ex10-8.htm

Exhibit 10.8

    AMENDMENT

    TO

    AMENDED
      AND RESTATED PARTICIPATION AGREEMENT

    


    


    This
      Amendment to Amended and Restated
      Participation Agreement (the “Agreement”) is made and entered into
      this 28th day of September, 2007, by and between Ridgelake Energy,
      Inc. a Louisiana corporation, whose mailing address is 3636 N. Causeway
      Blvd., Metairie, LA 70002-7216, sometimes hereinafter referred to as
      "Ridgelake", GulfX, LLC, a Delaware limited liability company,
      whose mailing address is 15 Rheola Street, West Perth, Western Australia 6005,
      Australia, sometimes hereinafter referred to as “GulfX,” and South Marsh
      LLC, a Delaware limited liability company, whose mailing address is 15
      Rheola Street, West Perth, Western Australia 6005, Australia, sometimes
      hereinafter referred to as “South Marsh.” GulfX and South Marsh are sometimes
      individually referred to herein as a “Participant” and collectively as the
“Participants.”  Ridgelake, GulfX and South Marsh are sometimes
      individually referred to herein as a “Party” or collectively as the
“Parties.”

    


    WITNESSETH:

    


    WHEREAS,
      Ridgelake, GulfX and South
      Marsh entered into that certain Amended and Restated Participation Agreement
      dated December 8, 2006 (the “Restated Agreement”), pursuant to which Ridgelake
      granted to GulfX and South Marsh the opportunity to earn a working interest
      in
      the oil and gas leases more particularly described on Exhibit “A” attached
      thereto; and

    


    WHEREAS,
      since execution of the
      Restated Agreement, the Parties have identified several instances where
      ambiguities have resulted in disputes relevant to the intentions of the Parties;
      and

    


    WHEREAS,
      such disputes specifically
      included disputes between the Participants and Ridgelake as to the applicable
      response date with respect to certain operations proposed by Ridgelake prior
      to
      the date hereof in connection with Viosca Knoll Block 79 and the timeliness
      of
      Participants’ response thereto; and

    


    WHEREAS,
      in an effort to prevent future
      conflicts, the Parties now wish to amend the Restated Agreement as necessary
      to
      eliminate those ambiguities that have been identified by them.

    


    NOW,
      THEREFORE, for and in
      consideration of the recitals, covenants and agreements contained herein, and
      for other good and valuable consideration, the Parties hereby amend the Restated
      Agreement as follows:

    


    
      	
               

            	
              1.

            	
              Article
                1.1.3, page 3 of the Restated Agreement – The words “Article III” on line
                5 are amended to read “Article IV.”

            


    

    


    
      	
               

            	
              2.

            	
              The
                Parties agree to include a new Article 1.1.5, which shall read as
                follows:

            


    

    


    
      	
               

            	
              “1.1.5  The
                Parties hereto acknowledge that, prior to commencing actual operations
                on
                a Lease with respect to an interest earning Operation, as contemplated
                herein, Ridgelake, in its sole discretion, may deem it necessary
                to enter
                into agreements with third parties necessary to support or facilitate
                such
                Operations; e.g., slot rental, drilling and similar agreements
                (“S-F Agreement(s)”).  Accordingly, Participants hereby agree
                that within fifteen (15) days after receipt from Ridgelake of an
                AFE
                reflecting the Participants’ share of the costs of any such S-F
                Agreement (“S-F AFE”), each Participant shall advise Ridgelake whether it
                will or will not share in such costs (“S-F Notice”).  In the
                event a Participant agrees to pay its share of such costs, then within
                thirty (30) days after the date of initial receipt of the S-F AFE
                by the
                Participant, Participant shall either (i) furnish to Ridgelake a
                binding
                and noncancellable Standby Letter of Credit in the format attached
                hereto
                as Exhibit “A,” payable to Ridgelake and issued by a USA bank approved by
                Ridgelake; or (ii) pay Participant’s share of the S-F AFE to Ridgelake
                (jointly “S-F Financial Obligation”).  Participant’s failure to
                timely issue
                an S-F Notice and/or to timely comply with an S-F Financial Obligation
                shall ipso facto without further notice by Ridgelake terminate
                all of Participant’s rights under this Agreement relevant to the Lease for
                which the S-F Agreement is deemed necessary by Ridgelake in connection
                with an interest earning Operation, including, without limitation,
                the
                right to recover from Ridgelake any Sunk Costs, Lease Expenses and
                any
                other funds previously paid or advanced pursuant to this Agreement,
                even
                if Ridgelake subsequently fails to enter into the S-F
                Agreement.  If a Participant timely issues the S-F Notice to
                Ridgelake and timely complies with the S-F Financial Obligation,
                then it
                is understood and agreed that the said Participant has agreed to
                and is
                bound by all of the terms and conditions of the S-F
                Agreement, regardless of whether or not the Participant subsequently
                executes the applicable S-F
                Agreement.”

            


    

    
    

    
      	
               

            	
              3.

            	
              The
                Parties agree to include a new Article 1.3.1, which shall read as
                follows:

            


    

    


    
      	
               

            	
              “1.3.1  Notwithstanding
                the terms contained in the JOA, it is understood and agreed that
                within
                fifteen (15) days after receipt by Participant of an AFE from Ridgelake
                reflecting the costs for a proposed interest earning Operation relevant
                to
                a Lease, the Participant shall advise Ridgelake whether or not Participant
                will participate in the proposed Operation, with it understood that
                failure to execute and return the AFE to Ridgeklake in the aforesaid
                fifteen (15) day period shall be deemed as an election by the Participant
                to not participate in the interest earning Operation.  In the
                event Participant agrees to participate in the proposed Operation,
                it
                shall pay its share of such costs to Ridgelake in the time period
                proscribed in Article 1.1.4 above.  Provided, however, if
                Ridgelake anticipates that operations will be commenced within forty-five
                (45) days or less from the date of the AFE, then Participant shall
                pay its
                proportionate share of the AFE to Ridgelake within twenty (20) days
                of the
                receipt of the AFE by the Participant.  Failure to timely advise
                Ridgelake that Participant will participate in the proposed Operation
                and/or failure to timely pay its share of the costs associated therewith
                shall ipso facto without further notice or action on Ridgelake’s
                part terminate all of Participant’s rights under this Agreement relevant
                to the Lease for which the AFE has been submitted by Ridgelake, including,
                without limitation, the right to recover from Ridgelake any Sunk
                Costs,
                Lease Expenses and any other funds previously advanced and/or paid
                by
                Participant to Ridgelake relevant to the applicable
                Lease.”

            


    

    


    
      	
               

            	
              4.

            	
              Exhibit
                B4 (Operations – South Marsh Island 138), Part 2(b)(B), is hereby amended
                to read as follows:

            


    

    


    
      	
               

            	
              “B.  If
                an election is made to plug and abandon the Initial Well drilled
                on the
                Lease (Project Well 1), it is understood that the Participants shall
                pay
                their proportionate share of all costs and expenses associated with
                the
                plugging and abandoning of the well and the clean-up of the
                Lease.  However, should either Participant desire to earn an
                interest in the Lease, then within one (1) year from release of the
                drilling rig from Project Well 1, Participant(s) shall pay to Ridgelake
                the additional cash consideration referenced in Part A above.  A
                Participant’s failure to pay the additional cash consideration within the
                aforesaid one (1) year period shall ipso facto without further
                notice or action on Ridgelake’s part result in the termination of all of
                such Participant’s rights under this Agreement relevant to SMI 138,
                including without limitation, the right to recover from Ridgelake
                any Sunk
                Costs, Lease Expenses and any other funds previously advanced or
                paid by
                such Participant to Ridgelake relevant to the
                Lease.”

            


    

    


    
      	
               

            	
              5.

            	
              Exhibit
                B5 (Operations – South Marsh Island 152), attached to the Restated
                Agreement, shall be deleted in its entirety and the revised Exhibit
                B5
                attached hereto shall be substituted therefor in the Participation
                Agreement.

            


    

    


    
      	
               

            	
              6.

            	
              Ridgelake
                agrees that any objections to the timeliness of Participants’ response to
                Ridgelake’s proposals prior to the date hereof for operations in
                connection with Viosca Knoll Block 79 are hereby waived and that,
                as of
                the date hereof, the Participants shall not
                be deemed to have forfeited their rights to earn an interest in such
                Lease; provided, however, that such waiver applies only to such proposals
                prior to the date hereof and shall not extend to disputes which may
                arise
                with respect to the timeliness of responses to proposals made after
                the
                date hereof.

            


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    
      	
               

            	
            


    

    


    IN
      WITNESS WHEREOF, the parties have
      executed this Agreement as of the day and year first set forth
      above.

    


    


    RIDGELAKE
      ENERGY,
      INC.

    


    By:
/s/
      William M.
      Hines

                                                                                                          
      William M. Hines

                                                                                                           
      Vice
      President

    
 

    


    GULFX,
      LLC

    


    By:
      ___________________________________

    Name:

    Title:

    


    


    SOUTH
      MARSH LLC, appearing by and through Velocity Oil & Gas, Inc., its sole
      Member.

    


    By:
/s/
      Frank A.
      Jacobs

    Name:
      Frank A. Jacobs

    Title:
      President, CEO and sole
      Director of Velocity Oil & Gas, Inc., a Nevada corporation

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      “A”

    STANDBY
      LETTER OF CREDIT

    


    Attached
      to and made part of that certain Amendment to Amended and Restated Participation
      Agreement

    dated
      the ______ day of September, 2007,

    by
      and between Ridgelake Energy, Inc., GulfX, LLC and South Marsh
      LLC

    


    


    


    Beneficiary
      Name:                          Ridgelake
      Energy, Inc.

    Beneficiary
      Address:                    
3636 N. Causeway Blvd., Suite 300

             
      Metairie, LA 70002-7216

    


    


    We
      hereby
      issue our Irrevocable Standby Letter of Credit in your favor for the account
      of
      ____________________, a ___________________ corporation, for the sum of
      $__________ (United States Dollars ____________ Dollars and _____ Cents),
      available by your sight draft on us accompanied by the following:

    


    The
      draft
      hereunder must be presented to us at our office on or before (Expiry Date)
      ____________________ and must be marked “DRAWN UNDER _______________ Bank,
      IRREVOCABLE LETTER OF CREDIT NO. _______, DATED __________ and must be
      accompanied by the original Letter of Credit.

    


    Partial
      Draws are permitted.

    


    We
      shall
      have neither the obligation nor the right to inquire into the validity or
      genuineness of the signature of the officer executing such sight draft on behalf
      of Ridgelake Energy, Inc.

    


    This
      undertaking is issued subject to the International Standby Practices
      1998.

    


    We
      hereby
      agree with you that your sight draft drawn under and in compliance with the
      terms of this credit will be duly honored by us if presented to us at our
      offices located at ______________, ____________, ____________, on or before
      (Expiry Date) ____________.  This Irrevocable Letter of Credit shall
      terminate on ____________.

     

    EXHIBIT
      B5

    OPERATIONS
      – SOUTH MARSH ISLAND 152

    


    Attached
      to and made part of that certain Amendment to Amended and Restated Participation
      Agreement

    dated
      the ______ day of September, 2007,

    by
      and between Ridgelake Energy, Inc., GulfX, LLC and South Marsh
      LLC

    


    


    
      	
               

            	
              1.

            	
              LEASE

            


    

    


    OCS-G
      27091 - That certain Oil and Gas lease of Submerged Lands Under the Outer
      Continental Shelf Lands Act dated July 1, 2005, by and between the United States
      of America as Lessor and Ridgelake Energy, Inc, as Lessee, covering all of
      Block
      152, South Marsh Island Area, South Addition, OCS Leasing Map, Louisiana Map
      No.
      3C, and covering approximately 2,500 acres of submerged lands within the Outer
      Continental Shelf.

     

    
      	
               

            	
              2.

            	
              INTEREST
                EARNING OPERATIONS

            


    

    


    
      	
              (a)

            	
              INTEREST
                EARNING OPERATION A

            


    

    


    Project
      Well 1:  OCS-G 27091. Well No. 1 to casing election point

    


    Surface
      Location (deviated
      hole)      X=  1,748,636.51

    Y=   -
      165,663.41

    (Note:
      the location of the well is approximate and may be altered by Ridgelake at
      its
      sole discretion if it deems it necessary in order to properly drill the project
      well)

    


    Alternate
      Surface Location (deviated
      hole)    X=  1,745,100

    Y=    -163,100

    (Note:
      the location of the well is approximate and may be altered by Ridgelake at
      its
      sole discretion if it deems it necessary in order to properly drill the project
      well)

    


    Objective
      depth:   6,500’ Subsea

    


    (b)           SECONDARY
      INTEREST EARNING CONSIDERATION

    


    
      	
               

            	
              A.   If
                Ridgelake elects to set the Platform at the sole cost, risk and expense
                of
                the owners of SMI 152 following the drilling of Project Well 1, then
                the
                Secondary Interest Earning Consideration to be paid by the Participants
                to
                Ridgelake is as follows:

            


    

    


    If
      GulfX
      elects to participate in mudline suspension of Project Well 1 then, within
      30
      days of making such election, it shall be required to pay to Ridgelake an
      additional cash consideration equal to 4.17% of the following estimated
      costs:

    


    
      	
              
                               
                  (i)

              

            	
              
                One
                  third (1/3) of the estimated cost to fabricate, install and hookup
                  a
                  platform appropriate for the development of the field discovered
                  by
                  Project Well 1, and

              

            	
            


    

    
      	
               

            	
              (ii)

            	
              The
                estimated cost of a flowline, and

            


    

    
      	
               

            	
              (iii)

            	
              The
                estimated cost to complete Project Well
                1

            


    

    


    The
      basis
      for determination of these costs shall be third party, arms length estimates
      which shall be provided to Participants together with the AFE for Project Well
      1.

    


    If
      South
      Marsh elects to participate in mudline suspension of Project Well 1 then, within
      30 days of making such election, it shall be required to pay to Ridgelake an
      additional cash consideration equal to 5.0% of the following estimated
      costs:

    


    
      	
              
                                (i)

              

            	
              One
                third (1/3) of the estimated cost to fabricate, install and hookup
                a
                platform appropriate for the development of the field discovered
                by
                Project Well 1, and

            	
            


    

    
      	
               

            	
              (ii)

            	
              The
                estimated cost of a flowline, and

            


    

    
      	
               

            	
              (iii)

            	
              The
                estimated cost to complete Project Well
                1

            


    

    


    The
      basis
      for determination of these costs shall be third party, arms length estimates
      which shall be provided to Participants together with the AFE for Project Well
      1.

    


    
      	
               

            	
              B.

            	
              If
                Ridgelake is able to negotiate an agreement with the owners of SMI
                149 for
                the setting of a platform to be jointly used by the owners of SMI
                149 and
                SMI 152, then it is understood and agreed that the Participants shall
                timely pay their proportionate share of the following costs and
                expenses:

            


    

    


    
      	
               

            	
              (i)

            	
              Its
                proportionate share (GulfX 16.67% and South Marsh 20.00%) of the
                costs and
                expenses to drill, complete and hook-up Project Well 1 for
                production;

            


    

    
      	
               

            	
              (ii)

            	
              Its
                proportionate share (GulfX 16.67% and South Marsh 20.00%) of the
                Slot
                Rental Fee allocated to the Slot to be used to drill Project Well
                1;

            


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    
      	
               

            	
              (iii)

            	
              Its
                proportionate share (GulfX 12.50% and South Marsh 15.00%) of any
                Slot
                Rental Fee for additional slots required under the agreement with
                the
                owners of SMI 149;

            


    

    
      	
               

            	
              (iv)

            	
              Its
                proportionate share (GulfX 16.67% and South Marsh 20.00%) of the
                total
                cost allocated to the SMI 152 joint account to run a flowline(s)
                from the
                platform installed under the agreement.  Should the agreement
                require the SMI 152 owners to pay throughput fees for the flowline(s)
                in
                lieu of paying the capital cost, GulfX shall pay 16.67% and South
                Marsh
                shall pay 20.00% of the throughput charges until such time as the
                cumulative throughput charges exceed 100% of that proportionate share
                of
                the total cost (actual or best estimate thereof) of laying the flowline(s)
                that would have been allocated to the SMI 152 joint account had the
                costs
                been allocated on a connected well basis (at such time as the cumulative
                throughput charges exceed 100% of that proportionate share of the
                total
                cost of laying the flowline(s) that would have been allocated on
                a
                connected well basis, GulfX shall then pay 12.50% and South Marsh
                shall
                then pay 15.00% of all subsequent throughput
                charges);

            


    

    
      	
               

            	
              (v)

            	
              Its
                proportionate share (GulfX 13.89% and South Marsh 16.67%) of the
                total
                share of capital costs to build and install the platform or facilities
                that have been charged by the SMI 149 owners to the SMI 152 joint
                account
                under the platform use agreement that is not allocated to an individual
                slot; and

            


    

    
      	
               

            	
              (vi)

            	
              Its
                proportionate share (GulfX 13.89% and South Marsh 16.67%) of the
                total
                share of capital costs to install or buy into facilities, including
                facilities on a remote processing platform, if applicable, that has
                been
                charged by the SMI 149 owners to the SMI 152 joint
                account.  Should the agreement require the SMI 152 partners to
                pay throughput fees for such facilities in lieu of paying the capital
                cost, GulfX shall pay 13.89% and South Marsh shall pay 16.67% of
                the
                throughput charges until such time as the cumulative throughput charges
                exceed 100% of that proportionate share of the total cost (actual
                or best
                estimate thereof) to install new facilities that would have been
                allocated
                to the SMI 152 joint account had the total costs been allocated on
                a
                connected well basis (at such time as the cumulative throughput charges
                exceed 100% of that proportionate share of the total cost to install
                new
                facilities that would have been allocated to the SMI 152 joint account
                had
                the total costs been allocated on a connected well basis, GulfX shall
                then
                pay 12.50% and South Marsh shall then pay 15.00% of all subsequent
                throughput charges).

            


    

    


    
      	
               

            	
              3.

            	
              GULFX
                INTEREST EARNING RIGHTS AND
                OBLIGATIONS

            


    

    


    
      	
                  (a)

            	
              GulfX
                must participate in and pay 16.67% of the cost to drill Project Well
                1 to
                the casing election point and must participate and pay 16.67% of
                any
                sidetrack of said well to bypass junk and/or any other sidetrack
                that is
                required because of mechanical problems, or any redrill of the said
                well
                due to the loss of the hole because of mechanical problems
                therein.

            


    

    


    
      	
                  (b)

            	
              If
                GulfX participates in and pays 16.67% of the costs and expenses associated
                with the drilling of Project Well 1 and any sidetracks and redrills
                thereof, and if GulfX participates in and pays 16.67% of the costs
                and
                expenses to run casing in the well and all other operations on or
                related
                to the well through the release of the drilling rig from the well,
                including but not limited to running and cementing of casing, mudline
                suspending the well and the demobilizing or the rig from the well,
                and if
                GulfX pays the additional cash consideration in accordance with either
                part 2(b)A of the Interest Earning Operations described above or
                its
                proportionate share of the costs and expenses enumerated in part
                2(b)B
                above (except throughput charges in part 2(b)B above), then GulfX
                shall
                earn twelve and one-half percent (12.50%) of all of Ridgelake’s right,
                title and interest in the Lease and Ridgelake shall deliver an assignment
                of such interest to GulfX within thirty (30) days of the release
                of the
                rig from the well.

            


    

    


    
      	
                  (c)

            	
              Once
                GulfX has been granted title in accordance with paragraph 3(b) then
                all
                future operations on the lease shall be conducted in accordance with
                and
                pursuant to the JOA attached as Exhibit
                D.

            


    

    


    
      	
                  (d)

            	
              If
                GulfX does not meet and perform the obligations expressed in Article
                3(a)
                and 3(b) above, GulfX will earn no interest in the Lease and shall
                forfeit
                all Sunk Costs and Lease Expenses previously paid on the
                Lease.  (NOTE: It is recognized that Ridgelake may chose to set
                a Platform on the Lease prior to the drilling of Project Well
                1.  If Ridgelake should so decide to set a Platform on SMI 152
                before the drilling of the aforesaid well than it is agreed that
                GulfX may
                elect not to proceed with the development of the Lease as if the
                Lease was
                not included under the Participation Agreement to which this Exhibit
                is
                attached and Ridgelake will refund to GulfX all Sunk Cost and Lease
                Expense payments paid to Ridgelake for the
                Lease.)

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
              4.

            	
              SOUTH
                MARSH INTEREST EARNING RIGHTS AND
                OBLIGATIONS

            


    

    


    
      	
                  (a)

            	
              South
                Marsh must participate in and pay 20.00% of the cost to drill Project
                Well
                1 to the casing election point and must participate and pay 20.00%
                of any
                sidetrack of said well to bypass junk and/or any other sidetrack
                that is
                required because of mechanical problems, or any redrill of the said
                well
                due to the loss of the hole because of mechanical problems
                therein.

            


    

    


    
      	
                  (b)

            	
              If
                South Marsh participates in and pays 20.00% of the costs and expenses
                associated with the drilling of Project Well 1 and any sidetracks
                and
                redrills thereof, and if South Marsh participates in and pays 20.00%
                of
                the costs and expenses to run casing in the well and all other operations
                on or related to the well through the release of the drilling rig
                from the
                well, including but not limited to running and cementing of casing,
mudline
                suspending the well and the demobilizing or the rig from the well,
                and if
                South Marsh pays the additional cash consideration in accordance
                with
                either part 2(b)A of the Interest Earning Operations described above
                or
                its proportionate share of the costs and expenses enumerated in part
                2(b)B
                above (except throughput charges in part 2(b)B above), then South
                Marsh
                shall earn fifteen percent (15.00%) of all of Ridgelake’s right, title and
                interest in the Lease and Ridgelake shall deliver an assignment of
                such
                interest to South Marsh within thirty (30) days of the release of
                the rig
                from the well.

            


    

     

    
      	
                  (c)

            	
              Once
                South Marsh has been granted title in accordance with paragraph 4(b)
                then
                all future operations on the lease shall be conducted in accordance
                with
                and pursuant to the JOA attached as Exhibit
                D.

            


    

    


    
      	
                  (d)

            	
              If
                South Marsh does not meet and perform the obligations expressed in
                Article
                4(a) and 4(b) above, South Marsh will earn no interest in the Lease
                and
                shall forfeit all Sunk Costs and Lease Expenses previously paid on
                the
                Lease.  (NOTE: It is recognized that Ridgelake may chose to set
                a Platform on the Lease prior to the drilling of Project Well
                1.  If Ridgelake should so decide to set a Platform on SMI 152
                before the drilling of the aforesaid well than it is agreed that
                South
                Marsh may elect not to proceed with the development of the Lease
                as if the
                Lease was not included under the Participation Agreement to which
                this
                Exhibit is attached and Ridgelake will refund to South Marsh all
                Sunk Cost
                and Lease Expense payments paid to Ridgelake for the
                Lease.)