LEASE ACQUISITION AND PARTICIPATION AGREEMENT
                       Alpena County Antrim Shale Project
                             Alpena County, Michigan

     This Agreement is made and entered into on this 8th day of December,  2002,
between Aurora Energy,  Ltd., P.O. Box 961, Traverse City, Michigan  49685-0961,
herein  "Aurora",  and Cadence  Resources Corp. of 6 East Rose St. PO Box 2056.,
Walla, Walla, WA 99362, herein "Investor".

     Whereas,  Aurora  has  developed  or will  develop  certain  oil and/or gas
prospects in Alpena  County,  Michigan,  and has acquired oil and gas leaseholds
and  intends to acquire  additional  oil and gas  leaseholds  in Alpena  County,
Michigan;

     Whereas,  Investor  desires  to  acquire  an  interest  in said oil and gas
leaseholds and the wells to be permitted, drilled and operated thereon; and,

     Whereas, Aurora and Investor desire to establish an Area of Mutual Interest
consisting  of all of Alpena  County,  Michigan,  and  develop  the same for the
production of hydrocarbons as provided for herein.

     Now therefore,  for and in consideration of the sums to be paid pursuant to
this  Agreement,  the mutual  promises  contained  herein and the benefits to be
derived  therefrom  Aurora and  Investor  agree as  follows:

Section 1. Area of Mutual Interest

     1.01.  The lands  subject to this  Agreement and deemed the "Area of Mutual
Interest" or "AMI" shall include all of Alpena County, Michigan.  Projects known
as Treasure Island,  Ravine Creek, and Gerhke have been committed to Wells Fargo
Energy  Capital  and are  excluded  from this AMI  although  they are located in
Alpena County,  Michigan.  Also, as Aurora  develops  projects in Alcona County,
Michigan,  they  may at  Aurora's  option  be  included  in the AMI.  Notice  of
inclusion will be subject to Investor's approval.

Section 2. Oil and Gas Leases

     2.01. Aurora Leases.  Aurora is the owner of the oil and gas leases set out
on Exhibit I attached hereto (the "Aurora Leases").  For and in consideration of
the  sum  provided  for  in  Section  2.03  below,   the  receipt  of  which  is
acknowledged,  Aurora  sells,  assigns and sets over unto  Investor an undivided
Twenty-two and one-half percent (22.5%) interest before payout on a well-by-well
basis and an undivided  Twenty  percent  (20.0%)  after payout on a well by well
basis, in and to each of the Aurora Leases;  subject,  however, to the terms and
provisions of this Agreement.



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     2.02. Subsequently Acquired Leases. It is understood by the parties that it
may be  advisable  to acquire  additional  leases  within the AMI  (Subsequently
Acquired Leases).  Aurora, at its option,  may acquire such Leases on such terms
and for such  consideration  as Aurora deems  reasonable.  On each monthly Joint
Interest Billing statement,  Aurora shall provide Investor with an estimation of
Subsequently  Acquired  Leases  to be  obtained  by  Aurora  in the next  month,
including the  acquisition  costs for the same.  Based on these  estimated lease
acquisition  costs  Aurora shall  include on each Joint  Interest  Billing,  the
Investor's  proportionate  advance payment required for said lease acquisitions.
Reconciliation  to Investor's Joint Interest Billing shall be made  periodically
based on the actual costs of the leasing program.  Investor shall participate in
such Subsequently  Acquired Leases to the extent of an undivided  twenty-two and
one-half  percent (22.5%)  interest before payout on a well by well basis and an
undivided  twenty percent (20.0%) after payout on a well by well basis by paying
to Aurora  twenty-five  percent  (25%) of the actual  acquisition  costs for the
Subsequently Acquired Leases.  Payment by Investor shall be made within ten (10)
days of receipt of each Joint  Interest  Billing.  For purposes of this section,
lease  acquisition  costs shall include but shall not be limited to lease bonus,
surface use fees and land and legal fees.  If Investor does not make his payment
as  required  in this  paragraph,  he  forfeits  his  interest  to those  leases
acquired.

     2.03.  Payment by  Investor.  Contemporaneous  with the  execution  of this
Agreement,  Investor  shall pay to Aurora the sum of  Forty-seven  Thousand Five
Hundred  Dollars  ($47,500.00).  Said sum shall be applied  first to  Investor's
proportionate   share,  based  on  twenty-five   percent  (25%),  of  the  lease
acquisition costs of the Aurora Leases, then to Investor's  proportionate share,
based on  twenty-five  percent  (25%) of project  development  costs to the date
hereof.   Any  sums   remaining   thereafter   will  be  applied  to  Investor's
proportionate  share of the cost of the Test Well  provided  for in Section 3.01
below.

Section 3. Development of AMI

     3.01. Test Well. Aurora agrees to commence the drilling of ten wells within
the AMI on or before December 31, 2002 (the "Test Well"). The Test Well shall be
in the  Black  Bean  Antrim  unit,  located  in T30N & T31N of R6E & 7E,  Alpena
County,  Michigan.  Investor  agrees to participate in the drilling of said Test
Well to the extent of an  undivided  five  percent  (25%),  which will result on
Investor acquiring an undivided  twenty-two and one-half percent (22.5%) working
interest  before payout on a well by well basis and an undivided  twenty percent
(20.0%)  working  interest  after  payout on a well by well  basis  pursuant  to
Section  5.02  below.  Within  ten (10) days prior to the  estimated  spud date,
Investor shall pay its proportionate  share of the estimated  dry-hole costs for
the Test Well as set out on the AFE  attached  hereto and made a part  hereof as
Exhibit II. In the event Investor elects to participate in the completion of the
Test



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Well,   Investor  will  pay  its   proportionate   share  of  completion   costs
simultaneously  with making its election to participate in the completion of the
Test Well.

     3.02.  Subsequent  Wells.  During  the term of this  Agreement,  Aurora may
propose the drilling of a well or wells within the AMI, other than the Test Well
(which consists of 10 wells),  to test any formation  ("Subsequent  Well").  The
Subsequent Well or Wells may be proposed on a well-by-well or unit basis. Aurora
shall  provide  Investor  with a  summary  of its  intended  operations  and the
estimated  development costs.  Within twenty (20) days of receipt of the notice,
Investor shall notify Aurora of its election to  participate or not  participate
in the proposed  Subsequent  Well.  Failure to respond  within  twenty (20) days
shall be deemed an election not to participate. Investor shall have the right to
participate  in any  proposed  Subsequent  Well to the  extent  of an  undivided
twenty-five  percent  (25%)  working  interest,  which will  result in  Investor
acquiring an undivided  twenty-two and one-half percent (22.5%) working interest
before payout on a well by well basis and an undivided  twenty  percent  (20.0%)
working  interest  after payout on a well by well basis pursuant to Section 5.02
below.  In the event Investor  elects not to  participate in a Subsequent  Well,
Aurora shall refund to Investor the leasehold acquisition costs paid by Investor
for  those  leases  contained  in the  drilling  unit for the  Subsequent  Well.
Investor  shall then  forthwith  re-assign  to Aurora its interest in the leases
contained in the drilling unit for the Subsequent  Well, and Investor shall have
no further interest in said Subsequent Well. In the event Investor elects not to
participate in a Subsequent  Well within an established  pooled or unitized area
as  provided  for in  Section  4.02  below  in  which  Investor  had  previously
participated,  the interest of Investor in that pooled or unitized area shall be
based on the  wells in which  Investor  has  participated  divided  by the total
number of wells in the pooled or unitized area,  proportionately  reduced by the
undivided interest in said wells acquired by Investor hereunder.

     3.03. Subsequent Operations.  During the term of this Agreement, Aurora may
propose  to  rework,   re-complete,   deepen  or  sidetrack  an  existing   well
(hereinafter  collectively,   "Subsequent  Operations").  Aurora  shall  provide
Investor with a summary of its proposed Subsequent  Operations and the estimated
costs.  Within twenty (20) days of receipt of the notice,  Investor shall notify
Aurora  of its  election  to  participate  or not  participate  in the  proposed
Subsequent  Operations.  Failure to  respond  within  twenty  (20) days shall be
deemed an  election  not to  participate.  In the event one (1) or more  working
interest  owners of the  existing  well  elect not to  participate,  Aurora  may
proceed with the  Subsequent  Operations  provided that parties  owning at least
fifty  percent  (50%) of the  working  interest  in the  existing  well elect to
participate,  but upon the following  terms:  Aurora shall  purchase the working
interest  of the working  interest  owners who elect not to  participate  in the
Subsequent Operations (the "Non-Consenting Parties"). The amount of compensation
to be paid for the Non-Consenting Parties' working interest in the existing well
shall be the one hundred percent (100%) of the  NonConsenting  Parties'  capital
cost of the existing well less fifty  percent  (50%) of the revenue  received by
the Non-Consenting Party for production from the existing well.




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Notwithstanding  anything  set  forth  herein,  parties  having at least a fifty
percent  (50%)  working  interest in the Aurora Leases and/or AMI, may propose a
Subsequent  Well(s) and parties  having at least a fifty  percent  (50%) working
interest  in an  existing  well  may  propose  Subsequent  Operations.  In  such
instances,  if Aurora  elects  not to  participate,  Aurora  shall  nevertheless
operate  such well if  requested by the working  interest  owners.  In addition,
Aurora's working interest in such proposed  Subsequent Well shall default to the
other working  interest  owners who elect to  participate  and Aurora's  working
interest in an existing well for which Subsequent  Operations are proposed shall
be  purchased  by the  working  interest  owners  who  elect to  participate  in
accordance with the terms set forth in this Section.

Section 4. Well Spacing, Pooling of Interests

     4.01.  Drilling Units.  Each Test Well and Subsequent Well shall be drilled
on a  permitted  unit  of a size  authorized  by the  regulatory  agency  having
jurisdiction.

     4.02. Pooling of Interests. At such time that Aurora has confirmed the
commercial feasibility of an area within the AMI, Aurora shall prepare and
record with the Aipena County, Michigan Register of Deeds a pooling declaration,
pooling agreement or unitization agreement which shall include those lands and
leases which, in the opinion of Aurora, are reasonable and necessary to comply
with this Agreement. Such declaration of agreement may provide for expansion of
the unit upon the terms and conditions deemed appropriate by Aurora.

Section 5. Net Revenue Interest; Aurora's Carried Working Interest

     5.01.  Net  Revenue  Interest.  The net  revenue  interest  to the  working
interest  of Investor  shall be an eighty  percent  (.80) net  revenue  interest
unless the lease is less than eighty  percent (.80) net revenue  interest and in
which case the actual net revenue interest prevails, which ever is less.

     5.02 Aurora's Carried Working Interest. Investor agrees that it shall carry
Aurora for a proportionate  working  interest in the Aurora Leases  described in
Section 2.01, the  Subsequently  Acquired Leases  described in Section 2.02, the
Test Well  described in Section  3.01 and in any  Subsequent  Well  described in
Section 3.02 within the AMI in which Investor participates.  The carried working
interest  in the Test  Well and all  Subsequent  Wells  shall be to the point of
first sale  (after the sales  meter).  Investor  shall pay all costs of whatever
nature  attributable to and associated with said carried working interest to the
point of first sale as provided  herein.  At such time that a well to which this
paragraph applies goes into production, Aurora shall pay its proportionate share
of lease operating expenses, including the cost of Lease Purchase agreements for
compressors and C02 reduction units. For




<PAGE>
purposes of this Section and Sections 2.01, 2.02, 3.02 and 3.03, then,  Investor
shall pay  twenty-five  percent  (25%) of the actual costs and shall  acquire an
undivided twenty-two and one-half percent (22.5%) working interest before payout
on a well by well basis and an undivided twenty percent (20.0%) working interest
after payout on a well by well basis.

     5.03  Payout  Defined.  Payout  shall be  defined as the first of the month
following the point that Investor has recouped 100% of the actual costs invested
into said well. For the purpose of simplifying the calculation of payout, Aurora
shall  treat any group of wells  that are  commonly  pooled  with only one sales
meter, and no individual well meters, as a single well.

Section 6. Assignments

     6.01. Assignment of the Aurora Leases.  Contemporaneously  with the payment
by Investor to Aurora of the sum provided in Section  2.01 herein,  Aurora shall
assign to Investor an undivided  twenty-two and one-half percent (22.5%) working
interest  before payout on a well by well basis and an undivided  twenty percent
(20.0%)  working  interest  after  payout on a well by well  basis in and to the
Aurora Leases and subsequently acquired leasehold. Said assignment shall deliver
to Investor the net revenue  interest  provided for in Section 5.01 herein.  The
assignment  of said Leases  shall be subject to all of the terms and  conditions
contained  in the  leases  assigned,  this  Agreement  and the  Joint  Operating
Agreement as referenced in Section 8 herein.

     6.02.  Assignments of Subsequently  Acquired Leases. Within sixty (60) days
after Investor has paid its proportionate share of the acquisition costs for the
Subsequently  Acquired Leases, Aurora shall assign to Investor its proportionate
share of said leases.  The Assignment shall be on the same terms and contain the
same limitations as provided for in Section 6.01 above.

Section 7. Warranty of Title

     7.01. Aurora does not warrant title to any part of the AMI, nor does Aurora
make any warranty as to the status of the Aurora Leases or Subsequently Acquired
Leases,  or to the extent of interests in oil and gas actually  covered thereby,
except that Aurora  hereby  warrants that the Leases within the AMI are free and
clear of all liens,  encumbrances,  mortgages  and defects of title  created by,
through or under Aurora but not  otherwise.  Aurora agrees that no well shall be
drilled  until  title to the  drilling  unit  therefore  has been  examined by a
licensed attorney.

Section 8. Operating Agreement

     8.01.  Operating  Agreement.  The  terms  and  provisions  of the  A.A.P.L.
610-1989 Model Form  Operating  Agreement  attached  hereto as Exhibit III shall
govern


<PAGE>

operations  conducted with the AMI. Aurora shall be named operator for each well
within the AMI.  Aurora may be removed as operator  only upon a showing of gross
negligence.

     8.02.  Option  Agreement.  It is  understood  between the parties that this
agreement  applies to  Investors  participation  in 100 wells in Alpena  County,
Michigan  and that in the  event  that the  Investor  actually  participates  by
funding  the  first  70  wells,  that  the  investor  is  granted  the  right to
participate in an additional 100 wells, making its total potential participation
of 25% of 200 wells.

Section 9. Acknowledgments, Representations and Agreements of Investor

     9.01.  Acknowledgement of Investor.  Investor acknowledges that it has been
advised as follows:

     a. The interests  represented by this  Agreement  have not been  registered
under the  Securities  Act of 1933, as amended,  nor under the Michigan  Uniform
Securities Act, or any other state  securities  laws. A transfer,  sale or other
disposition of such  interests may be made only if such transfer,  sale or other
disposition is exempt from the  registration  requirements of the Securities Act
of  1933,  as  amended,  and of  applicable  state  securities  laws  or if such
registration requirements are complied with.

     b. That  Aurora's  reliance  upon such  exemptions  for  private or limited
offerings is based, in part, upon the representations and agreements of Investor
contained herein.

     c. That the  re-offer  and  resale  of the  interests  represented  by this
Agreement is limited,  in that no transfer,  sale or other  disposition  of such
interest may be made,  unless the transfer,  sale or other disposition is exempt
from the  registration  requirements  of the Securities Act of 1933, as amended,
and of the  Michigan  Uniform  Securities  Act and any  other  applicable  state
securities acts, or unless such registration requirements are complied with.

     9.02. Representations and Agreements.

     a. Investor represents that it has had such previous experience in business
and financial matters and in oil and gas matters in particular, that it is fully
capable of evaluating the risks and merits of an investment of this nature,  and
that it is in a  position  to  bear  the  financial  risks  of such  investment,
including  limited  liquidity  during  an  indeterminate  period of time and the
possible loss of all funds invested.

     b. Investor represents that it was not formed for the purpose of purchasing
securities of Aurora, and that it invests not more than 10% of its assets in the
securities  of Aurora,  and Investor  further  acknowledges  that Aurora was not
affiliated  with  the  organization  of  Investor  or  the  solicitation  of its
investors.




<PAGE>

     c.  Investor  represents  that  it is  acquiring  an  interest  under  this
Agreement  for its own account and not for the account of others and not for the
resale thereof,  except only as may have been specifically  approved by Investor
and Aurora in writing.

     d. Investor agrees that it will sell, assign, transfer, pledge, encumber or
otherwise dispose of his interest under this Agreement or any part thereof, only
if the sale, assignment,  transfer,  pledge, encumbrance or other disposition is
exempt from the  registration  requirements  of federal  securities laws and the
Michigan  Uniform  Securities Act and any other applicable state securities laws
or such registration requirements have been complied with.

     e.  Investor  acknowledges  that  it  understands  the  meaning  and  legal
consequences of the representations and agreements contained in this section and
hereby agrees to indemnify  Aurora and hold Aurora harmless from and against any
and all loss, damage or liability due to or arising out of the untruth or breach
of any such representation or agreement.

Section 10. Miscellaneous Provisions

     10.01.  No  Partnership.  It is not the intention of the parties  hereto to
create,  nor shall this  instrument  be  construed as creating a mining or other
partnership  or  association  which might render the parties liable as partners.
Each of the parties hereby elects,  under the authority of Section 761(a) of the
Internal  Revenue Act of 1986,  to be excluded from the  application  of all the
provisions  of  Subchapter K of Chapter 1 of Subtitle A of the Internal  Revenue
Act of 1986 or provision of similar  import in any subsequent  Internal  Revenue
Code of the  United  States.  If the  income  tax laws of the state in which the
property covered hereby is located contain, or may hereafter contain, provisions
similar to those contained in the Subchapter of the Internal Revenue Act of 1986
above  referred to under  which a similar  election  is  permitted,  each of the
parties  agrees that such election shall be exercised.  Investor  authorizes and
directs Aurora to execute such an election with the proper  governmental  office
or agency.  If requested by Aurora to do so, Investor agrees to execute and join
in such an election.

     10.02.  Force  Majeure.  If either party is rendered  unable,  wholly or in
part, by force majeure to carry out its obligations under this Agreement,  other
than the obligations to make money payments,  that party shall give to the other
party  prompt  written  notice  of  the  force  majeure  with   reasonably  full
particulars  concerning  it;  thereupon,  the obligation of the party giving the
notice,  so far as it is  affected  by the  force  majeure,  shall be  suspended
during,  but no longer than, the continuance of the force majeure.  The affected
party shall use all reasonable  diligence to remove the force majeure  situation
as quickly as practicable.


<PAGE>


     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.

     The term  "force  majeure"  as herein  employed  shall  mean an act of God,
strike,  lockout or other  industrial  disturbance,  act of public  enemy,  war,
blockade,   public  riot,  lightening,   fire,  storm,  flood,  explosion,   any
governmental   action,   any   governmental   delay,   restraint   or  inaction,
unavailability of equipment,  delay in setting gas meters by utilities, delay in
getting  pipelines laid for the  transportation  of gas, delays caused by filing
with FERC, the Indiana Public Utilities  Commission,  or any other  governmental
agency, 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.

     10.03.  Sale of Gas.  Investor has the right to take in kind or  separately
dispose of its proportionate share of gas from the AMI. Any expenditure incurred
in the  taking  in kind or  separate  disposition  by  Investor  of its share of
production shall be borne by Investor. If Investor fails to make arrangements to
take its share of gas in kind or  separately  dispose of the same,  Aurora shall
have the  option to market  Investor's  share of gas  produced  within  the AMI,
subject to revocation at will by Investor.

         Investor shall give Aurora fifteen (15) days advance notice of its
intent to take and market its share of gas and the period of time during which
Investor will take and market its gas. Any changes in Investor's election to
take and market its gas will be effective only after fifteen (15) days advance
notice to Aurora.

     10.04.  Term of Agreement.  This Agreement shall remain in force so long as
any lease  within  the AMI  remains in effect  and for an  additional  period of
ninety (90) days thereafter.  In the event, within said ninety (90) day period a
well is drilled,  reworked or  re-completed  on or within the AMI, the Agreement
shall remain in force so long as such well or wells are capable of producing and
for an additional period of ninety (90) days thereafter.

     10.05. Notices. Unless otherwise agreed upon, where provisions are made for
Notice or concurrence of any kind, such notice shall be addressed as follows:

 If to Aurora:            P.O. Box 961
                          Traverse City, MI 49685-0961
                          Attention: William W. Deneau

 If to Investor:          P.O. Box 2056
                          Walla Walla, WA 99362
                          Attention: Howard M. Crosby




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Notices of change of address of either  party shall be  effective  upon  written
notification to the other party mailed to the addresses shown above.

     10.06. Complete Agreement.  This Agreement,  including the exhibits hereto,
embodies  the  complete  and  full  agreement  of  the  parties  hereto;  and no
alterations,  modifications or changes herein shall be effective or binding upon
the parties unless the same are concurred in writing by the parties.

     10.07.  Access to  Information.  Investor shall be entitled to all drilling
and production reports and shall have access,  upon reasonable notice to Aurora,
to all drill sites and facilities.  Such  information  shall be confidential and
not disclosed to third parties without the prior written approval of Aurora.

     10.08.  Successors.  The terms,  covenants and conditions of this Agreement
shall be  binding  upon and shall  inure to the  benefit of the  successors  and
assigns of the parties hereto.

     10.09.  Applicable Law.  Notwithstanding the place where this Agreement may
be executed by either of the parties  hereto,  the parties  expressly agree that
all the terms of  provisions  hereof  shall be  construed  under the laws of the
State of Michigan.

     10.10. Alteration.  Except as otherwise provided for herein, this Agreement
cannot be amended,  altered or any of its provisions  waived on behalf of either
party, except in writing by a duly authorized agent of either party.

     10.11. Severability. If any part of this Agreement is held to be invalid or
unenforceable  under the laws of any jurisdiction  where this Agreement is to be
governed or sought to be enforced, the remaining provisions shall be enforceable
to the maximum extent permitted by law; provided, that such remaining provisions
effectuate fully the intent of the parties as manifested herein.

     10.12.  Drafting of Agreement.  In the event a dispute  arises  between the
parties in a court of law or  otherwise as to the meaning or  interpretation  of
this  Agreement  or the  rights  and  responsibilities  of the  parties  created
hereunder,  this  Agreement  shall be deemed to have been drafted by all parties
hereto.

     In witness  whereof,  the parties have executed this Lease  Acquisition and
Participation Agreement on the date first written above.







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Witnesses:
/s/ Barbara J. Johnson                  /s/ John Miller
----------------------------            ----------------------------------------
                                        For:  Aurora Energy, Ltd.
                                        By:   John Miller
                                        Its:  Vice President



/s/ Howard Crosby                       /s/ John P. Ryan
----------------------------            ----------------------------------------
                                        For:  Cadence Resources Corp.
                                        By:   John Ryan
                                        Its:  Vice President



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                              Schedule "A" omitted