Exhibit 10.14


 


	
  Cano
  Petroleum, Inc.

  The Oil & Gas Commerce Building

  309 West Seventh Street,
  Suite 1600

  Fort Worth, TX 76102

  	
   

  	
   

  	
  

  
	
  Phone (US) 817-698-0900

  	
   

  	
   

  	
  producing oil & gas

  
	
  Toll Free 1-877-698-0900

  	
   

  	
   

  	
  in the USA

  
	
  Fax 817-698-0796

  	
   

  	
   

  	
  for the USA

  



 


February 14, 2006


 


Energy Components SPC EEP
Energy


Exploration and Production
Segregated Portfolio


Grand Pavilion Commercial
Centre


802 West Bay Road, Suite 14


George Town, Grand Cayman,
B.W.I., Cayman Islands


Attention: Michael Proctor


 


Mitchell Energy Partners


7515 Greenville Avenue,
Suite 905


Dallas, Texas 75231


Attention: Mynan C. Feldman


Facsimile: (469) 916-7489


 


UnionBanCal Equities, Inc.


445 S. Figueroa Street, 13th Floor


Los Angeles, CA 90071


Attention: Michael Ross


Facsimile: (213) 236-7619


 


Gentlemen:


 


Reference is made to that
certain Subordinated Credit Agreement (the “Agreement”)
dated as of November 29, 2005, by and among Cano Petroleum, Inc. (the “Borrower”), the lenders named
therein, and Energy Components SPC EEP Energy Exploration and Production
Segregated Portfolio (“Energy Components”),
as Administrative Agent and Lender. Capitalized terms used herein shall, unless
otherwise indicated, have the respective meanings set forth in the Agreement.


 


Borrower hereby notifies
Energy Components, as Administrative Agent and Lender, and UnionBanCal Equities,
Inc. (“UnionBanCal”), as Lender,
that Borrower may not be able to comply with the covenant set forth in Section 5.01 of the Agreement, which
requires that Borrower comply in all material respects with all material Legal
Requirements. In connection with Borrower’s acquisition of W.O. Energy of
Nevada, Inc. (“W.O.”), Borrower is required
to file the financial statements of W.O. and the pro forma financial information
required by Item 9.01(a-b) of Form 8-K by amendment (the “Amendment”)
to the 8-K previously filed with the Securities and Exchange Commission on
December 5, 2005 (the “8-K”). The
required financial statements and pro forma financial information involve all
of W.O.’s prior activities, including non-oil & gas activities that were specifically excluded from Borrower’s
acquisition of W.O. (e.g. an airplane company and a hotel company).
Additionally, Borrower and Borrower’s independent auditor have received no
cooperation or support from W.O.’s external accountant in this matter. Such
Amendment is required to be filed within 71 days after the date the initial 8-K
was required to be filed (December 5, 2005), but Borrower will be unable to file
the Amendment in a timely manner. Borrower intends to file the Amendment as soon as possible, but no later than 10 calendar days from the date
hereof. As a result, Borrower is requesting that Energy Components, as Majority
Lender, waive, for a period not to exceed ten (10) calendar days from the date hereof,
the requirements of Section 5.01 of the Agreement, insofar and only insofar as such requirements


 


WWW.CANOPETRO.COM


 

















 


pertain to the timely filing
of the Amendment (the “Covenant”).
By execution of this letter in the space provided below, Energy Components, as
Majority Lender, hereby waives the Covenant according to the terms set forth
herein.


 


	
  Warmest regards,

  
	
   

  
	
  /s/ Mike Ricketts

  	
   

  
	
  Mike Ricketts

  
	
  Chief Financial Officer

  
	
  Telephone Number: (817) 412-1349

  
	
  Fax Number: (817) 334-0222

  



 


 


	
   

  	
  Accepted and Agreed to:

  
	
   

  	
   

  
	
   

  	
  ENERGY
  COMPONENTS SPC EEP ENERGY

  
	
   

  	
  EXPLORATION
  AND PRODUCTION SEGREGATED

  
	
   

  	
  PORTFOLIO

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark A. Margason

  	
   

  
	
   

  	
  Name:

  	
  Mark A. Margason

  	
   

  
	
   

  	
  Title:

  	
  Duly Authorized Signer

  	
   

  
						



 


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