petro_10q-ex1005.htm


     

    Exhibit
10.5


     

     

     

     

    PARTNERSHIP
INTEREST PURCHASE AGREEMENT


     

    BY
AND AMONG

     

    PETRO
RESOURCES CORPORATION,

     

    PRC
HHEP II, LP

     

    AND

     

    HHEP
GP II, L.P.

     

     

     

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    TABLE
OF CONTENTS

    
    

     

    
      	 	 	
              PAGE

            
	 	 
	ARTICLE I
      DEFINITIONS	
              1

            
	
              1.1

            	Definitions	
              1

            
	
              1.2

            	
              Interpretation

            	
              2

            
	 	 
	ARTICLE
      II PURCHASE AND SALE OF PARTNERSHIP INTEREST; CLOSING	
              3

            
	
              2.1

            	Purchase
      and Sale of Partnership Interest	
              3

            
	
              2.2

            	Purchase
      Price	
              3

            
	
              2.3

            	Closing	
              3

            
	 	 
	ARTICLE III
      REPRESENTATIONS AND WARRANTIES OF SELLER	
               4

            
	
              3.1

            	Existence
      and Good Standing; Authority; Enforceability	
               4

            
	
              3.2

            	Partnership
      Interest	
               4

            
	
              3.3

            	No
      Conflicts; Consents and Approvals	
               4

            
	
              3.4

            	Litigation	
               4

            
	
              3.5

            	Brokers	
               5

            
	 	 
	ARTICLE IV
      REPRESENTATIONS AND WARRANTIES OF PURCHASER	
               5

            
	
              4.1

            	Existence
      and Good Standing; Authority; Enforceability	
               5

            
	
              4.2

            	No
      Conflicts; Consents and Approvals	
               5

            
	
              4.3

            	Litigation	
               5

            
	
              4.4

            	Brokers	
               5

            
	
              4.5

            	Investor
      Status and Investment Intent	
               5

            
	
              4.6

            	Other	
               6

            
	 	 
	ARTICLE V ADDITIONAL
      AGREEMENTS	
               8

            
	
              5.1

            	Consent
      and Waiver regarding Transfer of Partnership Interest	
               8

            
	
              5.2

            	Sales
      and Transfer Taxes	
               8

            
	
              5.4

            	Further
      Assurances	
               8

            
	 	 
	ARTICLE VI SURVIVAL
      OF REPRESENTATIONS AND WARRANTIES	
               8

            
	
              6.1

            	Survival	
               8

            
	 	 
	ARTICLE VII
      GENERAL	
               9

            
	
              7.1

            	Notices	
               9

            
	
              7.2

            	Counterparts	
               9

            
	
              7.3

            	Miscellaneous	
               9

            


    

     

    
      
         


      

      
        i

        
          

        

      

      
         


      

    


    PARTNERSHIP
INTEREST PURCHASE AGREEMENT

     

    This
PARTNERSHIP INTEREST PURCHASE AGREEMENT dated as of September 26, 2008 (this
“Agreement”) is made by and among PETRO RESOURCES CORPORATION, a Delaware
corporation (“Seller”), PRC HHEP II, LP, a Texas limited partnership
(“Purchaser”) and HHEP GP II, L.P., a Delaware limited partnership (the “General
Partner”).

     

    RECITALS:

     

    Seller is
the record and beneficial owner of a 51⁄3% limited partner interest (the
“Partnership Interest”) in Hall-Houston Exploration  II, L.P., a
Delaware limited partnership (the “Partnership”).  Seller desires to
sell the Partnership Interest to Purchaser and Purchaser desires to purchase the
Partnership Interest from Seller on the terms and conditions of this
Agreement.  Upon the consummation of the transactions contemplated by
Article II, Seller will own no interest in the Partnership and Purchaser will
become a substituted limited partner in the Partnership with a 51⁄3% limited
partner interest in the Partnership.

     

    NOW,
THEREFORE, in consideration of the mutual covenants, agreements, representations
and warranties contained herein, and in reliance thereon, Seller and Purchaser,
intending to be legally bound, hereby agree as follows:

     

    ARTICLE
I

    DEFINITIONS

     

    1.1           Definitions.  In
this Agreement, including the recitals, the following terms have the meanings
specified in the following Sections:

    


    
      	
              Defined
      Term

            	
              Section

            
	 
      	 
      
	
              “Agreement”

            	
              Preamble

            
	
              “Closing”

            	
              2.3

            
	
              “Closing
      Date”

            	
              2.3

            
	
              “General
      Partner”

            	
              Preamble

            
	
              “Partnership”

            	
              Recitals

            
	
              “Partnership
      Interest”

            	
              Recitals

            
	
              “Purchase
      Price”

            	
              2.2

            
	
              “Purchaser”

            	
              Preamble

            
	
              “Seller”

            	
              Preamble

            


    

    


    Capitalized
terms used but not otherwise defined in this Agreement have the meanings
assigned to such terms in the Partnership Agreement.

     

    In
addition, the following terms shall have the following meanings:

     

    “Contract” shall mean,
with respect to any Person, any contract, lease, commitment, sales order,
purchase order, agreement, instrument, mortgage, deed of trust, indenture,
franchise, note, bond or other contractual obligation pursuant to the terms of
which such Person is entitled to any present or future benefit or subject to any
present or future benefit, and shall include the certificate of incorporation,
bylaws, partnership agreement and similar organizational documents of any
Person.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    “Governmental
Authority” shall mean the government of the United States, any state or
political subdivision thereof, and any body exercising executive, legislative,
judicial regulatory or administrative authority or functions of or pertaining to
government.

     

    “Legal Requirement”
shall mean any applicable constitutional provision, statute, act, code, law,
rule, ordinance, order, decree, ruling, proclamation, resolution, judgment,
decision, declaration or interpretive or advisory opinion or letter of any
Governmental Authority.

     

    “Liens” shall mean all
mortgages, liens, pledges, encumbrances, charges, agreements, claims,
restrictions and defects of title.

     

    “Partnership
Agreement” shall mean the Amended and Restated Agreement of Limited
Partnership of Hall-Houston Exploration II, L.P. dated as of April 21, 2006, as
amended.

     

    “Person” shall mean an
individual, partnership, corporation, business trust, trust, unincorporated
association, limited liability company, joint venture or any other entity of
whatever nature.

     

    “Securities Act” shall
mean the Securities Act of 1933, as amended.

     

    1.2            Interpretation.  In
this Agreement, unless the context otherwise requires:

     

    (a)    The terms
“hereby,” “hereunder,” and any similar terms, as used in this Agreement, refer
to this Agreement.

     

    (b)    Any reference
to any Section or Schedule contained in this Agreement shall refer to such
Section or Schedule as set forth in or attached to this Agreement,
notwithstanding use of or failure to use the term “hereof,” “hereto” or “herein”
in connection with such reference.

     

    (c)    Words shall
apply equally to both singular and plural forms of the terms defined, and words
importing gender shall include all genders.

     

    (d)    Any headings
preceding the text of the several Sections of this Agreement, and any table of
contents appended to copies hereof, shall be solely for convenience of reference
and shall not constitute a part of this Agreement, nor shall they affect its
meaning, construction or effect.

     

    (e)    Unless
expressly limited, all references to agreements are references to agreements as
the provisions thereof may be amended, modified or waived from time to
time.

     

    (f)    The word
“including” when following any general statement, term or matter shall not be
construed to limit such general statement, term or matter to the specific items
or matters set forth immediately following such word or similar words, whether
or not non-limiting language (such as “without limitation” or “but not limited
to” or words of similar import) is used with reference thereto, but rather shall
be deemed to refer to all other items or matters that could reasonably fall
within the broadest possible scope of such general statement, term or
matter.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (g)    Statements
herein qualified by “known to Seller,” “Seller’s knowledge” or a similar phrase
shall mean that an executive officer of Seller after reasonable due inquiry has
no current actual knowledge of the inaccuracy of such statement.  No
knowledge of any other Person shall be imputed to Seller unless actually
disclosed to Seller in writing.

     

    ARTICLE
II

    PURCHASE
AND SALE OF PARTNERSHIP INTEREST; CLOSING

     

    2.1       
    Purchase and Sale of
Partnership Interest.  Subject to the terms and conditions of
this Agreement, and in reliance on the representations and warranties contained
in this Agreement, as of 9:00 a.m. Houston, Texas time on the Closing
Date:

     

    (a)    Seller hereby
sells, assigns, transfers and delivers, free and clear of any Liens, the
Partnership Interest, together with all rights, titles, interests, remedies,
powers and privileges thereunto appertaining, to Purchaser; and Purchaser hereby
purchases and accepts the Partnership Interest and assumes Seller’s obligation
to fund the remaining Unfunded Commitment with respect to the Partnership
Interest of approximately $1,353,000 and hereby agrees to be bound by the
Partnership Agreement as a Limited Partner;

     

    (b)    Purchaser
shall pay the Purchase Price to Seller by wire transfer of immediately available
funds to an account designated in writing by Seller;

     

    (c)    Seller shall
pay a placement fee equal to 3% of the Purchase Price to Herndon Plant Oakley
Ltd. by wire transfer of immediately available funds to an account designated in
writing by Purchaser;

     

    (d)    Seller hereby
withdraws from the Partnership as a limited partner; and

     

    (e)    After giving
effect to the sale and purchase under this Section and the completion of the
Closing, Seller shall be a substituted Limited Partner in the Partnership with a
51⁄3% Percentage Interest in the Partnership.

     

    2.2      
     Purchase
Price.  The aggregate cash consideration for the transfer of
Seller’s Partnership Interest shall be $8,000,000 (the “Purchase
Price”).

     

    2.3     
      Closing.  The
closing of the transactions contemplated by this Article II (the “Closing”)
shall take place at the office of the General Partner at the address set forth
in Section 7.1 of this Agreement on the date this Agreement is executed
(such date, the “Closing
Date”).

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    ARTICLE
III

    REPRESENTATIONS
AND WARRANTIES OF SELLER

     

    Seller
hereby represents and warrants to Purchaser that:

     

    3.1           Existence and Good Standing;
Authority; Enforceability.  Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of its state
of incorporation.  Seller has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement.  The execution and delivery of this Agreement and the
performance of the transactions contemplated hereby have been duly and validly
authorized by such action, corporate or otherwise, necessary on behalf of
Seller, and this Agreement constitutes the legal, valid and binding obligation
of Seller, enforceable against Seller in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency or other laws of
general application relating to or affecting the enforcement of creditors’
rights.

     

    3.2           Partnership
Interest.

     

    (a)    Seller is the
record and beneficial owner of the Partnership Interest, free and clear of all
Liens (except for the requirements of applicable securities laws and the
applicable provisions of the Partnership Agreement).

     

    (b)    Except for the
Partnership Agreement, there are no outstanding written or oral subscriptions,
options, Contracts, commitments or demands of any character relating to the
Partnership Interest to which Seller is a party or by which Seller is
bound.  No proxy has been granted to any Person with respect to the
Partnership Interest.

     

    3.3           No Conflicts; Consents and
Approvals.  Neither (i) the execution, delivery or performance
of this Agreement by Seller, nor (ii) the consummation of the transactions
herein contemplated do or will violate or result in a breach of or constitute a
default under any applicable Contract or Legal Requirement.  Except
for those that have been made, obtained or waived, as applicable, no consent,
approval, notification, authorization or order of, or declaration, filing or
registration with, or waiver or other action by any Governmental Authority or
other Person is required to be obtained or made by Seller in connection with the
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby.  Neither (i) the execution, delivery
or performance of this Agreement by Seller, nor (ii) the consummation of the
transactions herein contemplated will, to Seller’s knowledge, result in the
imposition or creation of any Lien upon or with respect to the Partnership
Interest.  Seller makes no representation that the sale of the
Partnership Interests will not result in a reassessment or revaluation of the
Partnership’s property and the imposition of tax therefor.

     

    3.4           Litigation.  There
is no litigation, investigation or other proceeding pending or, to Seller’s
knowledge, threatened against Seller or any of Seller’s affiliates which, if
adversely determined, would adversely affect Seller’s ability to perform its
obligations under this Agreement.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    3.5           Brokers.  Other
than Herndon Plant Oakley Ltd., no broker or finder has acted directly or
indirectly for Seller in connection with this Agreement or the transactions
contemplated hereby, and other than Herndon Plant Oakley Ltd., no broker or
finder is entitled to any brokerage or finder’s fee or other commission on
account of Seller.

     

    ARTICLE
IV

    REPRESENTATIONS
AND WARRANTIES OF PURCHASER

     

    Purchaser
hereby represents and warrants to Seller and the General Partner
that:

     

    4.1           Existence and Good Standing;
Authority; Enforceability.  Purchaser is a limited partnership
duly organized, validly existing and in good standing under the laws of its
state of formation.  Purchaser has all requisite limited partnership
power and authority to execute, deliver and perform its obligations under this
Agreement.  The execution and delivery of this Agreement and the
performance of the transactions contemplated hereby have been duly and validly
authorized by such action, partnership or otherwise, necessary on behalf of
Purchaser, and this Agreement constitutes the legal, valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency or
other laws of general application relating to or affecting the enforcement of
creditors’ rights.

     

    4.2           No Conflicts; Consents and
Approvals.  Neither (i) the execution, delivery or performance
of this Agreement by Purchaser, nor (ii) the consummation of the transactions
herein contemplated do or will violate or result in a breach of or constitute a
default under any applicable Contract or Legal Requirement.  Except
for those that have been made, obtained or waived, as applicable, no consent,
approval, notification, authorization or order of, or declaration, filing or
registration with, or waiver or other action by any Governmental Authority or
other Person is required to be obtained or made by Purchaser in connection with
the execution, delivery and performance of the Agreement or the consummation of
the transactions contemplated hereby.

     

    4.3           Litigation.  There
is no litigation, investigation or other proceeding pending or, to Purchaser’s
knowledge, threatened against Purchaser or any of Purchaser’s Affiliates which,
if adversely determined, would adversely affect Purchaser’s ability to perform
its obligations under this Agreement or the Partnership Agreement.

     

    4.4           Brokers.  Other
than Herndon Plant Oakley Ltd., no broker or finder has acted directly or
indirectly for Purchaser in connection with this Agreement or the transactions
contemplated hereby, and other than Herndon Plant Oakley Ltd., no broker or
finder is entitled to any brokerage or finder’s fee or other commission on
account of Purchaser.

     

    4.5           Investor Status and
Investment Intent.

     

    (a)    Purchaser is
an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated
under the Securities Act.

     

    (b)    Purchaser is
acquiring the Partnership Interest for Purchaser’s own account for investment,
and not with a view to any distribution, resale, subdivision, or
fractionalization thereof in violation of the Securities Act or any other
applicable securities law, and Purchaser has no present plans to enter into any
contract, undertaking, agreement, or arrangement for any such distribution,
resale, subdivision, or fractionalization.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (c)    Purchaser has
carefully reviewed and is familiar with the terms of the Partnership Agreement
and understands and agrees that in connection with the Closing that Purchaser
will become a party to, and be bound by all of the terms and conditions of, the
Partnership Agreement.  The General Partner has made available to
Purchaser or its representatives all other agreements, documents, records, and
books that Purchaser or its representatives have requested relating to the
purchase of the Partnership Interest.  Purchaser has had a full
opportunity to ask questions of and receive answers from the General Partner or
a Person acting on behalf of the Partnership concerning the terms and conditions
of an investment in the Partnership, and all questions asked by Purchaser have
been adequately answered to the full satisfaction of Purchaser.

     

    (d)    Purchaser
understands that the purchase and sale of the Partnership Interest has not been
and will not be registered under the Securities Act or the securities laws of
any other domestic or foreign jurisdiction and that the Partnership Interest
cannot be sold or transferred without the prior written consent of the General
Partner, which consent may be withheld in its sole and absolute discretion.
Purchaser understands that any certificate representing the Partnership Interest
will bear legends restricting the transfer thereof.

     

    (e)    Purchaser
understands that investment in the Partnership entails a high degree of risk and
understands fully the risks associated with the operation of the Partnership and
Purchaser’s investment in the Partnership.   Purchaser (i) has
such knowledge and experience in financial and business matters that it is
capable of evaluating the risks and merits of purchasing and owning the
Partnership Interest (ii) is able to bear the economic risk of losing its entire
investment in the Partnership and (iii) is able to bear such risk for an
indefinite period of time. Purchaser further represents that he is relying
solely on its own conclusions or the advice of its own counsel or investment
representative with respect to tax aspects of any investment in the
Partnership.

     

    4.6           Other.

     

    (a)    Purchaser’s
address set forth in Section 7.1 is the Purchaser’s principal place of business,
and the Purchaser has no present intention of moving its principal place of
business  to any other domestic or foreign jurisdiction.

     

    (b)    Purchaser is
not a “benefit plan investor” (as such term is defined in 29 C.F.R.
§2510.3-101(f)(2)).

     

    (c)    Purchaser
understands that the Partnership has not been registered as an investment
company under the Investment Company Act in reliance upon an exemption from
registration thereunder, and it agrees that the Partnership Interest that it is
acquiring may not be sold, offered for sale, transferred, pledged, hypothecated,
or otherwise disposed of in any manner that would require the Partnership to
register as an investment company under the Investment Company
Act.  Purchaser has been advised that the Partnership has no
obligation and does not intend to register any Interests under the Investment
Company Act.  Purchaser will not maintain a separate investment
account with respect to its investment in the Partnership whereby each of its
partners, shareholders, trustees or other owners will have the right to elect
not to participate in such investment, except where such election will require
the consent of all persons or the consent of the Purchaser’s general partner (or
other controlling person).  Purchaser shall deliver promptly to the
General Partner any information or documents that the General Partner may
reasonably request to verify the foregoing and to ensure compliance with the
Investment Company Act and the availability of an exemption of the Partnership
from registration thereunder.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (d)    Purchaser
understands that neither the Partnership, the General Partner nor the GP Company
has registered as an investment adviser under the Investment Advisers Act in
reliance upon an exemption from registration provided by Section 203(b)(3)
thereunder.  In particular and without limitation, the Purchaser is
not an investment company registered under the Investment Company Act or any
entity that has elected to be a business development company (as defined in
Section 202(a)(22) of the Investment Advisers Act) pursuant to Section 54 of the
Investment Company Act (and has not withdrawn such election), and Purchaser
covenants that it will not transfer, pledge, hypothecate or otherwise dispose of
its Partnership Interest to any such investment company or business development
company.

     

    (e)    Purchaser
acknowledges and agrees that, pursuant to the Partnership Agreement, the General
Partner has the exclusive power and discretion to make all investment decisions
on behalf of the Partnership, subject to the terms of the Partnership
Agreement.  Accordingly, the Purchaser acknowledges that neither the
General Partner nor any Affiliate thereof has rendered or will render any
investment advice or securities valuation advice to the Purchaser, and that
Purchaser is not acquiring the Partnership Interest in reliance upon, or with
the expectation of, any such advice.

     

    (f)    Purchaser’s
tax year ends on December 31 of each year.

     

    (g)    Purchaser was
not formed with, and will not be used for, a principal purpose of permitting the
Partnership to satisfy the 100 partner limitation contained in Section
1.7704-1(h)(1)(ii) of the Treasury Regulations promulgated under the
Code.

     

    (h)    Purchaser does
hereby represent and warrant to the Partnership and to the General Partner that
it and all of its beneficial owners are in compliance with all laws, statutes,
rules and regulations relating to anti-terrorism or anti-money laundering laws
of any federal, state or local government in the United States of America
applicable to such person(s) or entity(ies), including without limitation, the
USA PATRIOT Act, Pub. L, No. 107-56 (October 26, 2001), Executive Order No.
13224, 66 Fed. Reg. 49079 (Sept. 23, 2001) and all other similar requirements
contained in the rules and regulations of the Office of Foreign Asset Control
(“OFAC”), the Department of Treasury and in any enabling legislation or other
Executive Orders in respect thereof.  Purchaser further represents and
warrants to the Partnership and the General Partner that neither it nor any of
its beneficial owners is listed on the Specially Designated Nationals and
Blocked Persons List maintained by OFAC and/or on any other lists of terrorists
or terrorist organizations maintained and made publicly available by any
governmental department, agency, or other entity.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (i)    Purchaser is
eligible to acquire and hold an interest in federal oil and gas leases and is in
compliance with the certification requirements under 43 CFR Parts 12 and 18 to
the extent applicable to it.

     

    (j)    Purchaser has
not relied on any information provided by the Partnership or the General Partner
in making its investment decision other than information contained in the
informational memorandum of the Partnership dated February 20, 2006, in the
estimate of the reserves, future production and income attributable to certain
leasehold and royalty interests of the Partnership as of March 31, 2008 prepared
by Ryder Scott Company or in communications sent to all of the Partnership’s
limited partners as part of the Partnership’s normal reporting
practices.

     

    ARTICLE
V

    ADDITIONAL
AGREEMENTS

     

    5.1           Consent and Waiver regarding
Transfer of Partnership Interest.  The General Partner hereby
(a) consents in all respects to the sale and transfer of the Partnership
Interest by Seller to Purchaser under this Agreement, (ii) waives the
requirement regarding the delivery of legal opinions as set forth in Section
8.2(a) of the Partnership Agreement, (iii) deems this Agreement to satisfy all
other applicable conditions and requirements set forth in Section 8.2, (iv)
consents to the withdrawal of Seller as a limited partner of the Partnership,
and (v) consents to the admission of Purchaser as a Limited Partner with a 51⁄3%
Percentage Interest in the Partnership.

     

    5.2           Sales and Transfer
Taxes.  Seller shall pay all sales, use and transfer taxes, if
any, arising from or related to the sale and transfer of the Partnership
Interest.

     

    5.3           Expenses.  Each
party hereto shall bear its own expenses incurred in connection with the
negotiation, preparation, execution and performance of this
Agreement.

     

    5.4           Further
Assurances.  Seller agrees, at the request of Purchaser and
without any additional consideration, hereby agrees to do, make, execute,
acknowledge and deliver all such other instruments of conveyance, assignment,
transfer and consent as Purchaser may reasonably require to document the
transfer of the Partnership Interest as contemplated by this
Agreement.

     

    ARTICLE
VI

    SURVIVAL
OF REPRESENTATIONS AND WARRANTIES

     

    6.1           Survival.  All
representations and warranties made by Seller or Purchaser in this Agreement
shall be continuing and shall survive the Closing for a period of 12 months
after the Closing Date, notwithstanding any investigation at any time made by or
on behalf of Purchaser or Seller, as the case may be, except that the
representations of Seller set forth in Section 3.2 shall survive
indefinitely.  Such representations and warranties shall thereafter
terminate and be of no further force or effect; provided that there shall be no
limitation period in the case of actual fraud.  All other agreements
and undertakings in this Agreement that by their terms are to be performed in
whole or in part, or which prohibit actions, subsequent to the Closing, shall
survive the Closing in accordance with their terms.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    ARTICLE
VII

    GENERAL

     

    7.1           Notices.  All
notices or requests or other communication required or permitted hereunder shall
be marked “PERSONAL AND CONFIDENTIAL” and shall be delivered in writing as
follows:

     

    If to
Purchaser:

    


    PRC HHEP
II, LP

    Suite 2200 South Tower

    800 N.
Shoreline Blvd.

    Corpus
Christi, TX  78401

    Telefax:  361-
888-9342

    Attn:  Phillip
M. Plant

    


    If to
Seller:

    


    Petro
Resources Corporation

    777 Post
Oak Blvd.

    Suite
910

    Houston,
Texas 77056

    Telefax:  (832)
369-6992

    Attn:  Wayne P.
Hall

    


    If to the
General Partner:

    


    HHEP
GP-II, L.P.

    4605 Post
Oak Place, Suite 100

    Houston,
Texas  77027

    Telefax:  713-333-0976

    Attn:  Brad
Bynum

    


    All
notices or requests or other communications so addressed and dispatched by
overnight courier shall be effective 24 hours after the time of delivery to the
courier.  If so addressed but otherwise dispatched or telefaxed, they
shall be effective when received.  The address of any party for such
notice, request or other communication may be changed by giving notice to the
other parties at any time.

     

    7.2           Counterparts.  This
Agreement may be executed in one or more counterparts, all of which taken
together shall constitute one and the same instrument.

     

    7.3           Miscellaneous.

     

    (a)    This Agreement
constitutes the entire understanding between the parties with respect to the
subject matter hereof and may not be amended or modified in any respect or to
any extent whatsoever, except by an instrument in writing, executed by each of
the parties hereto.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (b)   This Agreement shall not
be assignable by any Party without the prior written consent of each of the
other parties hereto.

     

    (c)    This Agreement
shall inure to the benefit and be binding upon the parties hereto and their
respective heirs, executors, successors and permitted assigns.  The
Partnership shall be a third party beneficiary of the provisions of this
Agreement that inure to the benefit of the Partnership.

     

    (d)    In the event
that any of the provisions contained herein shall be deemed invalid or
unenforceable, then the remaining provisions shall be construed as if such
invalid or unenforceable provisions were not contained herein.

     

    (e)    THIS AGREEMENT
SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS, WITHOUT REGARD TO ITS CONFLICTS OF LAWS PROVISIONS.

     

    (f)    SELLER AND
PURCHASER HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY IN ANY LITIGATION RELATING
TO THIS AGREEMENT.

     

    (g)   Unless otherwise
specifically provided herein, time is of the essence of this Agreement and of
each of its provisions.

     

    
      
         


      

      
        10

        
          

        

      

      
         


      

    


    IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.

    
    

     

     

    
      	 	
              SELLER:

               

            
	 	
              PETRO
      RESOURCES CORPORATION

               

            
	 	By:       /s/  Wayne
      P. Hall
	 	
              Name: Wayne P.
      Hall

              Title:   
      Chief Executive Officer

               

               

            
	 	
              PURCHASER:

               

            
	 	
              PRC
      HHEP II, LP

               

            
	 	
              By:  PRC
      HHEP-GP, LLC, its general partner

               

            
	 	By:        
      /s/ Philip M. Plant
	 	
              Name:  Phillip
      M. Plant

              Title:  
       President

               

               

            
	 	
              GENERAL
      PARTNER:

               

            
	 	
              HHEP
      GP-II, L.P.

               

            
	 	
              By:  Hall-Houston
      Exploration Partners, L.L.C., its general partner

               

            
	 	By:        
      /s/ Charles Bradley Bynum
	 	
              Name:  Charles
      Bradley Bynum

              Title:    Vice
      President and

               Chief
      Financial Officer

            


    

     

     

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

     

     

    
      


      September
29, 2008

      


      Mr.
Phillip M. Plant

      PRC HHEP
II, LP

      800 N.
Shoreline Blvd.

      Suite
2200 South Tower

      Corpus
Christi, TX  78401

      


      
        	
                Re:

              	
                Partnership
      Interest Purchase Agreement (the “Purchase Agreement”) by and among Petro
      Resources Corporation (“Seller”), PRC HHEP II, LP (“Purchaser”) and HHEP
      GP II, L.P. (the “General Partner”)

              


      

      


      
        	
                 
      

              	
                Dear
      Mr. Plant:

              


      

      


      Reference
is hereby made to the Purchase Agreement for all purposes.  Any
capitalized term used herein that is not defined herein shall have the meaning
attributed to it in the Purchase Agreement.

       

      As
additional consideration for Purchaser’s execution and delivery of the Purchase
Agreement, Seller hereby agrees that, if the General Partner makes one or more
capital calls with respect to the Partnership Interest in an amount in excess of
$1,353,000.00, Seller shall pay Purchaser the amount of such excess by wire
transfer in immediately available funds within 24 hours of Purchaser’s notice to
Seller of such capital call; provided that Seller’s total liability under this
letter agreement shall not exceed $754,255.94 in the aggregate.  The
parties to this letter agreement agree that to the extent Seller pays Purchaser
any amounts pursuant to this letter agreement, such payments shall be treated as
an adjustment to the Purchase Price.

       

      This
letter agreement shall be governed by the laws of the State of Texas without
giving effect to any conflict of law provisions.

       

      Each
party to this letter agreement shall execute such further documents as may be
necessary to effectuate the transactions contemplated hereby on terms reasonably
satisfactory to the parties.

       

      


       

      


       

      [Remainder
of page intentionally left blank.]

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        Mr.
Phillip M. Plant

        September
29, 2008

        Page
2

      

       

      Please
indicate your agreement to the foregoing by countersigning this letter in the
space provided below.

       

       

      


      
        	Sincerely,
	 
	
                PETRO
      RESOURCES CORPORATION

              
	 
      
	 
      
	
                By:    /s/
      Wayne P. Hall                                            
      

                Name:  Wayne
      P. Hall

                Title:    Chief
      Executive Officer

              


      

      


      


      


      


      


      AGREED TO
AND ACCEPTED

      THIS 29th
DAY OF September, 2008:

      


      
        	
                PRC
      HHEP II, LP

              
	
                 

                By:           PRC
      HHEP-GP, LLC, its general partner

                 

                By:       
      /s/
      Phillip M. Plant

                Name:  Phillip M.
      Plant

                Title:  President