Exhibit 10.5


                             PARTICIPATION AGREEMENT
                             -----------------------

     This  Participation  Agreement is made and  effective as of the 20th day of
September, 2005 between the following parties:

     Calibre Energy, Inc.  (hereafter "Calibre")
     1825 I Street NW
     Washington, DC 20006

     KEROGEN Energy, Inc.  (hereafter "Kerogen")
     Ashford Crossing II
     1880 Dairy Ashford South, Suite 545
     Houston, Texas 77077

     WHEREAS, Kerogen is in the business of generating oil and gas prospects;

     WHEREAS,  Calibre is willing to fund the  generation of shale gas prospects
by  Kerogen  and  exploit  such  prospects  with  Kerogen on the terms set forth
herein.

     NOW  THEREFORE,  the  Parties,  intending  to be  legally  bound,  agree as
follows:

                                       I.
                             Generation of Prospects
                             -----------------------

     1.01 Kerogen will  generate or identify in the market an initial  shale gas
Prospect in that portion of the Williston  Basin,  as delineated on the attached
plat Exhibit "A" (Williston  Basin) in general  accordance with the proposal set
forth in Exhibit "B" attached hereto.

     1.02  Kerogen  may  generate  additional  shale gas  Prospects  within  the
Williston Basin. Any such additional "Prospects" generated by Kerogen during the
term hereof shall be offered to Calibre on the terms and conditions set forth in
this Agreement.

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<PAGE>


                                       II.
                          Generation Funding by Calibre
                          -----------------------------

     2.01  Calibre  will pay Kerogen the sum of $638,600  (plus  approved  third
party  expenses)  for  generation  of shale gas  prospects  within the Williston
Basin,  with the  payments to be made as follows:  $350,000 on August 15,  2005;
$200,000  on or  before  October  15,  2005  and the  balance  to be  paid  upon
completion of the generation of a Prospect as per the attached Exhibit "B".

                                      III.
                                Calibre Election
                                ----------------

     3.01 All Prospects  generated,  identified  or acquired by Kerogen,  in the
Williston Basin,  during the Term of this Agreement shall be offered to Calibre.
Calibre will have the  opportunity to participate in the Prospect for 30% of the
interest available to Kerogen at the time of the Prospect Meeting.  In the event
either party, or an affiliate of either party, makes an acquisition in which all
or a portion the assets are located within the boundaries of the Williston Basin
as  depicted  on Exhibit  "A" that  acquisition  and all lands  information  and
production  will be  excluded  from the  terms of this  Agreement,  if the total
consideration  to make the  acquisition  is  excess of  twenty  million  dollars
($20,000,000).

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     3.02 Once a  Prospect  is  generated  by Kerogen as per  Exhibit  "B",  the
Prospect  (with  studies)  will be presented  in writing to Calibre,  and within
thirty (30) days there from,  the parties  will convene a meeting to discuss the
Prospect  and a budget  for the  Prospect  ("Prospect  Meeting").  All  material
presented by Kerogen at the Prospect  Meeting will be  considered  "Intellectual
Property". It is also anticipated that during the Term of this Agreement Kerogen
will identify  projects being developed by third parties,  or propose to acquire
interests in projects which are already in the market.  If Kerogen evaluates any
of these  opportunities  that it considers  prospective,  it may call a Prospect
Meeting  (Note:  if the  opportunity is time sensitive to the degree that it may
not be available  later,  Kerogen may request a Prospect Meeting to occur within
48 hours) to present the opportunity to Calibre. For purposes of this Agreement,
such opportunity  will also be referred to and be considered a Prospect.  Within
fifteen  (15) days from the Prospect  Meeting,  Calibre must elect in writing to
participate in the Prospect on the terms contained in this Agreement, or forfeit
all  rights to such  Prospect  to  Kerogen.  Time is of the  essence  in Calibre
exercising  its rights under this P. 3.02;  failure to respond in writing within
the time provided shall be deemed an election not to  participate.  In the event
Calibre accepts the Prospect,  it will be committing to 30% of Kerogen's actual,
total  costs to acquire and develop the  Prospect.  All  interpretive  materials
created  by  Kerogen  and  presented  at  the  Prospect  Meeting  ("Intellectual
Property"),  shall  remain the sole  property of Kerogen  until the Initial Test
Well has been drilled and evaluated in any given  Prospect.  Thereafter  Calibre
will have earned a non exclusive  license in the Intellectual  Property for each
Prospect in which it participates. Calibre shall treat all Intellectual Property
provided to it by Kerogen as  confidential.  The parties  will execute a binding
confidentiality  agreement at the Prospect Meeting.  Should Calibre elect not to
participate  in any  Prospect  presented  by  Kerogen,  it  agrees  to keep  all
information provided at the Prospect Meeting confidential and further agrees not
to acquire any leases or rights to property  within the Contract Area designated
by Kerogen  for the  Prospect  for 2 years from the date the  Prospect  Meeting.
Should Calibre or any affiliate acquire such interests, it agrees to assign such
interests to Kerogen upon written request, at no cost.

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                                       IV.
                          Leasing / Acquisition Program
                          -----------------------------

     4.01 Once a Prospect is  generated,  approved and accepted by Calibre,  the
parties shall immediately define in writing an Area of Mutual Interest (AMI) and
Contract  Area  around  the  geographic  boundaries  of  the  Prospect  for  the
acquisition of oil and gas leases.  Any party  acquiring an interest  within the
AMI during  the term of this  agreement  will  offer the other  party that other
party's  percentage  interest  and if that party  accepts by agreeing to pay its
percentage  interest  of  actual  costs  then the  ownership  of any  leases  or
properties acquired by either party within the Contract Area will be owned:

     Calibre 30% (Subject to Kerogen 10% Carried Interest)
     Kerogen 70%

Thereafter, the parties shall initiate a leasing program to lease (or farm-in) a
block of prospective acreage within the Contract Area. The parties shall
endeavor to lease between 10,000 and 20,000 acres (or such additional acreage as
may be reasonable). In the event the Prospect is to be acquired by an
acquisition or earned under a farmout or participation arrangement, then Kerogen
will take such actions as are necessary to effect such transaction. Kerogen will
take title in its name, to either the leases or contractual rights as is
necessary to implement the plan set forth in the Prospect Meeting. At such time
as Calibre has participated in the Operations necessary to test the Prospect by
drilling as discussed in the Operations section below, Kerogen will prepare and
deliver recordable assignments to effectively convey 90% of 30% of its interest
in the drill site spacing unit for such well. Kerogen will reserve all rights
not conveyed in such assignments. Kerogen will either participate for, or secure
additional participants for 70% of its interest. In the event Kerogen is not
able to place all or a portion of the remaining 70%, it will offer that interest
to Calibre on the same terms as the 30% (adjusted proportionately to the
interest so accepted by Calibre), if Calibre accepts the additional interest the
parties will proceed to develop the Prospect with the necessary adjustments
being made to this Agreement. In the event the entire interest cannot be placed,
either with Calibre, Kerogen or third parties the Prospect will be treated as
not accepted and the Parties will not pursue it. The 10% of 30% reserved to
Kerogen is a carried working interest that will bear none of the drilling nor
completion costs in any of the wells drilled on any of the Prospects.

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     4.02 Calibre will fund 30% of all of Kerogen's actual costs for leasing and
acquisition activities related to the Prospect. Kerogen may provide Calibre with
a cash call representing Kerogen's estimate of costs and expenses to be incurred
during the next succeeding calendar month.  Calibre agrees to pay such cash call
invoice  within 10 business days of receipt.  In the event Calibre shall fail to
pay either an actual invoice or a cash call as provided  hereunder,  Kerogen may
tender a default  notice in  writing;  if within  thirty days of said notice the
payment  is not  received,  Kerogen  may elect to hold  Calibre  non-consent  as
provided  for under  the  Operating  Agreement,  or  Kerogen  may deem that such
default is an election to reject the Prospect, if drilling has not yet commenced
thereon.  Calibre  will  have  rights  to audit  the  invoices  pursuant  to the
Operating Agreement, should it dispute any invoice.

     4.03 Kerogen will be  responsible  for overseeing and directing the leasing
or acquisition  program.  Calibre will be consulted on both the budget and terms
being accepted for the leases and contracts  being secured in the Contract Area.
Should either party want to acquire a lease,  the terms of which the other party
does not want to  accept,  it shall  have the right to do so.  If such  lease is
acquired  for those terms,  then that lease shall be excluded  from the contract
area of the Operating  Agreement described in Article VI. Calibre will have full
rights to access the lease and title data within any  Prospect to assure  itself
that title and  environmental  conditions of the  properties  being acquired are
acceptable  to  Calibre.  Calibre is hereby  waiving any claims of action it may
have  against  Kerogen  as Kerogen  performs  its  duties  and  carries  out its
obligations  hereunder,  unless Kerogen is grossly negligent or performs acts of
willful  misconduct.  Any assignment(s)  delivered pursuant to the terms of this
Agreement will be without warranty of title except by through and under Kerogen.

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                                       V.
                                Kerogen Election
                                ----------------

     5.01  Kerogen  shall have the right and option at any time to exchange  the
10% carried interest reserved above to a proportionately  reserved 3% overriding
royalty interest, proportionately reduced to the Calibre 30% working interest.

                                       VI.
                                   Operations
                                   ----------

     6.01 Once a  Prospect  is  accepted,  the  parties  will enter into a Joint
Operating  Agreement as described in P. 6.02. The Contract Area of which will be
defined  in the  Prospect  Meeting.  Kerogen  will be  carried  for 10%  working
interest  (proportionately  reduced to Calibre's  interest) through the tanks in
all wells  drilled  within  the  Contract  Areas,  during  the term of the Joint
Operating  Agreement for that Contract  Area.  Kerogen or a mutually  acceptable
third party will be  designated  as the Operator  for the Contract  Area for any
Prospects.
     6.02 All operations  shall be conducted under the 1982 A.A.P.L.  Model Form
Operating  Agreement  (Operating  Agreement).  Each  Contract  Area shall have a
separate  Operating  Agreement  signed by the  parties.  In lieu of  non-consent
penalties  in the  Operating  Agreement,  should  Calibre  not  timely  elect to
participate in a subsequent  well, it shall be deemed to have  relinquished  its
interest in the well and all leasehold  acreage not previously  assigned  within
the Contract Area to Kerogen.

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<PAGE>


                                      VII.
                                      Term
                                      ----

     7.01 This  Agreement  shall  continue for a Term expiring  September  20th,
2007. (The term of the Operating Agreement(s)  referenced in P. 6.02 shall be as
set forth in each Operating Agreement).

                                      VIII.
                                 No Partnership
                                 --------------

     8.01 This  Agreement  does not create,  and is not  intended  to create,  a
partnership  or joint  venture  between the  parties,  or a fiduciary or special
relationship between the parties.

                                       IX.
                            Limitation of Assignment
                            ------------------------

     Without  the prior  written  consent  of the other  Party,  the  rights and
privileges of this  Agreement,  or any Prospect,  or rights to any Contract Area
generated  pursuant to the terms hereof,  may not be shown or sold by any party.
Such consent may not be  unreasonably  withheld.  This  Limitation of Assignment
provision will terminate upon the completion of the first well for each Contract
Area as to that Contract Area. Any Assignment of any interest  acquired pursuant
to the terms of this Participation  Agreement will be made specifically  subject
to the terms and provisions of this Participation Agreement.

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<PAGE>


                                       X.
                         Entire Agreement and Amendments
                         -------------------------------

         9.01 This Agreement constitutes the entire understanding between the
parties with respect to the subject matter hereof, and supersedes all other
agreements written or oral between the parties with respect to such subject
matter. This Agreement may not be changed, modified or amended except by a
written agreement between the Parties, which specifies that it amends this
Agreement.

                                       XI.
                                   Arbitration
                                   -----------

     10.01 Any  disputes  arising  out of or related to this  Agreement  must be
arbitrated in accordance with the rules for commercial  arbitration disputes for
the American Arbitration Association.

                                      XII.
                                     Notice
                                     ------

     11.01 All  notices  authorized  or  required  to be given  pursuant to this
Agreement  shall be in writing  and may be  delivered  by hand,  mailed by first
class airmail, sent by  telecommunication,  or overnight delivery to the address
set forth in this Agreement.

     The notice shall be deemed to have been given and received:

     a.   if  delivered,  on  the  day on  which  it  was  delivered,  excluding
          Saturdays, Sundays and statutory holidays; or

     b.   if mailed, on the days received, or

     c.   if sent by telecommunication,  on the first business day following the
          day it was dispatched.

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     A party may change its  address  for the  receipt of notices at any time by
giving written notice thereof to the other party.


                                      XII.
                             Counterpart Execution
                             ---------------------

     This Agreement may be executed in multiple counterparts.


CALIBRE Energy, Inc.
By:    /s/ Edward L. Moses
   ---------------------------
     Edward L. Moses,
     Sr. VP of Operations


KEROGEN RESOURCES, Inc.
By:    /s/ Thomas Harris
   ---------------------------
     Thomas Harris
     President

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