Exhibit 10.1

[MONTCREST ENERGY, INC. LOGO]
320 Hemphill Street
Fort Worth, TX 76104
817-916-4983

June 8, 2012

Attn: Gregory Rotelli

                           JOINT DEVELOPMENT AGREEMENT

     This binding Joint  Development  Agreement  (the  "Agreement")  is made and
Effective  this 8th day of June,  2012,  (the  "Effective  Date") by and between
MONTCREST ENERGY PROPERTIES,  INC., MONTCREST ENERGY, INC., a Texas corporation,
BLACK  STRATA,  LLC,  on  the  one  hand  (hereinafter  jointly  referred  to as
"MontCrest")  and  INDEPENDENCE   ENERGY   CORPORATION,   (collectively  as  the
"Parties")

                                 I. DEFINITIONS

     As used in this  Agreement,  the following terms used herein are defined as
follows:

     1.0  "Joint  Operating  Agreement"  or "JOA"  shall  mean and refer to that
certain Joint Operating Agreement attached hereto as Exhibit A, and incorporated
herein as though fully set forth at length,  including any JOA Exhibits attached
thereto.

     1.1 "Lease or Lease(s)s" shall mean and refer to those certain Lease(s) set
forth in "Exhibit B, JOA," attached hereto to the JOA and incorporated herein as
though fully set forth at length, including any JOA Exhibits attached hereto,

     1.2 "Well or Wells" shall mean and refer to any oil, gas, and/or  injection
Well drilled,  re-entered,  or  recompleted  on any Lease(s)  within the Area of
Mutual Interest ("AMI") and includes  without  limitation any and all geological
formations  on, in or under the foregoing  Leases,  any "Well" or "Well(s)," and
any "Personal Property and Incidental  Rights," in, on or under the Leases as of
the Effective Date.

     1.3 "Areas of Mutual Interest"  ("AMI") shall mean and refer to mineral the
Coleman  County South  Lease(s)  consisting  of 2,420.92  +/- acres,  located in
Coleman County,  Texas. SEE, "Exhibit A," Legal Description of Properties",  and
"Exhibit B JOA,"  attached  hereto and  incorporated  herein as though fully set
forth at length.

     1.4 "Personal Property and Incidental Rights" shall mean all rights, titles
and interests of MONTCREST in and to or derived from the  following,  insofar as
the same are  attributable  to,  appurtenant to,  incidental to, or used for the
operation of any Wells with the AMI including:

     (a) all easements,  rights-of-way,  permits, licenses,  servitudes or other
interests;

     (b) all equipment,  personal property,  inventory,  spare parts,  fixtures,
pipelines,  tank batteries,  appurtenances,  and improvements  situated upon the
Lease(s)  and  used or held  for  use in  connection  with  the  development  or

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operation  of any Wells  located on the Lease(s) or the  production,  treatment,
storage,  compression,  processing  or  transportation  of oil and gas from such
Wells;

     (c)  all  contracts,  agreements,  and  title  instruments  to  the  extent
attributable  to and affecting  the AMI, any Lease(s) and any Personal  Property
and Incidental Rights in existence pertaining to the AMI;

     d) all intellectual  property,  in any way related to geological formations
under AMI including but not limited to seismic data, surveys, logs, reports, and
geological data and information, in the possession of MONTCREST,  subject to its
control, or available upon MONTCREST'S request.

     1.5 "MONTCREST'S AMI Interest" shall mean and refer to MONTCREST'S  mineral
estate ownership,  and/or authority over at least seventy-five  percent (75%) of
the Net Revenue  Interest of the Lease(s) within the AMI and one hundred percent
(100%) of the Working Interest in the Lease(s) within the AMI.

     1.6 "Working  Interest"  shall mean a percentage of ownership in an oil and
gas Well granting its owner the right to explore,  drill and produce oil and gas
from a tract of property.  After  royalties are paid, the working  interest also
entitles its owner to share in production  revenues with other working  interest
owners, based on the percentage of working interest owned.

                II. REPRESENTATIONS AND WARRANTIES AND COVENANTS

     2.1 MONTCREST represents, warrants and covenants to INDEPENDENCE that as of
the Effective Date of this Agreement, that:

     (a)  MONTCREST  has full rights and  authority  over the  mineral  lease(s)
rights, titles and interests of at least an undivided seventy-five percent (75%)
Net Revenue  Interest  equaling a one hundred percent (100%) working interest in
the AMI, without the joinder of any other person or entity.

     (b) MONTCREST has not sold or attempted to sell, or pledged,  hypothecated,
or encumbered,  or attempted to pledge,  hypothecate,  or encumber,  MONTCREST'S
interests  in the  AMI,  and  MONTCREST  has the  full  right  to  execute  this
Agreement,  free and clear of all liens and  claims,  and without the consent of
any third party.

     (c) MONTCREST represents that it is the owner of, or has the authority over
all right,  title and  interest  in and to the  mineral  estate  acres which are
identified in the Lease(s) set forth in "Exhibit B, JOA."

                                 III. ENGAGEMENT

     Independence Energy desires to develop hydrocarbons in, on or under certain
of MontCrest's and Black Strata's interests in Coleman within the AMI identified
by the Leases in the State of Texas and in  consideration  of the  foregoing and
respective representations, warranties, provisions and agreements set forth here
within,  Parties  hereto  enter into this  Agreement  and  covenant and agree as
follows:

3.1 JOINT DEVELOPMENT.

     (a)  INDEPENDENCE  will pay to MONTCREST at closing,  Ninety Thousand Seven
Hundred Eighty Four Dollars and Fifty Cents  ($90,784.50)  and in  consideration
thereof MONTCREST will assign to INDEPENDENCE, MONTCREST'S AMI Interest save and
except Eighty Seven Point Five Percent  (87.5%) of the Working  Interests in the
Lease(s)  within  the  AMI  (hereinafter   "MONTCREST'S   Retained  Interests").
MontCrest  will offer the right of first refusal for sixty days to  Independence
for an additional Twelve Point Five percent (12.5%).

     (b) In  consideration  of MONTCREST'S  Retained  Interests,  MONTCREST will
serve as  Manager  of the AMI under the JOA to  develop  hydrocarbons  in, on or
under  the  AMI in  accordance  with  Texas'  reasonable  and  prudent  operator
standard.

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     (c) MONTCREST  will be  responsible  for obtaining and engaging  geological
engineering for AMI to explore and develop hydrocarbons in, on or under the AMI;
however,  INDEPENDENCE shall each bear the burden of the costs of all geological
engineering of the AMI.

3.2 TERM.

     This Agreement shall have the same term as the JOA.

3.3. CONFIDENTIALITY.

     The parties to this Agreement  acknowledge  and agree to be bound by a duty
of confidentiality.  Except as and to the extent required by law, each Party (as
applicable,  the "Recipient Party") agrees that it will not disclose or use, and
will direct its  representatives  and  affiliates  not to disclose or use to the
detriment  of the other  Party (as  applicable,  the  "Disclosing  Party"),  any
Confidential Information (as defined below) furnished, or to be furnished by the
Disclosing  Party  or  its   representatives  to  the  Recipient  Party  or  its
representatives  and  affiliates  at any  time or in any  manner  other  than in
connection with its evaluation of the transaction proposed in this Agreement For
purposes of this Section  "Confidential  Information" means any confidential and
proprietary  business  information  relating  to  the  Disclosing  Party  or its
businesses   (including,   without  limitation,   ideas,  technical  information
including seismic data and/or  geological  information,  procedures,  processes,
business and financial models and projections, marketing and business materials,
price lists, sales catalogs,  advertising literature,  samples,  customer lists,
customer  information,   and  trade  secrets  owned  and/or  controlled  by  the
Disclosing Party), unless (i) such information is already known to the Recipient
Party or its representatives or to others not bound by a duty of confidentiality
or such information becomes publicly available through no fault of the Recipient
Party or its  representatives,  (ii) the use of such information is necessary or
appropriate  in making any filing or obtaining any consent or approval  required
for the consummation of the Joint Operating  Agreement,  or (iii) the furnishing
or use of such  information  is  required  by or  necessary  or  appropriate  in
connection with legal  proceedings and public filings.  Upon the written request
of the  Disclosing  Party,  the  Recipient  Party  will  promptly  return to the
Disclosing  Party or  destroy  any  Confidential  Information  in the  Recipient
Party's  possession  and  certify in writing  to the  Disclosing  Party that the
Recipient Party has done so.

     (a) The Confidential  Information,  is not in any manner, without the prior
     written consent of Disclosing Party, be disclosed by Recipient Party.

     (b) Each  Recipient  Party shall  safeguard the  Confidential  Information,
     whether  provided  in  written,  electronic,  oral or any  other  form,  as
     strictly   confidential  and  proprietary,   and  shall  not  disclose  the
     Confidential  Information  to any Person  except as expressly  permitted in
     this  Agreement.  In addition,  each Recipient  Party shall comply with all
     laws protecting the Confidential  Information from unauthorized disclosure.
     Recipient  Party shall take no action  which would cause any portion of the
     Confidential  Information  which is  privileged  to lose  such  protection.
     Recipient  Party shall  implement  all systems and  controls  necessary  to
     ensure that it complies with this Agreement. This Section shall continue in
     full force and effect after termination of this Agreement for any reason.

     (c) Recipient  Party will not utilize the  Confidential  Information in any
     way directly or  indirectly  detrimental  to  Disclosing  Party,  including
     without  limitation  making any effort to directly or  indirectly  lease or
     attempt to lease, or otherwise  acquire any mineral interest acreage within
     a fifty mile (50) mile radius of MontCrest Project(s).

     (d) Disclosing Party may request return of the Confidential Information and
     upon receipt of such request the Recipient  Party shall  promptly  retrieve
     all Confidential  Information  disseminated to any person and return to the
     Disclosing Party all of the Confidential  Information  disclosed hereunder,
     including  all copies  thereof  and all  written  transcriptions  of orally
     transmitted data related hereto.

     (e) Recipient Party  guarantees the full  performance of this Agreement and
     agrees to be responsible and liable for any breach of this Agreement by any
     of Recipient Party as defined in this Agreement.

     (f) In the event that Recipient Party becomes legally compelled to disclose
     any of the Confidential Information,  Recipient Party agrees that Recipient
     Party will provide  Disclosing  Party with prompt notice so that Disclosing

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     Party may seek a protective order or other appropriate  remedy and/or waive
     compliance  with the provisions of this  Agreement.  In the event that such
     protective  order or other  remedy is not  obtained,  Recipient  Party will
     furnish  only that  portion  of the  Confidential  Information  which it is
     advised by counsel is legally  required and will  exercise its best efforts
     to obtain reliable  assurance that confidential  treatment will be accorded
     to the Confidential Information.

3.4 MUTUAL NON-CIRCUMVENTION.

     The Parties to this  Agreement  shall not perform any act in  violation  of
this Agreement through any other person or entity, or through any plan,  scheme,
design,  or subterfuge  calculated to circumvent the  requirements  or spirit of
this  Agreement  by  technical  means or  otherwise.  Shall any  parties to this
Agreement,  affiliated person, related entity, direct,  indirect party, agent or
secondary party to this Agreement  circumvent this Agreement in any matter,  the
responsible  parties  thereto  shall be held liable for any damages,  contingent
damages,  fees, income,  allocation of funds or equity due under this Agreement.
Any legal fees or expenses  related to any  litigation due to  circumvention  or
other issues under this Agreement shall be paid by the party or related entities
responsible thereof.

     No Recipient Party shall attempt to circumvent Disclosing Party in order to
acquire  rights to, or interests  relating to the  Opportunities  and  Corporate
Events,  the employees,  the agents, the contractors or the key personnel of the
Disclosing Party. Recipient Party therefore agrees that the Recipient Party will
not directly or indirectly  solicit the  employees,  agents,  contractors or key
personnel of the Disclosing Party.

3.5 NO PARTNERSHIP.

     This  Agreement  is not  intended to create,  and shall not be construed to
create or constitute  any  relationship  of  partnership,  limited  partnership,
association  for profit,  agency  (except as  otherwise  expressly  provided for
herein),  fiduciary  (except as  otherwise  expressly  provided  herein),  joint
venture, mining partnership,  mutual agency, or other relationship  constituting
or creating joint and/or  collective  liability.  The  relationship  between the
parties hereto are that of contractor and independent contractor and neither are
employees,  servants, agents, partners or joint venturers of the other parties..
Neither party shall be responsible for withholding, and shall not withhold, FICA
or taxes of any kind from any  compensation  due to the other  party,  except as
provided in the JOA. Neither  MONTCREST and  INDEPENDENCE nor their  affiliates,
employees,  subcontractors,  or agents shall be entitled to receive any benefits
which employees of MONTCREST and  INDEPENDENCE are entitled to receive and shall
not be entitled to workers'  compensation,  unemployment  compensation,  medical
insurance,  life  insurance,  paid  vacations,  paid holidays,  pension,  profit
sharing, or Social Security on account of their work.

     3.6  INDEMNITY.  INDEPENDENCE  shall  indemnify and hold  MONTCREST,  their
respective managers,  members,  agents and employees,  harmless from any and all
claims,  causes of action,  losses,  damage,  liabilities,  costs and  expenses,
including  attorney fees,  arising from or related to  INDEPENDENCE'  investors,
shareholders, officers, directors and employees in connection with INDEPENDENCE'
engagement  in this Joint  Development  Agreement  and  involvement  in the AMI.
INDEPENDENCE  shall be  responsible  for and assume all liability for and hereby
agrees to defend,  this  Agreement,  indemnify and hold  harmless  MONTCREST and
BLACK STRATA from and against Claims by any Third Party to the extent such Claim
is  caused  or  related  to  INDEPENDENCE'  investors,  shareholders,  officers,
directors  and  employees in connection  with  INDEPENDENCE'  engagement in this
Joint Development Agreement and involvement in the AMI.

     MONTCREST  will  defend  title  to the  AMI  against  all  claims  made  in
connection  with AMI,  and  agrees to defend  and  indemnify  INDEPENDENCE,  its
successors  and  assigns,  from  any  claim of any  person  of any  interest  of
pertaining to title to the Lease(s)  within the AMI arising by, through or under
MONTCREST, or in any way related to MONTCREST'S ownership,  possession or use of
the AMI, and agrees to defend and hold INDEPENDENCE harmless, and INDEPENDENCE'S
successors and assigns,  from any costs, expenses (including attorney's fees and
all costs of  prosecuting  or defending any title claim in  connection  with the
AMI,  including  any claim  brought by or against  INDEPENDENCE,  for losses and
damages, arising out of or related in any manner to any such title claim.

     MONTCREST further agrees to indemnify INDEPENDENCE set forth herein-below:

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     (a) Indemnity Definitions -:

          1) "Claim" or "Claims" means, unless specifically  provided otherwise,
          all claims  (including but not limited to, those for property  damage,
          pollution [including, without limitation,  response costs, remediation
          costs,  and damages to natural  resources],  bodily  injury,  personal
          injury,  illness,  disease,  maintenance,  cure,  loss of  parental or
          spousal  consortium,  wrongful  death,  loss of  support,  death,  and
          wrongful  termination of employment),  damages,  liabilities,  losses,
          demands, liens,  encumbrances,  fines, penalties,  causes of action of
          any  kind  (including  actions  in REM or in  PERSONAM),  obligations,
          costs, judgments, interest and awards (including payment of attorney's
          fees and costs of litigation and investigation  costs) or amounts,  of
          any kind or character (except punitive or exemplary damages),  whether
          under judicial proceedings,  administrative  proceedings or otherwise,
          or  conditions  in the  premises of or  attributable  to any person or
          persons or any party or parties,  breach of representation or warranty
          (expressed or implied), under any theory of tort, contract,  breach of
          contract,   (including   any   Claims   which   arise  by   reason  of
          indemnification   or  assumption  of  liability   contained  in  other
          contracts   entered  into  by  Company   Indemnities   or   Contractor
          Indemnities),  arising  in  connection  with  this  Agreement  or  the
          operations  under this  Agreement,  including  , but not  limited  to,
          Claims which arise out of or are directly or indirectly connected with
          equipment  and/or  the  ownership,  possession,  management,  manning,
          maintenance,  supply,  or  operation  (including,  but not limited to,
          ingress, egress, loading and unloading operations).

          2).  "INDEPENDENCE  Indemnities"  means  INDEPENDENCE  ENERGY  and its
          officers,  directors,  and insurers and  INDEPENDENCE and Invitees and
          Personnel.

          3).  "MONTCREST  Indemnities"  means  MONTCREST and BLACK STRATA,  its
          co-venturers,  if any, and its and their officers, directors, insurers
          and MONTCREST'S and BLACK STRATA'S Invitees and Personnel.

          4). THE TERM  "REGARDLESS  OF FAULT" MEANS WITHOUT REGARD TO THE CAUSE
          OR CAUSES OF ANY CLAIM,  INCLUDING WITHOUT LIMITATION,  A CLAIM CAUSED
          IN  WHOLE  OR  IN  PART  BY  THE  NEGLIGENCE   (WHETHER  SOLE,  JOINT,
          CONCURRENT,  COMPARATIVE,  CONTRIBUTORY,  ACTIVE,  PASSIVE,  GROSS, OR
          OTHERWISE),  WILLFUL MISCONDUCT,  STRICT LIABILITY,  OR OTHER FAULT OF
          ANY MEMBER OF INDEPENDENCE  INDEMNITEES,  MONTCREST AND BLACK STRATA ,
          MONTCREST AND BLACK STRATA INVITEES AND/OR THIRD PARTIES,  AND WHETHER
          OR NOT CAUSED BY A PRE-EXISTING CONDITION OR BY ANY EQUIPMENT,  OWNED,
          OR PROVIDED  BY  MONTCREST  AND BLACK  STRATA OR  MONTCREST  AND BLACK
          STRATA INVITEES.

     (b) General - The parties agree that:

          1). The indemnity  obligations  contained in these  Agreement  include
          indemnification  for  punitive or  exemplary  damage  under any law or
          otherwise;

          2). The Indemnity  obligations  under this  Agreement are effective to
          the  maximum  extent  permitted  by  law.  If a law  is  applied  in a
          jurisdiction  which prohibits or limits a Party's ability to indemnify
          the other,  then that Party's liability shall exist to the full extent
          allowed by the law of the relevant jurisdiction;

          3). In support of the indemnity  obligations contained in Sub-sections
          below,  MONTCREST shall provide,  each for the benefit of INDEPENDENCE
          and  INDEPENDENCE  Indemnities,  coverage  and  amounts  of  liability
          insurance  which in no event shall be less than the minimum set out in
          Sub-sections below;

          4.) In the event MONTCREST fails to furnish a defense and indemnity as
          provided  for herein,  INDEPENDENCE  shall be entitled to receive from
          MONTCREST, in addition to its attorneys' fees, costs, expenses and any
          amounts  paid in  judgment or  settlement,  all costs,  expenses,  and

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          attorneys'  fees  incurred  in  the  enforcement  of  this  Agreement.
          Furthermore,  the prevailing Party in any litigation  relating to this
          Agreement,  other than that involving  defense and indemnity  which is
          addressed  above,  shall be  entitled to recover  its  reasonable  and
          necessary  attorneys;  fees and  costs of  litigation  from the  other
          Party; and

          5.)  INDEPENDENCE  will promptly notify MONTCREST after receipt of any
          Claim for which it may seek  indemnification.  Each  Party  also shall
          immediately  notify  the  other of any  occurrence  in which  physical
          injury  occurs and to  complete  and  provide  the other Party with an
          accident report for each such occurrence.

     (c) Bodily  Injury,  Death,  and Damage to  Property  of  INDEPENDENCE  and
INDEPENDENCE Personnel:

          MONTCREST AND BLACK STRATA AGREE TO BE RESPONSIBLE  FOR AND ASSUME ALL
          LIABILITY FOR AND HEREBY AGREES TO DEFEND, THIS AGREEMENT,  INDEMNIFY,
          AND HOLD HARMLESS  INDEPENDENCE AND INDEPENDENCE  INDEMNITEES  AGAINST
          CLAIMS ARISING IN CONNECTION WITH:

          1).  BODILY  INJURY  TO AND/OR  DEATH OF  MONTCREST  AND BLACK  STRATA
          PERSONNEL AND MONTCREST AND BLACK STRATA INVITEES;

          2).  MONTCREST  AND  BLACK  STRATA'S  DAMAGE TO  PROPERTY  OF G& F AND
          CHESS'S PERSONNEL, AND THEIR INVITEES; ARISING IN CONNECTION WITH THIS
          AGREEMENT, REGARDLESS OF FAULT.

     (d) Pollution and Hazardous Materials and Substances:

          1). MONTCREST Responsibilities -MONTCREST AND BLACK STRATA AGREE TO BE
          RESPONSIBLE  FOR AND ASSUME ALL  LIABILITY FOR AND HEREBY  AGREES,  TO
          DEFEND,  THIS  AGREEMENT,  INDEMNIFY  AND HOLD  HARMLESS  INDEPENDENCE
          INDMNITEES  AGAINST  CLAIMS  FOR  LOSSS OF OR DAMAGE  TO  PROPERTY  ON
          ACCOUNT  OF AN  UNAUTHORIZED  LEASE OR  DISCHARGE  (INCLUDING  BUT NOT
          LIMITED  TO  ANY  SPILLING,   LEAKING,  PUMPING,  POURING,   EMITTING,
          EMPTYING,  INJECTING,  ESCAPING,  LEACHING, DUMPING, OR DISPOSING INTO
          THE  ENVIRONMENT)  OF ANY  SUBSTANCE,  MATERIAL,  SEWERAGE,  COMPOUND,
          MIXTURE,  POLLUTANT, OR CONTAMINANT,  WHICH ORIGINATES FROM OPERATIONS
          OF MONTCREST OR BLACK  STRATA ,  MONTCREST  AND BLACK STRATA  INVITEES
          AND/OR THIRD PARTIES,  REGARDLESS OF FAULT. MONTCREST AND BLACK STRATA
          AGREES TO BE  RESPONSIBLE  FOR AND ASSUME ALL LIABILITY FOR AND HEREBY
          AGREES TO DEFEND,  THIS TEMPORARY WORK SPACE AGREEMENT,  INDEMNIFY AND
          HOLD HARMLESS  INDEPENDENCE  INDEMNITEES AGAINST CLAIMS FOR LOSS OF OR
          DAMAGE TO PROPERTY ON ACCOUNT OF AN  UNAUTHORIZED  THIS TEMPORARY WORK
          SPACE  AGREEMENT  OR  DISCHARGE  (INCLUDING  BUT  NOT  LIMITED  TO ANY
          SPILLING,  LEAKING, PUMPING, POURING, EMITTING,  EMPTYING,  INJECTING,
          ESCAPING, LEACHING, DUMPING, OR DISPOSING INTO THE ENVIRONMENT) OF ANY
          SUBSTANCE,   MATERIAL,  SEWERAGE,  COMPOUND,  MIXTURE,  POLLUTANT,  OR
          CONTAMINANT,   WHICH  ORIGINATES  FROM  THE  AMI  ON  THE  WORK  SITE,
          REGARDLESS OF FAULT.

     (e)  Debris  and Wreck  Removal  -MONTCREST  AND BLACK  STRATA  AGREE TO BE
          RESPONSIBLE  FOR AND ASSUME  ALL  LIABILITY  FOR AND HEREBY  AGREES TO
          DEFEND,  THIS  AGREEMENT,  INDEMNIFY  AND HOLD  HARMLESS  INDEPENDENCE
          INDEMNITEES  FOR THE COSTS OF  REMOVAL OF SUCH  PROPERTY  AND FROM AND
          AGAINST CLAIMS ARISING IN CONNECTION  WITH MONTCREST OR BLACK STRATA'S
          OBLIGATION TO REMOVE SUCH DEBRIS OR WRECKAGE, REGARDLESS OF FAULT.

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     (f)  Liability  to Third  Parties - MONTCREST  and BLACK STRATA agree to be
          responsible  for and assume  all  liability  for and hereby  agrees to
          defend, this Agreement,  indemnify and hold harmless  INDEPENDENCE and
          INDEPENDENCE  Indemnitees,  and MONTCREST and BLACK STRATA agree to be
          responsible  for and assume  all  liability  for and hereby  agrees to
          defend,  this  Agreement,  indemnify  and hold  harmless  INDEPENDENCE
          ENERGY and  INDEPENDENCE  indemnitees from and against Claims by or in
          favor of or incurred by or  sustained by any Third Party to the extent
          such Claim is caused by  MONTCREST  and BLACK  STRATA,  MONTCREST  and
          BLACK STRATA invitees and/or MONTCREST and BLACK STRATA personnel.

     (g)  Liability  for  Non-Compliance  with  Applicable  Laws - MONTCREST and
          BLACK STRATA agree to be responsible  for and assume all liability for
          and  hereby  agrees to  defend,  this  Agreement,  indemnify  and hold
          harmless  INDEPENDENCE  ENERGY  Indemnitees  from and  against  Claims
          arising in  connection  with  MONTCREST and BLACK STRATA and MONTCREST
          and  BLACK  STRATA   invitees   and/or   MONTCREST  and  BLACK  STRATA
          personnel's violation of Applicable Laws.

     (h)  Insurance  - As to all  operations  provided  for in  this  Agreement,
          MONTCREST and BLACK STRATA  represent,  covenant and warrant that they
          shall carry and maintain the following minimum insurance  coverage for
          one year  from  the  Effective  Date of this  Agreement,  with  policy
          territory sufficient to cover the operations.

          1). General  Liability  Insurance  with limits of $1,000,000  combined
          single limit per occurrence,  including,  but not limited to, coverage
          for public  liability  including  bodily  injury and  property  damage
          liability,  personal/advertising  injury,  contractual  liability  for
          those  liabilities  assumed by the Party herein,  cross  liability and
          severability  of  interest,  liability  for  removal of  wreck/debris,
          liability for pollution and cleanup on a sudden and accidental  basis,
          products and completed  operations,  protective  liability/independent
          contractors/work  sublet,  and with the "care,  custody,  and  control
          exclusion" deleted.

          2).  Property  Insurance  covering  MONTCREST  and  BLACK  STRATA  and
          MONTCREST and BLACK STRATA invitees and/or  MONTCREST and BLACK STRATA
          personnel's  machinery  and equipment  for its  replacement  value and
          including removal of wreck/debris coverage.

          3). Umbrella Excess Liability  Insurance with limits of $3,000,000 per
          accident/occurrence  in excess of the primary  liability  coverage and
          limits above.

                                IV. MISCELLANEOUS

     (a)  Costs.  Except  as  otherwise  provided  herein,  each  Party  will be
responsible  for and bear  all of its own  costs  and  expenses  (including  any
broker's or finder's fees and the expenses of its  representatives)  incurred at
any time in  connection  with this  Agreement and pursuing or  consummating  the
transactions contemplated herein.

     (b)  Enforceability.  To the  extent  any  provision  or  portion  of  this
Agreement  shall be held,  found  or  deemed  to be  unreasonable,  unlawful  or
unenforceable,  then the parties  hereto  expressly  covenant and agree that any
such provision or portion  thereof shall be modified to the extent  necessary in
order that any such provision or portion thereof shall be legally enforceable to
the fullest  extent  permitted by applicable law and that any court of competent
jurisdiction  shall,  and the parties hereto do hereby  expressly  authorize any
court of  competent  jurisdiction  to,  enforce  any such  provision  or portion
thereof or to modify  any such  provision  or portion  thereof in order that any
such provision or portion thereof shall be enforced by such court to the fullest
extent permitted by applicable law.

     (c)  Governing  Law.  THIS  AGREEMENT  WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF TEXAS  (EXCLUSIVE  OF CONFLICTS OF LAW
PRINCIPLES) AND WILL, TO THE MAXIMUM EXTENT PRACTICABLE,  BE DEEMED TO CALL FOR.
PERFORMANCE IN TARRANT COUNTY, TEXAS.

     (d) Third  Parties.  Except as  expressly  set forth or referred to in this
Agreement,  nothing in this Agreement is intended or will be construed to confer

                                       7
<PAGE>
upon or give to any party  other than the  Parties to this  Agreement  and their
successors  and permitted  assigns,  if any, any rights or remedies  under or by
reason of this Agreement.

     (e) Assignment.  Neither this Agreement nor any rights or obligations under
this Agreement may be assigned or delegated  without the written  consent of the
other  Party.  Any  attempted  assignment  or  delegation  in  violation  of the
immediately preceding sentence will be void.

     (f)   Counterparts.   This  Agreement  may  be  executed  in  one  or  more
counterparts,  each of  which  will be  deemed  to be an  original  copy of this
Agreement and all of which,  when taken  together,  will be deemed to constitute
one and the same agreement.

     (g) No Liability.  No past or future action,  course of conduct, or failure
to act relating to the  negotiation  of the terms of this  Agreement,  will give
rise to or serve as a basis for any obligation or other liability on the part of
the Parties.  Under the terms of this  Agreement,  MONTCREST and BLACK STRATA on
the one  hand  and  INDEPENDENCE  ENERGY  on the  other  hand  shall  assume  no
liabilities or contingent  liabilities for any matters related to this Agreement
and shall be held harmless for any Acts of God,  environmental,  performance  or
other types of issues by the other parties.

     (h) Attorney's Fees. Except as otherwise provided herein,  each Party shall
be entitled to recover all of its reasonable attorneys' fees, costs and expenses
incurred  as a result of any  breach  of this  Agreement  by the other  Party or
incurred, by such Party in enforcing this Agreement.

     (i) Access to Books and Records All books and records of each Party and its
affiliates  that are relevant to the subject matter of this  Agreement  shall be
made available to the other Party,  during normal business hours at such Party's
request, for examination or audit without charge to the other Party.

     (j)  Notices:   Parties  executing  this  Agreement  agree  that  facsimile
transmission  and/or electronic mail may be utilized for execution  thereof.  In
the event notices are required to be served to any of the  undersigned  parties,
the address below shall prevail.

          Notice to  MontCrest  and Black Strata will be  sufficient  if made or
          addressed to MONTCREST ENERGY,  INC., Craig M. Crockett,  320 Hemphill
          Street, Fort Worth, Texas 76104.

          Notice to Independence  Energy  Corporation.,  Greg Rotelli,  3020 Old
          Ranch Parkway Suite 300 Seal Beach, California 90740.

          Each Party may change the address and  Facsimile  number for notice to
          it, by giving notice of that change in accordance  with the provisions
          of this paragraph.

          Any notices  necessary or appropriate  under this  Agreement  shall be
          deemed  delivered  on  the  date  of  actual  receipt  for  notice  by
          facsimile, courier or overnight mail, or three (3) business days after
          being deposited with the U. S. Postal Service,  properly addressed and
          with proper postage  affixed,  for delivery by registered or certified
          mail, return receipt requested.

     (k.) Binding Agreement:  This Agreement shall be binding upon, and inure to
the  benefit  of  INDEPENDENCE  ENERGY on the one hand and  MONTCREST  and BLACK
STRATA on the other hand, and their respective  representatives,  successors and
assigns.  This Agreement  shall be binding on the parties,  their  subsidiaries,
agents, brokers, divisions, associates,  employees, heirs, affiliated companies,
assigns or designees.

     (l.) Cumulative  Remedies:  Each and all of the several rights and remedies
provided for in this Agreement shall be cumulative. No one right or remedy shall
be  exclusive  of the  others  or of any right or  remedy  allowed  in law or in
equity.  No waiver or  indulgence by either Party of any failure of either Party
to keep or perform any promise or condition of this Agreement  shall be a waiver
of any  preceding  or  succeeding  breach  of the same or any other  promise  or
condition. No waiver by either Party of any right shall be construed as a waiver
of any other  right.  Neither  Party shall be required to give notice to enforce
strict adherence to all terms of this Agreement.  This Agreement is not intended

                                       8
<PAGE>
to limit any rights that either  Party may have under any other  agreement or at
law with respect to inventions,  original works or authorship,  trade secrets or
other proprietary rights.

     (m.)  Entire  Agreement:  This  Agreement  constitutes  the  full,  entire,
integrated,  and complete agreement of the parties respecting the subject matter
addressed  herein.  No force  or  effect  shall  be  given  to  representations,
promises, agreements, or understandings,  written or oral, not herein contained.
This Agreement may not  subsequently  be amended or modified except by a writing
signed by both parties hereto. Except as otherwise provided herein, no change or
modification  hereof shall be valid or binding unless the same is in writing and
signed by the parties hereto.

     (n.)  Headings:  The headings and other  captions in this Agreement are for
convenience and reference only and shall not be used in interpreting, construing
or enforcing any of the provisions of this Agreement.

     (o.) DISPUTE RESOLUTION.

     1). Mediation.  Except as otherwise  provided under Section 11(c) below, no
     Party shall institute a proceeding in any court or administrative agency to
     resolve  any  dispute  arising  under  this  Agreement  or the  agreements,
     instruments  and  documents  contemplated  hereby  between  the  Parties (a
     "Dispute")  before  that Party has sought to resolve  the  Dispute  through
     direct  negotiation  with the other  Party.  If the Dispute is not resolved
     within  seven (7) days after a demand for direct  negotiation  the  Parties
     shall  attempt  to  resolve  the  Dispute  through  a  private,   informal,
     non-binding dispute resolution process in which a neutral third person, the
     mediator,  helps disputing parties to reach an agreement  "Mediation").  If
     the Parties do not promptly  agree on a mediator,  either Party may request
     the  American  Arbitration  Association  to  appoint a  mediator.  Upon the
     selection of a mediator,  the  mediator  and the Parties  shall have thirty
     (30) days to convene and attempt to resolve the Dispute. If the mediator is
     unable to  facilitate a resolution  of the Dispute  within ten (10) days of
     such meeting,  the mediator shall issue a written  statement to the Parties
     to that effect and the aggrieved  Party may then seek relief by arbitration
     as  provided  under  Section 11 (b)  below.  Either  Party may,  by summary
     proceedings (e.g., a plea in or motion to stay further proceedings),  bring
     any action in court to compel the  mediation of any Dispute.  All costs and
     expenses of the  mediator  shall be equally  borne by each of the  Parties.
     With  regard to any other  costs or  expenses  incurred  as a result of the
     Mediation,  the respective Party so incurring such costs and expenses shall
     be solely liable for such costs and expenses.

     2). Arbitration. Except as otherwise provided below, the Parties agree that
     any Dispute which the Parties are not able to resolve by Mediation  will be
     resolved  by binding  arbitration  to be  conducted  in Fort  Worth,  Texas
     pursuant  to the  Rules  for  Arbitration  of  Commercial  Disputes  of the
     American Arbitration Association.

     3).  Injunctive  Relief.  Sections  11  (a)  and K (b)  above  relating  to
     Mediation  and  Arbitration  shall not  apply to any  claim for  injunctive
     relief; including,  without limitation,  claims for specific performance, a
     preliminary injunction, or a temporary restraining order. Such claims shall
     be submitted to a court of competent jurisdiction,  and neither Party shall
     be  required  to post any bond or other  security.  If a Party  chooses  to
     pursue injunctive relief, such conduct shall not constitute a waiver of, or
     be deemed  inconsistent with, the Mediation and Arbitration  provisions set
     forth in this Section,  11 (c). Once the claims for  injunctive  relief are
     finally  decided,  any and all  remaining  claims  shall  be  submitted  to
     Mediation or  Arbitration,  as applicable,  pursuant to this Section 11 (c)
     and the arbitrator  shall be bound by the findings and rulings of the court
     on the claims for injunctive  relief.  Claims for  injunctive  relief under
     this  Section,  11 (c) shall be heard  exclusively  in the federal or state
     courts located in Tarrant County,  Texas,  and the Parties  expressly waive
     the right to any other jurisdiction that they may have as a result of their
     present or future domiciles or any other cause.

                    IV. JOINT REPRESENTATIONS AND WARRANTIES

     Each Party to this  Agreement  represents,  warrants  and  covenants to the
other Party that the Party:

(a) that each of them have  obtained any  required  consents or approvals to the
terms of this Agreement from their respective partners, officers, directors, and
members,  and that each of them has the full right to execute this Agreement and
any assignments to effectuate the terms of this  Agreement,  without the consent
of any other party.

                                       9
<PAGE>
(b) that each of them has full power and  authority  to execute  and  deliver to
this Agreement and to perform all of their obligations under this Agreement. All
of these  actions  have been duly  authorized  and are not in conflict  with any
provision  of law or the terms of any of the  Undersigned  Parties'  constituent
documents  or any  agreement  or  undertaking  to which  any of the  Undersigned
Parties  or  entities  is a party or by which it is bound.  Upon  execution  and
delivery, this Agreement and the other documents,  and each of them, will be the
valid and binding obligations of the Undersigned Parties,  enforceable according
to their terms.

     (c) that each of them has read this Agreement is completely informed of the
facts  relating to the subject  matter of this  Agreement  and of the rights and
obligations of both Parties;

     (d)  that  each  of them  enters  into  this  Agreement  voluntarily  after
receiving  or having  the  opportunity  to  receive  the  advice of  independent
attorneys, accountants, advisors, and other counsel;

     (e) that each of them have given  careful and mature  thought to the making
of this Agreement;

     (f) that each of them has carefully  read each and every  provision of this
Agreement;

     (g)  that  each of  them  completely  understands  the  provisions  of this
Agreement, concerning both the subject matter and the legal effect; and

     (h) states that this Agreement was signed without any coercion, any duress,
or any Agreement other than those specifically set forth in this Agreement.

     (i) that if any  provision of this  Agreement is for any reason found to be
unenforceable, all other provisions will nevertheless remain enforceable.

     (j) that the waiver of any breach of any provision of this  Agreement  will
not waive any other breach of that or any other provision.

     (k) that this Agreement,  except as it otherwise  expressly provides may be
amended or modified only by a written instrument signed by both Parties.

     (l) that this Agreement,  except as it otherwise expressly  provides,  will
bind and inure to the  benefit  of the  respective  legatees,  devisees,  heirs,
executors, administrators, assigns, and successors in interest of the Parties.

     (m) that  neither  Party  to this  Agreement  may  claim  any  construction
presumption  with  respect to the  drafting of this  Agreement,  nor any portion
thereof,  and this Agreement  shall not be construed  against or in favor of any
Party.

     (n) that a scanned image or copy of this  Agreement may be used to prove-up
this Agreement and each Party waives the production of the original Agreement.

     (o) that this  Agreement  shall  require  approval  of all  parties for any
future nullification or cancellation thereof.

                                       10
<PAGE>
Effective, acknowledged, accepted, and agreed to this the 8th day of June, 2012:

MontCrest Energy, Inc.                       Independence Energy Corporation


By: /s/ Douglas E. Forrest                   By: /s/ Gregory Rotelli
   -----------------------------------          --------------------------------
Name:    Douglas E. Forrest                  Name:    Gregory Rotelli
Title:   President                           Title:   President, and CEO
Date:    June 8, 2012                        Date:    June 8, 2012

Black Strata, LLC


By: /s/ Douglas E. Forrest
   -----------------------------------
Name:    Douglas E. Forrest
Title:   President
Date:    June 8, 2012

                                       11
<PAGE>
                                   EXHIBIT "A"

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 3, Page
656, Document 00000420,  in the Deed Records of Coleman County,  Texas, made and
effective  the  1st day of  February  2009  between  Hubert  Rutherford  & Gerri
Rutherford PO Box 174 Novice Texas 79538,  Lessor and Black Strata, LLC, Lessee,
covering the LEASED  PREMISIS,  to wit: 106.15 acres in the T&NO R.R. Co. Survey
13, A-654 Coleman CAD property ID R13161.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 3, Page
358, Document 00000353,  in the Deed Records of Coleman County,  Texas, made and
effective  the 1st day of February  2009 between Riley Joe Goates 765 River Road
Waco,  Texas  76705,  Lessor and Black Strata LLC,  Lessee,  covering the LEASED
PREMISIS,  to wit:  being the Eastern 113.15 acres more or less of a 228.30 acre
tract of land in Coleman County,  Texas being 228.3 acres out of the East Line &
Red River R.R.  Company  Survey No. 3 Abstract  No. 851 and 1.0 acres out of the
M.M. Givens Survey No. 10, Abstract No. 1640, also being out of the D.M. Hankins
1435.25 acre tract and said 228.30 acre tract.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 3, Page
358, Document 00000353,  in the Deed Records of Coleman County,  Texas, made and
effective  the 1st day of June  2009  between  Hubert A.  Rutherford  & Gerri J.
Rutherford of P.O. Box 174 in Novice Texas 79538,  Lessor, and Black Strata LLC,
Lessee,  covering the LEASED PREMISIS,to wit: being 160.00 acres more or less in
the NW 1/4 of WE Ashley  Survey,  Section 14 A-1410,  aka NW 1/4 Sec 14, S.P. RY
Co., and being more fully  described by metes and bounds in Warranty Deed Volume
720, Page 498, dated 9/24/2003 in the Deed Records of Coleman County, Texas.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 3, Page
358, Document 00000353,  in the Deed Records of Coleman County,  Texas, made and
effective the effective the 1st day of February 2009 between William Fowler 2706
Hedgeway Arlington,  Texas 76016, Lessor and Black Strata LLC, Lessee,  covering
the LEASED  PREMISIS,  to wit:  124.45 acres in the EL & RR Co. Survey 3, A-851,
Coleman CAD property ID R14011.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 3, Page
358, Document 00000353,  in the Deed Records of Coleman County,  Texas, made and
effective  the 1st day of February  2009 between  William  Fowler 2706  Hedgeway
Arlington,  Texas 76016 Lessor and Black Strata LLC, Lessee, covering the LEASED
PREMISIS,  to wit: 113.16 acres in the EL & RR Co. Survey 3, A-851,  Coleman CAD
property ID R51416.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 3, Page
363, Document 00000354,  in the Deed Records of Coleman County,  Texas, made and
effective  the 1st day of February  2009  between  Elda Fae Atchley aka Elda Fae
McDaniel Atchley PO Box 68 Novice,  Texas 79538,  Lessor,  and Black Strata LLC,
Lessee,  covering the LEASED PREMISIS,  to wit: 106.4 acres in the T&NO R.R. Co.
Survey 13, A-654, Coleman CAD property ID R13159.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 3, Page
368, Document 00000355,  in the Deed Records of Coleman County,  Texas, made and
effective  the 1st day of February 2009 between Gary D. Holt and Stella T. Holt,
1819 FM 3114  Chifton,  Texas 76634,  Lessor,  and Black  Strata,  LLC,  Lessee,
covering  the  LEASED  PREMISIS,  to wit:  320 acres in the EL&RR Co.  Survey 3,
A-851, Coleman CAD property ID.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 3, Page
373, Document 00000356,  in the Deed Records of Coleman County,  Texas, made and
effective the 1st day of February  2009 between  William  Fowler 2706  Hedgeway,
Arlington,  Texas  76016,  Lessor,  and Black Strata LLC,  Lessee,  covering the
LEASED PREMISIS,  to wit: 124.45 acres in the EL&RR Co. Survey 3, A-851, Coleman
CAD  property ID R14011,  Being a 131.24  acre tract of land in Coleman  County,
Texas,  being 125.45 acres out of the East Line & Red River R.R.  Company Survey
No.3,  Abstract  No. 851 and 5.89  acres out of the M.M.  Givens  Survey  No.10,
Abstract No.  1640,  also being out of the D.M.  Hankins  1435.25 acre tract and
said 131.24 acre tract.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 3, Page
379, Document 00000357,  in the Deed Records of Coleman County,  Texas, made and
effective the 1st day of February 2009,  between William Fowler,  Joanie Fowler,
Delain Herzog, Jannie Herzog 2706 Hedgeway Arlington Texas 76016, Lessor(s), and

                                       12
<PAGE>
Black Strata LLC, Lessee,  covering the LEASED PREMISIS,  to wit: 106.4 acres in
the T&NO R.R. Co. Survey 13, A-654, Coleman CAD property ID R13163.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 3, Page
388, Document 00000359,  in the Deed Records of Coleman County,  Texas, made and
effective the 1st day of February 2009, between Kelley C. Fowler 550 HCR 3350 N.
Hubbard,  Texas  76648,  Lessor and Black  Strata,  Lessee,  covering the LEASED
PREMISIS,  to wit: 113.15 acres in the EL & RR Co. Survey 3, A-851,  Coleman CAD
property ID R14009.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 3, Page
388, Document 00000359,  in the Deed Records of Coleman County,  Texas, made and
effective  the 1st day of  April  2009  between  HUBERT  RUTHERFORD  etux  GERRI
RUTHERFORD,  Rt. 1, Box 40, Tuscola,  Texas 79562 Lessor and Black Strata,  LLC,
Lessee,  covering the LEASED PREMISIS, to wit: Being a 273.80 acre tract of land
in Coleman County,  Texas,  being 167.65 acres out of the M.M. Givens Survey No.
10,  Abstract No. 1640 and 106.15 acres Out of the Block 1 of the Subdivision of
the R.M. Wellborn Subdivision of Section No. 13, of the T.&N.O.R.R.  Co. Survey,
Abstract No. 654, also being out of the D.M. Hankins 1435.25 acre tract and said
273.80  acre tract No. 4 of land,  SAVE and EXCEPT the 106.15  acre tract out of
the T.&N.O.RR.Co. Survey 13, Abstract 654 described more fully in Deed Volume 82
Page 596 Deed Records, Coleman County, Texas.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 6, Page
282, Document 00000811,  in the Deed Records of Coleman County,  Texas, made and
effective the 1st day of April 2009 between William G. Fowler, Lessor, and Black
Strata LLC,  Lessee,  covering the LEASED  PREMISIS,  to wit:  Being a 5.89 acre
tract out of a 131.24 acre tract of land in Coleman  County,  Texas being 125.45
acres out of the East Line & Red River R.R.  Company  Survey No.3,  Abstract No.
851 and 5.89 acres out of the M.M. Givens Survey No. 10, Abstract No. 1640, also
being out of the D.M.  Hankins  1435.25  acre tract and said  131.24 acre tract;
SAVE AND  EXCEPT a 125.45  acre  tract  out of the East  Line & Red  River  R.R.
Company Survey N. 10, Abstract No. 851.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 6, Page
282, Document 00000811,  in the Deed Records of Coleman County,  Texas, made and
effective the 1st day of June 2009 between  Gerri J.  Rutherford of P.O. Box 174
in Novice Texas,  79538,  Lessor and Black  Strata,  LLC,  Lessee,  covering the
LEASED  PREMISIS,  to  wit:  being  109.72  acres  more or less in the SE 1/4 of
Section 25, Block 2 of the T&N.O.R.R.  CO. survey and being more fully described
by metes and bounds in Deed Volume 450, Page 582, dated 11/24/1971 & Volume 623,
Page 556 in the Deed Records of Coleman County, Texas.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 6, Page
282, Document 00000811,  in the Deed Records of Coleman County,  Texas, made and
effective  the 1st day of June 2009 between  Martha Smart Bennett 6866 W. Remuda
Arizona 83583,  Lessor and Black Strata LLC,  covering the LEASED  PREMISIS,  to
wit: 160 total acres  Abstract  A-865 T.H.  Lydston  Survey 119 Coleman  County,
Texas. This LEASED PREMISIS is further described by metes and bounds as follows:

That certain "Oil, Gas And Mineral Lease" recorded at Book at Book OR, Volume 6,
Page 288, Document 00000812,  in the Deed Records of Coleman County, Texas, made
and effective the 1st day of April 2009 between William G. Fowler, Kelly Fowler,
and Danny Fowler,  Lessor(s) and Black Strata, LLC, Lessee,  covering the LEASED
PREMISIS,to  wit:  being a 139.21 acre tract of land in Coleman  County,  Texas,
being out of the M.M. Givens Survey No. 10, Abstract No. 1640, also being out of
the D.M. Hankins 1435.25 acre tract, and said 139.21 acre tract.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 6, Page
301, Document 00000814,  in the Deed Records of Coleman County,  Texas, made and
effective  the 1st day of April 2009 between  Kelly Fowler and William G. Fowler
of 1202 West  Arkansas  Lane  Arlington,  Texas,  Lessor,  and Black Strata LLC,
Lessee,  covering the LEASED PREMISIS,  to wit: Being a 103.49 acre tract out of
the M.M.  Givens  survey No. 10 Abstract  No.  1640 and out of the D.M.  Hankins
1435.25 acre tract Coleman County,  Texas, further described by metes and bounds
in the Deed Record from Green river Land and Cattle  Company to Anthony  Patrick
Lange Jr.  recorded in Volume 556. Page 949 of the Deed Records  Coleman County,
Texas incorporated herein by reference.

                                       13
<PAGE>
                            JOINT OPERATING AGREEMENT

     WHEREAS,  MontCrest  Energy,  Inc.  is an  interest  owner of certain  that
certain  Oil and Gas Lease  and/or Oil and Gas  Interests  in the Area of Mutual
Interest  and the  parties,  hereto  have  reached an  agreement  to explore and
develop the Area of Mutual Interest for the commercial production of Oil and Gas
to the extent and as hereinafter provided,

     NOW THEREFORE, it is agreed as follows:

                                   ARTICLE I.

                                   DEFINITIONS

     As used in this  agreement,  the  following  words and terms shall have the
meanings here ascribed to them:

     A. The term "Area of Mutual  Interest"  or "AMI" shall mean  Coleman  South
Leases Two  Thousand  Four  Hundred  Twenty  net  mineral  acres,  more or less,
(2,420.92  +/-), in Coleman  County,  Texas,  located within  T.&N.O.R.R  Survey
Block,  Abstract  1640,  Abstract  654,  Abstract  851,and  Abstract  865,  more
particularly described on Exhibit "A" attached hereto and incorporated herein.

     B. The term "AFE" shall mean an  Authority  for  Expenditure  prepared by a
party to this  agreement for the purpose of estimating  the costs to be incurred
in conducting an operation hereunder.

     C.  The term  "Completion"  or  "Complete"  shall  mean a single  operation
intended  to  complete a well as a producer of Oil and Gas in one or more Zones,
including,  but not limited to, the setting of production  casing,  perforating,
well stimulation and production testing conducted in such operation.

     D. The term  "Contract  Operator"  shall  mean Black  Strata,  LLC or other
designated  oil and gas operator whose role is to conduct  operations  necessary
for proper development, operation, protection and maintenance of the AMI and the
Joint Property.

     E. The  term  "Deepen"  shall  mean a single  operation  whereby  a well is
drilled  to an  objective  Zone  below  the  deepest  Zone in which the well was
previously  drilled,  or below the Deepest Zone proposed in the associated  AFE,
whichever is the lesser.

     F. The terms "Drilling Party" and "Consenting Party" shall mean a party who
agrees to join in and pay its share of the cost of any operation conducted under
the provisions of this agreement.

     G. The term  "Drilling  Unit" shall mean the area fixed for the drilling of
one well by order or rule of any state or federal  body having  authority.  If a
Drilling  Unit is not fixed by any such rule or order,  a Drilling Unit shall be
the  drilling  unit as  established  by the  pattern of  drilling in the Area of
Mutual Interest unless fixed by express agreement of the Drilling Parties.

     H. The term  "Drill  site"  shall mean the Oil and Gas Lease or Oil and Gas
Interest on which a proposed well is to be located.

     I. The term  "Initial  Well" shall mean the well  required to be drilled by
the parties hereto as provided in Article VI.A.

     J. The term "Manager of the AMI" shall mean reciprocally, MontCrest Energy,
Inc., a Non-Operator,  who shall oversee  supervision and management of the Area
of Mutual  necessary for development,  operation,  protection and maintenance of
the Area of Mutual Interest.

                                       14
<PAGE>
     K. The term "Manager of Operations" shall mean Black Strata, LLC engaged by
MontCrest Energy,  Inc. for the purpose of overall supervision and management of
the  oil  and/or  gas  well(s)  for  development,   operation,   protection  and
maintenance of the oil and/or gas well(s).

     L. The term  "Non-Consent  Well"  shall  mean a well in which less than all
parties have conducted an operation as provided in Article VI.B.2.

     M. The terms "Non-Drilling  Party" and "Non-Consenting  Party" shall mean a
party who elects not to participate in a proposed operation.

     N. The term "Non-Operators"  shall mean the Parties to this agreement other
than the  Contract  Operator  and Manger of  Operations  and  includes,  without
limitation  MontCrest Energy,  Inc., and any working interest holder in the Area
of Mutual Interest.

     O. The term  "Oil and Gas"  shall  mean oil,  gas,  casing  head  gas,  gas
condensate, and/or all other liquid or gaseous hydrocarbons and other marketable
substances  produced  therewith,  unless an intent to limit the inclusiveness of
this term is specifically stated.

     P. The term "Oil and Gas Interests" or "Interests"  shall mean unleased fee
and mineral  interests in Oil and Gas in tracts of land lying within the Area of
Mutual Interest which are owned by parties to this agreement.

     Q. The terms "Oil and Gas Lease,"  "Lease" and  "Leasehold"  shall mean the
oil and gas leases or interests therein covering tracts of land lying within the
Area of Mutual Interest which are owned by the parties to this agreement.

     R. The term  "Party" or  "Parties"  shall mean the parties  subject to this
agreement, including Contract Operator, Manger of Operations and Non-Operators.

      S. The term "Plug  Back"  shall mean a single  operation  whereby a deeper
Zone is abandoned in order to attempt a Completion in a shallower Zone.

     T. The term  "Recompletion" or "Recomplete" shall mean an operation whereby
a Completion  in one Zone is  abandoned  in order to attempt a  Completion  in a
different Zone within the existing wellbore.

     U. The term "Rework" shall mean an operation conducted in the wellbore of a
well after it is completed to secure,  restore,  or improve production in a Zone
which is currently open to production in the wellbore.  Such operations include,
but are not  limited  to, well  stimulation  operations  but exclude any routine
repair or maintenance  work or drilling,  Sidetracking,  Deepening,  Completing,
Re-completing, or Plugging Back of a well.

     V. The term "Sidetrack" shall mean the directional  control and intentional
deviation  of a well from  vertical  so as to change  the bottom  hole  location
unless done to straighten  the hole or drill around junk in the hole to overcome
other mechanical difficulties.

     W. The term  "well"  shall mean and refer to certain oil and/or gas well(s)
within the Area of Mutual Interest.

     X. The term "Zone" shall mean a stratum of earth  containing  or thought to
contain a common  accumulation  of Oil and Gas  separately  producible  from any
other common accumulation of Oil and Gas.

Unless the  context  otherwise  clearly  indicates,  words used in the  singular
include the plural,  the word "person" includes natural and artificial  persons,
the plural  includes  the  singular,  and any  gender  includes  the  masculine,
feminine, and neuter.

                                       15
<PAGE>
                                   ARTICLE II.

                                    EXHIBITS

     The  following  exhibits,  as  indicated  below and  attached  hereto,  are
incorporated in and made a part hereof:

A. Exhibit "A," page 42, shall include the following information:

     (1)  Description of the Area of Mutual Interest subject to this agreement,
     (2)  Restrictions, if any, as to depths, formations, or substances,
     (3)  Parties to agreement with  addresses and telephone  numbers for notice
          purposes,
     (4)  Percentages or fractional interests of parties to this agreement,
     (5)  Oil and Gas  Leases  and/or  Oil and  Gas  Interests  subject  to this
          agreement,
     (6)  Burdens on production.

B. Exhibit "B," page 44, Form of Lease.

C. Exhibit "C," page 47, Accounting Procedure.

D. Exhibit "D," page 59, Insurance.

E. Exhibit "E," page 60 Gas Balancing Agreement.

F. Exhibit "F," page 69  Non-Discrimination  and Certification of Non-Segregated
   Facilities.

G. Other:

H. Other:

If any  provision  of any  exhibit,  except  Exhibits  "A" "E," "F," and "G," is
inconsistent  with any provision  contained in the body of this  agreement,  the
provisions in the body of this agreement shall prevail.

                                  ARTICLE III.

                              INTERESTS OF PARTIES

A. OIL AND GAS INTERESTS:

If any party owns an Oil and Gas Interest in the Area of Mutual  Interest,  that
Interest shall be treated as if it were covered by the form of Oil and Gas Lease
attached  hereto as Exhibit  "B," and the owner  thereof  shall be deemed to own
both royalty  interest in such lease and the interest of the lessee  thereunder;
except that such rights arising under "Exhibit B" shall be limited in proportion
to the Area of Mutual Interest.

B. INTERESTS OF PARTIES IN COSTS AND PRODUCTION:

Unless  changed  by other  provisions,  all costs and  liabilities  incurred  in
operations  under this agreement  shall be borne and paid, and all equipment and

                                       16
<PAGE>
materials  acquired in operations in the Area of Mutual Interest shall be owned,
by the  parties as their  interests  are set forth in  Exhibit  "A." In the same
manner,  the parties shall also own all  production of Oil and Gas from the Area
of Mutual  Interest  subject,  however,  to the payment of  royalties  and other
burdens on production as described hereafter.

Regardless of which party has  contributed  any Oil and Gas Lease or Oil and Gas
Interest  on which  royalty  or other  burdens  may be  payable  and  except  as
otherwise expressly provided in this agreement, each party shall pay or deliver,
or cause to be paid or  delivered,  all  burdens on its share of the  production
from the Area of Mutual  Interest  up to,  but not in excess  of,  THREE  TENTHS
(3/10)  and shall  indemnify,  defend and hold the other  parties  free from any
liability  therefore.  Except as otherwise expressly provided in this agreement,
if any party has contributed hereto any Lease or Interest which is burdened with
any  royalty,   overriding  royalty,  production  payment  or  other  burden  on
production  in excess of the amounts  stipulated  above,  such party so burdened
shall  assume and alone bear all such excess  obligations  and shall  indemnify,
defend  and hold the  other  parties  hereto  harmless  from any and all  claims
attributable  to such excess burden.  However,  so long as the Drilling Unit for
the productive Zone(s) is identical with the Area of Mutual Interest, each party
shall  pay or  deliver,  or  cause  to be  paid or  delivered,  all  burdens  on
production  from the Area of Mutual  Interest due under the terms of the Oil and
Gas  Lease(s)  which such party has  contributed  to this  agreement,  and shall
indemnify, defend and hold the other parties free from any liability therefore.

No party  shall ever be  responsible,  on a price  basis  higher  than the price
received by such party,  to any other party's  lessor or royalty  owner,  and if
such other party's lessor or royalty owner should demand and receive  settlement
on a higher price basis,  the party  contributing  the affected Lease shall bear
the additional royalty burden attributable to such higher price.

Nothing  contained  in this  Article  III.B.  shall be deemed an  assignment  or
cross-assignment  of  interests  covered  hereby,  and in the  event two or more
parties  contribute  to  this  agreement  jointly  owned  Leases,  the  parties'
undivided  interests  in said  Leaseholds  shall be  deemed  separate  leasehold
interests for the purposes of this agreement.

C. SUBSEQUENTLY CREATED INTERESTS:

If any party has contributed hereto a Lease or Interest that is burdened with an
assignment  of  production  given as security  for the payment of money,  or if,
after the date of this  agreement,  any party  creates  an  overriding  royalty,
production  payment,  net profits  interest,  assignment  of production or other
burden payable out of production attributable to its working interest hereunder,
such burden shall be deemed a "Subsequently  Created Interest."  Further, if any
party has  contributed  hereto a Lease or Interest  burdened  with an overriding
royalty,  production payment, net profits interests, or other burden payable out
of production  created prior to the date of this  agreement,  and such burden is
not  shown on  Exhibit  "A," such  burden  also  shall be deemed a  Subsequently
Created  Interest to the extent such burden  causes the burdens on such  party's
Lease or Interest to exceed the amount stipulated in Article III.B. above.

The party whose interest is burdened with the Subsequently Created Interest (the
"Burdened   Party")  shall  assume  and  alone  bear,   pay  and  discharge  the
Subsequently Created Interest and shall indemnify,  defend and hold harmless the
other parties from and against any liability therefore. Further, if the Burdened
Party fails to pay, when due, its share of expenses  chargeable  hereunder,  all
provisions  of Article  VI1.B.  shall be  enforceable  against the  Subsequently
Created Interest in the same manner as they are enforceable  against the working
interest of the Burdened  Party.  If the Burdened  Party is required  under this
agreement  to assign or  relinquish  to any other  party,  or parties,  all or a
portion of its working interest and/or the production attributable thereto, said
other party, or parties,  shall receive said assignment  and/or  production free
and clear of said Subsequently  Created  Interest,  and the Burdened Party shall
indemnify,  defend and hold harmless said other party, or parties,  from any and
all  claims and  demands  for  payment  asserted  by owners of the  Subsequently
Created Interest.

                                       17
<PAGE>
                                   ARTICLE IV.

                                     TITLES

A. TITLE EXAMINATION:

Title  examination shall be made on the Drill site of any proposed well prior to
commencement  of  drilling  operations  and,  if a majority  in  interest of the
Drilling  Parties so  request or The  Manager  of  Operations  so elects,  title
examination  shall be made on the entire  Drilling Unit, or maximum  anticipated
Drilling  Unit,  of the well.  The opinion  will  include the  ownership  of the
working interest,  minerals, royalty, overriding royalty and production payments
under the applicable Leases.

Each party  contributing  Leases  and/or Oil and Gas Interests to be included in
the Drill site or Drilling Unit, if appropriate, shall furnish to the Manager of
Operations  all  abstracts  (including  federal  lease  status  reports),  title
opinions,  title papers and curative  material in its possession free of charge.
All such  information  not in the possession of or made available to the Manager
of Operations by the parties,  but necessary for the  examination  of the title,
shall be obtained by the Manager of Operations.  The Manager of Operations shall
cause title to be examined by  attorneys  on its staff or by outside  attorneys.
Copies of all title  opinions shall be furnished to each Drilling  Party.  Costs
incurred by the Manager of Operations in procuring abstracts,  fees paid outside
attorneys for title examination (including  preliminary,  supplemental,  shut-in
royalty  opinions and division order title opinions) and other direct charges as
provided in Exhibit "C" shall be borne by the Drilling Parties in the proportion
that the  interest of each  Drilling  Party  bears to the total  interest of all
Drilling  Parties  as such  interests  appear in  Exhibit  "A." The  Manager  of
Operations shall make no charge for services  rendered by its staff attorneys or
other personnel in the performance of the above functions.

Each party  shall be  responsible  for  securing  curative  matter  and  pooling
amendments  or  agreements  required  in  connection  with Leases or Oil and Gas
Interests  contributed  by such  party.  The  Manager  of  Operations  shall  be
responsible  for the  preparation  and  recording  of  pooling  designations  or
declarations and  communitization  agreements as well as the conduct of hearings
before  governmental  agencies for the securing of spacing or pooling  orders or
any  other  orders  necessary  or  appropriate  to  the  conduct  of  operations
hereunder.  This shall not prevent any party from appearing on its own behalf at
such hearings. Costs incurred by the Manager of Operations,  including fees paid
to outside  attorneys,  which are associated with hearings  before  governmental
agencies,   and  which  costs  are  necessary  and  proper  for  the  activities
contemplated under this agreement,  shall be direct charges to the joint account
and shall not be covered by the  administrative  overhead charges as provided in
Exhibit "C."

The  Manager of  Operations  shall make no charge for  services  rendered by its
staff attorneys or other personnel in the performance of the above functions.

No well  shall be  drilled on the Area of Mutual  Interest  until  after (I) the
title to the Drill site or Drilling Unit, if  appropriate,  has been examined as
above provided, and (2) the title has been approved by the examining attorney or
title has been accepted by all of the Drilling Parties in such well.

B. LOSS OR FAILURE of TITLE:

     3.  Other  Losses:  All  losses of Leases or  Interests  committed  to this
agreement, shall be joint losses and shall be borne by all parties in proportion
to their  interests.  This shall  include  but not be limited to the loss of any
Lease or  Interest  through  failure to  develop  or because  express or implied
covenants have not been performed  (other than  performance  which requires only
the payment of money), and the loss of any Lease by expiration at the end of its

                                       18
<PAGE>
primary term if it is not renewed or extended. There shall be no readjustment of
interests in the remaining  portion of the Area of Mutual Interest on account of
any joint loss.

                                   ARTICLE V.

                              MANAGER OF OPERATIONS

A. DESIGNATION AND RESPONSIBILITIES OF MANAGER OF OPERATIONS:

     MontCrest Energy,  Inc., Manager of the AMI, hereby designates as Manger of
Operations,  Black Strata,  LLC. As the Manger of Operations,  Black Strata, LLC
shall  supervise all  operations  in connection  with the oil and/or gas well(s)
within  the AMI as  permitted  and  required  by,  and within the limits of this
agreement.  In its  performance  of services  hereunder  for the  Non-Operators,
Manager  of  Operations  and  the  Contract  Operator  shall  be an  independent
contractor not subject to the control or direction of the  Non-Operators  except
as to the type of operation to be  undertaken  in  accordance  with the election
procedures contained in this agreement.

     The Manager of Operations  shall not be deemed,  or hold itself out as, the
agent of either the Non-Operators,  including without limitation, the Manager of
the AMI, or hold itself out as having the  authority to bind the  Non-Operators,
including  without  limitation,  the  Manager of the AMI, to any  obligation  or
liability  assumed or  incurred  by the  Manager of  Operations  as to any third
party.  The  Manager of  Operations  shall  conduct  its  activities  under this
agreement as a reasonable  prudent operator,  in a good and workmanlike  manner,
with due diligence and dispatch, in accordance with good oilfield practice,  and
in compliance  with  applicable  law and  regulation,  but in no event shall the
Manager  of  Operations  have any  liability  as to  other  parties  for  losses
sustained  or  liabilities  incurred  except  such  as  may  result  from  gross
negligence or willful misconduct.

     The Contract Operator shall not be deemed, or hold itself out as, the agent
of  either  the  Manager  of  Operations  or  Non-Operators,  including  without
limitation,  the Manager of the AMI, or hold itself out as having the  authority
to bind either the Manager of Operations or Non-Operators,  to any obligation or
liability  assumed or incurred by the  Contract  Operator as to any third party.
The Contract  Operator  shall conduct its  activities  under this agreement as a
reasonable  prudent  operator,  in a  good  and  workmanlike  manner,  with  due
diligence  and  dispatch,  in accordance  with good  oilfield  practice,  and in
compliance  with  applicable  law and  regulation,  but in no  event  shall  the
Contract Operator have any liability as to other parties for losses sustained or
liabilities  incurred except such as may result from gross negligence or willful
misconduct.

B. RESIGNATION OR REMOVAL OF CONTRACT OPERATOR AND SELECTION OF SUCCESSOR:

     1. Resignation or Removal of Contract  Operator:  The Contract Operator may
resign  at  any  time  by  giving  written  notice  thereof  to the  Manager  of
Operations. If Contract Operator terminates its legal existence, or is no longer
capable of serving as Contract  Operator,  Contract  Operator shall be deemed to
have  resigned  without  any  action by the  Manager of  Operations,  except the
selection  of a successor.  The  Contract  Operator may be removed only for good
cause by the Manager of Operations  which shall not be deemed  effective until a
written  notice has been  delivered  to the  Contract  Operator by the Manger of
Operations  detailing  the alleged  Contract  Operator's  default  and  Contract
Operator has failed to cure the default within thirty (30) days from its receipt
of the notice or, if the default  concerns an  operation  then being  conducted,
within forty-eight (48) hours of its receipt of the notice. For purposes hereof,
"good cause" shall mean not only gross negligence or willful misconduct but also
the material breach of or inability to meet the standards of operation contained
in Article  V.A. or material  failure or  inability  to perform its  obligations
under this agreement.

                                       19
<PAGE>
     Subject to Article  VII.D.1,  such  resignation or removal shall not become
effective  until  7:00  o'clock  A.M.  on the  first day of the  calendar  month
following  the  expiration  of ninety  (90) days  after the  giving of notice of
resignation by Contract Operator or action by the Manger of Operations to remove
Contract  Operator,  unless a successor  Contract Operator has been selected and
assumes the duties of Contract Operator at an earlier date.  Contract  Operator,
after  effective  date of  resignation  or removal,  shall be bound by the terms
hereof as a Non-Operator.  A change of a corporate name or structure of Contract
Operator or transfer of Contract  Operator's  interest to any single subsidiary,
parent or successor  corporation  shall not be the basis for removal of Contract
Operator.

     2.  Selection of  Successor  Contract  Operator:  Upon the  resignation  or
removal of Contract Operator under any provision of this agreement,  a successor
to the  Contract  Operator  shall be  selected  by the  Manager  of  Operations;
provided that the Manager of  Operations  owns an interest in the Area of Mutual
Interest at the time such successor  Contract  Operator is selected.  The former
Contract  Operator  shall  promptly  deliver to the  Manager of  Operations  all
records and data relating to the operations  conducted by the former Operator to
the  extent  such  records  and data are not  already in the  possession  of the
successor  operator.  Any cost of  obtaining  or  copying  the  former  Contract
Operator's records and data shall be charged to the joint account.

     3. Effect of Bankruptcy:  If Contract Operator becomes insolvent,  bankrupt
or is placed in  receivership,  it shall be deemed to have resigned  without any
action by the Manager of Operations,  except the selection of a successor.  If a
petition  for relief  under the federal  bankruptcy  laws is filed by or against
Operator,  and the removal of  Contract  Operator  is  prevented  by the federal
bankruptcy  court, the Manger of Operations shall assume interim  operations and
serve until a Contract  Operator has elected to reject or assume this  agreement
pursuant to the  Bankruptcy  Code,  and an election to reject this  agreement by
Contract  Operator  as a debtor in  possession,  or by a trustee in  bankruptcy,
shall be deemed a resignation  as Contract  without any action by the Manager of
Operations,  except the selection of a successor.  During the period of time the
Manager of Operations  controls  operations in the event of Contract  Operator's
insolvency,  bankruptcy, or receivership, all actions shall require the approval
of two (2) or more  parties  owning a  majority  interest  in the Area of Mutual
Interest. In the event there are only two (2) parties to this agreement,  during
the period of time the Manager of Operations controls operations,  a third party
acceptable  to the Manager of  Operations  Operator  and the federal  bankruptcy
court shall be selected as a member of an operating  committee,  and all actions
shall require the approval of two (2) members of the operating committee without
regard to their interest in the Area of Mutual Interest.

C. EMPLOYEES AND CONTRACTORS:

     The number of employees or contractors used by the Manager of Operations or
Contract Operator in conducting operations hereunder,  their selection,  and the
hours of labor and the compensation  for services  performed shall be determined
by the Manager of Operations, and all such employees or contractors shall be the
employees or contractors of the Manager of Operations.

D. RIGHTS AND DUTIES OF THE MANAGER OF OPERATIONS OR CONTRACT OPERATOR:

     1. Competitive  Rates and Use of Affiliates:  All wells drilled in the Area
of Mutual Interest shall be drilled on a competitive contract basis at the usual
rates  prevailing  in the area.  If it so desires,  the Manager of Operations or
Contract  Operator  may employ its own tools and  equipment  in the  drilling of
wells,  but its charges  therefore shall not exceed the prevailing  rates in the
area and the rate of such charges shall be agreed upon by the parties in writing
before drilling operations are commenced, and such work shall be performed under
the  same  terms  and  conditions  as are  customary  and  usual  in the area in
contracts of independent contractors who are doing work of a similar nature. All
work  performed or materials  supplied by affiliates  or related  parties of the
Manager of Operations  and Contract  Operator  shall be performed or supplied at
competitive rates, pursuant to written agreement, and in accordance with customs
and standards prevailing in the industry.

                                       20
<PAGE>
     2.  Discharge  of Joint  Account  Obligations:  Except as herein  otherwise
specifically provided, the Manager of Operations shall cause to be promptly paid
and discharge  expenses incurred in the development and operation of the Area of
Mutual Interest  pursuant to this agreement and shall charge each of the parties
hereto  with  their  respective  proportionate  shares  upon the  expense  basis
provided in Exhibit "C." MontCrest Energy, Inc. shall keep an accurate record of
the joint account  hereunder,  showing expenses incurred and charges and credits
made and received.

     3. Protection from Liens: The Manager of Operations shall cause to be paid,
as and when they  become  due and  payable.  All  accounts  of  contractors  and
suppliers  and wages and salaries for services  rendered or  performed,  and for
materials  supplied  on, to or in respect of the Area of Mutual  Interest or any
operations  for the joint  account  thereof,  and shall  keep the Area of Mutual
Interest free from liens and encumbrances  resulting there from except for those
resulting  from a  bona  fide  dispute  as to  services  rendered  or  materials
supplied.

     4. Custody of Funds:  MontCrest Energy,  Inc. shall hold for the account of
the Non-Operators any funds of the Non-Operators advanced or paid to the Manager
of Operations,  either for the conduct of operations hereunder or as a result of
the sale of production  from the Area of Mutual  Interest,  and such funds shall
remain the funds of the Non-Operators on whose account they are advanced or paid
until  used  for  their   intended   purpose  or  otherwise   delivered  to  the
Non-Operators  or applied  toward the  payment of debts as  provided  in Article
VI1.B.  Nothing in this  paragraph  shall be  construed to establish a fiduciary
relationship  between the Manager of  Operations  and any  Non-Operator  for any
purpose  other than to account  for  Non-Operator  funds as herein  specifically
provided.

     5. Access to Area of Mutual Interest and Records:  MontCrest Energy,  Inc.,
shall except as otherwise provided herein,  permit each Non-Operator or its duly
authorized  representative,  at the Non-Operator's  sole risk and cost, full and
free  access  at all  reasonable  times  to all  operations  of  every  kind and
character  being  conducted for the joint account on the Area of Mutual Interest
and to the records of operations  conducted  thereon or  production  there from,
including the MontCrest Energy,  Inc.'s books and records relating thereto. Such
access  rights  shall not be exercised in a manner  interfering  with  MontCrest
Energy, Inc. or the Manager of Operations' conduct of an operation hereunder and
shall not  obligate  MontCrest  Energy,  Inc.,  the  Manager of  Operations,  or
Contract Operator to furnish any geologic or geophysical data of an interpretive
nature unless the cost of preparation of such  interpretive  data was charged to
the joint  account.  The Manager of  Operations or MontCrest  Energy,  Inc. will
furnish to each  Non-Operator  upon  request  copies of any and all  reports and
information  obtained by MontCrest Energy,  Inc., the Manager of Operations,  or
Contract  Operator in connection with  production and related items,  including,
without limitation,  meter and chart reports,  production purchaser  statements,
but  excluding  purchase  contracts  and pricing  information  to the extent not
applicable to the production of the Non-Operator  seeking the  information.  Any
audit of the records  relating to amounts  expended and the  appropriateness  of
such  expenditures  shall be conducted  in  accordance  with the audit  protocol
specified in Exhibit "C."

     6. Filing and Furnishing Governmental Reports: The Manager of Operations or
Contract Operator will file, and furnish copies to each requesting  Non-Operator
not in default of its payment obligations,  all operational notices,  reports or
applications  required to be filed by local, State,  Federal, or Indian agencies
or authorities having jurisdiction over operations hereunder.  Each Non-Operator
shall  provide to the Manager of  Operations  on a timely basis all  information
necessary to the Manager of Operations or the Contract Operator, as the case may
be, to make such filings.

     7. Drilling and Testing Operations: The following provisions shall apply to
each well drilled hereunder, including but not limited to the Initial Well:

                                       21
<PAGE>
      (a) The Manager of Operations  will promptly advise  Non-Operators  of the
date on which the well is spudded,  or the date on which drilling operations are
commenced  and the  Contract  Operator  shall  promptly  advise  the  Manager of
Operations  of the  date on  which  the  well is  spudded,  or the date on which
drilling operations are commenced.

      (b) The Manager of  Operations  will send to  Non-Operators  such reports,
test results and notices regarding the progress of operations on the well as the
Non-Operators  shall reasonably  request,  including,  but not limited to, daily
drilling reports,  completion reports,  and well logs, and the Contract Operator
shall promptly send to the Manager of Operations such reports,  test results and
notices  regarding  the  progress  of  operations  on the well as the Manager of
Operations  shall  reasonably  request,  including,  but not limited  to,  daily
drilling reports, completion reports, and well logs.

      (c) The Manager of Operations shall adequately test all Zones  encountered
which may  reasonably  be  expected  to be capable of  producing  Oil and Gas in
paying  quantities as a result of  examination  of the electric log or any other
logs or cores or tests  conducted  hereunder  and the and the Contract  Operator
shall adequately test all Zones  encountered which may reasonably be expected to
be  capable  of  producing  Oil and Gas in  paying  quantities  as a  result  of
examination  of the electric  log or any other logs or cores or tests  conducted
hereunder.

     8. Cost  Estimates:  The Manager of  Operations  shall finish  estimates of
current  and  cumulative  costs  incurred  for the joint  account at  reasonable
intervals  during the conduct of any operation  pursuant to this agreement.  The
Manager of Operations  shall not be held liable for errors in such  estimates so
long as the estimates are made in good faith.

     9.  Insurance:  At all times  while  operations  are  conducted  hereunder,
Contract  Operator shall comply with the workers  compensation  law of the state
where the operations are being conducted.  Contract Operator shall also carry or
provide  insurance  for the  benefit  of the joint  account  of the  parties  as
outlined  in  Exhibit  "D"  attached  hereto  and made a part  hereof.  Contract
Operator  shall  require all  contractors  engaged in work on or for the Area of
Mutual Interest to comply with the workers  compensation  law of the state where
the operations are being  conducted and to maintain such other  insurance as the
Manger of Operations may require.

In the event automobile liability insurance is specified in said Exhibit "D," or
subsequently  receives the approval of the  parties,  no direct  charge shall be
made by Operator for premiums paid for such  insurance  for Contract  Operator's
automotive equipment.

                                   ARTICLE VI.

                            DRILLING AND DEVELOPMENT

A. WELL:

     On or before October,  2012,  Contract Operator shall commence the drilling
of those certain oil and/or gas well(s) known as MEI # 120 (hereinafter "the oil
and/or gas well(s)  within the AMI" at the location  identified  in Exhibit "A,"
which also defines the Area of Mutual Interest.

        The  drilling  of the oil  and/or  gas  well(s)  within  the AMI and the
participation  therein by all parties is obligatory,  subject to Article V1.C.1.
as to participation in Completion operations and Article V1.F. as to termination
of operations and Article XI as to occurrence of force majeure.

B. SUBSEQUENT OPERATIONS:

     1. Proposed  Operations:  If any party should desire to Rework,  Sidetrack,
Deepen, Re-complete or Plug Back a dry hole or the oil and/or gas well(s) within
the AMI are no longer  capable of producing in paying  quantities  in which such

                                       22
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party has not otherwise relinquished its interest in the proposed objective Zone
under this agreement,  the party desiring to drill, Rework,  Sidetrack,  Deepen,
Re-complete or Plug Back the Manager of Operations  shall give written notice of
the proposed operation to the parties who have not otherwise  relinquished their
interest in such objective Zone under this agreement and to all other parties in
the case of a proposal for Sidetracking or Deepening,  specifying the work to be
performed,  the location,  proposed depth, objective Zone and the estimated cost
of the  operation.  The  parties to whom such a notice is  delivered  shall have
thirty (30) days after  receipt of the notice  within  which to notify the party
proposing to do the work whether  they elect to  participate  in the cost of the
proposed  operation.  If a drilling rig is on location,  notice of a proposal to
Rework,  Sidetrack,  Re-complete,  Plug Back or Deepen may be given by telephone
and the response period shall be limited to forty-eight (48) hours.

Failure of a party to whom such notice is  delivered  to reply within the period
above fixed shall constitute an election by that party not to participate in the
cost of the proposed operation.  Any proposal by a party to conduct an operation
conflicting  with the  operation  initially  proposed  shall be delivered to all
parties within the time and in the manner provided in Article VI.B.6.

If all parties to whom such notice is delivered  elect to  participate in such a
proposed operation,  the parties shall be contractually committed to participate
therein  provided such operations are commenced within the time period hereafter
set forth,  and the Manger of  Operations  shall,  no later than sixty (60) days
after  expiration  of the notice  period of thirty  (30) days (or as promptly as
practicable  after the  expiration  of the  forty-eight  (48) hour period when a
drilling rig is on location, as the case may be), actually commence the proposed
operation and thereafter  complete it with due diligence at the risk and expense
of the parties participating therein; provided,  however, said commencement date
may be extended  upon written  notice of same by the Manger of Operations to the
other parties, for a period of up to thirty (30) additional days if, in the sole
opinion  of the  Manger  of  Operations,  such  additional  time  is  reasonably
necessary  to obtain  permits  from  governmental  authorities,  surface  rights
(including  rights-of-way)  or appropriate  drilling  equipment,  or to complete
title  examination or curative matter required for title approval or acceptance.
If the  actual  operation  has not  been  commenced  within  the  time  provided
(including  any extension  thereof as  specifically  permitted  herein or in the
force majeure provisions of Article XI) and if any party hereto still desires to
conduct said operation, written notice proposing same must be resubmitted to the
other  parties in  accordance  herewith as if no prior  proposal  had been made.
Those  parties  that did not  participate  in the drilling of the oil and/or gas
well(s)  within  the AMI for which a  proposal  to Deepen or  Sidetrack  is made
hereunder shall, if such parties desire to participate in the proposed Deepening
or  Sidetracking  operation,  reimburse the Drilling  Parties in accordance with
Article  VI.B.4.  in the event of a Deepening  operation and in accordance  with
Article VI.B.5. in the event of a Sidetracking operation.

2.   Operations  by Less  Than All  Parties:  See also  Article  XVI,  G,  Other
     Provisions:

      (a)  Determination of  Participation.  If any party to whom such notice is
delivered as provided in Article VI.B.1 or V1.C.1.  elects not to participate in
the proposed  operation,  then,  in order to be entitled to the benefits of this
Article,  the party or parties giving the notice and such other parties as shall
elect to participate in the operation shall, no later than sixty (60) days after
the  expiration  of the notice  period of thirty  (30) days (or as  promptly  as
practicable  after the  expiration  of the  forty-eight  (48) hour period when a
drilling rig is on location,  as the case may be) actually commence the proposed
operation and complete it with due  diligence.  The Manger of  Operations  shall
cause   Contract   Operator   to  perform  all  work  for  the  account  of  the
Consenting-Parties;  provided, however, if no drilling rig or other equipment is
on location, the Consenting Parties shall either:

                                       23
<PAGE>
     (i)  Request the Manger of Operations to cause Contract Operator to perform
          the work  required by such  proposed  operation for the account of the
          Consenting Parties, or
     (ii) Designate the Manger of Operations to perform such work, or
     (iii)In the event  that the  MontCrest  Energy,  Inc.  is a  Non-Consenting
          Party,  designate one of the Consenting Parties as Operator to perform
          such  work.  The rights and  duties  granted to and  imposed  upon the
          Operator  under this  agreement  are granted to and  imposed  upon the
          party  designated  as Operator  for an operation in which the original
          Operator  is  a  Non-Consenting   Party.   Consenting  Parties,   when
          conducting  operations in the Area of Mutual Interest pursuant to this
          Article  VI.B.2.,  shall comply with all terms and  conditions of this
          agreement.

If less than all parties approve any proposed  operation,  the proposing  party,
immediately after the expiration of the applicable  notice period,  shall advise
all Parties of the total  interest of the parties  approving  such operation and
its  recommendation as to whether the Consenting Parties should proceed with the
operation as proposed.  Each Consenting  Party,  within  forty-eight  (48) hours
after delivery of such notice, shall advise the proposing party of its desire to

     (i)  limit  participation  to such party's interest as shown on Exhibit "A"
          or
     (ii) Carry only its proportionate part (determined by dividing such party's
          interest  in the  Area of  Mutual  Interest  by the  interests  of all
          Consenting  Parties in the Area of Mutual Interest) of  Non-Consenting
          Parties' interests, or
     (iii)Carry its  proportionate  part  (determined  as  provided  in (ii)) of
          Non-Consenting  Parties'  interests  together with all or a portion of
          its proportionate part of any  Non-Consenting  Parties' interests that
          any  Consenting   Party  did  not  elect  to  take.  Any  interest  of
          Non-Consenting Parties that is not carried by a Consenting Party shall
          be deemed to be carried by the party  proposing  the operation if such
          party does not withdraw its proposal.  Failure to advise the proposing
          party within the time required  shall be deemed an election under (i).
          In the event a  drilling  rig is on  location,  notice may be given by
          telephone, and the time permitted for such a response shall not exceed
          a total  of  forty-eight  (48)  hours.  The  proposing  party,  at its
          election,  may  withdraw  such  proposal  if there is less  than  100%
          participation and shall notify all parties of such decision within ten
          (10) days,  or within  twenty-four  (24) hours if a drilling rig is on
          location,  following  expiration of the applicable response period. If
          100% subscription to the proposed operation is obtained, the proposing
          party  shall  promptly   notify  the   Consenting   Parties  of  their
          proportionate  interests  in the  operation  and the party  serving as
          Operator shall commence such operation  within the period  provided in
          Article  V1.B.l.,  subject  to the same  extension  right as  provided
          therein.

      (b) Relinquishment of Interest for Non-Participation.  The entire cost and
risk of conducting such operations  shall be borne by the Consenting  Parties in
the proportions  they have elected to bear same under the terms of the preceding
paragraph.  Consenting Parties shall keep the leasehold estates involved in such
operations free and clear of all liens and encumbrances of every kind created by
or arising from the operations of the Consenting  Parties.  If such an operation
results in a dry hole,  then  subject  to  Articles  VI.B.6.  and  VI.E.3.,  the
Consenting  Parties shall plug and abandon the oil and/or gas well(s) within the
AMI and  restore  the surface  location  at their sole cost,  risk and  expense;
provided,  however,  that those Non-Consenting  Parties that participated in the
drilling,  Deepening or  Sidetracking  of the well shall remain  liable for, and
shall pay, their proportionate shares of the cost of plugging and abandoning the
oil and/or gas well(s) within the AMI and restoring the surface location insofar
only as those  costs were not  increased  by the  subsequent  operations  of the
Consenting  Parties.  If the oil and/or gas well(s)  within the AMI are drilled,

                                       24
<PAGE>
Reworked,  Sidetracked,   Deepened,  Re-completed  or  Plugged  Back  under  the
provisions of this Article results in a well capable of producing Oil and/or Gas
in paying  quantities,  the Consenting  Parties shall Complete and equip the oil
and/or gas  well(s)  within the AMI to produce at their sole cost and risk,  and
the oil and/or gas  well(s)  within the AMI are shall then be turned over to the
Manger of Operations (if MontCrest  Energy,  Inc. did not conduct the operation)
and shall be  operated  by the Manger of  Operations  at the expense and for the
account  of  the  Consenting  Parties.   Upon  commencement  of  operations  for
Re-drilling, Reworking, Sidetracking,  Re-completing, Deepening or Plugging Back
of the oil and/or gas well(s) within the AMI by Consenting Parties in accordance
with the provisions of this Article,  each Non-Consenting  Party shall be deemed
to have relinquished to Consenting Parties, and the Consenting Parties shall own
and be entitled to receive, in proportion to their respective interests,  all of
such  Non-Consenting  Party's  interest in the oil and/or gas well(s) within the
AMI and share of production there from.

Neither  consenting nor non-consenting  parties will have any rights,  title, or
interest in acreage held by production by the oil and/or gas well(s)  within the
AMI, provided however,  that consenting  parties to proposed operation will have
rights,  title,  or interest in the oil and/or gas well(s) within the AMI in the
case of a Reworking, Sidetracking, Deepening, Re-completing or Plugging Back, or
a Completion under the provisions of this Article including each  Non-Consenting
Party's relinquishment of each Non-Consenting Party's to Consenting Parties, and
the  Consenting  Parties shall own and be entitled to receive,  in proportion to
their respective interests,  all of such Non-Consenting  Party's interest in the
oil and/or gas well(s) within the AMI and share of production there from.

     (c)  Reworking,   Re-completing  or  Plugging  Back.  An  election  not  to
participate in the drilling, Sidetracking or Deepening of a well shall be deemed
an election  not to  participate  in any  Reworking or Plugging  Back  operation
proposed in such a well, or portion thereof.

     (d) Recoupment  Matters.  During the period of time Consenting  Parties are
entitled to receive Non-Consenting Party's share of production,  or the proceeds
there from,  Consenting  Parties shall be responsible  for the payment of all ad
valorem,  production,  severance,  excise,  gathering  and other taxes,  and all
royalty,  overriding  royalty and other  burdens  applicable  to  Non-Consenting
Party's share of production not excepted by Article III.C.

     (e)  In  the  case  of  any   Reworking.   Sidetracking,   Plugging   Back,
Re-completing or Deepening operation,  the Consenting Parties shall be permitted
to use, free of cost,  all casing,  tubing and other  equipment in the well, but
the ownership of all such equipment shall remain unchanged; and upon abandonment
of a well after such Reworking,  Sidetracking,  Plugging Back,  Re-completing or
Deepening,  the  Consenting  Parties shall account for all such equipment to the
owners thereof,  with each party receiving its proportionate  part in kind or in
value, less cost of salvage.

     3. Stand-By  Costs: In the event that the oil and/or gas well(s) within the
AMI have been drilled or Deepened and has reached its  authorized  depth and all
tests have been completed and the results thereof  furnished to the parties,  or
when operations on the oil and/or gas well(s) within the AMI have been otherwise
terminated  pursuant to Article VI.F.,  stand-by costs incurred pending response
to  a  party's   notice   proposing  a   Reworking,   Sidetracking,   Deepening,
Re-completing,  Plugging  Back or  Completing  operation  in the oil  and/or gas
well(s) within the AMI including the period  required under Article  VI.B.6.  to
resolve competing  proposals) shall be charged and borne as part of the drilling
or Deepening operation just completed.  Stand-by costs subsequent to all parties
responding,  or  expiration  of the response  time  permitted,  whichever  first
occurs,  and  prior  to  agreement  as to  the  participating  interests  of all
Consenting Parties pursuant to the terms of the second grammatical  paragraph of
Article  VI.B.2.  (a),  shall be  charged  to and borne as part of the  proposed
operation, but if the proposal is subsequently withdrawn because of insufficient
participation,  such stand-by  costs shall be allocated  between the  Consenting
Parties in the proportion each Consenting Party's interest.

                                       25
<PAGE>
In the  event  that  notice  for a  Sidetracking  operation  is given  while the
drilling rig to be utilized is on location, any party may request and receive up
to five (5) additional days after  expiration of the  forty-eight  hour response
period  specified in Article  VI.B. 1. within which to respond by paying for all
stand-by costs and other costs incurred  during such extended  response  period:
Operator may require such party to pay the estimated stand-by time in advance as
a condition to extending the response  period.  If more than one party elects to
take such  additional  time to respond to the  notice,  standby  costs  shall be
allocated  between the parties taking additional time to respond on a day-to-day
basis in the proportion each electing party's interest.

     4.  Sidetracking:  Any party having the right to  participate in a proposed
Sidetracking operation that does not own an interest in the affected wellbore at
the time of the  notice  shall,  upon  electing  to  participate,  tender to the
wellbore  owners  its  proportionate   share  (equal  to  its  interest  in  the
Sidetracking operation) of the value of that portion of the existing wellbore to
be utilized as follows:

      (a)  If  the   proposal  is  for   Sidetracking   an  existing  dry  hole,
reimbursement  shall be on the basis of the actual costs incurred in the initial
drilling of the well down to the depth at which the  Sidetracking  operation  is
initiated.

      (b) If the  proposal  is for  Sidetracking  a well  which  has  previously
produced,  reimbursement  shall be on the  basis of such  party's  proportionate
share of drilling and equipping  costs  incurred in the initial  drilling of the
well down to the depth at which the  Sidetracking  operation is conducted,  such
party's  proportionate  share of the cost of the well's  salvable  materials and
equipment  down to the depth at which the  Sidetracking  operation  is initiated
shall be determined in accordance with the provisions of Exhibit "C."

     5. Order of  Preference  of  Operations:  Except as otherwise  specifically
provided in this  agreement,  if any party  desires to propose the conduct of an
operation  that  conflicts  with a proposal  that has been made by a party under
this Article VI, such party shall have  fifteen  (15) days from  delivery of the
initial  proposal,  in the case of a  proposal  to drill a well or to perform an
operation on a well where no drilling rig is on location,  or  twenty-four  (24)
hours, from delivery of the initial  proposal,  if a drilling rig is on location
for the well on which  such  operation  is to be  conducted,  to  deliver to all
parties  entitled  to  participate  in  the  proposed   operation  such  party's
alternative  proposal,  such alternate  proposal to contain the same information
required  to be  included in the initial  proposal.  Each party  receiving  such
proposals  shall elect by  delivery  of notice to Operator  within five (5) days
after expiration of the proposal period,  or within  twenty-four (24) hours if a
drilling rig is on location  for the well that is the subject of the  proposals,
to participate in one of the competing proposals.  Any party not electing within
the time required shall be deemed not to have voted. The proposal  receiving the
vote of parties owning the largest aggregate  percentage interest of the parties
voting shall have priority over all other competing proposals;  in the case of a
tie vote, the initial  proposal shall prevail.  Operator shall deliver notice of
such result to all parties  entitled to participate in the operation within five
(5) days after  expiration of the election  period (or within  twenty-four  (24)
hours,  if a drilling  rig is on  location).  Each party shall then have two (2)
days (or  twenty-four  (24) hours if a rig is on location)  from receipt of such
notice to elect by delivery of notice to the Manger of Operations to participate
in such operation or to relinquish interest in the affected well pursuant to the
provisions  of Article  VI.B.2.;  failure  by a party to  deliver  notice to the
Manger of  Operations  within  such period  shall be deemed an  election  not to
participate in the prevailing proposal. SEE, ALSO, ARTICLE XVI.

     6. Conformity to Spacing  Pattern:  Notwithstanding  the provisions of this
Article VI.B.2, it is agreed that no wells shall be proposed to be drilled to or
Completed in or produced from a Zone from which a well located  elsewhere on the
Area  of  Mutual  Interest  is  producing,  unless  such  well  conforms  to the
then-existing well spacing pattern for such Zone.

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<PAGE>
     7. Paying Wells: No party shall conduct any Reworking,  Deepening, Plugging
Back, Completion,  Re-completion, or Sidetracking operation under this agreement
with respect to any well then capable of producing in paying  quantities  except
with the consent of all parties that have not relinquished interests in the well
at the time of such operation. See also Article XVI.J. Provisions.

C. COMPLETION OF WELLS; REWORKING AND PLUGGING BACK:

     1.   Completion:  Without  the  consent  of all  parties,  no well shall be
          drilled, Deepened or Sidetracked, except any well drilled, Deepened or
          Sidetracked  pursuant to the  provisions  of Article  VI.B.2.  of this
          agreement.  Consent to the drilling,  Deepening or Sidetracking  shall
          include all  necessary  expenditures  for the  drilling,  Deepening or
          Sidetracking, testing, Completing and equipping of the well, including
          necessary tankage and/or surface facilities.

D. OTHER OPERATIONS

Neither the Manager of Operations nor the Contract  Operator shall undertake any
single  project  reasonably  estimated  to require an  expenditure  in excess of
THIRTY  THOUSAND  Dollars  ($30,000.00)  except in connection with the drilling,
Sidetracking,  Reworking, Deepening, Completing,  Re-completing or Plugging Back
of a well that has been previously  authorized by or pursuant to this agreement;
provided,  however,  that,  in case of  explosion,  fire,  flood or other sudden
emergency, whether of the same or different nature, Operator may take such steps
and  incur  such  expenses  as in its  opinion  are  required  to deal  with the
emergency to safeguard life and property, but the Manager of Operations,  or the
Contract  Operator,  as the case may be, shall report,  as promptly as possible,
the emergency to the other parties.  MontCrest Energy,  Inc. shall, with the use
of cost data provided by the Manager of  Operations,  prepare an AFE for its own
use, and MontCrest  Energy,  Inc. shall furnish any  Non-Operator an information
copy thereof for any single project costing in excess of THIRTY THOUSAND Dollars
($30,000).  Any party who has not relinquished its interest in a well shall have
the right to propose that the Manager of Operations  direct Contract Operator to
perform repair work or undertake the  installation  of artificial lift equipment
or  ancillary  production  facilities  such as salt water  disposal  wells or to
conduct  additional  work with  respect  to a well  drilled  hereunder  or other
similar project (but not including the  installation of gathering lines or other
transportation  or  marketing  facilities,  the  installation  of which shall be
governed  by separate  agreement  between the  parties)reasonably  estimated  to
require  expenditure  in excess  of the  amount  first  set forth  above in this
Article V1.D.  (except in connection  with an operation  required to be proposed
under  Articles  V1.B.1.  or  V1.C.1.  Option  No. 2,  which  shall be  governed
exclusively  by those  Articles).  The Manager of Operations  shall deliver such
proposal to all parties entitled to participate  therein.  If within thirty (30)
days thereof the Manager of Operations secures the written consent of any two or
more parties  owning at least 50% of the  interests  of the parties  entitled to
participate  in such  operation,  each party having the right to  participate in
such project shall be bound by the terms of such proposal and shall be obligated
to pay its proportionate share of the costs of the proposed project as if it had
consented to such project pursuant to the terms of the proposal.

E. ABANDONMENT OF WELLS:

     1. Abandonment of Dry Holes: Except for a well drilled or Deepened pursuant
to Article VI.B.2., a well which has been drilled or Deepened under the terms of
this  agreement  and is  proposed  to be  completed  as a dry hole  shall not be
plugged and abandoned without the consent of all parties.  Should the Manager of
Operations, after diligent effort, be unable to contact any party, or should any
party fail to reply within  forty-eight  (48) hours after  delivery of notice of
the proposal to plug and abandon  such well,  such party shall be deemed to have
consented to the proposed abandonment.  Such well shall be plugged and abandoned
in accordance with  applicable  regulations and at the cost, risk and expense of
the parties who participated in the cost of drilling or Deepening such well. Any
party who objects to, plugging and abandoning  such well by notice  delivered to

                                       27
<PAGE>
the Manager of Operations within forty-eight (48) hours after delivery of notice
of the  proposed  plugging  shall  take  over  the  well  as of the  end of such
forty-eight (48) hour notice period and conduct further  operations in search of
Oil and/or Gas subject to the provisions of Article VI.B.; failure of such party
to provide  proof  reasonably  satisfactory  to the Manager of Operations of its
financial  capability to conduct such operations or to take over the well within
such period or thereafter to conduct operations on such well or plug and abandon
such well shall entitle the Manager of  Operations to retain or take  possession
of the well and plug and abandon the well.  The party taking over the well shall
indemnify MontCrest Energy, Inc. (if the MontCrest Energy, Inc. is an abandoning
party)  and the other  abandoning  parties  against  liability  for any  further
operations  conducted  on  such  well  except  for the  costs  of  plugging  and
abandoning the well and restoring the surface,  for which the abandoning parties
shall remain proportionately liable.

     2. Abandonment of Wells That Have Produced:  Except for any well in which a
Non-Consent operation has been conducted, any well which has been completed as a
producer shall not be plugged and abandoned  without the consent of all parties.
If all  parties  consent to such  abandonment,  the well  shall be  plugged  and
abandoned in accordance  with  applicable  regulations and at the cost, risk and
expense of all the parties hereto. Failure of a party to reply within sixty (60)
days of delivery of notice of proposed  abandonment  shall be deemed an election
to consent to the proposal.

If, within sixty (60) days after delivery of notice of the proposed  abandonment
of any well,  all parties do not agree to the  abandonment  of such well,  those
wishing to continue its operation shall be obligated to take over the well as of
the expiration of the  applicable  notice period and shall  indemnify  MontCrest
Energy,  Inc. (if the MontCrest  Energy,  Inc. is an  abandoning  party) and the
other  abandoning  parties against  liability for any further  operations on the
well  conducted  by such  parties.  Failure  of such party or parties to provide
proof  reasonably  satisfactory  to the Manager of Operations of their financial
capability  to  conduct  such  operations  or to take over the well  within  the
required  period or thereafter to conduct  operations on such well shall entitle
the Manager of Operations to retain or take possession of such well and plug and
abandon the well.

Parties taking over a well as provided  herein shall tender to each of the other
parties its proportionate share of the value of the well's salvable material and
equipment, determined in accordance with the provisions of Exhibit "C," less the
estimated  cost of salvaging and the estimated  cost of plugging and  abandoning
and restoring the surface;  provided,  however,  that in the event the estimated
plugging and abandoning and surface  restoration costs and the estimated cost of
salvaging  are  higher  than  the  value of the  well's  salvable  material  and
equipment, each of the abandoning parties shall tender to the parties continuing
operations  their  proportionate  shares  of the  estimated  excess  cost.  Each
abandoning party shall assign to the non-abandoning  parties,  without warranty,
express or  implied,  as to title or as to  quantity,  or fitness for use of the
equipment  and  material,  all of its  interest in the  wellbore of the well and
related equipment,  together with its interest in the Leasehold insofar and only
insofar  as such  Leasehold  covers  the  right to obtain  production  from that
wellbore. If the interest of the abandoning party is or includes and Oil and Gas
Interest,  such party shall execute and deliver to the  non-abandoning  party or
parties an oil and gas lease, limited to the wellbore for a term of one (1) year
and so long  thereafter  as Oil and/or Gas is produced.  Such lease to be on the
form  attached  as  Exhibit  "B." The  assignments  or leases so  limited  shall
encompass the Drilling Unit upon which the well is located. The payments by, and
the  assignments or leases to, the assignees  shall be in a ratio based upon the
relationship  of their  respective  percentage of  participation  in the Area of
Mutual Interest to the aggregate of the percentages of participation in the Area
of Mutual Interest of all assignees. There shall be no readjustment of interests
in the remaining portions of the Area of Mutual Interest.

Thereafter, abandoning parties shall have no further responsibility,  liability,
or  interest  in the  operation  of or  production  from the well in the Area of
Mutual  Interest.  Upon  request,  the Manager of Operations  shall  continue to

                                       28
<PAGE>
operate the assigned well for the account of the  non-abandoning  parties at the
rates and charges contemplated by this agreement.

     3. Abandonment of Non-Consent Operations:  The provisions of Article VI.E.1
or VI.E.2.  above shall be applicable as between Consenting Parties in the event
of the proposed  abandonment of any well excepted from said Articles;  provided,
however, no well shall be permanently plugged and abandoned unless and until all
parties  having  the  right to  conduct  further  operations  therein  have been
notified of the proposed  abandonment  and afforded the  opportunity to elect to
take over the well in accordance with the provisions of this Article VI.E.;  and
provided further,  that Non-Consenting  Parties who own an interest in a portion
of the well shall pay their  proportionate  shares of  abandonment  and  surface
restoration  cost for such well as  provided  in  Article  VI.B.2.(b).  SEE ALSO
ARTICLE XVI.F. OTHER PROVISIONS.

F. TERMINATION OF OPERATIONS:

The Manager of the AMI,  at its sole and  exclusive  discretion,  shall make all
determinations with respect to whether and when to commence an operation for the
Drilling, Reworking, Sidetracking, Plugging Back, Deepening, Testing, Completion
or plugging of a well,  without regard to consent of any other party;  provided,
however, that in the event granite or other practically  impenetrable  substance
or  condition  in the  hole is  encountered  which  renders  further  operations
impractical,  the Manager of  Operations  may, in its sole  discretion  elect to
discontinue  operations and give notice of such condition in the manner provided
in  Article  VI.B.I.,  and the  provisions  of  Article  V.I.B.  or VI.E.  shall
thereafter apply to such operation, as appropriate.

G. TAKING PRODUCTION IN KIND - GAS BALANCING AGREEMENT ATTACHED:

Each party shall take in kind or separately  dispose of its proportionate  share
of all Oil and Gas  produced  from the Area of  Mutual  Interest,  exclusive  of
production  which may be used in  development  and producing  operations  and in
preparing  and  treating  Oil and  Gas for  marketing  purposes  and  production
unavoidably  lost.  Any  extra  expenditure  incurred  in the  taking in kind or
separate  disposition by any party of its proportionate  share of the production
shall be borne by such party.  Any party taking its share of  production in kind
shall be  required to pay for only its  proportionate  share of such part of the
Manager of Operations or Contract Operator's surface facilities which it uses.

Each party shall execute such division  orders and contracts as may be necessary
for the sale of its  interest in  production  from the Area of Mutual  Interest,
and, except as provided in Article VII.B.,  shall be entitled to receive payment
directly from the purchaser thereof for its share of all production.

If any  party  fails  to  make  the  arrangements  necessary  to take in kind or
separately dispose of its proportionate  share of the Oil produced from the Area
of Mutual Interest,  the Manager of Operations shall have the right,  subject to
the  revocation  at will by the party  owning  it,  but not the  obligation,  to
purchase  such Oil or sell it to others  at any time and from time to time,  for
the account of the non-taking party. Any such purchase or sale by the Manager of
Operations may be terminated by the Manager of Operations upon at least ten (10)
days written notice to the owner of said  production and shall be subject always
to the right of the owner of the production  upon at least ten (10) days written
notice to the Manager of Operations to exercise at any time its right to take in
kind, or separately dispose of, its share of all Oil not previously delivered to
a purchaser.

Any purchase or sale by the Manager of  Operations of any other party's share of
Oil shall be only for such reasonable periods of time as are consistent with the
minimum  needs of the industry  under the  particular  circumstances,  but in no
event for a period in excess of one (1) year.

Any such sale by the  Manager of  Operations  shall be in a manner  commercially
reasonable under the  circumstances  but Contract Operator shall have no duty to
share any existing  market or to obtain a price equal to that received under any
existing market. The sale or delivery of a non-taking party's share of Oil under

                                       29
<PAGE>
the terms of any existing  contract of the Contract  Operator shall not give the
non-taking  party any interest in or make the  non-taking  party a party to said
contract.  No  purchase  shall be made by  Contract  Operator  without  Contract
Operator  first giving the Manager of  Operations  and the  non-taking  party at
least ten (1O) days written notice of such intended purchase and the price to be
paid or the pricing basis to be used.

All parties shall give timely written notice to the Manager of Operations of Gas
marketing  arrangements  for the following  month,  excluding  price,  and shall
contemporaneously  notify  Contract  Operator  and  the  Manager  of  Operations
immediately in the event of a change in such arrangements.

Contract Operator shall maintain records of al1 marketing  arrangements,  and of
volumes  actually sold or transported,  which records shall be made available to
the Manager of Operations and Non-Operators upon reasonable request.

In the event one or more parties'  separate  disposition of its share of the Gas
causes split-stream  deliveries to separate pipelines and/or deliveries which on
a day-to-day basis for any reason are not exactly equal to a party's  respective
proportionate  share of total Gas sales to be allocated to it, the  balancing or
accounting  between the parties  shall be IN  accordance  with any Gas balancing
agreement  between the parties hereto,  whether such an agreement is attached as
Exhibit "E" or is a separate  agreement.  Contract Operator shall give notice to
the Manager of Operations and  Non-Operators  of the first sales of Gas from any
well under this agreement.

                                  ARTICLE VII.

                      EXPENDITURES AND LIABILITY OF PARTIES

A. LIABILITY OF PARTIES:

The liability of the parties  shall be several,  not joint or  collective.  Each
party shall be responsible  only for its  obligations,  and shall be liable only
for its proportionate share of the costs of developing and operating the Area of
Mutual  Interest.  Accordingly,  the liens  granted among the parties in Article
VII.B. are given to secure only the debts of each severally,  and no party shall
have any  liability  to third  parties  hereunder  to satisfy the default of any
other party in the payment of any expense or obligation hereunder. It is not the
intention  of the parties to create,  nor shall this  agreement  be construed as
creating a mining or other partnership,  joint venture,  agency  relationship or
association,  or to render the  parties  liable as  partners,  co-venturers,  or
principals. In their relations with each other under this agreement, the parties
shall  not be  considered  fiduciaries  or to have  established  a  confidential
relationship  but  rather  shall  be  free  to act on an  arms-length  basis  in
accordance with their own respective  self-interest,  subject,  however,  to the
obligation of the parties to act in good faith in their dealings with each other
with respect to activities hereunder.

B. LIENS AND SECURITY INTERESTS:

Each party  grants to the other  parties  hereto a lien upon any interest it now
owns or  hereafter  acquires in Oil and Gas Leases and Oil and Gas  Interests in
the Area of Mutual  Interest,  and a security  interest  and/or  purchase  money
security  interest  in any  interest  it now owns or  hereafter  acquires in the
personal  property  and  fixtures on or used or obtained  for use in  connection
therewith,  to secure performance of all of its obligations under this agreement
including but not limited to payment of expense,  interest and fees,  the proper
disbursement of all monies paid hereunder,  the assignment or  relinquishment of
interest in Oil and Gas Leases as required hereunder, and the proper performance
of operations  hereunder.  Such lien and security interest granted by each party
hereto shall  include  such  party's  leasehold  interests,  working  interests,
operating  rights.  and royalty and overriding  royalty interests in the Area of
Mutual Interest now owned or hereafter  acquired and in lands pooled or unitized
therewith or otherwise becoming subject to this agreement,  the Oil and Gas when

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<PAGE>
extracted there from and equipment  situated thereon or used or obtained for use
in connection therewith  (including,  without limitation,  all wells, tools, and
tubular goods), and accounts  (including,  without limitation,  accounts arising
from  gas  imbalances  or from  the  sale of Oil  and/or  Gas at the  wellhead),
contract rights,  inventory and general intangibles  relating thereto or arising
there from, and all proceeds and products of the foregoing.

If any party fails to pay its share of cost  within  thirty days (30) days after
rendition  of  a  statement   therefore  by  the  Manager  of  Operations,   the
non-defaulting parties, including the Manager of Operations,  shall upon request
by the Manager of Operations,  pay the unpaid amount in the proportion  that the
interest  of each such party  bears to the  interest  of all such  parties.  The
amount  paid by each  party so paying its share of the  unpaid  amount  shall be
secured by the liens and security rights  described in Article VII.B.,  and each
paying  party  may  independently  pursue  any  remedy  available  hereunder  or
otherwise.

If any party does not perform all of its obligations hereunder,  and the failure
to perform subjects such party to foreclosure or execution  proceedings pursuant
to the provisions of this agreement, to the extent allowed by governing law, the
defaulting  party waives any available  right of  redemption  from and after the
date of judgment,  any required  valuation or  appraisement  of the mortgaged or
secured  property  prior to sale,  any available  right to stay  execution or to
require a marshaling  of assets and any required bond in the event a receiver is
appointed.  In addition,  to the extent  permitted by applicable law, each party
hereby  grants to the other  parties a power of sale as to any property  that is
subject to the lien and  security  rights  granted  hereunder,  such power to be
exercised  in  the  manner   provided  by  applicable  law  or  otherwise  in  a
commercially reasonable manner and upon reasonable notice.

Each party  agrees  that the other  parties  shall be  entitled  to utilize  the
provisions  of Oil and Gas lien law or other  lien law of any state in which the
Area of Mutual  Interest is situated  to enforce the  obligations  of each party
hereunder.  Without  limiting the  generality  of the  foregoing,  to the extent
permitted by applicable law,  Non-Operators agree that the Contract Operator may
invoke or utilize  the  mechanics'  or  material  men's lien law of the state in
which the Area of Mutual  Interest is situated in order to secure the payment to
Contract  Operator of any sum due hereunder for services  performed or materials
supplied by Contract Operator.

C. ADVANCES:

The Manager of  Operations,  at its election,  shall have the right from time to
time to demand  and  receive  from one or more of the other  parties  payment in
advance of their respective  shares of the estimated amount of the expense to be
incurred in operations  hereunder during the next succeeding month,  which right
may be exercised only by submission to each such party of an itemized  statement
of such estimated expense,  together with an invoice for its share thereof. Each
such statement and invoice for the payment in advance of estimated expense shall
be submitted on or before the 20th day of the next preceding  month.  Each party
shall pay to the Manager of Operations its proportionate  share of such estimate
within  fifteen (15) days after such  estimate  and invoice is received.  If any
party fails to pay its share of said estimate  within said time,  the amount due
shall bear  interest as provided  in Exhibit "C" until paid.  Proper  adjustment
shall be made monthly  between  advances and actual expense to the end that each
party shall bear and pay its  proportionate  share of actual expenses  incurred,
and no more.

D. DEFAULTS AND REMEDIES:

If any party fails to discharge any financial  obligation  under this agreement,
including without limitation the failure to make any advance under the preceding
Article  VII.C.  or any other  provision  of this  agreement,  within the period
required for such payment  hereunder,  then in addition to the remedies provided
in Article VII.B. or elsewhere in this agreement,  the remedies  specified below
shall be  applicable.  For  purposes  of this  Article  VII.D.,  all notices and
elections shall be delivered only by the Manager of Operations,  except that the

                                       31
<PAGE>
Manager of Operations shall deliver any such notice and election  requested by a
non-defaulting Non-Operator,  and when the Manager of Operations is the party in
default,   the  applicable  notices  and  elections  can  be  delivered  by  any
Non-Operator.  Election of any one or more of the following  remedies  shall not
preclude the  subsequent  use of any other remedy  specified  below or otherwise
available to a non-defaulting party.

     1.  Suspension  of Rights:  Any party may deliver to the party in default a
Notice of Default,  which shall  specify the  default,  specify the action to be
taken to cure the  default,  and specify  that  failure to take such action will
result in the exercise of one or more of the remedies  provided in this Article.
If the  default is not cured  within  thirty  (30) days of the  delivery of such
Notice of Default,  all of the rights of the  defaulting  party  granted by this
agreement  may upon  notice be  suspended  until the  default is cured,  without
prejudice  to the right of the  non-defaulting  party or parties to  continue to
enforce the obligations of the defaulting party previously accrued or thereafter
accruing  under this  agreement.  If the Manager of  Operations  is the party in
default,  the  Non-Operators  shall  have  in  addition  the  right,  by vote of
Non-Operators owning a majority in interest in the Area of Mutual Interest after
excluding  the voting  interest of the Manager of  Operations,  to appoint a new
Operator  effective  immediately.  The rights of a defaulting  party that may be
suspended hereunder at the election of the non-defaulting parties shall include,
without  limitation,  the  right  to  receive  information  as to any  operation
conducted  hereunder  during the period of such  default,  the right to elect to
participate in an operation proposed under Article VI.B. of this agreement,  the
right to participate in an operation  being  conducted under this agreement even
if the party has previously  elected to participate in such  operation,  and the
right to receive proceeds of production from any well subject to this agreement.

     2. Suit for Damages:  Non-defaulting  parties or the Manager of  Operations
for the benefit of non-defaulting  parties may sue (at joint account expense) to
collect the amounts in default,  plus interest accruing on the amounts recovered
from the date of default until the date of  collection at the rate  specified in
Exhibit "C" attached  hereto.  Nothing herein shall prevent any party from suing
any defaulting party to collect  consequential damages accruing to such party as
a result of the default.

    3. Deemed Non-Consent: The non-defaulting party may deliver a written Notice
of Non-Consent Election to the defaulting party at any time after the expiration
of the thirty-day cure period  following  delivery of the Notice of Default,  in
which event if the billing is for the drilling a new well or the Plugging  Back,
Sidetracking,  Reworking  or  Deepening  of a well  which  is to be or has  been
plugged as a dry hole, or for the Completion or  Re-completion  of any well, the
defaulting party will be conclusively  deemed to have elected not to participate
in the operation  and to be a  Non-Consenting  Party with respect  thereto under
Article VI.B. or VI.C., as the case may be, to the extent of the costs unpaid by
such party,  notwithstanding  any election to participate  theretofore  made. If
election  is made to  proceed  under  this  provision,  then the  non-defaulting
parties may not elect to sue for the unpaid amount pursuant to Article  VII.D.2.
Until the  delivery of such  Notice of  Non-Consent  Election to the  defaulting
party,  such party shall have the right to cure its default by paying its unpaid
share of costs plus  interest  at the rate set forth in Exhibit  "C,"  provided,
however,  such  payment  shall not  prejudice  the rights of the  non-defaulting
parties to pursue remedies for damages incurred by the non-defaulting parties as
a result of the  default.  Any  interest  relinquished  pursuant to this Article
VII.D.3.  shall be offered to the non-defaulting  parties in proportion to their
interests,  and  the  non-defaulting  parties  electing  to  participate  in the
ownership of such interest  shall be required to contribute  their shares of the
defaulted amount upon their election to participate therein.

     4. Advance  Payment:  If a default is not cured within  thirty (30) days of
the  delivery  of  a  Notice  of  Default,   the  Manager  of   Operations,   or
Non-Operators,  (if MontCrest Energy,  Inc. happens to be the defaulting party),
may thereafter  require advance payment from defaulting party of such defaulting
party's  anticipated  share of any item of  expense  for  which the  Manager  of
Operations,  Contract Operator,  or Non-Operators,  as the case may be, would be
entitled to reimbursement under any provision of this agreement,  whether or not

                                       32
<PAGE>
such expense was the subject of the previous default.  Such right includes,  but
is not limited to, the right to require  advance payment for the estimated costs
of drilling, Re-drilling,  Reworking, Side-tracking,  Re-completing,  Deepening,
Plugging Back or Completion of a well as to which an election to  participate in
drilling or Completion has been made. If the  defaulting  party fails to pay the
required  advance  payment,  the  non-defaulting  parties  may pursue any of the
remedies  provided in the Article  VI.D. or any other  default  remedy  provided
elsewhere in this  agreement.  Any excess of funds  advanced  remaining when the
operation is completed  and all costs have been paid shall be promptly  returned
to the advancing party.

     5. Costs and  Attorneys'  Fees: In the event any party is required to bring
legal proceedings to enforce any financial obligation of a party hereunder,  the
prevailing  party in such action  shall be entitled to recover all court  costs,
costs of collection,  and a reasonable  attorney's  fee, which the lien provided
for herein shall also secure.

E. RENTALS, SHUT-IN WELL PAYMENTS AND MINIMUM ROYALTIES:

Rentals, shut-in well payments and minimum royalties which may be required under
the terms of any lease shall be paid by the party or parties who subjected  such
lease  to this  agreement  at its or their  expense.  In the  event  two or more
parties own and have contributed  interests in the same lease to this agreement,
such parties may  designate one of such parties to make said payments for and on
behalf of all such  parties.  Any party may  request,  and shall be  entitled to
receive,  proper evidence of all such payments.  In the event of failure to make
proper payment of any rental,  shut-in well payment or minimum  royalty  through
mistake or  oversight  where such  payment is required to continue  the lease in
force, any loss which results from such non-payment shall be borne in accordance
with the provisions of Article IV.B.2.

Contract  Operator shall notify the Manager of Operations  Non-Operators  of the
anticipated  completion  of a  shut-in  well,  or the  shutting  in or return to
production  of a  producing  well,  at least five (5) days prior to taking  such
action, or at the earliest opportunity  permitted by circumstances,  but assumes
no liability for failure to do so. In the event of failure by Contract  Operator
to so notify the Manager of Operations and Non-Operators,  the loss of any lease
contributed hereto by the Manager of Operations and  Non-Operators,  as the case
may be, for failure to make timely payments of any shut-in well payment shall be
borne jointly by the parties hereto under the provisions of Article IV.B.3.

F. TAXES:

Beginning with the first calendar year after the effective date hereof, Contract
Operator  shall  render for ad valorem  taxation  all  property  subject to this
agreement  which by law should be rendered for such taxes,  and it shall pay all
such  taxes  assessed  thereon  before  they  become  delinquent.  Prior  to the
rendition  date, the Manager of Operations  with the  reasonable  cooperation of
each Non-Operator shall furnish Contract Operator  information as to burdens (to
include,  but not be limited to, royalties,  overriding royalties and production
payments) on Leases and Oil and Gas Interests  contributed by such Non-Operator.
If the assessed valuation of any Lease is reduced by reason of its being subject
to outstanding excess royalties,  overriding  royalties or production  payments,
the  reduction  in ad valorem  taxes  resulting  there  from shall  inure to the
benefit of the owner or owners of such Lease, and Contract Operator shall adjust
the  charge  to such  owner or  owners  so as to  reflect  the  benefit  of such
reduction.  If the ad valorem  taxes are based in whole or in part upon separate
valuations of each party's working interest,  then  notwithstanding  anything to
the contrary herein,  charges to the joint account shall be made and paid by the
parties  hereto in  accordance  with the tax  value  generated  by each  party's
working interest. Contract Operator shall bill the Manager of Operations for the
other parties for their  proportionate  shares of all tax payments in the manner
provided in Exhibit "C."

If Contract Operator  considers any tax assessment  improper,  Contract Operator
may, with the consent of the Manager of Operations,  protest within the time and
manner  prescribed by law, and prosecutes the protest to a final  determination,

                                       33
<PAGE>
unless all parties  agree to abandon the protest  prior to final  determination.
During  the  pendency  of  administrative  or  judicial  proceedings,   Contract
Operator, with the consent of the Manager of Operations, may elect to pay, under
protest,  all such taxes and any interest and penalty.  When any such  protested
assessment  shall have been  finally  determined,  Contract  Operator,  with the
consent of the Manager of  Operations,  shall pay the tax for the joint account,
together with any interest and penalty accrued, and the total cost shall then be
assessed against the parties, and be paid by them. as provided in Exhibit "C."

Each  party  shall pay or cause to be paid all  production,  severance,  excise,
gathering  and other taxes  imposed  upon or with respect to the  production  or
handling of such party's  share of Oil and Gas produced  under the terms of this
agreement.

                                  ARTICLE VIII.

                ACQUISITION, MAINTENANCE OR TRANSFER OF INTEREST

A. SURRENDER OF LEASES:

The Leases  covered by this  agreement,  insofar as they embrace  acreage in the
Area of Mutual Interest, shall not be surrendered in whole or in part unless all
parties consent thereto.

However,  should any party desire to  surrender  its interest in any Lease or in
any  portion  thereof,  such party  shall give  written  notice of the  proposed
surrender to all parties, and the parties to whom such notice is delivered shall
have thirty (30) days after  delivery of the notice  within  which to notify the
party proposing the surrender whether they elect to consent thereto.  Failure of
a party to whom such notice is  delivered  to reply  within  said 30-day  period
shall constitute consent to the surrender of the Leases described in the notice.
If all parties do not agree or consent thereto,  the party desiring to surrender
shall assign,  without express or implied warranty of title, all of its interest
in such Lease, or portion  thereof,  and any well,  material and equipment which
may be located thereon and any rights in production  thereafter  secured, to the
parties not consenting to such surrender. If the interest of the assigning party
is or includes an Oil and Gas Interest,  the  assigning  party shall execute and
deliver to the party or parties not  consenting to such surrender an oil and gas
lease  covering such Oil and Gas Interest for a term of one (I) year and so long
thereafter  as Oil and/or Gas is produced  from the land covered  thereby,  such
lease to be on the form attached  hereto as Exhibit "B." Upon such assignment or
lease,  the assigning  party shall be relieved from all  obligations  thereafter
accruing,  but not theretofore accrued, with respect to the interest assigned or
leased and the  operation of any well  attributable  thereto,  and the assigning
party shall have no further  interest in the assigned or leased premises and its
equipment and  production  other than the  royalties  retained in any lease made
under the terms of this Article.  The party  assignee or lessee shall pay to the
party assignor or lessor the reasonable  salvage value of the latter's  interest
in any well's salvable  materials and equipment  attributable to the assigned or
leased  acreage.  The value of all salvable  materials  and  equipment  shall be
determined in accordance  with the provisions of Exhibit "C," less the estimated
cost of  salvaging  and  the  estimated  cost of  plugging  and  abandoning  and
restoring  the  surface.  If such value is less than such costs,  then the party
assignor or lessor shall pay to the party  assignee or lessee the amount of such
deficit.  If the  assignment  or lease is in favor of more than one  party,  the
interest shall be shared by such parties in the proportions that the interest of
each bears to the total interest of all such parties.

Any assignment, lease or surrender made under this provision shall not reduce or
change the  assignor's,  lessor's  or  surrendering  party's  interest as it was
immediately before the assignment, lease or surrender in the balance of the Area
of  Mutual  Interest:  and the  acreage  assigned,  leased or  surrendered,  and
subsequent operations thereon,  shall not thereafter be subject to the terms and
provisions  of this  agreement  but  shall be  deemed  subject  to an  Operating
Agreement in the form of this agreement.

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<PAGE>
B. RENEWAL OR EXTENSION OF LEASES:

If any  party  secures  a  renewal  or  replacement  of an Oil and Gas  Lease or
Interest  subject to this  agreement,  then all other  parties shall be notified
promptly  upon such  acquisition  or, in the case of a  replacement  Lease taken
before expiration of an existing Lease, promptly upon expiration of the existing
Lease.  The  parties  notified  shall have the right for a period of thirty (30)
days  following  delivery of such notice in which to elect to participate in the
ownership of the renewal or  replacement  Lease,  insofar as such Lease  affects
lands within the Area of Mutual Interest, by paying to the party who acquired it
their  proportionate  shares of the  acquisition  cost allocated to that part of
such Lease within the Area of Mutual  Interest,  which shall be in proportion to
the  interest  held at that time by the parties in the Area of Mutual  Interest.
Each party who  participates  in the purchase of a renewal or replacement  Lease
shall  be given an  assignment  of its  proportionate  interest  therein  by the
acquiring party.
If some,  but less than all, of the parties elect to participate in the purchase
of a renewal or replacement Lease, it shall be owned by the parties who elect to
participate  therein, in a ratio based upon the relationship of their respective
percentage of  participation  in the Area of Mutual Interest to the aggregate of
the percentages of  participation  in the Area of Mutual Interest of all parties
participating  in the  purchase  of  such  renewal  or  replacement  Lease.  The
acquisition  of a  renewal  or  replacement  Lease by any or all of the  parties
hereto shall not cause a readjustment  of the interests of the parties stated in
Exhibit "A," but any renewal or replacement Lease in which less than all parties
elect to participate  shall not be subject to this agreement but shall be deemed
subject to a separate Operating Agreement in the form of this agreement.

The  provisions  of this Article  shall apply to renewal or  replacement  Leases
whether they are for the entire interest  covered by the expiring Lease or cover
only a portion of its area or an interest  therein.  Any renewal or  replacement
base  taken  before  the  expiration  of its  predecessor  Lease,  or  taken  or
contracted for or becoming  effective within six (6) months after the expiration
of the  existing  Lease,  shall be  subject  to this  provision  so long as this
agreement  is in  effect  at the  time of such  acquisition  or at the  time the
renewal  or  replacement  Lease  becomes  effective;  but  any  Lease  taken  or
contracted  for more than six (6) months  after the  expiration  of an  existing
Lease  shall  not be  deemed a  renewal  or  replacement  Lease and shall not be
subject to the provisions of this agreement.

The provisions in this Article shall also be applicable to extensions of Oil and
Gas Leases.

C. ACREAGE OR CASH CONTRIBUTIONS:

While this agreement is in force,  if any party  contracts for a contribution of
cash towards the drilling of a well or any other operation on the Area of Mutual
Interest,  such  contribution  shall  be paid to the  party  who  conducted  the
drilling or other  operation and shall be applied by it against the cost of such
drilling or other operation.  If the contribution be in the form of acreage, the
party to whom the  contribution  is made shall promptly  tender an assignment of
the  acreage,  without  warranty  of  title,  to  the  Drilling  Parties  in the
proportions  said Drilling  Parties  shared the cost of drilling the well.  Such
acreage  shall  become a separate  Area of Mutual  Interest  and,  to the extent
possible,  be governed by  provisions  identical to this  agreement.  Each party
shall promptly notify all other parties of any acreage or cash  contributions it
may obtain in support of any well or any other  operation  on the Area of Mutual
Interest.  The above  provisions  shall also be applicable to optional rights to
earn acreage  outside the Area of Mutual  Interest  which are in support of well
drilled inside Area of Mutual Interest.

If any party  contracts for any  consideration  relating to  disposition of such
party's share of substances produced hereunder,  such consideration shall not be
deemed a contribution as contemplated in this Article VIII.C.

                                       35
<PAGE>
D. WAIVER OF RIGHTS TO PARTITION:

     If  permitted  by the laws of the state or  states  in which  the  property
covered hereby is located, each party hereto owning an undivided interest in the
Area of Mutual  Interest  waives any and all rights it may have to partition and
have set aside to it in severalty its undivided interest therein.

                                   ARTICLE IX.

                         INTERNAL REVENUE CODE ELECTION

This  agreement  is not  intended  to create,  and shall not be  constructed  to
create,  a relationship  of partnership or an association  for profit between or
among the parties hereto.  Notwithstanding  any provision herein that the rights
and liabilities hereunder are several and not joint or collective,  or that this
agreement and operations  hereunder shall not constitute a partnership,  if, for
federal  income tax purposes,  this  agreement  and the operation  hereunder are
regarded as a partnership,  each party hereby affected elects to be exclude from
the application of all of the provisions of sub Chapter "D", Chapter 1. Subtitle
"A", of the  Internal  Revenue  Code of 1954,  as permitted  and  authorized  by
Section 761 of the Code and the regulations  promulgated  there-under.  Contract
Operator is  authorized  and  directed to execute on behalf of each party hereby
affected  such  evidence of this election as may be required by the Secretary of
the  Treasure of the United  States of the  Federal  Internal  Revenue  Service,
including  specifically,  but  not  by way of  limitation,  all of the  returns,
statements,  and the data required by Federal Regulations 1.761. Should there be
any requirement  that each party hereby  affected give further  evidence of this
election,  each such party shall  execute such  documents and furnish such other
evidence as may be required by the Federal Internal Revenue Service or as may be
necessary  to evidence  this  election.  No such party shall give any notices or
take any other action inconsistent with the election made hereby. If any present
or future income tax laws of the United  States  contain  provisions  similar to
those in Sub Chapter "D",  Chapter 1, Subtitle "A" of the Internal  Revenue Code
of 1954,  under which an election similar to that provided by Section 761 of the
Code is permitted, each party hereby affected shall make such election as may be
permitted or required by such laws. In making the foregoing election,  each such
party states that the income derived by such party from operations hereunder can
be adequately determined without the computation of partnership taxable income.

                                   ARTICLE X.

                               CLAIMS AND LAWSUITS

The Manager of  Operations  may settle any single  uninsured  third party damage
claim or suit arising from  operations  hereunder  if the  expenditure  does not
exceed TEN  THOUSAND  Dollars  ($10,000.00)  and if the  payment is in  complete
settlement of such claim or suit. If the amount required for settlement  exceeds
the above  amount,  the parties  hereto  shall  assume and take over the further
handling of the claim or suit, unless such authority is delegated to the Manager
of  Operations.  All costs and  expenses  of  handling  settling,  or  otherwise
discharging  such  claim  or suit  shall be the  joint  expense  of the  parties
participating  in the operation from which the claim or suit arises.  If a claim
is made  against  any party or if any  party is sued on  account  of any  matter
arising from  operations  hereunder  over which such  individual  has no control
because of the rights  given  Contract  Operator by this  agreement,  such party
shall  immediately  notify  all other  parties,  and the claim or suit  shall be
treated as any other claim or suit involving operations hereunder.

                                   ARTICLE XI.

                                  FORCE MAJEURE

If any party is rendered  unable,  wholly or in part,  by force majeure to carry
out its obligations under this agreement, other than the obligation to indemnify
or make money payments or furnish  security,  that party shall give to all other

                                       36
<PAGE>
parties  prompt  written  notice  of the  force  majeure  with  reasonably  full
particulars  concerning it;  thereupon,  the obligations of the party giving the
notice,  so far as they are  affected by the force  majeure,  shall be suspended
during,  but no longer than,  the  continuance  of the force  majeure.  The term
"force majeure," as here employed, shall mean an act of God, strike, lockout, or
other industrial  disturbance,  act of the public enemy, war,  blockade,  public
riot,  lightening,  fire,  storm,  flood  or  other  act of  nature,  explosion,
governmental action,  governmental delay, restraint or inaction,  unavailability
of equipment,  and any other cause, whether of the kind specifically  enumerated
above or  otherwise,  which is not  reasonably  within the  control of the party
claiming suspension.

The  affected  party  shall use all  reasonable  diligence  to remove  the force
majeure  situation as quickly as  practicable.  The  requirement  that any force
majeure shall be remedied  with all  reasonable  dispatch  shall not require the
settlement  of  strikes,  lockouts,  or  other  labor  difficulty  by the  party
involved,  contrary to its wishes;  how all such  difficulties  shall be handled
shall be entirely within the discretion of the party concerned.

                                  ARTICLE XII.

                                     NOTICES

All notices  authorized or required between the parties by any of the provisions
of this agreement,  unless otherwise specifically provided,  shall be in writing
and delivered in person or by United  States mail,  courier  service,  telegram,
telex,  telecopier or any other form of facsimile,  postage or charges  prepaid,
and  addressed  to such  parties at the  addresses  listed on  Exhibit  "A." All
telephone  or oral  notices  permitted  by this  agreement  shall  be  confirmed
immediately thereafter by written notice. The originating notice given under any
provision  hereof shall be deemed  delivered  only when received by the party to
whom such notice is directed,  and the time for such party to deliver any notice
in response thereto shall run from the date the originating  notice is received.
"Receipt"  for  purposes  of this  agreement  with  respect  to  written  notice
delivered hereunder shall be actual delivery of the notice to the address of the
party to be notified  specified in  accordance  with this  agreement,  or to the
telecopy, facsimile or telex machine of such party. The second or any responsive
notice shall be deemed  delivered when deposited in the United States mail or at
the office of the courier or telegraph  service,  or upon  transmittal by telex.
telecopy or facsimile, or when personally delivered to the party to be notified,
provided,  that when response is required  within 24 or 48 hours,  such response
shall be given orally or by telephone, telex, telecopy or other facsimile within
such period.  Each party shall have the right to change its address at any time,
and from time to time, by giving written notice thereof to all other parties. If
a party is not available to receive  notice orally or by telephone  when a party
attempts to deliver a notice required to be delivered within 24 or 48 hours, the
notice may be  delivered  in writing by any other  method  specified  herein and
shall be deemed  delivered in the same manner  provided above for any responsive
notice.

                                  ARTICLE XIII.

                                TERM OF AGREEMENT

This  agreement  shall  remain in full  force  and  effect as to the Oil and Gas
Leases  and/or  Oil and Gas  Interests  subject  hereto  for the  period of time
selected below;  provided,  however,  no party hereto shall ever be construed as
having any right,  title or interest in or to any Lease or Oil and Gas  Interest
contributed by any other party beyond the term of this agreement.

So long as any of the Oil and Gas Leases subject to this agreement remain or are
continued  in force as to any part of the Area of Mutual  Interest,  whether  by
production, extension, renewal or otherwise.

                                       37
<PAGE>
The  termination of this  agreement  shall not relieve any party hereto from any
expense, liability or other obligation or any remedy therefore which has accrued
or attached prior to the date of such termination.

Upon  termination  of this  agreement and the  satisfaction  of all  obligations
hereunder,  in the event a memorandum of this Operating Agreement has been filed
of record,  Contract  Operator is  authorized to file of record in all necessary
recording  offices a notice of  termination,  and each  party  hereto  agrees to
execute such a notice of termination as to Contract  Operator's  interest,  upon
request of  Contract  Operator,  if  Contract  Operator  has  satisfied  all its
financial obligations.

                                  ARTICLE XIV.

                      COMPLIANCE WITH LAWS AND REGULATIONS

A. LAWS, REGULATIONS AND ORDERS:

This agreement shall be subject to the applicable laws of the state in which the
Area of Mutual Interest is located, to the valid rules, regulations,  and orders
of any  duly  constituted  regulatory  body  of  said  state;  and to all  other
applicable federal,  state, and local laws, ordinances,  rules,  regulations and
orders.

B. GOVERNING LAW:

THIS AGREEMENT AND ALL MATTERS PERTAINING  HERETO,  INCLUDING BUT NOT LIMITED TO
MATTERS OF PERFORMANCE,  NON-PERFORMANCE,  BREACH, REMEDIES, PROCEDURES, RIGHTS,
DUTIES, AND INTERPRETATION OR CONSTRUCTION,  SHALL BE GOVERNED AND DETERMINED BY
THE LAW OF THE STATE IN WHICH THE AREA OF MUTUAL  INTEREST  IS  LOCATED.  IF THE
AREA OF MUTUAL INTEREST IS IN TWO OR MORE STATES,  THE LAW OF THE STATE OF TEXAS
SHALL GOVERN.

C. REGULATORY AGENCIES:

Nothing  herein  contained  shall  grant,  or be  construed  to grant,  Contract
Operator the right or authority to waive or release any rights,  privileges,  or
obligations which the Manager of Operations and any Non-Operators may have under
federal or state laws or under rules,  regulations or orders  promulgated  under
such  laws in  reference  to oil,  gas and  mineral  operations,  including  the
location, operation, or production of wells, on tracts offsetting or adjacent to
the Area of Mutual Interest.

With respect to the  operations  hereunder,  Non-Operators  agree to release the
Manager of Operations  and Contract  Operator from any and all losses,  damages,
injuries,  claims and causes of action arising out of,  incident to or resulting
directly or indirectly  from the Manager of Operations  and Contract  Operator's
interpretation  or application of rules,  rulings,  regulations or orders of the
Department of Energy or Federal Energy  Regulatory  Commission or predecessor or
successor agencies to the extent such  interpretation or application was made in
good faith and does not constitute gross negligence.  Each Non-Operator  further
agrees to reimburse Operator for such Non-Operator's  share of production or any
refund, fine, levy or other governmental sanction that the Manager of Operations
or the Contract Operator may be required to pay as a result of such an incorrect
interpretation  or  application,  together with  interest and penalties  thereon
owing by the Manager of  Operations  or Contract  Operator,  as the case may be,
which results from such incorrect interpretation or application.

                                   ARTICLE XV.

                                  MISCELLANEOUS

A. EXECUTION:

This  agreement  shall be  binding  upon the  Manager  of  Operations,  Contract
Operator and each Non-Operator when this agreement or a counterpart  thereof has
been  executed by the  Manager of  Operations,  and  Contract  Operator  and any

                                       38
<PAGE>
Non-Operator  notwithstanding  that  this  agreement  is not then or  thereafter
executed  by all of the  parties to which it is  tendered or which are listed on
Exhibit "A" as owning an  interest in the Area of Mutual  Interest or which own,
in fact, an interest in the Area of Mutual  Interest.  The Manager of Operations
may,  however,  by written notice to all  Non-Operators who have become bound by
this agreement as aforesaid,  given at any time prior to the actual spud date of
the oil and/or gas well(s)  within the AMI, but in no event later than five days
prior to the date specified in Article VI.A. for  commencement of the oil and/or
gas well(s) within the AMI, terminate this agreement if Contract Operator,  with
the consent of the Manager of Operations  determines  that there is insufficient
participation to justify  commencement of drilling operations in connection with
the oil and/or gas well(s)  within the AMI. In the event of such a  termination,
all  further  obligations  of the  parties  hereunder  shall  cease  as of  such
termination.  In the event any Non-Operator has advanced or prepaid any share of
drilling or other  costs  hereunder,  all sums so advanced  shall be returned to
such  Non-Operator  without offset. In the event Operator proceeds with drilling
operations for re-entry of the oil and/or gas well(s) within the AMI without the
execution  hereof  by all  persons  listed  on  Exhibit  "A" as having a current
working  interest  in such well,  the  Manager  of  Operations  shall  indemnify
Non-Operators  with respect to all costs incurred for the oil and/or gas well(s)
within the AMI which would have been charged to such person under this agreement
if such person had executed the same and the Manager of Operations shall receive
all revenues  which would have been received by such person under this agreement
if such person had executed the same.

B. SUCCESSORS AND ASSIGNS:

This  agreement  shall be  binding  upon and shall  inure to the  benefit of the
parties hereto and their  respective  heirs,  devisees,  legal  representatives,
successors  and  assigns,  and the terms  hereof shall be deemed to run with the
Leases or Interests included within the Area of Mutual Interest.

C. COUNTERPARTS:

This  instrument  may be executed in any number of  counterparts,  each of which
shall be considered an original, for all purposes.

D. SEVERABILITY:

For the  purposes  of assuming  or  rejecting  this  agreement  as an  executory
contract  pursuant  to federal  bankruptcy  laws,  this  agreement  shall not be
severable,  but rather  must be assumed or  rejected  in its  entirety,  and the
failure  of any  party to this  agreement  to comply  with all of its  financial
obligations provided herein shall be a material default.

                                  ARTICLE XVI.

                                OTHER PROVISIONS

     A. MODIFICATION OF ARTICLE VI.B.2. EACH NON-OPERATOR SHALL PAY TO MONTCREST
ENERGY,  INC. OR THE MANAGER OF OPERATIONS  ITS PRO RATA PORTION OF THE AFE COST
OF  DRILLING  OR  RE-ENTERING  THE OIL  AND/OR GAS  WELL(S)  WITHIN THE AMI ON A
"TURNKEY  BASIS."  "TURNKEY BASIS" SHALL MEAN THAT ALL COSTS ACCRUED THROUGH THE
INITIAL  COMPLETION  OF  THE  OIL  AND/OR  GAS  WELL(S)  WITHIN  THE  AMI IN THE
ELLENBURGER FORMATION ("OBJECTIVE FORMATION") ARE INCLUDED IN EACH NON-OPERATING
PARTY'S WORKING  INTEREST  PURCHASE PRICE BASED, IN PART, ON THE AFE PROVIDED TO
WORKING  INTEREST  HOLDERS IN CONNECTION  WITH THE OIL AND/OR GAS WELL(S) WITHIN
THE AMI AND  THE  OBJECTIVE  FORMATION,  AND  THAT  ANY  COSTS  ASSOCIATED  WITH
EXPLORATION  FOR OIL AND GAS AND/OR  COMPLETIONS  IN OTHER  FORMATIONS OR ZONES,
OTHER THAN THE OBJECTIVE  FORMATION,  SHALL BE BORNE BY EACH NON-OPERATING PARTY
ON A PRO RATA BASIS IN PROPORTION TO EACH NON-OPERATING PARTY'S WORKING INTEREST
PERCENTAGE.  FOR ALL  EXPLORATION  FOR OIL AND GAS AND/OR  COMPLETIONS  IN OTHER
FORMATIONS OR ZONES, OTHER THAN THE OBJECTIVE FORMATION,  MONTCREST ENERGY, INC.
SHALL PROVIDE EACH NON-OPERATING PARTY WITH AN AFE, AND EACH NON-OPERATING PARTY
WILL BE BILLED FOR ANY COSTS  ASSOCIATED WITH EXPLORATION FOR OIL AND GAS AND/OR

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<PAGE>
COMPLETIONS IN OTHER FORMATIONS OR ZONES, OTHER THAN THE OBJECTIVE FORMATION, IN
PROPORTION  TO EACH  NON-OPERATING  PARTY'S  WORKING  INTEREST.  IN THE  EVENT A
NON-OPERATOR  FAILS OR ELECTS NOT TO PARTICIPATE IN CONNECTION WITH  EXPLORATION
FOR OIL AND GAS AND/OR  COMPLETIONS IN OTHER FORMATIONS OR ZONES, OTHER THAN THE
OBJECTIVE FORMATION, OR OTHERWISE FAILS TO TENDER TO MONTCREST ENERGY, INC., THE
NON-OPERATOR'S  PRO RATA SHARE OF COSTS BASED UPON EACH  NON-OPERATOR'S  WORKING
INTEREST PERCENTAGE,  THE NON-OPERATOR'S  INTEREST IN THE SUBJECT OIL AND/OR GAS
WELL(S)  WITHIN THE AMI, MAY BE FORFEITED AT THE MONTCREST  ENERGY,  INC.'S SOLE
DISCRETION.  ACCORDINGLY,  MONTCREST  ENERGY,  INC.  SHALL NOT BE OBLIGATED,  OR
OBLIGATE  THE  MANAGER  OF  OPERATIONS  OR THE  CONTRACT  OPERATOR  TO  COMMENCE
OPERATIONS FOR EXPLORATION OR PRODUCTION OF OIL AND/OR GAS AND/OR COMPLETIONS IN
OTHER FORMATIONS OR ZONES,  OTHER THAN THE OBJECTIVE  FORMATION,  IN THE AREA OF
MUTUAL  INTEREST,  UNTIL  MONTCREST  ENERGY,  INC.  HAS  RECEIVED  100%  OF SAID
ESTIMATED COSTS.

        B. IF ANY PARTY HERETO SHOULD SUBSEQUENTLY CREATE AN OVERRIDING ROYALTY,
PRODUCTION PAYMENT OR OTHER BURDEN AGAINST ITS WORKING INTEREST  PRODUCTION AND,
IF ANY OTHER PARTY OR PARTIES SHOULD CONDUCT NON-CONSENT  OPERATIONS PURSUANT TO
THIS AGREEMENT, AND AS A RESULT, BECOME ENTITLED TO RECEIVE THE WORKING INTEREST
PRODUCTION  OTHERWISE  BELONGING TO THE  NON-PARTICIPATING  PARTY,  THE PARTY OR
PARTIES   ENTITLED   TO  RECEIVE  THE  WORKING   INTEREST   PRODUCTION   OF  THE
NON-PARTICIPATING  PARTY SHALL RECEIVE SUCH PRODUCTION FREE AND CLEAR OF BURDENS
AGAINST SUCH PRODUCTION WHICH MAY HAVE BEEN CREATED SUBSEQUENT TO THIS AGREEMENT
THE  NON-PARTICIPATING  PARTY  CREATING  SUCH  SUBSEQUENT  BURDEN SHALL HOLD THE
PARTICIPATING  PARTY OR PARTIES  HARMLESS  WITH  RESPECT TO THE  RECEIPT OF SUCH
WORKING INTEREST PRODUCTION.

        C. NO PARTY SHALL DISTRIBUTE ANY INFORMATION OR PHOTOGRAPHS TO THE PRESS
OR OTHER MEDIA  WITHOUT THE APPROVAL OF ALL THE  CONSENTING  PARTIES,  EXCEPT AS
REQUIRED BY LAW OR REGULATION.  WHEN ALL  CONSENTING  PARTIES HAVE REVIEWED SUCH
MATERIAL, AND ALL CONSENTING PARTIES HAVE APPROVED THE ISSUANCE OF THE MATERIAL,
THE COMPANY  PROPOSING THE RELEASE OF THE  INFORMATION  SHALL HAVE THE PRINCIPAL
RESPONSIBILITY FOR ITS ISSUANCE. THE ONLY OTHER EXCEPTION TO THE FOREGOING SHALL
BE THAT IN THE  EVENT  OF AN  EMERGENCY  INVOLVING  EXTENSIVE  PROPERTY  DAMAGE,
OPERATIONS FAILURE, LOSS OF HUMAN LIFE OR OTHER CLEAR EMERGENCY, THE OPERATOR IS
AUTHORIZED  TO FURNISH SUCH MINIMUM  STRICTLY  FACTUAL  INFORMATION  AS SHALL BE
NECESSARY TO SATISFY THE LEGITIMATE PUBLIC INTEREST ON THE PART OF THE PRESS AND
DULY  CONSTITUTED  AUTHORITIES.  IF TIME DOES NOT PERMIT THE  OBTAINING OF PRIOR
APPROVAL BY THE CONSENTING  PARTIES SUCH PARTY SHALL  THEREUPON  PROMPTLY ADVISE
THE OTHER PARTIES OF THE INFORMATION SO FURNISHED.

     D.  NOTWITHSTANDING  OTHER PROVISIONS OF THIS AGREEMENT,  IT IS AGREED THAT
WHERE A WELL WHICH HAS BEEN AUTHORIZED  UNDER THE TERMS OF THIS AGREEMENT BY ALL
PARTIES, SHALL HAVE BEEN DRILLED TO THE OBJECTIVE FORMATION,  AND THE MANAGER OF
OPERATIONS  HAS  COMPLETED  SUCH  TESTS,  INCLUDING,   WITHOUT  LIMITATION,  ANY
PRODUCTION TESTS, WHICH THE MANAGER OF OPERATIONS REASONABLY DEEMS NECESSARY FOR
THE PROPER  EVALUATION OF THE  FORMATION  AND HAS FURNISHED  SUCH RESULTS TO THE
PARTIES,  AND THE PARTIES  CANNOT  AGREE ON THE  SEQUENCE  AND TIMING OF FURTHER
OPERATIONS  REGARDING  SAID WELL, THE FOLLOWING  ELECTIONS  SHALL CONTROL IN THE
ORDER ENUMERATED  HEREAFTER:  (1) AN ELECTION TO ATTEMPT TO COMPLETE THE WELL AT
EITHER THE OBJECTIVE FORMATION;  (2) AN ELECTION TO DEEPEN SAID WELL; AND (3) AN
ELECTION TO PLUG AND ABANDON SAID WELL.

IF THERE ARE CONFLICTING RECOMMENDATIONS FOR FURTHER OPERATIONS, THE SEQUENCE OF
PRECEDENCE FOR A FURTHER  OPERATION ARE LISTED HEREIN IN THIS ARTICLE XVI(D). AT
ANY TIME A WELL IS DEEPENED AS PROVIDED  HEREIN,  UPON TOTAL DEPTH BEING REACHED
IN SUCH DEEPENING  OPERATION AND FOLLOWING TESTING TO SUCH AN EXTENT AS SHALL BE
DEEMED  PRUDENT  BY  OPERATOR,   THE  PROVISIONS  ABOVE  PERTAINING  TO  FURTHER
OPERATIONS  SHALL BE APPLICABLE  INSOFAR AS SUCH FURTHER  OPERATIONS  PERTAIN TO
ITEMS (L), (2) AND (3) IN THIS ARTICLE XVI(D). IT IS PROVIDED,  HOWEVER, THAT IF
AT THE  TIME  SAID  PARTICIPATING  PARTIES  ARE  CONSIDERING  ANY  OF THE  ABOVE
ELECTIONS  THE HOLE IS IN SUCH  CONDITION  THAT A  PRUDENT  OPERATOR  WOULD  NOT
CONDUCT THE OPERATIONS CONTEMPLATED, THEN SUCH ELECTION SHALL BE ELIMINATED FROM
THE PRIORITIES SET FORTH HEREIN.

     E. Billing  Additional  Interest.  Notwithstanding  the  provisions of this
Agreement and the Accounting  Procedure  attached as Exhibit "C", the parties to

                                       41
<PAGE>
this Agreement  specifically  agree that if a party sells or otherwise  disposes
all of its  interest  as set forth on  Exhibit  "A",  whether  to one or several
assignees,  Contract  Operator shall issue statements and billings to that party
for the  interest  conveyed  and  shall  contemporaneously  provide  same to the
Manager of Operations.

The  selling   party  shall   promptly   furnish  to   Contract   Operator   and
contemporaneously provide same to the Manager of Operations, the following:

     1.   Written notice of the conveyance and copies of the Assignments;

     2.   The name of the  Assignee to be billed in which it consents to receive
          statements  and  billings  for a  portion  of or the  entire  interest
          credited to selling party on Exhibit "A".

     F. Consent to Abandonment and Surrender.  If the Contract  Operator,  based
upon prudent operator standard, desires to abandon a well, the Contract Operator
shall notify the Manager of Operations of such desire to abandon a well, and the
Manager of Operations shall notify the other parties hereto of its intention and
if any party  receiving such notice shall fail to reply in writing within thirty
(30)  days of the  date of such  notice,  such  party  shall be  deemed  to have
consented to such abandonment or surrender and the Contract Operator, shall have
the authority to abandon any such well as provided in Article VI.E.2, as if each
party had consented to such abandonment or as the case may be, to surrender such
lease  pursuant  to the terms of Article  VIII,  A.  hereof as if such party had
consented to such surrender.

     G. "In or Out" Non-Consent Election as to Certain Proposed  Operations.  An
election by any party not to  participate  in the  completion  of the first well
drilled in any section of land covered by this Agreement,  or an election not to
participate  in additional  drilling on a Section is an election out of the well
in question and all remaining undeveloped lands in the section. This shall apply
to any and all  sections of land shown on Exhibit "A" and to any lands which may
be added to this  Agreement by  amendment.  This penalty  shall not apply to any
re-working,  re-drilling,  plugging back or deepening of a well. Such operations
shall be governed by Article VI.B.2. of this Agreement.

     H. Notwithstanding any contrary provision in Article VI, should two or more
working  interest  owners owning a majority in interest desire to re-complete an
additional  interval  within  a  producing  formation,   or  to  re-complete  an
additional formation not producing at the time of the re-completion  attempt but
which can be  commingled  with an  existing  producing  formation,  the  parties
desiring to attempt  such  re-completion  shall give the other  parties  written
notice of the proposed operation,  specifying the work to be done, the objective
formation  or  interval  to be  re-completed  and  the  estimated  cost  of  the
operation.  The parties  receiving such notice shall have thirty (30) days after
receipt of such notice within which to notify the party  wishing to  re-complete
whether they elect to participate in the cost of the proposed operation. Failure
to make an election  will  constitute  an  election  not to  participate  in the
proposed  operation.  Should a party elect not to participate in such operation,
such party shall be treated as a  Non-Consenting  Party under Article VI of this
Agreement and the  consenting  parties shall proceed as specified in Article VI.
If any party  elects not to  participate  in such  operation  and the  operation
results in the  establishment of production the Contract Operator shall allocate
all production from the well between  intervals that were producing prior to the
re-completion and the newly completed interval based on the following formula:

     a)   Denominator:   sum  a)  daily   production  from  producing   interval
          immediately prior to the commencement of the re-completion attempt and

                                       42
<PAGE>
     b)   daily  production  from new producing  interval  immediately  prior to
          being  commingled  with the interval that was  producing  prior to the
          re-completion attempt.

     c)   Numerator for interval  producing prior to the re-completion  attempt:
          daily production of this interval  immediately  prior to re-completion
          work. decimal interest is = c divided by a (b/a).

The Manger of Operations,  Contract Operator,  and  Non-Operator(s)  acknowledge
that each is aware of the tax consequences and risk factors associated with this
transaction.  If ANY PARTY invests in this prospect,  there is no assurance that
the well drilled will obtain any production or will otherwise  permit any return
on investment from production.  Because of the speculative nature of oil and gas
exploration  and  development  in general,  it is understood  that the MontCrest
Energy, Inc., the Manager of Operations, Contract Operator, and their respective
agents,  employees,  officers,  directors,   affiliates,  or  assigns,  make  no
representation,  warranty or guarantee of any kind, express or implied, that any
well will be profitable, and if profitable, the amount of such profits.





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                                       43
<PAGE>
IN WITNESS WHEREOF, this agreement shall be Effective as of the 8th day of June,
2012.

                                    MANAGER OF THE AMI
                                    MontCrest Energy, Inc.


                                    /s/ John Forrest
                                    --------------------------------------
                                    By: John Forrest
                                    Title: Secretary
                                    Date: June 8, 2012
                                    Tax ID or SSN: 27-0743683

                                    MANAGER OF OPERATIONS
                                    Black Strata, LLC


                                    /s/ Douglas E. Forrest
                                    --------------------------------------
                                    By: Douglas E. Forrest
                                    Title: President, Co-Manager
                                    Date: June 8, 2012
                                    Tax ID or SSN: 26-4605206

                                    NON OPERATOR
                                    Independence Energy Corporation


                                    /s/ Gregory Rotelli
                                    --------------------------------------
                                    By: Gregory Rotelli
                                    Title: CEO, President IDNG
                                    Date: June 8, 2012
                                    Tax ID or SSN:




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                                       44
<PAGE>
                                   EXHIBIT "A"

ATTACHED TO AND MADE A PART OF THAT CERTAIN JOINT OPERATING AGREEMENT DATED JUNE
8th, 2012, BETWEEN MontCrest Energy, Inc., and Black Strata, LLC.

(1)  Description  of lands subject to this  agreement:  AREA OF MUTUAL  INTEREST
(AMI):

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 3, Page
656, Document 00000420,  in the Deed Records of Coleman County,  Texas, made and
effective  the  1st day of  February  2009  between  Hubert  Rutherford  & Gerri
Rutherford PO Box 174 Novice Texas 79538,  Lessor and Black Strata, LLC, Lessee,
covering the LEASED  PREMISIS,  to wit: 106.15 acres in the T&NO R.R. Co. Survey
13, A-654 Coleman CAD property ID R13161.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 3, Page
358, Document 00000353,  in the Deed Records of Coleman County,  Texas, made and
effective  the 1st day of February  2009 between Riley Joe Goates 765 River Road
Waco,  Texas  76705,  Lessor and Black Strata LLC,  Lessee,  covering the LEASED
PREMISIS,  to wit:  being the Eastern 113.15 acres more or less of a 228.30 acre
tract of land in Coleman County,  Texas being 228.3 acres out of the East Line &
Red River R.R.  Company  Survey No. 3 Abstract  No. 851 and 1.0 acres out of the
M.M. Givens Survey No. 10, Abstract No. 1640, also being out of the D.M. Hankins
1435.25 acre tract and said 228.30 acre tract.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 3, Page
358, Document 00000353,  in the Deed Records of Coleman County,  Texas, made and
effective  the 1st day of June  2009  between  Hubert A.  Rutherford  & Gerri J.
Rutherford of P.O. Box 174 in Novice Texas 79538,  Lessor, and Black Strata LLC,
Lessee,  covering the LEASED PREMISIS,to wit: being 160.00 acres more or less in
the NW 1/4 of WE Ashley  Survey,  Section 14 A-1410,  aka NW 1/4 Sec 14, S.P. RY
Co., and being more fully  described by metes and bounds in Warranty Deed Volume
720, Page 498, dated 9/24/2003 in the Deed Records of Coleman County, Texas.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 3, Page
358, Document 00000353,  in the Deed Records of Coleman County,  Texas, made and
effective the effective the 1st day of February 2009 between William Fowler 2706
Hedgeway Arlington,  Texas 76016, Lessor and Black Strata LLC, Lessee,  covering
the LEASED  PREMISIS,  to wit:  124.45 acres in the EL & RR Co. Survey 3, A-851,
Coleman CAD property ID R14011.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 3, Page
358, Document 00000353,  in the Deed Records of Coleman County,  Texas, made and
effective  the 1st day of February  2009 between  William  Fowler 2706  Hedgeway
Arlington,  Texas 76016 Lessor and Black Strata LLC, Lessee, covering the LEASED
PREMISIS,  to wit: 113.16 acres in the EL & RR Co. Survey 3, A-851,  Coleman CAD
property ID R51416.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 3, Page
363, Document 00000354,  in the Deed Records of Coleman County,  Texas, made and
effective  the 1st day of February  2009  between  Elda Fae Atchley aka Elda Fae
McDaniel Atchley PO Box 68 Novice,  Texas 79538,  Lessor,  and Black Strata LLC,
Lessee,  covering the LEASED PREMISIS,  to wit: 106.4 acres in the T&NO R.R. Co.
Survey 13, A-654, Coleman CAD property ID R13159.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 3, Page
368, Document 00000355,  in the Deed Records of Coleman County,  Texas, made and
effective  the 1st day of February 2009 between Gary D. Holt and Stella T. Holt,
1819 FM 3114  Chifton,  Texas 76634,  Lessor,  and Black  Strata,  LLC,  Lessee,
covering  the  LEASED  PREMISIS,  to wit:  320 acres in the EL&RR Co.  Survey 3,
A-851, Coleman CAD property ID.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 3, Page
373, Document 00000356,  in the Deed Records of Coleman County,  Texas, made and
effective the 1st day of February  2009 between  William  Fowler 2706  Hedgeway,
Arlington,  Texas  76016,  Lessor,  and Black Strata LLC,  Lessee,  covering the
LEASED PREMISIS,  to wit: 124.45 acres in the EL&RR Co. Survey 3, A-851, Coleman
CAD  property ID R14011,  Being a 131.24  acre tract of land in Coleman  County,
Texas,  being 125.45 acres out of the East Line & Red River R.R.  Company Survey
No.3,  Abstract  No. 851 and 5.89  acres out of the M.M.  Givens  Survey  No.10,
Abstract No.  1640,  also being out of the D.M.  Hankins  1435.25 acre tract and
said 131.24 acre tract.

                                       45
<PAGE>
That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 3, Page
379, Document 00000357,  in the Deed Records of Coleman County,  Texas, made and
effective the 1st day of February 2009,  between William Fowler,  Joanie Fowler,
Delain Herzog, Jannie Herzog 2706 Hedgeway Arlington Texas 76016, Lessor(s), and
Black Strata LLC, Lessee,  covering the LEASED PREMISIS,  to wit: 106.4 acres in
the T&NO R.R. Co. Survey 13, A-654, Coleman CAD property ID R13163.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 3, Page
388, Document 00000359,  in the Deed Records of Coleman County,  Texas, made and
effective the 1st day of February 2009, between Kelley C. Fowler 550 HCR 3350 N.
Hubbard,  Texas  76648,  Lessor and Black  Strata,  Lessee,  covering the LEASED
PREMISIS,  to wit: 113.15 acres in the EL & RR Co. Survey 3, A-851,  Coleman CAD
property ID R14009.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 3, Page
388, Document 00000359,  in the Deed Records of Coleman County,  Texas, made and
effective  the 1st day of  April  2009  between  HUBERT  RUTHERFORD  etux  GERRI
RUTHERFORD,  Rt. 1, Box 40, Tuscola,  Texas 79562 Lessor and Black Strata,  LLC,
Lessee,  covering the LEASED PREMISIS, to wit: Being a 273.80 acre tract of land
in Coleman County,  Texas,  being 167.65 acres out of the M.M. Givens Survey No.
10,  Abstract No. 1640 and 106.15 acres Out of the Block 1 of the Subdivision of
the R.M. Wellborn Subdivision of Section No. 13, of the T.&N.O.R.R.  Co. Survey,
Abstract No. 654, also being out of the D.M. Hankins 1435.25 acre tract and said
273.80  acre tract No. 4 of land,  SAVE and EXCEPT the 106.15  acre tract out of
the T.&N.O.RR.Co. Survey 13, Abstract 654 described more fully in Deed Volume 82
Page 596 Deed Records, Coleman County, Texas.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 6, Page
282, Document 00000811,  in the Deed Records of Coleman County,  Texas, made and
effective the 1st day of April 2009 between William G. Fowler, Lessor, and Black
Strata LLC,  Lessee,  covering the LEASED  PREMISIS,  to wit:  Being a 5.89 acre
tract out of a 131.24 acre tract of land in Coleman  County,  Texas being 125.45
acres out of the East Line & Red River R.R.  Company  Survey No.3,  Abstract No.
851 and 5.89 acres out of the M.M. Givens Survey No. 10, Abstract No. 1640, also
being out of the D.M.  Hankins  1435.25  acre tract and said  131.24 acre tract;
SAVE AND  EXCEPT a 125.45  acre  tract  out of the East  Line & Red  River  R.R.
Company Survey N. 10, Abstract No. 851.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 6, Page
282, Document 00000811,  in the Deed Records of Coleman County,  Texas, made and
effective the 1st day of June 2009 between  Gerri J.  Rutherford of P.O. Box 174
in Novice Texas,  79538,  Lessor and Black  Strata,  LLC,  Lessee,  covering the
LEASED  PREMISIS,  to  wit:  being  109.72  acres  more or less in the SE 1/4 of
Section 25, Block 2 of the T&N.O.R.R.  CO. survey and being more fully described
by metes and bounds in Deed Volume 450, Page 582, dated 11/24/1971 & Volume 623,
Page 556 in the Deed Records of Coleman County, Texas.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 6, Page
282, Document 00000811,  in the Deed Records of Coleman County,  Texas, made and
effective  the 1st day of June 2009 between  Martha Smart Bennett 6866 W. Remuda
Arizona 83583,  Lessor and Black Strata LLC,  covering the LEASED  PREMISIS,  to
wit: 160 total acres  Abstract  A-865 T.H.  Lydston  Survey 119 Coleman  County,
Texas. This LEASED PREMISIS is further described by metes and bounds as follows:

That certain "Oil, Gas And Mineral Lease" recorded at Book at Book OR, Volume 6,
Page 288, Document 00000812,  in the Deed Records of Coleman County, Texas, made
and effective the 1st day of April 2009 between William G. Fowler, Kelly Fowler,
and Danny Fowler,  Lessor(s) and Black Strata, LLC, Lessee,  covering the LEASED
PREMISIS,to  wit:  being a 139.21 acre tract of land in Coleman  County,  Texas,
being out of the M.M. Givens Survey No. 10, Abstract No. 1640, also being out of
the D.M. Hankins 1435.25 acre tract, and said 139.21 acre tract.

That certain "Oil,  Gas And Mineral  Lease"  recorded at Book OR, Volume 6, Page
301, Document 00000814,  in the Deed Records of Coleman County,  Texas, made and
effective  the 1st day of April 2009 between  Kelly Fowler and William G. Fowler
of 1202 West  Arkansas  Lane  Arlington,  Texas,  Lessor,  and Black Strata LLC,
Lessee,  covering the LEASED PREMISIS,  to wit: Being a 103.49 acre tract out of
the M.M.  Givens  survey No. 10 Abstract  No.  1640 and out of the D.M.  Hankins
1435.25 acre tract Coleman County,  Texas, further described by metes and bounds
in the Deed Record from Green river Land and Cattle  Company to Anthony  Patrick
Lange Jr.  recorded in Volume 556. Page 949 of the Deed Records  Coleman County,
Texas incorporated herein by reference.

                                       46
<PAGE>
                                   EXHIBIT "B"
                                  Form Of Lease

ATTACHED TO AND MADE A PART OF THAT CERTAIN JOINT OPERATING AGREEMENT DATED June
8th, 2012, BETWEEN MontCrest Energy, Inc., and Black Strata, LLC.

               OIL, GAS AND MINERAL LEASE

THIS  AGREEMENT made and effective  this ___th day of _________  20__,  between,
_________________________________,  Texas Lessor and MontCrest Energy, Inc., 320
Hemphill Street, Lessee.

     1.  GRANT.  Lessor,  in  consideration  of cash  payment and other good and
valuable  consideration  in hand paid, of the royalties  herein provided for, of
the  agreements  of Lessee  herein  contained,  hereby  grants,  leases and lets
exclusively  onto Lessee the land  described in  paragraph 2 below,  hereinafter
referred to as leased premises,  for the purposes of  investigating,  exploring,
prospecting,  drilling and mining for and producing  oil, gas (the term 'gas' as
used herein includes helium,  carbon dioxide and other commercial gases, as well
as hydrocarbons gases), sulphur,  fissionable materials, and all other minerals,
conducting exploration,  geological and geophysical surveys, core tests, gravity
and magnetic surveys, for introducing or injecting fire, air, gas, steam, water,
salt water,  chemicals,  and fluids or substances into any subsurface stratum or
strata which is not  productive of fresh water for primary,  secondary and other
enhanced recovery operations.

     2. LEASED PREMISES.



     3. TERM. Subject to the other provisions herein contained, this Lease shall
be for a term of FIVE (5) Year from the date hereof (called  "primary term") and
as long thereafter as oil, gas, sulphur,  fissionable materials or other mineral
Is  produced  In paying  quantities  from the  leased  premises  or land  pooled
therewith, or this lease is otherwise maintained in force and effect pursuant to
other provisions herein contained.

     4. ROYALTY PAYMENT. The royalties to be paid to the Lessor are: (a) On oil,
ONE-FIFTH  (1/5) of that  produced  and  saved  from said  land,  the same to be
delivered at the wells or to the Lessor's credit into the pipelines to which the
wells may be connected.  Lessee shall have the continuing right to purchase such
production at the wellhead market price then prevailing in the same field (or if
there is no such price then prevailing In the same field, then the nearest field
in which there is such a prevailing  price) for  production of similar grade and
gravity.  Lessee may sell any royalty oil in its  possession  and pay Lessor the
price  received  by  Lessee  for  such oil  computed  at the  well,  (b) For gas
(including  casinghead gas) and all other substances  covered hereby (i) if used
off the  leased  premises  or used  in the  manufacture  of  gasoline  or  other
products, the market value at the well of ONE-FIFTH (1/5) of the gas so used, or
(ii) if sold  on or off the  leased  premises,  ONE-FIFTH  (1/5)  of the  amount
realized from such sale, provided the amount realized from the sale of gas on or
off the leased premises shall be the price established by the Gas Sales Contract
entered  into in good faith by Lessee and gas  purchaser,  provided  that on gas
sold by Lessee the market  value shall not exceed the amount  received by Lessee
for such gas computed at the mouth of the well.  This lease may be maintained in
effect in the event that gas is capable of being  produced but because of market
conditions is unable to be produced by the paying of shut-in royalty payments of
$10.00 per acre.  The shut-in  payments are due at or prior to the expiration of
the primary  term and at the first  anniversary  of that date  (shut-in  royalty
payments only maintain the lease an additional two years).

     5. POOLING.  Lessee shall have the right but not the  obligation  during or
after the primary  term while this lease is in effect to pool all or any part of
the leased premises or interest therein with any other lands or interests, as to
any or all depths or horizons,  and as to any or all substances  covered by this
lease,  either before or after the  commencement of production,  whenever Lessee
deems it necessary  or proper to do so in order to prudently  develop or operate
the leased  premises,  or not similar pooling  authority  exists with respect to
such other lands or  interests.  The unit formed by such pooling for an oil well
shall not exceed 80 acres plus a maximum acreage tolerance of 10%, and for a gas
well shall not exceed 640 acres plus a maximum acreage  tolerance of 10%, except
that  larger  units may be formed  for oil wells or gas wells to  conform to any
well  spacing or density  pattern  that may be  prescribed  or  permitted by any
governmental  authority  having  jurisdiction.  In exercising its pooling rights
hereunder, Lessee shall file of record a written declaration describing the unit
and stating the  effective  date of pooling.  Production,  drilling or reworking
operations  anywhere  on a unit  which  includes  all or any part of the  leased
premises  shall be  treated  as if it were  production,  drilling  or  reworking
operations on the leased premises,  except that the production on which Lessor's
royalty is  calculated  shall be that  proportion  of the total unit  production
produced  and saved which the net acreage  covered by this Lease and included in
the unit bears to the total  gross  acreage in the unit.  Pooling in one or more
instances shall not exhaust  Lessee's  pooling rights hereunder and Lessee shall
have the  recurring  right  but not the  obligation  to revise  any unit  formed
hereunder by  expansion  or  contraction,  or both,  either  before or after the
commencement  of production,  in order to conform to the well spacing or density
pattern   prescribed  or  permitted  by  the   governmental   authority   having
jurisdiction, or to conform to any productive acreage determination made by such
governmental authority. In making such a revision, Lessee shall file of record a
written  declaration  describing the revised unit and stating the effective date
of revision.  To the extent any portion of the Leased premises is included in or
excluded  from the unit by  virtue  of such  revision,  the  proportion  of unit
production on which royalties are payable hereunder shall thereafter be adjusted
accordingly.  In the  absence  of  production  from a unit,  or  upon  permanent
cessation  thereof,  Lessee may terminate the unit by filing of record a written
declaration describing the unit and stating the date of termination.

     6.  OPERATIONS.  If Lessee drills a well which is incapable of producing In
paying  quantities  (hereinafter  called ("dry hole") on the leased  Premises or
lands  pooled  therewith,  or If  all  production  (whether  or  not  in  paying
quantities)  ceases  from any cause,  Including  a revision  of unit  boundaries
pursuant to the  provisions  of  Paragraph  5 or the action of any  governmental
authority,  then in the event this lease is not  otherwise  being  maintained in
force it  nevertheless  remain  in  force If  Lessee  commences  operations  for
reworking  an existing  well or for  drilling an  additional  well on the leased
premises or pooled  therewith  within 90 days after  completion of operations on
such dry hole or within 90 days after such cessation of all production.  This is
a PAID-UP  LEASE.  In  consideration  of down cash  payment,  Lessor agrees that

                                       47
<PAGE>
Lessee shall not he obligated to commence or continue any operations  during the
primary term. If at the end of the primary term or any time thereafter, oil, gas
or other substances  covered hereby are not being produced in paying  quantities
from the leased premises or lands pooled  therewith,  but Lessee is then engaged
in drilling,  reworking or any other operations  reasonably calculated to obtain
or restore  production  therefrom,  this lease shall  remain in force so long as
such  operations  are  prosecuted  with no cessation of more than 90 consecutive
days, and if any such operations result in the production of oil or gas or other
substances  covered hereby,  as long thereafter as there is production in paying
quantities from the leased premises or lands pooled therewith.  After completion
of a well  capable of  producing in paying  quantities  hereunder,  Lessee shall
drill such additional  wells on the leased premises or lands pooled therewith as
a  reasonably   prudent   operator   would  drill  under  the  same  or  similar
circumstances  to (a) develop the leased  premises as to formations then capable
of  producing  in paying  quantities  on the  leased  premises  or lands  pooled
therewith, or (b) protect the leased premises fron uncompensated drainage by any
well or wells  located on other  lands not pooled  therewith.  There shall be no
covenant to drill  exploratory wells or any additional wells except as expressly
provided herein.

     7. LESSER INTEREST.  Should Lessor own less than the full mineral estate in
all or any part of the leased premises the royalty and shut-in payments, payable
hereunder  for any  well on any part of the  leased  premises  or  lands  pooled
therewith shall be reduced to the proportion that Lessor's  mineral  interest in
such part of the leased  premises  bears to the full mineral estate in such part
of the leased premises.

     8. ANCILLARY  RIGHTS.  Lessee may use in its operations,  free of cost, any
oil, gas, water and/or other substances produced on the leased premises,  except
water from  Lessor's  wells or ponds.  The right of ingress  and egress  granted
hereby shall apply to the entire leased premises described in Paragraph 2 above,
notwithstanding  any  partial  release or other  termination  of this lease with
respect thereto.  If expressly requested in writing by the surface owner, Lessee
agrees to bury pipelines  across  cultivated  land below ordinary plow depth, as
such depth may be determined at the time of burial.  After the pipeline has once
been laid below such depth,  Lessee shall not  thereafter be required to restore
the ground cover,  or to lower,  or to remove such  pipeline  unless the surface
owner first agrees in writing to bear the entire cost  thereof,  and advances to
Lessee the estimated  cost thereof.  No well shall be located less than 200 feet
from any house or barn now on the leased premises without Lessor's consent,  and
Lessee shall pay for damage  caused by its  operations  to  buildings  and other
improvements  now on the  leased  premises,  and to  timber  and  growing  crops
thereon.  Lessee  shall  have  the  right at any time to  remove  its  fixtures,
equipment and materials,  including well casing, from the leased premises during
the term of this lease or within a reasonable  time  thereafter.  Lessee may lay
pipelines,  build roads, tanks, power stations,  erect telephone and power lines
and construct other facilities deemed necessary by Lessee on and over and across
the leased  premises  and other  lands owned or claimed by Lessor  adjacent  and
contiguous  thereto to produce,  save,  take care of,  treat  transport  and own
products granted by this lease.

     9. OWNERSHIP CHANGES. The interest of either Lessee or Lessee hereunder may
be assigned, devised or otherwise transferred in whole or in part by area and/or
by depth or horizon,  and the rights and  obligations  of the parties  hereunder
shall extend to their respective  heirs,  devisees,  executors,  administrators,
successors,  and assigns.  No change in Lessor's ownership shall have the effect
of reducing the rights or enlarging the obligations of Lessee hereunder,  and no
change in  ownership  shall be binding on Lessee  until 60 days after Lessee has
been  furnished  the original or certified or duly  authenticated  copies of the
documents establishing such change of ownership to the satisfaction of Lessee or
until Lessor has satisfied the notification  requirements  contained in Lessee's
usual form of division  order.  In the event the death of any person entitled to
shut-in  payments  hereunder,  Lessee may pay or tender such shut-in payments to
the credit of decedent or decedent's estate in the depository  designated above.
If at any time two or more persons are entitled to shut-in  payments  hereunder,
Lessee may pay or tender such shut-in  payments to such persons or to the credit
in the  depository,  either  jointly or separately in proportion to the interest
which each owns. If Lessee transfers its interest  hereunder in whole or in part
Lessee shall be relieved of all obligations  thereafter  arising with respect to
the  transferred  interest,  and  failure  of the  transferee  to  satisfy  such
obligations with respect to the transferred interest shall not affect the rights
of Lessee with respect to any interest not so transferred. If Lessee transfers a
full or  undivided  interest in all or any  portion of the area  covered by this
lease,  the  obligation to pay or tender  shut-in  payments  hereunder  shall be
divided  between  Lessee and the  Transferee  in  proportion  to the net acreage
interest in this lease then held by each.

     10.  BREACH OR DEFAULT.  No  litigation  shall be  initiated by Lessor with
respect to any breach or default by Lessee  hereunder,  for a period of at least
90 days after Lessor has given Lessee written notice fully describing the breach
or default, and then only if Lessee fails to remedy the breach or default within
such period.  In the event the matter is litigated and there is a final judicial
determination  that a breach or default  has  occurred,  this lease shall not be
forfeited or  cancelled in whole or in part unless  Lessee is given a reasonable
time  after such  judicial  determination  to remedy  the breach or default  and
Lessee fails to do so.

     11.  WARRANTY OF TITLE.  Lessor hereby  warrants and agrees to defend title
conveyed to Lessee hereunder,  and agrees that Lessee at Lessee's option nay pay
and discharge any taxes,  mortgages or liens existing,  levied or assessed on or
against the leased premises.  If Lessee  exercises such option,  Lessee shall be
subrogated to the rights of the party to whom payment is made,  and, In addition
to its other  rights,  may  reimburse  itself out of any  royalties,  or shut-in
payments  otherwise  payable to Lessor  hereunder.  In the event  Lessee is made
aware of any claim  inconsistent  with  Lessor's  title,  Lessee may suspend the
payment of royalties and shut-in  payments  hereunder,  without  interest  until
Lessee  has been  furnished  satisfactory  evidence  that  such  claim  has been
resolved.  Lessee  shall  have the right to accept  leases or  conveyances  from
others  owning or claiming to own  interests  in the leased  premises or covered
hereby adverse to the rights of Lessor herein.  Should Lessee become involved in
any  dispute  or  litigation  arising  out of any claim  adverse to the title of
Lessor to said leased  premises,  Lessee may recover from Lessor its  reasonable
and necessary expenses and attorney fees incurred in such dispute or litigation,
with the right to apply  royalties  accruing  hereunder  toward  satisfying said
expenses and attorney fees.

     12. REGULATION AND DELAY.  Lessee's  obligations under this Lease,  whether
express or implied, shall be subject to all applicable laws, rules,  regulations
and  orders  of  any  governmental   authority  having  jurisdiction   including
restrictions on the drilling and production of wells,  and the price of oil, gas
and other substances  covered hereby.  When drilling,  reworking,  production or
other  operations are prevented or delayed or  interrupted by such laws,  rules,
regulations  orders,  or by inability to obtain  necessary  permits,  equipment,
services,  material, water,  electricity,  fuel access or casements, or by fire,
flood, adverse weather conditions, war, sabotage, rebellion, insurrection, riot,
strike, or labor disputes,  or by inability to obtain a satisfactory  market for
production  or failure of  purchasers  or  carriers  to take or  transport  such
production,  or by any other cause not reasonably within Lessee's control,  this
lease shall not terminate because of such prevention, delay or interruption, and
shall be  maintained  in force  and  effect  for so long as such  force  majeure
continues, and for 60 days thereafter, or so long as this lease is maintained in
force by some other  provisions  thereof,  whichever  is the later date.  Lessee
shall not be liable for breach of any express of implied covenants of this lease
when  drilling,  production or other  operations  are so  prevented,  delayed or
interrupted.

                                       48
<PAGE>
     13. EXECUTION. This lease may be signed in any number of counterparts, each
of which shall be binding upon all who execute same,  whether or not all parties
named in the caption  hereof  execute this lease.  Should any one or more of the
parties named herein as Lessor fall to execute this lease, it shall nevertheless
be binding on the party or parties who execute the same, and additional  parties
may execute this lease as Lessor,  and this lease shall be binding on each party
executing  the same  notwithstanding  that such party is named herein as Lessor,
and all of the  provisions  of this lease  shall  inure to the benefit of and be
binding on the parties hereto and their respective heirs, legal representatives,
successors and assigns.

     IN WITNESS  WHEREOF,  this LEASE is executed to be effective as of the date
entered  into,  but upon  execution  shall be binding on the  signatory  and the
signatory's heirs, devisees, executors, administrators, successors and assigns.



-------------------------------------
Lessor

                     ACKNOWLEDGMENT

STATE OF TEXAS

COUNTY OF ___________

     The  foregoing  instrument  was  acknowledged  before  me  this  ___ day of
___________, 20__ by ____________________



                                           --------------------------------
                                           Notary of Public, State of Texas


                                       49
<PAGE>
                                   EXHIBIT "C"

ATTACHED TO AND MADE A PART OF THAT CERTAIN JOINT OPERATING AGREEMENT DATED JUNE
8th, 2012, BETWEEN MontCrest Energy, Inc., and Black Strata, LLC.

                              ACCOUNTING PROCEDURE

                                JOINT OPERATIONS

                              I. GENERAL PROVISIONS

1. DEFINITIONS:

     1.1 The  term  "Contract  Operator"  shall  mean a  designated  oil and gas
operator whose role is to conduct operations  necessary for proper  development,
operation, protection and maintenance of the AMI in the Joint Property as herein
below defined.

     1.2 "Joint Property" shall mean the real and personal  property relating to
the oil and/or gas well(s)  within the AMI that is the subject of this agreement
to which this Accounting Procedure is attached.

     1.3 "Joint  Operations"  shall mean all operations  necessary or proper for
the development, operation, protection and maintenance of the Joint Property.

     1.4 "Joint  Account"  shall mean the account  showing the charges  paid and
credits  received  in the  conduct of the Joint  Operations  and which are to be
shared by the Parties.

     1.5 The  term  "Manager  of the AMI"  shall  mean  reciprocally,  MontCrest
Energy,  Inc., a Non-Operator,  who shall oversee  supervision and management of
the  Area  of  Mutual  necessary  for  development,  operation,  protection  and
maintenance of the Area of Mutual Interest.

     1.6 The term "Manager of Operations"  shall mean Black Strata,  LLC engaged
by MontCrest Energy,  Inc. for the purpose of overall supervision and management
of the oil  and/or  gas  well(s)  within  the AMI  for  development,  operation,
protection and maintenance of the oil and/or gas well(s) within the AMI.

     1.7 The term "Non-Operators" shall mean the Parties to this agreement other
than the  Contract  Operator  and Manger of  Operations  and  includes,  without
limitation MontCrest Energy, Inc., and any working interest holder in the AMI in
the Joint Property.

     1.8 "Parties" shall mean the parties to this agreement  including  Contract
Operator, Manger of Operations and Non-Operators.

     1.9 "First Level  Supervisors"  shall mean those  employees  whose  primary
function in Joint Operations is the direct supervision of other employees and/or
contract  labor  directly  employed on the Joint  Property in a field  operating
capacity.

     1.10 "Technical  Employees"  shall mean those employees  having special and
specific engineering, geological or other professional skills, and whose primary
function in Joint  Operations is the handling of specific  operating  conditions
and problems for the benefit of the Joint Property.

     1.11   "Personal   Expenses"   shall  mean  travel  and  other   reasonable
reimbursable expenses of Operator's employees.

     1.12  "Material"  shall  mean  personal  property,  equipment  or  supplies
acquired or held for use on the Joint Property.

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     1.13  "Controllable  Material"  shall mean Material which at the time is so
classified in the Material Classification Manual as most recently recommended by
the Council or Petroleum Accountants Societies.

2. STATEMENT AND BILLINGS:

     The  Manager of the AMI shall bill  Non-Operators,  based upon data  timely
provided by the Manger of  Operations  and Contract  Operator,  on or before the
last day of each month for their  proportionate  share of the Joint  Account for
the preceding month. Such bills will be accompanied by statements which identify
the authority for  expenditure,  lease or facility,  and all charges and credits
summarized by appropriate  classifications of investment and expense except that
items  of  Controllable  Material  and  unusual  charges  and  credits  shall be
separately identified and fully described in detail.

3. ADVANCES AND PAYMENTS BY NON-OPERATORS:

     3.1 Unless otherwise  provided for in the agreement,  Manager of Operations
may require the  Non-Operators  to advance their share of estimated  cash outlay
for the succeeding  month's  operation within fifteen (15) days after receipt of
the billing or by the first day of the month for which the advance is  required,
whichever is later.  The Manager of Operations shall adjust each monthly billing
to reflect advances received from the Non-Operators.

     3.2 Each Non-Operator  shall pay its proportion of all bills within fifteen
(15) days after  receipt.  If payment is not made within  such time,  the unpaid
balance  shall  bear  interest  monthly at the prime rate in effect at West Side
Bank &  Trust,  Fort  Worth,  Texas  on the  first  day of the  month  in  which
delinquency  occurs  plus  1% or the  maximum  contract  rate  permitted  by the
applicable  usury  laws in the  state in which the Joint  Property  is  located,
whichever is the lesser,  plus attorney's  fees, court costs, and other costs in
connection with the collection of unpaid amounts.

4. ADJUSTMENTS:

     Payment of any such bills shall not prejudice the right of any Non-Operator
to protest or question the correctness thereof; provided, however, all bills and
statements  rendered to  Non-Operators  by the Manager of Operations  during any
calendar  year shall  conclusively  be  presumed  to be true and  correct  after
twenty-four  (24) months  following  the end of any such calendar  year,  unless
within the said  twenty-four  (24) month  period a  Non-Operator  takes  written
exception  thereto and makes claim on Operator  for  adjustment.  No  adjustment
favorable to Operator shall be made unless it is made within the same prescribed
period. The provisions of this paragraph shall not prevent adjustments resulting
from a physical  inventory of  Controllable  Material as provided for in Section
V.A.

5. AUDITS:

     5.1 A  Non-Operator,  upon notice in writing to the Manager of the AMI, the
Manger of Operations  and Contract  Operator,  shall have the right to audit the
Manager of the AMI'  accounts and records  relating to the Joint Account for any
calendar year within the twenty-four (24) month period following the end of such
calendar year;  provided,  however,  the making of an audit shall not extend the
time for the taking of written  exception to and the  adjustments of accounts as
provided  for in  Paragraph  4 of this  Section I.  Where  there are two or more
Non-Operators, the Non-Operators shall make every reasonable effort to conduct a
joint audit in a manner which will result in a minimum of  inconvenience  to the
Manager  of the  AMI.  The  Manager  of the AMI  shall  bear no  portion  of the

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Non-Operators'  audit cost incurred under this paragraph unless agreed to by the
Manager of the AMI. The audits  shall not be conducted  more than once each year
without  prior  approval  of the  Manager  of the AMI,  and shall be made at the
expense of those Non-Operators approving such audit.

     5.2 The Manager of the AMI shall reply in writing to an audit report within
180 days after receipt of such report.

6. APPROVAL BY NON-OPERATORS:

     Where an approval or other  agreement  of the Parties or  Non-Operators  is
expressly required under other sections of this Accounting  Procedure and if the
agreement to which this  Accounting  Procedure is attached  contains no contrary
provisions  in  regard  thereto,  the  Manager  of  the  AMI  shall  notify  all
Non-Operators of Manager of the AMI's proposal, and the agreement or approval of
a  majority  in  interest  of the  Non-Operators  shall  be  controlling  on all
Non-Operators.

                               II. DIRECT CHARGES

The Manager of the AMI shall charge the Joint Account with the following items:

1. ECOLOGICAL AND ENVIRONMENTAL:

     Costs  incurred  for the  benefit  of the  Joint  Property  as a result  of
governmental or regulatory requirements to satisfy environmental  considerations
applicable  to the Joint  Operations.  Such  costs  may  include  surveys  of an
ecological or archaeological nature and pollution control procedures as required
by applicable laws and regulations.

1. RENTALS AND ROYALTIES:

     Lease  rentals and  royalties  paid by the Contract  Operator for the Joint
Operations.

2. LABOR:

     2.1

     (a)  Salaries and wages of Contract  Operator's  field  employees  directly
          employed on the Joint Property in the conduct of Joint Operations.

     (b)  Salaries of First level Supervisors in the field.

     (c)  Salaries and wages of  Technical  Employees  directly  employed on the
          Joint Property if such charges are excluded from the overhead rates.

     (d)  Salaries  and  wages of  Technical  Employees  either  temporarily  or
          permanently  assigned to and directly employed in the operation or the
          Joint Property if such charges are excluded from the overhead rates.

     2.2 Expenditures or contributions  made pursuant to assessments  imposed by
governmental  authority which are applicable to Operator's  costs  chargeable to
the Joint Account under Paragraphs 3.1 and 3.2 of this Section II.

     2.3  Personal  Expenses of those  employees  whose  salaries  and wages are
chargeable to the Joint Account under Paragraphs 3.1 and 3.2 of this Section 11.

3. MATERIAL

     Material  purchased or furnished by the Manager of  Operations  or Contract
Operator for use on the Joint  Property as provided  under Section IV. Only such
Material  shall be purchased for or  transferred to the Joint Property as may be

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required for  immediate  use and is reasonably  practical  and  consistent  with
efficient and economical operations. The accumulation of surplus stocks shall be
avoided.

4. TRANSPORTATION

     Transportation of employees and Material necessary for the Joint Operations
but subject to the following limitations:

     4.1 If Material is moved to the Joint  Property from the either the Manager
of Operations or Contract  Operator's  warehouse or other properties,  no charge
shall be made to the Joint Account for a distance greater than the distance from
the nearest  reliable supply store where like material is normally  available or
railway  receiving  point  nearest the Joint  Property  unless  agreed to by the
Parties.

     4.2 If surplus  Material  is moved to either the Manager of  Operations  or
Contract  Operator's  warehouse or other properties,  no charge shall be made to
the Joint  Account  for a distance  greater  than the  distance  to the  nearest
reliable  supply  store where like  material is normally  available,  or railway
receiving point nearest the Joint Property  unless agreed to by the Parties.  No
charge  shall  be made  to the  Joint  Account  for  moving  Material  to  other
properties  belonging to either the Manager of Operations  or Contract  Operator
unless agreed to by the Parties.

     4.3 In the application of  subparagraphs  5.1 and 5.2 above,  the option to
equalize or charge actual  trucking cost is available  when the actual charge is
$700 or less  excluding  accessorial  charges.  The $700 will be adjusted to the
amount  most  recently  recommended  by the  Council  of  Petroleum  Accountants
Societies.

5. SERVICES:

The cost of  contract  services,  equipment  and  utilities  provided by outside
sources, except services excluded by Paragraph 10 of Section II and Paragraph i,
ii, and iii, of Section 111. The cost of  professional  consultant  services and
contract services of technical  personnel directly engaged on the Joint Property
if such charges are excluded from the overhead  rates.  The cost of professional
consultant  services or contract  services of technical  personnel  not directly
engaged on the Joint  Property  shall not be charged to the Joint Account unless
previously agreed to by the Parties. NO COST OF OUTSIDE PROFESSIONAL  CONSULTANT
OR CONTRACT SERVICES ARE COVERED IN THE OVERHEAD RATES.

6.  EQUIPMENT  AND  FACILITIES  FURNISHED BY MANAGER OF  OPERATIONS  OR CONTRACT
OPERATOR:

The Manager of  Operations or Contract  Operator  shall charge the Joint Account
for use of Operator owned  equipment and facilities at rates  commensurate  with
costs of ownership and operation. Such rates shall include costs of maintenance,
repairs, other operating expense, insurance,  taxes, depreciation,  and interest
on gross  investment  less  accumulated  depreciation  not to exceed Ten percent
(10%) per annum. Such rates shall not exceed average  commercial rates currently
prevailing in the immediate area of the Joint Property.

7. DAMAGES AND LOSSES TO JOINT PROPERTY:

All costs or expenses  necessary for the repair or replacement of Joint Property
made  necessary  because of damages or losses  incurred by fire.  flood,  storm,
theft,  accident,  or other cause,  except those  resulting  from The Manager of
Operations or Contract  Operator's gross negligence or willful  misconduct.  The
Manager of Operations or Contract  Operator shall furnish  Non-Operator  written
notice of  damages  or losses  incurred  as soon as  practicable  after a report
thereof has been received by The Manager of Operations or Contract Operator.

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8. LEGAL EXPENSE:

Expense  of  handling,   investigating   and  settling   litigation  or  claims,
discharging  of liens,  payment of judgments and amounts paid for  settlement of
claims incurred in or resulting from operations under the agreement or necessary
to protect or recover the Joint Property,  except that no charge for services of
the Manager of the AMI, the Manager of Operations or Contract  Operator's  legal
staff or fees or expenses of outside  attorneys shall be made unless  previously
agreed to by the Parties. All other legal expense is considered to be covered by
the  overhead  provisions  of  Section  III  unless  otherwise  agreed to by the
Parties, except as provided in Section I, Paragraph 3.

9. TAXES:

All taxes of every kind and nature assessed or levied upon or in connection with
the Joint Property,  the operation  thereof,  or the production  there from, and
which  taxes  have been paid by the  Contract  Operator  for the  benefit of the
Parties,  If the ad  valorem  taxes are based in whole or in part upon  separate
valuations of each party's working interest,  then  notwithstanding  anything to
the contrary herein,  charges to the Joint Account shall be made and paid by the
Parties  hereto in  accordance  with the tax  value  generated  by each  party's
working interest.

10. INSURANCE

Net premiums paid for insurance  required to be carried for the Joint Operations
for the protection of the Parties.  In the event Joint  Operations are conducted
in a state in which  Contract  Operator  may act as  self-insurer  for  Worker's
Compensation  and/or  Employers  Liability  under the  respective  state's laws,
Contract   Operator   may,  at  its   election,   include  the  risk  under  its
self-insurance  program and in that event,  Contract  Operator  shall  include a
charge at Contract Operator's cost not to exceed manual rates.

11. ABANDONMENT and RECLAMATION

Costs incurred for abandonment of the Joint  Property,  including costs required
by governmental or other regulatory authority.

12. COMMUNICATIONS

Cost of acquiring,  leasing,  installing,  operating,  repairing and maintaining
communication systems, including radio and microwave facilities directly serving
the Joint Property.  In the event communication  facilities/systems  serving the
Joint Property are The Manager of Operations or Contract Operator owned, charges
to the Joint  Account  shall be made as provided in  Paragraph 8 of this Section
II.

13. OTHER EXPENDITURES

Any other  expenditure not covered or dealt with in the foregoing  provisions of
this  Section II, or in Section III and which is of direct  benefit to the Joint
Property and is incurred by the Operator in the necessary and proper  conduct of
the Joint Operations.

                                  III. OVERHEAD

1. OVERHEAD - DRILLING AND PRODUCING OPERATIONS

     i)   As compensation for administrative,  supervision,  office services and
          warehousing  costs,  the Manager of  Operations  or Contract  Operator
          shall charge drilling and producing  operations on a Fixed Rate Basis,
          Paragraph  1.1, or Unless  otherwise  agreed to by the  Parties,  such

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<PAGE>
          charge  shall be in lieu of costs  and  expenses  of all  offices  and
          salaries  or  wages  plus  applicable  burdens  and  expenses  of  all
          personnel,  except those  directly  chargeable  under  Paragraph  3.1,
          Section II. The cost and expense of services  from outside  sources in
          connection  with matters of taxation,  traffic,  accounting or matters
          before or  involving  governmental  agencies  shall be  considered  as
          included in the  overhead  rates  provided  for in the above  selected
          Paragraph  of this Section III unless such cost and expense are agreed
          to by the Parties as a direct charge to the Joint Account.

     ii)  The salaries,  wages and Personal Expenses of Technical  Employees AND
          FIRST LEVEL  SUPERVISORS  and/or the cost of  professional  consultant
          services  and  contract  services  of  technical   personnel  directly
          employed on the Joint  Property  shall not be covered by the  overhead
          rates.

     iii) The salaries,  wages and Personal Expenses of Technical  Employees AND
          FIRST  LEVEL  SUPERVISORS  and/or  costs  of  professional  consultant
          services  and  contract   services  of  technical   personnel   either
          temporarily  or permanently  assigned to and directly  employed in the
          operation of the Joint  Property  shall not be covered by the overhead
          rates.

1.1 Overhead - Fixed Rate Basis

     (a)  The Manager of Operations or Contract  Operator shall charge the Joint
          Account at the following rates per well per month:

          Drilling Well Rate              $10,000.00

          (Prorated for less than a full month)

          Producing Well Rate             $850.00


     (b)  Application of Overhead - Fixed Rate Basis shall be as follows:

1.2 Drilling Well Rate

     (a)  Charges for drilling wells shall begin on the date the well is spudded
          and terminate on the date the drilling rig,  completion  rig, or other
          units used in completion of the well is released,  whichever is later,
          except that no charge shall be made during  suspension  of drilling or
          completion  operations for fifteen (15) or more  consecutive  calendar
          days.

     (b)  Charges for wells  undergoing any type of workover or recompletion for
          a period of five (5)  consecutive  work days or more  shall be made at
          the drilling  well rate.  Such charges shall be applied for the period
          from  date  workover  operations,  with  rig or  other  units  used in
          workover,  commence through date of rig or other unit release,  except
          that no charge  shall be made  during  suspension  of  operations  for
          fifteen (15) or more consecutive calendar days.

1.3 Producing Well Rates

     (a)  An active well either produced or injected into for any portion of the
          month shall be considered as a one-well charge for the entire month.

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     (b)  Each active completion in a  multi-completed  well in which production
          is not commingled  down hole shall be considered as a one-well  charge
          providing  each  completion  is  considered  a  separate  well  by the
          governing regulatory authority.

     (c)  An inactive gas well shut in because of  overproduction  or failure of
          purchaser to take the  production  shall be  considered  as a one-well
          charge  providing  the gas well is directly  connected  to a permanent
          sales outlet.

     (d)  A one-well  charge  shall be made for the month in which  plugging and
          abandonment operations are completed on any well. This one-well charge
          shall  be made  whether  or not the  well  has  produced  except  when
          drilling well rate applies.

     (e)  All other inactive wells  (including but not limited to inactive wells
          covered by unit allowable,  lease  allowable,  transferred  allowable,
          etc.) shall not qualify for an overhead charge.

     (f)  The well  rates  shall be  adjusted  as of the first day of April each
          year  following  the  effective  date of the  agreement  to which this
          Accounting Procedure is attached.  The adjustment shall be computed by
          multiplying  the rate currently in use by the  percentage  increase or
          decrease in the average  weekly  earnings of Crude  Petroleum  and Gas
          Production Workers for the last calendar year compared to the calendar
          year  preceding  as shown by the index of average  weekly  earnings of
          Crude Petroleum and Gas Production  Workers as published by the United
          States  Department  of  Labor,  Bureau  of  Labor  Statistics,  or the
          equivalent  Canadian  index as  published  by  Statistics  Canada,  as
          applicable.  The adjusted  rates shall be the rates  currently in use.
          Plus or minus the computed adjustment.

2. OVERHEAD - MAJOR CONSTRUCTION

To compensate The Manager of Operations or Contract  Operator for overhead costs
incurred in the construction and installation of fixed assets,  the expansion of
fixed  assets,  and any  other  project  clearly  discernible  as a fixed  asset
required for the development and operation of the Joint Property, The Manager of
Operations  or  Contract  Operator  shall  either  negotiate a rate prior to the
beginning of construction,  or shall charge the Joint Account for overhead based
on the following rates for any Major Construction project in excess of $10,000:

     A.   5% of first $100,000 or total cost if less, plus

     B.   3% of costs in excess of $100,000 but less than $1,000,000, plus

     C.   1% of costs in excess of $1,000,000.

Total cost shall mean the gross cost of any one project. For the purpose of this
paragraph,  the  component  parts  of a  single  project  shall  not be  treated
separately  and the cost of drilling  and  workover  wells and  artificial  lift
equipment shall be excluded.

3. CATASTROPHE OVERHEAD

To compensate the Manager of Operations or Contract  Operator for overhead costs
incurred in the event of expenditures  resulting from a single occurrence due to
oil spill, blowout,  explosion, fire, storm, hurricane, or other catastrophes as
agreed to by the Parties,  which are necessary to restore the Joint  Property to

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the   equivalent   condition  that  existed  prior  to  the  event  causing  the
expenditures. Operator shall either negotiate a rate prior to charging the Joint
Account or shall charge the Joint  Account for overhead  based on the  following
rates:

     A.   5% of total costs through $100,000; plus

     B.   3% of total costs in excess of $100,000 but less than $1,000,000; plus

     C.   1% of total costs in excess of $l,000,000.

Expenditures  subject to the  overheads  above will not be reduced by  insurance
recoveries, and no other overhead provisions of this Section III shall apply.

4. AMENDMENT of RATES:

The overhead  rates provided for in this Section III may be amended from time to
time only by mutual  agreement  between the Parties hereto if, in practice,  the
rates are found to be insufficient or excessive.

         IV. PRICING OF JOINT ACCOUNT MATERIAL PURCHASES, TRANSFERS AND
                                  DISPOSITIONS

The Manager of Operations or Contract  Operator is responsible for Joint Account
Material and shall make provide data relating  thereto to the Manager of the AMI
for proper and timely charges and credits for all Material  movements  affecting
the Joint Property. The Manager of Operations or Contract Operator shall provide
all Material for use on the Joint Property; however, at the Manager of the AMI's
option, such Material may be supplied by the Manager of the AMI or a designee of
the Manager of the AMI. The Manager of  Operations  or Contract  Operator  shall
make timely  disposition  of idle and/or surplus  Material,  such disposal being
made either  through sale to the Manager of Operations  or Contract  Operator or
Non-Operator,  division in kind, or sale to outsiders. The Manager of Operations
or Contract Operator may purchase, but shall be under no obligation to purchase,
interest of Non-Operators in surplus condition A or B Material.  The disposal of
surplus  Controllable  Material not  purchased by the Manager of  Operations  or
Contract Operator shall be agreed to by the Parties.

1. PURCHASES:

Material  purchased  shall  be  charged  at the  price  paid by the  Manager  of
Operations  or  Contract  Operator  plus 10% after  deduction  of all  discounts
received.  In case of Material  found to be  defective or returned to vendor for
any other reasons,  credit shall be passed to the Joint Account when  adjustment
has been received by the Manager of Operations or Contract Operator.

2. TRANSFERS AND DISPOSITIONS:

Material furnished to the Joint Property and Material transferred from the Joint
Property  or  disposed of by the  Manager of  Operations  or Contract  Operator,
unless  otherwise  agreed to by the  Parties,  shall be priced on the  following
basis exclusive of cash discounts:

2.1 New Material(Condition A)Tubular Goods Other than Line Pipe

     (a)  Tubular  goods,  sized 2 3/8 inches OD and  larger,  except line pipe,
          shall  be  priced  at  Eastern  mill  published  carload  base  prices
          effective as of date of movement  plus  transportation  cost using the
          80,000  pound  carload  weight  basis to the railway  receiving  point
          nearest the Joint Property for which  published rail rates for tubular
          goods exist. If the 80,000 pound rail rate is not offered,  the 70,000

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          pound or 90,000  pound  rail  rate may be used.  Freight  charges  for
          tubing  will  be  calculated   from  Lorain,   Ohio  and  casing  from
          Youngstown, Ohio.

     (b)  For  grades  which  are  special  to one mill  only,  prices  shall be
          computed at the mill base of that mill plus  transportation  cost from
          that mill to the railway receiving point nearest the Joint Property as
          provided above in Paragraph  2.A.(l)(a).  For transportation cost from
          points other than Eastern  mills,  the 30,000 pound Oil Field  Haulers
          Association interstate truck rate shall be used.

     (c)  Special  end  finish  tubular  goods  shall be  priced  at the  lowest
          published   out-of-stock   price,   f.o.b.   Houston,    Texas,   plus
          transportation  cost, using Oil Field Haulers  Association  interstate
          30,000 pound truck rate,  to the railway  receiving  point nearest the
          Joint Property.

     (d)  Macaroni  tubing (size less than 2 3/8 inch OD) shall be priced at the
          lowest  published  out-of-  stock  prices  f.o.b.  the  supplier  plus
          transportation   costs,  using  the  Oil  Field  Haulers   Association
          interstate truck rate per weight of tubing transferred, to the railway
          receiving point nearest the Joint Property.

2.2 Line Pipe

     (a)  Line pipe movements  (except size 24 inch OD and larger with walls 3/4
          inch and over) 30,000 pounds or more shall be priced under  provisions
          of tubular  goods  pricing in  Paragraph  A.(l)(a) as provided  above.
          Freight charges shall be calculated from Lorain, Ohio.

     (b)  Line Pipe movements (except size 24 inch OD) and larger with walls 3/4
          inch and over) less than 30,000 pounds shall be priced at Eastern mill
          published  carload base prices effective as of date of shipment,  plus
          20 percent,  plus  transportation  costs based on freight rates as set
          forth under provisions of tubular goods pricing in Paragraph  A.(l)(a)
          as provided  above.  Freight  charges shall be calculated from Lorain,
          Ohio.

     (c)  Line  pipe 24 inch OD and over and 3/4 inch wall and  larger  shall be
          priced f.o.b. the point of manufacture at current new published prices
          plus  transportation  cost to the railway  receiving point nearest the
          Joint Property.

     (d)  Line pipe,  including fabricated line pipe, drive pipe and conduit not
          listed on published  price lists shall be priced at quoted prices plus
          freight to the railway  receiving  point nearest the Joint Property or
          at prices agreed to by the Parties.

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2.3 Other Material  shall be priced at the current new price,  in effect at date
of movement, as listed by a reliable supply store nearest the Joint Property, or
point of manufacture,  plus transportation costs, if applicable,  to the railway
receiving point nearest the Joint Property.

2.4 Unused new Material,  except  tubular  goods,  moved from the Joint Property
shall be priced at the  current  new price,  in effect on date of  movement,  as
listed by a  reliable  supply  store  nearest  the Joint  Property,  or point of
manufacture,  plus transportation costs, if applicable, to the railway receiving
point nearest the Joint Property. Unused new tubulars will be priced as provided
above in Paragraph 2.A.(1) and (2).

2.5 Good Used Material (Condition B) Material in sound and serviceable condition
and suitable for reuse without reconditioning:

     (a)  Material moved to the Joint Property At seventy-five  percent (75%) of
          current new prices determined by Paragraph 1.

     (b)  Material used on and moved from the Joint Property.

          (i)  At seventy-five percent (75%) of current new price, as determined
               by Paragraph 1, if Material was  originally  charged to the Joint
               Account as new Material or

          (ii) At sixty-five  percent (65%) of current new price,  as determined
               by Paragraph A, if Material was  originally  charged to the Joint
               Account as used Material

2.6  Material  not used on and moved  from the Joint  Property  At  seventy-five
percent  (75%) of current new price as  determined  by  Paragraph A. The cost of
reconditioning, if any, shall be absorbed by the transferring property.

3. Other Used Material

3.1 Condition C: Material  which is not in sound and  serviceable  condition and
not suitable  for its  original  function  until after  reconditioning  shall be
priced at fifty percent (50%) of current new price as determined by Paragraph A.
The cost of reconditioning shall be charged to the receiving property,  provided
Condition C value plus cost of reconditioning does not exceed Condition B value.

3.2 Condition D: Material,  excluding  junk, no longer suitable for its original
purpose,  but  usable  for  some  other  purpose  shall  be  priced  on a  basis
commensurate  with its use. The Manager of Operations  or Contract  Operator may
dispose of Condition D Material under procedures normally used by the Manager of
Operations or Contract Operator without prior approval of Non-Operators.

     (a)  Casing,  tubing,  or drill  pipe used as line pipe  shall be priced as
          Grade A and B seamless line pipe of comparable  size and weight.  Used
          casing.  tubing or drill pipe utilized as line pipe shall be priced at
          used line pipe prices.

     (b)  Casing,  tubing or drill pipe used as higher  pressure  service  lines
          than standard line pipe,  e.g. power oil lines,  shall be priced under
          normal pricing  procedures for casing,  tubing,  or drill pipe.  Upset
          tubular goods shall be priced on a no upset basis.

3.3  Condition  E:Junk  shall be priced at  prevailing  prices.  The  Manager of
Operations  or  Contract  Operator  may dispose of  Condition  E Material  under
procedures  normally  utilized by the Manager of Operations or Contract Operator
without prior approval of Non-Operators.

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3.4 Obsolete  Material which is serviceable and usable for its original function
but  condition  and/or value of such  Material is not  equivalent  to that which
would justify a price as provided above may be specially  priced as agreed to by
the Parties.  Such price should  result in the Joint  Account being charged with
the value of the service rendered by such Material.

3.5 Pricing Conditions

     (a)  Loading or unloading  costs may be charged to the Joint Account at the
          rate of  twenty-five  cents  (25c) per  hundred  weight on all tubular
          goods  movements,  in  lieu  of  actual  loading  or  unloading  costs
          sustained at the stocking  point.  The above rate shall be adjusted as
          of the first day of April each year  following  January 1, 1985 by the
          same percentage  increase or decrease used to adjust overhead rates in
          Section III, Paragraph  l-A.(3).  Each year, the rate calculated shall
          be rounded to the nearest  cent and shall be the rate in effect  until
          the first day of April next year.  Such rate shall be  published  each
          year by the Council of Petroleum Accountants Societies.

     (b)  Material  involving  erection  costs  shall be charged  at  applicable
          percentage of the current knocked-down price of new Material.

4. PREMIUM PRICES:

Whenever  Material is not  readily  obtainable  at  published  or listed  prices
because of national emergencies.  strikes or other unusual causes over which the
Manager of  Operations  or  Contract  Operator  has no  control,  the Manager of
Operations  or Contract  Operator may charge the Joint  Account for the required
Material  at the  Manager of  Operations  or  Contract  Operator's  actual  cost
incurred in  providing  such  Material,  in making it suitable  for use,  and in
moving it to the Joint  Property;  provided  notice in writing is  furnished  to
Non-Operators  of the proposed  charge prior to billing  Non-Operators  for such
Material.  Each Non-Operator  shall have the right, by so electing and notifying
Non-Operator  within  ten  days  after  receiving  notice  from the  Manager  of
Operations or Contract Operator,  to furnish in kind all or part of his share of
such  Material  suitable for use and  acceptable to the Manager of Operations or
Contract Operator.

5.  WARRANTY OF MATERIAL  FURNISHED  BY THE  MANAGER OF  OPERATIONS  OR CONTRACT
OPERATOR:

The Manager of  Operations  or Contract  Operator  does not warrant the Material
furnished.  In case of  defective  Material,  credit  shall not be passed to the
Joint Account until adjustment has been received by the Manager of Operations or
Contract Operator from the manufacturers or their agents.

                                 V. INVENTORIES

The Manager of Operations or Contract  Operator shall maintain  detailed records
of Controllable Material.

1. PERIODIC INVENTORIES, NOTICE AND REPRESENTATION:

At reasonable  intervals,  inventories shall be taken by the Manager of the AMI,
the Manager of Operations or Contract Operator of the Joint Account Controllable
Material.  Written notice of intention to take  inventory  shall be given by the
Manager of the AMI,  the Manager of  Operations  or  Contract  Operator at least
thirty (30) days before any inventory is to begin so that  Non-Operators  may be
represented  when  any  inventory  is  taken.  Failure  of  Non-Operators  to be
represented  at an inventory  shall bind  Non-Operators  to accept the inventory
taken by the Manager of the AMI, the Manager of Operations or Contract Operator.

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2. RECONCILIATION AND ADJUSTMENT OF INVENTORIES

RECONCILIATION  OF INVENTORY WITH THE JOINT ACCOUNT SHALL BE MADE, AND A LIST OF
COVERAGES  AND  SHORTAGES  SHALL BE  FURNISHED TO THE  NON-OPERATORS.  INVENTORY
ADJUSTMENTS SHALL BE MADE BY THE MANAGER OF OPERATIONS OR CONTRACT OPERATOR WITH
THE JOINT ACCOUNT FOR SUCH OVERAGES AND SHORTAGES, BUT THE MANAGER OF OPERATIONS
OR  CONTRACT  OPERATOR  SHALL  BE HELD  ACCOUNTABLE  TO  NON-OPERATORS  ONLY FOR
SHORTAGES  DUE TO LACK OF  REASONABLE  DILIGENCE  IN  FOLLOWING  USUAL OIL FIELD
PRACTICES IN THE AREA.

3. SPECIAL INVENTORIES:

Special inventories may be taken whenever there is any sale, change of interest,
or CHANGE of the  Manager of the AMI,  the  Manager of  Operations  or  Contract
Operator  in the Joint  Property.  It shall be the duty of the party  selling to
notify all other  Parties as quickly as possible  after the transfer of interest
takes place. In such cases,  both the seller and the purchaser shall be governed
by such inventory. In cases involving a change of Contract Operator, all Parties
shall be governed by such inventory.

4. EXPENSE OF CONDUCTING INVENTORIES:

4.1 The expense of conducting  periodic  inventories shall not be charged to the
Joint Account unless agreed to by the Parties.

4.2 The  expense  of  conducting  special  inventories  shall be  charged to the
Parties requesting such inventories,  except inventories  required due to change
of Contract Operator shall be charged to the Joint Account.






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                                   EXHIBIT "D"

ATTACHED TO AND MADE A PART OF THAT CERTAIN JOINT OPERATING AGREEMENT DATED JUNE
8th, 2012, BETWEEN MontCrest Energy, Inc., and Black Strata, LLC.

                              INSURANCE PROVISIONS

Contract  Operator  shall carry the following  minimum  amount of insurance with
respect to Unit Operations:

     1.   Statutory Workmen's  Compensation  Insurance as may be required in the
          state or  states  where  work  under  this  agreement,  or  activities
          relative  thereto,  will be  performed,  plus  Workmen's  Compensation
          Insurance  as may be required  by Federal  law,  if  applicable,  plus
          Employer's Liability Insurance.

     2.   Public   liability  and  property  damage  insurance  with  limits  of
          $1,000,000 for each occurrence.

     3.   Automobile  public liability and property damage insurance with limits
          of $1,000,000 combined single limit.

All insurance coverage required hereby shall be carried at the joint expense and
for the benefit of the Working Interest Owners.  Premiums for automobile  public
liability and property damage insurance on Unit Contract  Operator's fully owned
equipment  shall  not be  charged  directly  to the joint  account,  but will be
covered by the flat rate charged  assessed for the use of such  equipment.  Unit
Contact Operator will not carry fire,  windstorm or explosion insurance covering
Unit Operations or Unit Equipment.

Contractors and  subcontractors  will be required to carry insurance of the same
types as hereinabove specified and in such amount as deemed necessary by Working
Interest Owners.

If the parties hereto or any of them shall insure their  respective risks beyond
the specific  limits of insurance  required  hereunder to be carried by the Unit
Contract  Operator,  the benefits of such  insurance  shall inure to the parties
procuring and maintaining the same, respectively, and the cost of such insurance
shall be borne by such parties, respectively, without reimbursement one from the
other and without entering into any accounting hereunder.

     INSURANCE ON FILE AT BLACK STRATA OFFICE, 320 HEMPHILL ST, FORT WORTH
                  TEXAS 76104, AND CAN BE REVIEWED AT ANY TIME




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                                   EXHIBIT "E"

ATTACHED TO AND MADE A PART OF THAT CERTAIN JOINT OPERATING AGREEMENT DATED JUNE
8th, 2012, BETWEEN MontCrest Energy, Inc., and Black Strata, LLC.

              GAS BALANCING AGREEMENT ("AGREEMENT")

1. DEFINITIONS: The following definitions shall apply to this Agreement:

     1.01 "Arm's Length  Agreement"  shall mean any gas sales  agreement with an
     unaffiliated  purchaser  or any gas  sales  agreement  with  an  affiliated
     purchaser  where  the  sales  price  and  delivery  conditions  under  such
     agreement are  representative  of prices and delivery  conditions  existing
     under other similar agreements in the area between  unaffiliated parties at
     the same time for natural gas of comparable quality and quantity.

     1.02 "Balancing  Area" shall mean all the acreage and depths subject to AMI
     in this Operating Agreement.

     1.03 "Full Share of Current  Production" shall mean the Percentage Interest
     of each Party in the Gas actually  produced from the Balancing  Area during
     each month.

     1.04 "Gas"  shall mean all  hydrocarbons  produced or  producible  from the
     Balancing  Area,  whether from a well classified as an oil well or gas well
     by the regulatory agency having jurisdiction in such matters,  which are or
     may be made  available  for sale or separate  disposition  by the  Parties,
     excluding oil,  condensate and other liquids  recovered by field  equipment
     operated  for the joint  account.  "Gas" does not include gas used in joint
     operations,  such as for fuel, recycling or reinjection, or which is vented
     or lost prior to its sale or delivery from the Balancing Area.

     1.05 "Makeup Gas" shall mean any Gas taken by an Under  produced Party from
     the  Balancing  Area in excess  of its Full  Share of  Current  Production,
     whether pursuant to Section 3.3 or Section 4.1 hereof.

     1.06 "Mcf" shall mean one  thousand  cubic feet.  A cubic foot of Gas shall
     mean the volume of gas  contained  in one cubic foot of space at a standard
     pressure base and at a standard temperature base.

     1.07  "MMBtu"  shall mean one  million  British  Thermal  Units.  A British
     Thermal  Unit shall mean the  quantity of heat  required to raise one pound
     avoirdupois  of pure water from 58.5  degrees  Fahrenheit  to 59.5  degrees
     Fahrenheit at a constant pressure of 14.73 pounds per square inch absolute.

     1.08 "Contract  Operator"  shall mean the  individual or entity  designated
     under the terms of the Operating  Agreement or, in the event this Agreement
     is not employed in connection with an operating  agreement,  the individual
     or entity designated as the contract operator of the well(s) located in the
     Balancing Area.

     1.09  "Overproduced  Party"  shall  mean any Party  having  taken a greater
     quantity of Gas from the  Balancing  Area than the  Percentage  interest of
     such  Party  in the  cumulative  quantity  of all  Gas  produced  from  the
     Balancing Area.

     1.10 "Overproduction"  shall mean the cumulative quantity of Gas taken by a
     Party in excess of its Percentage  Interest in the  cumulative  quantity of
     all Gas produced from the Balancing Area.

     1.11  "Party"  shall mean those  individuals  or  entities  subject to this
     Agreement, and their respective heirs, successors, transferees and assigns.

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<PAGE>
     1.12 "Percentage Interest" shall mean the percentage or decimal interest of
     each Party in the Gas  produced  from the  Balancing  Area  pursuant to the
     Operating Agreement covering the Balancing Area.

     1.13 "Royalty"  shall mean payments on production of Gas from the Balancing
     Area to all owners of royalties,  overriding royalties, production payments
     or similar interests.

     1.14 "Under  Produced  Party"  shall mean any Party  having  taken a lesser
     quantity of Gas from the  Balancing  Area than the  Percentage  Interest of
     such  Party  in the  cumulative  quantity  of all  Gas  produced  from  the
     Balancing Area.

     1.15  "Underproduction"  shall mean the  deficiency  between the cumulative
     quantity  of Gas  taken  by a Party  and  its  Percentage  Interest  in the
     cumulative quantity of all Gas produced from the Balancing Area.

2. BALANCING AREA:

     2.1 If this  Agreement  covers more than one  Balancing  Area,  it shall be
     applied as if each  Balancing  Area were covered by separate but  identical
     agreements. All balancing hereunder shall be on the basis of Gas taken from
     the Balancing Area measured in MCF's.

     2.2 In the event that all or part of the Gas  deliverable  from a Balancing
     Area is or becomes  subject to one or more maximum lawful  prices,  any Gas
     not subject to price controls shall be considered as produced from a single
     Balancing  Area and Gas subject to each maximum lawful price category shall
     be considered produced from a separate Balancing Area.

3. RIGHT OF PARTIES TO TAKE GAS:

     3.1 Each Party desiring to take Gas will notify the Operator,  or cause the
     Operator  to be  notified,  of  the  volumes  nominated,  the  name  of the
     transporting  pipeline and the pipeline  contract number (if available) and
     meter station  relating to such delivery,  sufficiently  in advance for the
     Operator,  acting with  reasonable  diligence,  to meet all  nomination and
     other  requirements.  Operator  is  authorized  to deliver  the  volumes so
     nominated and confirmed (if confirmation required) transporting pipeline in
     accordance with the terms

     3.2 Each Party shall make a reasonable,  good faith effort to take its Full
     Share of Current  Production each month, to the extent that such production
     is required to maintain leases in effect, to protect the producing capacity
     of a well or reservoir,  to preserve correlative rights, or to maintain oil
     production.

     3.3 When a Party  fails for any  reason to take its Full  Share of  Current
     Production  (as such Share may be reduced by the right Of the other Parties
     to make up for Underproduction as provided herein), the other Parties shall
     be entitled  to take any Gas which such Party fails to take.  To the extent
     practicable,  such Gas  shall be made  available  initially  to each  under
     produced  Party in the  proportion  that it's  Percentage  Interest  in the
     Balancing  Area  bears  to the  total  Percentage  Interests  of all  Under
     produced Parties desiring to take such Gas. If all such Gas is not taken by
     the Under  produced  Parties,  the  portion  not taken  shall  then be made
     available  to the other  Parties in the  proportion  that their  respective
     Percentage  Interests in the  Balancing  Area bear to the total  Percentage
     Interests of such Parties.

     3.4 All Gas  taken by a Party in  accordance  with the  provisions  of this
     Agreement,   regardless  of  whether  such  Party  is  under   produced  or

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     overproduced, shall be regarded as Gas taken for its own account with title
     thereto being in such taking Party.

     3.5  Notwithstanding  the provisions of Section 3.3 hereof, no Overproduced
     Party  shall be  entitled  in any  month to take any Gas in excess of three
     hundred percent (300%) of its Percentage  interest of the Balancing  Area's
     then-current Maximum Monthly  Availability;  provided,  however,  that this
     limitation shall not apply to the extent that it would preclude  production
     that is  required to maintain  leases in effect,  to protect the  producing
     capacity of a well or  reservoir,  to preserve  correlative  rights,  or to
     maintain oil  production.  "Maximum  Monthly  Availability"  shall mean the
     maximum  average  monthly rate of  production at which Gas can be delivered
     from the Balancing  Area, as  determined by the Operator,  considering  the
     maximum  efficient  well rate for each well within the Balancing  Area, the
     maximum  allowable(s)  set by the appropriate  regulatory  agency,  mode of
     operation, production facility capabilities and pipeline pressures.

4. IN-KIND BALANCING:

     4.1 Effective the first day of any calendar month following at least thirty
     (30) days' prior  written  notice to the Manager of  Operations or Contract
     Operator,  any Under  Produced  Party may begin taking,  in addition to its
     Full Share of Current  Production  and any  Makeup  Gas taken  pursuant  to
     Section 3.3 of this Agreement,  a share of current production determined by
     multiplying   twenty-five  percent  (25%)of  the  Full  Shares  of  Current
     Production  of all  Overproduced  Parties by a fraction,  the  numerator of
     which is the  Percentage  Interest  of such  Under  Produced  Party and the
     denominator of which is the total of the Percentage  Interests of all Under
     Produced  Parties  desiring  to  take  Makeup  Gas.  In no  event  will  an
     Overproduced  Party be required to provide  more than  twenty-five  percent
     (25%) of its Full Share of Current  Production  for Makeup Gas. The Manager
     of Operations or Contract  Operator will promptly  notify all  Overproduced
     Parties of the election of an Under  Produced  Party to begin taking Makeup
     Gas. See Section 14 for additional provisions.

     4.2 Notwithstanding any other provision of this Agreement, at such time and
     for so long as Contract Operator,  or(insofar as concerns production by the
     Contract Operator) any Under Produced Party,  determines in good faith that
     an  Overproduced  Party has  produced  all of its  share of the  ultimately
     recoverable  reserves in the Balancing Area, such Overproduced Party may be
     required to make  available for Makeup Gas, upon the demand of the Contract
     Operator or any Under Produced Party,  up to one-hundred  percent (100%) of
     such Overproduced Party's Full Share of Current Production.

5. STATEMENT OF GAS BALANCES:

     5.1 The Contract Operator will maintain appropriate accounting on a monthly
     and  cumulative  basis of the volumes of Gas that each Party is entitled to
     receive  and the  volumes of Gas  actually  taken or sold for each  Party's
     account.  Within five (5) days of receipt Contract Operator shall give said
     receipt to the  Manager of  Operations.  Within  thirty (30) days after the
     month of  production,  the Contract  Operator  will furnish a statement for
     such month showing (1)each Party's Full Share of Current  Production,(2)the
     total volume of Gas actually  taken or sold for each Party's  account,  (3)
     the difference between the volume taken by each Party and that Party's Full
     Share of Current  Production,(4)the  Overproduction or  Underproduction  of
     each Party,  and (5) other data as  recommended  by the  provisions  of the
     Council of Petroleum  Accountants  Societies Bulletin No. 24, as amended or
     supplemented hereafter.  Each Party taking Gas will promptly provide to the
     Contract   Operator  any  data  required  by  the  Contract   Operator  for
     preparation of the statements required hereunder.

     5.2 If any Party  fails to provide  the data  required  herein for four (4)
     consecutive production months, the Contract Operator, or where the Contract

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<PAGE>
     Operator  has  failed  to  provide  data,  another  Party,  may  audit  the
     production and Gas sales and  transportation  volumes of the  non-reporting
     Party to provide the  required  data.  Such audit shall be  conducted  only
     after  reasonable  notice and during normal business hours in the office of
     the Party whose records are being audited.  All costs  associated with such
     audit will be charged to the  account of the Party  failing to provide  the
     required data.

6. PAYMENTS ON PRODUCTION:

     6.1 Each Party taking Gas shall pay or cause to be paid all  production and
     severance taxes due on all volumes of Gas actually taken by such Party.

     6.2 ENTITLEMENTS:  Each Party shall pay or cause to be paid all Royalty due
     with respect to Royalty  owners to whom it is  accountable as if such Party
     were taking its Full Share of Current  Production,  and only its Full Share
     of Current Production.

     6.3 In the event that any  governmental  authority  requires  that  Royalty
     payments be made on any other basis than that  provided for in this Section
     6, each Party agrees to make such Royalty payments accordingly,  commencing
     on the effective  date  required by such  governmental  authority,  and the
     method provided for herein shall be thereby superseded.

7. CASH SETTLEMENTS:

     7.1 Upon the earlier of the plugging and  abandonment of the last producing
     interval in the Balancing Area, the termination of the Operating  Agreement
     or any pooling or unit  agreement  covering the  Balancing  Area, or at any
     time no Gas is taken from the  Balancing  Area for a period of twelve  (12)
     consecutive  months,  any Party may give  written  notice  calling for cash
     settlement of the Gas production  imbalances among the Parties. Such notice
     shall be given to all Parties in the Balancing Area.

     7.2 Within  sixty (60) days after the notice  calling  for cash  settlement
     under Section 7.1, the Contract  Operator  will  distribute to each Party a
     Final Gas  Settlement  Statement  detailing the quantity of  Overproduction
     owed by each  Overproduced  Party to each Under  Produced Party pursuant to
     the methodology set out in Section 7.4.

     7.3 (DIRECT PARTY-TO-PARTY SETTLEMENT) Within sixty (60) days after receipt
     of the Final Gas Settlement Statement,  each Overproduced Party will pay to
     each Under  Produced  Party  entitled to settlement  the  appropriate  cash
     settlement,  accompanied by appropriate  accounting  detail. At the time of
     payment,  the Overproduced  Party will notify the Contract  Operator of the
     Gas imbalance settled by the Overproduced Party's payment.

     7.4 (MOST  RECENT SALES  BASIS) The amount of the cash  settlement  will be
     based on the  proceeds  received by the  Overproduced  Party under an Arm's
     Length Agreement for the volume of Gas that constituted  Overproduction  by
     the  Overproduced  Party  from  the  Balancing  Area.  For the  purpose  of
     implementing   the  cash   settlement   provision  of  the  Section  7,  an
     Overproduced  Party will not be considered to have produced any of an Under
     Produced  Party's  share of Gas until the  Overproduced  Party has produced
     cumulatively  all of its  Percentage  Interest  share of the Gas ultimately
     produced from the Balancing Area.

     7.5 The values used for calculating  the cash settlement  under Section 7.4
     will  include  all  proceeds  received  for  the  sale  of  the  Gas by the
     Overproduced  Party  calculated at the Balancing Area,  after deducting any
     production  or severance  taxes paid and any Royalty  actually  paid by the
     Overproduced  Party to an Under Produced Party's Royalty  owner(s),  to the
     extent said payments amounted to a discharge of said Under Produced Party's

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     Royalty  obligation,  as well  as any  reasonable  marketing,  compression,
     treating, gathering or transportation costs incurred directly in connection
     with the sale of the Overproduction.

     7.5.1  (FOR  VALUATION   UNDER   PERCENTAGE  OF  PROCEEDS   CONTRACTS)  For
     Overproduction  sold under a gas purchase  contract  providing  for payment
     based on a percentage of the proceeds obtained by the purchaser upon resale
     of residue gas and liquid hydrocarbons extracted at a gas processing plant,
     the values used for  calculating  cash  settlement  will  include  proceeds
     received by the Overproduced Party for both the liquid hydrocarbons and the
     residue gas attributable to the Overproduction.

     7.5.2  (VALUATION FOR PROCESSED GAS) For Over production  processed for the
     account  of the  Overproduced  Party  at a gas  processing  plant  for  the
     extraction of liquid  hydrocarbons,  the values used for  calculating  cash
     settlement will include the proceeds received by the Overproduced Party for
     the sale of the liquid hydrocarbons extracted from the Overproduction, less
     the actual  reasonable costs incurred by the Overproduced  Party to process
     the  Overproduction  and to  transport,  fractionate  and handle the liquid
     hydrocarbons extracted there from prior to sale.

     7.6 To the extent the  Overproduced  Party did not sell all  Overproduction
     under an Arm's Length  Agreement,  the cash settlement will be based on the
     weighted average price received by the Overproduced  Party for any gas sold
     from the Balancing Area under Arm's Length  Agreements during the months to
     which such  Overproduction is attributed.  In the event that no sales under
     Arm's  Length  Agreements  were  made  during  any  such  month,  the  cash
     settlement for such month will be based on the spot sales prices  published
     for  the  applicable  geographic  area  during  such  month  in a  mutually
     acceptable pricing bulletin.

     7.7 Interest  compounded  at the rate of nine percent (9%) per annum or the
     maximum lawful rate of interest applicable to the Balancing Area, whichever
     is less,  will accrue for all amounts due under  Section 7.1  beginning the
     first day  following  the date payment is due pursuant to Section 7.3. Such
     interest shall be borne by the Contract Operator or any Overproduced  Party
     in the proportion that their respective delays beyond the deadlines set out
     in Sections 7.2 and 7.3 contributed to the accrual of the interest.

     7.8 In lieu of the cash settlement required by Section 7.3, an Overproduced
     Party may  deliver  to the  Under  Produced  Party an offer to  settle  its
     Overproduction in-kind and at such rates, quantities,  times and sources as
     may be agreed upon by the Under Produced  Party.  If the Parties are unable
     to agree upon manner in which such in-kind settlement gas will be furnished
     within sixty (60) days after the  Overproduced  Party's  offer to settle in
     kind,  which  period may be  extended by  agreement  of said  Parties,  the
     Overproduced Party shall make a cash settlement as provided in Section 7.3.
     The making of an in-kind  settlement  offer under this Section 7.8 will not
     delay the  accrual of interest  on the cash  settlement  should the Parties
     fail to reach agreement on an in-kind settlement.

     7.9 (FOR BALANCING AREAS SUBJECT TO FEDERAL PRICE  REGULATION) That portion
     of any monies collected by an Overproduced Party for  Overproduction  which
     is subject to refund by orders of the Federal Energy Regulatory  Commission
     or other  governmental  authority may be withheld by the Overproduced Party
     until such prices are fully approved by such governmental authority, unless
     the Under Produced Party furnishes a corporate  undertaking,  acceptable to
     the Overproduced  Party,  agreeing to hold the Overproduced  Party harmless
     from financial loss due to refund orders by such governmental authority.

     7.10  (INTERIM  CASH  BALANCING)  At any  time  during  the  term  of  this
     Agreement,  any Overproduced  Party may, in its sole discretion,  make cash
     settlement(s)  with the Under Produced  Parties covering all or part of its
     outstanding Gas imbalance, provided that such settlements must be made with
     all Under Produced Parties proportionately based on the relative imbalances
     of the Under Produced  Parties,  and provided further that such settlements

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     may not be made more often than once every  twenty-four  (24) months.  Such
     settlements  will be calculated in the same manner provided above for final
     cash settlements.  The Overproduced  Party will provide Contract Operator a
     detailed  accounting  of any such cash  settlement  within thirty (30) days
     after the settlement is made.

8. TESTING:

Not  withstanding  any provision of this  Agreement to the  contrary,  any Party
shall have the right,  from time to time,  to produce and take up to one hundred
percent   (100%)  of  a  well's  entire  Gas  stream  to  meet  the   reasonable
deliverability test(s) required by such Party's Gas purchaser,  and the right to
take any  Makeup Gas shall be  subordinate  to the right of any Party to conduct
such tests; provided,  however, that such tests shall be conducted in accordance
with prudent  operating  practices  only after  thirty (30) days' prior  written
notice to the  Manager of  Operations  or  Contract  Operator  and shall last no
longer than seventy-two (72) hours.

9. OPERATING COSTS:

Nothing in this Agreement  shall change or affect any Party's  obligation to pay
its proportionate  share of all costs and liabilities  incurred in operations on
or in connection  with the Balancing  Area, as its share thereof is set forth in
the  Operating  Agreement,  irrespective  of  whether  any  Party is at any time
selling  and using Gas or  whether  such sales or use are in  proportion  to its
Percentage Interest in the Balancing Area.

10. LIQUIDS:

The  Parties  shall  share  proportionately  in and own all liquid  hydrocarbons
recovered  with  Gas by  field  equipment  operated  for the  joint  account  in
accordance with their Percentage Interests in the Balancing Area.

11. AUDIT RIGHTS:

Not withstanding any provision in this Agreement or any other agreement  between
the Parties hereto, and further  notwithstanding any termination or cancellation
of this  Agreement,  for a period of two (2) years from the end of the  calendar
year in which any  information  to be furnished  under  Section 5 or 7 hereof is
supplied, any Party shall have the right to audit the records of any other Party
regarding  quantity,   including  but  not  limited  to  information   regarding
Btu-content.  Any Under  produced Party shall have the right for a period of two
(2) years  from the end of the  calendar  year in which any cash  settlement  is
received pursuant to Section 7 to audit the records of any Overproduced Party as
to all matters  concerning  values,  including  but not  limited to  information
regarding  prices and disposition of Gas from the Balancing Area. Any such audit
shall be conducted at the expense of the Party or Parties  desiring  such audit,
and shall be conducted, after reasonable notice, during normal business hours in
the office of the Party  whose  records  are being  audited.  Each Party  hereto
agrees to  maintain  records as to the volumes and prices of Gas sold each month
and the volumes of Gas used in its own  operations,  along with the Royalty paid
on any such Gas used by a Party in its own operations. The audit rights provided
for in this Section 11 shall be in addition to those provided for in Section 5.2
of this Agreement.

12. MISCELLANEOUS:

     12.1 As between  the  Parties,  in the event of any  conflict  between  the
     provisions of this Agreement and the provisions of any gas sales  contract,
     or in the event of any conflict  between the  provisions of this  Agreement
     and the  provisions  of the  Operating  Agreement,  the  provisions of this
     Agreement shall govern.

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     12.2 Each Party  agrees to defend,  indemnify  and hold  harmless all other
     Parties from and against any and all liability for any claims, which may be
     asserted by any third party which now or hereafter  stands in a contractual
     relationship  with  such  indemnifying  Party  and  which  arise out of the
     operation of this  Agreement or any activities of such  indemnifying  Party
     under the provisions of this Agreement,  and does further agree to save the
     other Parties  harmless  from all judgments or damages  sustained and costs
     incurred in connection therewith.

     12.3  Except as  otherwise  provided  in this  Agreement,  the  Manager  of
     Operations or Contract  Operator is authorized to administer the provisions
     of this  Agreement,  but shall have no liability  to the other  Parties for
     losses sustained or liability  incurred which arise out of or in connection
     with the performance of Contract  Operator's duties hereunder,  except such
     as  may  result  from  Contract   Operator'  gross  negligence  or  willful
     misconduct.  Contract  Operator  shall not be liable to any Under  Produced
     Party for the  failure of any  Overproduced  Party,  (other  than  Contract
     Operator) to pay amounts owed pursuant to the terms hereof.
     12.4 This  Agreement  shall  remain in full force and effect for as long as
     the  Operating  Agreement  shall  remain  in  force  and  effect  as to the
     Balancing Area, and thereafter  until the Gas accounts  between the Parties
     are settled in full,  and shall inure to the benefit of and be binding upon
     the  Parties  hereto,  and  their  respective  heirs,   successors,   legal
     representatives  and  assigns,  if any.  The Parties  hereto  agree to give
     notice of the  existence of this  Agreement to any successor in interest of
     any such Party and to  provide  that any such  successor  shall be bound by
     this Agreement, and shall further make any transfer of any interest subject
     to the Operating Agreement,  or any part thereof, also subject to the terms
     of this Agreement.

     12.5  Unless the context  clearly  indicates  otherwise,  words used in the
     singular  include the plural,  the plural  includes the  singular,  and the
     neuter gender includes the masculine and the feminine.

     12.6 In the event that any  "Optional"  provision of this  Agreement is not
     adopted by the Parties to this  Agreement by a typed printed or handwritten
     indication,  such provision shall not form a part of this Agreement, and no
     inference shall be made concerning the intent of the Parties in such event.
     In the event that any  "Alternative"  provision of this Agreement is not so
     adopted by the Parties, Alternative 1 in each such instance shall be deemed
     to have been  adopted by the Parties as a result of any such  omission.  In
     those cases where it is indicated  that an Optional  provision  may be used
     only if a specific Alternative is selected: (i) an election to include said
     Optional  provision  shall  not be  effective  unless  the  Alternative  in
     question  is  selected;  and (ii) the  election  to include  said  Optional
     provision must be expressly  indicated hereon, it being understood that the
     selection  of an  Alternative  either  expressly  or by default as provided
     herein  shall not, in and of itself,  constitute  an election to include an
     associated Optional provision.

     12.7  This  Agreement  shall  bind  the  Parties  in  accordance  with  the
     provisions  hereof, and nothing herein shall be construed or interpreted as
     creating any rights in any person or entity not a signatory  hereto,  or as
     being a stipulation in favor of any such person or entity.

     12.8 If  contemporaneously  with  this  Agreement  becoming  effective,  or
     thereafter,  any Party requests that any other Party execute an appropriate
     memorandum  or  notice of this  Agreement  in order to give  third  parties
     notice of record of same and submits same for execution in recordable form,
     such memorandum or notice shall be duly executed by the Party to which such
     request is made and delivered  promptly  thereafter to the Party making the
     request.  Upon  receipt,  the Party  making  the  request  shall  cause the
     memorandum or notice to be duly recorded in the  appropriate  real property
     or other records affecting the Balancing Area.

     12.9 In the event Internal  Revenue Service  regulations  require a uniform
     method of computing  taxable  income by all  Parties,  each Party agrees to
     compute and report income to the Internal  Revenue Service (select one) [ ]

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<PAGE>
     as if such Party were  taking its Full Share of Current  Production  during
     each relevant tax period in accordance  with such  regulations,  insofar as
     same relate to  entitlement  method tax  computations;  or |X| based on the
     quantity of Gas taken for its account in accordance with such  regulations,
     insofar as some relate to sales method tax computations.

13. ASSIGNMENT AND RIGHTS UPON ASSIGNMENT:

     13.1  Subject to the  provisions  of Sections  13.2 (if  elected)  and 13.3
     hereof, and notwithstanding  anything in this Agreement or in the Operating
     Agreement  to the  contrary,  if any  Party  assigns  (including  any sale,
     exchange or other  transfer)  any of its working  interest in the Balancing
     Area  when such  Party is an Under  produced  or  Overproduced  Party,  the
     assignment or other act of transfer  shall,  insofar as the Parties  hereto
     are concerned,  include all interest of the assigning or transferring Party
     in the Gas, all rights to receive or  obligations to provide or take Makeup
     Gas and all rights to receive or obligations  to make any monetary  payment
     which may  ultimately  be due  hereunder,  as  applicable.  The  Manager of
     Operations or Contract  Operator and each of the other Parties hereto shall
     thereafter  treat  the  assignment   accordingly,   and  the  assigning  or
     transferring  Party shall look solely to its  assignee or other  transferee
     for any interest in the Gas or monetary payment that such Party may have or
     to  which  it may be  entitled,  and  shall  cause  its  assignee  or other
     transferee to assume its obligations hereunder.

     13.2 (CASH  SETTLEMENT UPON  ASSIGNMENT)  Notwithstanding  anything in this
     Agreement  (including  but not limited to the  provisions  of Section  13.1
     hereof) or in the Operating  Agreement to the contrary,  and subject to the
     provisions  of Section  13.3  hereof,  in the event an  Overproduced  Party
     intends to sell, assign, exchange or otherwise transfer any of its interest
     in a Balancing  Area, such  Overproduced  Party shall notify in writing the
     other working interest owners who are Parties hereto in such Balancing Area
     of such fact at least  thirty (30) days prior to closing  the  transaction.
     Thereafter,  any Under  Produced  Party may demand  from such  Overproduced
     Party  in  writing,   within   fifteen  (15)  days  after  receipt  of  the
     Overproduced  Party's notice, a cash settlement of its Underproduction from
     the Balancing  Area.  The Contract  Operator  shall be notified of any such
     demand and of any cash  settlement  pursuant  to this  Section  13, and the
     Overproduction  and   Underproduction  of  each  Party  shall  be  adjusted
     accordingly.  Any cash settlement pursuant to this Section 13 shall be paid
     by the  Overproduced  Party on or before the  earlier to occur (i) of sixty
     (60) days after receipt of the Under Produced Party's demand or (ii) at the
     closing of the transaction in which the Overproduced Party sells,  assigns,
     exchanges or otherwise  transfers  its interest in a Balancing  Area on the
     same basis as otherwise  set forth in Sections 7.3 through 7.6 hereof,  and
     shall bear interest at the rate set forth in Section 7.7 hereof,  beginning
     sixty (60)days after the Overproduced Party's sale, assignment, exchange or
     transfer of its  interest in the  Balancing  Area for any amounts not paid.
     Provided, however, if any Under Produced Party does not so demand such cash
     settlement  of its  Underproduction  from the  Balancing  Area,  such Under
     Produced Party shall look exclusively to the assignee or other successor in
     interest  of  the  Overproduced  Party  giving  notice  hereunder  for  the
     satisfaction of such Under Produced  Party's Under production in accordance
     with the provisions of Section 13.1 hereof.

     13.3 The provisions of this Section 13 shall not be applicable in the event
     any Party  mortgages  its  interest or disposes of its  interest by merger,
     reorganization, consolidation or sale of substantially all of its assets to
     a subsidiary  or parent  company,  or to any company in which any parent or
     subsidiary of such Party owns a majority of the stock of such company.

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14. OTHER PROVISIONS:

     14.1 The election of an under produced party to commence  taking makeup gas
     under the  provisions  of Article 4,  hereof,  shall remain in effect until
     such  under-produced  party gives Contract Operator thirty (30) days notice
     of its  election  to  cease  taking  makeup  gas,  or  until  such  party's
     underproduction  is  eliminated,  whichever  first occurs.  In the event an
     under-produced party provides notice to the Contract Operator of its intent
     to cease taking makeup gas, such under-produced  party shall not thereafter
     be allowed to request  makeup gas again until one (1) year from last day of
     the month in which they last took makeup gas.  This  section does not apply
     to permanent  overproduction  situations.  Please see section 4.3 regarding
     situations where an Overproduced Party has produced all of its share of the
     ultimately recoverable reserves in the Balancing Area.

15. COUNTERPARTS

This  Agreement may be executed in  counterparts,  each of which when taken with
all other  counterparts shall constitute a binding agreement between the Parties
hereto;  provided,  however,  that if a Party or  Parties  owning  a  Percentage
Interest in the Balancing Area equal to or greater than a  _____________________
percent  (_____%)  therein  fail(s)  to  execute  this  Agreement  on or  before
____________________,  this  Agreement  shall not be binding  upon any Party and
shall be of no further force and effect.

IN WITNESS WHEREOF, this agreement shall be Effective as of the 8th day of JUNE,
2012.

                                   MANAGER OF THE AMI
                                   MontCrest Energy, Inc.


                                   /s/ John Forrest
                                   ---------------------------------
                                   By: John Forrest
                                   Title: Secretary
                                   Date: JUNE 8, 2012
                                   Tax ID or SSN: 27-0743683

                                   MANAGER OF OPERATIONS
                                   Black Strata, LLC


                                   /s/ Douglas E. Forrest
                                   -----------------------------------
                                   By: Douglas E. Forrest
                                   Title: President, Co-Manager
                                   Date: JUNE 8, 2012
                                   Tax ID or SSN: 26-4605206

                                   NON OPERATOR
                                   Independence Energy Corporation


                                   /s/ Gregory Rotelli
                                   -----------------------------------
                                   By: Gregory Rotelli
                                   Title: CEO, President IDNG
                                   Date: June 8, 2012
                                   Tax ID or SSN:

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                                   EXHIBIT "F"

ATTACHED TO AND MADE A PART OF THAT CERTAIN JOINT OPERATING AGREEMENT DATED JUNE
8th, 2012, BETWEEN MontCrest Energy, Inc., and Black Strata, LLC.

          NON-DISCRIMINATION AND CERTIFICATION OF SEGREGATED FACILITIES

In the  performance  of its duties under this  Agreement,  the Operator shall be
bound  by and  comply  with all the  terms  and  provisions  of  Section  202 of
Executive Order 11246 of September 24, 1965, to the extent it is applicable, all
of which are incorporated herein by reference to the same extent as if fully set
forth herein,  and shall be bound by and comply with the rules,  regulations and
relevant orders adopted pursuant to such Executive Order.




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