Document:

Exhibit
10.01

      Production
Lease

      PL
09-04-15-01

      

      This Production Lease entered
into on the 15th day of April, 2009.

      

      
        BETWEEN: HER MAJESTY THE QUEEN IN THE RIGHT OF
THE PROVINCE OF NOVA SCOTIA, as represented by the Minister of
Energy,

      

      

      (hereinafter
referred to as the “Minister”)

      

      -
and-

       

      ELMWORTH ENERGY CORPORATION, a
body corporate registered to carry on business in the Province of Nova
Scotia,

      

      (hereinafter
referred to as the “Lessee”)

      

      WHEREAS:

      

      
        	
                A.

              	
                Exploration
      Agreement No. 99-09-15-02 was issued to Northstar Energy Corporation on
      September 15, 1999;

              

      

      

      
        	
                B.

              	
                The
      Lessee is a successor in title to Northstar Energy Corporation and the
      current holder of Exploration Agreement No.
  99-09-15-02;

              

      

      

      
        	
                C.

              	
                The
      Lessee filed a Development Plan with the Minister under section 52 of the
      Petroleum Resources
      Regulations (the “Regulations”) on June 24,
  2008;

              

      

      

      
        	
                D.

              	
                The
      Minister is of the opinion that:

              

      

      

      
        	
                 
      

              	
                (i)

              	
                petroleum
      can be commercially produced from the Lands;
and

              

      

      

      
        	
                 

              	
                (ii)

              	
                none
      of the conditions referred to in section 54 of the Regulations
      exist;

              

      

      

      NOW THEREFORE, in
consideration of the rentals, royalties and the covenants and agreements herein
contained, the Minister, on behalf of the Province, and the Lessee agree as
follows:

      

      INTERPRETATION

      

      
        	
                1.

              	
                (1)

              	
                (a)

              	
                In
      this Lease, a reference to the Petroleum Resources Act
      (the “Act”) or to any Act of the Legislature of Nova Scotia shall be
      construed as a reference to

              

      

      

      
        	
                 
      

              	
                (i)

              	
                that
      Act, as amended from time to time,

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                any
      replacement of all or part of that Act from time to time enacted by the
      Legislature, as amended from time to time,
and

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        	
                 
      

              	
                (iii)

              	
                any
      regulations, orders, directives, by-laws or other subordinate legislation
      from time to time made under any enactment referred to in clause (i) or
      (ii), as amended from time to time.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                A
      reference to the Minister includes the Deputy Minister of the Department
      of Energy and any other person duly authorized by the Minister to act in
      the Minister’s behalf.

              

      

      

      
        	
              	
                (2)

              	
                Except
      as provided in this Article and unless the context otherwise requires,
      words used in this Lease have the same meaning as in the Act and
      Regulations, and

              

      

      

      
        	
                 
      

              	
                (a)

              	
                “Administrator”
      means the person appointed by the Minister under the Onshore Petroleum Drilling
      Regulations;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                “Anniversary
      Date” means the anniversary date of the Effective Date of each year of the
      term of this Lease;

              

      

      

      
        	
                 
      

              	
                (c)

              	
                “Commencement
      Date” means the day on which commercial production
  begins;

              

      

      

      
        	
                 
      

              	
                (d)

              	
                “Department”
      means the Nova Scotia Department of
Energy;

              

      

      

      
        	
                 
      

              	
                (e)

              	
                “Development
      Program” means the program described in Schedule
  II;

              

      

      

      
        	
                 
      

              	
                (f)

              	
                “Designation
      of Representative” means the designation of a representative made by the
      Lessee pursuant to Section 3 of the Regulations and filed with the
      Registrar in accordance with this
Lease;

              

      

      

      
        	
                 
      

              	
                (g)

              	
                “Effective
      Date” means April 15, 2009;

              

      

      

      
        	
                 
      

              	
                (h)

              	
                “Lands”
      means the lands described in Schedule I or such portion of those lands as
      may from time to time be subject to this
Lease;

              

      

      

      
        	
                 
      

              	
                (i)

              	
                “Lease”
      means this Production Lease entered into in accordance with and subject to
      the Act and Regulations;

              

      

      

      
        	
                 
      

              	
                (j)

              	
                “1999
      Agreement” means the Exploration Agreement (No. 99-09-15-02) issued on
      September 15, 1999;

              

      

      

      (k)           “Petroleum”
means petroleum as defined in the Act, excluding coal gas;

      

      (l)           “Province”
means the Government of the Province of Nova Scotia;

      

      
        	
                 
      

              	
                (m)

              	
                “Regulations”
      mean the Petroleum
      Resources Regulations, N.S. Reg.  178/85 as amended from
      time to time;

              

      

      

      
        	
                 
      

              	
                (n)

              	
                “Waste”,
      in addition to its ordinary meaning, means waste as understood in the
      petroleum industry; and

              

      

      

      
        	
                 
      

              	
                (o)

              	
                “Year”
      means the 12-month period beginning at 12:01 a.m. on the Effective Date or
      Anniversary Date, as the case may
be.

              

      

      

      GRANT

      

      
        	
                2.

              	
                Subject
      to the terms and conditions of this Lease, the Act and Regulations, the
      Minister hereby grants to the Lessee the right to undertake the activities
      described in the Development Program and to produce Petroleum from or
      within those rock units found within the Lands, described as being from
      the top of the Windsor group to the basement formation, together with the
      right to market the Petroleum so produced and, provided always that title
      to Petroleum subject at any time to any royalty right of the Minister
      remains vested in the Minister, title to Petroleum so
      produced.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SURFACE
RIGHTS

      

      
        	
                3.

              	
                The
      Lessee shall satisfy the Minister that it has the permission of the owner
      of the surface rights or that it has been granted and has complied with
      the terms of an order pursuant to subsection 24(3) of the Act, before
      entering any lands pursuant to this
Lease.

              

      

      

      ROYALTIES

      

      
        	
                4.

              	
                (1)

              	
                All
      Petroleum produced under the authority of this Lease is subject to such
      royalties payable to the Province in the nature and amount as prescribed
      by the Regulations.

              

      

      

      
        	
                 
      

              	
                (2)

              	
                The
      Province reserves the right at any time to review and amend any
      regulations or enact new regulations respecting royalties under the Act
      and Regulations.

              

      

      

      TERM/RENEWAL

      

      
        	
                5.

              	
                (1)

              	
                This
      Lease commences on the Effective Date and shall continue for a term of ten
      (10) years from the Commencement Date unless it is renewed, surrendered or
      cancelled.

              

      

      

      
        	
                 
      

              	
                (2)

              	
                Subject
      to Article 5(4), on the expiration of the initial term of this Lease,
      provided the Lessee has complied with all of the terms and conditions of
      this Lease, the Act and Regulations, and provided that commercial
      production of Petroleum has actually commenced and has not just been
      deemed to have commenced under Article 7, the Lessee shall have the option
      to renew the Lease, on the same terms and conditions, for a further term
      of ten (10) years. The option to renew shall be exercised by the Lessee
      providing to the Minister written notice within three (3) months from the
      end of the initial term.

              

      

      

      
        	
                 
      

              	
                (3)

              	
                Subject
      to Article 5(4), further renewals of this Lease may be granted by the
      Minister upon such terms and conditions as the Minister may
      determine.

              

      

      

      
        	
                 
      

              	
                (4)

              	
                The
      renewal of this Lease for any term beyond the initial term shall be
      subject to the surrender by the Lessee of those portions of the Lands
      which the Minister determines are not producing Petroleum, or are not
      capable of producing Petroleum, at the time of
  renewal.

              

      

      

      DEVELOPMENT
PROGRAM

      

      
        	
                6.

              	
                (1)

              	
                The
      Lessee shall diligently carry out the Development Program attached hereto
      as Schedule II during the term of the
Lease.

              

      

      

      
        	
                 
      

              	
                (2)

              	
                With
      the written approval of the Minister, the Development Program may be
      amended.

              

      

      

      
        	
                 
      

              	
                (3)

              	
                The
      Development Program shall be stratigraphically defined to cover rock units
      from the top of the Windsor group to the basement formation included in
      the Lands.

              

      

      

      
        	
                 
      

              	
                (4)

              	
                The
      Lessee acknowledges and agrees that, notwithstanding anything else in this
      Lease, repeated or serious failure to comply with any material provision
      of the Development Program shall constitute grounds for cancellation of
      this Lease pursuant to Section 36 of the
  Regulations.

              

      

      

      COMMERCIAL PRODUCTION AND
COMMENCEMENT DATE

      

      
        	
                7.

              	
                (1)

              	
                The
      Minister shall determine the time at which commercial production of
      Petroleum has commenced under this
Lease.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (2)

              	
                If
      the Minister has not made a determination that commercial production
      commenced under Article 7(1) on or before the second Anniversary Date, the
      parties agree that commercial production, for the purposes of determining
      the date this Lease is to  commence under subsection 15(3) of
      the Act and section 64 of the Regulations, shall be deemed to be have
      commenced on the first Anniversary
Date.

              

      

      

      CONDITIONS

      

      
        	
                8.

              	
                The
      Lessee agrees to comply with the conditions set forth in Schedule IV
      within the times set out in the Schedule and acknowledges that failure to
      comply with any condition shall constitute a breach of this Lease
      entitling the Minister to cancel the
Lease.

              

      

      

      DATA/INFORMATION

      

      
        	
                9.

              	
                (1)

              	
                Except
      as provided herein, the Lessee shall, in a timely manner, submit data and
      information to the Minister as provided in Section 71 of the
      Regulations.

              

      

      

      
        	
                 
      

              	
                (2)

              	
                Annual
      progress reports shall include a summary of operations, activities and
      findings related to this Lease and a prognosis for the subsequent
      reporting period.

              

      

      

      
        	
                 
      

              	
                (3)

              	
                The
      Lessee shall keep accurate books and records in accordance with generally
      accepted accounting principles and applicable industry standards showing
      the quantities and values of the Petroleum produced and expenditures from
      the Lands.

              

      

      

      
        	
                 
      

              	
                (4)

              	
                Whenever
      required to do so the Lessee shall, at reasonable times and upon
      reasonable notice, submit such books and records for inspection or audits
      by any officer or person authorized by the
  Minister.

              

      

      

      
        	
                 
      

              	
                (5)

              	
                All
      data and information shall be submitted by the Lessee in hard copy paper
      format and electronically in a format deemed acceptable to the
      Minister.

              

      

      

      CONFIDENTIALITY

      

      
        	
                10.

              	
                (1)

              	
                This
      Lease and all information provided to the Minister pursuant to the terms
      of the Lease, the Act or Regulations is subject to the Freedom of Information and
      Protection of Privacy Act and the head of the appropriate public
      body shall make any decisions respecting release of any
      information.

              

      

      

      
        	
                 
      

              	
                (2)

              	
                Subject
      to Article 10(1) the Minister shall not knowingly disclose information
      contained in the books and records of the Lessee unless authorized to do
      so by the Act, Regulations, this Lease or as required by law, or unless
      necessary for the purpose of the administration or enforcement of the Act
      or Regulations or for the purpose of legal proceedings relating to such
      administration or enforcement.

              

      

      

      OPERATIONS

      

      
        	
                11.

              	
                (1)

              	
                General:  All
      operations under this Lease shall be
performed

              

      

      

      
        	
                 
      

              	
                (a)

              	
                in
      accordance with all enactments, including the Act, the Regulations and
      this Lease,

              

      

      

      
        	
                 
      

              	
                (b)

              	
                in
      a manner to promote safety, the protection of the environment, the
      conservation of the petroleum resource and the protection of correlative
      rights, and

              

      

      

      
        	
                 
      

              	
                (b)

              	
                in
      such manner as is usual and customary in similar petroleum
      operations.

              

      

      

      
        	
                 
      

              	
                (2)

              	
                Reasonable
      Measures:  The Lessee shall take all reasonable measures
      deemed necessary by the Administrator to accomplish the intent of this
      Article which measures may include, but are not limited to, modification
      to siting or design of facilities, timing of operations, and
      specifications of interim and final reclamation
  measures.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        	
                 
      

              	
                (3)

              	
                Seismic/Drilling
      Programs:  Approvals for seismic and drilling programs
      and production operations shall be as provided in the Act and the Onshore Petroleum Geophysical
      Regulations and the Onshore Petroleum Drilling
      Regulations.

              

      

      

      
        	
                 
      

              	
                (4)

              	
                Well Sites/Pads
      Sizes: Each well site/pad requires the prior written approval of
      the Administrator.

              

      

      

      
        	
                 
      

              	
                (5)

              	
                Well Density:
      Well spacing and siting requires the prior written approval of the
      Administrator.

              

      

      

      
        	
                 
      

              	
                (6)

              	
                Flaring:
      Flaring shall only be permitted with the prior written approval of the
      Administrator and will only be permitted during well testing, and for a
      brief time during the startup of the
well.

              

      

      

      
        	
                 
      

              	
                (7)

              	
                Compression:
      Compression operations must comply with any noise levels/standards imposed
      from time to time by the Nova Scotia Department of
      Environment.

              

      

      

      SITE MAINTENANCE/LAND
RECLAMATION/FACILITIES DECOMMISSIONING

      

      
        	
                12.

              	
                (1)

              	
                The
      Lessee shall maintain work sites established on the Lands in a clean and
      orderly manner at all times, and shall not cause or permit any nuisance or
      damage to Lands or adjacent lands.

              

      

      

      
        	
                 
      

              	
                (2)

              	
                The
      Lessee shall prepare and submit, a detailed program (the “Abandonment and
      Reclamation Program”) acceptable to the Minister on or before the fifth
      Anniversary Date.

              

      

      

      
        	
                 
      

              	
                (3)

              	
                Site
      restoration in accordance with the Abandonment and Reclamation Program
      shall be completed within 12 months of the end of the term of this Lease
      or any renewal, or such additional time as may be agreed by the
      Minister.

              

      

      

      
        	
                 
      

              	
                (4)

              	
                Unless
      the Minister otherwise agrees in writing, well termination and facilities
      shall be suspended or abandoned in the manner provided in Schedule
      V.

              

      

      

      
        	
                 
      

              	
                (5)

              	
                Cessation
      of operations or termination of this Lease for any reason shall not
      relieve the Lessee from the obligations of this
  section.

              

      

      

      CONSERVATION OF
RESOURCES

      

      
        	
                13.

              	
                The
      Lessee shall take all reasonable measures to conserve the resources of the
      Province and, except in an emergency situation, shall not, by any act or
      omission, cause or allow any Waste of petroleum or mineral resources or
      cause or allow any unreasonable damage to formations or deposits
      containing the same beyond that which is usual, customary and acceptable
      in skillful and proper operations of a similar
  nature.

              

      

      

      COMPLIANCE WITH
LAWS/REGULATIONS

      

      
        	
                14.

              	
                (1)

              	
                General:  In
      carrying out the Development Program, the Lessee, its employees,
      administrators, agents, successors, contractors and sub-contractors shall
      comply with all laws, including the provisions of the Environment Act, Occupational Health and Safety
      Act and regulations thereunder, all of which may from time to time
      be amended, and shall perform such site restoration as is required by the
      Province and by law.

              

      

      

      
        	
                 
      

              	
                (2)

              	
                Groundwater
      Protection/Produced Waste: The Lessee shall comply with all laws,
      regulations, policies, standards and guidelines in effect now or
      implemented in the future by the Nova Scotia Department of Environment
      respecting groundwater protection and discharge water from its
      operations.

              

      

      

      
        	
                 
      

              	
                (3)

              	
                Environmental
      Assessments: The Lessee shall comply with all laws and regulations
      respecting the environmental assessment of petroleum
      operations.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      CONTINUING
OBLIGATIONS

      

      
        	
                15.

              	
                The
      provisions of this Lease which, by their terms, are intended to survive or
      which must survive in order to give effect to the continuing obligations
      of the Minister and the Lessee shall survive the suspension or termination
      of this Lease.

              

      

      

      MINERAL, PETROLEUM AND
UNDERGROUND HYDROCARBONS STORAGE RIGHTS

      

      
        	
                16.

              	
                The
      Lessee agrees to conduct its operations upon the Lands in such a manner as
      not to interfere with or disrupt the reasonably necessary activities of
      the holder of any mineral rights, petroleum rights or underground gas
      storage rights that are now or may hereafter be issued or entered into
      pursuant to the Mineral
      Resources Act, the Petroleum Resources Act
      or the Underground
      Hydrocarbons Storage Act, whichever may be the case, respecting all
      or any portion of the Lands.

              

      

      

      POWERS OF
MINISTER

      

      
        	
                17.

              	
                Any
      questions of interpretation on anything contained in this Lease or to any
      matter or thing to which it pertains shall be decided by the Minister or
      as specified in this Lease, by the Administrator and the decision of the
      Minister or the Administrator shall be final and
  binding.

              

      

      

      WAIVER

      

      
        	
                18.

              	
                No
      waiver by the Minister or the Administrator of any breach of any of the
      terms or conditions contained in this Lease shall take effect or be
      binding upon the Minister unless the waiver is expressed in writing by the
      Minister or the Administrator, and any waiver so expressed shall not limit
      or affect the Minister’s rights with respect to any other or future
      breach.

              

      

      

      INDEMNITY

      

      
        	
                19.

              	
                (1)

              	
                For
      purposes of this Article, "Interest Holder" shall not include any person
      whose only interest in this Lease or in any right granted hereunder is a
      mortgage or other security interest, but shall include any person who
      acquires or holds any interest in this Lease or any right granted
      hereunder as a result of any realization or enforcement
      process.

              

      

      

      
        	
                 
      

              	
                (2)

              	
                Any
      Interest Holder in this Lease shall, in respect of that portion of the
      Lands to which each such Interest Holder’s interest relates, at all times,
      jointly and severally, indemnify and save harmless the Minister from and
      against all claims, demands, losses, costs, damages, actions, suits or
      other proceedings by whomever made, sustained, brought or prosecuted, in
      any manner based upon, occasioned by, or attributable to, anything done or
      omitted to be done by the Lessee, its contractors, employees, servants or
      agents, in the fulfilment of agreements made herein or in the exercise of
      the rights or obligations contained
herein.

              

      

      

      
        	
                 
      

              	
                (3)

              	
                For
      greater certainty, an Interest Holder in this Lease who does not hold an
      interest with respect to that portion of the Lands in relation to which
      claim, demand, loss, cost, damage, action, suit or other proceedings
      arises is not liable to indemnify the  Minister under
      sub-article (2).

              

      

      

      
        	
                 
      

              	
                (4)

              	
                Notwithstanding
      sub-article (2), the Interest Holders shall not be liable to indemnify the
      Minister in respect of any claims, demands, loss, costs, damages, actions,
      suits or other proceedings arising through any wilful or negligent act of
      the Province or any of its agents or
employees.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      TERMINATION

      

      
        	
                20.

              	
                (1)

              	
                Where
      it is alleged that the Lessee breached or defaulted under the Act, the
      Regulations, or this Lease or renewals thereof, or failed to perform the
      work required under this Lease or renewals thereof, the Minister shall
      give the Lessee at least thirty (30) calendar days to remedy the breach or
      default.

              

      

      

      
        	
                 
      

              	
                (2)

              	
                The
      Minister shall advise the Lessee by notice, in writing, of the alleged
      breach or default and shall also advise the Lessee of the above noted
      period of time which the Lessee may remedy the breach or default or show,
      to the satisfaction of the Minister, that the Lessee has not breached or
      defaulted.

              

      

      

      
        	
                 
      

              	
                (3)

              	
                If
      the Lessee is not able to remedy the breach or default alleged in the
      notice or show, to the satisfaction of the Minister, that the Lessee has
      not breached or defaulted, the Minister may declare this Lease suspended
      or cancelled.

              

      

      

      
        	
                 
      

              	
                (4)

              	
                Suspension
      or cancellation of this Lease shall in no way relieve the Lessee of
      obligations contained herein, including site reclamation and observance of
      all obligations in law.

              

      

      

      GOODS AND
SERVICES

      

      
        	
                21.

              	
                Every
      twelve (12) months during the term of this Lease, the Lease shall report
      to the Minister, in such form as the Minister may determine, as
      to

              

      

      

      
        	
                 
      

              	
                (a)

              	
                utilization
      of services provided from within Nova Scotia and utilization of goods
      manufactured in Nova Scotia or, where not so manufactured, provided from
      within Nova Scotia;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                the
      number of qualified employees and independent contractors normally
      resident in Nova Scotia providing services to the Lessee;
    and

              

      

      

      
        	
                 
      

              	
                (c)

              	
                evidence
      that the Lessee’s contractors and main sub-contractors are acquiring goods
      and services in accordance with Section 20 of the
    Regulations.

              

      

      

      SECURITY

      

      
        	
                22.

              	
                (1)

              	
                The
      Lessee shall provide security to the Minister, in a form satisfactory to
      the Minister, acting reasonably, in a fixed amount representing 10 percent
      of the value of the Development Program undertaken in each year that this
      Lease is in effect, which shall secure performance of the obligation of
      the Lessee under the Act, the Regulations, and this Lease for the term of
      the Lease and any extension or
renewal.

              

      

      

      
        	
                 
      

              	
                (2)

              	
                At
      the end of each year, the Minister reserves the right to adjust the amount
      of the financial security provided under
(1).

              

      

      

      
        	
                 
      

              	
                (3)

              	
                The
      security shall,

              

      

      

      
        	
                 
      

              	
                (a)

              	
                for
      the first year of the Development Program, be provided within thirty (30)
      days of the execution of the Lease and prior to commencement of the
      Development Program; and,

              

      

      

      
        	
                 
      

              	
                (b)

              	
                in
      respect of the second and subsequent years of the Lease, be provided on
      the earlier of

              

      

      

      
        	
                 
      

              	
                (i)

              	
                the
      Anniversary Date, or

              

      

      
        	
                 
      

              	
                (ii)

              	
                ten
      (10) days prior to the commencement of a subsequent phase of the
      Development Program.

              

      

      

      
        	
                 
      

              	
                (4)

              	
                The
      Province shall return the security securing performance of the Lessee’s
      obligations in any previous year or for a previous phase of the
      Development Program upon receipt of any subsequent security required in
      accordance with this Article.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (5)

              	
                Security
      or the uncalled balance thereof shall be cancelled and the original
      document returned by the Minister to the Lessee within a reasonable period
      of time, where,

              

      

      

      
        	
                 
      

              	
                (a)

              	
                in
      the opinion of the Minister, a failure to fulfill the obligations under
      this Lease is the result of technical difficulties beyond the control of
      the Lessee despite adherence to good oilfield
  practices;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                further
      performance under this Lease would not be reasonable in the Minister’s
      opinion; or

              

      

      

      
        	
                 
      

              	
                (c)

              	
                the
      obligations for which the security was issued have been performed to the
      satisfaction of the Minister.

              

      

      

      
        	
                 
      

              	
                (6)

              	
                Where
      the Lessee proposes a modification to the Development Program which
      increases its value, the Minister may require an additional sum to secure
      the performance of the Lessee’s obligation pursuant to the Development
      Program, which modification may require provision of an additional
      security or, in the alternative, an increase in the amount of the security
      referenced in Article 22(1).

              

      

      

      
        	
                 
      

              	
                (7)

              	
                In
      addition to security required in relation to the Development Program, the
      Minister may require the Lessee to furnish bonds in a form satisfactory to
      the Minister in such amounts as the Minister considers appropriate to
      ensure performance of obligations with respect to
  royalty.

              

      

      

      INSURANCE

      

      
        	
                23.

              	
                (1)

              	
                The
      Lessee shall procure the insurance coverage as described in Schedule
      III  or shall cause the insurance coverage to be procured and
      such insurance shall be maintained in full force during the term of this
      Lease to protect all insureds for the purposes and risks outlined
      therein.

              

      

      

      
        	
                 
      

              	
                (2)

              	
                Insurance
      under subsection (1) shall provide coverage for  the Lessee, its
      subcontractors, consultants, their successors and assigns, and their
      respective directors, officers, and employees, and protect all insureds
      from all claims arising out of liability for property damage, bodily
      injury including death and personal
injury.

              

      

      

      
        	
                 
      

              	
                (3)

              	
                All
      policies shall be insured by financially sound insurers licensed to carry
      on business in Canada.  The policies described in Schedule III
      shall be written on an occurrence
basis.

              

      

      

      
        	
                 
      

              	
                (4)

              	
                Certified
      copies of all insurance policies required, or certificates of insurance
      with endorsements acceptable in form and substance to the Province, shall
      be delivered to the Province on execution of this
  Lease.

              

      

      

      
        	
                 
      

              	
                (5)

              	
                The
      Lessee, the Province, all subcontractors, consultants, subconsultants, and
      other parties listed in subsection (2) shall be added as additional
      insureds on the policy.

              

      

      

      
        	
                 
      

              	
                (6)

              	
                If
      any policy can only be written on a "claims made" basis, the policy must
      provide the Province and the Lessee with the right, upon cancellation or
      termination by refusal to renew the policy, to purchase an extended
      reporting period of not less than two (2)
years.

              

      

      

      
        	
                 
      

              	
                (7)

              	
                Each
      of the policies of insurance maintained pursuant to this Lease shall
      contain a waiver of the insurer's right of subrogation against any insured
      under this Lease.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      NOTICE

      

      
        	
                24.

              	
                (1)

              	
                Where
      in this Lease or under the Regulations it is required that a notice,
      communication or statement (hereinafter called “Notices”) be given, such
      Notices may be served on the parties at the following
    address:

              

      

      

      
        
          	
                  To
      the Lessee at:

                	
                  Elmworth
      Energy Corporation

                
	 
      	
                  Suite
      1250, 521 -3rd
      Avenue, S.W.

                
	 
      	
                  Calgary,
      Alberta T2P 3T3

                
	 
      	 
      
	 
      	
                  Attention:    
      Howard Anderson, President & Chief Operating
Officer

                
	 
      	
                  Telephone:   (403)
      781-7722

                
	 
      	
                  Fax:                       
       (403) 262-4472

                
	 
      	 
      
	
                  To
      the Minister at:

                	
                  Department
      of Energy

                
	 
      	
                  Bank
      of Montreal Building

                
	 
      	
                  5151
      George Street, Suite 400

                
	 
      	
                  PO
      Box 2664

                
	 
      	
                  Halifax,
      NS  B3J 3P7

                
	 
      	 
      
	 
      	
                  Attention:    
      Manager, Petroleum Resources

                
	 
      	
                  Telephone:  
      (902) 424-4575

                
	 
      	
                  Fax:                        
      (902) 424-8125

                
	 
      	 
      
	
                  To
      the Registrar at:

                	
                  Department
      of Natural Resources

                
	 
      	
                  1701
      Hollis Street

                
	 
      	
                  P.
      O. Box 698

                
	 
      	
                  Halifax,
      NS B3J 2T9

                
	 
      	 
      
	 
      	
                  Attention:    
      Registrar of Mineral and Petroleum Titles

                
	 
      	
                  Telephone:  
      (902) 424-8155

                
	 
      	
                  Fax:              (902)
      424-7735

                

        

      

      

      and on
the Representative at the address specified in the Designation of Representative
filed with the Registrar.

      

      
        	
                 
      

              	
                (2)

              	
                Upon
      giving the other party thirty (30) days notice in writing, the Minister or
      the Lessee may amend the address for service from time to
      time.

              

      

      

      (3)           Notices
may be served:

      

      
        	
                 
      

              	
                (a)

              	
                personally,
      and personally served Notices shall be deemed received by the addressee
      when actually delivered; or

              

      

      

      
        	
                 
      

              	
                (b)

              	
                by
      fax directed to the party on whom they are to be served at that party’s
      address for service.  Notices so served shall be deemed received
      by the respective addressee thereof

              

      

      

      
        	
                 
      

              	
                (i)

              	
                when
      actually received by them if received within the normal working hours of a
      business day, or

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                at
      the commencement of the next ensuing business day following transmission
      thereof, whichever is earlier.

              

      

      

      GENERAL

      

      
        	
                25.

              	
                (1)

              	
                The
      Lessee acknowledges that the laws of Nova Scotia govern all matters
      relating to this Lease, and the Lessee acknowledges and submits to the
      jurisdiction of the courts of the Province of Nova
  Scotia.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        	
                 
      

              	
                (2)

              	
                The
      Lessee shall comply with the provisions
of

              

      

      

      
        	
                 
      

              	
                (a)

              	
                the
      Petroleum Resources Act,
      the Energy
      Resources Conservation Act,  the Pipeline Act and the
      Gas Distribution Act,
      as amended, and

              

      

      

      
        	
                 
      

              	
                (b)

              	
                any
      other Acts of the Legislature of Nova Scotia that prescribe, apply to or
      affect the rights and obligations of the Lessee’s petroleum rights, or
      that relate to or affect the Lessee in the conduct of operations or
      activities under this Lease.

              

      

      

      
        	
                 
      

              	
                (3)

              	
                In
      the event of conflict or inconsistency between a provision of this Lease
      and a provision in the Act or Regulations, the latter provision
      prevails.

              

      

      

      
        	
                 
      

              	
                (4)

              	
                The
      Lessee agrees to waive and hereby waives all rights, prerogatives,
      privileges and immunities that would otherwise exempt the Lessee from
      compliance with any of the provisions of the Petroleum Resources Act
      or of any Acts of the Legislature.

              

      

      

      
        	
                26.

              	
                All
      schedules, maps and attachments affixed hereto constitute and form part of
      this Lease.

              

      

      

      
        	
                27.

              	
                The
      headings used in this Lease are inserted for convenience of reference only
      and shall not affect the meaning of construction of any
      provision.

              

      

      

      
        	
                28.

              	
                This
      Lease represents the entire agreement between the parties respecting the
      Lands and may be amended only in writing executed by both
      parties.

              

      

      

      
        	
                29.

              	
                Time
      shall be of the essence of this
Lease.

              

      

      

      
        	
                30.

              	
                This
      Lease may be executed in several counterparts, each of which when so
      executed shall be deemed to be an original, and such counterparts together
      shall constitute one and the same instrument, and it shall not be
      necessary in proving the same to produce more than one set of such
      counterparts.

              

      

      

      CONSULTATION

      

      
        	
                31.

              	
                (1)

              	
                The
      Lessee agrees to participate in a consultation program with respect to the
      Development Program proposed under this Lease, including any community
      based committee established by the
Minister.

              

      

      

      
        	
                 
      

              	
                (2)

              	
                The
      Lessee agrees to use reasonable efforts to identify aboriginal groups who
      may have an interest in this proposed Petroleum project and establish
      contact with them.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    IN WITNESS WHEREOF, these
presents are duly executed on the part of the Province in the name of the
Minister and by the Lessee under its corporate seal by its officers duly
authorized in that regard.

    

    DATED AT
Halifax this 15th day of
April, 2009.

    

    
      
        
          	 
      	 
      	
                  HER
      MAJESTY THE QUEEN IN THE

                  RIGHT
      OF THE PROVINCE OF NOVA

                  SCOTIA

                
	 
      	 
      	 
      
	
                  /s/ ALISON SCOTT

                	 
      	
                  /s/ BARRY BARNET

                
	
                  Witness

                	 
      	
                  Minister
      of Energy

                

        

      

    

    

    DATED AT
Halifax this 15th day of
April, 2009.

    

    
      
        
          
            
              
                
                  
                    	 
      	 
      	
                            ELMWORTH
      ENERGY CORPORATION

                          
	 
      	 
      	 
      
	
                            /s/ VAN PENNICK

                          	 
      	
                            /s/ J. HOWARD ANDERSON

                          
	
                            Witness

                          	 
      	
                            Per

                          
	 	 	 
	 
      	 
      	 
      
	
                            Witness

                          	 
      	
                            Per

                          

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
I

    

    Production
Lease No.  PL #09-04-15-01

    Kings,
Hants, and Colchester Counties

    

    
      
        
          	
                  Reference
      Map

                	 
      	
                  Reservation

                
	 
      	 
      	 
      
	
                  11
      D 13 C

                	 
      	
                  W

                
	
                  11
      E 4 B

                	 
      	
                  R S
      T U V W

                
	
                  11
      E 4 C

                	 
      	
                  R S
      T U V W

                
	
                  11
      E 4 D

                	 
      	
                  T U
      V W

                
	
                  11
      E 5 A

                	 
      	
                  R S
      T U V

                
	
                  11
      E 5 B

                	 
      	
                  R S
      U

                
	
                  21
      A 16 C

                	 
      	
                  U
      V*

                
	
                  21
      A 16 D

                	 
      	
                  T*
      U* V W*

                
	
                  21
      H 1 A

                	 
      	
                  R
      S* T U V W

                
	
                  21
      H 1 B

                	 
      	
                  R
      U* V

                
	
                  21
      H 1 C

                	 
      	
                  R

                
	
                  21
      H 1 D

                	 
      	
                  R S
      T U V

                

        

      

    

    

    Total
hectares (less excluded and submarine areas)

    192,074
ha (more or less)

    

    * Areas
contain Water Supply Areas.  Notice of any work within the Water
Supply Area is to be provided to the Registrar prior to
commencement.  Ground disturbance activity within a Water Supply Area
is to be conducted only with the prior consent from the Department of
Environment.

    

    The
following Sections are excluded from forming a part of the Agreement Lands
contained with this Schedule I

    

    
      
        
          
            	
                    Reference
      Map

                  	 
      	
                    Reservation

                  	 
      	
                    Tract

                  	 
      	
                    Section

                  
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                    11
      D 13 C

                  	 
      	
                    W

                  	 
      	
                    831

                  	 
      	
                    M+

                  
	
                    11
      D 13 C

                  	 
      	
                    W

                  	 
      	
                    841

                  	 
      	
                    F+G+H+J
      KL+O+P+ Q+

                  
	
                    11
      D 13 C

                  	 
      	
                    W

                  	 
      	
                    851

                  	 
      	
                    A+B+

                  
	
                    11
      D 13 C

                  	 
      	
                    W

                  	 
      	
                    1062

                  	 
      	
                    EFLM
      NO

                  
	
                    11
      D 13 C

                  	 
      	
                    W

                  	 
      	
                    1072

                  	 
      	
                    HJKP
      Q

                  
	
                    11
      E 4 B

                  	 
      	
                    S

                  	 
      	
                    102

                  	 
      	
                    CDEF

                  
	
                    11
      E 4 B

                  	 
      	
                    S

                  	 
      	
                    112

                  	 
      	
                    ABGH

                  
	
                    11
      E 4 B

                  	 
      	
                    S

                  	 
      	
                    113

                  	 
      	
                    L+M+N+O+
      P+Q+

                  
	
                    11
      E 4 B

                  	 
      	
                    S

                  	 
      	
                    143

                  	 
      	
                    A+B+C+

                  
	
                    11
      E 5 A

                  	 
      	
                    T

                  	 
      	
                    604

                  	 
      	
                    N+

                  
	
                    11
      E 5 A

                  	 
      	
                    T

                  	 
      	
                    614

                  	 
      	
                    A+B+C+D
      EFGH JKLM NOPQ

                  
	
                    11
      E 5 A

                  	 
      	
                    T

                  	 
      	
                    624

                  	 
      	
                    E+F+G+J+
      K+LMN OPQ

                  
	
                    11
      E 5 A

                  	 
      	
                    T

                  	 
      	
                    634

                  	 
      	
                    H+JK+L+
      M+NOP Q

                  
	
                    11
      E 5 A

                  	 
      	
                    T

                  	 
      	
                    644

                  	 
      	
                    A+E+F+G+
      HJKL MNOP Q

                  
	
                    11
      E 5 A

                  	 
      	
                    T

                  	 
      	
                    654

                  	 
      	
                    A+BC+D+
      EFGH JKLM NOPQ

                  
	
                    11
      E 5 A

                  	 
      	
                    T

                  	 
      	
                    664

                  	 
      	
                    A+B+C+D+
      EFGH JKLM NOPQ

                  
	
                    11
      E 5 A

                  	 
      	
                    U

                  	 
      	
                    535

                  	 
      	
                    M+

                  
	
                    11
      E 5 A

                  	 
      	
                    U

                  	 
      	
                    544

                  	 
      	
                    J+Q+

                  
	
                    11
      E 5 A

                  	 
      	
                    U

                  	 
      	
                    724

                  	 
      	
                    H+JK+L
      N+O+PQ

                  
	
                    11
      E 5 A

                  	 
      	
                    U

                  	 
      	
                    704

                  	 
      	
                    L+M+NO+
      P+

                  
	
                    11
      E 5 A

                  	 
      	
                    U

                  	 
      	
                    694

                  	 
      	
                    J+K+L+M+
      NOPQ

                  
	
                    11
      E 5 A

                  	 
      	
                    U

                  	 
      	
                    684

                  	 
      	
                    J+M+NO+
      P+Q

                  
	
                    11
      E 5 A

                  	 
      	
                    U

                  	 
      	
                    674

                  	 
      	
                    D+E+F+G+
      J+KLM NOPQ

                  
	
                    11
      E 5 A

                  	 
      	
                    V

                  	 
      	
                    734

                  	 
      	
                    ABCD+
      EFGH JKLM NOPQ

                  

          

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        
          	
                  Reference
      Map

                	 
      	
                  Reservation

                	 
      	
                  Tract

                	 
      	
                  Section

                
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                  11
      E 5 A

                	 
      	
                  V

                	 
      	
                  744

                	 
      	
                  E+F+G+H+
      J+KLM NOPQ

                
	
                  11
      E 5 A

                	 
      	
                  V

                	 
      	
                  754

                	 
      	
                  A+B+CD
      EFGH+ JKLM NOPQ

                
	
                  11
      E 5 A

                	 
      	
                  V

                	 
      	
                  764

                	 
      	
                  All
      Sections

                
	
                  11
      E 5 A

                	 
      	
                  V

                	 
      	
                  774

                	 
      	
                  All
      Sections

                
	
                  11
      E 5 A

                	 
      	
                  V

                	 
      	
                  784

                	 
      	
                  All
      Sections

                
	
                  11
      E 5 A

                	 
      	
                  V

                	 
      	
                  91-96
      incl4

                	 
      	
                  All
      Sections

                
	
                  11
      E 5 A

                	 
      	
                  V

                	 
      	
                  974

                	 
      	
                  ABCD
      EFGH JKL+M+NO+P+Q+

                
	
                  11
      E 5 A

                	 
      	
                  V

                	 
      	
                  984

                	 
      	
                  ABCD
      EFGH J+KLM NO+P+Q+

                
	
                  11
      E 5 A

                	 
      	
                  V

                	 
      	
                  99-1024

                	 
      	
                  All
      Sections

                
	
                  11
      E 5 B

                	 
      	
                  R

                	 
      	
                  294

                	 
      	
                  M+N+O+P+

                
	
                  11
      E 5 B

                	 
      	
                  R

                	 
      	
                  304

                	 
      	
                  C+D+EF+
      G+H+J+K LMNO PQ

                
	
                  11
      E 5 B

                	 
      	
                  S

                	 
      	
                  104

                	 
      	
                  N+

                
	
                  11
      E 5 B

                	 
      	
                  S

                	 
      	
                  114

                	 
      	
                  E+K+L+M+
      NOP+Q+

                
	
                  11
      E 5 B

                	 
      	
                  S

                	 
      	
                  124

                	 
      	
                  C+D+EF+
      G+H+JK LMNO PQ

                
	
                  11
      E 5 B

                	 
      	
                  S

                	 
      	
                  13-14incl4

                	 
      	
                  All
      Sections

                
	
                  11
      E 5 B

                	 
      	
                  S

                	 
      	
                  154

                	 
      	
                  A+B+C+D
      EFGH+ JKLM NOPQ

                
	
                  11
      E 5 B

                	 
      	
                  S

                	 
      	
                  164

                	 
      	
                  E+K+L+M+
      NOPQ+

                
	
                  11
      E 5 B

                	 
      	
                  S

                	 
      	
                  174

                	 
      	
                  N+

                
	
                  11
      E 5 B

                	 
      	
                  S

                	 
      	
                  314

                	 
      	
                  A+B+C+E+F+GHJKL+M+NOPQ

                
	
                  11
      E 5 B

                	 
      	
                  S

                	 
      	
                  324

                	 
      	
                  C+D+EF+
      G+H+J+K LMNO PQ

                
	
                  11
      E 5 B

                	 
      	
                  S

                	 
      	
                  33-36incl4

                	 
      	
                  All
      Sections

                
	
                  11
      E 5 B

                	 
      	
                  U

                	 
      	
                  454

                	 
      	
                  D+E+F+K+
      L+MNO P+

                
	
                  11
      E 5 B

                	 
      	
                  U

                	 
      	
                  444

                	 
      	
                  A+B+CD
      EFGH JKLM NOPQ

                
	
                  11
      E 5 B

                	 
      	
                  U

                	 
      	
                  434

                	 
      	
                  All
      Sections

                
	
                  11
      E 5 B

                	 
      	
                  U

                	 
      	
                  494

                	 
      	
                  P+Q+

                
	
                  11
      E 5 B

                	 
      	
                  U

                	 
      	
                  514

                	 
      	
                  L+M+NO+
      P+Q

                
	
                  11
      E 5 B

                	 
      	
                  U

                	 
      	
                  524

                	 
      	
                  A+B+CD
      EFGH+ J+KLM NOPQ

                
	
                  11
      E 5 B

                	 
      	
                  U

                	 
      	
                  53-54incl4

                	 
      	
                  All
      Sections

                
	
                  11
      E 5 B

                	 
      	
                  U

                	 
      	
                  67-70incl4

                	 
      	
                  All
      Sections

                
	
                  11
      E 5 B

                	 
      	
                  U

                	 
      	
                  714

                	 
      	
                  A+B+C+D+
      EFGH JKLM NOPQ

                
	
                  11
      E 5 B

                	 
      	
                  U

                	 
      	
                  724

                	 
      	
                  D+

                
	
                  21
      A 16 C

                	 
      	
                  U

                	 
      	
                  466

                	 
      	
                  All
      Sections

                
	
                  21
      A 16 C

                	 
      	
                  U

                	 
      	
                  476

                	 
      	
                  All
      Sections

                
	
                  21
      A 16 D

                	 
      	
                  V

                	 
      	
                  767

                	 
      	
                  JKLM
      NOPQ

                
	
                  21
      A 16 D

                	 
      	
                  V

                	 
      	
                  777

                	 
      	
                  JKOP
      Q

                
	
                  21
      A 16 D

                	 
      	
                  V

                	 
      	
                  927

                	 
      	
                  ABCF
      GHJK LMNO PQ

                
	
                  21
      A 16 D

                	 
      	
                  V

                	 
      	
                  937

                	 
      	
                  BCDE
      FGHJ KLMN OPQ

                
	
                  21
      A 16 D

                	 
      	
                  V

                	 
      	
                  947

                	 
      	
                  EMNO

                
	
                  21
      A 16 D

                	 
      	
                  V

                	 
      	
                  997

                	 
      	
                  CDEF
      GM

                
	
                  21
      A 16 D

                	 
      	
                  V

                	 
      	
                  1007

                	 
      	
                  ABCD
      EFGH JMN

                
	
                  21
      A 16 D

                	 
      	
                  V

                	 
      	
                  1017

                	 
      	
                  ABCD
      FGHJ K

                
	
                  21
      H 1 A

                	 
      	
                  R

                	 
      	
                  28

                	 
      	
                  MNO

                
	
                  21
      H 1 A

                	 
      	
                  R

                	 
      	
                  38

                	 
      	
                  GHJK
      LNOP Q

                
	
                  21
      H 1 A

                	 
      	
                  R

                	 
      	
                  198

                	 
      	
                  AFGH
      JKLO PQ

                
	
                  21
      H 1 A

                	 
      	
                  R

                	 
      	
                  20-21incl8

                	 
      	
                  All
      Sections

                
	
                  21
      H 1 A

                	 
      	
                  R

                	 
      	
                  228

                	 
      	
                  ABCD
      EFGH JKLM NOP

                
	
                  21
      H 1 A

                	 
      	
                  R

                	 
      	
                  278

                	 
      	
                  CD

                
	
                  21
      H 1 A

                	 
      	
                  R

                	 
      	
                  288

                	 
      	
                  ABCD
      EFGH KLMN O

                
	
                  21
      H 1 A

                	 
      	
                  R

                	 
      	
                  298

                	 
      	
                  All
      Sections

                
	
                  21
      H 1 A

                	 
      	
                  R

                	 
      	
                  308

                	 
      	
                  ABHJ
      Q

                
	
                  21
      H 1 A

                	 
      	
                  S

                	 
      	
                  359

                	 
      	
                  N+

                
	
                  21
      H 1 A

                	 
      	
                  S

                	 
      	
                  369

                	 
      	
                  J+K+L+M+
      N+O+P+Q+

                
	
                  21
      H 1 A

                	 
      	
                  T

                	 
      	
                  379

                	 
      	
                  A+BCD+
      F+GHK

                
	
                  21
      H 1 A

                	 
      	
                  T

                	 
      	
                  389

                	 
      	
                  D+

                
	
                  21
      H 1 B

                	 
      	
                  R

                	 
      	
                  259

                	 
      	
                  J+Q+

                

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        
          	
                  Reference
      Map

                	 
      	
                  Reservation

                	 
      	
                  Tract

                	 
      	
                  Section

                
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                  21
      H 1 B

                	 
      	
                  V

                	 
      	
                  9310

                	 
      	
                  J+K+P+Q+

                
	
                  21
      H 1 B

                	 
      	
                  V

                	 
      	
                  9410

                	 
      	
                  N+

                
	
                  21
      H 1 C

                	 
      	
                  R

                	 
      	
                  14

                	 
      	
                  E+F+G+H+
      JKLM+ NOPQ

                
	
                  21
      H 1 C

                	 
      	
                  R

                	 
      	
                  24

                	 
      	
                  J+K+L+O+
      P+

                
	
                  21
      H 1 C

                	 
      	
                  R

                	 
      	
                  204

                	 
      	
                  H+J+P+Q

                
	
                  21
      H 1 C

                	 
      	
                  R

                	 
      	
                  214

                	 
      	
                  D+E+FK+
      L+MNO P+Q+

                
	
                  21
      H 1 C

                	 
      	
                  R

                	 
      	
                  224

                	 
      	
                  Q+

                
	
                  21
      H 1 C

                	 
      	
                  R

                	 
      	
                  234

                	 
      	
                  A+B+C+F+
      GH+J+K L+N+OP Q

                
	
                  21
      H 1 C

                	 
      	
                  R

                	 
      	
                  244

                	 
      	
                  ABC+F+
      G+HJK L+M+NO PQ

                
	
                  21
      H 1 C

                	 
      	
                  R

                	 
      	
                  25-26incl4

                	 
      	
                  All
      Sections

                
	
                  21
      H 1 C

                	 
      	
                  R

                	 
      	
                  274

                	 
      	
                  A+E+G+H+
      JK+L+M+ NOPQ

                
	
                  21
      H 1 C

                	 
      	
                  R

                	 
      	
                  284

                	 
      	
                  A+BCD
      EFGH JKLM NOPQ

                
	
                  21
      H 1 C

                	 
      	
                  R

                	 
      	
                  294

                	 
      	
                  AB+F+G
      HJKL+ M+N+OP Q

                
	
                  21
      H 1 D

                	 
      	
                  S

                	 
      	
                  104

                	 
      	
                  M+N+

                
	
                  21
      H 1 D

                	 
      	
                  S

                	 
      	
                  114

                	 
      	
                  A+BCD
      EFGH+ J+KLM NOPQ

                
	
                  21
      H 1 D

                	 
      	
                  S

                	 
      	
                  12-14incl4

                	 
      	
                  All
      Sections

                
	
                  21
      H 1 D

                	 
      	
                  S

                	 
      	
                  154

                	 
      	
                  D+E+M+N+

                
	
                  21
      H 1 D

                	 
      	
                  S

                	 
      	
                  3212

                	 
      	
                  N+

                
	
                  21
      H 1 D

                	 
      	
                  S

                	 
      	
                  3312

                	 
      	
                  C+D+F+G+
      H+J+Q+

                
	
                  21
      H 1 D

                	 
      	
                  S

                	 
      	
                  3412

                	 
      	
                  A+

                
	
                  21
      H 1 D

                	 
      	
                  S

                	 
      	
                  344

                	 
      	
                  D+EF+L+
      MNO+

                
	
                  21
      H 1 D

                	 
      	
                  S

                	 
      	
                  35-36incl4

                	 
      	
                  All
      Sections

                
	
                  21
      H 1 D

                	 
      	
                  T

                	 
      	
                  37-38incl4

                	 
      	
                  All
      Sections

                
	
                  21
      H 1 D

                	 
      	
                  T

                	 
      	
                  394

                	 
      	
                  C+DEF+
      L+MNO+ P+

                
	
                  21
      H 1 D

                	 
      	
                  T

                	 
      	
                  4012

                	 
      	
                  A+H+

                
	
                  21
      H 1 D

                	 
      	
                  T

                	 
      	
                  4112

                	 
      	
                  D+E+M+N+

                
	
                  21
      H 1 D

                	 
      	
                  T

                	 
      	
                  5612

                	 
      	
                  L+M+N+O+
      P+

                
	
                  21
      H 1 D

                	 
      	
                  T

                	 
      	
                  59-62incl4

                	 
      	
                  All
      Sections

                
	
                  21
      H 1 D

                	 
      	
                  T

                	 
      	
                  634

                	 
      	
                  B+CDE
      FG+H+J+ KLMN OPQ

                
	
                  21
      H 1 D

                	 
      	
                  T

                	 
      	
                  6512

                	 
      	
                  A+B+H+

                
	
                  21
      H 1 D

                	 
      	
                  T

                	 
      	
                  6612

                	 
      	
                  E+F+G+

                
	
                  21
      H 1 D

                	 
      	
                  T

                	 
      	
                  7011

                	 
      	
                  JKPQ

                
	
                  21
      H 1 D

                	 
      	
                  T

                	 
      	
                  7111

                	 
      	
                  LMNO

                
	
                  21
      H 1 D

                	 
      	
                  U

                	 
      	
                  7411

                	 
      	
                  CDEF

                
	
                  21
      H 1 D

                	 
      	
                  U

                	 
      	
                  7511

                	 
      	
                  ABGH

                
	
                  21
      H 1 D

                	 
      	
                  V

                	 
      	
                  914

                	 
      	
                  C+D+EF+
      G+H+J+K LMNO PQ

                
	
                  21
      H 1 D

                	 
      	
                  V

                	 
      	
                  924

                	 
      	
                  M+N+O+P
      Q

                
	
                  21
      H 1 D

                	 
      	
                  V

                	 
      	
                  974

                	 
      	
                  K+L+O+P+
      Q+

                
	
                  21
      H 1 D

                	 
      	
                  V

                	 
      	
                  98

                	 
      	
                  B+C+D+G+
      M+N+

                
	
                  21
      H 1 D

                	 
      	
                  V

                	 
      	
                  99

                	 
      	
                  A+B+E+F+G+H+J+K+LMNOPQ+

                
	
                  21
      H 1 D

                	 
      	
                  V

                	 
      	
                  100

                	 
      	
                  D+EF+G+
      H+JKL MNOP Q

                
	
                  21
      H 1 D

                	 
      	
                  V

                	 
      	
                  101

                	 
      	
                  A+B+CD
      EFGH JKLM NOPQ

                
	
                  21
      H 1 D

                	 
      	
                  V

                	 
      	
                  102

                	 
      	
                  All
      Sections

                

        

      

    

    

    +
portions of Section only

    1
Department of National Defence Lands

    2
Non-Mineral Registration No. 007

    3 Smiley’s
Provincial Park

    4
Submarine lands

    5 Anthony
Provincial Park

    6 Uranium
Closure

    7
Non-Mineral Registration No. 001

    8
Non-Mineral Registration No. 002

    9 Indian
Reservation No. 35 - Horton

    10 Grand
Pré Historic Park

    11 Mineral
Lease No. 00-1

    12
Cheverie Protected Beach

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    SCHEDULE
II

    

    Development
Program

    Production
Lease No.  PL#09-04-15-01

    

    This
schedule provides the details of the Development Program, revised from that
which was submitted as part of Elmworth’s Development Plan dated June 24
2008.  The first table is an updated Table 1-1 which outlines the
minimum work required prior to specific deadlines.  This table has
been revised for prevailing economic and operational conditions.  The
second is a schedule of estimated annual capital expenditures.

     

    The total
well count of ten has not changed from the Development Plan as originally
submitted.  Three of those wells had already been drilled prior to the
effective date, during the period in which the Development Plan was being
approved by the Department of Energy, leaving seven wells to be drilled within
the first five years of the lease.  The change from Elmworth’s
original submission is the need for an additional year to drill the remaining
Kennetcook wells, and two additional years for the remaining outlying
wells.

     

    Two more
wells will be drilled in the Kennetcook area before the second anniversary of
the lease or the end of Phase I, approximately March 2011, and the remaining 5
wells will be drilled in the outlying areas before the 5th
anniversary, or end of Phase II, approximately March 2014.

     

    If wells
are drilled sooner than outlined in the schedule, they will count towards the
final tally of wells required under this program.

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      	
                                                                               Revised
      Table 1-1

                                                                            
	
                                                                               Delineation
      Program Minimum Drilling Commitment

                                                                            	 
	
                                                                              Area

                                                                            	 	
                                                                              Anniversary of

                                                                              Effective Date

                                                                            	 	
                                                                              Minimum

                                                                              Well

                                                                              Commitment

                                                                              per original

                                                                              Table 1-1

                                                                            	 	 	
                                                                              Drilled

                                                                              during

                                                                              approval

                                                                              process

                                                                            	 	 	
                                                                              Wells

                                                                              remaining

                                                                            	 
	
                                                                              Kennetcook

                                                                            	 	
                                                                              2nd

                                                                            	 	 	
                                                                              4

                                                                            	 	 	 	
                                                                              2

                                                                            	 	 	 	
                                                                              2

                                                                            	 
	
                                                                              Stanley

                                                                            	 	
                                                                              5th

                                                                            	 	 	
                                                                              2

                                                                            	 	 	 	
                                                                              1

                                                                            	 	 	 	
                                                                              1

                                                                            	 
	
                                                                              Avon

                                                                            	 	
                                                                              5th

                                                                            	 	 	
                                                                              2

                                                                            	 	 	 	
                                                                              0

                                                                            	 	 	 	
                                                                              2

                                                                            	 
	
                                                                              Wolfville

                                                                            	 	
                                                                              5th

                                                                            	 	 	
                                                                              2

                                                                            	 	 	 	
                                                                              0

                                                                            	 	 	
                                                                               

                                                                            	
                                                                              2

                                                                            	 
	
                                                                              Total

                                                                            	 	 
      	 	 	
                                                                              10

                                                                            	 	 	 	
                                                                              3

                                                                            	 	 	 	
                                                                              7*

                                                                            	 

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    * These
wells are to be drilled by the end of the 5th year of
this lease agreement

     

    The
second table shows estimated capital expenditures by calendar
year.   Although future costs may change, estimated year 1
capital of $2 million is the value on which the initial 10% performance bond
should be based. Note that completion costs beyond year 1 are not included due
to geologic uncertainty of whether wells will be completed if successful versus
abandoned if dry

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Estimated
Annual Activity and Capital Expenditure to Satisfy Minimum Work Commitment
based

    on
Table 1-1

    

    
      
        
          
            
              
                
                  
                    
                      
                        	
                                Prior to

                                Anniversary

                              	 	
                                Wells Drilled

                              	 	 	
                                Drilling

                                Capital

                                ($million)

                              	 	 	
                                Wells

                                Completed

                              	 	 	
                                Completion

                                Capital

                                ($million)

                              	 	
                                Seismic

                                Work

                              	 	
                                Seismic

                                Capital

                                ($million)

                              	 	 	
                                Total

                                Capital

                                ($million)

                              	 
	
                                approval

                                period

                                (activity)

                              	 	 	
                                3

                              	 	 	$	12.0	 	 	 	0.5	 	 	$	4.0	 	
                                Processing

                              	 	$	0.1	 	 	$	16.1	 
	
                                1st –
      2010

                              	 	 	
                                0

                              	 	 	$	0.0	 	 	 	2.5	 	 	$	1.5	 	
                                110
      km 2D

                              	 	$	0.5	 	 	$	2.0	 
	
                                2nd –
      2011

                              	 	 	
                                2

                              	 	 	$	3.0	 	 	 	0	*	 	$	0.0	 	
                                Processing

                              	 	$	0.2	 	 	$	3.2	 
	
                                3rd -
      2012

                              	 	 	
                                2

                              	 	 	$	3.0	 	 	 	0	*	 	$	0.0	 	 
      	 	 	 	 	 	$	3.0	 
	
                                4th –
      2013

                              	 	 	
                                2

                              	 	 	$	3.0	 	 	 	0	*	 	$	0.0	 	 
      	 	 	 	 	 	$	3.0	 
	
                                5th –
      2014

                              	 	 	
                                1

                              	 	 	$	1.5	 	 	 	0	*	 	$	0.0	 	 
      	 	 	 	 	 	$	1.5	 
	
                                Total

                                 Phase I & II

                              	 	 	
                                7

                              	 	 	$	10.5	 	 	 	2.5	 	 	$	1.5	 	 
      	 	$	0.7	 	 	$	12.7	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                Grand total

                              	 	 	
                                10

                              	 	 	$	22.5	 	 	 	3	 	 	$	5.5	 	 
      	 	$	0.8	 	 	$	28.8	 

                      

                    

                  

                

              

            

          

        

      

    

    Note:  Anticipated
schedule of work may change based on geological results, operational
restrictions and annual access to capital funding.

     

    Production Lease – Years Six
through Ten

     

    Within 60
days of the 5th
anniversary of the Effective Date in 2014, the Lessee shall submit to the
Minister a revised Development Plan to describe its planned activities for the
five remaining years of the Lease.  This revised Development Plan will
review the results of the work program undertaken during the first five years of
the lease, and will provide an estimate of work expected to be undertaken in the
next five years.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    SCHEDULE
III

    Insurance

    Production
Lease  No.  PL#09-04-15-01

    

    1.
Commercial General Liability Insurance

        

    This
insurance will include the following provisions:

    

    (a)
policy limit of liability of at least Five Million Dollars ($5,000,000.00) per
occurrence (can be structured as primary plus supplemental layers, or primary
plus umbrella and/or excess);

    

    (b)
products hazards and completed operations coverage subject to separate annual
aggregate limits equal to the policy limit of liability;

    

    (c)
personal injury liability;

    

    (d)
blanket written and oral contractual liability;

    

    (e)
contingent employer’s liability;

    

    (f) broad
form occurrence property damage;

    

    (g)
non-owned automobile liability;

    

    (h)
tenants legal liability (broad form);

    

    (i)
cross-liability and separation of interest with respect to each
insured;

    

    (j)
insurer must give ninety (90) days prior written notice of cancellation of or
material change to the policy to the Province and the Lessee;

    

    (k)
primary insurance without right of contribution of any other insurance carried
by the Province.

    

    (l)
Environmental Impairment Liability (may be on a separate policy and may be
issued on “claims made” basis).

    

    2.
Automobile Liability Insurance

    

    Automobile
Liability Insurance shall insure all licensed vehicles owned, or operated by the
Lessee.  This insurance will include the following
provisions:

    

    (a)
policy limit of liability of at least Two Million Dollars ($2,000,000.00) per
occurrence (can be structured as primary plus supplemental layers, or primary
plus umbrella and/or excess);

    

    (b)
insurer must give ninety (90) days prior written notice of cancellation of or
material change to the policy to the Lessee and the Province;

    

    (c) the
Lessee shall ensure that all subcontractors have Automobile Liability Insurance
in the amount of Two Million Dollars ($2,000,000.00) per occurrence with a
maximum deductible of Fifty Thousand ($50,000.00) per occurrence.

    

    3.  Workers’
Compensation Insurance

    

    (a)
Workers’ Compensation Insurance shall be maintained for the Lessee’s employees
in accordance with the requirements of the laws of the Province of Nova
Scotia.  The Lessee must ensure that evidence of coverage required by
law is provided by all subcontractors.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
IV

    Additional Terms and
Conditions

    Production
Lease  No.  PL#09-04-15-01

    

    The
Approval in Principle, of the Production Lease will be in a phased approach for
the 10-year term of the Production Lease; with the following structural
breakdown:

    

    Phase One
– Two (2) Years from the Effective Date

    Phase Two
– Up to the fifth (5th)
Anniversary Date

    Phase
Three – To the end of the initial term

    

    The
additional conditions identified are:

    

    
      
        
          	
                  Condition
      1

                	 
      	
                  A
      Water Disposal Plan will be developed on or before the second Anniversary
      Date of the Lease, the Lessee must file a water disposal plan, acceptable
      to the Minister of Energy that will address large scale water
      disposal.

                
	 
      	 
      	 
      
	
                  Condition
      2

                	 
      	
                  On
      each Anniversary Date of the Lease the Lessee must present, in a form
      acceptable to the Minister, a detailed technical report and presentation
      that addresses reservoir characteristics, well productivity, recovery
      factors, completions and any reservoir updates of the project as
      prescribed by the Minister.

                
	 
      	 
      	 
      
	
                  Condition
      3

                	 
      	
                  On
      each Anniversary Date of the Lease the Lessee will provide, in a form
      acceptable to the Minister, a report on the economic benefits of the
      project in terms of local goods and services used and procurement
      opportunities for Nova Scotians.

                
	 
      	 
      	 
      
	
                  Condition
      4

                	 
      	
                  The
      Lessee must adhere to the requirements of the Environment Act for all
      work proposed under the approved Development Program.

                
	 
      	 
      	 
      
	
                  Condition
      5

                	 
      	
                  Following
      the completion of each of Phases One and Two of the Development Program,
      the Minister and the Lessee will complete a technical evaluation of the
      focused lands (as described in the Development Program), and if, in the
      opinion of the Minister the technical information does not establish
      possible reserves in the focused area  then at the request of
      the Minister, the Lessee shall surrender to the Minister such portions of
      the focused area lands as determined by the Minister.

                
	 
      	 
      	 
      
	
                  Condition
      6

                	 
      	
                  Following
      the completion of each of the first two milestones of the Development
      Program, the Minister will assess, based upon the Lessee's reporting of
      its activities to prove reserves, whether on the basis of those
      activities, any Lands other than the focused area lands should be
      surrendered. At the request of the Minister, the Lessee shall surrender to
      the Minister such portions of the Lands as determined by the Minister on
      this basis.

                
	 
      	 
      	 
      
	
                  Condition
      7

                	 
      	
                  The
      Lessee must file an abandonment and reclamation program, acceptable to the
      Minister of Energy on or before the fifth Anniversary Date of the
      Lease.

                
	 
      	 
      	 
      
	
                  Condition
      8

                	 
      	
                  The
      Lessee agrees to participate in a consultation program with respect to the
      Development Program proposed under this Lease, including any community
      based committee established by the Department. The Lessee agrees to use
      reasonable efforts to identify aboriginal groups who may have an interest
      in this proposed natural gas project and establish initial contact with
      them. As the Department is consulting with the aboriginal community
      respecting this Lease, the Lessee will work with the Department to
      discharge this
duty.

                

        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
V

    Well Termination
Guidance

    Production
Lease  No.  PL#09-04-15-01

    

    PART
6

    WELL
TERMINATION

    Suspension
or Abandonment

    57. The licensee shall ensure
every well and facility is abandoned in accordance with an abandonment plan that
has been submitted to and approved by the Chief Operations Officer and the Chief
Environmental Officer.

    

    58. The licensee shall ensure
every well that is abandoned or suspended

    (a) can be readily
located,

    (b) is left in a condition
that prevents any formation fluid from flowing through or

    escaping
from the well bore and that provides for isolation of all

    (i)
petroleum bearing zones,

    (ii)
discrete pressure zones, and

    (iii)
potable water zones, and

    (c) is monitored and
inspected to maintain its continued integrity and to prevent
pollution.

    

    Responsibility
to Abandon

    59. (1) If the licensee fails
to abandon a well or facility in compliance with section 58, the Chief
Operations Officer may by order direct that the well be abandoned in accordance
with the regulations by the owners of the working interests in the well or by
any one or more of those owners and shall specify in the order the deadline for
compliance.

    (2) The
Chief Operations Officer may order that a well or facility be abandoned at
Government expense if the licensee fails to abandon the well or facility
pursuant to section 58 and the owners of the working interests in the well or
facility fail to comply with an order to abandon the well or facility issued
under subsection (1).

    (3) Where
the Government incurs abandonment costs in respect of a well or facility as a
result of an order under subsection (2), the Government may recover those
abandonment costs from the security deposit held for that well or
facility.

    (4) If
the security deposit is insufficient to cover the abandonment costs

    (a) subject to paragraph (b),
the owners of the working interests in the well or facility are primarily liable
to the Government for the abandonment costs in proportion to the respective
percentage shares of those working interests;

    (b) where the owner or any
one or more of the owners of a working interest is a

    corporation,

    (i) the
owner or owners of the working interest, and

    (ii) the
person or persons who control that corporation, are jointly and severally liable
to the Government for the portion of the abandonment costs that is proportionate
to the percentage share of that working interest.

    (5) If
the Government is unable to recover that portion of abandonment costs of a well
from the owners of the working interest and any other persons referred to in
subsection (2), the Government may recover any remaining unpaid amount from the
holder of the petroleum lease where the well was drilled.

    

    Drilling
Rig Removal

    60. No person shall remove or have removed
a drilling rig from a well drilled under these Regulations, unless the well has
been terminated in accordance with these Regulations.Unassociated Document

    Exhibit
10.1

    

    DEBENTURE
MODIFICATION

    AND
SECOND EXTENSION AGREEMENT

    

    THIS
AGREEMENT is by and between Enable Holdings, Inc. (hereinafter referred to as
“Company”), and ___________ (hereinafter referred to as the “Holder”), and shall
have an effective date as of the date it is fully executed by all of the parties
hereto.

    

    WITNESSETH:

    

    WHEREAS,
Company previously executed a Debenture in an original principal amount of
_________________ and originally dated October 14, 2008 as extended on January
14, 2009, copies of which are attached hereto as Exhibit A. (hereinafter jointly
referred to as the “Debenture”); and

    

    WHEREAS,
the Debenture was a part of a Bridge Loan financing between the Company, the
Holder and several other lenders with principal balance currently totaling Two
Million Four Hundred Fifty Thousand ($2,450,000);

    

    WHEREAS,
the Company has commenced raising money for a Senior Convertible Debenture (the
“Convertible Debenture”) of up to Seven Million Five Hundred Thousand Dollars
($7,500,000) of which an amount in excess of One Million Three Hundred Thousand
Dollars ($1,300,000) has been raised;

    

    WHEREAS,
the Holder herein agrees that Debenture shall in all respects be treated pari
passu with the holders of the Convertible Debenture; and

    

    WHEREAS,
the Company desires to extend the term of payment for this Debenture for an
additional ninety (90) days along with the majority of the other Bridge Loan
Financing debentures; and

    

    WHEREAS,
the Company has complied with all material terms of the Debenture up to the date
of this extension; and

    

    WHEREAS,
Company and Holder wish to modify the Debenture in accordance with the terms and
conditions contained herein.

    

    NOW,
THEREFORE, in consideration of the foregoing premises and the terms and
conditions, provisions and covenants contained herein, Company and Holder do
hereby agree as follows:

    

    
      	
               
      

            	
              1.

            	
              Interest
      Payments as set forth in Section 2 shall continue to be paid
      monthly.

            

    

    

    
      	
               
      

            	
              2.

            	
              The
      Holder agrees that all the rights, stipulations and conditions contained
      in the Debenture, and any and all mortgages securing repayment thereof
      shall be deemed pari passu with the rights, stipulations and conditions
      contained in the Convertible
Debenture.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              3.

            	
              The
      Maturity Date shall be extended until July 14,
  2009.

            

    

    

    
      	
               
      

            	
              4.

            	
              All
      the rights, remedies, stipulations and conditions contained in the
      Debenture, and any and all mortgages securing repayment thereof, shall
      also apply to any default in or failure to pay the modified payments
      required hereunder.

            

    

    

    
      	
               
      

            	
              5.

            	
              Company
      shall make and execute any and all other documents as may be necessary or
      required to effectuate the terms and conditions of this
      Agreement.

            

    

    

    
      	
               
      

            	
              6.

            	
              Save
      and except for the modifications contained herein, the terms, conditions
      and provisions of the Debenture, and any and all mortgages securing
      repayment thereof, shall continue in full force and
  effect.

            

    

    

    IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the 14th day
of April, 2009.

    

    ENABLE
HOLDINGS, INC.

    

    

    

    _______________________                                                                                     ___________________________

    By:

    Its:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}]]