**EXHIBIT 10.24a**

May 15, 2007

Rocky Mountain Gas, Inc.

Attn:  Mr. JohnReader

500 4th Avenue, S.W., Suite 2600

Calgary, Alberta T2P2V6

CANADA

Dear John:

Re:          RockyMountain Gas, Inc. (“RMG”) v. PRB Energy, Inc. (“PRB”)

Based on ourdiscussions, PRB proposes the following to settle and compromise all issues indispute between PRB and RMG in the above-referenced arbitration.

1.     Exceptas set forth in paragraph 2 below, PRB shall, on June 1, 2007,prepare and execute mutually acceptable assignments to RMG of all of PRB’sinterests in the Venture Properties as that term was defined in the Farmout andDevelopment Agreement (“FDA”) between PRB and RMG (the “Venture Properties”)and shall resign and approve of RMG as the successor operator of those VentureProperties, including, without limitation, the following:

11 Dannar Pilot Wells

  6 Nonconsent Dannar Pilot Wells

  2 Fulkerson Wells

12 Reno/Dilts Wells.

All of PRB’s interests in all of the remaining acreage in the North& South Gillette, Castle Rock, Reno, and Dilts areas.

2.     RMGshall, on or before June 1, 2007, prepare, execute and deliver a mutuallyacceptable assignment to PRB of all of RMG’s interest in Section 19,Township 48 North, Range 71 West (“Section 19”) from the base ofthe Wyodak coal formation to all depths. RMG agrees to obtain mortgage releases for the interests assigned to PRBin Section 19.  PRB will retain itspresent interest in Section 19 and remain as operator of Section 19 as toall interests below the base of the Wyodak coal formation.

3.     RMGshall retain its interests in Section 19 from the surface to the base ofthe Wyodak coal formation, and RMG shall remain as operator of thoseinterests.  RMG agrees to retain anyassociated plugging and abandonment liability related to the existing Wyodakwells.

4.     RMGagrees to assign to PRB all of RMG’s interests in infrastructure, surfacefacilities, surface use agreements, and permits in Section 19.  RMGagrees to assign to PRB all Wyoming Department of Environmental Qualitypermits, water lines, and surface use agreements necessary to access and usethe water discharge points associated with Section 19 and located in theNorthwest 1⁄4, Section 36, Township 48 North, Range 72 West(Permit No. WYO-043141).

5.     RMGand PRB agree to enter into a mutually acceptable facilities use agreement forSection 19 which would provide that RMG shall have a right to use theinfrastructure, surface facilities, permits, roads and water lines inSection 19 on a market-rate basis as necessary to conduct its operationsin 

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Section 19. RMG and PRB agree to cooperate in good faith with respect to all aspectsof use of the surface facilities in or associated with Section 19.

6.     RMGagrees to pay $3.25 million (U.S.) to PRB evidenced by a promissory notebearing 10% interest providing for wire transfer payment in immediatelyavailable funds as follows:

a.     $500,000on May 22, 2007

b.     $500,000on June 21, 2007

c.     paymentof the remaining balance and accrued interest on or before October 31,2007

d.     Thepromissory note shall provide that it may be prepaid by RMG at any time withoutany prepayment penalty.

7.     RMGagrees to secure the promissory note with a first lien mortgage executed by RMGin favor of PRB on RMG’s share of the Venture Properties under the FDA inCampbell County, Wyoming and on the interests to be assigned to RMG asdescribed under paragraph 1 above, subject to the approval of RMG’slenders.  RMG agrees to use itsreasonable efforts to obtain the consent of its lenders on or beforeJune 1, 2007.  Upon obtaining suchlender consent, PRB shall deliver the assignments to RMG and RMG shall deliverthe first lien mortgage to PRB in accordance with paragraph 10 below.  If RMG does not receive such lender consentfor the granting of the first lien mortgage, then RMG and PRB shall addresstheir respective rights in a separate agreement.  Until the promissory note is fully paid, RMGcovenants that it will not sell, convey, or assign (including withoutlimitation any lien or farmout arrangement) any of the interests assigned toRMG without the written consent of PRB.

8.     Asprovided in the Stipulation between RMG and PRB dated May 9, 2007, PRBshall allow RMG to copy the data and information identified by RMG, includingall data and information on the Moyer Pilot Project in Section 19, on orbefore June 1, 2007.

9.     Thissettlement resolves all claims between RMG and PRB arising prior to the date ofthis agreement, except that for the production months of April and May 2007,RMG and PRB shall each pay their respective portions of the joint interestbillings under the Joint Operating Agreement dated August 1, 2005 within 15days of receipt thereof, and shall receive their respective share of offsettingrevenues in accordance with such agreement.

10.   Onor before May 31, 2007, PRB and RMG agree to execute and deliver alldocuments necessary to implement this settlement including without limitationthe assignments of interests, the first lien mortgage, and a general and mutualrelease providing that each party shall bear its own attorney fees and costsand for dismissal of the pending arbitration proceedings with prejudice.

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11.   Theparties may enforce this agreement by specific performance or an action fordamages in a federal or state court in Wyoming.

If RMG agrees tothe proposed settlement terms, please execute this agreement in the spaceprovided below and return it to me.
|                                        | Sincerely,             |
|---------------------------------------------|------------------------|
|                                        |                   |
|                                        | PRB Energy, Inc.       |
|                                        |                   |
|                                        |                   |
|                                        | By:                    | /s/ Robert W.  Wright |   |
|                                        |                   | Robert Wright |   |
|                                        |                   | Chief Executive  Officer |   |
|                                        |                   |   |
|                                        |                   |
| **ACCEPTED  AND AGREED MAY 15, 2007:** | ** **             |
| ** **                                  | ** **             |
| Rocky Mountain  Gas, Inc.                   |                   |
|                                        |                   |
|                                        |                   |
| By:                                         | /s/ John F.  Reader    |   |   |
|                                        | John F. Reader         |   |
|                                        | Senior Vice  President |   |
|                                             |                        |  |  |  |  |

 

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