Document:

EXHIBIT
      10.1

    

    PARTICIPATION
      AGREEMENT

    RE:
      FROST NATIONAL BANK DEEP PROSPECT, 

    LIVE
      OAK COUNTY, TEXAS

    

    This
      Participation Agreement (“Agreement”) is made and entered into effective as of
      the 7th day of June, 2006 (“Effective Date”), by and between Bayou City
      Exploration, Inc., a Nevada Corporation (hereinafter “Company”) and True North
      Energy Corp. (hereinafter “Participant”). Company and Participant are sometimes
      hereinafter referred to, individually, as a “Party” and, collectively, as the
“Parties”.

    

    WHEREAS,
      Company
      has identified a prospect for oil and gas (“Prospect”), known to the Parties as
      the Frost National Bank Deep Prospect, and purchased, or is in the process
      of
      purchasing, oil and gas leases the (“Leases”) on such Prospect, and;

    

    WHEREAS,
      Participant has expressed a desire to participate with Company in the drilling
      of a test well in search of oil or gas on the Leases or portions thereof and
      in
      the further development of the Leases, if warranted, and;

    

    WHEREAS,
      the
      Parties desire to join together and enter into a final and binding agreement
      to
      fully express the terms and conditions which are to govern between the Parties
      as to the development of the Prospect, and;

    

    NOW,
      THEREFORE,
      for and
      in consideration of the mutual covenants and promises herein contained, the
      Parties hereby agree as follows: 

    

    
      	1.	
              
              

            

    

    

    Contemporaneously
      with the execution hereof, the Parties shall execute the Joint Operating
      Agreement (“JOA”) and Memorandum of Joint Operating Agreement, naming Bayou City
      Exploration, Inc. as operator (“Operator”). The executed JOA is attached hereto
      and incorporated herein as Exhibit “A”. The JOA shall control the operations
      conducted on the Prospect. Should there be a conflict between the terms and
      conditions of this Agreement and the JOA, the terms and conditions of this
      Agreement shall prevail.

    

    
      	2.	
              LEASEHOLD

            

    

    

    Company
      represents, but does not warrant that it owns, or is in the process of
      acquiring, certain oil, gas and mineral leases within the Prospect area as
      depicted on the Plat labeled Exhibit “H” of the JOA attached hereto and
      incorporated herein as Exhibit “A” to this Agreement.

     

    
      
         

      

      
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      	3.	
              PARTICIPANTS
                INTEREST

            

    

    

    Participant
      hereby elects to earn a 12.5% working interest after payout in the Leases
      pursuant to the terms of this Agreement and the JOA by participating in the
      drilling of the Test Well.

    

    
      	4.	
              PROSPECT
                COSTS

            

    

    

    Participants
      share of current cost to be charged by Company with respect to the Prospect
      including, but not limited to, prospect fee, lease bonus, land brokerage,
      permitting, drafting/surveying, legal, title curative, geological and
      geophysical costs are $94,888.00 (“Prospect Costs”). Participant agrees to
      pay the sum of $94,888.00, being its share of the current Prospect Costs upon
      execution of this Agreement. The parties acknowledge that there may be
      additional necessary expenditures incurred by Company prior to spudding the
      test
      Well, including but not limited to additional lease bonus, land brokerage,
      permitting, drafting/surveying, legal, title curative, geological and
      geophysical costs.  Participant agrees to pay 16.6666% of necessary
      additional Prospect Costs.  Appropriate and timely billings and payments
      shall be made accordingly by the Parties. The entire Prospect Costs are fully
      refundable in the event this Agreement is rescinded by Company for any reason
      or
      Company fails to cause the Initial Test Well to be drilled for any
      reason.

    

    
      	5.	
              INITIAL
                TEST WELL

            

    

    

    On
      or
      before August 1, 2006 (“Commencement Date”), subject to rig availability,
      Company will commence or cause to be commenced, on behalf of the Joint Account,
      operations for the re-entry of the Arco Mclean #1 as the test well (“Test Well”)
      to evaluate the Prospect. The Test Well will be re-entered with due diligence
      and in a good and workmanlike manner to a depth sufficient to test the Wilcox
      formation which in this well is present from a depth of 11,900’ to a depth of
      12,700’ (TVD) beneath the surface of the earth (the "Objective
      Depth").

    

    
      	6.	
              SUBSTITUTE
                TEST WELL

            

    

    

    In
      the
      event conditions render further re-entry operations impracticable prior to
      reaching the Objective Depth in the Test Well, then, for a period of ninety
      (90)
      days after making the election, either Party shall have the right to propose
      the
      drilling of a substitute Test Well to the Objective Depth on the Leases or
      on
      lands pooled therewith. If Participant elects to participate in drilling the
      substitute Test Well, the substitute Test Well shall be drilled under the same
      terms as the Test Well and the substitute Test Well shall be deemed to be the
      Test Well for all purposes under this Agreement. 

    

    
      
        
          	7.	
                  EXPENSES
                    FOR DRILLING THE TEST
                    WELL

                

        

      

    

    

    Participant
      shall bear and pay, in the percentages set forth below, its share of the costs
      and expenses described below. Such payment shall be due and payable to Company
      on or before fifteen (15) days after receipt of an invoice or invoices for
      such
      costs or any portion thereof. 

     

    
      
         

      

      
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              A.
                

            	
              16.6666%
                of the costs and expenses incurred in drilling the Test Well (and
                any
                substitute well therefore) to casing point, or to a lesser depth
                if
                impenetrable conditions are encountered in the well, and in plugging
                and
                abandoning the well if no completion attempt is made. The term “casing
                point” shall mean that point in time when the Test Well has been drilled
                to the Objective Depth, logged, evaluated and Company has notified
                Participant that a completion attempt will be made.  
                

            

    

    

    
      	 	
              B.

            	
              16.6666%
                of the costs and expenses incurred in completing the Test Well (and
                any
                substitute well therefore) and in equipping the same for production,
                and
                for all title opinions and title curative work. Should a party not
                elect
                to participate in completion of the Test Well such non-participating
                Party
                will be subject to the provisions of Article VI section B of the
                JOA.

            

    

    

    
      	8.	
              SUBSEQUENT
                WELLS

            

    

    

    As
      to any
      subsequent wells drilled within the Prospect area, the Participant has the
      option, but not the obligation, to participate in the drilling of such
      subsequent wells by paying 12.5% of the costs and expenses of drilling such
      well
      including the cost of completing such subsequent well and equipping the same
      for
      production. Should a party not elect to participate in such subsequent well
      such
      non-participating Party will be subject to the provisions of Article VI section
      B of the JOA.

    

    
      	9.	
              INTERESTS
                EARNED BY DRILLING TO OBJECTIVE
                DEPTH

            

    

    

    At
      such
      time as the Test Well has reached the Objective Depth and Participant has
      elected whether or not to participate in the completion of the well at the
      Objective Depth, Participant shall have earned an undivided 12.5% of the
      leasehold interest in and to the Leases, with the exception of the Leases
      included in the Test Well unit, and subject to the provisions of the Leases,
      this Agreement and the JOA. 

    

    In
      the
      case of the Test Well unit Participant will earn 16.6666% working interest
      before payout and 12.5% working interest after payout. “Payout” is defined as
      that point in time when there has been recovered from one hundred percent (100%)
      of production, less only royalties, overriding royalties and production taxes
      an
      amount of money equal to one hundred percent (100%) of the drilling, completing
      and operating costs (during the payout period) of the initial test well. After
      Payout, Participant will have an 12.5% working interest in the Test Well
      unit.

    

    Company
      shall assign to Participant any interest earned, effective as of the date of
      this Agreement, and such assignment shall be made within thirty (30) days after
      the date on which the drilling rig has been released or the date on which the
      Objective Depth has been reached which ever is later. The assignment shall
      be
      subject to, among other things, the terms and provisions of this Agreement,
      the
      terms and provisions of the JOA, and all royalties, overriding royalties,
      payments out of production, and similar leasehold burdens affecting the Leases
      and existing as of the Effective Date of this Agreement. The Parties acknowledge
      the overriding royalty burdens owed to Sunray Operating Company, LLC. as set
      out
      in Article XVI Section 14 of the JOA and Company further represents that there
      are no other overriding royalty burdens on the leasehold estate. The drilling
      of
      additional wells on the Leases and the operation of the Test Well and any
      additional wells on the Leases or lands pooled therewith shall be governed
      by
      the terms of this Agreement and the provisions of the JOA when not in conflict
      with this Agreement.

    

    
      
         

      

      
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              10.

            	
              WELL
                INFORMATION -
                CONFIDENTIALITY

            

    

    

    The
      Parties agree that all information, data and other materials, including but
      not
      limited to wire line logs, mud logs, geological interpretations, seismic data
      (subject to all of the terms and conditions of any third party licensor or
      agreement) and other production data (“Data”) which might be obtained or
      accumulated is to be non-public, confidential and proprietary in nature, except,
      that such Data can be shown to affiliated companies, reputable engineering
      firms, gas transmission companies, reputable financial institutions, reputable
      and financially responsible third parties with whom a Party to this Agreement
      is
      engaged in negotiations for the sale of some portion of the interest in this
      Prospect, or any governmental entities requiring such Data. The Parties agree
      that the Data may not otherwise be disclosed, sold, traded, or published with
      out the prior written consent of Company. The Parties, their agents, consultants
      and independent contractors, at their sole cost, risk and expense, shall have
      access at all times to the derrick floor of all wells drilled under this
      Agreement and to all information in connection with the drilling and testing
      of
      all such wells. Operator agrees to send the Parties daily drilling reports
      reporting drilling information consistent with accepted industry standards
      including but not limited to work done, depth drilled, the results of tests
      made
      and oil and gas shows encountered. Operator shall furnish the Parties all well
      data acquired in connection with the drilling and producing of such wells
      including but not limited to copies of the surveyors location plat, all wire
      line and mud logs, reports showing the results of all tests and any forms and
      reports filed with any State or Federal Agency.

    

    
      	11.	
              NOTICES.

            

    

    

    All
      notices and information to be given hereunder shall be in writing and shall
      be
      sent by United States certified mail, telegram, telex, facsimile, email,
      overnight delivery service or telecopy, postage or charges prepaid and addressed
      to the Party to whom such notice is given as follows:

     

    
      	 	If to Company:	
              Bayou City Exploration, Inc.

              
                10777
                  Westheimer, Suite 170

                Houston,
                  Texas 77042

                Attention:
                  Mr. Morris Hewitt

                Telephone: 832-358-3900

                Facsimile: 832-358-3903

                Email:        
                  mhewitt@bcexploration.com

              

            
	 	 	 

    

     

    
      
         

      

      
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      	 	If to Participant:	
              True North Energy Corp.

              
                1200
                  Smith Street

                16th
                  Floor

                Houston,
                  Texas 77002

                Attention:
                   Max
                  Pozzoni

                Telephone: 832-476-8699

                Email:          
                  max@tnecorp.com

              

            

    

      

    
      	12.	
              ASSIGNMENT
                AND BINDING EFFECT.

            

    

    

    This
      Agreement shall inure to the benefit of and be binding upon the Parties and
      their successors and permitted assigns. Neither Party may assign its rights
      and
      obligations under this Agreement without the prior written consent of the other,
      which consent will not be unreasonably withheld, delayed or conditioned. In
      the
      event of an assignment, the assignee shall agree to be bound by the terms and
      provisions of this Agreement, including any JOA provided for hereunder. In
      the
      event of such assignment the assigning Party shall be relieved from all
      obligations thereafter accruing, but not theretofore accrued, with respect
      to
      the interest assigned. 

    

    
      	13.	
              ENTIRETY
                OF AGREEMENT.

            

    

    

    This
      Agreement and the Exhibits attached hereto constitute the entire agreement
      between the Parties with respect to the subject matter hereof, and there are
      no
      representations or other agreements between the Parties except as expressly
      set
      forth herein and included within the Exhibits attached hereto. Any amendment
      to
      this Agreement shall not be effective unless in writing and executed by the
      Parties to this Agreement.

    

    
      	14.	
              GOVERNING
                LAW.

            

    

    

    This
      Agreement and the rights and obligations of the parties hereunder shall be
      governed by and interpreted, construed and enforced in accordance with the
      laws
      of the State of Texas (excluding any conflict of law rules which would refer
      to
      the laws of another jurisdiction). This Agreement shall be performable in
      Houston, Harris County, Texas and venue for any litigation to enforce a
      provision hereof or construe this Agreement shall be in Houston, Harris County,
      Texas. 

    

    
      	15.	
              RELATIONSHIP
                OF PARTIES.

            

    

    

    This
      Agreement is not intended to create a relationship of partnership or an
      association for profit between or among the Parties. It is expressly agreed
      that
      the obligations and liabilities of the Parties are several and not joint.
      Nothing contained in this Agreement shall be construed to create or impose
      a
      partnership duty, obligation or liability on any of the Parties or an
      association for profit between or among the Parties. Notwithstanding the
      foregoing provisions, if, for federal income tax purposes, this Agreement and
      the operations hereunder are regarded as a partnership, each of the Parties
      elects, under the authority of Section 761(a) of the Internal Revenue Code
      of
      1986, as amended, and applicable issued regulations, to be excluded from the
      application of all provisions of Subchapter K of Chapter 1 of the Internal
      Revenue Code of 1986, as amended. Should there be any requirement that a Party
      give further evidence of this election, such Party shall execute such documents
      and furnish such other evidence as may be required by the Internal Revenue
      Service or as may be necessary to evidence this election.

    

    
      
         

      

      
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              16.

            	
              TERM
                OF AGREEMENT.

            

    

    

    This
      Agreement shall remain in force and effect for a period commencing on the
      Effective Date hereof and, subject to the provisions hereof which provide for
      an
      earlier termination, ending on the date on which the JOA terminates in
      accordance with the provisions of Article XIII. of the JOA. 

    

    
      	17.	
              SEVERABILITY

            

    

    

    If
      any
      term, provision or condition of this Agreement is held invalid, unenforceable
      or
      contrary to applicable laws, it shall be reformed to the extent necessary to
      conform, consistent with the intention of the Parties, to such laws, and if
      such
      provision cannot be so reformed, it shall be deemed deleted and the validity
      of
      the other terms, provisions and conditions shall not be affected.

    

    
      	18.	
              MISCELLANEOUS

            

    

     

    A.
      The
      titles and the section headings contained in this Agreement are inserted for
      convenient reference only and shall not be construed as limiting or extending
      the meaning of any provision of this Agreement.

    

    B.
      This
      Agreement and any documents to be executed pursuant hereto may be executed
      in
      multiple counterparts, each of which shall constitute an original and all of
      which, when construed together, shall constitute but one and the same
      instrument.

     

    C.
      The
      Parties hereby agree to do, execute or procure to be done and executed, any
      and
      all further necessary acts, deeds, documents and things within their power
      to
      give effect to this Agreement and its intent.

    

    D.
      No
      waiver of any term, provision or condition of or rights under this Agreement
      shall be effective unless in writing and signed by an authorized representative
      of the waiving Party. The failure of either Party to insist upon the strict
      performance of any term, provision or condition of this Agreement shall not
      be
      construed as a waiver or relinquishment in the future of the same or any other
      term, provision or condition.

    

    E.
      If any
      action at law or in equity is necessary to enforce or interpret any of the
      rights or obligations under this Agreement, the prevailing Party shall be
      entitled to reasonable attorney’s fees, costs, and necessary disbursements from
      the non-prevailing Party in addition to any other relief to which the prevailing
      Party may be entitled.

     

    

    
      
         

      

      
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      If
        the
        foregoing sets forth your understanding of our agreement, please so indicate
        by
        signing in the space provided below and returning one (1) original of this
        Agreement to the undersigned.

       

    

     

    BAYOU
      CITY EXPLORATION, INC.

    
      	 	 	 	 
	 	 	 	 
	By:	/s/
              Morris Hewitt	 	 
	 	Name: Morris
              Hewitt	 	 
	 	Title: President	 	 
	 	 	 	 
	 	 	 	 
	TRUE NORTH ENERGY
              CORP.
              	 	 
	 	 	 	 
	 	 	 	 
	By:	/s/
              Massimiliano Pozzoni	 	 
	 	Name:  Massimiliano
              Pozzoni	 	 
	 	Title: Chief
              Financial Officer	 	 

    

     

     

    
      
         

      

      
        7
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      10.2

     

    PARTICIPATION
      AGREEMENT

    RE:
      JABONCILLO WINDMILL PROSPECT, 

    LIVE
      OAK COUNTY, TEXAS

    

    This
      Participation Agreement (“Agreement”) is made and entered into effective as of
      the 7th day of June, 2006 (“Effective Date”), by and between Bayou City
      Exploration, Inc. a Nevada Corporation (hereinafter “Company”) and True North
      Energy Corp, (hereinafter “Participant”). Company and Participant are sometimes
      hereinafter referred to, individually, as a “Party” and, collectively, as the
“Parties”.

    

    WHEREAS,
      Company
      has identified a prospect for oil and gas (“Prospect”), known to the Parties as
      the Jaboncillo Windmill Prospect, and purchased, or is in the process of
      purchasing, oil and gas leases the (“Leases”) on such Prospect, and;

    

    WHEREAS,
      Participant has expressed a desire to participate with Company in the drilling
      of a test well in search of oil or gas on the Leases or portions thereof and
      in
      the further development of the Leases, if warranted, and;

    

    WHEREAS,
      the
      Parties desire to join together and enter into a final and binding agreement
      to
      fully express the terms and conditions which are to govern between the Parties
      as to the development of the Prospect, and;

    

    NOW,
      THEREFORE,
      for and
      in consideration of the mutual covenants and promises herein contained, the
      Parties hereby agree as follows: 

    

    
      	7.	
              JOINT
                OPERATING AGREEMENT

            

    

    

    Contemporaneously
      with the execution hereof, the Parties shall execute the Joint Operating
      Agreement (“JOA”) and Memorandum of Joint Operating Agreement, naming Bayou City
      Exploration, Inc. a Nevada Corporation, as operator (“Operator”). The executed
      JOA is attached hereto and incorporated herein as Exhibit “A”. The JOA shall
      control the operations conducted on the Prospect. Should there be a conflict
      between the terms and conditions of this Agreement and the JOA, the terms and
      conditions of this Agreement shall prevail.

    

    
      	8.	
              LEASEHOLD

            

    

    

    Company
      represents, but does not warrant that it owns, or is in the process of
      acquiring, certain oil, gas and mineral leases within the Prospect area as
      depicted on the Plat labeled Exhibit “H” of the JOA attached hereto and
      incorporated herein as Exhibit “A” to this Agreement.

     

    
      
         

      

      
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      	9.	
              PARTICIPANTS
                INTEREST

            

    

    

    Participant
      hereby elects to earn a 12.5% working interest after payout in the Leases
      pursuant to the terms of this Agreement and the JOA by participating in the
      drilling of the Test Well.

    

    
      	10.	
              PROSPECT
                COSTS

            

    

    

    Participant’s
      share of current land cost to be charged by Company with respect to the
      Prospect, including lease bonus, land brokerage, title opinions, surveying,
      permit fees, geological and geophysical costs are $20,375.00 (“Prospect Costs”).
      Participant agrees to pay the sum of $20,375.00, being its share, of the
      Prospect Costs upon execution of this Agreement. The parties acknowledge that
      there may be additional expenditures incurred by Company including but not
      limited to additional lease bonuses land brokerage, drilling title examination,
      and curative. Appropriate and timely billings and payments shall be made
      accordingly by the Parties. The entire Prospect Costs are fully refundable
      in
      the event this Agreement is rescinded by Company for any reason or Company
      fails
      to cause the Initial Test Well to be drilled for any reason.

    

    
      	11.	
              INITIAL
                TEST WELL

            

    

    

    On
      or
      before August 1, 2006 (“Commencement Date”), subject to rig availability,
      Company proposed to commence or cause to be commenced, operations for the
      drilling of a test well (“Test Well”) in search of oil and/or gas at a legal
      location of Company’s choice on the Prospect. The Test Well will be drilled with
      due diligence and in a good and workmanlike manner to a depth sufficient to
      test
      the Hockley formation or to a depth of 3000’ (TVD) beneath the surface of the
      earth, whichever is the lesser depth (the "Objective Depth").

    

    
      	12.	
              SUBSTITUTE
                TEST WELL

            

    

    

    In
      the
      event impenetrable conditions which render further drilling impracticable are
      met prior to reaching the Objective Depth in the Test Well, then, subject to
      the
      provisions of Section 5 above, for a period of ninety (90) days after making
      the
      election, either Party shall have the right to drill a substitute Test Well
      to
      the Objective Depth on the Leases or on lands pooled therewith. The substitute
      Test Well shall be drilled under the same terms as the Test Well and the
      substitute Test Well shall be deemed to be the Test Well for all purposes under
      this Agreement. 

    

    
      
        
          	7.	
                  EXPENSES
                    FOR DRILLING THE TEST
                    WELL

                

        

      

    

    

    Participant
      shall bear and pay, in the percentages set forth below, its share of the costs
      and expenses described below. Such payment shall be due and payable to Company
      on or before fifteen (15) days after receipt of an invoice or invoices for
      such
      costs or any portion thereof. 

     

    
      
         

      

      
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              A.
                

            	
              16.6667%
                of the costs and expenses incurred in drilling the Test Well (and
                any
                substitute well therefore) to casing point, or to a lesser depth
                if
                impenetrable conditions are encountered in the well, and in plugging
                and
                abandoning the well if no completion attempt is made. The term “casing
                point” shall mean that point in time when the Test Well has been drilled
                to the Objective Depth, logged, evaluated and Company has notified
                Participant that a completion attempt will be made.  
                

            

    

    

    
      	 	
              B.

            	
              16.6667%
                of the costs and expenses incurred in completing the Test Well (and
                any
                substitute well therefore) and in equipping the same for
                production

            

    

    

    
      	8.	
              SUBSEQUENT
                WELLS

            

    

    

    As
      to any
      subsequent wells drilled within the Prospect area, the Participant has the
      option, but not the obligation, to participate in the drilling of such
      subsequent wells by paying 12.5% of the costs and expenses of drilling such
      well
      including the cost of completing such subsequent well and equipping the same
      for
      production. Should a party not elect to participate in such subsequent well
      such
      non-participating Party will be subject to the provisions of Article VI section
      B of the JOA.

    

    
      	9.	
              INTERESTS
                EARNED BY DRILLING TO OBJECTIVE
                DEPTH

            

    

    

    At
      such
      time as the Test Well has reached the Objective Depth and Participant has
      elected whether or not to participate in the completion of the well at the
      Objective Depth, Participant shall have earned an undivided 12.5% of the
      leasehold interest in and to the Leases, with the exception of the Leases
      included in the Test Well unit, and subject to the provisions of the Leases,
      this Agreement and the JOA. 

    

    In
      the
      case of the Test Well unit Participant will earn 16.6666% working interest
      before payout and 12.5% working interest after payout. “Payout” is defined as
      that point in time when there has been recovered from one hundred percent (100%)
      of production, less only royalties, overriding royalties and production taxes
      an
      amount of money equal to one hundred percent (100%) of the drilling, completing
      and operating costs (during the payout period) of the initial test well. After
      Payout, Participant will have an 12.5% working interest in the Test Well
      unit.

    

    Company
      shall assign to Participant any interest earned, effective as of the date of
      this Agreement, and such assignment shall be made within thirty (30) days after
      the date on which the drilling rig has been released or the date on which the
      Objective Depth has been reached which ever is later. The assignment shall
      be
      subject to, among other things, the terms and provisions of this Agreement,
      the
      terms and provisions of the JOA, and all royalties, overriding royalties,
      payments out of production, and similar leasehold burdens affecting the Leases
      and existing as of the Effective Date of this Agreement. The Parties acknowledge
      the overriding royalty burdens owed to Sunray Operating Company, LLC. as set
      out
      in Article XVI Section 14 of the JOA and Company further represents that there
      are no other overriding royalty burdens on the leasehold estate. The drilling
      of
      additional wells on the Leases and the operation of the Test Well and any
      additional wells on the Leases or lands pooled therewith shall be governed
      by
      the terms of this Agreement and the provisions of the JOA when not in conflict
      with this Agreement.

     

    
      
         

      

      
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      	10.	
              WELL
                INFORMATION -
                CONFIDENTIALITY

            

    

    

    The
      Parties agree that all information, data and other materials, including but
      not
      limited to wire line logs, mud logs, geological interpretations, seismic data
      (subject to all of the terms and conditions of any third party licensor or
      agreement) and other production data (“Data”) which might be obtained or
      accumulated is to be non-public, confidential and proprietary in nature, except,
      that such Data can be shown to affiliated companies, reputable engineering
      firms, gas transmission companies, reputable financial institutions, reputable
      and financially responsible third parties with whom a Party to this Agreement
      is
      engaged in negotiations for the sale of some portion of the interest in this
      Prospect, or any governmental entities requiring such Data. The Parties agree
      that the Data may not otherwise be disclosed, sold, traded, or published with
      out the prior written consent of Company. The Parties, their agents, consultants
      and independent contractors, at their sole cost, risk and expense, shall have
      access at all times to the derrick floor of all wells drilled under this
      Agreement and to all information in connection with the drilling and testing
      of
      all such wells. Operator agrees to send the Parties daily drilling reports
      reporting drilling information consistent with accepted industry standards
      including but not limited to work done, depth drilled, the results of tests
      made
      and oil and gas shows encountered. Operator shall furnish the Parties all well
      data acquired in connection with the drilling and producing of such wells
      including but not limited to copies of the surveyors location plat, all wire
      line and mud logs, reports showing the results of all tests and any forms and
      reports filed with any State or Federal Agency.

    

    
      	11.	
              NOTICES.

            

    

    

    All
      notices and information to be given hereunder shall be in writing and shall
      be
      sent by United States certified mail, telegram, telex, facsimile, email,
      overnight delivery service
      or
      telecopy, postage or charges prepaid and addressed to the Party to whom such
      notice is given as follows:

     

    
      	 	If to Company:	
              Bayou City Exploration, Inc.

              
                10777
                  Westheimer, Suite 170

                Houston,
                  Texas 77042

                Attention:
                  Mr. Morris Hewitt

                Telephone: 832-358-3900

                Facsimile: 832-358-3903

                Email:        
                  mhewitt@bcexploration.com

              

            

    

     

    
      
         

      

      
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      	 	If to Participant:	
              True North Energy Corp.

              
                1200
                  Smith Street 

                16th
                  Floor

                Houston,
                  Texas 77002

                Attention:
                   Max
                  Pozzoni

                Telephone: 832-476-8699

                Email:  max@tnecorp.com

              

            
	 	 	 

    

      

    
      	12.	
              ASSIGNMENT
                AND BINDING EFFECT.

            

    

    

    This
      Agreement shall inure to the benefit of and be binding upon the Parties and
      their successors and permitted assigns. Neither Party may assign its rights
      and
      obligations under this Agreement without the prior written consent of the other,
      which consent will not be unreasonably withheld, delayed or conditioned. In
      the
      event of an assignment, the assignee shall agree to be bound by the terms and
      provisions of this Agreement, including any JOA provided for hereunder. In
      the
      event of such assignment the assigning Party shall be relieved from all
      obligations thereafter accruing, but not theretofore accrued, with respect
      to
      the interest assigned. 

    

    
      	13.	
              ENTIRETY
                OF AGREEMENT.

            

    

    

    This
      Agreement and the Exhibits attached hereto constitute the entire agreement
      between the Parties with respect to the subject matter hereof, and there are
      no
      representations or other agreements between the Parties except as expressly
      set
      forth herein and included within the Exhibits attached hereto. Any amendment
      to
      this Agreement shall not be effective unless in writing and executed by the
      Parties to this Agreement.

    

    
      	14.	
              GOVERNING
                LAW.

            

    

    

    This
      Agreement and the rights and obligations of the parties hereunder shall be
      governed by and interpreted, construed and enforced in accordance with the
      laws
      of the State of Texas (excluding any conflict of law rules which would refer
      to
      the laws of another jurisdiction). This Agreement shall be performable in
      Houston, Harris County, Texas and venue for any litigation to enforce a
      provision hereof or construe this Agreement shall be in Houston, Harris County,
      Texas. 

    

    
      	15.	
              RELATIONSHIP
                OF PARTIES.

            

    

    

    This
      Agreement is not intended to create a relationship of partnership or an
      association for profit between or among the Parties. It is expressly agreed
      that
      the obligations and liabilities of the Parties are several and not joint.
      Nothing contained in this Agreement shall be construed to create or impose
      a
      partnership duty, obligation or liability on any of the Parties or an
      association for profit between or among the Parties. Notwithstanding the
      foregoing provisions, if, for federal income tax purposes, this Agreement and
      the operations hereunder are regarded as a partnership, each of the Parties
      elects, under the authority of Section 761(a) of the Internal Revenue Code
      of
      1986, as amended, and applicable issued regulations, to be excluded from the
      application of all provisions of Subchapter K of Chapter 1 of the Internal
      Revenue Code of 1986, as amended. Should there be any requirement that a Party
      give further evidence of this election, such Party shall execute such documents
      and furnish such other evidence as may be required by the Internal Revenue
      Service or as may be necessary to evidence this election.

    

    
      
         

      

      
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              16.

            	
              TERM
                OF AGREEMENT.

            

    

    

    This
      Agreement shall remain in force and effect for a period commencing on the
      Effective Date hereof and, subject to the provisions hereof which
      provide for an earlier termination,
      ending
      on the date on which the JOA terminates in accordance with the provisions of
      Article XIII. of the JOA. 

    

    
      	17.	
              SEVERABILITY

            

    

    

    If
      any
      term, provision or condition of this Agreement is held invalid, unenforceable
      or
      contrary to applicable laws, it shall be reformed to the extent necessary to
      conform, consistent with the intention of the Parties, to such laws, and if
      such
      provision cannot be so reformed, it shall be deemed deleted and the validity
      of
      the other terms, provisions and conditions shall not be affected.

    

    
      	18.	
              MISCELLANEOUS

            

    

     

    A.
      The
      titles and the section headings contained in this Agreement are inserted for
      convenient reference only and shall not be construed as limiting or extending
      the meaning of any provision of this Agreement.

    

    B.
      This
      Agreement and any documents to be executed pursuant hereto may be executed
      in
      multiple counterparts, each of which shall constitute an original and all of
      which, when construed together, shall constitute but one and the same
      instrument.

     

    C.
      The
      Parties hereby agree to do, execute or procure to be done and executed, any
      and
      all further necessary acts, deeds, documents and things within their power
      to
      give effect to this Agreement and its intent.

    

    D.
      No
      waiver of any term, provision or condition of or rights under this Agreement
      shall be effective unless in writing and signed by an authorized representative
      of the waiving Party. The failure of either Party to insist upon the strict
      performance of any term, provision or condition of this Agreement shall not
      be
      construed as a waiver or relinquishment in the future of the same or any other
      term, provision or condition.

    

    E.
      If any
      action at law or in equity is necessary to enforce or interpret any of the
      rights or obligations under this Agreement, the prevailing Party shall be
      entitled to reasonable attorney’s fees, costs, and necessary disbursements from
      the non-prevailing Party in addition to any other relief to which the prevailing
      Party may be entitled.

    

    If
      the
      foregoing sets forth your understanding of our agreement, please so indicate
      by
      signing in the space provided below and returning one (1) original of this
      Agreement to the undersigned.

    

    
      
         

      

      
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    BAYOU
      CITY EXPLORATION, INC.

    
      	 	 	 
	 	 	 
	By:	/s/
              Morris Hewitt	 
	 	Name: Morris
              Hewitt	 
	 	Title: President	 
	 	 	 
	 	 	 
	TRUE NORTH ENERGY
              CORP.
              	 
	 	 	 
	By:	/s/
              Massimiliano Pozzoni	 
	
            	Name:  Massimiliano
              Pozzoni	 
	 	Title: Chief
              Financial Officer	 

    

       

     

    
      
         

      

      
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