Agreement with Burnett Oil


    AGREEMENT

     

    THIS
      AGREEMENT (this “Agreement”) is entered into on the first day of November, 2006,
      by and between Burnett Oil Company, a general partnership whose address is
      801
      Cherry Street, Unit #9, Burnett Plaza, Suite 1500, Fort Worth, Texas 76102-6881
      (hereinafter referred to as “Burnett”) and Standard Drilling, Inc., a Nevada
      corporation whose address is 1155 Dairy Ashford St., Suite 402, Houston, Texas
      77079 (hereinafter referred to as “Standard”). Standard and Burnett are
      sometimes collectively referred to herein as the “Parties” and individually as a
“Party.” 

    


    WHEREAS,
      Burnett is the owner of the oil and gas leases described in Exhibit A
      (collectively the “Leases”); and

     

    WHEREAS,
      the Parties desire to set forth the terms pursuant to which Standard can earn
      an
      interest in the Leases by making a cash payment and drilling and completing
      a
      well into the Barnett Shale; 

     

    NOW,
      THEREFORE, in consideration of the mutual benefits and obligations hereunder,
      the Parties agree as follows:

     

    1. Definitions.
      The
      following terms shall have the designated meanings:

     

    “Assigned
      Interests” means an undivided 60% of 8/8ths interest which yields a net revenue
      interest of 48% in and to the following assets:

    


    (a)
       the
      Leases (whose leasehold burdens cannot exceed 20%), including without limitation
      all overriding royalty interests and working interests therein;

    


    (b) the
      oil
      and gas wells located upon the lands covered by the Leases or pooled or unitized
      therewith including the Earning Well (collectively, the “Wells”);

    


    (c) all
      platforms, water source wells, injection wells, tubular goods, well equipment,
      lease equipment, production equipment, pipelines and all other personal
      property, fixtures and facilities appurtenant to or used in connection with
      the
      Leases or the Wells (collectively the “Facilities”);

    


    (d) all
      oil,
      gas, distillate, condensate, casinghead gas or other liquid or vaporous
      hydrocarbons, or other minerals (collectively, the “Hydrocarbons”), produced
      from or attributable to the Leases from and after the Effective Time, and all
      Hydrocarbons produced prior to the Effective Time and in storage as of the
      date
      of the Assignment;

    


    (e) all
      production sales contracts, transportation agreements, pooling agreements,
      unitization agreements, operating agreements, processing agreements, surface
      leases, office or building leases, easements, permits, licenses and
      rights-of-way, orders of governmental authorities, and all other contracts,
      agreements and instruments related to or utilized in connection with the Leases,
      Wells, Facilities, or the production, storage, treatment, transportation, sale
      or disposal of Hydrocarbons or other substances therefrom (the “Contracts”);
      and

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (f) copies
      of
      all of Assignor’s files, records and data regarding the Leases, Wells and
      Facilities including without limitation, all abstracts of title, title opinions,
      title curative documents, title records, leases, assignments, contracts,
      correspondence, geologic, geophysical and seismic records, data and information,
      and production records, logs, core data, pressure data and decline curves,
      production curves accounting records and all related items (the “Files”).


     

    “Assignment”
      means an assignment substantially in the form of Exhibit B.

     

    “Burnett
      Group” shall mean, individually or in any combination, Burnett, its affiliates,
      and each of their respective directors, officers, members and
      employees.

     

    “Defend”
      shall mean the obligation of the indemnitor at the indemnitees’ election
      (i) to defend the indemnitees at its sole expense or (ii) to reimburse
      the indemnitees for the indemnitees’ reasonable expenses incurred in defending
      themselves. Notwithstanding the indemnitee’s election of option (i) above, the
      indemnitee shall be entitled to participate in its defense at its sole
      cost.

    


    “Drilling
      Operations” means any and all operations related to or arising out of drilling
      or completing the Earning Well or any replacement well therefore. 

    


    “Drilling
      Rig” means a drilling rig substantially meeting the specifications set forth in
      Exhibit C which is to be supplied by Standard and which is capable of reaching
      the total depth of the lateral in the Barnett Shale formation. If Standard
      is
      unable to supply such drilling rig but elects to go forward, as provided for
      in
      Section 2.2 below, with a third party drilling rig secured by either Standard
      or
      Burnett that is capable of reaching the total depth of the lateral in the
      Barnett Shale formation, then the term "Drilling Rig” shall mean such third
      party drilling rig.

     

    “Earning
      Well” shall have the meaning given that term in Section 3.1. 

    


    “Effective
      Time” shall have the meaning given that term in the Assignment. 

    


    “Force
      Majeure” means acts of God, acts of government or any agency, subdivision or
      instrumentality thereof, acts of civil disorder, acts of industrial disorder,
      failures of facilities or vessels, shortages, any inability to obtain or
      acquire, at reasonable cost, necessary authorizations or equipment, and any
      other occurrence, condition, or situation not within the control of the Party
      and that could not have been prevented by the exercise of reasonable
      diligence.

    


    “Losses”
      shall mean claims, demands, causes of action, losses, liabilities, indemnity
      obligations, costs, damages or expenses of any kind and character (including
      attorney’s fees and other legal expenses and punitive, exemplary and the
      multiplied portion of multiplied damages).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    “JOA”
      means a joint operating agreement substantially in the form of Exhibit D
      governing the operation of the Leases.

    


    “Standard
      Group” shall mean, individually or in any combination, Standard, its affiliates,
      and each of their respective directors, officers and employees.

    


    “Well
      Costs” shall mean all costs associated with the Earning Well incurred up to the
      date when Standard has completed the on-lease tie-in point to a gathering
      pipeline that will transport gas from the Leases to a third party gathering
      or
      sales pipeline, including, but not limited to, costs of permitting, surveying,
      title opinions, roads, location, drilling, completion and equipping.


    


    2.
      Cash
      Consideration.
      

     

    2.1 Payment.
      Standard shall pay to Burnett the sum of $250,000 (the “Cash Consideration”) on
      or before November 1, 2006 in partial consideration for the Assigned Interests,
      subject to the terms hereof.

     

    2.2 Mobilization
      and Forfeiture.
      Standard shall promptly notify Burnett when the Drilling Rig is in a condition
      to permit mobilization to location (the “Rig Completion Notice”). If Standard
      fails to provide such notice on or before November 30, 2006, it shall forfeit
      the Cash Consideration (subject to Section 2.3) and this Agreement shall
      terminate. If, prior to November 30, 2006, Standard learns that it will be
      unable to mobilize the Drilling Rig to location by such date, it will give
      Burnett immediate notice thereof and either party will be free to locate and
      secure another drilling rig in order to save the Leases prior to the end of
      their primary terms. In that event, if either Standard or Burnett locates and
      secures another drilling rig for the Earning Well, Standard must elect within
      forty eight (48) hours of receipt of an executed drilling rig contract to either
      go forward with the drilling of the Earning Well or, if it elects not to do
      so
      or fails to respond within the forty eight (48) hour notice period (which shall
      be deemed an election not to go forward), Standard shall forfeit the Cash
      Consideration (subject to Section 2.3 below) and this agreement shall terminate.
      If Standard pays the Well Costs associated with the Drilling Operations,
      Standard shall be deemed to have satisfied its obligation to drill and complete
      the Earning Well. Provided (i) Burnett has obtained all necessary consents
      and
      authorizations for Standard to drill the Earning Well and receive the
      Assignment, including those required under Section 3.1, (ii) the drillsite
      location for the Earning Well is completed as necessary to support the Drilling
      Operations by the Drilling Rig, and (iii) Burnett is not in breach of this
      Agreement, Burnett shall notify Standard,
      or the
      other agreed to drilling contractor, when
      it
      is ready for Standard to mobilize the Drilling Rig to location (the
“Mobilization Notice”). If, following receipt of a Mobilization Notice in
      compliance with the foregoing, and
      if
      Standard has provided Burnett the Rig Completion Notice, Standard
      fails to commence actual drilling with the Drilling Rig on location within
      fourteen (14) days after the later to occur of the Rig Completion Notice or
      such
      Mobilization Notice (such 14 day period being referred to herein as the
“Mobilization Period”), Standard shall forfeit the Cash Consideration (subject
      to Section 2.3) and this Agreement shall terminate. If
      Standard has given Burnett the Rig Completion Notice and
      Burnett
      fails to give Standard a Mobilization Notice in compliance with the foregoing
      or
      fails to obtain the consents, permits and authorizations in accordance with
      Section 3.1, in either case at least fourteen (14) days prior to Lease
      termination, or if this Agreement terminates prior to Burnett assigning the
      Assigned Interests to Standard, Burnett shall promptly reimburse Standard for
      all actual, out of pocket Well Costs.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.3 Return
      of Cash Consideration.
      Burnett
      shall promptly return the Cash Consideration to Standard if Burnett breaches
      this Agreement, including without limitation failing to obtain all necessary
      consents, permits and authorizations in accordance with Section 3.1, failing
      to
      deliver the Assignment upon completion of the Earning Well in accordance with
      Section 8, or breaching at any time during this Agreement its warranty of title
      set forth in Section 5.3 and the Assignment. 

     

    3.
      Earning
      Well.
      

     

    3.1 Consents
      and Authorizations.
      Burnett
      shall obtain, in form and substance satisfactory to Standard, acting reasonably,
      the consents and authorizations described below that are necessary to permit
      Standard to have the right to, at its sole cost through the on-lease tie-in
      point to a gathering pipeline that will transport the gas from the Leases to
      a
      third party gathering or sales pipeline, drill, complete, and equip one (1)
      well
      substantially at the location and in accordance with the drilling program and
      the specifications set forth in Exhibit E (the “Earning Well”), to receive the
      Assignment, and to further assign all or part of its interest to Calibre Energy,
      Inc. (“Calibre”), as follows: 

     

    (a) drilling
      permit or any other necessary permit, any consent to build the drillsite
      location, clear title for drilling purposes, proof of surface damage payment,
      proof of drilling water payment and proof of permission from Johnson County
      to
      access county roads; and

    


    (b) all
      necessary consents to the Assignment (and further assignment to Calibre)
      including any consents by the lessors under the Leases.

     

    3.2 Costs
      for the Earning Well.
      If any
      Well Costs are incurred with respect to any matter (including but not limited
      to
      facilities, equipment, improvements, roads, permits, surveys, or opinions)
      that
      is subsequently used in connection with any well or operation on the Leases
      other than the Earning Well, Burnett shall promptly reimburse Standard for
      its
      appropriate working interest percentage
      of the
      Well Costs attributable to such matter. 

     

    3.3 Drilling
      Well as Consideration/No Obligation.
      Nothing
      in this Agreement shall be construed as obligating Standard to drill or complete
      the Earning Well, or any well, it being acknowledged and agreed that drilling
      and completion of the Earning Well constitutes performance consideration from
      Standard (in addition to the Cash Consideration) for the Assigned Interests
      and
      Standard shall have no liability, and Burnett shall release and indemnify
      Standard from any such liability, for failing to drill and complete the Earning
      Well, or any well. If Standard elects to drill and complete the Earning Well,
      Standard shall consult with Burnett regarding the technical aspects of drilling
      and completing the Earning Well.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4.
      Standard’s
      Representations and Warranties.
      Standard hereby represents and warrants as follows:

     

    4.1 Standard
      is a corporation duly organized and validly existing under the laws of Nevada.
      Standard is qualified to conduct business in each jurisdiction where necessary
      to perform this Agreement. 

     

    4.2 Standard
      has full power and authority to execute and perform this Agreement and the
      Assignment.

     

    4.3 Standard
      has the financial assets and capability to meet its financial obligations under
      this agreement.

     

    


     

    5.
      Burnett’s
      Representations and Warranties.
      Burnett
      hereby represents and warrants as follows: 

     

    5.1 Burnett
      is a general partnership duly organized and validly existing under the laws
      of
      Texas. Burnett is qualified to conduct business in each jurisdiction where
      necessary to perform this Agreement.

     

    5.2 Burnett
      has full power and authority to execute and perform this Agreement and to
      execute and deliver the Assignment. 

     

    5.3 The
      Leases are in full force and effect, and neither Burnett nor any other person
      is
      in breach or default thereunder (or with the giving of notice or lapse of time
      or both, would be in breach or default). Burnett owns the Leases free and clear
      of any liens, mortgages, security interests, charges, pledges, restrictions,
      ownership rights of third persons, or other defects or encumbrances of any
      kind
      or character except for the terms and conditions of the Leases. Burnett is
      (i)
      entitled to receive not less than 80% of all Hydrocarbons produced, saved and
      marketed from the Leases or any Wells thereon or lands covered thereby, all
      without reduction, suspension or termination of such interest throughout the
      duration of the life of such Leases and Wells, and (ii) obligated to bear not
      more than 100% of the costs and expenses relating to the maintenance,
      development and operation of such Leases and any Wells, without increase
      throughout the duration of the life of such Leases or Wells.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    6.
      Indemnification.

     

    6.1 Standard’s
      Personnel.
      Standard shall release, Defend, indemnify, and hold harmless Burnett Group
      from
      and against any and all Losses arising out of the bodily injury or death, or
      property damage or loss, of any of Standard’s contractors (but in no event
      including Burnett), representatives, employees, agents or invitees (or the
      representatives, employees, agents or invitees of such contractors), arising
      out
      of, related to or in connection with Drilling Operations, REGARDLESS
      OF WHETHER CAUSED OR CONTRIBUTED TO BY THE SOLE, JOINT OR CONCURRENT NEGLIGENCE,
      STRICT LIABILITY OR OTHER FAULT OF ANY MEMBER OF BURNETT GROUP, OR A PREEXISTING
      CONDITION. 

    


    6.2 Burnett’s
      Personnel.
      Burnett
      shall release, Defend, indemnify, and hold harmless Standard Group from and
      against any and all Losses arising out of the bodily injury or death, or
      property damage or loss, of any of Burnett’s contractors (but in no event
      including Standard), representatives, employees, agents or invitees (or the
      representatives, employees, agents or invitees of such contractors), arising
      out
      of, related to or in connection with Drilling Operations, REGARDLESS
      OF WHETHER CAUSED OR CONTRIBUTED TO BY THE SOLE, JOINT OR CONCURRENT NEGLIGENCE,
      STRICT LIABILITY OR OTHER FAULT OF ANY MEMBER OF STANDARD GROUP, OR A
      PREEXISTING CONDITION.

    


    6.3 Insurance
      Support/Limitation.
      The
      mutual indemnity obligations in Sections 6.1 and 6.2 above shall be
      supported by insurance provided by the Parties in equal amounts, of the types
      described in Exhibit F. Notwithstanding anything in this Agreement to the
      contrary, (i) in the event enforcement of Sections 6.1 and/or 6.2
      above is governed by the Texas Anti-Indemnity Statute (Tex. Civ. Prac. &
Rem. Code Ann. §§127.001-127.007 (1986 & Supp. 1996) as amended) or similar
      statute in another jurisdiction, and (ii) to the extent the indemnified
      losses under such Section 6.1 or 6.2, as applicable, result from the
      indemnitee’s negligence, then the obligations of the indemnitor under such
      Section 6.1 or 6.2, as applicable, shall be limited to the extent of
      insurance required pursuant to this Section 6.3 (or any such greater amount
      allowed by law).

    


    6.4 Standard’s
      Property.
      Standard shall release, Defend, indemnify, and hold harmless Burnett Group
      from
      and against any and all Losses arising out of the damage or loss of (or patent
      or license infringement resulting from the use of) Standard Group’s property,
      including the Drilling Rig (collectively, “Standard’s Property”) arising out of,
      related to or in connection with Drilling Operations, REGARDLESS
      OF WHETHER CAUSED OR CONTRIBUTED TO BY THE SOLE, JOINT OR CONCURRENT NEGLIGENCE,
      STRICT LIABILITY OR OTHER FAULT OF ANY MEMBER OF BURNETT GROUP, OR A PREEXISTING
      CONDITION.

    


    6.5 Burnett’s
      Property.
      Burnett
      shall release, Defend, indemnify, and hold harmless Standard Group from and
      against any and all Losses arising out of the damage or loss of (or patent
      or
      license infringement resulting from the use of) Burnett Group’s property arising
      out of, related to or in connection with Drilling Operations, REGARDLESS
      OF WHETHER CAUSED OR CONTRIBUTED TO BY THE SOLE, JOINT OR CON-CUR-RENT
      NEGLIGENCE, STRICT LIABILITY, OR OTHER FAULT OF ANY MEMBER OF STANDARD GROUP,
      OR
      A PREEXISTING CONDITION.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    6.6 Indirect
      or Consequential Damages.
      The
      Parties waive and release all claims against the other Party for indirect or
      consequential damages arising out of this Agreement or Drilling Operations,
      REGARDLESS
      OF WHETHER CAUSED OR CONTRIBUTED TO BY THE SOLE, JOINT OR CONCURRENT NEGLIGENCE
      OR STRICT LIABILITY OF THE OTHER PARTY, OR A PREEXISTING
      CONDITION.
      As used
      herein, “indirect
      or consequential damages”
      shall
      include, but not be limited to, loss of revenue, profit or use of capital,
      production delays, loss of product, reservoir loss or damage, losses resulting
      from failure to meet other contractual commitments or deadlines and downtime
      of
      facilities.

    


    6.7 No
      Limit.
      Except
      as otherwise provided herein, the foregoing indemnity obligations shall not
      be
      limited to the amount of insurance carried by the Parties.

    


    6.8 Ownership
      Indemnity.
      Upon
      execution and delivery of the Assignment, but subject to Burnett’s indemnity
      obligation below and the JOA, Standard agrees to indemnify, release, Defend
      and
      hold harmless Burnett Group from and against any and all Losses caused by,
      arising from, attributable to, or alleged to be caused by, arising from or
      attributable to the ownership or operation of the Assigned Interests and arising
      from and after the Effective Time. Upon execution and delivery of the
      Assignment, Burnett agrees to indemnify, release, Defend and hold harmless
      Standard Group from and against any and all Losses caused by, arising from,
      attributable to, or alleged to be caused by, arising from or attributable to
      the
      ownership or operation of the Assigned Interests and arising prior to the
      Effective Time.

    


    6.9 Indemnified
      Groups.
      The
      provisions of this Section 6 shall extend to and be enforceable by and for
      the
      benefit of the members of Burnett Group and Standard Group.

    


    7. Insurance.
      During
      Drilling Operations, Standard shall carry insurance in the amounts and of the
      types set forth in Exhibit F.

     

    8. Assignment. Promptly
      upon installation of the Christmas tree for the Earning Well, Burnett shall
      execute and deliver the Assignment to Standard (or its designee).

     

    9. JOA
      and Subsequent Drilling.

     

    9.1 JOA.
      Upon
      execution and delivery of the Assignment, the Parties shall cause to be executed
      and delivered the JOA and appoint Burnett as operator thereunder. 

     

    9.2      Subsequent
      Drilling Operations.
      Standard shall have the right to submit proposals for all future drilling
      operations with respect to the Leases. Provided that Standard’s proposal
      includes financial terms no less favorable than those offered by reputable
      third parties using comparable equipment and crews, and provided that Burnett
      is
      satisfied with the quality and efficiency of Standard’s equipment and crews, in
      its sole discretion, Burnett shall retain Standard to conduct such drilling
      operations.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    10. Miscellaneous.

     

    10.1  Confidentiality.
      The
      Parties agree that this Agreement and any financial or technical information
      furnished or disclosed to a Party hereunder shall not be disclosed or made
      available to any other Person without the prior written consent of the other
      Party; provided that nothing herein shall limit the disclosure of any such
      information (i) to the extent required by statute, rule, regulation or judicial,
      administrative or regulatory process, (ii) to counsel for the Parties, (iii)
      to
      auditors or accountants of the Parties, (iv) in connection with any litigation
      to which the Party is a party, (v) to an affiliate of the Party, and (vi) to
      a
      bona fide potential purchaser from the Party. Notwithstanding the above
      restrictions, neither Party shall have any obligation for any disclosure of
      confidential information that is, or becomes, generally known to the public
      without breach of the terms of this Agreement. The confidentiality obligations
      in this section shall survive termination of this Agreement for one (1) year,
      whereupon they shall likewise terminate.

     

    10.2 Relationship
      of Parties.
      The
      relationship of the Parties will be that of independent contractors and will
      not
      be that of lender-borrower, partners, joint venturers, principal and agent
      or
      employer and employee. Nothing herein shall be construed to create a
      partnership. Accordingly, the Parties each herein disclaim and waive any
      fiduciary duty that either of them may be argued to have to the other. Neither
      Party has any authority whatsoever to, and neither Party shall: (i) make any
      agreement, representation or warranty in the name of or on behalf of the other
      Party; (ii) bind the other Party in any matter; (iii) act as the agent or
      representative of the other Party; or (iv) assume, create or incur any
      obligation or liability of any nature whatsoever, in the name of or on behalf
      of
      the other Party whether by contract or otherwise. Nothing herein shall be
      construed to (A) limit the right of the Parties to independently pursue other
      business opportunities, whether of a similar or dissimilar nature to those
      involved in this agreement, or (B) create any right or option of either Party
      to
      participate in such independent business opportunities of the other
      Party.

     

    10.3 Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Texas other than such laws that would apply the laws of another
      jurisdiction.

     

    10.4 Force
      Majeure.
      The
      Parties shall be relieved of their respective obligations (other than their
      obligations to pay or repay the Cash Consideration and Burnett’s obligation
      under Section 3.1) under this Agreement to the extent that the performance
      thereof is prevented by Force Majeure. The Party claiming it is prevented from
      performing an obligation hereunder as a result of Force Majeure shall give
      notice thereof to the other Party as soon as practicable after the commencement
      thereof and shall exercise reasonable diligence to overcome such Force Majeure
      and resume performance; provided, however, that the settlement of any labor
      dispute to prevent or end any such Force Majeure shall be within the sole
      discretion of the claiming Party.

     

    10.5 Interpretation.
      As used
      herein, “include” or “including” shall be deemed to mean including without
      limitation. Headers are inserted for convenience only and shall not be deemed
      to
      affect the meaning of this Agreement. This Agreement shall not be construed
      for
      or against any Party on the grounds that such Party was the drafter of this
      Agreement, it being acknowledged and agreed that this Agreement was mutually
      drafted by the Parties.

     

    10.6 Entire
      Agreement.
      This
      Agreement and all Exhibits hereto embody the final, entire agreement between
      the
      Parties hereto and supersedes any and all prior commitments, agreements,
      representations, and understandings, whether written or oral, relating to the
      subject matter hereof.

     

    10.7 Assignability.
      No
      Party shall assign, transfer or otherwise dispose of any of its rights or
      obligations hereunder, without the consent of the other Party; provided,
      however, that Standard may assign the right to acquire the Assigned Interest
      hereunder to any of its affiliates designated for such purpose.

     

    10.8 Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      deemed to be an original instrument, but all which shall constitute but one
      Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF the
      Parties have executed this Agreement as of the date first indicated
      above.

    

      


       

      
        	 	
                BURNETT
                  OIL COMPANY

              
	 	 
	 	
                By:
                  Burnett Oil Co., Inc., its Managing General Partner

              
	 	 
	 	
                By:

              
	 	
                Name:
                  

              
	 	
                Title:

              
	 	 
	 	
                STANDARD
                  DRILLING, INC. 

                 

              
	 	
                By:

              
	 	
                Name:
                  

              
	 	
                Title:

              
	 	 


      

       

    

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      A

    LEASES

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    EXHIBIT
      B

    FORM
      OF ASSIGNMENT 

    


    ASSIGNMENT,
      BILL OF SALE AND CONVEYANCE

    


    


    THIS
      ASSIGNMENT, BILL OF SALE AND CONVEYANCE (this “Assignment”), effective as of
      7:00 a.m. local time on _______________, 2006 (the “Effective Time”), is made
      from Burnett Oil Company, a Texas general partnership, whose address is 801
      Cherry Street, Unit #9, Burnett Plaza, Suite 1500, Fort Worth, Texas 76102-6881
      (hereinafter called “Assignor”) to [Standard Drilling, Inc. or its designee], a
      Nevada corporation, whose address is 1155 Dairy Ashford St., Suite 402, Houston,
      Texas 77079 (hereinafter called “Assignee”).

    


    ARTICLE
      I

    GRANTING
      AND HABENDUM CLAUSES

    


    For
      good
      and valuable consideration, the receipt and sufficiency of which is hereby
      acknowledged, Assignor does hereby grant, bargain, sell, transfer, convey,
      set
      over, assign and deliver unto Assignee an undivided 60% of 8/8 interest in
      and
      to the following assets (collectively, such interests in such assets are
      referred to as the “Assigned Interests”):

    


    (a)
       the
      oil
      and gas leases described in Attachment A (collectively the “Leases”), including,
      without limitation, all overriding royalty interests and working interests
      therein;

    


    (b) the
      oil
      and gas wells located upon the lands covered by the Leases or pooled or unitized
      therewith including the well described in Attachment A (collectively, the
“Wells”);

    


    (c) all
      platforms, water source wells, injection wells, tubular goods, well equipment,
      lease equipment, production equipment, pipelines and all other personal
      property, fixtures and facilities appurtenant to or used in connection with
      the
      Leases or the Wells (collectively the “Facilities”);

    


    (d) all
      oil,
      gas, distillate, condensate, casinghead gas or other liquid or vaporous
      hydrocarbons, or other minerals (collectively, the “Hydrocarbons”), produced
      from or attributable to the Leases from and after the Effective Time, and all
      Hydrocarbons produced prior to the Effective Time and in storage as of the
      date
      hereof;

    


    (e) all
      production sales contracts, transportation agreements, pooling agreements,
      unitization agreements, operating agreements, processing agreements, surface
      leases, office or building leases, easements, permits, licenses and
      rights-of-way, orders of governmental authorities, and all other contracts,
      agreements and instruments related to or utilized in connection with the Leases,
      Wells, Facilities, or the production, storage, treatment, transportation, sale
      or disposal of Hydrocarbons or other substances therefrom (the “Contracts”);
      and

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (f) copies
      of
      all of Assignor’s files, records and data regarding the Leases, Wells and
      Facilities including without limitation, all abstracts of title, title opinions,
      title curative documents, title records, leases, assignments, contracts,
      correspondence, geologic, geophysical and seismic records, data and information,
      and production records, logs, core data, pressure data and decline curves,
      production curves accounting records and all related items (the
“Files”);

    


    TO
      HAVE
      AND TO HOLD the Assigned Interests unto Assignee and its successors and assigns,
      forever.

    


    ARTICLE
      II

    WARRANTY

    


    2.1 Warranty.
      Assignor hereby binds itself, its successors and assigns, subject to the terms
      of the Leases, to warrant and forever defend all and singular the Assigned
      Interests unto Assignee against every person whosoever lawfully claiming or
      to
      claim the same by, through or under Assignor but not otherwise. Assignor does
      further bind and obligate itself and its successors and assigns to warrant
      and
      forever defend unto Assignee, its successors and assigns, against all persons
      lawfully claiming or to claim the same or any part thereof by, through or under
      Assignor, but not otherwise, that, as a result of the conveyance of the Assigned
      Interests pursuant to this Assignment and pursuant to the foregoing warranty,
      Assignee is and will be (i) entitled to receive not less than 48% (being 60%
      of
      80% of 8/8) of all Hydrocarbons produced, saved and marketed from the Leases
      or
      any wells thereon or lands covered thereby, all without reduction, suspension
      or
      termination of such interest throughout the duration of the life of such Leases
      and Wells; and (ii) obligated to bear not more than 60% of the costs and
      expenses relating to the maintenance, development and operation of such Leases
      or Wells, without increase throughout the duration of the life of such Leases
      or
      Wells.

    


    2.2 Subrogation. Assignor
      hereby transfers and assigns unto Assignee, its successors and assigns, all
      of
      its right, title and interest under and by virtue of all covenants and
      warranties pertaining to the Assigned Interests, express or implied (including,
      without limitation, title warranties and manufacturers,’ suppliers’ and
      contractors’ warranties), that have heretofore been made by any of Assignor’s
      predecessors in title, or by any third party manufacturers, suppliers and
      contractors. This Assignment is made with full substitution and subrogation
      in
      and to all of the covenants and warranties that Assignor has or may have against
      predecessors in title and with full subrogation of all rights accruing under
      the
      applicable statutes of limitations and all rights and actions of warranty
      against all former owners of the Assigned Interests.

    


    2.3 Disclaimers. All
      tangible equipment and personal property included in the Assigned Interest
      is
      sold “AS
      IS, WHERE IS” AND ASSIGNOR MAKES NO, AND DISCLAIMS ANY, REPRESENTATION OR
      WARRANTY, WHETHER EXPRESSED OR IMPLIED, AND WHETHER BY LAW, STATUTE OR
      OTHERWISE, AS TO FITNESS FOR ANY PARTICULAR PURPOSE, MERCHANTABILITY, CONFORMITY
      OF MODELS OR SAMPLES OF MATERIALS, AND PHYSICAL CONDITION.
      Assignor and Assignee agree that to the extent required by applicable law to
      be
      operative, the disclaimers of certain warranties contained in this paragraph
      are
      conspicuous. Nothing in this Section 2.3 shall impair the warranty of title
      given by Assignor in Section 2.1 hereof.

    


    ARTICLE
      III

    MISCELLANEOUS

    


    3.1 Further
      Assurances. Assignor
      covenants and agrees to execute and deliver to Assignee all such other and
      additional conveyances, instruments and other documents and to do all such
      other
      acts and things as may be necessary to more fully vest in Assignee record title
      to all of the Assigned Interests herein granted or intended to be granted,
      and
      to put Assignee in actual possession thereof. 

    


    3.2 Assumption. Assignee
      expressly assumes all of Assignor's obligations relating to the Assigned
      Interests but only insofar as same arise and are attributable to periods of
      time
      from and after the Effective Time.

    


    3.3 Counterparts.
      This
      Assignment may be executed in any number of counterparts, and each counterpart
      hereof shall be deemed to be an original instrument, but all such counterparts
      together shall constitute but one conveyance.

    


    3.4 Successors
      and Assigns.
      This
      Assignment shall bind and inure to the benefit of Assignor and Assignee and
      their respective successors and assigns.

    


    Executed
      this ___ day of _________________, 2006, but effective for all purposes as
      of
      the Effective Time.

    

      


      
        	 	 
	 	
                ASSIGNOR:

              
	 	 
	 	
                Burnett
                  Oil Company

              
	 	 
	 	
                By:
                  Burnett Oil Co., Inc., its Managing General Partner

              
	 	 
	 	
                By:

              
	 	
                Name:
                  

              
	 	
                Title:
                  

              
	 	 
	
                 

              	 
	 	
                ASSIGNEE:

              
	 	
                [Standard
                  Drilling, Inc. or its designee]

              
	 	 
	 	
                By:

              
	 	
                Name:
                  

              
	 	
                Title:
                  

              


      

       

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    ACKNOWLEDGMENT

    


    


    State
      of
      Texas     
§

     

    County
      of
      _________   §

    


    


    This
      instrument was acknowledged before me on ________(date) by __________(name
      of
      officer), ________ (title of officer), on behalf of Burnett Oil Co., Inc.,
      as
      Managing General Partner of Burnett Oil Company .

     

    

      


      
        	
                (SEAL)
                  

              	 	
                 

              
	 	 	
                (Signature
                  of Officer)

              
	
                 

              	
                 

              	
                (Title
                  of Officer) 

              


      

      
 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    ACKNOWLEDGMENT

    


    


    State
      of
      Texas  §

     

    County
      of
      _________ §

    


    


    This
      instrument was acknowledged before me on ________(date) by __________(name
      of
      officer), ____________(title of officer), of [Standard Drilling, Inc. or its
      designee], a ________________ corporation, on behalf of said corporation.


     

    
      


      
        	
                (SEAL)
                  

              	 	
                 

              
	 	 	
                (Signature
                  of Officer)

              
	
                 

              	
                 

              	
                (Title
                  of Officer) 

              


      

      
 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    ATTACHMENT
      A TO ASSIGNMENT

    LEASES/WELL

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    EXHIBIT
      C

    DRILLING
      RIG

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


     

    EXHIBIT
      D

    FORM
      OF JOINT OPERATING AGREEMENT

    [To
      be attached]

    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    


    EXHIBIT
      E

    DRILLING
      PROGRAM AND WELL SPECIFICATIONS

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      F

    INSURANCE