**EXHIBIT 10.25**

June 15, 2007

William F. Hayworth

President

PRB Energy, Inc.

1875 Lawrence Street, Suite 450

Denver, Colorado 80202

Re:          $15,000,000 Senior Secured Debenturesissued December 28, 2006 (the “Debentures”)

We understand thatPRB Energy, Inc. (the “Company”) has entered into a SettlementAgreement, dated May 15, 2007, with Rocky Mountain Gas, Inc. (“RMG”)that resolves certain disputes between the Company and RMG (the “SettlementAgreement”).  A copy of theSettlement Agreement has previously been supplied to us and is attached heretoas Exhibit A.

Pursuant to theSettlement Agreement, RMG has agreed, pursuant to the terms of a promissorynote bearing 10% interest to be issued in favor of the Company (the “PromissoryNote”), to pay the Company $3.25 million as follows:  (i) $500,000 on May 22, 2007; (ii) $500,000on June 21, 2007; and (iii) $2.25 million, plus interest, on or before October31, 2007.  In addition, RMG has agreed totransfer, convey and assign to the Company all of its right, title and interestin certain assets described in the Settlement Agreement (the “RMG SettlementAssets”).  Pursuant to the SettlementAgreement, the Company has agreed to transfer, convey and assign to RMG all ofits right, title and interest in certain assets described in the SettlementAgreement (the “PRB Settlement Assets”). Pursuant to the Debentures and the Security Agreement (as such term isdefined in the Debentures), our consent is required in order for the Companyand its affiliates to transfer, convey and assign all of its right, title andinterest in the PRB Settlement Assets to RMG. In consideration of the agreements herein contained and other good andvaluable consideration, the receipt and sufficiency of which is herebyacknowledged, DKR Soundshore Oasis Holding Fund Ltd. (“DKR”) and WestCoast Opportunity Fund, LLC (“West Coast”) hereby consent to thetransfer, conveyance and assignment by the Company of all of its right, titleand interest in the PRB Settlement Assets to RMG.

In connectiontherewith, the Company hereby agrees that upon receipt of the Promissory Notefrom RMG, the Company will promptly deliver the original copy of the PromissoryNote to Rajni Narasi, Associate General Counsel of DKR, to be held ascollateral pursuant to the Security Agreement. Upon receipt of its interest in the RMG Settlement Assets, the Companyhereby further agrees to take any and all actions necessary to promptly cause afirst priority perfected lien in the RMG Settlement Assets to be created infavor of DKR and West Coast.

With respect tothe $3.25 million to be paid by RMG to the Company pursuant to the PromissoryNote, the parties to this letter agreement hereby agree that the Company shallbe entitled to retain, in their entirety, each of the first two payments of$500,000 described above.  With respectto the remaining $2.25 million, plus interest thereon (the “Final PaymentAmount”), the parties to this letter agreement hereby agree that theCompany shall be entitled to retain 50% of the Final Payment Amount and thatDKR and West Coast shall be entitled to the remaining 50% of the Final PaymentAmount, on a pro rata basis (the “Lender Portion of the Final Payment Amount”).  The parties further agree that the LenderPortion of the Final Payment Amount shall be applied by the Company topartially redeem, on a pro rata basis, the principal amounts then outstandingunder the Debentures.  Such redemptionsshall include the payment of the 110% premium amount referenced in Section 5 ofthe Debentures.

By copy of this letter,the Company, DKR and West Coast authorize David G. Stolfa, Trustee of theMortgage, Deed of Trust, Assignment of Production, Security Agreement andFinancing Statement, dated as of 

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February 1, 2007, totake any and all actions, and to issue any and all releases, necessary totransfer, convey and assign the Company’s interest in the PRB Settlement Assetsto RMG.

From time to timeon and after the date hereof and without further consideration, the parties tothis letter agreement shall each deliver or cause to be delivered to any otherparty, at such times and places as shall reasonably be requested, suchadditional instruments as any of the others may reasonably request for thepurpose of carrying out the transactions contemplated by this letter agreement.

Nothing containedin this letter agreement shall be deemed to constitute a consent of any actionsby the Company other than those actions contemplated by the SettlementAgreement or waiver of any breach or default pursuant to the Debentures or theSecurity Agreement not related to the Settlement Agreement.

This letteragreement may be signed in any number of counterparts with the same effect asif all parties had signed the same document. All counterparts shall be construed together and shall constitute onedocument.
|                            | Very truly yours,              |
|---------------------------------|--------------------------------|
|                            | DKR SOUNDSHORE  OASIS          |
|                            | HOLDING FUND  LTD.             |
|                            |                           |
|                            | By                             |        /s/Barbara  Burger |   |
|                            | Name:                          |  Barbara Burger |   |
|                            | Its:                           |          Director |   |
|                            |                           |
|                            |                           |
|                            | WEST COAST  OPPORTUNITY        |
|                            | FUND, LLC                      |
|                            |                           |
|                            | By                             |        /s/Atticus  Lowe |   |
|                            | Name:                          |  Atticus Lowe |   |
|                            | Its:                           |          CIO |   |
|                            |                           |
|                            |                           |
| AGREED TO AND  ACKNOWLEDGED BY: |                           |
|                            |                           |
| PRB ENERGY, INC.                |                           |
|                            |                           |
| By:                             |                           | /s/ William F.  Hayworth |   |   |
|                            | Name: William F.  Hayworth     |   |
|                            | Title: President               |   |
|                            |                           |
| cc:                             | David G. Stolfa,  Esq.         |   |
|                            | 3300 S.  Columbine Circle      |   |
|                            | Englewood, CO  80113           |   |
|                            |                           |   |
|                            | Charles F.  Savage, Esq.       |   |
|                            | 155 S. Madison  St., Suite 326 |   |
|                            | Denver, CO 80209               |   |
|                                 |                                |  |  |  |  |  |  |  |  |  |  |

 

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