Document:

Exhibit 10.3

HAWLER ENERGY, LTD.
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Ugland House                            Phone: 01 817 886-0378
South Church Street                     Fax:   01 775 640-5119
George Town, Grand Cayman
Cayman Islands

                                September 8, 2006

Calibre Energy Inc
Suite 402
1155 Dairy Ashford St.
Houston, Texas  77079-3012

Gentlemen:

         I am writing to set forth our understanding.

         The Hawler Energy, Ltd., a Cayman Islands company ("Hawler"), together
with A & T Petroleum Company, Ltd. ("A&T"), executed that certain Exploration
and Production Sharing Agreement dated March 29, 2006 with the Oil and Gas
Petroleum Establishment of the Kurdistan Regional Government - Iraq (the "PSA"),
a copy of which has been furnished to you. For convenience, terms defined in the
PSA shall have the same meaning when used herein.

         A&T, as Operator, and Hawler, as Non-Operator, have executed that
certain Joint Operating Agreement dated August ___, 2006 (the "JOA"), a copy of
which has been furnished to you. For convenience, terms defined in the JOA shall
have the same meanings when used herein. The JOA reflects a Participating
Interest in Hawler of 50% as of the Effective Date (the "Hawler 50%
Participating Interest").

         Hawler has agreed to sell, and you have agreed to purchase an undivided
10% of the interest of the Contractor under the PSA, as follows:

         1. You have paid to Hawler this date the sum of $2.0 million.

         2. You agree to pay an additional $1.0 million to Hawler within thirty
days of the completion of the initial well on the lands included within the PSA
concession area as a well capable of production or as a dry hole.

         3. As to joint interest billings, including cash calls, made by the
Operator under the JOA after August 1, 2006, to the Hawler 50% Participating
Interest

                  a) you will pay 20% of such billings, reflecting your 10%
         Participating Interest, to the Operator; and

                  (b) in addition, you will pay 80% of such billings, reflecting
         billings to a 40% Participating Interest, to Hawler until the amount of
         such payments equals $2.5 million.

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Calibre Energy, Inc.
September 8, 2006
Page 2 of 3

                  Your payment under (b) of this paragraph shall not entitle you
         to receive cost recovery oil attributable to such expenditures.

4. The PSA requires that an intended deed of assignment of the Contractor's
interest in the PSA be presented to the OGE for its prior approval. You and
Hawler shall promptly present to the OGE an intended deed of assignment
assigning from Hawler to you 10% of the Contractor's interest under the PSA.
Upon approval by the OGE of the deed of assignment, Hawler shall execute and
deliver a conforming deed of assignment to you. The assignment shall warrant
title by, through and under Hawler, but not otherwise. Until such time, if any,
as the OGE approves the intended deed of assignment, as between Hawler and you,
you shall be treated as the owner of 10% of the Contractor's interest under the
PSA, and you shall pay such costs as are properly payable by the holder of a 10%
Participating Interest, and be entitled to receive that share of hydrocarbons
inuring to the holder of 10% of the Contractor's Interest under the PSA.

         This Agreement constitutes the entire agreement between you and Hawler
regarding the PSA or oil and gas operations or investments within the Kurdistan
Regional Government of Iraq by either of us. No oral statements or prior written
material not specifically incorporated herein shall be of any force or effect.

         You have advised us that you anticipate assigning your rights under
this contract to a special purpose entity. Hawler consents to such assignment.

         You acknowledge that W. Richard Anderson is a director of Hawler and
may personally benefit from your investment under this letter. W. Richard
Anderson is also a director of Calibre Energy, Inc.

         If I have correctly set forth our understandings, kindly so indicate by
executing one counterpart of this letter and returning it to the undersigned.
Yours very truly,

                                                     W. Richard Anderson
                                                     Director

<PAGE>

Calibre Energy, Inc.
September 8, 2006
Page 3 of 3

ACCEPTED AND AGREED TO THIS
13th DAY OF SEPTEMBER, 2006

Calibre Energy, Inc

S/ Edward L. MosesHAWLER ENERGY, LTD.
================================================================================
Ugland House                   Phone: 01 817 886-0378
South Church Street            Fax:   01 775 640-5119
George Town, Grand Cayman
Cayman Islands

                                September 8, 2006

Calibre Energy Inc
Suite 402
1155 Dairy Ashford St.
Houston, Texas  77079-3012

Gentlemen:

     Of even date herewith, we have executed an agreement for your participation
in that certain Exploration and Production Sharing Agreement dated March 29,
2006 with the Oil and Gas Petroleum Establishment of the Kurdistan Regional
Government - Iraq, which is operated by A&T Petroleum Company, Ltd. This letter
shall evidence our further agreement regarding additional opportunities in the
energy sector in Iraq.

     We have furnished you a copy of the agreement styled "Confidentiality and
Non-Competition Agreement" dated November 3, 2003 between PETOIL Petroleum and
Petroleum Products International Exploration and Production Incorporated
("PetOil") and Prime Natural Resources, Inc. ("Prime") (the "PetOil
Non-Competition Agreement"). The PetOil Non-Competition Agreement restricts
activities of the Prime Natural Resources, Inc. in the area described in
Paragraph 11 thereof (the "PetOil Non-Competition Lands").

     We have also furnished you a copy of an agreement dated April 29, 2006,
between KAR Group and Prime (the "KAR Agreement). The KAR Agreement restricts
certain of Prime's activities until April 29, 2007.

     We have executed an area of mutual interest agreement with an affiliate of
Hillwood Energy, Ltd. ("Hillwood"). The agreement contemplates that the interest
of Hawler and Hillwood will be equal in newly acquired production sharing
agreements in the PetOil Non-Competition Lands, to the extent possible.

Non-PetOil Lands

     For purpose of this agreement, an "opportunity" is an acquisition by you or
Hawler Energy, Ltd., or any of your or Hawler's affiliates (as defined herein),
of any rights or interests in any agreement or arrangement for the exploration
or production of oil, gas or other hydrocarbons in the area of the Kurdistan
Regional Government of Iraq (an "opportunity") outside of the PetOil
Non-Competition Lands.

<PAGE>

Calibre Energy, Inc.
September 8, 2006
Page 2 of 5

     We have reached an agreement concerning the first opportunity acquired
after this date and before September 8, 2008 (the "First Opportunity"). As to a
second and subsequent opportunity, neither Hawler nor its affiliates shall have
an obligation to you, nor shall you or your affiliates have any obligation to
Hawler.

     The party acquiring the First Opportunity shall give notice to the other
party as soon as practical after such acquisition. The notice shall include all
of the terms and conditions of the acquisition together with copies of the
relevant agreements or contracts under which the rights are granted and all
technical information and data in the acquiring party's possession or to which
it has access. Such notice shall also delineate the opportunity with sufficient
clarity in terms of area and any related rights. The receiving party shall have
30 days (or such shorter period as may be required by the terms of the
opportunity presented) to notify the acquiring party whether it elects to
participate in the opportunity on the same terms and conditions as the acquiring
party is participating.

     If Hawler or its affiliate is the acquiring party, and Calibre elects to
participate, the ownership interest shall be:

     Hawler (and Hillwood)                      91%

     Calibre                                    9%

     In such event, Calibre shall pay, or reimburse, Hawler or its affiliate for
9% of its documented costs and expenses in acquiring the opportunity, and
thereupon Hawler or its affiliate shall transfer 9% of the rights and interests
acquired to Calibre, and the parties shall share on a 91% Hawler/9% Calibre
basis all rights, interests, costs and expenses on such opportunity thereafter.
If Calibre elects not to participate, or fails to respond to the notice within
the period above set out, then Hawler or its affiliate shall have the right to
own and deal with the opportunity free and clear of any rights or claims of
Calibre.

     If Calibre or its affiliate is the acquiring party, and Hawler elects to
participate, the ownership interest shall be:

     Hawler (and Hillwood)                      91%

     Calibre                                    9%

     In such event, Hawler or its affiliate shall pay, or reimburse, Calibre or
its affiliate for 91% of its documented costs and expenses in acquiring the
opportunity, and thereupon Calibre or its affiliate shall transfer 91% of the
rights and interests acquired to Hawler, and the parties shall share on a 91%
Hawler/9% Calibre basis all rights, interests, costs and expenses on such
opportunity thereafter. If Hawler elects not to participate, or fails to respond
to the notice within the period above set out, then Calibre or its affiliate
shall have the right to own and deal with the opportunity free and clear of any
rights or claims of Hawler.

<PAGE>

Calibre Energy, Inc.
September 8, 2006
Page 3 of 5

     On the First Opportunity, Hawler shall have the right to designate the
operator of the opportunity.

     Calibre agrees that it shall not acquire a second or subsequent opportunity
for a period of six months after the date of notice of acquisition of the First
Opportunity, provided, however, the foregoing restriction on acquisition of
opportunities shall not exist after September 8, 2008.

The PetOil Non-Competition Lands

     Subsequent to signing the PetOil Non-Competition Agreement, Prime acquired
one half of the contractor's interest in under a production sharing agreement
between the government of Iraq and PetOil (the "2003 PSA") covering the lands
described on Annex "A" to the PetOil Non-Competition Agreement.

     Prime seeks to enter into an agreement with the Kurdistan Regional
Government - Iraq by which one or more production sharing agreements are
substituted for the 2003 PSA (the "Substitute PSA"). The Substitute PSAs would
cover less than all the lands covered by the 2003 PSA. Prime would seek to
terminate the PetOil Non-Competition Agreement at that time.

     We agree to furnish you with copies of the Substitute PSAs when they are
secured. You agree that for a period of six months neither you nor your
affiliate shall acquire any opportunity in the PetOil Non-Competition Lands.
Thereafter, with respect to the PetOil Non-Competition Lands, we agree as
follows:

     (a) you may acquire any opportunity in the PetOil Non-Competition Lands.
Upon an acquisition made prior to September 8, 2008, you agree to offer
interests in the opportunity in the same manner provided herein for the First
Opportunity, i.e., if accepted by Hawler, the interests shall be owned on a
Hawler (and Hillwood) 91%/Calibre 9% basis, and Hawler shall be entitled to
designate the operator.

     (b) if Hawler agrees that if it or its affiliate acquires prior to
September 8, 2008, any opportunity that is both outside of the lands covered by
a Substitute PSA and within the PetOil Non-Competition Lands, then, provided no
First Opportunity has previously been offered, it shall offer you an opportunity
to participate in the first such opportunity so acquired in the same manner
provided herein for the First Opportunity, and such shall be treated as the
First Opportunity for the purposes of this agreement. As to such opportunity,
Hawler shall be entitled to designate the operator.

<PAGE>

Calibre Energy, Inc.
September 8, 2006
Page 4 of 5

Miscellaneous

     For purposes of this agreement, the term "affiliate" shall include entities
of which a party controls, is controlled by, or is under common control with the
relevant entity; and "control" shall be deemed to exist if one party owns or has
the right to vote more than 50% of the shares or interests an another party, or
where one party has at least 50% of the directors or managers of another party.
An "affiliate" shall also include any officer, director or partner of a party
hereto.

     Notices to be given hereunder shall be given by hand delivery, facsimile,
email or certified or registered mail to the other party's addresses, as
appropriate. If notice is given by facsimile or email, it shall be confirmed in
writing by certified or registered mail.

     This agreement is executed in connection with the agreement referenced in
the first paragraph above and is a portion of the consideration for the
execution of that agreement. Further, this agreement, together with the
agreement referenced in the first paragraph above, constitutes the entire
agreement between you and Hawler regarding additional oil and gas operations or
investments within Iraq by either of us. No oral statements or prior written
material not specifically incorporated herein shall be of any force or effect.

     Hawler's undertakings under this agreement are subject to the constraints
imposed by the KAR Agreement until April 29, 2007.

     If I have correctly set forth our understandings, kindly so indicate by
executing one counterpart of this letter and returning it to the undersigned.

                                                     Yours very truly,

                                                     W. Richard Anderson
                                                     Director

<PAGE>

Calibre Energy, Inc.
September 8, 2006
Page 5 of 5

ACCEPTED AND AGREED TO THIS
13th DAY OF SEPTEMBER, 2006

Calibre Energy, Inc.

/s/ Edward L. Moses

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