LETTER OF INTENT

         This LETTER OF INTENT is entered into this 27th day of March,  2006, by
and between NITRO PETROLEUM, INC., a Nevada Corporation, hereinafter "NITRO", PO
Box 929,  Penticton,  British Columbia,  Canada V2A 6J9 and REO ENERGY, LTD. and
JMT  RESOURCES,   LTD,  a  Texas  Partnership,   hereinafter  "REO"  and  "JMT",
respectively, whose offices are at 5416 Birchman Ave., Fort Worth, Texas 76107.

         WHEREAS,  REO is the majority owner and operator of certain oil and gas
leases  located  in  Arkansas  and  Texas  ("Leases")  and is also the  owner of
approximately  one-quarter  working  interests in 27 wells. REO has the internal
expertise to develop and operate its  leasehold  interests  located in Texas and
Arkansas,  it seeks to form a joint venture  partnership with a qualified entity
to facilitate equity and debt financing; and

         WHEREAS,  NITRO is a listed  company  trading  on the  over-the-counter
bulletin board company who desires to participate in the  development of oil and
gas  interests  in the States of Texas and  Arkansas and is qualified to provide
debt and equity financing to its prospective partner; and

        WHEREAS,  NITRO wishes to fully acquire,  over stages,  REO and JMT, and
provide  sufficient  financing in its efforts to develop oil and gas  properties
located in Arkansas and Texas;

        NOW THEREFORE,  for good and proper  consideration having been paid, the
parties to this Letter of Intent agree to be bound by its terms and  conditions,
to provide a directors resolution authorizing the companies herein to enter into
this  Agreement  by majority  resolutions  of the  stockholders  of both parties
hereto, based on representations contained herein and otherwise provided to each
party and the following terms and conditions  which are agreed to by the parties
to this  Letter of  Intent,  and agree to  incorporation  of such  items in, and
execution  of, a Definitive  Agreement and Plan of  Redevelopment  (the "Closing
Agreement"):

1.      NITRO is a corporation  duly  organized and validly  existing  under the
        laws of the State of Nevada,  has the  corporate  power to  perform  its
        business as presently  conducted,  is properly authorized to do business
        and is in  good  standing  in the  state  where  such  authorization  is
        necessary.  As of the date of this  Letter of  Intent,  NITRO is trading
        entity  under the symbol  "NPTR"  which  trades on the  over-the-counter
        bulletin board market and is current in its filings and  requirements to
        maintain a listing on that exchange.

2.      NITRO  desires to purchase one hundred  percent  (100%) of REO in
        several  stages.  REO currently owns the following  assets,  hereinafter
        collectively  referred to as REO's Interests;  approximately 7,000 acres
        of mineral leasehold in Cooke and Montague Counties,  Texas and is known
        as the Barnett Shale Leases ("Barnett  Leases") see exhibit "A" attached
        hereto,   approximately   1,700  acres  of  mineral   leasehold  in  the
        Fayetteville  Shale located in several counties in Arkansas and is known
        as the Fayetteville Shale Leases ("Fayetteville Leases") see exhibit "A"
        attached hereto, and, an average working

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         interest of twenty-five percent (25%) in approximately 27 wells drilled
         on the  Barnett  Leases  and  known as the  Barnett  Working  Interests
         ("Barnett Working Interests"), see exhibit "B" attached hereto.

 3.      NITRO desires to purchase one hundred  percent  (100%) of JMT in
         several stages.  JMT currently owns the following  assets,  hereinafter
         collectively referred to as JMT's Interests;  approximately 7,500 acres
         of  mineral  leasehold  in  Navarro  County,  Texas and is known as the
         Corsicana Field ("Field") see exhibit "C" attached hereto. Nitro, as of
         the  date of this  Agreement,  has a  twenty-three  and  three-quarters
         percent  (23.75%)  interest  in  the  Corsicana  Leases  based  on  its
         commitment to fund an additional  $3,000,000 over the next two years in
         JMT's  Corsicana  Pilot  Project  while JMT  retains  its  interest  of
         fortyseven and one-half percent (47.5%).

4.       REO and JMT agree to the sell REO's and JMT's Interests to NITRO based
         on NITRO's inducement and consideration of the following terms and
         conditions:

          [a]. The payment of $500,000, the receipt of which is hereby
               acknowledged by REO and JMT, NITRO and/or its nominee[s] has paid
               to REO an advance against the initial equity purchase of
               thirty-three percent (33%) of REO's Interests for $6,200,000 USD
               ("First Stage Purchase"), which consists of the following
               breakdown:

                     1. $2.7 million to buy Big Giant Rig 2
                     2. $2 million cash to Rife/Bennett ($1 million each)
                     3. $1.5 to pay off all existing debt of REO; and

          [b]. NITRO shall pay in cash the remaining purchase price of
               $5,700,000 USD for the First Stage Purchase on or before May 1,
               2006 and;

          [c]. NITRO shall provide a cash equity financing to REO and/or its
               affiliate JMT, the approximate amount of $59,000,000 USD by or
               before December 31, 2006, the uses and or allocations of which
               are attached herein as Exhibit "B" or [ii] in the event that
               NITRO fails to meet its funding obligations under paragraphs 4[b]
               or 4[c], the equity contributed to date by NITRO to REO will be
               converted to a working interest ownership in Big Giant Rig # 2
               purchased under 4[a] 1., the terms of which are described in
               paragraph 5 of this Agreement;

Upon the funding of equity  monies  described  in 4 [c] above,  Nitro and/or REO
will enlist a mutually  acceptable  third-party  engineer to determine the total
appraised  value of REO's  Interests,  which at that time shall also include any
acquisitions  made during the period from the date of this Agreement to the date
that a final  value  determination  is made,  which  shall be done no later than
December 31, 2007.

          [d]. The final purchase price for REO's and JMT's interests will be
               based on the valuation of all of their respective assets,

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               existing as of the date of this Agreement and including those
               acquired up to the date of evaluation, less the funds advanced to
               REO and JMT, as defined herein, and hereafter multiplied by the
               amount of residual interest held by REO and JMT after the first
               stage of financing, as defined above, or sixty-six and two-thirds
               percent (66.66%).

5.       In exchange for the initial equity  contribution  made by NITRO to REO,
         NITRO shall be  entitled  to receive  33% of the net income  derived by
         REO. Conversely,  in exchange for the funding provided by NITRO to JMT,
         NITRO will be entitled to receive  70% of the net income  derived  from
         JMT's Interest in the Corsicana Leases. NITRO will earn a proportionate
         working  interest  in those  wells  drilled  and  completed  under this
         project as their investment progresses.

6.       NITRO is in compliance with all material provisions and requirements of
         any and all contracts,  agreements,  leases,  licenses, and SEC/listing
         requirements  and to which  NITRO is a party and which,  is material to
         the conduct of the business of the Joint Venture with REO.

7.       The acquisition of JMT as contemplated herein calls for the development
         of the Field in phases  with the Pilot  Project  being  labeled  as the
         first phase and the  redevelopment  of the entire  Field as  subsequent
         phases.  If the parties hereto determine that the Phase 1 Pilot Project
         is   successful,   then  the  Joint  Venture  shall  proceed  with  the
         redevelopment  of the entire Field.  NITRO will be responsible  for the
         financing of the redevelopment of the Field and other ancillary actions
         undertaken by the Joint Venture,  including,  but limited to 3D seismic
         shoots of the  Field,  drilling  and  completing  well bores to greater
         depths and acquiring  additional  acreage in and around the location of
         the Field.

        A further  major  inducement  to JMT to enter into this  acquisition  is
        NITRO's commitment to affect a $3,000,000 funding in a timely manner for
        NITRO/JMT's future development plans of the Corsicana Field, should both
        parties  choose to continue  into phase II of the  redevelopment  of the
        Field.  Should these funds not  materialize in the manner  described and
        agreed in the Definitive  Agreement and Plan of  Redevelopment,  certain
        default  provisions would limit NITRO's interest in the Field to that of
        the Pilot Project. Its interest in the net income derived from the Pilot
        Project, however, would not be diminished as a result.

8.      As required by law,  the vote for approval of the  Definitive  Agreement
        and Plan of Redevelopment contemplated by this Letter of Intent shall be
        approved  by a vote of the  holders of at least a majority of the issued
        and outstanding shares of NITRO, JMT and REO.
         Furthermore,   there   are   filing   requirements   concerning   Proxy
        Solicitation  Materials (Regulation  14A/Schedule 14A) which are subject
        to filing with the Securities and Exchange Commission.

9.      At any time prior to the acquisition Closing Date, the parties hereto
        may, by written mutual agreement, approved by their respective Board of
        Directors, amend, modify or waive

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         compliance with any of the conditions,  covenants or provisions of this
         Letter of Intent or the Definitive Agreement and Plan of Redevelopment.

10.      Each  party  hereto  agrees  to grant to the.  other the right of first
         refusal on the sale of their respective  interests or on any subsequent
         drilling   opportunity  on  the  subject  properties  described  above,
         regardless of circumstance or depth,  including REO's  additional 3,000
         acres in the Corsicana area.

11.      Contemplated dates relating to this Letter of Intent, the terms and
         conditions of the acquisition, and the acquisition Closing Dates are:

         March 31, 2006     Letter of Intent Closing Date - Signing of Letter of
                            Intent

         May 1, 2006        Equity Funding Date - NITRO's initial equity
                            contribution of $5,700,000 is due for the purchase
                            of 33% of REO

        December 31,  2006  2nd  Equity  Funding  Date - no less  than
                            $59,000,000  must be received  under the   terms of
                            the Definitive  Agreement and Plan of Redevelopment
                            to affect the final purchase of the REO's and JMT's
                            respective interests.

        December 31, 2007   Enlist the services of a  third-party   appraiser to
                            determine  the fair market value of the assets
                            acquired   by  NITRO,   both  initially and during
                            the time since it entered into this Agreement.

12A. Inability to Fund based on conditions set forth herein

        In the event that Nitro is able to fund the initial acquisition of REO's
        percentage and JMT's  percentage,  as described  above,  then Nitro will
        convert  the  money  it has  funded  on  December  31,  2006 to  working
        interests  and/or  overriding  royalties in the leases acquired from the
        date of this Agreement to December 31, 2006,  and also include,  but not
        be limited  to,  acquisitions  of  equipment,  wells  drilled  and other
        purchases  considered to be assets of the Joint Venture.  The respective
        interest  assigned to Nitro under these  circumstances  will be equal to
        the amount of financing provided by Nitro (both debt and equity) divided
        by the current fair market value of all of the assets,  as determined by
        a mutually acceptable, third party appraiser.

12B. Representations & Warranties by JMT Resources, Ltd. and REO Energy, Ltd.

         JMT and REO represents and warrants as follows:

         [a].     That JMT and REO is without contingent and/or substantial
                  liabilities that

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         would effect the Pilot Project.  Any such contracts and/or  obligations
         are  in  the  usual  course  of  business  and  no  such  contracts  or
         obligations are liens or other liabilities  which, if disclosed,  would
         alter substantially the financial condition what has been represented.

                 [b]. There have not been, and prior to the acquisition  Closing
        Date there will not be, any material  adverse  changes in the  financial
        position of contracts and/or obligations,  except changes arising in the
        ordinary course of business.

                 [c]. JMT is the rightful  owner of the 95% working  interest in
        the Field,  whose leases and acreage  amounts are listed in Exhibit "A."
        REO is the rightful owner of 100% working interest in the Barnett Leases
        and Fayetteville  Leases, whose leases and acreage amounts are listed in
        Exhibit  "A." These  leases are  unencumbered  and without  liens or any
        other type of  deficiency  that would  prevent  REO from  executing  the
        Definitive Agreement and Plan of Redevelopment. Further, that REO is the
        rightful owner of the working  interests listed in exhibit "B," attached
        hereto,  which  interests  have not been  encumbered  or pledged and are
        without any type of title deficiency.

                 [d]. REO and or its affiliates will indemnify NITRO against all
        existing liabilities,  contingent or otherwise, which currently exist on
        any  of  the  assets  held  by  JMT  and  REO  and  both  parties  shall
        simultaneously hold NITRO harmless accordingly.

13.     Representations & Warranties by NITRO.

        NITRO represents and warrants as follows:

          [a]. The Officers of NITRO are duly authorized to execute this
               agreement pursuant to authorization of its Board of Directors.

          [b]. Since their latest filing with the SEC, there have not been, and
               prior to the acquisition Closing Date there will not be, any
               material adverse changes in the financial position of NITRO
               except changes arising in the ordinary course of business.

          [c]. NITRO is not involved in any pending litigation or governmental
               investigation or proceeding not reflected in such Financial
               Statements or otherwise disclosed in writing to REO that would
               have an adverse effect of the Redevelopment of the Field or any
               other asset acquired herein.

14.     The  parties  hereto  agree  to  keep   confidential   all   proprietary
        information.  The parties further agree to keep confidential any and all
        names,  telephone or facsimile numbers, and any other matters considered
        confidential  arising from this agreement and the subsequent  Definitive
        Agreement and Plan of Redevelopment.

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15.      This agreement may be signed in counterpart. Facsimile signatures, if
         required, shall be acceptable and legally binding.

16.     This Letter of Intent,  and its terms and conditions  therein,  shall be
        effective and binding upon the date of execution of this agreement. This
        Agreement and the legal  relations  between the parties  hereto shall be
        governed by and  construed in  accordance  with the laws of the State of
        Texas.

 17.    All parties to this agreement realize time is of the essence in
        concluding this transaction.


IN WITNESS  WHEREOF,  the parties have executed this  agreement in good faith on
the day and date first above written.

NITRO PETROLEUM, LTD.                       JMT RESOURCES, LTD.


/s/ Ted Kozub                               /s/ Mark Zouvas
--------------------------                  -------------------------
By: Ted Kozub                               By: Mark S. Zouvas
Title: President                            Title: Managing Partner

--------------------------                  -------------------------
Attest:                                     Attest:


REO Energy, Ltd.


-------------------------
By: Joe Bill Bennett
Title: Managing Partner

-------------------------
Attest: