Document:

EOG RESOURCES

                                                          EOG RESOURCES, INC.
                                                          600 Seventeenth Street
                                                          Suite 1100N
                                                          Denver, CO 80202
                                      December 3, 2003    (303) 572-9000
                                                          Fax: (303) 824-5400

Petrosearch Corporation
P.O. Box 672
Fulshear, TX 77441

Attention:  Mr. Brad Simmons
            President

                                      RE:  Farmout with Option Agreement
                                           Starbuck Prospect
                                           Phillips and Valley Counties, Montana

Gentlemen:

     This Farmout with Option Agreement is made and entered into this 3rd day of
December,  2003,  by  and  between  EOG Resources, Inc., a Delaware corporation,
hereinafter  referred  to  as  "Farmor",  and  Petrosearch  Corporation, a Texas
Corporation,  hereinafter  referred  to  as  "Farmee."  Farmor  and Farmee, when
jointly referred to, shall be known as the "Parties" to this Agreement.

                                   I. RECITALS
                                      --------

     Farmor  represents,  but  does not warrant, that it is the owner of certain
oil and gas leases and interests therein as described in Exhibit "A.1", covering
lands  as  shown in yellow on Exhibit "A.2" both Exhibits attached hereto and by
this  reference made a part hereof. Reference is made to those leases and to the
record  thereof  for  all  of  the terms and conditions thereof. Such leases and
lands  described  in  Exhibits  "A.1"  will  hereinafter  be  referred to as the
"Contract  Acreage",  As shown on Exhibit "A.2", the Contract Acreage is divided
into two (2) separate earning blocks.

                                  II. AGREEMENT
                                      ---------

     For and in consideration of the mutual covenants and agreements hereinafter
set  forth  to  be  kept and performed by each of the Parties and other good and
valuable consideration the receipt and adequacy of which is hereby acknowledged,
the  Parties  do  hereby agree to and adopt the terms and conditions hereinafter
stated.

                       III. TEST WELL AND OPTION TEST WELL
                            ------------------------------

     A.  On  or  before  September 1, 2004, Farmee shall commence or cause to be
commenced  the  actual  drilling of a well, hereinafter referred to as the "Test
Well", at a legal location of Farmee's choice on the Contract Acreage.

                            energy opportunity growth

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     B.  Farmee shall prosecute drilling of the Test Well with due diligence and
in  a  good  and  workmanlike  manner  to  a  depth sufficient to adequately and
conclusively  test  the  Lodgepole  formation  or  to  the  depth of 5,656 feet,
whichever  is the lesser depth, hereinafter referred to as the "Contract Depth."
The  Test  Well will be drilled to the Contract Depth, tested and completed as a
well  capable  of  producing oil and/or gas in commercial quantities, or the dry
hole  will  be  plugged  and  abandoned  and the premises restored in a good and
workmanlike  manner within ninety (90) days from commencement of actual drilling
operations.

     C.  If  the  Test  Well  is  drilled  and  completed in the time and manner
specified  in  this  Agreement,  Farmee  shall  earn  the  option,  but  not the
obligation,  to drill a second well, hereinafter referred to as the "Option Test
Well"  at a legal location of Farmee's choice on the undrilled Block. The Option
Test  Well, if drilled, must be actually spudded within one-hundred eighty (180)
days  after the date the rotary rig is released from the Test Well. Farmee shall
prosecute  drilling of the Option Test Well with due diligence and in a good and
workmanlike  manner  to the Contract Depth. The Option Test Well will be drilled
to  the  Contract Depth, tested and completed as a well capable of producing oil
and/or  gas  in  commercial  quantities  or  the  dry  hole  will be plugged and
abandoned  and  the  premises  restored  in a good and workmanlike manner within
ninety (90) days from commencement of actual drilling operations.

     D.  If, because of encountering impenetrable substances or because of other
conditions  making further drilling impractical, Farmee may discontinue drilling
of  the  Test  Well  and/or Option Test Well before reaching the Contract Depth,
Farmee  shall  have  the  right  to  drill  a substitute test well at a location
mutually  acceptable to Farmor and to Farmee, provided that the drilling of said
substitute  test  well  is  commenced  not later than thirty (30) days after the
discontinuance of actual drilling of the original Test Well or Option Test Well.
Such  substitute  test well will be drilled in a good and workmanlike manner and
to  the  Contract  Depth. If such substitute test well is commenced, drilled and
completed  as herein provided, Farmee shall have complied with this Agreement to
the  same  extent  as  if  the Test Well or Option Test Well had been commenced,
drilled  and completed in accordance herewith. Each reference herein to the Test
Well or Option Test Well shall include any substitute test well therefor.

     E.  All  costs, expenses and risks incurred or arising out of the drilling,
testing,  completing,  equipping and/or plugging and abandoning of the Test Well
or  Option  Test Well, if drilled, and all costs and expenses incurred by Farmee
in  complying  with the terms, conditions and provisions of this Agreement shall
be borne solely by Farmee.

     F.  For  any  well  drilled  hereunder,  Farmee shall provide to Farmor the
geologic information and reports described in Exhibit "B" attached hereto and by
this  reference made a part hereof Farmor shall at all times have full access to
the rig floor at its sole cost, risk and expense.

     G.  In  the  event  the Test Well and/or Option Test Well is completed as a
well  capable of producing oil and/or gas, Farmee, within thirty (30) days after
completion thereof, shall furnish Farmor with an itemized statement of the costs
of  drilling,  testing,  completing  and  equipping such well and disclosing all
credits,  including  credits for salvage material, and shall also furnish Farmor
with a detailed inventory of the equipment placed in and on the well. During the
period  of  payout  of  such  well as hereinafter provided, Farmee shall furnish
Farmor  each  quarter  with  an itemized statement of the costs of operating and
maintaining  the  applicable  well  and  with monthly reports of all production,
production sold, production on hand

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December 3, 2003
Page 3 of 9

and  run  tickets  disclosing  the type, quality and quantity of production from
such  well  and  the  disposition  thereof.

                                 IV. ASSIGNMENT
                                     ----------

     In  the  event Farmee drills and completes the Test Well and/or Option Test
Well  in  accordance  with the terms and conditions of this Agreement, ("Earning
Well")  and further provided that Farmee shall have furnished to Farmor evidence
that  all  bills  for labor and materials in connection with Farmee's operations
have been fully paid, and upon receipt of written request within sixty (60) days
following  completion  of  such  well,  Farmor  will, subject to the conditions,
exceptions,  reservations,  covenants  and agreements herein set forth, transfer
and assign to Farmee without representation or warranty of title, either express
or implied, the following:

     A.  Should  Farmee  plug and abandon the Earning Well as a dry hole, Farmor
shall  assign  to Farmee seventy-five percent (75%) of Farmor's working interest
in and to that portion of the Contract Acreage located within the Block in which
the Earning Well is located.

     B.  Provided  Farmee  completes  the  Earning  Well  as  a  well capable of
producing oil and/or gas in commercial quantities, Farmor shall assign to Farmee
one  hundred percent (100%) of Farmor's working interest in the Wellbore subject
to  the  reservation  by  Farmor  of an overriding royalty interest equal to the
difference  between existing lease burdens and twenty percent (20%) of 8/8ths of
all  oil, gas, other minerals, condensate, and casinghead gas produced and saved
from  the  Earning  Well. Said overriding royalty interest shall be inclusive of
the  landowner's  royalty  and any overriding royalty or other burdens which now
exist  provided,  however,  that  as  to  federal  leases the overriding royalty
retained  may  be  reduced to the extent required by the applicable regulations.
Farmor's  reserved overriding royalty interest shall be delivered free and clear
of  all  liens  and  all  costs of development and operation. In addition to the
assignment  covering  the  wellbore,  Farmor shall assign to Farmee seventy-five
percent  (75%)  of  Farmor's  working  interest  in that portion of the Contract
Acreage located within the Block in which the Earning Well is located.

     C.  The  overriding  royalty  interest  reserved  herein to Farmor shall be
reduced  proportionately  if  the  Oil and Gas Lease(s) to be assigned to Farmee
cover(s)  less  than the full undivided interest in the oil, gas, and associated
hydrocarbons  in  the  assigned  premises,  if Farmor does not own all leasehold
rights  in  said lease(s), and/or if all or any part of the assigned premises is
pooled  or  communitized with other lands. Said pooling or communitization shall
only  be  done  with  Farmor's  consent.

     D. Farmor shall have the right to use any rights-of-way, easements or roads
which  Farmee  may  obtain or build in connection with its operations hereunder;
and if Farmor actually uses said rights-of-way, easements, or roads, then Farmor
will reimburse upon being billed by Farmee for a proportionate share of the cost
of maintaining same.

     E.  Any  interest  earned  by  Farmee  hereunder  shall  be  subject to its
proportionate  share  of  all  leasehold burdens existing as of the date of this
Agreement,  all  agreements  affecting  such  interest  as  of  the date of this
Agreement and the terms and provisions of this Agreement.

     F. Upon receipt of any assignment earned by Farmee hereunder, Farmee agrees
to  file  same  with  the  governmental agency having authority (if applicable),
record same in the

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December 3, 2003
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county records and furnish Farmor with a copy of the approved (if applicable)
and recorded assignment as soon as it is available.

                                    V. PAYOUT
                                       ------

     A.  For  purposes of this Agreement, "Payout" shall be defined individually
for  each Earning Well as the day when the proceeds or revenue received from the
sale  of  production  from  the Earning Well, after deducting the payment of all
taxes,  royalties  and overriding royalties, including the applicable overriding
royalty  retained  by  Farmor  pursuant  hereto,  shall equal the total costs of
drilling,  testing,  completing and equipping the Earning Well plus the costs of
operating  and  maintaining  same  during  the  payout  period. If Farmee should
receive  a  cash  contribution  toward  the  drilling  of  Earning  Well,  such
contribution  shall  be  applied against the cost of such drilling and the costs
which  Farmee  shall  be  entitled to recoup with respect to such well under the
provisions of this paragraph shall be reduced accordingly. Further, in the event
Farmee  drills  a substitute test well as provided herein, then it is understood
that only the cost of the substitute test well and not any abandoned well may be
included  in  the  Payout account. Farmee shall so notify Farmor that Payout has
been  reached  in  the  Earning Well in writing within thirty (30) days thereof.

                            VI. CONVERSION AT PAYOUT
                                --------------------

     A.  At  such time Farmee notifies Farmor that Payout has been reached, then
Farmor  shall  have  thirty  (30)  days after receipt of such notice in which to
elect  to  convert Farmor's applicable reserved overriding royalty interest to a
working  interest  equal  to  percent  (25%)  of the working interest within the
Wellbore  originally assigned to Farmee by virtue of the well which has now paid
out  pursuant  to  the terms of this Agreement. If Farmor does not make a formal
election  pursuant  to  this  Article,  then the absence of an election shall be
deemed  an  election  by  Farmor to convert Farmor's reserved overriding royalty
                                 ----------
interest  to  the  working  interest  described  in  this  Article. Said working
interest  shall  be  owned  by  Farmor  free  and  clear of all encumbrances not
existing  on  the  date of this Agreement. The conversion, if exercised, will be
effective  as of 7:00 a.m. the day following Payout. If Farmor elects to convert
its  applicable reserved overriding royalty as provided herein, then the Parties
agree  they  will  prepare,  execute  and  deliver  to  each other the necessary
conveyances  and/or  assignments  and  will  execute  all necessary transfer and
division orders so as to carry out the intent and purpose of this paragraph.

                          VII. EXTENSIONS AND RENEWALS
                               -----------------------

     A. All of Farmor's present rights and all of the reservations and rights to
which  Farmor  will  be  entitled pursuant to this Agreement shall extend and be
applicable  to  (1)  any extension of a portion or all of any lease covering the
Contract  Acreage  and  (2)  any  renewal lease covering a portion or all of any
lease covering the Contract Acreage which may be acquired directly or indirectly
by  Farmee within one (1) year from the date of expiration or termination of any
current  lease  covering the Contract Acreage. All acquisition costs of any such
extension  or  renewal lease acquired by Farmee shall be borne by Farmee. Farmee
shall  execute  and  deliver  to  Farmor  an  assignment conveying to Farmor the
interests  in  such  acquisition  to  which  Farmor is entitled pursuant to this
Agreement  within  thirty  (30)  days  following  such  acquisition.

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December 3, 2003
Page 5 of 9

                            VIII. OPERATING AGREEMENT
                                  -------------------

     All operations conducted by Farmee hereunder shall be performed pursuant to
and under the provisions of the "Operating Agreement" attached hereto as Exhibit
"C"  and  by this reference made a part hereof. The terms and provisions of such
operating  agreement  shall  be  in  full  force and effect as to all operations
conducted  hereunder  including the drilling of the Test Well and/or Option Test
Well,  if  drilled,  by  Farmee,  except  to  the extent a specific provision is
contained  in  this  Agreement  to  the  contrary,  in which event the terms and
provisions hereof shall control.

                           IX. INSURANCE AND INDEMNITY
                               -----------------------

     At  all  times  while  conducting operations on the Contract Acreage and/or
Option Acreage, Farmee shall:

     A.   Conduct  said  operations  strictly  in  accordance with the terms and
          provisions of the Oil and Gas Leases covering the Contract Acreage.

     B.   Observe  and  comply with all applicable laws, ordinances, regulations
          and  orders  of  all  government  authorities  and  agencies,  whether
          Federal,  State,  County,  or  municipal.

     C.   Keep  the  Test  Well  and  Option Test Well and the equipment used in
          connection therewith free from all liens and encumbrances.

     D.   Comply  with  all  provisions  concerning  insurance in Exhibit "D" of
          the Operating Agreement.

          Such  insurance  shall  be  maintained  in  a  form which protects the
          interest of all Parties hereto by having Farmor named as an additional
          insured  if necessary under the policies providing such insurance. All
          insurance  shall  be  subject  to approval of Farmor, and Farmee shall
          submit  certificates  of  insurance  and  evidence  of its coverage to
          Farmor upon request.

     E.   Protect,  defend, indemnify and hold harmless Farmor and its officers,
          directors  and  employees from and against any and all losses, claims,
          demands,  liabilities or causes of action of every kind and character,
          including  costs  of  litigation,  attorneys'  fees, without limit and
          without  regard to the cause or causes thereof, in favor of any person
          or  party,  on  account  of  damage to their property or on account of
          bodily  injury  or  death, arising out of or in any way connected with
          Farmee's  operations  pursuant  to  the  terms  of  this  Agreement.

                           X. ENVIRONMENTAL INDEMNITY
                              -----------------------

     Farmee  shall  assume all responsibility for, including control and removal
of,  and  protect, defend, hold Farmor and its officers, directors and employees
harmless  from  and  against all claims, fines, expenses, demands, and causes of
action  of  every  kind and character, including costs of litigation, attorneys'
fees,  arising  out  of  any  federal,  state  or  local laws, rules, orders and
regulations applicable to any waste material or hazardous substances on the land
or  the  presence,  disposal, release or threatened release of waste material or
hazardous  substance  from the land into the atmosphere or into or upon the land
or any water

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December 3, 2003
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course or body of water, including ground water, attributable to Farmee's
operations under the terms of this Agreement.

         XI. DELAY RENTALS, MINIMUM ROYALTIES AND SHUT-IN WELL PAYMENTS
             ----------------------------------------------------------

     Farmee shall bear seventy-five percent (75%) of Farmor's share of all delay
rentals  which may become due and payable concerning the Contract Acreage during
the  term  of this Agreement. Farmee shall pay Farmor upon being billed therefor
for seventy-five percent (75%) of such delay rentals. Farmor shall not be liable
for  erroneous  payment  or  inadvertent  failure  to pay any such delay rental.
Farmee,  at  its sole cost and expense, agrees to timely pay any and all shut-in
well payments and minimum royalties which may be required under the terms of the
leases covering the Contract Acreage. Farmee agrees to notify Farmor at any time
a well is completed on the Contract Acreage which is capable of producing but is
not  produced,  and at any time production ceases for any reason within ten (10)
days  of  such  occurrence. Said notice shall include the date of shut-in and/or
cessation  of  production,  the  reason  therefor,  the location of the well and
Farmee's  estimate  of  when  the  well  will  be returned to production. Farmee
further  agrees  to  furnish  to  Farmor  a  photostatic  copy  of  any  and all
instruments served upon Farmee which evidence a change in the ownership of delay
rentals and/or royalties.

                             XII. ASSUMPTION OF WELL
                                  ------------------

     In  the  event  Farmee determines that the Test Well or Option Test Well is
incapable  of  producing  oil  and/or  gas  in commercial quantities, and should
Farmee  desire  to  plug  and  abandon such well as a dry hole, Farmee shall not
commence  to  abandon  such  well  until  Farmee  has  furnished Farmor with all
information available which has been derived from the drilling, testing, coring,
surveying  and  logging  of  the  well,  and  thereafter Farmee has given Farmor
forty-eight  (48)  hours  (exclusive  of Saturday, Sunday and/or legal holidays)
notice  of  its  intention  to abandon. During the forty-eight (48) hour period,
Farmor  shall  have  the right, insofar as Farmee is able to grant the right, to
take  over  the  well  to  be  abandoned  by Farmee ("Assumed Well") and attempt
completion thereof and/or to conduct such further operations as Farmor sees fit,
in  which event Farmee shall deliver the hole and rig to Farmor for such further
operations.  Failure to notify Farmee within the aforesaid forty-eight (48) hour
period  shall  constitute  Farmor's  concurrence  in such well being plugged and
abandoned.  If  Farmor  takes  over a well in accordance with this Article, then
Farmee  will  bear  and  assume all cost, expense and liability incurred for the
Assumed  Well prior to the time Farmor takes over the well, and Farmor will pay,
assume  and bear all cost, obligation, risk and expense after its assumption. If
Farmor does take over the well in accordance with this Article, then Farmor will
pay  Farmee  the  reasonable  salvage  value for pipe and equipment in or on the
Assumed  Well  less the estimated cost of salvaging such material which is taken
for  the  further operations contemplated herein. If the Assumed Well is plugged
and abandoned, Farmor shall pay all costs of plugging and abandoning the Assumed
Well, BUT Farmee shall nevertheless continue to be liable for restoration of the
surface  upon  which  the Assumed Well is located. However, any additional costs
for  restoration  of  the surface which are the result of Farmor's operations in
assuming  such  well shall be borne by Farmor. If Farmor assumes the well, it is
understood  that  Farmee  shall  not  be  entitled  to an assignment of Farmor's
working  interest in and to the Contract Acreage or Option Acreage within a nine
section spot surrounding the well.

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December 3, 2003
Page 7 of 9

                                 XIII. SURRENDER
                                       ---------

     A. In the event Farmee should, at any time after the date of any assignment
made  by  Farmor under the terms of this Agreement, elect to surrender, release,
forfeit  or  allow  to terminate for any reason a portion or all of the interest
assigned,  Farmee  shall  notify Farmor in writing of such election no less than
sixty  (60)  days  prior to said action. Farmor shall have, for twenty (20) days
after  receipt  of  such  notice,  the  option  to  reacquire  from  Farmee  by
reassignment  all of such interest together with all of Farmee's interest in all
wells,  material  and equipment attributable to such interest. Said reassignment
shall  be  executed  and delivered to Farmor within ten (10) days after Farmee's
receipt  of Farmor's written notice to reacquire such interest and shall be free
and  clear  of any liens, adverse claims overriding royalty interest, production
payments  or  other encumbrances of whatsoever nature which have been created or
caused  by  Farmee  or by any party claiming by, through or under Farmee. Farmor
shall  pay  Farmee,  in consideration therefor, the reasonable salvage value for
pipe  and  equipment  in or on all wells attributable to such interest, less the
estimated  cost  of  salvaging  same after its receipt from Farmee of a complete
inventory  of  the  equipment  and  material  in  said  well(s).

     B.  In the event Farmor elects to exercise any reassignment option reserved
by it in any provision of this Agreement, such reassignment into Farmor shall be
free  and  clear  of  any  liens,  adverse  claims, overriding royalty interest,
production  payments  or  other encumbrances of whatsoever nature which may have
been created or caused by any action by Farmee.

                             XIV. TERM OF AGREEMENT
                                  -----------------

     A.  If  Farmee  fails  to drill the Test Well as herein provided, or drills
said  Test Well to a depth less than Contract Depth and does not timely exercise
its  right  to  drill  a  substitute test well as provided above, this Agreement
shall  terminate in its entirety and, notwithstanding anything in this Agreement
to  the  contrary, any interest which Farmee might otherwise be entitled to earn
under  this Agreement in or to the Contract Acreage or Test Well shall terminate
and revert to Farmor.

     B.  If  Farmee  fails  to drill the Option Test Well as herein provided, or
drills  said  Option  Test Well to a depth less than Contract Depth and does not
timely  exercise  its  right  to drill a substitute test well as provided above,
this  Agreement  shall terminate and, notwithstanding anything in this Agreement
to  the  contrary, any interest which Farmee might otherwise be entitled to earn
under  this  Agreement in or to the unearned Block shall terminate and revert to
Farmor.

     C.  If  Farmee  defaults in the timely and proper performance of any of its
obligations/covenants  contained  herein,  this Agreement shall terminate in its
entirety  and,  notwithstanding  anything in this Agreement to the contrary, any
interest  which  Farmee might otherwise be entitled to earn under this Agreement
in  or  to  the  Contract  Acreage  shall  terminate and automatically revert to
Farmor.

     D.  Such  automatic termination described above, however, shall not operate
to  relieve  Farmee  of  the  obligations  and liabilities incurred hereunder by
Farmee, its successors and assigns, prior to such termination.

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December 3, 2003
Page 8 of 9

                             XV. GENERAL PROVISIONS
                                 ------------------

     A.  This Agreement, as to the rights, duties and obligations hereunder, may
not  be  assigned  without the express written consent of Farmor, such terms and
conditions being particular and peculiar to the Farmee hereunder.

     B. This contract constitutes the entire agreement between Farmor and Farmee
and there are no other terms or provisions, either written or oral.

     C.  Upon  written request, Farmor shall furnish to Farmee copies of the Oil
and Gas Lease(s) covering the drillsite tract for any well drilled hereunder and
title  data  relating  thereto  in  its  possession,  including  copies  of  any
assignments,  contracts, rental receipts and agreements relating thereto and any
other  title  data  in  its  possession, including title opinions, provided that
Farmor  shall  not  be  responsible  for the accuracy of any such title opinion.
Farmee,  at  its  sole  cost and expense, shall obtain any additional title data
desired  and  furnish  Farmor  with  copies  of all title opinions and pertinent
materials obtained by Farmee covering the Contract Acreage.

     D.  Farmee, at its sole cost, risk and expense, shall maintain the Contract
Acreage  in a clean and orderly condition, remove all waste products and fill in
all  pits  dug  in  connection  with  Farmee's  operations thereon. Farmee shall
restore the Contract Acreage to its original condition as nearly as possible and
settle  all  claims  for  surface  damages.  If  Farmee  fails  to  perform  any
restoration  or clean-up operations within a reasonable time after completion or
abandonment,  or  fails  to settle any claims in connection with surface damages
within  sixty  (60)  days  after written demand from Farmor then, in such event,
Farmor  may  do  so  and  Farmee  agrees to reimburse Farmor for all expenses so
incurred.

     E.  Farmor  and Farmee shall each have the right to take and dispose of its
proportionate share of any and all of the production from or attributable to the
Contract Acreage.

     F.  Any  provision  hereof  which  is  inconsistent  with  any  law,  rule,
regulation  or  order  is  hereby  modified so as to conform therewith; and this
Agreement, as so modified, shall continue in full force and effect.

     G.  Should  Farmee drill and complete the Test Well and/or Option Test Well
as a well capable of production, Farmee shall place of record in the appropriate
County's  records  an  proper  affidavit  of  production describing the lease(s)
covering the applicable drillsite tract.

     H.  If  this  Agreement  is  not  executed by Farmee and returned to Farmor
within  thirty  (30) days from the date hereof, then and thereupon at the option
of Farmor this Agreement shall be null and void and of no effect.

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December 3, 2003
Page 9 of 9

     Executed  as of the day and year first written above. This Agreement may be
executed  in  any  number  of counterparts, each of which shall be considered an
original for all purposes.

                                        Very truly yours,

                                        EOG RESOURCES, INC.

                                        By:     /s/ J. Michael Schween
                                             -----------------------------------
                                                J. Michael Schween
                                        Title:  Agent and Attorney-in-Fact

AGREED TO AND ACCEPTED this       day of December, 2004
                            -----

PETROSEARCH CORPORATION

By:
    ------------------------------------
        Brad Simmons
        Title: President

<PAGE>
<TABLE>
<CAPTION>
                                                          Exhibit 'A.1'

                                                                                                                     Recording
Lease Number   Lessor Name                  Description                                 Lease Date   Gross Acres   Book    Page
-------------  ---------------------------  ------------------------------------------  -----------  -----------  ------  -------
<S>            <C>                          <C>                                         <C>          <C>          <C>     <C>
Block A Lands

0077012-000    USA MTM-92276                T37N-R34E                                    12-11-2002      2238.36
                                            SEC 1: LOTS 1, 2, 3, 4, S2N2, S2
                                            SEC 2: LOTS 1, 2, 3, 4, S2N2
                                            SEC 11: ALL
                                            SEC 12: N2, SW, N2SE, SWSE
                                            PHILLIPS COUNTY, MONTANA

0077021 -000   USA MTM-92277                T37N-R34E                                    12-11-2002       440.00
                                            SEC 10: NE, E2W2
                                            SEC 12: SESE
                                            SEC 13: E2NE
                                            PHILLIPS COUNTY, MONTANA

0077022-000    USA MTM-92278                T37N-R34E                                    12-11-2002        40.00
                                            SEC 10: SWNW
                                            PHILLIPS COUNTY, MONTANA

0077023-000    USA MTM-92279                T37N-R34E                                    12-11-2002      2440.00
                                            SEC 13: W2NE, NW, S2
                                            SEC 14: ALL
                                            SEC 23: ALL
                                            SEC 24: N2, SW, N2SE, SWSE
                                            PHILLIPS COUNTY, MONTANA

0077024-000    USA MTM-92280                T37N-R34E                                    12-11-2002       480.00
                                            SEC 15: S2
                                            SEC 22: E2E2
                                            PHILLIPS COUNTY, MONTANA

0077025-000    USA MTM-92281                T37N-R34E                                    12-11-2002       920.00
                                            SEC 25: NWNE, S2NE, NW, S2
                                            SEC 26: E2
                                            PHILLIPS COUNTY, MONTANA

0076961-000    USA MTM-91732                T3SN-R35E                                    05-31-2002      2249.32
                                            SEC 1: LOTS 1, 2, 3, 4, S2
                                            SEC 2: LOTS 1, 2, 3, 4, S2
                                            SEC 11: ALL
                                            SEC 12: ALL
                                            VALLEY COUNTY. MONTANA

0076962-000    USA MTM-91733                T3SN-R35E                                    05-31-2002      1940.64
                                            SEC 3: LOTS 1,2,3,4,S2
                                            SEC 4: LOTS 1,2,3,4,S2
                                            SEC 9: S2NE, SENW, S2
                                            SEC 10: NE, SWNW, S2
                                            VALLEY COUNTY, MONTANA

0076963-000    USA MTM-91734                T36N-R35E                                    05-31-2002      2164.01
                                            SEC 5: LOTS 1,2,3,4, S2
                                            SEC 6: LOTS 1,2,3,6, E2SW, SE
                                            SEC 7: LOTS 1,2,3,4, E2, E2W2
                                            SEC 8: ALL
                                            VALLEY COUNTY, MONTANA

0076964-000    USA MTM-92345                T36N-R35E                                    05-31-2002      1260.00
                                            SEC 13: ALL
                                            SEC 14: ALL
                                            VALLEY COUNTY, MONTANA

                                     1 of 7
<PAGE>
                                                          Exhibit 'A.1'

                                                                                                                     Recording
Lease Number   Lessor Name                  Decription                                  Lease Date   Gross Acres   Book    Page
-------------  ---------------------------  ------------------------------------------  -----------  -----------  ------  -------
0076965-000    USA MTM-92346                T3SN-R35E                                    05-31-2002       320.00
                                            SEC 15: NE, N2NW, S2SW
                                            VALLEY COUNTY, MONTANA

0076966-000    USA MTM-92347                T36N-R35E                                    05-31-2002      1265.32
                                            SEC 17: ALL
                                            SEC 18: LOTS 1,2,3,4, E2, E2W2
                                            VALLEY COUNTY, MONTANA

0076967-000    USA MTM-91742                T37N-R35E                                    05-31-2002      1262.32
                                            SEC 4: LOTS 1,2,3,4, S2NE, N2SE
                                            SEC 9: W2, S2SE
                                            SEC 10: E2, E2W2, SWSW
                                            VALLEY COUNTY, MONTANA

0076968-000    USA MTM-91743                T37N-R35E                                    05-31-2002      1156.60
                                            SEC 7: LOTS 1,2,3, E2W2
                                            SEC 8: E2E2
                                            SEC 17: E2, E2W2, W2SW
                                            SEC 18: SE
                                            VALLEY COUNTY, MONTANA

0076969-000    USA MTM-91744                Insofar as lease covers:                     05-31-2002       360.00
                                            T37N-R35E
                                            SEC 15: NENE, W2
                                            VALLEY COUNTY, MONTANA

0076970-000    USA MTM-91745                T37N-R35E                                    05-31-2002       958.69
                                            SEC 19: LOTS 1,2,3, NE, E2NW, NESW,
                                            N2SE, SESE
                                            SEC 20: E2
                                            SEC 21: W2SW, NWSE
                                            VALLEY COUNTY, MONTANA

0076971-000    USA MTM-91746                Insofar as lease covers:                     05-31-2002       160.00
                                            T37N-R35E
                                            SEC 22: E2SW
                                            SEC 23: W2SW
                                            VALLEY COUNTY, MONTANA

0076972-000    USA MTM-91747                Insofar as lease covers:                     05-31-2002       560.00
                                            T37N-R35E
                                            Sec 26: W2NW
                                            Sec 27:  NE, E2NW, SW, W2SE
                                            VALLEY COUNTY, MONTANA

0076973-000    USA MTM-91748                T37N-R3SE                                    05-31-2002      1360.00
                                            SEC 28: W2NE, W2NW, SENW, S2
                                            SEC 29: ALL
                                            SEC 30: E2E2, SWSE
                                            VALLEY COUNTY, MONTANA

0076974-000    USA MTM-91749                T37N-R35E                                    05-31-2002      1080.16
                                            SEC 31: LOTS 1,2,3,4, E2, E2W2
                                            SEC 32: E2, W2SW, SESW
                                            VALLEY COUNTY, MONTANA

0076975-000    USA MTM-91750                T37N-R35E                                    05-31-2002      1840.00
                                            SEC 33: ALL
                                            SEC 34: W2NE, W2, SE
                                            SEC 35: ALL
                                            VALLEY COUNTY, MONTANA

0076985-000    USA MTM-91768                T36N-R35E                                    05-31-2002       672.51
                                            SEC 6: LOTS 4,5
                                            SEC 9: N2N2, SWNW
                                            SEC 10: N2NW
                                            SEC 15: S2NW, N2SW, SE
                                            VALLEY COUNTY, MONTANA

                                     2 of 7
<PAGE>
                                                          Exhibit 'A.1'

                                                                                                                     Recording
Lease Number   Lessor Name                  Decription                                  Lease Date   Gross Acres   Book    Page
-------------  ---------------------------  ------------------------------------------  -----------  -----------  ------  -------
0076987-000    USA MTM-91773                T37N-R35E                                    05-31-2002       640.00
                                            SEC 4: S2NW, SW, S2SE
                                            SEC 9: NE, N2SE
                                            SEC 10: SWNW, NWSW
                                            VALLEY COUNTY, MONTANA

0076988-000    USA MTM-91774                T37N-R35E                                    05-31-2002      1835.10
                                            SEC 5: LOTS 1,2,3,4, S2N2, S2
                                            SEC 6: LOTS 1,2,3,4,5,6,7, S2NE, SENW,
                                            E2SW, SE
                                            SEC 7: LOT 4, E2
                                            SEC 8: W2W2
                                            VALLEY COUNTY, MONTANA

0076989-000    USA MTM-91775                T37N-R35E                                    05-31-2002       996.75
                                            SEC 17: W2NW
                                            SEC 18: LOTS 1,2,3,4, NE, E2W2
                                            SEC 19: LOT 4, SESW, SWSE
                                            SEC 20: W2
                                            VALLEY COUNTY, MONTANA

0076990-000    USA MTM-91776                T37N-R35E                                    05-31-2002      1440.00
                                            SEC 21: N2, E2SW, NESE, S2SE
                                            SEC 22: E2, NW, W2SW
                                            SEC 23: SWNE, NW, E2SW, W2SE
                                            VALLEY COUNTY, MONTANA

0076991-000    USA MTM-91777                Insofar as lease covers:                     05-31-2002       600.00
                                            T37N-R35E
                                            SEC 26: E2, E2NW
                                            SEC 27: W2NW
                                            SEC 28: E2NE, NENW
                                            VALLEY COUNTY, MONTANA

0077002-000    ST MT 34,813-02              T36N-R35E                                    09-04-2002       640.00
                                            SEC 16: ALL
                                            VALLEY COUNTY, MONTANA

0077004-000    ST MT 34,819-02              T37N-R35E                                    09-04-2002       640.00
                                            SEC 16: ALL
                                            VALLEY COUNTY. MONTANA

0077008-000    VALLEY COUNTY OF MONTANA     Insofar as lease covers:                     08-19-2002       320.00      79      359
                                            T37N-R35E
                                            SEC 26: SW
                                            SEC 27: E2SE
                                            SEC 34: E2NE
                                            VALLEY COUNTY, MONTANA

0077011-001    DEER VALLEY RANCH, INC       Insofar as lease covers:                     08-13-2002        40.00      79      364
                                            T37N-R35E
                                            SEC 10: NWNW
                                            VALLEY COUNTY, MONTANA

0077011-002    BEIL RANCH, INC.             Insofar as lease covers:                     08-13-2002        40.00      79      362
                                            T37N-R35E
                                            SEC 10: NWNW
                                            VALLEY COUNTY, MONTANA

                                     3 of 7
<PAGE>
                                                          Exhibit 'A.1'

                                                                                                                    Recording
Lease Number   Lessor Name                  Decription                                  Lease Date   Gross Acres   Book    Page
-------------  ---------------------------  ------------------------------------------  -----------  -----------  ------  -------
Block B Lands

0076969-000    USA MTM-91744                Insofar as lease covers:                     05-31-2002       640.00
                                            T37N-R35E
                                            SEC 13: N2NE, NWSW, SESW
                                            SEC 14: SWNE, NW, N2SW, SESW, SE
                                            VALLEY COUNTY, MONTANA

0076971-000    USA MTM-91746                Insofar as lease covers:                     05-31-2002       360.00
                                            T37N-R35E
                                            SEC 23: N2NE, E2SE
                                            SEC 24: W2SW, W2SE, SESE
                                            VALLEY COUNTY, MONTANA

0076972-000    USA MTM-91747                Insofar as lease covers:                     05-31-2002       440.00
                                            T37N-R35E
                                            SEC 25: E2, N2NW, SENW
                                            VALLEY COUNTY, MONTANA

0076976-000    USA MTM-92348                T36N-R36E                                    05-31-2002       880.00
                                            SEC 3:   S2SE
                                            SEC 10: ALL
                                            SEC 15: N2N2
                                            VALLEY COUNTY, MONTANA

0076977-000    USA MTM-91753                T36N-R36E                                    05-31-2002      1323.81
                                            SEC 5: SW
                                            SEC 6: LOTS 3,4,5,6, E2SW, SE
                                            SEC 7: LOTS 1,2,3,4, E2W2, SE
                                            SEC 9: E2NE, NW, S2SE
                                            VALLEY COUNTY, MONTANA

0076978-000    USA MTM-92349                T36N-R36E                                    05-31-2002       460.68
                                            SEC 18: LOTS 1,2,3,4, NE, E2W2
                                            VALLEY COUNTY, MONTANA

0076979-000    USA MTM-91757                T37N-R36E                                    05-31-2002      1369.39
                                            SEC 3: LOTS 2,3,4, SWNW, NWSW
                                            SEC 4: LOTS 1,2,3,4, S2N2, SW, W2SE
                                            SEC 9: NE, NENW, S2SW
                                            SEC 10: SW, N2SE, SWSE
                                            VALLEY COUNTY, MONTANA

0076980-000    USA MTM-91758                T37N-R35E                                    05-31-2002      1022.04
                                            SEC 5: LOTS 3,4, S2NW, SW
                                            SEC 6: LOTS 3,4,5,6,7, SENW, E2SW
                                            SEC 8: W2, SESE
                                            VALLEY COUNTY, MONTANA

0076981-000    USA MTM-91759                T37N-R36E                                    05-31-2002       920.00
                                            SEC 14: SENW, SWSW
                                            SEC 23: NWNE, S2NE, NW, S2
                                            SEC 24: SWNE, W2SW
                                            SEC 25: W2SW, SWSE
                                            VALLEY COUNTY, MONTANA

0076982-000    USA MTM-91760                T37N-R36E                                    05-31-2002      1200.00
                                            SEC 15: W2NE, W2, SE
                                            SEC 21: NENE, W2NE, NW
                                            SEC 22: E2, NWNW
                                            VALLEY COUNTY, MONTANA

0076983-000    USA MTM-91761                T37N-R36E                                    05-31-2002       679.99
                                            SEC 17: N2, N2SE
                                            SEC 18: NENE
                                            SEC 19: LOT 4
                                            SEC 20: N2NE, SESW, S2SE
                                            VALLEY COUNTY, MONTANA

                                     4 of 7
<PAGE>
                                                          Exhibit 'A.1'

                                                                                                                   Recording
Lease Number   Lessor Name                  Decription                                  Lease Date   Gross Acres  Book    Page
-------------  ---------------------------  ------------------------------------------  -----------  -----------  ------  -------
0076984-000    USA MTM-91762                T37N-R36E                                    05-31-2002      1840.85
                                            SEC 29: N2, W2SW, E2SE
                                            SEC 30: LOTS, 3,4
                                            SEC 31: LOTS 1,2,3,4, E2, E2W2
                                            SEC 32: W2NW, SENW, SW, NWSE
                                            SEC 33: W2NE, NW, N2SW
                                            VALLEY COUNTY, MONTANA

0076986-000    USA MTM-91772                T37N-R35E                                    05-31-2002      1080.00
                                            SEC 1: SESW, S2SE
                                            SEC 11: ALL
                                            SEC 13: NW, NESW
                                            SEC 14: N2NE, SENE
                                            VALLEY COUNTY, MONTANA

0076991-000    USA MTM-91777                Insofar as lease covers:                     05-31-2002       200.00
                                            T37N-R35E
                                            SEC 25: SWNW, SW
                                            VALLEY COUNTY, MONTANA

0076992-000    USA MTM-91785                T36N-R36E                                    05-31-2002      1120.00
                                            SEC 7: NE
                                            SEC 8: ALL
                                            SEC 9: W2NE, SW, N2SE
                                            VALLEY COUNTY, MONTANA

0076993-000    USA MTM-92350                T36N-R36E                                    05-31-2002       480.00
                                            SEC 15: S2N2, S2
                                            VALLEY COUNTY, MONTANA

0076994-000    USA MTM-92351                T36N-R36E                                    05-31-2002       640.00
                                            SEC 17: NE, W2
                                            SEC 18: SE
                                            VALLEY COUNTY, MONTANA

0076995-000    USA MTM-91790                T37N-R36E                                    05-31-2002       853.95
                                            SEC 2: LOT 4, SWNW, SW
                                            SEC 3: LOT 1, S2NE, SENW, NESW, S2SW
                                            SEC 10: NW
                                            SEC 11: N2NW, SENW, SESE
                                            VALLEY COUNTY, MONTANA

0076996-000    USA MTM-91791                T37N-R36E                                    05-31-2002      1053.56
                                            SEC 4: E2SE
                                            SEC 5: LOTS 1,2, S2NE, SE
                                            SEC 8: NE, N2SE, SWSE
                                            SEC 9: NWNW, S2NW, N2SW, SE
                                            VALLEY COUNTY, MONTANA

0076997-000    USA MTM-91792                T37N-R36E                                    05-31-2002      1372.89
                                            SEC 6: LOTS 1,2, S2NE, SE
                                            SEC 7: E2
                                            SEC 17: SW, S2SE
                                            SEC 18: NWNE, S2NE, SE
                                            SEC 19: NENE, SESE
                                            SEC 20: N2NW, SWSW
                                            VALLEY COUNTY, MONTANA

0076998-000    USA MTM-91793                T37N-R36E                                    05-31-2002       760.00
                                            SEC 12: SWSW
                                            SEC 13: W2W2
                                            SEC 14: E2, NENW, SESW
                                            SEC 23: NENE
                                            SEC 24: W2NW, SENW
                                            VALLEY COUNTY, MONTANA

                                     5 of 7
<PAGE>
                                                          Exhibit 'A.1'

                                                                                                                     Recording
Lease Number   Lessor Name                  Decription                                  Lease Date   Gross Acres  Book    Page
-------------  ---------------------------  ------------------------------------------  -----------  -----------  ------  -------
0076999-000    USA MTM-91794                T37N-R36E                                    05-31-2002      1040.00
                                            SEC 21: SENE, S2
                                            SEC 22: NENW, S2NW, SW
                                            SEC 29: E2SW, W2SE
                                            SEC 30: NE, N2SE
                                            VALLEY COUNTY, MONTANA

0077000-000    USA MTM-92352                T37N-R36E                                    05-31-2002       320.00
                                            SEC 26: S2
                                            VALLEY COUNTY, MONTANA

0077001-000    USA MTM-91796                T37N-R36E                                    05-31-2002      1600.00
                                            SEC 27: S2
                                            SEC 28: S2
                                            SEC 33: E2NE, S2SW, SE
                                            SEC 34: ALL
                                            VALLEY COUNTY, MONTANA

0077003-000    ST MT 34,815-02              T36N-R36E                                    09-04-2002       640.00
                                            SEC 16: ALL
                                            VALLEY COUNTY, MONTANA

0077005-ODD    ST MT 34,820-02              T37N-R35E                                    09-04-2002       640.00
                                            SEC 36: ALL
                                            VALLEY COUNTY, MONTANA

0077006-000    ST MT 34,821-02              T37N-R36E                                    09-04-2002       640.00
                                            SEC 16: ALL
                                            VALLEY COUNTY, MONTANA

0077007-000    VALLEY COUNTY OF MONTANA     Insofar as lease covers:                     08-19-2002       318.72      79      355
                                            T36N-R36E
                                            SEC 4: LOTS 3,4
                                            SEC 5: LOTS 1,2,3,4
                                            SEC 6: LOTS 1,2
                                            VALLEY COUNTY, MONTANA

0077008-000    VALLEY COUNTY OF MONTANA     Insofar as lease covers:                     08-19-2002       607.03      79      359
                                            T37N-R36E
                                            SEC 2: LOT 3, SENW, SWNE, W2SE
                                            SEC 11: W2NE
                                            SEC 30: LOTS 1,2, E2W2, S2SE
                                            VALLEY COUNTY, MONTANA

0077009-000    MCCOLLY RANCH, INC           T37N-R36E                                    06-24-2002      1916.17      79      349
                                            SEC 7: LOTS 1,2,3,4, E2W2
                                            SEC 18: LOTS 1,2, E2NW
                                            SEC 19: LOTS 1,2,3, E2W2, W2E2, SENE,
                                            NESE
                                            SEC 20: S2N2, N2S2
                                            T37N-R35E
                                            SEC 13: SWSW, S2NE, N2SE
                                            SEC 23: SENE
                                            SEC 24: NW, E2SW, S2NE, NESE
                                            VALLEY COUNTY, MONTANA

0077010-001    DEER VALLEY RANCH, INC       T36N-R36E                                    08-13-2002       955.06      79      363
                                            SEC 3: LOTS 1,2,3,4, N2SE, SW
                                            SEC 4: LOTS 1,2, S2
                                            SEC 5: SE
                                            VALLEY COUNTY, MONTANA

                                     6 of 7
<PAGE>
                                                          Exhibit 'A.1'

                                                                                                                    Recording
Lease Number   Lessor Name                  Decription                                  Lease Date   Gross Acres  Book     Page
-------------  ---------------------------  ------------------------------------------  -----------  -----------  ------  -------
0077010-002    BEIL RANCH, INC              T36N-R36E                                    08-13-2002       955.06      79      361
                                            SEC 3: LOTS 1,2,3,4, N2SE, SW
                                            SEC 4: LOTS 1,2, S2
                                            SEC 5: SE
                                            VALLEY COUNTY, MONTANA

0077010-003    ROSS C HYDE AND AUDREY HYDE  T36N-R36E                                    08-21-2002      1275.06      79      369
                                            SEC 3: LOTS 1,2,3,4, N2SE, SW
                                            SEC 4: LOTS 1,2, S2
                                            SEC 5: SE
                                            T37N-R36E
                                            SEC 32: NENW, NE, E2SE, SWSE
                                            VALLEY COUNTY, MONTANA

0077010-004    BEIL RANCH, INC              T37N-R36E                                    08-20-2002       320.00      79      388
                                            SEC 32: NENW, NE, E2SE, SWSE
                                            VALLEY COUNTY, MONTANA

0077010-005    DEER VALLEY RANCH, INC       T37N-R36E                                    08-20-2002       320.00      79      387
                                            SEC 32: NENW, NE, E2SE, SWSE
                                            VALLEY COUNTY, MONTANA

0077011-001    DEER VALLEY RANCH, INC       Insofar as lease covers:                     08-13-2002      1503.36      79      364
                                            T37N-R35E
                                            SEC 1: S2NW, N2SW, SWSW
                                            SEC 2: LOTS 1,2,3,4, S2N2, S2
                                            SEC 12: NE, W2, SE
                                            VALLEY COUNTY, MONTANA

0077011-002    BEIL RANCH, INC.             Insofar as lease covers:                     08-13-2002      1503.36      79      362
                                            T37N-R35E
                                            SEC 1: S2NW, N2SW, SWSW
                                            SEC 2: LOTS 1,2,3,4, S2N2, S2
                                            SEC 12: NE, W2, SE
                                            VALLEY COUNTY, MONTANA
</TABLE>

                                     7 of 7
<PAGE>
                               [GRAPHIC OMITTED]

<PAGE>
                                   EXHIBIT "B"
            Attached to and made a part of that certain Farmout with
            Option Agreement, dated December 3, 2003, by and between
        EOG Resources, Inc., as Farmor, and PetroSearch Corp., as Farmee

                              GEOLOGIC REQUIREMENTS

                              EOG RESOURCES, INC.

IN DRILLING THE TEST WELL(S), LESSEE SHALL:
-------------------------------------------

(i)       Test  as  a prudent operator any formation that either before or after
          logging  as  hereinafter  provided  appears  favorable  to  Lessor for
          the production of oil and/or gas.

(ii)      Conduct all operations with approved and accepted practices prevailing
          in  the  area  where  the  well  is drilled for wells of similar depth
          and testing similar formations.

(iii)     Make  adequate  evaluation  and  tests  to  Lessor's  satisfaction  to
          determine  if  the  well  is  capable of producing oil and/or gas from
          any  formation  encountered. This evaluation shall include, but not be
          limited to, a Dual Induction and/or Lateral Log, a BHC Sonic Log and a
          Compensated Neutron-Density Log over all zones of interest.

(iv)      Afford  Lessor,  at  its  sole risk and expense, access to the derrick
          floor  and  full  and  free  access  to  the  well  and  the  records
          thereof at any and all times.

(v)       Give  Lessor  notice, pursuant to the notice provisions of this Lease,
          to  have  a  representative  present  before  any  testing,  coring or
          logging  of  a prospective oil or gas zone, or plugging and abandoning
          the well.

(vi)      Advise  Lessor,  in writing, before commencing operations, of the name
          and address of the geologist and/or engineer servicing the well.

(vii)     Furnish  Lessor,  without  cost,  the  following  reports,  data  and
          information:

          DURING THE DRILLING OF THE WELL
          -------------------------------

          (a)  Daily  telephone  and  written  reports,  giving  the  nature  of
               all  work  done, tests conducted, shows encountered, cores taken,
               and  depth  and  formations  penetrated,  beginning with the date
               actual  work  is  commenced  at the location and continuing until
               initial  daily  potential has been established or, if a dry hole,
               the well has been plugged and abandoned.

          (b)  Lessor  shall  have  the  right  to request properly labeled well
               cuttings  or  dry  samples (if available) and to receive properly
               annotated drilling time charts which are to be taken at intervals
               of  not  more  than  ten  (10)  feet from the base of the surface
               casing  continuously  to total depth. Lessor further reserves the
               right  to slab any cores recovered during drilling operations and
               to receive all core analyses prepared by or for Lessee. If Lessor
               elects  not  to  slab available cores, Lessee will furnish Lessor
               properly  labeled core chips taken at one foot intervals from all
               cores cut.

          (c)  Water samples, on request.

          (d)  Three  (3)  copies  of  all  forms  and  reports filed with State
               and/or Federal agencies.

                                   Page 1 of 3
<PAGE>
          UPON COMPLETION OF THE WELL
          ---------------------------

          (e)  Three (3) copies of the chronological log and history of the well
               (well  records  and  information  record).

          (f)  One  (1) immediate fax upon logging and three (3) final prints of
               all  logging  surveys  undertaken.

          (g)  A certified copy or photoprint of the plugging record required by
               the  governmental  office  or  body  having jurisdiction over the
               premises,  if  the  test  well  is  a  dry  hole.

          (h)  Three (3) copies of any core analysis and three (3) copies of any
               core  report.

          (i)  Three (3) copies of any bottom hole survey pressure taken,

          (j)  Three (3) copies of any directional survey, if run.

          (k)  Three (3) copies of drillstem test charts and analysis, if taken.

          (l)  Three (3) copies of gas-oil ratio test, if taken.

          (m)  Three  (3) copies of open flow potential and shut-in test, if gas
               well.

          (n)  Three (3) copies of any electrical log analysis.

          (o)  Three (3) copies of geologic report, if performed.

          (p)  Three (3) copies of all forms and reports filed with State and/or
               Federal  agencies.

          (q)  One  (1)  copy  of the open-hole data in digital LAS format, on a
               3.5"  disk.

Prior  to  the  commencement of operations and after completion of any well as a
well capable of producing oil or gas, all notices shall be delivered as provided
in  Section  19  of  this  Lease.

Upon  the  commencement of drilling operations, all notices and reports shall be
made  to:

          One (1) copy sent to:          One (1) copy sent to:

          EOG Resources, Inc.            EOG Resources, Inc.
          600 17th Street, Suite 1100N   P.O. Box 4362
          Denver, Colorado 80202         Houston, Texas 77210-4362
          Jim Peterson                   Attn: Reservoir Engineering, Joe Tigner
          (303) 824-5403 (fax for logs)

          One (1) copy sent to:

          EOG Resources, Inc.
          P.O. Box 250
          1540 Piney Drive
          Big Piney, Wyoming 83113
          Attention: Curt C. Parsons

                                   Page 2 of 3
<PAGE>
Phone daily drilling reports to:

          Attention:  Rita Thomas
          Phone:      (307) 276-3331

Fax daily drilling reports to:

          Attention:  Rita Thomas
          Phone:      (307) 276-3335

Notification for logging, testing, coring, etc.

Name:     Jim Peterson
     ----------------------------------
Office Phone:      (303) 824-5492      Home Phone:    (303) 7958036
             --------------------------           --------------------------

                                       or

Name:     Gene Clower
     ---------------------------------------------------------------------------
Office Phone:      (303) 824-5432      Home Phone:    (303) 734-9783
             --------------------------           ------------------------------

                                  Page 3 of 3
<PAGE>
EOG RESOURCES

                                                          EOG RESOURCES, INC.
                                                          600 Seventeenth Street
                                                          Suite 1100N
                                                          Denver, CO 80202
                                                          (303) 572-9000
                                                          Fax: (303) 824-5400

                                      August 31, 2004

Petrosearch Corporation
P.O. Box 672
Fulshear, TX 77441

Attention:  Mr. Brad Simmons
            President

                                      RE:  Amendatory Letter
                                           Farmout with Option Agreement
                                           Starbuck Prospect
                                           Phillips and Valley Counties, Montana

Gentlemen:

     Reference  is  made  to  that  certain  Farmout with Option Agreement dated
December 3, 2003, by and between EOG Resources, Inc., as Farmor, and Petrosearch
Corporation, as "Farmee," hereinafter referred to as "Said Agreement."

     Said Agreement is hereby amended as follows:

     Article  III.A, line 1: Change the date "September 1, 2004" to "December 1,
2004."

     Except  as  amended  hereunder,  all  of  the  terms and conditions of Said
Agreement are hereby said to be in full force and effect.

     Please  signify  your  acceptance  to the foregoing, by dating, signing and
returning  the  duplicate  letter  to  the  attention of the R. G. Davis, at the
letterhead address.

                                      EOG RESOURCES, INC.

                                      By: /s/ J. Michael Schween
                                         -------------------------------
                                              J. Michael Schween
                                      Title:  Agent and Attorney-in-Fact

Accepted and agreed to this 31st day of August, 2004
                            ----        ------

PETROSEARCH CORPORATION

By:  /s/ Bradley J. Simmons
     ----------------------

                           Bradley J. Simmons
                           ------------------

Title:  President
        -------------------

                            energy opportunity growth
<PAGE>
EOG RESOURCES

                                                          EOG RESOURCES, INC.
                                                          600 Seventeenth Street
                                                          Suite 1100N
                                                          Denver, CO 80202
                                                          (303) 572-900O
                                                          Fax: (303)824-5400

                                  April 1,2005

Petrosearch Energy Corporation
4925 Greenville Avenue, Suite 200
Dallas, TX 75206

Attention: Mr. Dan N. Denton
           Vice President

                                      RE:  Second Amendatory Letter
                                           Farmout with Option Agreement
                                           Starbuck Prospect
                                           Phillips and Valley Counties, Montana

Gentlemen:

     Reference  is  made  to  that  certain  Farmout with Option Agreement dated
December  3,  2003, as amended by Letter Agreement dated August 31, 2004, by and
between  EOG  Resources,  Inc.,  as  Farmor,  and  Petrosearch  Corporation,  as
"Farmee,"  hereinafter  referred  to  as  "Said  Agreement."

Said  Agreement  is  hereby  amended  as  follows:

Article  III.A,  line  1:  Change  the date "December 1, 2004" to "September 15,
2005."

Article  III.A:  Add  the  following  paragraphs:

"Before  May  15,  2005,  Farmee  shall,  at  its  sole  cost, risk and expense,
prosecute  and  complete a micromagnetic survey ("Survey") over all or a portion
of  the Contract Acreage. Farmee and/or its contractor shall be responsible for,
and  shall  defend,  indemnify  and  hold Farmor and its successors and assigns,
harmless  from  any and all liability or injuries to property or persons arising
out of, caused by, or related to such operations, including reasonable costs and
attorney's  fees.

Upon  completion  of  the  Survey  Farmee  shall,  as soon as practical, provide
Farmor,  free  of  cost and any restrictions on its use, all data, including any
supporting  data,  relating to the Survey. Within thirty (30) days of completion
of  the  Survey,  but not later than July 1, 2005, Farmee shall advise Farmor of
its  election to proceed with the drilling of the Test Well. In the event Farmee
elects  to  drill the Test Well it shall advise Farmor of the drilling depth and
the  target  formation(s), ("Contract Depth.") In no event may Contract Depth be
above  the  base  of  the  Eagle  Shale.

Article  III.B:  Replace  the first sentence in its entirety with the following:

"Farmee  shall  prosecute  drilling of the Test Well with due diligence and in a
good  and  workmanlike  manner  to  Contract  Depth."

                            ENERGY OPPORTUNITY GROWTH
<PAGE>
Article  XI:  Add  the  following  sentence:

"Notwithstanding  the  foregoing,  for  a  period  beginning January 1, 2005 and
ending  when  the Test Well reaches Contract Depth Farmee shall bear one hundred
percent  (100%)  of  Farmor's  share  of  delay rentals which may become due and
payable  concerning  the  Contract  Acreage  during  the term of this Agreement.
Concurrent  with deliver of a fully executed original hereof, Farmee shall remit
to Farmor a company check in the amount of $20,116.60 covering delay rentals due
and  payable  on  Contract  Acreage for the period beginning January 1, 2005 and
ending  June  30,  2005."

Article  XIV:  Add  the  following  paragraph:

"If Farmee fails to prosecute the micromagnetic survey as herein provided within
the  time  allowed  this  Agreement  shall  terminate  in  its  entirety,  and
notwithstanding  anything  in this Agreement to the contrary, any interest which
Farmee  might  otherwise  be entitled to earn hereunder or in or to the Contract
Acreage  shall  terminate  and  revert  to  Farmor."

     Except  as  amended  hereunder,  all  of  the  terms and conditions of Said
Agreement  are  hereby  held  to  be  in  full  force  and  effect.

     Please  signify  your  acceptance  to the foregoing, by dating, signing and
returning  the  duplicate  letter  to  the  attention of the R. G. Davis, at the
letterhead  address.

                                             EOG RESOURCES, INC.

                                             By: /s/ J. Michael Schween
                                                --------------------------
                                                    J. Michael Schween
                                             Title: Agent and Attorney-in-Fact

Accepted and agreed to this 12 day of April, 2005
                            --

PETROSEARCH ENERGY CORPORATION, A NEVADA CORPORATION
successor in interest to Petrosearch Corporation, a Texas Corporation

By:  /s/ Dan N. Denton
   ------------------------
     Dan N. Denton
     Vice PresidentA.A.P.L. FORM 610 - 1989

                         MODEL FORM OPERATING AGREEMENT

                                    [FORM OF]

                               OPERATING AGREEMENT

                                      DATED

                               SEPTEMBER 01,  2003
                             --------------  ------
                                              Year

OPERATOR    PETROX OPERATING COMPANY, LLC
            --------------------------------------------------------------------

CONTRACT AREA   NE/4, N/2SE/4, SE/4SE/4 OF SECTION 18-T139N-R96W, INCLUDING
              ------------------------------------------------------------------
                THE CONOCO-GRUMAN 18-1 WELLBORE.
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

COUNTY OR PARISH OF  STARK     , STATE OF     NORTH DAKOTA
                    -----------            ------------------

                              COPYRIGHT  1989 - ALL RIGHTS RESERVED AMERICAN
                              ASSOCIATION OF PETROLEUM LANDMEN, 4100  FOSSIL
                              CREEK BLVD. FORT WORTH, TEXAS, 76137, APPROVED
                              FORM.

                                           A.A.P.L. NO. 610-1989

<PAGE>
<TABLE>
<CAPTION>
A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT -1989

                                 TABLE OF CONTENTS
                                 -----------------

Article                                 Title                                 Page
-------                                 -----                                 ----
<S>      <C>                                                                  <C>
     I.  DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
         -----------
    II.  EXHIBITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
         --------
   III.  INTERESTS OF PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . 2
         --------------------
         A.   OIL AND GAS INTERESTS: . . . . . . . . . . . . . . . . . . . . . . 2
         B.   INTERESTS OF PARTIES IN COSTS AND PRODUCTION:. . . . . . . . . . . 2
         C.   SUBSEQUENTLY CREATED INTERESTS:. . . . . . . . . . . . . . . . . . 2
    IV.  TITLES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
         ------
         A.   TITLE EXAMINATION: . . . . . . . . . . . . . . . . . . . . . . . . 2
         B.   LOSS OR FAILURE OF TITLE:. . . . . . . . . . . . . . . . . . . . . 3
              1.   Failure of Title. . . . . . . . . . . . . . . . . . . . . . . 3
              2.   Loss by Non-Payment or Erroneous Payment of Amount Due. . . . 3
              3.   Other Losses. . . . . . . . . . . . . . . . . . . . . . . . . 3
              4.   Curing Title. . . . . . . . . . . . . . . . . . . . . . . . . 3
     V.  OPERATOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
         --------
         A.   DESIGNATION AND RESPONSIBILITIES OF OPERATOR:. . . . . . . . . . . 4
         B.   RESIGNATION OR REMOVAL OF OPERATOR AND SELECTION OF SUCCESSOR: . . 4
              1.   Resignation or Removal of Operator. . . . . . . . . . . . . . 4
              2.   Selection of Successor Operator . . . . . . . . . . . . . . . 4
              3.   Effect of Bankruptcy. . . . . . . . . . . . . . . . . . . . . 4
         C.   EMPLOYEES AND CONTRACTORS: . . . . . . . . . . . . . . . . . . . . 4
         D.   RIGHTS AND DUTIES OF OPERATOR: . . . . . . . . . . . . . . . . . . 4
              1.   Competitive Rates and Use of Affiliates . . . . . . . . . . . 4
              2.   Discharge of Joint Account Obligations. . . . . . . . . . . . 4
              3.   Protection from Liens . . . . . . . . . . . . . . . . . . . . 4
              4.   Custody of Funds. . . . . . . . . . . . . . . . . . . . . . . 5
              5.   Access to Contract Area and Records . . . . . . . . . . . . . 5
              6.   Filing and Furnishing Governmental Reports. . . . . . . . . . 5
              7.   Drilling and Testing Operations . . . . . . . . . . . . . . . 5
              8.   Cost Estimates. . . . . . . . . . . . . . . . . . . . . . . . 5
              9.   Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 5
    VI.  DRILLING AND DEVELOPMENT. . . . . . . . . . . . . . . . . . . . . . . . 5
         ------------------------
         A.   INITIAL WELL:. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
         B.   SUBSEQUENT OPERATIONS: . . . . . . . . . . . . . . . . . . . . . . 5
              1.   Proposed Operations . . . . . . . . . . . . . . . . . . . . . 5
              2.   Operations by Less Than All Parties . . . . . . . . . . . . . 6
              3.   Stand-By Costs. . . . . . . . . . . . . . . . . . . . . . . . 7
              4.   Deepening . . . . . . . . . . . . . . . . . . . . . . . . . . 8
              5.   Sidetracking. . . . . . . . . . . . . . . . . . . . . . . . . 8
              6.   Order of Preference of Operations . . . . . . . . . . . . . . 8
              7.   Conformity to Spacing Pattern . . . . . . . . . . . . . . . . 9
              8.   Paying Wells. . . . . . . . . . . . . . . . . . . . . . . . . 9
         C.   COMPLETION OF WELLS; REWORKING AND PLUGGING BACK:. . . . . . . . . 9
              1.   Completion. . . . . . . . . . . . . . . . . . . . . . . . . . 9
              2.   Rework, Recomplete or Plug Back . . . . . . . . . . . . . . . 9
         D.   OTHER OPERATIONS:. . . . . . . . . . . . . . . . . . . . . . . . . 9
         E.   ABANDONMENT OF WELLS:. . . . . . . . . . . . . . . . . . . . . . . 9
              1.   Abandonment of Dry Holes. . . . . . . . . . . . . . . . . . . 9
              2.   Abandonment of Wells That Have Produced . . . . . . . . . . .10
              3.   Abandonment of Non-Consent Operations . . . . . . . . . . . .10
         F.   TERMINATION OF OPERATIONS: . . . . . . . . . . . . . . . . . . . .10
         G.   TAKING PRODUCTION IN KIND: . . . . . . . . . . . . . . . . . . . .10
              (Option 1) Gas Balancing Agreement . . . . . . . . . . . . . . . .10
              (Option 2) No Gas Balancing Agreement. . . . . . . . . . . . . . .11
   VII.  EXPENDITURES AND LIABILITY OF PARTIES . . . . . . . . . . . . . . . . .11
         -------------------------------------
         A.   LIABILITY OF PARTIES:. . . . . . . . . . . . . . . . . . . . . . .11
         B.   LIENS AND SECURITY INTERESTS:. . . . . . . . . . . . . . . . . . .12
         C.   ADVANCES:. . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
         D.   DEFAULTS AND REMEDIES: . . . . . . . . . . . . . . . . . . . . . .12
              1.   Suspension of Rights. . . . . . . . . . . . . . . . . . . . .13
              2.   Suit for Damages. . . . . . . . . . . . . . . . . . . . . . .13
              3.   Deemed Non-Consent. . . . . . . . . . . . . . . . . . . . . .13
              4.   Advance Payment . . . . . . . . . . . . . . . . . . . . . . .13
              5.   Costs and Attorneys' Fees . . . . . . . . . . . . . . . . . .13
         E.   RENTALS, SHUT-IN WELL PAYMENTS AND MINIMUM ROYALTIES:. . . . . . .13
         F.   TAXES: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
  VIII.  ACQUISITION, MAINTENANCE OR TRANSFER OF INTEREST. . . . . . . . . . . .14
         ------------------------------------------------
         A.   SURRENDER OF LEASES: . . . . . . . . . . . . . . . . . . . . . . .14
         B.   RENEWAL OR EXTENSION OF LEASES:. . . . . . . . . . . . . . . . . .14
         C.   ACREAGE OR CASH CONTRIBUTIONS: . . . . . . . . . . . . . . . . . .14

                                        i
<PAGE>
A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT -1989

                                 TABLE OF CONTENTS
                                 -----------------

         D.   ASSIGNMENT; MAINTENANCE OF UNIFORM INTEREST: . . . . . . . . . . .15
         E.   WAIVER OF RIGHTS TO PARTITION: . . . . . . . . . . . . . . . . . .15
         F.   PREFERENTIAL RIGHT TO PURCHASE:. . . . . . . . . . . . . . . . . .15
    IX.  INTERNAL REVENUE CODE ELECTION. . . . . . . . . . . . . . . . . . . . .15
         ------------------------------
     X.  CLAIMS AND LAWSUITS . . . . . . . . . . . . . . . . . . . . . . . . . .15
         -------------------
    XI.  FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
         -------------
   XII.  NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
         -------
  XIII.  TERM OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . .16
         -----------------
   XIV.  COMPLIANCE WITH LAWS AND REGULATIONS. . . . . . . . . . . . . . . . . .16
         ------------------------------------
         A.   LAWS, REGULATIONS AND ORDERS:. . . . . . . . . . . . . . . . . . .16
         B.   GOVERNING LAW: . . . . . . . . . . . . . . . . . . . . . . . . . .16
         C.   REGULATORY AGENCIES: . . . . . . . . . . . . . . . . . . . . . . .16
    XV.  MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
         -------------
         A.   EXECUTION: . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
         B.   SUCCESSORS AND ASSIGNS:. . . . . . . . . . . . . . . . . . . . . .17
         C.   COUNTERPARTS:. . . . . . . . . . . . . . . . . . . . . . . . . . .17
         D.   SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . .17
   XVI.  OTHER PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . .17
         ----------------
</TABLE>

                                       ii
<PAGE>
A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT -1989

                               OPERATING AGREEMENT

     THIS  AGREEMENT, entered into by and between  PETROX OPERATING COMPANY, LLC
                                                   -----------------------------
                                                                               ,
------------------------------------------------------------------------------
hereinafter designated and referred to as "Operator," and the signatory party or
parties  other  than Operator, sometimes hereinafter referred to individually as
"Non-Operator,"  and  collectively  as  "Non-Operators."

                                   WITNESSETH:

     WHEREAS,  the  parties  to  this agreement are owners of Oil and Gas Leases
and/or  Oil  and  Gas  Interests  in the land identified in Exhibit "A," and the
parties  hereto  have  reached  an agreement to explore and develop these Leases
and/or Oil and Gas Interests for the production of Oil and Gas to the extent and
as  hereinafter  provided,

     NOW, THEREFORE, it is agreed as follows:

                                   ARTICLE I.
                                  DEFINITIONS

     As  used  in  this  agreement, the following words and terms shall have the
meanings  here  ascribed  to  them:

     A.   The  term  "AFE" shall mean an Authority for Expenditure prepared by a
party  to  this agreement for the purpose of estimating the costs to be incurred
in  conducting  an  operation  hereunder.

     B.   The  term  "Completion"  or  "Complete"  shall mean a single operation
intended  to  complete a well as a producer of Oil and Gas in one or more Zones,
including,  but  not  limited to, the setting of production casing, perforating,
well  stimulation  and  production  testing  conducted  in  such  operation.

     C.   The  term  "Contract  Area"  shall  mean all of the lands, Oil and Gas
Leases  and/or  Oil  and Gas Interests intended to be developed and operated for
Oil  and  Gas  purposes under this agreement. Such lands, Oil and Gas Leases are
described  in  Exhibit  "A."

     D.   The  term  "Deepen"  shall  mean  a single operation whereby a well is
drilled  to  an  objective  Zone  below  the  deepest Zone in which the well was
previously  drilled,  or  below the Deepest Zone proposed in the associated AFE,
whichever  is  the  lesser.

     E.   The  terms  "Drilling Party" and "Consenting Party" shall mean a party
who  agrees  to join in and pay its share of the cost of any operation conducted
under  the  provisions  of  this  agreement.

     F.   The term "Drilling Unit" shall mean the area fixed for the drilling of
one well by order or rule of any state or federal body having authority.    If a
Drilling  Unit  is not fixed by any such rule or order, a Drilling Unit shall be
the drilling unit as established by the pattern of drilling in the Contract Area
unless  fixed  by  express  agreement  of  the  Drilling  Parties.

     G.   The  term  "Drillsite"  shall  mean  the  Oil and Gas Lease on which a
proposed  well  is  to  be  located.

     H.   The  term  Initial  Well  shall  mean  the  Gruman 18-1 wellbore to be
re-entered  and  sidetracked  by the parties hereto as provided in Article VI.A.

     I.   The  term  "Non-Consent Well" shall mean a well in which less than all
parties  have  conducted  an  operation  as  provided  in  Article  VI.B.2.

     J.   The terms "Non-Drilling Party" and "Non-Consenting Party" shall mean a
party  who  elects  not  to  participate  in  a  proposed  operation.

     K.   The  term  "Oil  and  Gas"  shall  mean  oil, gas, casinghead gas, gas
condensate,  and/or  all  other  liquid  or  gaseous  hydrocarbons  and  other
marketable  substances  produced  therewith,  unless  an  intent  to  limit  the
inclusiveness  of  this  term  is  specifically  stated.

     M.   The  terms "Oil and Gas Lease," "Lease" and "Leasehold" shall mean the
oil and gas leases or intereoto therein covering tracts of land lying within the
Contract  Area  which  are  owned  by  the  parties  to  this  agreement.

     N.   The  term  "Plug  Back" shall mean a single operation whereby a deeper
Zone  is  abandoned  in  order  to  attempt  a  Completion  in a shallower Zone.

     O.   The  term  "Recompletion"  or  "Recomplete"  shall  mean  an operation
whereby  a  Completion in one Zone is abandoned in order to attempt a Completion
in  a  different  Zone  within  the  existing  wellbore.

     P.   The term "Rework" shall mean an operation conducted in the wellbore of
a well after it is Completed to secure, restore, or improve production in a Zone
which  is  currently  open  to  production  in  the wellbore.    Such operations
include,  but  are  not limited to, well stimulation operations but exclude  any
routine  repair  or  maintenance  work  or  drilling,  Sidetracking,  Deepening,
Completing,  Recompleting,  or  Plugging  Back  of  a  well.

     Q.   The  term  "Sidetrack"  shall  mean  the  directional  control  and
intentional deviation of a well from vertical so as to change  the  bottom  hole
location  unless  done  to  straighten  the  hole  or  drill  around  junk  in
the  hole  to  overcome  other  mechanical  difficulties.

     R.   The term "Zone" shall mean a stratum of earth containing or thought to
contain  a  common  accumulation  of  Oil and Gas separately producible from any
other  common  accumulation  of  Oil  and  Gas.

     Unless  the context otherwise clearly indicates, words used in the singular
include  the  plural, the word "person" includes natural and artificial persons,
the  plural  includes  the  singular,  and  any  gender  includes the masculine,
feminine,  and  neuter.

                                   ARTICLE II.
                                    EXHIBITS

     The  following  exhibits,  as  indicated  below  and  attached  hereto, are
incorporated  in  and  made  a  part  hereof:

  X   A.  Exhibit "A," shall include the following information:
-----
          (1) Description of lands subject to this agreement,
          (2) Restrictions, if any, as to depths, formations, or substances,
          (3) Parties to agreement with addresses and telephone numbers for
              notice purposes,
          (4) Percentages or fractional interests of parties to this agreement,
          (5) Oil and Gas Leases and/or Oil and Gas Interests subject to this
              agreement,
          (6) Burdens on production.
  X   C.  Exhibit "C," Accounting Procedure.
-----
  X   D.  Exhibit "D," Insurance.
-----
  X   E.  Exhibit "E," Gas Balancing Agreement.
-----
  X   F.  Exhibit "F," Non-Discrimination and Certification of Non-Segregated
-----
          Facilities.

                                      - 1 -
<PAGE>
A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT -1989

     If  any  provision of any exhibit, except Exhibits "E," "F" is inconsistent
with  any  provision  contained in the body of this agreement, the provisions in
the  body  of  this  agreement  shall  prevail.

                                  ARTICLE III.
                              INTERESTS OF PARTIES

B.   INTERESTS  OF  PARTIES  IN  COSTS  AND  PRODUCTION:

     Unless  changed  by other provisions, all costs and liabilities incurred in
operations  under  this agreement shall be borne and paid, and all equipment and
materials  acquired  in  operations  on the Contract Area shall be owned, by the
parties as their interests are set forth in Exhibit "A." In the same manner, the
parties  shall  also  own  all  production of Oil and Gas from the Contract Area
subject, however, to the payment of royalties and other burdens on production as
described  hereafter.

     Regardless  of which party has contributed any Oil and Gas Lease or Oil and
Gas  Interest  on  which  royalty  or other burdens may be payable and except as
otherwise expressly provided in this agreement, each party shall pay or deliver,
or  cause  to  be  paid or delivered, all burdens on its share of the production
from  the  Contract  Area  up  to, but not in excess of, TWENTY (20) PERCENT and
                                                         -------------------
shall  indemnify,  defend  and  hold  the  other parties free from any liability
therefor. Except as otherwise expressly provided in this agreement, if any party
has contributed hereto any Lease or Interest which is burdened with any royalty,
overriding  royalty,  production payment or other burden on production in excess
of  the  amounts stipulated above, such party so burdened shall assume and alone
bear  all such excess obligations and shall indemnify, defend and hold the other
parties  hereto  harmless  from  any  and all claims attributable to such excess
burden.  However,  so  long  as  the Drilling Unit for the productive Zone(s) is
identical  with  the Contract Area, each party shall pay or deliver, or cause to
be paid or delivered, all burdens on production from the Contract Area due under
the  terms  of the Oil and Gas Lease(s) which such party has contributed to this
agreement,  and shall indemnify, defend and hold the other parties free from any
liability  therefor.

     No  party shall ever be responsible, on a price basis higher than the price
received  by  such  party,  to any other party's lessor or royalty owner, and if
such  other party's lessor or royalty owner should demand and receive settlement
on  a  higher  price basis, the party contributing the affected Lease shall bear
the  additional  royalty  burden  attributable  to  such  higher  price.

     Nothing  contained  in this Article III.B. shall be deemed an assignment or
cross-assignment  of  interests  covered  hereby,  and  in the event two or more
parties  contribute  to  this  agreement  jointly  owned  Leases,  the  parties'
undivided  interests  in  said  Leaseholds  shall  be  deemed separate leasehold
interests  for  the  purposes  of  this  agreement.

C.   SUBSEQUENTLY  CREATED  INTERESTS:

     If  any  party  has contributed hereto a Lease or Interest that is burdened
with  an assignment of production given as security for the payment of money, or
if,  after  the date of this agreement, any party creates an overriding royalty,
production  payment,  net  profits  interest,  assignment of production or other
burden payable out of production attributable to its working interest hereunder,
such  burden  shall be deemed a "Subsequently Created Interest." Further, if any
party  has  contributed  hereto  a Lease or Interest burdened with an overriding
royalty,  production payment, net profits interests, or other burden payable out
of  production  created  prior to the date of this agreement, and such burden is
not  shown  on  Exhibit  "A,"  such  burden  also shall be deemed a Subsequently
Created  Interest  to  the extent such burden causes the burdens on such party's
Lease  or  Interest  to  exceed  the  amount stipulated in Article III.B. above.

     The party whose interest is burdened with the Subsequently Created Interest
(the  "Burdened  Party")  shall  assume  and  alone  bear, pay and discharge the
Subsequently  Created Interest and shall indemnify, defend and hold harmless the
other  parties from and against any liability therefor. Further, if the Burdened
Party  fails  to  pay, when due, its share of expenses chargeable hereunder, all
provisions  of  Article  VII.B.  shall  be  enforceable against the Subsequently
Created  Interest in the same manner as they are enforceable against the working
interest  of  the  Burdened  Party. If the Burdened Party is required under this
agreement  to  assign  or  relinquish  to  any other party, or parties, all or a
portion of its working interest and/or the production attributable thereto, said
other  party,  or  parties, shall receive said assignment and/or production free
and  clear  of  said Subsequently Created Interest, and the Burdened Party shall
indemnify,  defend  and hold harmless said other party, or parties, from any and
all  claims  and  demands  for  payment  asserted  by owners of the Subsequently
Created  Interest.

                                   ARTICLE IV.
                                     TITLES

A.   TITLE  EXAMINATION:

     Title examination shall be made on the Drillsite of any proposed well prior
to  commencement  of  drilling  operations and, if a majority in interest of the
Drilling  Parties  so  request or Operator so elects, title examination shall be
made  on  the entire Drilling Unit, or maximum anticipated Drilling Unit, of the
well.  The opinion will include the ownership of the working interest, minerals,
royalty, overriding royalty and production payments under the applicable Leases.
Each party contributing Leases to be included in the Drillsite or Drilling Unit,
if appropriate, shall furnish to Operator all abstracts (including federal lease
status  reports),  title  opinions,  title  papers  and curative material in its
possession free of charge. All such information not in the possession of or made
available  to  Operator by the parties, but necessary for the examination of the
title,  shall be obtained by Operator. Operator shall cause title to be examined
by  attorneys on its staff or by outside attorneys. Copies of all title opinions
shall  be  furnished  to  each  Drilling  Party.  Costs  incurred by Operator in
procuring  abstracts,  fees  paid  outside  attorneys  for  title  examination
(including  preliminary,  supplemental,  shut-in  royalty  opinions and division
order  title opinions) and other direct charges as provided in Exhibit "C" shall
be  borne  by  the  Drilling Parties in the proportion that the interest of each
Drilling  Party  bears  to  the  total  interest of all Drilling Parties as such
interests  appear  in  Exhibit  "A."  Operator shall make no charge for services
rendered  by  its  staff  attorneys or other personnel in the performance of the
above  functions.

     Each  party  shall  be responsible for securing curative matter and pooling
amendments  or agreements required in connection with Leases contributed by such
party.  Operator  shall  be  responsible  for  the  preparation and recording of
pooling  designations  or declarations and communitization agreements as well as
the conduct of hearings before governmental agencies for the securing of spacing
or pooling orders or any other orders necessary or appropriate to the conduct of
operations hereunder. This shall not prevent any party from appearing on its own
behalf  at  such  hearings.  Costs  incurred by Operator, including fees paid to
outside  attorneys,  which  are  associated  with  hearings  before governmental
agencies,  and  which  costs  are  necessary  and  proper  for  the  activities
contemplated  under this agreement, shall be direct charges to the joint account
and  shall  not be covered by the administrative overhead charges as provided in
Exhibit  "C."

                                      - 2 -
<PAGE>
A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT -1989

Operator  shall  make  no charge for services rendered by its staff attorneys or
other  personnel  in  the  performance  of  the  above  functions.

     No  well shall be drilled on the Contract Area until after (1) the title to
the  Drillsite  or  Drilling  Unit,  if  appropriate, has been examined as above
provided, and (2) the title has been approved by the examining attorney or title
has  been  accepted  by  all  of  the  Drilling  Parties  in  such  well.

                                      - 3 -
<PAGE>
A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT -1989

                                   ARTICLE V.
                                    OPERATOR

A.   DESIGNATION  AND  RESPONSIBILITIES  OF  OPERATOR:

     PETROX  OPERATING  COMPANY.  LLC     shall  be the Operator of the Contract
     ------------------------------------
Area,  and  shall  conduct and direct and have full control of all operations on
the  Contract  Area  as permitted and required by, and within the limits of this
agreement.  In  its  performance  of  services  hereunder for the Non-Operators,
Operator  shall  be  an  independent  contractor  not  subject to the control or
direction  of  the  Non-Operators  except  as  to  the  type  of operation to be
undertaken  in  accordance  with  the  election  procedures  contained  in  this
agreement. Operator shall not be deemed, or hold itself out as, the agent of the
Non-Operators with authority to bind them to any obligation or liability assumed
or  incurred  by  Operator  as  to  any  third party. Operator shall conduct its
activities  under this agreement as a reasonable prudent operator, in a good and
workmanlike  manner,  with  due  diligence and dispatch, in accordance with good
oilfield  practice, and in compliance with applicable law and regulation, but in
no event shall it have any liability as Operator to the other parties for losses
sustained  or  liabilities  incurred  except  such  as  may  result  from  gross
negligence  or  willful  misconduct.

B.   RESIGNATION  OR  REMOVAL  OF  OPERATOR  AND  SELECTION  OF  SUCCESSOR:

     1.   Resignation or Removal of Operator: Operator may resign at any time by
          -----------------------------------
giving written notice thereof to Non-Operators. If Operator terminates its legal
existence,  or  is  no  longer capable of serving as Operator, Operator shall be
deemed  to  have  resigned  without  any  action  by  Non-Operators,  except the
selection  of  a  successor.  Operator may be removed only for good cause by the
affirmative  vote of Non-Operators owning a majority interest based on ownership
as  shown  on  Exhibit  "A"  remaining  after  excluding  the voting interest of
Operator;  such  vote  shall  not be deemed effective until a written notice has
been  delivered  to the Operator by a Non-Operator detailing the alleged default
and  Operator  has  failed  to cure the default within thirty (30) days fro  its
receipt  of  the  notice  or,  if  the  default concerns an operation then being
conducted,  within  forty-eight  (48)  hours  of  its receipt of the notice. For
purposes  hereof,  "good  cause" shall mean not only gross negligence or willful
misconduct but also the material breach of or inability to meet the standards of
operation  contained in Article V.A. or material failure or inability to perform
its  obligations  under  this  agreement.

     Subject  to  Article VII.D.l., such resignation or removal shall not become
effective  until  7:00  o'clock  A.M.  on  the  first  day of the calendar month
following  the  expiration  of  ninety  (90)  days after the giving of notice of
resignation  by  Operator  or  action  by  the Non-Operators to remove Operator,
unless a successor Operator has been selected and assumes the duties of Operator
at  an  earlier  date. Operator, after effective date of resignation or removal,
shall  be  bound  by the terms hereof as a Non-Operator. A change of a corporate
name  or  structure of Operator or transfer of Operator's interest to any single
subsidiary,  parent  or successor corporation shall not be the basis for removal
of  Operator.

     2.   Selection  of  Successor  Operator: Upon the resignation or removal of
          -----------------------------------
Operator  under  any  provision of this agreement, a successor Operator shall be
selected  by  the  parties.  The  successor  Operator shall be selected from the
parties  owning  an  interest  in  the  Contract Area at the time such successor
Operator  is  selected.  The  successor  Operator  shall  be  selected  by  the
affirmative  vote of two (2) or more parties owning a majority interest based on
ownership  as  shown on Exhibit "A"; provided, however, if an Operator which has
been  removed  or  is  deemed  to  have  resigned fails to vote or votes only to
succeed itself, the successor Operator shall be selected by the affirmative vote
of  the  party or parties owning a majority interest based on ownership as shown
on  Exhibit  "A"  remaining  after excluding the voting interest of the Operator
that  was removed or resigned. The former Operator shall promptly deliver to the
successor  Operator all records and data relating to the operations conducted by
the  former  Operator to the extent such records and data are not already in the
possession  of  the  successor  operator.  Any  cost of obtaining or copying the
former Operator's records and data shall be charged to the joint account.

     3.   Effect  of  Bankruptcy:  If Operator becomes insolvent, bankrupt or is
          -----------------------
placed  in  receivership, it shall be deemed to have resigned without any action
by  Non-Operators, except the selection of a successor. If a petition for relief
under  the  federal  bankruptcy  laws  is  filed by or against Operator, and the
removal  of  Operator  is  prevented  by  the  federal  bankruptcy  court,  all
Non-Operators  and  Operator  shall  comprise  an interim operating committee to
serve  until Operator has elected to reject or assume this agreement pursuant to
the  Bankruptcy  Code, and an election to reject this agreement by Operator as a
debtor  in  possession,  or  by  a  trustee  in  bankruptcy,  shall  be deemed a
resignation  as  Operator  without  any  action  by  Non-Operators,  except  the
selection  of  a  successor.  During  the period of time the operating committee
controls  operations,  all actions shall require the approval of two (2) or more
parties  owning  a majority interest based on ownership as shown on Exhibit "A."
In the event there are only two (2) parties to this agreement, during the period
of time the operating committee controls operations, a third party acceptable to
Operator,  Non-Operator  and the federal bankruptcy court shall be selected as a
member of the operating committee, and all actions shall require the approval of
two  (2) members of the operating committee without regard for their interest in
the  Contract  Area  based  on  Exhibit  "A."

C.   EMPLOYEES  AND  CONTRACTORS:

     The  number  of  employees  or  contractors  used by Operator in conducting
operations  hereunder,  their  selection,  and  the  hours  of  labor  and  the
compensation  for  services  performed  shall be determined by Operator, and all
such employees or contractors shall be the employees or contractors of Operator.

D.   RIGHTS  AND  DUTIES  OF  OPERATOR:

     1.   Competitive  Rates  and  Use of  Affiliates:  All wells drilled on the
          --------------------------------------------
Contract  Area  shall  be  drilled  on a competitive contract basis at the usual
rates  prevailing  in  the  area.  If it so desires, Operator may employ its own
tools and equipment in the drilling of wells, but its charges therefor shall not
exceed  the  prevailing  rates in the area and the rate of such charges shall be
agreed  upon by the parties in writing before drilling operations are commenced,
and such work shall be performed by Operator under the same terms and conditions
as  are  customary and usual in the area in contracts of independent contractors
who are doing work of a similar nature. All work performed or materials supplied
by  affiliates  or related parties of Operator shall be performed or supplied at
competitive rates, pursuant to written agreement, and in accordance with customs
and  standards  prevailing  in  the  industry.

     2.   Discharge  of  Joint  Account Obligations:  Except as herein otherwise
          ------------------------------------------
specifically  provided,  Operator  shall  promptly  pay  and  discharge expenses
incurred  in the development and operation of the Contract Area pursuant to this
agreement  and  shall  charge  each  of the parties hereto with their respective
proportionate  shares  upon  the expense basis provided in Exhibit "C." Operator
shall  keep  an accurate record of the joint account hereunder, showing expenses
incurred  and  charges  and  credits  made  and  received.

     3.   Protection from Liens: Operator shall pay, or cause to be paid, as and
          ----------------------
when  they become due and payable, all accounts of contractors and suppliers and
wages  and  salaries  for  services  rendered  or  performed,  and for materials
supplied  on,  to  or  in respect of the Contract Area or any operations for the
joint  account  thereof,  and  shall  keep  the  Contract  Area  free  from

                                      - 4 -
<PAGE>
A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT -1989

liens  and  encumbrances  resulting  therefrom except for those resulting from a
bona  fide  dispute  as  to  services  rendered  or  materials  supplied.

     4.   Custody  of  Funds:  Operator  shall  hold  for  the  account  of  the
          -------------------
Non-Operators  any  funds of the Non-Operators advanced or paid to the Operator,
either  for  the  conduct  of operations hereunder or as a result of the sale of
production  from the Contract Area, and such funds shall remain the funds of the
Non-Operators  on  whose  account they are advanced or paid until used for their
intended  purpose  or otherwise delivered to the Non-Operators or applied toward
the  payment  of  debts  as provided in Article VII.B. Nothing in this paragraph
shall  be  construed  to establish a fiduciary relationship between Operator and
Non-Operators  for  any  purpose other than to account for Non-Operator funds as
herein  specifically  provided.  Nothing  in  this  paragraph  shall require the
maintenance  by  Operator  of  separate  accounts for the funds of Non-Operators
unless  the  parties  otherwise  specifically  agree.

     5.   Access  to  Contract  Area  and  Records:  Operator  shall,  except as
          -----------------------------------------
otherwise  provided  herein,  permit  each  Non-Operator  or its duly authorized
representative,  at  the Non-Operator's sole risk and cost, full and free access
at  all  reasonable  times  to  all operations of every kind and character being
conducted  for  the  joint  account  on  the Contract Area and to the records of
operations conducted thereon or production therefrom, including Operator's books
and  records  relating  thereto.  Such access rights shall not be exercised in a
manner  interfering  with Operator's conduct of an operation hereunder and shall
not  obligate  Operator  to  furnish  any  geologic  or  geophysical  data of an
interpretive nature unless the cost of preparation of such interpretive data was
charged  to  the  joint account. Operator will furnish to each Non-Operator upon
request  copies  of  any and all reports and information obtained by Operator in
connection  with  production  and  related items, including, without limitation,
meter  and  chart  reports,  production  purchaser  statements,  run tickets and
monthly  gauge reports, but excluding purchase contracts and pricing information
to  the  extent not applicable to the production of the Non-Operator seeking the
information.  Any  audit  of Operator's records relating to amounts expended and
the  appropriateness  of such expenditures shall be conducted in accordance with
the  audit  protocol  specified  in  Exhibit  "C."

     6.   Filing  and  Furnishing  Governmental Reports: Operator will file, and
          ----------------------------------------------
upon written request promptly furnish copies to each requesting Non-Operator not
in  default  of  its  payment  obligations,  all operational notices, reports or
applications required to be filed by local, State, Federal or Indian agencies or
authorities  having  jurisdiction  over  operations hereunder. Each Non-Operator
shall  provide  to  Operator  on  a  timely  basis  all information necessary to
Operator  to  make  such  filings.

     7.   Drilling  and Testing Operations: The following provisions shall apply
          ---------------------------------
to  each  well drilled hereunder, including but not limited to the Initial Well:

          (a)  Operator  will promptly advise Non-Operators of the date on which
the  well  is  spudded,  or the date on which drilling operations are commenced.

          (b) Operator will send to Non-Operators such reports, test results and
notices  regarding  the  progress of operations on the well as the Non-Operators
shall reasonably request, including, but not limited to, daily drilling reports,
completion  reports,  and  well  logs.

          (c)  Operator  shall  adequately  test all Zones encountered which may
reasonably  be  expected  to  be  capable  of  producing  Oil  and Gas in paying
quantities  as  a result of examination of the electric log or any other logs or
cores  or  tests  conducted  hereunder.

     8.   Cost  Estimates:  Upon request of any Consenting Party, Operator shall
          ----------------
furnish estimates of current and cumulative costs incurred for the joint account
at  reasonable  intervals  during  the conduct of any operation pursuant to this
agreement.  Operator  shall  not  be held liable for errors in such estimates so
long  as  the  estimates  are  made  in  good  faith.

     9.   Insurance:  At  all  times  while  operations are conducted hereunder,
          ----------
Operator  shall  comply with the workers compensation law of the state where the
operations  are being conducted; provided, however, that Operator may be a self-
insurer  for  liability  under  said  compensation  laws in which event the only
charge  that  shall be made to the joint account shall be as provided in Exhibit
"C." Operator shall also carry or provide insurance for the benefit of the joint
account  of  the  parties  as outlined in Exhibit "D" attached hereto and made a
part  hereof.  Operator  shall require all contractors engaged in work on or for
the Contract Area to comply with the workers compensation law of the state where
the  operations  are  being  conducted  and  to maintain such other insurance as
Operator  may  require.

     In  the  event  automobile liability insurance is specified in said Exhibit
"D,"  or  subsequently  receives  the  approval of the parties, no direct charge
shall  be  made  by Operator for premiums paid for such insurance for Operator's
automotive  equipment.

                                   ARTICLE VI.
                            DRILLING AND DEVELOPMENT

A.   INITIAL  WELL:

     On  or  before  the  24th  day  of SEPTEMBER, 2003. Operator shall commence
                          ----          ---------  ----
the  re-entry  of  the  Initial Well  at  the  following  location:

RE-ENTRY  OF  THE  GRUMAN  18-1  WELL  IN  SECTION  18-139N-R96W.

and  shall  thereafter:

SIDETRACK  THE  ORIGINAL  HOLE TO A BOTTOM HOLE LOCATION PREVIOUSLY AGREED TO BY
THE  PARTIES  SUFFICIENT  TO  TEST  THE  LODGEPOLE  REEF  FORMATION.

The drilling of the Initial Well and the participation therein by all parties is
obligatory,  subject  to  Article  VI.C.l.  as  to  participation  in Completion
operations  and  Article VI.F. as to termination of operations and Article XI as
to  occurrence  of  force  majeure.

B.   SUBSEQUENT  OPERATIONS:

     1.   Proposed  Operations:  If  any party hereto should desire to drill any
          ---------------------
well  on  the  Contract Area other than the Initial Well, or if any party should
desire  to  Rework,  Sidetrack,  Deepen, Recomplete or Plug Back a dry hole or a
well no longer capable of producing in paying quantities in which such party has
not  otherwise  relinquished  its  interest in the proposed objective Zone under
this  agreement,  the  party  desiring  to  drill,  Rework,  Sidetrack,  Deepen,
Recomplete  or  Plug  Back such a well shall give written notice of the proposed
operation  to  the parties who have not otherwise relinquished their interest in
such  objective  Zone

                                      - 5 -
<PAGE>
A.A.P.L.  FORM  610  -  MODEL  FORM  OPERATING  AGREEMENT  -1989

under  this  agreement  and  to  all other parties in the case of a proposal for
Sidetracking  or  Deepening,  specifying the work to be performed, the location,
proposed  depth,  objective  Zone  and  the estimated cost of the operation. The
parties  to  whom  such  a notice is delivered shall have thirty (30) days after
receipt  of the notice within which to notify the party proposing to do the work
whether  they  elect  to participate in the cost of the proposed operation. If a
drilling  rig  is  on  location,  notice  of  a  proposal  to Rework, Sidetrack,
Recomplete,  Plug  Back  or  Deepen  may  be given by telephone and the response
period shall be limited to forty-eight (48) hours, exclusive of Saturday, Sunday
and legal holidays. Failure of a party to whom such notice is delivered to reply
within  the period above fixed shall constitute an election by that party not to
participate  in  the  cost of the proposed operation. Any proposal by a party to
conduct  an operation conflicting with the operation initially proposed shall be
delivered  to  all parties within the time and in the manner provided in Article
VI.B.6.

     If  all  parties  to  whom such notice is delivered elect to participate in
such  a  proposed  operation,  the  parties  shall be contractually committed to
participate  therein  provided  such  operations  are  commenced within the time
period  hereafter  set forth, and Operator shall, no later than ninety (90) days
after  expiration  of  the  notice period of thirty (30) days (or as promptly as
practicable  after  the  expiration  of  the forty-eight (48) hour period when a
drilling rig is on location, as the case may be), actually commence the proposed
operation  and thereafter complete it with due diligence at the risk and expense
of  the parties participating therein; provided, however, said commencement date
may  be  extended  upon written notice of same by Operator to the other parties,
for  a  period  of  up to thirty (30) additional days if, in the sole opinion of
Operator,  such  additional  time is reasonably necessary to obtain permits from
governmental  authorities,  surface  rights  (including  rights-of-way)  or
appropriate  drilling  equipment,  or  to complete title examination or curative
matter  required  for  title approval or acceptance. If the actual operation has
not  been commenced within the time provided (including any extension thereof as
specifically  permitted herein or in the force majeure provisions of Article XI)
and  if any party hereto still desires to conduct said operation, written notice
proposing  same  must be resubmitted to the other parties in accordance herewith
as if no prior proposal had been made. Those parties that did not participate in
the  drilling  of  a  well  for  which a proposal to Deepen or Sidetrack is made
hereunder shall, if such parties desire to participate in the proposed Deepening
or  Sidetracking  operation,  reimburse  the Drilling Parties in accordance with
Article  VI.B.4.  in  the  event of a Deepening operation and in accordance with
Article  VI.B.5.  in  the  event  of  a  Sidetracking  operation.

     2.   Operations  by  Less  Than  All  Parties:
          -----------------------------------------

          (a)  Determination of Participation.  If any party to whom such notice
               -------------------------------
is delivered as provided in Article VI.B.l. or VI.C.l. (Option No. 2) elects not
to  participate  in the proposed operation, then, in order to be entitled to the
benefits  of this Article, the party or parties giving the notice and such other
parties  as  shall  elect  to  participate in the operation shall, no later than
ninety  (90)  days after the expiration of the notice period of thirty (30) days
(or as promptly as practicable after the expiration of the forty-eight (48) hour
period when a drilling rig is on location, as the case may be) actually commence
the  proposed  operation  and  complete  it  with  due diligence. Operator shall
perform  all  work for the account of the Consenting Parties; provided, however,
if  no  drilling  rig  or  other  equipment is on location, and if Operator is a
Non-Consenting  Party, the Consenting Parties shall either: (i) request Operator
to  perform  the work required by such proposed operation for the account of the
Consenting  Parties, or (ii) designate one of the Consenting Parties as Operator
to  perform  such  work.  The  rights and duties granted to and imposed upon the
Operator  under  this  agreement  are  granted  to  and  imposed  upon the party
designated  as  Operator  for  an  operation in which the original Operator is a
Non-Consenting  Party.  Consenting  Parties,  when  conducting operations on the
Contract  Area pursuant to this Article VI.B.2., shall comply with all terms and
conditions  of  this  agreement.

     If  less  than  all  parties  approve any proposed operation, the proposing
party,  immediately  after the expiration of the applicable notice period, shall
advise all Parties of the total interest of the parties approving such operation
and  its recommendation as to whether the Consenting Parties should proceed with
the  operation as proposed. Each Consenting Party, within forty-eight (48) hours
(exclusive  of  Saturday,  Sunday,  and  legal  holidays) after delivery of such
notice,  shall  advise  the  proposing  party  of  its  desire  to  (i)  limit
participation  to  such  party's  interest as shown on Exhibit "A" or (ii) carry
only its proportionate part (determined by dividing such party's interest in the
Contract  Area  by the interests of all Consenting Parties in the Contract Area)
of  Non-Consenting  Parties'  interests,  or  (iii) carry its proportionate part
(determined  as  provided in (ii)) of Non-Consenting Parties' interests together
with  all  or a portion of its proportionate part of any Non-Consenting Parties'
interests  that  any  Consenting  Party  did  not elect to take. Any interest of
Non-Consenting Parties that is not carried by a Consenting Party shall be deemed
to  be  carried  by  the  party  proposing  the operation if such party does not
withdraw  its  proposal.  Failure  to advise the proposing party within the time
required  shall  be deemed an election under (i). In the event a drilling rig is
on location, notice may be given by telephone, and the time permitted for such a
response  shall  not  exceed  a  total  of  forty-eight (48) hours (exclusive of
Saturday,  Sunday and legal holidays). The proposing party, at its election, may
withdraw such proposal if there is less than 100% participation and shall notify
all  parties  of  such decision within ten (10) days, or within twenty-four (24)
hours  if  a drilling rig is on location, following expiration of the applicable
response period. If 100% subscription to the proposed operation is obtained, the
proposing  party  shall  promptly  notify  the  Consenting  Parties  of  their
proportionate interests in the operation and the party serving as Operator shall
commence  such  operation within the period provided in Article VI.B.1., subject
to  the  same  extension  right  as  provided  therein.

          (b)  Relinquishment of Interest for Non-Participation. The entire cost
               -------------------------------------------------
and  risk of conducting such operations shall be borne by the Consenting Parties
in  the  proportions  they  have  elected  to  bear  same under the terms of the
preceding  paragraph.  Consenting  Parties  shall  keep  the  leasehold  estates
involved  in  such  operations  free  and clear of all liens and encumbrances of
every  kind created by or arising from the operations of the Consenting Parties.
If such an operation results in a dry hole, then subject to Articles VI.B.6. and
VI.E.3.,  the Consenting Parties shall plug and abandon the well and restore the
surface  location  at their sole cost, risk and expense; provided, however, that
those  Non-Consenting  Parties  that  participated in the drilling, Deepening or
Sidetracking  of  the  well  shall  remain  liable  for,  and  shall  pay, their
proportionate  shares  of  the  cost  of  plugging  and  abandoning the well and
restoring the surface location insofar only as those costs were not increased by
the  subsequent  operations  of  the  Consenting  Parties.  If any well drilled,
Reworked,  Sidetracked,  Deepened,  Recompleted  or  Plugged  Back  under  the
provisions of this Article results in a well capable of producing Oil and/or Gas
in  paying  quantities, the Consenting Parties shall Complete and equip the well
to  produce  at their sole cost and risk, and the well shall then be turned over
to  Operator  (if  the  Operator  did  not  conduct  the operation) and shall be
operated  by  it  at  the expense and for the account of the Consenting Parties.
Upon  commencement  of  operations  for  the  drilling, Reworking, Sidetracking,
Recompleting,  Deepening or Plugging Back of any such well by Consenting Parties
in  accordance  with  the  provisions of this Article, each Non-Consenting Party
shall  be  deemed to have relinquished to Consenting Parties, and the Consenting
Parties  shall own and be entitled to receive, in proportion to their respective
interests,  all of such Non-Consenting Party's interest in the well and share of
production  therefrom  or,  in  the  case  of  a  Reworking,  Sidetracking,

                                      - 6 -
<PAGE>
A.A.P.L.  FORM  610  -  MODEL  FORM  OPERATING  AGREEMENT  -1989

Deepening,  Recompleting  or  Plugging Back, or a Completion pursuant to Article
VI.C.l.  Option  No.  2,  all  of  such  Non-Consenting  Party's interest in the
production obtained from the operation in which the Non-Consenting Party did not
elect  to  participate. Such relinquishment shall be effective for the remaining
life of the well. See Article XVI for additional provisions.

     Notwithstanding anything to the contrary in this Article VI.B., if the well
does  not reach the deepest objective Zone described in the notice proposing the
well  for  reasons  other  than  the  encountering  of  granite  or  practically
impenetrable  substance  or  other  condition  in  the  hole  rendering  further
operations  impracticable,  Operator  shall  give  notice  thereof  to  each
Non-Consenting  Party  who  submitted or voted for an alternative proposal under
Article VI.B.6. to drill the well to a shallower Zone than the deepest objective
Zone  proposed  in  the  notice  under which the well was drilled, and each such
Non-Consenting  Party  shall  have  the  option  to  participate  in the initial
proposed  Completion of the well by paying its share of the cost of drilling the
well  to  its actual depth, calculated in the manner provided in Article VI.B.4.
(a). If any such Non-Consenting Party does not elect to participate in the first
Completion proposed for such well, the relinquishment provisions of this Article
VI.B.2.  (b)  shall  apply  to  such  party's  interest.

          (c)  Reworking,  Recompleting  or  Plugging  Back.  An election not to
               ---------------------------------------------
participate in the drilling, Sidetracking or Deepening of a well shall be deemed
an  election  not  to  participate  in  any Reworking or Plugging Back operation
proposed  in  such  a well, or portion thereof, to which the initial non-consent
election applied. Similarly, an election not to participate in the Completing or
Recompleting  of  a  well  shall be deemed an election not to participate in any
Reworking  operation  proposed  in such a well, or portion thereof, to which the
initial  non-consent  election  applied.

          (d)  Recoupment  Matters. During the period of time Consenting Parties
               --------------------
are  entitled  to  receive  Non-Consenting  Party's  share of production, or the
proceeds  therefrom,  Consenting Parties shall be responsible for the payment of
all  ad  valorem,  production, severance, excise, gathering and other taxes, and
all  royalty,  overriding royalty and other burdens applicable to Non-Consenting
Party's  share  of  production not excepted by Article III.C.

     In  the case of any Reworking, Sidetracking, Plugging Back, Recompleting or
Deepening  operation,  the Consenting Parties shall be permitted to use, free of
cost,  all  casing, tubing and other equipment in the well, but the ownership of
all  such equipment shall remain unchanged; and upon abandonment of a well after
such  Reworking,  Sidetracking,  Plugging  Back,  Recompleting or Deepening, the
Consenting  Parties  shall account for all such equipment to the owners thereof,
with  each party receiving its proportionate part in kind or in value, less cost
of  salvage.

     3.  Stand-By  Costs:  When  a  well  which has been drilled or Deepened has
         ----------------
reached  its  authorized depth and all tests have been completed and the results
thereof  furnished  to  the  parties,  or  when operations on the well have been
otherwise  terminated pursuant to Article VI.F., stand-by costs incurred pending
response  to  a  party's  notice  proposing  a  Reworking,

                                      - 7 -
<PAGE>
A.A.P.L.  FORM  610  -  MODEL  FORM  OPERATING  AGREEMENT  -1989

Sidetracking,  Deepening,  Recomputing, Plugging Back or Completing operation in
such  a  well  (including  the  period required under Article VI.B.6. to resolve
competing  proposals)  shall  be  charged  and  borne as part of the drilling or
Deepening  operation  just  completed.  Stand-by costs subsequent to all parties
responding,  or  expiration  of  the  response  time  permitted, whichever first
occurs,  and  prior  to  agreement  as  to  the  participating  interests of all
Consenting  Parties pursuant to the terms of the second grammatical paragraph of
Article  VI.B.2.  (a),  shall  be  charged  to and borne as part of the proposed
operation, but if the proposal is subsequently withdrawn because of insufficient
participation,  such  stand-by  costs  shall be allocated between the Consenting
Parties  in  the proportion each Consenting Party's interest as shown on Exhibit
"A"  bears  to  the  total  interest  as  shown on Exhibit "A" of all Consenting
Parties.

     In  the  event  that notice for a Sidetracking operation is given while the
drilling rig to be utilized is on location, any party may request and receive up
to  five  (5)  additional days after expiration of the forty-eight hour response
period  specified  in  Article VI.B.l. within which to respond by paying for all
stand-by  costs  and  other costs incurred during such extended response period;
Operator may require such party to pay the estimated stand-by time in advance as
a  condition  to extending the response period. If more than one party elects to
take  such  additional  time  to  respond  to the notice, standby costs shall be
allocated  between the parties taking additional time to respond on a day-to-day
basis  in  the proportion each electing party's interest as shown on Exhibit "A"
bears to the total interest as shown on Exhibit "A" of all the electing parties.

     4.   Deepening:  If  less  than  all  parties  elect  to  participate  in a
          ----------
drilling,  Sidetracking,  or  Deepening  operation  proposed pursuant to Article
VI.B.l.,  the  interest  relinquished  by  the  Non-Consenting  Parties  to  the
Consenting  Parties under Article VI.B.2. shall be governed by the provisions in
Article  XVI.

     The  foregoing  shall  not imply a right of any Consenting Party to propose
any  Deepening  for a Non-Consent Well prior to the drilling of such well to its
Initial  Objective  without  the  consent  of  the  other  Consenting Parties as
provided  in  Article  VI.F.

     6.   Order  of  Preference of Operations.  Except as otherwise specifically
          ------------------------------------
provided  in  this  agreement, if any party desires to propose the conduct of an
operation  that  conflicts  with  a proposal that has been made by a party under
this  Article  VI,  such party shall have fifteen (15) days from delivery of the
initial  proposal,  in  the  case of a proposal to drill a well or to perform an
operation  on  a  well where no drilling rig is on location, or twenty-four (24)
hours,  exclusive  of  Saturday, Sunday and legal holidays, from delivery of the
initial  proposal,  if  a drilling rig is on location for the well on which such
operation  is to be conducted, to deliver to all parties entitled to participate
in  the  proposed  operation  such  party's alternative proposal, such alternate
proposal  to contain the same information required to be included in the initial
proposal.  Each party receiving such proposals shall elect by delivery of notice
to  Operator  within  five  (5) days after expiration of the proposal period, or
within twenty-four (24) hours (exclusive of Saturday, Sunday and legal holidays)
if  a  drilling  rig  is  on  location  for  the well that is the subject of the
proposals,  to  participate  in  one  of  the competing proposals. Any party not
electing  within  the  time  required  shall  be  deemed  not to have voted. The
proposal  receiving  the vote of parties owning the largest aggregate percentage
interest  of  the  parties  voting  shall have priority over all other competing
proposals;  in  the  case  of  a  tie  vote,  the

                                      - 8 -
<PAGE>
A.A.P.L.  FORM  610  -  MODEL  FORM  OPERATING  AGREEMENT  -1989

initial  proposal shall prevail. Operator shall deliver notice of such result to
all  parties entitled to participate in the operation within five (5) days after
expiration  of  the election period (or within twenty-four (24) hours, exclusive
of  Saturday, Sunday and legal holidays, if a drilling rig is on location). Each
party  shall  then  have  two (2) days (or twenty-four (24) hours if a rig is on
location) from receipt of such notice to elect by delivery of notice to Operator
to  participate in such operation or to relinquish interest in the affected well
pursuant  to  the  provisions  of Article VI.B.2.; failure by a party to deliver
notice  within such period shall be deemed an election not to participate in the
                                                       ---
prevailing  proposal.

     7.   Conformity  to Spacing Pattern. Notwithstanding the provisions of this
          -------------------------------
Article  VI.B.2.,  it is agreed that no wells shall be proposed to be drilled to
or  Completed  in or produced from a Zone from which a well located elsewhere on
the  Contract  Area is producing, unless such well conforms to the then-existing
well  spacing  pattern  for  such  Zone.

     8.   Paving  Wells.  No  party  shall  conduct  any  Reworking,  Deepening,
          --------------
Plugging  Back,  Completion,  Recompletion, or Sidetracking operation under this
agreement  with  respect  to  any  well  then  capable  of  producing  in paying
quantities  except  with  the  consent of all parties that have not relinquished
interests  in  the  well  at  the  time  of  such  operation.

C.  COMPLETION  OF  WELLS;  REWORKING  AND  PLUGGING  BACK:

     1.   Completion:  Without  the  consent  of  all  parties, no well shall be
          -----------
drilled,  Deepened  or  Sidetracked,  except  any  well  drilled,  Deepened  or
Sidetracked  pursuant  to  the  provisions of Article VI.B.2. of this agreement.
Consent  to  the  drilling,  Deepening  or  Sidetracking  shall  include:

     [ ]  Option  No. 1:  All necessary expenditures for the drilling, Deepening
          --------------
          or  Sidetracking,  testing,  Completing  and  equipping  of  the well,
          including  necessary  tankage  and/or  surface  facilities.

     2.   Rework,  Recomplete  or  Plug  Back:  No  well  shall  be  Reworked,
          ------------------------------------
Recompleted or Plugged Back except a well Reworked, Recompleted, or Plugged Back
pursuant  to the provisions of Article VI.B.2. of this agreement. Consent to the
Reworking,  Recompleting  or Plugging Back of a well shall include all necessary
expenditures  in conducting such operations and Completing and equipping of said
well,  including  necessary  tankage  and/or  surface  facilities.

D.   OTHER  OPERATIONS:

     Operator  shall  not  undertake  any single project reasonably estimated to
require  an  expenditure  in  excess  of TWENTY-FIVE THOUSAND Dollars ($ 25,000)
                                         --------------------          --------
except  in  connection  with  the  drilling, Sidetracking, Reworking, Deepening,
Completing,  Recompleting  or  Plugging  Back of a well that has been previously
authorized by or pursuant to this agreement; provided, however, that, in case of
explosion,  fire,  flood  or  other  sudden  emergency,  whether  of the same or
different nature, Operator may take such steps and incur such expenses as in its
opinion  are  required to deal with the emergency to safeguard life and property
but  Operator,  as promptly as possible, shall report the emergency to the other
parties. If Operator prepares an AFE for its own use, Operator shall furnish any
Non-Operator  so  requesting  an information copy thereof for any single project
costing  in excess of TWENTY-FIVE THOUSAND Dollars ($ 25,000). Any party who has
                      --------------------          --------
not  relinquished  its  interest  in a well shall have the right to propose that
Operator  perform  repair  work or undertake the installation of artificial lift
equipment  or  ancillary production facilities such as salt water disposal wells
or  to conduct additional work with respect to a well drilled hereunder or other
similar  project (but not including the installation of gathering lines or other
transportation  or  marketing  facilities,  the  installation  of which shall be
governed  by  separate  agreement  between  the parties) reasonably estimated to
require  an  expenditure  in  excess of the amount first set forth above in this
Article  VI.D.  (except  in connection with an operation required to be proposed
under  Articles  VI.B.l.  or  VI.C.l.  Option  No.  2,  which  shall be governed
exclusively  be  those  Articles).  Operator  shall deliver such proposal to all
parties  entitled  to  participate  therein.  If within thirty (30) days thereof
Operator  secures  the  written  consent of any party or parties owning at least
FIFTY-ONE %  of  the  interests  of  the parties entitled to participate in such
---------
operation,  each  party having the right to participate in such project shall be
bound  by  the  terms  of  such  proposal  and  shall  be  obligated  to pay its
proportionate  share of the costs of the proposed project as if it had consented
to  such  project  pursuant  to  the  terms  of  the  proposal.

E.   ABANDONMENT  OF  WELLS:

     1.   Abandonment  of  Dry  Holes:  Except  for any well drilled or Deepened
          ----------------------------
pursuant  to  Article VI.B.2., any well which has been drilled or Deepened under
the  terms of this agreement and is proposed to be completed as a dry hole shall
not  be

                                      - 9 -
<PAGE>
A.A.P.L.  FORM  610  -  MODEL  FORM  OPERATING  AGREEMENT  -1989

plugged and abandoned without the consent of all parties. Should Operator, after
diligent  effort,  be  unable  to contact any party, or should any party fail to
reply  within  forty-eight  (48)  hours (exclusive of Saturday, Sunday and legal
holidays)  after  delivery  of  notice  of the proposal to plug and abandon such
well,  such party shall be deemed to have consented to the proposed abandonment.
All  such  wells  shall  be  plugged and abandoned in accordance with applicable
regulations and at the cost, risk and expense of the parties who participated in
the  cost  of drilling or Deepening such well. Any party who objects to plugging
and abandoning such well by notice delivered to Operator within forty-eight (48)
hours  (exclusive  of  Saturday,  Sunday  and  legal holidays) after delivery of
notice  of  the proposed plugging shall take over the well as of the end of such
forty-eight  (48) hour notice period and conduct further operations in search of
Oil and/or Gas or to conduct water disposal operations subject to the provisions
of  Article VLB.; failure of such party to provide proof reasonably satisfactory
to  Operator  of  its financial capability to conduct such operations or to take
over  the  well  within  such period or thereafter to conduct operations on such
well  or  plug  and  abandon  such well shall entitle Operator to retain or take
possession  of the well and plug and abandon the well. The party taking over the
well shall indemnify Operator (if Operator is an abandoning party) and the other
abandoning  parties  against  liability  for any further operations conducted on
such well except for the costs of plugging and abandoning the well and restoring
the  surface,  for  which  the  abandoning  parties shall remain proportionately
liable.

     2.   Abandonment  of Wells That Have Produced: Except for any well in which
          -----------------------------------------
a  Non-Consent  operation  has been conducted hereunder for which the Consenting
Parties  have  not  been fully reimbursed as herein provided, any well which has
been  completed  as  a  producer  shall not be plugged and abandoned without the
consent  of  all  parties.  If all parties consent to such abandonment, the well
shall  be plugged and abandoned in accordance with applicable regulations and at
the  cost,  risk  and  expense  of all the parties hereto. Failure of a party to
reply within sixty (60) days of delivery of notice of proposed abandonment shall
be  deemed  an  election  to consent to the proposal. If, within sixty (60) days
after delivery of notice of the proposed abandonment of any well, all parties do
not  agree  to  the  abandonment  of  such  well,  those wishing to continue its
operation  shall  be obligated to take over the well as of the expiration of the
applicable  notice  period  and  shall  indemnify  Operator  (if  Operator is an
abandoning  party)  and  the  other abandoning parties against liability for any
further  operations on the well conducted by such parties. Failure of such party
or  parties  to  provide  proof  reasonably  satisfactory  to  Operator of their
financial  capability to conduct such operations or to take over the well within
the  required  period  or  thereafter  to  conduct operations on such well shall
entitle  operator to retain or take possession of such well and plug and abandon
the  well.

     Parties  taking  over a well as provided herein shall tender to each of the
other  parties  its  proportionate  share  of  the  value of the well's salvable
material  and equipment, determined in accordance with the provisions of Exhibit
"C," less the estimated cost of salvaging and the estimated cost of plugging and
abandoning  and  restoring the surface; provided, however, that in the event the
estimated  plugging  and  abandoning  and  surface  restoration  costs  and  the
estimated  cost  of  salvaging  are higher than the value of the well's salvable
material  and  equipment,  each  of  the  abandoning parties shall tender to the
parties continuing operations their proportionate shares of the estimated excess
cost.  Each abandoning party shall assign to the non-abandoning parties, without
warranty,  express or implied, as to title or as to quantity, or fitness for use
of  the  equipment and material, all of its interest in the wellbore of the well
and  related  equipment, together with its interest in the Leasehold insofar and
only  insofar  as such Leasehold covers the right to obtain production from that
wellbore. If the interest of the abandoning party is or includes and Oil and Gas
Interest,  such  party  shall execute and deliver to the non-abandoning party or
parties an oil and gas lease, limited to the wellbore and, for a term of one (1)
year  and  so  long thereafter as Oil and/or Gas is produced. The assignments or
leases  so  limited  shall  encompass  the  Drilling Unit upon which the well is
located.  The payments by, and the assignments or leases to, the assignees shall
be  in  a  ratio  based  upon the relationship of their respective percentage of
participation  in  the  Contract  Area  to  the  aggregate of the percentages of
participation  in  the  Contract  Area  of  all  assignees.  There  shall  be no
readjustment  of  interests  in  the  remaining  portions  of the Contract Area.

     Thereafter,  abandoning  parties  shall  have  no  further  responsibility,
liability,  or  interest  in the operation of or production from the well in the
Zone  then  open  other  than the royalties retained in any lease made under the
terms  of  this  Article.  Upon  request, Operator shall continue to operate the
assigned  well  for  the  account of the non-abandoning parties at the rates and
charges  contemplated  by  this  agreement, plus any additional cost and charges
which  may  arise  as the result of the separate ownership of the assigned well.

     3.   Abandonment  of  Non-Consent  Operations:  The  provisions  of Article
          -----------------------------------------
VI.E.l.  or  VI.E.2.  above shall be applicable as between Consenting Parties in
the  event  of the proposed abandonment of any well excepted from said Articles;
provided, however, no well shall be permanently plugged and abandoned unless and
until  all  parties  having the right to conduct further operations therein have
been  notified of the proposed abandonment and afforded the opportunity to elect
to  take  over the well in accordance with the provisions of this Article VI.E.;
and  provided  further,  that  Non-Consenting  Parties  who own an interest in a
portion  of  the  well  shall  pay their proportionate shares of abandonment and
surface  restoration  cost  for  such  well  as  provided in Article VI.B.2.(b).

F.   TERMINATION  OF  OPERATIONS:

     Upon  the  commencement  of  an  operation  for  the  drilling,  Reworking,
Sidetracking,  Plugging  Back,  Deepening,  testing, Completion or plugging of a
well, including but not limited to the Initial Well, such operation shall not be
terminated  without  consent  of  parties  bearing  51  %  of  the costs of such
                                                    --
operation;  provided,  however,  that  in the event granite or other practically
impenetrable  substance  or  condition  in the hole is encountered which renders
further  operations  impractical,  Operator  may discontinue operations and give
notice  of  such  condition  in  the  manner provided in Article VI.B.l, and the
provisions of Article VLB. or VI.E. shall thereafter apply to such operation, as
appropriate.

G.   TAKING  PRODUCTION  IN  KIND:

     [ ]  OPTION  NO.  1:  GAS  BALANCING  AGREEMENT  ATTACHED
          ---------------

               Each  party  shall  take  in  kind  or  separately dispose of its
          proportionate  share  of  all  Oil  and Gas produced from the Contract
          Area,  exclusive  of  production  which may be used in development and
          producing  operations  and  in  preparing and treating Oil and Gas for
          marketing  purposes  and  production  unavoidably  lost.  Any  extra
          expenditure  incurred in the taking in kind or separate disposition by
          any  party of its proportionate share of the production shall be borne
          by  such party. Any party taking its share of production in kind shall
          be  required  to  pay for only its proportionate share of such part of
          Operator's  surface  facilities  which  it  uses.

               Each  party  shall  execute such division orders and contracts as
          may  be  necessary for the sale of its interest in production from the
          Contract  Area,  and,  except  as provided in Article VII.B., shall be
          entitled  to  receive  payment

                                     - 10 -
<PAGE>
A.A.P.L.  FORM  610  -  MODEL  FORM  OPERATING  AGREEMENT  -1989

          directly  from  the purchaser thereof for its share of all production.

               If  any party fails to make the arrangements necessary to take in
          kind  or  separately  dispose of its proportionate share of the Oil or
          Gas  produced  from  the Contract Area, Operator shall have the right,
          subject  to the revocation at will by the party owning it, but not the
          obligation,  to  purchase  such Oil or Gas or sell it to others at any
          time  and  from time to time, for the account of the non-taking party.
          Any  such  purchase  or sale by Operator may be terminated by Operator
          upon  at  least  ten  (10)  days  written  notice to the owner of said
          production  and  shall  be subject always to the right of the owner of
          the  production upon at least ten (10) days written notice to Operator
          to  exercise  at  any  time  its  right to take in kind, or separately
          dispose  of, its share of all Oil or Gas not previously delivered to a
          purchaser. Any purchase or sale by Operator of any other party's share
          of Oil or Gas shall be only for such reasonable periods of time as are
          consistent with the minimum needs of the industry under the particular
          circumstances, but in no event for a period in excess of one (1) year.

               Any  such  sale  by  Operator  shall  be in a manner commercially
          reasonable  under the circumstances but Operator shall have no duty to
          share  any existing market or to obtain a price equal to that received
          under  any  existing  market.  The  sale  or delivery by Operator of a
          non-taking party's share of Oil or Gas under the terms of any existing
          contract  of Operator shall not give the non-taking party any interest
          in  or make the non-taking party a party to said contract. No purchase
          shall be made by Operator without first giving the non-taking party at
          least  ten  (10) days written notice of such intended purchase and the
          price  to  be  paid  or  the  pricing  basis  to  be  used.

               All parties shall give timely written notice to Operator of their
          Gas  marketing  arrangements for the following month, excluding price,
          and shall notify Operator immediately in the event of a change in such
          arrangements.  Operator  shall  maintain  records  of  all  marketing
          arrangements,  and  of  volumes  actually  sold  or transported, which
          records  shall  be  made  available  to  Non-Operators upon reasonable
          request.

               In  the  event  one  or more parties' separate disposition of its
          share  of the Gas causes split-stream deliveries to separate pipelines
          and/or  deliveries  which on a day-to-day basis for any reason are not
          exactly  equal  to a party's respective proportion- ate share of total
          Gas  sales  to be allocated to it, the balancing or accounting between
          the  parties  shall  be in accordance with any Gas balancing agreement
          between  the  parties hereto, whether such an agreement is attached as
          Exhibit  "E" or is a separate agreement. Operator shall give notice to
          all  parties  of  the  first  sales  of  Gas  from any well under this
          agreement.

                                  ARTICLE VII.
                      EXPENDITURES AND LIABILITY OF PARTIES

A.   LIABILITY  OF  PARTIES:

     The  liability  of  fee  parties shall be several, not joint or collective.
Each  party  shall  be responsible only for its obligations, and shall be liable
only  for  its  proportionate share of fee costs of developing and operating the
Contract  Area.  Accordingly,  the  liens  granted  among fee parties in Article
VII.B.  are given to secure only the debts of each severally, and no party shall
have  any  liability  to  third  parties hereunder to satisfy fee default of any
other party in fee payment of any expense or obligation hereunder. It is not fee
intention  of  the  parties  to create, nor shall this agreement be construed as
creating,  a  mining or other partnership, joint venture, agency relationship or
association,  or  to  render  fee  parties  liable as partners, co-venturers, or
principals. In their relations wife each other under this agreement, the parties
shall  not  be  considered  fiduciaries  or  to  have established a confidential
relationship  but  rather  shall  be  free  to  act  on an arm's-length basis in
accordance  wife  their  own  respective self-interest, subject, however, to fee
obligation of fee parties to act in good faith in their dealings wife each other
with  respect  to  activities  hereunder.

                                     - 11 -
<PAGE>
A.A.P.L.  FORM  610  -  MODEL  FORM  OPERATING  AGREEMENT  -1989

B.   LIENS  AND  SECURITY  INTERESTS:

     Each  party  grants to the other parties hereto a lien upon any interest it
now owns or hereafter acquires in Oil and Gas Leases in the Contract Area, and a
security interest and/or purchase money security interest in any interest it now
owns  or  hereafter acquires in the personal property and fixtures on or used or
obtained  for  use  in connection therewith, to secure performance of all of its
obligations  under  this  agreement  including  but  not  limited  to payment of
expense,  interest  and  fees,  the  proper  disbursement  of  all  monies  paid
hereunder, the assignment or relinquishment of interest in Oil and Gas Leases as
required  hereunder,  and  the  proper performance of operations hereunder. Such
lien  and  security  interest  granted  by  each party hereto shall include such
party's  leasehold  interests,  working interests, operating rights, and royalty
and  overriding  royalty  interests  in the Contract Area now owned or hereafter
acquired and in lands pooled or unitized therewith or otherwise becoming subject
to  this  agreement,  the  Oil  and  Gas  when extracted therefrom and equipment
situated thereon or used or obtained for use in connection therewith (including,
without  limitation,  all  wells,  tools,  and  tubular  goods),  and  accounts
(including, without limitation, accounts arising from gas imbalances or from the
sale  of Oil and/or Gas at the wellhead), contract rights, inventory and general
intangibles relating thereto or arising therefrom, and all proceeds and products
of  the  foregoing.

     To  perfect  the  lien  and  security agreement provided herein, each party
hereto  shall  execute  and  acknowledge  the  recording  supplement  and/or any
financing  statement  prepared  and submitted by any party hereto in conjunction
herewith  or  at any time following execution hereof, and Operator is authorized
to  file  this agreement or the recording supplement executed herewith as a lien
or  mortgage  in the applicable real estate records and as a financing statement
with  the proper officer under the Uniform Commercial Code in the state in which
the  Contract  Area  is  situated  and  such other states as Operator shall deem
appropriate  to  perfect  the security interest granted hereunder. Any party may
file  this  agreement, the recording supplement executed herewith, or such other
documents  as  it  deems  necessary as a lien or mortgage in the applicable real
estate  records  and/or  a financing statement with the proper officer under the
Uniform  Commercial  Code.

     Each  party  represents  and  warrants to the other parties hereto that the
lien and security interest granted by such party to the other parties shall be a
first  and  prior lien, and each party hereby agrees to maintain the priority of
said lien and security interest against all persons acquiring an interest in Oil
and Gas Leases and Interests covered by this agreement by, through or under such
party.  All  parties acquiring an interest in Oil and Gas Leases and Oil and Gas
Interests  covered  by  this agreement, whether by assignment, merger, mortgage,
operation  of  law,  or  otherwise, shall be deemed to have taken subject to the
lien  and security interest granted by this Article VII.B. as to all obligations
attributable  to  such  interest hereunder whether or not such obligations arise
before  or  after  such  interest  is  acquired.

     To  the  extent  that  parties  have  a security interest under the Uniform
Commercial  Code of the state in which the Contract Area is situated, they shall
be  entitled  to  exercise  the rights and remedies of a secured party under the
Code.  The  bringing  of a suit and the obtaining of judgment by a party for the
secured  indebtedness  shall  not be deemed an election of remedies or otherwise
affect the lien rights or security interest as security for the payment thereof.
In  addition, upon default by any party in the payment of its share of expenses,
interests  or fees, or upon the improper use of funds by the Operator, the other
parties  shall have the right, without prejudice to other rights or remedies, to
collect from the purchaser the proceeds from the sale of such defaulting party's
share  of  Oil  and  Gas  until  the amount owed by such party, plus interest as
provided  in  "Exhibit C," has been received, and shall have the right to offset
the  amount  owed  against the proceeds from the sale of such defaulting party's
share of Oil and Gas. All purchasers of production may rely on a notification of
default  from  the  non-defaulting  party or parties stating the amount due as a
result  of  the  default,  and  all parties waive any recourse available against
purchasers  for  releasing  production  proceeds  as provided in this paragraph.

     If any party fails to pay its share of cost within one hundred twenty (120)
days  after  rendition  of  a statement therefor by Operator, the non-defaulting
parties,  including  Operator,  shall  upon  request by Operator, pay the unpaid
amount  in  the  proportion  that  the  interest of each such party bears to the
interest  of all such parties. The amount paid by each party so paying its share
of the unpaid amount shall be secured by the liens and security rights described
in  Article  VII.B.,  and  each paying party may independently pursue any remedy
available  hereunder  or  otherwise.

     If  any  party  does  not perform all of its obligations hereunder, and the
failure  to  perform subjects such party to foreclosure or execution proceedings
pursuant to the provisions of this agreement, to the extent allowed by governing
law,  the  defaulting  party  waives  any available right of redemption from and
after  the  date  of  judgment,  any  required  valuation or appraisement of the
mortgaged  or  secured  property  prior  to  sale,  any  available right to stay
execution  or  to  require  a  marshaling of assets and any required bond in the
event  a  receiver  is  appointed.  In  addition,  to  the  extent  permitted by
applicable law, each party hereby grants to the other parties a power of sale as
to  any  property  that  is  subject  to  the  lien  and security rights granted
hereunder,  such  power to be exercised in the manner provided by applicable law
or  otherwise  in  a  commercially reasonable manner and upon reasonable notice.

     Each  party  agrees that the other parties shall be entitled to utilize the
provisions  of  Oil and Gas lien law or other lien law of any state in which the
Contract  Area  is  situated to enforce the obligations of each party hereunder.
Without  limiting  the  generality  of the foregoing, to the extent permitted by
applicable  law,  Non-Operators  agree  that  Operator may invoke or utilize the
mechanics'  or materialmen's lien law of the state in which the Contract Area is
situated in order to secure the payment to Operator of any sum due hereunder for
services  performed  or  materials  supplied  by  Operator.

C.   ADVANCES:

     Operator, at its election, shall have the right from time to time to demand
and  receive  from  one or more of the other parties payment in advance of their
respective  shares  of  the  estimated  amount  of the expense to be incurred in
operations  hereunder  during  the  next  succeeding  month,  which right may be
exercised only by submission to each such party of an itemized statement of such
estimated  expense,  together  with  an invoice for its share thereof. Each such
statement  and  invoice for the payment in advance of estimated expense shall be
submitted  on  or  before  the  20th day of the next preceding month. Each party
shall  pay  to  Operator its proportionate share of such estimate within fifteen
(15) days after such estimate and invoice is received. If any party fails to pay
its  share of said estimate within said time, the amount due shall bear interest
as  provided  in Exhibit "C" until paid. Proper adjustment shall be made monthly
between  advances  and  actual expense to the end that each party shall bear and
pay  its  proportionate  share  of  actual  expenses  incurred,  and  no  more.

D.   DEFAULTS  AND  REMEDIES:

     If  any  party  fails  to  discharge  any  financial  obligation under this
agreement,  including  without  limitation the failure to make any advance under
the  preceding  Article  VII.C. or any other provision of this agreement, within
the period required for such payment hereunder, then in addition to the remedies
provided  in  Article  VII.B.  or  elsewhere  in  this  agreement,  the remedies
specified  below  shall  be applicable. For purposes of this Article VII.D., all
notices  and  elections  shall  be  delivered

                                     - 12 -
<PAGE>
A.A.P.L. FORM 610 - MODEL FORM OPERATING AGREEMENT - 1989

only  by  Operator,  except  that  Operator  shall  deliver  any such notice and
election  requested  by  a non-defaulting Non-Operator, and when Operator is the
party  in  default, the applicable notices and elections can be delivered by any
Non-Operator.  Election  of  any one or more of the following remedies shall not
preclude  the  subsequent  use  of any other remedy specified below or otherwise
available  to  a  non-defaulting  party.

     1.   Suspension of Rights:  Any party may deliver to the party in default a
          ---------------------
Notice  of  Default,  which  shall specify the default, specify the action to be
taken  to  cure  the  default, and specify that failure to take such action will
result  in the exercise of one or more of the remedies provided in this Article.
If  the  default  is  not  cured within thirty (30) days of the delivery of such
Notice  of  Default,  all  of the rights of the defaulting party granted by this
agreement  may  upon  notice  be  suspended  until the default is cured, without
prejudice  to  the  right  of the non-defaulting party or parties to continue to
enforce  the  obligations  of  the  defaulting  party  previously  accrued  or
thereafter  accruing  under this agreement. If Operator is the party in default,
the  Non-Operators  shall  have  in addition the right, by vote of Non-Operators
owning  a  majority  in interest in the Contract Area after excluding the voting
interest  of  Operator,  to  appoint  a  new Operator effective immediately. The
rights  of a defaulting party that may be suspended hereunder at the election of
the  non-defaulting  parties  shall  include,  without  limitation, the right to
receive information as to any operation conducted hereunder during the period of
such  default,  the right to elect to participate in an operation proposed under
Article  VLB.  of this agreement, the right to participate in an operation being
conducted  under  this  agreement  even  if  the party has previously elected to
participate  in  such operation, and the right to receive proceeds of production
from  any  well  subject  to  this  agreement.

     2.   Suit  for Damages:  Non-defaulting parties or Operator for the benefit
          ------------------
of  non-defaulting  parties  may  sue  (at joint account expense) to collect the
amounts  in  default,  plus  interest accruing on the amounts recovered from the
date  of  default  until the date of collection at the rate specified in Exhibit
"C"  attached  hereto.  Nothing  herein  shall  prevent any party from suing any
defaulting  party  to  collect consequential damages accruing to such party as a
result  of  the  default.

     3.   Deemed  Non-Consent:  The  non-defaulting  party may deliver a written
          --------------------
Notice  of  Non-Consent  Election  to the defaulting party at any time after the
expiration  of  the  thirty-day  cure period following delivery of the Notice of
Default,  in  which  event  if the billing is for the drilling a new well or the
Plugging  Back, Sidetracking, Reworking or Deepening of a well which is to be or
has  been  plugged  as  a dry hole, or for the Completion or Recompletion of any
well,  the  defaulting  party will be conclusively deemed to have elected not to
participate  in  the  operation  and  to  be a Non-Consenting Party with respect
thereto  under  Article  VLB. or VI.C., as the case may be, to the extent of the
costs  unpaid  by  such  party,  notwithstanding  any  election  to  participate
theretofore  made. If election is made to proceed under this provision, then the
non-defaulting  parties  may  not elect to sue for the unpaid amount pursuant to
Article  VII.D.2.

     Until the delivery of such Notice of Non-Consent Election to the defaulting
party,  such party shall have the right to cure its default by paying its unpaid
share  of  costs  plus  interest at the rate set forth in Exhibit "C," provided,
however,  such  payment  shall  not  prejudice  the rights of the non-defaulting
parties to pursue remedies for damages incurred by the non-defaulting parties as
a  result  of  the  default.  Any interest relinquished pursuant to this Article
VII.D.3.  shall  be offered to the non-defaulting parties in proportion to their
interests,  and  the  non-defaulting  parties  electing  to  participate  in the
ownership  of  such interest shall be required to contribute their shares of the
defaulted  amount  upon  their  election  to  participate  therein.

     4.   Advance Payment:  If a default is not cured within thirty (30) days of
          ----------------
the  delivery  of a Notice of Default, Operator, or Non-Operators if Operator is
the defaulting party, may thereafter require advance payment from the defaulting
party  of  such  defaulting party's anticipated share of any item of expense for
which  Operator,  or  Non-Operators,  as  the  case may be, would be entitled to
reimbursement under any provision of this agreement, whether or not such expense
was the subject of the previous default. Such right includes, but is not limited
to,  the  right to require advance payment for the estimated costs of drilling a
well  or Completion of a well as to which an election to participate in drilling
or  Completion  has been made. If the defaulting party fails to pay the required
advance  payment,  the  non-defaulting  parties  may  pursue any of the remedies
provided in the Article VII.D. or any other default remedy provided elsewhere in
this  agreement.  Any  excess  of funds advanced remaining when the operation is
completed  and  all  costs  have  been  paid  shall  be promptly returned to the
advancing  party.

     5.   Costs and Attorneys' Fees: In the event any party is required to bring
          --------------------------
legal  proceedings to enforce any financial obligation of a party hereunder, the
prevailing  party  in  such action shall be entitled to recover all court costs,
costs  of  collection,  and a reasonable attorney's fee, which the lien provided
for  herein  shall  also  secure.

E.   RENTALS,  SHUT-IN  WELL  PAYMENTS  AND  MINIMUM  ROYALTIES:

     Rentals,  shut-in well payments and minimum royalties which may be required
under the terms of any lease shall be paid by the party or parties who subjected
such  lease  to this agreement at its or their expense. In the event two or more
parties  own and have contributed interests in the same lease to this agreement,
such  parties may designate one of such parties to make said payments for and on
behalf  of  all  such  parties.  Any party may request, and shall be entitled to
receive,  proper  evidence of all such payments. In the event of failure to make
proper  payment  of  any rental, shut-in well payment or minimum royalty through
mistake  or  oversight  where  such payment is required to continue the lease in
force, any loss which results from such non-payment shall be borne in accordance
with  the  provisions  of  Article  IV.B.2.

     Operator  shall  notify  Non-Operators  of  the anticipated completion of a
shut-in well, or the shutting in or return to production of a producing well, at
least  five  (5)  days (excluding Saturday, Sunday, and legal holidays) prior to
taking  such  action, or at the earliest opportunity permitted by circumstances,
but  assumes  no  liability  for  failure  to  do so. In the event of failure by
Operator to so notify Non-Operators, the loss of any lease contributed hereto by
Non-Operators  for  failure  to make timely payments of any shut-in well payment
shall  be  borne  jointly  by the parties hereto under the provisions of Article
IV.B.3.

F.   Taxes:

     Beginning  with  the  first  calendar year after the effective date hereof,
Operator  shall  render  for  ad  valorem  taxation all property subject to this
agreement  which  by law should be rendered for such taxes, and it shall pay all
such  taxes  assessed  thereon  before  they  become  delinquent.  Prior  to the
rendition  date,  each  Non-Operator  shall  furnish  Operator information as to
burdens  (to include, but not be limited to, royalties, overriding royalties and
production  payments)  on  Leases  and Oil and Gas Interests contributed by such
Non-Operator. If the assessed valuation of any Lease is reduced by reason of its
being  subject  to  outstanding  excess  royalties,  overriding  royalties  or
production payments, the reduction in ad valorem taxes resulting therefrom shall
inure  to  the  benefit of the owner or owners of such Lease, and Operator shall
adjust  the  charge to such owner or owners so as to reflect the benefit of such
reduction.  If  the ad valorem taxes are based in whole or in part upon separate
valuations  of  each  party's working interest, then notwithstanding anything to
the  contrary herein, charges to the joint account shall be made and paid by the
parties  hereto  in  accordance  with  the  tax  value generated by each party's
working  interest. Operator shall bill the other parties for their proportionate
shares of all tax payments in the manner provided in Exhibit "C."

                                     - 13 -
<PAGE>
A.A.P.L.  FORM  610  -  MODEL  FORM  OPERATING  AGREEMENT - 1989

     If  Operator  considers  any  tax assessment improper, Operator may, at its
discretion,  protest within the time and manner prescribed by law, and prosecute
the  protest  to  a final determination, unless all parties agree to abandon the
protest  prior  to final determination. During the pendency of administrative or
judicial  proceedings,  Operator may elect to pay, under protest, all such taxes
and any interest and penalty. When any such protested assessment shall have been
finally  determined,  Operator shall pay the tax for the joint account, together
with any interest and penalty accrued, and the total cost shall then be assessed
against  the  parties,  and  be  paid  by  them,  as  provided  in  Exhibit "C."

     Each party shall pay or cause to be paid all production, severance, excise,
gathering  and  other  taxes  imposed  upon or with respect to the production or
handling  of  such party's share of Oil and Gas produced under the terms of this
agreement.

                                  ARTICLE VIII.
                ACQUISITION, MAINTENANCE OR TRANSFER OF INTEREST

A.   SURRENDER  OF  LEASES:

     The  Leases  covered  by this agreement, insofar as they embrace acreage in
the  Contract  Area,  shall  not  be  surrendered in whole or in part unless all
parties  consent  thereto.

     However,  should any party desire to surrender its interest in any Lease or
in  any  portion  thereof,  such party shall give written notice of the proposed
surrender to all parties, and the parties to whom such notice is delivered shall
have  thirty  (30)  days after delivery of the notice within which to notify the
party  proposing the surrender whether they elect to consent thereto. Failure of
a  party  to  whom  such  notice is delivered to reply within said 30-day period
shall  constitute  a  consent  to  the  surrender of the Leases described in the
notice.  If  all  parties do not agree or consent thereto, the party desiring to
surrender shall assign, without express or implied warranty of title, all of its
interest in such Lease, or portion thereof, and any well, material and equipment
which may be located thereon and any rights in production thereafter secured, to
the  parties  not consenting to such surrender. If the interest of the assigning
party  is or includes an Oil and Gas Interest, the assigning party shall execute
and  deliver to the party or parties not consenting to such surrender an oil and
gas  lease  covering such Oil and Gas Interest for a term of one (1) year and so
long  thereafter  as  Oil  and/or Gas is produced from the land covered thereby,
such  lease  to  be  on  the  form  attached  hereto  as  Exhibit "B." Upon such
assignment  or lease, the assigning party shall be relieved from all obligations
thereafter  accruing,  but not theretofore accrued, with respect to the interest
assigned  or  leased and the operation of any well attributable thereto, and the
assigning  party  shall  have  no  further  interest  in  the assigned or leased
premises  and  its equipment and production other than the royalties retained in
any  lease  made  under  the terms of this Article. The party assignee or lessee
shall  pay  to  the party assignor or lessor the reasonable salvage value of the
latter's interest in any well's salvable materials and equipment attributable to
the  assigned  or  leased  acreage.  The  value  of  all  salvable materials and
equipment  shall be determined in accordance with the provisions of Exhibit "C,"
less  the  estimated  cost  of  salvaging and the estimated cost of plugging and
abandoning  and  restoring  the  surface. If such value is less than such costs,
then  the party assignor or lessor shall pay to the party assignee or lessee the
amount  of such deficit. If the assignment or lease is in favor of more than one
party,  the interest shall be shared by such parties in the proportions that the
interest  of  each  bears  to  the  total  interest  of all such parties. If the
interest of the parties to whom the assignment is to be made varies according to
depth,  then  the  interest  assigned  shall  similarly  reflect such variances.

     Any  assignment,  lease  or  surrender  made under this provision shall not
reduce or change the assignor's, lessor's or surrendering party's interest as it
was  immediately before the assignment, lease or surrender in the balance of the
Contract  Area;  and the acreage assigned, leased or surrendered, and subsequent
operations  thereon, shall not thereafter be subject to the terms and provisions
of  this  agreement but shall be deemed subject to an Operating Agreement in the
form  of  this  agreement.

B.   RENEWAL  OR  EXTENSION  OF  LEASES:

     If  any  party  secures  a  renewal  or replacement of an Oil and Gas Lease
subject  to  this  agreement,  then all other parties shall be notified promptly
upon  such  acquisition  or,  in  the  case  of a replacement Lease taken before
expiration of an existing Lease, promptly upon expiration of the existing Lease.
The  parties  notified  shall  have  the  right for a period of thirty (30) days
following  delivery  of  such  notice  in  which  to elect to participate in the
ownership  of  the  renewal  or replacement Lease, insofar as such Lease affects
lands  within  the  Contract  Area, by paying to the party who acquired it their
proportionate  shares  of  the  acquisition  cost allocated to that part of such
Lease  within  the  Contract  Area, which shall be in proportion to the interest
held  at  that  time  by  the  parties  in  the  Contract  Area.  Each party who
participates in the purchase of a renewal or replacement Lease shall be given an
assignment of its proportionate interest therein by the acquiring party.

     If  some,  but  less  than  all, of the parties elect to participate in the
purchase of a renewal or replacement Lease, it shall be owned by the parties who
elect  to  participate  therein, in a ratio based upon the relationship of their
respective  percentage of participation in the Contract Area to the aggregate of
the  percentages  of  participation  in  the  Contract  Area  of  all  parties
participating  in  the  purchase  of  such  renewal  or  replacement  Lease. The
acquisition  of  a  renewal  or  replacement  Lease by any or all of the parties
hereto  shall not cause a readjustment of the interests of the parties stated in
Exhibit "A," but any renewal or replacement Lease in which less than all parties
elect  to participate shall not be subject to this agreement but shall be deemed
subject  to  a  separate  Operating  Agreement  in  the  form of this agreement.

     If  the  interests  of  the  parties in the Contract Area vary according to
depth, then their right to participate proportionately in renewal or replacement
Leases  and  their right to receive an assignment of interest shall also reflect
such  depth  variances.

     The provisions of this Article shall apply to renewal or replacement Leases
whether  they are for the entire interest covered by the expiring Lease or cover
only  a  portion  of its area or an interest therein. Any renewal or replacement
Lease  taken  before  the  expiration  of  its  predecessor  Lease,  or taken or
contracted  for or becoming effective within six (6) months after the expiration
of  the  existing  Lease,  shall  be  subject  to this provision so long as this
agreement  is  in  effect  at  the  time  of such acquisition or at the time the
renewal  or  replacement  Lease  becomes  effective;  but  any  Lease  taken  or
contracted  for  more  than  six  (6) months after the expiration of an existing
Lease  shall  not  be  deemed  a  renewal  or replacement Lease and shall not be
subject  to  the  provisions  of  this  agreement.

     The  provisions  in  this Article shall also be applicable to extensions of
Oil  and  Gas  Leases.

C.   ACREAGE  OR  CASH  CONTRIBUTIONS:

     While this agreement is in force, if any party contracts for a contribution
of  cash  towards  the drilling of a well or any other operation on the Contract
Area, such contribution shall be paid to the party who conducted the drilling or
other  operation and shall be applied by it against the cost of such drilling or
other  operation.  If  the  contribution be in the form of acreage, the party to
whom  the  contribution  is  made  shall  promptly  tender  an assignment of the
acreage,  without  warranty of title, to the Drilling Parties in the proportions
said  Drilling  Parties shared the cost of drilling the well. Such acreage shall
become  a  separate  Contract  Area  and, to the extent possible, be governed by
provisions  identical  to  this  agreement. Each party shall promptly notify all
other  parties  of any acreage or cash contributions it may obtain in support of
any well or any other operation on the Contract Area. The above provisions shall
also  be applicable to optional rights to earn acreage outside the Contract Area
which  are  in  support  of  well  drilled  inside  Contract  Area.

                                     - 14 -
<PAGE>
A.A.P.L.  FORM  610  -  MODEL  FORM  OPERATING  AGREEMENT - 1989

     If  any  party  contracts  for any consideration relating to disposition of
such  party's  share  of substances produced hereunder, such consideration shall
not  be  deemed  a  contribution  as  contemplated  in  this  Article  VIII.C.

D.   ASSIGNMENT;  MAINTENANCE  OF  UNIFORM  INTEREST:

     For the purpose of maintaining uniformity of ownership in the Contract Area
in  the  Oil  and  Gas  Leases,  wells, equipment and production covered by this
agreement  no  party shall sell, encumber, transfer or make other disposition of
its  interest  in the Oil and Gas Leases embraced within the Contract Area or in
wells,  equipment  and  production  unless  such  disposition  covers  either:

     1.   the  entire  interest  of  the party in all Oil and Gas Leases, wells,
equipment  and  production;  or

     2.   an  equal undivided percent of the party's present interest in all Oil
and  Gas  Leases,  wells,  equipment  and  production  in  the  Contract  Area.

     Every  sale,  encumbrance,  transfer or other disposition made by any party
shall  be  made  expressly  subject  to this agreement and shall be made without
prejudice  to the right of the other parties, and any transferee of an ownership
interest  in  any Oil and Gas Lease shall be deemed a party to this agreement as
to  the  interest  conveyed from and after the effective date of the transfer of
ownership;  provided,  however,  that the other parties shall not be required to
recognize  any  such  sale,  encumbrance,  transfer or other disposition for any
purpose  hereunder until thirty (30) days after they have received a copy of the
instrument  of  transfer  or other satisfactory evidence thereof in writing from
the  transferor or transferee. No assignment or other disposition of interest by
a  party  shall  relieve  such  party of obligations previously incurred by such
party  hereunder  with  respect  to  the interest transferred, including without
limitation  the  obligation  of  a  party  to  pay  all costs attributable to an
operation  conducted  hereunder  in  which  such party has agreed to participate
prior  to  making such assignment, and the lien and security interest granted by
Article  VII.B.  shall  continue  to  burden  the interest transferred to secure
payment  of  any  such  obligations.

     If, at any time the interest of any party is divided among and owned by two
or  more  co-owners,  Operator, at its discretion, may require such co-owners to
appoint  a  single  trustee  or  agent  with  full authority to receive notices,
approve  expenditures,  receive  billings  for  and approve and pay such party's
share of the joint expenses, and to deal generally with, and with power to bind,
the  co-owners  of  such  party's  interest  within  the scope of the operations
embraced in this agreement; however, all such co- owners shall have the right to
enter  into and execute all contracts or agreements for the disposition of their
respective  shares  of  the Oil and Gas produced from the Contract Area and they
shall  have  the  right  to  receive,  separately,  payment of the sale proceeds
thereof.

E.   WAIVER  OF  RIGHTS  TO  PARTITION:

     If  permitted  by  the  laws  of  the state or states in which the property
covered hereby is located, each party hereto owning an undivided interest in the
Contract  Area  waives  any and all rights it may have to partition and have set
aside  to  it  in  severally  its  undivided  interest  therein.

F.   PREFERENTIAL  RIGHT  TO  PURCHASE:

[X] [ ]   (Optional;  Check  if  applicable.)

     Should any party desire to sell all or any part of its interests under this
agreement,  or  its rights and interests in the Contract Area, it shall promptly
give  written  notice to the other parties, with full information concerning its
proposed  disposition,  which  shall  include  the  name  and  address  of  the
prospective  transferee  (who  must be ready, willing and able to purchase), the
purchase price, a legal description sufficient to identify the property, and all
other  terms  of  the offer. The other parties shall then have an optional prior
right,  for a period of ten (10) days after the notice is delivered, to purchase
for the stated consideration on the same terms and conditions the interest which
the  other party proposes to sell; and, if this optional right is exercised, the
purchasing  parties  shall  share the purchased interest in the proportions that
the  interest  of  each  bears  to the total interest of all purchasing parties.
However,  there  shall be no preferential right to purchase in those cases where
any  party  wishes  to  mortgage  its  interests,  or  to  transfer title to its
interests  to  its mortgagee in lieu of or pursuant to foreclosure of a mortgage
of  its  interests,  or  to  dispose of its interests by merger, reorganization,
consolidation,  or by sale of all or substantially all of its Oil and Gas assets
to  any party, or by transfer of its interests to a subsidiary or parent company
or  to  a  subsidiary of a parent company, or to any company in which such party
owns  a  majority  of  the  stock.

                                   ARTICLE IX.
                         INTERNAL REVENUE CODE ELECTION

     If,  for  federal  income  tax  purposes, this agreement and the operations
hereunder  are  regarded as a partnership, and if the parties have not otherwise
agreed  to  form  a  tax  partnership pursuant to Exhibit "G" or other agreement
between  them,  each  party  thereby  affected  elects  to  be excluded from the
application of all of the provisions of Subchapter "K," Chapter 1, Subtitle "A,"
of  the  Internal  Revenue  Code  of 1986, as amended ("Code"), as permitted and
authorized  by  Section  761  of  the  Code  and  the  regulations  promulgated
thereunder.  Operator  is  authorized  and directed to execute on behalf of each
party  hereby  affected such evidence of this election as may be required by the
Secretary  of  the Treasury of the United States or the Federal Internal Revenue
Service,  including  specifically,  but  not  by  way  of limitation, all of the
returns,  statements,  and  the  data required by Treasury Regulation Sec.1.761.
Should  there  be  any  requirement that each party hereby affected give further
evidence  of  this  election,  each  such party shall execute such documents and
furnish  such  other evidence as may be required by the Federal Internal Revenue
Service  or  as  may be necessary to evidence this election. No such party shall
give  any  notices  or take any other action inconsistent with the election made
hereby. If any present or future income tax laws of the state or states in which
the  Contract Area is located or any future income tax laws of the United States
contain  provisions similar to those in Subchapter "K," Chapter 1, Subtitle "A,"
of  the Code, under which an election similar to that provided by Section 761 of
the  Code  is  permitted, each party hereby affected shall make such election as
may  be  permitted  or  required by such laws. In making the foregoing election,
each  such  party  states  that the income derived by such party from operations
hereunder  can  be  adequately determined without the computation of partnership
taxable  income.

                                   ARTICLE X.
                               CLAIMS AND LAWSUITS

     Operator  may  settle any single uninsured third party damage claim or suit
arising from operations hereunder if the expenditure does not exceed TWENTY-FIVE
                                                                     -----------
THOUSAND  Dollars  ($ 25,000)  and  if  the payment is in complete settlement of
--------            --------
such  claim  or  suit.  If  the amount required for settlement exceeds the above
amount,  the  parties  hereto shall assume and take over the further handling of
the claim or suit, unless such authority is delegated to Operator. All costs and
expenses of handling settling, or otherwise discharging such claim or suit shall
be  a the joint expense of the parties participating in the operation from which
the  claim  or suit arises. If a claim is made against any party or if any party
is  sued  on  account of any matter arising from operations hereunder over which
such  individual  has  no  control  because of the rights given Operator by this
agreement,  such party shall immediately notify all other parties, and the claim
or  suit  shall  be  treated  as  any  other  claim or suit involving operations
hereunder.

                                     - 15 -
<PAGE>
A.A.P.L.  FORM  610  -  MODEL  FORM  OPERATING  AGREEMENT - 1989

                                   ARTICLE XL
                                  FORCE MAJEURE

     If  any  party  is  rendered unable, wholly or in part, by force majeure to
carry  out  its  obligations  under this agreement, other than the obligation to
indemnify  or  make money payments or furnish security, that party shall give to
all  other  parties  prompt  written notice of the force majeure with reasonably
full  particulars  concerning it; thereupon, the obligations of the party giving
the notice, so far as they are affected by the force majeure, shall be suspended
during,  but  no  longer  than,  the  continuance of the force majeure. The term
"force majeure," as here employed, shall mean an act of God, strike, lockout, or
other  industrial  disturbance,  act  of the public enemy, war, blockade, public
riot,  lightening,  fire,  storm,  flood  or  other  act  of  nature, explosion,
governmental  action,  governmental delay, restraint or inaction, unavailability
of  equipment, and any other  cause, whether of the kind specifically enumerated
above  or  otherwise,  which  is  not reasonably within the control of the party
claiming  suspension.

     The  affected  party shall use all reasonable diligence to remove the force
majeure  situation  as  quickly  as  practicable. The requirement that any force
majeure  shall  be  remedied  with all reasonable dispatch shall not require the
settlement  of  strikes,  lockouts,  or  other  labor  difficulty  by  the party
involved,  contrary  to  its  wishes; how all such difficulties shall be handled
shall  be  entirely  within  the  discretion  of  the  party  concerned.

                                  ARTICLE XII.
                                     NOTICES

     All  notices  authorized  or  required  between  the  parties by any of the
provisions  of  this agreement, unless otherwise specifically provided, shall be
in  writing  and  delivered in person or by United States mail, courier service,
telegram,  telex,  telecopier,  email or any other form of facsimile, postage or
charges  prepaid,  and  addressed  to  such  parties  at the addresses listed on
Exhibit  "A." All telephone or oral notices permitted by this agreement shall be
confirmed immediately thereafter by written notice. The originating notice given
under  any  provision hereof shall be deemed delivered only when received by the
party  to  whom  such notice is directed, and the time for such party to deliver
any notice in response thereto shall run from the date the originating notice is
received.  "Receipt"  for  purposes  of  this  agreement with respect to written
notice delivered hereunder shall be actual delivery of the notice to the address
of  the  party to be notified specified in accordance with this agreement, or to
the  telecopy,  facsimile,  email  address  or  telex machine of such party. The
second  or any responsive notice shall be deemed delivered when deposited in the
United States mail or at the office of the courier or telegraph service, or upon
transmittal by telex, email, telecopy or facsimile, or when personally delivered
to  the party to be notified, provided, that when response is required within 24
or  48  hours,  such  response  shall  be given orally or by telephone, telex, /
telecopy  or other facsimile within such period. Each party shall have the right
to  change  its  address  at  any time, and from time to time, by giving written
notice  thereof  to  all  other  parties. If a party is not available to receive
notice orally or by telephone when a party attempts to deliver a notice required
to be delivered within 24 or 48 hours, the notice may be delivered in writing by
any  other  method  specified  herein  and shall be deemed delivered in the same
manner  provided  above  for  any  responsive  notice.

                                  ARTICLE XIII.
                                TERM OF AGREEMENT

     This  agreement shall remain in full force and effect as to the Oil and Gas
Leases  and/or  Oil  and  Gas  Interests  subject thereto for the period of time
selected  below;  provided,  however, no party hereto shall ever be construed as
having  any right, title or interest in or to any Lease contributed by any other
party  beyond  the  term  of  this  agreement.

     [X] [ ]   Option  No.  2: In the event the well described in Article VI.A.,
               ---------------
               or  any  subsequent  well  drilled  under  any  provision of this
               agreement,  results in the Completion of a well as a well capable
               of  production  of  Oil  and/or  Gas  in  paying quantities, this
               agreement  shall  continue  in  force so long as any such well is
               capable  of  production, and for an additional period of 365 days
                                                                        ---
               thereafter;  provided,  however,  if,  prior to the expiration of
               such  additional  period,  one  or more of the parties hereto are
               engaged in drilling, Reworking, Deepening, Sidetracking, Plugging
               Back,  testing or attempting to Complete or Re-complete a well or
               wells  hereunder,  this  agreement  shall continue in force until
               such  operations  have  been  completed and if production results
               therefrom,  this  agreement  shall  continue in force as provided
               herein.  In the event the well described in Article VI.A., or any
               subsequent  well drilled hereunder, results in a dry hole, and no
               other  well  is  capable  of  producing  Oil  and/or Gas from the
               Contract  Area,  this  agreement shall terminate unless drilling,
               Deepening, Sidetracking, Completing, Re-completing, Plugging Back
               or  Reworking  operations  are commenced within 180 days from the
               date of abandonment of said well. "Abandonment" for such purposes
               shall  mean  either  (i) a decision by all parties not to conduct
               any further operations on the well or (ii) the elapse of 180 days
                                                                        ---
               from  the  conduct of any operations on the well, whichever first
               occurs.

     The  termination  of this agreement shall not relieve any party hereto from
any  expense,  liability  or  other  obligation or any remedy therefor which has
accrued  or  attached  prior  to  the  date  of  such  termination.

     Upon  termination of this agreement and the satisfaction of all obligations
hereunder,  in the event a memorandum of this Operating Agreement has been filed
of  record,  Operator is authorized to file of record in all necessary recording
offices  a notice of termination, and each party hereto agrees to execute such a
notice  of  termination  as to Operator's interest, upon request of Operator, if
Operator  has  satisfied  all  its  financial  obligations.

                                  ARTICLE XIV.
                      COMPLIANCE WITH LAWS AND REGULATIONS

A.   LAWS,  REGULATIONS  AND  ORDERS:

     This  agreement  shall  be  subject  to the applicable laws of the state in
which  the Contract Area is located, to the valid rules, regulations, and orders
of  any  duly  constituted  regulatory  body  of  said  state;  and to all other
applicable  federal,  state,  and local laws, ordinances, rules, regulations and
orders.

B.   GOVERNING  LAW:

     THIS AGREEMENT AND ALL MATTERS PERTAINING HERETO, INCLUDING BUT NOT LIMITED
TO  MATTERS  OF  PERFORMANCE,  NON-PERFORMANCE,  BREACH,  REMEDIES,  PROCEDURES,
RIGHTS,  DUTIES,  AND  INTERPRETATION  OR  CONSTRUCTION,  SHALL  BE GOVERNED AND
DETERMINED  BY  THE  LAW  OF  THE  STATE  OF  TEXAS.

C.   REGULATORY  AGENCIES:

     Nothing  herein  contained  shall grant, or be construed to grant, Operator
the  right  or  authority  to  waive  or  release  any  rights,  privileges,  or
obligations  which  Non-Operators  may have under federal or state laws or under
rules,  regulations  or

                                     - 16 -
<PAGE>
A.A.P.L.  FORM  610  -  MODEL  FORM  OPERATING  AGREEMENT - 1989

orders  promulgated  under  such  laws  in  reference  to  oil,  gas and mineral
operations, including the location, operation, or production of wells, on tracts
offsetting  or  adjacent  to  the  Contract  Area.

     With  respect  to  the operations hereunder, Non-Operators agree to release
Operator from any and all losses, damages, injuries, claims and causes of action
arising  out of, incident to or resulting directly or indirectly from Operator's
interpretation  or  application  of rules, rulings, regulations or orders of the
Department  of  Energy or Federal Energy Regulatory Commission or predecessor or
successor  agencies to the extent such interpretation or application was made in
good  faith  and does not constitute gross negligence. Each Non-Operator further
agrees  to reimburse Operator for such Non-Operator's share of production or any
refund,  fine, levy or other governmental sanction that Operator may be required
to  pay as a result of such an incorrect interpretation or application, together
with  interest  and  penalties  thereon  owing  by  Operator as a result of such
incorrect  interpretation  or  application.

                                   ARTICLE XV.
                                  MISCELLANEOUS

A.   EXECUTION:

     This  agreement shall be binding upon each Non-Operator when this agreement
or  a  counterpart  thereof  has been executed by such Non-Operator and Operator
notwithstanding that this agreement is not then or thereafter executed by all of
the parties to which it is tendered or which are listed on Exhibit "A" as owning
an  interest  in  the  Contract  Area  or which own, in fact, an interest in the
Contract Area. Operator may, however, by written notice to all Non-Operators who
have become bound by this agreement as aforesaid, given at any time prior to the
actual  spud date of the Initial Well but in no event later than five days prior
to  the  date  specified  in Article VI.A. for commencement of the Initial Well,
terminate  this  agreement  if  Operator  in its sole discretion determines that
there  is  insufficient  participation  to  justify  commencement  of  drilling
operations.  In  the  event  of  such  a  termination  by  Operator, all further
obligations  of the parties hereunder shall cease as of such termination. In the
event  any  Non-Operator  has advanced or prepaid any share of drilling or other
costs  hereunder,  all  sums  so advanced shall be returned to such Non-Operator
without  interest.  In  the event Operator proceeds with drilling operations for
the  Initial  Well without the execution hereof by all persons listed on Exhibit
"A"  as having a current working interest in such well, Operator shall indemnify
Non-Operators  with  respect  to  all  costs incurred for the Initial Well which
would  have  been charged to such person under this agreement if such person had
executed  the same and Operator shall receive all revenues which would have been
received  by  such  person  under this agreement if such person had executed the
same.

B.   SUCCESSORS  AND  ASSIGNS:

     This  agreement shall be binding upon and shall inure to the benefit of the
parties  hereto  and  their  respective  heirs, devisees, legal representatives,
successors  and  assigns,  and  the terms hereof shall be deemed to run with the
Leases  or  Interests  included  within  the  Contract  Area.

C.   COUNTERPARTS:

     This  instrument  may  be  executed  in any number of counterparts, each of
which  shall  be  considered  an  original  for  all  purposes.

D.   SEVERABILITY:

     For  the  purposes  of assuming or rejecting this agreement as an executory
contract  pursuant  to  federal  bankruptcy  laws,  this  agreement shall not be
severable,  but  rather  must  be  assumed  or rejected in its entirety, and the
failure  of  any  party  to  this  agreement to comply with all of its financial
obligations  provided  herein  shall  be  a  material  default.

                                  ARTICLE XVI.
                                OTHER PRO VISIONS

     A.   NOTWITHSTANDING  ANYTHING  TO  THE CONTRARY HEREIN CONTAINED, OPERATOR
          SHALL  HAVE  THE  RIGHT  TO  PROPOSE  THE  DRILLING,  SIDETRACKING  OR
          DEEPENING  OF  A WELL UNDER THE TERMS AND CONDITIONS OF THIS OPERATING
          AGREEMENT.  HOWEVER,  SHOULD ANY PARTY ELECT NOT TO PARTICIPATE IN THE
          DRILLING,  SIDETRACKING  OR  DEEPENING  OF  THE  WELL,  AND  SUCH WELL
          OPERATION  IS  COMPLETED  IN  A TIMELY MANNER AS PROVIDED HEREIN, THEN
          SUCH PARTY(S) ELECTING NOT TO PARTICIPATE SHALL RELINQUISH ALL RIGHTS,
          TITLE  AND  INTEREST  RELATIVE  TO  THE  WELLBORE.  THESE RIGHTS SHALL
          INCLUDE  ANY REVENUES FROM THE WELLBORE (UNLESS SUCH PARTY IS ENTITLED
          TO  A  ROYALTY  OR  OVERRIDING  ROYALTY  INTEREST)  AND  ANY RIGHTS TO
          PARTICIPATE  IN  ANY WORKOVER, RECOMPLETION OR PLUGGING BACK OPERATION
          IN  SAID  WELLBORE.

     B.   THE OPERATING AGREEMENT SHALL AT ALL TIMES BE SUBJECT TO THE TERMS AND
          PROVISIONS  OF  THAT CERTAIN EXPLORATION AGREEMENT DATED MAY 15, 2003,
          BETWEEN  PETROX  OPERATING  COMPANY,  LLC  ("PETROX")  OIL FOR AMERICA
          ("OFA"),  OXBOW  ENERGY,  LLC  ("OXBOW")  AND  PETROSEARCH CORPORATION
          ("PETROSEARCH").  IF  THERE  IS  ANY CONFLICT OR AMBIGUITY BETWEEN THE
          PROVISIONS  OF  THE  OPERATING AGREEMENT AND THE EXPLORATION AGREEMENT
          DATE MAY 15, 2003, THE TERMS OF THE EXPLORATION AGREEMENT SHALL GOVERN
          IN  ALL  EVENTS.

                                     - 17 -
<PAGE>
A.A.P.L.  FORM  610  -  MODEL  FORM  OPERATING  AGREEMENT - 1989

IN WITNESS WHEREOF, this agreement shall be effective as of the     day of     ,
                                                                ---        ----
           .
-----------

PETROX  OPERATING  COMPANY.  LLC,  who  has  prepared  and  circulated this form
--------------------------------
for  execution, represents and warrants that the form was printed from and, with
the exception(s) listed below, is identical to the AAPL Form 610-1989 Model Form
Operating  Agreement, as published in computerized form by Forms On-A-Disk, Inc.
No  changes,  alterations,  or  modifications,  other  than  those  made  by
strikethrough and/or insertion and that are clearly recognizable as changes have
been  made  to  the  form.

ATTEST  OR  WITNESS:                    OPERATOR

                                          PETROX  OPERATING  COMPANY, LLC
                                        ----------------------------------------
                                      By
------------------------------------    ----------------------------------------
                                          DAN  DENTON
------------------------------------    ----------------------------------------
                                        Type  or  print  name

                                        Title
                                             -----------------------------------
                                        Date
                                            ------------------------------------
                                        Tax ID or S.S. No.
                                                          ----------------------

                                  NON-OPERATORS

                                          GUIDANCE  PETROSEARCH.  L.L.C.
                                        ----------------------------------------
                                      By
------------------------------------    ----------------------------------------
                                          BRAD  SIMMONS
------------------------------------    ----------------------------------------
                                        Type  or  print  name

                                        Title
                                             -----------------------------------
                                        Date
                                            ------------------------------------
                                        Tax ID or S.S. No.
                                                          ----------------------

                                        OXBOW  ENERGY.  LLC
                                        ----------------------------------------
                                      By
------------------------------------    ----------------------------------------
                                          TONY  MARTIN
------------------------------------    ----------------------------------------
                                        Type  or  print  name

                                        Title  PRESIDENT
                                             -----------------------------------
                                        Date
                                            ------------------------------------
                                        Tax ID or S.S. No.
                                                          ----------------------

                                        OIL  FOR  AMERICA
                                        ----------------------------------------
                                     By
------------------------------------    ----------------------------------------
                                          ROBERT  J.  ANGERER.  SR.
------------------------------------    ----------------------------------------
                                        Type  or  print  name

                                        Title  GENERAL  PARTNER
                                             -----------------------------------
                                        Date
                                            ------------------------------------
                                        Tax ID or S.S. No.
                                                          ----------------------

                                     - 18 -
<PAGE>
A.A.P.L.  FORM  610  -  MODEL  FORM  OPERATING  AGREEMENT - 1989

                                 ACKNOWLEDGMENTS

     Note: The following forms of acknowledgment are the short forms approved by
the  Uniform Law on Notarial Acts. The validity and effect of these forms in any
state  will  depend  upon  the  statutes  of  that  state.

Individual  acknowledgment:

State  of                )
         ---------------

                         )ss.

County  of               )
          --------------

     This  instrument  was  acknowledged  before  me  on

                                      by
--------------------------------------  ----------------------------------------

(Seal,  if  any)
                                        ----------------------------------------

                                        Title (and Rank)
                                                        ------------------------

                                        My commission expires:
                                                              ------------------

Acknowledgment  in  representative  capacity:

State  of                )
         ---------------

                         )ss.

County  of               )
          --------------

     This instrument was acknowledged before me on

                                      by                                      as
--------------------------------------  --------------------------------------
               of                                                              .
---------------  --------------------------------------------------------------

(Seal,  if  any)
                                        ----------------------------------------

                                        Title (and Rank)
                                                        ------------------------

                                        My commission expires:
                                                              ------------------

                                     - 19 -
<PAGE>
                                   EXHIBIT "A"

Attached  to and made a part of that certain Operating Agreement dated September
01,  2003,  between Petrox Operating Company, LLC, Guidance Petrosearch, L.L.C.,
Oxbow  Energy,  LLC  and  Oil  for  America.

                                    ARTICLE I

                 DESCRIPTION OF LANDS SUBJECT TO THIS AGREEMENT
                 ----------------------------------------------

NE/4,  N/2SE/4,  SE/4SE/4  of Section 18-T139N-R96W, including the Conoco-Gruman
18-1  wellbore.

                                   ARTICLE II

              RESTRICTIONS AS TO DEPTHS, FORMATIONS, OR SUBSTANCES
              ----------------------------------------------------

None.

                                   ARTICLE III

                            PARTIES TO THE AGREEMENT
                            ------------------------

Petrox  Operating  Company,  LLC
Mr.  Dan  Denton
4925  Greenville  Ave.
Suite  125
Dallas,  TX  75206
Office - (214) 373-9442
Fax  -   (214) 373-9963
Email -  dan@dandenton.com

Guidance  Petrosearch,  LLC
Mr.  Brad  Simmons
P.O.  Box  672
Fulshear,  TX  77441
Office - (281)  346-1873
Email -  brad.simmons@mindspring.com

Oxbow  Energy,  LLC
Mr.  Tony  Martin
3878  Oak  Lawn  Ave.
Suite  100B-300
Dallas,  TX  75219
Office - (214)  878-7010
Email -  tony7@airmail.net

                  Oil for America
                  Mr. Robert J. Angerer, Sr.
P.O.  Box  10468                AND            2530 6th Ave. W., Apt. 110
Tallahassee,  FL  32302                        Dickinson, ND 58601
Office - (850)  576-5982                       (701)  483-5982
Email -  rangererl@comcast.net
         robertjangerer@ndsupernet.com

<TABLE>
<CAPTION>
                                          ARTICLE IV

                       OWNERSHIP INTERESTS OF PARTIES TO THIS AGREEMENT
                       ------------------------------------------------

PARTY                          WORKING INTEREST BEFORE PAYOUT   WORKING INTEREST AFTER PAYOUT
-----------------------------  -------------------------------  -----------------------------
<S>                            <C>                              <C>
Petrox Operating Company, LLC                0.00%                           0.00%
Guidance Petrosearch, LLC                   85.00%                          63.75%
Oxbow Energy, LLC                           15.00%                          11.25%
Oil for America                              0.00%                          25.00%
</TABLE>

<PAGE>
                             EXHIBIT "A" (continued)

                                    ARTICLE V

                   OIL & GAS LEASES SUBJECT TO THIS AGREEMENT
                   ------------------------------------------

1.   Oil  &  Gas  Lease,  dated  September  25,  2002, between RUDOLPH HEIDT AND
     CAROLINE  HEIDT,  individually  and as Trustees of the Rudolph and Caroline
     Heidt  Mineral  Trust,  as  Lessor and CONOCO INC., as Lessee, covering the
     NE/4,  N/2  of  SE/4  and  SE/4  of SE/4 of Section 18, T139N - R96W, Stark
     County, North Dakota, recorded at Document Number 3019894, Records of Stark
     County,  North  Dakota.

2.   Oil  &  Gas  Lease,  dated September 25, 2002, between ROBERT D. GRUMAN AND
     CATHERINE  M.  GRUMAN,  individually  and  as  Trustees  of  the Robert and
     Catherine  Gruman  Mineral  Trust,  as  Lessor  and CONOCO INC., as Lessee,
     covering  the  NE/4,  N/2  of  SE/4 and SE/4 of SE/4 of Section 18, T139N -
     R96W,  Stark  County,  North  Dakota,  recorded at Document Number 3019895,
     Records  of  Stark  County,  North  Dakota.

                                   ARTICLE VI

                              BURDENS ON PRODUCTION
                              ---------------------

None  in  excess  of  that  shown  in  Article  III.B  of the attached Operating
Agreement.

<PAGE>
                                                      COPAS 1984 ONSHORE
                                                      Recommended by the Council
                                                      of Petroleum Accountants
                                                      Societies

-------------------------------------------------------------------------COPAS--
                                   EXHIBIT "C"

Attached  to and made a part of THAT CERTAIN OPERATING AGREEMENT DATED SEPTEMBER
                               -------------------------------------------------
01, 2003 BETWEEN PETROX OPERATING COMPANY, LLC, GUIDANCE PETROSEARCH, L.L.C.,
--------------------------------------------------------------------------------
OXBOW ENERGY, LLC  AND  OIL  FOR  AMERICA.
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

                              ACCOUNTING PROCEDURE

                                JOINT OPERATIONS

                              I. GENERAL PROVISIONS

1.   DEFINITIONS

     "Joint  Property"  shall mean the real and personal property subject to the
     agreement  to  which  this  Accounting  Procedure  is  attached.

     "Joint  Operations"  shall  mean all operations necessary or proper for the
     development,  operation,  protection and maintenance of the Joint Property.

     "Joint Account" shall mean the account showing the charges paid and credits
     received  in the conduct of the Joint Operations and which are to be shared
     by  the  Parties.

     "Operator" shall mean the party designated to conduct the Joint Operations.

     "Non-Operators"  shall  mean  the  Parties to this agreement other than the
     Operator.

     "Parties"  shall  mean  Operator  and  Non-Operators.

     "First Level Supervisors" shall mean those employees whose primary function
     in  Joint  Operations  is  the direct supervision of other employees and/or
     contract labor directly employed on the Joint Property in a field operating
     capacity.

     "Technical  Employees"  shall  mean  those  employees  having  special  and
     specific  engineering,  geological  or other professional skills, and whose
     primary  function in Joint Operations is the handling of specific operating
     conditions  and  problems  for  the  benefit  of  the  Joint  Property.

     "Personal  Expenses"  shall  mean  travel and other reasonable reimbursable
     expenses  of  Operator's  employees.

     "Material"  shall mean personal property, equipment or supplies acquired or
     held  for  use  on  the  Joint  Property.

     "Controllable  Material"  shall  mean  Material  which  at  the  time is so
     classified  in  the  Material  Classification  Manual  as  most  recently
     recommended  by  the  Council  or  Petroleum  Accountants  Societies.

2.   STATEMENT  AND  BILLINGS

     Operator  shall  bill Non-Operators on or before the last day of each month
     for their proportionate share of the Joint Account for the preceding month.
     Such  bills  will be accompanied by statements which identify the authority
     for  expenditure, lease or facility, and all charges and credits summarized
     by  appropriate classifications of investment and expense except that items
     of  Controllable  Material  and  unusual  charges  and  credits  shall  be
     separately  identified  and  fully  described  in  detail.

3.   ADVANCES  AND  PAYMENTS  BY  NON-OPERATORS

     A.   Unless  otherwise  provided  for  in  the  agreement, the Operator may
          require  the  Non-Operators  to  advance their share of estimated cash
          outlay  for  the succeeding month's operation within fifteen (15) days
          after  receipt  of  the  billing  or by the first day of the month for
          which  the  advance  is  required,  whichever is later. Operator shall
          adjust  each  monthly  billing  to  reflect advances received from the
          Non-Operators.

     B.   Each Non-Operator shall pay its proportion of all bills within fifteen
          (15)  days after receipt. If payment is not made within such time, the
          unpaid balance shall bear interest monthly at the prime rate in effect
          at  CHASE MANHATTAN on the first day of the month in which delinquency
              ---------------
          occurs  plus  3%  or  the  maximum  contract  rate  permitted  by  the
          applicable  usury  laws  in  the  state in which the Joint Property is
          located,  whichever  is the lesser, plus attorney's fees, court costs,
          and  other  costs in connection with the collection of unpaid amounts.

4.   ADJUSTMENTS

     Payment of any such bills shall not prejudice the right of any Non-Operator
     to  protest  or  question  the  correctness thereof; provided, however, all
     bills  and  statements  rendered  to  Non-Operators  by Operator during any
     calendar  year  shall conclusively be presumed to be true and correct after
     twenty-four (24) months following the end of any such calendar year, unless
     within  the said twenty-four (24) month period a Non-Operator takes written
     exception thereto and makes claim on Operator for adjustment. No adjustment
     favorable  to  Operator  shall  be  made  unless it is made within the same
     prescribed  period.  The  provisions  of  this  paragraph shall not prevent
     adjustments resulting from a physical inventory of Controllable Material as
     provided  for  in  Section  V.

      COPYRIGHT (C) 1985 BY THE COUNCIL OF PETROLEUM ACCOUNTANTS SOCIETIES.

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                                                      COPAS 1984 ONSHORE
                                                      Recommended by the Council
                                                      of Petroleum Accountants
                                                      Societies

-------------------------------------------------------------------------COPAS--

5.   AUDITS

     A.   A  Non-Operator,  upon  notice  in  writing  to Operator and all other
          Non-Operators,  shall  have the right to audit Operator's accounts and
          records relating to the Joint Account for any calendar year within the
          twenty-four (24) month period following the end of such calendar year;
          provided,  however,  the  making of an audit shall not extend the time
          for the taking of written exception to and the adjustments of accounts
          as  provided for in Paragraph 4 of this Section I. Where there are two
          or  more  Non-Operators, the Non-Operators shall make every reasonable
          effort  to  conduct  a  joint audit in a manner which will result in a
          minimum  of  inconvenience  to  the  Operator.  Operator shall bear no
          portion of the Non-Operators' audit cost incurred under this paragraph
          unless  agreed  to  by the Operator. The audits shall not be conducted
          more  than  once  each year without prior approval of Operator, except
          upon  the resignation or removal of the Operator, and shall be made at
          the  expense  of  those  Non-Operators  approving  such  audit.

     B.   The Operator shall reply in writing to an audit report within 180 days
          after  receipt  of  such  report.

6.   APPROVAL  BY  NON-OPERATORS

     Where  an  approval  or  other agreement of the Parties or Non-Operators is
     expressly required under other sections of this Accounting Procedure and if
     the  agreement  to  which this Accounting Procedure is attached contains no
     contrary  provisions  in  regard  thereto,  Operator  shall  notify  all
     Non-Operators  of the Operator's proposal, and the agreement or approval of
     a  majority  in  interest  of the Non-Operators shall be controlling on all
     Non-Operators.

                               II. DIRECT CHARGES

Operator shall charge the Joint Account with the following items:

1.   ECOLOGICAL  AND  ENVIRONMENTAL

     Costs  incurred  for  the  benefit  of  the  Joint  Property as a result of
     governmental  or  regulatory  requirements  to  satisfy  environmental
     considerations  applicable  to the Joint Operations. Such costs may include
     surveys  of  an  ecological  or archaeological nature and pollution control
     procedures  as  required  by  applicable  laws  and  regulations.

2.   RENTALS  AND  ROYALTIES

     Lease rentals and royalties paid by Operator for the Joint Operations.

3.   LABOR

     A.   (1)  Salaries  and  wages  of  Operator's  field  employees  directly
               employed  on  the  Joint  Property  in  the  conduct  of  Joint
               Operations.

          (2)  Salaries  of  First  level  Supervisors  in  the  field.

          (3)  Salaries  and  wages  of Technical Employees directly employed on
               the Joint Property if such charges are excluded from the overhead
               rates.

          (4)  Salaries  and  wages of Technical Employees either temporarily or
               permanently assigned to and directly employed in the operation or
               the Joint Property if such charges are excluded from the overhead
               rates.

     B.   Operator's cost of holiday, vacation, sickness and disability benefits
          and  other  customary  allowances paid to employees whose salaries and
          wages  are  chargeable to the Joint Account under Paragraph 3A of this
          Section  II.  Such  costs  under this Paragraph 3B may be charged on a
          "when  and  as paid basis" or by "percentage assessment" on the amount
          of  salaries and wages chargeable to the Joint Account under Paragraph
          3A  of  this  Section  II.  If percentage assessment is used, the rate
          shall  be  based  on  the  Operator's  cost  experience.

     C.   Expenditures  or contributions made pursuant to assessments imposed by
          governmental  authority  which  are  applicable  to  Operator's  costs
          chargeable  to  the  Joint  Account under Paragraphs 3A and 3B of this
          Section  II.

     D.   Personal  Expenses  of  those  employees  whose salaries and wages are
          chargeable  to  the  Joint  Account under Paragraphs 3A and 3B of this
          Section  II.

4.   EMPLOYEE  BENEFITS

     Operator's  current  costs  or  established plans for employees' group life
     insurance,  hospitalization,  pension,  retirement, stock purchase, thrift,
     bonus,  and  other benefit plans of a like nature, applicable to Operator's
     labor  cost  chargeable  to the Joint Account under Paragraphs 3A and 3B of
     this  Section  II shall be Operator's actual cost not to exceed the percent
     most  recently  recommended  by  the  Council  of  Petroleum  Accountants
     Societies.

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                                                      COPAS 1984 ONSHORE
                                                      Recommended by the Council
                                                      of Petroleum Accountants
                                                      Societies

-------------------------------------------------------------------------COPAS--

5.   MATERIAL

     Material  purchased  or furnished by Operator for use on the Joint Property
     as  provided under Section IV. Only such Material shall be purchased for or
     transferred  to the Joint Property as may be required for immediate use and
     is  reasonably  practical  and  consistent  with  efficient  and economical
     operations.  The  accumulation  of  surplus  stocks  shall  be  avoided.

6.   TRANSPORTATION

     Transportation of employees and Material necessary for the Joint Operations
     but  subject  to  the  following  limitations:

     A.   If  Material  is  moved  to  the  Joint  Property  from the Operator's
          warehouse  or  other  properties, no charge shall be made to the Joint
          Account  for  a  distance  greater  than the distance from the nearest
          reliable  supply  store  where  like material is normally available or
          railway receiving point nearest the Joint Property unless agreed to by
          the  Parties.

     B.   If  surplus Material is moved to Operator's warehouse or other storage
          point,  no  charge  shall  be made to the Joint Account for a distance
          greater  than  the distance to the nearest reliable supply store where
          like  material  is  normally  available,  or  railway  receiving point
          nearest  the Joint Property unless agreed to by the Parties. No charge
          shall  be  made  to  the  Joint  Account  for moving Material to other
          properties  belonging  to  Operator,  unless agreed to by the Parties.

     C.   In  the  application  of  subparagraphs  A  and B above, the option to
          equalize  or  charge actual trucking cost is available when the actual
          charge is $400 or less excluding accessorial charges. The $400 will be
          adjusted  to  the  amount  most recently recommended by the Council of
          Petroleum  Accountants  Societies.

7.   SERVICES

     The  cost of contract services, equipment and utilities provided by outside
     sources,  except  services  excluded  by  Paragraph  10  of  Section II and
     Paragraph  i,  ii,  and  Hi,  of  Section  III.  The  cost  of professional
     consultant  services  and contract services of technical personnel directly
     engaged  on  the  Joint  Property  if  such  charges  are excluded from the
     overhead  rates.  The  cost of professional consultant services or contract
     services  of technical personnel not directly engaged on the Joint Property
     shall  not  be  charged to the Joint Account unless previously agreed to by
     the  Parties.

8.   EQUIPMENT  AND  FACILITIES  FURNISHED  BY  OPERATOR

     A.   Operator  shall  charge  the  Joint  Account for use of Operator owned
          equipment and facilities at rates commensurate with costs of ownership
          and operation. Such rates shall include costs of maintenance, repairs,
          other  operating expense, insurance, taxes, depreciation, and interest
          on gross investment less accumulated depreciation not to exceed twenty
                                                                          ------
          percent  (  20  %)  per  annum.  Such  rates  shall not exceed average
                    ------
          commercial  rates  currently  prevailing  in the immediate area of the
          Joint  Property.

     B.   In  lieu  of  charges in Paragraph 8A above, Operator may elect to use
          average commercial rates prevailing in the immediate area of the Joint
          Property less 20%. For automotive equipment, Operator may elect to use
          rates  published  by  the  Petroleum  Motor  Transport  Association.

9.   DAMAGES  AND  LOSSES  TO  JOINT  PROPERTY

     All  costs  or  expenses  necessary  for the repair or replacement of Joint
     Property  made  necessary  because  of  damages or losses incurred by fire,
     flood,  storm, theft, accident, or other cause, except those resulting from
     Operator's  gross  negligence or willful misconduct. Operator shall furnish
     Non-Operator  written  notice  of  damages  or  losses  incurred as soon as
     practicable  after  a  report  thereof  has  been  received  by  Operator.

10.  LEGAL  EXPENSE

     Expense  of  handling,  investigating  and  settling  litigation or claims,
     discharging  of liens, payment of judgments and amounts paid for settlement
     of  claims  incurred in or resulting from operations under the agreement or
     necessary  to  protect or recover the Joint Property, except that no charge
     for  services  of  Operator's  legal  staff  or  fees or expense of outside
     attorneys  shall  be  made  unless previously agreed to by the Parties. All
     other  legal expense is considered to be covered by the overhead provisions
     of Section in unless otherwise agreed to by the Parties, except as provided
     in  Section  I,  Paragraph  3.

11.  TAXES

     All taxes of every kind and nature assessed or levied upon or in connection
     with  the  Joint  Property,  the  operation  thereof,  or  the  production
     therefrom,  and  which taxes have been paid by the Operator for the benefit
     of  the Parties. If the ad valorem taxes are based in whole or in part upon
     separate  valuations of each party's working interest, then notwithstanding
     anything to the contrary herein, charges to the Joint Account shall be made
     and  paid  by the Parties hereto in accordance with the tax value generated
     by  each  party's  working  interest.

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                                                      COPAS 1984 ONSHORE
                                                      Recommended by the Council
                                                      of Petroleum Accountants
                                                      Societies

-------------------------------------------------------------------------COPAS--

12.  INSURANCE

     Net  premiums  paid  for  insurance  required  to  be carried for the Joint
     Operations for the protection of the Parties. In the event Joint Operations
     are  conducted  in  a  state  in which Operator may act as self-insurer for
     Worker's  Compensation  and/or  Employers  Liability  under  the respective
     state's  laws,  Operator  may,  at its election, include the risk under its
     self-insurance  program  and in that event, Operator shall include a charge
     at  Operator's  cost  not  to  exceed  manual  rates.

13.  ABANDONMENT  AND  RECLAMATION

     Costs  incurred  for  abandonment  of  the  Joint Property, including costs
     required  by  governmental  or  other  regulatory  authority.

14.  COMMUNICATIONS

     Cost  of  acquiring,  leasing,  installing,  operating,  repairing  and
     maintaining communication systems, including radio and microwave facilities
     directly  serving  the  Joint  Property.  In  the  event  communication
     facilities/systems  serving  the Joint Property are Operator owned, charges
     to  the  Joint  Account  shall  be  made as provided in Paragraph 8 of this
     Section  II.

15.  OTHER  EXPENDITURES

     Any other expenditure not covered or dealt with in the foregoing provisions
     of this Section II, or in Section III and which is of direct benefit to the
     Joint  Property and is incurred by the Operator in the necessary and proper
     conduct  of  the  Joint  Operations.

                                  III. OVERHEAD

1.   OVERHEAD  -  DRILLING  AND  PRODUCING  OPERATIONS

     i.   As  compensation  for administrative, supervision, office services and
          warehousing  costs,  Operator  shall  charge  drilling  and  producing
          operations  on  either:

          (X)  Fixed  Rate  Basis,  Paragraph  1A,  or
          ( )  Percentage  Basis,  Paragraph  IB

          Unless  otherwise  agreed  to  by the Parties, such charge shall be in
          lieu  of  costs and expenses of all offices and salaries or wages plus
          applicable  burdens  and  expenses  of  all  personnel,  except  those
          directly  chargeable  under  Paragraph  3A,  Section  II. The cost and
          expense of services from outside sources in connection with matters of
          taxation,  traffic,  accounting  or  matters  before  or  involving
          governmental  agencies shall be considered as included in the overhead
          rates provided for in the above selected Paragraph of this Section III
          unless  such cost and expense are agreed to by the Parties as a direct
          charge  to  the  Joint  Account.

     ii.  The  salaries,  wages  and  Personal  Expenses  of Technical Employees
          and/or  the  cost  of  professional  consultant  services and contract
          services  of  technical  personnel  directly  employed  on  the  Joint
          Property:

          ( )  shall  be  covered  by  the  overhead  rates,  or
          (X)  shall  not  be  covered  by  the  overhead  rates.

     iii. The  salaries,  wages  and  Personal  Expenses  of Technical Employees
          and/or costs of professional consultant services and contract services
          of  technical  personnel either temporarily or permanently assigned to
          and  directly  employed  in  the  operation  of  the  Joint  Property:

          ( )  shall  be  covered  by  the  overhead  rates,  or
          (X)  shall  not  be  covered  by  the  overhead  rates.

     A.   Overhead  -  Fixed  Rate  Basis

          (1)  Operator  shall  charge  the Joint Account at the following rates
               per  well  per  month:

               Drilling  Well  Rate  $  7020
                                      ---------------------------
                      (Prorated for less than a full month)

               Producing  Well  Rate  $  625
                                       --------------------------

          (2)  Application  of  Overhead - Fixed Rate Basis shall be as follows:

               (a)  Drilling  Well  Rate

                    (1)  Charges  for drilling wells shall begin on the date the
                         well  is spudded and terminate on the date the drilling
                         rig,  completion rig, or other units used in completion
                         of  the  well  is  released,  whichever

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                                                      COPAS 1984 ONSHORE
                                                      Recommended by the Council
                                                      of Petroleum Accountants
                                                      Societies

-------------------------------------------------------------------------COPAS--

                         is  later,  except  that no charge shall be made during
                         suspension  of  drilling  or  completion operations for
                         fifteen  (15)  or  more  consecutive  calendar  days.

                    (2)  Charges  for  wells  undergoing any type of workover or
                         recompletion  for a period of five (5) consecutive work
                         days  or  more shall be made at the drilling well rate.
                         Such  charges shall be applied for the period from date
                         workover  operations,  with  rig or other units used in
                         workover,  commence  through  date of rig or other unit
                         release,  except  that  no  charge shall be made during
                         suspension  of  operations  for  fifteen  (15)  or more
                         consecutive  calendar  days.

               (b)  Producing  Well  Rates

                    (1)  An active well either produced or injected into for any
                         portion  of the month shall be considered as a one-well
                         charge  for  the  entire  month.

                    (2)  Each  active  completion  in  a multi-completed well in
                         which  production  is not commingled down hole shall be
                         considered  as  a  one-well  charge  providing  each
                         completion  is  considered  a  separate  well  by  the
                         governing  regulatory  authority.

                    (3)  An  inactive gas well shut in because of overproduction
                         or failure of purchaser to take the production shall be
                         considered  as a one-well charge providing the gas well
                         is  directly  connected  to  a  permanent sales outlet.

                    (4)  A  one-well charge shall be made for the month in which
                         plugging  and  abandonment  operations are completed on
                         any well. This one-well charge shall be made whether or
                         not  the  well  has  produced except when drilling well
                         rate  applies.

                    (5)  All  other inactive wells (including but not limited to
                         inactive  wells  covered  by  unit  allowable,  lease
                         allowable,  transferred  allowable,  etc.)  shall  not
                         qualify  for  an  overhead  charge.

          (3)  The  well  rates  shall  be adjusted as of the first day of April
               each  year following the effective date of the agreement to which
               this  Accounting  Procedure  is attached. The adjustment shall be
               computed  by  multiplying  the  rate  currently  in  use  by  the
               percentage increase or decrease in the average weekly earnings of
               Crude  Petroleum and Gas Production Workers for the last calendar
               year  compared  to  the  calendar  year preceding as shown by the
               index  of  average  weekly  earnings  of  Crude Petroleum and Gas
               Production  Workers  as published by the United States Department
               of  Labor, Bureau of Labor Statistics, or the equivalent Canadian
               index  as  published  by  Statistics  Canada,  as applicable. The
               adjusted rates shall be the rates currently in use, plus or minus
               the  computed  adjustment.

2.   OVERHEAD  -  MAJOR  CONSTRUCTION

     To  compensate Operator for overhead costs incurred in fee construction and
     installation  of fixed assets, fee expansion of fixed assets, and any other
     project  clearly  discernible as a fixed asset required for fee development
     and operation of fee Joint Property, Operator shall either negotiate a rate
     prior  to  fee  beginning  of  construction,  or  shall  charge  fee  Joint

                                      - 5 -
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                                                      COPAS 1984 ONSHORE
                                                      Recommended by the Council
                                                      of Petroleum Accountants
                                                      Societies

-------------------------------------------------------------------------COPAS--

     Account  for  overhead  based  on  the  following  rates  for  any  Major
     Construction  project  in  excess  of  $  25,000
                                             ----------

     A.   5  %  of  first  $100.000  or  total  cost  if  less,  plus
        -----

     B.   3  %  of  costs  in  excess of $100.000 but less than $1.000.000. plus
        -----

     C.   2  %  of  costs  in  excess  of  $1,000,000.
        -----

     Total cost shall mean the gross cost of any one project. For the purpose of
     this  paragraph,  the  component  parts  of  a  single project shall not be
     treated  separately  and  the  cost  of  drilling  and  workover  wells and
     artificial  lift  equipment  shall  be  excluded.

3.   CATASTROPHE  OVERHEAD

     To  compensate  Operator  for  overhead  costs  incurred  in  the  event of
     expenditures  resulting from a single occurrence due to oil spill, blowout,
     explosion,  fire,  storm,  hurricane, or other catastrophes as agreed to by
     the  Parties,  which  are  necessary  to  restore the Joint Property to the
     equivalent  condition  that  existed  prior  to  the  event  causing  the
     expenditures,  Operator shall either negotiate a rate prior to charging the
     Joint  Account  or shall charge the Joint Account for overhead based on the
     following  rates:

     A.   5  %  of  total  costs  through  $100.000:  plus
        -----

     B.   3  %  of  total  costs in excess of $100.000 but less than $1.000.000:
        -----
                plus

     C.   2  %  of  total  costs  in  excess  of  $1.000.000.
        -----

     Expenditures  subject  to  the  overheads  above  will  not  be  reduced by
     insurance  recoveries, and no other overhead provisions of this Section III
     shall  apply.

4.   AMENDMENT  OF  RATES

     The  overhead  rates  provided  for in this Section III may be amended from
     time  to  time  only  by mutual agreement between the Parties hereto if, in
     practice,  the  rates  are  found  to  be  insufficient  or  excessive.

  IV. PRICING OF JOINT ACCOUNT MATERIAL PURCHASES, TRANSFERS AND DISPOSITIONS

Operator  is  responsible  for  Joint Account Material and shall make proper and
timely  charges  and  credits  for  all  Material  movements affecting the Joint
Property.  Operator  shall  provide  all Material for use on the Joint Property;
however,  at  Operator's  option,  such  Material  may  be  supplied  by  the
Non-Operator.  Operator  shall  make  timely  disposition of idle and/or surplus
Material,  such  disposal  being  made  either  through  sale  to  Operator  or
Non-Operator, division in kind, or sale to outsiders. Operator may purchase, but
shall  be  under no obligation to purchase, interest of Non-Operators in surplus
condition  A  or  B  Material. The disposal of surplus Controllable Material not
purchased  by  the  Operator  shall  be  agreed  to  by  the  Parties.

1.   PURCHASES

     Material  purchased  shall  be  charged at the price paid by Operator after
     deduction  of  all  discounts  received.  In  case  of Material found to be
     defective  or  returned  to  vendor  for any other reasons, credit shall be
     passed  to  the  Joint  Account  when  adjustment  has been received by the
     Operator.

2.   TRANSFERS  AND  DISPOSITIONS

     Material  furnished to the Joint Property and Material transferred from the
     Joint  Property  or disposed of by the Operator, unless otherwise agreed to
     by  the  Parties,  shall be priced on the following basis exclusive of cash
     discounts:

     A.   New  Material  (Condition  A)

          (1)  Tubular  Goods  Other  than  Line  Pipe

               (a)  Tubular goods, sized 2 3/8 inches OD and larger, except line
                    pipe, shall be priced at Eastern mill published carload base
                    prices  effective as of date of movement plus transportation
                    cost  using  the  80,000  pound  carload weight basis to the
                    railway receiving point nearest the Joint Property for which
                    published  rail rates for tubular goods exist. If the 80,000
                    pound  rail  rate is not offered, the 70,000 pound or 90,000
                    pound rail rate may be used. Freight charges for tubing will
                    be  calculated from Lorain, Ohio and casing from Youngstown,
                    Ohio.

               (b)  For  grades which are special to one mill only, prices shall
                    be  computed  at  the  mill  base  of  that  mill  plus
                    transportation  cost from that mill to the railway receiving
                    point  nearest  the  Joint  Property  as  provided  above in
                    Paragraph  2.A.(l)(a).  For  transportation cost from points
                    other  than  Eastern  mills,  the  30,000

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                                                      COPAS 1984 ONSHORE
                                                      Recommended by the Council
                                                      of Petroleum Accountants
                                                      Societies

-------------------------------------------------------------------------COPAS--

                    pound  Oil  Field  Haulers Association interstate truck rate
                    shall  be  used.

               (c)  Special  end  finish  tubular  goods  shall be priced at the
                    lowest  published out-of-stock price, f.o.b. Houston, Texas,
                    plus  transportation  cost,  using  Oil  Field  Haulers
                    Association  interstate  30,000  pound  truck  rate,  to the
                    railway  receiving  point  nearest  the  Joint  Property.

               (d)  Macaroni  tubing  (size  less  than  2 3/8 inch OD) shall be
                    priced  at  the  lowest published out-of-stock prices f.o.b.
                    the  supplier plus transportation costs, using the Oil Field
                    Haulers  Association  interstate  truck  rate  per weight of
                    tubing  transferred,  to the railway receiving point nearest
                    the  Joint  Property.

          (2)  Line  Pipe

               (a)  Line  pipe movements (except size 24 inch OD and larger with
                    walls  3/4  inch  and  over)  30,000 pounds or more shall be
                    priced  under  provisions  of  tubular  goods  pricing  in
                    Paragraph  A.(l)(a) as provided above. Freight charges shall
                    be  calculated  from  Lorain,  Ohio.

               (b)  Line Pipe movements (except size 24 inch OD) and larger with
                    walls 3/4 inch  and  over)  less than 30,000 pounds shall be
                    priced  at  Eastern  mill  published  carload  base  prices
                    effective  as  of  date  of  shipment, plus 20 percent, plus
                    transportation  costs  based  on  freight rates as set forth
                    under  provisions  of  tubular  goods  pricing  in Paragraph
                    A.(l)(a)  as  provided  above.  Freight  charges  shall  be
                    calculated  from  Lorain,  Ohio.

               (c)  Line  pipe 24 inch  OD and over and 3/4 inch wall and larger
                    shall  be  priced f.o.b. the point of manufacture at current
                    new published prices plus transportation cost to the railway
                    receiving  point  nearest  the  Joint  Property.

               (d)  Line  pipe,  including  fabricated line pipe, drive pipe and
                    conduit  not listed on published price lists shall be priced
                    at quoted prices plus freight to the railway receiving point
                    nearest  the  Joint  Property  or at prices agreed to by the
                    Parties.

          (3)  Other  Material  shall  be  priced  at  the current new price, in
               effect  at date of movement, as listed by a reliable supply store
               nearest  the  Joint  Property,  or  point  of  manufacture,  plus
               transportation  costs,  if  applicable,  to the railway receiving
               point  nearest  the  Joint  Property.

          (4)  Unused  new  Material, except tubular goods, moved from the Joint
               Property  shall  be priced at the current new price, in effect on
               date  of  movement,  as listed by a reliable supply store nearest
               the  Joint Property, or point of manufacture, plus transportation
               costs,  if applicable, to the railway receiving point nearest the
               Joint  Property.  Unused  new tubulars will be priced as provided
               above  in  Paragraph  2.A.(1)  and  (2).

          B.   Good  Used  Material  (Condition  B)

               Material  in  sound  and  serviceable  condition and suitable for
               reuse  without  reconditioning:

               (1)  Material  moved  to  the  Joint  Property

                    At  seventy-five  percent  (75%)  of  current  new price, as
                    determined  by  Paragraph  A.

               (2)  Material  used  on  and  moved  from  the  Joint  Property

                    (a)  At  seventy-five percent (75%) of current new price, as
                         determined  by  Paragraph A, if Material was originally
                         charged  to  the  Joint  Account  as  new  Material  or

                    (b)  At  sixty-five  percent  (65%) of current new price, as
                         determined  by  Paragraph A, if Material was originally
                         charged  to  the  Joint  Account  as  used  Material

               (3)  Material  not  used  on  and  moved  from the Joint Property

                    At  seventy-five  percent  (75%)  of  current  new  price as
                    determined  by  Paragraph  A.

               The  cost  of  reconditioning,  if  any, shall be absorbed by the
               transferring  property.

          C.   Other  Used  Material

               (1)  Condition  C

                    Material which is not in sound and serviceable condition and
                    not  suitable  for  its  original  function  until  after
                    reconditioning  shall  be  priced  at fifty percent (50%) of
                    current  new price as determined by Paragraph A. The cost of
                    reconditioning  shall  be charged to the receiving property,
                    provided  Condition C value plus cost of reconditioning does
                    not  exceed  Condition  B  value.

                                      - 7 -
<PAGE>
                                                      COPAS 1984 ONSHORE
                                                      Recommended by the Council
                                                      of Petroleum Accountants
                                                      Societies

-------------------------------------------------------------------------COPAS--

               (2)  Condition  D

                    Material,  excluding  junk,  no  longer  suitable  for  its
                    original purpose, but usable for some other purpose shall be
                    priced  on  a  basis commensurate with its use. Operator may
                    dispose  of  Condition  D Material under procedures normally
                    used  by  Operator  without prior approval of Non-Operators.

                    (a)  Casing,  tubing,  or drill pipe used as line pipe shall
                         be  priced  as  Grade  A  and  B  seamless line pipe of
                         comparable  size  and  weight.  Used  casing, tubing or
                         drill  pipe  utilized  as  line pipe shall be priced at
                         used  line  pipe  prices.

                    (b)  Casing,  tubing  or  drill pipe used as higher pressure
                         service  lines  than standard line pipe, e.g. power oil
                         lines,  shall be priced under normal pricing procedures
                         for  casing, tubing, or drill pipe. Upset tubular goods
                         shall  be  priced  on  a  non  upset  basis.

               (3)  Condition  E

                    Junk  shall  be  priced  at  prevailing prices. Operator may
                    dispose  of  Condition  E Material under procedures normally
                    utilized  by  Operator  without  prior  approval  of
                    Non-Operators.

          D.   Obsolete  Material

               Material  which  is  serviceable  and  usable  for  its  original
               function  but  condition  and/or  value  of  such Material is not
               equivalent  to that which would justify a price as provided above
               may  be  specially priced as agreed to by the Parties. Such price
               should  result  in the Joint Account being charged with the value
               of  the  service  rendered  by  such  Material.

          E.   Pricing  Conditions

               (1)  Loading  or  unloading  costs  may  be  charged to the Joint
                    Account  at  the  rate  of  twenty-five cents (25 cents) per
                    hundred  weight  on  all tubular goods movements, in lieu of
                    actual  loading or unloading costs sustained at the stocking
                    point.  The above rate shall be adjusted as of the first day
                    of  April  each  year  following January 1, 1985 by the same
                    percentage  increase  or  decrease  used  to adjust overhead
                    rates in Section III, Paragraph l.A.(3). Each year, the rate
                    calculated shall be rounded to the nearest cent and shall be
                    the  rate  in effect until the first day of April next year.
                    Such  rate  shall  be  published each year by the Council of
                    Petroleum  Accountants  Societies.

               (2)  Material  involving  erection  costs  shall  be  charged  at
                    applicable  percentage  of the current knocked-down price of
                    new  Material.

3.   PREMIUM  PRICES

     Whenever  Material  is not readily obtainable at published or listed prices
     because of national emergencies, strikes or other unusual causes over which
     the  Operator has no control, the Operator may charge the Joint Account for
     the  required  Material at the Operator's actual cost incurred in providing
     such Material, in making it suitable for use, and in moving it to the Joint
     Property;  provided  notice in writing is furnished to Non-Operators of the
     proposed  charge  prior  to  billing  Non-Operators for such Material. Each
     Non-Operator  shall  have  the right, by so electing and notifying Operator
     within  ten  days  after receiving notice from Operator, to furnish in kind
     all  or  part of his share of such Material suitable for use and acceptable
     to  Operator.

4.   WARRANTY  OF  MATERIAL  FURNISHED  BY  OPERATOR

     Operator  does  not  warrant  the  Material furnished. In case of defective
     Material,  credit shall not be passed to the Joint Account until adjustment
     has  been  received  by  Operator  from  the manufacturers or their agents.

                                 V. INVENTORIES

The  Operator  shall  maintain  detailed  records  of  Controllable  Material.

1.   PERIODIC  INVENTORIES,  NOTICE  AND  REPRESENTATION

     At  reasonable  intervals,  inventories  shall  be taken by Operator of the
     Joint  Account  Controllable  Material. Written notice of intention to take
     inventory  shall  be given by Operator at least thirty (30) days before any
     inventory  is  to  begin  so that Non-Operators may be represented when any
     inventory  is  taken.  Failure  of  Non-Operators  to  be represented at an
     inventory  shall  bind  Non-Operators  to  accept  the  inventory  taken by
     Operator.

2.   RECONCILIATION  AND  ADJUSTMENT  OF  INVENTORIES

     Adjustments  to  the  Joint  Account resulting from the reconciliation of a
     physical  inventory shall be made within six months following the taking of
     the inventory. Inventory adjustments shall be made by Operator to the Joint
     Account  for

                                      - 8 -
<PAGE>
                                                      COPAS 1984 ONSHORE
                                                      Recommended by the Council
                                                      of Petroleum Accountants
                                                      Societies

-------------------------------------------------------------------------COPAS--

     overages  and  shortages,  but, Operator shall be held accountable only for
     shortages  due  to  lack  of  reasonable  diligence.

3.   SPECIAL  INVENTORIES

     Special  inventories  may  be  taken  whenever there is any sale, change of
     interest, or change of Operator in the Joint Property. It shall be the duty
     of  the  party  selling  to notify all other Parties as quickly as possible
     after  the transfer of interest takes place. In such cases, both the seller
     and the purchaser shall be governed by such inventory. In cases involving a
     change  of  Operator,  all  Parties  shall  be  governed by such inventory.

4.   EXPENSE  OF  CONDUCTING  INVENTORIES

     A.   The expense of conducting periodic inventories shall not be charged to
          the  Joint  Account  unless  agreed  to  by  the  Parties.

     B.   The  expense of conducting special inventories shall be charged to the
          Parties  requesting  such inventories, except inventories required due
          to  change  of  Operator  shall  be  charged  to  the  Joint  Account.

                                      - 9 -
<PAGE>
                                   EXHIBIT "D"

                                    INSURANCE
                                    ---------

Attached to and made a part of that certain Operating Agreement dated September
01, 2003, between Petrox Operating Company, LLC, Guidance Petrosearch, L.L.C.,
Oxbow Energy, LLC and Oil for America.

Operator shall carry for and charge to the Joint Account the following insurance
to cover the operations on the Contract Area covered by the Agreement referred
to above:

     1.   Workers Compensation Insurance including Employers' Liability, in
          compliance  with  the  laws  of  the  State  of  North  Dakota.

     2.   Comprehensive General Liability Insurance, excluding products, with
          limits  of  two  million dollars ($2,000,000) for injuries or death to
          one  person:  one  million  dollars  ($1,000,000)  for  each accident.

     3.   Operator shall require that each independent contractor and
          subcontractor carry and maintain insurance at its/his own expense in
          amounts deemed necessary to cover the risks inherent to the work or
          services being performed. Operator will furnish, or cause to be
          furnished, evidence of insurance coverage maintained by its
          contractors and subcontractors when required by Non-Operators.

     4.   All losses which would not be covered by the insurance described in
          items  1-3  above  and all losses in excess of said insurance shall be
          borne by all parties in the accordance with the terms of the Agreement
          referenced  above  under  terms  of  which  said  operations are being
          conducted  by  the  parties.  The  Operator  shall  promptly  notify
          Non-Operators  of  any  loss,  damage  or  claim  not  covered  by the
          insurance  obtained  hereunder  for  the  joint  account.

     5.   Any party, individually, may at its own expense acquire such
          additional insurance, including Umbrella Liability Insurance, as it
          desires covering that party's financial participation in the
          operations covered in the Agreement referenced above; provided,
          however, that such party shall obtain waivers by their insurers of all
          rights of subrogation in favor of the other parties to the Agreement
          referenced above.

<PAGE>
A.A.P.L.  FORM 610-E - GAS             AMERICAN ASSOCIATION OF PETROLEUM LANDMEN
BALANCING AGREEMENT - 1992             APPROVED FORM               A.A.P.L. NO.6

NOTE: Instructions For Use of Gas Balancing
-----

Agreement MUST be reviewed before finalizing
this document.

                                   EXHIBIT "E"

                      GAS BALANCING AGREEMENT ("AGREEMENT")
                    ATTACHED TO AND MADE PART OF THAT CERTAIN
     OPERATING AGREEMENT DATED    SEPTEMBER 01, 2003
                               ---------------------------------------------
BY AND BETWEEN PETROX OPERATING COMPANY. LLC     ,     GUIDANCE PETROSEARCH,
              ----------------------------------- --------------------------
LLC, OXBOW ENERGY, LLC AND OIL FOR AMERICA ("OPERATING AGREEMENT")
--- -------------------   ----------------
RELATING TO THE CONTRACT AREA DEFINED IN THE OPERATING AGREEMENT     AREA,
                -----------------------------------------------------
        STARK       COUNTY/PARISH, STATE OF   NORTH DAKOTA                     .
--------------------                        -----------------------------------

1.   DEFINITIONS

     The  following  definitions  shall  apply  to  this  Agreement:

     1.01 "Arm's  Length  Agreement"  shall mean any gas sales agreement with an
          unaffiliated  purchaser  or any gas sales agreement with an affiliated
          purchaser  where  the  sales  price and delivery conditions under such
          agreement  are  representative  of  prices  and  delivery  conditions
          existing  under  other  similar  agreements  in  the  area  between
          unaffiliated  parties  at  the same time for natural gas of comparable
          quality  and  quantity.

     1.02 "Balancing  Area"  shall  mean  (select  one):

          [ ]  each well subject to the Operating Agreement that produces Gas or
          is  allocated a share of Gas production. If a single well is completed
          in two or more producing intervals, each producing interval from which
          the  Gas  production  is  not  commingled  in  the  wellbore  shall be
          considered  a  separate  well.

          [X] [ ]   all  of  the  acreage  and  depths subject to the Operating
                    Agreement.
          [ ]
             -------------------------------------------------------------------

             -------------------------------------------------------------------

             -------------------------------------------------------------------

             -------------------------------------------------------------------

     1.03 "Full  Share of Current Production" shall mean the Percentage Interest
          of  each  Party  in  the Gas actually produced from the Balancing Area
          during  each  month.

     1.04 "Gas"  shall  mean  all  hydrocarbons  produced or producible from the
          Balancing  Area,  whether from a well classified as an oil well or gas
          well  by  the  regulatory  agency having jurisdiction in such matters,
          which are or may be made available for sale or separate disposition by
          the  Parties, excluding oil, condensate and other liquids recovered by
          field equipment operated for the joint account. "Gas" does not include
          gas  used  in  joint  operations,  such  as  for  fuel,  recycling  or
          reinjection,  or which is vented or lost prior to its sale or delivery
          from  the  Balancing  Area.

     1.05 "Makeup  Gas"  shall mean any Gas taken by an Underproduced Party from
          the  Balancing Area in excess of its Full Share of Current Production,
          whether  pursuant  to  Section  3.3  or  Section  4.1  hereof.

     1.06 "Mcf"  shall  mean  one thousand cubic feet. A cubic foot of Gas shall
          mean  the  volume  of  gas  contained  in one cubic foot of space at a
          standard  pressure  base  and  at  a  standard  temperature  base.

     1.07 "MMBtu"  shall  mean  one  million  British  Thermal  Units. A British
          Thermal  Unit  shall  mean  the quantity of heat required to raise one
          pound  avoirdupois  of pure water from 58.5 degrees Fahrenheit to 59.5
          degrees  Fahrenheit  at a constant pressure of 14.73 pounds per square
          inch  absolute.

     1.08 "Operator"  shall  mean  the individual or entity designated under the
          terms  of  the  Operating Agreement or, in the event this Agreement is
          not employed in connection with an operating agreement, the individual
          or  entity  designated  as  the operator of the well(s) located in the
          Balancing  Area.

     1.09 "Overproduced  Party"  shall  mean  any  Party  having taken a greater
          quantity  of  Gas from the Balancing Area than the Percentage interest
          of  such Party in the cumulative quantity of all Gas produced from the
          Balancing  Area.

     1.10 "Overproduction"  shall mean the cumulative quantity of Gas taken by a
          Party  in excess of its Percentage Interest in the cumulative quantity
          of  all  Gas  produced  from  the  Balancing  Area.

     1.11 "Party"  shall  mean  those  individuals  or  entities subject to this
          Agreement,  and  their  respective  heirs, successors, transferees and
          assigns.

     1.12 "Percentage Interest" shall mean the percentage or decimal interest of
          each Party in the Gas produced from the Balancing Area pursuant to the
          Operating  Agreement  covering  the  Balancing  Area.

     1.13 "Royalty"  shall mean payments on production of Gas from the Balancing
          Area  to  all  owners  of  royalties, overriding royalties, production
          payments  or  similar  interests.

     1.14 "Underproduced  Party"  shall  mean  any  Party  having taken a lesser
          quantity  of  Gas from the Balancing Area than the Percentage Interest
          of  such Party in the cumulative quantity of all Gas produced from the
          Balancing  Area.

     1.15 "Underproduction"  shall  mean  the  deficiency between the cumulative
          quantity  of  Gas  taken by a Party and its Percentage Interest in the
          cumulative  quantity  of  all  Gas  produced  from the Balancing Area.

     1.16 [X] [ ] (Optional) "Winter Period" shall mean the month(s) of NOVEMBER
                                                                        --------
          AND  DECEMBER  in  one  calendar  year and the month(s) of JANUARY AND
          -------------                                              -----------
          FEBRUARY  in  the  succeeding  calendar  year.
          --------

2.        BALANCING  AREA

     2.1  If  this  Agreement  covers  more than one Balancing Area, it shall be
applied  as  if  each  Balancing  Area  were  covered  by separate but identical
agreements.  All balancing hereunder shall be on the basis of Gas taken from the
Balancing  Area  measured in (ALTERNATIVE 1) [ ] Mcfs or (ALTERNATIVE 2) [X] [ ]
MMBtus.

     2.2  In  the event that all or part of the Gas deliverable from a Balancing
Area  is  or  becomes  subject to one or more maximum lawful prices, any Gas not
subject  to  price  controls  shall  be  considered  as  produced  from a single
Balancing  Area  and  Gas subject to each maximum lawful price category shall be
considered  produced  from  a  separate  Balancing  Area.

3.   RIGHT  OF  PARTIES  TO  TAKE  GAS

     3.1  Each Party desiring to take Gas will notify the Operator, or cause the
Operator  to be notified, of the volumes nominated, the name of the transporting
pipeline  and  the  pipeline  contract  number  (if available) and meter station
relating to such delivery, sufficiently in advance for the Operator, acting with
reasonable  diligence,  to  meet  all  nomination  and  other

                                      - 1 -
<PAGE>
A.A.P.L.  FORM  610-E  -  GAS  BALANCING  AGREEMENT  -  1992

requirements.  Operator  is  authorized  to deliver the volumes so nominated and
confirmed  (if  confirmation  is  required)  to  the  transporting  pipeline  in
accordance  with  the  terms  of  this  Agreement.

     3.2  Each Party shall make a reasonable, good faith effort to take its Full
Share  of  Current  Production each month, to the extent that such production is
required  to  maintain  leases in effect, to protect the producing capacity of a
well  or  reservoir,  to  preserve  correlative  rights,  or  to  maintain  oil
production.

     3.3  When  a  Party  fails for any reason to take its Full Share of Current
Production  (as  such  Share may be reduced by the right of the other Parties to
make  up  for  Underproduction  as  provided herein), the other Parties shall be
entitled  to  take  any  Gas  which  such  Party  fails  to  take. To the extent
practicable,  such  Gas  shall be made available initially to each Underproduced
Party in the proportion that its Percentage Interest in the Balancing Area bears
to  the total Percentage Interests of all Underproduced Parties desiring to take
such Gas. If all such Gas is not taken by the Underproduced Parties, the portion
not  taken  shall  then be made available to the other Parties in the proportion
that  their  respective  Percentage  Interests in the Balancing Area bear to the
total  Percentage  Interests  of  such  Parties.

     3.4  All  Gas  taken  by  a Party in accordance with the provisions of this
Agreement,  regardless  of  whether such Party is underproduced or overproduced,
shall  be  regarded as Gas taken for its own account with title thereto being in
such  taking  Party.

     3.5  Notwithstanding  the provisions of Section 3.3 hereof, no Overproduced
Party  shall be entitled in any month to take any Gas in excess of three hundred
percent  (300%)  of its Percentage Interest of the Balancing Area's then-current
Maximum  Monthly Availability; provided, however, that this limitation shall not
apply  to  the  extent  that  it  would  preclude production that is required to
maintain  leases  in  effect,  to  protect  the  producing capacity of a well or
reservoir,  to  preserve  correlative  rights,  or  to  maintain oil production.
"Maximum  Monthly  Availability"  shall mean the maximum average monthly rate of
production  at which Gas can be delivered from the Balancing Area, as determined
by  the  Operator,  considering  the  maximum  efficient well rate for each well
within  the  Balancing  Area,  the  maximum  allowable(s) set by the appropriate
regulatory  agency,  mode  of  operation,  production  facility capabilities and
pipeline  pressures.

     3.6  In  the event that a Party fails to make arrangements to take its Full
Share  of  Current  Production  required  to  be  produced to maintain leases in
effect,  to  protect  the producing capacity of a well or reservoir, to preserve
correlative  rights,  or  to  maintain oil production, the Operator may sell any
part  of  such Party's Full Share of Current Production that such Party fails to
take for the account of such Party and render to such Party, on a current basis,
the  full  proceeds  of  the  sale,  less any reasonable marketing, compression,
treating, gathering or transportation costs incurred directly in connection with
the  sale  of  such  Full  Share  of  Current  Production.  In  making  the sale
contemplated  herein,  the Operator shall be obligated only to obtain such price
and  conditions for the sale as are reasonable under the circumstances and shall
not  be  obligated  to share any of its markets. Any such sale by Operator under
the  terms  hereof  shall  be  only  for  such reasonable periods of time as are
consistent  with  the  minimum  needs  of  the  industry  under  the  particular
circumstances,  but  in  no  event  for  a  period  in  excess  of  one  year.
Notwithstanding the provisions of Article 3.4 hereof, Gas sold by Operator for a
Party  under  the  provisions  hereof  shall  be  deemed to be Gas taken for the
account  of  such  Party.

4.   IN-KIND  BALANCING

     4.1  Effective  the  first  day  of  any  calendar month following at least
TWENTY  (  20  )  days'  prior written notice to the Operator, any Underproduced
-------- ------
Party  may begin taking, in addition to its Full Share of Current Production and
any  Makeup  Gas  taken  pursuant  to  Section 3.3 of this Agreement, a share of
current  production  determined  by  multiplying  FIFTY percent (  50  %) of the
                                                  -----          ------
Full Shares of Current Production of all Overproduced Parties by a fraction, the
numerator  of  which  is the Percentage Interest of such Underproduced Party and
the  denominator  of  which  is  the  total  of  the Percentage Interests of all
Underproduced  Parties  desiring  to  take  Makeup  Gas.  In  no  event  will an
Overproduced  Party  be required to provide more than FIFTY percent (  50  %) of
                                                      -----          ------
its  Full Share of Current Production for Makeup Gas. The Operator will promptly
notify  all  Overproduced  Parties  of the election of an Underproduced Party to
begin  taking  Makeup  Gas.

     4.2  [ ]  (OPTIONAL  -  SEASONAL  LIMITATION  ON  MAKEUP  -  OPTION  1)
Notwithstanding  the  provisions  of  Section 4.1, the average monthly amount of
Makeup  Gas taken by an Underproduced Party during the Winter Period pursuant to
Section  4.1  shall not exceed the average monthly amount of Makeup Gas taken by
such  Underproduced  Party during the __________ ( ________ ) months immediately
preceding  the  Winter  Period.

     4.2  [X] [ ]  (OPTIONAL  -  SEASONAL  LIMITATION  ON  MAKEUP  -  OPTION  2)
Notwithstanding  the  provisions  of  Section 4.1, no Overproduced Party will be
required  to  provide  more  than  TWENTY-FIVE  percent (  25  %)  of  its  Full
                                   -----------           ------
Share  of  Current  Production  for  Makeup  Gas  during  the  Winter  Period.

     4.3  [ ]  (OPTIONAL) Notwithstanding any other provision of this Agreement,
at  such time and for so long as Operator, or (insofar as concerns production by
the  Operator)  any  Underproduced  Party,  determines  in  good  faith  that an
Overproduced  Party  has produced all of its share of the ultimately recoverable
reserves  in the Balancing Area, such Overproduced Party may be required to make
available  for  Makeup Gas, upon the demand of the Operator or any Underproduced
Party,  up  to              percent  (     %)  of such Overproduced Party's Full
               ------------           -----
Share  of  Current  Production.

5.   STATEMENT  OF  GAS  BALANCES

     5.1  The  Operator  will  maintain  appropriate accounting on a monthly and
cumulative  basis  of  the volumes of Gas that each Party is entitled to receive
and  the  volumes of Gas actually taken or sold for each Party's account. In the
event  any  party  is  Underproduced for any reason, Within forty-five (45) days
after  the  month  of production, the Operator will furnish a statement for such
month  showing  (1) each Party's Full Share of Current Production, (2) the total
volume  of  Gas  actually  taken  or  sold  for  each  Party's  account, (3) the
difference between the volume taken by each Party and that Party's Full Share of
Current Production, (4) the Overproduction or Underproduction of each Party, and
(5)  other  data  as  recommended  by the provisions of the Council of Petroleum
Accountants Societies Bulletin No.24, as amended or supplemented hereafter. Each
Party  taking Gas will promptly provide to the Operator any data required by the
Operator  for  preparation  of  the  statements  required  hereunder.

     5.2  If  any  Party  fails to provide the data required herein for four (4)
consecutive production months, the Operator, or where the Operator has failed to
provide  data,  another  Party,  may  audit  the  production  and  Gas sales and
transportation  volumes of the non-reporting Party to provide the required data.
Such  audit  shall  be  conducted only after reasonable notice and during normal
business  hours  in the office of the Party whose records are being audited. All
costs  associated  with  such  audit will be charged to the account of the Party
failing  to  provide  the  required  data.

6.   PAYMENTS  ON  PRODUCTION

     6.1  Each Party taking Gas shall pay or cause to be paid all production and
severance  taxes  due  on  all  volumes  of  Gas  actually  taken by such Party.

     6.2  [ ] (ALTERNATIVE 1 - ENTITLEMENTS) Each Party shall pay or cause to be
paid  all  Royalty  due  with  respect  to  Royalty

                                      - 2 -
<PAGE>
A.A.P.L.  FORM  610-E  -  GAS  BALANCING  AGREEMENT  -  1992

owners  to whom it is accountable as if such Party were taking its Full Share of
Current  Production,  and  only  its  Full  Share  of  Current  Production.

     6.2.1  [ ]  (OPTIONAL  -  FOR  USE  ONLY WITH SECTION 6.2 - ALTERNATIVE I -
ENTITLEMENT)  Upon written request of a Party taking less than its Full Share of
Current  Production in a given month ("Current Underproducer"), any Party taking
more  than  its  Full  Share  of  Current  Production  in  such  month ("Current
Overproducer") will pay to such Current Underproducer an amount each month equal
to  the  Royalty percentage of the proceeds received by the Current Overproducer
for that portion of the Current Underproducer's Full Share of Current Production
taken by the Current Overproducer; provided, however, that such payment will not
exceed  the  Royalty  percentage  that  is  common to all Royalty burdens in the
Balancing  Area.  Payments  made  pursuant  to this Section 6.2.1 will be deemed
payments  to  the  Underproduced  Party's Royalty owners for purposes of Section
7.5.

     6.2  [X] [ ]  (ALTERNATIVE  2  - SALES) Each Party shall pay or cause to be
paid  Royalty due with respect to Royalty owners to whom it is accountable based
on  the  volume  of  Gas  actually  taken  for  its  account.

     6.3  In  the  event  that  any governmental authority requires that Royalty
payments  be  made  on any other basis than that provided for in this Section 6,
each  Party  agrees to make such Royalty payments accordingly, commencing on the
effective  date required by such governmental authority, and the method provided
for  herein  shall  be  thereby  superseded.

7.   CASH  SETTLEMENTS

     7.1  Upon the earlier of the plugging and abandonment of the last producing
interval  in  the  Balancing Area, the termination of the Operating Agreement or
any pooling or unit agreement covering the Balancing Area, or at any time no Gas
is taken from the Balancing Area for a period of twelve (12) consecutive months,
any  Party  may  give  written  notice  calling  for  cash settlement of the Gas
production  imbalances  among  the  Parties.  Such  notice shall be given to all
Parties  in  the  Balancing  Area.

     7.2  Within  sixty  (60)  days after the notice calling for cash settlement
under  Section  7.1,  the  Operator  will  distribute  to each Party a Final Gas
Settlement  Statement  detailing  the  quantity  of  Overproduction owed by each
Overproduced  Party  to  each  Underproduced  Party and identifying the month to
which  such Overproduction is attributed, pursuant to the methodology set out in
Section  7.4.

     7.3  [X] [ ]  (ALTERNATIVE  I  -  DIRECT  PARTY-TO-PARTY SETTLEMENT) Within
sixty  (60)  days  after  receipt  of  the  Final Gas Settlement Statement, each
Overproduced  Party  will pay to each Underproduced Party entitled to settlement
the  appropriate  cash settlement, accompanied by appropriate accounting detail.
At  the  time of payment, the Overproduced Party will notify the Operator of the
Gas  imbalance  settled  by  the  Overproduced  Party's  payment.

     7.3  [ ]  (ALTERNATIVE  2  - SETTLEMENT THROUGH OPERATOR) Within sixty (60)
days  after  receipt  of  the  Final Gas Settlement Statement, each Overproduced
Party  will  send  its  cash  settlement,  accompanied by appropriate accounting
detail,  to  the  Operator. The Operator will distribute the monies so received,
along with any settlement owed by the Operator as an Overproduced Party, to each
Underproduced  Party  to  whom  settlement  is due within ninety (90) days after
issuance  of  the  Final  Gas  Settlement  Statement.  In  the  event  that  any
Overproduced  Party  fails to pay any settlement due hereunder, the Operator may
turn  over  responsibility for the collection of such settlement to the Party to
whom  it  is  owed,  and  the  Operator will have no further responsibility with
regard  to  such  settlement.

     7.3.1  [ ]  (OPTIONAL  -  FOR  USE  ONLY  WITH SECTION 7.3, ALTERNATIVE 2 -
SETTLEMENT  THROUGH  OPERATOR)  Any  Party shall have the right at any time upon
thirty  (30)  days' prior written notice to all other Parties to demand that any
settlements  due such Party for Overproduction be paid directly to such Party by
the  Overproduced  Party,  rather  than  being paid through the Operator. In the
event  that  an  Overproduced  Party  pays  the  Operator  any  sums  due  to an
Underproduced  Party at any time after thirty (30) days following the receipt of
the  notice  provided  for  herein,  the  Overproduced Party will continue to be
liable  to  such  Underproduced  Party  for  any  sums so paid, until payment is
actually  received  by  the  Underproduced  Party.

     7.4  [X] [ ]  (ALTERNATIVE  1  -  HISTORICAL SALES BASIS) The amount of the
cash settlement will be based on the proceeds received by the Overproduced Party
under  an  Arm's  Length  Agreement  for  the Gas taken from time to time by the
Overproduced  Party  in excess of the Overproduced Party's Full Share of Current
Production.  Any  Makeup  Gas taken by the Underproduced Party prior to monetary
settlement hereunder will be applied to offset Overproduction chronologically in
the  order  of  accrual.

     7.4  [ ]  (ALTERNATIVE  2 - MOST RECENT SALES BASIS) The amount of the cash
settlement  will  be  based  on  the proceeds received by the Overproduced Party
under  an  Arm's  Length  Agreement  for  the  volume  of  Gas  that constituted
Overproduction  by  the  Overproduced  Party  from  the  Balancing Area. For the
purpose  of  implementing  the  cash  settlement  provision of the Section 7, an
Overproduced  Party  will  not  be  considered  to  have  produced  any  of  an
Underproduced  Party's  share  of  Gas until the Overproduced Party has produced
cumulatively all of its Percentage Interest share of the Gas ultimately produced
from  the  Balancing  Area.

     7.5  The  values used for calculating the cash settlement under Section 7.4
will  include  all proceeds received for the sale of the Gas by the Overproduced
Party  calculated  at  the  Balancing  Area,  after  deducting any production or
severance  taxes paid and any Royalty actually paid by the Overproduced Party to
an  Underproduced Party's Royalty owner(s), to the extent said payments amounted
to  a discharge of said Underproduced Party's Royalty obligation, as well as any
reasonable  marketing,  compression, treating, gathering or transportation costs
incurred directly in connection with the sale of the Overproduction.

     7.5.1  [X] [ ]  (OPTIONAL  -  FOR  VALUATION  UNDER  PERCENTAGE OF PROCEEDS
CONTRACTS)  For  Overproduction sold under a gas purchase contract providing for
payment  based  on  a  percentage of the proceeds obtained by the purchaser upon
resale  of  residue  gas  and  liquid hydrocarbons extracted at a gas processing
plant,  the  values  used  for calculating cash settlement will include proceeds
received  by  the  Overproduced  Party  for both the liquid hydrocarbons and the
residue  gas  attributable  to  the  Overproduction.

     7.5.2  [ ]  (OPTIONAL  -  VALUATION  FOR  PROCESSED  GAS  -  OPTION  1) For
Overproduction  processed  for  the  account  of the Overproduced Party at a gas
processing plant for the extraction of liquid hydrocarbons, the full quantity of
the  Overproduction will be valued for purposes of cash settlement at the prices
received  by the Overproduced Party for the sale of the residue gas attributable
to  the  Overproduction  without  regard  to  proceeds  attributable  to  liquid
hydrocarbons  which  may  have  been  extracted  from  the  Overproduction.

     7.5.2  [X] [ ]  (OPTIONAL  -  VALUATION  FOR  PROCESSED GAS - OPTION 2) For
Overproduction  processed  for  the  account  of the Overproduced Party at a gas
processing  plant for the extraction of liquid hydrocarbons, the values used for
calculating  cash  settlement  will  include  the  proceeds  received  by  the
Overproduced  Party  for  the sale of the liquid hydrocarbons extracted from the
Overproduction,  less  the  actual reasonable costs incurred by the Overproduced
Party to process the Overproduction and to transport, fractionate and handle the
liquid hydrocarbons extracted therefrom prior to sale.

     7.6  To  the  extent the Overproduced Party did not sell all Overproduction
under  an  Arm's  Length  Agreement,  the  cash  settlement will be based on the
weighted  average price received by the Overproduced Party for any gas sold from
the

                                      - 3 -
<PAGE>
A.A.P.L.  FORM  610-E  -  GAS  BALANCING  AGREEMENT  -  1992

Balancing  Area  under  Arm's  Length Agreements during the months to which such
Overproduction  is  attributed.  In  the  event that no sales under Arm's Length
Agreements  were  made during any such month, the cash settlement for such month
will  be  based  on  the  higher  spot sales prices published for the applicable
geographic  area  during  such  month  in  the  Gas  Daily  or  Inside  FERC5

     7.7  Interest  compounded  at  the  rate of TEN percent (  10  %) per annum
                                                 ---          ------
or  the  maximum  lawful  rate  of  interest  applicable  to the Balancing Area,
whichever  is  less, will accrue for all amounts due under Section 7.1 beginning
the  first  day  following the date payment is due pursuant to Section 7.3. Such
interest  shall  be  borne  by  the  Operator  or  any Overproduced Party in the
proportion that their respective delays beyond the deadlines set out in Sections
7.2  and  7.3  contributed  to  the  accrual  of  the  interest.

     7.8  In  lieu  of  the  cash  settlement  required  by  Section  7.3,  an
Overproduced Party may deliver to the Underproduced Party an offer to settle its
Overproduction  in-kind  and at such rates, quantities, times and sources as may
be  agreed  upon  by the Underproduced Party. If the Parties are unable to agree
upon  the  manner  in which such in-kind settlement gas will be furnished within
sixty  (60)  days  after the Overproduced Party's offer to settle in kind, which
period  may  be  extended  by  agreement of said Parties, the Overproduced Party
shall  make  a  cash  settlement  as  provided  in Section 7.3. The making of an
in-kind  settlement  offer  under this Section 7.8 will not delay the accrual of
interest on the cash settlement should the Parties fail to reach agreement on an
in-kind  settlement.

     7.9  [X] [ ]  (OPTIONAL  -  FOR  BALANCING  AREAS  SUBJECT TO FEDERAL PRICE
REGULATION)  That  portion  of any monies collected by an Overproduced Party for
Overproduction  which  is  subject  to  refund  by  orders of the Federal Energy
Regulatory  Commission  or  other  governmental authority may be withheld by the
Overproduced  Party  until  such  prices are fully approved by such governmental
authority,  unless  the  Underproduced  Party furnishes a corporate undertaking,
acceptable  to  the  Overproduced Party, agreeing to hold the Overproduced Party
harmless  from  financial  loss  due  to  refund  orders  by  such  governmental
authority.

     7.10  [X] [ ]  (OPTIONAL  -  INTERIM CASH BALANCING) At any time during the
term of this Agreement, any Overproduced Party may, in its sole discretion, make
cash  settlement(s)  with  the Underproduced Parties covering all or part of its
outstanding  Gas imbalance, provided that such settlements must be made with all
Underproduced  Parties  proportionately  based on the relative imbalances of the
Underproduced  Parties,  and  provided  further that such settlements may not be
made  more  often than once every twenty-four (24) months. Such settlements will
be  calculated in the same manner provided above for final cash settlements. The
Overproduced  Party will provide Operator a detailed accounting of any such cash
settlement  within  thirty  (30)  days  after  the  settlement  is  made.

8.   TESTING

     Notwithstanding  any provision of this Agreement to the contrary, any Party
shall  have  the right, from time to time, to produce and take up to one hundred
percent  (100%)  of  a  well's  entire  Gas  stream  to  meet  the  reasonable
deliverability  test(s) required by such Party's Gas purchaser, and the right to
take  any  Makeup  Gas shall be subordinate to the right of any Party to conduct
such  tests; provided, however, that such tests shall be conducted in accordance
with  prudent  operating  practices  only  after  TWENTY  (  20  )  days'  prior
                                                  ------   ------
written  notice  to  the  Operator  and  shall  last  no longer than TWENTY-FOUR
                                                                     -----------
(  24  )  hours.
 ------

9.   OPERATING  COSTS

     Nothing  in this Agreement shall change or affect any Party's obligation to
pay  its proportionate share of all costs and liabilities incurred in operations
on  or  in connection with the Balancing Area, as its share thereof is set forth
in  the  Operating  Agreement,  irrespective of whether any Party is at any time
selling  and  using  Gas  or  whether such sales or use are in proportion to its
Percentage  Interest  in  the  Balancing  Area.

10.  LIQUIDS

     The  Parties shall share proportionately in and own all liquid hydrocarbons
recovered  with  Gas  by  field  equipment  operated  for  the  joint account in
accordance with their Percentage Interests in the Balancing Area.

11.  AUDIT  RIGHTS

     Notwithstanding  any  provision  in  this  Agreement or any other agreement
between  the  Parties  hereto,  and  further  notwithstanding any termination or
cancellation  of  this  Agreement, for a period of two (2) years from the end of
the  calendar year in which any information to be furnished under Section 5 or 7
hereof  is  supplied, any Party shall have the right to audit the records of any
other  Party  regarding  quantity,  including  but  not  limited  to information
regarding Btu-content. Any Underproduced Party shall have the right for a period
of  two (2) years from the end of the calendar year in which any cash settlement
is received pursuant to Section 7 to audit the records of any Overproduced Party
as  to  all  matters concerning values, including but not limited to information
regarding  prices and disposition of Gas from the Balancing Area. Any such audit
shall  be  conducted at the expense of the Party or Parties desiring such audit,
and shall be conducted, after reasonable notice, during normal business hours in
the  office  of  the  Party  whose  records are being audited. Each Party hereto
agrees  to  maintain records as to the volumes and prices of Gas sold each month
and  the  volumes of Gas used in its own operations, along with the Royalty paid
on any such Gas used by a Party in its own operations. The audit rights provided
for in this Section 11 shall be in addition to those provided for in Section 5.2
of  this  Agreement.

12.  MISCELLANEOUS

     12.1  As  between  the  Parties,  in  the event of any conflict between the
provisions of this Agreement and the provisions of any gas sales contract, or in
the  event  of  any  conflict  between  the provisions of this Agreement and the
provisions  of  the  Operating Agreement, the provisions of this Agreement shall
govern.

     12.2  Each  Party  agrees  to defend, indemnify and hold harmless all other
Parties  from  and  against  any  and all liability for any claims, which may be
asserted  by  any  third  party  which  now or hereafter stands in a contractual
relationship  with  such indemnifying Party and which arise out of the operation
of  this  Agreement  or  any  activities  of  such  indemnifying Party under the
provisions  of  this Agreement, and does further agree to save the other Parties
harmless  from  all  judgments  or  damages  sustained  and  costs  incurred  in
connection  therewith.

     12.3 Except as otherwise provided in this Agreement, Operator is authorized
to  administer  the provisions of this Agreement, but shall have no liability to
the  other Parties for losses sustained or liability incurred which arise out of
or  in  connection  with  the performance of Operator's duties hereunder, except
such  as  may  result  from  Operator's  gross negligence or willful misconduct.
Operator  shall  not be liable to any Underproduced Party for the failure of any
Overproduced  Party,  (other  than Operator) to pay any amounts owed pursuant to
the  terms  hereof.

     12.4  This  Agreement  shall remain in full force and effect for as long as
the  Operating  Agreement  shall  remain in force and effect as to the Balancing
Area,  and  thereafter until the Gas accounts between the Parties are settled in
full,  and shall inure to the benefit of and be binding upon the Parties hereto,
and  their  respective  heirs,  successors,  legal  representatives

                                      - 4 -
<PAGE>
A.A.P.L.  FORM  610-E  -  GAS  BALANCING  AGREEMENT  -  1992

and assigns, if any. The Parties hereto agree to give notice of the existence of
this  Agreement  to  any  successor in interest of any such Party and to provide
that any such successor shall be bound by this Agreement, and shall further make
any  transfer  of  any  interest subject to the Operating Agreement, or any part
thereof,  also  subject  to  the  terms  of  this  Agreement.

     12.5  Unless  the  context  clearly  indicates otherwise, words used in the
singular  include  the  plural, the plural includes the singular, and the neuter
gender  includes  the  masculine  and  the  feminine.

     12.6  In  the  event that any "Optional" provision of this Agreement is not
adopted  by  the  Parties  to  this Agreement by a typed, printed or handwritten
indication,  such  provision  shall  not  form  a part of this Agreement, and no
inference  shall  be made concerning the intent of the Parties in such event. In
the  event  that any "Alternative" provision of this Agreement is not so adopted
by the Parties, Alternative 1 in each such instance shall be deemed to have been
adopted by the Parties as a result of any such omission. In those cases where it
is  indicated  that  an  Optional  provision  may  be  used  only  if a specific
Alternative  is  selected:  (i)  an  election to include said Optional provision
shall  not be effective unless the Alternative in question is selected; and (ii)
the  election  to  include  said  Optional provision must be expressly indicated
hereon,  it  being  understood  that  the  selection  of  an  Alternative either
expressly  or  by  default  as  provided  herein  shall  not,  in and of itself,
constitute  an  election  to  include  an  associated  Optional  provision.

     12.7  This  Agreement  shall  bind  the  Parties  in  accordance  with  the
provisions  hereof,  and  nothing  herein  shall  be construed or interpreted as
creating  any rights in any person or entity not a signatory hereto, or as being
a  stipulation  in  favor  of  any  such  person  or  entity.

     12.8  If  contemporaneously  with  this  Agreement  becoming  effective, or
thereafter,  any  Party  requests  that  any  other Party execute an appropriate
memorandum  or notice of this Agreement in order to give third parties notice of
record  of  same  and  submits  same  for  execution  in  recordable  form, such
memorandum  or  notice shall be duly executed by the Party to which such request
is  made and delivered promptly thereafter to the Party making the request. Upon
receipt, the Party making the request shall cause the memorandum or notice to be
duly  recorded  in  the appropriate real property or other records affecting the
Balancing  Area.

     12.9  In  the  event Internal Revenue Service regulations require a uniform
method  of computing taxable income by all Parties, each Party agrees to compute
and  report  income  to the Internal Revenue Service (select one) [_] as if such
Party  were taking its Full Share of Current Production during each relevant tax
period  in  accordance  with  such  regulations,  insofar  as  same  relate  to
entitlement  method  tax  computations;  or [X] [_] based on the quantity of Gas
taken  for  its  account  in  accordance  with such regulations, insofar as same
relate  to  sales  method  tax  computations.

13.  ASSIGNMENT  AND  RIGHTS  UPON  ASSIGNMENT

     13.1  Subject  to  the  provisions  of  Sections 13.2 (if elected) and 13.3
hereof,  and  notwithstanding  anything  in  this  Agreement or in the Operating
Agreement to the contrary, if any Party assigns (including any sale, exchange or
other  transfer)  any  of  its  working interest in the Balancing Area when such
Party  is an Underproduced or Overproduced Party, the assignment or other act of
transfer  shall,  insofar  as  the  Parties  hereto  are  concerned, include all
interest  of  the  assigning  or  transferring  Party  in the Gas, all rights to
receive  or  obligations to provide or take Makeup Gas and all rights to receive
or  obligations  to  make  any  monetary  payment  which  may  ultimately be due
hereunder,  as  applicable.  Operator and each of the other Parties hereto shall
thereafter  treat  the assignment accordingly, and the assigning or transferring
Party  shall look solely to its assignee or other transferee for any interest in
the  Gas  or  monetary  payment  that  such Party may have or to which it may be
entitled,  and  shall  cause  its  assignee  or  other  transferee to assume its
obligations  hereunder.

     13.2  [ ]  (Optional  -  Cash  Settlement  Upon Assignment) Notwithstanding
anything  in  this  Agreement  (including  but  not limited to the provisions of
Section  13.1 hereof) or in the Operating Agreement to the contrary, and subject
to  the  provisions  of  Section 13.3 hereof, in the event an Overproduced Party
intends to sell, assign, exchange or otherwise transfer any of its interest in a
Balancing  Area,  such  Overproduced  Party  shall  notify  in writing the other
working  interest  owners  who are Parties hereto in such Balancing Area of such
fact  at least SIXTY (  60  ) days prior to closing the transaction. Thereafter,
               -----  ------
any  Underproduced  Party  may  demand  from such Overproduced Party in writing,
within  FORTY-FIVE  (  45  )  days  after  receipt  of  the Overproduced Party's
        ----------   ------
notice,  a  cash  settlement of its Underproduction from the Balancing Area. The
Operator  shall  be  notified  of  any  such  demand  and of any cash settlement
pursuant  to this Section 13, and the Overproduction and Underproduction of each
Party  shall  be  adjusted  accordingly.  Any  cash  settlement pursuant to this
Section  13  shall be paid by the Overproduced Party on or before the earlier to
occur  (i)  of sixty (60) days after receipt of the Underproduced Party's demand
or (ii) at the closing of the transaction in which the Overproduced Party sells,
assigns,  exchanges  or  otherwise transfers its interest in a Balancing Area on
the  same  basis  as otherwise set forth in Sections 7.3 through 7.6 hereof, and
shall bear interest at the rate set forth in Section 7.7 hereof, beginning sixty
(60)  days after the Overproduced Party's sale, assignment, exchange or transfer
of  its  interest  in  the  Balancing  Area  for any amounts not paid. Provided,
however,  if  any Underproduced Party does not so demand such cash settlement of
its Underproduction from the Balancing Area, such Underproduced Party shall look
exclusively  to  the assignee or other successor in interest of the Overproduced
Party giving notice hereunder for the satisfaction of such Underproduced Party's
Underproduction  in  accordance  with  the  provisions  of  Section 13.1 hereof.

     13.3 The provisions of this Section 13 shall not be applicable in the event
any  Party  mortgages  its  interest  or  disposes  of  its  interest by merger,
reorganization,  consolidation  or  sale of substantially all of its assets to a
subsidiary  or  parent  company,  or  to  any  company  in  which  any parent or
subsidiary  of  such  Party  owns  a  majority  of  the  stock  of such company.

14.   OTHER  PROVISIONS

                                      - 5 -
<PAGE>
A.A.P.L.  FORM  610-E  -  GAS  BALANCING  AGREEMENT  -  1992

                                      - 6 -
<PAGE>
A.A.P.L.  FORM  610-E  -  GAS  BALANCING  AGREEMENT  -  1992

                                      - 7 -
<PAGE>
                                   EXHIBIT "F"

        NON-DISCRIMINATION AND CERTIFICATION OF NON-SEGREGATED FACILITIES
        -----------------------------------------------------------------

To the extent applicable, the parties to this Operating Agreement shall comply
with all Federal, State and Local laws, statutes, codes, regulations, executive
orders, rules, ordinances, mandates, aid directives (collectively "Laws")
dealing with equal employment opportunity hiring and reporting requirements,
affirmative action compliance programs, employment of the handicapped, the
Americans with Disabilities Act, employment of and affirmative action programs
for disabled veterans and veterans of the Vietnam era, utilization of minority
business enterprises, minority business enterprises, minority business
enterprises subcontracting programs, utilization of women-owned business
concerns, women-owned business contracting programs, utilization of small
business concerns and small business concerns owned and controlled by socially
and economically disadvantaged individuals, small business and small
disadvantaged business subcontracting programs, utilization of labor surplus
area concerns, labor surplus area subcontracting programs, non-segregated
facilities certification requirements, Title VII of the Civil Rights Act of
1964, Civil Rights Act of 1991, nondiscrimination under federal and state
contracts, Age Discrimination in Employment Act of 1967, National Labor
Relations Act, Immigration Reform Aid Control Act of 1986, Pregnancy
Discrimination Act of 1978, Federal Family Care and Medical Leave Act, Equal Pay
Act, sexual harassment, worker's compensation discrimination, AIDS or HIV
positive status discrimination, sex discrimination, race discrimination, sexual
orientation discrimination, religious creed discrimination, marital status
discrimination, medical condition discrimination, notional origin
discrimination, and all new and additional laws dealing with the same or similar
matters, all of which laws are incorporated herein by reference.

Each party hereto certifies that it does not and will not maintain any
facilities it provides for its employees in a segregated manner or permit its
employees to perform their services at any location under its control were
segregated facilities are maintained, and such party will obtain a similar
certification in the form approved by the Director, Office of the Federal
Contract Compliance programs, prior to the award of any non-exempt subcontract.

<PAGE>

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