Exhibit 10.20


    Exhibit
      10.20

    


    April
      12,
      2005

    


    


    Ken
      Hooper

    La
      Mesa
      Partners, L. C.

    6200
      Virginia Parkway, Suite 200

    McKinney,
      Texas 75071

    


    Gentlemen:

    


        This
      letter,
      when accepted by you as hereinafter provided, shall constitute the entire and
      complete agreement between La Mesa Partners, LC of McKinney, Texas, (“Farmor”)
      and Affiliated Holdings, Inc., of Houston, Texas, (“Farmee”) with regard to
      certain drilling operations to be performed by Farmee and the assignment by
      Farmor to Farmee of certain oil and gas leasehold rights of the Hartford
      Prospect in Ohio Co., Kentucky, as hereinafter set forth:

    


        TITLE.
      Farmor
      represents but does not warrant that it is the owner and holder of a working
      interest in that certain Oil and Gas Lease, whether one or more, described
      on
      Exhibit “A” (“Subject Lease”) covering the lands embraced by the Subject Lease
      (“Subject Lands”). Farmor shall make available to Farmee a copy of the Subject
      Lease and any other title data with respect thereto currently maintained in
      the
      files of Farmor, but there will be no obligation on the part of Farmor to
      furnish Farmee with any additional title data or title curative materials with
      respect to the Subject Lease. Farmee shall satisfy itself as to title to the
      Subject Lease but shall furnish Farmor, free of cost, copies of any title
      opinions acquired by Farmee in connection with the Subject Lands or any well
      drilled pursuant to this agreement.

    


        INITIAL
      TEST
      WELL.
      On or
      before July 15, 2005 (approximately 90) days from the date of this agreement,
      Farmee shall commence the actual drilling of a test well (hereinafter referred
      to as the “Initial Test Well”) for oil and or gas at a legal location on the
      Subject Lands or lands pooled therewith, and Farmee shall thereafter prosecute
      the drilling of the Initial Test Well with due diligence and dispatch in a
      good
      workmanlike manner, at Farmee’s sole cost, risk and expense, to a depth of two
      thousand and seven hundred feet (2,700’) or a depth sufficient to adequately
      test the base of the New Albany Shale Formation, whichever is the lesser depth,
      and shall complete the Initial Test Well as a producer of oil and/or gas in
      paying quantities or properly plug and abandon such well as a dry hole at its
      sole cost, risk and expense. Failure to timely commence and drill the Initial
      Test Well shall be an ipso facto termination of this agreement in its entirety
      unless Farmor grants a written extension whereby allowing additional time for
      such operations.

    


        FARMOR
      AND
      FARMEE EACH AGREE THAT FARMEE MUST TIMELY DRILL THE INITIAL TEST WELL IN ORDER
      TO BE ENTITLED TO EARN ANY RIGHTS FROM FARMOR AS FURTHER SET FORTH IN THIS
      AGREEMENT. 

    


        SUBSTITUTE
      WELL. 
      In the
      event that during the course of the drilling of any Test Well, Farmee shall
      encounter loss of hole, excessive water flow or any other conditions that render
      further drilling of such well impractical with the use of ordinary rotary
      drilling methods, Farmee shall have the right to commence, on or before the
      expiration of thirty (30 ) days next succeeding abandonment of operations upon
      such well, actual drilling of a substitute well at a location authorized for
      the
      well it is sought to replace under the previous terms of this Farmout Agreement.
      If such substitute well shall be so commenced and drilled in accordance with
      the
      applicable terms and provisions hereof respecting such well, then the substitute
      well shall be deemed for all purposes of this agreement to constitute such
      well
      for which it is a substitute and to have been timely commenced and drilled
      in
      accordance with the terms and provisions hereof respecting the
      same.

    


        RIGHTS
      EARNED. In
      the
      event Farmee shall have timely commenced, drilled and completed the Initial
      Test
      Well as a producer of oil and/or gas in paying quantities or properly plugged
      and abandoned same as a dry hole, and otherwise observed and complied with
      all
      of the terms and provisions of this agreement, then Farmor, following written
      request from Farmee, shall prepare, execute and deliver to Farmee, without
      express or implied warranty of title, an assignment of its entire aforesaid
      interest in and to the Subject Lease, INSOFAR AND ONLY INSOFAR AS the Subject
      Lease may be included within the drilling, spacing or production or proration
      unit assigned to the Initial Test Well subject, however, to the reservations
      by
      Farmor as hereinafter specified. Said assignment shall be made subject to the
      terms of this Farmout Agreement, and shall further reserve unto Farmor any
      right
      needed for the enjoyment of any other right or privilege reserved or
      expected.

    


        If
      Farmee has
      earned an the assignment discussed above (“Assignment”), it shall also be
      entitled to a one-time election to purchase from Farmor the balance of the
      Subject Lands not covered by the Assignment (“Additional Interest”) for a
      purchase price (“Purchase Price”) of twenty dollars ($20.00 ) per net mineral
      acre. Farmee must make its election to purchase the Additional Interest in
      writing within forty-five (45) days of release of the last rig used (drilling
      or
      completion). If Farmee elects to purchase the Additional Interest, concurrent
      to
      receipt of the above specified payment Farmor will execute and deliver to Farmee
      an assignment of all its interest in the Additional Interest subject to the
      reservations stated herein. 

    


        PAYMENT. As
      payment for the Purchase Price, Farmor agrees to a cash payment of one third
      of
      the Purchase Price at the time of the one-time election with the balance to
      be
      paid in the form of a convertible note, which note will be due twenty-four
      (24)
      months from the date of Farmee’s election to purchase the Subject Lands at an
      annual interest rate of eight percent (8%) and a conversion price which is
      a
      twenty-five percent (25%) discount to the closing bid price on the date of
      the
      cash payment with a minimum conversion price of $1.00 per share.

    


        RESERVATIONS.
      With
      respect to the rights to be assigned Farmee by Farmor as provided in the RIGHTS
      EARNED provision herein, Farmor shall reserve unto itself an overriding royalty
      interest, inclusive
      of (a)
      that certain previously created overriding royalty due John Nolan Wesson
      pursuant to that certain Agreement between Farmor and Nolan Wesson dated
      September 18, 2001 and attached hereto as Exhibit “B” and (b) any other
      previously created overriding royalties of record, equal to six percent of
      eight-eighths (6.00% of 8/8ths) of the market value at the well as produced
      of
      all oil, gas, casinghead gas, condensate and related hydrocarbons that are
      produced, saved and sold, free and clear of all costs of production other than
      a
      proportionate part of applicable production taxes, under the terms and
      provisions of the Subject Leases attributable to the Subject Lands to the extent
      the same are covered by such assignment, and the market value of the production
      sold at the well shall be deemed to be the gross proceeds of the
      sale.

    


        PROPORTIONATE
      REDUCTION. In
      the
      event the Subject Lease shall cover less than the full fee simple estate in
      the
      oil, gas, condensate, casinghead gas and related hydrocarbons located under
      the
      Subject Lands, and/or in the event that Farmor owns less than a one hundred
      percent (100%) working interest in the Subject Lease as to formations underlying
      the Subject Lands, and/or in the event the Subject Lease comprises less than
      one
      hundred percent of the entire proration unit assigned to any Test Well or
      Initial Well, then the overriding royalty interest reserved by Assignor herein
      shall be reduced accordingly.

    


        LIABILITY.
      The
      entire cost, risk and expense of all operations performed by Farmee pursuant
      to
      this agreement shall be borne solely by Farmee, and Farmee shall hold Farmor
      harmless from any and all claims, demands, liabilities or obligations of any
      kind or character resulting from, relating to or arising in any manner from
      such
      operations (including, but not limited to attorney’s fees and expenses of
      litigation and settlement incurred by Farmor in defending any such claims or
      demands Farmor may have against Farmee by reason of Farmee’s breach of its
      undertakings hereunder), Farmee shall not permit any liens of any kind or
      character to be filed or asserted against the Subject Lease or the Subject
      Lands
      by any party whatsoever arising in any manner out of operations performed by
      Farmee pursuant to this agreement, and Farmee, in conducting the operations
      herein specified, shall observe and comply with all of the terms and provisions
      of the Subject Lease, and shall restore the surface of the Subject Lands as
      near
      as practicable to its condition prior to the commencement of such operations.
      Additionally, Farmee shall carry adequate insurance acceptable to Farmor for
      operations performed by Farmee pursuant to this agreement and upon request
      of
      Farmor, Farmee shall furnish to Farmor a valid certificate evidencing such
      insurance coverage. 

    


        ABANDONMENT
      OF WELLS.
      If at
      any time prior to any such assignment earned therefore as provided for herein,
      Farmee desires to plug and abandon any Test Well, at least forty-eight (48)
      hours prior to the plugging and abandonment of such well, Farmee shall notify
      Farmor of its intent to plug and abandon such well, and Farmor shall have the
      right, within forty-eight (48) hours after receipt of Farmee’s notice of its
      intent to plug and abandon, to take over such well for additional testing any
      method, or for deepening, with Farmor being solely responsible for all costs
      and
      expenses incurred in connection therewith, including standby rig time, if
      required. In the event such well shall be taken over by Farmor for such purposes
      and such work results in a completion attempt wherein such well shall be
      completed as a producer of oil and/or gas, all of Farmee’s rights in such well
      and in any related equipment, and in the right to earn an assignment hereunder
      shall be extinguished and forfeited; provided, however, that Farmor agrees
      to
      pay Farmee the reasonable value of any salvageable material in the hole which
      Farmee has contributed. In the event the completion attempt results in a dry
      hole, Farmor shall plug and abandon such well at its sole cost and expense,
      and
      Farmee’s rights hereunder shall remain in full force and effect. Further, in the
      event Farmor shall take over such well for such purpose but no completion
      attempt is made, then Farmee agrees, upon receipt of notice for Farmor that
      no
      completion attempt will be made, to plug and abandon such well at Farmee’s sole
      cost, risk and expense, except for normal plugging and abandoning costs caused
      by such operations of Farmor and , in such case, the amount in excess of the
      normal costs shall be borne by Farmor, and Farmee’s rights hereunder shall
      remain in full force and effect.

    


    


        SURRENDER
      OF
      INTEREST. If
      at any
      time after any such assignment as provided for herein has been delivered to
      Farmee, Farmee desires to discontinue operations and to plug any Test Well
      and
      release, surrender or abandon Farmee’s interest earned hereunder by reason of
      the drilling and completion of the same, Farmee shall notify Farmor in writing
      and concurrently furnish Farmor with an electrical log acceptable to Farmor,
      and
      Farmor shall have thirty (30) days after receipt of such notice within which
      Farmor my inspect and test such well and notify Farmee whether Farmor desires
      to
      take over the interest previously earned therefore by Farmee, and if Farmor
      elects to take over such interest Farmee shall, within ten (10) days after
      receipt of written notice from Farmor of such election, deliver to Farmor an
      assignment of such interest (free and clear of all burdens not now existing)
      and
      of all the personal property and equipment related thereto and, upon receipt
      of
      such assignment, Farmor shall pay Farmee for the salvage value of the equipment
      so assigned. For the purposes hereof “salvage value” shall be deemed to mean the
      fair market value of salvageable equipment less the reasonable cost of salvaging
      same.

    


        RELATIONSHIP
      OF PARTIES. In
      conducting all operations contemplated herein. Farmee and Farmor shall act
      independently of one another, so that no party hereto shall be acting as the
      other’s agent, employee or partner or as a member of a joint venture with the
      other, and in connection therewith, this agreement is not intended to create,
      and nothing herein shall be construed to create, an association, trust, joint
      venture, mining partnership or other partnership or entity of any
      kind.

    


        GEOLOGICAL
      WELL REQUIREMENTS. In
      connection with the drilling of any Test Well, Farmee shall provide Farmor
      with
      all geological, test and engineering data derived from drilling operations
      of
      the initial earning well.

    


        LEASE
      PAYMENTS. Farmor
      agrees to make delay rental payments or minimum royalty payments, as applicable,
      at the times and in the amounts which, in Farmor’s opinion, are necessary to
      maintain its interest in the Subject Lease in full force and effect; provided,
      however, that Farmor shall not be liable to Farmee in damage or otherwise for
      untimely or improper payment thereof or failure to pay same through
      inadvertence, mistake, clerical error or over sight, Farmee shall, upon
      receiving an invoice from Farmor for any payments so made, promptly reimburse
      Farmor for Farmee’s proportionate share of such payments, which shall be
      calculated as the proportion that Farmee’s assigned interest in the Subject
      Lease (without reduction for any depth limitation) bears to Farmor’s interest in
      the Subject Lease prior to such assignment.

    


        APPROVALS.
      If the
      approval of any governmental or tribal agency shall be required with respect
      to
      any assignments specified herein, Farmor and Farmee agree to cooperate in
      obtaining said approval and, if necessary, this agreement shall be amended
      to
      conform with the requirements which may be imposed; provided, however, that
      none
      of said requirements, if any, shall change the substantive relationship of
      Farmor and Farmee or in any way change their respective rights to receive
      production from or attributable to the Subject Lands covered by the Subject
      Lease.

    


        RIGHT
      TO
      ASSIGN. Time
      is
      of the essence hereof, and this agreement shall be binding upon the parties
      hereto and shall extend to and be binding upon their respective successors
      and
      assigns; provided, however, that his agreement shall not be assigned by Farmee
      in whole or part to any person, firm or corporation without the prior written
      consent of Farmor which is not to be unreasonably withheld. However,
      notwithstanding any assignment by Farmee with the prior written consent of
      Farmor, the assignment shall not be or become effective until Farmor shall
      not
      have been furnished with a duly executed copy thereof. Farmor shall have the
      right to make the herein specified assignments solely to Farmee, and any
      assignees under any such assignment shall look solely to Farmee for any
      assignment of oil and gas leasehold rights that may be due them by reason of
      Farmee’s assignment to them of an interest in this agreement. Any assignment by
      Farmee shall be subject to the terms and conditions of this Agreement, to which
      the Assignee thereon shall specifically agree to be bound. 

    


        NOTICES.
      Except
      as
      otherwise specifically provided for herein, the notices specified herein shall
      be in writing and will be deemed to have been received when personally delivered
      or when deposited in the United States mail (postage prepaid) to the appropriate
      party at the address set forth below or at the address such party shall
      theretofore have designated by written notice to the notifying
      party:

    


    La
      Mesa
      Partners, Inc.   
      Affiliated Holdings, Inc,

    6200
      Virginia Parkway  1117
      Herkimer Street

    Suite
      200
      Suite 110

    McKinney,
      Texas 75071  
Houston,
      Texas 77008   

    OFFICE:
      800-709-5650   OFFICE:
      (713) 802-2944

    FAX:
      972-542-3170    FAX: 
      (713)
      868-0085

    


        ACCEPTANCE.
      If
      the
      foregoing correctly sets out your understanding or our agreement, please
      evidence your acceptance by returning within seven (7) days from the date
      hereof, one copy of this letter fully executed in the space provided below.
      Our
      failure to receive an accepted copy within fifteen (15) days gives us the option
      of canceling this agreement, or granting you additional time within which to
      accept it.

    


    Very
      truly yours,

    


    La
      Mesa Partners, Inc.

    


    


    BY:  _______________________
      

    


    


    


    TITLE: _______________________

    


    


    


    AGREED
      AND ACCEPTED

    


    This
      ________ day of April, 2005.

    


    Affiliated
      Holdings, Inc.

    


    BY:  _______________________
      

    


    


    


    TITLE: _______________________