Exhibit 10.3

NEITHER THIS DEBENTURE NOR THE
SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE ACT) OR ANY STATE SECURITIES
LAWS AND NEITHER THIS DEBENTURE NOR ANY INTEREST THEREIN NOR THE SECURITIES INTO WHICH
THIS DEBENTURE IS CONVERTIBLE MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH
LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY, IS AVAILABLE.

# EDEN ENERGY CORP. $500,000 (US) CONVERTIBLE DEBENTURE

# DUE August 31, 2006

EDEN ENERGY CORP. (hereinafter
referred to as the Company), for value received, hereby promises to pay to
Fort Scott Energy Corp., of 5548 Parthenon Place, West Vancouver, British Columbia V7W
2V7, (the Holder) on August 31, 2006 (the Maturity
Date), or on such earlier or later date as the Principal Amount hereof may
become due in accordance with the provisions of this Convertible Debenture (the
Debenture), on presentation and surrender of this Debenture, the sum of
FIVE HUNDRED THOUSAND DOLLARS ($500,000) (the Principal Amount) in
lawful money of the United States of America at the offices of the Company in Vancouver,
British Columbia, and to pay interest on the Principal Amount in the amounts and at the
times specified in this Debenture.

This Debenture is made subject to the
following terms:

# 1.          INTEREST

# 1.1       Interest Rate

| | Interest
(Interest) on the Principal Amount or such portion thereof as shall be
outstanding from time-to-time shall be payable from the date of this Debenture (the
Effective Date) through to the date of full payment or conversion of
the sums due under this Debenture at the rate of seven percent (7%) per annum from the
Effective Date until the earlier of the Maturity Date or the date of payment or conversion
of all sums due under this Debenture.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 1.2       Payment of Interest

| | Interest
accrued under the terms of this Debenture shall be due and payable on the annual
anniversary of this Debenture, with the first payment becoming due on August 31, 2005, and
the Company will pay to the Holder all Interest due and payable as soon as expediently
possible. Interest payments due hereunder will be paid in cash.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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ii

# 2.          CONVERSION

# 2.1        Conversion Right

| | (a) | TheHolder may, at its option, convert, (a
               Conversion), at any time and from time to time during the
               term of this Debenture, all or any part of the Principal Amount then
               outstanding, into units (Units) at a conversion price of
               US$0.25 per Unit to the Maturity Date, with each Unit consisting of one share of
               the Companys common shares (a Conversion Share) and one
               half of one non-transferable share purchase warrant (a
               Warrant). Each whole Warrant entitles the Holder to purchase
               one additional share of the Companys common shares (a Warrant
               Share) at an exercise price of US$0.50 per share.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Warrants will expire at 4:00 p.m., Pacific Standard Time, on the later of the Maturity
Date or two years from the date of issuance of the Warrants.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------

# 2.2       Conversion Notice

| | To
convert this Debenture, the Holder shall, within forty-eight (48) hours of being presented
with payment of the Principal Amount, in whole or in part, deliver to the Company a
written notice substantially in the form of Schedule A to this Debenture (a
Conversion Notice), specifying the portion of the Principal Amount,
expressed in American dollars, to be converted into Units on the Conversion Date. The
Conversion shall be effected on the date (the Conversion Date)
specified in the Conversion Notice.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 2.3        Reservation of
Common Stock

| | The
Company shall reserve and keep available out of its authorized but unissued common shares,
solely for the purpose of effecting a Conversion, such number of shares of common shares
as shall from time to time be sufficient to issue Conversion Shares and Warrant Shares
upon a full Conversion of the then outstanding Principal Amount.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 3.          COVENANTS

# 3.1        General Covenants

| | The
Company covenants with the Holder that, subject to the provisions of this Debenture and
for so long as it remains outstanding:
| | ----------------------------------------------------------------------------------------------------------------------------------

| | (a) | it will use commercially reasonable best efforts to:
| | --- | ----------------------------------------------------

| | (i) | at
all times maintain its existence, corporate, partnership or otherwise;
| | --- | -------------------------------------------------------------------------

| | (ii) | at
all times maintain its good standing in all jurisdictions where they,
                    respectively, carry on business;
| | ---- | -----------------------------------------------------------------------------------------------------------------------------

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iii

| | (iii) | carry
on and conduct its business in a proper, efficient and businesslike
                    manner;
| | ----- | -----------------------------------------------------------------------------------------------------

| | (iv) | keep
or cause to be kept proper books of account; and
| | ---- | -----------------------------------------------------

| | (v) | use
the proceeds of this Debenture for working capital in the development of the
                    oil and gas properties owned by the Company and to pay down any
existing debt.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 4.         DEFAULT

| | On
a material failure of the Company to comply with representations and covenants of the
Company made in this Debenture, including the covenant set forth herein, the Holder may by
notice in writing to the Company declare this Debenture in default and accelerate the
Obligations such that the same shall become due and payable in cash on the date that is
five (5) days after such notice.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 5.         NON-TRANSFERABLE

| | This
Debenture may not be transferred without the prior written consent of the Company, which
the Company may grant or withhold in its sole discretion.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------

# 6.          ADJUSTMENT

6.1          If:

| | (a) | there are any changes in the capital structure of the Company through stock
               splits or consolidations or reclassifications or changes in or elimination of
               par value shares, or
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | any dividends or other distributions are made to all or substantially all
               holders of shares, or
| | --- | --------------------------------------------------------------------------------------------------------------

| | (c) | any rights to purchase shares at prices substantially below fair market value
               are granted to all or substantially all holders of shares of the Company, or
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d) | as a result of any other recapitalization, merger or consolidation the shares of
               the Company are converted into or exchangeable for any other shares,
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | then
in any such case the Company shall make proportional adjustments in the number of shares
issuable on conversion hereof as may be required to prevent material dilution of the
rights of the Holder hereunder.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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iv

# 7.         NOTICE

| | Any
notice required or permitted to be delivered hereunder shall be deemed sufficient if sent
or delivered via confirmed fax, courier with tracking service, or in person to the
following fax number or address, or in such other manner as the party upon whom notice is
being served consents and acknowledges receipt:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | If
to the Company:
| | ------------------

| | Eden
Energy Corp.Suite 1925 200 Burrard Street,Vancouver B.C. V6C 3L6
| | ---------------------------------------------------------------------

| | with
a copy to:
| | ---------------

| | Clark,
Wilson800-885 West Georgia Street,Vancouver, BC V6C 3H1Attention: Bernard PinskyFax
Number: (604) 687-6314
| | -----------------------------------------------------------------------------------------------------------------

| | If
to the Holder:
| | -----------------

| | 5548
Parthenon PlaceWest Vancouver, BC V7W 2V7Attention: Richard Coglon
| | -----------------------------------------------------------------------

IN WITNESS WHEREOF the Company has
caused this Debenture to be signed by any one director of the Company, manually or by
facsimile signature, as of the 31st day of August, 2004.

| |                           
| | --------------------------
| | EDEN ENERGY CORP.         
| | by:      /s/ Donald Sharpe

# THIS  DEBENTURE IS NOT
 TRANSFERABLE  OTHER THAN AS SET OUT IN THIS  DEBENTURE.  THERE IS NO PUBLIC MARKET FOR
THIS DEBENTURE.

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# SCHEDULE A

# FORM OF CONVERSION
NOTICE

# TO:     EDEN ENERGY CORP.
(the Company)

The undersigned, the registered
holder (the Holder) of the enclosed secured convertible debenture (the
Debenture), hereby irrevocably elects to convert such Debenture (or
$____________ of the principal amount and accrued interest thereof) into units
(Units) with each Unit consisting of one share (a Share of the
Companys common shares and one half of one non-transferable share purchase warrant
(the Warrant) entitling the Holder to purchase one additional share of the
Companys common shares, in accordance with the terms of the enclosed Debenture and
directs that the Shares and Warrants issuable and deliverable upon the conversion be
issued and delivered to the person indicated below.

|                              |                                                                               
|----------------------------- | ------------------------------------------------------------------------------
|DATED:  _____________________ | _____________________________________Name of Holder (Please Print)            
|                              | By:__________________________________Authorized Signatory                     
|                              | _____________________________________Official Capacity or Title (Please Print)
|                              | _____________________________________Address                                  
|                              | _____________________________________Address                                  
|                              | _____________________________________Telephone Number                         

|                                                                         | 
|------------------------------------------------------------------------ | 
|REGISTER THE SHARES ANDWARRANTS AS SET FORTH BELOW:                      | 
|________________________________________Name                             | 
|________________________________________Account reference, if applicable | 
|________________________________________Address                          | 
|________________________________________Address                          | 
|                                                                         | 
|                                                                         |