Exhibit 10.18

September 11, 2002



Mr. James W. Scott
Mid-Power Resources Corp.
3800 Howard Hughes Parkway, Suite 860-A
Las Vegas, Nevada 89109


Re:      Lakeside Prospect
         Claude Boudreaux #1 Well
         Cameron Parish, Louisiana


Dear Mr. Scott:

Please accept this letter as formal  confirmation  of certain verbal  agreements
related to the Lakeside  Prospect and the Claude  Boudreaux #1 Well,  located in
Cameron Parish, Louisiana:

         1.       Effective  5 PM  Central  Standard  Time on August  31,  2002,
                  ("Effective Time") Mid-Power Resources Corp. ("Mid-Power") was
                  the only  Working  Interest  Owner in the Claude  Boudreaux #1
                  Well ("Well") to elect to complete, test, produce,  eventually
                  plug, and abandon said Well and restore location.

         2.       Petrogulf  III,  L.L.C.  ("Petrogulf")  owning 40.00%  Working
                  Interst  and  Harvest  Natural  Resources  ("Harvest")  owning
                  35.00% Working Interest each individually  elected to plug and
                  abandon the Well.  Harvest has assigned  all right,  title and
                  interest to all oil and gas leases in the Lakeside Prospect to
                  Mid-Power and Mid-Power has accepted the same.

         3.       Petrogulf  has  sufficient  funds  held  for  the  account  of
                  Petrogulf, Harvest and Mid-Power to cover all expenses due and
                  payable  for  Lakeside  Prospect  and the  Well  prior  to the
                  Effective  Time.  Petrogulf  agrees to provide  Mid-Power with
                  Petrogulf's  accounting  and  final  settlement  invoices  and
                  credits in favor of Harvest and  Mid-Power as said  accounting
                  is completed.  Petrogulf has advised  Mid-Power that as of the
                  Effective   Time   approximately   $387,000.00   remained   in
                  Mid-Power's  account.  The $387,000 is based upon actual bills
                  paid and JIB'd by  accounting  as of August 31, 2002.  It does
                  not  include any  outstanding  invoices.  Petrogulf  estimated
                  incremental  costs of $175,000.00 to run three and a half inch
                  tubing for casing, cementing, and a single perforating run. It
                  does not include plugging and abandonment or site restoration.
                  Mid-Power agreed to pay 100% of

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                  all costs incurred  beyond 5:00 PM August 31, 2002.  Petrogulf
                  is attempting to acquire final approval from the Louisiana Oil
                  and  Gas  Commission  for  the  tubingless  completion.   When
                  Mid-Power  take over  completely as Operator and furnishes its
                  own bond,  Petrogulf  shall  furnish an accounting of invoices
                  received to date by Petrogulf.

         4.       Petrogulf  represents to Mid-Power that full disclosure of all
                  known  liabilities  and  existing  conditions  such  as  costs
                  incurred in acquiring  of leases in the Lakeside  Prospect and
                  the  drilling  of the  Claude  Boudreaux  #1 Well and known to
                  Petrogulf  has  been  given.   From  the  Effective  Time  on,
                  Mid-Power  shall be responsible  for and has accepted the full
                  financial  obligations  and total  liabilities for all further
                  operations on the well including final well completion,  well,
                  abandonment and site restoration in accordance with all leases
                  and  rights of way,  applicable  State and  Federal  and Local
                  rules and  regulations.  Mid-Power hereby does fully indemnify
                  and  agrees to hold  Petrogulf  harmless  as of the  Effective
                  Time.

         5.       Mid-Power also obligates itself to attempt a completion in the
                  Marge  Howei  sand,  thereby,  earning  75.00% of  Petrogulf's
                  40.00% working interest,  being 30.00% working interest in all
                  Lakeside  Prospect  Leases,  excluding  the  Western  Lease as
                  defined in Paragraph 8.

         6.       Petrogulf shall continue as Operator of Record operating under
                  the  reasonable and industry  standard  direction of Mid-Power
                  for a period not to exceed thirty (30) days from the effective
                  date,  unless said period is either reduced or extended by the
                  written agreement by and between  Petrogulf and Mid-Power.  At
                  Petrogulf's  sole option,  an  extension  may be granted for a
                  period  not to exceed an  additional  thirty  (30)  additional
                  days.  Mid-Power  agrees to be bound by the elections of Davis
                  as communicated in writing to Petrogulf and send via facsimile
                  transmission  to  303-893-0519.  Petrogulf  shall  endeavor to
                  achieve   Davis'   overall   completion   objectives,    while
                  maintaining  specific  operational  control. At the end of the
                  thirty (30) days, or the agreed to reduced or extended period,
                  Mid-Power  shall  immediately  secure a proper and appropriate
                  State bond for the subject well and  Petrogulf  shall  prepare
                  and forward  properly styled  Louisiana well transfer forms to
                  Mid-Power  and  Mid-Power  agrees  to  complete  the  form and
                  immediately  return it to Petrogulf.  Petrogulf will file said
                  well  transfer  form in  favor  of  Mid-Power  or  Mid-Power's
                  approved designee in accordance with the terms as provided for
                  in this paragraph.

         7.       Mid-Power  hereby  agrees  to and  accepts  any and all  other
                  liabilities  and obligations  under the controlling  Operating
                  Agreement and AMI.

         8.       As  consideration  to  Petrogulf,  Mid-Power  agrees to credit
                  Petrogulf  with an  undivided  ten  percent  (10.00%)  carried
                  Working  Interest  based  on a  73.00%  net  revenue  interest
                  through completion and tie in, or plug and abandonment of the

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                  well and  restoration  of the location,  thereafter  Petrogulf
                  shall  pay  its  10.00%   working   interest  in  all  further
                  operations  and expenses  associated  with the Well and Leases
                  within the Lakeside  Prospect,  as set forth in the  Operating
                  Agreement.  Petrogulf  shall retain and Mid-Power  agrees that
                  Petrogulf  shall own an undivided  non-carried  40.00% working
                  interest  based  on a  73.00%  net  revenue  interest  in  the
                  westermost  180  acres  ("Western   Lease")  of  the  Lakeside
                  Prospect  Leases  shown  in  Exhibit  "A"  (Lakeside  Prospect
                  Leases),  provided  that the Western  Lease in not included in
                  the Claude  Boudreaux #1 Well final approved  producing  unit,
                  until  Mid-Power  ties  in the  well  to a gas  or  oil  sales
                  pipeline.  At that  point and upon such  notice to  Petrogulf,
                  Petrogulf shall be obligated to provide  Mid-Power with 75.00%
                  of Petrogulf;s  40.00% working interest,  being 30.00% working
                  interest,  in and to the  Western  Lease as  referenced  above
                  (Petrogulf will retain a 10.00% carried working interest based
                  on a 73.00% net  revenue  interest  in  Western  Lease in like
                  manner as the balance of the leases in the Lakeside Prospect).
                  Petrogulf's  10.00%  working  interest  will not be carried by
                  Mid-Power on the drilling of any new wells on any leases.

         9.       This Letter Agreement  contains the entire  agreement  between
                  the  parties  and may not be  amended  except in  writing  and
                  executed by both parties.

         10.      The Intent of this Agreement is that Mid-Power has assumed the
                  entire obligation to attempt to test and complete the Well, or
                  plug and abandon and restore the location,  whereby, Petrogulf
                  will  assign all of its'  interest,  except  10.00%  under the
                  Lakeside Prospect Leases excluding the Western Lease. Further,
                  if  Mid-Power  ties the Well into a pipeline,  Mid-Power  will
                  also earn the most Westerly 180 acres (Western Lease),  except
                  for  10.00%,  which  will  be  retained  by  Petrogulf.  After
                  completion of the Claude  Boudreaux well,  Petrogulf shall pay
                  its' 10.00% of all operations of said well.

         11.      In the  event  there  is a  conflict  between  the  terms  and
                  conditions   of  this  Letter   Agreement  and  the  Operating
                  Agreement, the terms and conditions of the Operating Agreement
                  shall prevail.

If this Letter  Agreement  meets with your  understanding,  please indicate your
acceptance by signing,  dating and returning a copy of this Letter  Agreement to
the attention of the  undersigned.  For the purposes of  satisfying  this Letter
Agreement or notice requirements as provided for herein, facsimile transmissions
shall be considered  legally  binding.  A fax signature is deemed the same as an
original.

Very truly yours,

Petrogulf III, L.L.C.
By it's Agent and the Operator of the Well

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PETROGULF CORPORATION

/s/ Betty A. Pennington
----------------------------
Betty A. Pennington
Vice President

Agreed to and Accepted this 12th day of September, 2002,


Mid-Power Resource Corp.

 /s/ James W. Scott
---------------------------
 James W. Scott
 President


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