Filed by Automated Filing Services Inc. (604) 609-0244 - Park Place Energy Corp. - Exhibit 10.8







	September 25, 2006 	 
	 	 
	Park Place Energy Inc. 	Patch Energy Inc. 
	1220 – 666 Burrard Street 	1220 – 666 Burrard Street 
	Vancouver, B.C. V6C 2X8 	Vancouver, B.C. V6C 2X8 
	 	 
	Attention:                        
      David Clark 	Attention:                        
      David Clark 
	                                          
      Chief Financial Officer 	                                          
      Chief Financial Officer 


Dear Sir: 

	Re: 	Farmout and Option Agreement
  
	  	N 1⁄2 Sec 22, SW 1⁄4 & Lsds 11
      & 12 Sec 26 Twp 12 Rge 5 W4M 
	  	Medicine Hat Area, Alberta
  


This letter is to evidence the Agreement between Park Place
Energy Inc. (“Park Place”), Patch Energy Inc. (“Patch”) and Pine Petroleum
Limited (“Pine”) pursuant to which Farmor grants to Farmee the right to earn an
interest in the Farmout Lands, the Option Lands and the Area of Mutual Interest
on the terms and conditions contained herein (the “Agreement”). 

	1. 	
      DEFINITIONS

	 	 	 
		
      Each capitalized term used in this Agreement will have
      the meaning given to it in the Farmout and Royalty Procedure, and, in
      addition:

	 	 	 
		a) 	
      “Area of Mutual Interest” means sections 22, 23, 26 and
      27-12-5 W4M;

	 	 	 
		b) 	
      "Contract Depth" means the drilling of the Test Well to a
      depth sufficient to adequately test all Mesozoic formations and to
      penetrate 15 meters into the Mississippian Section or to a total drill
      depth of 950 meters below Kelly Bushing subsurface or whichever first
      occurs;

	 	 	 
		c) 	
      “Farmee” means Park Place and Patch as to a 50% interest
      each;

	 	 	 
		d) 	
      “Farmor” means Pine;

	 	 	 
		e) 	
      “Farmout and Royalty Procedure” means the 1997 CAPL
      Farmout and Royalty Procedure with insertions as set forth in Schedule
      “B”;








	 	f) 	
      “Farmout Lands” means the lands described as such in
      Schedule “A”;

	 	 	 
	 	g) 	
      “Mutual Interest Lands” means any parcel of land or other
      interest 50% or more of the surface area of which is located within the
      Area of Mutual Interest.

	 	 	 
	 	h) 	
      “Option Lands” means the lands described as such in
      Schedule “A”;

	 	 	 
	 	i) 	
      “Operating Procedure” means the 1990 CAPL Operating
      Procedure with insertions as set forth in Schedule “C”;

	 	 	 
	 	j) 	
      “Participant” means Pine as to an undivided 10% working
      interest;




		
      To the extent necessary to effect the provisions of the
      Farmout & Royalty Procedure, references to "Farmor", "Farmee" and
      "Farmout Lands" within the Farmout & Royalty Procedure shall be deemed
      to be "Farmor", "Farmee" and "Farmout Lands", respectively, as such terms
      are defined in this Agreement

	 	 
		
      Unless otherwise provided herein, all other terms which
      are defined in the Farmout & Royalty Procedure shall, in this
      Agreement, have the meaning ascribed to them in the Farmout & Royalty
      Procedure

	 	 
	2. 	
      SCHEDULES

	 	 
		
      The following Schedules are attached hereto and made part
      of this Agreement:




	 	a) 	
      Schedules “A” and “A1”, which describe the Farmout Lands,
      the Option Lands and the Encumbrances;

	 	 	 
	 	b) 	
      Schedule ”B”, which is the Farmout and Royalty
      Procedure;

	 	 	 
	 	c) 	
      Schedule “C”, which is the Operating Procedure;

	 	 	 
	 	d) 	
      Schedule "D", which specifies the types of drilling
      information required to be supplied by the Farmee to Farmor pursuant to
      the Farmout and Royalty Procedure.




	3. 	
      TEST WELL

	 	 	 
		a) 	
      On or before November 30, 2006 (subject only to surface
      access, regulatory approval and rig availability – Farmee will use its
      best efforts to obtain these items in a timely fashion), Farmee (90%), on
      behalf of itself and the Participant (10%), will commence drilling a well
      at a location of its choice on the Farmout Lands (“Test Well”). The Test
      Well will de drilled to Contract Depth and abandoned or completed in
      accordance with the provisions of Article 3.00 of the Farmout and Royalty
      Procedure. As between Park Place, Patch and the Participant, the terms and
      conditions of the Operating Procedure shall apply.

	 	 	 
		b) 	
      Farmee shall not assign all, or any portion of, its
      interest in this Agreement without the Farmor's prior written
    consent.








	4. 	
      INTEREST EARNED

	 	 
		
      By fulfilling the requirements enumerated in Clause 3 of
      this Agreement, and subject to the provisions of Clause 3.03 of the
      Farmout and Royalty Procedure, Farmee will earn an undivided 50% of
      Farmor’s Interest in the Farmout Lands. Thereafter, the Farmout Lands will
      be operated in accordance with the Operating Procedure with Patch being
      named as operator.

	 	 
		
      The Farmee shall pay its proportionate share of the
      Encumbrances on the Farmout Lands.

	 	 
	5. 	
      OPTION WELL

	 	 
		
      Within 45 days of release of the rig used to drill the
      Test Well, Farmee may elect to drill a well (“Option Well”) on the Option
      Lands to earn an interest in the Option Lands. All of the terms and
      conditions applicable to the Test Well will apply to the Option Well
      mutatis mutandis other than the Option Well will be commenced within 45
      days of the Farmee’s election.

	 	 
		
      In the event that Farmee has acquired 3D Seismic data
      pursuant to Clause 6 of this Agreement, and notwithstanding the provisions
      of this Clause 5, Farmor may agree, at its sole discretion, that the
      Option Well be located in the Farmout Lands rather than the Option
      Lands.

	 	 
	6. 	
      3D SEISMIC

	 	 
		
      After the Farmee has drilled the Test Well, the Farmee
      may elect within 30 days of release of the rig used to drill the Test
      Well, to shoot a 3D seismic program over the Farmout Lands and the Option
      Lands (“3D Seismic”). Field acquisition of the 3D Seismic shall commence
      within 60 days of Farmee’s election and the 3D Seismic shall be acquired
      and processed at Farmee’s (90%) and Participant’s (10%) sole cost and in
      an amount sufficient to provide 100% coverage of an area of at least 1280
      acres (the area of coverage shall include the Option Lands) within the
      Area of Mutual Interest. If the Farmee shoots the 3D Seismic, the time to
      elect to drill the Option Well will be extended until 45 days after
      completion of field acquisition of the 3D Seismic.

	 	 
		
      Farmor shall be provided with a licenced, processed copy
      of the 3D Seismic data.

	 	 
		
      Farmee may recover its share of the field acquisition and
      processing cost of the 3D Seismic (“Seismic Cost”) from the sale of
      petroleum substances from the Option Well (net of the lessor royalty, the
      Encumbrances and operating costs) as follows:




	 	Applied to Seismic Cost 	40% 
	 	Farmee 	25% 
	 	Farmor 	25%



After the Farmee has recovered its
share of the Seismic Cost from the sale of petroleum substances from the Option
Well as above, production from the Option Well shall be shared by Farmee as to
45% and Farmor as to 45%. 





	7. 	
      AREA OF MUTUAL INTEREST

	 	 	 
		
      Subject to Article 8.00 of the Farmout and Royalty
      Procedure:

	 	 	 
		a) 	
      The Area of Mutual Interest shall be in effect until
      March 31, 2008.

	 	 	 
		b) 	
      The interests of the parties in Mutual Interest Lands
      will be: 

                       
      Farmee – 45%, Farmor – 45% and Participant –
10%




	8. 	
      MISCELLANEOUS

	 	 	 
		a) 	
      Each of the Parties represents and warrants that it now
      has, or is entitled to have full right, full power and absolute authority
      to enter into this Agreement.

	 	 	 
		b) 	
      In the event of a conflict between any term or condition
      of this Agreement and any schedule attached hereto, the term or condition
      of this Agreement shall prevail.

	 	 	 
		c) 	
      Unless, and to the extent only, specifically provided for
      herein, no party shall be under any obligation to the other parties with
      respect to such party acquiring an interest in, or conducting operations
      on, lands other than the Farmout Lands and the Option Lands.

	 	 	 
		d) 	
      Any party which develops its own interpretation from
      information obtained pursuant to the Agreement shall not be required to
      provide any other party with such interpretation, or any interpretative
      data, or material, and shall be entitled to use such interpretations for
      its sole benefit.

	 	 	 
		e) 	
      This Agreement and the relationship between the parties
      shall be construed and enforced in accordance with the laws in effect in
      the Province of Alberta. Each party attorns to the jurisdiction of the
      Courts of the Province of Alberta, and all Courts of Appeal
    therefrom.

	 	 	 
		f) 	
      The terms of this Agreement express and constitute the
      entire agreement between the parties. No amendments shall be binding
      unless agreed to by all parties in writing. No implied covenant, or
      liability, is created, or shall arise, by reason of this Agreement, or
      anything herein contained.

	 	 	 
		g) 	
      This Agreement supersedes and replaces all prior
      agreements, documents, writings and verbal understandings between the
      parties relating to the Farmout Lands, the Option Lands and the Area of
      Mutual Interest.

	 	 	 
		h) 	
      This Agreement shall be binding upon and enure to the
      benefit of the parties and their respective successors and
  assigns.







i)               
The two year period for seeking a remedial order under section 3(1)(a) of the
Limitations Act, R.S.A. 2000 C.L-12, as amended, for any claim (as defined in
the Act) arising in connection with this Agreement, is extended to: 

1)      For
claims disclosed by audit, two years after the time this Agreement permitted
that audit to be performed; and 

2)      For
all other claims, four years. 

j)               
This Agreement may be executed in counterpart and together all counterparts
shall constitute one agreement. 

If this reflects your understanding of the terms and conditions
agreed upon respecting this Agreement, please initial each page, sign this
letter and return one signed counterpart page to us. 


Yours truly, 
PINE PETROLEUM LIMITED 

/s/ John A. Duckett 
John A. Duckett 
Director 

 

Accepted and agreed to this 20 day of October, 2006 

/s/ David Stadnyk

___________________________________________________
Park Place Energy
Inc. 

 

Accepted and agreed to this 20 day of October, 2006 

 

/s/ John Thornton

___________________________________________________
Patch Energy Inc.


 

 

This is the execution page for a Farmout and Option Agreement
dated the 25th day of September, 2006 between Park Place Energy Inc.,
Patch Energy Inc. and Pine Petroleum Limited. 




SCHEDULE “A" 

This is Schedule "A" attached to and made part of a Farmout and
Option Agreement dated the 25th day of September, 2006 between Park
Place Energy Inc., Patch Energy Inc. and Pine Petroleum Limited. 

	FARMOUT LANDS 	TITLE DOCUMENTS 
	 	 
	Twp 12, Rge 5 W4M: N 1⁄2 Section 22 	Crown P&NG Lease # 0403050008 
	all P&NG below base Medicine Hat 	Lessor
      Royalty:            
      Crown 
	to base Mannville 	 
	 	 
	Farmor’s Interest – an undivided 90% working interest 	 
	  	 
	OPTION LANDS 	TITLE DOCUMENTS 
	 	 
	Twp 12, Rge 5 W4M: SW 1⁄4 & Lsds 11 & 12 Section 26
    	Crown P&NG Lease # 0403030044 
	all Petroleum to base Mannville 	Lessor
      Royalty:             
      Crown 
	 	 
	Farmor’s Interest – an undivided 90% working interest 	 


ENCUMBRANCES on the FARMOUT LANDS and the OPTION
LANDS 

0.5% non-convertible gross overriding royalty payable to
Covenant Resources Ltd. as described in Schedule “A1”. 




SCHEDULE “A1" 

This is Schedule "A1" attached to and made part of a Farmout
and Option Agreement dated the 25th day of September, 2006 between
Park Place Energy Inc., Patch Energy Inc. and Pine Petroleum Limited. 





 





 





 





 





 





 





 





 





 





 





 





 





 





 





 





 





 





 





 





 





 





 





 





 





 





 





 





 





 





 





 





 





 





 




SCHEDULE “B" 

This is Schedule "B" attached to and made part of a Farmout and
Option Agreement dated the 25th day of September, 2006 between Park
Place Energy Inc., Patch Energy Inc. and Pine Petroleum Limited 

INSERTIONS FOR THE 1997 CAPL FARMOUT & ROYALTY
PROCEDURE:


	 	Clause 1.01 (f) 	"Effective Date" 	September 25, 2006 
	 	Clause 1.01 (t) 	"Payout" 	Will not apply 
	 	Clause 1.02 	"Clause 311 - Insurance" 	Alternate A 
	 	Article 4.00 	"Option Well" 	Will apply 
	 	Article 5.00 	"Overriding Royalty" 	Will not apply 
	 	Article 5.01 A (a) 	“Quantification of ... Royalty” 	will not apply 
	 	Article 5.01 A (b) 	“Quantification of ... Royalty” 	will not apply 
	 	Article 5.04 B 	“Allowed Deductions” 	will not apply 
	 	Article 6.00 	"Conversion of Overriding Royalty" 	Will not apply 
	 	Article 6.04 	“Operations at Conversion” 	not applicable 
	 	Article 8.00 	"Area of Mutual Interest" 	Will apply 
	 	Clause 11.02 	"Farmee to Reimburse Farmor" 	Will not apply 







SCHEDULE “C" 

This is Schedule "C" attached to and made part of a Farmout and
Option Agreement dated the 25th day of September, 2006 between Park
Place Energy Inc., Patch Energy Inc. and Pine Petroleum Limited 

INSERTIONS FOR THE 1990 CAPL OPERATING PROCEDURE:


	Clause 311 	“Insurance” 	Alternate “A” 
			Farmee shall carry a minimum of $3,000,000.00
      of insurance pursuant to Clause 311 (e) and shall include Farmor and
      Participant as a named insureds as to their respective interests in this
      Agreement 
	Clause 604 	“Marketing Fee” 	Alternate “A” 
	Clause 903 	“Less ... Parties Participate” 	Alternate “A” 
	Clause 1007 (a)(iv) 	“Penalty ... Production” 	Development Wells - 300% 
	 	  	Exploratory Wells - 500% 
	Clause 1010 (a)(iv) 	“Exception to Clause 1007” 	365 days 
	Clause 2202 	“Addresses For Notices” 	As per page one of the Agreement 
	Clause 2401 	“Right to Assign ... Dispose” 	Alternate “A” 
	Clause 2404 	“Recognition on Assignment” 	           
                         
                         
             deleted and replaced 
	 	  	with the 1993 CAPL Assignment Procedure
  


INSERTIONS FOR THE 1996 PASC ACCOUNTING
PROCEDURE:


  	Clause 105 	(a) 	“Operating Fund” 	10% of approved forecast 
	Clause 110 	  	“Approvals” 	2 or more owners, 70% or more 
	Clause 112 	(a) 	“Expenditure Limitations” 	not in excess of $25,000.00 
	Clause 112 	(c) 	“Expenditure Limitations” 	not in excess of $25,000.00 
	Clause 202 	(b) 	“Employee Benefits” 	22% of cost 
	Clause 213 	(b) 	“Camp and Housing” 	shall be chargeable 
	Clause 216 	  	“Warehouse Handling” 	5% of cost 
	Clause 221 	  	“Allocation Options” 	not applicable 
	Clause 302 	(a) 	“Exploration Project” 	(1) 	5%, $50,000.00 
	 	  	  	(2) 	3%, $100,000.00 
	 	  	  	(3) 	1% 
	 	 (b) 	“Drilling” 	(1) 	3%, $50,000.00 
	 	  	  	(2) 	2%, $100,000.00 
	 	  	  	(3) 	1% 
	 	 (c) 	“Initial
      Construction” 	(1) 	5%, $50,000.00 
	 	  	  	(2) 	3%, $100,000.00 
	 	  	  	(3) 	1% 
	 	 (d) 	“Subsequent
      Construction” 	(1) 	5%, $50,000.00 
	 	  	  	(2) 	3%, $100,000.00 
	 	  	  	(3) 	1% 
	 	 (e) 	“Operations and
      Maintenance” 	(1) 	0% and 
	 	  	  	(2) 	$250.00/producing well/month 
	 	  	  	  	Subclause 302(e)(2) shall not be 
	 	  	  	  	adjusted 
	Clause 406 	  	“Dispositions” 	$25,000.00








SCHEDULE “D" 

This is Schedule "D" attached to and made part of a Farmout and
Option Agreement dated the 25th day of September, 2006 between Park
Place Energy Inc., Patch Energy Inc. and Pine Petroleum Limited