Document:

EXHIBIT 4.3  

AGENCY AGREEMENT 

Effective as of February
22, 2005 

Kodiak Oil & Gas Corp.

Suite 330, 1625 Broadway

Denver, Colorado 80202 

	Attention:        	
Mr. Lynn A. Peterson

President and Chief Executive Officer
 

Dear Sir: 

Re:    Private Placement of
Common Shares 

        Jennings
Capital Inc. (the “Agent”) understands that Kodiak Oil & Gas Corp. (the
“Corporation”) proposes to issue and sell up to 10,000,000 Common Shares (the
“Total Offered Shares”) on both a brokered and non-brokered basis at a price of
CDN $0.86 per Common Share by way of private placement. 

        Subject
to the terms and conditions hereof, the Agent hereby agrees to act as, and the Corporation
hereby appoints the Agent as, the sole and exclusive agent of the Corporation to offer, on
a reasonable best efforts basis and in accordance with the terms hereof, up to 3,400,000
of the Total Offered Shares (the “Offered Shares”) for sale on the Closing Date
(as defined below) in the Selling Jurisdictions (as defined below) on a private placement
basis at the price of CDN $0.86 per Offered Share. 

        The
Agent shall be entitled, in connection with the sale of the Offered Shares, to retain as
sub-agents other registered investment dealers or brokers to participate in the
solicitation of offers to purchase the Offered Shares and may receive (for delivery to the
Corporation at the Closing Time (as defined below)) subscriptions for Offered Shares from
other registered investment dealers or brokers (where registration is necessary). The
Agent will have the exclusive right to select such sub-agents and the fees payable to such
sub-agents shall be for the account of the Agent. It is understood and agreed that the
Agent is under no obligation to purchase any of such Offered Shares, although it may
subscribe for Offered Shares if it so desires. 

        In
consideration for its services hereunder, the Agent shall be entitled to the fee provided
for in accordance with Section 2 hereof. 

	1.  	   	Definitions  

	  	
In
this Agreement:

– 2 – 

	  	(a)  	  	“Agency
Fee” shall have the meaning set forth in section 2 of                this
Agreement;  

	  	(b)  	  	“Agent’s
counsel” means Bennett Jones LLP or such other                legal counsel as
the Agent may appoint;  

	  	(c)  	  	“Applicable
Securities Laws” includes all applicable                securities, corporate
and other laws, rules, regulations, notices, policies and                similar
instruments and proposed notices and policies;  

	  	(d)  	  	“Business
Day” means a day which is not a Saturday, Sunday or                legal holiday
in Denver, Colorado or Calgary, Alberta;  

	  	(e)  	  	“Closing
Date” means March 17, 2005 or such other date as the                Agent and
the Corporation may agree;  

	  	(f)  	  	“Closing
Time” means 10:00 a.m. (Calgary time) or such other                time, on the
Closing Date, as the Agent and the Corporation may agree;  

	  	(g)  	  	“Common
Shares” means common shares in the capital of the                Corporation;  

	  	(h)  	  	“Corporation’s
counsel” means Miller Thomson LLP, or such                other legal counsel as
the Corporation may appoint;  

	  	(i)  	  	“Documents” means,
collectively:  

	  	  	(a)  	  	the
audited consolidated financial statements of the Corporation for the years
          ended December 31, 2003 and 2002;  

	  	  	(b)  	  	the
management information circular and proxy statement of the Corporation           dated
May 7, 2004 with respect to the annual meeting of shareholders of the
          Corporation held on June 18, 2004;  

	  	  	(c)  	  	the
interim reports of the Corporation for the three months ended March 31,           2004,
the six months ended June 30, 2004 and the nine months ended September 30,           2004
including, without limitation, the unaudited financial statements of the
          Corporation for such three, six and nine month periods;  

	  	  	(d)  	  	all
material change reports of the Corporation filed after December 31, 2003;           and  

	  	  	(e)  	  	all
press releases of the Corporation subsequent to December 31, 2003;  

	  	(j) 	  	“Due
Diligence Session” shall have the meaning set forth in           section 3(c) of
this Agreement;  

	  	(k)  	  	“Exchange” means
the TSX Venture Exchange or any successor                thereto;  

	  	(l)  	  	“Financial
Statements” means, collectively, the comparative                audited
financial statements of the Corporation for the financial year ended
               December 31, 2003 and the unaudited interim financial statements of the
               Corporation for the three months ended  

– 3 – 

	  	
March
31, 2004, the six months ended June 30, 2004 and the nine months ended September 30,
2004;  

	  	(m)  	  	“MI
45-102” means Multilateral Instrument 45-102: Resale of
               Securities, as adopted on November 30, 2001 in the Selling
Jurisdictions and                as amended;  

	  	(n)  	  	“Public
Record” means all information filed by or on behalf of                the
Corporation with the Securities Commissions including, without limitation,
               the Documents and any other information filed with any Securities
Commission in                compliance, or intended compliance, with any Applicable
Securities Laws;  

	  	(o)  	  	“Securities
Commissions”means the securities commissions or                similar
regulatory authorities in the Selling Jurisdictions;  

	  	(p)  	  	“Selling
Dealer Group” means the dealers and brokers other than                the Agent
who participate in the offer and sale of the Offered Shares pursuant                to
this Agreement;  

	  	(q)  	  	“Selling
Jurisdictions” means the provinces of Alberta, British                Columbia
and Ontario, and certain other jurisdictions outside Canada, including                the
United States of America;  

	  	(r)  	  	“Subscriber” means
any person who executes a Subscription                Agreement which is accepted by the
Corporation;  

	  	(s)  	  	“Subscription
Agreements” means the agreements to be entered                into between the
Subscribers and the Corporation with respect to the offering of                the
Offered Shares;  

	  	(t)  	  	“Third
Parties” means any one or more persons other than the
               Corporation; and  

	  	(u)  	  	“Transfer
Agent” means CIBC Mellon Trust Company in its                capacity as
registrar and transfer agent for the Common Shares; and  

	  	(v)  	  	“United
States” means the United States of America, its                territories and
possessions, any state of the United States, and the District of                Columbia.  

The terms “affiliated”,
“misrepresentation”, “material change” and “material fact”
shall have the meanings ascribed thereto under the Applicable Securities Laws,
“distribution” means “distribution” or “distribution to the
public”, as the case may be, as defined under the Applicable Securities Laws and
“distribute” has a corresponding meaning. 

	2.  	   	Commission  

        In
consideration for its services hereunder, the Corporation agrees to pay the Agent on the
Closing Date a fee equal to 8.82% of the aggregate gross proceeds (the “Agency
Fee”) received by the Corporation on the sale of the Offered Shares. 

– 4 – 

	3.  	   	Covenants
of the Corporation  

	  	(a)  	  	The
Corporation will duly, punctually and faithfully perform all the obligations
               to be performed by it under the Subscription Agreements which the
Corporation                accepts.  

	  	(b)  	  	The
Corporation will use its best efforts to give effect to and complete all of
               its obligations under this Agreement.  

	  	(c)  	  	Without
limiting the scope of the due diligence inquiries the Agent may conduct,
               the Corporation shall make available its directors, officers, employees
and                other consultants to answer any questions which the Agent may have and
to                participate in one or more due diligence sessions to be held prior to
the                Closing Date (the “Due Diligence Session”); the Agent shall
distribute                a list of written questions to be answered in advance of such
Due Diligence                Session and the Corporation shall provide written responses
to such questions in                advance of the Due Diligence Session.  

	  	(d)  	  	during
the period commencing with the date hereof and ending on the conclusion                of
the distribution of the Offered Shares, promptly inform the Agent in writing
               of the full particulars of:  

	  	  	(i)  	  	any
material change (actual, anticipated or threatened) in the assets,
               liabilities (absolute, contingent or otherwise), capital, business,
operations                or condition (financial or otherwise) of the Corporation,  

	  	  	(ii)  	  	any
change in any material fact contained or referred to in the Public Record,  

	  	  	(iii)  	  	the
occurrence of a material fact or event which, in any such case, is, or may
               be, of such a nature as to: render any part of the Public Record untrue,
false                or misleading in a material respect; result in a misrepresentation
in any part                of the Public Record, or result in any part of the Public
Record not complying                with Applicable Securities Laws, or  

	  	  	(iv)  	  	the
discovery by the Corporation of any misrepresentation in any part of the
               Public Record,  

	  	
provided
the Corporation shall in good faith discuss with the Agent any change in circumstances
(actual, proposed or prospective) which is of such a nature that there is reasonable
doubt whether notice in writing need be given to the Agent pursuant to this section 3(d),
notwithstanding this obligation, the Corporation shall be entitled to comply with
Applicable Securities Laws;  

	  	(e)  	  	during
the period commencing with the date hereof and ending on the conclusion                of
the distribution of the Offered Shares, promptly inform the Agent of the full
               particulars of:  

– 5 – 

	  	  	(i)  	  	any
request of any Securities Commission for any amendment to the Public Record
               or for any additional information which may be material to the
distribution of                the Offered Shares,  

	  	  	(ii)  	  	the
issuance by any Securities Commission, the Exchange or other securities
               commission or similar regulatory authority or by any other competent
authority                of any order to cease or suspend trading of any securities of
the Corporation or                of the institution or threat of institution of any
proceedings for that purpose,                or  

	  	  	(iii)  	  	the
receipt by the Corporation of any communication from any Securities
               Commission, the Exchange or other securities commission or similar
regulatory                authority or any other competent authority relating to the
Public Record or the                distribution of the Offered Shares;  

	  	(f)  	  	use
the net proceeds from the sale of the Offered Shares to fund the
               Corporation’s share of the exploration and drilling programs in
respect of                its Pacific Rim properties in the Green River Basin in Wyoming,
including its                coalbed methane and conventional tight gas prospects, and
the Corporation’s                oil prospects in the Williston Basin of Eastern
Montana and Western North Dakota                over the next 12 months and for general
administrative purposes;  

	  	(g)  	  	file
a duly completed and executed Form 45-102F2 pursuant to MI 45-102 within 10
               days of the Closing Date;  

	  	(h)  	  	use
its best efforts to maintain its status as a “reporting issuer” or
               equivalent status in at least one of the Selling Jurisdictions until the
date                that is six months from the Closing Date;  

	  	(i)  	  	during
the period commencing on the date hereof and ending on the date which is
               30 days following the Closing Date, promptly provide to the Agent, for
review                prior to the publication, filing or issuance thereof any proposed
document,                including without limitation, any press release, annual
information form,                material change report or information circular, which is
or may be deemed to be                part of the Public Record;  

	  	(j)  	  	promptly
comply with Applicable Securities Laws to the satisfaction of the Agent
               and the Agent’s Counsel with respect to any change or occurrence of
the                nature referred to in section 3(d) and take such steps, which in the
               Agent’s opinion, acting reasonably, may be necessary or advisable to
comply                with Applicable Securities Laws;  

	  	(k)  	  	make
all necessary arrangements with the Exchange so that the Offered Shares
               shall be listed and posted for trading on the Exchange as soon as
practicable                after the Closing Time; and  

	  	(l)  	  	except
for the issuance by the Corporation of options to acquire Common Shares
               and the issuance of Common Shares upon the exercise of such options, all
in                accordance with the past practices of the Corporation, from the Closing
Date                until  

– 6 – 

	  	
the
date that is 90 days following the Closing Date, not offer, or announce the offering of,
or enter into or make or announce any agreement to issue, sell or exchange any Common
Shares to the public or securities convertible or exchangeable into Common Shares without
the prior consent of the Agent, such consent not to be unreasonably withheld.  

	4.  	   	Material
Change  

        From
the date hereof until the Closing Time, the Corporation will promptly inform the Agent of
the full particulars of any material change (actual, anticipated or threatened) in its
business, operations, capital or condition (financial or otherwise) or its properties or
assets and the occurrence of a material fact or event, which, in any such case, is, or may
be, of such a nature as to render any responses provided by the Corporation at the Due
Diligence Session untrue, false or misleading in a material respect, provided that if the
Corporation is uncertain as to whether a material change, change, occurrence or event of
the nature referred to in this paragraph has occurred, it shall promptly inform the Agent
of the full particulars of the occurrence giving rise to the uncertainty and shall consult
with the Agent as to whether the occurrence is of such nature. 

	5.  	   	Representations,
Warranties and Covenants of the Corporation  

        The
Corporation represents and warrants to the Agent, and acknowledges that the Agent is
relying upon such representations and warranties: 

	  	(a)  	  	the
Corporation has been duly incorporated and organized and is validly existing
               under the laws of the Yukon Territory and has all requisite corporate
authority                and power to carry on its business, as now conducted and as
presently proposed                to be conducted by it, and to own its properties and
assets;  

	  	(b)  	  	the
Corporation has no subsidiaries and is not affiliated with, nor is it a
               holding corporation of, any other body corporate, nor is it a partner of
any                partnership;  

	  	(c)  	  	the
Corporation is duly registered and qualified to carry on business and is
               validly subsisting under the laws of each jurisdiction in which it carries
on                its business;  

	  	(d)  	  	the
Corporation has full corporate power and authority to issue the Offered
               Shares and upon issuance, such Offered Shares will be issued as fully paid
and                non-assessable;  

	  	(e)  	  	the
Corporation is not in default or breach of, and the execution and delivery
               of, and the performance of and compliance with the terms of this Agreement
and                the Subscription Agreements by the Corporation, or any of the
transactions                contemplated hereby or thereby do not and will not result in
any breach of, or                constitute a default under, and do not and will not
create a state of facts                which, after notice or lapse of time or both,
would result in a breach of or                constitute a default under, any term or
provision of the articles, by-laws or                resolutions of the Corporation, or
any indenture, mortgage, note, contract,                agreement (written or oral),
instrument, lease or other document to which either                the Corporation is a
party or by which it is bound, or any judgment, decree,                order, statute,
rule or  

– 7 – 

	  	
regulation
applicable to the Corporation, which default or breach might reasonably be expected to
materially adversely affect the business, operations, capital or condition (financial or
otherwise) of the Corporation or its assets;  

	  	(f)  	  	the
Corporation has full corporate right, power and authority to enter into this
               Agreement and the Subscription Agreements and the Corporation has the full
               corporate right, power and authority to perform its obligations set out
therein,                and this Agreement and the Subscription Agreements have been or
will be, as the                case may be, duly authorized, executed and delivered by
the Corporation and are                legal, valid and binding obligations of the
Corporation enforceable against the                Corporation in accordance with their
terms subject to the general qualifications                that:  

	  	  	(i)  	  	enforceability
may be limited by bankruptcy, insolvency or other laws affecting                creditors’ rights
generally; and  

	  	  	(ii)  	  	equitable
remedies, including the remedies of specific performance and                injunctive
relief, are available only in the discretion of the applicable court;                and  

	  	  	(iii)  	  	rights
to indemnify and contribution may be limited by applicable law;  

	  	(g)  	  	the
Corporation does not have any material debts, liabilities or obligations
               (absolute, contingent or otherwise) other than as set forth in the
Financial                Statements;  

	  	(h)  	  	there
has not been any material adverse change in the capital, assets,
               liabilities or obligations (absolute, accrued, contingent or otherwise) of
the                Corporation from the position set forth in the Financial Statements
and there                has not been any adverse material change in the business,
operations, capital or                condition (financial or otherwise) or results of
the operations of the                Corporation since December 31, 2003; and since that
date there have been no                material facts, transactions, events or
occurrences which could materially                adversely affect the capital, assets,
liabilities (absolute, accrued, contingent                or otherwise), business,
operations or condition (financial or otherwise) or                results of the
operations of the Corporation, and the Corporation has not                incurred,
assumed or suffered any liability (absolute, accrued, contingent or
               otherwise) or entered into any transaction which is or may be material to
the                Corporation and is not in the ordinary course of business;  

	  	(i)  	  	there
are no actions, suits, proceedings or inquiries including, to the
               knowledge of the Corporation, pending or threatened against or affecting
the                Corporation at law or in equity or before or by any federal,
provincial, state,                county, municipal or other governmental department,
commission, board, bureau,                agency or instrumentality which in any way
materially adversely affect, or may                in any way materially adversely
affect, the business, operations or condition                (financial or otherwise) of
the Corporation or its assets or which affect or may                affect the
distribution of the Offered Shares;  

– 8 – 

	  	(j)  	  	the
Corporation has not incurred, assumed or suffered any liability (absolute,
               accrued, contingent or otherwise) or entered into any transaction, which
is or                may be material to the Corporation and is not in the ordinary course
of                business;  

	  	(k)  	  	the
Corporation is not a party to or bound by any material agreement of
               guarantee, indemnification (other than an indemnification of directors and
               officers in accordance with the by-laws of the Corporation and applicable
laws,                and indemnification obligations in favour of agents or underwriters
of                securities offerings) or any other like commitment of the obligations,
               liabilities (contingent or otherwise) of indebtedness of any other person;  

	  	(l)  	  	the
Corporation does not have any loans or other indebtedness currently
               outstanding to or from any of its shareholders, officers, directors or
employees                or any other person not dealing at arm’s length with the
Corporation;  

	  	(m)  	  	the
authorized capital of the Corporation consists of 100,000,000 Common Shares,
               of which as at the date hereof, 34,810,540 Common Shares are issued and
               outstanding as fully paid and non-assessable;  

	  	(n)  	  	other
than pursuant to the provisions of this Agreement and other than options
               to acquire 3,152,000 Common Shares held by officers, directors, and
employees                and consultants of the Corporation under the Corporation’s
stock option                plan, and 2,824,643 outstanding warrants, there are no
outstanding securities                convertible or exchangeable into any securities or
ownership interests of the                Corporation, or any agreement, warrant, option,
right or privilege being or                capable of becoming an agreement, warrant,
option or right for the purchase of                any unissued securities of the
Corporation;  

	  	(o)  	  	the
Corporation has duly filed all tax returns required to be filed by it, has
               paid all taxes due and payable by it and has paid all assessments and
               re-assessments and all other taxes, governmental charges, penalties,
interest                and other fines due and payable by it and which are claimed by
any governmental                authority to be due and owing, other than those that are
not reasonably expected                to have a material adverse effect on the
Corporation, and adequate provision has                been made for taxes payable for
any completed fiscal period for which tax                returns are not yet required and
there are no agreements, waivers, or other                arrangements providing for an
extension of time with respect to the filing of                any tax return or payment
of any tax, governmental charge or deficiency by the                Corporation and there
are no actions, suits, proceedings, investigations or                claims, to the
Corporation’s knowledge, threatened or pending against the
               Corporation in respect of taxes, governmental charges or assessments or
any                matters under discussion with any governmental authority relating to
taxes,                governmental charges or assessments asserted by any such authority;  

	  	(p)  	  	no
authorization, approval or consent of any court or governmental authority or
               agency is required to be obtained by the Corporation in connection with
the sale                and delivery of the Offered Shares;  

– 9 – 

	  	(q)  	  	the
form and terms of the definitive certificates representing the Common Shares
               are in due and proper form under the laws governing the Corporation;  

	  	(r)  	  	the
minute books of the Corporation contain full, true and correct copies of the
               constating documents of the Corporation and copies of all minutes of all
               meetings and all consent resolutions of the directors, committees of
directors                and shareholders of the Corporation, and all such meetings were
duly called and                properly held and all such resolutions were properly
adopted except to the                extent that any such failure could not reasonably be
expected to have a material                adverse effect on the Corporation;  

	  	(s)  	  	other
than as provided for in this Agreement, the Corporation has not incurred
               any obligation or liability, contingent or otherwise, for brokerage fees,
               finder’s fees, agent’s commission or other similar forms of
               compensation with respect to the transactions contemplated herein;  

	  	(t)  	  	there
are no material contracts or agreements to which the Corporation is a
               party or by which it is bound. For the purposes of this paragraph, any
contract                or agreement pursuant to which the Corporation will, or may
reasonably be                expected to result in, a requirement of the Corporation to
expend more than an                aggregate of $100,000 or receive or be entitled to
receive revenue of more than                $100,000 in either case during any 12 month
period, or is out of the ordinary                course of business of the Corporation,
shall be considered to be material;  

	  	(u)  	  	the
Corporation is not a party to any contracts of employment which may not be
               terminated on one month’s notice or which provide for payments
occurring on                a change of control of the Corporation, except for guaranteed
one year contracts                for three employees of the Corporation;  

	  	(v)  	  	although
it does not warrant title, the Corporation does not have reason to                believe
that it does not have good and marketable title to or the irrevocable
               right to produce and sell its petroleum, natural gas, bitumen and related
               hydrocarbons (for the purposes of this clause, the foregoing are referred
to as                the “Interests”) and does represent and warrant that the
Interests are                free and clear of all liens, charges, encumbrances,
restrictions or adverse                claims created by, through or under the
Corporation, other than any liens or                encumbrances that may be outstanding
pursuant to credit agreements with the                Corporation’s bank, and those
arising in the ordinary course of business,                which are not material in the
aggregate, and to the knowledge of the Corporation                after due inquiry, the
Corporation holds its interest under valid and subsisting                leases,
licenses, permits, consessions, concession agreements, contracts,
               subleases, reservations or other agreements;  

	  	(w)  	  	any
and all operations of the Corporation and to the knowledge of the
               Corporation, any and all operations by third parties, on or in respect of
the                assets and properties of the Corporation, have been conducted in
accordance with                good oil and gas industry practices and in material
compliance with applicable                laws, rules, regulations, orders and directions
of government and other                competent authorities;  

– 10 – 

	  	(x)  	  	the
Corporation has conducted, and is conducting, its business in compliance in
               all material respects with all applicable laws, rules and regulations and,
in                particular, all legislation, regulations or by-laws or other lawful
requirements                of any governmental or regulatory bodies (“Environmental
Laws”) of                each jurisdiction in which it carries on business relating
to the protection of                the environment, occupational health and safety or
the processing, use,                treatment, storage, disposal, discharge, transport or
handling of any                pollutants, contaminants, chemicals or industrial, toxic
or hazardous wastes or                substances (“Hazardous Substances”) or
the licensing thereof and the                Corporation holds all licenses,
registrations, permits, authorities and                qualifications in all
jurisdictions in which the Corporation carries on its                business which is
necessary or desirable to carry on the business of the                Corporation as now
conducted and as presently proposed to be conducted, and all                such
licenses, registrations, permits, authorities and qualifications are valid
               and existing and in good standing and none of such licenses,
registrations,                permits, authorities or qualifications contains any
burdensome term, provision,                condition or limitations which has or is
likely to have any material adverse                effect on the business of the
Corporation as now conducted, or as proposed to be                conducted, the
Corporation has not received notice of any proceedings relating                to the
revocation or modification of any such licenses, registrations, permits,
               authorities or qualifications which, if the subject of an unfavourable
decision,                ruling or finding, would materially adversely affect the
business, operations,                financial condition or prospects of the Corporation,
the Corporation has not                received any notice of, or been prosecuted for, an
offence alleging                non-compliance with any Environmental Laws, and the
Corporation has not settled                any allegation of non-compliance short of
prosecution, and there are no orders                or directions relating to
environmental matters requiring any work, repairs,                construction or capital
expenditures to be made with respect to any of the                assets of the
Corporation nor has the Corporation received notice of any of the                same;  

	  	(y)  	  	the
Corporation is not in default of any material requirement of Applicable
               Securities Laws and the Corporation is entitled to avail itself of the
               applicable prospectus exemptions available under the Applicable Securities
Laws                in respect of the trades in its securities to Subscribers as
contemplated by                this Agreement;  

	  	(z)  	  	there
has not occurred any material spills, emissions or pollution of any
               property of the Corporation, or for which the Corporation is or may be
               responsible, nor is the Corporation the subject of any outstanding stop
orders,                control orders, clean-up orders of reclamation orders under
applicable                environmental laws and regulations;  

	  	(aa)  	  	the
representations and warranties made by the Corporation in the Subscription
               Agreements are, or will be, true and correct as of the date at which they
are                made;  

	  	(bb)  	  	the
books of account and other records of the Corporation, whether of a
               financial or accounting nature or otherwise, have been maintained in
accordance                with prudent business practices;  

– 11 – 

	  	(cc)  	  	to
the knowledge of the Corporation as at the date of this Agreement, no insider
               of the Corporation has the present intention to sell any securities of the
               Corporation;  

	  	(dd)  	  	all
filings by the Corporation pursuant to which the Corporation has received or
               is entitled to receive government incentives have been made in accordance,
in                all material respects, with all applicable legislation and contain no
               misrepresentations of material fact or omit to state any material fact
which                could cause any amount previously paid to the Corporation or
previsously accrued                on the accounts thereof to be recovered or disallowed;  

	  	(ee)  	  	any
and all operations of the Corporation and to the knowledge of the
               Corporation, any and all operations by third parties, on or in respect of
the                assets and properties of the Corporation, have been conducted in
accordance with                applicable laws, rules, regulations, orders and directions
of government and                other competent authorities;  

	  	(ff)  	  	the
responses given by management on behalf of the Corporation in the Due
               Diligence Session shall, to the knowledge of management, after reasonable
               inquiry, be true, correct and complete in all material respects as at the
time                such responses are given;  

	  	(gg)  	  	the
Corporation shall comply with all the covenants and agreements made by it in
               the Subscription Agreements; and  

	  	(hh)  	  	with
respect to offers and sales in the United States, the Corporation makes the
               representations applicable to the Corporation contained in Schedule
               “A” hereto.  

	  	
It
is further agreed by the Corporation that all representations, warranties and covenants
in this section 5 made by the Corporation to the Agent, as supplemented pursuant to
Section 10(d) hereof, shall also be deemed to be made for the benefit of the Subscribers
as if the Subscribers were also parties hereto (it being agreed that the Agent is acting
for and on behalf of the Subscribers for this purpose).  

	6.  	   	Indemnity  

	(a)  	  	The
Corporation shall indemnify and save the Agent, and the Agent’s agents,
               directors, officers, employees, shareholders, partners and affiliates,
harmless                against and from all liabilities, claims, demands, losses (other
than losses of                profit in connection with the distribution of the Offered
Shares) costs, damages                and expenses to which the Agent, or any of the Agent’s
agents, directors,                officers, employees, shareholders, partners or
affiliates may be subject or                which the Agent, or any of the Agent’s
agents, directors, officers,                employees, shareholders, partners or
affiliates may suffer or incur, whether                under the provisions of any
statute or otherwise, in any way caused by, or                arising directly or
indirectly from or in consequence of:  

	  	  	(i)  	  	any
information or statement relating to or provided by the Corporation which is
               or is alleged to be untrue or any omission or alleged omission to provide
any                information or state any fact the omission of which makes or  

– 12 – 

	  	
is
 alleged  to make  any  such  information  or statement untrue or misleading in light of
the circumstances in which it was made; 

	  	  	(ii)  	  	any
misrepresentation or alleged misrepresentation made by the Corporation to
               the Agent;  

	  	  	(iii)  	  	any
prohibition or restriction of trading in the securities of the Corporation
               or any prohibition or restriction affecting the distribution of Units
imposed by                any competent authority if such prohibition or restriction is
based on any                misrepresentation or alleged misrepresentation of a kind
referred to in                subparagraph 6(a)(i) or 6(a)(ii);  

	  	  	(iv)  	  	any
order made or any inquiry, investigation (whether formal or informal) or
               other proceeding commenced or threatened by any one or more competent
               authorities (not based upon the activities or the alleged activities of
the                Agent or its banking or selling group members, if any) relating to or
materially                affecting the trading or distribution of the Offered Shares;  

	  	  	(v)  	  	any
misrepresentation contained herein or any breach of, default under or
               non-compliance by the Corporation with any representation, warranty, term
or                condition of this Agreement, a Subscription Agreement or any
requirement of                Applicable Securities Laws; or  

	  	  	(vi)  	  	the
exercise by any Subscriber of any contractual or statutory right of
               rescission in connection with the purchase of the Offered Shares;  

	  	
provided
that in the event and to the extent that a court of competent jurisdiction shall
determine (or the parties hereto mutually agree in writing) that any proceedings or
liabilities in respect of which indemnity may be sought resulted solely from the gross
negligence, fraud, wilful misconduct or fraudulent misrepresentation of any party
entitled to indemnity hereunder, this indemnity shall not apply.  

	  	
The
Agent shall be entitled, as trustee, to enforce the obligations contained herein on
behalf of any other party entitled to indemnity or contribution hereunder.  

	  	
The
Corporation agrees that in case any legal proceedings or investigation shall be brought
against or initiated against the Corporation by any securities commission, regulatory
authority, stock exchange, court, or other entity having regulatory authority, and any
representative of the Agent shall be required to testify in connection therewith or shall
be required to respond to procedures designed to discover information regarding, in
connection with, or by reason of the performance of professional services rendered to the
Corporation by the Agent, the Corporation shall pay the Agent the reasonable costs
thereof (including an amount to reimburse the Agent for time spent by its personnel in
connection therewith on such individuals’ usual per diem rates and out-of-pocket
expenses incurred by its personnel in connection therewith), as they occur.  

– 13 – 

	  	(b)  	  	If
any claim contemplated by paragraph 6(a) shall be asserted against any of the
               persons or corporations in respect of which indemnification is or might
               reasonably be considered to be provided for in such paragraph, such person
or                corporation (the “Indemnified Person”) shall notify the
Corporation                (the “Indemnifying Party”), as soon as possible of
the nature of such                claim (provided that the failure to so notify the
Indemnifying Party shall not                relieve the Indemnifying Party of any
liability which the Indemnifying Party may                have hereunder except and to
the extent that any such delay or failure to give                notice as herein
required prejudices the defence of such claim or results in any                material
increase in the liability which the Indemnifying Party has under this
               indemnity) and the Indemnifying Party shall be entitled (but not required)
to                assume the defense of any suit brought to enforce such claim, provided
however,                that the defence shall be through legal counsel selected by the
Indemnifying                Party and acceptable to the Indemnified Person acting
reasonably and that no                settlement may be made by the Indemnifying Party or
the Indemnified Person                without the prior written consent of the other,
such consent not to be                unreasonably withheld. The Indemnified Person shall
have the right to retain its                own counsel in any proceeding relating to a
claim contemplated by paragraph 6(a)                if:  

	  	  	(i)  	  	the
Indemnified Person has been advised by counsel that there may be a
               reasonable legal defence available to the Indemnified Person which is
different                from or additional to a defence available to the Indemnifying
Party (in which                case the Indemnifying Party shall not have the right to
assume the defence of                such proceedings on the Indemnified Person’s
behalf);  

	  	  	(ii)  	  	the
Indemnifying Party shall not have taken the defence of such proceedings and
               employed counsel within ten (10) days after notice of commencement of such
               proceedings; or  

	  	  	(iii)  	  	the
employment of such counsel has been authorized by the Indemnifying Party in
               connection with the defense of such proceeding;  

	  	
and,
in any such event, the reasonable fees and expenses of such Indemnified Person’s
counsel (on a solicitor and his client basis) shall be paid by the Indemnifying Party,
provided that the Indemnifying Party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the fees and expenses
of more than one separate law firm (in addition to any local counsel) for all such
Indemnified Persons.  

	  	(c)  	  	The
Corporation shall not, without Agent’s prior consent, settle,
               compromise, consent to the entry of any judgment in or otherwise seek to
               terminate any action, suit, proceeding, investigation or claim in respect
of                which indemnification may be sought hereunder (whether or not an
Indemnified                Person is a party thereto) unless such settlement, compromise,
consent or                termination includes a release of each Indemnified Person from
any and all                liabilities arising out of such action, suit, proceeding,
investigation or                claim. No admission of liability for any  

– 14 – 

	  	
proceeding
shall be made without the consent of the Indemnified Persons affected, such consent not
to be unreasonably withheld or delayed. No admission of liability shall be made by an
Indemnified Person without the consent of the Corporation, such consent not to be
unreasonably withheld or delayed, and the Corporation shall not be liable for any
settlement or any proceeding made without their consent, such consent not to be
unreasonably withheld or delayed.  

	  	(d)  	  	The
rights to indemnification provided in this Section 6 shall be in
               addition to, and without prejudice to, any other rights or remedies which
any                Indemnified Person may have.  

	7.  	   	Contribution  

        In
order to provide for just and equitable contribution in circumstances in which the
indemnification provided for in this Agreement is due in accordance with its terms but is,
for any reason, held by a court to be unavailable from the Indemnifying Party on ground of
policy or otherwise, each of the Indemnifying Party and the party or parties seeking
indemnification shall contribute to the aggregate liabilities, claims, demands, losses
(other than losses of profit in connection with the distribution of the Offered Shares),
costs, damages and expenses (including legal or other expenses reasonably incurred in
connection with investigation or defense of the same) to which they may be subject or
which they may suffer or incur: 

	  	(a)  	  	in
such proportion as is appropriate to reflect the relative benefit received by
               the Indemnifying Party on the one hand, and by the party or parties
seeking                indemnity on the other hand, from the offering of the Offered
Shares; or  

	  	(b)  	  	if
the allocation provided by paragraph 7(a) above is not permitted by
               applicable law, in such proportion as is appropriate to reflect not only
the                relative benefits referred to in paragraph 7(a) above but also to
reflect the                relative fault of the party or parties seeking indemnity, on
the one hand, and                the parties from whom indemnity is sought, on the other
hand, in connection with                the statements, commissions or omissions or other
matters which resulted in such                liabilities, claims, demands, losses,
costs, damages or expenses as well as any                other relevant equitable
considerations.  

For the purposes of this section 7,
the relative benefits received by the Corporation, on the one hand, and the Agent, on the
other hand, shall be deemed to be in the same proportion that the total proceeds of the
offering received by the Corporation (net of fees but before deducting expenses) bear to
the fees received by the Agent. 

        The
parties hereto agree that it would not be just and equitable if contributions pursuant to
this Agreement were determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to in the
immediately preceding paragraphs. The rights to contribution provided in this section 7
shall be in addition to, and without prejudice to, any other right to contribution which
the parties hereto may have. 

        Any
liability of the Agent under this section 7 shall be limited to the amount payable to the
Agent under section 2 hereof. 

– 15 – 

        The
obligations under the indemnity and right of contribution provided herein shall apply
whether or not the transactions contemplated by this Agreement are completed and shall
survive the completion of the transactions contemplated under this Agreement and the
termination of this Agreement. 

	8.  	   	Expenses  

        Whether
or not the transactions contemplated herein shall be completed, all costs and expenses of
or incidental to the creation, issuance and distribution of the Offered Shares shall be
borne by the Corporation, including, without limitation, the fees payable pursuant to the
Applicable Securities Laws, the fees and expenses of the Corporation’s counsel, the
reasonable fees and expenses of any special counsel retained by the Corporation’s
counsel, the fees and expenses of the Corporation’s auditors, transfer agents,
engineers and other outside consultants, the reasonable fees and expenses of Agent’s
counsel and the reasonable out-of-pocket expenses of the Agent relating to this
transaction and all other costs and out-of-pocket expenses relating to this transaction.
The Agent shall provide to the Corporation receipts or other documentation evidencing
reasonable out-of-pocket expenses for which the Agent is seeking reimbursement. 

	9.  	   	Termination  

	  	(a)  	  	The
Agent may terminate its obligations hereunder, by written notice to the
               Corporation, in the event that after the date hereof and at or prior to
the                Closing Time:  

	  	  	(i)  	  	any
order to cease or suspend trading in any securities of the Corporation, or
               prohibiting or restricting the distribution of the Offered Shares is made,
or                proceedings are announced, commenced or threatened for the making of
any such                order, by any securities commission or similar regulatory
authority or by any                other competent authority, and has not been rescinded,
revoked or withdrawn;  

	  	  	(ii)  	  	the
state of the financial markets or the energy industry is such that the
               Offered Shares cannot, in the sole opinion of the Agent acting reasonably,
be                successfully marketed;  

	  	  	(iii)  	  	any
inquiry, investigation (whether formal or informal) or other proceeding in
               relation to the Corporation or any of its directors or senior officers is
               announced, commenced or threatened by any securities commission or similar
               regulatory authority or by any other competent authority if, in the
reasonable                opinion of the Agent, the announcement, commencement or
threatening thereof                materially adversely affects or may materially
adversely affect the trading or                distribution of the Offered Shares;  

	  	  	(iv)  	  	there
shall have occurred any material adverse change (actual, contemplated or
               threatened) or any change in a material fact or occurrence of a material
fact or                event or event of the nature described in paragraph 4, as
determined by the                Agent in its sole discretion, acting reasonably, in
respect of the business,                operations, capital or condition (financial or  

– 16 – 

	  	
otherwise) of the Corporation or its
properties, assets, liabilities or obligations           (absolute, accrued, contingent
or otherwise);  

	  	  	(v)  	  	there
should develop, occur or come into effect or existence any event, action,
               state, condition or financial occurrence, or any catastrophe of national
or                international consequence, any law or regulation, or any other
occurrence of any                nature whatsoever, which, in the sole opinion of the
Agent acting reasonably,                materially adversely affects, or involves, or
will materially adversely affect,                or involve, the financial markets or the
business, operations or affairs of the                Corporation, such that it would not
be practical (in the sole opinion of the                Agent) to market the Offered
Shares;  

	  	  	(vi)  	  	the
Corporation shall be in breach of, default under or non-compliance with, in
               any material respect, any representation, warranty, term or condition of
this                Agreement or the Subscription Agreements; or  

	  	  	(vii)  	  	the
Agent shall determine that there exists any fact or circumstance not
               generally disclosed by the Corporation at the date hereof, which would
have, in                the opinion of the Agent, acting reasonably, a significant
adverse effect on the                market price or value of the Offered Shares.  

	  	(b)  	  	The
Agent may exercise any or all of the rights provided for in                paragraph 9(a)
or sections 10 or 14 notwithstanding any material change,                change, event or
state of facts and notwithstanding any act or thing taken or                done by the
Agent or any inaction by the Agent, whether before or after the                occurrence
of any material change, change, event or state of facts including,                without
limitation, any act of the Agent related to the offering of the Offered
               Shares for sale and the Agent shall only be considered to have waived or
be                estopped from exercising or relying upon any of its rights under or
pursuant to                paragraph 9(a) or sections 10 or 14if such waiver or
estoppel is in                writing and specifically waives or estoppes such exercise
or reliance.  

	  	(c)  	  	If
the Closing Date has not occurred on or before April 15, 2005, either the
               Corporation or the Agent may terminate its obligations under this
Agreement by                written notice to the other.  

	  	(d)  	  	The
Corporation and the Agent may terminate this Agreement at any time by mutual
               agreement in writing signed by the Corporation and the Agent.  

	  	(e)  	  	Any
termination pursuant to the terms of this Agreement shall be effected by
               notice in writing delivered to the Corporation or the Agent, as the case
may be,                provided that no termination shall discharge or otherwise affect
any obligation                of the parties under sections 6, 7 or 8 herein. The right
of either party to                terminate its obligations hereunder is in addition to,
and without prejudice to,                any other remedies it may have.  

– 17 – 

	10.  	   	Closing
Documents  

        The
obligations of the Agent hereunder shall be conditional upon the Agent receiving, and the
Agent shall have the right on the Closing Date on behalf of the Subscribers to withdraw
all Subscription Agreements delivered and not previously withdrawn by Subscribers unless
the Agent receives, at or prior to the Closing Time: 

	  	(a)  	  	A
legal opinion of the Corporation’s counsel addressed to the Agent and
               Agent’s counsel, in form and substance reasonably satisfactory to the
Agent                and Agent’s counsel, with respect to such matters as the Agent
and                Agent’s counsel may reasonably request relating to the offering
of the                Offered Shares, including, without limitation, that:  

	  	  	(i) 	  	
the
Corporation:  

	  	  	  	(A)  	  	has
been duly incorporated, is validly subsisting and is current and up to date           in
respect of all corporate filings required under the laws of the jurisdiction           of
its incorporation;  

	  	  	  	(B)  	  	has
all requisite power and authority to carry on its business as now conducted           by
it and to own its properties and assets; and  

	  	  	  	(C)  	  	is
qualified to carry on business under the laws of the jurisdictions in which           it
carries on a material portion of its business;  

	  	  	(ii)  	  	the
Corporation has all necessary corporate power and authority to enter into
               this Agreement and the Subscription Agreements and the Corporation has all
               necessary corporate power and authority to perform its obligations set out
               herein and therein, and this Agreement and the Subscription Agreements
have been                duly authorized, executed and delivered by the Corporation and
constitute legal,                valid and binding obligations of the Corporation,
enforceable against the                Corporation in accordance with their terms subject
to laws relating to                creditors’ rights generally and except that
rights to indemnity and                contribution may be limited or unavailable by
applicable law;  

	  	  	(iii)  	  	the
execution and delivery of this Agreement and the Subscription Agreements by
               the Corporation and the fulfillment of the terms thereof by the
Corporation and                the performance of and compliance with the terms of this
Agreement and the                Subscription Agreements by the Corporation do not and
will not result in a                breach of, or constitute a default under, and do not
and will not create a state                of facts which, after notice or lapse of time
or both, will result in a breach                of or constitute a default under, any
applicable laws or any term or provision                of the articles, by-laws of the
Corporation or, of which counsel is aware,                resolutions of the directors or
shareholders of the Corporation or any mortgage,                note, indenture,
contract, agreement (written or oral), instrument, lease or                other document
to which the Corporation is a party or by which it is bound on                the Closing
Date, of which such counsel is aware, which might reasonably be                expected
to  

– 18 – 

	  	
materially
 adversely  affect  the  business,   operations,   capital  or  condition
                           (financial or otherwise) of the Corporation; 

	  	  	(iv)  	  	the
form and terms of the definitive certificates representing the Common Shares
               have been approved and adopted by the directors of the Corporation and are
in                due and proper form under the laws governing the Corporation;  

	  	  	(v)  	  	the
Common Shares have been duly created, authorized and issued as fully paid
               and non-assessable;  

	  	  	(vi)  	  	the
offering, sale, issuance and delivery of the Offered Shares by the
               Corporation to the Subscribers in accordance with the Subscription
Agreements                are exempt, either by statute, regulation or order, from the
registration and                prospectus requirements of the Applicable Securities Laws
in the Selling                Jurisdictions and no prospectus will be required and no
other document must be                filed, proceeding taken or approval, permit,
consent, authorization or authority                obtained in any of the Selling
Jurisdictions to permit such offering, sale and                delivery of the Offered
Shares by the Corporation to the Subscribers, except for                the filing by the
Corporation, within the prescribed time periods, of the                required reports
of such sale and the payment by the Corporation of applicable                fees
relating thereto;  

	  	
and
as to the authorized and issued capital of the Corporation, the first trade in the
Offered Shares and all other legal matters, including compliance with the Applicable
Securities Laws, in any way connected with the issuance, sale and delivery of the Offered
Shares as the Agent may reasonably request.  

	  	
It
is understood that the Corporation’s counsel may rely on the opinions of local
counsel acceptable to it as to matters governed by the laws of jurisdictions other than
Alberta or Canada and on certificates of officers of the Corporation as to relevant
matters of fact.  

	  	(b)  	  	A
certificate of the Corporation dated the Closing Date, addressed to the Agent
               and signed on the Corporation’s behalf by its Chief Executive Officer
and                one other senior officer of the Corporation satisfactory to the Agent,
acting                reasonably, certifying that:  

	  	  	(i)  	  	the
Corporation has complied with and satisfied all terms and conditions of this
               Agreement and the Subscription Agreements on its part to be complied with
or                satisfied at or prior to the Closing Time;  

	  	  	(ii)  	  	the
representations, warranties and covenants of the Corporation set forth in
               this Agreement and the Subscription Agreements are true and correct at the
               Closing Time, as if made at such time;  

	  	  	(iii)  	  	no
event of a nature referred to in subparagraph 9(a)(i), (iii), (iv) or (v) has
               occurred or to the knowledge of such officers is pending, contemplated or  

– 19 – 

	  	
threatened
excluding with respect to subparagraphs  9(a)(iii),  (iv) or (v) any obligation to make a
determination                            as to the Agent's opinion; 

	  	  	(iv)  	  	no
order, ruling or determination having the effect of ceasing or suspending
               trading in any securities of the Corporation or prohibiting or restricting
the                distribution of the Offered Shares has been made, or proceedings have
been                announced, commenced or, to the knowledge of the Corporation,
threatened for the                making of any such order, ruling or determination by
any securities commission                or similar regulatory authority or by any other
competent authority, and has not                been rescinded, revoked or withdrawn,
and, to the knowledge of such officers, no                proceedings for such purpose
are pending, contemplated or threatened;  

	  	  	(v)  	  	the
Corporation has made and/or obtained, on or prior to the Closing Time, all
               necessary filings, approvals, consents and acceptances of applicable
regulatory                authorities and under any applicable agreement or document to
which the                Corporation is a party or by which it is bound in respect of the
execution and                delivery of this Agreement and the Subscription Agreements
by the Corporation,                the offering and sale of the Offered Shares and the
consummation of the other                transactions contemplated hereby (subject to
completion of filings with certain                regulatory authorities following the
Closing Date; and  

	  	  	(vi)  	  	such
other matters as may be reasonably requested by the Agent or Agent’s
               counsel.  

	  	(c)  	  	Executed
copies of the Subscription Agreements in form and substance reasonably
               satisfactory to the Agent and the Agent’s counsel.  

	  	(d)  	  	Confirmation
of additional representations and warranties as may be reasonably
               requested by the Agent to address special issues identified during the
course of                the Agent’s due diligence review.  

	  	
Subject
to the compliance by the Agent with its obligations hereunder, the Corporation may not
reject any properly completed Subscription Agreement unless: (i) the number of Common
Shares subscribed for pursuant to all the Subscription Agreements and tendered by the
Agent, exceeds the maximum number of Common Shares to be sold under this Agreement; or
(ii) the issuance of Offered Shares pursuant to any such Subscription Agreement would
breach or violate Applicable Securities Laws.  

	11.  	  	Deliveries  

        The
sale of the Offered Shares shall be completed at the Closing Time at the offices of
Agent’s counsel or at such other place as the Corporation and the Agent may agree.
Subject to the conditions set forth in section 10 herein, the Agent, on the Closing Date,
shall deliver to the Corporation: 

	  	(a)  	  	all
completed Subscription Agreements and where applicable, all completed forms
               required by the Applicable Securities Laws; and  

– 20 – 

	  	(b)  	  	a
certified cheque(s) or bank draft(s) payable to the Corporation at par in
               Calgary, or wire transfer of funds, in an amount equal to the aggregate
amount                of all of the subscriptions for Offered Shares delivered to and
accepted by the                Corporation, less the fees, expenses and disbursements
provided for in Sections                2 and 8 herein (or effect payment in such other
manner as the Corporation and                the Agent may agree);  

	  	
against
delivery by the Corporation of:  

	  	(c)  	  	the
opinions, certificates and documents referred to in section 10 above; and  

	  	(d)  	  	definitive
certificates representing, in the aggregate, all of the Offered                Shares
subscribed for in the name of Jennings Capital Inc. or in such name or
               names as the Agent shall notify the Corporation in writing not less than
               twenty-four (24) hours prior to the Closing Time provided such
certificates                registered in such names may, subject to receipt by the
Corporation of a                satisfactory indemnity, be delivered in advance of the
Closing Date to the Agent                or such other parties in such locations as the
Agent may direct and the Agent                and the Corporation may agree upon.  

	12.  	  	Due
Diligence  

        The
Agent shall have the option to terminate this Agreement if its due diligence inquiries or
investigations identify a material adverse circumstance which either existed as at the
effective date of this Agreement but which was not disclosed in writing to the Agent or
which occurred after the effective date hereof but prior to the Closing Time. 

	13.  	  	Notices  

        Any
notice or other communication to be given hereunder shall, in the case of notice to be
given to the Corporation, be addressed to the Corporation Attention: Mr. Lynn A. Peterson,
at the above address, fax no. (303) 592-8071 and a copy to: 

	  	
Miller Thomson LLP

Robson Court

1000 - 840 Howe Street

Vancouver, BC

 V6Z 2M1 

Attention: Gregory C. Smith

Fax No.: (604) 643-1258

and, in the case of notice to be
given to the Agent, be addressed to: 

	  	
Jennings Capital Inc.

2600, 520 - 5th Ave SW

Calgary, Alberta T2P 3R7

Attention: Mr. Martin McGoldrick

Fax No.: (403) 292-0979 

– 21 – 

	  	
and a copy to:

Bennett Jones LLP

4500, 855 - 2nd Street S.W.

Calgary, Alberta T2P 4K7

Attention: Mr. J. Douglas Foster

Fax No.: (403) 265-7219  

or to such other address as the party
may designate by notice given to the other. Each communication shall be personally
delivered to the addressee or sent by fax transmission to the addressee, and: 

	  	(a)  	  	a
communication which is personally delivered shall, if delivered before 4:00
               p.m. (local time) on a Business Day, be deemed to be given and received on
that                day and, in any other case be deemed to be given and received on the
first                Business Day following the day on which it is delivered; and  

	  	(b)  	  	a
communication which is sent by fax transmission shall, if sent on a Business
               Day before 2:00 p.m. (local time), be deemed to be given and received on
that                day and, in any other case, be deemed to be given and received on the
first                Business Day following the day on which it is sent.  

	14.  	  	Conditions  

	  	(a)  	  	All
terms and conditions of this Agreement to be performed by the Corporation
               shall be construed as conditions, and any breach or failure to comply with
any                material terms and conditions shall entitle the Agent to terminate its
               obligations hereunder by written notice to that effect given to the
Corporation                prior to the Closing Time. The Agent may waive in whole or in
part any breach                of, default under or non-compliance with any
representation, warranty, term or                condition hereof, or extend the time for
compliance therewith, without prejudice                to its rights in respect of any
other representation, warranty, term or                condition hereof or any other
breach of, default under or non-compliance with                any other representation,
warranty, term or condition hereof, provided that any                such waiver or
extension shall be binding on the Agent only if the same is in                writing.  

	  	(b)  	  	All
terms and conditions of this Agreement to be performed by the Agent shall be
               construed as conditions, and any breach or failure to comply with any
material                terms and conditions shall entitle the Corporation to terminate
its obligations                to sell the Offered Shares by written notice to that
effect given to the Agent                prior to the Closing Time. The Corporation may
waive in whole or in part any                breach of, default under or non-compliance
with any representation, warranty,                term or condition hereof, or extend the
time for compliance therewith, without                prejudice to its rights in respect
of any other representation, warranty, term                or condition hereof or any
other breach of, default under or non-compliance with                any other
representation, warranty, term or condition hereof, provided that any                such
waiver or extension shall be binding on the Corporation only if the same is
               in writing.  

– 22 – 

	15.  	  	Survival
of Representations and Warranties  

        All
representations, warranties, terms and conditions herein or contained in certificates or
documents submitted pursuant to or in connection with the transactions contemplated herein
shall survive the payment by the Agent for the Offered Shares, if any, and the termination
of this Agreement and shall continue in full force and effect for the benefit of the Agent
and the Corporation regardless of any investigation by or on behalf of the Agent with
respect thereto. 

	16.  	  	Agent’s
Covenants  

        The
Agent covenants and agrees with the Corporation that it will: 

	  	(a)  	  	conduct
activities in connection with the proposed offer and sale of the Offered
               Shares in compliance with all the Applicable Securities Laws and cause a
similar                covenant to be contained in any agreement entered into with any
Selling Dealer                Group established in connection with the distribution of
the Offered Shares;  

	  	(b)  	  	not
advertise the proposed offering or sale of the Offered Shares in the printed
               media of general and regular paid circulation, radio, television or
               telecommunications including electronic display;  

	  	(c)  	  	not
solicit subscriptions for the Offered Shares, trade in Offered Shares or
               otherwise do any act in furtherance of a trade of Offered Shares outside
of the                Selling Jurisdictions, provided that the Agent may offer the
Offered Shares in                the United States of America only in accordance with the
restrictions set forth                in Schedule “A” hereto, and may offer the
Offered Shares outside of                Canada and the United States in accordance with
applicable laws; and  

	  	(d)  	  	not
take any actions or make available to prospective subscribers any documents
               or materials which would constitute or require the Corporation to prepare
an                offering memorandum as defined under Applicable Securities Laws of the
Selling                Jurisdictions.  

	17.  	  	Severance  

        If
one or more of the provisions contained herein shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement, but this
Agreement shall be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein. 

	18.  	  	Relationship
Between the Corporation and the Agent  

        The
Corporation (i) acknowledges and agrees that the Agent may have certain statutory
obligations as a registrant under the Applicable Securities Laws and may have fiduciary
relationships with its clients; (ii) acknowledges and agrees that the Agent is neither the
agent of the Corporation nor otherwise a fiduciary of the Corporation; and (iii) consents
to the Agent acting hereunder while continuing to act for its clients. To the extent that
the Agent’s statutory obligations as a registrant under the Applicable Securities
Laws or fiduciary relationships with its clients (if any) conflict with its obligations
hereunder, the Agent shall be entitled to fulfill its 

– 23– 

        statutory
obligations as registrants under the Applicable Securities Laws and its duties to its
clients. Nothing in this Agreement shall be interpreted to prevent the Agent from
fulfilling its statutory obligations as a registrant under the Applicable Securities Laws
or to act as a fiduciary of its clients. 

	19.  	  	Governing
Law  

        This
Agreement shall be governed by and construed in accordance with the laws of the Province
of Alberta and the laws of Canada applicable therein. 

	20.  	  	Time
of the Essence  

        Time
shall be of the essence of this Agreement. 

	21.  	  	Counterpart
Execution  

        This Agreement
may be executed in one or more counterparts each of which so executed shall constitute an
original and all of which together shall constitute one and the same agreement. 

	22.  	  	Amendment  

        It
is understood that the terms and conditions of this Agreement supersede any previous
verbal or written agreement between the Agent and the Corporation. 

– 24 – 

        If
the foregoing is in accordance with your understanding and is agreed to by you, please
confirm your acceptance by signing the enclosed copies of this letter at the place
indicated and by returning the same to the Agent. 

	  	

JENNINGS CAPITAL INC.

Per: ______________________________________ 

ACCEPTED AND AGREED to as of this 

22nd day of February, 2005. 

KODIAK OIL & GAS CORP. 

Per: _______________________

SCHEDULE “A” 

TERMS AND CONDITIONS
FOR 

UNITED STATES OFFERS AND
SALES 

	  	
This
is Schedule “A” to the Agency Agreement (the “Agreement”) between
Kodiak Oil & Gas Corp.and Jennings Capital Inc. dated as of February 22, 2005. 

	1.  	  	As
used in this Schedule “A”, capitalized terms used herein and not
                    defined herein shall have the meanings ascribed thereto in the
Agreement and the                     following terms shall have the meanings indicated:  

	  	(a) 	  	“Affiliate” means
an “affiliate” as that term defined in           Rule 501(b) of Regulation D.  

	  	(b)  	  	“Directed
Selling Efforts” means “directed selling efforts”               as that
term is defined in Regulation S. Without limiting the foregoing, but for
               greater clarity in this Schedule “A”, it means, subject to the
               exclusions from the definition of directed selling efforts contained in
               Regulation S, any activity undertaken for the purpose of, or that could
               reasonably be expected to have the effect of, conditioning the market in
the                United States for the Common Shares and includes the placement of any
               advertisement in a publication with a “general circulation in the
United                States” that refers to the offering of Common Shares;  

	  	(c)  	  	“Exchange
Act” means the United States Securities Exchange Act of                1934, as
amended;  

	  	(d)  	  	“Foreign
Issuer” means a “foreign issuer” as that term is                defined in
Regulation S. Without limiting the foregoing, but for greater clarity                in
this Schedule “A”, it means any issuer that is (a) the government
               of any country, or of any political subdivision of a country, other than
the                United States; or (b) a corporation or other organization incorporated
under the                laws of any country other than the United States, except an
issuer meeting the                following conditions: (1) more than 50% of the
outstanding voting securities of                such issuer are directly or indirectly
owned of record by residents of the                United States; and (2) any of the
following: (i) the majority of the executive                officers or directors are
United States citizens or residents, (ii) more than                50% of the assets of
the issuer are located in the United States, or (iii) the                business of the
issuer is administered principally in the United States;  

	  	(e)  	  	“General
Solicitation” and “General Advertising” mean                “general
solicitation” and “general advertising”,                respectively, as
used in Rule 502(c) of Regulation D, including, without                limitation,
advertisements, articles, notices or other communication published                in any
newspaper, magazine or similar media or on the internet or broadcast over
               television, radio or the internet, or any seminar or meeting whose
attendees had                been invited by general solicitation or general advertising;  

– 2 – 

	  	(f)  	  	“Institutional
Accredited Investor” means an institution that is an                “accredited
investor” within the meaning of Rule 501(a)(i), (a)(2),                (a)(3), or
(a)(7) of Regulation D;  

	  	(g)  	  	“Investment
Company Act” means the United States Investment Company                Act of 1940,
as amended;  

	  	(h)  	  	“Regulation
D” means Regulation D adopted by the SEC under the                Securities Act;  

	  	(i)  	  	“Regulation
S” means Regulation S adopted by the SEC under the                Securities Act;  

	  	(j)  	  	“SEC” means
the United States Securities and Exchange Commission;  

	  	(k)  	  	“Securities
Act” means the United States Securities Act of 1933, as                amended;  

	  	(l)  	  	“Substantial
U.S. Market Interest” means “substantial U.S. market                interest” as
that term is defined in Regulation S; and  

	  	  	(m)  	  	“U.S.
Placement Agent” means Westminster Securities Corporation.  

	2. 	  	The
Agent represents, warrants and agrees as follows:  

	  	(a)  	  	The
Agent acknowledges that the Common Shares have not been and will not be
               registered under the Securities Act and that the Common Shares may not be
               offered or sold within the United States except pursuant to the exemption
from                the registration requirements of the Securities Act provided by
Section 4(2)                thereof and Rule 506 promulgated thereunder, and represents
and agrees that                neither the Agent nor the U.S. Placement Agent, nor any
person acting on their                behalf (A) has made or will make any Directed
Selling Efforts in connection with                the offer and sale of the Common
Shares, or (B) has made or will make (except as                contemplated by, and
pursuant to the terms of, Section 2(c) this Schedule                “A”) (x)
any offer to sell or solicitation of any offer to buy the                Common Shares to
any person in the United States or (y) any sale of the Common                Shares to
any person unless, at the time the order to purchase such Common                Shares
was placed, such person was outside the United States or the seller of
               such Common Shares and any person acting on its behalf reasonably believed
that,                at the time the order to purchase such Common Shares was placed,
such person was                outside the United States.  

	  	(b)  	  	The
Agent agrees that all offers and sales in the United States shall be made in
               compliance with all applicable federal and state laws and regulations
governing                registration and conduct of broker-dealers.  

	  	(c)  	  	The
Agent agrees that the Common Shares may be offered and sold in the United
               States pursuant only pursuant to Section 4(2) of the Securities Act and
Rule 506                promulgated thereunder and, thereunder, only to persons
reasonably believed by                the Agent to be Institutional Accredited Investors.
The Agent agrees, further,                that all offers to sell and solicitation of
offers to buy Common Shares in the                United  

– 3 – 

	  	
States
shall be made by the U.S.  Placement  Agent in accordance with, and in transactions that
do not require registration or qualification under, state securities (“blue sky”)
laws, and that all sales to persons in the United States shall be made only to persons
that have duly completed, executed and delivered a subscription agreement in a form
agreed between the Corporation and the Agent.  

	  	(d)  	  	The
U.S. Placement Agent is a duly registered broker-dealer with the United
               States Securities and Exchange Commission and is a member of and in good
               standing with the National Association of Securities Dealers, Inc.  

	  	(e)  	  	Neither
the Agent nor its affiliates nor the U.S. Placement Agent nor any other
               person acting on its behalf has engaged or will engage in any form of
General                Solicitation or General Advertising or Directed Selling Efforts in
connection                with the offer and sale of the Common Shares.  

	  	(f)  	  	At
the closing, the Agent and the U.S. Placement Agent will provide a
               certificate, substantially in the form of Exhibit I to this Schedule
               “A”, relating to the manner of the offer and sale of the Common
Shares                in the United States.  

	3. 	  	The
Corporation represents, warrants and agrees as follows:  

	  	(a)  	  	The
Corporation represents that it is, and as of the date of issuance of the
               Common Shares will be, a Foreign Issuer and that as of the date hereof
there is                and as of the date of the issuance of the Common Shares the
Corporation                reasonably believes there will be no Substantial U.S. Market
Interest in the                Common Shares.  

	  	(b)  	  	The
Corporation represents that at the date hereof and at the date of the sale
               of the Common Shares it is not, and is not required to be, registered as
an                “investment company” pursuant to the provisions of the
Investment                Company Act.  

	  	(c)  	  	The
Corporation represents and agrees that neither it nor any of its affiliates,
               nor any person (other than the Agent and the U.S. Placement Agent as to
which                the Corporation makes no representation) acting on behalf of it or
its                affiliates:  

	  	  	(i)  	  	has
made or will make any Directed Selling Efforts in connection with the offer           and
sale of the Common Shares, or has taken or will take any action, including           any
Directed Selling Efforts, that would cause the exemption afforded by Section
          4(2) of the Securities Act or Rule 506 of Regulation D or the exclusion from
          registration afforded by Regulation S to be unavailable for offers and sales of
          the Common Shares pursuant to the Agreement;  

	  	  	(ii)  	  	in
connection with the offer or sale of the Common Shares has engaged or will
          engage in any General Solicitation or General Advertising; and  

– 4 – 

	  	  	(iii)  	  	                  other
than offers and sales outside the United States in accordance with           Regulation
S, within the six month period prior to the date hereof has offered           or sold any
securities of the Corporation.  

Except with respect to offers or
sales to Institutional Accredited Investors within the United States in reliance upon an
exemption from registration under the U.S. Securities Act in accordance with the terms of
the Agreement and this Schedule “A”, neither the Corporation nor any of its
affiliates, nor any person acting on its or their behalf (other than the Agent and the
U.S. Placement Agent as to which the Corporation makes no representation), has made or
will make: (A) any offer to sell, or any solicitation of an offer to buy, any Common
Shares to a U.S. Person or a person in the United States; or (B) any sale of Common Shares
unless, at the time the buy order was or will have been originated, the purchaser is (i)
outside the United States or (ii) the Corporation, its affiliates, and any person acting
on their behalf reasonably believes that the purchaser is outside the United States. 

EXHIBIT I 

U.S. PLACEMENT
AGENT’S CERTIFICATE 

In connection with the private
placement in the United States of special warrants (the “Special Warrants”) in
the capital of Kodiak Oil & Gas Corp. (the “Corporation”) pursuant to the
agency agreement dated as of February 22, 2005 (such agreement, including Schedule
“A” thereto, the “Agreement”) between the Corporation and Jennings
Capital Inc. (the “Agent”), the undersigned does hereby certify on behalf of the
Agent as follows: 

	  	(d)  	  	Westminster
Securities Corporation (the “Placement Agent”) is a duly
               registered broker-dealer with the United States Securities and Exchange
               Commission and is a member of and in good standing with the National
Association                of Securities Dealers, Inc. on the date hereof;  

	  	(e)  	  	all
offers and sales of the Common Shares in the United States have been
               effected by the Placement Agent in accordance with all applicable U.S.
federal                and state laws governing the registration and conduct of brokers
and dealers;  

	  	(f)  	  	all
offers and sales of Common Shares in the United States were made to
               institutions reasonably believed to be Institutional Accredited Investors;  

	  	(g)  	  	no
form of General Solicitation or General Advertising was used by us in
               connection with the offer and sale of the Common Shares, including
               advertisements, articles, notices or other communications published in any
               newspaper, magazine or similar media or the internet or broadcast over
radio,                television or the internet, or any seminar or meeting whose
attendees had been                invited by general solicitation or general advertising,
in connection with the                offer or sale of the Common Shares in the United
States;  

	  	(h)  	  	the
Placement Agent has delivered to purchasers of the Common Shares in the
               United States, a copy of the same information relating to the Corporation
as                provided to subscribers in Canada and have not used any written
material other                than such documents in connection therewith;  

	  	(i)  	  	immediately
prior to transmitting any documents to offerees, we had reasonable                grounds
to believe and did believe that each offeree was an Institutional
               Accredited Investor and, on the date hereof, we continue to believe that
each                purchaser of the Common Shares is an Institutional Accredited
Investor; and  

	  	(j)  	  	the
offering of the Common Shares in the United States has been conducted by us
               in accordance with the terms of the Agreement.  

Terms used in this certificate have
the meanings given to them in the Agreement unless otherwise defined herein. 

Dated:
___________________, 2005 

	
JENNINGS CAPITAL INC.

By  __________________________

       Name:

       Title: 	
WESTMINSTER SECURITIES CORPORATION

By  __________________________

       Name:

       Title:AGENCY AGREEMENT 

January 26, 2004 

Kodiak Oil & Gas Corp.

Suite 330,
1625 Broadway

DENVER, CO  80202  

	Attention:  	   	Mr.
Lynn Peterson

President and Chief Executive Officer  

Re:   Proposed Issue and Sale of up to
$4,000,000 of Units  

Jennings Capital Inc. (the
“Agent”) understands as set forth below. 

	1.  	  	Kodiak
Oil & Gas Corp. (the “Corporation”) proposes to           offer for
sale on a private placement basis up to $4,000,000 in Units at a price           of $0.35
per Unit.  

	2.  	  	The
proceeds from the issue and sale of the Units will be used by the           Corporation
to fund the Pacific Rim Prospect and for general corporate purposes.  

Subject to the terms and conditions
hereof, the Agent hereby agrees to act as, and the Corporation hereby appoints the Agent
as, the sole and exclusive agent of the Corporation to offer the Units for sale on a
private placement basis in the Selling Jurisdictions and to use its best efforts to secure
subscriptions therefor, provided that the Agent shall not be under any obligation to
purchase any of the Units. The Agent shall be entitled, in its sole discretion, to engage
sub-agents and offer them as compensation any part of the sales commission described
below. The Agent shall, however, be under no obligation to engage any sub-agent. 

In consideration for its services
hereunder, including acting as financial advisor to the Corporation and advising on the
terms and conditions of the distribution, the Agent shall be entitled to be paid the
commission provided for in section 9.1. For greater certainty, the services provided by
the Agent in connection herewith will not be subject to goods and services tax provided
for in the Excise Tax Act (Canada) (“GST”) and
taxable supplies will be incidental to the exempt financial services provided. 

Set forth below are the further terms
and conditions of this agreement. 

ARTICLE 1 

INTERPRETATION  

	1.1  	  	Wherever
used in this agreement the terms set forth below have the meanings ascribed thereto. 

	  	
“Agent’s
Counsel” means Bennett Jones LLP.  

	  	
“Agent’s
Warrants” means a number of warrants equal to 8% of the number of
Units sold pursuant to the Offering, each warrant entitling the holder to acquire one
Common Share on or before the first anniversary of the Closing Date at a price of $0.50
per Common Share. 

	  	
“Applicable
Securities Laws” includes, without limitation, all applicable
securities, corporate and other laws, rules, regulations, notices, policies and rulings of
the Selling Jurisdictions. 

	  	
“Business
Day” means a day, other than a Saturday, Sunday or a statutory
holiday in Denver, Colorado.  

	  	
“Closing
Date” means the date or dates on which the Offering is completed and
which is expected to take place on or about February 25, 2004, or such other date as the
Agent and the Corporation may agree upon in writing. 

	  	
“Closing
Time” means 11:00 a.m. (Calgary time) or such other time, on the
applicable Closing Date, as the Agent and the Corporation may agree upon in writing. 

	  	
“Common
Shares” means common shares in the capital of the Corporation.  

	  	
“Corporation’s
Counsel” means Miller Thomson LLP. 

	  	
“Documents”means,
collectively: 

	  	(a) 	  	the
audited consolidated financial statements of the Corporation for the years
          ended December 31, 2002 and 2001; (b) the management information circular and
          proxy statement of the Corporation dated June 23, 2003 with respect to the
          annual meeting
of shareholders of the Corporation held on July 24, 2003;  

	  	(c)  	  	                the
interim reports of the Corporation for the three months ended March 31,
               2003, the six months ended June 30, 2003 and the nine months ended
September 30,                2003 including, without limitation, the unaudited financial
statements of the                Corporation for such three, six and nine month periods;  

	  	(d)  	  	the
annual information form for the year ended December 31, 2002 dated September
               22, 2003; 

	  	 (e)  	  	all
material change reports of the Corporation filed after                December 31, 2002;
and  

	  	(f)  	  	all
press releases of the Corporation subsequent to                December 31, 2002.  

2 

	  	
“Exchange”means
the TSX Venture Exchange or any successor thereto.  

	  	
“Financial
Statements” means, collectively, the comparative audited financial
statements of the Corporation for the fiscal year ended December 31, 2002 and the
unaudited interim financial statements of the Corporation for the three months ended March
31, 2003, the six months ended June 30, 2003 and the nine months ended September 30, 2003. 

	  	
“MI
45-102” means Multilateral Instrument 45-102: Resale of
Securities, as adopted on November 30, 2001 in the Selling Jurisdictions and as
amended. 

	  	
“Offering”means
the private placement offerings of Units described herein.  

	  	
“Public
Record” means all information filed by or on behalf of the Corporation
with the Securities Commissions including, without limitation, the Documents and any other
information filed with any Securities Commission in compliance, or intended compliance,
with any Applicable Securities Laws. 

	  	
“Securities
Commissions” means the securities commissions or similar regulatory
authorities in the Selling Jurisdictions.  

	  	
“Selling
Jurisdictions” means the provinces of British Columbia, Alberta and
Ontario.  

	  	
“Subscriber”means
any person who executes a Subscription Agreement that is accepted by the Corporation.  

	  	
“Subscription
Agreements” means the subscription agreements for Units to be entered
into on the Closing Date between the Corporation and each of the Subscribers. 

	  	
“Transfer
Agent” means CIBC Mellon Trust Company in its capacity as registrar
and transfer agent for the Common Shares.  

	  	
“Unit”means
a unit consisting of one Common Share and one half of one Warrant.  

	  	
“Warrant”
means a Common Share purchase warrant which entitles the registered holder to purchase one
Common Share at an exercise price of $0.50 per Common Share on or before the first
anniversary of the Closing Date. 

	1.2 	  	
In addition, the terms “misrepresentation”,
“material change” and “material
fact” shall have the meanings ascribed thereto under the Applicable
Securities Laws, “distribution” or “distribution
to the public”, as the case may be, shall also have the meanings as
defined under the Applicable Securities Laws and
“distribute” has corresponding meaning. 

	1.3 	  	
The terms “this agreement”,
“hereto”, “herein”,
“hereby”, “hereunder”,
“hereof” and similar expressions refer to the agreement of
the parties set forth herein and not to a particular paragraph or other portion of this
agreement. 

ARTICLE 2 

THE OFFERING  

	2.1  	  	 The
Corporation represents and warrants to and covenants and agrees with the Agent that the
representations and warranties of the Corporation set forth in the Subscription
Agreements are  

3 

3 

	  	
true
and correct and that the Corporation will fully comply with the covenants and agreements
of the Corporation set forth therein.  

	2.2 	  	
The Agent agrees to obtain and to deliver to the Corporation at or prior to the Closing
Time a duly completed Subscription Agreement, a corporate placee registration form in the
form required by the Exchange, if applicable, and such other documents specifically
referred to in the Subscription Agreement or as are required under Applicable Securities
Laws and supplied to the Agent by the Corporation for completion in connection with the
distribution of the Units, all of which shall have been duly executed by each of the
Subscribers. 

	2.3 	  	
The Agent shall offer the Units for sale to the public, directly and/or through other duly
qualified investment dealers and brokers, only as permitted by Applicable Securities Laws
and upon the terms and conditions set forth in this agreement, at an offering price not
exceeding the price set forth on the first page of this agreement. The Agent will not
solicit offers to purchase or sell the Units so as to require registration of the Units or
filing of a prospectus with respect to the Units under the laws of any jurisdiction. 

	2.4 	  	
The Agent will have the exclusive authority to appoint other registered dealers (or other
dealers duly qualified in their respective jurisdictions) as its sub-agents to assist in
the distribution contemplated hereby provided that any such sub-agents shall be approved
by the Corporation acting reasonably and any fees payable to such sub-agents shall be for
the account of the Agent. 

ARTICLE 3

DUE DILIGENCE REVIEW  

	3.1 	  	
Prior to the Closing Time, the Corporation shall allow the Agent the opportunity to
conduct required due diligence and to obtain, acting reasonably, satisfactory results
therefrom. In particular, the Corporation shall allow the Agent and the Agent’s
Counsel to conduct all due diligence which the Agent may reasonably require in order to
confirm the Public Record is accurate, complete and current in all material respects and
to fulfil the Agent’s obligations as a registrant. The Agent shall have the option to
terminate this agreement if its due diligence inquiries or investigations identify a
material adverse circumstance which existed either at the effective date of this
agreement, but which was not disseminated to the public, or occurred after the effective
date hereof but prior to the Closing Time. 

ARTICLE 4

DELIVERY OF DOCUMENTS  

	4.1 	  	
The Corporation shall, as soon as reasonably possible, deliver to the Agent as many copies
of the Documents as the Agent may reasonably request and such delivery shall constitute
the Agent’s authority to use the Documents in connection with the Offering of Units
for sale in the Selling Jurisdictions. 

ARTICLE 5

REPRESENTATIONS AND
WARRANTIES OF THE CORPORATION 

	5.1 	  	
The Corporation represents and warrants to the Agent, and acknowledges that the Agent is
relying upon such representations and warranties, that: 

	  	(a)  	  	 the
Corporation has been duly continued and organized and the Corporation is
               validly subsisting under the laws of the Yukon Territory and has all
requisite                corporate authority  

4 

	  	
and
power to carry on its business, as now conducted and as                presently proposed
to be conducted by it, and to own its properties and assets;  

	  	(b)  	  	the
Corporation is qualified to carry on business and is validly existing under
               the laws of each jurisdiction in which it carries on business;  

	  	(c)  	  	the
Corporation has no subsidiaries and the Corporation is not affiliated with,
               nor is it a holding corporation of, any other body corporate;  

	  	(d)  	  	the
Corporation has conducted and is conducting its business in compliance in
               all material respects with all applicable laws, rules and regulations and,
in                particular, all applicable licensing and environmental legislation,
regulations                or by-laws or other lawful requirements of any governmental or
regulatory bodies                applicable to the Corporation of each jurisdiction in
which the Corporation                carries on its business, and the Corporation holds
all licences, registrations                and qualifications in all jurisdictions in
which the Corporation carries on its                business which are necessary or
desirable to carry on the business of the                Corporation as now conducted and
all such licenses, registrations or                qualifications are valid and existing
and in good standing and none of such                licenses, registrations or
qualifications contains any burdensome term,                provision, condition or
limitation which has or is likely to have any material                adverse effect on
the business of the Corporation as now conducted or as                proposed to be
conducted (other than governmental royalties and income taxes),                and,
except as disclosed by the Corporation in writing to the Agent, to the
               knowledge of the Corporation, the Corporation has not received any notice
of                proceedings relating to the revocation or modification of any such
licenses,                registrations, permits, authorities or qualifications which, if
the subject of                an unfavourable decision, ruling or finding, would
materially affect the                business, operations, financial condition or
prospects of the Corporation;  

	  	(e)  	  	at
the Closing Time, the Warrants and the Agent’s Warrants will have been
               created, and the Common Shares included in the Units will be duly and
validly                authorized, allotted and reserved for issuance and upon receipt of
the purchase                price therefore will be issued as fully paid and
non-assessable Common Shares;  

	  	(f)  	  	the
Common Shares issuable upon the exercise of the Warrants and the                Agent’s
Warrants have been duly and validly authorized and allotted for                issuance
and, upon exercise (including payment) of the Warrants or the                Agent’s
Warrants, and compliance with all other terms of the Warrants or                the Agent’s
Warrants, as the case may be, will be validly issued and                outstanding as
fully paid and non-assessable.  

	  	(g)  	  	 the
Corporation is not in default or breach of, and the execution and delivery
               of, and the performance of and compliance with the terms of, this
agreement, the                Subscription Agreement, the Warrants and the Agent’s
Warrants and the                performance of any of the transactions contemplated
hereby and thereby by the                Corporation, do not and will not result in any
breach of, or constitute a                default under, and do not and will not create a
state of facts which, after                notice or lapse of time or both, will result
in a breach of or constitute a                default under, any applicable laws which
are material to the Corporation and its                operations or any term or
provision of the articles, by-laws or resolutions of                the directors or
shareholders of the Corporation, or any mortgage, note,                indenture,
contract, agreement (written or oral), instrument, lease or other                document
to which the Corporation is a party or by which it is bound on the                Closing
Date, or any judgment, decree, order, statute, rule or regulation
               applicable to the Corporation which default or breach might reasonably be 

5 

	  	
expected
to materially adversely affect the business, operations, capital or
               condition (financial or otherwise) of the Corporation and its subsidiaries
               (taken as a whole) or their respective properties or assets;  

	  	(h)  	  	the
Corporation has full corporate power and authority to enter into this
               agreement and the Subscription Agreement and to create and issue the Units
               (including the Warrants) and the Agent’s Warrants and to perform its
               obligations set out herein and therein, and this agreement has been, and
the                Subscription Agreements, the Warrants and the Agent’s Warrants
will be, on                the Closing Date, duly authorized, executed and delivered by
the Corporation,                and this agreement is and the Subscription Agreements,
the Warrants and the                Agent’s Warrants will be, on the Closing Date,
legal, valid and binding                obligations of the Corporation enforceable
against the Corporation in accordance                with their respective terms, subject
to the general qualifications that:  

	  	  	(i)  	  	enforceability
may be limited by bankruptcy, insolvency, moratorium,                reorganization or
other laws affecting creditors’ rights generally,  

	  	  	(ii)  	  	enforceability
may be limited by general principles of equity, including the                limitation
that the grant of equitable remedies, including specific performance,                is
discretionary and may not be available,  

	  	  	(iii)  	  	the
equitable or statutory powers of the courts in Canada having jurisdiction to
               stay proceedings before them and the execution of judgments, and  

	  	  	(iv)  	  	rights
to indemnity and contribution hereunder may be limited under applicable
               law;  

	  	(i)  	  	there
has not been any material change or adverse material change in the assets,
               liabilities or obligations (absolute, accrued, contingent or otherwise) or
in                the business operations, capital or condition (financial or otherwise)
or in the                results of the operations of the Corporation from the position
set forth in the                Financial Statements or as otherwise disclosed in the
Documents or in press                releases made by the Corporation and publicly
disseminated; and since that date                there have been no material facts,
transactions, events or occurrences which                could materially adversely
affect the capital, assets, liabilities (absolute,                accrued, contingent or
otherwise), business, operations or condition (financial                or otherwise) or
results of the operations of the Corporation which have not                been disclosed
in the Public Record;  

	  	(j)  	  	the
Financial Statements fairly present in all material respects, in accordance
               with generally accepted accounting principles in Canada, consistently
applied,                the financial position and condition of the Corporation as at the
dates thereof                and the results of the operations of the Corporation for the
periods then ended                and reflect all assets, liabilities and contingent
liabilities of the                Corporation as at the dates thereof;  

	  	(k)  	  	to
the knowledge of the Corporation, after due inquiry, there has not occurred
               any material spills, emissions or pollution on any property of the
Corporation                or for which the Corporation may be responsible, nor is the
Corporation the                subject of any outstanding stop orders, control orders,
clean-up orders or                reclamation orders under applicable environmental laws
and regulations;  

6 

	  	(l)  	  	except
as disclosed in the Financial Statements, there are no actions, suits,
               proceedings or inquiries, including, to the Corporation’s knowledge,
               pending or threatened against or affecting the Corporation at law or in
equity                or before or by any United States, Canadian or other federal,
provincial,                municipal or other governmental department, commission, board,
bureau, agency or                instrumentality, domestic or foreign, which in any way
materially adversely                affects, or may in any way materially adversely
affect, the assets, properties,                business, operations, capital or condition
(financial or otherwise) of the                Corporation or which affects or may affect
the distribution of the Units and the                Corporation has no knowledge of any
existing ground on which any such actual,                suit, proceeding or inquiry
might be commenced with any reasonable likelihood of                success;  

	  	(m)  	  	the
information and statements set forth in the Public Record as at the date
               hereof, as it relates to the Corporation, are true, correct, and complete
and do                not contain any misrepresentation as of the respective dates of
such information                or statements, and no material change has occurred in
relation to the                Corporation which is not disclosed in the Public Record,
and the Corporation has                not filed any confidential material change reports
which continue to be                confidential;  

	  	(n)  	  	the
authorized capital of the Corporation consists of 100,000,000 Common Shares
               of which 14,373,675 Common Shares are duly issued and outstanding as at
the date                hereof, all of which Common Shares are fully paid and
non-assessable;  

	  	(o)  	  	other
than pursuant to the provisions of this agreement and other than                (i) options
to acquire 1,287,000 Common Shares held by officers, directors,                employees
and consultants of the Corporation under the Corporation’s stock
               option plan, and (ii) 2,448,749 warrants entitling the holders
thereof to                purchase 2,448,749 Common Shares, as of the date of this
agreement, no person,                firm, corporation or other entity holds any
securities convertible or                exchangeable into securities of the Corporation
or now has any agreement,                warrant, option, right or privilege (whether
pre-emptive or contractual) being                or capable of becoming an agreement,
option or right for the purchase,                subscription or issuance of any unissued
shares, securities (including                convertible securities) or warrants of the
Corporation;  

	  	(p)  	  	except
as disclosed in the Public Record, the Corporation has duly and on a
               timely basis filed all material tax returns required to be filed by it,
has paid                all material taxes due and payable by it and has paid all
material assessments                and re-assessments and all other material taxes,
governmental charges,                penalties, interest and other fines due and payable
by it and which are claimed                by any governmental authority to be due and
owing and adequate provision has                been made for taxes payable for any
completed fiscal period for which tax                returns are not yet required and
there are no agreements, waivers, or other                arrangements providing for an
extension of time with respect to the filing of                any tax return or payment
of any tax, governmental charge or deficiency by the                Corporation and, to
the Corporation’s knowledge, there are no actions,                suits,
proceedings, investigations or claims threatened or pending against the
               Corporation in respect of material taxes, governmental charges or
assessments or                any matters under discussion with any governmental
authority relating to taxes,                governmental charges or assessments asserted
by any such authority;  

	  	(q)  	  	the
issued and outstanding Common Shares are listed and posted for trading on
               the Exchange;  

7 

	  	(r)  	  	the
minute books of the Corporation are materially up-to-date and contain the
               minutes of all meetings and all the resolutions of directors and
shareholders                thereof;  

	  	(s)  	  	the
Corporation is a “reporting issuer” or has equivalent status in
               the Provinces of British Columbia and Alberta and is not in default of any
               requirement in relation thereto;  

	  	(t)  	  	the
Corporation is a “qualifying issuer” under MI 45-102;  

	  	(u)  	  	CIBC
Mellon Trust Company is the duly appointed registrar and transfer agent of
               the Corporation with respect to its Common Shares;  

	  	(v)  	  	other
than as provided for in this agreement, the Corporation has not incurred
               any obligation or liability, contingent or otherwise, for brokerage fees,
               finder’s fees, agent’s commission or other similar forms of
               compensation with respect to the transactions contemplated herein;  

	  	(w)  	  	no
Securities Commission or any other securities commission or similar
               regulatory authority has issued any order preventing or suspending trading
of                any securities of the Corporation, the Corporation is not in default of
any                material requirement of Applicable Securities Laws and, if the
representations                and warranties made by Subscribers in the Subscription
Agreements are accurate,                the Corporation is entitled to avail itself of
the applicable prospectus                exemptions available under such Applicable
Securities Laws in respect of the                trades in its securities to Subscribers
resident in the Selling Jurisdictions as                contemplated by this agreement;  

	  	(x)  	  	to
the knowledge of the Corporation, no other party is in default in the
               observance or performance or any term or obligation to be performed by it
under                any contract to which the Corporation is a party or by which it is
bound which                is material to the business of the Corporation and, to the
knowledge of the                Corporation, no event has occurred with which notice or
lapse of time or both                would directly or indirectly constitute such a
default, in any such case which                default or event would reasonably be
expected to have a material adverse effect                on the assets or properties,
business, results of operations, prospects or                condition (financial or
otherwise) of the Corporation;  

	  	(y)  	  	to
the knowledge of the Corporation, no insider of the Corporation has a present
               intention to sell any securities of the Corporation held by it;  

	  	(z)  	  	the
Corporation does not have reason to believe that the Corporation does not
               have title to or the right to produce and sell its mineral, petroleum,
natural                gas and related hydrocarbons (for the purposes of this clause, the
foregoing are                referred to as the “Interests”)
and does                represent and warrant that the Interests are free and clear of
adverse claims                created by, through or under the Corporation, except as
disclosed in the Public                Record or those arising in the ordinary course of
business, which are not                material in the aggregate, and, to the knowledge
of the Corporation after due                inquiry, the Corporation holds its Interests
under valid and subsisting leases,                licenses, permits, concessions,
concession agreements, contracts, subleases,                reservations or other
agreements and;  

	  	(aa)  	  	any
and all operations of the Corporation have been conducted in accordance with
               good practices applicable to its industry of operation and in material
               compliance with applicable laws, rules, regulations, orders and directions
of                government and other competent authorities.  

8 

ARTICLE 6

COVENANTS  

	6.1  	  	The
Corporation covenants and agrees with the Agent that the Corporation shall: 

	  	(a)  	  	duly,
punctually and faithfully perform all the obligations to be performed, and
                    covenants made, by it under this agreement, the Subscription
Agreements, the                     Warrants and the Agent’s Warrants;  

	  	(b)  	  	during
the period commencing with the date hereof and ending on the conclusion
                    of the distribution of the Units, promptly inform the Agent in
writing of the                     full particulars of:  

	  	  	(i)  	  	any
material change (actual, anticipated or threatened) in the assets,
                    liabilities (absolute, contingent or otherwise), capital, business,
operations                     or condition (financial or otherwise) of the Corporation,  

	  	  	(ii)  	  	any
change in any material fact contained or referred to in the Public Record,  

	  	  	(iii)  	  	the
occurrence of a material fact or event which, in any such case, is, or may
                    be, of such a nature as to: render any part of the Public Record
untrue, false                     or misleading in a material respect; result in a
misrepresentation in any part                     of the Public Record, or result in any
part of the Public Record not complying                     with Applicable Securities
Laws, or  

	  	  	(iv)  	  	the
discovery by the Corporation of any misrepresentation in any part of the
                    Public Record,  

	  	
provided
the Corporation shall in good faith discuss with the Agent any change in circumstances
(actual, proposed or prospective) which is of such a nature that there is reasonable doubt
whether notice in writing need be given to the Agent pursuant to this section 6.1(b),
notwithstanding this obligation, the Corporation shall be entitled to comply with
Applicable Securities Laws; 

	  	  	(c)  	  	during
the period commencing with the date hereof and ending on the conclusion                of
the distribution of the Units, promptly inform the Agent of the full
               particulars of:  

	  	  	(i)  	  	any
request of any Securities Commission for any amendment to the Public Record
               or for any additional information which may be material to the
distribution of                the Units,  

	  	  	(ii)  	  	the
issuance by any Securities Commission, the Exchange or other securities
               commission or similar regulatory authority or by any other competent
authority                of any order to cease or suspend trading of any securities of
the Corporation or                of the institution or threat of institution of any
proceedings for that purpose,                or  

	  	  	(iii)  	  	the
receipt by the Corporation of any communication from any Securities
               Commission, the Exchange or other securities commission or similar
regulatory                authority or any other competent authority relating to the
Public Record or the                distribution of the Units;  

9 

	  	(d)  	  	use
the net proceeds from the Offering of Units to fund the Corporation’s
               Pacific Rim Prospect and for general corporate purposes, including the
repayment                of a note to CP Resources LLC, a private company with common
directors with the                Corporation, in the amount of US$264,000 for the
drilling of the initial two                wells on the Pacific Rim Prospect;  

	  	(e)  	  	file
a duly completed and executed Form 45-102F2 pursuant to MI 45-102 within 10
               days of the Closing Date;  

	  	 (f)  	  	use
its best efforts to maintain its status as a                “reporting issuer” or
equivalent status in at least one of the Selling Jurisdictions until the date that is six
months from the Closing Date;  

	  	(g)  	  	during
the period commencing on the date hereof and ending on the date which is
               30 days following the Closing Date, promptly provide to the Agent, for
review                prior to the publication, filing or issuance thereof any proposed
document,                including without limitation, any press release, annual
information form,                material change report or information circular, which is
or may be deemed to be                part of the Public Record;  

	  	(h)  	  	promptly
comply with Applicable Securities Laws to the satisfaction of the Agent
               and the Agent’s Counsel with respect to any change or occurrence of
the                nature referred to in section 6.1(b) and take such steps, which in the
               Agent’s opinion, acting reasonably, may be necessary or advisable to
comply                with Applicable Securities Laws;  

	  	(i)  	  	make
all necessary arrangements with the Exchange so that the Common Shares
               issuable on the Closing Date and upon the subsequent exercise of the
Warrants                and Agent’s Warrants shall be listed and posted for trading
on the Exchange                as soon as practicable after the Closing Time; and  

	  	(j)  	  	except
for the issuance by the Corporation of options to acquire Common Shares
               and the issuance of Common Shares upon the exercise of such options, all
in                accordance with the past practices of the Corporation, from the Closing
Date                until the date that is 90 days following the Closing Date, not offer,
or                announce the offering of, or enter into or make or announce any
agreement to                issue, sell or exchange any Common Shares to the public or
securities                convertible or exchangeable into Common Shares without the
prior consent of the                Agent, such consent not to be unreasonably withheld.  

	6.2  	  	The
Agent covenants and agrees with the Corporation that the Agent shall: 

	  	(a)  	  	obtain
from each Subscriber an executed Subscription Agreement and all                applicable
undertakings, questionnaires and other forms required under the                Applicable
Securities Laws for completion in connection with the distribution of                the
Units;  

	  	(b)  	  	conduct
activities in connection with the proposed offer and sale of the Units                in
compliance with all Applicable Securities Laws and applicable securities laws
               in the other jurisdictions and cause a similar covenant to be contained in
any                agreement entered into with any selling group members; and, without
limitation,                agrees that it will not make available to prospective
purchasers of Units any                document or material which would constitute an
offering memorandum as defined                under Applicable Securities Laws;  

10 

	  	(c)  	  	not
solicit subscriptions for the Units, trade in Units or otherwise do any act
               in furtherance of a trade of Units outside of the Selling Jurisdictions
except                such trades or acts as may be in compliance with the applicable
securities laws                thereof and which will not result in any registration,
reporting or other filing                or compliance obligation of any type being
imposed upon the Corporation in any                jurisdiction that is not a Selling
Jurisdiction and without the express written                consent of the Corporation;
and  

	  	(d)  	  	not
advertise the proposed Offering or sale of the Units in the printed media of
               general and regular paid circulation, radio, television, or
telecommunications,                including electronic display.  

ARTICLE 7

CLOSING  

	7.1  	  	The
issue and sale of the Units shall be completed at the Closing Time at the offices of
Bennett Jones LLP, 4500 Bankers Hall East, 855 — 2nd Street S.W., Calgary, AB T2P
4K7 or at such other place as the Corporation and the Agent may agree. Subject to the
satisfaction of the conditions set forth in Article 8, the Agent, on each Closing Date,
shall deliver to the Corporation:  

	  	(a)  	  	all
completed Subscription Agreements (including any applicable documents
               specifically referred to in the Subscription Agreements); and  

	  	(b)  	  	a
cheque or bank draft payable to the Corporation in Calgary in an amount equal
               to the aggregate of all subscriptions of Units delivered to and accepted
by the                Corporation on such Closing Date, net of the Agent’s
commission and                expenses to be paid on such Closing Date;  

	  	
against
delivery by the Corporation of definitive certificates representing, in the aggregate, all
of the Common Shares and Warrants comprising the Units subscribed for on such Closing Date
registered in such name or names as the Agent shall direct the Corporation in writing not
less than one Business Day prior to the applicable Closing Date, together with the
Agent’s Warrants, as set forth in section 9.1 and such other documents and actions
required pursuant to section 8.1. 

	7.2 	  	
Except where the Corporation is aware of a material misrepresentation in a Subscription
Agreement, the Corporation may not reject any properly completed Subscription Agreements
which are in compliance with Applicable Securities Laws unless the number of Units
subscribed for pursuant to all Subscription Agreements on a Closing Date tendered by the
Agent exceed the maximum number of Units to be sold under this agreement on such Closing
Date, in which case, Subscription Agreements representing the over-allotment shall, after
consultation with the Agent, be rejected or amended. 

ARTICLE 8

CONDITIONS OF CLOSING  

	8.1 	  	
The obligations of the Agent hereunder shall be conditional upon the Agent receiving, and
the Agent shall have the right on the Closing Date on behalf of Subscribers for Units to
withdraw all subscriptions delivered and not previously withdrawn by Subscribers unless
the Agent receives, on the Closing Date: 

11 

	  	(a)  	  	a
legal opinion of the Corporation’s Counsel addressed to the Agent, the
               Agent’s Counsel and the Subscribers, in form and substance reasonably
               satisfactory to the Agent, with respect to such matters as the Agent may
               reasonably request relating to the Offering, the issuance and sale of the
Units                subscribed for on the applicable Closing Date, including, without
limitation:  

	  	  	(i)  	  	the
due incorporation, continuation or amalgamation, as the case may be, and
               valid existence of the Corporation, 

	  	  	 (ii)  	  	the
due registration or qualification                of the Corporation to carry on business
under the laws of each jurisdiction in which the Corporation carries on a material
portion of its business as now conducted by it,  

	  	  	(iii)  	  	the
corporate power and capacity of the Corporation, 

	  	  	 (iv)  	  	the
authorized capital                     of the Corporation,  

	  	  	(v)  	  	the
Common Shares included in the Units (and the Common Shares issuable upon
                    exercise of the Warrants and the Agent’s Warrants) to be issued
have been                     duly authorized, allotted and reserved for issuance and
will, when issued, be                     issued as fully paid and non-assessable,  

	  	  	(vi)  	  	the
due creation and issuance of the Warrants and the Agent’s Warrants,  

	  	  	(vii)  	  	the
due authorization, execution, delivery and enforceability of this agreement,
                    and the Subscription Agreements, the Warrants and the Agent’s
Warrants, by                     the Corporation and the fulfillment of the terms hereof
and thereof,  

	  	  	(viii)  	  	that
the execution and delivery of this agreement and the Subscription
                    Agreements, and the sale, delivery and the distribution of the Units,
do not and                     will not result in a breach of, and do not and will not
create a set of facts                     which, after notice or lapse of time or both,
conflict with any terms,                     conditions or provisions of the articles of
the Corporation, the by-laws or any                     resolutions of the directors or
shareholders of the Corporation, or, so far as                     the Corporation’s
Counsel is aware, any indenture, contract, agreement                     (written or
oral), instrument, lease or other document to which the Corporation
                    is a party or by which it is bound,  

	  	  	(ix)  	  	compliance
with all Applicable Securities Laws including, without limitation,
                    the receipt of all necessary regulatory approvals (including, without
                    limitation, the conditional approval of the Exchange) relating to the
                    distribution of the Units and the Agent’s Warrants,  

	  	  	(x)  	  	the
distribution of the Units in the Selling Jurisdictions,  

	  	  	(xi)  	  	the
first trade in Common Shares and the Warrants comprising the Units and the
                    Common Shares issuable upon exercise of the Warrants and the Agent’s
                    Warrants,  

12 

	  	  	(xii)  	  	the
Common Shares comprising the Units and the Common Shares issuable upon
                    exercise of the Warrants and the Agent’s Warrants, having been
                    conditionally approved for listing on the Exchange, and  

	  	  	(xiii)  	  	all
such other matters as the Agent and Agent’s Counsel may reasonably
                    request.  

	  	
It
is understood that the Corporation’s Counsel may rely on certificates of officers of
the Corporation and governmental authorities, the Transfer Agent and the Exchange as to
relevant matters of fact; 

	  	(b)  	  	a
certificate of the Corporation dated the Closing Date, addressed to the Agent
               and signed on the Corporation’s behalf by two senior officers of the
               Corporation acceptable to the Agent, acting reasonably, certifying that:  

	  	  	(i)  	  	the
Corporation has complied with and satisfied all covenants, terms and
               conditions of this agreement on its part to be complied with or satisfied
at or                prior to the Closing Time,  

	  	  	(ii)  	  	the
representations and warranties of the Corporation set forth in this
               agreement and, where applicable, in the Subscription Agreements are true
and                correct at the Closing Time, as if made at such time,  

	  	  	(iii)  	  	no
event of the nature referred to in sections 10.2(a), (b), (c), (d) or (f) has
               occurred or to the knowledge of such officers is pending, contemplated or
               threatened,  

	  	  	(iv)  	  	the
Corporation has made and/or obtained, on or prior to the Closing Time, all
               necessary filings, approvals, consents and acceptances of applicable
regulatory                authorities and under any applicable agreement or document to
which the                Corporation is a party or by which it is bound in respect of the
execution and                delivery of this agreement and the Subscription Agreements,
the offering and                sale of the Units and the consummation of the other
transactions contemplated                hereby, and  

	  	  	(v)  	  	such
other matters as may be reasonably requested by the Agent or Agent’s
               Counsel;  

	  	(c)  	  	evidence
satisfactory to the Agent that the Corporation has obtained all                necessary
conditional approvals of the Exchange for the issuance of the Units                and
the listing of the Common Shares comprising the Units and the Common Shares
               issuable upon exercise of the Warrants and the Agent’s Warrants,
subject                only to the filing of any documents and payment of any fees which
may be                required by the Exchange;  

	  	(d)  	  	definitive
certificates representing, in the aggregate, all of the Common Shares                and
Warrants comprising the Units, in each case subscribed for on the Closing
               Date registered in such name or names as the Agent shall notify the
Corporation                in writing not less than 24 hours prior to the Closing Time
provided that such                certificates registered in such names may, subject to
receipt by the Corporation                and the Transfer Agent of a satisfactory
indemnity, be delivered in advance of                the Closing Date to the Agent or
such other parties in such locations as the                Agent may direct and the Agent
and the Corporation may agree upon;  

13 

	  	(e)  	  	duly
completed and executed copies of the Subscription Agreements, each in form
               and substance reasonably satisfactory to the Agent and the Agent’s
Counsel;  

	  	(f)  	  	the
commission provided for in section 9.1; and (g) the Agent’s Warrants.  

	  	
The
foregoing conditions are for the sole benefit of the Agent, and may be waived in whole or
in part by the Agent at any time and without limitation, the Agent shall have the right,
on behalf of potential Subscribers, to withdraw all Subscription Agreements delivered and
not previously withdrawn or rescinded by such persons if such conditions are not met. If
any of the foregoing conditions are not met, the Agent may terminate its obligations under
this agreement without prejudice to any other remedies it may have. 

ARTICLE 9

COMMISSION AND EXPENSES 

	9.1 	  	
In consideration for its services hereunder, the Corporation agrees to (i) pay to the
Agent at the Closing Time a cash commission equal to the amount of 8% of the gross
subscription proceeds from the sale of the Units; and (ii) deliver to the Agent the
Agent’s Warrants. 

	9.2 	  	
Whether or not the transactions contemplated herein shall be completed, all reasonable
costs and expenses of or incidental to the distribution of the Units, including, without
limitation, all costs and expenses of or incidental to the private placement of the Units,
the fees and expenses of Corporation’s Counsel, the fees and expenses of local
counsel retained by Corporation’s Counsel, the fees and expenses of the
Corporation’s auditors, the reasonable fees, expenses and disbursements of
Agent’s Counsel, the reasonable out-of-pocket expenses of the Agent relating to this
transaction and all other costs and expenses relating to this transaction shall be borne
by the Corporation and paid forthwith upon receiving an account therefor. 

ARTICLE 10

EARLY TERMINATION  

	10.1 	  	
All representations, warranties, covenants, terms and conditions of this agreement shall
be construed as conditions. The Agent may waive in whole or in part any breach of, default
under or non-compliance by the Corporation with, any representation, warranty, covenant,
term or condition hereof, or extend the time for compliance therewith, without prejudice
to any of its rights in respect of any other representation, warranty, covenant, term or
condition hereof, or any other breach of, default under or non-compliance with any other
representation, warranty, covenant, term or condition hereof, provided that any such
waiver or extension shall be binding on the Agent only if the same is in writing. 

	10.2 	  	
In addition to any other remedies which may be available to the Agent, the Agent shall be
entitled, at its option, to terminate and cancel, without any liability on the
Agent’s part, the Agent’s obligations under this agreement if, at or prior to
the Closing Time: 

	  	(a)  	  	any
order to cease or suspend trading in any securities of the Corporation, or
               prohibiting or restricting the distribution of the Units or proceedings
are                announced or commenced for the making of any such order, by any
Securities                Commission or similar regulatory authority, the Exchange or by
any other                competent authority, and has not been rescinded, revoked or
withdrawn;  

14 

	  	(b)  	  	any
inquiry, investigation (whether formal or informal) or other proceeding in
               relation to the Corporation or any of its directors or senior officers is
               announced, commenced or threatened by any Securities Commission or similar
               regulatory authority, the Exchange or any other competent authority or any
order                is issued under or pursuant to any statute of Canada or of any of
the provinces                or jurisdictions of Canada, or any other applicable law or
regulatory authority,                or there is any change of law, regulation or policy
or the interpretation or                administration thereof, which, in the opinion of
the Agent, acting reasonably,                operates to materially prevent, restrict or
affect trading in the Common Shares                and which has not been rescinded,
revoked or withdrawn;  

	  	(c)  	  	there
shall occur an event, or, the Agent’s due diligence investigations
               shall identify or discover an event, fact or circumstance, (actual,
contemplated                or threatened) which constitutes a material change or any
change in a material                fact or occurrence of a material fact or event in
respect of the business,                operations, assets or affairs (financial or
otherwise) of the Corporation as                disclosed in the Public Record, which in
the Agent’s sole opinion, acting                reasonably, could be reasonably
expected to have a material adverse effect on                the market price or value of
the Warrants or the Common Shares;  

	  	(d)  	  	there
should develop, occur or come into effect or existence any event, action,
               state, condition or major financial occurrence of national or
international                consequence or any action by government, law or regulation,
enquiry or other                such occurrence which, in the sole opinion of the Agent,
acting reasonably,                materially adversely affects the financial markets or
the business, operations                or affairs of the Corporation such that it would
not be practicable to market                the Units or which would render the Units
unsaleable;  

	  	(e)  	  	the
state of the financial markets or of the industry or markets in which the
               Corporation operates is or becomes such that the Units cannot, in the
reasonable                opinion of the Agent, be successfully or profitably marketed;
or  

	  	(f)  	  	the
Corporation shall be in breach of, default under or non-compliance with any
               material representation, warranty, covenant, term or condition of this
agreement                or the Subscription Agreements.  

	10.3 	  	
The Agent may exercise any or all of the rights provided for in sections 8.1, 10.1 or 10.2
notwithstanding any act or thing taken or done by the Agent or any action by the Agent,
whether before or after the occurrence of any material change, including, without
limitation, any act of the Agent related to the Offering or continued Offering of the
Units for sale and the Agent shall only be considered to have waived or be estopped from
expressing or relying upon any of its rights under or pursuant to sections 8.1, 10.1 or
10.2 if such waiver or estoppel is in writing and expressly waives or estops such exercise
or reliance. 

	10.4 	  	
Any termination pursuant to the terms of this agreement shall be effected by notice in
writing delivered to the Corporation; provided that no termination shall discharge or
otherwise affect any obligation of the Corporation under section 9.2 or Article 11 if the
closing of the Offering has occurred. The rights of the Agent to terminate its obligations
hereunder are in addition to, and without prejudice to, any other remedies it may have. 

15 

ARTICLE 11

INDEMNIFICATION AND
CONTRIBUTION  

	11.1 	  	
The Corporation shall indemnify and save the Agent, and each of the Agent’s
directors, officers, employees and advisors (collectively “Indemnified
Persons” and singularly an “Indemnified
Person”) harmless against and from all liabilities, claims, demands,
losses (other than losses of profit in connection with, the distribution of the Units),
costs, damages, fines, penalties and expenses (collectively, the
“Liabilities”) to which such persons or companies may be
subject or which such persons or companies may suffer or incur, whether under the
provisions of any statute or otherwise, in any way caused by, or arising directly or
indirectly from or in consequence of: 

	  	(a)  	  	any
information or statement contained in the Public Record (other than any
               information or statement relating solely to the Agent and furnished to the
               Corporation by the Agent expressly for inclusion in the Public Record)
which is                or is alleged to be untrue or any omission or alleged omission to
provide any                information or state any fact the omission of which makes or
is alleged to make                any such information or statement untrue or misleading
in light of the                circumstances in which it was made;  

	  	(b)  	  	any
misrepresentation or alleged misrepresentation (except a misrepresentation
               which is based upon information relating solely to and provided to the
               Corporation by the Agent expressly for inclusion in the Public Record)
contained                in the Public Record;  

	  	(c)  	  	any
prohibition or restriction of trading in the securities of the Corporation
               or any prohibition or restriction affecting the distribution of the Units
               imposed by any competent authority if such prohibition or restriction is
based                on any misrepresentation or alleged misrepresentation of a kind
referred to in                section 11.1(a);  

	  	(d)  	  	any
order made or any inquiry, investigation (whether formal or informal) or
               other proceeding commenced or threatened by any one or more competent
               authorities into the affairs of the Corporation relating to or affecting
the                distribution of the Units other than any such order, inquiry,
investigation or                other proceeding based solely upon the activities or
alleged activities of the                Agent (or selling group members, if any); or  

	  	(e)  	  	any
breach of, default under or non-compliance by the Corporation with any
               representation, warranty, covenant, term or condition of this agreement,
the                Subscription Agreements or any requirement of Applicable Securities
Laws.  

	  	
The
Corporation hereby waives its right to recover contribution from the Agent with respect to
any liability of the Corporation by reason of or arising out of any misrepresentation in
the Public Record. 

	  	
With
respect to any person or corporation in respect of which indemnification is or might
reasonably be considered to be provided for in this Article 11 and who is not a party to
this agreement, the Agent shall obtain and hold the rights and benefits of this Article 11
in trust for and on behalf of such person or corporation. 

	  	
The
Corporation agrees that in case any legal proceedings or investigation shall be brought
against or initiated against the Corporation by any governmental commission, regulatory
authority, the Exchange, a court, or other entity having regulatory authority, and an
Indemnified Person or other representatives of the Agent shall be required to testify in
connection therewith or shall be required to respond to procedures designed to discover
information regarding, in  

16 

	  	
connection
with, or by reason of the performance of professional services rendered to the
Corporation by the Agent, the Corporation shall pay the Agent the reasonable costs
(including an amount to reimburse the Agent for time spent by its personnel in connection
therewith on a per diem basis and out-of-pocket expenses incurred by their
personnel in connection therewith) as they occur unless such proceedings or
investigations shall be brought or initiated as a result of any actions or inaction of
the Agent, or any selling group members, if any.  

	11.2 	  	
If any claim contemplated by section 11.1 shall be asserted against any Indemnified
Person, such Indemnified Person shall notify the Corporation as soon as possible of the
nature of such claim and the Corporation shall be entitled (but not required) to assume
the defense of any suit brought to enforce such claim; provided however, that the defense
shall be through legal counsel selected by the Corporation and acceptable to the
Indemnified Person acting reasonably and that no settlement may be made by the Corporation
or the Indemnified Person without the prior written consent of the other, such consent not
to be unreasonably withheld. The Indemnified Person shall have the right to retain its own
counsel in any proceeding relating to a claim contemplated by section 11.1 if: 

	  	(a)  	  	the
Corporation or the Indemnified Person has been advised by counsel that there
               are legal defenses available to the Indemnified Person which are different
from                or additional to defenses available to the Corporation (in which case
the                Corporation shall not have the right to assume the defense of such
proceedings                on the Indemnified Person’s behalf);  

	  	(b)  	  	the
Corporation shall not have taken the defense of such proceedings and
               employed counsel within 10 days after notice of commencement of such
               proceedings; or  

	  	(c)  	  	the
employment of such counsel has been authorized by the Corporation in
               connection with the defense of such proceedings;  

	  	
and,
in any such event, the reasonable fees and expenses of such Indemnified Person’s
counsel (on a solicitor and his client basis) shall be paid by the Corporation provided
that in no event shall the Corporation be required to pay the fees and disbursements of
more than one set of counsel in any single jurisdiction for all Indemnified Persons. 

	11.3 	  	
In order to provide for just and equitable contribution in circumstances in which the
indemnification provided for in this agreement is due in accordance with its terms but is,
in whole or in part, for any reason, held by a court to be unavailable from the
Corporation on grounds of policy or otherwise, the Corporation and the party or parties
seeking indemnification shall contribute to the aggregate Liabilities (including legal or
other expenses reasonably incurred in connection with the investigation or defense of the
same) to which they may be subject or which they may suffer or incur: 

	  	(a)  	  	in
such proportion as is appropriate to reflect the relative benefit received by
               the Corporation on the one hand, and by the party or parties seeking
indemnity                on the other hand, from the Offering; or  

	  	(b)  	  	if
the allocation provided by section 11.3(a) is not permitted by applicable
               law, in such proportion as is appropriate to reflect not only the relative
               benefits referred to in section 11.3(a) but also to reflect the relative
fault                of the party or parties seeking indemnity, on the one hand, and the
parties from                whom indemnity is sought, on the other hand, in connection
with the statements                or omissions or other matters which resulted in such
Liabilities, as well as any                other relevant equitable considerations.  

17 

	  	
The
relative benefits received by the Corporation, on the one hand, and the Agent on the other
hand shall be deemed to be in the same proportion that the total proceeds of the Offering
received by the Corporation (net of Agent’s commissions but before deducting
expenses) bear to the fees received by the Agent. In any event, the Corporation and the
Agent agree that any contribution of the Agent should be limited to the fees paid to the
Agent in connection with the distribution of the Units. The Corporation agrees that it
would not be just and equitable if contributions pursuant to this agreement were
determined by any other method of allocation than those referred to above. 

	  	
The
rights to contribution provided in this section 11.3 shall be in addition to, and without
prejudice to, any other right to contribution which the Agent may have. 

ARTICLE 12

SURVIVAL OF REPRESENTATIONS, WARRANTIES,

COVENANTS, TERMS AND
CONDITIONS  

	12.1 	  	
It is understood that all representations, warranties, covenants, indemnities, terms and
conditions herein or contained in certificates or documents submitted pursuant to or in
connection with the transactions contemplated herein shall survive the payment by the
Agent for the Units and the termination of this agreement and shall continue in full force
and effect for the benefit of the Agent regardless of any investigation by or on behalf of
the Agent with respect thereto. 

ARTICLE 13

NOTICES  

	13.1 	  	
Any notice or other communication to be given hereunder shall, in the case of notice to be
given to the Corporation, be addressed to the Corporation to the President, at the above
address, fax no. (303) 592-8071 and to Miller Thomson LLP, Robson Court, 1000 – 840
Howe Street, Vancouver, B.C., V6Z 2M1, Attention: Gregory C. Smith, fax no. (604) 643-1200
and, in the case of notice to be given to the Agent, be addressed to: 

	  	
Jennings Capital Inc.

2600, 520-5th Avenue S.W.

Calgary, Alberta T2P 3S8

Attention: Martin McGoldrick

Fax No: (403) 292-0979

	  	
with
a copy to:  

	  	
Bennett Jones LLP

4500 Bankers Hall East

855 – 2nd Avenue S.W.

Calgary, Alberta T2P 4K7

Attention: J. Douglas Foster

Fax No. (403) 265-7219 

        Any
such notice or other communication shall be in writing and may be given by fax or
delivery, and shall be deemed to be have been given upon being faxed (provided that such
time falls before 5:00 p.m. (Calgary time) on a Business Day, otherwise notice shall be
deemed to have been so given on the next Business Day) or upon receipt if delivered. 

18 

ARTICLE 14

GENERAL  

	14.1 	  	
It is the intention of the Corporation to constitute the Agent as a trustee for the
Subscribers in respect of the benefit of the representations, warranties and covenants of
the Corporation set forth in this agreement. 

14.2 The Corporation: 

	  	(a)  	  	acknowledges
and agrees that the Agent has certain statutory obligations as a
               registrant under the Applicable Securities Laws and has fiduciary
relationships                with the Subscribers in connection with this transaction
(its                “clients”);  

	  	(b)  	  	acknowledges
and agrees that the Agent is not a fiduciary of the Corporation;                and 

	  	 (c)  	  	consents
to the Agent acting hereunder while continuing to act for its                clients.  

	  	
To
the extent that the Agent’s statutory obligations as a registrant under Applicable
Securities Laws or fiduciary relationships with its clients conflicts with its obligations
hereunder the Agent shall be entitled to fulfil its statutory obligations as a registrant
under Applicable Securities Laws and its duties to its clients. Nothing in this agreement
shall be interpreted to prevent the Agent from fulfilling its statutory obligations as a
registrant under Applicable Securities Laws or to act as a fiduciary of its clients. 

	14.3 	  	
If one or more of the provisions contained herein shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this agreement, but this
agreement shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein. 

	14.4 	  	
This agreement shall be governed by and construed in accordance with the laws of the
Province of Alberta and the laws of Canada applicable therein and each of the parties
hereto irrevocably attorns to the jurisdiction of the courts of the Province of Alberta. 

	14.5  	  	Time
shall be of the essence of this agreement. 

	14.6 	  	
This agreement may be executed in one or more counterparts and delivered by facsimile,
each of which so executed shall constitute an original and all of which together shall
constitute one and the same agreement. 

	14.7 	  	
This agreement represents the entire agreement of the parties hereto relating to the
subject matter hereof and there are no representations, warranties, covenants or other
agreements relating to the subject matter hereof except as stated or referred to herein. 

19 

	14.8 	  	
It is understood that the terms and conditions of this agreement supersede any previous
verbal or written agreement between the Agent and the Corporation with respect to the
subject matter hereof. 

If the foregoing is in accordance
with your understanding and is agreed to by you, please confirm your acceptance by signing
the enclosed copies of this letter at the place indicated and by returning the same to
Agents’ Counsel. 

	  	
JENNINGS CAPITAL INC.

By:             
              
                

ACCEPTED AND AGREED to effective as
of the date of this Agreement 

KODIAK OIL & GAS CORP.

By:

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