Unassociated Document


    NOTE
PURCHASE AGREEMENT

    


    THIS NOTE
PURCHASE AGREEMENT (this “Agreement”), dated as of
August 13, 2009 (“Effective
Date”), is entered into by and between American Petro-Hunter, Inc., a
Nevada corporation (the “Company”), and John E.
Friesen, an individual (the “Purchaser”).

    


    RECITAL

    


    WHEREAS, the Purchaser is
willing to acquire from the Company, and the Company is willing to issue to the
Purchaser, on the terms and subject to the conditions set forth herein, a (i)
Secured Convertible Promissory Note in the aggregate principal amount of
$500,000 (the “Note”) on
the terms and conditions as set forth in the Note in the form attached hereto as
Exhibit A, and
(ii) warrant to purchase 1,428,571 shares of common stock of the Company (the
“Warrant”) on the terms
and conditions set forth in the Warrant in the form attached hereto as Exhibit
D.

    


    NOW, THEREFORE, in
consideration of the foregoing, and the representations, warranties, covenants
and conditions set forth below, the parties hereto, intending to be legally
bound, hereby agree as follows:

    


    AGREEMENT

    


    1.       Issuance and Receipt of the Note and
Warrant. The Company agrees to issue and deliver the Note and Warrant to
the Purchaser upon receipt of funds from the Purchaser.  The issue
date of the Note and Warrant shall be such date the Company first receives such
funds.

     

    


    2.       Representations and Warranties of the
Company.  The Company represents, and warrants to, the
Purchaser as follows:

     

    (a) 
Organization and Good Standing:
Certificate of Incorporation and Bylaws. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its organization and has all requisite corporate power and authority to
carry on its business as now conducted and proposed to be
conducted.  The Company is duly qualified to conduct business as a
foreign corporation and is in good standing as a foreign corporation in all
jurisdictions where the properties owned, leased or operated by it are located
or where its business is conducted, except where the failure to so qualify or be
in good standing is not reasonably likely to have a material adverse effect on
the Company’s business, financial condition, results of operations, assets,
liabilities or prospects (a “Material Adverse
Effect”).

     

    (b) 
Corporate
Power.  The Company has all requisite legal and corporate power
to enter into, execute, deliver and perform its obligations under this
Agreement, the Note and Warrant.  This Agreement is and, upon each of
their issuance, the Note and Warrant will be, valid and binding obligations of
the Company, enforceable in accordance with their terms.

     

    (c) 
Authorization.

     

    (i)         Corporate
Action.  All corporate and legal action on the part of the Company,
its officers, directors and stockholders necessary for the execution and
delivery of this Agreement and the Note, and the performance of the Company’s
obligations hereunder and thereunder, has been taken.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    (ii)         No
Preemptive Rights.  No person has any right of first refusal or any
preemptive or similar rights in connection with the issuance of the Note, or the
issuance of common stock of the Company upon conversion of the Note (the “Conversion
Stock”).

     

    (d) 
Noncontravention.  The
execution, delivery and performance of and compliance with this Agreement, the
Note, the issuance of the Conversion Stock will not result in nor constitute any
breach, default or violation of (i) any agreement, contract, lease,
license, instrument or commitment (oral or written) to which the Company is a
party or is bound or (ii) any law, rule, regulation, statute or order applicable
to the Company or its properties, nor result in the creation of any mortgage,
pledge, lien, encumbrance or charge upon any of the properties or assets of the
Company, any of which breach, default or violation under clause (i) or (ii),
preceding, would have a Material Adverse Effect.

     

    (e) 
Consents. No consent,
approval, order or authorization of, or designation, registration, declaration
or filing with, any federal, state, local or provincial or other governmental
authority or other person on the part of the Company is required in connection
with the valid execution and delivery of this Agreement and the Note, or the
offer, or issuance of the Note or the Conversion Stock other than, if required,
filings or qualifications under applicable state securities laws, which filings
or qualifications, if required, will be timely filed or obtained by the
Company.

     

    (f) 
Offering.  In
reliance, in part, on the representations and warranties of the Purchaser in
Section 3 hereof, the offer and issuance of the Note in conformity with the
terms of this Agreement and the issuance of the Conversion Stock will not result
in a violation of the requirements of Section 5 of the Securities Act of 1933,
as amended, (the “Securities
Act”) or the qualification or registration requirements of any applicable
state securities laws.

     

    (g) 
Compliance with
Laws.  The Company is not (i) subject to the terms or
provisions of any material judgment, decree, order, writ or injunction or (ii)
in violation of any terms or provisions of any laws, rules, or regulations,
except where such violations do not and are not likely to have a Material
Adverse Effect.

     

    (h) 
Compliance with Corporate
Instruments and Laws.  The Company is not in violation of any
provisions of its Articles of Incorporation or Bylaws as currently in
effect.  The Company is in compliance in all material respects with
all applicable laws, statutes, rules, and regulations of all governmental and
regulatory authorities which are applicable and the compliance with which is
material to the Company or its assets or business.  All licenses,
franchises, permits and other governmental authorizations held by the Company
and which are material to its business are valid and sufficient in all respects
for the business presently carried on by the Company.

     

    (i)  
Use of
Proceeds.  The Company expects to use the net proceeds received
under this Agreement for general working capital purposes and possibly the
acquisition of assets and companies. The Company has not reserved or allocated
specific amounts for these purposes. Accordingly, the Company’s management will
have broad discretion as to the application of such funds.


    
      
         


      

      
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    (j) 
Public
Filings.

     

    (i)         The
Company has filed all reports required to be filed by Section 13 or 15 (d) of
the Securities Exchange Act of 1934, as amended, during the past twelve months
(the “Company SEC
Reports”). The Company SEC Reports, each as amended prior to the date
hereof, (i) have been prepared in all material respects in accordance with
the requirements of the Securities Act or the under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), as the case
may be, and the rules and regulations promulgated thereunder, and (ii) did
not, when filed as amended prior to the date hereof, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading.

     

    (ii)         Each
of the consolidated financial statements (including, in each case, any notes
thereto) contained in or incorporated by reference into the Company SEC Reports
was prepared in accordance with U.S. Generally Accepted Accounting Principles
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto), complied in all material respects with
applicable accounting requirements and the rules and regulations of the
Securities and Exchange Commission (the “SEC”) and each fairly
presented, in all material respects, the consolidated financial position,
results of operations and cash flows of the Company of the dates thereof and for
the respective periods indicated therein except as otherwise noted therein
(subject, in the case of unaudited statements, to normal and recurring year end
adjustments).

     

    3.       Representations and Warranties by the
Purchaser. The Purchaser represents, and warrants to, and covenants with,
the Company as follows:

     

    (a) 
Investment. The
Purchaser is acquiring the Note, Warrant and Conversion Stock for the
Purchaser’s own account, and not directly or indirectly for the account of any
other person.  The Purchaser is acquiring the Note and Conversion
Stock for investment and not with a view to distribution or resale thereof
except in compliance with Securities Act of 1933, as amended (the “Securities Act”) and any applicable state
law regulating securities.

     

    (b) 
Registration of Note and
Conversion Stock.  The Purchaser must bear the economic risk of
investment for an indefinite period of time because the Note, Warrant and
Conversion Stock have not been registered under the Securities Act and therefore
cannot and will not be sold unless they are subsequently registered under the
Securities Act or an exemption from such registration is
available.  The Company has made no representations, warranties or
covenants whatsoever as to whether any exemption from the Securities Act,
including, without limitation, any exemption for limited sales in routine
brokers’ transactions pursuant to Rule 144 under the Securities Act will become
available. Transfer of the Note, Warrant and Conversion Stock have not been
registered or qualified under any applicable state law regulating securities and
therefore the Note, Warrant and Conversion Stock cannot and will not be sold
unless they are subsequently registered or qualified under any such act or an
exemption therefrom is available.  The Company has made no
representations, warranties or covenants whatsoever as to whether any exemption
from any such act will become available.

     

    (c) 
Accredited Investor. The
Purchaser represents and warrants to, and covenants with, the Company that: (i)
the Purchaser is an “accredited investor” as defined in Rule 501 of Regulation D
under the Securities Act and the Purchaser is also knowledgeable, sophisticated
and experienced in making, and is qualified to make decisions with respect to
investments in securities presenting an investment decision like that involved
in the purchase of the Note, including investments in securities issued by the
Company and investments in comparable companies, and has requested, received,
reviewed and considered all information it deemed relevant in making an informed
decision to purchase the Note; and (ii) the Purchaser has had the opportunity to
review the risks identified on Annex I, attached
hereto.


    
      
         


      

      
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    (d) 
Access to
Information.  The Purchaser acknowledges that he has had access
to the Company SEC Reports.  The Purchaser further acknowledges that
the Company has made available to him the opportunity to ask questions of and
receive answers from the Company's officers and directors concerning the terms
and conditions of this Agreement and the business and financial condition of the
Company, and the Purchaser has received such information about the business and
financial condition of the Company and the terms and conditions of the Agreement
as he has requested.  The Purchaser understands that the Note, Warrant
and Conversion Stock are speculative investments, which involve a high degree of
risk of loss of the Purchaser’s entire investment.  Among others, the
undersigned has had the opportunity to review of the risks identified under the
caption “Risk Factors” in the Company SEC Reports and Annex I.

     

    (e) 
Foreign
Matters.  The Purchaser acknowledges that no action has been or
will be taken in any jurisdiction outside the United States by the Company that
would permit an offering of the Note, or possession or distribution of offering
materials in connection with the issuance of the Note, in any jurisdiction
outside the United States where legal action by the Company for that purpose is
required.  Each Purchaser outside the United States will comply with
all applicable laws and regulations in each foreign jurisdiction in purchasing
this Note, Warrant and the Conversion Stock.

     

    (f) 
Compliance with
Laws.  Purchaser will not use any of the Conversion Stock to
cover any short position in the Common Stock of the Company if doing so would be
in violation of applicable securities laws.

     

    (g) 
Legal and Tax
Advice.  The Purchaser understands that nothing in the Company
SEC Reports, this Agreement or any other materials presented to the Purchaser in
connection with the purchase of the Note, Warrant and Conversion Stock
constitutes legal, tax or investment advice.  The Purchaser has
consulted such legal, tax and investment advisors, as it, in its sole
discretion, has deemed necessary or appropriate in connection with its purchase
of the Note, Warrant and Conversion Stock.

     

    4.       Redemption Right. Upon the
Repayment Date (as defined in the Note), the Company shall have the right to
automatically convert any remaining outstanding principal balance and accrued
interest under the Note into Conversion Stock at the rate of the Conversion
Price (as defined in the Note).

     

    5.       Security
Interest and Collateral Assignment.

     

    (a) 
Security
Interest.  As security interest for the full, prompt, complete,
and final payment when due (whether at stated maturity, by acceleration, or
otherwise) of the amounts owed under the Note, the Company shall grant to the
Purchaser a security interest in all of the Company’s right, title, and interest
in, to, and under all of the Company’s assets on the terms and conditions set
forth in the form of Security Agreement attached hereto as Exhibit
B.

     

    (b) 
Collateral
Assignment.  The Company agrees to pay and assign up to $7,500
of any royalty fees payable to the Company from the Company’s investment in the
Poston Prospect #1 Lutters oil well located in Trego County, Kansas on the terms
and conditions set forth in the form of Collateral Assignment of Royalties
attached hereto as Exhibit C. Each
payment shall be credited first to accrued but unpaid interest and the balance
to principal.


    
      
         


      

      
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    6.       Indemnification.

     

    (a) 
Company’s Indemnification of
Purchaser.  To the extent permitted by law, the Company shall
defend, indemnify and hold harmless the Purchaser from and against any and all
losses, claims, judgments, liabilities, demands, charges, suits, penalties,
costs or expenses, including court costs and attorneys’ fees resulting from any claim, demand, suit,
action or proceeding brought by any third party (“Claims and Liabilities”) with
respect to or arising from (i) the breach of any warranty or any inaccuracy
of any representation made by the Company in this Agreement, or (ii) the
breach of any covenant or agreement made by the Company in this
Agreement.

     

    (b) 
Purchaser’s Indemnification of
Company.  To the extent permitted by law, the Purchaser shall
defend, indemnify and hold harmless the Company from and against any and all
Claims and Liabilities with respect to or arising from (i) the breach of
any warranty or any inaccuracy of any representation made by the Purchaser in
this Agreement, or (ii) the breach of any covenant or agreement made by the
Purchaser in this Agreement.

     

    (c) 
Claims
Procedure.  Promptly after the receipt by any indemnified party
(the “Indemnitee”) of
notice of the commencement of any action or proceeding against such Indemnitee,
such Indemnitee shall, if a claim with respect thereto is or may be made against
any indemnifying party (the “Indemnifying Party”) pursuant
to this Section 6, give such Indemnifying Party written notice of the
commencement of such action or proceeding and give such Indemnifying Party a
copy of such claim and/or process and all legal pleadings in connection
therewith.  The failure to give such notice shall not relieve any
Indemnifying Party of any of its indemnification obligations contained in this
Section 6, except where, and solely to the extent that, such failure actually
and materially prejudices the rights of such Indemnifying Party.  Such
Indemnifying Party shall have, upon request within thirty (30) days after
receipt of such notice, but not in any event after the settlement or compromise
of such claim, the right to defend, at its own expense and by its own counsel
reasonably acceptable to the Indemnitee, any such matter involving the asserted
liability of the Indemnitee; provided, however, that if the Indemnitee
determines that there is a reasonable probability that a claim may materially
and adversely affect it, other than solely as a result of money payments
required to be reimbursed in full by such Indemnifying Party under this Section
6 or if a conflict of interest exists between Indemnitee and the Indemnifying
Party, the Indemnitee shall have the right to defend, compromise or settle such
claim or suit; and, provided, further, that such settlement or compromise shall
not, unless consented to in writing by such Indemnifying Party, which shall not
be unreasonably withheld, be conclusive as to the liability of such Indemnifying
Party to the Indemnitee.  In any event, the Indemnitee, such
Indemnifying Party and its counsel shall cooperate in the defense against, or
compromise of, any such asserted liability, and in cases where the Indemnifying
Party shall have assumed the defense, the Indemnitee shall have the right to
participate in the defense of such asserted liability at the Indemnitee’s own
expense.  In the event that such Indemnifying Party shall decline to
participate in or assume the defense of such action, prior to paying or settling
any claim against which such Indemnifying Party is, or may be, obligated under
this Section 6 to indemnify an Indemnitee, the Indemnitee shall first supply
such Indemnifying Party with a copy of a final court judgment or decree holding
the Indemnitee liable on such claim or, failing such judgment or decree, the
terms and conditions of the settlement or compromise of such
claim.  An Indemnitee’s failure to supply such final court judgment or
decree or the terms and conditions of a settlement or compromise to such
Indemnifying Party shall not relieve such Indemnifying Party of any of its
indemnification obligations contained in this Section 6, except where, and
solely to the extent that, such failure actually and materially prejudices the
rights of such Indemnifying Party.  If the Indemnifying Party is
defending the claim as set forth above, the Indemnifying Party shall have the
right to settle the claim only with the consent of the
Indemnitee.


    
      
         


      

      
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    (d) 
Exclusive
Remedy.  Each of the parties hereto acknowledges and agrees
that, from and after the Effective Date, its sole and exclusive monetary remedy
with respect to any and all claims relating to the subject matter of this
Agreement shall be pursuant to the indemnification provisions set forth in this
Section 6, except that nothing in this Agreement shall be deemed to constitute a
waiver of any injunctive or other equitable remedies or any tort claims of, or
causes of action arising from, intentionally fraudulent misrepresentation,
willful breach or deceit.

     

    7.       Confidentiality.  The
Purchaser represents to the Company that, at all times during the Company’s
offering of the Note, the Purchaser has maintained in confidence all non-public
information regarding the Company received by the Purchaser from the Company or
its agents, and covenants that it will continue to maintain in confidence such
information and shall not use such information for any purpose other than to
evaluate the purchase of the Note until such information (a) becomes generally
publicly available other than through a violation of this provision by the
Purchaser or his agents or (b) is required to be disclosed in legal proceedings
(such as by deposition, interrogatory, request for documents, subpoena, civil
investigation demand, filing with any governmental authority or similar
process), provided, however, that before making any use or disclosure in
reliance on this subparagraph (b) the Purchaser shall give the Company at least
fifteen (15) days prior written notice (or such shorter period as required by
law) specifying the circumstances giving rise thereto and will furnish only that
portion of the non-public information which is legally required and will
exercise his best efforts to obtain reliable assurance that confidential
treatment will be accorded any non-public information so furnished.

     

    8.       Miscellaneous.

     

    (a) 
Waivers and
Amendments.  Any provision of this Agreement may be amended,
waived or modified upon the written consent of the Company and the
Purchaser.

     

    (b) 
Governing
Law.  This Agreement and all actions arising out of or in
connection with this Agreement shall be governed by and construed in accordance
with the laws of the State of Nevada, without regard to the conflict of laws
provisions of the State of Nevada or of any other state.

     

    (c)  
Entire
Agreement.  This Agreement, together with the Exhibits hereto,
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof.

     

    (d) 
Notices.  All
notices, requests and other communications hereunder shall be in writing and
shall be deemed to have been duly given at the time of receipt if delivered by
hand or by facsimile transmission or three (3) days after being mailed,
registered or certified mail, return receipt requested, with postage prepaid to
the applicable parties hereto at the address stated on the signature page hereto
or if any party shall have designated a different address or facsimile number by
notice to the other party given as provided above, then to the last address or
facsimile number so designated.

     

    (e) 
Validity.  If
any provision of this Agreement shall be judicially determined to be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions thereof shall not in any way be affected or impaired
thereby.


    
      
         


      

      
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    (f) 
Counterparts.  This
Agreement may be executed in any number of counterparts, and a party’s delivery
of a signed counterpart by facsimile transmission shall constitute that party’s
due execution of this Agreement.

     

    
      
        
        

      

      
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    IN WITNESS WHEREOF, the
parties have executed and delivered this Agreement as of the date and year first
written above.

    


    AMERICAN
PETRO-HUNTER, INC.

    


    
      
        	
                By:

              	
                /s/ Robert
  McIntosh

              


      

    

    


    Name:
Robert McIntosh

    Title:
Chief Executive Officer

     

    Address:
17470 North Pacesetter Way

      Scottsdale,
AZ  85255

     

    JOHN
E. FRIESEN

    


    
      
        	
                By:

              	
                /s/ John E.
  Friesen

              


      

    

    


    
      
        	
                Address:

              	 
      
	 
      


      

    


    
      
         


      

      
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    EXHIBIT
A

    FORM OF SECURED CONVERTIBLE
PROMISSORY NOTE


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

    
      Exhibit
A

    

     

    
      THIS NOTE
AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933.  THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED, OR OTHER­WISE TRANSFERRED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN
OPINION OF COUNSEL SATISFACTORY TO THE BORROWER THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH
ACT.

       

      American
Petro-Hunter, Inc.

       

      SECURED
CONVERTIBLE PROMISSORY NOTE

      
        	 	 
	August 13,
      2009	
                $500,000

              
	 	 



      American
Petro-Hunter, Inc., a Nevada corporation (the “Company”), for value received,
promises to pay to the order of John E. Friesen (the “Holder”), the sum of $500,000,
or the aggregate unpaid principal balance of all amounts outstanding hereunder,
whichever is less (the "Principal"), plus simple
interest thereon from the date first set forth above until paid at an annual
interest rate equal to eighteen percent (18%) and in accordance with the
provisions of Section
2 below.  Any remaining principal and interest hereof will be
payable at the principal office of the Company or by mail to the registered
address of the Holder on or before August 13, 2010 (the “Repayment Date”) except that
no payment will be required to the extent that such principal and interest are
or have been paid or converted pursuant to the terms hereof or under the
Agreement.

       

      This Note
is issued by the Company in connection with that certain Note Purchase Agreement
dated as of even date herewith (the “Agreement”).  This
Note incorporates by reference all the terms of the Note Purchase
Agreement.  The following is a statement of the rights of the Holder
and the conditions to which this Note is subject, and to which the Holder, by
the acceptance of this Note, agrees:

       

      1. Definitions.  As
used in this Note, the following terms, unless the context otherwise requires,
have the following meanings:

       

      1.1 “Company” will mean American
Petro-Hunter, Inc. and will include any corporation, partnership, limited
liability company or other entity that will succeed to or assume the obligations
of the Company under this Note.

       

      1.2 “Holder” will mean any person
who will at the time be the registered holder of this Note.

       

      2. Conversion
and Payment of Interest

       

      2.1 Any
monthly royalty fee payable to the Company from the Company’s twenty five (25%)
ownership of working interest in the Poston Prospect #1 Lutters oil well located
in Trego County, Kansas will be payable by mail to the registered address of the
Holder in an amount equal to the lesser of (i) such royalty fee payable to the
Company, or (ii) $7,500. Such payment shall continue until and including the
Repayment Date. Any remaining accrued interest shall be payable in arrears on
the 1st day after the end of each month, commencing August 1, 2009, and
continuing thereafter until and including the Repayment Date, when all accrued
but unpaid interest and the unpaid principal balance shall be paid in full. Each
payment shall be credited first to accrued but unpaid interest and the balance
to principal, and interest shall cease to accrue on the amount of principal so
paid. Interest shall be computed on the basis of a year of 365 days for the
actual number of days elapsed.

       

      
        
           

        

        
          A-1

          
            

          

        

        
           

        

      

      2.2 At any
time prior to the Repayment Date, Holder at its option and upon prior written
notice to the Company, may convert in whole or in part, the outstanding
Principal and accrued but unpaid interest thereon (the “Debt”) into shares of common
stock of the Company based on a per share conversion price of the lower of (i)
$0.35, or (ii) a twenty five percent (25%) discount to the average closing
trading price (as reported by Bloomberg) of a share of Company common stock
during the five (5) trading days prior to the conversion date  (the
“Conversion Price”);
provided, however, the number
of shares of Company common stock that may be acquired by Holder upon any
conversion of the Debt shall be limited to the extent necessary to ensure that,
following such exercise, the total number of shares of Company common stock then
beneficially owned by Holder and his affiliates and any other persons whose
beneficial ownership of Company common stock would be aggregated with the
Holder’s for purposes of Section 13(d) of the Exchange Act, does not exceed
4.999% of the total number of issued and outstanding shares of Company common
stock (including for such purpose the shares of Company common stock issuable
upon such conversion).  For such purposes, beneficial ownership shall
be determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations thereunder.  Notwithstanding the foregoing, Holder may
waive such limitation on conversion contained in this Section 2.2 or
increase or decrease such limitation percentage to any other percentage as
specified in a written notice to the Company.

       

      2.3 In the
event of conversion, the Holder will surrender the original copy of this Note
for conversion at the principal office of the Company at the time of such
closing.  Holder agrees to execute all necessary documents in
connection with the conversion of this Note, including a definitive stock
purchase agreement.  If upon such conversion of this Note a fraction
of a share would result, then the Company will round up to the nearest whole
share.

       

      2.4 All
rights with respect to such portion of this Note converted pursuant to Section 2.2 shall
terminate upon issuance of the corresponding shares of common stock to the
Holder.  Notwithstanding the foregoing, Holder agrees to surrender
this Note to the Company for cancellation as to that portion of the Note that
the Holder elects to convert under Section 2.2 as
soon as possible following the conversion of this Note, and the Company shall
execute and deliver a new Note upon the same terms and conditions set forth
herein, dated the date hereof, evidencing the right of the Holder to the balance
of the principal that was not converted (and accrued but unpaid interest
thereon, as applicable).

       

      3. Issuance of Consideration on
Conversion.  As soon as practicable after conversion of this
Note pursuant to Section 2 and receipt
of the original Note and related documents, but in not event later than five (5)
business days, the Company at its expense will cause to be issued in the name of
and delivered to the Holder, a certificate or certificates for the number of
shares of securities to which the Holder will be entitled on such conversion
(bearing such legends as may be required by applicable state and federal
securities laws in the opinion of legal counsel for the Company), together with
any other securities and property, if any, to which the Holder is entitled on
such conversion under the terms of this Note.

       

      4. Adjustment
Provisions.  The number and character of shares of common stock
issuable upon conversion of this Note and the Conversion Price therefor, are
subject to adjustment upon occurrence of the following events:

       

      
        
           

        

        
          A-2

          
            

          

        

        
           

        

      

      4.1 Adjustment for Stock Splits, Stock
Dividends, Recapitalizations, etc.  The Conversion Price of
this Note and the number of shares of common stock issuable upon conversion of
this Note shall each be proportionally adjusted to reflect any stock dividend,
stock split, reverse stock split, reclassification, recapitalization or other
similar event affecting the number of outstanding shares of common
stock.

       

      4.2 Adjustment for Reorganization,
Consolidation, Merger.  In the event (a) of any
reorganization of the Company, (b) the Company consolidates with or merges
into another entity, (c) the Company sells all or substantially all of its
assets to another entity and then distributes the proceeds to its shareholders,
or (d) the Company issues or otherwise sells securities representing more
than 50% of the voting power of the Company in a single or series of related
transactions immediately after giving effect to such transaction or series of
related transaction (each of such events shall be referred to herein as a “Liquidation Event”), then,
and in each such case, the Holder, upon the conversion of this Note at any time
after the consummation of any Liquidation Event shall be entitled to receive, in
lieu of the stock or other securities and property receivable upon the
conversion of this Note prior to such consummation, the stock or other
securities or property to which the Holder would have been entitled upon the
consummation of such Liquidation Event if the Holder had converted this Note
immediately prior thereto, all subject to further adjustment as provided in this
Note, and the successor or purchasing entity in a Liquidation Event (if other
than the Company) shall duly execute and deliver to the Holder a supplement
hereto acknowledging such entity’s obligations under this Note.

       

      4.3           No Change
Necessary.  The form of this Note need not be changed because
of any adjustment in the Conversion Price or in the number of shares of common
stock issuable upon its conversion.

       

      5. Defaults.  Holder
may declare the entire unpaid principal and accrued interest on this Note due
and payable within five (5) business days, by a notice in writing sent by
certified mail to the Company if the Company defaults in the payment of
principal of the Note or accrued interest thereon when due and not cured by the
Company within thirty (30) days.

       

      6. Prepayment.  At any
time prior to the Repayment Date and upon seven (7) days prior written notice,
the Company may prepay, in whole or in part, the Debt in full satisfaction and
accord of the Company’s obligations under this Note.

       

      7. Secured Note.  The
full amount of this Note is secured by the Collateral identified and described
as security therefor in the Security Agreement attached as Exhibit B to the
Agreement.

       

      8. Representations and Acknowledgments
of the Holder.  The Holder hereby represents, warrants,
acknowledges and agrees that:

       

      8.1 Investment.  The
Holder is acquiring this Note and the securities issuable upon conversion of
this Note (together, the “Securities”) for the Holder’s
own account, and not directly or indirectly for the account of any other
person.  The Holder is acquiring the Securities for investment and not
with a view to distribution or resale thereof except in compliance with
Securities Act of 1933 (the “Act”) and any applicable state
law regulating securities.

       

      8.2 Access to
Information.  The Holder has had the opportunity to ask
questions of, and to receive answers from, appropriate executive officers of the
Company with respect to the terms and conditions of the transactions
contemplated hereby and with respect to the business, affairs, financial
condition and results of operations of the Company.  The Holder has
had access to such financial and other information as is necessary in order for
the Holder to make a fully informed decision as to investment in the Company,
and has had the opportunity to obtain any additional information necessary to
verify any of such information to which the Holder has had access.

       

      
        
           

        

        
          A-3

          
            

          

        

        
           

        

      

      8.3 Pre-Existing
Relationship.  The Holder further represents and warrants that
the Holder has such business or financial expertise as to be able to protect the
Holder’s own interests in connection with the purchase of the
Securities.

       

      8.4 Speculative
Investment.  The Holder’s investment in the Company represented
by the Securities is highly speculative in nature and is subject to a high
degree of risk of loss in whole or in part; the amount of such investment is
within the Holder’s risk capital means and is not so great in relation to the
Holder’s total financial resources as would jeopardize the personal financial
needs of the Holder and the Holder’s family in the event such investment were
lost in whole or in part.

       

      8.5 Unregistered
Securities.

       

      (a) The
Holder must bear the economic risk of investment for an indefinite period of
time because the Securities have not been registered under the Act and therefore
cannot and will not be sold unless they are subsequently registered under the
Act or an exemption from such registration is available.  The Company
has made no representations, warranties or covenants whatsoever as to whether
any exemption from the Act, including, without limitation, any exemption for
limited sales in routine brokers’ transactions pursuant to Rule 144 under the
Act will become available.

       

      (b) Transfer
of the Securities has not been registered or qualified under any applicable
state law regulating securities and therefore the Securities cannot and will not
be sold unless they are subsequently registered or qualified under any such act
or an exemption therefrom is available.  The Company has made no
representations, warranties or covenants whatsoever as to whether any exemption
from any such act will become available.

       

      8.6 Accredited
Investor.  The Holder presently qualifies as an “accredited
investor” within the meaning of Regulation D of the rules and regulations
promulgated under the Act.

       

      9. Miscellaneous.

       

      9.1 Waiver and
Amendment.  Any provision of this Note may be amended, waived
or modified only upon the written consent of the Company and the
Holder.

       

      9.2 Restrictions on
Transfer.  This Note may only be transferred in compliance with
applicable state and federal laws.  All rights and obligations of the
Company and the Holder will be binding upon and benefit the successors, assigns,
heirs, and administrators of the parties.

       

      9.3 Company
Representation.  The Company represents to the Holder that the
Company is a corporation duly organized, validly existing, authorized to
exercise all its corporate powers, rights and privileges, and in good standing
in the State of Nevada and has the corporate power and corporate authority to
own and operate its properties and to carry on its business as now conducted;
all corporate action on the part of the Company, its officers, directors, and
shareholders necessary for the authorization, execution, delivery, and
performance of all obligations under this Note have been taken; this Note
constitutes a legally binding and valid obligation of the Company enforceable in
accordance with its terms, except to the extent that such enforcement may be
subject to applicable bankruptcy, insolvency, reorganization, arrangement,
moratorium, fraudulent conveyance or other laws or court decisions relating to
or affecting the rights of creditors generally, and such enforcement may be
limited by equitable principles of general applicability.

       

      
        
           

        

        
          A-4

          
            

          

        

        
           

        

      

      9.4 No
Assignment.  Holder may not transfer or assign all or any part
of this Note except upon prior written notice to the Company and with the
Company’s prior written consent, which consent shall not be unreasonably
withheld; except that Holder may transfer this Note or part thereof either
during his lifetime or on death by will or intestacy to his immediate family or
to a trust, the beneficiaries of which are exclusively Holder and/or a member or
members of his immediate family, or to a family-owned corporation.

       

      9.5 Governing Law.  This
Note will be governed by the laws of the State of Nevada applicable to contracts
between Nevada residents wholly to be performed in Nevada.

       

      
        
           

        

        
          A-5

          
            

          

        

        
           

        

      

       

      IN WITNESS WHEREOF, the Company has
caused this Note to be issued as of the date first above written.

      
        
          	 	 	 
	 	 	 
	 	      
                  American
      Petro-Hunter, Inc.

                  a
      Nevada corporation

                	 
	 	 	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Robert
      McIntosh	 
	 	 	      
                  Robert
      McIntosh

                  Chief
      Executive Officer

                	 
	 	 	 	 
	 	 	 	 


        

      

      
        Agreed
and Accepted by the Holder:

      

      


      


      /s/ John
E. Friesen

      John E.
Friesen

       

    

    
      
         

      

      
        A-6

        
          

        

      

      
         

      

      
        Exhibit
B

      

       

    

    EXHIBIT
B

    FORM OF SECURITY
AGREEMENT


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

    
      SECURITY
AGREEMENT

       

      THIS SECURITY AGREEMENT (this “Agreement”) is made
as of August 13, 2009 (“Effective Date”) by and
between ­­­­­­­­­­­­John E.
Friesen (the “Secured
Party”) and American Petro-Hunter, Inc., a Nevada corporation (the “Company”).

       

      RECITAL

       

      A.           Pursuant
to that certain Note Purchase Agreement dated as of the Effective Date (“Purchase Agreement”),
Company and Secured Party entered into a Secured Convertible Promissory Note
dated as of the Effective Date (the “Note”)
evidencing the Company’s obligation to repay the Secured Party certain funds on
the terms and conditions set forth in the Note.

       

      B.           The
parties have agreed that the Company’s obligations under such Note will be
secured by the Company’s grant to the Secured Party of a security interest in
and to certain Collateral (as defined below), pursuant to the terms and
conditions of this Agreement.

       

      NOW,
THEREFORE, in consideration of the foregoing, and the representations,
warranties, covenants and conditions set forth below, the parties hereto,
intending to be legally bound, hereby agree as follows:

       

      AGREEMENT

       

      1. SECURITY.

       

      1.1 Grant of Security
Interest.  As security for the prompt and punctual payment and
performance of all Indebtedness (as defined below) of the Company to the Secured
Party when and as due under the Note, the Company hereby grants to the Secured
Party a security interest in the Collateral (as defined below).  For
purposes of this Agreement, “Indebtedness” means
all obligations and liabilities of the Company to the Secured Party under (i)
the Note, and (ii) this Agreement.

       

      1.2 Collateral
Defined.  As used in this Agreement, the term “Collateral” means,
(i) collectively, any and all of the “accounts,” “chattel paper,” “contracts,”
“documents,” “equipment,” “fixtures,” “general intangibles” (including, without
limitation, all intellectual property of the Company), “goods,” “investment
property,” “instruments,” and “inventory” (as such terms are defined in the
Uniform Commercial Code in effect on the Effective Date), and all other assets
and personal property held in the Company’s name, whether now owned by the
Company or hereafter acquired, and all proceeds and products thereof and all
accessions to, substitutions and replacements for, and rents and profits of each
of the foregoing; and (ii) all of the royalty fees payable to the Company from
the Company’s investment in the Poston Prospect #1 Lutters oil well located in
Kansas in an amount not to exceed $7,500 per month; provided that any royalty
fees in excess of $7,500 per month shall be payable to the Company.

       

      1.3 Secured Party
Rights.  Secured Party is hereby authorized to file one of more
UCC-1 Financing Statements with the Secretary of State of the State of Nevada
evidencing and providing notice of the security interest granted pursuant to
this Agreement in the Collateral.

       

      1.4 Release of
Collateral.  Upon the full and final discharge of all of the
Indebtedness, the Secured Party will execute and deliver such documents as may
be reasonably necessary and requested by the Company to release the Collateral
from the security interest granted to the Secured Party in this
Agreement.

       

      1.5 Termination.  When
all the Indebtedness has been paid in full and discharged, this Agreement and
the security interest granted to the Secured Party hereunder will terminate and
a UCC-3 Termination Statement shall be filed by Secured Party to indicate the
termination of the security interest created hereby.

       

      
        
           

        

        
          B-1

          
            

          

        

        
           

        

      

      2. REPRESENTATIONS AND
WARRANTIES OF THE COMPANY.  The Company hereby represents and
warrants to the Secured Party that the statements contained in the following
paragraphs of this Section 2 are all true and correct immediately prior to the
execution of the Note.

       

      2.1 Title.  The
Company owns all right, title and interest in and to the
Collateral.

       

      2.2 Right to Grant
Interest.  The Company has the right to grant the security
interest under this Agreement to Secured Party in the Collateral.

       

      2.3 No
Bankruptcy.  Company is not subject to any bankruptcy case or
insolvency proceedings before any court in any jurisdiction.  In the
ninety (90) days preceding the date of this Agreement, the Company has not
received any threat from any third party to subject the Company to any
involuntary bankruptcy or insolvency proceeding.

       

      3. COVENANTS OF THE
COMPANY.  So long as any of the Company Indebtedness to the
Secured Party has not been fully satisfied, the Company covenants and agrees
with the Secured Party that:

       

      3.1 Payment of
Indebtedness.  The Company will pay all Indebtedness when due
under the Note;

       

      3.2 Condition of
Collateral.  The Company will maintain the Collateral in good
condition and repair;

       

      3.3 Further Assurances.
The Company will execute and deliver such documents as Secured Party deems
necessary to create, perfect and continue the security interests granted by this
Agreement;

       

      3.4 Taxes.  The
Company will pay all taxes due and owing by the Company at such time as they
become due.

       

      3.5 No Sale or
Transfer.  The Company will not to sell, offer to sell, or
otherwise transfer the Collateral, except in the ordinary course of
business;

       

      3.6 Books and
Records.  The Company will keep, in accordance with accounting
principles consistently applied, complete and accurate books and records
regarding all Collateral;

       

      3.7 Inspection.  The
Company will permit Secured Party and its designees at all reasonable times to
inspect the Collateral and Debtor’s books and records relating to Collateral,
and to audit and make copies or extracts from such books and
records

       

      4. RIGHTS AND REMEDIES UPON
EVENT OF DEFAULT.

       

      4.1 General
Remedies.  In the event of an occurrence of a default (as that
term is defined in Section 5 of the Note), in addition to exercising any other
rights or remedies the Secured Party may have under the Note, at law or in
equity, or pursuant to the provisions of the Uniform Commercial Code, the
Secured Party may, at its option, and without demand first made, exercise any
one or all of the following rights and remedies: (i) collect the Collateral
and its proceeds; (ii) take possession of the Collateral wherever it may be
found, using all reasonable means to do so, or require the Company to assemble
the Collateral and make it available to the Secured Party at a place designated
by the Secured Party that is reasonably convenient to the Company;
(iii) proceed with the foreclosure of the security interest in the
Collateral granted herein and the sale or endorsement and collection of the
proceeds of the Collateral in any manner permitted by law or provided for
herein; (iv) sell, lease or otherwise dispose of the Collateral at public
or private sale, with or without having the Collateral at the place of sale;
(v) institute a suit or other action against the Company for recovery on
the Note or to obtain possession or effect a sale of the Collateral;
(vi) exercise any rights and remedies of a Company under the Uniform
Commercial Code; and/or (vii) offset, against any payment due from the
Company to the Secured Party, the whole or any part of any Indebtedness of the
Secured Party to the Company.

       

      
        
           

        

        
          B-2

          
            

          

        

        
           

        

      

      4.2 No Election of
Remedies.  The election by the Secured Party of any right or
remedy will not prevent the Secured Party from exercising any other right or
remedy against the Company.

       

      4.3 Proceeds.  If
a default (as defined in Section 5 of the Note) occurs, all proceeds and
payments with respect to the Collateral will be retained by the Secured Party
(or if received by the Company will be held in trust and will be forthwith
delivered by the Company to the Secured Party in the original form received,
endorsed in blank) and held by the Secured Party as part of the Collateral or
applied by the Secured Party to the payment of the Indebtedness.

       

      4.4 Sales of
Collateral.  Any item of Collateral may be sold for cash or
other value at public or private sale or other disposition and the proceeds
thereof collected by or for the Secured Party as provided in the Uniform
Commercial Code or under other applicable law.  The Company agrees to
promptly execute and deliver, or promptly cause to be executed and delivered,
such instruments, documents, assignments, waivers, certificates and affidavits
and supply or cause to be supplied such further information and take such
further action as the Secured Party may reasonably require in connection with
any such sale or disposition.  The Secured Party will have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in the Company,
which right or equity is hereby waived or released.  If any notice of
a proposed sale, lease, license or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least ten (10) days before such sale, lease, license or other
disposition.  The Secured Party agrees to give the Company ten (10)
days’ prior written notice of any sale, lease, license or other disposition of
Collateral (or any part thereof) by the Secured Party.

       

      4.5 Application of
Proceeds.  The proceeds of all sales and collections in respect
of the Collateral, the application of which is not otherwise specifically herein
provided for, will be applied as follows:  (i) first, to the
payment of the costs and expenses of such sale or sales and collections and the
actual attorneys’ fees and out-of-pocket expenses incurred by the Secured Party
relating to costs of collection; (ii) second, any surplus then remaining
will be applied to the payment of all unpaid principal under the Note; and
(iii) third, any surplus then remaining will be paid to the
Company.

       

      5. GENERAL
PROVISIONS.

       

      5.1 Survival of
Warranties.  The representations, warranties and covenants of
the Company and the Secured Party contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and shall
in no way be affected by any investigation of the subject matter thereof made by
or on behalf of any of the Secured Party or the Company, as the case may
be.

       

      
        
           

        

        
          B-3

          
            

          

        

        
           

        

      

      5.2 Successors and
Assigns.  The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties.

       

      5.3 Governing
Law.  This Agreement shall be governed by and construed under
the internal laws of the State of Nevada as applied to agreements among Nevada
residents entered into and to be performed entirely within Nevada, without
reference to principles of conflict of laws or choice of laws and, to the extent
applicable, by federal law.

       

      5.4 Counterparts.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

       

      5.5 Headings.  The
headings and captions used in this Agreement are used only for convenience and
are not to be considered in construing or interpreting this
Agreement.  All references in this Agreement to sections, paragraphs,
exhibits and schedules shall, unless otherwise provided, refer to sections and
paragraphs hereof and exhibits and schedules attached hereto, all of which
exhibits and schedules are incorporated herein by this reference.

       

      5.6 Notices.  Unless
otherwise provided, any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given (i) at the time
of personal delivery, if delivery is in person; (ii) one (1) business day
after deposit with an express overnight courier for United States deliveries, or
two (2) business days after such deposit for deliveries outside of the United
States, with proof of delivery from the courier requested; or (iii) three
(3) business days after deposit in the United States mail by certified mail
(return receipt requested) for United States deliveries when addressed to the
party to be notified at the address indicated for such party on the signature
page hereto, or, or at such other address as any party or the Company may
designate by giving ten (10) days’ advance written notice to all other
parties.

       

      5.7 Severability.  If
one or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision(s) shall be excluded from this Agreement and the
balance of the Agreement shall be interpreted as if such provision(s) were so
excluded and shall be enforceable in accordance with its terms.

       

      5.8 Further
Assurances.  From and after the date of this Agreement, upon
the request of the Secured Party or the Company, the Company and the Secured
Party shall execute and deliver such instruments, documents or other writings as
may be reasonably necessary or desirable to confirm and carry out and to
effectuate fully the intent and purposes of this Agreement.

       

      5.9           Waiver and
Amendment.  Any of the terms and provisions of this Agreement
may be waived at any time by the party that is entitled to the benefit thereof,
but only by a written instrument executed by such party.  This
Agreement may be amended only by an agreement in writing executed by the
parties.

      


      5.10           Delay or
Omission.  No delay or omission to exercise any right, power or
remedy accruing to any party hereto shall impair any such right, power or remedy
of such party nor be construed to be a waiver of any such right, power or remedy
nor constitute any course of dealing or performance hereunder.

      


       

      [SIGNATURE
PAGE IMMEDIATELY FOLLOWS]

       

      
        
           

        

        
          B-4

          
            

          

        

        
           

        

      

      IN WITNESS WHEREOF, the parties have
caused this SECURITY AGREEMENT to be executed and delivered as of the date first
above written.

      


       

      


       

      SECURED
PARTY:

       

      


      /s/ John
E. Friesen

      JOHN E.
FRIESEN

      


      


      


       

      COMPANY:

      


      AMERICAN
PETRO-HUNTER, INC.

      
        	 	 
	 	 
	By: 	
                /s/
      Robert McIntosh

                Robert
      McIntosh

                Chief
      Executive Officer

              
	 	 


      

       

    

    
      
         

      

      
        B-5

        
          

        

      

      
         

      

    

    EXHIBIT
C

    FORM OF COLLATERAL
ASSIGNMENT OF ROYALTIES


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

    
      COLLATERAL
ASSIGNMENT OF ROYALTIES

      


      THIS COLLATERAL ASSIGNMENT OF ROYALTIES
(the “Assignment”) is
made as of August 13, 2009 by American Petro-Hunter, Inc., a Nevada corporation
(“Assignor”), in favor
of John E. Friesen, an individual (“Assignee”).

      


      RECITAL

       

      A.           Pursuant
to that certain Note Purchase Agreement dated as of the Effective Date (“Purchase Agreement”), Assignor
and Assignee entered into a Secured Convertible Promissory Note dated as of the
Effective Date (the “Note”)
evidencing the Assignor’s obligation to repay the Assignee certain funds on the
terms and conditions set forth in the Note.

       

      B.           Assignor
is the owner of a twenty-five percent (25%) working interest in the Poston
Prospect #1 Lutters oil well located in Kansas, as evidenced by that certain
Division Order, recorded in the Register of Deeds for Trego County, State of
Kansas (the “Interest”).

       

      C.           The
parties have agreed that the Assignor’s obligations under such Note will be
secured by the Assignor’s collateral assignment to the Assignee of the Interest,
and to pay Assignor’s royalties from the Interest to Assignee, pursuant to the
terms and conditions of this Agreement.

       

      NOW,
THEREFORE, in consideration of the foregoing, and the representations,
warranties, covenants and conditions set forth below, the parties hereto,
intending to be legally bound, hereby agree as follows:

       

      1.           Collateral
Assignment.  Assignor hereby irrevocably grants, sells,
assigns, transfers and sets over to Assignee all of the royalties, issues,
profits, royalties, income and other benefits (collectively, the “Royalties”) derived from the
Interest, together with all of Assignor's right, title and interest in the
Interest, now or hereafter held by Assignor as security for the performance of
the obligations of Assignor under the Note.

      


      2.           Payment
Rights.  Assignor hereby agrees to pay all of the Royalties in
an amount not to exceed $7,500 per month to Assignee, and retain any Royalties
in excess of $7,500 per month.

      


      3.           Termination of
Assignment.  Unless Assignor is in default under the terms of
the Purchase Agreement or Note, this Assignment shall terminate upon the earlier
of August 13, 2010 or the earlier repayment in full of all unpaid interest and
principal under the Note.

      


      4.           Priority of Assignment;
Further Assurances.  Assignor hereby represents and warrants
that the assignment of Royalties hereby granted is a first priority assignment
and that no other assignments of all or any portion of the Royalties or the
Interest exists or remains outstanding.  Assignor agrees to take such
action and to execute, deliver and record such documents as may be reasonably
necessary to evidence such assignment, to establish the priority thereof and to
carry out the intent and purpose hereof.

      


      
        
           

        

        
          C-1

          
            

          

        

        
           

        

      

      5.           Acknowledgment.  The Assignor and
Assignee acknowledge that the only terms and conditions upon which the Royalties
are to be paid are as set forth in this Agreement.  Any dispute with
respect to the Royalties shall be resolved by Assignor and Assignee pursuant to
the terms of the Purchase Agreement.

      


      6.           Successors and
Assigns.  The provisions of this Assignment shall be binding
upon Assignor, its legal representatives, successors or assigns and shall be for
the benefit of Assignee, its successors and assigns.

      


      7.           Notices.  Any
notice under this Agreement shall be in writing, and any written notice or other
document shall be deemed to have been duly given (i) on the date of
personal service on the parties, (ii) on the third business day after
mailing, if the document is mailed by registered or certified mail,
(iii) one day after being sent by professional or overnight courier or
messenger service guaranteeing one-day delivery, with receipt confirmed by the
courier, or (iv) on the date of transmission if sent by telegram, telex,
telecopy or other means of electronic transmission resulting in written copies,
with receipt confirmed.  Any such notice shall be delivered or
addressed to the parties at the addresses set forth below or at the most recent
address specified by the addressee through written notice under this
provision.  Failure to give notice in accordance with any of the
foregoing methods shall not defeat the effectiveness of notice actually received
by the addressee.

      


      8.           Governing
Law.  This Assignment shall be governed by and construed in
accordance with the laws of the State of Nevada.

      


      9.           Counterparts.  This
Assignment may be executed in any number of counterparts each of which shall be
deemed an original and all of which shall constitute one and the same instrument
with the same effect as if all parties had signed the same signature
page.  Any signature page of this Assignment may be detached from any
counterpart of this Assignment and reattached to any other counterpart of this
Assignment identical in form hereto but having attached to it one or more
additional signature pages.

      


      10.           Severability.  If
any term of this Assignment, or the application thereof to any person or
circumstance, shall, to any extent, be invalid or unenforceable, the remainder
of this Assignment, or the application of such term to persons or circumstances
other than those as to which it is invalid or unenforceable, shall not be
affected thereby, and each term of this Assignment shall be valid and
enforceable to the fullest extent permitted by law.

      


      11.           Amendments.  This
Assignment may not be amended, modified or changed, nor shall any waiver of any
provision hereof be effective, except only by an instrument in writing and
signed by the party against whom enforcement of any such amendment,
modification, change or waiver is sought.

      


      
        
           

        

        
          C-2

          
            

          

        

        
           

        

      

      IN
WITNESS WHEREOF, Assignor has caused this Assignment to be executed by its
representative thereunto duly authorized as of the date first above
written.

      


      ASSIGNEE:

       

      


      /s/ John
E. Friesen

      JOHN E.
FRIESEN

      


      Address:
____________________________

      ___________________________________

      


      


      


      ASSIGNOR:

      


      AMERICAN
PETRO-HUNTER, INC.

      
        
          	 	 
	 	 
	By: 	
                  /s/
      Robert McIntosh

                  Robert
      McIntosh

                  Chief
      Executive Officer

                
	 	 


        

        
          	 	 
	Address: 	
                  17470
      North Pacesetter Way

                  Scottsdale,
      AZ 85255

                
	 	 


        

      

      

      

    

     

    
      
         

      

      
        C-3

        
          

        

      

      
         

      

    

    EXHIBIT
D

    FORM OF
WARRANT


    
      
         


      

      
        12

        
          

        

      

      
         


      

    

     

    
      Exhibit
D

    

     

    
      THE
SECURITIES EVIDENCED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE
SOLD, TRANSFERRED, OR ASSIGNED, UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT COVERING SUCH SECURITIES, OR THE SALE IS MADE
IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT OR PURSUANT TO AN EXEMPTION
UNDER THE SECURITIES ACT.

      
        	 	 
	August 13,
      2009	
                1,428,571
      Warrants

                Warrant
      Certificate:  20090625

              
	 	 


      

      WARRANT

      TO
PURCHASE COMMON STOCK

      OF

      AMERICAN
PETRO-HUNTER INC.

      (Void
after August 13, 2011)

      


      


      1. Issuance of
Warrant.  FOR
VALUE RECEIVED, on and after the date of issuance of this Warrant, and
subject to the terms and conditions herein set forth, the Holder (as defined
below) is entitled to purchase from American Petro-Hunter Inc., a Nevada
corporation (the “Company”), at any time during
the Exercise Period (as defined below), at a price per share equal to the
Warrant Price (as defined below and subject to adjustment as described below),
the Warrant Stock (as defined below and subject to adjustment as described
below) upon exercise of this warrant (this “Warrant”) pursuant to Section
6 hereof.

       

      2. Definitions.  As
used in this Warrant, the following terms have the definitions ascribed to them
below:

       

      (a) “Commencement Date” means
August 13, 2009.

       

      (b) “Common Stock” means the Common
Stock, $0.001 par value, of the Company.

       

      (c)  “Exercise Period” means the
period commencing on the Commencement Date and ending at 5:00 p.m. Pacific
Standard Time on the Termination Date (as defined below); provided, however, the Exercise
Period shall end and this Warrant shall no longer be exercisable and shall
become null and void (except the right to receive the securities and property to
which the Holder is entitled by virtue of exercising or converting this Warrant
in connection with any Termination Event) upon consummation of any of the
following (each, a “Termination
Event”): (i) the lease of all or substantially all of the assets of the
Company or the exclusive license of all or substantially all of the Company’s
intellectual property to a third party, (ii) the acquisition of the Company by
another entity by means of any transaction or series of related transactions
(including without limitation, any reorganization, merger or consolidation, but
excluding any merger or conversion effected exclusively for the purpose of
changing the domicile of the Company), or (iii) the sale, conveyance or disposal
of all or substantially all of the assets of the Company, unless the Company’s
shareholders of record as constituted immediately prior to such acquisition or
sale will, immediately after such acquisition or sale (by virtue of securities
issued as consideration for the Company’s acquisition or sale or otherwise) hold
at least fifty percent (50%) of the voting power of the surviving or acquiring
entity.  Notwithstanding anything to the contrary herein, this Warrant
shall continue in full force and effect until the Termination Date unless (y) no
less than thirty (30) days prior to any Termination Event, the Company shall
have given the Holder notice of such Termination Event, which notice shall
include a reasonably detailed description of the terms of such Termination
Event, and (z) the Company shall have given the Holder a reasonable opportunity
to exercise or convert this Warrant.

       

      
        
           

        

        
          D-1

          
            

          

        

        
           

        

      

      (d) “Holder” means John E. Friesen
or his assigns.

       

      (e) “Termination Date” means August 13, 2011.

       

      (f) “Warrant Price” means $0.50 per
warrant share.

       

      (g) “Warrant Stock” means the
shares of Common Stock purchasable upon exercise of this Warrant or issuable
upon conversion of this Warrant.  The total number of shares of
Warrant Stock to be issued upon the exercise of this Warrant shall be 1,428,571;
provided, however, such number
shall be subject to adjustment as described in Section 3 hereof.

       

      3. Adjustments and
Notices.  The Warrant Price and the number of shares of Warrant
Stock shall be subject to adjustment from time to time in accordance with this
Section 3.

       

      (a) Subdivision, Stock Dividends
or Combinations.  In case the Company shall at any time
subdivide the outstanding shares of Common Stock or shall issue a stock dividend
with respect to the Common Stock, the Warrant Price in effect immediately prior
to such subdivision or the issuance of such dividend shall be proportionately
decreased, and in case the Company shall at any time combine the outstanding
shares of the Common Stock, the Warrant Price in effect immediately prior to
such combination shall be proportionately increased, in each case effective at
the close of business on the date of such subdivision, dividend or combination,
as the case may be.  When any adjustment is required to be made to the
Warrant Price, the number of shares of Warrant Stock purchasable upon the
exercise of this Warrant shall be changed to the number determined by dividing
(i) an amount equal to the number of shares issuable upon the exercise of
this Warrant immediately prior to such adjustment, multiplied by the Warrant
Price in effect immediately prior to such adjustment, by (ii) the Warrant
Price in effect immediately after such adjustment.  The provisions of
this Section 3(a) shall similarly apply to successive subdivisions and
combinations.

       

      (b) Reclassification, Exchange,
Substitution, In-Kind Distribution.  Upon any
reclassifications, exchange, substitution or other event that results in a
change of the number and/or class of the securities issuable upon exercise of
this Warrant or upon the payment of a dividend in securities or property other
than shares of Common Stock, the Holder shall be entitled to receive, upon
exercise of this Warrant, the number and kind of securities and property that
Holder would have received if this Warrant had been exercised or converted
immediately before the record date for such reclassification, exchange,
substitution, or other event or immediately prior to the record date for such
dividend.  The Company or its successor shall promptly issue to Holder
a new warrant for such new securities or other property.  The new
warrant shall provide for adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Section 3 including,
without limitation, adjustments to the Warrant Price and to the number of
securities or property issuable upon exercise of the new warrant. The provisions
of this Section 3(b) shall similarly apply to successive reclassifications,
exchanges, substitutions, or other events and successive dividends.

       

      (c) Certificate of
Adjustment.  In each case of an adjustment or readjustment of
the Warrant Price, the Company, at its own expense, shall compute such
adjustment or readjustment in accordance with the provisions hereof and prepare
a certificate executed by the Company’s Chief Financial Officer showing such
adjustment or readjustment, and shall mail such certificate, by first class
mail, postage prepaid, to the Holder.

       

      (d) No
Impairment.  The Company shall not, by amendment of its
Articles of Incorporation or through a reorganization, transfer of assets,
consolidation, dissolution, issue, or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
to be observed or performed under this Warrant by the Company, but shall at all
times in good faith assist in carrying out all of the provisions of this Section
3 and in taking all such action as may be necessary or appropriate to protect
the Holder’s rights under this Section 3 against impairment.

       

      
        
           

        

        
          D-2

          
            

          

        

        
           

        

      

      (e) Fractional
Shares.  No fractional shares shall be issuable upon exercise
or conversion of the Warrant and the number of shares to be issued shall be
rounded to the nearest whole share.  If a fractional share interest
arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional share interest by paying the Holder an amount computed
by multiplying the fractional interest by the fair market value of a full
share.

       

      4. Reservation of
Stock.  On and after the Commencement Date, the Company shall
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of Warrant Stock upon the exercise or
conversion of this Warrant.  Issuance of this Warrant shall constitute
full authority to the Company’s officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
shares of Warrant Stock issuable upon the exercise or conversion of this
Warrant.

       

      5. Exercise of
Warrant.  This Warrant may be exercised as a whole or part by
the Holder, at any time after the date hereof prior to the termination of this
Warrant, by the surrender of this Warrant, together with the Notice of Exercise
and Investment Representation Statement in the forms attached hereto as Attachments 1 and 2,
respectively, duly completed and delivered to  the principal office of
the Company, specifying the portion of the Warrant to be exercised and
accompanied by payment in full of the Warrant Price in cash or by check with
respect to the shares of Warrant Stock being purchased.  This Warrant
shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided above, and the
person entitled to receive the shares of Warrant Stock issuable upon such
exercise shall be treated for all purposes as the holder of such shares of
record as of the close of business on such date.  As promptly as
practicable after such date, the Company shall issue and deliver to the person
or persons entitled to receive the same a certificate or certificates for the
number of full shares of Warrant Stock issuable upon such
exercise.  If this Warrant shall be exercised for less than the total
number of shares of Warrant Stock then issuable upon exercise, promptly after
surrender of this Warrant upon such exercise, the Company will execute and
deliver a new warrant, dated the date hereof, evidencing the right of the Holder
to the balance of this Warrant Stock purchasable hereunder upon the same terms
and conditions set forth herein.

       

      6. Transfer of
Warrant.  Notwithstanding anything to the contrary herein,
subject to applicable securities laws, this Warrant may be transferred or
assigned in whole or in part by the Holder, and the Company shall permit such
transfer or assignment to an affiliate of the Holder.

       

      7. Termination.  This
Warrant shall terminate at 5:00 p.m. Pacific Standard Time on the Termination
Date, subject to earlier termination as set forth in Section 2(d)
hereof.

       

      8. Miscellaneous.  This
Warrant shall be governed by the laws of the State of Nevada, as such laws are
applied to contracts to be entered into and performed entirely in Nevada. In the
event of any dispute among the Holder and the Company arising out of the terms
of this Warrant, the parties hereby consent to the exclusive jurisdiction of the
federal and state courts located in the State of Nevada for resolution of such
dispute, and agree not to contest such exclusive jurisdiction or seek to
transfer any action relating to such dispute to any other jurisdiction. The
headings in this Warrant are for purposes of convenience and reference only, and
shall not be deemed to constitute a part hereof.  Neither this Warrant
nor any term hereof may be changed or waived orally, but only by an instrument
in writing signed by the Company and the Holder of this Warrant.

       

      
        
           

        

        
          D-3

          
            

          

        

        
           

        

      

       

      AMERICAN
PETRO-HUNTER INC.

       

       

      /s/ Robert
McIntosh                                                                           

      Authorized
Signature

       

      Robert
McIntosh                                                      

      Name

       

      Chief Executive
Officer                                                                           

      Title

       

      
        
           

        

        
          D-4

          
            

          

        

        
           

        

      

       

      ATTACHMENT
1

       

      NOTICE
OF EXERCISE

       

      


       

      TO:           ___________________

       

      1. The
undersigned hereby elects to purchase _______________ shares of the Warrant
Stock pursuant to the terms of the attached Warrant, and tenders herewith
payment of the purchase price in full, together with all applicable transfer
taxes, if any.

       

      2. Please
issue a certificate or certificates representing said shares of Warrant Stock in
the name of the undersigned or in such other name as is specified
below:

       

      


      


      _____________________________________

      (Name)

      


      _____________________________________

      (Address)

      
        	 	 
	_____________________________________
      
                (Date) 

              	
                ___________________________________

                (Name
      of Warrant Holder)

              
	 	 
	 	
                ___________________________________

                (Signature)

                 

                _______________________________­­­____

                (Title)

              
	 	 


      

       

      
        
           

        

        
          D-5

          
            

          

        

        
           

        

      

      ATTACHMENT
2

      


      INVESTMENT
REPRESENTATION STATEMENT

      


      


      Shares of
Common Stock of American Petro-Hunter, Inc., a Nevada corporation (the
“Company”)

      


      In connection with the purchase of the
above-listed securities, the undersigned hereby represents to the Company as
follows:

       

      (a) The
securities to be received upon the exercise of the Warrant (the “Securities”)
will be acquired for investment for its own account, not as a nominee or agent,
and not with a view to the sale or distribution, within the meaning of the
Securities Act of 1933, as amended (the “Securities Act”) of any part thereof,
and the undersigned has no present intention of selling, granting participation
in or otherwise distributing the same, other than to its affiliates, but
subject, nevertheless, to any requirement of law that the disposition of its
property shall at all times be within its control.  By executing this
statement, the undersigned further represents that it does not, other than in
connection with transfers to its affiliates, have any contract, undertaking,
agreement or arrangement with any person to sell, transfer, or grant
participations to such person or to any third person, with respect to any
Securities issuable upon exercise of the Warrant.

       

      (b) The
undersigned understands that the Securities issuable upon exercise of the
Warrant at the time of issuance may not be registered under the Securities Act
and applicable state securities laws, on the ground that the issuance of such
securities is exempt pursuant to Section 4(2) of the Securities Act and state
law exemptions relating to offers and sales not by means of a public offering,
and that the Company’s reliance on such exemptions is predicated on the
undersigned’s representations set forth herein.

       

      (c) The
undersigned agrees that in no event will it make a disposition of any Securities
acquired upon the exercise of the Warrant unless and until the undersigned
provides, at the Company’s request, an opinion of counsel reasonably
satisfactory to the Company that such transfer does not require registration
under the Securities Act and the securities laws applicable with respect to any
other applicable jurisdiction. Notwithstanding the foregoing, no opinion of
counsel shall be necessary and such transfer or assignment by the undersigned
shall be permitted (a) if such transfer or assignment is to an affiliate of the
undersigned or (b) if the Company becomes the subject of foreign ownership,
control or influence and such transfer or assignment is to a charitable
organization.

       

      (d) The
undersigned acknowledges that an investment in the Company is highly speculative
and represents that it is able to fend for itself in the transactions
contemplated by this statement, has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of its
investments, and has the ability to bear the economic risks (including the risk
of a total loss) of its investment.  The undersigned represents that
it has had the opportunity to ask questions of the Company concerning the
Company’s business and assets and to obtain any additional information which it
considered necessary to verify the accuracy of or to amplify the Company’s
disclosures, and has had all questions which have been asked by it
satisfactorily answered by the Company

       

      
        
           

        

        
          D-6

          
            

          

        

        
           

        

      

      (e) The
undersigned acknowledges that the Securities issuable upon exercise or
conversion of the Warrant must be held indefinitely unless subsequently
registered under the Securities Act or an exemption from such registration is
available.  The undersigned is aware of the provisions of Rule 144
promulgated under the Securities Act which permit limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things, the existence of a public market for
the shares, the availability of certain current public information about the
Company, the resale occurring not less than six months after a party has
purchased and paid for the security to be sold from the Company or any affiliate
of the Company, the sale being through a “broker’s transaction” or in
transactions directly with a “market maker” (as provided by Rule 144(f)) and the
number of shares being sold during any three month period not exceeding
specified limitations.

       

      
        	 	 
	      
                Dated:________________________

              	
                 

              
	 	
                _______________________________________

                (Typed
      or Printed Name)

              
	 	
                ___________________________________

                (Signature)

                 

                _______________________________­­­____

                (Title)

              
	 	 


      

       

    

    
      
         

      

      
        D-7

        
          

        

      

      
         

      

    

    ANNEX
I

    RISK
FACTORS

     

    The risks
described below are the ones the Company believes are the most important for the
Purchaser to consider, although these risks are not the only ones that the
Company faces. If events anticipated by any of the following risks actually
occur, the Company’s business, operating results or financial condition could
suffer and the trading price of the Company’s common stock could
decline.  As used below, “we,” “us” and “our” refer to American
Petro-Hunter Inc., which is also sometimes referred to as the
“Company.”

     

    Risks
Relating to Our Business

     

    The
duration or severity of the current global economic downturn and disruptions in
the financial markets, and their impact on our company, are
uncertain.

    


    The oil
and gas industry generally is highly cyclical, with prices subject to worldwide
market forces of supply and demand and other influences. The recent global
economic downturn, coupled with the global financial and credit market
disruptions, have had a historic negative impact on the oil and gas industry.
These events have contributed to an unprecedented decline in crude oil and
natural gas prices, weak end markets, a sharp drop in demand, increased global
inventories, and higher costs of borrowing and/or diminished credit
availability. While we believe that the long-term prospects for oil and gas
remain bright, we are unable to predict the duration or severity of the current
global economic and financial crisis. There can be no assurance that any actions
we may take in response to further deterioration in economic and financial
conditions, will be sufficient. A protracted continuation or worsening of the
global economic downturn or disruptions in the financial markets could have a
material adverse effect on our business, financial condition or results of
operations.

    


    We
have a history of losses which may continue, which may negatively impact our
ability to achieve our business objectives.

    


    We have
incurred net losses and other comprehensive losses of $3,681,022 for the period
from January 24, 1996 (inception) to March 31, 2009. We cannot be assured that
we can achieve or sustain profitability on a quarterly or annual basis in the
future. Our operations are subject to the risks and competition inherent in the
establishment of a business enterprise. There can be no assurance that future
operations will be profitable. We may not achieve our business objectives and
the failure to achieve such goals would have an adverse impact on
us.

    


    If
we are unable to obtain additional funding our business operations will be
harmed and if we do obtain additional financing our then existing shareholders
may suffer substantial dilution.

    


    We will
require additional funds to initiate our oil and gas exploration activities, and
to take advantage of any available business opportunities. Historically, we have
financed our expenditures primarily with proceeds from the sale of debt and
equity securities, and bridge loans from our officers and stockholders. In order
to meet our obligations or acquire an operating business, we will have to raise
additional funds. Obtaining additional financing will be subject to market
conditions, industry trends, investor sentiment and investor acceptance of our
business plan and management. These factors may make the timing, amount, terms
and conditions of additional financing unattractive or unavailable to us. If we
are not successful in achieving financing in the amount necessary to further our
operations, implementation of our business plan may fail or be
delayed.

    


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    Our
independent auditors have expressed substantial doubt about our ability to
continue as a going concern, which may hinder our ability to obtain future
financing
..


    In their
report dated April 15, 2009, our independent auditors stated that our financial
statements for the fiscal year ended December 31, 2008 were prepared assuming
that we would continue as a going concern. Our ability to continue as a going
concern is an issue raised as a result of recurring losses from operations. We
continue to experience net operating losses. Our ability to continue as a going
concern is subject to our ability to obtain necessary funding from outside
sources, including obtaining additional funding from the sale of our securities.
Our continued net operating losses increase the difficulty in meeting such goals
and there can be no assurances that such methods will prove
successful.

    


    We
have a limited operating history and if we are not successful in growing our
business, then we may have to scale back or even cease our ongoing business
operations
..

    


    We have
yet to generate positive earnings from our current business strategy and there
can be no assurance that we will ever operate profitably. Our company has a
limited operating history in the business of oil and gas exploration and must be
considered in the development stage. Our success is significantly dependent on a
successful acquisition and exploration activities. Our operations will be
subject to all the risks inherent in the establishment of a developing
enterprise and the uncertainties arising from the absence of a significant
operating history. We may be unable to locate recoverable reserves or operate on
a profitable basis. We are in the development stage and potential investors
should be aware of the difficulties normally encountered by enterprises in the
development stage. If our business plan is not successful, and we are not able
to operate profitably, investors may lose some or all of their investment in our
company.

    


    Our
compliance with the Sarbanes-Oxley Act and SEC rules concerning internal
controls may be time-consuming, difficult and costly for us.

    


    It may be
time consuming, difficult and costly for us to maintain, improve and implement
our internal controls and reporting procedures policy as required by the
Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal
controls and other finance staff in order to further develop and implement
appropriate internal controls and reporting procedures as we grow our business.
If we are unable to comply with the internal controls requirements of the
Sarbanes-Oxley Act, we may not be able to obtain the independent accountant
certifications that the Sarbanes-Oxley Act requires publicly-traded companies to
obtain, and this would impact our ability to comply with SEC regulations
governing public companies.

    


    Risks
Related to our Oil and Gas Exploration

    


    If
we are unable to successfully recruit qualified managerial and field personnel
having experience in oil and gas exploration, we may not be able to execute on
our business plan.

    


    In order
to successfully implement and manage our business plan, we will be dependent
upon, among other things, successfully recruiting qualified managerial and field
personnel having experience in the oil and gas exploration business. Competition
for qualified individuals is intense. There can be no assurance that we will be
able to find, attract and retain existing employees or that we will be able to
find, attract and retain qualified personnel on acceptable terms.

    


    Even
if we are able to discover and produce oil or natural gas, the potential
profitability of oil and gas ventures depends upon factors beyond the control of
our company.

    


    The
potential profitability of oil and gas properties is dependent upon many factors
beyond our control. For instance, world prices and markets for oil and gas are
unpredictable, highly volatile, potentially subject to governmental fixing,
pegging, controls or any combination of these and other factors, and respond to
changes in domestic, international, political, social and economic environments.
Additionally, due to worldwide economic uncertainty, the availability and cost
of funds for production and other expenses have become increasingly difficult,
if not impossible, to project. These changes and events may materially affect
our future financial performance. These factors cannot be accurately predicted
and the combination of these factors may result in our company not receiving an
adequate return on invested capital.


    
      
         


      

      
        10

        
          

        

      

      
         


      

    


    Inherent
risk in drilling

    


    Drilling
for oil and gas involves numerous risks, including the risk that we will not
encounter commercially productive oil and gas reservoirs. The wells we drill or
participate in may not be productive and we may not recover all or any portion
of our investment in those wells. The seismic data and other technologies we use
do not allow us to know conclusively prior to drilling a well that crude or
natural gas is present or may be produced economically. The costs of drilling,
completing and operating wells are often uncertain, and drilling operations may
be curtailed, delayed or canceled as a result of a variety of factors including,
but not limited to:

     

    
      	
               
      

            	
              •

            	
              unexpected
      drilling conditions;

            


    

    


    
      	
               
      

            	
              •

            	
              pressure
      or irregularities in formations;

            


    

    


    
      	
               
      

            	
              •

            	
              equipment
      failures or accidents;

            


    

    


    
      	
               
      

            	
              •

            	
              mechanical
      difficulties, such as lost or stuck oil field drilling and service
      tools;

            


    

    


    
      	
               
      

            	
              •

            	
              fires,
      explosions, blowouts and surface
cratering;

            


    

    


    
      	
               
      

            	
              •

            	
              uncontrollable
      flows of oil and formation water;

            


    

    


    
      	
               
      

            	
              •

            	
              environmental
      hazards, such as oil spills, pipeline ruptures and discharges of toxic
      gases;

            


    

    


    
      	
               
      

            	
              •

            	
              other
      adverse weather
conditions; and

            


    

    


    
      	
               
      

            	
              •

            	
              increase
      in the cost of, or shortages or delays in the availability of, drilling
      rigs and equipment.

            


    

     

    Certain
future drilling activities may not be successful and, if unsuccessful, this
failure could have an adverse effect on our future results of operations and
financial condition. While all drilling, whether developmental or exploratory,
involves these risks, exploratory drilling involves greater risks of dry holes
or failure to find commercial quantities of hydrocarbons.

    


    Our
oil and gas operations involve substantial costs and are subject to various
economic risks.

    


    Our oil
and gas operations are subject to the economic risks typically associated with
exploration, development and production activities, including the necessity of
significant expenditures to locate and acquire producing properties and to drill
exploratory wells. The cost and length of time necessary to produce any reserves
may be such that it will not be economically viable. In conducting exploration
and development activities, the presence of unanticipated pressure or
irregularities in formations, miscalculations or accidents may cause our
exploration, development and production activities to be unsuccessful. In
addition, the cost and timing of drilling, completing and operating wells is
often uncertain. We also face the risk that the oil and gas reserves may be less
than anticipated, that we will not have sufficient funds to successfully drill
on the property, that we will not be able to market the oil and gas due to a
lack of a market and that fluctuations in the prices of oil will make
development of those leases uneconomical. This could result in a total loss of
our investment.

    


    A
substantial or extended decline in oil and gas prices may adversely affect our
business, financial condition, cash flow, liquidity or results of operations as
well as our ability to meet our capital expenditure obligations and financial
commitments to implement our business plan.

    


     Any
revenues, cash flow, profitability and future rate of growth we achieve will be
greatly dependent upon prevailing prices for oil and gas. Our ability to
maintain or increase our borrowing capacity and to obtain additional capital on
attractive terms is also expected to be dependent on oil and gas prices.
Historically, oil and gas prices and markets have been volatile and are likely
to continue to be volatile in the future. Prices for oil and gas are subject to
potentially wide fluctuations in response to relatively minor changes in supply
of and demand for oil and gas, market uncertainty, and a variety of additional
factors beyond our control. Those factors include:


    
      
         


      

      
        11

        
          

        

      

      
         


      

    

    


    
      	
               
      

            	
              •

            	
              the
      domestic and foreign supply of oil and natural
  gas;

            


    

    


    
      	
               
      

            	
              •

            	
              the
      ability of members of the Organization of Petroleum Exporting Countries
      and other producing countries to agree upon and maintain oil prices and
      production levels;

            


    

    


    
      	
               
      

            	
              •

            	
              political
      instability, armed conflict or terrorist attacks, whether or not in oil or
      natural gas producing regions;

            


    

    


    
      	
               
      

            	
              •

            	
              the
      level of consumer product demand;

            


    

    


    
      	
               
      

            	
              •

            	
              the
      growth of consumer product demand in emerging markets, such as China and
      India;

            


    

    


    
      	
               
      

            	
              •

            	
              weather
      conditions, including hurricanes and other natural occurrences that affect
      the supply and/or demand of oil and natural
gas;

            


    

    


    
      	
               
      

            	
              •

            	
              domestic
      and foreign governmental regulations and other
  actions;

            


    

    


    
      	
               
      

            	
              •

            	
              the
      price and availability of alternative
fuels;

            


    

    


    
      	
               
      

            	
              •

            	
              the
      price of foreign imports;

            


    

    


    
      	
               
      

            	
              •

            	
              the
      availability of liquid natural gas imports;
and

            


    

    


    
      	
               
      

            	
              •

            	
              worldwide
      economic conditions.

            


    

     

    These
external factors and the volatile nature of the energy markets make it difficult
to estimate future prices of oil and natural gas. Lower oil and natural gas
prices may not only decrease our revenues on a per unit basis, but may also
reduce the amount of oil we can produce economically, if any. A substantial or
extended decline in oil and natural gas prices may materially affect our future
business, financial condition, results of operations, liquidity and borrowing
capacity. While our revenues may increase if prevailing oil and gas prices
increase significantly, exploration and production costs and acquisition costs
for additional properties and reserves may also increase.

    


    Competition
in the oil and gas industry is highly competitive and there is no assurance that
we will be successful in acquiring viable leases.

    


    The oil
and gas industry is intensely competitive. We compete with numerous individuals
and companies, including many major oil and gas companies which have
substantially greater technical, financial and operational resources and staffs.
Accordingly, there is a high degree of competition for desirable oil and gas
leases, suitable properties for drilling operations and necessary drilling
equipment, as well as for access to funds. We cannot predict if the necessary
funds can be raised or that any projected work will be completed.

    


    Oil
and gas operations are subject to comprehensive regulation which may cause
substantial delays or require capital outlays in excess of those anticipated
causing an adverse effect on our company .

    


    Oil and
gas operations are subject to country-specific federal, state, and local laws
relating to the protection of the environment, including laws regulating removal
of natural resources from the ground and the discharge of materials into the
environment. Oil and gas operations are also subject to country-specific
federal, state, and local laws and regulations which seek to maintain health and
safety standards by regulating the design and use of drilling methods and
equipment. Various permits from government bodies are required for drilling
operations to be conducted and no assurance can be given that such permits will
be received. Environmental standards imposed by federal, state, provincial, or
local authorities may be changed and any such changes may have material adverse
effects on our activities. Moreover, compliance with such laws may cause
substantial delays or require capital outlays in excess of those anticipated,
thus causing an adverse effect on us. Additionally, we may be subject to
liability for pollution or other environmental damages. To date, we have not
been required to spend any material amount on compliance with environmental
regulations. However, we may be required to do so in the future and this may
affect our ability to expand or maintain our operations.


    
      
         


      

      
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    The
unavailability or high cost of drilling rigs, equipment, supplies, personnel and
oil field services could adversely affect our ability to execute our exploration
and development plans on a timely basis and within our budget.

    


    Our
industry is cyclical and, from time to time, there is a shortage of drilling
rigs, equipment, supplies or qualified personnel. During these periods, the
costs and delivery times of rigs, equipment and supplies are substantially
greater. In addition, the demand for, and wage rates of, qualified drilling rig
crews rise as the number of active rigs in service increases. As a result of
increasing levels of exploration and production in response to strong prices of
oil and natural gas, the demand for oilfield services and equipment has risen,
and the costs of these services and equipment are increasing. If the
unavailability or high cost of drilling rigs, equipment, supplies or qualified
personnel were particularly severe in Wyoming, we could be materially and
adversely affected because our operations and properties are concentrated in
Wyoming.

     

    We
depend on the skill, ability and decisions of third party operators to a
significant extent.

    


    The
success of the drilling, development and production of the oil properties in
which we have or expect to have a working interest is substantially dependent
upon the decisions of such third-party operators and their diligence to comply
with various laws, rules and regulations affecting such properties. The failure
of any third-party operator to make decisions, perform their services, discharge
their obligations, deal with regulatory agencies, and comply with laws, rules
and regulations, including environmental laws and regulations in a proper manner
with respect to properties in which we have an interest could result in material
adverse consequences to our interest in such properties, including substantial
penalties and compliance costs. Such adverse consequences could result in
substantial liabilities to us or reduce the value of our properties, which could
negatively affect our results of operations.

    


    Exploration
and production activities are subject to certain environmental regulations which
may prevent or delay the commencement or continuation of our
operations.

    


    In
general, our future exploration and production activities are subject to certain
country-specific federal, state and local laws and regulations relating to
environmental quality and pollution control. Such laws and regulations increase
the costs of these activities and may prevent or delay the commencement or
continuation of a given operation. Compliance with these laws and regulations
has not had a material effect on our operations or financial condition to date.
Specifically, we will be subject to legislation regarding emissions into the
environment, water discharges and storage and disposition of hazardous wastes.
In addition, legislation has been enacted which requires well and facility sites
to be abandoned and reclaimed to the satisfaction of U.S. state authorities.
However, such laws and regulations are frequently changed and we are unable to
predict the ultimate cost of compliance. Generally, environmental requirements
do not appear to affect us any differently or to any greater or lesser extent
than other companies in the industry. We believe that our current operations
comply, in all material respects, with all applicable environmental
regulations.

    


    
      
        
        

      

      
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    Risks
Related to our Common Stock

    


    Our common stock may be subject to
the penny stock rules which may make it more difficult to sell our common
stock.


    The
Securities and Exchange Commission has adopted regulations which generally
define a “penny stock” to be any equity security that has a market price, as
defined, less than $5.00 per share or an exercise price of less than $5.00 per
share, subject to certain exceptions. Our securities may be covered by the penny
stock rules, which impose additional sales practice requirements on
broker-dealers who sell to persons other than established customers and
accredited investors such as, institutions with assets in excess of $5,000,000
or an individual with net worth in excess of $1,000,000 or annual income
exceeding $200,000 or $300,000 jointly with his or her spouse. For transactions
covered by this rule, the broker-dealers must make a special suitability
determination for the purchase and receive the purchaser’s written agreement of
the transaction prior to the sale. Consequently, the rule may affect the ability
of broker-dealers to sell our securities and also affect the ability of our
stockholders to sell their shares in the secondary market.

    


    Our
management and stockholders may lose control of the Company as a result of a
merger or acquisition.

    


    We may
consider an acquisition in which we would issue as consideration for the
business opportunity to be acquired an amount of our authorized but unissued
common stock that would, upon issuance, represent the great majority of the
voting power and equity of the Company. As a result, the acquiring company's
stockholders and management would control the Company, and our current
management may be replaced by persons unknown at this time. Such a merger would
result in a greatly reduced percentage of ownership of the Company by its
current stockholders.

    


    We
have historically not paid dividends and do not intend to pay
dividends.

    


    We have
historically not paid dividends to our stockholders and management does not
anticipate paying any cash dividends on our common stock to our stockholders for
the foreseeable future. We intend to retain future earnings, if any, for use in
the operation and expansion of our business.

    


    A
limited public trading market exists for our common stock, which makes it more
difficult for our stockholders to sell their common stock in the public
markets.

    Although
our common stock is quoted on the OTCBB under the symbol “AAPH,” there is a
limited public market for our common stock. No assurance can be given that an
active market will develop or that a stockholder will ever be able to liquidate
its shares of common stock without considerable delay, if at all. Many brokerage
firms may not be willing to effect transactions in the securities. Even if a
purchaser finds a broker willing to effect a transaction in these securities,
the combination of brokerage commissions, state transfer taxes, if any, and any
other selling costs may exceed the selling price. Furthermore, our stock price
may be impacted by factors that are unrelated or disproportionate to our
operating performance. These market fluctuations, as well as general economic,
political and market conditions, such as recessions, interest rates or
international currency fluctuations may adversely affect the market price and
liquidity of our common stock.


    
      
         


      

      
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