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EXHIBIT 10.8.1    
  


Redwood Energy Production, L.P.

One Maritime Plaza, Suite 400

San Francisco, CA 94111

(415) 398-8186

FAX (415) 398-9227  


June 14, 2001 


Panther
Rodessa, L.P.

1021 Main Street, Suite 1290

Houston, TX 77002 


Newstar
Energy U.S.A., Inc.

1905 Abbott Road

East Lansing, MI 48826-1799 


Frederick
R. McCord, Trustee

1021 Main Street, Suite 1400

Houston, TX 77002 


Re: Clarification of Purchase and Sale Agreement / Ratification of Pending Transaction  


Gentlemen:



    Reference
is made to that Purchase and Sale Agreement (the "PSA") made and entered into December 29, 2000 by and between Panther Rodessa, L.P., Newstar Energy
U.S.A., Inc., and Frederick R. McCord, Trustee (collectively, "Seller") and Redwood Energy Production, L.P. ("Buyer"). Buyer is preparing to enter into agreements with various third parties in
order to (1) re-enter the Ruby Magness Well in the Madisonville Field, (ii) drill or recomplete an injection well, (iii) install a gas treatment plant, (iv) and
provide a gas gathering/transportation system (i), (ii), (iii), and (iv), collectively, the "Project"). In order to move forward with the Project, Buyer desires to amend and clarify the PSA to delete
the last sentence of the first paragraph of Section 11 (a)(iv) and provide in its place the following: 


    "At
eighteen (18) months after Closing, should Buyer, directly or through any third party contractor, be constructing the facilities, plant, and/or pipelines to begin actual
sales of gas from the Rodessa/Sligo Interval on the Properties, Buyer shall have thirty (30) months after Closing to commence actual sales of gas from the Rodessa/S1igo Interval on the
Properties." 


    Buyer
has furnished to Seller unexecuted copies of the Gas Purchase Contract between Gateway Processing Company and Buyer (the "GPA"). The GPA provides for a sale of Rodessa/Sligo
Interval gas at the wellhead with Buyer's sales price to be determined by "netting back" from the gross proceeds received by Gateway in downstream, arm's length third party gas sales the Fixed Monthly
Treating Fee or the Floating Monthly Treating Fee, as applicable, as set forth in Article VII of the GPA. Buyer hereby requests your ratification, adoption, and approval of the formula set Out
in the GPA for the determination of Buyer's gas sales price for the calculation of all amounts to be paid to Seller or any successor or assign by virtue of the Assignment of Net Profits Interest in
connection with the PSA, any other undivided leasehold working interest, or any overriding or other royalty interest in the Properties (as defined in the PSA). Buyer acknowledges that the capital
costs incurred by Gateway Processing Company, Hanover Compression Limited Partnership, or their affiliates or subcontractors in 







connection with the Project shall not be included as "Costs" or "Debits" in the calculation of "Net Profits" or "Payout" under the Assignment of Net Profits Interest. 



    Newstar
Energy U.S.A., Inc. ("Newstar") currently serves as the operator of the Properties. In order to facilitate Buyer's re-entry of the Ruby Magness Well,
promptly after execution of this letter, Newstar
shall execute and deliver to Buyer sufficient numbers of Railroad Commission of Texas Form P-4 to designate Buyer as operator of the Properties. If Buyer fails or refuses to pay the
$500,000.00 payment due by June 30, 2001 (the "June 30 Payment") under the PSA, Buyer promptly shall re-execute and redeliver to Newstar sufficient numbers of Railroad
Commission of Texas Form P-4 to redesignate Newstar as operator of the Properties. Subject to Newstar's delivery of executed Form P-4s to Buyer, Buyer irrevocably
appoints and designates Newstar as its agent and attorney-in-fact solely for the purpose of executing and filing with the Railroad Commission of the State of Texas on behalf of
Buyer a Form P-4 redesignating Newstar as operator of the Properties; provided, however, Newstar shall not make any such filing unless and until Buyer fails to make the
June 30 Payment. If Buyer makes the June 30 Payment in accordance with the PSA, the limited power of attorney granted hereunder shall ipso
facto terminate and be of no further force and effect. 


    Buyer
acknowledges that Seller's execution of this letter does not constitute, and shall not be deemed to constitute, any assumption of any contractual or other obligation or
liability to Gateway Processing Company or Hanover Compression Limited Partnership in connection with the Project. 


    In
order to evidence your agreement with respect to Buyer's requested change to first paragraph of Section 11 (a)(iv) of the PSA, your ratification, adoption, and
approval of the structure and pricing provisions of the GPA as described above, and Newstar's agreement to execute Form P-4s to designate Buyer as operator of the Properties in
accordance with the provisions hereof, please execute one copy of this letter and return same to Redwood at the letterhead address. This letter may be executed in one 







or more counterparts, each of which shall be deemed and original, and all of which, when taken together, shall constitute one and the same instrument. We appreciate your cooperation in this matter. 



	 
	 	 
	 	 
	 	 
	 	 
	 	 

	 	 	 	 	 	 	Very truly yours,
	

 	
 	

 	
 	

 	
 	

REDWOOD ENERGY PRODUCTION, L.P.
	

 	
 	

 	
 	

 	
 	

By:	
 	

Redwood Energy Company,

its General Partner
	

 	
 	

 	
 	

 	
 	

 	
 	

By:	
 	

 
	 	 	 	 	 	 	 	 	 	 	

	

 	
 	

 	
 	

 	
 	

 	
 	

Name:	
 	

S. J. Doshi
	 	 	 	 	 	 	 	 	 	 	

	

 	
 	

 	
 	

 	
 	

 	
 	

Title:	
 	

President
	 	 	 	 	 	 	 	 	 	 	

	
 AGREED TO, RATIFIED, AND APPROVED	
 	

 	
 	

 	
 	

 
	

THIS 14th DAY OF JUNE, 2001.	
 	

 	
 	

 	
 	

 
	

PANTHER RODESSA, L.P.	
 	

 	
 	

 	
 	

 
	

By:	
 	

Smitherman Energy Management, Inc.

its general partner	
 	

 	
 	

 	
 	

 
	

 	
 	

By:	
 	

 	
 	

 	
 	

 	
 	

 
	 	 	 	 	
	 	 	 	 	 	 
	

 	
 	

Name:	
 	

Jim Smitherman	
 	

 	
 	

 	
 	

 
	 	 	 	 	
	 	 	 	 	 	 
	

 	
 	

Title:	
 	

President	
 	

 	
 	

 	
 	

 
	 	 	 	 	
	 	 	 	 	 	 





	
AGREED TO, RATIFIED, AND APPROVED	
 	

 	
 	

 
	

THIS 14th DAY OF JUNE, 2001.	
 	

 	
 	

 
	

NEWSTAR ENERGY USA, INC.	
 	

 	
 	

 
	

By:	
 	

 	
 	

 	
 	

 	
 	

 
	 	 	
	 	 	 	 	 	 
	

Name:	
 	

David Pratt	
 	

 	
 	

 	
 	

 
	 	 	
	 	 	 	 	 	 
	

Title:	
 	

President	
 	

 	
 	

 	
 	

 
	 	 	
	 	 	 	 	 	 
	
AGREED TO, RATIFIED, AND APPROVED	
 	

 	
 	

 
	

THIS          DAY OF JUNE, 2001.	
 	

 	
 	

 
	

FREDERICK R. McCORD, TRUSTEE	
 	

 	
 	

 
	

By:	
 	

 	
 	

 	
 	

 	
 	

 
	 	 	
 Trustee	 	 	 	 	 	 











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EXHIBIT 10.8.1