Exhibit
10.1


SECOND
AMENDMENT TO COMBINED CREDIT AGREEMENTS


THIS SECOND AMENDMENT TO COMBINED CREDIT AGREEMENTS,
dated as of May 24, 2007 (this “Amendment”),
is by and among STORM CAT ENERGY CORPORATION, a
company incorporated under the laws of the Province of British Columbia, Canada
(the “Canadian Borrower”), STORM CAT ENERGY (USA) CORPORATION, a Colorado corporation
(the “U.S. Borrower”), JPMORGAN CHASE BANK, N.A., as Global Administrative Agent
(in such capacity, the “Global Administrative
Agent”) and the sole financial institution a party to the U.S.
Credit Agreement as a Lender thereunder (in such capacity, the “U.S. Lender”), JPMORGAN
CHASE BANK, N.A., TORONTO BRANCH, as Canadian Administrative Agent
(in such capacity, the “Canadian Administrative Agent”)
and the sole financial institution a party to the Canadian Credit Agreement as
a Lender thereunder (in such capacity, the “Canadian
Lender,” and together with the U.S. Lender, the “Combined Lenders”).


W I
T N E S S E T H:


1.             The
U.S. Borrower, the Canadian Borrower (as the parent entity of the U.S.
Borrower), the Global Administrative Agent, and the U.S. Lender are parties to
that certain Credit Agreement dated as of July 28, 2006 (as previously amended,
the “U.S. Credit Agreement”), pursuant
to which the U.S. Lender agreed to make loans to, and extensions of credit on
behalf of, the U.S. Borrower.


2.             The
Canadian Borrower, the Global Administrative Agent, the Canadian Administrative
Agent, and the Canadian Lender are parties to that certain Credit Agreement
dated as of July 28, 2006 (as previously amended, the “Canadian
Credit Agreement,” and together with the U.S. Credit Agreement,
the “Combined Credit Agreements”),
pursuant to which the Canadian Lender agreed to make loans to, and extensions
of credit on behalf of, the Canadian Borrower.


3.             The
parties to the Combined Credit Agreements intend to amend the Combined Credit
Agreements as follows:


NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein contained, the parties hereto agree as follows:


I.              Amendments to U.S. Credit
Agreement.


A.            Section
1.1 of the U.S. Credit Agreement is hereby amended by inserting the following
definitions to such Section:


“Conforming Credit Criteria”
means the credit standards and other criteria customarily applied by the Global
Administrative Agent and Combined Lenders in the determination of credit
limitations for companies similar to the Loan Parties.


“Conforming Global
Borrowing Base” means the “Conforming Global Borrowing Base” as
determined from time to time prior to March 31, 2008 pursuant to Section 2.7
based on the Global Administrative Agent’s application of Conforming Credit
Criteria.



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“Conforming U.S. Borrowing
Base” means the “Conforming U.S. Borrowing Base” as determined
from time to time prior to March 31, 2008 pursuant to Section 2.7 based
on the Global Administrative Agent’s application of Conforming Credit Criteria.


“Second Amendment”
means the Second Amendment to Combined Credit Agreements dated as of May 24,
2007, by and among Borrower, Canadian Borrower, Global Administrative Agent,
Canadian Administrative Agent, Lenders and Canadian Lenders.


“Total Senior Debt”
means Total Funded Debt less any Permitted Subordinated Debt issued and
outstanding.


B.            The
definitions of “Applicable Rate,” “Global Borrowing Base,” “Global Borrowing
Base Utilization Percentage,” “Loan Value” and “U.S. Borrowing Base” contained
in Section 1.1 of the U.S. Credit Agreement are hereby amended to read in full
as follows:


“Applicable
Rate” means, for any day and with respect to any Eurodollar
Loans, any ABR Loans or any Commitment Fees payable hereunder, as the case may
be, the applicable rate per annum set forth below in the Global Borrowing Base
Utilization Grid with respect to “Eurodollar Loans,” “ABR Loans” or “Commitment
Fees,” as the case may be, based on the Global Borrowing Base Utilization
Percentage then in effect on such date:


	
  Global Borrowing Base Utilization Grid

  	
   

  
	
  Global 

  	
   

  	
  <50

  	
  %

  	
  350

  	
  %

  	
  375

  	
  %

  	
  390

  	
  %

  	
  >100

  	
  %

  	
  3112.5

  	
  %

  	
  3125

  	
  %

  	
  3137.5

  	
  %

  	
  3150

  	
  %

  
	
  Borrowing Base Utilization Percentage:

  	
   

  	
   

  	
   

  	
  <75

  	
  %

  	
  <90

  	
  %

  	
  <100

  	
  %

  	
  <112.5

  	
  %

  	
  <125

  	
  %

  	
  <137.5

  	
  %

  	
  <150

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Eurodollar Loans:

  	
   

  	
  1.250

  	
  %

  	
  1.500

  	
  %

  	
  1.750

  	
  %

  	
  2.000

  	
  %

  	
  2.500

  	
  %

  	
  2.750

  	
  %

  	
  3.000

  	
  %

  	
  3.500

  	
  %

  	
  4.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ABR Loans:

  	
   

  	
  0

  	
  %

  	
  0

  	
  %

  	
  0.250

  	
  %

  	
  0.500

  	
  %

  	
  1.000

  	
  %

  	
  1.250

  	
  %

  	
  1.500

  	
  %

  	
  2.000

  	
  %

  	
  2.500

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Commitment

  Fees:

  	
   

  	
  0.300

  	
  %

  	
  0.375

  	
  %

  	
  0.375

  	
  %

  	
  0.500

  	
  %

  	
  0.500

  	
  %

  	
  0.500

  	
  %

  	
  0.500

  	
  %

  	
  0.500

  	
  %

  	
  0.500

  	
  %

  



 


Each change in the Applicable Rate shall apply during
the period commencing on the effective date of such change and ending on the
date immediately preceding the effective date of the next such change.


“Global Borrowing Base”
means the “Global Borrowing Base” as determined from time to time pursuant to Section
2.7.  From and after March 31, 2008,
the Global Borrowing Base shall be, and shall be in an amount equal to, the
Conforming Global Borrowing Base.


“Global Borrowing Base
Utilization Percentage” means, at any time of determination, an
amount (expressed as a percentage) equal to the quotient of (a) the
Combined Credit Exposure divided by (b) (i) from the Effective Date
(as defined in the Second 



 2
 









Amendment) until March 31, 2008, the Conforming Global
Borrowing Base, and (ii) from and after March 31, 2008, the Global Borrowing
Base.


“Loan Value”
means, with respect to the Borrowing Base Properties, the value which the
Global Administrative Agent, in its sole discretion, attributes to the
Borrowing Base Properties (or a particular Borrowing Base Property) in its
calculation of the Global Borrowing Base, U.S. Borrowing Base, Conforming
Global Borrowing Base and/or Conforming U.S. Borrowing Base.


“U.S. Borrowing Base”
means the “U.S. Borrowing Base” as determined from time to time pursuant to Section
2.7.  From and after March 31, 2008,
the U.S. Borrowing Base shall be, and shall be equal to, the Conforming U.S.
Borrowing Base.


C.            Section 2.7
of the U.S. Credit Agreement is hereby amended to read in full as follows:


“Section 2.7                   Global Borrowing Base.


(a)           Global Borrowing Base, Conforming
Global Borrowing Base, U.S. Borrowing Base and Conforming U.S. Borrowing Base
As Of Second Amendment Effective Date. 
During the period from the Effective Date (as defined in the Second
Amendment) to the date of the first redetermination thereafter of the Global
Borrowing Base, U.S. Borrowing Base, Conforming Global Borrowing Base and
Conforming U.S. Borrowing Base pursuant to the provisions of this Section, (i)
the amount of the Global Borrowing Base has been determined by the Global
Administrative Agent and acknowledged by Borrower and the Canadian Borrower and
agreed to by the Combined Lenders to be U.S.$35,000,000, (ii) the amount of the
U.S. Borrowing Base has been determined by the Global Administrative Agent and
acknowledged by Borrower and agreed to by the Combined Lenders to be U.S.
$35,000,000, (iii) the amount of the Conforming Global Borrowing Base has been
determined by the Global Administrative Agent and acknowledged by Borrower and
the Canadian Borrower and agreed to by the Combined Lenders to be U.S.
$20,000,000, and (iv) the amount of the Conforming U.S. Borrowing Base has been
determined by the Global Administrative Agent and acknowledged by Borrower and
the Canadian Borrower and agreed to by the Combined Lenders to be U.S.
$20,000,000.


(b)           Annual Scheduled Determinations of
the Global Borrowing Base, Conforming Global Borrowing Base, U.S. Borrowing
Base and Conforming U. S. Borrowing Base. Promptly after January 1 of each
calendar year, and in any event prior to March 1st of each calendar year,
Borrower shall furnish to the Global Administrative Agent and the Combined
Lenders a Reserve Report in form and substance reasonably satisfactory to the
Global Administrative Agent, prepared by an Approved Engineer, which Reserve
Report shall evaluate as of December 31st of the immediately preceding calendar
year (i) the Proven Reserves attributable to the Oil and Gas Properties which
Borrower wishes to include in the Global 



 3
 









Borrowing Base, and a
projection of the rate of production and net operating income with respect
thereto, as of such date, and (ii) the Proven Reserves attributable to the Oil
and Gas Properties of Borrower and the U.S. Loan Parties which Borrower wishes
to include in the U.S. Borrowing Base, and a projection of the rate of production
and net operating income with respect thereto, as of such date, in each case,
together with additional data concerning pricing, hedging, operating costs and
quantities of production, and other information and engineering and geological
data as the Global Administrative Agent or any Combined Lender may reasonably
request.  Within 15 days after receipt of
such report and information, the Global Administrative Agent shall make an
initial determination of the Global Borrowing Base, the Conforming Global Borrowing
Base, the U.S. Borrowing Base and the Conforming U.S. Borrowing Base, and upon
such initial determination shall promptly notify the Combined Lenders in
writing of the Global Administrative Agent’s initial determination of the
Global Borrowing Base, the Conforming Global Borrowing Base, the U.S. Borrowing
Base and the Conforming U.S. Borrowing Base. 
The Global Administrative Agent shall make such determination in
accordance with its customary practices and standards for oil and gas loans and
in the exercise of its sole and reasonable discretion and, with respect to the
Conforming Global Borrowing Base and Conforming U.S. Borrowing Base, such
determination shall be based on the Global Administrative Agent’s application
of Conforming Credit Criteria and shall only be made prior to March 31,
2008.  Within 15 days following their
receipt of the proposed amount for the redetermined Global Borrowing Base,
Conforming Global Borrowing Base, U.S. Borrowing Base and Conforming U.S.
Borrowing Base, (A) all Combined Lenders (in the case of a proposed increase of
the Global Borrowing Base or Conforming Global Borrowing Base) and/or all
Lenders (in the case of a proposed increase of the U.S. Borrowing Base or the
Conforming U.S. Borrowing Base), or (B) Required Lenders (in the case of a
decrease or reaffirmation of the Global Borrowing Base or Conforming Global
Borrowing Base) and/or U.S. Required Lenders (in the case of a decrease or
reaffirmation of the U.S. Borrowing Base or Conforming U.S. Borrowing Base)
shall approve or reject the Global Administrative Agent’s initial determination
of the Global Borrowing Base, the Conforming Global Borrowing Base,  the U.S. Borrowing Base and the Conforming
U.S. Borrowing Base by written notice to the Global Administrative Agent; provided,
however that failure by any Combined Lender to reject in writing the
Global Administrative Agent’s determination of the Global Borrowing Base, the
Conforming Global Borrowing Base, the U.S. Borrowing Base and the Conforming
U.S. Borrowing Base within such 15-day period shall be deemed an acceptance of
such determination by such Combined Lender. 
If all of the Combined Lenders (in the case of the Global Borrowing Base
or Conforming Global Borrowing Base) or all of the Lenders (in the case of the
U.S. Borrowing Base or Conforming U.S. Borrowing Base), or the Required Lenders
or U.S. Required Lenders, as applicable, fail to approve any such determination
of the Global Borrowing Base, the Conforming Global Borrowing Base, the U.S.
Borrowing Base or the Conforming U.S. Borrowing Base made by the Global
Administrative Agent hereunder, then the Global 



 4
 









Administrative Agent
shall poll the Combined Lenders, Required Lenders or U.S. Required Lenders, as
appropriate, and the Global Borrowing Base, the Conforming Global Borrowing
Base, the U.S. Borrowing Base and the Conforming U.S. Borrowing Base, as
applicable, shall be set at the highest amount on which all Combined Lenders
(in the case of the Global Borrowing Base or Conforming Global Borrowing Base)
or all Lenders (in the case of the U.S. Borrowing Base or Conforming U.S.
Borrowing Base) if such number would result in an increase in the Global
Borrowing Base, the Conforming Global Borrowing Base, the U.S. Borrowing Base
or the Conforming U.S. Borrowing Base, or otherwise, the Required Lenders or
the U.S. Required Lenders, as applicable, can agree, it being understood that a
Combined Lender is deemed to have agreed to any and all amounts that are lower
than the amount actually determined by such Combined Lender to be the
appropriate value of the Global Borrowing Base, the Conforming Global Borrowing
Base, the U.S. Borrowing Base and the Conforming U.S. Borrowing Base.  Upon approval or deemed approval by the
Combined Lenders, Lenders, Required Lenders or U.S. Required Lenders, as
applicable, of the Global Borrowing Base, the Conforming Global Borrowing Base,
the U.S. Borrowing Base and the Conforming U.S. Borrowing Base, the Global
Administrative Agent upon notice thereof shall, by written notice to Borrower,
Canadian Borrower and the Combined Lenders, designate the new Global Borrowing
Base and the Conforming Global Borrowing Base available to Borrower and the
Canadian Borrower, and the new U.S. Borrowing Base and Conforming U.S.
Borrowing Base available to Borrower, in each case as of April 1st of the
applicable calendar year (each such notice in this Section 2.7(b) or Section
2.7(c) below, herein a “Global Borrowing Base Designation
Notice”).  Upon
receipt of such Global Borrowing Base Designation Notice, Borrower shall
designate the Allocated U.S. Borrowing Base and the Allocated Canadian
Borrowing Base to the Global Administrative Agent in accordance with Section
2.7(d).


(c)           Semi-Annual and Quarterly
Scheduled Determinations of the Global Borrowing Base, Conforming Global
Borrowing Base, U.S. Borrowing Base and Conforming U.S. Borrowing Base.


(i)            In addition, promptly after June 30
of each calendar year, and in any event prior to September 1st of each calendar
year, Borrower will make available for review by the Global Administrative
Agent a Reserve Report in form and substance reasonably satisfactory to the
Global Administrative Agent, prepared by Borrower’s internal petroleum
engineers, which Reserve Report shall evaluate as of June 30 of such calendar
year (A) the Proven Reserves attributable to the Oil and Gas Properties which
Borrower wishes to include in the Global Borrowing Base, and a projection of
the rate of production and net operating income with 



 5
 









respect thereto, as of
such date, and (B) the Proven Reserves attributable to the Oil and Gas
Properties of Borrower and the U.S. Loan Parties which Borrower wishes to
include in the U.S. Borrowing Base, and a projection of the rate of production
and net operating income with respect thereto, as of such date, in each case,
together with additional data concerning pricing, hedging, operating costs, and
quantities of production, and other information and engineering and geological
data as the Global Administrative Agent or any Combined Lender may reasonably request.  The Global Administrative Agent and the
Required Lenders (or all Combined Lenders in the case of a proposed increase of
the Global Borrowing Base or Conforming Global Borrowing Base), or the Global
Administrative Agent and the U.S. Required Lenders (or all Lenders in the case
of a proposed increase of the U.S. Borrowing Base or the Conforming U.S.
Borrowing Base), as applicable, shall approve and designate the new Global
Borrowing Base, the Conforming Global Borrowing Base, the U.S. Borrowing Base and
the Conforming U.S. Borrowing Base, as applicable, in each case as of October
1st of the applicable calendar year (and, with respect to the Conforming Global
Borrowing Base and Conforming U.S. Borrowing Base, only to the extent prior to
March 31, 2008) in accordance with the procedures and standards described
in Section 2.7(b) and Borrower shall provide a Global Borrowing Base
Allocation Notice to the Global Administrative Agent in accordance with Section
2.7(d).


(ii)           In addition, prior to June 1,
2007 (with respect to the July 1, 2007 redetermination) and December 1,
2007 (with respect to the January 1, 2008 redetermination), Borrower will
make available for review by the Global Administrative Agent an Internal
Reserve Report or such other updated engineering, production, operating,
geological and other information and data, including, without limitation,
information and data concerning pricing, hedging, operating costs, and
quantities of production, as the Global Administrative Agent or any Combined Lender
may reasonably request in connection with the redeterminations provided for in
this Section 2.7(c)(ii).  The
Global Administrative Agent and the Required Lenders (or all Combined Lenders
in the case of a proposed increase of the Global Borrowing Base or Conforming
Global Borrowing Base), or the Global Administrative Agent and the U.S.
Required Lenders (or all Lenders in the case of a proposed increase of the U.S.
Borrowing Base or the Conforming U.S. Borrowing Base), as applicable, shall
approve and designate the new Global Borrowing Base, the Conforming Global
Borrowing Base, the U.S. Borrowing Base and the Conforming U.S. Borrowing Base,
as applicable, in each case as of July 1, 2007 and January 1, 2008 in
accordance with the procedures and standards described in Section 2.7(b)
and Borrower shall provide a Global Borrowing Base Allocation Notice to the
Global Administrative Agent in accordance with Section 2.7(d).


(d)           Allocation of the Global Borrowing
Base. The Global Borrowing Base shall be comprised of the Allocated U.S.
Borrowing Base and the Allocated Canadian Borrowing Base, and allocations
between the Allocated U.S. Borrowing Base and Allocated Canadian Borrowing Base
shall be made in accordance with this Section 2.7(d).


 



 6
 









(i)            The “Allocated
U.S. Borrowing Base” means, as of any date, the amount in U.S.
Dollars designated or determined as such from time to time (A) by Borrower
pursuant to a Global Borrowing Base Allocation Notice delivered in accordance
with Section 2.7(d)(iii) or (iv) of this Agreement or (B) in
accordance with the other provisions of this Agreement.  On the Effective Date (as defined in the
Second Amendment), the Allocated U.S. Borrowing Base shall be U.S.$35,000,000.


(ii)           The “Allocated
Canadian Borrowing Base” means, as of any date, the Equivalent
Amount in U.S. Dollars designated as such from time to time (A) by Borrower
pursuant to a Global Borrowing Base Allocation Notice delivered in accordance
with Section 2.7(d)(iii) or (iv) of this Agreement or (B) in
accordance with the other provisions of this Agreement.  On the Effective Date (as defined in the
Second Amendment), the Allocated Canadian Borrowing Base shall be U.S.$0.


(iii)          Upon receipt of the Global Borrowing
Base Designation Notice, Borrower shall specify within ten (10) days of its
receipt thereof the allocation of the Global Borrowing Base between the
Allocated U.S. Borrowing Base and the Allocated Canadian Borrowing Base by
providing a written notice to the Global Administrative Agent of such
allocation (each such notice herein a “Global Borrowing Base
Allocation Notice”); provided that (A) the sum of the
Allocated U.S. Borrowing Base and the Allocated Canadian Borrowing Base shall
at all times be equal to the Global Borrowing Base, and (B) the Allocated U.S.
Borrowing Base shall never exceed the U.S. Borrowing Base then in effect.  In the event that Borrower fails to provide
the Global Administrative Agent with a Global Borrowing Base Allocation Notice
within the period required by this Section 2.7(d)(iii), the Global Borrowing
Base will be allocated in same proportion as existed prior to such
redetermination. Promptly upon the allocation of the Global Borrowing Base
between the Allocated U.S. Borrowing Base and the Allocated Canadian Borrowing
Base in accordance with the procedures set forth above, the Global
Administrative Agent shall provide a written notice to the Combined Lenders and
Borrower, which written notice shall set forth the Allocated U.S. Borrowing
Base and the Allocated Canadian Borrowing Base to be in effect.  Any designation of the Allocated U.S.
Borrowing Base or the Allocated Canadian Borrowing Base effected pursuant to
this Section 2.7(d)(iii) in connection with a determination or
redetermination of the Global Borrowing Base or U.S. Borrowing Base shall be
effective as of the date of the Global Borrowing Base Designation Notice.


(iv)          Borrower shall have the right to
request the Combined Lenders to increase the Allocated U.S. Borrowing Base (but
in no event to an amount in excess of the U.S. Borrowing Base then in effect)
and decrease the Allocated Canadian Borrowing Base, or to increase the 



 7
 









Allocated Canadian
Borrowing Base and decrease the Allocated U.S. Borrowing Base, by providing a
written notice to the Global Administrative Agent and the Combined Lenders; provided that Borrower may change the Allocated U.S.
Borrowing Base and/or the Allocated Canadian Borrowing Base only one (1) time
during any fiscal quarter unless necessary to cure any deficiency as
contemplated by Section 2.10(b).  In connection with such increase or decrease,
each Combined Lender shall have its share of the Allocated U.S. Borrowing Base
or the Allocated Canadian Borrowing Base, as applicable, increased or
decreased, as the case may be, by an amount in proportion to its Applicable
Percentage (as defined herein, in the case of a Lender, and as defined in the
Canadian Credit Agreement, in the case of a Canadian Lender).  The revised Allocated U.S. Borrowing Base and
Allocated Canadian Borrowing Base shall become effective upon the delivery by
the Global Administrative Agent to Borrower and the Combined Lenders of written
notice thereof.


(e)           Discretionary Determination of the
Global Borrowing Base, Conforming Global Borrowing Base, U.S. Borrowing Base
and Conforming U.S. Borrowing Base. 
Each of Borrower and, at the request of the Required Lenders, the Global
Administrative Agent, shall have the right to redetermine the Global Borrowing
Base, the Conforming Global Borrowing Base, the U.S. Borrowing Base and the
Conforming U.S. Borrowing Base at any time and from time to time but not more
often than one (1) time between any scheduled redetermination (annual or
semi-annual) of the Global Borrowing Base, the Conforming Global Borrowing
Base, the U.S. Borrowing Base and the Conforming U.S. Borrowing Base (and, with
respect to the Conforming Global Borrowing Base and Conforming U.S. Borrowing
Base, only to the extent prior to March 31, 2008).  If either Borrower or, at the request of the
Required Lenders, the Global Administrative Agent, shall elect to make a
discretionary redetermination of the Global Borrowing Base, the Conforming
Global Borrowing Base, the U.S. Borrowing Base and the Conforming U.S.
Borrowing Base pursuant to the provisions of this Section 2.7(e),
Borrower shall, within 30 days of receipt of a request therefor from the Global
Administrative Agent, deliver to the Global Administrative Agent an Internal
Reserve Report or such other updated engineering, production, operating and
other data as the Global Administrative Agent or any Combined Lender may
reasonably request.  The Global
Administrative Agent, the Required Lenders, the Combined Lenders, the U.S.
Required Lenders or all Lenders, as applicable, shall approve and designate the
new Global Borrowing Base, Conforming Global Borrowing Base, U.S. Borrowing
Base and Conforming U.S. Borrowing Base in accordance with the procedures and
standards described in Section 2.7(b) and Borrower shall provide a
Global Borrowing Base Allocation Notice to the Global Administrative Agent in
accordance with Section 2.7(d)(iii); provided that in the event
that Borrower fails to provide such Global Borrowing Base Allocation Notice,
the Global Borrowing Base shall be allocated between the Allocated U.S.
Borrowing Base 



 8
 









and the Allocated Canadian Borrowing Base in
accordance with Section 2.7(d)(iii).


(f)            General Provisions With Respect
to the Global Borrowing Base, the Conforming Global Borrowing Base, the U.S.
Borrowing Base and the Conforming U.S. Borrowing Base. The determination of
the Global Borrowing Base, the Conforming Global Borrowing Base, the U.S.
Borrowing Base and the Conforming U.S. Borrowing Base shall be made by the
Global Administrative Agent and the Combined Lenders or the Required Lenders,
or the Lenders or the U.S. Required Lenders, as applicable, taking into
consideration the estimated value of the Oil and Gas Properties owned by
Borrower and the other Loan Parties as reflected in the most recent Reserve
Report delivered hereunder and any other relevant information obtained by or delivered
to the Global Administrative Agent or any Combined Lender, all in accordance
with the other provisions of this Section 2.7 in accordance with their
customary practices for oil and gas loans as in effect from time to time and,
with respect to the Conforming Global Borrowing Base and Conforming U.S.
Borrowing Base, only prior to March 31, 2008 and based on the Global
Administrative Agent’s and each Combined Lender’s application of Conforming
Credit Criteria.  It is understood by the
parties hereto that the Combined Lenders shall have no commitment or obligation
whatsoever to increase the Global Borrowing Base, Conforming Global Borrowing
Base, U.S. Borrowing Base or Conforming U.S. Borrowing Base to any amount in
excess of U.S.$250,000,000, and nothing herein contained shall be construed to
be a commitment by the Combined Lenders to so increase the Global Borrowing
Base, Conforming Global Borrowing Base, U.S. Borrowing Base or Conforming U.S.
Borrowing Base.  The Global Borrowing
Base, Conforming Global Borrowing Base, U.S. Borrowing Base or Conforming U.S.
Borrowing Base may each be redetermined pursuant to Section 2.7(b)
(annual), Section 2.7(c) (semi-annual/quarterly), Section 2.7(e)
(discretionary), and Section 2.7(i) (mandatory) and may be adjusted from
time to time to give effect to occurrence of asset dispositions under Section
2.7(g).  In connection with any
redetermination or adjustment pursuant to any of the foregoing, if the Global
Administrative Agent determines that either a Global Borrowing Base Deficiency
or a U.S. Borrowing Base Deficiency exists, the Global Administrative Agent
shall give written notice thereof to Borrower and the date such notice is
received shall be the “Deficiency Notification
Date”.


(g)           Adjustment of Global Borrowing
Base and Conforming Global Borrowing Base In Connection With Asset Dispositions.  In the event that Borrower sells, transfers
or otherwise disposes in one or more transactions any Property pursuant to Section
7.5(f), if the aggregate Loan Value of all such Property so sold,
transferred or otherwise disposed of during the period since the most recent
redetermination of the Global Borrowing Base shall exceed 5% of the amount of
the then current Conforming Global Borrowing Base, then the Global Borrowing Base
and Conforming Global Borrowing Base shall be reduced by an amount equal to the
Loan Value assigned to such Property in the most recently prepared Reserve
Report.  The Global Administrative Agent
shall provide notice 



 9
 









to Borrower and the Combined Lenders of the reduction
in the Global Borrowing Base and Conforming Global Borrowing Base resulting
from such disposition, which reduction shall be effective as of the date of
such notice.  Any such reduction in the
Global Borrowing Base and Conforming Global Borrowing Base shall result in a
corresponding reduction in the U.S. Borrowing Base, the Conforming U.S.
Borrowing Base and the Allocated U.S. Borrowing Base (to the extent that the
Property so sold, transferred or otherwise disposed of is located in the United
States) or in the Allocated Canadian Borrowing Base (to the extent that the
Property so sold, transferred or otherwise disposed of is located in Canada).


(h)           Maximum Credit.  The Global Borrowing Base shall represent the
maximum amount of credit in the form of loans, letters of credit and bankers’
acceptances (subject to the aggregate Combined Commitments and subject to the
other provisions hereof or of the Canadian Credit Agreement) that the Combined
Lenders will extend to Borrower or Canadian Borrower pursuant to the Combined
Loan Documents at any one time prior to the Maturity Date.  The U.S. Borrowing Base shall represent the
maximum amount of credit in the form of Loans and Letters of Credit (subject to
the aggregate Commitments and subject to the other provisions thereof) that the
Lenders will extend to Borrower pursuant to the Loan Documents at any one time
prior to the Maturity Date.”


(i)            Mandatory Determination of the
Global Borrowing Base, Conforming Global Borrowing Base, U.S. Borrowing Base and
Conforming U.S. Borrowing Base.  In
addition to the other redeterminations of the Global Borrowing Base, Conforming
Global Borrowing Base, U.S. Borrowing Base and Conforming U.S. Borrowing Base
provided for herein, and notwithstanding anything to the contrary contained
herein, effective on and as of March 31, 2008 (i) the Global Borrowing Base
shall reduce immediately and automatically to an amount equal to the Conforming
Global Borrowing Base then in effect, at which time and continuing thereafter,
the Global Borrowing Base shall be in an amount equal to the Conforming Global
Borrowing Base, and (ii) the U.S. Borrowing Base shall reduce immediately and
automatically to an amount equal to the Conforming U.S. Borrowing Base then in
effect, at which time and continuing thereafter, the U.S. Borrowing Base shall
be in an amount equal to the Conforming U.S. Borrowing Base.


D.            Section
2.10(b)(i) of the U.S. Credit Agreement is hereby amended to insert the
following parenthetical in line two thereof immediately following the term “Global
Borrowing Base”:


“(other than a redetermination and reduction of the
Global Borrowing Base pursuant to Section 2.7(i))”.


E.             Section
2.10(b)(ii) of the U.S. Credit Agreement is hereby amended to insert the
following parenthetical in line two thereof immediately following the term “Global
Borrowing Base”:


 



 10
 









“(other than a redetermination and reduction of the
Global Borrowing Base pursuant to Section 2.7(i))”.


F.             Section
2.10(b)(vi) of the U.S. Credit Agreement is hereby amended to read in full as
follows:


“(vi)        in the case of a Global Borrowing Base
Deficiency or any U.S. Borrowing Base Deficiency not resulting from a reason
described in clauses (i), (ii), (iii) or (iv) above, and except as otherwise
set forth in the proviso below in this clause (vi), Borrower will prepay within
thirty (30) days the Loans and “Loans” under the Canadian Credit Agreement in
an aggregate principal amount equal to such Global Borrowing Base Deficiency or
U.S. Borrowing Base Deficiency together, in each case, with unpaid interest
thereon accrued to the date of such prepayment and, if after prepaying all such
Loans and “Loans” under the Canadian Credit Agreement, a Global Borrowing Base
Deficiency remains as a result of any LC Exposure, pay to the Global Administrative
Agent an amount equal to such remaining Global Borrowing Base Deficiency to be
held as cash collateral as provided in Section 2.4(i); provided,
that, in the case of a Global Borrowing Base Deficiency or any U.S. Borrowing
Base Deficiency resulting from a redetermination or reduction of the Global
Borrowing Base and U.S. Borrowing Base pursuant to Section 2.7(i),
Borrower will repay within one (1) Business Day the Loans and “Loans” under the
Canadian Credit Agreement in an aggregate principal amount equal to such Global
Borrowing Base Deficiency or U.S. Borrowing Base Deficiency together, in each
case, with unpaid interest thereon accrued to the date of such prepayment and,
if after prepaying all such Loans and “Loans” under the Canadian Credit Agreement,
a Global Borrowing Base Deficiency remains as a result of any LC Exposure, pay
to the Global Administrative Agent an amount equal to such remaining Global
Borrowing Base Deficiency to be held as cash collateral as provided in Section
2.4(i).”


G.            Section
5.1(e) of the U.S. Credit Agreement is hereby amended to read in full as
follows:


“(e)         By March 1st of each year, a Reserve
Report prepared by an Approved Engineer (the “Independent
Reserve Report”), by September 1st of each year, a Reserve
Report prepared by Borrower, utilizing the customary discount rates and price
deck of the Global Administrative Agent and in form and substance acceptable to
the Global Administrative Agent (the “Internal Reserve Report”),
and by June 1, 2007 and December 1, 2007, an Internal Reserve Report
or such other updated engineering and data as provided in Section 2.7(c)(ii);”.


H.            Article V of the U.S. Credit
Agreement is hereby amended to insert the following new Section 5.16 thereto
which shall read in full as follows:


“Section 5.16         Hedging Agreements.  In connection with each redetermination of
the Global Borrowing Base, Conforming Global Borrowing Base, U.S. Borrowing
Base and Conforming U.S. Borrowing on or about July 1, 



 11















 


2007, October 1,
2007, January 1, 2008 and April 1, 2008, in each case pursuant to Section 2.7(b)
and Section 2.7(c), as applicable, the Borrower shall have,
effective as of each such applicable redetermination date, entered into new
Hedging Agreements (in the form of swaps) with Approved Counterparties and (a)
without regard to existing Hedging Agreements and only with respect to the
additional three (3) month period necessary to maintain compliance with clause
(c) below, (b) the notional volumes for which are not less than 80% of the
reasonably anticipated projected production from proved, developed, producing
Oil and Gas Properties, and (c) which Hedging Agreements shall have a term of
three (3) years from each such applicable redetermination date.”


I.              Section
6.1 of the U.S. Credit Agreement is hereby amended to read in full as follows:


“Section 6.1                   Ratio of Total Senior Debt
to EBITDA.  As of the end of any
fiscal quarter, commencing with the fiscal quarter ending March 31, 2007,
Parent will not permit its ratio of Total Senior Debt outstanding to Annualized
EBITDA to be greater than (a) for the fiscal quarters ending March 31, 2007 and
June 30, 2007, 4.00 to 1.0, and (b) for the fiscal quarter ending September 30,
2007, and for each fiscal quarter thereafter, 3.00 to 1.0.


J.             Section
7.5(f) of the U.S. Credit Agreement is hereby amended to read in full as
follows:


“(f)          provided no Event of Default then
exists, and provided further that (i) the Combined Credit Exposure of all
Combined Lenders does not then exceed the current Conforming Global Borrowing
Base, and (ii) the aggregate Credit Exposure of the Lenders does not then
exceed the current Conforming U.S. Borrowing Base, the sale, issuance, transfer
or other disposition in one or more transactions of Property constituting
either Equity Interests in Parent or Restricted Subsidiaries or any Oil and Gas
Properties that are given value in the calculation of Present Value or the
Global Borrowing Base, as applicable; provided that, with respect to the
Oil and Gas Properties only, the aggregate Loan Value of such Oil and Gas
Property so sold, transferred or disposed of during the period since the most
recent redetermination of the Global Borrowing Base shall not exceed 5% of the
amount of the then current Conforming Global Borrowing Base.”


K.            Section
10.2(b)(v) of the U.S. Credit Agreement is hereby amended to read in full as
follows:


“(v)         change
any of the provisions of this Section 10.2, Section 2.7 (unless a
lesser vote is otherwise required pursuant to this Section 10.2), Section
2.10 (unless a lesser vote is otherwise required pursuant to this Section
10.2), or the definition of “Required Lenders,” “U.S. Required Lenders” or
any other provision of any Combined Loan Document specifying the number or
percentage of Lenders, Canadian Lenders or Combined Lenders required to
determine or redetermine the Global Borrowing Base, the Conforming Global
Borrowing Base, 



 12
 









the U.S. Borrowing Base, the Conforming U.S. Borrowing
Base, the Allocated U.S. Borrowing Base or the Allocated Canadian Borrowing
Base or required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Combined Lender,”.


L.             The
proviso immediately following Section 10.2(b)(vii) of the U.S. Credit Agreement
is hereby amended to read in full as follows:


“provided, further, that no such
agreement shall (1) change any provision regarding when determinations of the
Global Borrowing Base, the Conforming Global Borrowing Base, the U.S. Borrowing
Base and the Conforming U.S. Borrowing Base are required pursuant to Section
2.7, (2) postpone or defer scheduled Global Borrowing Base, Conforming
Global Borrowing Base, U.S. Borrowing Base or Conforming U.S. Borrowing Base
redeterminations pursuant to Section 2.7, or (3) change any provision
regarding remedies for a Global Borrowing Base Deficiency or a U.S. Borrowing
Base Deficiency pursuant to Section 2.10, without the written consent of
the Required Lenders;”.


II.            Amendments to Canadian Credit
Agreement.


A.            Section
1.1 of the Canadian Credit Agreement is hereby amended by inserting the
following definitions to such Section:


“Conforming Global
Borrowing Base” means the “Conforming Global Borrowing Base” as
determined from time to time prior to March 31, 2008 pursuant to Section
2.7 of the U.S. Credit Agreement.


“Conforming U.S. Borrowing
Base” means the “Conforming U.S. Borrowing Base” as determined
from time to time prior to March 31, 2008 pursuant to Section 2.7
of the U.S. Credit Agreement.


“Second Amendment”
means the Second Amendment to Combined Credit Agreements dated as of May 24,
2007, by and among Borrower, U.S. Borrower, Global Administrative Agent,
Canadian Administrative Agent, Lenders and U.S. Lenders.


B.            The
definition of “Applicable Rate” and “Global Borrowing Base Utilization
Percentage” contained in Section 1.1 of the Canadian Credit Agreement is hereby
amended to read in full as follows:


“Applicable Rate”
means, for any day and with respect to any Eurodollar Loans, any Canadian Prime
Loans, any USBR Loans, any Bankers’ Acceptance or any Commitment Fees payable
hereunder, as the case may be, the applicable rate per annum set forth below in
the Global Borrowing Base Utilization Grid with respect to “Eurodollar Loans,” “Canadian
Prime Loans,” “USBR Loans,” “Bankers’ Acceptances Stamping Fee” or “Commitment
Fee,” as the case may be, based on the Global Borrowing Base Utilization
Percentage then in effect on such date:



 13
 









 


	
  Global Borrowing Base Utilization Grid

  	
   

  
	
  Global 

  	
   

  	
  <50

  	
  %

  	
  350

  	
  %

  	
  375

  	
  %

  	
  >90

  	
  %

  	
  >100

  	
  %

  	
  3112.5

  	
  %

  	
  3125

  	
  %

  	
  3137.5

  	
  %

  	
  3150

  	
  %

  
	
  Borrowing Base Utilization Percentage:

  	
   

  	
   

  	
   

  	
  <75

  	
  %

  	
  <90

  	
  %

  	
  £100

  	
  %

  	
  <112.5

  	
  %

  	
  <125

  	
  %

  	
  <137.5

  	
  %

  	
  <150

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Eurodollar Loans:

  	
   

  	
  1.250

  	
  %

  	
  1.500

  	
  %

  	
  1.750

  	
  %

  	
  2.000

  	
  %

  	
  2.500

  	
  %

  	
  2.750

  	
  %

  	
  3.000

  	
  %

  	
  3.500

  	
  %

  	
  4.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Canadian Prime Loans:

  	
   

  	
  0

  	
  %

  	
  0

  	
  %

  	
  0.250

  	
  %

  	
  0.500

  	
  %

  	
  1.000

  	
  %

  	
  1.250

  	
  %

  	
  1.500

  	
  %

  	
  2.000

  	
  %

  	
  2.500

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  USBR Loans

  	
   

  	
  0

  	
  %

  	
  0

  	
  %

  	
  0.250

  	
  %

  	
  0.500

  	
  %

  	
  1.000

  	
  %

  	
  1.250

  	
  %

  	
  1.500

  	
  %

  	
  2.000

  	
  %

  	
  2.500

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bankers’ Acceptance Stamping Fee

  	
   

  	
  1.250

  	
  %

  	
  1.500

  	
  %

  	
  1.750

  	
  %

  	
  2.000

  	
  %

  	
  2.500

  	
  %

  	
  2.750

  	
  %

  	
  3.000

  	
  %

  	
  3.500

  	
  %

  	
  4.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Commitment Fees:

  	
   

  	
  0.300

  	
  %

  	
  0.375

  	
  %

  	
  0.375

  	
  %

  	
  0.500

  	
  %

  	
  0.500

  	
  %

  	
  0.500

  	
  %

  	
  0.500

  	
  %

  	
  0.500

  	
  %

  	
  0.500

  	
  %

  



 


Each change in the Applicable Rate shall apply during
the period commencing on the effective date of such change and ending on the
date immediately preceding the effective date of the next such change.


“Global Borrowing Base
Utilization Percentage” means, at any time of determination, an
amount (expressed as a percentage) equal to the quotient of (a) the
Combined Credit Exposure divided by (b) (i) from the Effective Date
(as defined in the Second Amendment) until March 31, 2008, the Conforming
Global Borrowing Base, and (ii) from and after March 31, 2008, the Global
Borrowing Base.


C.            Section 2.7(a)
of the Canadian Credit Agreement is hereby amended to read in full as follows:


“(a)         Effectiveness.  Notwithstanding anything to the contrary in
this Agreement, for so long as any of the Combined Commitments are in effect
and/or any Combined Obligation is outstanding, the Global Borrowing Base and
Conforming Global Borrowing Base shall each be determined in accordance with
and as provided in Section 2.7 of the U.S. Credit Agreement.”


D.            Section
2.10(b)(i) of the Canadian Credit Agreement is hereby amended to insert the
following parenthetical in line two thereof immediately following the term “Global
Borrowing Base”:


“(other than a redetermination and reduction of the
Global Borrowing Base pursuant to Section 2.7(i) of the U.S. Credit Agreement)”.


E.             Section
2.10(b)(ii) of the Canadian Credit Agreement is hereby amended to insert the
following parenthetical in line two thereof immediately following the term “Global
Borrowing Base”:


 



 14
 









“(other than a redetermination and reduction of the
Global Borrowing Base pursuant to Section 2.7(i) of the U.S. Credit Agreement)”.


F.             Section
2.10(b)(vi) of the Canadian Credit Agreement is hereby amended to read in full
as follows:


“(vi)        in the case of a Global Borrowing Base
Deficiency or any Canadian Borrowing Base Deficiency not resulting from a
reason described in clauses (i), (ii), (iii) or (iv) above, and except as
otherwise set forth in the proviso below in this clause (vi), Borrower will
prepay within thirty (30) days the Loans and “Loans” under the U.S. Credit
Agreement in an aggregate principal amount equal to such Global Borrowing Base
Deficiency or Canadian Borrowing Base Deficiency together, in each case, with
unpaid interest thereon accrued to the date of such prepayment and, if after
prepaying all such Loans and “Loans” under the U.S. Credit Agreement, a Global
Borrowing Base Deficiency remains as a result of any LC Exposure, pay to the
Global Administrative Agent an amount equal to such remaining Global Borrowing
Base Deficiency to be held as cash collateral as provided in Section 2.4(i);
provided, that, in the case of a Global Borrowing Base Deficiency or any
Canadian Borrowing Base Deficiency resulting from a redetermination or
reduction of the Global Borrowing Base pursuant to Section 2.7(i) of the U.S.
Credit Agreement, Borrower will repay within one (1) Business Day the Loans and
“Loans” under the U.S. Credit Agreement in an aggregate principal amount equal
to such Global Borrowing Base Deficiency or Canadian Borrowing Base Deficiency
together, in each case, with unpaid interest thereon accrued to the date of
such prepayment and, if after prepaying all such Loans and “Loans” under the
U.S. Credit Agreement, a Global Borrowing Base Deficiency remains as a result
of any LC Exposure, pay to the Global Administrative Agent an amount equal to
such remaining Global Borrowing Base Deficiency to be held as cash collateral
as provided in Section 2.4(i).”


G.            Section
10.2(b)(v) of the Canadian Credit Agreement is hereby amended to read in full
as follows:


“(v)         change any of the provisions of this Section
10.2, Section 2.7 (unless a lesser vote is otherwise required
pursuant to this Section 10.2), Section 2.10 (unless a lesser
vote is otherwise required pursuant to this Section 10.2), or the
definition of “Required Lenders” or any other provision of any Combined Loan
Document specifying the number or percentage of Lenders, U.S. Lenders or
Combined Lenders required to determine or redetermine the Global Borrowing Base,
the Conforming Global Borrowing Base, the Allocated U.S. Borrowing Base or the
Allocated Canadian Borrowing Base or required to waive, amend or modify any
rights thereunder or make any determination or grant any consent thereunder,
without the written consent of each Combined Lender,”.


III.           Effectiveness.  This Amendment shall become effective as of
the date (the “Effective Date”)
when (a) the Global Administrative Agent shall have received counterparts
hereof duly executed by the U.S. Borrower, the Canadian Borrower, the Global
Administrative 



 15
 









Agent, the Canadian Administrative Agent and the Combined Lenders (or,
in the case of any party as to which an executed counterpart shall not have
been received, telegraphic, telex, or other written confirmation from such
party of execution of a counterpart hereof by such party), and (b) each other
condition precedent set forth below in this Section III shall have
been satisfied:


(i)            the U.S. Borrower and Canadian
Borrower shall have paid (A) all fees and amounts as U.S. Borrower and Canadian
Borrower shall be required to pay to Global Administrative Agent and its
Affiliates pursuant to any separate agreement between or among U.S. Borrower,
Canadian Borrower, Global Administrative Agent and/or its Affiliates, and (B)
all reasonable fees and expenses incurred by Global Administrative Agent in
connection with the preparation, negotiation and execution of this Amendment,
including, without limitation, all reasonable fees and expenses of Vinson &
Elkins L.L.P., counsel to Global Administrative Agent.


(ii)           Global Administrative Agent shall
have received such other documents, instruments and agreements as it or any
Combined Lender may reasonably request, all in form and substance reasonably
satisfactory to Global Administrative Agent and the Combined Lenders.


IV.           Reaffirmation of Representations and Warranties.  To induce the Combined Lenders, the Global
Administrative Agent and the Canadian Administrative Agent to enter into this
Amendment, the U.S. Borrower and the Canadian Borrower hereby reaffirm, as of
the date hereof, the following:


A.            The
representations and warranties of each Loan Party (as such term is defined in
the U.S. Credit Agreement and the Canadian Credit Agreement, collectively, the “Combined Loan Parties”) set forth
in the Combined Loan Documents to which it is a party are true and correct on
and as of the date hereof (or, if stated to have been made expressly as of an
earlier date, were true and correct in all material respects as of such date).


B.            Each
of the Combined Loan Parties (a) is a corporation, partnership or limited
liability company duly incorporated or organized (as applicable), validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, (b) has all corporate, partnership or
limited liability company power (as applicable) and all material governmental
licenses, authorizations, consents and approvals required to carry on its
businesses as now conducted and as proposed to be conducted, and (c) is
duly qualified to transact business as a foreign corporation, partnership or
limited liability company in each jurisdiction where a failure to be so
qualified would reasonably be expected to have a Material Adverse Effect.


C.            The
execution, delivery and performance of this Amendment and the other Combined
Loan Documents by each Combined Loan Party (to the extent each Loan Party is a
party to this Agreement and such Loan Documents) (a) are within such Loan
Party’s corporate, partnership or limited liability company powers,
(b) when executed will be duly authorized by all necessary corporate,
partnership or limited liability company action, (c) require no action by
or in respect of, or filing with, any Governmental Authority (other than
(i) actions or filings 



 16
 









pursuant to the Exchange Act and (ii) actions or
filings that have been taken or made and are in full force and effect) and
(d) do not contravene, or constitute a default under, any provision of
applicable Governmental Rule (including, without limitation, Regulation U) or
of the articles or certificate of incorporation, bylaws, regulations,
partnership agreement or comparable charter documents of any Combined Loan
Party or of any agreement, judgment, injunction, order, decree or other
instrument (including, without limitation, any Permitted Subordinated Debt
Document) binding upon any Combined Loan Party or result in the creation or
imposition of any Lien on any Borrowing Base Property or Collateral other than
the Liens securing the Combined Obligations.


D.            This
Amendment and each of the other Combined Loan Document constitutes, or when
executed and delivered will constitute, valid and binding obligations of each
Combined Loan Party which is a party thereto, enforceable against each such
Combined Loan Party which executes the same in accordance with its terms except
as the enforceability thereof may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium, or similar Governmental Rules affecting
creditors’ rights generally, and (b) equitable principles of general
applicability (whether enforcement is sought by proceedings at law or in
equity).


E.             Neither
a Default nor an Event of Default has occurred or will exist under either
Combined Credit Agreement after giving effect to the transactions contemplated
by this Amendment or the other Combined Loan Documents.  Neither the U.S. Borrower or any of its
Subsidiaries nor the Canadian Borrower or any of its Subsidiaries is in default
under, nor has any event or circumstance occurred which, but for the expiration
of any applicable grace period or the giving of notice, or both, would
constitute a default under, any material agreement to which the U.S. Borrower
or any of its Subsidiaries or the Canadian Borrower or any of its Subsidiaries
is a party or by which the U.S. Borrower or any of its Subsidiaries or the
Canadian Borrower or any of its Subsidiaries is bound, which default would
reasonably be expected to have a Material Adverse Effect.  The Canadian Borrower and the U.S. Borrower
are in compliance with the financial covenants set forth in Article VI of the
U.S. Credit Agreement (as amended by this Amendment).


F.             No
event or events have occurred since December 31, 2005 which individually or in
the aggregate would reasonably be expected to have a Material Adverse Effect.


V.            Defined Terms.  Except as amended hereby, terms used herein
when defined in the U.S. Credit Agreement shall have the same meanings herein
unless the context otherwise requires.


VI.           Reaffirmation of Combined Credit Agreements.  This Amendment shall be deemed to be an
amendment to the Combined Credit Agreements, and the Combined Credit
Agreements, as amended hereby, are hereby ratified, approved and confirmed in
each and every respect.  All references
to the Combined Credit Agreements herein and in any other document, instrument,
agreement or writing shall hereafter be deemed to refer to the Combined Credit
Agreements as amended hereby.


VII.         Governing Law.  THIS AMENDMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.


 



 17
 









NOTWITHSTANDING THE FOREGOING SENTENCE AND AFTER
GIVING EFFECT TO THE TEXTUAL AMENDMENTS CONTAINED IN SECTIONS I AND II OF THIS
AMENDMENT, (i) THE U.S. CREDIT AGREEMENT (AS AMENDED HEREBY) SHALL CONTINUE TO
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW SPECIFIED IN
SECTION 10.9(a) OF THE U.S. CREDIT AGREEMENT, AND (ii) THE CANADIAN CREDIT
AGREEMENT (AS AMENDED HEREBY) SHALL CONTINUE TO BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW SPECIFIED IN SECTION 10.9(a) OF THE CANADIAN
CREDIT AGREEMENT.


VIII.        Severability of Provisions.  Any provision of this Amendment held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.


IX.           Counterparts.  This Amendment may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. 
Delivery of an executed counterpart of a signature page of this
Amendment by telecopy (or other electronic transmission acceptable to the
Global Administrative Agent) shall be effective as delivery of a manually
executed counterpart of this Amendment.


X.            Headings.  Article and Section headings used herein
are for convenience of reference only, are not part of this Amendment and shall
not affect the construction of, or be taken into consideration in interpreting,
this Amendment.


XI.           Successors and Assigns.  This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, except that neither the U.S. Borrower nor the Canadian Borrower may
assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of the Global Administrative Agent, each Issuing Bank
and each Combined Lender (and any attempted assignment or transfer by either
the U.S. Borrower or the Canadian Borrower without such consent shall be null
and void).


XII.         No Oral Agreements.  THIS AMENDMENT, THE
COMBINED CREDIT AGREEMENTS, AS AMENDED HEREBY, AND THE OTHER COMBINED LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE
SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG
THE PARTIES.


[SIGNATURES BEGIN ON FOLLOWING PAGE]



 18














 


IN WITNESS WHEREOF, the U.S. Borrower, the Canadian
Borrower, the Combined Lenders, the Global Administrative Agent, and the
Canadian Administrative Agent have executed this Amendment as of the date first
above written.


	
  

  	
  U.S. BORROWER

  
	
   

  	
   

  
	
   

  	
  STORM CAT ENERGY (USA) CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul Wiesner

  
	
   

  	
  Name:

  	
  Paul Wiesner

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  CANADIAN BORROWER

  
	
   

  	
   

  
	
   

  	
  STORM CAT ENERGY CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul Wiesner

  
	
   

  	
  Name:

  	
  Paul Wiesner

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  



 


[SIGNATURE
PAGE TO SECOND AMENDMENT TO COMBINED CREDIT AGREEMENTS]











 


	
  

  	
  AGENTS AND COMBINED LENDERS

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A., as
  Global

  Administrative Agent and as a U.S. Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. Scott Fowler

  
	
   

  	
   

  	
  J. Scott Fowler,

  
	
   

  	
   

  	
  Senior Vice President

  



 


[SIGNATURE
PAGE TO SECOND AMENDMENT TO COMBINED CREDIT AGREEMENTS]











 


	
  

  	
  JPMORGAN CHASE BANK, N.A., TORONTO 

  BRANCH, as Canadian Administrative Agent and as 

  a Canadian Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael N. Tam

  
	
   

  	
  Name:

  	
  Michael N. Tam

  
	
   

  	
  Title:

  	
  Senior Vice President

  



 


[SIGNATURE
PAGE TO SECOND AMENDMENT TO COMBINED CREDIT AGREEMENTS]