Document:

Exhibit 10.3

    
      

    

    DRAGON
      ENERGY
      CORPORATION

    650
      POYDRAS
      STREET,
      SUITE
      2828

    NEW
      ORLEANS,
      LOUISIANA
      70130-6155

    

    
      	
              FAX

            	 	
              TELEPHONE

            
	
              (504)
                586-0017

            	 	
              (504)
                586-1717

            

    

    

    September
      30, 2005

     

     

    Argyle
      Energy, Inc.

    10777
      Westheimer, Suite 170

    Houston,
      Texas 77042

    

    Attention:   
       Mr. Harry J. Peters

    

    
      	 	
              Re:

            	
              Side
                Letter to First Amendment of Farmout
                Agreement

            

    

    
      	 	 	
              Barnett
                Crossroads Prospect (Prospect No.
                20)

            

    

    
      	 	 	
              Escambia
                County

            

    

                                                           
      A L A B A M
      A                                                                                                                   

    

    Gentlemen:

    

    The
      First
Amendment
      of Farmout Agreement dated September 30, 2005 ("Amendment") between DRAGON
      ENERGY CORPORATION ("Dragon")
      and ARGYLE
      ENERGY, INC. ("Argyle"),
      executed concurrently with this Side Letter to First Amendment of Farmout
      Agreement ("Side Letter") provides for an extension of the Test Well
      commencement date. The Amendment is subject to and contingent upon the following
      additional terms and consideration:

    

    
      	
            	
              1.

            	
              Notwithstanding
                anything in the Farmout Agreement or the Amendment to the contrary,
                Dragon
                is hereby appointed operator of the Test Well and Operator under
                the
                Operating Agreement unless and until Dragon, at its sole discretion,
                elects to resign. Dragon will make a good faith effort to perform
                the
                pre-drilling functions of Operator as
                follows:

            

    

    

    
      	 	
              a.

            	
              Renew
                the Bobbie G. Bonner, et ux lease, the Amyrillis E. Davis lease and
                the
                Cecil E. Ellis, et ux lease, all dated January 26, 2004, and recited
                on
                Exhibit "A" to the Farmout Agreement, for a one year primary term
                (which
                leases have already been renewed), and pay all applicable delay rentals
                for all of the remaining leases listed on the Exhibit "A" to the
                Farmout
                Agreement up to March 31, 2006.

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      Argyle
        Energy, Inc.

      Attention:
        Mr. Harry Peters

      September
        30, 2005

      Page
        2

    

    
       

    

    
      	 	
              b.

            	
              Form,
                or cause to be formed, a 160 acre drilling unit covering the SW/4
                of the
                SW/4 of Section 17, the SE/4 of the SE/4 of Section 18, the NE/4
                of the
                NE/4 of Section 19, and the NW/4 of the NW/4 of Section 20, Township
                3
                North, Range 8 East, Escambia County, Alabama, or, alternatively,
                a
                suitable 240 acre drilling unit covering the prospective
                reservoir.

            

    

    

    
      	 	
              c.

            	
              Obtain
                supplemental abstracts; mineral title opinions, supplemental title
                opinions, and perform necessary title curative work covering the
                240 acres
                subject to the Leases.

            

    

    

    
      	 	
              d.

            	
              Obtain
                appropriate surface leases and surface damage releases for the Test
                Well.

            

    

    

    
      	 	
              e.

            	
              Obtain
                all required governmental and environmental permits for drilling
                the Test
                Well.

            

    

    

    
      	 	
              f.

            	
              Prepare
                an AFE for drilling of the Test
                Well

            

    

    

    
      	 	
              g.

            	
              Make
                arrangements to secure a drilling rig and negotiate a drilling rig
                contract. Argyle shall advance any necessary deposit and be responsible
                for any penalties which may be incurred as a result of cancellation
                of the
                rig contract.

            

    

     

    
      	
            	
              2.

            	
              In
                consideration for the Amendment and the services of Dragon described
                herein, Argyle has advanced the sum of Thirty Thousand and 00/100
                Dollars
                ($30,000.00) in cash to Dragon as a deposit for the cost of lease
                renewals
                and delay rentals described above, and agrees to pay Dragon the sum
                of
                $10,000 per month plus third party costs for management services.
                In
                addition, Argyle agrees to advance to Dragon 100% of all other estimated
                pre-spud costs, by wire transfer, within fifteen (15) days of Argyle's
                receipt of a written AFE and invoice. Dragon will account to Argyle
                for
                expenditure of these advances.

            

    

    

    
      	
            	
              3.

            	
              In
                the event that Dragon elects to operate the drilling of the Test
                Well,
                Argyle shall wire transfer dry hole costs as required for drilling
                the
                Test Well on or before March 31,
                2006.

            

    

    

    
      	
            	
              4.

            	
              This
                Side Letter may be extended by mutual consent of the parties, provided
                that Argyle has fully funded, as required, the drilling of the Test
                Well
                prior to March 31, 2006.

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      Argyle
        Energy, Inc.

      Attention:
        Mr. Harry Peters

      September
        30, 2005

      Page
        3

    

    
       

      Please
        indicate your acceptance of this Side Letter by dating, signing and thereafter
        returning to the undersigned the enclosed duplicate copy. The remaining
        counterpart should be retained far your files. If this SIDE
        LETTER TO FIRST AMENDMENT OF FARMOUT AGREEMENT is circulated
        and executed by facsimile transmission, the signatures of the Dragon and
        Argyle
        shall be considered as
        original
        and self-proving for all purposes under the law. This Side Letter may be
        executed in
        multiple
        counterparts, each of which shall be deemed to be an original, binding, and
        enforceable document, all of which shall constitute one and the same
        instrument.

    

     

    
      	 	 	
              Very
                truly yours,

            
	 	 	 
	 	 	
              DRAGON
                ENERGY CORPORATION

            
	 	 	 
	 	 	 
	 	
              By: 
                

            	
              /s/
                McLain J. Forman

            
	 	 	
              McLAIN
                J. FORMAN

            
	 	 	
              PRESIDENT

            

    

    

    
      	
              MJF:rs

            	 
	
              Attachment

            	 
	 	 
	
              AGREED
                TO AND ACCEPTED

            	 
	
              THIS
                30TH DAY OF SEPTEMBER 2005.

            	 

    

    

    
      	 	
              ARGYLE
                ENERGY, INC.

            	 
	 	 	 
	 	 	 
	
              BY: 
                

            	
              /s/
                Harry J. Peters

            	 
	 	
              HARRY
                J. PETERS

            	 
	 	
              SENIOR
                VICE-PRESIDENTExhibit 10.4

    
      

    

    DRAGON
      ENERGY
      CORPORATION

    650
      POYDRAS
      STREET,
      SUITE
      2828

    NEW
      ORLEANS,
      LOUISIANA
      70130-6155

    

    
      	
              FAX

            	 	
              TELEPHONE

            
	
              (504)
                586-0017

            	 	
              (504)
                586-1717

            

    

    

    March
      14,
      2006

    

    
      	
              Ignis
                Petroleum Corporation 

            	
              Bayou
                City Exploration, Inc. 

            
	
              100
                Crescent Court, 7th
                Floor

            	
              f/k/a
                Blue Ridge Energy, Inc.

            
	
              Dallas,
                Texas 75201-1832

            	
              10777
                Westheimer

            
	
              Attention: Mr.
                Michael P. Piazza   

            	
              Suite
                170   

            
	 	
              Houston,
                Texas 77024

            
	 	 
	
              Argyle
                Energy, Inc.

            	
              Newton
                Properties, Inc.

            
	
              10777
                Westheimer 

            	
              Trust
                Company Complex

            
	
              Suite
                170

            	
              Ajeltake
                Road

            
	
              Houston,
                Texas 77042

            	
              Ajeltake
                Island, 

            
	 	
              Majuro,
                Marshall Islands MH96960

            
	 	 
	 	 
	 	 
	 	 

    

    

      
        	
                Re:

              	
                RATIFICATION
                  AND AMENDMENT OF

              
	 	 	
                Farmout
                  Agreement, First Amendment of Farmout Agreement,

              
	 	 	
                and
                  Side Letter to First Amendment of Farmout Agreement

              
	 	
                Barnett
                  Crossroads Prospect (Prospect No. 20)

              
	 	
                Escambia
                  County

              
	 	
                A
                  L
                  A B A M A

              	 

      

       

    

    Gentlemen:

    

    DRAGON
      ENERGY CORPORATION (“Dragon”),
      IGNIS
      PETROLEUM CORPORATION (“Ignis”),
      BAYOU
      CITY EXPLORATION, INC. F/K/A BLUE RIDGE ENERGY, INC.
      (“BCE”),
ARGYLE
      ENERGY, INC.
      (“Argyle”) and NEWTON
      PROPERTIES, INC.
      (“Newton”) hereby agree to the following:

    

    

    
      	 	
              1.

            	
              Ignis
                has acquired from Newton all of Argyle’s interest in the Farmout
                Agreement,
                dated August 23, 2004, between Dragon and Argyle (the “Farmout”), as
                amended by The
                First Amendment of Farmout Agreement,
                dated September 30, 2005, between Dragon and Argyle (the “Amendment”), and
                the Side
                Letter to the First Amendment of Farmout Agreement,
                dated September 30, 2005, between Dragon and Argyle (the “Side Letter,”
                and together with the Farmout and the Amendment the “Argyle-Dragon
                Agreements”), which constitute the entirety of the agreements between
                Dragon and Argyle concerning the Barnett Crossroads Prospect (Prospect
                No.
                20) in Escambia County, Alabama (the “Prospect”), save and except that
                Argyle reserved for itself an overriding royalty interest (the “Argyle
                Royalty”) out of the seventy-five percent (75%) of the working interest in
                the Prospect which was earnable by Argyle (now earnable by Ignis)
                under
                the Argyle-Dragon Agreements, such that Ignis has acquired the right
                to
                earn seventy-five percent (75%) of the working interest in the Prospect
                with a corresponding net revenue interest of fifty-two and five tenths
                percent (52.5%). The Argyle Royalty shall have no effect whatsoever
                on the
                twenty-five percent (25%) of the working interest retained by Dragon
                under
                the Argyle-Dragon Agreements.

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        Ignis
          Petroleum Corporation et al

        March
          14,
          2006

        Page
          2

      

    

    
      	 	
              2.

            	
              None
                of the parties hereto shall have any further obligation to any other
                party
                with regard to the Prospect, except that (1) Ignis shall have all
                of the
                rights and obligations of Argyle under the Argyle-Dragon Agreements,
                (2)
                Dragon shall continue to have its own rights and obligations under
                the
                Argyle-Dragon Agreements, and (3) the Argyle-Dragon Agreements are
                hereby
                modified as set forth in this letter agreement (this “Agreement”).
                Accordingly, all other previously executed agreements among the parties
                related to the Prospect are hereby terminated and shall be of no
                further
                force or effect, including without
                limitation:

            

    

    

    
      	 	
              §

            	
              Letter
                Agreement, dated March 31, 2005, by and among Argyle, Newton and
                BCE;

            

    

    
      	 	
              §

            	
              Operating
                Agreement, dated March 31, 2005, by and between BCE, as operator,
                and
                Newton, as non-operator;

            

    

    
      	 	
              §

            	
              Letter
                Agreement, dated April 22, 2005, by and between Newton and
                Ignis;

            

    

    
      	 	
              §

            	
              Assignment
                of an Interest in Oil, Gas and Mineral Leases, dated April 22, 2005,
                made
                by Newton in favor of Ignis;

            

    

    
      	 	
              §

            	
              Letter
                Agreement, dated September 29, 2005, by and among Argyle, Newton,
                Ignis
                and BCE; and

            

    

    
      	 	
              §

            	
              Letter
                Agreement, dated September 30, 2005, by and among Newton, Ignis and
                Ignis
                Petroleum Group, Inc.

            

    

    

    Provided,
      however, that each party shall do and perform, or cause to be done and
      performed, all such further acts and things, and shall execute and deliver
      all
      such other agreements, certificates, instruments and documents, as any other
      party may reasonably request in order to carry out the intent and accomplish
      the
      purposes of assigning Argyle’s rights under the Argyle-Dragon Agreements, as
      amended hereby, to Ignis.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        Ignis
          Petroleum Corporation et al

        March
          14,
          2006

        Page
          3

      

    

    
      	 	
              3.

            	
              Ignis
                and Dragon hereby ratify and confirm the Argyle-Dragon Agreements,
                including the Operating Agreement attached to the Farmout as Exhibit
                IV
                (the “Operating Agreement”), except that notwithstanding anything in the
                Argyle-Dragon Agreements to the contrary the Argyle-Dragon Agreements
                shall be modified as follows:

            

    

    

    
      	 	
              a.

            	
              Dragon
                is the contract operator of the Test Well on behalf of Ignis and
                is
                designated the operator under the Operating Agreement. Dragon shall
                have
                all of the rights and
                obligations
                of
                the Operator under the Operating Agreement and Ignis shall have all
                rights
                and obligations of the Non-Operator under the Operating
                Agreement.

            

    

    

    
      	 	
              b.

            	
              In
                addition to any amounts to which Dragon is entitled under the Operating
                Agreement and any third party costs but in lieu of the monthly fee
                Argyle
                agreed to pay Dragon under Section 2 of the Side Letter, Ignis agrees
                to
                pay Dragon the sum of $10,000.00 per month, in advance, as a fee
                for
                management services until the earlier of (i) the Test Well is plugged
                and
                abandoned and the drillsite is restored to the surface owner’s written
                satisfaction or (ii) another mutually acceptable operator is appointed
                by
                Dragon and Ignis. If the well is completed as a well capable of commercial
                production, the monthly management fee will thereafter be in an amount
                mutually acceptable to Dragon and Ignis.

            

    

    

    
      	 	
              c.

            	
              Dragon,
                as contract operator for Ignis, will perform the operations described
                in
                Sections 3.1, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8 and 3.9 of the Farmout
                Agreement on behalf of Ignis. Ignis will be responsible for 100%
                of all
                costs to casing point, including any additional testing approved
                by Ingis,
                as described in Section 3.4, plus either 100% of all costs to plug
                and
                abandon the Test Well and restore the drillsite or 75% of all costs
                of
                completing and equipping the Test Well, in accordance with the Farmout
                Agreement.

            

    

    

    
      	 	
              d.

            	
              Section
                9 of the Farmout Agreement is deleted in its entirety. Dragon shall
                have
                no liability as contract operator of the Test Well or as Operator
                under
                the Operating Agreement for losses sustained or liabilities incurred,
                except such as may result from Dragon’s gross negligence or willful
                misconduct. Dragon
                shall provide insurance for the benefit of Ignis in accordance with
                Exhibit “D” to the Operating Agreement. The cost of all insurance provided
                by Dragon shall be charged to the joint account under the terms of
                the
                Operating Agreement. 

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        Ignis
          Petroleum Corporation et al

        March
          14,
          2006

        Page
          4

      

    

    
      	 	
              e.

            	
              If
                Dragon fails to commence the Test Well by the date required in the
                Argyle-Dragon Agreements, or Dragon does not drill the Test Well
                (or
                Substitute Test Well) to Casing Point through no material fault of
                Ignis,
                Ignis shall be granted sixty 60 days of additional time to commence
                the
                Test Well or the Substitute Test Well under Section 3 of the
                Farmout.

            

    

    

    
      	 	
              f.

            	
              Ignis
                agrees to advance to Dragon 100% of the total estimated dry hole
                cost of
                the Wefel Family Trust 19-1 well (the “Test Well”) in the amount of
                $1,675,000.00 as shown on the AFE, attached as Exhibit “A” hereto, in two
                payments. Dragon acknowledges that the first payment in the amount
                of
                $970,750.00 was paid by Ignis on or before February 2, 2006 and that
                the
                second payment in the amount of $704,250.00 was
                paid
                on
                or before February 14, 2006.

            

    

    

    
      	 	
              g.

            	
              If
                at any time during the drilling, evaluating, plugging, and abandonment
                or
                restoration of the drillsite of the Test Well, Dragon estimates that
                the
                total costs will exceed the amount of $1,675,000.00, Ignis agrees
                that it
                will advance to Dragon 100% of any estimated additional amounts related
                to
                the “dry hole.”

            

    

    

    
      	 	
              h.

            	
              In
                the event that Ignis elects to participate in the completion of the
                Test
                Well, Ignis will advance to Dragon Ignis’
                share of the estimated total cost of all necessary expenditures for
                the
                completing and equipping of said well. If at any time during the
                completion or equipping of the Test Well, Dragon estimates that Ignis’
                share of the completion and equipping costs will exceed the amount
                previously advanced by Ignis, Ignis agrees that it will advance to
                Dragon
                Ignis’
                share
                of any estimated additional amounts related to such
                costs.

            

    

    

    
      	 	
              i.

            	
              The
                advances listed in sub-paragraphs 3.f., 3.g. and 3.h. hereinabove
                shall be
                paid within forty-eight (48) hours, or within two (2) business days
                as the
                case may be, following the receipt of an invoice from Dragon, by
                wire
                transfer of funds as follows:

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        Ignis
          Petroleum Corporation et al

        March
          14,
          2006

        Page
          5

      

    

    Dragon
      Energy Corporation - Project Account

    Account
      No. 716 234 335

    Whitney
      National Bank - Routing No. 065000171

    

    
      	 	
              j.

            	
              Dragon
                will account to Ingis for all advances of funds in accordance with
                the
                terms of the Operating Agreement.

            

    

    

    
      	 	
              k.

            	
              In
                the event that Ignis fails to make timely payment to Dragon of any
                of the
                amounts listed in sub-paragraphs 3.f., 3.g. and 3.h. hereinabove,
                Ignis
                immediately forfeits all of its interests in the Farmout and in the
                lands
                subject to the Farmout to Dragon, and Dragon, in addition to the
                remedies
                set out in the Farmout or the Operating Agreement, may immediately
                cease
                all operations, abandon the well, and release the drilling rig at
                the sole
                cost of Ignis, and Dragon will have no further obligations under
                the
                Farmout.

            

    

    

    
      	 	
              4.

            	
              The
                addresses of Dragon and Ignis for notices, consents, approvals and
                other
                communications are the following:

            

    

     

    
      
        	
                Dragon
                  Energy Corporation

              
	
                650
                  Poydras Street, Suite 2828

              
	
                New
                  Orleans, Louisiana 70130-6155

              
	
                Attention:

              	
                Mr.
                  McLain J. Forman

              
	
                Email:

              	
                dragonenergy@bellsouth.net

              
	
                Office
                  Telephone:

              	
                (504)
                  586-1717

              
	
                Office
                  Fax:

              	
                (504)
                  586-0017

              
	 	 
	
                Ignis
                  Petroleum Corporation

              
	
                100
                  Crescent Court, 7th
                  Floor

              
	
                Dallas,
                  Texas 75201-1832

              
	
                Attention:

              	
                Mr.
                  Michael P. Piazza

              
	
                Email:

              	
                mpp@ignispetro.com

              
	
                Office
                  Telephone:

              	
                (214)
                  459-8188

              
	
                Office
                  Fax:

              	
                (214)
                  459-3101

              

      

       

    

    Please
      indicate your acceptance of this Ratification and Amendment by dating, signing
      and thereafter returning to the undersigned the enclosed duplicate copy. The
      remaining counterpart should be retained for your files. If this Ratification
      and Amendment is circulated and executed by facsimile transmission, the
      signatures of the parties shall be considered as original and self-proving
      for
      all purposes under the law. This Ratification and Amendment may be executed
      in
      multiple counterparts, each of which shall be deemed to be an original, binding,
      and enforceable document, all of which shall constitute one and the same
      instrument.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        Ignis
          Petroleum Corporation et al

        March
          14,
          2006

        Page
          6

      

    

    

    
      	 	 	
              Very
                truly yours,

            
	 	 	 
	 	 	
              DRAGON
                ENERGY CORPORATION

            
	 	 	 
	 	 	 
	 	
              By:

            	/s/
              McLain J. Forman
	 	 	
              McLAIN
                J. FORMAN

            
	 	 	
              PRESIDENT

            

    

    

      
        	
                MJF:rs

              	 
	
                Attachment

              	 
	 	 
	 	 
	
                RATIFICATION
                  AND AMENDMENT OF FARMOUT AGREEMENT, FIRST AMENDMENT OF FARMOUT
                  AGREEMENT,
                  AND SIDE LETTER TO FIRST AMENDMENT OF FARMOUT AGREEMENT AGREED
                  TO AND
                  ACCEPTED THIS    15     
                  DAY OF MARCH 2006.

              	 
	 	 
	
                IGNIS
                  PETROLEUM CORPORATION

              	 

      

       

      
      

      
        	
                BY:

              	/s/
                Michael P. Piazza	 
	 	
                Michael
                  P. Piazza.

              	 
	 	
                President
                  and 

              	 
	 	
                Chief
                  Executive Officer

              	 

      
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        Ignis
          Petroleum Corporation et al

        March
          14,
          2006

        Page
          7

      

    

     

    
      
        	
                RATIFICATION
                  AND AMENDMENT OF FARMOUT AGREEMENT, FIRST AMENDMENT OF FARMOUT
                  AGREEMENT,
                  AND SIDE LETTER TO FIRST AMENDMENT OF FARMOUT AGREEMENT AGREED
                  TO AND
                  ACCEPTED THIS    14th     
                  DAY OF MARCH 2006.

              	 
	 	 
	
                BAYOU
                  CITY EXPLORATION, INC.

              	 
	
                F/K/A
                  BLUE RIDGE ENERGY, INC. 

              	 

      

       

       

      
        	
                BY:

              	 
                	 /s/
                E.S.	 
	
                NAME:

              	 Ed
                Suhr	 
	
                TITLE:

              	 SR
                VP - Land	 

      

      

        
          	
                  RATIFICATION
                    AND AMENDMENT OF FARMOUT AGREEMENT, FIRST AMENDMENT OF FARMOUT
                    AGREEMENT,
                    AND SIDE LETTER TO FIRST AMENDMENT OF FARMOUT AGREEMENT AGREED
                    TO AND
                    ACCEPTED THIS _______ DAY OF MARCH 2006.

                	 
	 	 
	
                  NEWTON
                    PROPERTIES, INC.

                	 

 

         

      

      
        
          	
                  BY:

                	 
                  	
                   /s/
                    David Craven

                	 
	
                  NAME:

                	 David
                  Craven	 
	
                  TITLE:

                	 Director	 

        

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        Ignis
          Petroleum Corporation et al

        March
          14,
          2006

        Page
          8

      

    

    

    
      	
              RATIFICATION
                AND AMENDMENT OF FARMOUT AGREEMENT, FIRST AMENDMENT OF FARMOUT AGREEMENT,
                AND SIDE LETTER TO FIRST AMENDMENT OF FARMOUT AGREEMENT AGREED TO
                AND
                ACCEPTED THIS     14th   
                 DAY OF MARCH 2006.

            	 
	 	 
	
              ARGYLE
                ENERGY, INC.

            	 

    

     

     

    
      	
              BY:

            	 
	 /s/
              Harry Peters	 
	
              NAME:

            	 Harry
              Peters	 
	
              TITLE:

            	 SR
              VP

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00100-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00100-of-00352.parquet"}]]