EX-10.4






PROMISSORY NOTE




U.S. $ 5,000.00



Midland, Texas

December 20, 2005




FOR VALUE RECEIVED, the undersigned, Esconde Resources LP, a Texas Limited Partnership
(“Maker”), whose address is 415 West Wall St., Suite 625, Midland, Texas, hereby unconditionally
promises to pay to SJM Family L.P. (“Payee,” together with Maker, the “Parties”), in lawful money
of the United States of America, the principal sum Five Thousand Dollars ($5,000.00).



1. Payments



1.1 Principal and Interest. Payment shall be made on April 1, 2005, with interest at the rate
of 4.0% per annum (the “Interest Rate”). This note may be paid in full without penalty.



1.2 Manner of Payment. Principal, interest, and all other amounts due under this Note will be
payable, in U.S. dollars, to Payee by check or wire transfer in immediately available funds to an
account designated by Payee in writing. If any payment on this Note is due on a day that is not a
Business Day, such payment will be due on the next succeeding Business Day, and such extension of
time will be taken into account in calculating the amount of interest payable under this Note.
“Business Day” means any day other than a Saturday, Sunday or legal holiday in the State of Texas.



2. Defaults



2.1 Events of Default. The occurrence of any one or more of the following events with respect
to Maker will constitute an event of default hereunder (“Event of Default”):




(a) if Maker fails to pay when due any payment of principal or interest on this Note
and such failure continues for 30 days after Payee demands payment thereof from maker in
writing; or




(b) if Maker, under the laws of any jurisdiction: (i) is dissolved, liquidated or
wound up, or otherwise ceases doing business; (ii) becomes insolvent or is unable to pay
its debts or fails or admits in writing its inability generally to pay its debts as they
become due; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator
or similar official; (iv) makes a general assignment for the benefit of its creditors; or
(v) institutes a proceeding, or has an involuntary proceeding instituted against it,
seeking a judgment of insolvency, bankruptcy, or any other similar relief under any
bankruptcy, insolvency, or other similar law affecting creditors’ rights that is not
dismissed within 120 days thereafter.



2.2 Notice by Maker. Maker will notify Payee in writing within five days after the occurrence
of any Event of Default of which Maker acquires knowledge.



2.3 Remedies. Upon the occurrence of an Event of Default hereunder (unless cured by Maker or
waived in writing by Payee), Payee may, at its option, (a) by written notice to Maker, declare the
entire unpaid principal balance of this Note, together with all accrued interest thereon,
immediately due and payable or (b) exercise any and all rights and remedies available to it under
applicable law, including the right to collect from Maker all sums due under this Note. Maker will
pay all costs and expenses incurred by or on behalf of Payee in connection with Payee’s exercise of
any or all of its rights and remedies under this Note, including reasonable attorneys’ fees.



3. Miscellaneous



3.1 Waiver. Maker hereby, waives presentment, demand, protest, and notice of dishonor and
protest.



3.2 Non-Negotiability. This Note is non-negotiable and cannot be assigned or transferred by
Payee without the express prior written Consent of Maker.



3.3 Successors. All of the terms, agreements, covenants, representations, warranties, and
conditions of this Note are binding upon, and inure to the benefit of and are enforceable by, the
Parties and their respective successors. If Payee is an entity and if the principal business,
operations or a majority or substantial portion of the assets of Payee are assigned, conveyed,
allocated, or otherwise transferred, including by sale, merger, consolidation, amalgamation,
conversion, or similar transactions, such receiving person or persons will automatically become
bound by and subject to the provisions of this Note, and Payee will cause the receiving person or
persons will automatically be bound by and subject to the provisions of this Note, and Payee will
cause the receiving person or persons to expressly assume its obligations hereunder.



3.4 Assignment by Maker. Maker may (a) assign any or all of its rights and obligations
hereunder to one or more of its affiliates and (b) designate one or more of its affiliates to
perform its obligations hereunder (in any or all of which cases Maker nonetheless will remain
responsible for the performance of all of its obligations hereunder).



3.5 Notices. All notices, requests, demands, claims, and other communications hereunder will
be in writing. Any notice, request, demand, claim, or other communication hereunder will be deemed
duly given if (and then three business days after) it is sent by registered or certified mail,
return receipt requested, postage prepaid, and addressed to the intended recipient as set forth
below:



If to Maker:



Esconde Resources LP



415 West Wall St., Suite 625



Midland, Texas 79701



Attention: Ronnie L. Steinocher



If to Payee:



SJM Family L.P.



4016 Highlands West Dr..



Fort Collins, Colorado 80526



Attention: Steven J. McGoffin



Either Party may send any notice, request, demand, claim, or other communication hereunder to the
intended recipient at the address set forth above using any other means (including personal
delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim, or other communication will be deemed to have
been duly given unless and until it actually is received by the intended recipient. Either Party
may change the address to which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other notice in the manner herein set forth.



3.7 Time. Time is of the essence in performance of this Note.



3.8 Headings. The article and section headings contained in this Note are inserted for
convenience only and will not affect in any way the meaning or interpretation of this Note.



3.9 Governing Law. The Note and the performance of the obligations of the Parties hereunder
will be governed by and construed in accordance with the laws of the State of Texas, without giving
effect to any choice of law principles.



3.10 Amendments and Waivers. No amendment, modification, replacement, termination, or
cancellation of any provision of this Note will be valid, unless the same will be in writing and
signed by each Party. No waiver by any Party of any default, misrepresentation, or breach of
warrant or covenant hereunder, whether intentional or not, may be deemed to extend to any prior or
subsequent default, misrepresentation, or Breach of warranty or covenant hereunder or affect in any
way any rights arising because of any prior or subsequent such occurrence.



3.11 Severability. The provisions of this Note will be deemed severable and the invalidity or
unenforceability of any provision will not affect the validity or enforceability of the other
provisions hereof; provided that if any provision of this Note, as applied to any Party or to any
circumstance, is adjudged by a court to be enforceable in accordance with its terms, the Parties
agree that the court making such determination will have the power to modify the provision in a
manner consistent with its objectives such that it is enforceable, and/or to delete specific words
or phrases, and in its reduced form, such provision will then be enforceable and will be enforced.



3.12 Remedies. Except as expressly provided herein, the rights, obligations and remedies
created by this Note are cumulative and in addition to any other rights, obligations or remedies
otherwise available at law or in equity. Except as expressly provided herein, nothing herein will
be considered an election of remedies.



IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the date first above
written.



ESCONDE RESOURCES LP



By: Esconde Energy LLC, its General Partner



	 	 	 
	By: /s/
	 	Ronnie L. Steinocher

	 
	 	 

	 	 	Ronnie L. Steinocher, Manager