**Exhibit 10.8**

 

FIRST AMENDMENT TO

SUBORDINATED CREDIT AGREEMENT

 

This First Amendment to Subordinated CreditAgreement (this “First Amendment”) is made and entered into as of April 28,2006 (the “Effective Date”) by and among ENERGY COMPONENTS SPC EEP ENERGYEXPLORATION AND PRODUCTION SEGREGATED PORTFOLIO, a Cayman Islands company, asAdministrative Agent and Lender (each as defined in accordance with Section 1below)(“Energy Components”), UNIONBANCAL EQUITIES, INC., a Californiacorporation, as Lender (as defined in accordance with Section 1 below)(“UBEI”)(EnergyComponents and UBEI referred to collectively as the “Lenders”), CANO PETROLEUM, INC.,a Delaware corporation (“Borrower”) and the GUARANTORS (as defined inaccordance with Section 1 below).

 

WHEREAS, Lenders and Borrower entered intothat certain Subordinated Credit Agreement dated as of November 29, 2005(the “Agreement”);

 

WHEREAS, Borrower desires to purchase certainassets of Myriad Resources Corporation and its affiliates (the “Acquisition”);

 

WHEREAS, in connection with the Acquisition,Pantwist, LLC, a wholly-owned subsidiary of Borrower, desires to become aGuarantor pursuant to that certain Guaranty Agreement dated as of November 29,2005 among Energy Components, as Administrative Agent for the Lenders, LadderCompanies, Inc., Square One Energy, Inc., W.O. Energy of Nevada, Inc.,WO Energy, Inc., W.O. Operating Company, Ltd. and W.O. Production Company,Ltd.

 

WHEREAS, in connection with the Acquisition,Borrower desires to amend certain provisions of that certain Senior CreditAgreement dated November 29, 2005 among Borrower, Union Bank ofCalifornia, N.A., as Senior Agent, and the lenders party thereto from time totime (the “Senior Facility”); and

 

WHEREAS, Lenders and Borrower desire to amendcertain terms of the Agreement so that such amended terms are substantiallysimilar to certain terms of the Senior Facility, as amended.

 

NOW, THEREFORE, in consideration of theforegoing and the mutual agreements and covenants set forth herein, and for othergood and valuable consideration, the receipt and sufficiency of which arehereby acknowledged and accepted, Lenders, Guarantors and Borrower agree asfollows:

 

1.             Certain Terms.Each term defined in the Agreement and used in this First Amendment withoutdefinition shall have the meaning assigned to such term in the Agreement,unless expressly provided to the contrary.

 

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2.             Defined Terms. Section 1.01 of the Agreement isamended by inserting the following new definitions in alphabetical order:

 

*“First Amendment” means the FirstAmendment to Subordinated Credit Agreement dated as of April 28, 2006among the Borrower, the Guarantors, the Lenders, and the Administrative Agent,which amends this Agreement.*

 

*“Twister Oil and Gas Properties” meansthe Oil and Gas Properties acquired by the Pantwist, LLC from Myriad ResourcesCorporation and its affiliates pursuant to that certain Asset**Purchase and Sale Agreement among Myriad ResourcesCorporation, Westland Energy Company, and PAMTEX, a Texas general partnershipcomposed of PAMTEX GP1 Ltd. and PAMTEX GP2 Ltd. as sellers, and the Borrower asthe purchaser and dated April 25, 2006.*

 

3.             Amendment to Section 4.07(a) of theAgreement. Section 4.07(a) ofthe Agreement is hereby amended by deleting the first sentence thereof in itsentirety and replacing it with the following:

 

*There is no pending or, to the best knowledgeof the Borrower, threatened action or proceeding affecting the Borrower or anyof the Guarantors before any court, Governmental Authority or arbitrator whichcould reasonably be expected to cause a Material Adverse Change other than asset forth in Schedule 4.07 or which purports to affect the legality,validity, binding effect or enforceability of this Agreement, any Note, or anyother Loan Document.*

 

4.             Amendmentto Section 5.04(d) of the Agreement. Section 5.04(d) ofthe Agreement is hereby deleted in its entirety and replaced with thefollowing:

 

*(d)**          Productionand Hedging Reports. As soon as available and in any event within 45 daysafter the end of each fiscal quarter, commencing with the fiscal quarter endingMarch 31, 2006, a report certified by a Responsible Officer of theBorrower in form and substance satisfactory to the Administrative Agentprepared by the Borrower (i) covering each of the Oil and Gas Propertiesof the Borrower and its Subsidiaries (other than the Barnett Shale Properties)and detailing on a quarterly basis (A) the production, revenue, and priceinformation and associated operating expenses for each such quarter, (B) anychanges to any producing reservoir, production equipment, or producing wellduring each such quarter, which changes could cause a Material Adverse Change,and (C) any sales of the Borrower’s or any Subsidiaries’ Oil and GasProperties during each such quarter (other than the Barnett Shale Properties), (ii) settingforth a true and complete list of all Hedge Contracts of the Borrower and itsSubsidiaries and detailing the material terms thereof (including the type,term, effective date, termination date and notional amounts or volumes), thenet mark to market value thereof, all credit support agreements relatingthereto (including any margin required or supplied), and the counterparty toeach such agreement, and (iii) certifying the Borrower’s compliance with Section 5.12hereof.*”

 

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5.             Amendmentto Section 5.12 of the Agreement. Section 5.12 of the Agreement is deleted in its entirety andreplaced with the following:

 

*Section 5.12**         HedgingArrangements. The Borrower shall:*

 

*(a) maintain the Hydrocarbon Hedge Agreementsin existence on March 31, 2006 and as described in Schedule 5.12 fora minimum period of at least three years as of the end of December 31,2006 and as of the end of each six month period ending thereafter,*

 

*(b) on or before 10 days following the effectivedate of the First Amendment, enter into, and from and after such date, maintain(i) Hydrocarbon Hedge Agreements covering not less than 50% of the “proved,developed and producing” crude oil reserves attributable to the Twister Oil andGas Properties for a minimum period of at least three years as of the effectivedate of the First Amendment and as of the end of each two fiscal quarter periodending thereafter, and at a minimum floor of $60 per Bbl, and (ii) HydrocarbonHedge Agreements covering not less than 50% of the “proved, developed andproducing” natural gas reserves attributable to the Twister Oil and GasProperties for a minimum period of at least three years as of the effectivedate of the First Amendment and as of the end of each two fiscal quarter periodending thereafter, and with a weighted average contract price of $7.60 per Mcf,and*

 

*(c) notwithstanding any of theforegoing, maintain Hydrocarbon Hedge Agreements covering no less than 50% andno more than 80% of the production volumes attributable to “proved, developedand producing” Proven Reserves of the Borrower’s and its Subsidiaries’ Oil andGas Properties.*

 

6.             Schedule 4.07. A new Schedule 4.07 to the Agreementis added as set forth in Schedule 4.07 attached to this First Amendment.

 

7.             Schedule 4.21.Schedule 4.21 to the Agreement is replaced in its entirety with the Schedule 4.21attached to this First Amendment.

 

8.             Borrower Representations and Warranties.The Borrower represents and warrants that: (a) the representations and warrantiescontained in the Agreement, as amended hereby, are true and correct in allmaterial respects on and as of the Effective Date as if made on as and as ofsuch date except to the extent that any such representation or warrantyexpressly relates solely to an earlier date, in which case such representationor warranty is true and correct in all material respects as of such earlierdate; (b) no Default has occurred and is continuing; (c) the execution, delivery and performance ofthis First Amendment are within the corporate power and authority of theBorrower and have been duly authorized by appropriate corporate and governingaction and proceedings; (d) this First Amendment constitutes the legal,valid, and binding obligation of the Borrower enforceable in accordance withits terms, except as limited by applicable bankruptcy, insolvency,reorganization, moratorium, or similar laws affecting the rights of creditorsgenerally and general principles of equity; (e) there are no governmentalor other third party consents, licenses and approvals required in connectionwith the execution, delivery,

 

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performance, validity and enforceability of this First Amendment; and (f) theLiens under the Security Instruments are valid and subsisting and secureBorrower’s obligations under the Loan Documents.

 

9.             Guarantors Representations and Warranties.Each Guarantor represents and warrants that: (a) the representations andwarranties contained in the Guaranty and the representations and warrantiescontained in the other Loan Documents, as amended hereby, are true and correctin all material respects on and as of the Effective Date as if made on as andas of such date except to the extent that any such representation or warrantyexpressly relates solely to an earlier date, in which case such representationor warranty is true and correct in all material respects as of such earlierdate; (b) no Default has occurred and is continuing; (c) theexecution, delivery and performance of this First Amendment are within thecorporate, limited liability company, or partnership power and authority ofsuch Guarantor and have been duly authorized by appropriate corporate, limitedliability company, or partnership action and proceedings; (d) this FirstAmendment constitutes the legal, valid, and binding obligation of suchGuarantor enforceable in accordance with its terms, except as limited byapplicable bankruptcy, insolvency, reorganization, moratorium, or similar lawsaffecting the rights of creditors generally and general principles of equity; (e) thereare no governmental or other third party consents, licenses and approvalsrequired in connection with the execution, delivery, performance, validity andenforceability of this First Amendment; (f) it has no defenses to theenforcement of the Guaranty; and (g) the Liens under the SecurityInstruments are valid and subsisting and secure such Guarantor’s and theBorrower’s obligations under the Loan Documents.

 

10.           Conditions toEffectiveness. This First Amendment andthe amendments to the Agreement provided herein shall become effective on theEffective Date and enforceable against the parties hereto upon the occurrenceof the following conditions precedent:

 

(a)           TheAdministrative Agent shall have received multiple original counterparts, asrequested by the Administrative Agent, of this First Amendment duly and validlyexecuted and delivered by duly authorized officers of the Borrower, theGuarantors, the Administrative Agent, and the Lenders.

 

(b)           The Borrower or the respective Guarantor shall have delivered fullyexecuted, multiple originals of new Mortgages or supplements to existingMortgages, in form and substance acceptable to the Administrative Agent,and encumbering the Oil and Gas Properties acquired under the Acquisition.

 

(c)           The Administrative Agent shall have received afully executed, correct and complete copy of the asset purchase and saleagreement relating to the Acquisition and all other documents, agreements,instruments and amendments, if any, related thereto and certified as such by aduly authorized officer of the Borrower.

 

(d)           TheCollateral Trustee shall have received all requested lien releases, titleopinions and other title due diligence material satisfactory to it evidencingthe title to the Oil and Gas Properties to being acquired pursuant to theacquisition.

 

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(e)           All conditions to the effectiveness of the Acquisition, other than the paymentof the purchase price, shall have been met.

 

(f)            No Default shall have occurred and becontinuing as of the Effective Date.

 

(g)           The representations and warranties in this First Amendment shall betrue and correct in all material respects.

 

(h)           The Borrower shall havepaid all fees and expenses of the Administrative Agent’s outside legal counseland other consultants pursuant to all invoices presented for payment on orprior to the Effective Date.

 

11.           Acknowledgmentsand Agreements.

 

(a)           TheBorrower acknowledges that on the date hereof all Obligations are payablewithout defense, offset, counterclaim or recoupment.

 

(b)           The Administrative Agent and the Lenders hereby expressly reserve allof their rights, remedies, and claims under the Loan Documents. Nothing in thisFirst Amendment shall constitute a waiver or relinquishment of (i) anyDefault or Event of Default under any of the Loan Documents, (ii) any ofthe agreements, terms or conditions contained in any of the Loan Documents, (iii) anyrights or remedies of the Administrative Agent or any Lender with respect tothe Loan Documents, or (iv) the rights of the Administrative Agent or anyLender to collect the full amounts owing to them under the Loan Documents.

 

(c)           Each of the Borrower, the Guarantors, Administrative Agent, and Lendersdoes hereby adopt, ratify, and confirm the Agreement, as amended by this FirstAmendment, and acknowledges and agrees that the Agreement, as amended by thisFirst Amendment, is and remains in full force and effect, and the Borrower andthe Guarantors acknowledge and agree that their respective liabilities andobligations under the Agreement, as amended by this First Amendment, and theGuaranty, are not impaired in any respect by this First Amendment.

 

(d)           From and after the Effective Date, all references to the Agreement andthe Loan Documents shall mean such Agreement and such Loan Documents as amendedby this First Amendment.

 

(e)           This First Amendment is a Loan Document for the purposes of theprovisions of the other Loan Documents. Without limiting the foregoing, anybreach of representations, warranties, and covenants under this First Amendmentshall be a Default or Event of Default, as applicable, under the Agreement.

 

12.           Reaffirmation ofthe Guaranty. Each Guarantorhereby ratifies, confirms, acknowledges and agrees that its obligations underthe Guaranty are in full force and effect and that such Guarantor continues tounconditionally and irrevocably guarantee the full and punctual payment, whendue, whether at stated maturity or earlier by acceleration or otherwise, all ofthe Guaranteed Obligations (as defined in the Guaranty), as such GuaranteedObligations may have been amended by this First Amendment, and itsexecution and delivery of this First Amendment does not indicate or establishan approval or consent requirement by such Guarantor under the

 

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Guaranty in connection with the execution anddelivery of amendments, consents or waivers to the Agreement, the Notes or anyof the other Loan Documents.

 

**13.****          ****Release of Claims****.Borrower for itself, its successors, assigns and all those at interesttherewith (collectively, the “Releasing Parties”), jointly and severally,hereby voluntarily and forever, RELEASE, DISCHARGE AND ACQUIT AdministrativeAgent, Lenders and their officers, directors, shareholders, employees, agents,successors, assigns, representatives, affiliates and insurers (sometimesreferred to below collectively as the “Released Parties”) and all those atinterest therewith of and from any and all claims, causes of action,liabilities, damages, costs (including, without limitation, attorneys’ fees andall costs of court or other proceedings), and losses of every kind or nature atthis time known or unknown, direct or indirect, fixed or contingent, which theReleasing Parties, have or hereafter may have arising out of any act,occurrence, transaction, or omission occurring from the beginning of time tothe date of execution of this First Amendment if related to this FirstAmendment and/or the Agreement (the “Released Claims”), except that the futureduties and obligations of Lenders under such documents shall not be included inthe term Released Claims. IT IS THE EXPRESS INTENT OF THE RELEASING PARTIESTHAT THE RELEASED CLAIMS SHALL INCLUDE ANY CLAIMS OR CAUSES OF ACTION ARISINGFROM OR ATTRIBUTABLE TO THE NEGLIGENCE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCTOF ANY OF THE RELEASED PARTIES.**

 

14.           Counterparts. This First Amendment may be signed inany number of counterparts, each of which shall be an original and all ofwhich, taken together, constitute a single instrument. This First Amendment may beexecuted by facsimile signature and all such signatures shall be effective asoriginals.

 

15.           Successors and Assigns. This First Amendment shall be binding uponand inure to the benefit of the parties hereto and their respective successorsand assigns permitted pursuant to the Agreement.

 

16.           Invalidity.              In the event that any one or more of theprovisions contained in this First Amendment shall for any reason be heldinvalid, illegal or unenforceable in any respect, such invalidity, illegalityor unenforceability shall not affect any other provision of this FirstAmendment.

 

17.           Governing Law. This First Amendment shall be deemed to bea contract made under and shall be governed by and construed in accordance withthe laws of the State of Texas.

 

18.           **Entire Agreement****.****THIS FIRST AMENDMENT, THEAGREEMENT AS AMENDED BY THIS FIRST AMENDMENT, THE NOTES, AND THE OTHER LOANDOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITHRESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS,WRITTEN OR ORAL, WITH RESPECT THERETO.**

 

**THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.**

 

**[SIGNATURES BEGIN ON NEXT PAGE]**

 

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IN WITNESS WHEREOF, this First Amendment is executed and effective asof the Effective Date.

 

 
|   | BORROWER:                        |
|--------|----------------------------------|
|   |                             |
|   | CANO PETROLEUM, INC.        |
|   |                             |
|   |                             |
|   | By:                              |  /s/ S. Jeffrey Johnson |   |
|   | Name:                            |   S. Jeffrey Johnson |   |
|   | Title:                           |   Chief Executive Officer |   |
|   |                             |
|   |                             |
|   | GUARANTORS:                      |
|   |                             |
|   | SQUARE ONE ENERGY, INC.     |
|   |                             |
|   | By:                              |  /s/ S. Jeffrey Johnson |   |
|   | Name:                            |  S. Jeffrey Johnson |   |
|   | Title:                           |  President |   |
|   |                             |
|   |                             |
|   | LADDER COMPANIES, INC.      |
|   |                             |
|   | By:                              |  /s/ S. Jeffrey Johnson |   |
|   | Name:                            |  S. Jeffrey Johnson |   |
|   | Title:                           |  President |   |
|   |                             |
|   | W.O. ENERGY OF NEVADA, INC. |
|   |                             |
|   | By:                              | /s/ S. Jeffrey Johnson |   |
|   | Name:                            |  S. Jeffrey Johnson |   |
|   | Title:                           |  President |   |
|   |                             |
|   | WO ENERGY, INC.             |
|   |                             |
|   | By:                              |  /s/ S. Jeffrey Johnson |   |
|   | Name:                            |  S. Jeffrey Johnson |   |
|   | Title:                           |  President |   |
|        |                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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|   | W.O.  OPERATING COMPANY, LTD.                  |
|--------|------------------------------------------------|
|   | By: WO  Energy, Inc., its general partner |
|   |                                           |
|   | By:                                            |  /s/ S.  Jeffrey Johnson |   |
|   | Name:                                          |  S.  Jeffrey Johnson |   |
|   | Title:                                         |  President |   |
|   |                                           |
|   | W.O.  PRODUCTION COMPANY, LTD.                 |
|   | By: WO  Energy, Inc., its general partner |
|   |                                           |
|   | By:                                            |  /s/ S.  Jeffrey Johnson |   |
|   | Name:                                          |  S.  Jeffrey Johnson |   |
|   | Title:                                         |  President |   |
|   |                                           |
|   | PANTWIST,  LLC                                 |
|   |                                           |
|   | By:                                            | /s/ S.  Jeffrey Johnson |   |
|   | Name:                                          |  S.  Jeffrey Johnson |   |
|   | Title:                                         |  President |   |
|        |                                                |  |  |  |  |  |  |  |  |

 

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|   | LENDER AND ADMINISTRATIVE AGENT:                                                    |
|--------|-------------------------------------------------------------------------------------|
|   |                                                                                |
|   | ENERGY COMPONENTS SPC EEP  ENERGY  EXPLORATION AND PRODUCTION  SEGREGATED PORTFOLIO |
|   |                                                                                |
|   |                                                                                |
|   | By:                                                                                 |  /s/ Mark Margason |   |
|   | Name:                                                                               | Mark Margason |
|   | Title:                                                                              | Authorized Signer |
|        |                                                                                     |  |  |  |

 

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|   | LENDER                          |
|--------|---------------------------------|
|   |                            |
|   | UNIONBANCAL EQUITIES, INC. |
|   |                            |
|   |                            |
|   | By:                             | /s/ Michael A. Ross |   |
|   | Name:                           | Michael A. Ross |
|   | Title:                          | Vice President |
|        |                                 |  |  |  |

 

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**SCHEDULE 4.07**

 

**LITIGATION**

 

On March 24, 2006, the Borrower and certain of the Guarantors weresued for claims relating to the March fires that occurred on propertiesoperated by W.O. Operating Company, Ltd. The case is entitled: *In the 100th Judicial District Court ofCarson County, Texas, Cause No. 9840, The Tom L. and Anne Burnett Trust,by Anne Burnett Windfohr, Windi Phillips, Ben Fortson, Jr., George Beggs, IIIand Ed Hudson, Jr., as Co-Trustees; Anne Burnett Windfohr; and BurnettRanches, Ltd., Plaintiffs, v. Cano Petroleum, Inc., W.O. Energy of Nevada, Inc.;W.O. Operating Company, Ltd. and W.O. Energy, Inc., Defendants*.

 

On April 13, 2006, the Borrower and certain of the Guarantorsreceived notice that they were sued for claims relating to the March firesthat occurred on properties operated by W.O. Operating Company, Ltd. As of thisdate, neither the Borrower nor any of the Guarantors have been served withprocess in this case. The case is entitled: *JosephCraig Hutchison, et ux**vs. CanoPetroleum, Inc., W.O. Energy of Nevada, Inc.; W.O. Operating Company,Ltd. and W.O. Energy, Inc.*The plaintiffs’ attorney has alsoindicated that he will be adding two additional plaintiffs in this case, theChisum Family Limited Partnership and the Haggard Trust.

 

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**SCHEDULE 4.21**

 

**MATERIALAGREEMENTS**

 

Engagement for Professional Services by and between Cano Petroleum, Inc.and Bainbridge Capital dated April 14, 2005.

 

Gas Purchase and Processing Agreement by and between Ladder EnergyCompany and ScissorTail Energy, LLC dated September 1, 2004.

 

Gas Sales and Purchase Agreement by and between Alliant EnergyDesdemona, LP and KenMor Properties, LLC dated March 1, 2005.

 

Agreement by and between Square One Energy, Inc. and KenMorProperties, LLC dated October 7, 2005 (in which KenMor Properties, LLCassigns, transfers and conveys to Square One Energy, Inc. all of itsright, title and interest in and to the Gas Sales and Purchase Agreement by andbetween Alliant Energy Desdemona, LP and KenMor Properties, LLC dated March 1,2005), as amended by a First Amendment to Agreement dated October 7, 2005.

 

Gas Purchase Contract by and between Ladder Energy Company and WesternGas Resources, Inc. dated January 7, 1998.

 

Gas Purchase Contract by and between Square One Energy, Inc. andNewpoint Gas Services, Inc. dated April 21, 2004.

 

Crude Oil Purchase Agreement by and between Ladder Energy Company andSunoco, Inc. (R&M) dated February 1, 2000, as amended by a letteragreement between Sunoco Partners Marketing & Terminals, L.P. andLadder Energy Company dated September 12, 2005.

 

Crude Oil Purchase Agreement by and between Ladder Energy andCoffeyville Resources Crude Transportation dated October 4, 2005.

 

Natural Gas Liquid Mix Agreement by and between Square One Energy, Inc.and Dufour Petroleum, L.P. dated July 1, 2004, as amended by AmendmentLetter dated October 1, 2005 and as amended by Amendment Letter dated November 1,2005.

 

Office Lease Agreement by and between Ft. Worth Plaza LimitedPartnership, a Texas limited partnership, as Landlord and Cano Petroleum, Inc.(assignee of Cano Energy Corporation), as Tenant, purportedly dated April 10,2001, as amended by the First Amendment to Lease Agreement dated September 19,2001.

 

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Consulting Agreement by and between Cano Petroleum, Inc. andReservoir Solutions, Inc. dated August 15, 2005.

 

Lignin Surfactant System Development Agreement by and between CanoPetroleum, Inc. and Reservoir Solutions, Inc. dated July 20,2005.

 

Stock Purchase Agreement by and between Cano Petroleum, Inc., W.O. Energy of Nevada, Inc., Miles O’Loughlin and Scott White dated November 29,2005.

 

Employment Agreement by and between Huron Ventures, Inc. andMichael J. Ricketts dated May 28, 2004.

 

Employment Agreement by and between Huron Ventures, Inc. andThomas Cochrane dated May 28, 2004.

 

Employment Agreement by and between Cano Petroleum, Inc. and JamesK. Teringo, Jr. dated July 11, 2005.

 

Compensation Reimbursement Agreement by and between Cano Petroleum, Inc.and Sabine Production Operating, LLC dated October 31, 2005.

 

Omnibus Agreement by and between Cano Petroleum, Inc., CarlileManagement, LLC, Haddock Enterprises, LLC and Sabine Production Partners, LPdated October 31, 2005.

 

Amended and Restated Regulations of Sabine Production Operating, LLCexecuted by Cano Petroleum, Inc., Haddock Enterprises, LLC and CarlileManagement, LLC, effective as of August 3, 2005.

 

2005 Directors’ Stock Option Plan of Cano Petroleum, Inc.

 

Gas Purchase and Sales Contract by and between Arrow Oil and Gas, Inc.and STP, Inc. dated August 15, 2002.

 

Management Stock Pool Agreement dated May 28, 2004 among HuronVentures Inc. and The Shareholders of Davenport Field Unit Inc.

 

Management Stock Pool Escrow Agreement dated May 28, 2004 by andamong Huron Ventures Inc. and S. Jeffrey Johnson, et al.

 

Purchase and Sale Agreement dated August 16, 2004, by and betweenCano Energy Corporation and Cano Petroleum, Inc.

 

Purchase and Sale Agreement dated September 2, 2004, by andbetween Nowata Oil Properties LLC and Cano Petroleum, Inc.

 

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Purchase and Sale Agreement dated February 6, 2005, by and betweenSquare One Energy, Inc. and Cano Petroleum, Inc.

 

Subscription Agreement dated October 8, 2004 by and between CanoPetroleum, Inc. and Randall Boyd.

 

Stock Option Agreement dated December 16, 2004, between CanoPetroleum, Inc. and Gerald W. Haddock.

 

Form of Subscription Agreement dated March 18, 2005.

 

Letter Agreement dated March 29, 2005 among the HaddockEnterprises, LLC, Cano Petroleum, Inc. and Kenneth Carlile.

 

Sabine Production Partners, LP Transaction Summary dated August 4,2005.

 

Subscription Agreement dated September 16, 2005 by and betweenCano Petroleum, Inc. and Howard Hughes Medical Institute.

 

Subscription Agreement dated September 16, 2005 by and betweenCano Petroleum, Inc. and The Robert Wood Johnson Foundation.

 

Subscription Agreement dated September 16, 2005 by and betweenCano Petroleum, Inc. and Laborers’ District Council and Contractors’ ofOhio Pension Fund.

 

Subscription Agreement dated September 16, 2005 by and betweenCano Petroleum, Inc. and Ohio Carpenters’ Pension Fund.

 

Subscription Agreement dated September 16, 2005 by and betweenCano Petroleum, Inc. and New York Nurses Association Pension Plan.

 

Subscription Agreement dated September 16, 2005 by and betweenCano Petroleum, Inc. and Public Sector Pension Investment Board.

 

Subscription Agreement dated September 16, 2005 by and betweenCano Petroleum, Inc. and Spindrift Investors (Bermuda) L.P.

 

Subscription Agreement dated September 16, 2005 by and betweenCano Petroleum, Inc. and Spindrift Partners, L.P.

 

Non-Qualified Stock Option Agreement dated September 16, 2005 byand between Cano Petroleum, Inc. and James K. Teringo, Jr.

 

Subscription Agreement dated September 14, 2005 by and betweenCano Petroleum, Inc. and Touradji Global Resources Master Fund, Ltd.

 

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Subscription Agreement dated September 14, 2005 by and betweenCano Petroleum, Inc. and Renaissance US Growth Investment Trust PLC.

 

Subscription Agreement dated September 14, 2005 by and betweenCano Petroleum, Inc. and BFS US Special Opportunities Trust PLC.

 

Subscription Agreement dated September 14, 2005 by and betweenCano Petroleum, Inc. and Crestview Capital Master, LLC.

 

Gas Purchase Contract between W.O. OperatingCompany, Ltd. and Duke Field Services LP dated November 1, 2003.

 

Gas Purchase and Sales Agreement dated September 1,1975, between Skelly Oil Company, as Seller, and Phillips Petroleum Company, asBuyer.

 

Gas Purchase Contract between W.O. OperatingCompany, as Seller, and GPM Gas Corporation, as Buyer, dated March 15,1994.

 

Gas Purchase Contract between Hugoton EnergyCorporation, as Seller, and GPM Gas Corporation, as Buyer, dated August 3,1995, covering Sections 3 and 4, Block Y, M&C Survey, Hutchinson County,Texas.

 

Crude Oil Purchase Contract between W.O.Operating Company, as Seller, and Diamond Shamrock Refining Company LP, dated August 6,2001 (Valero is successor to Diamond Shamrock on this contract).

 

Gas Purchase Contract by and between W.O.Operating Company Limited, as Seller, and OneOK Texas Field Services LP, asBuyer, dated January 1, 2005.

 

Gas Purchase Contract between W.O. OperatingCompany, as Seller, and GPM Gas Corporation, as Buyer, dated March 15,1995.

 

Gas Purchase Contract dated August 3, 1995 by and between W.O.Operating Company and Duke Energy Field Services, as amended on August 1,2005 and September 1, 2005.

 

Oil Marketing Agreement dated January 13, 1994 by and between W.O.Operating Company and Pan Mark, Inc.

 

RegistrationRights Agreement by and between Cano Petroleum, Inc. and Miles O’Loughlindated November 29, 2005.

 

RegistrationRights Agreement by and between Cano Petroleum, Inc. and Scott White datedNovember 29, 2005.

 

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CreditAgreement among Cano Petroleum, Inc., as Borrower, The Lenders PartyHereto from Time to Time, as Lenders, and Union Bank of California, N.A., asAdministrative Agent and as Issuing Lender, dated November 29, 2005.

 

SubordinatedCredit Agreement among Cano Petroleum, Inc., as Borrower, The LendersParty Hereto From Time to Time, as Lenders, and Energy Components SPC EEPEnergy Exploration and Production Segregated Portfolio, as Administrative Agent,dated November 29, 2005.

 

GuarantyAgreement by and among Ladder Companies Inc., Square One Energy, Inc.,W.O. Energy of Nevada, Inc., WO Energy, Inc., W.O. Operating Company,Ltd. and W.O. Production Company, Ltd. in favor of Union Bank of California, N.A.,as Administrative Agent, dated November 29, 2005.

 

GuarantyAgreement by and among Ladder Companies Inc., Square One Energy, Inc.,W.O. Energy of Nevada, Inc., WO Energy, Inc., W.O. Operating Company,Ltd. and W.O. Production Company, Ltd. in favor of Energy Components SPC EEPEnergy Exploration and Production Segregated Portfolio, as AdministrativeAgent, dated November 29, 2005.

 

EscrowAgreement by and among Cano Petroleum, Inc., Miles O’Loughlin, Scott Whiteand The Bank of New York Trust Company, N.A., as Escrow Agent, dated November 29,2005.

 

PledgeAgreement by and among Cano Petroleum, Inc., W.O. Energy of Nevada, Inc.and WO Energy, Inc. in favor of Union Bank of California, N.A., asAdministrative Agent, dated November 29, 2005.

 

SecurityAgreement by and among Cano Petroleum, Inc., Ladder Companies Inc., SquareOne Energy, Inc., W.O. Energy of Nevada, Inc., WO Energy, Inc.,W.O. Operating Company, Ltd. and W.O. Production Company, Ltd. in favor ofUnion Bank of California, N.A., as Administrative Agent, dated November 29,2005.

 

CanoPetroleum, Inc. 2005 Long-Term Incentive Plan.

 

Form ofStock Option Agreement.

 

Summaryof terms of purchase of overriding royalty interests by Cano Petroleum, Inc.from THEprivate Energy Company, Inc. dated December 27, 2005.

 

SummarySheet:  Director Compensation.

 

EmploymentAgreement between Cano Petroleum, Inc. and S. Jeffrey Johnson effective January 1,2006.

 

Amendmentto Employment Agreement of Michael J. Ricketts effective January 1, 2006.

 

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Amendmentto Employment Agreement of Thomas Cochrane effective January 1, 2006.

 

Amendmentto Employment Agreement of James K. Teringo, Jr. effective January 1,2006.

 

AmendmentNo. 1 dated February 24, 2006, to the $100,00,000 Credit Agreementamong Cano Petroleum, Inc., as Borrower, The Lenders Party Hereto FromTime to Time as Lenders and Union Bank of California, N.A., as AdministrativeAgent and as Issuing Lender dated November 29, 2005.

 

Gas Purchase Agreement dated 5-2-90 Between Maple Gas Corporation(Buyer) and Myriad Resources Corporation (Seller).

 

Gas Purchase and Sales Agreement dated 2-1-74 between PhillipsPetroleum Company (Buyer) and Sohio Petroleum Company (Seller).

 

Gas Purchase Contract dated 11-1-87 between George A. Smith(Seller) and Westar Transmission Company [now Oneok Field Services] (Buyer).

 

Gas Purchase Contract dated January 14, 1998, between MyriadResources Corporation (Seller) and GPM Gas Corporation (Buyer).

 

Gas Services and/or Purchase Agreement dated 7-20-99, by and betweenMyriad Resources Corporation (Owner) and Dynegy Midstream Services).

 

Gas Purchase Contract dated May 10, 1990, by and between MyriadResources, as Seller, and Phillips 66 Natural Gas Company, as Buyer, covering Section 94,Block B-2, H&GN RR Company Survey, Gray County, Texas.

 

Gas Purchase Contract dated 10-31-95, between GPM Gas Corporation(Buyer) and Pamtex, Inc., et al (Seller).

 

Gas Purchase Contract dated 11-20-92 (Contract No. PAM0548-00R),between Rio Petroleum, Inc. (Seller) and GPM Gas Corporation (Buyer); asamended by instruments dated 6-1-99, 11-2-98 and 12-16-97.

 

Gas Purchase Agreement dated March 1, 2003, by and between OneokTexas Field Services, LP (Buyer), and Myriad Resources Corporation (Seller) coveringthe E/2NW/4 and W/2NE/4, Section 67, Block 4, I&GN Survey, CarsonCounty, Texas.

 

Gas Purchase Contract dated June 23, 1994, by and between MyriadResources Corporation, as Seller, and GPM Gas Corporation, as Buyer, coveringthe NE/4 Section 33, Block B-2, H&GN Survey, Gray County, Texas.

 

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Casinghead Gas Contract dated February 23, 1949, by and betweenDanciger Oil & Refining Company and Phillips Petroleum Company, asamended and extended.

 

Gas Purchase Contract dated 8-13-96, between GPM Gas Corporation(Buyer) and Myriad Resources Corporation (Seller). Covers Section 3, J.T.Sneed Survey.

 

Agreement dated June 25, 1928, by and between Roxana PetroleumCorporation and Danciger Oil & Refining Company of Texas covering theE 80 acres of SW/4, Section 5, Block 1, ACH&B Survey, GrayCounty, Texas.

 

Gas Purchase Contract dated 8-13-96, between GPM Gas Corporation(Buyer) and Myriad Resources Corporation (Seller). Covers Section 3, J.T.Sneed Survey.

 

Gas Purchase Contract dated 10-1-04, between Oneok Texas FieldServices, L.P. (Buyer) and Pamtex, Inc. (Seller). /4 and the E/2 NW/4, Section 127,Block 3, I&GN RR Co. Survey.

 

Agreement dated June 25, 1928, by and between Roxana PetroleumCorporation and Danciger Oil & Refining Company of Texas covering theE 80 acres of SW/4, Section 5, Block 1, ACH&B Survey, GrayCounty, Texas.

 

Gas Purchase Contract dated May 10, 1990, by and between MyriadResources, as Seller, and Phillips 66 Natural Gas Company, as Buyer, covering Section 94,Block B-2, H&GN RR Company Survey, Gray County, Texas.

 

Casinghead Gas Contract dated February 23, 1949, by and betweenDanciger Oil & Refining Company and Phillips Petroleum Company, asamended and extended.

 

Asset Purchase and Sale Agreement among Myriad Resources Corporation,Westland Energy Company, and PAMTEX, a Texas general partnership composed ofPAMTEX GP1 Ltd. and PAMTEX GP2 Ltd. as sellers, and the Borrower as thepurchaser and dated April 25, 2006, as assigned from the Borrower toPantwist, LLC

 

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