exv10w11






Exhibit 10.11




			
	 	 	 
	June 5th, 2009
	 	CONFIDENTIAL MEMO






Mr. Kevin Audrain

Drain Oil Company — C/O Audrain Heating & Cooling

502 W. Broadway St.

Fritch, Texas





	Re: 	 	Revised Asset Purchase Offer — Letter of Intent w/ Buyback Clause





Dear Mr. Audrain:



NYTEX Petroleum, Inc. (NYTEX) is pleased to offer to purchase 75% working interest in the assets of
Drain Oil Company (Drain) consisting of the Burnett R 47, Burnett U 3 (Hutchinson Co., TX) &
McLaughlin leases (Moore Co., TX). The terms and conditions of the offer are as follows:




	 	1.	 	The list of Drain assets to be purchased are 75% working interest in the
leasehold acreage in total & existing production from all the wellbores
(producing & non-producing) in:






	 	•	 	McLaughlin Lease — RRC ID 03771
	 
	 	•	 	Burnett R 47 Lease — RRC ID 00716
	 
	 	•	 	Burnett U 3 Lease — RRC ID 32017






	 	2.	 	NYTEX purchases 75% ownership in all Lease & Well equipment, tank
batteries, SWD pumps & equipment — any and all lease and well equipment in
these three leases.
	 
	 	3.	 	At closing, NYTEX wants to be the ‘Operator of Record’ in actively managing
the production and project development plans. Drain Oil will assign operations
to NYTEX by executing a P-4 change of operatorship form. Drain Oil
becomes a 25% non-operating partner with election rights in the development
plan — as per the mutually agreed upon details of a Joint Operating Agreement
(JOA).
	 
	 	4.	 	NYTEX and Drain Oil will partner in a joint production enhancement &
development program. The plan is for small investment in basic downhole
and surface equipment enhancements to increase daily production. The
overall development plan is to consist of a plan of up to 14 refracs and 8 new
drills, up to RRC lease density, and development will be based on overall
oilwell response to refracs and new completions.






	 	•	 	A two-well Refrac program is the initial development plan to gauge
oilwell response and optimize frac treatments — with no more than one refrac per
month for an 8-well initial refrac package.






	 	5.	 	At closing NYTEX will pay a cash payment Drain Oil of $700,000.




 









 












	 	6.	 	Upon signing this Letter of Intent — NYTEX will pay a $35,000 cash payment
as earnest money to Drain Oil which counts toward the $700,000 total
purchase price. If for some reason during the due diligence process an
incurable title defect is discovered — Drain Oil will return earnest money to
NYTEX.
	 
	 	7.	 	BUYBACK CLAUSE — For a 15 day period after initial production of the first
 two program wells (Refracs), Drain oil has the option to buyback their
working interest from NYTEX at the $700,000 price (plus NYTEX’s cash
outlays for the refracs themselves) if the following criteria are not met:






	 	•	 	At least 8 BOE per day, per well — determined either by portable well
tester or by average daily production over the 15 day period (after
flowback — first oil cut).
	 
	 	•	 	If 8 BOE per day criteria are not met by the first two wells — Drain has
the option of allowing additional program refrac wells to meet the
8 BOE criteria target.
	 
	 	•	 	If production is > 0 BOE per day & less than the 8 BOE per day criteria
and Drain decides to exercise his buyback clause — Drain can use the
revenue from the incremental production to pay back NYTEX’s frac
cost outlays.
	 
	 	•	 	After the 15 day Buyback Clause period — property sale at the terms
outlined herein is consummated and are considered final.






	 	8.	 	Upon mutual agreement and execution by both parties of this Asset Purchase
Offer, NYTEX will begin a due diligence period during which Drain Oil will
make available its books, records, title opinions & leases available to NYTEX
at mutually agreeable times and locations.
	 
	 	9.	 	During the due diligence period, a mutually agreeable Purchase and Sale
Agreement will be prepared for execution on the closing date of July 31st
2009.





 









 





NYTEX plans to work out a mutually agreeable plan where Drain Oil is contracted for certain
administrative services such as invoicing, production reporting, RRC filing reporting and
permitting. Contract period will be at least 120 days during the initial ‘transition’ period, and
can be extended to a longer term as agreed upon by both parties



If the terms and conditions of this Asset Purchase Offer are acceptable to you, please so indicate
by signing in the space provided below.



	 	 	 	 	 
	Respectfully submitted,

 	 	 
	/s/ Jason Lacewell
 	 	 
	NYTEX Petroleum, Inc.        	6/8/09 	 
	Jason Lacewell

Vice-President of E&P 	 	 
	 


	 	 	 	 	 
	 	 	 
	AGREED TO AND ACCEPTED BY:  	   /s/ Kevin Audrain
 	 	 
	 	Kevin Audrain, Owner, Drain Oil Company 	 	 



Date: June 8, 2009