

    


    9.            
      Operating Agreement  In the AOGI Agreement, Tatonka and AOGI
      agreed to enter into a mutually agreeable Joint Operating Agreement (the “JOA”)
      covering the Leases and Lands.  The Company also agrees to enter into
      the JOA.

    


    10.           Area
      of Mutual Interest.  In the AOGI Agreement, Tatonka and AOGI
      created an area of mutual interest (the “AMI”) encompassing Townships 45-49
      North, Ranges 68-71 West, 6th P.M., Campbell
      County, Wyoming.  The Company hereby agrees to be bound by the terms
      and conditions governing the AMI as if it were an original party to the AOGI
      Agreement.

    


    11.           Notices.  Except
      as herein otherwise expressly provided, any notice or other communication
      required or permitted hereunder shall be in writing and shall be deemed given
      only when received by the party to whom the same is directed as
      follows:

    


    
      	 	
              Tatonka
                Oil and Gas, Inc.

            	 
	 	
              1515
                Arapahoe Street

            	 
	 	
              Tower
                1, 10th
                Floor

            	 
	 	
              Denver,
                CO 80202

            	 
	 	
              Attn:
                Dirck E. Tromp

            	 
	 	
              Telephone:
                (303) 476-4102

            	 
	 	
              Fax:
                (303) 476-4101

            	 
	 	
              E-Mail:
                DTromp@tatonkaorg.com 

            
	 	 	 
	 	
              Clarion
                Finance Pte Ltd.

            	 
	 	
              80
                Raffles Place #32-01

            	
               

            
	 	
              
                Uob
                  Plaza, Singapore 048624

              

            	 
	 	
              Attn:
                _____________________

            	 
	 	
              Telephone:
                ________________

            	 
	 	
              Fax:
                ______________________

            	 
	 	
              E-Mail:
                ___________________

            	 


    

    


    12.           Term.  The
      term of this Agreement (the “Term”) shall commence as of the date hereof and it
      shall end the later of (i) the termination of the AOGI Agreement, (ii) the
      termination of the JOA, or (iii) when one of the parties, or its successors
      and
      assigns, no longer own an interest in the Leases and Lands.

    


    13.           Amendments.  No
      amendments or other changes to this Agreement shall be effective or binding
      on
      either of the parties unless the same shall be in writing and signed by both
      parties.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    14.           Applicable
      Law; Venue.  This Agreement shall be governed by and interpreted
      in accordance with the laws of the State of Colorado, without reference to
      its
      conflict of laws provisions.  Forum and venue shall be exclusively in
      state or federal court in Denver, Colorado.

    


    15.           Assignability;
      Binding on Successors.  Either party may assign its rights and/or
      obligations under this Agreement, provided that it provides notice of such
      assignment to the other party.  This Agreement shall be binding upon
      and shall inure to the benefit of the parties and their respective successors
      and assigns.

    


    16.           Severability.  If
      a court of competent jurisdiction determines that any clause or provision of
      this Agreement is void, illegal or unenforceable, the other clauses and
      provisions of the Agreement shall remain in full force and effect, and the
      clauses and provisions that are determined to be void, illegal or unenforceable
      shall be limited so that they shall remain in effect to the extent permissible
      by law.

    


    17.           Counterparts.  This
      Agreement may be executed by the parties in counterparts, each of which shall
      be
      deemed to be an original instrument, but which together shall constitute one
      and
      the same instrument.  Execution may be evidenced by faxed signatures
      with original signature pages to follow promptly.

    


    18.           Relationship
      of Parties.  This Agreement shall not create, and shall not be
      construed as creating, a mining or other partnership or association, nor does
      this Agreement render the parties liable as partners.  The liability
      of the parties shall be several and not joint or collective.

    


    19.           No
      Third Party Beneficiaries.  Except for AOGI and North Finn, this
      Agreement is not intended to accrue to the benefit of any third
      party.

    


    20.           Entire
      Agreement.  This Agreement constitutes the entire agreement and
      understanding between the parties with respect to the subject matter
      hereof.  This Agreement supersedes all prior oral and written
      discussions, agreements and understandings relating to such subject
      matter.

    


    If
      you
      agree that the foregoing accurately reflects the agreement between the parties,
      please so indicate by signing and returning to the attention of the undersigned
      the enclosed duplicate original of this Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              Sincerely,  

            
	 	  	 
	 	
              TATONKA
                OIL & GAS, INC.  

            
	 	  	 
	 	  	 
	 	  	 
	 	 By: /s/
              DIRCK E. TROMP
	 	  	
              Dirck
                E. Tromp

            
	 	  	
              President
                and Chief Executive Officer

            


    

     

     

    
      	
              AGREED
                TO AND

            
	
              ACCEPTED
                this 12th

            
	
              day
                of July, 2007

            
	 
	
              CLARION
                FINANCE PTE LTD.

            
	 
	 
	
              By:
                /s/ DAVID DAWES

            
	
              Name:
                David Dawes

            
	
              Its:  Principal