**Exhibit 10.14**

** **
| **Cano  Petroleum, Inc.**

The Oil & Gas Commerce Building

309 West Seventh Street,  Suite 1600

Fort Worth, TX 76102 |       |       |                                   |
|----------------------------------------------------------------------------------------------------------------------------|------------|------------|-----------------------------------|
| Phone (US) 817-698-0900                                                                                                    | ** ** | ** ** | **producing oil****&****gas** |
| Toll Free 1-877-698-0900                                                                                                   | ** ** | ** ** | **in the USA**                    |
| Fax 817-698-0796                                                                                                           | ** ** |       | **for the USA**                   |

** **

February 14, 2006

 

Energy Components SPC EEPEnergy

Exploration and ProductionSegregated Portfolio

Grand Pavilion CommercialCentre

802 West Bay Road, Suite 14

George Town, Grand Cayman,B.W.I., Cayman Islands

Attention: Michael Proctor

 

Mitchell Energy Partners

7515 Greenville Avenue,Suite 905

Dallas, Texas 75231

Attention: Mynan C. Feldman

Facsimile: (469) 916-7489

 

UnionBanCal Equities, Inc.

445 S. Figueroa Street, 13th Floor

Los Angeles, CA 90071

Attention: Michael Ross

Facsimile: (213) 236-7619

 

Gentlemen:

 

Reference is made to thatcertain Subordinated Credit Agreement (the ***“Agreement”***)dated as of November 29, 2005, by and among Cano Petroleum, Inc. (the ***“Borrower”***), the lenders namedtherein, and Energy Components SPC EEP Energy Exploration and ProductionSegregated Portfolio (***“Energy Components”***),as Administrative Agent and Lender. Capitalized terms used herein shall, unlessotherwise indicated, have the respective meanings set forth in the Agreement.

 

Borrower hereby notifiesEnergy Components, as Administrative Agent and Lender, and UnionBanCal Equities,Inc. (***“UnionBanCal”***), as Lender,that Borrower may not be able to comply with the covenant set forth in ***Section 5.01*** of the Agreement, whichrequires that Borrower comply in all material respects with all material LegalRequirements. In connection with Borrower’s acquisition of W.O. Energy ofNevada, Inc. (***“W.O.”***), Borrower is requiredto file the financial statements of W.O. and the pro forma financial informationrequired by Item 9.01(a-b) of Form 8-K by amendment (the ***“Amendment”***)to the 8-K previously filed with the Securities and Exchange Commission onDecember 5, 2005 (the ***“8-K”***). Therequired financial statements and pro forma financial information involve allof W.O.’s prior activities, including non-oil & gas activities that were specifically excluded from Borrower’sacquisition of W.O. (e.g. an airplane company and a hotel company).Additionally, Borrower and Borrower’s independent auditor have received nocooperation or support from W.O.’s external accountant in this matter. SuchAmendment is required to be filed within 71 days after the date the initial 8-Kwas required to be filed (December 5, 2005), but Borrower will be unable to filethe Amendment in a timely manner. Borrower intends to file the Amendment as soon as possible, but no later than 10 calendar days from the datehereof. As a result, Borrower is requesting that Energy Components, as MajorityLender, waive, for a period not to exceed ten (10) calendar days from the date hereof,the requirements of ***Section******5.01*** of the Agreement, insofar and only insofar as such requirements

 

**WWW.CANOPETRO.COM**

 

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pertain to the timely filingof the Amendment (the ***“Covenant”***).By execution of this letter in the space provided below, Energy Components, asMajority Lender, hereby waives the Covenant according to the terms set forthherein.

 
| Warmest regards,                 |
|----------------------------------|
|                             |
| /s/ Mike Ricketts                |   |
| Mike Ricketts                    |
| Chief Financial Officer          |
| Telephone Number: (817) 412-1349 |
| Fax Number: (817) 334-0222       |

 

 
|       | Accepted and Agreed to:                    |
|------------|--------------------------------------------|
|       |                                       |
| ** ** | **ENERGY  COMPONENTS SPC EEP ENERGY**      |
| ** ** | **EXPLORATION  AND PRODUCTION SEGREGATED** |
| ** ** | **PORTFOLIO**                              |
| ** ** | ** **                                 |
|       | By:                                        | /s/ Mark A. Margason |   |
|       | Name:                                      | Mark A. Margason |   |
|       | Title:                                     | Duly Authorized Signer |   |
|            |                                            |  |  |  |  |

 

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