AMENDING AGREEMENT


to the


PARTICIPATION AND OPERATING AGREEMENT


 


This Amending Agreement
(this “Amendment”) made as of February 1, 2012 (the “Effective Date”), between:


 


EERG Energy ULC, a wholly
owned subsidiary of Eternal Energy Corp. (hereinafter called “Eternal”), a corporation incorporated pursuant
to the laws of the Province of Alberta;


 


and


 


AEE Canada Inc., a wholly owned
subsidiary of American Eagle Energy, Inc. (hereinafter called “American Eagle”), a corporation incorporated
pursuant to the laws of the Province of Alberta;


 


and


 


PASSPORT ENERGY
INC. (hereinafter called “Passport”), a corporation formed pursuant to the laws of British Columbia.



 


WHEREAS the
parties entered into a Participation and Operating Agreement dated April 15, 2011 (the “Agreement”) whereby
the Farmors agreed to grant Passport a Working Interest in the Joint Lands;


 


AND WHEREAS
Eternal, as the Operator, drilled the Test Well on the Joint Lands and Passport earned a 25% Working Interest in and to the Test
Well pursuant to the terms and conditions of the Agreement;


 


AND WHEREAS
Eternal, as the Operator, gave notice of its intention to drill the Option Well on the Option Lands;


 


AND WHEREAS
Passport has acknowledged receipt of Eternal’s notice to drill the Option Well and has now elected to participate in the
drilling of the Option Well, subject to the amendments to the allocation of the Completion Costs and Working Interests of the Parties,
and such other amendments to the Agreement as hereby agreed by the Parties, all as further set forth in this Amendment;


 


NOW THEREFORE,
in consideration of the mutual covenants and agreements hereinafter set forth and other good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged by the Parties, the Parties hereby agree as follows:


 






    	



    	 



    
  


Article 1



amendments


 


From and after
the Effective Date, the Parties agree and acknowledge that the Agreement is hereby amended as follows:


 


		1.1	Amendments to the Definitions



 


		(a)	The definition of “AMI Interest” as set forth in Section 1.1(b) of the Agreement
shall be deleted in its entirety and replaced with the following:



 


“AMI
Interest” means the following ownership percentages of each of the Parties granted in respect of the AMI Lands pursuant
to Article 7 of this Agreement:


 


		(i)	with respect to Passport, a 15% interest ;



 


		(ii)	with respect to Eternal, 42.5% interest; and



 


		(iii)	with respect to American Eagle, 42.5% interest;”.



 


		(b)	The definition of “Option Well” as set forth in Section 1.1(s) of the Agreement
shall be amended to mean the Hardy 3D14-17-3A3-17-4-21 Well.



 


		1.2	Amendments to the Schedules



 


Schedule “A”
of the Agreement shall be deleted in its entirety and replaced with Schedule “A” attached and incorporated into to
this Amendment, which Schedule “A” shall replace and supersede the version of Schedule “A” attached to
the Agreement.


 


		1.3	Amendments to the Costs of the Option Well



 


Section
4.4(a) of the Agreement is deleted in its entirety and replaced with the following:


 


“4.4Costs of Option
Well


 


(a)In
the event that Passport has elected to participate in the Option Well pursuant to Section 4.1(a), Passport shall pay Eternal 23.1%
of the Estimated Drilling Costs to be incurred by Eternal with respect to the Option Well on or before January 27, 2012. Thereafter,
on or before that day which is 20 days after the date on which Passport receives from Eternal the summary of the actual Completion
Costs incurred by Eternal with respect to the Test Well,


 


(i)Passport
shall promptly pay to Eternal 23.1% of the difference between the Completion Costs and the Estimated Drilling Costs for the Option
Well, if the Completion Costs exceed the Estimated Drilling Costs; or


 






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(ii)Eternal
shall promptly reimburse Passport 23.1% of the difference between the Estimated Drilling Costs and the Completion Costs for the
Option Well, if the Completion Costs are less than the Estimated Drilling Costs.”


 


		1.4	Amendments to Earning of the Option Well



 


Section
4.5(a) of the Agreement is deleted in its entirety and replaced with the following:


 


“4.5Earning


 


(a)Where
the Farmors have elected to drill the Option Well pursuant to Section 4.1(a), upon the drilling of the Option Well to Contract
Depth and Completion, Capping or Abandonment of the Test Well, and subject to Eternal receiving payment pursuant to Section 4.4
(a) above:


 


(i)Eternal
shall transfer an undivided 7.5% Working Interest in the Option Well and in Sections 17 and 18 in Township 4, Range 21 W2M of the
Option Lands to Passport;


 


(ii)American
Eagle shall transfer an undivided 7.5% Working Interest in the Option Well and in Sections 17 and 18 in Township 4, Range 21 W2M
of the Option Lands to Passport;


 


(iii)Eternal
shall transfer an undivided 3.75% Working Interest in the W1⁄2 of Section 5 and all of Section 6 in Township 4, Range 21 W2M
of the Option Lands to Passport; and


 


(iv)American
Eagle shall transfer an undivided 3.75% Working Interest in the W1⁄2 of Section 5 and all of Section 6 in Township 4, Range
21 W2M of the Option Lands to Passport.


 


(b)As
a result of the transfers noted in Section 4.5(a) above, the resulting Working Interests of the Parties in and to the Option Well
and the applicable Option Lands and all Petroleum Substance received therefrom shall be as follows:


 


(i)With
respect to Eternal:


 


(A)a
42.5% Working Interest in the Option Well and in Sections 17 and 18 in Township 4, Range 21 W2M of the Option Lands; and


 


(B)a
46.25 % Working Interest in the W1⁄2 of Section 5 and all of Section 6 in Township 4, Range 21 W2M of the Option Lands.


 






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(ii)With
respect to American Eagle:


 


(A)a
42.5% Working Interest in the Option Well and in Sections 17 and 18 in Township 4, Range 21 W2M of the Option Lands; and


 


(B)a
46.25 % Working Interest in the W1⁄2 of Section 5 and all of Section 6 in Township 4, Range 21 W2M of the Option Lands.


 


(iii)With
respect to Passport:


 


(A)a
15% Working Interest in the Option Well and in Sections 17 and 18 in Township 4, Range 21 W2M of the Option Lands; and


 


(B)a
7.5% Working Interest in the W1⁄2 of Section 5 and all of Section 6 in Township 4, Range 21 W2M of the Option Lands.”


 


		1.5	Amendments to the Cost and Earning of the Disposal



 


Sections 5.2
and 5.3 of the Agreement are deleted in their entirety and replaced with the following:


 


“5.2Cost of Water Disposal
Well


 


In the event
that Passport has elected to participate in the conversion of the Water Disposal Well pursuant to Section 5.1, upon receipt of
invoice from Eternal for the estimated conversion costs of the Water Disposal Well, Passport shall pay Eternal 23.1% of the estimated
conversion costs to be incurred by Eternal with respect to conversion of the Water Disposal Well. Thereafter, on or before that
day which is 20 days after the date on which Passport receives from Eternal the summary of the actual conversion completion costs
incurred by Eternal with respect to conversion of the Water Disposal Well,


 


(a)Passport
shall pay to Eternal 23.1% of the difference between the actual conversion completion costs and the estimated conversion costs
for the Water Disposal Well, if the actual costs exceed the estimated costs; or


 


(b)Eternal
shall reimburse Passport 23.1% of the difference between the estimated costs and the actual costs for the Water Disposal Well,
if the actual costs are less than the estimated costs.


 


“5.3Earning


 


Upon completion
of conversion of the Water Disposal Well, and subject to Eternal receiving payment pursuant to Section 5.2 above:


 


(a)Eternal
shall transfer an undivided 7.5% Working Interest in the Water Disposal Well to Passport; and


 


(b)American
Eagle shall transfer an undivided 7.5% Working Interest in the Water Disposal Well to Passport.


 






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As a result
of the transfers noted above, the resulting Working Interests of the Parties in and to the Water Disposal Well and all proceeds
received therefrom shall be as follows:


 


(a)With
respect to Eternal a 42.5% Working Interest;


 


(b)With
respect to American Eagle a 42.5% Working Interest; and


 


(c)With
respect to Passport a 15% Working Interest.


 


Each of the
Farmors shall do all other acts and things necessary to transfer and to evidence the transfer of such Working Interest, including
the entering into of an assignment agreement on terms satisfactory to the Parties, acting reasonably.”


 


Article 2

RATIFICATION AND CONFIRMATION


 


		2.1	Participation and Operating Agreement



 


Except
as expressly amended hereby, the Agreement, as amended, is hereby ratified and confirmed and the Parties acknowledge that it continues
in full force and effect in all respects.


 


Article 3

GENERAL


 


		3.1	Governing Law



 


This Amendment shall,
in all respects, be subject to, interpreted, construed and enforced in accordance with and under the laws of the Province of Alberta
and the laws of Canada applicable therein. The Parties irrevocably attorn and submit to the exclusive jurisdiction of the courts
of Alberta and the courts of appeal therefrom in respect of all matters arising out of or in connection with this Amendment. To
the extent that the fact that the Lands lie within the Province of Saskatchewan requires the application of the laws in force in
the Province of Saskatchewan, such laws shall be adduced as evidence in the Alberta courts having jurisdiction in respect of a
dispute arising hereunder.


 


		3.2	Further Assurances



 


From time to time,
as and when reasonably requested by any Party, the other Party shall execute and deliver, or cause to be executed and delivered,
all such documents and instruments and shall take, or cause to be taken, all such further and other actions to implement or give
effect to this Amendment.


 






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		3.3	Entire Agreement



 


This Amendment supersedes
any and all other agreements, documents, writings and verbal understandings between the Parties relating to the subject matter
hereof and expresses the entire agreement of the Parties with respect to the subject matter hereof.


 


		3.4	Severability



 


If any covenant or
condition contained in this Amendment is determined to be, in whole or in part, invalid or unenforceable by reason of any rule
of law or public policy, such invalidity or unenforceability will not affect the validity or enforceability of any other covenant
or provision, such partial invalidity or unenforceability shall not affect the validity or enforceability of the remainder of such
covenant or provision and such invalid or unenforceable covenant or provision or portion thereof, as the case may be, shall be
severable from the remainder of this Amendment.


 


		3.5	Enurement



 


This Amendment shall
be binding upon and enure to the benefit of the Parties and their respective successors and assigns.


 


 


[this space intentionally
left blank – signature page follows]


 



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		3.6	Counterpart Execution



 


This Amendment may
be executed by facsimile and in counterpart, all of which, when taken together, shall be deemed one and the same instrument.


 


IN WITNESS WHEREOF
the Parties have executed this Agreement as of the day and year first above written.


 





	 	EERG Energy ulc .
	 	 
	 	By:	 
	 	 	[Name]
	 	 	[Title]
	 	 	 
	 	By:	 
	 	 	[Name]
	 	 	[Title]
	 	 	 
	 	AEE Canada INC.
	 	 
	 	By:	 
	 	 	[Name]
	 	 	[Title]
	 	 	 
	 	By:	 
	 	 	[Name]
	 	 	[Title]
	 	 	 
	 	PASSPORT ENERGY INC.
	 	 
	 	By:	 
	 	 	[Name]
	 	 	[Title]
	 	 	 
	 	By:	 
	 	 	[Name]
	 	 	[Title]







 


 



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SCHEDULE “A”


 


to Participation
and Operating Agreement

dated April 15, 2011, as amended, between

EERG Energy ULC., AEE Canada Inc. and Passport Energy Inc.


 


JOINT AND OPTION LANDS, TITLE DOCUMENTS,
WORKING INTEREST

AND ENCUMBRANCES


 





 






 


Joint Lands:


 


	Joint Lands	Title Documents	Working Interest	Encumbrances
	E1⁄2 and SW1⁄4 of Section 4, W1⁄2 of Section 9, W1⁄2 of Section 16 and W1⁄2 of Section 21 in Township 4, Range 21 W2M	 	
        - AEE Canada Inc. – 50%

        - EERG Energy ULC. – 50%
	
        - 9% GORR to Crescent Point Energy

        - 1.75% GORR to Fairway Resources LLP

        - .25% GORR to Tom Lantz

        - 1% GORR to Richard Findley

        - Saskatchewan Crown Royalties and Mineral
        Taxes



 


Option Lands:


 


	Option Lands	Title Documents	Working Interest	Encumbrances
	W1⁄2 of Section 5 and all of Sections 6, 17 and 18 in Township 4, Range 21 W2M	 	
        - AEE Canada Inc. – 50%

        - EERG Energy ULC. – 50%
	
        - 9% GORR to Crescent Point Energy

        - 1.75% GORR to Fairway Resources LLP

        - .25% GORR to Tom Lantz

        - 1% GORR to Richard Findley

        - Saskatchewan Crown Royalties and Mineral
        Taxes



 






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