EMPLOYMENT AGREEMENT
                              --------------------

     This Agreement (the  "Agreement") is made and entered into on this 17th day
of October, 2005 (the "Effective Date"), between QUEST RESOURCE CORPORATION (the
"Company, and DAVID E. GROSE ("Employee").

     1. Agreement to Employ; Duties.
        ---------------------------

          a  Agreement  to Employ.  The  Company  hereby  employs  Employee  and
Employee hereby accepts employment upon the terms and conditions hereinafter set
forth. Employee will serve as Chief Financial Officer of the Company.

          b Duties.  Employee agrees that so long as he is employed  pursuant to
this Agreement, he will: (i) to the satisfaction of the Company, devote his best
efforts and his entire  business  time to further  properly the interests of the
Company;  (ii) at all times be subject to the direction and control of the Board
of  Directors of the Company  with  respect to his  activities  on behalf of the
Company;  (iii) comply with all rules, orders and regulations of the Company and
all statutes,  regulations,  interpretive  rulings and other enactments to which
the Company is subject;  (iv)  truthfully and  accurately  maintain and preserve
such  records and make all reports as the  Company  may  require;  and (v) fully
account  for all  monies  which he may from time to time have  custody  over and
deliver the same to the Company whenever and however directed to do so.

     2. Compensation.
        ------------

          a Base  Salary.  For all  services  to be rendered  by  Employee,  the
Company  shall pay  Employee a salary at the rate of Two  Hundred  Seventy  Five
Thousand  ($275,000.00)  and No/100 Dollars per year, in  installments  of equal
frequency to the Company's standard payroll practices.  Salary payments shall be
subject to  withholding  and other  applicable  taxes  (e.g.,  federal and state
withholding, FICA, earnings tax, etc).

          b  Incentive  Bonus  Compensation/Stock  Options.  Employee  shall  be
entitled to  participate  in an  incentive  bonus plan or program  and/or  stock
option plan as may be  established by the Company's  Compensation  Committee for
senior executives of the Company.

     3. Term.  This Agreement  shall be effective on October 17, 2005, and shall
continue thereafter until terminated by either party as provided in Section 5 or
6 hereof.

     4. Employee  Benefits.  Employee  shall be entitled,  during his employment
hereunder,  to receive and participate in employee benefits  available to senior
executives  of the  Company  as the  Board  of  Directors  (or the  Compensation
Committee) of the Company determines, in its sole discretion, from time to time.


<PAGE>

          Employee acknowledges that the benefits described above are subject to
change  in the  discretion  of the  Board  of  Directors  (or  the  Compensation
Committee) of the Company,  and that Employee is only entitled to participate in
these  benefits to the extent they are made  available  by the Company to senior
executives from time to time.

     5. Termination of Employment by the Employee. Employee shall have the right
to terminate  his  employment  at any time by providing no less than thirty (30)
days prior written Notice of Termination to the Company.  Employee hereby agrees
to assist in the training of his replacement, if requested.

     6. Termination of Employment by the Company.
        ----------------------------------------

          a Without Cause. The Company may terminate Employee's employment under
this  Agreement  at any time without  cause.  In such event,  the Company  shall
continue to pay Employee  Base Salary as required  pursuant to Section 2a hereof
as  severance  pay for a period equal to twelve (12) months from the date of the
Company's giving of Notice of Termination to Employee;  provided,  however, that
Employee  shall  only  be paid  such  severance  pay if he  signs  an  agreement
containing  a release of claims  against the  Company,  in a form  substantially
similar to that included in Exhibit A, attached hereto and incorporated  herein.
Such severance pay will be paid in equal  installments on the Company's  regular
payroll  dates.  Employee  will cease to be an employee of the Company as of the
date  Notice of  Termination  is given,  and he will not  receive  or accrue any
benefits  of  employment  after  such  termination  of  employment  (e.g.,  life
insurance,  health insurance,  disability  insurance,  vacation accrual or other
benefits  provided  pursuant to this Agreement or otherwise in conjunction  with
Employee's  employment).  Severance  pay  shall not be paid to the  Employee  if
Employee owns, manages,  operates,  joins,  contracts with, or is employed by or
connected  in any manner  with  (whether  as  principal,  partner,  shareholder,
member, director, officer, employee, agent or otherwise), any business which may
be competitive in any manner to the business engaged in by the Company.

          b With Cause The Company may  terminate  Employee's  employment  under
this  Agreement  at any time for  cause  effective  immediately  upon  Notice of
Termination. In the event the Company terminates this Agreement for cause on the
part of Employee,  Employee shall receive Base Salary for the period to the date
of his termination. Employee shall not be entitled to receive severance pay from
the Company if his  employment  is  terminated  for cause.  For purposes of this
Agreement,  "cause"  shall be defined  to  include,  but not be limited  to, the
following: (i) any act or omission by Employee that constitutes gross negligence
or willful  misconduct;  (ii) theft,  dishonest acts or breach of fiduciary duty
that  materially  enrich  the  Employee  or  materially  damage  the  Company or
conviction of a felony,  (iii) any conflict of interest,  except those consented
to in writing by the Company;  (iv) any material  failure by Employee to observe
Company work rules,  policies or procedures  that is not cured by Employee after
10 days  written  notice;  (v) bad  faith  refusal  by  Employee  to  carry  out
reasonable  instruction  that is not  cured by  Employee  after 10 days  written
notice; or (vi) any material breach of this Agreement by Employee.

     7. Notice of Termination.  Any termination of Employee's  employment by the
Company  pursuant  to Section 6 or by  Employee  pursuant  to Section 5 shall be
communicated  by written Notice of  Termination to the other party hereto.  Said
Notice shall be deemed to have been

                                       2
<PAGE>

duly  given  when  delivered  personally  or by  overnight  delivery,  sent  via
facsimile,  or mailed by United States certified mail, return receipt requested,
postage prepaid, addressed as follows:

           If to the Company:

              Quest Resource Corporation
              9520 North May Avenue
              Oklahoma City, Oklahoma  73120
              Attention: Jerry D. Cash (or then current Chief Executive Officer)
                   Facsimile: (405) 840-9897

           If to Employee:

              David E. Grose
              9520 North May Avenue
              Oklahoma City, Oklahoma  73120
                   Facsimile: (405) 488-1156

or at such other address as either party may designate in writing to the other.

     8. Company  Property.  Upon  termination  of this  Agreement for any reason
whatsoever,  Employee  shall  immediately  deliver  to the  Company  any and all
Company property,  including,  without limitation, all Confidential Information,
as such  Confidential  Information  is  defined in  Section  15.  From and after
termination  of this  Agreement,  Employee  shall not represent  that he has any
further authority to act as a representative of the Company, in any capacity.

     9. Intellectual  Property.  Any interest in patents,  patent  applications,
inventions, copyrights, developments and processes ("Inventions") which Employee
now or hereafter  during the period  Employee is employed by the Company may own
or develop relating to the fields in which the Company may then be engaged shall
belong to the Company; and forthwith upon request of the Company, Employee shall
execute all  assignments  and other  documents and take all such other action as
the  Company  may  reasonably  request in order to vest in the  Company  all his
right,  title and interest in and to the Inventions free and clear of all liens,
charges and encumbrances.

     10. No  Conflicts.  Employee  represents  and  warrants to the Company that
neither the execution nor delivery of this  Agreement,  nor the  performance  of
Employee's obligations hereunder,  will conflict with, or result in a breach of,
any term,  condition,  or  provision  of, or  constitute  a default  under,  any
obligation,  contract,  agreement, covenant or instrument to which Employee is a
party or under which the Employee is bound, including,  without limitation,  the
breach by Employee of a fiduciary duty to any former employers.

     11. Personnel  Policies.  The general personnel policies of the Company (as
said  policies may exist from time to time) will apply to Employee with the same
force and effect as to any other  employee of the Company,  except to the extent
such general  personnel  policies are inconsistent with the terms and provisions
of this  Agreement,  in which event the terms and  provisions of this  Agreement
shall control.

                                       3
<PAGE>

     12.  Compensation  Review.  The Company  will conduct  periodic  reviews of
Employee and his performance no less frequently than annually. While the Company
currently  anticipates  that  during  such  reviews,  it may  consider  possible
increases to Base Salary,  both  Employee and the Company  hereby agree that the
Company shall have no obligation to alter or adjust any compensation or benefits
due to Employee pursuant to the terms of this Agreement.

     13. Expense Reimbursement.  Employee shall be reimbursed by the Company for
the  reasonable  and  necessary  business  expenses  incurred by Employee in the
discharge  of  his  duties,  subject  to the  Company's  standard  policies  and
procedures related to expense reimbursement and approval thereof.

     14. Conflict of Interest. Employee shall devote his full time and attention
to the business of the Company and the diligent discharge of the duties assigned
to Employee  throughout the term of this Agreement.  Unless  consented to by the
Company, Employee will not, directly or indirectly,  have any business interests
or investments (whether as principal, partner,  shareholder,  director, officer,
employee, agent or otherwise) that: (i) are other than passive investments which
do not require Employee's direct personal time, attention,  or services; or (ii)
create any conflict of interest with the Company or with  Employee's  employment
by the Company.  For  purposes of the  foregoing,  a conflict of interest  shall
include,  but not be limited to, any direct or indirect interest in any business
or  enterprise  that is  competitive  with the  Company  or any  corporation  or
business enterprise directly or indirectly  controlling,  controlled by or under
common control with the Company.

     Notwithstanding  the foregoing,  during the period  Employee is employed by
the Company,  Employee may own up to 1% of the outstanding  equity securities of
stock in any  corporation  which is listed  upon a national  stock  exchange  or
traded in the over-the-counter market.

     15. Confidentiality;  Restrictive Covenants. Employee acknowledges that his
employment  with the Company will afford Employee an opportunity to identify the
Company's business  strategies and know-how,  enable him to establish  favorable
relations  with the Company's  customers,  business  prospects and suppliers and
provide  him with  access to other  confidential,  trade  secret or  proprietary
information  of  the  Company  (collectively,  the  "Confidential  Information")
including, without limitation,  business and marketing plans, customer files and
lists, business prospects,  sales techniques,  billing files,  software,  source
code, financial  information,  reports,  summaries,  spreadsheets,  evaluations,
drawings,  specifications,  seismic data,  reserve reports,  prospect  analyses,
geological  and  geophysical  data,  maps,  models,  interpretations,  and other
confidential  or  proprietary  information  of the  Company  whether in written,
graphic,  electronic or any other format. Employee further acknowledges that the
Company will expend considerable  amounts of time, money and other assets in the
development of this Confidential Information which is essential to its business,
and Employee  acknowledges  that his employment by the Company is conditioned on
his  promise  not  to  use  any  Confidential  Information  or  to  divulge  any
Confidential  Information  to any person or entity not  employed  by the Company
without the Company's prior written approval. Employee, therefore, agrees not to
use, disclose or in any manner reveal to any person, firm, company,  corporation
or  other  entity  any of the  Confidential  Information  conveyed  to him or in
connection  with his  employment  by the  Company  prior or  subsequent  to this
Agreement

                                       4
<PAGE>

other than for Employee to carry out his duties under this  Agreement.  Anything
herein to the contrary  notwithstanding,  this Agreement shall be inoperative as
to such  portions  of the  Confidential  Information  which  (i)  are or  become
generally  available  to the public  other than as a result of a  disclosure  by
Employee;  (ii) become available to Employee on a  nonconfidential  basis from a
source, other than the Company or its representatives,  which has represented to
Employee (and which Employee has no reason to disbelieve after due inquiry) that
such source is  entitled  to  disclose  it, or (iii) were known to Employee on a
nonconfidential  basis  prior to  disclosure  to  Employee by the Company or its
representatives.

     Employee  further agrees that while he remains in the employ of the Company
and for a period of twelve (12) months following  termination of such employment
by  Employee  or by the  Company  for  cause,  Employee  will  not  directly  or
indirectly  (whether  through any person,  firm,  company,  corporation or other
entity,  other than the Company),  do any of the following  anywhere  within the
geographical area in which the Company does business:

          a. For his own account, for any person, firm, company,  corporation or
     other  entity,  other than the Company,  or for any other  reason,  solicit
     business or cause agents of any person, firm, company, corporation or other
     entity to  solicit  business  of a type  similar to that  solicited  by the
     Company from or for any person, firm, company,  corporation or other entity
     who was, at the effective date of the  termination  of his employment  with
     the Company,  or within a one (1) year period prior to such termination,  a
     customer of the Company,  as disclosed by the Company's  books and records,
     or solicit business from any prospective  customer of the Company with whom
     the Company has had  contact  within the one (1) year period  prior to such
     termination as disclosed by the Company's books and records;

          b. In any way, directly or indirectly,  whether  personally or through
     agents,  other  persons  or  otherwise,  divert or take away or  attempt to
     divert or take away any of such customers or  prospective  customers or any
     of the Company's  suppliers or business  prospects,  or otherwise interfere
     with or attempt to interfere with the Company's  relations with any of such
     customers, prospective customers, business prospects or suppliers; or

          c. In any other  way,  whether  personally  or through  agents,  other
     persons or otherwise, induce or attempt to induce any director, employee or
     agent of the Company to terminate his employment with the Company.

     16. Severability of Restrictive Covenants. It is understood and agreed that
the restrictions  imposed by the provisions of the foregoing Section 15 and each
subsection  thereof  are  separate  and  severable,  and it is the intent of the
parties hereto that in the event the restrictions imposed by said Section or any
subsection  should be  determined by any court of competent  jurisdiction  to be
void for any reason whatsoever,  the remaining  provisions of this Agreement and
the  restrictions  imposed by the remainder of said Section or subsection  shall
remain valid and binding upon the parties. It is also agreed and understood that
in the event any restriction contained in Section 15 should be considered by any
court of competent  jurisdiction to be unenforceable because unreasonable either
in length of time or area to which said restriction applies, it is the intent

                                       5
<PAGE>

of both parties hereto that said court reduce and reform the provisions  thereof
so as to apply to limits considered enforceable by said court.

     17. Equitable Remedies.  Recognizing that irreparable damage will result to
the  Company  in the  event of  breach  of any of the  foregoing  covenants  and
assurances  of Section 15 by  Employee,  the  Company  shall be  entitled  to an
injunction  to be issued by any court of competent  jurisdiction  enjoining  and
restraining  Employee and each and every person,  firm, company,  corporation or
other  entity  acting  in  concert  or  participating  with  Employee  from  the
continuation of such breach, and in addition thereto,  Employee shall pay to the
Company all  ascertainable  damages,  including costs and reasonable  attorneys'
fees and  expenses,  sustained  by the  Company  by reason of the breach of said
covenants and assurances.

     18. Survival of Representations. The covenants, agreements, representations
and warranties contained in or made by Employee pursuant to this Agreement shall
survive Employee's termination of employment,  irrespective of any investigation
made by or on behalf of any party.

     19. Waiver. Failure of either party to demand strict compliance with any of
the terms,  covenants or conditions  hereof shall not be deemed a waiver of such
term,  covenant or condition,  nor shall any waiver or  relinquishment by either
party of any right or power  hereunder at any one time or more times be deemed a
waiver or relinquishment of such right or power at any other time or times.

     20.  Severability.  The invalidity or  unenforceability of any provision or
provisions of this Agreement shall not affect the validity or  enforceability of
any other  provision  of this  Agreement,  which shall  remain in full force and
effect.

     21. Governing Law; Binding Effect.  This Agreement shall be governed by and
construed  in  accordance  with the laws of the State of  Oklahoma  and shall be
binding  upon  the  parties  hereto,  their  heirs,  executors,  administrators,
successors and assigns.

     22. Entire and Final Agreement.  This Agreement shall supersede any and all
agreements of employment, oral or written (including correspondence,  memoranda,
term sheets, etc.), heretofore existing and contains the entire agreement of the
parties with respect to the subject  matter  hereof.  This  Agreement may not be
modified  orally,  but only by an  agreement  in  writing,  signed  by the party
against whom the enforcement of any waiver, change,  modification,  extension or
discharge is sought.

     23. Assignment.  Neither this Agreement nor any of the rights,  obligations
or interests  arising  hereunder  may be assigned by Employee  without the prior
written  consent of the Company.  Neither this  Agreement nor any of the rights,
obligations  or  interests  arising  hereunder  may be assigned by the  Company,
without the prior written  consent of the Employee,  to a person other than: (1)
an affiliate of the Company;  or (2) any party with which the Company  merges or
consolidates,  or to whomever the Company may sell all or  substantially  of its
assets; provided,  however, that any such affiliate or successor shall expressly
assume all of the Company's  obligations  and liabilities to Employee under this
Agreement.

                                       6
<PAGE>

     24. Section Headings.  The section headings contained in this Agreement are
inserted  for purposes of  convenience  only and shall not affect the meaning or
interpretation of this Agreement.

     25. Signature Blocks.
         ----------------

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf and  Employee  has hereunto set his hand the day and year first above
written.

"Employee"                                  "Company"

/s/ David S. Grose                          QUEST RESOURCE CORPORATION
-----------------------------
David E. Grose

                                            By:  /s/ Jerry D. Cash
                                                 -------------------------------
                                                    Jerry D. Cash


                                            Title: Chief Executive Officer and
                                                   President


                                       7
<PAGE>


                                    EXHIBIT A


                                RELEASE AGREEMENT
                                -----------------

     THIS  RELEASE  AGREEMENT  ("Release")  is entered into  effective  the date
signed below,  by and between  DAVID E. GROSE  ("Employee")  and QUEST  RESOURCE
CORPORATION ("Company").

     WHEREAS,  the Company has determined  that  Employee's  employment with the
Company should end effective ________________________ ("Termination Date"); and

     WHEREAS,  the Company and Employee  desire to fully and finally resolve all
issues which might relate to Employee's employment with the Company.

     NOW THEREFORE,  in consideration of the mutual promises set forth below, it
is hereby agreed by and between Employee and Company as follows:

     A.   Payment to  Employee.  The Company  agrees to pay  Employee the sum of
          $________  (the  "Payment")  as  severance  pay,  less all  applicable
          withholdings  for state,  federal and FICA taxes. The Payment shall be
          paid  in  [insert  number  of  installments]   equal  installments  of
          $_________  on  each  regular  payroll  date  of  the  Company.   Such
          installments shall commence on the first payroll date that follows the
          expiration of the seven-day revocation period set forth in paragraph G
          below.

     B.   Employee's  Release of  Liability.  Employee  agrees to the  following
          general release:

          (a)  Employee  hereby  releases,  acquits and forever  discharges  the
          Company, its subsidiaries,  divisions, affiliates, agents, independent
          contractors, shareholders, employees, directors, and officers, and all
          of its predecessors and successors  (collectively  referred to in this
          Release  as  "Released  Parties")  of and from any and all  causes  of
          action, suits,  proceedings,  claims,  demands,  rights,  obligations,
          losses,  injury, costs,  expenses,  compensation and all other damages
          and  liabilities  of any kind or nature  whatsoever,  whether known or
          unknown,   suspected   or   unsuspected,    asserted   or   assertable
          (collectively  "Claims")  which Employee now owns or holds,  or at any
          time has owned or held, against the Released Parties arising out of or
          related to contract (express and/or implied),  tort, payment of wages,
          Title VII of the Civil  Rights  Act of 1964,  the Civil  Rights Act of
          1991, the Civil Rights Acts of 1866 and 1871,  the Age  Discrimination
          in Employment Act, as amended,  the Family Medical Leave Act, the Fair
          Labor  Standards Act, the Employee  Retirement  Income Security Act of
          1974, the Americans With  Disabilities  Act of 1991, the Equal Pay Act
          of 1963,  the  Rehabilitation  Act of 1973,  and/or any other federal,
          state or local statute,  law, ordinance,  order or principle of common
          law,  or any Claim in  relation  to  Employee's  ownership  or sale of
          Company stock or  participation  in any  compensation or stock plan or
          any Claim  relating to any other law,  common or statutory,  resulting
          from any act or omission  committed or omitted  prior to the date this
          Release is

                                       1
<PAGE>

          signed,  and  specifically  including  Claims  arising  out  of  or in
          consequence  of  the  employment  relationship  between  Employee  and
          Company, or the termination thereof.

          (b) Employee hereby represents,  warrants and agrees that Employee has
          not initiated,  nor will he initiate, any legal proceedings,  charges,
          complaints  or other  actions  in any court or  administrative  agency
          regarding the Claims  released  herein and that none of the Claims has
          been assigned,  encumbered or otherwise transferred.  Employee further
          waives any right he may have to any benefit or other  relief the Equal
          Employment Opportunity  Commission,  or similar state or local agency,
          might  seek on his  behalf,  and he agrees to  direct  such  agency to
          withdraw or dismiss any such action.

     C.   Confidentiality  of this Release.  Employee  agrees to keep the terms,
          amount  and  fact of this  Release  confidential.  Employee  will  not
          disclose any information  concerning this Release to anyone other than
          his immediate family,  tax advisor and attorney,  each of whom will be
          informed  and  bound  by  this  confidentiality  provision.   Employee
          acknowledges that revealing any information regarding the terms of his
          separation from employment or discussing the terms of this Release may
          cause the Company  injury and damage and will  constitute  a breach of
          his  obligations  under the Release and will cause a forfeiture of his
          rights hereunder.

     D.   Employee   Agreement.   The  parties   acknowledge   that   Employee's
          obligations  in  Sections  15 through 17 of the  Employment  Agreement
          entered into between  Company and Employee dated October 17, 2005 (the
          "Employment  Agreement") remain in full force and effect. This Release
          and Sections 15 through 17 of the Employment  Agreement constitute the
          entire agreement  between  Employee and the Company.  This Release may
          not be modified orally, but only by an agreement in writing, signed by
          the  party  against  whom  the  enforcement  of  any  waiver,  change,
          modification, extension or discharge is sought.

     E.   Time to  Review.  Employee  acknowledges  that he has been  given  the
          opportunity  to consider  and review this  Release with counsel of his
          choice for a reasonable  period of time, up to  twenty-one  (21) days,
          and that he understands his respective rights and obligations pursuant
          to this Release. Employee further declares he enters into this Release
          freely,  voluntarily  and  without any  pressure or coercion  from any
          person or entity, including, but not limited to, the Company or any of
          its representatives.

     F.   Time to Revoke.  Employee  understands that he has the right to revoke
          this Release  within a period of seven (7) days  following his signing
          this  Release  and that this  Release  shall not become  effective  or
          enforceable,  nor shall he receive the  Payment,  until the  seven-day
          revocation period has ended.

     G.   Governing Law;  Binding Effect.  This Release is made and entered into
          in the  State of  Oklahoma  and  shall be  interpreted,  enforced  and
          governed  by the laws of the State of  Oklahoma,  and shall be binding
          upon the  parties  hereto,  their  heirs,  executors,  administrators,
          successors and assigns.

                                       2
<PAGE>

     H.   Non-Admission of Liability.  Employee  understands and agrees that the
          Company  denies that he has  cognizable  claims against it. He further
          understands  and agrees that neither this Release nor any action taken
          hereunder  is to be  construed  as an  admission  by  the  Company  of
          violation  of any local,  state,  federal or common law. In fact,  the
          Employee  understands  that  the  Company  expressly  denies  any such
          violation.

     I.   Severability.  The invalidity or  unenforceability of any provision or
          provisions   of  this  Release   shall  not  affect  the  validity  or
          enforceability  of any other  provision of this  Release,  which shall
          remain in full force and effect.

     IN WITNESS  WHEREOF,  the Company has caused this Release to be executed on
its behalf to be effective the date signed below.


                                            QUEST RESOURCE CORPORATION


                                            By:
                                                -------------------------------

                                            Name:
                                                   ----------------------------

                                            Title:
                                                     --------------------------




I HAVE CAREFULLY READ AND FULLY UNDERSTAND THE TERMS OF THIS RELEASE,  INCLUDING
THE RELEASE OF CLAIMS  HEREIN,  AND HAVE HAD  SUFFICIENT  OPPORTUNITY TO CONSULT
WITH LEGAL COUNSEL  PRIOR TO EXECUTING  THIS RELEASE TO THE EXTENT I DEEMED SUCH
CONSULTATION  NECESSARY AND I VOLUNTARILY  ACCEPT AND AGREE TO THE TERMS OF THIS
RELEASE, INCLUDING THE RELEASE OF CLAIMS HEREIN.


                                    EMPLOYEE


Dated: _________________
                                    -------------------------------------------
                                           David. E. Grose



                             Current Address:
                                                   ----------------------------

                                                   ----------------------------
                             Current Telephone No.
                                                   ----------------------------

                                       3