AMENDMENT
NO. 3

       

      TO

       

      COLOMBIAN
PARTICIPATION AGREEMENT

       

      BY
AND AMONG

       

      GRAN
TIERRA ENERGY COLOMBIA LTD.,

       

      GRAN
TIERRA ENERGY INC.

       

      AND

       

      CROSBY
CAPITAL, LLC

       

      DATED

       

      AS
OF DECEMBER 31, 2008


      
        
           


        

        
          
          

          
            

          

        

        
           


        

      


      AMENDMENT
NO. 3

       

      TO

      


      COLOMBIAN
PARTICIPATION AGREEMENT

      


      This
Amendment No. 3 to Colombian Participation Agreement (this “Amendment”)
is effective as of December 31, 2008 by and among Gran Tierra
Energy Colombia Ltd., (the “Partnership”),
a Utah partnership (formerly known as Argosy
Energy International, a Utah limited partnership (“Argosy”)),
Gran
Tierra Energy Inc., a Nevada corporation (“Gran
Tierra”), and Crosby
Capital, LLC, a
Texas limited liability company (“Crosby”).  The
Partnership, Gran Tierra and Crosby are each individually referred to herein as
a “Party,”
and collectively as the “Parties.”  All
capitalized terms not otherwise defined here in shall be given the meaning
assigned to such terms in that certain Colombian Participation Agreement, dated
as of June 22, 2006, by and among Argosy, Gran Tierra, and Crosby (the “Original
Participation Agreement”), as amended by Amendment No. 1 dated as of
November 1, 2006 (“Amendment No.
1”) and Amendment No. 2 dated as of July 3, 2008 (“Amendment No.
2”).

       

      Recitals

       

      Whereas,
the Parties executed the Original Participation Agreement, Amendment No. 1 and
Amendment No. 2 and  such Original Participation Agreement, as amended
by Amendment No. 1 and Amendment No. 2 is hereinafter referred to as the “Agreement”;

       

      Whereas,
Gran Tierra is engaged in a corporate restructuring described on Exhibit A hereto (the “Corporate
Restructuring”) which requires the consent of Crosby under the
Agreement;

       

      Whereas,
in connection with the proposed Corporate Restructuring, the Parties desire to
further amend the Agreement to confirm their rights and obligations thereunder
subsequent to the proposed Corporate Restructuring;

       

      Whereas,
Crosby desires to provide its consent to the Corporate Restructuring, which
consent shall become effective in accordance with the provisions of this
Amendment No. 3;

       

      Whereas,
pursuant to Section 13.4 of the Agreement, no modification or waiver of any
provision of the Agreement shall be effective unless set forth in writing signed
by the Parties; and

       

      Whereas,
effective as of December 18, 2008, the general partner of the Partnership as of
such date, Argosy Energy Corp., a Delaware corporation, converted into a
Delaware limited liability company, Argosy Energy, LLC.


      
        
           


        

        
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      Agreement

       

      Now,
Therefore, in consideration of the covenants and promises herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereto agree as follows:

       

      1.           A
new Section 1.63 shall be added to the Agreement as follows:

       

      1.63  “Indirect Subsequent
Partnership Sale” has the meaning set forth in Section
8.2.

       

      2.           A
new subsection 1.64 shall be added as follows:

       

      1.64  “Parent” shall
mean any entity that (i) owns directly or indirectly 51% or more of the
outstanding equity securities of Gran Tierra, or (ii) possesses directly or
indirectly the right to elect a majority of the board of directors of Gran
Tierra, or (iii) which acquires all or substantially all the assets of Gran
Tierra.

       

      3.           A
new subsection 7.7 shall be added as follows:

       

      7.7  Basic Financial
Information and Reporting.

       

      7.7.1    During
the term of this Agreement, Gran Tierra will maintain true books and records of
account in which full and correct entries will be made of all its business
transactions pursuant to a system of accounting established and administered in
accordance with U.S. GAAP consistently applied, and will set aside on its books
all such proper accruals and reserves as shall be required under U.S.
GAAP  consistently applied.

       

      7.7.2    During
the term of this Agreement, if each of Gran Tierra and its Parent (if any)
ceases to be a reporting issuer under Section 12 of the Securities Exchange Act
of 1934, as amended, and to the extent requested by Crosby, as soon as
practicable after the end of each fiscal year of Gran Tierra and its Parent (if
any), and in any event within one hundred eighty (180) days thereafter, Gran
Tierra will furnish such Investor a balance sheet of Gran Tierra, as at the end
of such fiscal year, and a statement of income and a statement of cash flows of
Gran Tierra, for such year, all prepared in accordance with U.S. GAAP
consistently applied,  and setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable
detail.


      
        
           


        

        
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      7.7.3   
During the term of this Agreement, if each of Gran Tierra and its Parent (if
any) ceases to be a reporting issuer under Section 12 of the Securities Exchange
Act of 1934, as amended, and to the extent requested by Crosby, Gran Tierra will
furnish Crosby, as soon as practicable after the end of the first, second and
third quarterly accounting periods in each fiscal year of Gran Tierra, and in
any event within sixty (60) days thereafter, a balance sheet of Gran Tierra as
of the end of each such quarterly period, and a statement of income and a
statement of cash flows of Gran Tierra for such period and for the current
fiscal year to date, prepared in accordance with U.S. GAAP consistently applied
, with the exception that notes need not be attached to such quarterly
statements and year-end audit adjustments need not be made.

       

      7.7.4    Commencing
after January 1, 2009, if, during the term of this Agreement,  the
Partnership becomes an obligor or guarantor under any bank financing or other
credit facility or Partnership interests or assets are pledged as security for
any obligations under a bank financing or other credit facility, then Gran
Tierra or the Partnership shall promptly provide to Crosby copies of all such
fully executed credit and financing agreements and any related security
documents.

       

      4.           Section
6.2.1(b) of the Agreement shall be deleted in its entirety and replaced with the
following:

       

      (b)        
Term: The
Initial Letter of Credit shall remain outstanding for a period of five years
from date of Closing. Such period is referred to herein as the “Initial
Term.”

      


       

      5.           Section
6.3.2 shall be amended to add at the end of the existing text,  a new
subsection 6.3.2(d) providing as follows:

       

      (d) and
absence of any borrowings under any bank financing or other credit facility with
respect to which the Partnership is an obligor or guarantor, or with respect to
which any Partnership interests or assets have been pledged as security for
obligations thereunder.

       

      6.           A
new subsection 6.8 shall be added as follows:

       

      6.8  Performance by
Affiliates.  Notwithstanding anything to the contrary provided
herein, Gran Tierra shall be permitted to cause any of its affiliates to perform
the obligations of Gran Tierra under this Section 6, including without
limitation, procuring and delivering Initial Letters of Credit and Letters of
Credit.

       

      7.           Section
8.2 of the Agreement shall be deleted in its entirety and replaced with the
following:


      
        
           


        

        
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      8.2.  Subsequent Sale of
the Partnership or its Successors.  Notwithstanding anything to
the contrary contained in this Agreement, (i) Gran Tierra and its Affiliates may
assign, sell, transfer or otherwise dispose of any ownership interest in the
Partnership (a “Subsequent
Partnership Sale”) or of any interest in a subsidiary of Gran Tierra that
owns, directly or indirectly, an ownership interest in the Partnership (an
“Indirect Subsequent
Partnership Sale”), to a Person that is not an Affiliate of Gran Tierra
without the consent of Crosby provided that Crosby receives prior written notice
of any such non Affiliate transaction and further provided that the
non-Affiliate transferee executes a counterpart to this Agreement and thereby
agrees to be bound by the terms hereof, including without limitation the
provisions of Section
6, and (ii) Gran Tierra and its Affiliates may consummate a Subsequent
Partnership Sale or an Indirect Subsequent Partnership Sale by, among and
between Affiliates of Gran Tierra without Crosby’s consent and without an
agreement by such Affiliate transferee to execute a counterpart to this
Agreement or to be bound by the terms hereof provided that Gran Tierra and the
Partnership shall continue to be bound by this Agreement and Gran Tierra shall
provide Crosby with written notice of any such Subsequent Partnership Sale or
Indirect Subsequent Partnership Sale reasonably promptly following the
consummation thereof.

       

      8.           References
to the “Agreement” in the Original Participation Agreement shall be deemed to
include the Original Participation Agreement, as amended by Amendment No. 1,
Amendment No. 2 and this Amendment.  Except as expressly modified or
otherwise as set forth therein or herein, the terms and conditions of the
Original Participation Agreement remain in full force and effect.

       

      9.           This
Amendment does not alter or amend the Fifth Amended Extension Agreement dated
November 12, 2008 between the Parties.  Moreover, the Parties do not
waive any of their rights pursuant to the Agreement or the Fifth Amended
Extension Agreement.

       

      10.         Crosby
hereby consents to the Corporate Restructuring.

       

      11.         Each
Party shall be responsible for and pay all of its own costs and expenses
incurred at any time in connection with this Amendment.

       

      12.         This
Amendment may be executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the Parties and delivered to the
other Parties, it being understood that all Parties need not sign the same
counterpart.

       

      13.         A
facsimile, telecopy or other reproduction of this Amendment may be executed by
one or more parties to this Amendment, and an executed copy of this Amendment
may be delivered by one or more parties to this Amendment by facsimile or
similar electronic transmission device pursuant to which the signature of or on
behalf of such party can be seen, and such execution and delivery shall be
considered valid, binding and effective for all purposes.  At the
request of any party to this Amendment, all parties to this Amendment agree to
execute an original of this Amendment as well as any facsimile, telecopy or
other reproduction of this Amendment.

       

      
        
          
          

        

        
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      14.           By
their respective signatures below, each Party represents and warrants to the
others, that it has full power and authority to execute and deliver this
Amendment, that all requisite internal approvals, including approval by the
board of directors or other managerial authority has been properly obtained, and
that this Amendment shall constitute the legal, valid and binding obligation of
such Party enforceable in accordance with its terms, except to the extent such
enforcement may be subject to bankruptcy, insolvency, reorganization or other
similar laws affecting enforcement of creditors’ rights generally.

       

      The
remainder of this page left empty.


      
        
           


        

        
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      In Witness
Whereof, each of the undersigned has caused this Amendment No. 3 to be
executed as of the date first written above.

       

      
        
          
            
              
                
                  
                    	
                            Gran
      Tierra
      Energy Colombia Ltd.

                          
	
                            By:
      Argosy Energy, LLC (f/k/a Argosy Energy

                                          Corp.),
      its General Partner

                          
	 
      	 
      	 
      
	 
      	
                            By:

                          	
                            Gran
      Tierra Energy Cayman Islands II, Inc., its Manager

                          
	 
      	 
      	 
      	 
      
	 
      	 
      	
                            By:

                          	       
      /s/ Dana Coffield
	 
      	 
      	 
      	
                            Name:
      Dana Coffield

                          
	 
      	 
      	 
      	
                            Title:  President

                          


                  

                

              

            

          

        

      

      


      
        
          
            
              
                
                  
                    
                      	
                              Gran
      Tierra Energy Inc.

                            
	 
      	 
      
	
                              By:

                            	       
      /s/ Dana Coffield
	 
      	
                              Name:  Dana
      Coffield

                            
	 
      	
                              Title:  President
      and Chief Executive Officer

                            
	 
	
                              Crosby
      Capital, LLC

                            
	 
      	 
      
	
                              By:

                            	       
      /s/ Jay Allen Chaffee
	 
      	
                              Name:  Jay
      Allen Chaffee

                            
	 
      	
                              Title:  President

                            


                    

                  

                

              

            

          

        

      

       

      
        
           


        

        
          
          

          
            

          

        

        
           


        

      


      Exhibit
A

      


      Description
of Corporate Restructuring

       

      All capitalized terms not otherwise
defined herein shall have the meaning assigned to such terms in the Amendment to
which this Exhibit A is an exhibit.

      


      
        	
                1.

              	
                Gran
      Tierra will form a new Cayman corporation, referred to as “CFC
      1.”  CFC 1 will be a wholly-owned direct subsidiary of
      Gran Tierra.

              


      

       

      
        	
                2.

              	
                CFC
      1 will form a new Cayman corporation, referred to as “CFC
      2.”  CFC 2 will be a wholly-owned direct subsidiary of
      CFC 1.

              


      

       

      
        	
                3.

              	
                CFC
      2 will form a new Canadian corporation structured as an Alberta ULC,
      referred to as “ULC.”  ULC
      will be a wholly-owned direct subsidiary of CFC
  2.

              


      

       

      
        	
                4.

              	
                Gran
      Tierra will form a new Delaware limited liability company, referred to as
      “LLC
      1.”  LLC 1 will initially be a wholly-owned direct
      subsidiary of Gran Tierra.

              


      

       

      
        	
                5.

              	
                Prior
      to the time that the Restructuring becomes effective (the “Restructuring
      Effective
      Time”), Argosy Energy Corp., a Delaware corporation and general
      partner in the Partnership (“AEI”),
      will convert (the “AEI
      Conversion”) from a Delaware corporation into a newly formed
      Delaware limited liability company (“AEI
      LLC”) by simultaneously filing articles of organization and a
      certificate of conversion with the Secretary of State of
      Delaware.

              


      

       

      
        	
                 
      

              	
                a)

              	
                Existing
      stock ownership in AEI will convert to membership interests in AEI LLC on
      a pro rata basis.

              


      

       

      
        	
                 
      

              	
                b)

              	
                Gran
      Tierra will own 100% of the outstanding stock of AEI immediately prior to
      the AEI Conversion and will own 100% of the membership interest in AEI LLC
      immediately following the AEI
Conversion.

              


      

       

      
        	
                 
      

              	
                c)

              	
                There
      will be executed a Limited Liability Company Agreement providing for the
      governance of AEI LLC.  The sole Member of AEI LLC will be Gran
      Tierra.

              


      

       

      
        	
                6.

              	
                At
      the Restructuring Effective Time, Gran Tierra will transfer 100% of its
      ownership interest in the Partnership and 100% of its ownership interest
      in AEI LLC to LLC 1.  As a result, as of the Restructuring
      Effective Time:

              


      

       

      a)           LLC
1 will hold 100% of the membership interest in AEI LLC.

       

      
        	
                 
      

              	
                b)

              	
                AEI
      LLC will continue to be the general partner of the Partnership, holding a
      .7413% interest therein.

              


      

       

      
        	
                 
      

              	
                c)

              	
                LLC
      1 will become the limited partner of the Partnership, holding a 99.2857%
      interest therein.

              


      

       

      
        	
                 
      

              	
                d)

              	
                LLC
      1 will directly or indirectly control 100% of the equity interests in the
      Partnership.

              


      

       

      
        	
                7.

              	
                LLC
      1 will create separate LLC 1 series (individually or collectively, the
      “LLC
      Series”).

              


      

       

      
        
           


        

        
          
          

          
            

          

        

        
           


        

      

       

      
        	
                 
      

              	
                a)

              	
                Each
      Series will have separate rights, powers and duties and will be generally
      treated as a separate entity under Delaware
law.

              


      

       

      
        	
                 
      

              	
                b)

              	
                Each
      Series will represent rights to one of the nine Colombian Properties, as
      defined below. Thus, for example, Series 1 may represent rights to the
      interests in the Santana Block and Series 2 may represent rights to the
      interests in the Guauyaco block. As
such:

              


      

       

      
        	
                 
      

              	
                i.

              	
                Series
      1 will have rights, exclusive to other Series, in the assets in the
      Santana Block and the income derived
therefrom.

              


      

       

      
        	
                 
      

              	
                ii.

              	
                No
      other Series will have a claim of right to the assets of or income derived
      from the Santana block.

              


      

       

      
        	
                 
      

              	
                iii.

              	
                Liability
      of Series 1 will be limited to the assets of the Santana
      block.

              


      

       

      c)           There
will be a total of nine separate LLC Series created under LLC 1, as
follows:

       

      
        	
                 
      

              	
                i.

              	
                Three
      LLC Series will be created, each representing one of the three Colombian
      production properties (the “Colombian
      Production Properties”), as
follows:

              


      

       

      ·           Santana
block – 35% economic interest;

       

      ·           Guayuyaco
block – 35% economic interest; and

       

      ·           Chaza
block – 50% economic interest.

       

      
        	
                 
      

              	
                ii.

              	
                Six
      additional LLC Series will be created, each representing one of the six
      Colombian Exploration Properties (the “Colombian
      Exploration Properties” and together with the Colombian Production
      Properties, the “Colombian
      Properties”) as follows:

              


      

       

      
        	
                 
      

              	
                ·

              	
                Rio
      Magdalena – 100% economic interest (currently farming out 60% of economic
      interest);

              


      

       

      
        	
                 
      

              	
                ·

              	
                Talora
      – 20% economic interest (currently farming out whole
      interest);

              


      

       

      
        	
                 
      

              	
                ·

              	
                Mecaya
      – 15% economic interest (currently farming out whole
      interest);

              


      

       

      
        	
                 
      

              	
                ·

              	
                Azar
      – 40% economic interest (currently farming out 50-80% of economic
      interest);

              


      

       

      
        	
                 
      

              	
                ·

              	
                Putumayo
      West A – Currently under evaluation but if converted to E&E contract,
      portion to be farmed out; and

              


      

       

      
        	
                 
      

              	
                ·

              	
                Putumayo
      West B – Negotiating E&E contract; portion will be farmed
      out.

              


      

       

      
        	
                 
      

              	
                d)

              	
                All
      assets and other rights held in any of the Colombian Properties are the
      result of contracts to which the Partnership is a
  party.

              


      

       

      
        
           


        

        
          
          

          
            

          

        

        
           


        

      

       

      
        	
                 
      

              	
                i.

              	
                The
      Partnership will continue to be the party to such agreements following the
      Restructuring Effective Time.

              


      

       

      
        	
                 
      

              	
                ii.

              	
                No
      assignment or other transfer of any such agreement or rights provided
      thereunder will occur as a result of the
  Restructuring.

              


      

       

      
        	
                 
      

              	
                e)

              	
                Collectively,
      the nine LLC Series will represent ownership of 100% of the interests in
      the Colombian Properties and thus 100% of the assets of the
      Partnership.

              


      

       

      
        	
                8.

              	
                The
      partnership agreement of the Partnership will be amended and restated in
      connection with the Restructuring primarily to cause the Partnership to
      account separately for each of the nine Colombian Properties related to
      each of the nine LLC Series.

              


      

       

      
        	
                9.

              	
                Each
      of the LLC Series will enter into an indemnity agreement (the “Indemnity
      Agreement”).

              


      

       

      
        	
                 
      

              	
                a)

              	
                The
      parties to the Indemnity Agreement will be each of the nine LLC Series,
      AEI LLC, and the Partnership.

              


      

       

      
        	
                 
      

              	
                b)

              	
                Under
      the Indemnity Agreement, each respective LLC Series will indemnify all
      other LLC Series against judgments or liabilities not related to the
      assets held by such other LLC
Series.

              


      

       

      
        	
                 
      

              	
                c)

              	
                Under
      the Indemnity Agreement, each of the nine LLC Series will indemnify the
      Partnership and AEI LLC against losses arising from assets of such LLC
      Series.

              


      

       

      
        	
                10.

              	
                Additionally,
      the Indemnity Agreement will include a
guaranty.

              


      

       

      
        	
                 
      

              	
                a)

              	
                The
      guarantors will be Gran Tierra and CFC 1 as the members of the Series and
      each guarantor will guarantee any obligations of any of the LLC Series
      owned by such guarantor arising from the Indemnity
    Agreement.

              


      

       

      
        	
                11.

              	
                At
      the Restructuring Effective Time, Gran Tierra will transfer its interests
      in the three LLC Series related to the three Colombian Production
      Properties to CFC 1.

              


      

       

      
        	
                 
      

              	
                a)

              	
                The
      transfer will be made as an additional capital contribution by Gran Tierra
      to CFC 1, its wholly-owned foreign
subsidiary.

              


      

       

      
        	
                 
      

              	
                b)

              	
                No
      consideration will be received by Gran Tierra in return for such
      contribution.

              


      

       

      
        	
                 
      

              	
                c)

              	
                The
      end result of such transfers will be that profits derived from the
      Colombian Production Properties will be earned by and attributed to a
      Cayman entity, CFC 1.

              


      

       

      
        	
                 
      

              	
                d)

              	
                Interests
      in the other six series of LLC 1, attributable to the Colombian
      Exploration Properties, will be treated as continuing to be held by Gran
      Tierra.

              


      

       

      
        	
                12.

              	
                At
      the Restructuring Effective Time, Gran Tierra Energy Inc., an Alberta
      corporation (“GT
      CAN”) will transfer all management agreements to which GT CAN is a
      party (but not lease agreements for property and equipment) and all of its
      employees to ULC.

              


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                13.

              	
                Gran
      Tierra will amend its credit facility agreement and related agreements
      (the “Credit
      Facility”) with Standard Bank to terminate certain existing pledges
      created thereunder and to create new pledges granted by newly formed
      entities to properly reflect the post-Restructuring
    structure.

              


      

       

      
        	
                14.

              	
                In
      a separate and subsequent action Gran Tierra may assign the Credit
      Facility to CFC 1.