Exhibit 10.3

                                 March 24, 2003

Mr. Jubal S. Terry President/CEO Skyline Resources, Inc.
3000 Youngfield #338
Lakewood, Colorado 80215
Phone:   303-238-8712
Fax:     303-238-3190
email:   SKYLINERes@msn.com

Participation Agreement
Fly Creek Prospect (Coal Bank Draw & Slater Dome)
Moffat County, Colorado and Carbon County, Wyoming

Gentlemen:

     Skyline  Resources,   Inc.  (hereinafter  referred  to  as  "Skyline")  has
previously acquired leasehold interests in and to certain oil and gas leases, as
well  as  some  mineral  fee  interest,  covering  approximately  16,000  acres,
(hereinafter  referred to as the  "Prospect  Area")  that are more  particularly
described in those leases (the "Leases")  listed in Exhibit "A" attached  hereto
and made a part hereof.  Such interest shall be from the surface of the Earth to
the base of the Mesa Verde Formation.  Cedar Ridge, L.L.C. (hereinafter referred
to as "Cedar  Ridge"),  has agreed to acquire a Thirty-Six  and  666667/10000000
percent  (36.666667%)  working  interest in the Prospect Area in accordance with
the terms and conditions of this agreement (the "Agreement"), the attachments to
this Agreement, and the Purchase and Sale Agreement dated February 17, 2003.

     This Agreement,  together with all exhibits attached hereto and made a part
hereof shall confirm and set forth the  understanding  of, and agreement to, the
terms  and  conditions  whereby  Cedar  Ridge  shall  acquire  the  right  to an
assignment of a Thirty-Six and 666667/10000000  percent  (36.666667%)  undivided
working interest in and to interests in the form of leasehold interests.

                                       I.
              CONSIDERATION, ASSIGNMENT AND AREA OF MUTUAL INTEREST
              -----------------------------------------------------

1.1   At the time that Cedar Ridge and Skyline entered into the Letter of Intent
dated January 14, 2003,  Cedar Ridge  tendered to Skyline  Twenty-Five  Thousand
Dollars  ($25,000.00)  as an up front payment of a portion of the total purchase
price.  Cedar Ridge will,  upon execution of this  Agreement,  pay Skyline Three
Hundred Seventy-Five Thousand Dollars ($375,000.00), (hereinafter referred to as
the  "Acquisition  Price  Balance")  as  payment  in full for a  Thirty-Six  and
666667/100000  percent  (36.666667%)  of 8/8ths  working  interest in the Leases
within  the  Prospect  Area as  shown  on  Exhibit  "B".  Skyline  shall  retain
30.000000% of 8/8ths in the Prospect. As additional  consideration,  Cedar Ridge
shall pay on behalf of Skyline its retained  30.000000%  share of costs  through
the first $500,000.00 of Skyline's  proportionate  share of all costs. Thus, the
total  amount  of  consideration  for paid by  Cedar  Ridge  for its  36.666667%
interest in the Prospect is Nine Hundred Thousand Dollars  ($900,000.00)  (i.e.,
$25,000.00 + $375,000.00 + $500,000.00). In the event that Cedar Ridge, at Cedar
Ridge's sole discretion, does not invest in the Prospect Area its own 36.666667%
share of future funding  requirements plus funding on behalf of Skyline equal to
the  entire  $500,000  "carry"  so that  Skyline  has not  received  the  entire
$900,000.00 consideration to be paid for Cedar Ridge's interest in the Prospect,
then  Cedar  Ridge will earn a  proportionate  share of the  36.666667%  working
interest, which shall be in the proportion that the sum of (a) the $400,000 paid
on or before the date of this Agreement, plus (b) the actual dollars invested by
Cedar Ridge on behalf of Skyline  pursuant to the  "carry",  bear to the maximum
investment of $900,000.00 (e.g.,  $400,000/$900,000 = 44.444444% of 36.666667% =
Cedar Ridge "earned" working interest of 16.30%).

1.2    Upon receipt of the  Acquisition Price Balance, Skyline shall immediately
make  assignment  to Cedar Ridge of an undivided  thirty-six  and  66667/1000000
percent  (36.666667%)  of 8/8ths working  interest in and to the Leases covering
the  Prospect  Area  acreage  as  identified  on  Exhibit  "A"  under  a form of
assignment and bill of sale mutually agreeable to both parties,  with all leases
being delivered at an eighty percent (80%) net revenue interest  proportionately
reduced to Cedar Ridge's  working  interest.  It is understood that eight (8) of
the leases are  burdened  by a royalty in excess of twenty  percent  (20%),  and
those  particular  leases are  accepted  by Cedar  Ridge at a lower net  revenue
interest.  Those  particular  leases are shown on Exhibit "AA". It is understood
that the Leases  assigned to Cedar Ridge do not have any  burdens  imposed  upon
them by Skyline or any of Skyline's affiliates  (affiliate being any entity that
has a 5% or more  interest  in  Skyline  or in  which  Skyline  has a 5% or more
interest.  No party to this  Agreement  is to retain an  override  or impose any
additional burdens on any new acreage acquired.  Any and all existing Overriding
Royalty  Interests  are set forth in those  contracts set forth on Exhibit "A2".
Included with the Acquisition Price Balance is a 36.666667%  working interest in
the nine (9) existing wells, and associated  production and disposal  equipment,
as set forth on Exhibit  "A1",  subject to  adjustment  under Article 1.1 if the
full $500,000 "carry" is not paid by Cedar Ridge on behalf of Skyline.

Page 1 of 4

<PAGE>

1.3 The black  outlined area on the plat attached  hereto and made a part hereof
as  Exhibit  "B"  shall  be  hereinafter  referred  to as the  "Area  of  Mutual
Interest," or "AMI" for the Fly Creek Prospect. Cedar Ridge shall be entitled to
its proportionate  share of any additional  acreage acquired within the Prospect
Area as  provided in this  Article  1.3. It is  understood  by the parties  that
Skyline  is  unable to  deliver  all of the  acreage  indicated  in its  initial
negotiations with Cedar Ridge. As a result, Skyline has agreed to acquire at its
sole cost and expense the leasehold described on Exhibit "AB", and to deliver to
Cedar Ridge its 36.666667%  proportionate share of such newly-acquired leasehold
working  interest in these  leases  within  thirty (30) days of closing.  In the
event that Skyline  fails to acquire the leases set forth on Exhibit "AB" within
the time  period  provided,  then Cedar  Ridge  shall have the option to acquire
these  interests  and be  credited  with all of the  lease  costs  and  expenses
(including,  but not limited to,  brokerage  costs,  recording  fees,  and lease
bonus)  incurred  to  acquire  these  interests  against  the  $500,000  "carry"
described herein. All other leasehold  acquisitions  within said AMI in addition
of the leasehold  interests described in Exhibit "AB" that are to be acquired by
Skyline at its sole cost and  expense,  shall be governed by the  provisions  of
Article XV.10. of the Joint Operating Agreement attached as Exhibit "C".

1.4 The  assignment of interests in the Leases will be subject to the provisions
contained  in the  respective  leases  only and the  Joint  Operating  Agreement
attached  hereto as Exhibit "C";  provided that the parties agree that until the
$500,000  "carry" has been satisfied,  Skyline shall be deemed to have given its
consent to a proposed operation solely by notifying Cedar Ridge it consents, and
Skyline  shall  have no  obligation  to comply  with  Article  XV.5 of the Joint
Operating Agreement.

1.5  Cedar  Ridge   understands  that  Skyline  is  currently   negotiating  the
acquisition of additional  leasehold interest in the Prospect Area that includes
all rights in approximately  8,900 acres adjacent to the existing Leases and the
deeper  Niobrara  rights on the  existing  Leases  separate  and apart  from the
acreage  described  in Exhibit  "AB".  The parties  agree that Cedar Ridge shall
supervise the additional leasehold  acquisitions  (outside of those described in
Article  1.3 as being  acquired  at the sole  expense  of  Skyline)  within  the
Prospect Area, and that such  acquisitions  shall be on a "heads-up"  basis with
each party bearing its  proportionate  share of the acquisition  costs,  and all
interests acquired will be delivered as received (i.e., no additional overriding
royalty interest shall be added).

                                       II.
                 TERMS FOR OPERATIONS, INVESTMENT, AND PIPELINE
                 ----------------------------------------------

2.1  Skyline  and Cedar  Ridge agree that all  drilling  and  operations  on the
Prospect Area will be governed by the terms and conditions of the A.A.P.L.  Form
610-1982 Model Form  Operating  Agreement,  as modified,  and COPAS 1984 Onshore
Accounting  Procedure Joint Operations  (said A.A.P.L.  Form 610-1982 Model Form
Operating   Agreement,   and  COPAS  1984  Onshore  Accounting  Procedure  Joint
Operations  is  attached  hereto  and will be  collectively  referred  to as the
"Operating  Agreement") which is attached hereto as Exhibit "C", and names Cedar
Ridge, L.L.C. as Operator. Skyline is currently subject to one or more operating
agreement(s),  and  Skyline by its  execution  of this  Participation  Agreement
hereby agrees to have any and all other affected  parties elect to terminate the
existing  operating  agreement(s)  and acknowledge  that they are subject to the
Operating Agreement's terms and conditions as of the Closing Date. Additionally,
Skyline  hereby  confirms  that  the  termination  of  the  existing   operating
agreement(s) and execution of the Operating Agreement shall not adversely affect
Cedar Ridge in any manner.

2.2 In the event that Cedar Ridge, in its sole  discretion,  determines that the
development of the Prospect Area is not progressing to its  satisfaction  before
Cedar Ridge completes its entire investment in the Prospect Area (i.e. inclusive
of the time in which  Cedar  Ridge  has  "carried"  Skyline  for its  30.000000%
working  interest  through the expenditure on behalf of Skyline of $500,000.00),
then Cedar Ridge has the option to discontinue payments under the "carry" as set
forth above.  In this event,  Cedar Ridge shall earn a  proportionately  reduced
working  interest  in the  Prospect  Area,  based  upon  its  actual  amount  of
investment  as set forth in Article  1.1 above.  In such an event,  Cedar  Ridge
shall  promptly  re-assign to Skyline the working  interest in the Prospect Area
not earned by Cedar Ridge pursuant to Article 1.1, which  assignment shall be in
the same form,  including  warranties,  as the assignment  from Skyline to Cedar
Ridge,  and shall be free of any additional  burdens over those contained in the
assignment from Skyline to Cedar Ridge.

2.3 Skyline has secured the investment capital to build a sixteen-mile  pipeline
from the Prospect Area to Baggs,  WY.  Skyline  agrees that Cedar Ridge shall be
entitled to participate in and own its proportionate  share, being 36.666667% of
8/8ths of the  pipeline  and thereby  have  control of its ability to market its
working interest share of gas and other products.

Page 2 of 4

<PAGE>




                                      III.
                                     NOTICES


3.1   Any notice or information required to be furnished  hereunder  shall be in
writing or by fax and given to the following parties:

CEDAR RIDGE:                                SKYLINE:
Cedar Ridge, L.L.C.                         Skyline Resources, Inc.
484 Turner Drive                            3000 Youngfield
Building B                                  Suite 338
PO Box 3524                                 Lakewood, CO  80215
Durango, CO  81302-3524                     Attention: Mr. Jubal S. Terry
Attention: Mr. Terry Logan                  Office:    303-238-8712
Office:  970-382-5990                       FAX:       303-238-3190
FAX:     970-382-9820

3.2 Skyline and Cedar  Ridge  shall have the right to change  their  address for
notices by giving written notice of such change to the other party.

                                       IV.
                                  GENERAL TERMS
                                  -------------

4.1 This Agreement and all operations  conducted on the AMI and the Leases shall
be subject to all valid and applicable  laws,  orders,  rules and regulations of
any governmental body having jurisdiction over such operations.  The obligations
of  the  parties  hereunder  are  intended  to be  separate  and  not  joint  or
collective,  and nothing in this  Agreement or any act by Skyline or Cedar Ridge
shall ever be construed or implied as creating a mining partnership,  commercial
partnership,  or other  partnership  relation;  it being  the  intention  of the
parties  hereto not to create,  and this  Agreement  shall never be construed to
create, a mining or other partnership or joint venture.

4.2 Each party's  obligations  as set out in this  Agreement are several and not
joint and each party shall be  individually  responsible for its own obligations
as set out in this Agreement and in the Operating Agreement.

4.3 This Agreement shall inure to the benefit of and be binding upon Skyline and
Cedar  Ridge  and  their  successors  and  assigns;  and  this  Agreement  shall
constitute  a covenant  running  with the  Leases,  and any  additional  mineral
interests acquired under the terms of the AMI.

4.4 This Agreement and the interest in the Leases and/or Fee Interests  assigned
to Cedar Ridge  pursuant to this  Agreement may be assigned or  transferred,  in
whole or in part,  without  the prior  written  consent  of  Skyline;  provided,
however,  that in such event Cedar Ridge shall remain liable for the performance
of its obligations under this Agreement,  the Exhibits attached hereto,  and all
other  documents  executed  at  closing,  and  further  provided  that  any such
assignment  shall  nevertheless  be void unless it is made expressly  subject to
this Agreement.  Likewise, this Agreement and the interest in the Leases and Fee
subject to this agreement may be assigned or transferred by Skyline, in whole or
in part,  without the prior written consent of Cedar Ridge;  provided,  however,
that in such  event  Skyline  shall  remain  liable for the  performance  of its
obligations under this Agreement,  the Exhibits  attached hereto,  and all other
documents  executed at closing,  and further  provided that any such  assignment
shall  nevertheless  be  void  unless  it is  made  expressly  subject  to  this
Agreement.

4.5 THIS  AGREEMENT,  THE JOINT  OPERATING  AGREEMENT,  AND ANY OTHER  DOCUMENTS
EXECUTED AND DELIVERED  PURSUANT HERETO AND THE LEGAL  RELATIONSHIP  BETWEEN THE
PARTIES WITH RESPECT TO THIS  AGREEMENT,  SHALL BE GOVERNED BY AND  CONSTRUED IN
ACCORDANCE  WITH  THE LAWS OF THE  STATE OF  COLORADO  WITHOUT  REGARD  TO RULES
GOVERNING CONFLICTS OF LAW.

4.6 Cedar Ridge  represents  and  acknowledges  that prior to entering into this
Agreement,  Cedar Ridge was  advised by and has relied  solely on its own legal,
tax and other professional counsel concerning this Agreement, the Leases and the
value thereof.  Cedar Ridge represents and acknowledges that it is knowledgeable
in the area of oil and gas, including coal seam gas exploration and development,
and is able to bear the economic risk of any oil and gas investment  Cedar Ridge
is  obligated  to or might  choose to make in the Leases and that Cedar Ridge is
capable of evaluating the merits and risks of  investments in the Leases.  Cedar
Ridge  represents and  acknowledges  that it is acquiring the Leases for its own
account and not for  distribution or resale in any manner that would violate any
state or federal securities law, rule, regulation or order.


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<PAGE>

4.7 This Agreement, the Purchase and Sale Agreement dated February 17, 2003, and
the  documents  dated  March 7,  2003 and  signed  contemporaneously  with  this
Agreement,  contain the entire  understanding of the parties hereto with respect
to  the  subject  matter  hereof  and  shall  supercede  all  prior  agreements,
understandings,  negotiations and discussions  among the parties with respect to
such subject matter. No representations,  inducements,  promises, or agreements,
oral or otherwise,  which are not embodied in this  Agreement,  the Purchase and
Sale Agreement  dated February 17, 2003, and the other March 7, 2003  documents,
shall be of any force or effect. This Agreement may be executed in any number of
counterparts,  each of which will be  considered  an original for all  purposes.
Skyline and Cedar Ridge contributed to the preparation of this Agreement and the
terms and  conditions  contained  herein  shall not be construed in a light more
favorable to one party than the other.

4.8 If any one or more of the provisions of this  Agreement  shall be determined
to be invalid,  illegal or unenforceable in any respect, the validity,  legality
and enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired,  and the offending provision or provisions shall be
reformed, and the remaining provisions interpreted, so as to give effect, to the
maximum extent permissible, to the agreement of the parties as set out herein.

4.9 Neither Skyline nor Cedar Ridge shall make, nor permit any of its affiliates
or  representatives  to  make,  any news  release  or  other  public  disclosure
pertaining to this Agreement or the transactions contemplated hereby without the
prior  written  approval of the other  parties as to timing,  form and  content,
which  approval  shall  not  be  unreasonably   withheld.   Notwithstanding  the
foregoing,  either party may make such news  release or other public  disclosure
which,  in the opinion of such party's legal counsel,  is required to be made by
such party pursuant to the  applicable  securities  laws or securities  exchange
rules.

     If the foregoing  terms and conditions  confirm your  understanding  of our
Agreement,  please  execute in the space  provided  below for your signature and
return one (1) fully  executed  original of this Agreement to our offices at the
above address.

Yours very truly,

CEDAR RIDGE L.L.C.



/s/ Terry L. Logan
----------------------------------------
Terry L. Logan
Manager

Attachments
Agreed to and accepted this the 24th day of March,  2003, but effective February
28, 2003 at 11:59 p.m.

SKYLINE RESOURCES, INC

/s/ Jubal S. Terry
-----------------------------------------
By: Jubal S. Terry, President/CEO