**EXHIBIT10.1**

 

SUMMARY OF 2009 CASH INCENTIVEAWARDS

 

The 2009 Cash Incentive Awards are based onthe following threshold, target and maximum performance goals for fiscal year2009 and the weighting set forth next to the goals (Cano Petroleum, Inc. (“Cano”)notes that these goals are part of Cano’s incentive program and do notcorrespond to any financial or performance guidance that Cano has provided orwill provide and should not be considered as statements of Cano’s expectationsor estimates):

 
| ** **                           | ** ** | **Performance Goals** | ** ** | ** **     | ** ** |
|--------------------------------------|------------|-----------------------|------------|----------------|------------|
| **Performance Measure**              | ** ** | **Threshold**         | ** ** | **Target**     | ** ** | **Maximum** | ** ** | **Weighting** | ** ** |
| **Company Goals**                    | ** ** | ** **            | ** ** | ** **     | ** ** | ** ** | ** ** | ** ** | ** ** |
| Production*                          |       | 1,212 BOEPD           |       | 1,346 BOEPD    |       | 1,616 BOEPD |   | 55 | % |
| Proved Developed Producing Reserves  |       | 11,400 MBOE           |       | 12,667 MBOE    |       | 15,200 MBOE |   | 15 | % |
| EBITDA                               |       | $13,155,000           |       | $14,617,000    |       | $17,540,000 |   | 15 | % |
| Finding & Development Costs |       | $24.87 per BOE        |       | $22.38 per BOE |       | $18.65 per BOE |   | 15 | % |

 

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*Averagedaily production for fiscal year 2009.

 

Cano calculates EBITDA as earnings beforeinterest, taxes, depreciation and amortization.

 

The 2009 Cash Incentive Awards potentialpayout levels based on meeting the specified level of each of the performancegoals for the 2009 Cash Incentive Awards performance goals for each executiveofficer are set forth below:

 
| ** **          | ** ** | ** **           | ** ** | ** **                                     | ** ** | **2009 Bonus Payout**      | ** ** |
|---------------------|------------|----------------------|------------|------------------------------------------------|------------|--------------------------------------|------------|
| ** **          | ** ** | **Base Salary** | ** ** | **Target Bonus  (% of Salary)** | ** ** | **Threshold  (50% of  Target)** | ** ** | **Target** | ** ** | **Maximum  (150% of  Target)** | ** ** |
| S. Jeffrey Johnson  |       | $                    | 509,480    |                                           | 75         | %                                    | $          | 191,055 |   | $ | 382,110 |   | $ | 573,165 |   |
| Benjamin Daitch     |       | $                    | 250,000    |                                           | 75         | %                                    | $          | 93,750 |   | $ | 187,500 |   | $ | 281,250 |   |
| Patrick McKinney    |       | $                    | 250,000    |                                           | 75         | %                                    | $          | 93,750 |   | $ | 187,500 |   | $ | 281,250 |   |
| Michael J. Ricketts |       | $                    | 187,000    |                                           | 50         | %                                    | $          | 46,750 |   | $ | 93,500 |   | $ | 140,250 |   |
| Phillip Feiner      |       | $                    | 170,000    |                                           | 50         | %                                    | $          | 42,500 |   | $ | 85,000 |   | $ | 127,500 |   |

 

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