Filed by Automated Filing Services Inc. (604) 609-0244 - MegaWest Energy Corp. - Exhibit 10.31






October 24, 2007 


Longshot Oil Company 
P.O. Box 397 
Somers, MT

59932 

BS Oil Company Ltd. 
88 Bennett Cr. NW 
Calgary, AB

T2L 1R1 

	RE: 	OPERATING AND FARMIN
      AGREEMENT 
	  	Loma Area, Montana 
	 	MegaWest File No.:
      25001C00004 


The purpose of this letter is to confirm the agreement which
has been reached between our companies regarding the acreage set forth below.


	1. 	
      DEFINITIONS

	 	 	 	 
		
      The following terms and expressions shall have the
      meanings hereinafter assigned to them, namely:

	 	 	 	 
		(a) 	
      "Additional Loma Program" shall mean, in the event that
      Farmor and Farmee agree that the adequate initial evaluation of the
      farmout lands requires the expenditure of more than US $500,000.00, the
      mutually agreed upon nature and extent of the additional activities and
      expenditures required to complete such adequate initial evaluation, which
      additional activities may, without limitation, include (i) the kicking off
      and horizontal drilling into one or more of the zones of interest
      determined during the initial drilling of such test well (a "Supplemental
      Operation"), or (ii) the drilling of a second test well (a "Second Test
      Well"); provided, however, that under no circumstances shall the
      Additional Loma Program require expenditures in excess of US $1,000,000.00
      over and above the Earning Expenditures;

	 	 	 	 
		(b) 	
      "agreement" shall mean this letter Operating and Farmin
      Agreement;

	 	 	 	 
		(c) 	
      "Approved Encumbrances" shall mean the applicable
      lessor's royalty and any other encumbrances set forth and described in
      Schedule "A";

	 	 	 	 
		(d) 	
      "cap" shall mean the installation of such casing, plugs
      and equipment as are necessary to enable a well prospective of production
      of petroleum substances to be completed at a later date;

	 	 	 	 
		(e) 	
      "complete or completion" and the derivatives thereof
      shall mean in the case of a well capable of producing petroleum substances
      in at least paying quantities:

	 	 	 	 
			(i) 	
      in the case of an oil well: (A) the acquisition and
      installation of production casing in the hole (exclusive of surface and
      intermediate casing) and all other equipment, materials and services
      required to complete the well up to and







Farmin Agreement 
Page 2 

	 		
      including the outlet valve at the wellhead; and (B) such
      production testing as is reasonably desirable under the
    circumstances;

	 	 	 
	 	(ii) 	
      in the case of a gas well: (A) the acquisition and
      installation of production casing in the hole (exclusive of surface and
      intermediate casing) and all other equipment, materials and services
      required to complete the well up to and including the outlet valve at the
      wellhead; and (B) running adequate back pressure tests and a sustained
      production test consisting of an absolute open flow potential test
      sufficient to establish the initial productivity of the
  well;




	 	(f) 	
      "contract depth" shall mean a depth sufficient to
      penetrate to the base of the Souris River formation or to a final total
      depth of 4400 feet subsurface, whichever depth first occurs;

	 	 	 	 
	 	(g) 	
      "drilling" and the derivatives thereof shall mean all
      activities incidental to the drilling of a well and all services in
      respect thereof including, without limitation, the acquisition of all
      surface rights, construction of access roadways and the wellsite,
      drilling, coring, testing, logging and the acquisition and installation of
      all surface and intermediate casing as well as material and services in
      respect thereof;

	 	 	 	 
	 	(h) 	
      "Earning Date" means the first date on which the Farmee
      has satisfied the provisions of Clause 5(a) of the agreement
  herein;

	 	 	 	 
	 	(i) 	
      "Earning Expenditures" means the sum of $500,000.00 US
      dollars;

	 	 	 	 
	 	(j) 	
      "equip or equipping" and the derivatives thereof shall
      mean the acquisition and permanent installation of equipment beyond the
      outlet valve at the wellhead and required to produce petroleum substances
      from the well (excluding the equipment required to complete the well),
      including without limitation:

	 	 	 	 
	 		(i) 	
      in the case of an oil well: the acquisition and permanent
      installation of pumping equipment, flowlines, production tankage and all
      other equipment necessary for the production of petroleum
    substances;

	 	 	 	 
	 		(ii) 	
      in the case of a gas well: the acquisition and permanent
      installation of compressors, separators, heaters, treaters, dehydrators or
      other hydrate control facilities, production test tanks and all other
      equipment necessary for the production of petroleum substances to the
      point of entry into a gathering system, plant or other common
    facility;

	 	 	 	 
	 	(k) 	
      "Farmee" shall mean MegaWest Energy Montana
  Corp.;

	 	 	 	 
	 	(l) 	
      "Farmor" shall mean collectively Longshot Oil Company,
      and BS Oil Company Ltd.;

	 	 	 	 
	 	(m) 	
      "farmout lands" shall mean the areal, stratigraphic and
      substance rights described in Schedule "A" or so much of those rights as
      remain subject to this agreement and the title documents;

	 	 	 	 
	 	(n) 	
      "Loma Area AMI Lands" shall mean all areal, stratigraphic
      and substance rights with respect to lands within one mile of the outer
      boundary of the farmout lands;

	 	 	 	 
	 	(o) 	
      "Operating Procedure" shall mean the standard form AAPL
      1989 Model Form Operating Agreement, as amended, attached as Schedule "B"
      hereto;







Farmin Agreement 
Page 3 

	 	(p) 	
      "Payout" shall mean the point in time at which the
      cumulative gross revenues from the sale of 100% of production of petroleum
      substances from, or allocated to, the test well (net of any and all
      cumulative operating expenses and Approved Encumbrances) shall first
      exceed the greater of (i) the total expenditures of Farmee in drilling,
      completing, equipping and otherwise rendering the test well capable of
      production in paying quantities, and (ii) the Earning
  Expenditures;

	 	 	 	 
	 	(q) 	
      "Regulations" shall mean the applicable federal laws and
      laws of the state of Montana pertaining to drilling and production spacing
      units;

	 	 	 	 
	 	(r) 	
      "rentals or rental payments" shall mean all rents,
      renewals, taxes, penalties and other payments payable with respect to the
      title documents, but shall not include the initial consideration paid by
      Farmor with respect to any of the title documents;

	 	 	 	 
	 	(s) 	
      "spacing unit" shall mean all zones of that area of the
      farmout lands earned by the Farmee pursuant to this agreement, which area
      will be determined as of the drilling rig release date of the test well,
      and is described as follows;

	 	 	 	 
	 		(i) 	
      for a capped or completed well: the area allocated to a
      well pursuant to the Regulations for the purpose of producing the
      petroleum substance(s) in the zone(s) for which that well has been capped
      or completed; and

	 	 	 	 
	 		(ii) 	
      in every other case: the area allocated to a well
      pursuant to the Regulations for the purpose of producing crude oil, but in
      the absence of that allocation, the quarter-section, unit or similar
      geographical area that includes the bottom-hole co-ordinates of that
      well;

	 	 	 	 
	 	(t) 	
      "test well" shall mean an exploratory test well drilled
      by Farmee pursuant to Clause 5 for the recovery of petroleum substances;
      and

	 	 	 	 
	 	(u) 	
      "title documents" shall mean the documents set forth and
      described as such in Schedule "A" and any renewals or extensions thereof
      or further title documents issued pursuant thereto insofar as they relate
      to the farmout lands.




	2. 	
      SCHEDULES

	 	 	 
		
      The following schedules are attached hereto and
      incorporated into this agreement:

	 	 	 
		(a) 	
      Schedule "A", which sets forth the farmout lands, the
      title documents and the Approved Encumbrances; and

	 	 	 
		(b) 	
      Schedule "B", which sets forth the Operating
      Procedure.

	 	 	 
	3. 	
      TITLE

	 	 	 
		(a) 	
      Farmor does not warrant title to the farmout lands or the
      title documents or agree to convey to Farmee any better title thereto than
      Farmor has on the date hereof. Farmor covenants that the farmout lands are
      only encumbered by the Approved Encumbrances and that it has complied with
      all the terms of the grant of its interest in the farmout lands to the
      extent necessary to maintain them in force as of the date of this
      agreement.

	 	 	 
		(b) 	
      If the interest of any party in the farmout lands is now
      or hereafter shall become encumbered by any royalty, overriding royalty,
      production payment or other charge of a







Farmin Agreement 
Page 4 

similar nature, other than the
Approved Encumbrances, such royalty, overriding royalty, production payment or
other charge of a similar nature shall be charged to and paid entirely by the
party whose interest is or becomes thus encumbered. 

	4. 	 TEST WELL

	 	 	 	 
		 On or before October 31, 2008, Farmee shall
        have the exclusive right to spud a test well at a mutually acceptable
        location within the farmout lands and shall thereafter diligently and
        continuously, drill same to contract depth and test, to the reasonable
        satisfaction of Farmor, all zones prospective or containing petroleum
        substances, log and either complete, cap or abandon same all at Farmee's
        sole cost, risk and expense and in accordance with the terms and conditions
        of this agreement and the Regulations.

	 	 	 	 
	5. 	 INTEREST EARNED

	 	 	 	 
		(a) 	 Provided Farmee has either:

	 	 	 	 
			(i) 	 performed all of its requirements and obligations pursuant
        to this agreement with respect to the drilling, testing, logging, completion,
        capping or abandonment of the test well, or

	 	 	 	 
			(ii) 	 expended a sum equal to the Earning Expenditures in
        an effort to satisfy its requirements and obligations pursuant to Subclause
        7(a)(i) hereof,

	 	 	 	 
			 and provided further that Farmee is not
        in default of any term or condition of this agreement, then Farmee shall
        have earned, effective as of Earning Date, one third of Farmor's 60% interest
        (a net 20% interest) in and to the farmout lands and in the title documents
        as they pertain thereto, subject only to its proportionate share of the
        Approved Encumbrances.

	 	 	 	 
		(b) 	 Notwithstanding that earning has occurred,
        Farmee shall continue to bear 100% of the costs and expenses in respect
        of any Additional Loma Program, and shall be entitled to receive and retain
        100% of the revenues from the sale of production from the test well and/or
        any Second Earning Operation and/or Second Test Well (as applicable) that
        may form part of any such Additional Loma Program, until Payout, all as
        more particularly described in Clause 9 hereof.

	 	 	 	 
	6. 	 JOINT OPERATIONS AS AT THE DATE HEREOF

	 	 	 	 
		(a) 	 From and after the date hereof, the farmout
        lands shall be owned by the parties hereto in the following respective
        undivided working interests (hereinafter referred to as the "Participating
        Interests"):



MegaWest Energy Montana Corp.   
     -      40% 
Longshot Oil
Company                            
-     51% 
BS Oil Company
Ltd.                                
-       9% 

	 	(b) 	
      From and after the date hereof, except as otherwise
      provided in this Agreement, the parties hereto shall bear all costs and
      expenses paid or incurred under this Agreement and shall own, operate and
      develop the farmout lands, appurtenances thereto, the production of
      Petroleum Substances therefrom, and revenues received in connection
      therewith in accordance with the Participating Interests, and the
      Operating Procedure shall govern all operations on or in respect of the
      Joint Lands.







Farmin Agreement 
Page 5 

	 	(c) 	
      MegaWest Energy Montana Corp. is hereby appointed as
      initial Operator of the farmout lands as of the date
  hereof.




	7. 	
      JOINT OPERATIONS FOLLOWING EARNING BUT PRIOR TO
      PAYOUT

	 	 	 	 
		(a) 	
      Upon earning having occurred pursuant to Clause 5
      hereof:

	 	 	 	 
			(i) 	
      Farmor agrees to execute and deliver such assignments,
      without warranty of title, express or implied, as may reasonably be
      required to vest in Farmee the interest earned pursuant to this
      agreement;

	 	 	 	 
			(ii) 	
      until such time as the grantor of the title documents is
      bound thereby, Farmor shall hold the interest earned by Farmee in trust
      for Farmee until such time as Farmee has become the entitled owner
      pursuant to and in accordance with the terms of the Agreement of Purchase
      and Sale dated October 15, 2007 between Farmor and Farmee.

	 	 	 	 
		(b) 	
      Further, upon earning having occurred pursuant to Clause
      7 hereof, but prior to Payout:

	 	 	 	 
			(i) 	
      the farmout lands shall be owned by the parties hereto in
      the following respective undivided working interests (hereinafter referred
      to as the "Participating Interests");



MegaWest Energy Montana
Corp.   -      60% 
Longshot Oil
Company                       
-      34% 
BS Oil Company
Ltd.                           
-       6% 

	 	(ii) 	
      notwithstanding Subclause 7(b) hereof, Farmee shall bear
      100% of all costs and expenses in the farmout lands and shall be entitled
      to receive and retain all revenues from the sale of production from the
      farmout lands; and



subject only to Subclauses 7(b), 9,
10, 12, 13 and 14 hereof, the Operating Procedure shall govern operations
in respect of the farmout lands. 

	8. 	
      JOINT OPERATIONS FOLLOWING PAYOUT

	 	 	 
		
      Upon both earning and Payout having occurred, subject to
      the provisions of Clause 9 hereof, operations in respect of the farmout
      lands shall continue to be governed by the Operating Procedure, but the
      Parties shall bear all costs and expenses in accordance with their
      respective interests in the farmout lands and shall be entitled to receive
      and retain all revenues from the sale of production from the farmout lands
      in accordance with their respective working interests in the farmout
      lands.

	 	 	 
	9. 	
      ADDITIONAL EXPENDITURES REQUIRED FOR EVALUATION OF
      FARMOUT LANDS

	 	 	 
		(a) 	
      If the Farmee and Farmor agree that the adequate initial
      evaluation of the farmout lands requires an Additional Loma Program, then
      Farmee shall bear the cost of such Additional Loma Program notwithstanding
      that it has already earned a 20% interest in and to the farmout
    lands.

	 	 	 
		(b) 	
      In the event that Payout has not occurred prior to the
      conduct of the Additional Loma Program and the Farmee is bearing
      the cost of such Additional Loma Program
pursuant







Farmin Agreement 
Page 6 

	 		
      to the terms of Subclause 9(a) hereof, an amount equal to
      125% of the Farmor's share of the cost of the Additional Loma Program
      shall be added to the total expenditures of Farmee for the purposes of the
      calculation of "Payout".

	 	 	 
	 	(c) 	
      In the event that Payout has occurred prior to the
      conduct of the Additional Loma Program and the Farmee is bearing
      the cost of such Additional Loma Program pursuant to the terms of
      Subclause 9(a) hereof, Farmee shall nonetheless be entitled to receive the
      revenues attributable to Farmor's 40% share from the sale of production
      from the farmout lands until such time as the cumulative gross revenues
      from the sale of 100% of production of petroleum substances from, or
      allocated to, the test well (net of any and all cumulative operating
      expenses and Approved Encumbrances) shall first exceed 125% of the total
      expenditures of Farmee in completing the Additional Loma
  Program.




	10. 	
      ABANDONMENT

	 	 	 
		
      Insofar as the abandonment of a well forms part of the
      Farmee's earning operation or part of an Additional Loma Program, the
      following Subclauses shall apply.

	 	 	 
		(a) 	
      If Farmee has performed all related obligations hereunder
      to Farmor's reasonable satisfaction and if Farmee decides to abandon the
      test well upon reaching contract depth, Farmee shall give Farmor 48 hours
      notice (Farmee must supply Farmor with all information Farmee is obligated
      to provide Farmor for the test well and such other data for that well as
      Farmor may reasonably require for the exercise of its rights hereunder) if
      a drilling rig capable of conducting such abandonment is on location and
      15 days notice in any other case prior to commencing abandonment, within
      which time Farmor may:




	 	(i) 	
      at its sole risk and expense, elect to further test the
      test well. Farmee shall conduct the tests at Farmor's request and in a
      timely manner. Farmor shall reimburse Farmee for all expenses that Farmee
      incurs that it would not have otherwise incurred had Farmor not elected to
      make the tests and Farmee will promptly provide the data therefrom to
      Farmor, in which case the election period described above will apply from
      Farmor's receipt of that additional testing information; or

	 	 	 
	 	(ii) 	
      elect to take over the test well for completion in which
      event Farmee will, effective as of the date of Farmor's election to take
      over the well, assign the well (including the material, equipment and
      surface access rights relating solely thereto that Farmor wishes to use)
      to Farmor, without warranty; or

	 	 	 
	 	(iii) 	
      concur with Farmee's decision to abandon the test well
      and Farmee shall promptly so abandon the wellbore at its sole
    expense.




	 		
      If Farmor fails to respond to Farmee's notice given under
      this clause within the time mentioned above, then Farmor is deemed to have
      concurred in the abandonment.

	 	 	 
	 	(b) 	
      Compliance by Farmee with the provisions of Clause 10(a)
      will constitute Farmee's satisfaction of its obligation to abandon the
      wellbore of the test well for the purpose of earning hereunder.

	 	 	 
	 	(c) 	
      If Farmor takes over a well pursuant to this clause, and
      if Farmor commences to abandon the well within 13 months of Farmor's
      election to take over the well, Farmor will abandon that well for the
      account of Farmee, provided that Farmee will not be responsible for any
      extra costs of abandonment resulting from Farmor's takeover of that well.
      Farmor will







Farmin Agreement 
Page 7 

	 		
      calculate the abandonment costs for which Farmee is
      responsible under this clause and the net salvage value of the material
      and equipment Farmee had installed respecting that well. Farmor will
      provide Farmee with a statement showing the calculation of the proposed
      adjustment of accounts in reasonable detail. The party owing an amount
      will pay that amount to the other party within 30 days of the receipt of
      that statement.

	 	 	 
	 	(d) 	
      If Farmor does not commence to abandon the well within
      the period prescribed above, Farmee will calculate the amount of the
      estimated net salvage value of the material and equipment assigned to
      Farmor. Farmor will pay that amount within 30 days of receiving an invoice
      for same. Farmee will cease to be responsible for abandonment costs if
      Farmor so retains the well.

	 	 	 
	 	(e) 	
      If Farmor successfully completes the well in a zone
      originally contained in the farmout lands, Farmee will assign to Farmor,
      without warranty, Farmee's working interest in the spacing unit for that
      well in only the zone(s) completed by Farmor and the petroleum substances
      therein, effective as of the date of Farmor's election to take over that
      well. That assignment will not release Farmee from any obligation that
      should have been performed by it or any liability that may have accrued to
      it prior to that assignment.

	 	 	 
	 		
      With respect to the abandonment of any well which does
      not form part of the Farmee's earning operation or part of an Additional
      Loma Program, the Operating Procedure shall
apply.




	11. 	
      AREA OF MUTUAL INTEREST

	 	 	 
		(a) 	
      Farmor and Farmee hereby establish an area of mutual
      interest ("Loma Area AMI") encompassing all lands and formations within
      the Loma Area AMI lands, which Loma Area AMI shall remain active for a
      period of two (2) years from the date hereof.

	 	 	 
		(b) 	
      Farmor or Farmee shall not lease or sublease within the
      Loma Area AMI without giving notice to the other party of such lease or
      sub lease and the terms thereof, and offering the other party the
      opportunity to participate in that lease or sublease as to its respective
      working interest share. The party receiving such notice shall have fifteen
      (15) days to elect to participate in that lease or sub lease as to its
      working interest share, which election shall validly be made only if made
      in writing and accompanied by such party's share of the cost of acquiring
      such lease.

	 	 	 
		(c) 	
      Neither the Farmor or Farmee, nor the assignees of any of
      them, shall have the right to file a partition action of any mineral or
      leasehold interest within the Loma Area AMI. This provision may be indexed
      into the chain of title of the leases involved.

	 	 	 
		(d) 	
      Operations in respect of any lands acquired jointly be
      the parties pursuant to the terms of this Clause 11 shall be governed by
      the Operating Procedure.

	 	 	 
		(e) 	
      The Farmee shall be responsible for the administrative
      payment of lease delay rentals for present and future leases within the
      Loma Area AMI.

	 	 	 
	12. 	
      INDEMNIFICATION

	 	 	 
		(a) 	
      With respect to the operations set forth and described in
      Clause 4 hereof, Farmee shall:







Farmin Agreement 
Page 8 

	 	(i) 	
      be liable to Farmor for all losses, costs, damages and
      expenses whatsoever (whether contractual or otherwise) which Farmor may
      suffer, sustain, pay or incur; and, in addition

	 	 	 
	 	(ii) 	
      indemnify and hold harmless Farmor and its directors,
      officers, agents and employees against all actions, causes of action,
      proceedings, claims, demands, losses, costs, damages and expenses
      whatsoever that may be brought against or suffered by Farmor, its
      directors, officers, agents and employees or that they may sustain, pay or
      incur,




	 		
      by reason of any matter or thing arising out of or in any
      way attributable to the operations carried on by Farmee or its servants,
      agents, employees, independent contractors, licensees or invitees pursuant
      to this agreement; or

	 	 	 
	 	(b) 	
      With respect to all other operations carried on by Farmee
      or its servants, agents, employees, independent contractors, licensees or
      invitees, the Operating Procedure shall apply.

	 	 	 
	 	(c) 	
      With respect to any operations assumed or undertaken by
      Farmor, whether pursuant to Article 10 of this Agreement or otherwise,
      Farmor will indemnify Farmee in the same manner as Farmee indemnifies
      Farmor pursuant to this Agreement.




	13. 	
      RENTALS

	 	 	 
		(a) 	
      With respect to the operations set forth and described in
      Clause 4 hereof, Farmee shall reimburse Farmor for all rentals, security
      payments, penalties and/or compensatory royalties attributable to the
      farmout lands on a per diem basis from the date hereof until the date when
      Farmee has performed all of its obligations to earn its entire interest in
      the farmout lands as hereinbefore provided, with such payments being
      included in the definition of Earning Expenditures. If Farmee fails to
      reimburse Farmor within 30 days after receipt of Farmor's invoice, Farmor
      may charge interest from the day such invoice is due at the rate of 2%
      percent higher than the prevailing prime bank interest rate charged by the
      principal chartered bank in Canada then used by Farmor; and

	 	 	 
		(b) 	
      With respect to all other rentals, security payments,
      penalties and/or compensatory royalties attributable to the farmout lands,
      the Operating Procedure shall apply.

	 	 	 
	14. 	
      NOTICES

	 	 	 
		
      The addresses for service of the parties hereto shall be
      as follows:



BS Oil Company Ltd. 
Longshot Oil
Company 
c/o 
Longshot Oil Company 
P.O. Box 397 
Somers, MT

59932 
Attention: Land Department 
Fax: (509) 455-5924 * 51





Farmin Agreement 
Page 9 

Megawest Energy Montana Corp. 
c/o

Megawest Energy Corp. 
800, 926 - 5th Ave. SW 
Calgary, AB, Canada

T2P 0N7 

Attention: Land Department

Fax: (403) 984-6343 

All notices, communications and
statements required, permitted or contemplated hereunder shall be in writing,
and shall be delivered as follows: 

	 	(a) 	
      by personal service on a party at the address of such
      party set out above, in which case the item so served shall be deemed to
      have been received by that party when personally served;

	 	 	 
	 	(b) 	
      by facsimile transmission to a party to the fax number of
      such party set out above, in which case the item so transmitted shall be
      deemed to have been received by that party when transmitted; or

	 	 	 
	 	(c) 	
      except in the event of an actual or threatened postal
      strike or other labour disruption that may affect mail service, by mailing
      first class post, postage prepaid, to a party at the address of such party
      set out above, in which case the item so mailed shall be deemed to have
      been received by that party on the fifth day following the date of
      mailing.




		
      Farmor and Farmee may from time to time change their
      respective addresses for service by giving written notice to the
    other.

	 	 	 	 
	15. 	
      DEFAULT

	 	 	 	 
		(a) 	
      Insofar as the earning operations set forth and described
      in Clause 4 hereof are concerned, if Farmee is in default of any of its
      obligations:

	 	 	 	 
			(i) 	
      Farmor may give Farmee notice stating the nature of that
      default. If Farmee fails to commence to remedy that default within 30 days
      after receipt of notice or fails to continue to remedy that default with
      due diligence thereafter, Farmor may, by notice to Farmee, terminate all
      or any portion of the interest Farmee may have acquired in the farmout
      lands hereunder;

	 	 	 	 
			(ii) 	
      Nothing in this clause will release Farmee from any
      obligation: (i) to indemnify or be liable to Farmor pursuant to Clause 12;
      (ii) to pay any amount owing hereunder by Farmee; (iii) to keep
      information confidential; or (iv) if applicable, to finish abandoning the
      test well; and

	 	 	 	 
			(iii) 	
      The rights granted to Farmor in this clause will be in
      addition to and not in substitution for any other right or remedy that
      Farmor may have under this agreement. The existence or the exercise of
      those rights or the termination of Farmee's interests or rights under this
      clause will not deprive Farmor of any other right or remedy at law or in
      equity, including damages and indemnity.







Farmin Agreement 
Page 10 

	 	(b) 	
      In respect of all other operations, if Farmee is in
      default of any of its obligations, the Operating Procedure shall
    apply.




	16. 	
      MISCELLANEOUS

	 	 	 
		(a) 	
      Wherever any term or condition of any schedule conflicts
      or is at variance with any term or condition in the body hereof the latter
      shall prevail. In the event of any conflict or inconsistency between the
      provisions of this agreement and the title documents the provisions of the
      title documents shall prevail.

	 	 	 
		(b) 	
      This agreement and the relationship amongst the parties
      hereto shall be construed and determined according to the laws of the
      Province of Alberta and each party hereto does attorn to the jurisdiction
      of the courts of the Province of Alberta with respect to any matter
      arising out of this agreement.

	 	 	 
		(c) 	
      This agreement may be executed in separate counterparts
      each of which taken together shall comprise a complete
  agreement.



If the foregoing is in accordance with your understanding of
the agreement reached amongst our companies, would you please indicate your
acknowledgement and acceptance by signing in the space provided and returning
one copy of this letter agreement to this office. 

Yours very truly, 

MegaWest Energy Montana Corp. 


/s/ George Stapleton, II 

 

 

ACKNOWLEDGED AND AGREED TO THIS [] day of October, 2007.


 

BS OIL COMPANY LTD. 

Per: /s/ Geoffrey Say 

 

LONGSHOT OIL COMPANY 

Per: /s/ signed 




SCHEDULE "A" ATTACHED TO AND FORMING PART OF AN OPERATING
  AND FARMIN AGREEMENT DATED THIS • DAY OF OCTOBER, 2007 BETWEEN LONGSHOT
  OIL COMPANY, BS OIL COMPANY LTD., AND MEGAWEST ENERGY MONTANA CORP. 



Loma Area 


	Lease Date

	Lease/Acreage 
	Land
      Description 
	Assigned
      
Interest 
	January 14, 2007
      














	Lippard Clawitter 
Foundation 
76%
      Mineral Interest 
(6,575.03 gross acres) 
(4,977.5 net acres)
      










	Twp 26N
      Rge 10E 
Section 13, 23–26, all 
Section 22
      E2, SE4; Section 34 NE4; 
Section 35 Lots 1 & 2, N2, N2SW4, SE4
      
Twp 26N Rge 11E
      
Section 7 Lots 3 & 4, W2E2SW4, 
W2E2E2SW4, SE4SE4; 
Section
      17 N2, SW4, W2SE4, SE4SE4; 
Section 18 Lots 2, 3 & 4, E2W2, E2;
      
Section 19 Lots 1, 2 & 6, E2NW4, NE4; 
Section 20 Lots 1, 2
      & 6, NE4, N2NW4, 
SE4NW4, NE4SE4; 
Section 30 Lots 2, 6, 7, 8, 9
      & 13; 
Section 31 Lots 1 & 6 
Twp
      25N Rge 10E 
Section 1 Lots 3
      & 4; Section 2 Lots 1 & 2 	40%
      















	October 11, 2006 






	Gary Lippard 
20% Mineral Interest
      
(6,575.03 gross acres) 
(1,341.02 net acres) 



	Twp 26N
      Rge 10E 
Sections 13, 23, 26, all; Section 22
      E2, SE4 
Twp 26N Rge
      11E 
Section 17 N2, SW4, W2SE4, SE4SE4; 
Section 18 Lots
      2, 3 & 4, E2W2, E2; 
Section 19 Lots 1, 2 & 6, E2NW4, NE4;
      
Section 20 Lots 1, 2 & 6, NE4, N2NW4, 
SE4NW4, NE4SE4 	40%
    







	March 6, 2007 
	State of Montana 
(640 acres) 	Twp 26N
      Rge 10E 
Section 36, all 	40%









Page 2 

SCHEDULE "B" ATTACHED TO AND FORMING PART OF AN OPERATING
  AND FARMIN AGREEMENT DATED THIS • DAY OF OCTOBER, 2007 BETWEEN LONGSHOT
  OIL COMPANY, BS OIL COMPANY LTD., AND MEGAWEST ENERGY MONTANA CORP. 



[ AAPL Operating Procedure to be added ] 




SCHEDULE "B" ATTACHED TO AND FORMING PART OF OPERATING AND
  FARMIN AGREEMENT DATED THIS - DAY OF OCTOBER, 2007 BETWEEN LONGSHOT OIL
  COMPANY, BS OIL COMPANY LTD., AND MEGAWEST ENERGY MONTANA CORP.

A.A.P.L. FORM 610 - 1989 

MODEL FORM OPERATING AGREEMENT 

 

 

 

 

 

OPERATING AGREEMENT 

DATED 

October [] , 2007 , 

  year 

OPERATOR MegaWest Energy Montana Corp.                                                                                                             
  

CONTRACT AREA Loma                                                                                                                                                   

___________________________________________________________________________________ 

___________________________________________________________________________________ 

___________________________________________________________________________________ 

___________________________________________________________________________________ 

COUNTY OR PARISH OF Choteau                                                     ,
  STATE OF Montana                                        
  


  
    
      
        
          
            
              COPYRIGHT 1989 – ALL RIGHTS RESERVED AMERICAN
                ASSOCIATION OF PETROLEUM LANDMEN, 4100 FOSSIL CREEK BLVD. FORT
                WORTH, TEXAS, 76137, APPROVED FORM. 

              A.A.P.L. NO. 610 – 1989 

            

          

        

      

    

  






A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

TABLE OF CONTENTS 


  	Article 	Title 	Page 
	I. 	DEFINITIONS 	1 
	II. 	EXHIBITS 	1 
	III. 	INTERESTS OF PARTIES 	2 
	  	A.	OIL AND GAS INTERESTS: 	2 
	  	B.	INTERESTS OF PARTIES IN COSTS AND PRODUCTION: 	2 
	  	C.	SUBSEQUENTLY CREATED INTERESTS: 	2 
	IV. 	TITLES 	2 
	  	A.	TITLE EXAMINATION: 	2 
	  	B	LOSS OR FAILURE OF TITLE: 	3 
	  		1.	Failure of Title 	3 
	  		2.	Loss by Non-Payment or Erroneous Payment of Amount Due
        	3 
	  		3.	Other Losses 	3 
	  		4.	Curing Title 	3 
	V. 	OPERATOR 	4 
	  	A.	DESIGNATION AND RESPONSIBILITIES OF OPERATOR: 	4 
	  	B	RESIGNATION OR REMOVAL OF OPERATOR AND SELECTION OF SUCCESSOR:
        	4 
	  		1.	Resignation or Removal of Operator 	4 
	  		2.	Selection of Successor Operator 	4 
	  		3.	Effect of Bankruptcy 	4 
	  	C.	EMPLOYEES AND CONTRACTORS: 	4 
	  	D.	RIGHTS AND DUTIES OF OPERATOR: 	4 
	  		1.	Competitive Rates and Use of Affiliates 	4 
	  		2.	Discharge of Joint Account Obligations 	4 
	  		3.	Protection from Liens 	4 
	  		4.	Custody of Funds 	5 
	  		5.	Access to Contract Area and Records 	5 
	  		6.	Filing and Furnishing Governmental Reports 	5 
	  		7.	Drilling and Testing Operations 	5 
	  		8.	Cost Estimates 	5 
	  		9.	Insurance 	5 
	VI. 	DRILLING AND DEVELOPMENT 	5 
	  	A.	INITIAL WELL: 	5 
	  	B.	SUBSEQUENT OPERATIONS: 	5 
	  		1.	Proposed Operations 	5 
	  		2.	Operations by Less Than All Parties 	6 
	  		3.	Stand-By Costs 	7 
	  		4.	Deepening 	8 
	  		5.	Sidetracking 	8 
	  		6.	Order of Preference of Operations 	8 
	  		7.	Conformity to Spacing Pattern 	9 
	  		8.	Paying Wells 	9 
	  	C.	COMPLETION OF WELLS; REWORKING AND PLUGGING BACK: 	9 
	  		1.	Completion 	9 
	  		2.	Rework, Recomplete or Plug Back 	9 
	  	D.	OTHER OPERATIONS: 	9 
	  	E.	ABANDONMENT OF WELLS: 	9 
	  		1.	Abandonment of Dry Holes 	9 
	  		2.	Abandonment of Wells That Have Produced 	10 
	  		3.	Abandonment of Non-Consent Operations 	10 
	  	F.	TERMINATION OF OPERATIONS: 	10 
	  	G.	TAKING PRODUCTION IN KIND: 	10 
	  			(Option 1) Gas Balancing Agreement 	10 
	  			(Option 2) No Gas Balancing Agreement 	11 
	VII. 	EXPENDITURES AND LIABILITY OF PARTIES 	11 
	  	A.	LIABILITY OF PARTIES: 	11 
	  	B.	LIENS AND SECURITY INTERESTS: 	12 
	  	C.	ADVANCES: 	12 
	  	D.	DEFAULTS AND REMEDIES: 	12 
	  		1.	Suspension of Rights 	13 
	  		2.	Suit for Damages 	13 
	  		3.	Deemed Non-Consent 	13 
	  		4.	Advance Payment 	13 
	  		5.	Costs and Attorneys’ Fees 	13 
	  	E.	RENTALS, SHUT-IN WELL PAYMENTS AND MINIMUM ROYALTIES:
        	13 
	  	F.	TAXES: 	13 
	VIII. 	ACQUISITION, MAINTENANCE OR TRANSFER OF INTEREST
        	14 
	  	A.	SURRENDER OF LEASES: 	14 
	  	B.	RENEWAL OR EXTENSION OF LEASES: 	14 
	  	C.	ACREAGE OR CASH CONTRIBUTIONS: 	14 




i 




A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

TABLE OF CONTENTS 

	  	D.	ASSIGNMENT; MAINTENANCE OF UNIFORM INTEREST: 	15 
	  	E.	WAIVER OF RIGHTS TO PARTITION: 	15 
	  	F.	PREFERENTIAL RIGHT TO PURCHASE: 	15 
	IX. 	INTERNAL REVENUE CODE ELECTION 	15 
	X. 	CLAIMS AND LAWSUITS 	15 
	XI. 	FORCE MAJEURE 	16 
	XII. 	NOTICES 	16 
	XIII. 	TERM OF AGREEMENT 	16 
	XIV. 	COMPLIANCE WITH LAWS AND REGULATIONS 	16 
	  	A.	LAWS, REGULATIONS AND ORDERS: 	16 
	  	B.	GOVERNING LAW: 	16 
	  	C.	 REGULATORY AGENCIES: 	16 
	XV. 	MISCELLANEOUS 	17 
	  	A.	EXECUTION: 	17 
	  	B.	SUCCESSORS AND ASSIGNS: 	17 
	  	C.	COUNTERPARTS: 	17 
	  	D.	SEVERABILITY 	17 
	XVI. 	OTHER PROVISIONS 	17 


ii 




A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

OPERATING AGREEMENT 

                   
  THIS AGREEMENT, entered into by and between MegaWest Energy Montana Corp.
  , hereinafter designated and referred to as "Operator," and the signatory party
  or parties other than Operator, sometimes hereinafter referred to individually
  as "Non-Operator," and collectively as "Non-Operators." 

WITNESSETH: 

                   
  WHEREAS, the parties to this agreement are owners of Oil and Gas Leases and/or
  Oil and Gas Interests in the land identified in Exhibit "A," and the parties
  hereto have reached an agreement to explore and develop these Leases and/or
  Oil and Gas Interests for the production of Oil and Gas to the extent and as
  hereinafter provided,

                    
  NOW, THEREFORE, it is agreed as follows: 

ARTICLE I. 

  DEFINITIONS 

                   
  As used in this agreement, the following words and terms shall have the meanings
  here ascribed to them: 

                   
  A. The term "AFE" shall mean an Authority for Expenditure prepared by a party
  to this agreement for the purpose of estimating the costs to be incurred in
  conducting an operation hereunder. 

                   
  B. The term "Completion" or "Complete" shall mean a single operation intended
  to complete a well as a producer of Oil and Gas in one or more Zones, including,
  but not limited to, the setting of production casing, perforating, well stimulation
  and production testing conducted in such operation. 

                   
  C. The term "Contract Area" shall mean all of the lands, Oil and Gas Leases
  and/or Oil and Gas Interests intended to be developed and operated for Oil and
  Gas purposes under this agreement. Such lands, Oil and Gas Leases and Oil and
  Gas Interests are described in Exhibit "A."

                    
  D. The term "Deepen" shall mean a single operation whereby a well is drilled
  to an objective Zone below the deepest Zone in which the well was previously
  drilled, or below the Deepest Zone proposed in the associated AFE, whichever
  is the lesser. 

                   
  E. The terms "Drilling Party" and "Consenting Party" shall mean a party who
  agrees to join in and pay its share of the cost of any operation conducted under
  the provisions of this agreement. 

                   
  F. The term "Drilling Unit" shall mean the area fixed for the drilling of one
  well by order or rule of any state or federal body having authority. If a Drilling
  Unit is not fixed by any such rule or order, a Drilling Unit shall be the drilling
  unit as established by the pattern of drilling in the Contract Area unless fixed
  by express agreement of the Drilling Parties. 

                   
  G. The term "Drillsite" shall mean the Oil and Gas Lease or Oil and Gas Interest
  on which a proposed well is to be located. 

                   
  H. The term "Initial Well" shall mean the well required to be drilled by the
  parties hereto as provided in Article VI.A. 

                   
  I. The term "Non-Consent Well" shall mean a well in which less than all parties
  have conducted an operation as provided in Article VI.B.2. 

                   
  J. The terms "Non-Drilling Party" and "Non-Consenting Party" shall mean a party
  who elects not to participate in a proposed operation. 

                   
  K. The term "Oil and Gas" shall mean oil, gas, casinghead gas, gas condensate,
  and/or all other liquid or gaseous hydrocarbons and other marketable substances
  produced therewith, unless an intent to limit the inclusiveness of this term
  is specifically stated. 

                   
  L. The term "Oil and Gas Interests" or "Interests" shall mean unleased fee and
  mineral interests in Oil and Gas in tracts of land lying within the Contract
  Area which are owned by parties to this agreement. 

                   
  M. The terms "Oil and Gas Lease," "Lease" and "Leasehold" shall mean the oil
  and gas leases or interests therein covering tracts of land lying within the
  Contract Area which are owned by the parties to this agreement. 

                   
  N. The term "Plug Back" shall mean a single operation whereby a deeper Zone
  is abandoned in order to attempt a Completion in a shallower Zone. 

                   
  O. The term "Recompletion" or "Recomplete" shall mean an operation whereby a
  Completion in one Zone is abandoned in order to attempt a Completion in a different
  Zone within the existing wellbore. 

                   
  P. The term "Rework" shall mean an operation conducted in the wellbore of a
  well after it is Completed to secure, restore, or improve production in a Zone
  which is currently open to production in the wellbore. Such operations include,
  but are not limited to, well stimulation operations but exclude any routine
  repair or maintenance work or drilling, Sidetracking, Deepening, Completing,
  Recompleting, or Plugging Back of a well. 

                   
  Q. The term "Sidetrack" shall mean the directional control and intentional deviation
  of a well from vertical so as to change the bottom hole location unless done
  to straighten the hole or drill around junk in the hole to overcome other mechanical
  difficulties. 

                   
  R. The term "Zone" shall mean a stratum of earth containing or thought to contain
  a common accumulation of Oil and Gas separately producible from any other common
  accumulation of Oil and Gas. 

                   
  Unless the context otherwise clearly indicates, words used in the singular include
  the plural, the word "person" includes natural and artificial persons, the plural
  includes the singular, and any gender includes the masculine, feminine, and
  neuter. 

ARTICLE II. 

  EXHIBITS 

                   
  The following exhibits, as indicated below and attached hereto, are incorporated
  in and made a part hereof: 

		A. 	 Exhibit "A," shall include the following information:

	 	 	 	 
			(1) 	 Description of lands subject to this agreement,

	 	 	 	 
			(2) 	 Restrictions, if any, as to depths, formations, or substances,

	 	 	 	 
			(3) 	 Parties to agreement with addresses and telephone numbers
        for notice purposes,

	 	 	 	 
			(4) 	 Percentages or fractional interests of parties to this
        agreement,

	 	 	 	 
			(5) 	 Oil and Gas Leases and/or Oil and Gas Interests subject
        to this agreement,

	 	 	 	 
			(6) 	 Burdens on production.

	 	 	 	 
		B. 	 Exhibit "B," Form of Lease.

	 	 	 	 
	X 	 C. 
	Exhibit "C," Accounting Procedure.
	 	 	 	 
	X 	 D. 
	Exhibit "D," Insurance.
	 	 	 	 
		E. 	 Exhibit "E," Gas Balancing Agreement.

	 	 	 	 
		F. 	 Exhibit "F," Non-Discrimination and Certification
        of Non-Segregated Facilities.

	 	 	 	 
		G. 	 Exhibit "G," Tax Partnership.

	 	 	 	 
		H. 	 Other: __________________________________





	- 1 - 







A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

                   
  If any provision of any exhibit, except Exhibits "E," "F" and "G," is inconsistent
  with any provision contained in the body of this agreement, the provisions in
  the body of this agreement shall prevail. 

ARTICLE III. 

  INTERESTS OF PARTIES 

A. Oil and Gas Interests: 

                   
  If any party owns an Oil and Gas Interest in the Contract Area, that Interest
  shall be treated for all purposes of this agreement and during the term hereof
  as if it were covered by the form of Oil and Gas Lease attached hereto as Exhibit
  "B," and the owner thereof shall be deemed to own both royalty interest in such
  lease and the interest of the lessee thereunder. 

B. Interests of Parties in Costs and Production: 

                   
  Unless changed by other provisions, all costs and liabilities incurred in operations
  under this agreement shall be borne and paid, and all equipment and materials
  acquired in operations on the Contract Area shall be owned, by the parties as
  their interests are set forth in Exhibit "A." In the same manner, the parties
  shall also own all production of Oil and Gas from the Contract Area subject,
  however, to the payment of royalties and other burdens on production as described
  hereafter. 

                   
  Regardless of which party has contributed any Oil and Gas Lease or Oil and Gas
  Interest on which royalty or other burdens may be payable and except as otherwise
  expressly provided in this agreement, each party shall pay or deliver, or cause
  to be paid or delivered, all burdens on its share of the production from the
  Contract Area, and shall indemnify, defend and hold the other parties
  free from any liability therefor. Except as otherwise expressly provided in
  this agreement, if any party has contributed hereto any Lease or Interest which
  is burdened with any royalty, overriding royalty, production payment or other
  burden on production in excess of the amounts stipulated above, such party so
  burdened shall assume and alone bear all such excess obligations and shall indemnify,
  defend and hold the other parties hereto harmless from any and all claims attributable
  to such excess burden. However, so long as the Drilling Unit for the productive
  Zone(s) is identical with the Contract Area, each party shall pay or deliver,
  or cause to be paid or delivered, all burdens on production from the Contract
  Area due under the terms of the Oil and Gas Lease(s) which such party has contributed
  to this agreement, and shall indemnify, defend and hold the other parties free
  from any liability therefor. 

                   
  No party shall ever be responsible, on a price basis higher than the price received
  by such party, to any other party's lessor or royalty owner, and if such other
  party's lessor or royalty owner should demand and receive settlement on a higher
  price basis, the party contributing the affected Lease shall bear the additional
  royalty burden attributable to such higher price. 

                   
  Nothing contained in this Article III.B. shall be deemed an assignment or cross-assignment
  of interests covered hereby, and in the event two or more parties contribute
  to this agreement jointly owned Leases, the parties' undivided interests in
  said Leaseholds shall be deemed separate leasehold interests for the purposes
  of this agreement. 

C. Subsequently Created Interests: 

                   
  If any party has contributed hereto a Lease or Interest that is burdened with
  an assignment of production given as security for the payment of money, or if,
  after the date of this agreement, any party creates an overriding royalty, production
  payment, net profits interest, assignment of production or other burden payable
  out of production attributable to its working interest hereunder, such burden
  shall be deemed a "Subsequently Created Interest." Further, if any party has
  contributed hereto a Lease or Interest burdened with an overriding royalty,
  production payment, net profits interests, or other burden payable out of production
  created prior to the date of this agreement, and such burden is not shown on
  Exhibit "A," such burden also shall be deemed a Subsequently Created Interest
  to the extent such burden causes the burdens on such party's Lease or Interest
  to exceed the amount stipulated in Article III.B. above. 

                   
  The party whose interest is burdened with the Subsequently Created Interest
  (the "Burdened Party") shall assume and alone bear, pay and discharge the Subsequently
  Created Interest and shall indemnify, defend and hold harmless the other parties
  from and against any liability therefor. Further, if the Burdened Party fails
  to pay, when due, its share of expenses chargeable hereunder, all provisions
  of Article VII.B. shall be enforceable against the Subsequently Created Interest
  in the same manner as they are enforceable against the working interest of the
  Burdened Party. If the Burdened Party is required under this agreement to assign
  or relinquish to any other party, or parties, all or a portion of its working
  interest and/or the production attributable thereto, said other party, or parties,
  shall receive said assignment and/or production free and clear of said Subsequently
  Created Interest, and the Burdened Party shall indemnify, defend and hold harmless
  said other party, or parties, from any and all claims and demands for payment
  asserted by owners of the Subsequently Created Interest. 

ARTICLE IV. 

  TITLES 

A. Title Examination: 

                   
  Title examination shall be made on the Drillsite of any proposed well prior
  to commencement of drilling operations and, if a majority in interest of the
  Drilling Parties so request or Operator so elects, title examination shall be
  made on the entire Drilling Unit, or maximum anticipated Drilling Unit, of the
  well. The opinion will include the ownership of the working interest, minerals,
  royalty, overriding royalty and production payments under the applicable Leases.
  Each party contributing Leases and/or Oil and Gas Interests to be included in
  the Drillsite or Drilling Unit, if appropriate, shall furnish to Operator all
  abstracts (including federal lease status reports), title opinions, title papers
  and curative material in its possession free of charge. All such information
  not in the possession of or made available to Operator by the parties, but necessary
  for the examination of the title, shall be obtained by Operator. Operator shall
  cause title to be examined by attorneys on its staff or by outside attorneys.
  Copies of all title opinions shall be furnished to each Drilling Party. Costs
  incurred by Operator in procuring abstracts, fees paid outside attorneys for
  title examination (including preliminary, supplemental, shut-in royalty opinions
  and division order title opinions) and other direct charges as provided in Exhibit
  "C" shall be borne by the Drilling Parties in the proportion that the interest
  of each Drilling Party bears to the total interest of all Drilling Parties as
  such interests appear in Exhibit "A." Operator shall make no charge for services
  rendered by its staff attorneys or other personnel in the performance of the
  above functions. 

                   
  Each party shall be responsible for securing curative matter and pooling amendments
  or agreements required in connection with Leases or Oil and Gas Interests contributed
  by such party. Operator shall be responsible for the preparation and recording
  of pooling designations or declarations and communitization agreements as well
  as the conduct of hearings before governmental agencies for the securing of
  spacing or pooling orders or any other orders necessary or appropriate to the
  conduct of operations hereunder. This shall not prevent any party from appearing
  on its own behalf at such hearings. Costs incurred by Operator, including fees
  paid to outside attorneys, which are associated with hearings before governmental
  agencies, and which costs are necessary and proper for the activities contemplated
  under this agreement, shall be direct charges to the joint account and shall
  not be covered by the administrative overhead charges as provided in Exhibit
  "C." 

- 2 - 




A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

Operator shall make no charge for services rendered by its staff
  attorneys or other personnel in the performance of the above functions. 

                   
  No well shall be drilled on the Contract Area until after (1) the title to the
  Drillsite or Drilling Unit, if appropriate, has been examined as above provided,
  and (2) the title has been approved by the examining attorney or title has been
  accepted by all of the Drilling Parties in such well. 

B. Loss or Failure of Title: 

                   
  1. Failure of Title: Should any Oil and Gas Interest or Oil and Gas Lease
  be lost through failure of title, which results in a reduction of interest from
  that shown on Exhibit "A," the party credited with contributing the affected
  Lease or Interest (including, if applicable, a successor in interest to such
  party) shall have ninety (90) days from final determination of title failure
  to acquire a new lease or other instrument curing the entirety of the title
  failure, which acquisition will not be subject to Article VIII.B., and failing
  to do so, this agreement, nevertheless, shall continue in force as to all remaining
  Oil and Gas Leases and Interests; and, 

                   
  (a) The party credited with contributing the Oil and Gas Lease or Interest affected
  by the title failure (including, if applicable, a successor in interest to such
  party) shall bear alone the entire loss and it shall not be entitled to recover
  from Operator or the other parties any development or operating costs which
  it may have previously paid or incurred, but there shall be no additional liability
  on its part to the other parties hereto by reason of such title failure; 

                   
  (b) There shall be no retroactive adjustment of expenses incurred or revenues
  received from the operation of the Lease or Interest which has failed, but the
  interests of the parties contained on Exhibit "A" shall be revised on an acreage
  basis, as of the time it is determined finally that title failure has occurred,
  so that the interest of the party whose Lease or Interest is affected by the
  title failure will thereafter be reduced in the Contract Area by the amount
  of the Lease or Interest failed; 

                   
  (c) If the proportionate interest of the other parties hereto in any producing
  well previously drilled on the Contract Area is increased by reason of the title
  failure, the party who bore the costs incurred in connection with such well
  attributable to the Lease or Interest which has failed shall receive the proceeds
  attributable to the increase in such interest (less costs and burdens attributable
  thereto) until it has been reimbursed for unrecovered costs paid by it in connection
  with such well attributable to such failed Lease or Interest; 

                   
  (d) Should any person not a party to this agreement, who is determined to be
  the owner of any Lease or Interest which has failed, pay in any manner any part
  of the cost of operation, development, or equipment, such amount shall be paid
  to the party or parties who bore the costs which are so refunded; 

                   
  (e) Any liability to account to a person not a party to this agreement for prior
  production of Oil and Gas which arises by reason of title failure shall be borne
  severally by each party (including a predecessor to a current party) who received
  production for which such accounting is required based on the amount of such
  production received, and each such party shall severally indemnify, defend and
  hold harmless all other parties hereto for any such liability to account; 

                   
  (f) No charge shall be made to the joint account for legal expenses, fees or
  salaries in connection with the defense of the Lease or Interest claimed to
  have failed, but if the party contributing such Lease or Interest hereto elects
  to defend its title it shall bear all expenses in connection therewith; and


                   
  (g) If any party is given credit on Exhibit "A" to a Lease or Interest which
  is limited solely to ownership of an interest in the wellbore of any well or
  wells and the production therefrom, such party's absence of interest in the
  remainder of the Contract Area shall be considered a Failure of Title as to
  such remaining Contract Area unless that absence of interest is reflected on
  Exhibit "A." 

                   
  2. Loss by Non-Payment or Erroneous Payment of Amount Due: If, through
  mistake or oversight, any rental, shut-in well payment, minimum royalty or royalty
  payment, or other payment necessary to maintain all or a portion of an Oil and
  Gas Lease or interest is not paid or is erroneously paid, and as a result a
  Lease or Interest terminates, there shall be no monetary liability against the
  party who failed to make such payment. Unless the party who failed to make the
  required payment secures a new Lease or Interest covering the same interest
  within ninety (90) days from the discovery of the failure to make proper payment,
  which acquisition will not be subject to Article VIII.B., the interests of the
  parties reflected on Exhibit "A" shall be revised on an acreage basis, effective
  as of the date of termination of the Lease or Interest involved, and the party
  who failed to make proper payment will no longer be credited with an interest
  in the Contract Area on account of ownership of the Lease or Interest which
  has terminated. If the party who failed to make the required payment shall not
  have been fully reimbursed, at the time of the loss, from the proceeds of the
  sale of Oil and Gas attributable to the lost Lease or Interest, calculated on
  an acreage basis, for the development and opera ting costs previously paid on
  account of such Lease or Interest, it shall be reimbursed for unrecovered actual
  costs previously paid by it (but not for its share of the cost of any dry hole
  previously drilled or wells previously abandoned) from so much of the following
  as is necessary to effect reimbursement: 

                   
  (a) Proceeds of Oil and Gas produced prior to termination of the Lease or Interest,
  less operating expenses and lease burdens chargeable hereunder to the person
  who failed to make payment, previously accrued to the credit of the lost Lease
  or Interest, on an acreage basis, up to the amount of unrecovered costs; 

                   
  (b) Proceeds of Oil and Gas, less operating expenses and lease burdens chargeable
  hereunder to the person who failed to make payment, up to the amount of unrecovered
  costs attributable to that portion of Oil and Gas thereafter produced and marketed
  (excluding production from any wells thereafter drilled) which, in the absence
  of such Lease or Interest termination, would be attributable to the lost Lease
  or Interest on an acreage basis and which as a result of such Lease or Interest
  termination is credited to other parties, the proceeds of said portion of the
  Oil and Gas to be contributed by the other parties in proportion to their respective
  interests reflected on Exhibit "A"; and, 

                   
  (c) Any monies, up to the amount of unrecovered costs, that may be paid by any
  party who is, or becomes, the owner of the Lease or Interest lost, for the privilege
  of participating in the Contract Area or becoming a party to this agreement.


                   
  3. Other Losses: All losses of Leases or Interests committed to this
  agreement, other than those set forth in Articles IV.B.1. and IV.B.2. above,
  shall be joint losses and shall be borne by all parties in proportion to their
  interests shown on Exhibit "A." This shall include but not be limited to the
  loss of any Lease or Interest through failure to develop or because express
  or implied covenants have not been performed (other than performance which requires
  only the payment of money), and the loss of any Lease by expiration at the end
  of its primary term if it is not renewed or extended. There shall be no readjustment
  of interests in the remaining portion of the Contract Area on account of any
  joint loss. 

                   
  4. Curing Title: In the event of a Failure of Title under Article IV.B.1.
  or a loss of title under Article IV.B.2. above, any Lease or Interest acquired
  by any party hereto (other than the party whose interest has failed or was lost)
  during the ninety (90) day period provided by Article IV.B.1. and Article IV.B.2.
  above covering all or a portion of the interest that has failed or was lost
  shall be offered at cost to the party whose interest has failed or was lost,
  and the provisions of Article VIII.B. shall not apply to such acquisition. 

- 3 - 




A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

ARTICLE V. 

  OPERATOR 

A. Designation and Responsibilities of Operator: 

                   
  MegaWest Energy Montana Corp. shall be the Operator of the Contract Area,
  and shall conduct and direct and have full control of all operations on the
  Contract Area as permitted and required by, and within the limits of this agreement.
  In its performance of services hereunder for the Non-Operators, Operator shall
  be an independent contractor not subject to the control or direction of the
  Non-Operators except as to the type of operation to be undertaken in accordance
  with the election procedures contained in this agreement. Operator shall not
  be deemed, or hold itself out as, the agent of the Non-Operators with authority
  to bind them to any obligation or liability assumed or incurred by Operator
  as to any third party. Operator shall conduct its activities under this agreement
  as a reasonable prudent operator, in a good and workmanlike manner, with due
  diligence and dispatch, in accordance with good oilfield practice, and in compliance
  with applicable law and regulation, but in no event shall it have any liability
  as Operator to the other parties for losses sustained or liabilities incurred
  except such as may result from gross negligence or willful misconduct. 

B. Resignation or Removal of Operator and Selection of Successor:
  

                   
  1. Resignation or Removal of Operator: Operator may resign at any time
  by giving written notice thereof to Non-Operators. If Operator terminates its
  legal existence, no longer owns an interest hereunder in the Contract Area,
  or is no longer capable of serving as Operator, Operator shall be deemed to
  have resigned without any action by Non-Operators, except the selection of a
  successor. Operator may be removed only for good cause by the affirmative vote
  of Non-Operators owning a majority interest based on ownership as shown on Exhibit
  "A" remaining after excluding the voting interest of Operator; such vote shall
  not be deemed effective until a written notice has been delivered to the Operator
  by a Non-Operator detailing the alleged default and Operator has failed to cure
  the default within thirty (30) days from its receipt of the notice or, if the
  default concerns an operation then being conducted, within forty-eight (48)
  hours of its receipt of the notice. For purposes hereof, "good cause" shall
  mean not only gross negligence or willful misconduct but also the material
  breach of or inability to meet the standards of operation contained in Article
  V.A. or material failure or inability to perform its obligations under this
  agreement. 

                   
  Subject to Article VII.D.1., such resignation or removal shall not become effective
  until 7:00 o'clock A.M. on the first day of the calendar month following the
  expiration of ninety (90) days after the giving of notice of resignation by
  Operator or action by the Non-Operators to remove Operator, unless a successor
  Operator has been selected and assumes the duties of Operator at an earlier
  date. Operator, after effective date of resignation or removal, shall be bound
  by the terms hereof as a Non-Operator. A change of a corporate name or structure
  of Operator or transfer of Operator's interest to any single subsidiary, parent
  or successor corporation shall not be the basis for removal of Operator. 

                   
  2. Selection of Successor Operator: Upon the resignation or removal of
  Operator under any provision of this agreement, a successor Operator shall be
  selected by the parties. The successor Operator shall be selected from the parties
  owning an interest in the Contract Area at the time such successor Operator
  is selected. The successor Operator shall be selected by the affirmative vote
  of two (2) or more parties owning a majority interest based on ownership as
  shown on Exhibit "A"; provided, however, if an Operator which has been removed
  or is deemed to have resigned fails to vote or votes only to succeed itself,
  the successor Operator shall be selected by the affirmative vote of the party
  or parties owning a majority interest based on ownership as shown on Exhibit
  "A" remaining after excluding the voting interest of the Operator that was removed
  or resigned. The former Operator shall promptly deliver to the successor Operator
  all records and data relating to the operations conducted by the former Operator
  to the extent such records and data are not already in the possession of the
  successor operator. Any cost of obtaining or copying the former Operator's records
  and data shall be charged to the joint account. 

                   
  3. Effect of Bankruptcy: If Operator becomes insolvent, bankrupt or is
  placed in receivership, it shall be deemed to have resigned without any action
  by Non-Operators, except the selection of a successor. If a petition for relief
  under the federal bankruptcy laws is filed by or against Operator, and the removal
  of Operator is prevented by the federal bankruptcy court, all Non-Operators
  and Operator shall comprise an interim operating committee to serve until Operator
  has elected to reject or assume this agreement pursuant to the Bankruptcy Code,
  and an election to reject this agreement by Operator as a debtor in possession,
  or by a trustee in bankruptcy, shall be deemed a resignation as Operator without
  any action by Non-Operators, except the selection of a successor. During the
  period of time the operating committee controls operations, all actions shall
  require the approval of two (2) or more parties owning a majority interest based
  on ownership as shown on Exhibit "A." In the event there are only two (2) parties
  to this agreement, during the period of time the operating committee controls
  operations, a third party acceptable to Operator, Non-Operator and the federal
  bankruptcy court shall be selected as a member of the operating committee, and
  all actions shall require the approval of two (2) members of the operating committee
  without regard for their interest in the Contract Area based on Exhibit "A."


C. Employees and Contractors: 

                   
  The number of employees or contractors used by Operator in conducting operations
  hereunder, their selection, and the hours of labor and the compensation for
  services performed shall be determined by Operator, and all such employees or
  contractors shall be the employees or contractors of Operator. 

D. Rights and Duties of Operator: 

                   
  1. Competitive Rates and Use of Affiliates: All wells drilled on the
  Contract Area shall be drilled on a competitive contract basis at the usual
  rates prevailing in the area. If it so desires, Operator may employ its own
  tools and equipment in the drilling of wells, but its charges therefor shall
  not exceed the prevailing rates in the area and the rate of such charges shall
  be agreed upon by the parties in writing before drilling operations are commenced,
  and such work shall be performed by Operator under the same terms and conditions
  as are customary and usual in the area in contracts of independent contractors
  who are doing work of a similar nature. All work performed or materials supplied
  by affiliates or related parties of Operator shall be performed or supplied
  at competitive rates, pursuant to written agreement, and in accordance with
  customs and standards prevailing in the industry. 

                   
  2. Discharge of Joint Account Obligations: Except as herein otherwise
  specifically provided, Operator shall promptly pay and discharge expenses incurred
  in the development and operation of the Contract Area pursuant to this agreement
  and shall charge each of the parties hereto with their respective proportionate
  shares upon the expense basis provided in Exhibit "C." Operator shall keep an
  accurate record of the joint account hereunder, showing expenses incurred and
  charges and credits made and received. 

                   
  3. Protection from Liens: Operator shall pay, or cause to be paid, as
  and when they become due and payable, all accounts of contractors and suppliers
  and wages and salaries for services rendered or performed, and for materials
  supplied on, to or in respect of the Contract Area or any operations for the
  joint account thereof, and shall keep the Contract Area free from 

- 4 - 




A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

liens and encumbrances resulting therefrom except for those resulting
  from a bona fide dispute as to services rendered or materials supplied. 

                   
  4. Custody of Funds: Operator shall hold for the account of the Non-Operators
  any funds of the Non-Operators advanced or paid to the Operator, either for
  the conduct of operations hereunder or as a result of the sale of production
  from the Contract Area, and such funds shall remain the funds of the Non-Operators
  on whose account they are advanced or paid until used for their intended purpose
  or otherwise delivered to the Non-Operators or applied toward the payment of
  debts as provided in Article VII.B. Nothing in this paragraph shall be construed
  to establish a fiduciary relationship between Operator and Non-Operators for
  any purpose other than to account for Non-Operator funds as herein specifically
  provided. Nothing in this paragraph shall require the maintenance by Operator
  of separate accounts for the funds of Non-Operators unless the parties otherwise
  specifically agree. 

                   
  5. Access to Contract Area and Records: Operator shall, except as otherwise
  provided herein, permit each Non-Operator or its duly authorized representative,
  at the Non-Operator's sole risk and cost, full and free access at all reasonable
  times to all operations of every kind and character being conducted for the
  joint account on the Contract Area and to the records of operations conducted
  thereon or production therefrom, including Operator's books and records relating
  thereto. Such access rights shall not be exercised in a manner interfering with
  Operator's conduct of an operation hereunder and shall not obligate Operator
  to furnish any geologic or geophysical data of an interpretive nature unless
  the cost of preparation of such interpretive data was charged to the joint account.
  Operator will furnish to each Non-Operator upon request copies of any and all
  reports and information obtained by Operator in connection with production and
  related items, including, without limitation, meter and chart reports, production
  purchaser statements, run tickets and monthly gauge reports, but excluding purchase
  contracts and pricing information to the extent not applicable to the production
  of the Non-Operator seeking the information. Any audit of Operator's records
  relating to amounts expended and the appropriateness of such expenditures shall
  be conducted in accordance with the audit protocol specified in Exhibit "C."


                   
  6. Filing and Furnishing Governmental Reports: Operator will file, and
  upon written request promptly furnish copies to each requesting Non-Operator
  not in default of its payment obligations, all operational notices, reports
  or applications required to be filed by local, State, Federal or Indian agencies
  or authorities having jurisdiction over operations hereunder. Each Non-Operator
  shall provide to Operator on a timely basis all information necessary to Operator
  to make such filings. 

                   
  7. Drilling and Testing Operations: The following provisions shall apply
  to each well drilled hereunder, including but not limited to the Initial Well:


                   
  (a) Operator will promptly advise Non-Operators of the date on which the well
  is spudded, or the date on which drilling operations are commenced. 

                   
  (b) Operator will send to Non-Operators such reports, test results and notices
  regarding the progress of operations on the well as the Non-Operators shall
  reasonably request, including, but not limited to, daily drilling reports, completion
  reports, and well logs. 

                   
  (c) Operator shall adequately test all Zones encountered which may reasonably
  be expected to be capable of producing Oil and Gas in paying quantities as a
  result of examination of the electric log or any other logs or cores or tests
  conducted hereunder. 

                   
  8. Cost Estimates: Upon request of any Consenting Party, Operator shall
  furnish estimates of current and cumulative costs incurred for the joint account
  at reasonable intervals during the conduct of any operation pursuant to this
  agreement. Operator shall not be held liable for errors in such estimates so
  long as the estimates are made in good faith. 

                   
  9. Insurance: At all times while operations are conducted hereunder,
  Operator shall comply with the workers compensation law of the state where the
  operations are being conducted; provided, however, that Operator may be a self-
  insurer for liability under said compensation laws in which event the only charge
  that shall be made to the joint account shall be as provided in Exhibit "C."
  Operator shall also carry or provide insurance for the benefit of the joint
  account of the parties as outlined in Exhibit "D" attached hereto and made a
  part hereof. Operator shall require all contractors engaged in work on or for
  the Contract Area to comply with the workers compensation law of the state where
  the operations are being conducted and to maintain such other insurance as Operator
  may require. 

                   
  In the event automobile liability insurance is specified in said Exhibit "D,"
  or subsequently receives the approval of the parties, no direct charge shall
  be made by Operator for premiums paid for such insurance for Operator's automotive
  equipment. 

ARTICLE VI. 

  DRILLING AND DEVELOPMENT 

A. Initial Well: 

                   
  On or before the 31 day of October , 2008 , Operator shall
  commence the drilling of the Initial Well under the provisions in the head
  agreement. The drilling of the Initial Well and the participation therein
  by all parties is obligatory, subject to Article VI.C.1. as to participation
  in Completion operations and Article VI.F. as to termination of operations and
  Article XI as to occurrence of force majeure. 

B. Subsequent Operations: 

                   
  1. Proposed Operations: If any party hereto should desire to drill any
  well on the Contract Area other than the Initial Well, or if any party should
  desire to Rework, Sidetrack, Deepen, Recomplete or Plug Back a dry hole or a
  well no longer capable of producing in paying quantities in which such party
  has not otherwise relinquished its interest in the proposed objective Zone under
  this agreement, the party desiring to drill, Rework, Sidetrack, Deepen, Recomplete
  or Plug Back such a well shall give written notice of the proposed operation
  to the parties who have not otherwise relinquished their interest in such objective
  Zone 

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A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

under this agreement and to all other parties in the case of
  a proposal for Sidetracking or Deepening, specifying the work to be performed,
  the location, proposed depth, objective Zone and the estimated cost of the operation.
  The parties to whom such a notice is delivered shall have thirty (30) days after
  receipt of the notice within which to notify the party proposing to do the work
  whether they elect to participate in the cost of the proposed operation. If
  a drilling rig is on location, notice of a proposal to Rework, Sidetrack, Recomplete,
  Plug Back or Deepen may be given by telephone and the response period shall
  be limited to forty- eight (24) hours, exclusive of Saturday, Sunday and
  legal holidays. Failure of a party to whom such notice is delivered to reply
  within the period above fixed shall constitute an election by that party
  not to participate in the cost of the proposed operation. Any proposal by a
  party to conduct an operation conflicting with the operation initially proposed
  shall be delivered to all parties within the time and in the manner provided
  in Article VI.B.6. 

                   
  If all parties to whom such notice is delivered elect to participate in such
  a proposed operation, the parties shall be contractually committed to participate
  therein provided such operations are commenced within the time period hereafter
  set forth, and Operator shall, no later than ninety (90) days after expiration
  of the notice period of thirty (30) days (or as promptly as practicable after
  the expiration of the forty-eight (24) hour period when a drilling rig is
  on location, as the case may be), actually commence the proposed operation
  and thereafter complete it with due diligence at the risk and expense of the
  parties participating therein; provided, however, said commencement date may
  be extended upon written notice of same by Operator to the other parties, for
  a period of up to thirty (30) additional days if, in the sole opinion of Operator,
  such additional time is reasonably necessary to obtain permits from governmental
  authorities, surface rights (including rights-of- way) or appropriate drilling
  equipment, or to complete title examination or curative matter required for
  title approval or acceptance. If the actual operation has not been commenced
  within the time provided (including any extension thereof as specifically permitted
  herein or in the force majeure provisions of Article XI) and if any party hereto
  still desires to conduct said operation, written notice proposing same must
  be resubmitted to the other parties in accordance herewith as if no prior proposal
  had been made. Those parties that did not participate in the drilling of a well
  for which a proposal to Deepen or Sidetrack is made hereunder shall, if such
  parties desire to participate in the proposed Deepening or Sidetracking operation,
  reimburse the Drilling Parties in accordance with Article VI.B.4. in the event
  of a Deepening operation and in accordance with Article VI.B.5. in the event
  of a Sidetracking operation. 

                   
  2. Operations by Less Than All Parties: 

                   
  (a) Determination of Participation. If any party to whom such notice
  is delivered as provided in Article VI.B.1. or VI.C.1. (Option No. 2) elects
  not to participate in the proposed operation, then, in order to be entitled
  to the benefits of this Article, the party or parties giving the notice and
  such other parties as shall elect to participate in the operation shall, no
  later than ninety (90) days after the expiration of the notice period of thirty
  (30) days (or as promptly as practicable after the expiration of the forty-eight
  (24) hour period when a drilling rig is on location, as the case may be)
  actually commence the proposed operation and complete it with due diligence.
  Operator shall perform all work for the account of the Consenting Parties; provided,
  however, if no drilling rig or other equipment is on location, and if Operator
  is a Non-Consenting Party, the Consenting Parties shall either: (i) request
  Operator to perform the work required by such proposed operation for the account
  of the Consenting Parties, or (ii) designate one of the Consenting Parties as
  Operator to perform such work. The rights and duties granted to and imposed
  upon the Operator under this agreement are granted to and imposed upon the party
  designated as Operator for an operation in which the original Operator is a
  Non-Consenting Party. Consenting Parties, when conducting operations on the
  Contract Area pursuant to this Article VI.B.2., shall comply with all terms
  and conditions of this agreement. 

                   
  If less than all parties approve any proposed operation, the proposing party,
  immediately after the expiration of the applicable notice period, shall advise
  all Parties of the total interest of the parties approving such operation and
  its recommendation as to whether the Consenting Parties should proceed with
  the operation as proposed. Each Consenting Party, within forty-eight (24)
  hours (exclusive of Saturday, Sunday, and legal holidays) after delivery of
  such notice, shall advise the proposing party of its desire to (i) limit
  participation to such party's interest as shown on Exhibit "A" or (ii) carry
  only its proportionate part (determined by dividing such party's interest in
  the Contract Area by the interests of all Consenting Parties in the Contract
  Area) of Non-Consenting Parties' interests, or (iii) carry its proportionate
  part (determined as provided in (ii)) of Non-Consenting Parties' interests together
  with all or a portion of its proportionate part of any Non-Consenting Parties'
  interests that any Consenting Party did not elect to take. Any interest of Non-Consenting
  Parties that is not carried by a Consenting Party shall be deemed to be carried
  by the party proposing the operation if such party does not withdraw its proposal.
  Failure to advise the proposing party within the time required shall be deemed
  an election under (i). In the event a drilling rig is on location, notice may
  be given by telephone, and the time permitted for such a response shall not
  exceed a total of forty-eight (24) hours (exclusive of Saturday, Sunday and
  legal holidays). The proposing party, at its election, may withdraw such
  proposal if there is less than 100% participation and shall notify all parties
  of such decision within ten (10) days, or within twenty-four (24) hours if a
  drilling rig is on location, following expiration of the applicable response
  period. If 100% subscription to the proposed operation is obtained, the proposing
  party shall promptly notify the Consenting Parties of their proportionate interests
  in the operation and the party serving as Operator shall commence such operation
  within the period provided in Article VI.B.1., subject to the same extension
  right as provided therein. 

                   
  (b) Relinquishment of Interest for Non-Participation. The entire cost
  and risk of conducting such operations shall be borne by the Consenting Parties
  in the proportions they have elected to bear same under the terms of the preceding
  paragraph. Consenting Parties shall keep the leasehold estates involved in such
  operations free and clear of all liens and encumbrances of every kind created
  by or arising from the operations of the Consenting Parties. If such an operation
  results in a dry hole, then subject to Articles VI.B.6. and VI.E.3., the Consenting
  Parties shall plug and abandon the well and restore the surface location at
  their sole cost, risk and expense; provided, however, that those Non-Consenting
  Parties that participated in the drilling, Deepening or Sidetracking of the
  well shall remain liable for, and shall pay, their proportionate shares of the
  cost of plugging and abandoning the well and restoring the surface location
  insofar only as those costs were not increased by the subsequent operations
  of the Consenting Parties. If any well drilled, Reworked, Sidetracked, Deepened,
  Recompleted or Plugged Back under the provisions of this Article results in
  a well capable of producing Oil and/or Gas in paying quantities, the Consenting
  Parties shall Complete and equip the well to produce at their sole cost and
  risk, and the well shall then be turned over to Operator (if the Operator did
  not conduct the operation) and shall be operated by it at the expense and for
  the account of the Consenting Parties. Upon commencement of operations for the
  drilling, Reworking, Sidetracking, Recompleting, Deepening or Plugging Back
  of any such well by Consenting Parties in accordance with the provisions of
  this Article, each Non-Consenting Party shall be deemed to have relinquished
  to Consenting Parties, and the Consenting Parties shall own and be entitled
  to receive, in proportion to their respective interests, all of such Non- Consenting
  Party's interest in the well and share of production therefrom or, in the case
  of a Reworking, Sidetracking, 

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A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

Deepening, Recompleting or Plugging Back, or a Completion pursuant
  to Article VI.C.1. Option No. 2, all of such Non- Consenting Party's interest
  in the production obtained from the operation in which the Non-Consenting Party
  did not elect to participate. Such relinquishment shall be effective until the
  proceeds of the sale of such share, calculated at the well, or market value
  thereof if such share is not sold (after deducting applicable ad valorem, production,
  severance, and excise taxes, royalty, overriding royalty and other interests
  not excepted by Article III.C. payable out of or measured by the production
  from such well accruing with respect to such interest until it reverts), shall
  equal the total of the following: 

                   
  (i) 300 % of each such Non-Consenting Party's share of the cost of any
  newly acquired surface equipment beyond the wellhead connections (including
  but not limited to stock tanks, separators, treaters, pumping equipment and
  piping), plus 100% of each such Non-Consenting Party's share of the cost of
  operation of the well commencing with first production and continuing until
  each such Non-Consenting Party's relinquished interest shall revert to it under
  other provisions of this Article, it being agreed that each Non-Consenting Party's
  share of such costs and equipment will be that interest which would have been
  chargeable to such Non-Consenting Party had it participated in the well from
  the beginning of the operations; and 

                   
  (ii) 600 % of (a) that portion of the costs and expenses of drilling,
  Reworking, Sidetracking, Deepening, Plugging Back, testing, Completing, and
  Recompleting, after deducting any cash contributions received under Article
  VIII.C., and of (b) that portion of the cost of newly acquired equipment in
  the well (to and including the wellhead connections), which would have been
  chargeable to such Non-Consenting Party if it had participated therein. 

                   
  Notwithstanding anything to the contrary in this Article VI.B., if the well
  does not reach the deepest objective Zone described in the notice proposing
  the well for reasons other than the encountering of granite or practically impenetrable
  substance or other condition in the hole rendering further operations impracticable,
  Operator shall give notice thereof to each Non-Consenting Party who submitted
  or voted for an alternative proposal under Article VI.B.6. to drill the well
  to a shallower Zone than the deepest objective Zone proposed in the notice under
  which the well was drilled, and each such Non- Consenting Party shall have the
  option to participate in the initial proposed Completion of the well by paying
  its share of the cost of drilling the well to its actual depth, calculated in
  the manner provided in Article VI.B.4. (a). If any such Non- Consenting Party
  does not elect to participate in the first Completion proposed for such well,
  the relinquishment provisions of this Article VI.B.2. (b) shall apply to such
  party's interest. 

                   
  (c) Reworking, Recompleting or Plugging Back. An election not to participate
  in the drilling, Sidetracking or Deepening of a well shall be deemed an election
  not to participate in any Reworking or Plugging Back operation proposed in such
  a well, or portion thereof, to which the initial non-consent election applied
  that is conducted at any time prior to full recovery by the Consenting Parties
  of the Non-Consenting Party's recoupment amount. Similarly, an election not
  to participate in the Completing or Recompleting of a well shall be deemed an
  election not to participate in any Reworking operation proposed in such a well,
  or portion thereof, to which the initial non-consent election applied that is
  conducted at any time prior to full recovery by the Consenting Parties of the
  Non-Consenting Party's recoupment amount. Any such Reworking, Recompleting or
  Plugging Back operation conducted during the recoupment period shall be deemed
  part of the cost of operation of said well and there shall be added to the sums
  to be recouped by the Consenting Parties _300______% of that portion
  of the costs of the Reworking, Recompleting or Plugging Back operation which
  would have been chargeable to such Non-Consenting Party had it participated
  therein. If such a Reworking, Recompleting or Plugging Back operation is proposed
  during such recoupment period, the provisions of this Article VI.B. shall be
  applicable as between said Consenting Parties in said well. 

                   
  (d) Recoupment Matters. During the period of time Consenting Parties
  are entitled to receive Non-Consenting Party's share of production, or the proceeds
  therefrom, Consenting Parties shall be responsible for the payment of all ad
  valorem, production, severance, excise, gathering and other taxes, and all royalty,
  overriding royalty and other burdens applicable to Non-Consenting Party's share
  of production not excepted by Article III.C. 

                   
  In the case of any Reworking, Sidetracking, Plugging Back, Recompleting or Deepening
  operation, the Consenting Parties shall be permitted to use, free of cost, all
  casing, tubing and other equipment in the well, but the ownership of all such
  equipment shall remain unchanged; and upon abandonment of a well after such
  Reworking, Sidetracking, Plugging Back, Recompleting or Deepening, the Consenting
  Parties shall account for all such equipment to the owners thereof, with each
  party receiving its proportionate part in kind or in value, less cost of salvage.


                   
  Within ninety (90) days after the completion of any operation under this Article,
  the party conducting the operations for the Consenting Parties shall furnish
  each Non-Consenting Party with an inventory of the equipment in and connected
  to the well, and an itemized statement of the cost of drilling, Sidetracking,
  Deepening, Plugging Back, testing, Completing, Recompleting, and equipping the
  well for production; or, at its option, the operating party, in lieu of an itemized
  statement of such costs of operation, may submit a detailed statement of monthly
  billings. Each month thereafter, during the time the Consenting Parties are
  being reimbursed as provided above, the party conducting the operations for
  the Consenting Parties shall furnish the Non-Consenting Parties with an itemized
  statement of all costs and liabilities incurred in the operation of the well,
  together with a statement of the quantity of Oil and Gas produced from it and
  the amount of proceeds realized from the sale of the well's working interest
  production during the preceding month. In determining the quantity of Oil and
  Gas produced during any month, Consenting Parties shall use industry accepted
  methods such as but not limited to metering or periodic well tests. Any amount
  realized from the sale or other disposition of equipment newly acquired in connection
  with any such operation which would have been owned by a Non-Consenting Party
  had it participated therein shall be credited against the total unreturned costs
  of the work done and of the equipment purchased in determining when the interest
  of such Non-Consenting Party shall revert to it as above provided; and if there
  is a credit balance, it shall be paid to such Non- Consenting Party. 

                   
  If and when the Consenting Parties recover from a Non-Consenting Party's relinquished
  interest the amounts provided for above, the relinquished interests of such
  Non-Consenting Party shall automatically revert to it as of 7:00 a.m. on the
  day following the day on which such recoupment occurs, and, from and after such
  reversion, such Non-Consenting Party shall own the same interest in such well,
  the material and equipment in or pertaining thereto, and the production therefrom
  as such Non-Consenting Party would have been entitled to had it participated
  in the drilling, Sidetracking, Reworking, Deepening, Recompleting or Plugging
  Back of said well. Thereafter, such Non-Consenting Party shall be charged with
  and shall pay its proportionate part of the further costs of the operation of
  said well in accordance with the terms of this agreement and Exhibit "C" attached
  hereto. 

                   
  3. Stand-By Costs: When a well which has been drilled or Deepened has
  reached its authorized depth and all tests have been completed and the results
  thereof furnished to the parties, or when operations on the well have been otherwise
  terminated pursuant to Article VI.F., stand-by costs incurred pending response
  to a party's notice proposing a Reworking, 

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A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

Sidetracking, Deepening, Recompleting, Plugging Back or Completing
  operation in such a well (including the period required under Article VI.B.6.
  to resolve competing proposals) shall be charged and borne as part of the drilling
  or Deepening operation just completed. Stand-by costs subsequent to all parties
  responding, or expiration of the response time permitted, whichever first occurs,
  and prior to agreement as to the participating interests of all Consenting Parties
  pursuant to the terms of the second grammatical paragraph of Article VI.B.2.
  (a), shall be charged to and borne as part of the proposed operation, but if
  the proposal is subsequently withdrawn because of insufficient participation,
  such stand-by costs shall be allocated between the Consenting Parties in the
  proportion each Consenting Party's interest as shown on Exhibit "A" bears to
  the total interest as shown on Exhibit "A" of all Consenting Parties. 

                   
  In the event that notice for a Sidetracking operation is given while the drilling
  rig to be utilized is on location, any party may request and receive up to five
  (5) additional days after expiration of the forty-eight hour response period
  specified in Article VI.B.1. within which to respond by paying for all stand-by
  costs and other costs incurred during such extended response period; Operator
  may require such party to pay the estimated stand-by time in advance as a condition
  to extending the response period. If more than one party elects to take such
  additional time to respond to the notice, standby costs shall be allocated between
  the parties taking additional time to respond on a day-to-day basis in the proportion
  each electing party's interest as shown on Exhibit "A" bears to the total interest
  as shown on Exhibit "A" of all the electing parties. 

                   
  4. Deepening: If less than all parties elect to participate in a drilling,
  Sidetracking, or Deepening operation proposed pursuant to Article VI.B.1., the
  interest relinquished by the Non-Consenting Parties to the Consenting Parties
  under Article VI.B.2. shall relate only and be limited to the lesser of (i)
  the total depth actually drilled or (ii) the objective depth or Zone of which
  the parties were given notice under Article VI.B.1. ("Initial Objective"). Such
  well shall not be Deepened beyond the Initial Objective without first complying
  with this Article to afford the Non-Consenting Parties the opportunity to participate
  in the Deepening operation. 

                   
  In the event any Consenting Party desires to drill or Deepen a Non-Consent Well
  to a depth below the Initial Objective, such party shall give notice thereof,
  complying with the requirements of Article VI.B.1., to all parties (including
  Non- Consenting Parties). Thereupon, Articles VI.B.1. and 2. shall apply and
  all parties receiving such notice shall have the right to participate or not
  participate in the Deepening of such well pursuant to said Articles VI.B.1.
  and 2. If a Deepening operation is approved pursuant to such provisions, and
  if any Non-Consenting Party elects to participate in the Deepening operation,
  such Non-Consenting party shall pay or make reimbursement (as the case may be)
  of the following costs and expenses. 

                   
  (a) If the proposal to Deepen is made prior to the Completion of such well as
  a well capable of producing in paying quantities, such Non-Consenting Party
  shall pay (or reimburse Consenting Parties for, as the case may be) that share
  of costs and expenses incurred in connection with the drilling of said well
  from the surface to the Initial Objective which Non- Consenting Party would
  have paid had such Non-Consenting Party agreed to participate therein, plus
  the Non-Consenting Party's share of the cost of Deepening and of participating
  in any further operations on the well in accordance with the other provisions
  of this Agreement; provided, however, all costs for testing and Completion or
  attempted Completion of the well incurred by Consenting Parties prior to the
  point of actual operations to Deepen beyond the Initial Objective shall be for
  the sole account of Consenting Parties. 

                   
  (b) If the proposal is made for a Non-Consent Well that has been previously
  Completed as a well capable of producing in paying quantities, but is no longer
  capable of producing in paying quantities, such Non-Consenting Party shall pay
  (or reimburse Consenting Parties for, as the case may be) its proportionate
  share of all costs of drilling, Completing, and equipping said well from the
  surface to the Initial Objective, calculated in the manner provided in paragraph
  (a) above, less those costs recouped by the Consenting Parties from the sale
  of production from the well. The Non-Consenting Party shall also pay its proportionate
  share of all costs of re-entering said well. The Non-Consenting Parties' proportionate
  part (based on the percentage of such well Non-Consenting Party would have owned
  had it previously participated in such Non-Consent Well) of the costs of salvable
  materials and equipment remaining in the hole and salvable surface equipment
  used in connection with such well shall be determined in accordance with Exhibit
  "C." If the Consenting Parties have recouped the cost of drilling, Completing,
  and equipping the well at the time such Deepening operation is conducted, then
  a Non- Consenting Party may participate in the Deepening of the well with no
  payment for costs incurred prior to re-entering the well for Deepening 

                   
  The foregoing shall not imply a right of any Consenting Party to propose any
  Deepening for a Non-Consent Well prior to the drilling of such well to its Initial
  Objective without the consent of the other Consenting Parties as provided in
  Article VI.F. 

                   
  5. Sidetracking: Any party having the right to participate in a proposed
  Sidetracking operation that does not own an interest in the affected wellbore
  at the time of the notice shall, upon electing to participate, tender to the
  wellbore owners its proportionate share (equal to its interest in the Sidetracking
  operation) of the value of that portion of the existing wellbore to be utilized
  as follows: 

                   
  (a) If the proposal is for Sidetracking an existing dry hole, reimbursement
  shall be on the basis of the actual costs incurred in the initial drilling of
  the well down to the depth at which the Sidetracking operation is initiated.


                   
  (b) If the proposal is for Sidetracking a well which has previously produced,
  reimbursement shall be on the basis of such party's proportionate share of drilling
  and equipping costs incurred in the initial drilling of the well down to the
  depth at which the Sidetracking operation is conducted, calculated in the manner
  described in Article VI.B.4(b) above. Such party's proportionate share of the
  cost of the well's salvable materials and equipment down to the depth at which
  the Sidetracking operation is initiated shall be determined in accordance with
  the provisions of Exhibit "C." 

                   
  6. Order of Preference of Operations. Except as otherwise specifically
  provided in this agreement, if any party desires to propose the conduct of an
  operation that conflicts with a proposal that has been made by a party under
  this Article VI, such party shall have fifteen (15) days from delivery of the
  initial proposal, in the case of a proposal to drill a well or to perform an
  operation on a well where no drilling rig is on location, or twenty-four (24)
  hours, exclusive of Saturday, Sunday and legal holidays, from delivery of the
  initial proposal, if a drilling rig is on location for the well on which such
  operation is to be conducted, to deliver to all parties entitled to participate
  in the proposed operation such party's alternative proposal, such alternate
  proposal to contain the same information required to be included in the initial
  proposal. Each party receiving such proposals shall elect by delivery of notice
  to Operator within five (5) days after expiration of the proposal period, or
  within twenty-four (24) hours (exclusive of Saturday, Sunday and legal holidays)
  if a drilling rig is on location for the well that is the subject of the proposals,
  to participate in one of the competing proposals. Any party not electing within
  the time required shall be deemed not to have voted. The proposal receiving
  the vote of parties owning the largest aggregate percentage interest of the
  parties voting shall have priority over all other competing proposals; in the
  case of a tie vote, the 

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A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

 initial proposal shall prevail. Operator shall deliver
  notice of such result to all parties entitled to participate in the operation
  2 within five (5) days after expiration of the election period (or within twenty-four
  (24) hours, exclusive of Saturday, Sunday 3 and legal holidays, if a drilling
  rig is on location). Each party shall then have two (2) days (or twenty-four
  (24) hours if a rig 4 is on location) from receipt of such notice to elect by
  delivery of notice to Operator to participate in such operation or to 5 relinquish
  interest in the affected well pursuant to the provisions of Article VI.B.2.;
  failure by a party to deliver notice within 6 such period shall be deemed an
  election not to participate in the prevailing proposal. 

                   
  7. Conformity to Spacing Pattern. Notwithstanding the provisions of this
  Article VI.B.2., it is agreed that no wells shall be 8 proposed to be drilled
  to or Completed in or produced from a Zone from which a well located elsewhere
  on the Contract Area is producing, unless such well conforms to the then-existing
  well spacing pattern for such Zone. 

                   
  8. Paying Wells. No party shall conduct any Reworking, Deepening, Plugging
  Back, Completion, Recompletion, or Sidetracking operation under this agreement
  with respect to any well then capable of producing in paying quantities except
  with the consent of all parties that have not relinquished interests in the
  well at the time of such operation. 

C. Completion of Wells; Reworking and Plugging Back: 

                   
  1. Completion: Without the consent of all parties, no well shall be drilled,
  Deepened or Sidetracked, except any well drilled, Deepened or Sidetracked pursuant
  to the provisions of Article VI.B.2. of this agreement. Consent to the drilling,
  Deepening or Sidetracking shall include: 

		[   ] 	 Option No. 1: All necessary
        expenditures for the drilling, Deepening or Sidetracking, testing, Completing
        and equipping of the well, including necessary tankage and/or surface
        facilities. 

		[X] 	 Option No. 2: All necessary
        expenditures for the drilling, Deepening or Sidetracking and testing of
        the well. When such well has reached its authorized depth, and all logs,
        cores and other tests have been completed, and the results thereof furnished
        to the parties, Operator shall give immediate notice to the Non-Operators
        having the right to participate in a Completion attempt whether or not
        Operator recommends attempting to Complete the well, together with Operator's
        AFE for Completion costs if not previously provided. The parties receiving
        such notice shall have forty-eight (24) hours
        (exclusive of Saturday, Sunday and legal holidays) in which to elect by
        delivery of notice to Operator to participate in a recommended Completion
        attempt or to make a Completion proposal with an accompanying AFE. Operator
        shall deliver any such Completion proposal, or any Completion proposal
        conflicting with Operator's proposal, to the other parties entitled to
        participate in such Completion in accordance with the procedures specified
        in Article VI.B.6. Election to participate in a Completion attempt shall
        include consent to all necessary expenditures for the Completing and equipping
        of such well, including necessary tankage and/or surface facilities but
        excluding any stimulation operation not contained on the Completion AFE.
        Failure of any party receiving such notice to reply within the period
        above fixed shall constitute an election by that party not to participate
        in the cost of the Completion attempt; provided, that Article VI.B.6.
        shall control in the case of conflicting Completion proposals. If one
        or more, but less than all of the parties, elect to attempt a Completion,
        the provision of Article VI.B.2. hereof (the phrase "Reworking, Sidetracking,
        Deepening, Recompleting or Plugging Back" as contained in Article VI.B.2.
        shall be deemed to include "Completing") shall apply to the operations
        thereafter conducted by less than all parties; provided, however, that
        Article VI.B.2. shall apply separately to each separate Completion or
        Recompletion attempt undertaken hereunder, and an election to become a
        Non-Consenting Party as to one Completion or Recompletion attempt shall
        not prevent a party from becoming a Consenting Party in subsequent Completion
        or Recompletion attempts regardless whether the Consenting Parties as
        to earlier Completions or Recompletion have recouped their costs pursuant
        to Article VI.B.2.; provided further, that any recoupment of costs by
        a Consenting Party shall be made solely from the production attributable
        to the Zone in which the Completion attempt is made. Election by a previous
        Non-Consenting party to participate in a subsequent Completion or Recompletion
        attempt shall require such party to pay its proportionate share of the
        cost of salvable materials and equipment installed in the well pursuant
        to the previous Completion or Recompletion attempt, insofar and only insofar
        as such materials and equipment benefit the Zone in which such party participates
        in a Completion attempt. 



                   
  2. Rework, Recomplete or Plug Back: No well shall be Reworked, Recompleted
  or Plugged Back except a well Reworked, Recompleted, or Plugged Back pursuant
  to the provisions of Article VI.B.2. of this agreement. Consent to the Reworking,
  Recompleting or Plugging Back of a well shall include all necessary expenditures
  in conducting such operations and Completing and equipping of said well, including
  necessary tankage and/or surface facilities. 

D. Other Operations: 

                   
  Operator shall not undertake any single project reasonably estimated to require
  an expenditure in excess of Fifty thousand / 50,000.00 Dollars ($/
  ) except in connection with the Plugging Back of a well that has been
  previously authorized by or pursuant to this agreement; provided, however, that,
  in case of explosion, fire, flood or other sudden emergency, whether of the
  same or different nature, Operator may take such steps and incur such expenses
  as in its opinion are required to deal with the emergency to safeguard life
  and property but Operator, as promptly as possible, shall report the emergency
  to the other parties. If Operator prepares an AFE for its own use, Operator
  shall furnish any Non-Operator so requesting an information copy thereof for
  any single project costing in excess of twenty five thousand Dollars
  ($ 25,000.00 ). Any party who has not relinquished its interest in a
  well shall have the right to propose that Operator perform repair work or undertake
  the installation of artificial lift equipment or ancillary production facilities
  such as salt water disposal wells or to conduct additional work with respect
  to a well drilled hereunder or other similar project (but not including the
  installation of gathering lines or other transportation or marketing facilities,
  the installation of which shall be governed by separate agreement between the
  parties) reasonably estimated to require an expenditure in excess of the amount
  first set forth above in this Article VI.D. (except in connection with an operation
  required to be proposed under Articles VI.B.1. or VI.C.1. Option No. 2, which
  shall be governed exclusively be those Articles). Operator shall deliver such
  proposal to all parties entitled to participate therein. If within thirty (30)
  days thereof Operator secures the written consent of any party or parties owning
  at least 60 % of the interests of the parties entitled to participate
  in such operation, each party having the right to participate in such project
  shall be bound by the terms of such proposal and shall be obligated to pay its
  proportionate share of the costs of the proposed project as if it had consented
  to such project pursuant to the terms of the proposal. 

E. Abandonment of Wells: 

                   
  1. Abandonment of Dry Holes: Except for any well drilled or Deepened
  pursuant to Article VI.B.2., any well which has been drilled or Deepened under
  the terms of this agreement and is proposed to be completed as a dry hole shall
  not be 

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A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

plugged and abandoned without the consent of all parties. Should
  Operator, after diligent effort, be unable to contact any party, or should any
  party fail to reply within forty-eight (24) hours (exclusive of Saturday,
  Sunday and legal holidays) after delivery of notice of the proposal to plug
  and abandon such well, such party shall be deemed to have consented to the proposed
  abandonment. All such wells shall be plugged and abandoned in accordance with
  applicable regulations and at the cost, risk and expense of the parties who
  participated in the cost of drilling or Deepening such well. Any party who objects
  to plugging and abandoning such well by notice delivered to Operator within
  forty-eight (24) hours (exclusive of Saturday, Sunday and legal holidays)
  after delivery of notice of the proposed plugging shall take over the well as
  of the end of such forty-eight (24) hour notice period and conduct further
  operations in search of Oil and/or Gas subject to the provisions of Article
  VI.B.; failure of such party to provide proof reasonably satisfactory to Operator
  of its financial capability to conduct such operations or to take over the well
  within such period or thereafter to conduct operations on such well or plug
  and abandon such well shall entitle Operator to retain or take possession of
  the well and plug and abandon the well. The party taking over the well shall
  indemnify Operator (if Operator is an abandoning party) and the other abandoning
  parties against liability for any further operations conducted on such well
  except for the costs of plugging and abandoning the well and restoring the surface,
  for which the abandoning parties shall remain proportionately liable. 

                   
  2. Abandonment of Wells That Have Produced: Except for any well in which
  a Non-Consent operation has been conducted hereunder for which the Consenting
  Parties have not been fully reimbursed as herein provided, any well which has
  been completed as a producer shall not be plugged and abandoned without the
  consent of all parties. If all parties consent to such abandonment, the well
  shall be plugged and abandoned in accordance with applicable regulations and
  at the cost, risk and expense of all the parties hereto. Failure of a party
  to reply within sixty (60) days of delivery of notice of proposed abandonment
  shall be deemed an election to consent to the proposal. If, within sixty (60)
  days after delivery of notice of the proposed abandonment of any well, all parties
  do not agree to the abandonment of such well, those wishing to continue its
  operation from the Zone then open to production shall be obligated to take over
  the well as of the expiration of the applicable notice period and shall indemnify
  Operator (if Operator is an abandoning party) and the other abandoning parties
  against liability for any further operations on the well conducted by such parties.
  Failure of such party or parties to provide proof reasonably satisfactory to
  Operator of their financial capability to conduct such operations or to take
  over the well within the required period or thereafter to conduct operations
  on such well shall entitle operator to retain or take possession of such well
  and plug and abandon the well. 

                   
  Parties taking over a well as provided herein shall tender to each of the other
  parties its proportionate share of the value of the well's salvable material
  and equipment, determined in accordance with the provisions of Exhibit "C,"
  less the estimated cost of salvaging and the estimated cost of plugging and
  abandoning and restoring the surface; provided, however, that in the event the
  estimated plugging and abandoning and surface restoration costs and the estimated
  cost of salvaging are higher than the value of the well's salvable material
  and equipment, each of the abandoning parties shall tender to the parties continuing
  operations their proportionate shares of the estimated excess cost. Each abandoning
  party shall assign to the non-abandoning parties, without warranty, express
  or implied, as to title or as to quantity, or fitness for use of the equipment
  and material, all of its interest in the wellbore of the well and related equipment,
  together with its interest in the Leasehold insofar and only insofar as such
  Leasehold covers the right to obtain production from that wellbore in the Zone
  then open to production. If the interest of the abandoning party is or includes
  and Oil and Gas Interest, such party shall execute and deliver to the non- abandoning
  party or parties an oil and gas lease, limited to the wellbore and the Zone
  then open to production, for a term of one (1) year and so long thereafter as
  Oil and/or Gas is produced from the Zone covered thereby, such lease to be on
  the form attached as Exhibit "B." The assignments or leases so limited shall
  encompass the Drilling Unit upon which the well is located. The payments by,
  and the assignments or leases to, the assignees shall be in a ratio based upon
  the relationship of their respective percentage of participation in the Contract
  Area to the aggregate of the percentages of participation in the Contract Area
  of all assignees. There shall be no readjustment of interests in the remaining
  portions of the Contract Area. 

                   
  Thereafter, abandoning parties shall have no further responsibility, liability,
  or interest in the operation of or production from the well in the Zone then
  open other than the royalties retained in any lease made under the terms of
  this Article. Upon request, Operator shall continue to operate the assigned
  well for the account of the non-abandoning parties at the rates and charges
  contemplated by this agreement, plus any additional cost and charges which may
  arise as the result of the separate ownership of the assigned well. Upon proposed
  abandonment of the producing Zone assigned or leased, the assignor or lessor
  shall then have the option to repurchase its prior interest in the well (using
  the same valuation formula) and participate in further operations therein subject
  to the provisions hereof. 

                   
  3. Abandonment of Non-Consent Operations: The provisions of Article VI.E.1.
  or VI.E.2. above shall be applicable as between Consenting Parties in the event
  of the proposed abandonment of any well excepted from said Articles; provided,
  however, no well shall be permanently plugged and abandoned unless and until
  all parties having the right to conduct further operations therein have been
  notified of the proposed abandonment and afforded the opportunity to elect to
  take over the well in accordance with the provisions of this Article VI.E.;
  and provided further, that Non-Consenting Parties who own an interest in a portion
  of the well shall pay their proportionate shares of abandonment and surface
  restoration cost for such well as provided in Article VI.B.2.(b). 

F. Termination of Operations: 

                   
  Upon the commencement of an operation for the drilling, Reworking, Sidetracking,
  Plugging Back, Deepening, testing, Completion or plugging of a well, including
  but not limited to the Initial Well, such operation shall not be terminated
  without consent of parties bearing _60____% of the costs of such operation;
  provided, however, that in the event granite or other practically impenetrable
  substance or condition in the hole is encountered which renders further operations
  impractical, Operator may discontinue operations and give notice of such condition
  in the manner provided in Article VI.B.1, and the provisions of Article VI.B.
  or VI.E. shall thereafter apply to such operation, as appropriate. 

G. Taking Production in Kind: 

	 	[   ] 	Option No. 1: Gas Balancing Agreement
      Attached 
			       Each party shall
        take in kind or separately dispose of its proportionate share of all Oil
        and Gas produced from the Contract Area, exclusive of production which
        may be used in development and producing operations and in preparing and
        treating Oil and Gas for marketing purposes and production unavoidably
        lost. Any extra expenditure incurred in the taking in kind or separate
        disposition by any party of its proportionate share of the production
        shall be borne by such party. Any party taking its share of production
        in kind shall be required to pay for only its proportionate share of such
        part of Operator's surface facilities which it uses. 

			       Each party shall
        execute such division orders and contracts as may be necessary for the
        sale of its interest in production from the Contract Area, and, except
        as provided in Article VII.B., shall be entitled to receive payment 



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A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

	 	  	 directly from the purchaser
        thereof for its share of all production. 

			       
        If any party fails to make the arrangements necessary to take in kind
        or separately dispose of its proportionate share of the Oil produced from
        the Contract Area, Operator shall have the right, subject to the revocation
        at will by the party owning it, but not the obligation, to purchase such
        Oil or sell it to others at any time and from time to time, for the account
        of the non-taking party. Any such purchase or sale by Operator may be
        terminated by Operator upon at least ten (10) days written notice to the
        owner of said production and shall be subject always to the right of the
        owner of the production upon at least ten (10) days written notice to
        Operator to exercise at any time its right to take in kind, or separately
        dispose of, its share of all Oil not previously delivered to a purchaser.
        Any purchase or sale by Operator of any other party's share of Oil shall
        be only for such reasonable periods of time as are consistent with the
        minimum needs of the industry under the particular circumstances, but
        in no event for a period in excess of one (1) year. 

			       
        Any such sale by Operator shall be in a manner commercially reasonable
        under the circumstances but Operator shall have no duty to share any existing
        market or to obtain a price equal to that received under any existing
        market. The sale or delivery by Operator of a non-taking party's share
        of Oil under the terms of any existing contract of Operator shall not
        give the non-taking party any interest in or make the non-taking party
        a party to said contract. No purchase shall be made by Operator without
        first giving the non-taking party at least ten (10) days written notice
        of such intended purchase and the price to be paid or the pricing basis
        to be used. 

			       
        All parties shall give timely written notice to Operator of their Gas
        marketing arrangements for the following month, excluding price, and shall
        notify Operator immediately in the event of a change in such arrangements.
        Operator shall maintain records of all marketing arrangements, and of
        volumes actually sold or transported, which records shall be made available
        to Non-Operators upon reasonable request. 

			       
        In the event one or more parties' separate disposition of its share of
        the Gas causes split-stream deliveries to separate pipelines and/or deliveries
        which on a day-to-day basis for any reason are not exactly equal to a
        party's respective proportion- ate share of total Gas sales to be allocated
        to it, the balancing or accounting between the parties shall be in accordance
        with any Gas balancing agreement between the parties hereto, whether such
        an agreement is attached as Exhibit "E" or is a separate agreement. Operator
        shall give notice to all parties of the first sales of Gas from any well
        under this agreement. 

	 	[X]	 Option No. 2: No Gas
        Balancing Agreement: 

			       
        Each party shall take in kind or separately dispose of its proportionate
        share of all Oil and Gas produced from the Contract Area, exclusive of
        production which may be used in development and producing operations and
        in preparing and treating Oil and Gas for marketing purposes and production
        unavoidably lost. Any extra expenditures incurred in the taking in kind
        or separate disposition by any party of its proportionate share of the
        production shall be borne by such party. Any party taking its share of
        production in kind shall be required to pay for only its proportionate
        share of such part of Operator's surface facilities which it uses. 

			       
        Each party shall execute such division orders and contracts as may be
        necessary for the sale of its interest in production from the Contract
        Area, and, except as provided in Article VII.B., shall be entitled to
        receive payment directly from the purchaser thereof for its share of all
        production. 

			       
        If any party fails to make the arrangements necessary to take in kind
        or separately dispose of its proportionate share of the Oil and/or Gas
        produced from the Contract Area, Operator shall have the right, subject
        to the revocation at will by the party owning it, but not the obligation,
        to purchase such Oil and/or Gas or sell it to others at any time and from
        time to time, for the account of the non-taking party. Any such purchase
        or sale by Operator may be terminated by Operator upon at least ten (10)
        days written notice to the owner of said production and shall be subject
        always to the right of the owner of the production upon at least ten (10)
        days written notice to Operator to exercise its right to take in kind,
        or separately dispose of, its share of all Oil and/or Gas not previously
        delivered to a purchaser; provided, however, that the effective date of
        any such revocation may be deferred at Operator's election for a period
        not to exceed ninety (90) days if Operator has committed such production
        to a purchase contract having a term extending beyond such ten (10) -day
        period. Any purchase or sale by Operator of any other party's share of
        Oil and/or Gas shall be only for such reasonable periods of time as are
        consistent with the minimum needs of the industry under the particular
        circumstances, but in no event for a period in excess of one (1) year.
      

			       
        Any such sale by Operator shall be in a manner commercially reasonable
        under the circumstances, but Operator shall have no duty to share any
        existing market or transportation arrangement or to obtain a price or
        transportation fee equal to that received under any existing market or
        transportation arrangement. The sale or delivery by Operator of a non-taking
        party's share of production under the terms of any existing contract of
        Operator shall not give the non-taking party any interest in or make the
        non-taking party a party to said contract. No purchase of Oil and Gas
        and no sale of Gas shall be made by Operator without first giving the
        non-taking party ten days written notice of such intended purchase or
        sale and the price to be paid or the pricing basis to be used. Operator
        shall give notice to all parties of the first sale of Gas from any well
        under this Agreement. 

			       
        All parties shall give timely written notice to Operator of their Gas
        marketing arrangements for the following month, excluding price, and shall
        notify Operator immediately in the event of a change in such arrangements.
        Operator shall maintain records of all marketing arrangements, and of
        volumes actually sold or transported, which records shall be made available
        to Non-Operators upon reasonable request. 



ARTICLE VII. 

  EXPENDITURES AND LIABILITY OF PARTIES 

A. Liability of Parties: 

                   
  The liability of the parties shall be several, not joint or collective. Each
  party shall be responsible only for its obligations, and shall be liable only
  for its proportionate share of the costs of developing and operating the Contract
  Area. Accordingly, the liens granted among the parties in Article VII.B. are
  given to secure only the debts of each severally, and no party shall have any
  liability to third parties hereunder to satisfy the default of any other party
  in the payment of any expense or obligation hereunder. It is not the intention
  of the parties to create, nor shall this agreement be construed as creating,
  a mining or other partnership, joint venture, agency relationship or association,
  or to render the parties liable as partners, co-venturers, or principals. In
  their relations with each other under this agreement, the parties shall not
  be considered fiduciaries or to have established a confidential relationship
  but rather shall be free to act on an arm's-length basis in accordance with
  their own respective self-interest, subject, however, to the obligation of the
  parties to act in good faith in their dealings with each other with respect
  to activities hereunder. 

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A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

B. Liens and Security Interests: 

                   
  Each party grants to the other parties hereto a lien upon any interest it now
  owns or hereafter acquires in Oil and Gas Leases and Oil and Gas Interests in
  the Contract Area, and a security interest and/or purchase money security interest
  in any interest it now owns or hereafter acquires in the personal property and
  fixtures on or used or obtained for use in connection therewith, to secure performance
  of all of its obligations under this agreement including but not limited to
  payment of expense, interest and fees, the proper disbursement of all monies
  paid hereunder, the assignment or relinquishment of interest in Oil and Gas
  Leases as required hereunder, and the proper performance of operations hereunder.
  Such lien and security interest granted by each party hereto shall include such
  party's leasehold interests, working interests, operating rights, and royalty
  and overriding royalty interests in the Contract Area now owned or hereafter
  acquired and in lands pooled or unitized therewith or otherwise becoming subject
  to this agreement, the Oil and Gas when extracted therefrom and equipment situated
  thereon or used or obtained for use in connection therewith (including, without
  limitation, all wells, tools, and tubular goods), and accounts (including, without
  limitation, accounts arising from gas imbalances or from the sale of Oil and/or
  Gas at the wellhead), contract rights, inventory and general intangibles relating
  thereto or arising therefrom, and all proceeds and products of the foregoing.


                   
  To perfect the lien and security agreement provided herein, each party hereto
  shall execute and acknowledge the recording supplement and/or any financing
  statement prepared and submitted by any party hereto in conjunction herewith
  or at any time following execution hereof, and Operator is authorized to file
  this agreement or the recording supplement executed herewith as a lien or mortgage
  in the applicable real estate records and as a financing statement with the
  proper officer under the Uniform Commercial Code in the state in which the Contract
  Area is situated and such other states as Operator shall deem appropriate to
  perfect the security interest granted hereunder. Any party may file this agreement,
  the recording supplement executed herewith, or such other documents as it deems
  necessary as a lien or mortgage in the applicable real estate records and/or
  a financing statement with the proper officer under the Uniform Commercial Code.


                   
  Each party represents and warrants to the other parties hereto that the lien
  and security interest granted by such party to the other parties shall be a
  first and prior lien, and each party hereby agrees to maintain the priority
  of said lien and security interest against all persons acquiring an interest
  in Oil and Gas Leases and Interests covered by this agreement by, through or
  under such party. All parties acquiring an interest in Oil and Gas Leases and
  Oil and Gas Interests covered by this agreement, whether by assignment, merger,
  mortgage, operation of law, or otherwise, shall be deemed to have taken subject
  to the lien and security interest granted by this Article VII.B. as to all obligations
  attributable to such interest hereunder whether or not such obligations arise
  before or after such interest is acquired. 

                   
  To the extent that parties have a security interest under the Uniform Commercial
  Code of the state in which the Contract Area is situated, they shall be entitled
  to exercise the rights and remedies of a secured party under the Code. The bringing
  of a suit and the obtaining of judgment by a party for the secured indebtedness
  shall not be deemed an election of remedies or otherwise affect the lien rights
  or security interest as security for the payment thereof. In addition, upon
  default by any party in the payment of its share of expenses, interests or fees,
  or upon the improper use of funds by the Operator, the other parties shall have
  the right, without prejudice to other rights or remedies, to collect from the
  purchaser the proceeds from the sale of such defaulting party's share of Oil
  and Gas until the amount owed by such party, plus interest as provided in "Exhibit
  C," has been received, and shall have the right to offset the amount owed against
  the proceeds from the sale of such defaulting party's share of Oil and Gas.
  All purchasers of production may rely on a notification of default from the
  non-defaulting party or parties stating the amount due as a result of the default,
  and all parties waive any recourse available against purchasers for releasing
  production proceeds as provided in this paragraph. 

                   
  If any party fails to pay its share of cost within one hundred twenty (60)
  days after rendition of a statement therefor by Operator, the non-defaulting
  parties, including Operator, shall upon request by Operator, pay the unpaid
  amount in the proportion that the interest of each such party bears to the interest
  of all such parties. The amount paid by each party so paying its share of the
  unpaid amount shall be secured by the liens and security rights described in
  Article VII.B., and each paying party may independently pursue any remedy available
  hereunder or otherwise. 

                   
  If any party does not perform all of its obligations hereunder, and the failure
  to perform subjects such party to foreclosure or execution proceedings pursuant
  to the provisions of this agreement, to the extent allowed by governing law,
  the defaulting party waives any available right of redemption from and after
  the date of judgment, any required valuation or appraisement of the mortgaged
  or secured property prior to sale, any available right to stay execution or
  to require a marshaling of assets and any required bond in the event a receiver
  is appointed. In addition, to the extent permitted by applicable law, each party
  hereby grants to the other parties a power of sale as to any property that is
  subject to the lien and security rights granted hereunder, such power to be
  exercised in the manner provided by applicable law or otherwise in a commercially
  reasonable manner and upon reasonable notice. 

                   
  Each party agrees that the other parties shall be entitled to utilize the provisions
  of Oil and Gas lien law or other lien law of any state in which the Contract
  Area is situated to enforce the obligations of each party hereunder. Without
  limiting the generality of the foregoing, to the extent permitted by applicable
  law, Non-Operators agree that Operator may invoke or utilize the mechanics'
  or materialmen's lien law of the state in which the Contract Area is situated
  in order to secure the payment to Operator of any sum due hereunder for services
  performed or materials supplied by Operator. 

C. Advances: 

                   
  Operator, at its election, shall have the right from time to time to demand
  and receive from one or more of the other parties payment in advance of their
  respective shares of the estimated amount of the expense to be incurred in operations
  hereunder during the next succeeding month, which right may be exercised only
  by submission to each such party of an itemized statement of such estimated
  expense, together with an invoice for its share thereof. Each such statement
  and invoice for the payment in advance of estimated expense shall be submitted
  on or before the 20th day of the next preceding month. Each party shall pay
  to Operator its proportionate share of such estimate within fifteen (15) days
  after such estimate and invoice is received. If any party fails to pay its share
  of said estimate within said time, the amount due shall bear interest as provided
  in Exhibit "C" until paid. Proper adjustment shall be made monthly between advances
  and actual expense to the end that each party shall bear and pay its proportionate
  share of actual expenses incurred, and no more. 

D. Defaults and Remedies: 

                   
  If any party fails to discharge any financial obligation under this agreement,
  including without limitation the failure to make any advance under the preceding
  Article VII.C. or any other provision of this agreement, within the period required
  for such payment hereunder, then in addition to the remedies provided in Article
  VII.B. or elsewhere in this agreement, the remedies specified below shall be
  applicable. For purposes of this Article VII.D., all notices and elections shall
  be delivered 

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A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

only by Operator, except that Operator shall deliver any such
  notice and election requested by a non-defaulting Non-Operator, and when Operator
  is the party in default, the applicable notices and elections can be delivered
  by any Non-Operator. Election of any one or more of the following remedies shall
  not preclude the subsequent use of any other remedy specified below or otherwise
  available to a non-defaulting party. 

                   
  1. Suspension of Rights: Any party may deliver to the party in default
  a Notice of Default, which shall specify the default, specify the action to
  be taken to cure the default, and specify that failure to take such action will
  result in the exercise of one or more of the remedies provided in this Article.
  If the default is not cured within thirty (30) days of the delivery of such
  Notice of Default, all of the rights of the defaulting party granted by this
  agreement may upon notice be suspended until the default is cured, without prejudice
  to the right of the non-defaulting party or parties to continue to enforce the
  obligations of the defaulting party previously accrued or thereafter accruing
  under this agreement. If Operator is the party in default, the Non-Operators
  shall have in addition the right, by vote of Non-Operators owning a majority
  in interest in the Contract Area after excluding the voting interest of Operator,
  to appoint a new Operator effective immediately. The rights of a defaulting
  party that may be suspended hereunder at the election of the non-defaulting
  parties shall include, without limitation, the right to receive information
  as to any operation conducted hereunder during the period of such default, the
  right to elect to participate in an operation proposed under Article VI.B. of
  this agreement, the right to participate in an operation being conducted under
  this agreement even if the party has previously elected to participate in such
  operation, and the right to receive proceeds of production from any well subject
  to this agreement. 

                   
  2. Suit for Damages: Non-defaulting parties or Operator for the benefit
  of non-defaulting parties may sue (at joint account expense) to collect the
  amounts in default, plus interest accruing on the amounts recovered from the
  date of default until the date of collection at the rate specified in Exhibit
  "C" attached hereto. Nothing herein shall prevent any party from suing any defaulting
  party to collect consequential damages accruing to such party as a result of
  the default. 

                   
  3. Deemed Non-Consent: The non-defaulting party may deliver a written
  Notice of Non-Consent Election to the defaulting party at any time after the
  expiration of the thirty-day cure period following delivery of the Notice of
  Default, in which event if the billing is for the drilling a new well or the
  Plugging Back, Sidetracking, Reworking or Deepening of a well which is to be
  or has been plugged as a dry hole, or for the Completion or Recompletion of
  any well, the defaulting party will be conclusively deemed to have elected not
  to participate in the operation and to be a Non-Consenting Party with respect
  thereto under Article VI.B. or VI.C., as the case may be, to the extent of the
  costs unpaid by such party, notwithstanding any election to participate theretofore
  made. If election is made to proceed under this provision, then the non-defaulting
  parties may not elect to sue for the unpaid amount pursuant to Article VII.D.2.


                   
  Until the delivery of such Notice of Non-Consent Election to the defaulting
  party, such party shall have the right to cure its default by paying its unpaid
  share of costs plus interest at the rate set forth in Exhibit "C," provided,
  however, such payment shall not prejudice the rights of the non-defaulting parties
  to pursue remedies for damages incurred by the non- defaulting parties as a
  result of the default. Any interest relinquished pursuant to this Article VII.D.3.
  shall be offered to the non-defaulting parties in proportion to their interests,
  and the non-defaulting parties electing to participate in the ownership of such
  interest shall be required to contribute their shares of the defaulted amount
  upon their election to participate therein. 

                   
  4. Advance Payment: If a default is not cured within thirty (30) days
  of the delivery of a Notice of Default, Operator, or Non-Operators if Operator
  is the defaulting party, may thereafter require advance payment from the defaulting
  party of such defaulting party's anticipated share of any item of expense for
  which Operator, or Non-Operators, as the case may be, would be entitled to reimbursement
  under any provision of this agreement, whether or not such expense was the subject
  of the previous default. Such right includes, but is not limited to, the right
  to require advance payment for the estimated costs of drilling a well or Completion
  of a well as to which an election to participate in drilling or Completion has
  been made. If the defaulting party fails to pay the required advance payment,
  the non-defaulting parties may pursue any of the remedies provided in the Article
  VII.D. or any other default remedy provided elsewhere in this agreement. Any
  excess of funds advanced remaining when the operation is completed and all costs
  have been paid shall be promptly returned to the advancing party. 

                   
  5. Costs and Attorneys' Fees: In the event any party is required to bring
  legal proceedings to enforce any financial obligation of a party hereunder,
  the prevailing party in such action shall be entitled to recover all court costs,
  costs of collection, and a reasonable attorney's fee, which the lien provided
  for herein shall also secure. 

E. Rentals, Shut-in Well Payments and Minimum Royalties: 

                   
  Rentals, shut-in well payments and minimum royalties which may be required under
  the terms of any lease shall be paid by the party or parties who subjected such
  lease to this agreement at its or their expense. In the event two or more parties
  own and have contributed interests in the same lease to this agreement, such
  parties may designate one of such parties to make said payments for and on behalf
  of all such parties. Any party may request, and shall be entitled to receive,
  proper evidence of all such payments. In the event of failure to make proper
  payment of any rental, shut-in well payment or minimum royalty through mistake
  or oversight where such payment is required to continue the lease in force,
  any loss which results from such non-payment shall be borne in accordance with
  the provisions of Article IV.B.2. 

                   
  Operator shall notify Non-Operators of the anticipated completion of a shut-in
  well, or the shutting in or return to production of a producing well, at least
  five (5) days (excluding Saturday, Sunday, and legal holidays) prior to taking
  such action, or at the earliest opportunity permitted by circumstances, but
  assumes no liability for failure to do so. In the event of failure by Operator
  to so notify Non-Operators, the loss of any lease contributed hereto by Non-Operators
  for failure to make timely payments of any shut-in well payment shall be borne
  jointly by the parties hereto under the provisions of Article IV.B.3. 

F. Taxes: 

                   
  Beginning with the first calendar year after the effective date hereof, Operator
  shall render for ad valorem taxation all property subject to this agreement
  which by law should be rendered for such taxes, and it shall pay all such taxes
  assessed thereon before they become delinquent. Prior to the rendition date,
  each Non-Operator shall furnish Operator information as to burdens (to include,
  but not be limited to, royalties, overriding royalties and production payments)
  on Leases and Oil and Gas Interests contributed by such Non-Operator. If the
  assessed valuation of any Lease is reduced by reason of its being subject to
  outstanding excess royalties, overriding royalties or production payments, the
  reduction in ad valorem taxes resulting therefrom shall inure to the benefit
  of the owner or owners of such Lease, and Operator shall adjust the charge to
  such owner or owners so as to reflect the benefit of such reduction. If the
  ad valorem taxes are based in whole or in part upon separate valuations of each
  party's working interest, then notwithstanding anything to the contrary herein,
  charges to the joint account shall be made and paid by the parties hereto in
  accordance with the tax value generated by each party's working interest. Operator
  shall bill the other parties for their proportionate shares of all tax payments
  in the manner provided in Exhibit "C." 

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A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

                   
  If Operator considers any tax assessment improper, Operator may, at its discretion,
  protest within the time and manner prescribed by law, and prosecute the protest
  to a final determination, unless all parties agree to abandon the protest prior
  to final determination. During the pendency of administrative or judicial proceedings,
  Operator may elect to pay, under protest, all such taxes and any interest and
  penalty. When any such protested assessment shall have been finally determined,
  Operator shall pay the tax for the joint account, together with any interest
  and penalty accrued, and the total cost shall then be assessed against the parties,
  and be paid by them, as provided in Exhibit "C." 

                   
  Each party shall pay or cause to be paid all production, severance, excise,
  gathering and other taxes imposed upon or with respect to the production or
  handling of such party's share of Oil and Gas produced under the terms of this
  agreement. 

ARTICLE VIII. 

  ACQUISITION, MAINTENANCE OR TRANSFER OF INTEREST 

A. Surrender of Leases: 

                   
  The Leases covered by this agreement, insofar as they embrace acreage in the
  Contract Area, shall not be surrendered in whole or in part unless all parties
  consent thereto. 

                   
  However, should any party desire to surrender its interest in any Lease or in
  any portion thereof, such party shall give written notice of the proposed surrender
  to all parties, and the parties to whom such notice is delivered shall have
  thirty (30) days after delivery of the notice within which to notify the party
  proposing the surrender whether they elect to consent thereto. Failure of a
  party to whom such notice is delivered to reply within said 30-day period shall
  constitute a consent to the surrender of the Leases described in the notice.
  If all parties do not agree or consent thereto, the party desiring to surrender
  shall assign, without express or implied warranty of title, all of its interest
  in such Lease, or portion thereof, and any well, material and equipment which
  may be located thereon and any rights in production thereafter secured, to the
  parties not consenting to such surrender. If the interest of the assigning party
  is or includes an Oil and Gas Interest, the assigning party shall execute and
  deliver to the party or parties not consenting to such surrender an oil and
  gas lease covering such Oil and Gas Interest for a term of one (1) year and
  so long thereafter as Oil and/or Gas is produced from the land covered thereby,
  such lease to be on the form attached hereto as Exhibit "B." Upon such assignment
  or lease, the assigning party shall be relieved from all obligations thereafter
  accruing, but not theretofore accrued, with respect to the interest assigned
  or leased and the operation of any well attributable thereto, and the assigning
  party shall have no further interest in the assigned or leased premises and
  its equipment and production other than the royalties retained in any lease
  made under the terms of this Article. The party assignee or lessee shall pay
  to the party assignor or lessor the reasonable salvage value of the latter's
  interest in any well's salvable materials and equipment attributable to the
  assigned or leased acreage. The value of all salvable materials and equipment
  shall be determined in accordance with the provisions of Exhibit "C," less the
  estimated cost of salvaging and the estimated cost of plugging and abandoning
  and restoring the surface. If such value is less than such costs, then the party
  assignor or lessor shall pay to the party assignee or lessee the amount of such
  deficit. If the assignment or lease is in favor of more than one party, the
  interest shall be shared by such parties in the proportions that the interest
  of each bears to the total interest of all such parties. If the interest of
  the parties to whom the assignment is to be made varies according to depth,
  then the interest assigned shall similarly reflect such variances. 

                   
  Any assignment, lease or surrender made under this provision shall not reduce
  or change the assignor's, lessor's or surrendering party's interest as it was
  immediately before the assignment, lease or surrender in the balance of the
  Contract Area; and the acreage assigned, leased or surrendered, and subsequent
  operations thereon, shall not thereafter be subject to the terms and provisions
  of this agreement but shall be deemed subject to an Operating Agreement in the
  form of this agreement. 

B. Renewal or Extension of Leases: 

                   
  If any party secures a renewal or replacement of an Oil and Gas Lease or Interest
  subject to this agreement, then all other parties shall be notified promptly
  upon such acquisition or, in the case of a replacement Lease taken before expiration
  of an existing Lease, promptly upon expiration of the existing Lease. The parties
  notified shall have the right for a period of thirty (30) days following delivery
  of such notice in which to elect to participate in the ownership of the renewal
  or replacement Lease, insofar as such Lease affects lands within the Contract
  Area, by paying to the party who acquired it their proportionate shares of the
  acquisition cost allocated to that part of such Lease within the Contract Area,
  which shall be in proportion to the interest held at that time by the parties
  in the Contract Area. Each party who participates in the purchase of a renewal
  or replacement Lease shall be given an assignment of its proportionate interest
  therein by the acquiring party. 

                   
  If some, but less than all, of the parties elect to participate in the purchase
  of a renewal or replacement Lease, it shall be owned by the parties who elect
  to participate therein, in a ratio based upon the relationship of their respective
  percentage of participation in the Contract Area to the aggregate of the percentages
  of participation in the Contract Area of all parties participating in the purchase
  of such renewal or replacement Lease. The acquisition of a renewal or replacement
  Lease by any or all of the parties hereto shall not cause a readjustment of
  the interests of the parties stated in Exhibit "A," but any renewal or replacement
  Lease in which less than all parties elect to participate shall not be subject
  to this agreement but shall be deemed subject to a separate Operating Agreement
  in the form of this agreement. 

                   
  If the interests of the parties in the Contract Area vary according to depth,
  then their right to participate proportionately in renewal or replacement Leases
  and their right to receive an assignment of interest shall also reflect such
  depth variances. 

                   
  The provisions of this Article shall apply to renewal or replacement Leases
  whether they are for the entire interest covered by the expiring Lease or cover
  only a portion of its area or an interest therein. Any renewal or replacement
  Lease taken before the expiration of its predecessor Lease, or taken or contracted
  for or becoming effective within six (6) months after the expiration of the
  existing Lease, shall be subject to this provision so long as this agreement
  is in effect at the time of such acquisition or at the time the renewal or replacement
  Lease becomes effective; but any Lease taken or contracted for more than six
  (6) months after the expiration of an existing Lease shall not be deemed a renewal
  or replacement Lease and shall not be subject to the provisions of this agreement.


                   
  The provisions in this Article shall also be applicable to extensions of Oil
  and Gas Leases. 

C. Acreage or Cash Contributions: 

                   
  While this agreement is in force, if any party contracts for a contribution
  of cash towards the drilling of a well or any other operation on the Contract
  Area, such contribution shall be paid to the party who conducted the drilling
  or other operation and shall be applied by it against the cost of such drilling
  or other operation. If the contribution be in the form of acreage, the party
  to whom the contribution is made shall promptly tender an assignment of the
  acreage, without warranty of title, to the Drilling Parties in the proportions
  said Drilling Parties shared the cost of drilling the well. Such acreage shall
  become a separate Contract Area and, to the extent possible, be governed by
  provisions identical to this agreement. Each party shall promptly notify all
  other parties of any acreage or cash contributions it may obtain in support
  of any well or any other operation on the Contract Area. The above provisions
  shall also be applicable to optional rights to earn acreage outside the Contract
  Area which are in support of well drilled inside Contract Area. 

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A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

                   
  If any party contracts for any consideration relating to disposition of such
  party's share of substances produced hereunder, such consideration shall not
  be deemed a contribution as contemplated in this Article VIII.C. 

D. Assignment; Maintenance of Uniform Interest: 

                   
  For the purpose of maintaining uniformity of ownership in the Contract Area
  in the Oil and Gas Leases, Oil and Gas Interests, wells, equipment and production
  covered by this agreement no party shall sell, encumber, transfer or make other
  disposition of its interest in the Oil and Gas Leases and Oil and Gas Interests
  embraced within the Contract Area or in wells, equipment and production unless
  such disposition covers either: 

                   
  1. the entire interest of the party in all Oil and Gas Leases, Oil and Gas Interests,
  wells, equipment and production; or 

                     
  2. an equal undivided percent of the party's present interest in all Oil and
  Gas Leases, Oil and Gas Interests, wells, equipment and production in the Contract
  Area. 

                   
  Every sale, encumbrance, transfer or other disposition made by any party shall
  be made expressly subject to this agreement and shall be made without prejudice
  to the right of the other parties, and any transferee of an ownership interest
  in any Oil and Gas Lease or Interest shall be deemed a party to this agreement
  as to the interest conveyed from and after the effective date of the transfer
  of ownership; provided, however, that the other parties shall not be required
  to recognize any such sale, encumbrance, transfer or other disposition for any
  purpose hereunder until thirty (30) days after they have received a copy of
  the instrument of transfer or other satisfactory evidence thereof in writing
  from the transferor or transferee. No assignment or other disposition of interest
  by a party shall relieve such party of obligations previously incurred by such
  party hereunder with respect to the interest transferred, including without
  limitation the obligation of a party to pay all costs attributable to an operation
  conducted hereunder in which such party has agreed to participate prior to making
  such assignment, and the lien and security interest granted by Article VII.B.
  shall continue to burden the interest transferred to secure payment of any such
  obligations. 

                   
  If, at any time the interest of any party is divided among and owned by four
  or more co-owners, Operator, at its discretion, may require such co-owners to
  appoint a single trustee or agent with full authority to receive notices, approve
  expenditures, receive billings for and approve and pay such party's share of
  the joint expenses, and to deal generally with, and with power to bind, the
  co-owners of such party's interest within the scope of the operations embraced
  in this agreement; however, all such co- owners shall have the right to enter
  into and execute all contracts or agreements for the disposition of their respective
  shares of the Oil and Gas produced from the Contract Area and they shall have
  the right to receive, separately, payment of the sale proceeds thereof. 

E. Waiver of Rights to Partition: 

                   
  If permitted by the laws of the state or states in which the property covered
  hereby is located, each party hereto owning an undivided interest in the Contract
  Area waives any and all rights it may have to partition and have set aside to
  it in severalty its undivided interest therein. 

F. Preferential Right to Purchase: 

[X]              
   (Optional; Check if applicable.) 

                   
  Should any party desire to sell all or any part of its interests under this
  agreement, or its rights and interests in the Contract Area, it shall promptly
  give written notice to the other parties, with full information concerning its
  proposed disposition, which shall include the name and address of the prospective
  transferee (who must be ready, willing and able to purchase), the purchase price,
  a legal description sufficient to identify the property, and all other terms
  of the offer. The other parties shall then have an optional prior right, for
  a period of ten (10) days after the notice is delivered, to purchase for the
  stated consideration on the same terms and conditions the interest which the
  other party proposes to sell; and, if this optional right is exercised, the
  purchasing parties shall share the purchased interest in the proportions that
  the interest of each bears to the total interest of all purchasing parties.
  However, there shall be no preferential right to purchase in those cases where
  any party wishes to mortgage its interests, or to transfer title to its interests
  to its mortgagee in lieu of or pursuant to foreclosure of a mortgage of its
  interests, or to dispose of its interests by merger, reorganization, consolidation,
  or by sale of all or substantially all of its Oil and Gas assets to any party,
  or by transfer of its interests to a subsidiary or parent company or to a subsidiary
  of a parent company, or to any company in which such party owns a majority of
  the stock. 

ARTICLE IX. 

  INTERNAL REVENUE CODE ELECTION 

                   
  If, for federal income tax purposes, this agreement and the operations hereunder
  are regarded as a partnership, and if the parties have not otherwise agreed
  to form a tax partnership pursuant to Exhibit "G" or other agreement between
  them, each party thereby affected elects to be excluded from the application
  of all of the provisions of Subchapter "K," Chapter 1, Subtitle "A," of the
  Internal Revenue Code of 1986, as amended ("Code"), as permitted and authorized
  by Section 761 of the Code and the regulations promulgated thereunder. Operator
  is authorized and directed to execute on behalf of each party hereby affected
  such evidence of this election as may be required by the Secretary of the Treasury
  of the United States or the Federal Internal Revenue Service, including specifically,
  but not by way of limitation, all of the returns, statements, and the data required
  by Treasury Regulation §1.761. Should there be any requirement that each
  party hereby affected give further evidence of this election, each such party
  shall execute such documents and furnish such other evidence as may be required
  by the Federal Internal Revenue Service or as may be necessary to evidence this
  election. No such party shall give any notices or take any other action inconsistent
  with the election made hereby. If any present or future income tax laws of the
  state or states in which the Contract Area is located or any future income tax
  laws of the United States contain provisions similar to those in Subchapter
  "K," Chapter 1, Subtitle "A," of the Code, under which an election similar to
  that provided by Section 761 of the Code is permitted, each party hereby affected
  shall make such election as may be permitted or required by such laws. In making
  the foregoing election, each such party states that the income derived by such
  party from operations hereunder can be adequately determined without the computation
  of partnership taxable income. 

ARTICLE X. 

  CLAIMS AND LAWSUITS 

                   
  Operator may settle any single uninsured third party damage claim or suit arising
  from operations hereunder if the expenditure does not exceed 10,000.00 ten
  thousand Dollars ($ / ) and if the payment is in complete settlement
  of such claim or suit. If the amount required for settlement exceeds the above
  amount, the parties hereto shall assume and take over the further handling of
  the claim or suit, unless such authority is delegated to Operator. All costs
  and expenses of handling settling, or otherwise discharging such claim or suit
  shall be a the joint expense of the parties participating in the operation from
  which the claim or suit arises. If a claim is made against any party or if any
  party is sued on account of any matter arising from operations hereunder over
  which such individual has no control because of the rights given Operator by
  this agreement, such party shall immediately notify all other parties, and the
  claim or suit shall be treated as any other claim or suit involving operations
  hereunder. 

- 15 - 




A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

ARTICLE XI. 

  FORCE MAJEURE 

                   
  If any party is rendered unable, wholly or in part, by force majeure to carry
  out its obligations under this agreement, other than the obligation to indemnify
  or make money payments or furnish security, that party shall give to all other
  parties prompt written notice of the force majeure with reasonably full particulars
  concerning it; thereupon, the obligations of the party giving the notice, so
  far as they are affected by the force majeure, shall be suspended during, but
  no longer than, the continuance of the force majeure. The term "force majeure,"
  as here employed, shall mean an act of God, strike, lockout, or other industrial
  disturbance, act of the public enemy, war, blockade, public riot, lightening,
  fire, storm, flood or other act of nature, explosion, governmental action, governmental
  delay, restraint or inaction, unavailability of equipment, and any other cause,
  whether of the kind specifically enumerated above or otherwise, which is not
  reasonably within the control of the party claiming suspension. 

                   
  The affected party shall use all reasonable diligence to remove the force majeure
  situation as quickly as practicable. The requirement that any force majeure
  shall be remedied with all reasonable dispatch shall not require the settlement
  of strikes, lockouts, or other labor difficulty by the party involved, contrary
  to its wishes; how all such difficulties shall be handled shall be entirely
  within the discretion of the party concerned. 

ARTICLE XII. 

  NOTICES 

                   
  All notices authorized or required between the parties by any of the provisions
  of this agreement, unless otherwise specifically provided, shall be in writing
  and delivered in person or by United States mail, courier service, telegram,
  telex, telecopier or any other form of facsimile, postage or charges prepaid,
  and addressed to such parties at the addresses listed on Exhibit "A." All telephone
  or oral notices permitted by this agreement shall be confirmed immediately thereafter
  by written notice. The originating notice given under any provision hereof shall
  be deemed delivered only when received by the party to whom such notice is directed,
  and the time for such party to deliver any notice in response thereto shall
  run from the date the originating notice is received. "Receipt" for purposes
  of this agreement with respect to written notice delivered hereunder shall be
  actual delivery of the notice to the address of the party to be notified specified
  in accordance with this agreement, or to the telecopy, facsimile or telex machine
  of such party. The second or any responsive notice shall be deemed delivered
  when deposited in the United States mail or at the office of the courier or
  telegraph service, or upon transmittal by telex, telecopy or facsimile, or when
  personally delivered to the party to be notified, provided, that when response
  is required within 24 or 48 hours, such response shall be given orally or by
  telephone, telex, telecopy or other facsimile within such period. Each party
  shall have the right to change its address at any time, and from time to time,
  by giving written notice thereof to all other parties. If a party is not available
  to receive notice orally or by telephone when a party attempts to deliver a
  notice required to be delivered within 24 or 48 hours, the notice may be delivered
  in writing by any other method specified herein and shall be deemed delivered
  in the same manner provided above for any responsive notice. 

ARTICLE XIII. 

  TERM OF AGREEMENT 

                   
  This agreement shall remain in full force and effect as to the Oil and Gas Leases
  and/or Oil and Gas Interests subject hereto for the period of time selected
  below; provided, however, no party hereto shall ever be construed as having
  any right, title or interest in or to any Lease or Oil and Gas Interest contributed
  by any other party beyond the term of this agreement. 

		[X]	 Option No. 1: So long
        as any of the Oil and Gas Leases subject to this agreement remain or are
        continued in force as to any part of the Contract Area, whether by production,
        extension, renewal or otherwise. 

		[   ] 	 Option No. 2: In the
        event the well described in Article VI.A., or any subsequent well drilled
        under any provision of this agreement, results in the Completion of a
        well as a well capable of production of Oil and/or Gas in paying quantities,
        this agreement shall continue in force so long as any such well is capable
        of production, and for an additional period of ___ days thereafter; provided,
        however, if, prior to the expiration of such additional period, one or
        more of the parties hereto are engaged in drilling, Reworking, Deepening,
        Sidetracking, Plugging Back, testing or attempting to Complete or Re-complete
        a well or wells hereunder, this agreement shall continue in force until
        such operations have been completed and if production results therefrom,
        this agreement shall continue in force as provided herein. In the event
        the well described in Article VI.A., or any subsequent well drilled hereunder,
        results in a dry hole, and no other well is capable of producing Oil and/or
        Gas from the Contract Area, this agreement shall terminate unless drilling,
        Deepening, Sidetracking, Completing, Re- completing, Plugging Back or
        Reworking operations are commenced within __________________________ days
        from the date of abandonment of said well. "Abandonment" for such purposes
        shall mean either (i) a decision by all parties not to conduct any further
        operations on the well or (ii) the elapse of 180 days from the conduct
        of any operations on the well, whichever first occurs. 



                   
  The termination of this agreement shall not relieve any party hereto from any
  expense, liability or other obligation or any remedy therefor which has accrued
  or attached prior to the date of such termination. 

                   
  Upon termination of this agreement and the satisfaction of all obligations hereunder,
  in the event a memorandum of this Operating Agreement has been filed of record,
  Operator is authorized to file of record in all necessary recording offices
  a notice of termination, and each party hereto agrees to execute such a notice
  of termination as to Operator's interest, upon request of Operator, if Operator
  has satisfied all its financial obligations. 

ARTICLE XIV. 

  COMPLIANCE WITH LAWS AND REGULATIONS 

A. Laws, Regulations and Orders: 

                   
  This agreement shall be subject to the applicable laws of the state in which
  the Contract Area is located, to the valid rules, regulations, and orders of
  any duly constituted regulatory body of said state; and to all other applicable
  federal, state, and local laws, ordinances, rules, regulations and orders. 

B. Governing Law: 

                   
  This Agreement shall, in all respects, be subject to, interpreted, construed
  and enforced in accordance with andunder the laws of the Province of Alberta
  and applicable laws of Canada and shall, in all respects, be treated as a contract
  made in theProvince of Alberta. The Parties irrevocably attorn and submit to
  the exclusive jurisdiction of the courts of the Province of Alberta andcourts
  of appeal therefrom in respect of all matters arising out of or in connection
  with this Agreement, including but not limited tomatters of performance,
  non-performance, breach, remedies, procedures, rights, duties, and interpretation
  or construction;provided, however that the laws of the State of Montana shall
  be applicable in respect of the defined term "Regulations" as definedand used
  in the head agreement . 

C. Regulatory Agencies: 

                   
  Nothing herein contained shall grant, or be construed to grant, Operator the
  right or authority to waive or release any rights, privileges, or obligations
  which Non-Operators may have under federal or state laws or under rules, regulations
  or 

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A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

orders promulgated under such laws in reference to oil, gas and
  mineral operations, including the location, operation, or production of wells,
  on tracts offsetting or adjacent to the Contract Area. 

                   
  With respect to the operations hereunder, Non-Operators agree to release Operator
  from any and all losses, damages, injuries, claims and causes of action arising
  out of, incident to or resulting directly or indirectly from Operator's interpretation
  or application of rules, rulings, regulations or orders of the Department of
  Energy or Federal Energy Regulatory Commission or predecessor or successor agencies
  to the extent such interpretation or application was made in good faith and
  does not constitute gross negligence. Each Non-Operator further agrees to reimburse
  Operator for such Non-Operator's share of production or any refund, fine, levy
  or other governmental sanction that Operator may be required to pay as a result
  of such an incorrect interpretation or application, together with interest and
  penalties thereon owing by Operator as a result of such incorrect interpretation
  or application. 

ARTICLE XV. 

  MISCELLANEOUS 

A. Execution: 

                   
  This agreement shall be binding upon each Non-Operator when this agreement or
  a counterpart thereof has been executed by such Non-Operator and Operator notwithstanding
  that this agreement is not then or thereafter executed by all of the parties
  to which it is tendered or which are listed on Exhibit "A" as owning an interest
  in the Contract Area or which own, in fact, an interest in the Contract Area.
  Operator may, however, by written notice to all Non-Operators who have become
  bound by this agreement as aforesaid, given at any time prior to the actual
  spud date of the Initial Well but in no event later than five days prior to
  the date specified in Article VI.A. for commencement of the Initial Well, terminate
  this agreement if Operator in its sole discretion determines that there is insufficient
  participation to justify commencement of drilling operations. In the event of
  such a termination by Operator, all further obligations of the parties hereunder
  shall cease as of such termination. In the event any Non-Operator has advanced
  or prepaid any share of drilling or other costs hereunder, all sums so advanced
  shall be returned to such Non-Operator without interest. In the event Operator
  proceeds with drilling operations for the Initial Well without the execution
  hereof by all persons listed on Exhibit "A" as having a current working interest
  in such well, Operator shall indemnify Non-Operators with respect to all costs
  incurred for the Initial Well which would have been charged to such person under
  this agreement if such person had executed the same and Operator shall receive
  all revenues which would have been received by such person under this agreement
  if such person had executed the same. 

B. Successors and Assigns: 

                   
  This agreement shall be binding upon and shall inure to the benefit of the parties
  hereto and their respective heirs, devisees, legal representatives, successors
  and assigns, and the terms hereof shall be deemed to run with the Leases or
  Interests included within the Contract Area. 

C. Counterparts: 

                   
  This instrument may be executed in any number of counterparts, each of which
  shall be considered an original for all purposes. 

D. Severability: 

                   
  For the purposes of assuming or rejecting this agreement as an executory contract
  pursuant to federal bankruptcy laws, this agreement shall not be severable,
  but rather must be assumed or rejected in its entirety, and the failure of any
  party to this agreement to comply with all of its financial obligations provided
  herein shall be a material default. 

ARTICLE XVI. 

  OTHER PROVISIONS 

- 17 - 




A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

IN WITNESS WHEREOF, this agreement shall be effective as of the
  ___________________day of October , 2007 . 

MegaWest Energy Montana Corp. , who has prepared and circulated
  this form for execution, represents and warrants that the form was printed from
  and, with the exception(s) listed below, is identical to the AAPL Form 610-1989
  Model Form Operating Agreement, as published in computerized form by Forms On-A-Disk,
  Inc. No changes, alterations, or modifications, other than those made by strikethrough
  and/or insertion and that are clearly recognizable as changes, have been
  made to the form. 

	ATTEST OR WITNESS: 	 	 	OPERATOR 
	 	 	 	 
	  	 	 	MegaWest
      Energy Montana Corp. 
	 	 	 	 
	  	 	By 	
	 	 	 	 
	 	 	 	 
	  	 	 	Type or print name 
	 	 	 	 
	 	 	 	 
	  	 	 	Title ____________________________________________
	 	 	 	 
	  	 	 	Date ____________________________________________
	 	 	 	 
	  	 	 	Tax ID or S.S. No. __________________________________
	  	 	 	  
	 NON-OPERATORS 
	 	 	 	 
	  	 	 	BS Oil
      Company 
	 	 	 	 
	  	 	By 	
	 	 	 	 
	 	 	 	 
	  	 	 	Type or print name 
	 	 	 	 
	 	 	 	 
	  	 	 	Title ____________________________________________
	 	 	 	 
	  	 	 	Date ____________________________________________
	 	 	 	 
	  	 	 	Tax ID or S.S. No. __________________________________
	  	 	 	
	  	 	 	Longshot
      Oil Company 
	 	 	 	 
	  	 	By 	
	 	 	 	 
	 	 	 	 
	  	 	 	Type or print name 
	 	 	 	 
	 	 	 	 
	  	 	 	Title ____________________________________________
	 	 	 	 
	  	 	 	Date ____________________________________________
	 	 	 	 
	  	 	 	Tax ID or S.S. No. __________________________________
	  	 	 	
	 	 	 	 
	 	 	 	 
	  	 	By 	
	 	 	 	 
	 	 	 	 
	  	 	 	Type or print name 
	 	 	 	 
	  	 	 	Title ____________________________________________
	 	 	 	 
	  	 	 	Date ____________________________________________
	 	 	 	 
	  	 	 	Tax ID or S.S. No. __________________________________


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A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989 

ACKNOWLEDGMENTS 

                   
  Note: The following forms of acknowledgment are the short forms approved by
  the Uniform Law on Notarial Acts. 

The validity and effect of these forms in any state will depend
  upon the statutes of that state. 

Individual acknowledgment: 

State of __________________________ ) 

                                                                           
  ) ss. 

County of ________________________ ) 

                   
  This instrument was acknowledged before me on 

___________________________________________________ by _______________________________________________________

 

	(Seal, if any) 	
	 	 
	 	Title (and Rank) __________________________________________
	 	 
	 	My commission expires: ____________________________________


Acknowledgment in representative capacity: 

State of __________________________ ) 

                                                                           
  ) ss. 

County of ________________________ ) 

                   
  This instrument was acknowledged before me on 

___________________________________________________ by _____________________________________________________as


______________of________________________________________________________________________________________________
  . 

 

	(Seal, if any) 	
	 	 
	 	Title (and Rank) __________________________________________
	 	 
	 	My commission expires: ____________________________________


- 19 -