EX-10.18






FIRST AMENDMENT




TO




LOAN AGREEMENT




THIS FIRST AMENDMENT TO LOAN AGREEMENT ( “Amendment”) is entered into as of the 28th day
of December 2009, but effective as of December 15, 2009, by and among ESCONDE RESOURCES, LP, a
Texas limited partnership, whose address is 3327 West Wadley Avenue, Suite 3-267, Midland, Texas
79707 (the “Borrower”); ESCONDE ENERGY, LLC, a Texas limited liability company, whose address is
also 3327 West Wadley Avenue, Suite 3-267, Midland, Texas 79707 (the “Guarantor”); and AMERICAN
STATE BANK, a Texas banking association, whose address is 620 N. Grant, Odessa, Texas 79761-4797
(the “Bank”).



NOTICE IS TAKEN OF THE FOLLOWING:




	 	A.	 	Borrower, Guarantor, and Bank have previously entered into that certain Loan
Agreement, dated as of September 1, 2009 (the “Loan Agreement”). Capitalized terms not
otherwise defined herein are defined in the Loan Agreement.






	 	B.	 	The Loan Agreement provides for a term loan in the amount of Three Hundred Nine
Thousand Six Hundred Eighty-One and Eighty-Seven/100 Dollars ($309,681.87) (the
“Loan”). The Loan is evidenced by a Term Note, dated September 1, 2009, in the
original principal amount of Three Hundred Nine Thousand Six Hundred Eighty-One and
Eighty-Seven/100 Dollars ($309,681.87), which finally matures on December 15, 2009 (the
“Note”).






	 	C.	 	The Borrower and Guarantor have asked the Lender to modify the Loan to reflect
a maturity date of March 1, 2010.






	 	D.	 	Lender has agreed to amend the Loan Agreement, and the parties have agreed to
execute this Amendment and to modify the Note in order to evidence that agreement.





NOW, THEREFORE, for and in consideration of the premises and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree to amend the
terms of the Loan Agreement as follows:




	1.	 	Definitions.






Unless otherwise specifically defined herein, all defined terms used in this Amendment shall
have their respective meanings set forth in the Loan Agreement.



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2. Amendments.




	 	A.	 	The paragraph under Rate of the Loan Agreement is hereby amended by
deleting it in its entirety and substituting the following:






Interest under the Note shall accrue at an annual rate equal to the American State
Bank Base Rate, plus two and one-half percentage points (2.5%), but in no event to
be less than six and one-half percentage points (6.5%), and in no event to exceed
the “Highest Lawful Rate” as defined in the Note. For purposes of this Agreement,
the “American State Bank Base Rate” shall mean the rate announced by Bank as its
base lending rate as of the beginning of each Business Day, as hereinafter defined,
(and for holidays or weekends, the American State Bank Base Rate shall be the
American State Bank Base Rate as of the close of business on the most recent
Business Day immediately preceding such weekend or holiday) before all sums payable
hereunder have been paid in full. Without notice to the Borrower or any other
person, the American State Bank Base Rate may change from time to time pursuant to
the preceding sentence. The American State Bank Base Rate is a reference rate and
does not necessarily represent the lowest or best rate actually charged to any
customer. The Bank may make commercial loans or other loans at rates of interest
at, above, or below the American State Bank Base Rate. “Business Day” shall mean
any day other than Saturday, Sunday or legal holiday for commercial banks under the
laws of the State of Texas.




	 	B.	 	The paragraph under Structure of the Loan Agreement is hereby amended
by deleting it in its entirety and substituting the following:Pursuant to the terms of
the Deeds of Trust, the Bank has redirected the payment of all proceeds of oil and gas
production to the Bank, pursuant to the Letters in Lieu executed by the Borrower. Out
of such proceeds, the Bank shall first pay interest under the Note. After accrued
interest has been paid under the Note, the Bank shall make such principal payments as
it deems necessary under the Note, as well as pay any and all expenses associated with
the Loan, including any and all legal fees incurred. The maturity date of the Note is
March 1, 2010.






	 	C.	 	The paragraph under Maturity Date of the Loan Agreement is hereby
amended by deleting it in its entirety and substituting the following:






	 	 	 	As stated, the maturity date of the Term Loan is March 1, 2010.






	 	D.	 	The following paragraph shall be added to the Loan Agreement:






Should this debt not be paid in full on or before February 1, 2010, Bank has the
right to engage updated third party engineering.




	3.	 	Deeds of Trust. By joining in the execution of this Amendment, the Borrower
and Guarantors, as applicable, do hereby: (a) consent to the execution, delivery, and
performance by the Borrower and Guarantors of this Amendment and all other documents
executed in connection herewith and the transactions contemplated hereby; (b) ratify
and reaffirm those certain Deeds of Trust, Mortgages, Security Agreements, Assignments
of Production and Financing Statements, dated as of September 1, 2009, and any
amendments thereto, executed by the Borrower in favor of Lender, and duly recorded in
Borden, Garza, and Scurry Counties, in the State of Texas (collectively, the “Deeds of
Trust”), in all respects, and agree that such Deeds of Trust are, and shall remain, in
full force and effect; (iii)acknowledge and agree that this Amendment shall not serve
as a waiver, modification, impairment, or release of any of Borrower’s obligations
under the Deeds of Trust; (iv) acknowledge and agree that each of the Bank Liens
created under the Deeds of Trust securing the obligations under the Loans are hereby
ratified, affirmed, and extended to secure the obligations under the Loans as amended
by this Amendment; extended to secure the obligations under the Loans as amended by
this Amendment; and (v) acknowledge and agree that, as provided in the Deeds of Trust,
proceeds of production will be payable directly to the Bank, pursuant to the letters
in lieu previously executed by the Borrower (the “Letters in Lieu”). The Bank will
deduct the payments due under the Note from the proceeds of production.	 






	4.	 	Effectiveness:






	 	A.	 	Except to the extent specifically amended and supplemented hereby, all of the
terms, conditions and provisions of the Loan Agreement shall remain unmodified, and the
Loan Agreement, as amended and supplemented by this Amendment, is ratified and
confirmed as being in full force and effect.






	 	B.	 	All references to the Loan Agreement herein or in any other document or
instrument between Borrower and Lender shall hereinafter be construed to be references
to the Loan Agreement as modified by this Amendment.






	5.	 	Guarantor:






To evidence its continuing guaranty of the Loans, as modified and extended under the terms
of this Amendment, Guarantor has executed this Amendment.




	6.	 	Counterparts: This Amendment may be executed in any number of counterparts, each of
which when executed and delivered shall be deemed an original, but all of which constitute one
instrument. In making proof of this Amendment, it shall not be necessary to produce or
account for more than one counterpart thereof signed by each of the parties hereto.






	7.	 	Notice of Final Agreement:




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THIS WRITTEN AGREEMENT AND ANY OTHER INSTRUMENTS EXECUTED BY THE PARTIES CONTEMPORANEOUSLY
HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.



{The remainder of this page is intentionally left blank. Signature page follows.}





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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date and year first
above written.




BORROWER:



ESCONDE RESOURCES LP, a Texas




Limited Partnership



	 	 	 
	By:

	 	Esconde Energy LLC, its general partner
	By:

	 	Pierce-Hamilton Energy Partners LP,

Managing Member
	By:

	 	Muscoda Hill Energy LLC, its general partner
	By:

	 	/s/       Lisa P. Hamilton
	
 
	 	 
	
 
	 	Lisa P. Hamilton, President






/s/      Paul W. Heard—


Paul W. Heard, Managing Member



/s/ Ronnie L. Steinocher      



Ronnie L. Steinocher, Managing Member



GUARANTOR:




ESCONDE RESOURCES LLC, a Texas






Limited Liability Company




	 	 	 	By:
Pierce-Hamilton Energy Partners LP, its managing
member






	 	 	 	By:
Muscoda Hill Energy LLC, its general partner





	 	 	 
	By:      /s/ Lisa P. Hamilton—

	 	     
	 

	 	 
	Lisa P. Hamilton, President

	 	

	     /s/ Paul W. Heard

	 	

	 

	 	 
	Paul W. Heard

Managing Member

	 	



	     /s/ Ronnie L. Steinocher

	 	

	 

	 	

	Ronnie L. Steinocher

Managing Member

	 	



	AMERICAN STATE BANK

	 	

	By: /s/ Mike Marshall

	 	

	 

	 	 
	Mike Marshall, President

	 	








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