Letter
      Agreement

    


    Date: July 3,
      2007

    


    
      	To:	
              Amegy
                Bank National Association ("Amegy")

            


      	 	
              4400
                Post Oak Parkway

              PO
                Box 27459

              Houston,
                Texas 77227-7459

               

            


      	 	
              Tekoil
                and Gas Gulf Coast ("Tekoil")

              25050
                I-45 North, Suite 525

              The
                Woodlands, Texas 77380

            


    

     

    
      	From:	
              J.
                Aron & Company, 

            


      	 	
              as
                Administrative Agent (the "Administrative
                Agent")

              85
                Broad Street

              New
                York, New York 10004

            


    

     

    


    
      	
              Re:

            	
              Assignment
                of Deposit Account dated July 3, 2007, between Amegy and Tekoil (the
                "Assignment
                Agreement")

            


    

    


    Gentlemen:

    


    Reference
      is made to (i) the above-described Assignment Agreement, the defined terms
      of which are used herein unless otherwise defined herein, (ii) the Application
      and Agreement for Irrevocable Standby Letter of Credit of even date herewith
      made by Tekoil and accepted by Amegy (the "LC
      Agreement"),
      and
      (iii) the Credit Agreement dated as of May 11, 2007, among Tekoil, as
      borrower, Tekoil & Gas Corporation, as guarantor, the lenders parties
      thereto (the "Lenders"), and the Administrative Agent (as modified, the
      "Credit
      Agreement").

    


    The
      Lenders have agreed to make an additional loan to Tekoil under the Credit
      Agreement to enable Tekoil to fund the Account as required by Amegy for the
      issuance of the Irrevocable Documentary Blanket Letter of Credit No. ___ dated
      July ___, 2007 (the "Letter
      of Credit").
      Pursuant to the Assignment Agreement, Amegy retains possession and control
      of
      the Account and the other Collateral for so long as obligations remain
      outstanding with respect to the Letter of Credit. In connection with the
      foregoing and to induce the Lenders to make an additional loan to Tekoil for
      the
      funding of the Account, and for good and valuable consideration, the receipt
      and
      sufficiency of which are hereby acknowledged, Amegy, Tekoil and the
      Administrative Agent agree as follows:

    


    (i) Any
      funds
      returned or released by Amegy from the Account or otherwise with respect to
      the
      Collateral for any reason, whether due to reduction or expiration of the Letter
      of Credit or otherwise (other than for reimbursement of Amegy for any draws
      under the Letter of Credit or payment of usual and customary fees with respect
      thereto) shall be paid directly to the Administrative Agent. 

    


    (ii) In
      connection with the Credit Agreement, the parties hereto entered into a Blocked
      Deposit Account Control Agreement and a Default Deposit Account Control
      Agreement, both dated as of May 11, 2007 (collectively, the "Account
      Control Agreements").
      Amegy
      agrees and acknowledges that with respect to any conflict or inconsistency
      between the terms of the Assignment Agreement, the LC Agreement, the Letter
      of
      Credit, or any other agreement, on the one hand, and the terms of the Account
      Control Agreements, on the other, the terms of the Account Control Agreements
      shall govern. Without limiting the foregoing, Amegy agrees and acknowledges
      that, as provided in the Account Control Agreements (A) any security interest
      it
      may obtain in the respective Deposit Accounts described therein (including
      pursuant to the LC Agreement) shall be subordinate to the security interest
      of
      the Administrative Agent and (B) money and other items credited to such Deposit
      Accounts will not be subject to deduction, set-off, banker's lien, or other
      right in favor of any person other than the Administrative Agent except as
      otherwise specifically provided in the Account Agreements.

    


    (iii) None
      of
      the Assignment Agreement, the LC Agreement, nor the Letter of Credit may be
      amended or otherwise modified without the prior written consent of the
      Administrative Agent.

    


     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    



    If
      the
      foregoing accurately reflects your understanding and agreement regarding the
      foregoing, please sign in the space below and return one original of this
      letter, fully executed, to the undersigned.

    


    
      	 	 	 
	 	 	
              J. ARON & COMPANY, as Lead Arranger, 

              Syndication Agent, Administrative Agent and a
                Lender

            
	 	 	 	 
	 	 	By:	 
	 	 	Name:	 
	 	 	Title:
              	 


    

     

    AGREED
      and ACCEPTED as of the 29th
      of

    June,
      2007:

    


    AMEGY
      BANK NATIONAL ASSOCIATION

    


    


    
      	By:
              	  	 	 
	Name:	 	 	 
	Title:
              	 	 	 


    

          

     

    TEKOIL
      AND GAS GULF COAST, LLC

    


    By:
      Tekoil & Gas Corporation, 

    its
      Managing Member

    


    
      


      
        	By:
                	/s/
                Gerald Goodman	 	 
	Name:	Gerald
                Goodman	 	 
	Title:
                	Chief
                Financial Officer	 	 


      

            


      
        
           

        

        
          
            Signature
              Page to Letter Agreement