Exhibit 10.3


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

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

     Calibre Energy, Inc. (hereinafter "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  within the  Southern  Fort Worth Basin  ("SFWB")  which  includes  the
following counties in Texas;  Johnson,  Summerville,  Bosque,  Hill and Hood, in
general accordance with the proposal set forth in Exhibit "A" attached hereto.

     1.02 Kerogen may generate  additional  shale gas prospects within the SFWB.
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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                                       II.
                          Generation Funding by Calibre
                          -----------------------------

     2.01  Calibre  will pay Kerogen the sum of $597,600  (plus  approved  third
party expenses) for generation of shale gas prospects  within the SFWB, with the
payments to be made as follows:  $300,000 on September  1, 2005;  $200,000 on or
before  October  30,  2005 and the  balance  to be paid upon  completion  of the
generation of a Prospect as per the attached Exhibit "A".

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

     3.01 All Prospects  generated,  identified  or acquired by Kerogen,  in the
SFWB,  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  SFWB  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  "A",  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, proportionately reduced to the Calibre 30% working interest.

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

     6.01 Once a Prospect is accepted,  the parties will enter into an 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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