Document:

EXECUTION VERSION

                       NOTE AND WARRANT PURCHASE AGREEMENT

     This  NOTE  AND  WARRANT  PURCHASE  AGREEMENT, dated as of February 1, 2007
(this  "Agreement") is entered into by and among Petrosearch Energy Corporation,
        ---------
a  Nevada  corporation  (the "Company"), and RCH Petro Investors, LP, a Delaware
                              -------
limited  partnership  (the  "Purchaser").
                             ---------

     WHEREAS,  the  Company desires to raise an aggregate of $10 million through
the  sale  of  an 8% Senior Secured Convertible Promissory Note and a Warrant to
purchase  5,000,000  shares  of  Common  Stock;  and

     WHEREAS,  it  is  a  condition  to the Purchaser's purchase of the Note and
Warrant  that  the  Purchaser  be provided with certain registration rights with
respect to the shares of Common Stock into which the Note is convertible and the
shares  of  Common  Stock  underlying  the  Warrant.

     NOW  THEREFORE, in consideration of the mutual covenants and agreements set
forth  herein  and  for  good  and  valuable  consideration,  the  receipt  and
sufficiency  of  which  are  hereby  acknowledged, the Company and the Purchaser
hereby  agree  as  follows:

                                    ARTICLE I
                                   DEFINITIONS

     Section  1.01     Definitions.  As  used  in this Agreement, and unless the
                       -----------
context  requires  a  different  meaning,  the following terms have the meanings
indicated:

"     "Action"  against  a  Person  means  any  lawsuit,  action,  proceeding
      ------
or complaint  before  any  Governmental  Authority,  mediator  or  arbitrator.

     "Acts"  means  the  Securities  Act  and  the  Exchange  Act.
      ----

     "Affiliate"  means,  with  respect to a specified Person, any other Person,
      ---------
whether  now  in  existence  or  hereafter  created,  directly  or  indirectly
controlling,  controlled by or under direct or indirect common control with such
specified  Person.  For  purposes of this definition, "control" (including, with
correlative  meanings, "controlling," "controlled by," and "under common control
with")  means  the  power to direct or cause the direction of the management and
policies  of  such Person, directly or indirectly, whether through the ownership
of  voting  securities,  by  contract  or  otherwise.

     "Agreement" shall have the meaning specified in the introductory paragraph.
      ---------

     "Business  Day"  means  any  day  other than a Saturday, Sunday, or a legal
      -------------
holiday  for  commercial  banks  in  New  York,  New  York.

     "Closing"  shall  have  the  meaning  specified  in  Section  2.03.
      -------                                             -------------

     "Closing  Date"  shall  have  the  meaning  specified  in  Section  2.03.
      -------------                                             -------------

<PAGE>
     "Code"  means  the  Internal  Revenue  Code  of  1986,  as  amended.
      ----

     "Commission"  means  the  United States Securities and Exchange Commission.
      ----------

     "Common  Stock"  means  the  Company's  common  stock,  par  value  $0.001.
      -------------

     "Company Material Adverse Effect" means a material and adverse effect on
      ------------------------------
(i) the  assets,  liabilities,  financial condition, business, or affairs of the
Company  or (ii) the ability of the Company to consummate the transactions under
any  Transaction  Document.

     "Company Related Parties" shall have the meaning specified in Section 7.02.
      -----------------------                                      ------------

     "Company  SEC  Documents" shall have the meaning specified in Section 3.06.
      -----------------------                                      ------------

     "Conversion  Price"  shall  have  the  meaning  specified  in  the  Note.
      -----------------

     "Exchange  Act"  means the Securities Exchange Act of 1934, as amended from
      -------------
time  to  time,  and  the  rules  and  regulations of the Commission promulgated
there under.

     "GAAP"  means generally accepted accounting principles in the United States
      ----
of  America  in  effect  from  time  to  time.

     "Governmental Authority" shall include the country, state, county, city and
      ----------------------
political  subdivisions in which any Person or such Person's Property is located
or  which  exercises  valid  jurisdiction  over any such Person or such Person's
Property,  and  any  court,  agency,  department,  commission,  board, bureau or
instrumentality  of any of them and any monetary authorities that exercise valid
jurisdiction  over  any  such Person or such Person's Property. Unless otherwise
specified,  all  references  to  Governmental  Authority  herein  shall  mean  a
Governmental  Authority  having jurisdiction over, where applicable, the Company
or  any  of  its  Property  or  the  Purchaser.

     "Holder"  means  the  record  holder  of  the Note, Warrant, Note Shares or
      ------
Warrant  Shares.

     "Indemnified  Party"  shall  have  the  meaning  specified in Section 7.03.
      ------------------                                           ------------

     "Indemnifying  Party"  shall  have  the  meaning specified in Section 7.03.
      -------------------                                          ------------

     "Law"  means  any federal, state, local or foreign order, writ, injunction,
      ---
judgment,  settlement,  award,  decree,  statute,  law,  rule  or  regulation.

     "Lien"  means any interest in Property securing an obligation owed to, or a
      ----
claim  by,  a Person other than the owner of the Property, whether such interest
is  based on the common law, statute or contract, and whether such obligation or
claim  is  fixed  or  contingent,  and  including but not limited to the lien or
security  interest  arising  from  a  mortgage,  encumbrance,  pledge,  security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for  security  purposes.  For  the  purpose of this Agreement, a Person shall be
deemed  to be the owner of any Property that it has acquired or holds subject to
a  conditional  sale  agreement,  or  leases  under  a  financing lease or other
arrangement  pursuant  to  which  title  to the Property has been retained by or
vested  in  some  other  Person in a transaction intended to create a financing.

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<PAGE>
     "Note"  shall  have  the  meaning  specified  in  Section  2.01.
      ----                                             -------------

     "Note  Shares"  means the shares of Common Stock (i) to which the Holder is
      ------------
entitled  upon  conversion  of the Note and (ii) that are issued in lieu of cash
interest  payments  under  the  Note.

     "Offering  Notice"  shall  have  the  meaning  specified  in  Section 5.04.
      ----------------                                             ------------

     "OTC  BB"  shall mean the OTC Bulletin Board, on which the Company's Common
      -------
Stock  is  traded.

     "Party"  or  "Parties"  means  the  Company and the Purchaser party to this
      -----        -------
Agreement,  individually  or  collectively,  as  the  case  may  be.

     "Person" means any individual, corporation, company, voluntary association,
      ------
partnership,  joint  venture,  trust,  limited liability company, unincorporated
organization  or  government  or  any  agency,  instrumentality  or  political
subdivision  thereof,  or  any  other  form  of  entity.

     "Pledge  and  Security  Agreement"  means the pledge and security agreement
      --------------------------------
between  the Company and the Purchaser in substantially the form attached hereto
as  Exhibit C  pursuant  to  which  the  Company  agrees to pledge as collateral
    --------
securing  the  Note  25% of its 100% interest in Exploration Holding Co., L.L.C.

     "Preferred  Stock"  means,  collectively,  the  Series  A  8%  convertible
      ----------------
preferred  stock  and  the  Series B convertible preferred stock of the Company.

     "Property"  means  any  interest  in any kind of property or asset, whether
      --------
real,  personal  or  mixed,  or  tangible  or  intangible.

     "Proposed  Financing"  shall  have  the  meaning specified in Section 5.04.
      -------------------

     "Purchase  Price"  means  $10  million.
      ---------------

     "Purchased  Securities"  means,  collectively,  the  Note  and the Warrant.
      ---------------------

     "Purchaser" shall have the meaning specified in the introductory paragraph.
      ---------

     "Purchaser  Material  Adverse Effect" means any material and adverse effect
      -----------------------------------
on  (i) the ability of a Purchaser to meet its obligations under the Transaction
Documents on a timely basis or (ii) the ability of a Purchaser to consummate the
transactions  under  any  Transaction  Document.

     "Purchaser  Related  Parties"  shall  have the meaning specified in Section
      ---------------------------                                        -------
7.01.
----

     "Registration  Rights  Agreement"  means the Registration Rights Agreement,
      -------------------------------
substantially in the form attached to this Agreement as Exhibit D, to be entered
                                                        ---------
into  at  the  Closing,  between  the  Company  and  the  Purchaser.

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<PAGE>

     "Representatives"  of  any  Person  means  the Affiliates, control persons,
      ---------------
officers,  directors,  employees,  agents, counsel, investment bankers and other
representatives  of  such  Person.

     "Securities  Act" means the Securities Act of 1933, as amended from time to
      ---------------
time,  and  the  rules and regulations of the Commission promulgated thereunder.

     "Terminating  Breach"  shall  have  the  meaning  specified  in  Section
      -------------------                                             -------
8.09(a)(ii).
-----------

     "Transaction Documents"  means,  collectively,  this  Agreement,  the
      --------------------
Registration  Rights  Agreement, the Pledge and Security Agreement, the Note and
the  Warrant  and  any  and  all  other  agreements  or instruments executed and
delivered by the Parties on even date herewith or at Closing, or any amendments,
supplements,  continuations  or  modifications  thereto.

     "Transfer"  shall  have  the  meaning  specified  in  Section  5.08(b).
      --------

     "Warrant"  shall  have  the  meaning  specified  in  Section  2.02.
      -------

     "Warrant  Shares"  means the shares of Common Stock underlying the Warrant.
      ---------------

     Section  1.02     Accounting  Procedures  and  Interpretation.  Unless
                       -------------------------------------------
otherwise specified in this Agreement, all accounting terms used herein shall be
interpreted,  all  determinations  with respect to accounting matters under this
Agreement  shall  be  made,  and  all  financial statements and certificates and
reports  as to financial matters required to be furnished to the Purchaser under
this  Agreement  shall  be  prepared,  in  accordance  with  GAAP  applied  on a
consistent  basis  during the periods involved (except, in the case of unaudited
statements,  as  permitted  by Form 10-QSB promulgated by the Commission) and in
compliance  as  to  form  in  all  material  respects with applicable accounting
requirements and with the published rules and regulations of the Commission with
respect  thereto.

                                   ARTICLE II
                                SALE AND PURCHASE

     Section  2.01     Sale  and Issuance of the Note.  Subject to the terms and
                       ------------------------------
conditions  of  this Agreement, the Purchaser agrees to purchase and the Company
agrees  to  sell  the  8%  Senior  Secured  Convertible  Promissory  Note  in
substantially  the  form  attached  hereto  as  Exhibit  A  (the "Note") for the
                                                ----------
Purchase  Price.

     Section 2.02     Issuance of Warrants.  As additional consideration for the
                      --------------------
Purchaser's  agreement  to  the terms and conditions of this Agreement and other
valuable  consideration,  the  Company shall issue to the Purchaser a warrant to
purchase5,000,000  shares  of  Common  Stock,  with the exercise price and other
additional terms and conditions set forth in the form of Warrant attached hereto
as  Exhibit  B  (the "Warrant").
    ----------        -------

     Section  2.03     Closing.   The  execution and delivery of the Transaction
                       -------
Documents  (other  than  this Agreement) and execution and delivery of all other
instruments,  agreements,  and  other  documents required by this Agreement (the
"Closing")  shall  take  place  on  or  before  February  9,  2007 (the "Closing
 -------                                                                 -------

Date");provided,  however,  the  Parties  agree  to  use commercially reasonable
----

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<PAGE>
efforts  to  close the transaction on February 7, 2007.   The Closing shall take
place  at the offices of Baker Botts L.L.P., 98 San Jacinto, Suite 1500, Austin,
TX  78701.

                                   ARTICLE III
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company represents and warrants to the Purchaser, on and as of the date
of  this  Agreement  and  on  and  as  of  the  Closing  Date,  as  follows:

     Section  3.01     Valid  Existence.  Each  of  the  Company  and  its
                       ----------------
subsidiaries  is duly organized, validly existing and in good standing under the
laws  of  its  state  of incorporation or formation, and is duly qualified to do
business  in  all  jurisdictions  in  which the failure to be so qualified would
result  in  a  Company  Material  Adverse  Effect.  Each  of the Company and its
subsidiaries  has  all  requisite  power  and authority (i) to own and lease the
properties  and  assets  it currently owns and leases and it contemplates owning
and  leasing and (ii) to conduct its activities as such activities are currently
conducted  and  as  currently  contemplated  to  be  conducted.

     Section  3.02     Ownership  of  Exploration Holding Co. L.L.C. The Company
                       ---------------------------------------------
owns  100%  of  the  issued  and outstanding membership interests in Exploration
Holding  Co.  L.L.C., a Texas limited liability company ("Exploration Holding");
                                                          -------------------
such  membership  interests are duly authorized and validly issued in accordance
with  the  Company Agreement of Exploration Holding (the Exploration Holding LLC
Agreement)  and fully paid (to the extent required under the Exploration Holding
LLC  Agreement)  and  non-assessable  (except  as  such  nonassessability may be
affected by the Texas Business Organizations Code (the "TBOC")); and the Company
                                                        ----
owns  such  membership  interests  free  and  clear  of  all  Liens.

     Section  3.03     Ownership  of  Barnett  Petrosearch,  L.L.C.  Exploration
                       -------------------------------------------
Holding  owns 100% of the issued and outstanding membership interests in Barnett
Petrosearch,  L.L.C.,  a  Texas  limited  liability  company  ("Barnett");  such
                                                                -------
membership  interests  are duly authorized and validly issued in accordance with
Barnett's  limited liability company agreement (the "Barnett LLC Agreement") and
                                                     ---------------------
fully  paid  (to  the  extent  required  under  the  Barnett  LLC Agreement) and
non-assessable  (except  as  such nonassessability may be affected by the TBOC);
and  Exploration  Holding  owns  such membership interests free and clear of all
Liens.

     Section  3.04     Ownership  of  DDJET.  Barnett  owns  a  5.54455% limited
                       --------------------
partnership  interest  in  DDJET Limited, LLP, a Texas limited liability limited
partnership  ("DDJET"); such partnership interest is duly authorized and validly
issued  in accordance with DDJET's partnership agreement (the "DDJET Partnership
                                                               -----------------
Agreement")  and  fully paid (to the extent required under the DDJET Partnership
---------
Agreement)  and  non-assessable (except as such nonassessability may be affected
By  the  TBOC); and Barnet towns such partnership interest free and clear of all
Liens.

     Section  3.05     Capitalization  and  Valid  Issuance.
                       ------------------------------------

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<PAGE>
     (a)     As of the date of this Agreement, the issued and outstanding equity
of  the  Company  consists of37,952,070shares of Common Stock, 483,416 shares of
Series  A  8%  convertible  preferred  stock  and  43,000  shares  of  Series  B
convertible  preferred  stock. All of the outstanding Common Stock and Preferred
Stock  have  been  duly  authorized  and  validly  issued and are fully paid and
nonassessable. The rights, privileges and preferences of the Preferred Stock are
as  stated  in  the  Company's  Articles  of  Incorporation  (the  "Articles").

     (b)     Except  for  (i)  the conversion privileges of the Preferred Stock,
(ii)  the  conversion  privileges of the Note to be issued under this Agreement,
(iii)  the warrant being issued in connection with this Agreement, (iv) warrants
issued  in  February  2006  to certain investors, (v) the shares of Common Stock
issuable  upon  exercise of warrants granted pursuant to the Company's incentive
plan,  and (vi) all warrants disclosed in the Company's SEC Documents, there are
no  outstanding  options,  warrants,  rights  (including  conversion, preemptive
rights or similar rights) or agreements for the purchase or acquisition from the
Company  of  any  shares  of  its  capital stock.  The Company is not a party or
subject  to  any  agreement  or  understanding, and, to the Company's knowledge,
there  is  no  agreement  or  understanding between any persons and/or entities,
which  affects  or  relates  to  the  voting  or giving of written consents with
respect  to any security or by a director of the Company, except as provided for
in  the  Articles.

     (c)     The  issuance,  offer  and sale of the Note and the issuance of the
Warrant  have been duly authorized by the Company and, when issued and delivered
to  the  Purchaser against payment therefor in accordance with the terms of this
Agreement, will be validly issued, fully paid and nonassessable and will be free
of  any  and all Liens and restrictions on transfer, other than under applicable
state  and  federal  securities Laws and other than such Liens as are created by
the  Purchaser.

     (d)     The  Company's  currently outstanding Common Stock is quoted on the
OTC  BB.

     (e)     The Company has reserved the Note Shares and the Warrant Shares for
issuance  and  has  adequate authorized capital under its Articles to issue such
shares  when  the  Note  is  converted  or  the  Warrant  is  exercised.

     Section  3.06     Company SEC Documents.  The Company has timely filed with
                       ---------------------
the Commission all  reports, schedules and statements required to be filed by it
under  the  Exchange  Act since the filing of its Form 8-A12G on August 10, 2005
(all  such  documents  filed  on  or  prior  to  the  date  of  this  Agreement,
collectively,  the  "the  Company  SEC  Documents").  The Company SEC Documents,
                          -----------------------
including any audited or unaudited financial statements and any notes thereto or
schedules  included  therein, at the time filed  (except to the extent corrected
by a subsequently filed the Company SEC Document filed prior to the date of this
Agreement)  (i)  did not contain any untrue statement of a material fact or omit
to  state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, (ii) complied in all material respects with the applicable
requirements  of  the  Exchange  Act,  (iii) complied as to form in all material
respects  with  applicable  accounting requirements and with the published rules
and  regulations  of  the

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<PAGE>
Commission  with  respect  thereto,  (iv)  were prepared in accordance with GAAP
applied  on  a  consistent  basis  during the periods involved (except as may be
indicated  in  the  notes  thereto  or,  in the case of unaudited statements, as
permitted  by  Form  10-QSBof the Commission) and (v) fairly present (subject in
the  case  of  unaudited  statements  to  normal,  recurring  and year-end audit
adjustments)  in  all  material respects the consolidated financial position and
the  consolidated  results of its operations and cash flows for the periods then
ended.  Ham,  Langston  &  Brezina,  L.L.P.  is an independent registered public
accounting  firm  with  respect  to  the  Company  and  has not resigned or been
dismissed  as  independent  registered  public  accountants  of the Company as a
result  of or in connection with any disagreement with the Company on any matter
of  accounting  principles  or  practices,  financial  statement  disclosure  or
auditing  scope  or  procedures.

     Section  3.07     No  Material  Adverse  Change.  Except as set forth in or
                       -----------------------------
contemplated by the Company SEC Documents, since September 30, 2006, the Company
has  conducted  its  business  in  the  ordinary  course,  consistent  with past
practice,  and  there has been no (i) change that has had or would reasonably be
expected  to  have  a  Company  Material  Adverse  Effect,  (ii)  acquisition or
disposition  of any material asset by the Company or any contract or arrangement
therefor,  otherwise  than  for  fair  value in the ordinary course of business,
(iii)  material  change  in  the  Company's  accounting principles, practices or
methods  or  (iv)  incurrence  of  material  indebtedness.

     Section  3.08     Litigation.  Except  as  set  forth  in  the  Company SEC
                       ----------
Documents,  there  is  no  Action  pending  or, to the knowledge of the Company,
contemplated  or threatened against the Company or any of its officers (in their
capacity  as  such),  directors  (in  their capacity as such), Properties, which
(individually  or  in  the  aggregate)  reasonably  would  be expected to have a
Company  Material  Adverse  Effect  or  which  challenges  the  validity of this
Agreement  or which would reasonably be expected to adversely affect or restrict
the  Company's  ability  to  consummate  the  transactions  contemplated  by the
Transaction  Documents.

     Section  3.09     No  Conflict.  The execution, delivery and performance by
                       ------------
the  Company  of  the Transaction Documents to which it is a party and all other
agreements  and instruments to be executed and delivered by the Company pursuant
hereto or thereto or in connection herewith and therewith, and compliance by the
Company  with  the  terms and provisions hereof and thereof, do not and will not
(a)  violate  any  provision  of  any Law, governmental permit, determination or
award having applicability to the Company or any of its Properties, (b) conflict
with  or result in a violation of any provision of the articles of incorporation
or  bylaws  of  the Company (c) require any consent, approval or notice under or
result  in a violation or breach of or constitute (with or without due notice or
lapse  of  time  or  both)  a default (or give rise to any right of termination,
cancellation  or  acceleration)  under (i) any note, bond, mortgage, license, or
loan or credit agreement to which the Company is a party or by which the Company
or any of its Properties may be bound or (ii) any other agreement, instrument or
obligation,  or  (d) result in or require the creation or imposition of any Lien
upon or with respect to any of the Properties now owned or hereafter acquired by
the  Company,  except  in  the  cases  of  clauses  (a),  (c) and (d) where such
violation,  default,  breach,  termination,  cancellation,  failure  to  receive
consent or approval, or acceleration with respect to the foregoing provisions of
this Section  3.09  would  not,  individually or in the aggregate, reasonably be
expected  to  have  a  Company  Material  Adverse  Effect.

                                        7
<PAGE>
     Section  3.10     Authority.  The  execution  and  delivery  of,  and  the
                       ---------
performance  by  the  Company of its obligations under the Transaction Documents
have  been  duly  and  validly  authorized  by  the Company, and the Transaction
Documents  have  been  duly executed and delivered by the Company and constitute
the valid and legally binding agreements of the Company, enforceable against the
Company  in  accordance  with  their  terms,  except  as rights to indemnity and
contribution  hereunder  and  there  under  may  be  limited by federal or state
securities  laws or principles of public policy and subject to the qualification
that  the  enforceability of the Company's obligations hereunder and there under
may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium  and  other laws relating to or affecting creditors' rights generally
and  by  general  equitable  principles,  regardless  whether  enforcement  is
considered  in  a  proceeding  in  equity  or  at  law.

     Section  3.11     Compliance with Laws.  The Company is not in violation of
                       --------------------
any  judgment,  decree  or order or any Law applicable to the Company, except as
would  not,  individually  or  in the aggregate, have a Company Material Adverse
Effect.  The Company possess all certificates, authorizations and permits issued
by  the  appropriate  regulatory  authorities necessary to conduct its business,
except where the failure to possess such certificates, authorizations or permits
would  not  have,  individually  or in the aggregate, a Company Material Adverse
Effect,  and  the Company has not received any notice of proceedings relating to
the revocation or modification of any such certificate, authorization or permit,
except  where  such  potential  revocation  or  modification  would  not  have,
individually  in  the  aggregate,  a  Company  Material  Adverse  Effect.

     Section  3.12     Preemptive  Rights or Registration Rights.  Except for as
                       -----------------------------------------
set  forth  on  Exhibit  3.12, there are no preemptive rights or other rights to
                -------------
subscribe  for  or  to purchase, nor any restriction upon the voting or transfer
of,  any capital stock of the Company pursuant to any agreement or instrument to
which  the  Company  is  a  party  and  is  bound. Neither the execution of this
Agreement  nor  the  issuance  of  the  Note and Warrant as contemplated by this
Agreement  gives  rise  to any rights for or relating to the registration of any
Common  Stock,  other  than  as  set  forth  on  Exhibit  3.12.
                                                 -------------

     Section  3.13     Approvals.  Except  as  required  by  the  Commission  in
                       ---------
connection  with  the  Company's  obligations  under  the  Registration  Rights
Agreement,  no  authorization, consent, approval, waiver, license, qualification
or  written  exemption  from,  nor  any  filing,  declaration,  qualification or
registration with, any Governmental Authority or any other Person is required in
connection  with the execution, delivery or performance by the Company of any of
the  Transaction Documents to which it is a party, except (i) as may be required
under  the  state  securities  or "Blue Sky" Laws, (or (ii) where the failure to
receive such authorization, consent, approval, waiver, license, qualification or
written  exemption  or  to  make  such  filing,  declaration,  qualification  or
registration would not, individually or in the aggregate, reasonably be expected
to  have  a  Company  Material  Adverse  Effect.

     Section  3.14     Offering.  Assuming  the  accuracy of the representations
                       --------
and  warranties  of  the  Purchaser  contained  in  this Agreement, the sale and
issuance  of  the Purchased Securities pursuant to this Agreement is exempt from
the  registration  requirements  of  the Securities Act, and neither the Company
nor,  to  the  Company's  knowledge,  any  authorized  Representative

                                        8
<PAGE>
acting  on  its  behalf  has  taken or will take any action hereafter that would
cause  the  loss  of  such  exemption.

     Section  3.15     Certain  Fees.  Except  for  fees  payable  to  Scarsdale
                       -------------
Equities, LLC in its capacity as placement agent, no fees or commissions will be
payable  by  the Company to brokers, finders, or investment bankers with respect
to  the  sale  of  any  of  the  Purchased Securities or the consummation of the
transactions  contemplated  by  this Agreement.  The Company agrees that it will
indemnify  and  hold harmless the Purchaser from and against any and all claims,
demands, or liabilities for broker's, finder's, placement, or other similar fees
or  commissions  incurred by the Company or alleged to have been incurred by the
Company  in connection with the sale of Purchased Securities or the consummation
of  the  transactions  contemplated  by  this  Agreement.

     Section  3.16     No  Side  Agreements.  There  are no other agreements by,
                       --------------------
among  or  between  the  Company  or  its  Affiliates,  on the one hand, and the
Purchaser,  on  the  other  hand,  with respect to the transactions contemplated
hereby  nor promises or inducements for future transactions between or among any
of  such  parties.

     Section  3.17     Investment  Company  Status.  U.S.  Shipping  is  not  an
                       ---------------------------
"investment  company"  within the meaning of the Investment Company Act of 1940,
as  amended.

                                   ARTICLE IV
                 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

     The Purchaser represents and warrants to the Company, on and as of the date
of  this  Agreement  and  on  and  as  of  the  Closing  Date,  as  follows:

     Section  4.01     Valid  Existence.  The  Purchaser  (i) is duly organized,
                       ----------------
validly  existing  and  in  good  standing under the Laws of its jurisdiction of
organization and (ii) has all requisite power, and has all material governmental
licenses, authorizations, consents and approvals necessary to own its Properties
and  carry  on its business as its business is now being conducted, except where
the  failure  to  obtain  such  licenses, authorizations, consents and approvals
would  not  reasonably  be expected to have a Purchaser Material Adverse Effect.

     Section  4.02     No Conflicts.  The execution, delivery and performance by
                       ------------
the  Purchaser of the Transaction Documents to which it is a party and all other
agreements  and  instruments  to  be  executed  and  delivered  by the Purchaser
pursuant hereto or thereto or in connection herewith or therewith, compliance by
the Purchaser with the terms and provisions hereof and thereof, and the purchase
of the Purchased Securities by the Purchaser do not and will not (a) violate any
provision  of  any  Law,  governmental  permit,  determination  or  award having
applicability  to  the  Purchaser or any of its Properties, (b) conflict with or
result  in  a  violation of any provision of the organizational documents of the
Purchaser,  or  (c) require any consent (other than standard internal consents),
approval  or  notice  under  or result in a violation or breach of or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any  right  of  termination,  cancellation  or acceleration) under (i) any note,
bond, mortgage, license, or loan or credit agreement to which the Purchaser is a
party  or  by  which the Purchaser or any of its Properties may be bound or (ii)
any  other  such  agreement,  instrument  or  obligation,  except in the case of
clauses  (a)  and  (c),  where  such  violation,  default,  breach, termination,
cancellation,  failure  to  receive  consent  or  approval, or acceleration with
respect  to  the  foregoing  provisions  of

                                        9
<PAGE>
this Section  4.02  would  not,  individually or in the aggregate, reasonably be
     -------------
expected  to  have  a  Purchaser  Material  Adverse  Effect.

     Section  4.03     Authority.  The  execution  and  delivery  of,  and  the
                       ---------
performance  by the Purchaser of its obligations under the Transaction Documents
have  been  duly  and  validly  authorized by the Purchaser, and the Transaction
Documents  have been duly executed and delivered by the Purchaser and constitute
the  valid  and legally binding agreements of the Purchaser, enforceable against
the  Purchaser in accordance with their terms, except as rights to indemnity and
contribution  hereunder  and  there  under  may  be  limited by federal or state
securities  laws or principles of public policy and subject to the qualification
that the enforceability of the Purchaser's obligations hereunder and there under
may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium  and  other laws relating to or affecting creditors' rights generally
and  by  general  equitable  principles,  regardless  whether  enforcement  is
considered  in  a  proceeding  in  equity  or  at  law.

     Section  4.04     Investment.  The  Purchased Securities are being acquired
                       ----------
for  the  Purchaser's  own  account,  or  the  accounts  of clients for whom the
Purchaser  exercises  discretionary  investment  authority,  not as a nominee or
agent, and with no present intention of distributing the Purchased Securities or
any  part thereof, and that the Purchaser has no present intention of selling or
granting  any  participation  in  or  otherwise  distributing  the  same  in any
transaction  in violation of the securities Laws of the United States of America
or  any state, without prejudice, however, to the Purchaser's right at all times
(subject  to  the  Purchaser's  agreement  contained  in Section 4.07 to sell or
                                                         ------------
otherwise  dispose  of  all  or  any  part  of  the Purchased Securities under a
registration  statement  under  the Acts and applicable state securities Laws or
under  an  exemption  from  such  registration available there under (including,
without  limitation,  if  available,  Rule  144 promulgated there under). If the
Purchaser  should  in  the  future  decide  to  dispose  of any of the Purchased
Securities,  the Purchaser understands and agrees (a) that it may do so only (i)
in  compliance  with  the  Acts  and applicable state securities law, as then in
effect,  or  (ii)  in  the  manner  contemplated  by  any registration statement
pursuant  to which such securities are being offered, and (b) that stop-transfer
instructions  to  that effect will be in effect with respect to such securities.

     Section  4.05     Nature  of  Purchaser.  The  Purchaser  represents  and
                       ---------------------
warrants  to,  and  covenants  and  agrees  with, the Company that, (a) it is an
"accredited investor" within the meaning of Rule 501 of Regulation D promulgated
by  the  Commission  pursuant  to  the  Securities  Act and (b) by reason of its
business  and  financial  experience  it  has such knowledge, sophistication and
experience  in  business and financial matters so as to be capable of evaluating
the  merits and risks of the prospective investment in the Purchased Securities,
is  able  to bear the economic risk of such investment and, at the present time,
would  be  able  to  afford  a  complete  loss  of  such  investment.

     Section  4.06     Receipt  of  Information;  Authorization.  The  Purchaser
                       ----------------------------------------
acknowledges  that  it  (a)  has access to the Company SEC Documents and (b) has
been  provided  a reasonable opportunity to ask questions of and receive answers
from  Representatives  of  the  Company  regarding  such  matters.

                                       10
<PAGE>
     Section 4.07     Restricted Securities.  The Purchaser understands that the
                      ---------------------
Purchased  Securities  it  is  purchasing  are  characterized  as  "restricted
securities"  under  the  federal  securities  Laws  inasmuch  as  they are being
acquired  from  the Company in a transaction not involving a public offering and
that  under  such  Laws and applicable regulations such securities may be resold
without  registration  under  the  Securities  Act  only  in  certain  limited
circumstances. In this connection, Purchaser represents that it is knowledgeable
with respect to Rule 144 of the Commission promulgated under the Securities Act.
Purchaser  further  understands  that a restrictive legend will be placed on the
Purchased  Securities,  the  Note  Shares  and  the  Warrant  Shares.

     Section  4.08     Certain  Fees.  No fees or commissions will be payable by
                       -------------
the  Purchaser  to  brokers,  finders, or investment bankers with respect to the
sale  of any of the Purchased Securities or the consummation of the transactions
contemplated by this Agreement.  The Purchaser agrees that it will indemnify and
hold  harmless  the  Company  from  and  against any and all claims, demands, or
liabilities  for  broker's,  finder's,  placement,  or  other  similar  fees  or
commissions  incurred  by  the Purchaser or alleged to have been incurred by the
Purchaser  in  connection  with  the  purchase  of  Purchased  Securities or the
consummation  of  the  transactions  contemplated  by  this  Agreement.

     Section  4.09     Related  Parties.  The  Purchaser  is  not  an officer or
                       ----------------
director  of  the  Company and, on the date hereof and as of the date of Closing
(before  giving  effect to the purchase of Purchased Securities pursuant to this
Agreement),  the Purchaser and its Affiliates (a) hold less than five percent of
the Common Stock of the Company outstanding on the date hereof and (b) hold less
than  five  percent  of  the  outstanding  voting  power  of  the  Company.

     Section 4.10     Short Sales.  The Purchaser has not engaged in short sales
                      -----------
of  the  Company's  Common  Stock  during the three months preceding the Closing
Date.

                                    ARTICLE V
                                    COVENANTS

     Section  5.01     Notice  of  Default.  So  long  as  any  amounts  remain
                       -------------------
outstanding  under the Note, the Company covenants that it shall give the Holder
written  notice of the occurrence of any Event of Default (as defined in Section
8  of  the  Note)  promptly  upon  the  occurrence  thereof.

     Section  5.02     Observation  and  Information  Rights.  So  long  as  any
                       -------------------------------------
amounts  remain  outstanding under the Note, the Company covenants that it shall
(i)  provide the Holder, on a quarterly basis, evidence that it is in compliance
with the debt covenants contained the Note and(ii) in the event that the Company
has  not  timely  filed  the  Company SEC Documents provide the Holder quarterly
financial  information,  quarterly updates regarding the Company's business, and
other  information  which  would  have otherwise been filed with the Commission.

     Section  5.03     Price  Protection. Without limiting  the  Holder's  right
                       -----------------
set forth in Section 5.04,if the Company issues and sells capital in the Company
any  time  during the six months following the Closing Date with an equity price
less  than  the  Conversion  Price,  the Holder may, in its sole discretion, (i)
participate up to $10 million in the transaction in which the Company issues and
sells  such  capital  or  (ii)  demand  that the Company redeem 100% of the then

                                       11
<PAGE>
outstanding  principal amount of the Note, plus any accrued and unpaid interest.
The  Company  agrees  that in the event the Holder acts pursuant to (i) or (ii),
the  Company  shall  take  or  cause  to take all necessary action to effect the
Holder's  participation in such a transaction or the redemption of the Notes. In
the event the Notes are redeemed, the Company agrees that payment will be due to
the  Holder  in  immediately  available  cash  within ten days of receipt of the
Holder's  demand  for  redemption.

     Section  5.04      Future Participation Rights. The Company agrees that the
                        ---------------------------
Holder  has  the right to participate in the next financing of the Company up to
an aggregate amount of up to50%of the total amount raised by the Company in such
financing  on  terms  and  conditions  set by the Company. In the event that the
Company  elects  to  seek  such  financing,  it  will  give  written notice (the
"Offering  Notice") of such offering to the Holder. The Offering Notice shall(i)
 ----------------
set  forth  the  terms,  the amount of and conditions of the proposed financing,
which  shall  be  identical  in  all  material  respects to the to the terms and
conditions  being  offered  by  the  Company to other prospective investors (the
"Proposed  Financing")  and  (ii)specify  a date for the closing of the Proposed
 -------------------
Financing  which  shall  be not less than 15 days after the date of the Offering
Notice.  The Holder shall have ten days after the date of the Offering Notice to
provide  written  notice  to the Company of its intent to participate, pro rata,
with  all other prospective investors in the Proposed Financing. If such written
notice  is  not  received  within  such  time period, then the Holder's right to
participate  in  the  Proposed  Financing  shall  terminate.

     Section  5.05     Integration. The Company shall not sell, offer for sale
                       -----------
or  solicit  offers to buy or otherwise negotiate in respect of any security (as
defined  in  Section  2 of the Securities Act) that would be integrated with the
offer  or  sale  of  the Purchased Securities in a manner that would require the
registration  under  the Securities Act of the sale of the Purchased Securities.

     Section  5.06     Short Sales. The Holder agrees that it will not engage in
                       -----------
short  sales of the Company's Common Stock while any amount is outstanding under
the  Note.

     Section  5.07     Taking  of  Necessary Action.  Each of the Parties hereto
                       ----------------------------
shall  use  its  commercially reasonable efforts promptly to take or cause to be
taken  all  action  and promptly to do or cause to be done all things necessary,
proper  or advisable under applicable Law and regulations to consummate and make
effective  the transactions contemplated by this Agreement. Without limiting the
foregoing,  the  Company  and  the  Holder  will use its commercially reasonable
efforts  to make all filings and obtain all consents of Governmental Authorities
that  may  be  necessary  or,  in  the  reasonable  opinion of the Holder or the
Company,  as the case may be, advisable for the consummation of the transactions
contemplated  by  the  Transaction  Documents.

                                   ARTICLE VI
                               CLOSING CONDITIONS

     Section  6.01     Conditions  to  the  Closing
                       ----------------------------

          (a)     Mutual Conditions.  The respective obligation of each Party to
                  -----------------
consummate  the purchase and issuance and sale of the Purchased Securities shall
be  subject  to  the satisfaction on or prior to the Closing Date of each of the
following  conditions  (any

                                       12
<PAGE>
or  all  of  which  may  be  waived by a particular Party on behalf of itself in
writing,  in  whole  or  in  part,  to  the extent permitted by applicable Law):

              (i)     no Law shall have been enacted or promulgated, and no
     action  shall  have  been  taken,  by  any  Governmental  Authority  of
     competent  jurisdiction  which  temporarily,  preliminarily  or permanently
     restrains,  precludes,  enjoins  or otherwise prohibits the consummation of
     the  transactions  contemplated by this Agreement or makes the transactions
     contemplated  by  this  Agreement  illegal;  and

              (ii)     there  shall  not  be  pending  any  Action  by any
     Governmental  Authority  seeking  to  restrain,  preclude,  enjoin  or
     prohibit  the  transactions  contemplated  by  this  Agreement.

          (b)     Purchaser's  Conditions.  The  obligation  of the Purchaser to
                  -----------------------
consummate  the  purchase  of  the  Purchased Securities shall be subject to the
satisfaction on or prior to the Closing Date of each of the following conditions
(any or all of which may be waived by a particular Purchaser on behalf of itself
in  writing,  in  whole  or in part, to the extent permitted by applicable Law):

              (i)     The  Company  shall  have  performed and complied in all
     material  respects  with  the  covenants  and  agreements contained in this
     Agreement  that  are  required  to  be  performed  and complied with by the
     Company  on  or  prior  to  the  Closing  Date;

              (ii)     (the  representations  and warranties of the Company
     contained  in  this  Agreement  that  are  qualified  by  materiality  or
     Company  Material Adverse Effect shall be true and correct when made and as
     of  the  Closing Date and all other representations and warranties shall be
     true  and  correct in all material respects when made and as of the Closing
     Date,  in  each  case  as though made at and as of the Closing Date (except
     that  representations  made  as  of a specific date shall be required to be
     true  and  correct  as  of  such  date  only);

              (iii)     since  the  date of this Agreement, no Company Material
     Adverse Effect  shall  have  occurred  and  be  continuing;

              (iv)     the  Company shall have delivered, or caused to be
     delivered,  to  the  Purchaser  at  the  Closing,  the  Company's  closing
     deliveries  described  in  Section  6.02.
                                -------------

     (c)     The  Company's Conditions.   The  obligation  of  the  Company  to
             ------------------------
consummate  the  sale  of  the  Purchased  Securities  to the Purchaser shall be
subject  to  the  satisfaction  on  or  prior to the Closing Date of each of the
following  conditions  (any  or  all  of  which  may be waived by the Company in
writing,  in  whole  or  in  part,  to  the extent permitted by applicable Law):

              (i)     the  Purchaser  shall  have  performed  and  complied with
     in  all  material  respects  the  covenants  and  agreements  contained  in
     this  Agreement

                                       13
<PAGE>
     that  are  required  to  be  performed  and complied with by that Purchaser
     on  or  prior  to  the  Closing  Date;

              (ii)     the representations and warranties of the Purchaser
     contained  in  this  Agreement  that  are  qualified  by  materiality  or
     Purchaser  Material  Adverse Effect shall be true and correct when made and
     as  of  the Closing Date and all other representations and warranties shall
     be  true  and  correct  in  all  material  respects when made and as of the
     Closing  Date,  in  each  case as though made at and as of the Closing Date
     (except  that  representations made as of a specific date shall be required
     to  be  true  and  correct  as  of  such  date  only);

              (iii)     since the date of this Agreement, no Purchaser Material
     Adverse  Effect  shall  have  occurred  and  be  continuing;  and

              (iv)     the Purchaser shall have delivered, or caused to be
     delivered,  to  the  Company  at  the  Closing,  the  Purchaser's  closing
     deliveries  described  in  Section  6.03.

     Section  6.02     Company Deliveries.  At the Closing, subject to the terms
                       ------------------
and  conditions  of  this  Agreement,  the  Company will deliver, or cause to be
delivered,  to  the  Purchaser:

          (a)     The  Purchased  Securities,  free  and  clear  of  any  Liens,
encumbrances or interests of any other party other than restrictions on transfer
imposed  by  federal  and  state securities Laws and those imposed by Purchaser;

          (b)     The  Registration  Rights  Agreement in substantially the form
attached  to this Agreement as Exhibit D, which shall have been duly executed by
                               ---------
the  Company;

          (c)     The  Pledge  and  Security Agreement in substantially the form
attached  to this Agreement as Exhibit C, which shall have been duly executed by
                               ---------
the  Company;

          (d)     The  original  certificate  representing  a  25%  interest  in
Exploration  Holding  Co.,  L.L.C.  along  with  a unit power executed in blank;

          (e)     Copies  of  the UCC-1s evidencing that the same has been filed
as  required  by  the  Pledge  and  Security  Agreement;

          (f)     The  consent  required pursuant to Section 3.03 of the Company
Agreement  of  Exploration  Holding  Co,  L.L.C.  permitting  the  pledge of the
interests  under  the  Pledge  and  Security  Agreement;

          (g)     Waiver  of  Fortuna  Energy  LP's right to participate in this
offering;

          (h)     Copies  of  the  Articles  of  the  Company,  certified by the
Secretary  of  State  of  the  State  of  Nevada,  dated  as  of  a recent date;

                                       14
<PAGE>
          (i)     A  certificate  of  the  Secretary  of  State  of the State of
Nevada,  dated  as  of  a  recent  date,  that  the Company is in good standing;

          (j)     A  cross-receipt,  dated  the  Closing  Date,  executed by the
Company  and  delivered  to  the  Purchaser  certifying that it has received the
Purchase  Price  with respect to the Purchased Securities issued and sold to the
Purchaser;

          (k)     An  officer's  certificate of the Company substantially in the
form  attached  to  this  Agreement  as  Exhibit  E;  and
                                         ----------

          (l)     An  opinion addressed to the Purchaser from James Hughes dated
the  Closing  Date,  substantially  similar  in substance to the form of opinion
attached  to  this  Agreement  as  Exhibit  F.
                                   ----------

     Section  6.03     Purchaser  Deliveries.  At  the  Closing,  subject to the
                       ---------------------
terms  and conditions of this Agreement, the Purchaser will deliver, or cause to
be  delivered  to  the  Company:

          (a)     Payment  to  the  Company  of  the  Purchase  Price  by  wire
transfer(s)  of  immediately  available  funds  to  an account designated by the
Company  in  writing  at  least  one  (1)  Business  Day  prior  to the Closing;

          (b)     the  Registration  Rights  Agreement in substantially the form
attached  to this Agreement as Exhibit D, which shall have been duly executed by
                               ---------
the  Purchaser;

          (c)     the  Pledge  and  Security Agreement in substantially the form
attached  to  this Agreement as Exhibit C which shall have been duly executed by
                                ---------
the  Purchaser;

          (d)     a  cross-receipt,  dated  the  Closing  Date,  executed by the
Purchaser  and  delivered  to  the  Company  certifying  that  the Purchaser has
received  the  Purchased  Securities;  and

          (e)     an Officer's Certificate substantially in the form attached to
this  Agreement  as  Exhibit  G.
                     ----------

                                   ARTICLE VII
                       INDEMNIFICATION, COSTS AND EXPENSES

     Section  7.01     Indemnification  by  the  Company.  The Company agrees to
                       ---------------------------------
indemnify  the  Purchaser  and  its  Representatives  (collectively,  "Purchaser
                                                                       ---------
Related  Parties")  from,  and  hold  each  of them harmless against any and all
----------------
actions,  suits,  proceedings  (including  any  investigations,  litigation  or
inquiries),  demands  and  causes  of  action, and, in connection therewith, and
promptly  on  demand, pay and reimburse each of them costs, losses, liabilities,
damages,  or expenses of any kind or nature whatsoever, including the reasonable
fees  and disbursements of counsel and all other reasonable expenses incurred in
connection  with investigating, defending or preparing to defend any such matter
that  may  be  incurred  by them or asserted against or involve any of them as a
result  of,  arising  out  of, or in any way related to the breach of any of the

                                       15
<PAGE>
representations,  warranties  or  covenants  of  the  Company  contained
herein;provided  that  such  claim for indemnification relating to a breach of a
representation  or  warranty  is  made  prior  to  the  expiration  of  such
representation  or  warranty.

     Section  7.02     Indemnification  by  Purchaser.  The  Purchaser agrees to
                       ------------------------------
indemnify  the  Company  and  its  Representatives  (collectively,  "the Company
                                                                     -----------
Related  Parties")  from,  and  hold  each of them harmless against, any and all
----------------
actions,  suits,  proceedings  (including  any  investigations,  litigation,  or
inquiries),  demands  and  causes  of  action  and, in connection therewith, and
promptly upon demand, pay and reimburse each of them costs, losses, liabilities,
damages,  or  expenses  of  any  kind  or  nature whatsoever, including, without
limitation,  the  reasonable  fees  and  disbursements  of counsel and all other
reasonable  expenses  incurred  in  connection  with investigating, defending or
preparing  to  defend  any  such matter that may be incurred by them or asserted
against  or  involve  any  of them as a result of, arising out of, or in any way
related  to the breach of any of the representations, warranties or covenants of
the  Purchaser  contained  herein;  provided that such claim for indemnification
relating  to  a  breach  of  a  representation  or warranty is made prior to the
expiration  of  such  representation  or  warranty.

     Section 7.03     Indemnification Procedure.  Promptly after any the Company
                      -------------------------
Related  Party or Purchaser Related Party (hereinafter, the "Indemnified Party")
                                                             -----------------
has received notice of any indemnifiable claim hereunder, or the commencement of
any  action or proceeding by a third party, which the Indemnified Party believes
in  good  faith  is an indemnifiable claim under this Agreement, the Indemnified
Party  shall  give  the  indemnitor hereunder (the "Indemnifying Party") written
notice  of  such  claim  or  the  commencement of such action or proceeding, but
failure  to  so  notify the Indemnifying Party will not relieve the Indemnifying
Party  from any liability it may have to such Indemnified Party hereunder except
to  the  extent  that  the  Indemnifying  Party is materially prejudiced by such
failure.  Such  notice shall state the nature and the basis of such claim to the
extent  then  known.  The  Indemnifying Party shall have the right to defend and
settle,  at  its  own  expense  and  by  its own counsel who shall be reasonably
acceptable to the Indemnified Party, any such matter as long as the Indemnifying
Party  pursues  the same diligently and in good faith. If the Indemnifying Party
undertakes  to  defend or settle, it shall promptly notify the Indemnified Party
of  its  intention  to do so, and the Indemnified Party shall cooperate with the
Indemnifying  Party  and  its counsel in all commercially reasonable respects in
the  defense  thereof and the settlement thereof. Such cooperation shall include
furnishing  the Indemnifying Party with any books, records and other information
reasonably  requested  by  the Indemnifying Party and in the Indemnified Party's
possession or control. Such cooperation of the Indemnified Party shall be at the
cost  of  the  Indemnifying Party. After the Indemnifying Party has notified the
Indemnified  Party  of  its  intention to undertake to defend or settle any such
asserted liability, and for so long as the Indemnifying Party diligently pursues
such  defense,  the  Indemnifying  Party  shall not be liable for any additional
legal  expenses incurred by the Indemnified Party in connection with any defense
or  settlement  of  such  asserted  liability;  provided,  however,  that  the
Indemnified  Party  shall  be entitled (i) at its expense, to participate in the
defense  of  such  asserted  liability  and  the  negotiations of the settlement
thereof  and (ii) if (A) the Indemnifying Party has failed to assume the defense
or  employ  counsel reasonably acceptable to the Indemnified Party or (B) if the
defendants  in  any  such  action  include  both  the  Indemnified Party and the
Indemnifying  Party  and  counsel  to the Indemnified Party shall have concluded
that  there  may  be reasonable defenses available to the Indemnified Party that
are  different  from or in addition to those available to the Indemnifying Party
or  if  the

                                       16
<PAGE>
interests of the Indemnified Party reasonably may be deemed to conflict with the
interests  of  the Indemnifying Party, then the Indemnified Party shall have the
right  to  select  a  separate  counsel  and  to  assume  such legal defense and
otherwise  to  participate  in the defense of such action, with the expenses and
fees  of  such separate counsel and other expenses related to such participation
to  be  reimbursed  by  the Indemnifying Party as incurred.  Notwithstanding any
other  provision  of this Agreement, the Indemnifying Party shall not settle any
indemnified  claim  without  the  consent  of  the Indemnified Party, unless the
settlement  thereof imposes no liability or obligation on, involves no admission
of  wrongdoing or malfeasance by, and includes a complete release from liability
of,  the  Indemnified  Party.

                                  ARTICLE VIII
                                  MISCELLANEOUS

     Section  8.01     Interpretation.  Article,  Section, Schedule, and Exhibit
                       --------------
references  are to this Agreement, unless otherwise specified. All references to
instruments,  documents,  contracts,  and  agreements  are  references  to  such
instruments,  documents,  contracts,  and agreements as the same may be amended,
supplemented,  and  otherwise  modified  from  time  to  time,  unless otherwise
specified.  The  word  "including"  shall  mean  "including but not limited to."
Whenever  any  determination,  consent or approval is to be made or given by the
Company  under  the Transaction Documents, such action shall be in the Company's
sole discretion unless otherwise specified therein.  Whenever the Company has an
obligation  under  the Transaction Documents, the expense of complying with such
obligation  shall  be an expense of the Company, as applicable, unless otherwise
specified  therein.  Whenever  any  determination,  consent or approval is to be
made  or  given  by  the  Purchaser under the Transaction Documents, such action
shall  be in the Purchaser's sole discretion unless otherwise specified therein.
If  any  provision  in the Transaction Documents is held to be illegal, invalid,
not  binding,  or unenforceable, such provision shall be fully severable and the
Transaction  Documents  shall  be  construed  and  enforced  as if such illegal,
invalid,  not  binding, or unenforceable provision had never comprised a part of
the  Transaction  Documents,  and  the remaining provisions shall remain in full
force and effect. The Transaction Documents have been reviewed and negotiated by
sophisticated  parties  with  access to legal counsel and shall not be construed
against  the  drafter.

     Section  8.02     Survival  of  Provisions.  The  representations  and
                       ------------------------
warranties set forth in Sections 3.01, 3.02, 3.03, 3.04, 3.05, 3.10, 3.11, 3.13,
                        --------------------------------------------------------
3.18,  3.19, 4.01, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08 and 4.09 of this Agreement
-----------------------------------------------------     ----
shall survive the execution and delivery of this Agreement indefinitely, and the
other  representations  and warranties set forth in this Agreement shall survive
for  a period of twelve (12) months following the Closing Date regardless of any
investigation  made  by  or  on  behalf  of  the Company, or the Purchaser.  The
covenants made in this Agreement or any other Transaction Document shall survive
the  closing  of  the  transactions described herein and remain operative and in
full  force  and  effect  regardless  of  acceptance  of  any  of  the Purchased
Securities and payment therefor and repayment, conversion or repurchase thereof.
All  indemnification  obligations  of the Company, and the Purchaser pursuant to
this  Agreement  shall remain operative and in full force and effect unless such
obligations  are expressly terminated in a writing by the Parties, regardless of
any  purported  general  termination  of  this  Agreement.

     Section  8.03     No  Waiver;  Modifications  in  Writing
                       ---------------------------------------

                                       17
<PAGE>
          (a)     Delay.  No  failure  or  delay  on  the  part  of any Party in
                  -----
exercising  any  right,  power,  or  remedy  hereunder shall operate as a waiver
thereof,  nor  shall any single or partial exercise of any such right, power, or
remedy  preclude  any  other  or further exercise thereof or the exercise of any
right, power, or remedy. The remedies provided for herein are cumulative and are
not  exclusive  of  any  remedies  that may be available to a Party at Law or in
equity  or  otherwise.

          (b)     Specific  Waiver.  Except  as  otherwise  provided  herein, no
                  ----------------
amendment,  waiver,  consent,  modification,  or termination of any provision of
this  Agreement  or  any  other  Transaction  Document shall be effective unless
signed  by  each of Parties or each of the original signatories thereto affected
by such amendment, waiver, consent, modification, or termination. Any amendment,
supplement or modification of or to any provision of this Agreement or any other
Transaction Document, any waiver of any provision of this Agreement or any other
Transaction  Document,  and any consent to any departure by the Company from the
terms of any provision of this Agreement or any other Transaction Document shall
be  effective  only  in  the  specific instance and for the specific purpose for
which  made  or  given.  Except  where  notice  is specifically required by this
Agreement,  no  notice to or demand on the Company in any case shall entitle the
Company  to  any  other  or  further  notice  or  demand  in  similar  or  other
circumstances.

     Section  8.04     Binding  Effect;  Assignment
                       ----------------------------

          (a)     Binding  Effect.  This  Agreement  shall  be  binding upon the
                  ---------------
Company,  the  Purchaser, and their respective successors and permitted assigns.
Except  as  expressly  provided  in  this Agreement, this Agreement shall not be
construed  so  as  to confer any right or benefit upon any Person other than the
Parties  to  this Agreement and as provided in Article VII, and their respective
successors  and  permitted  assigns.

          (b)     Assignment  of Purchased Securities. All or any portion of the
                  -----------------------------------
Purchased  Securities purchased pursuant to this Agreement may be sold, assigned
or  pledged  by  the Purchaser, subject to compliance with applicable securities
Laws.

          (c)     Assignment  of  Rights.  The  Purchaser  may assign all or any
                  ----------------------
portion  of  its rights hereunder; provided the assignee shall be deemed to be a
Purchaser  hereunder  with respect to such assigned rights and shall agree to be
bound  by  the  provisions  of  this  Agreement.

     Section  8.05     Communications.  All  notices  and  demands  provided for
                       --------------
hereunder  shall  be  in  writing  and shall be given by registered or certified
mail,  return  receipt  requested,  telecopy, air courier guaranteeing overnight
delivery,  electronic  mail  or personal delivery to the addresses listed on the
signature  pages hereto or to such other address as the Company or the Purchaser
may designate in writing. All notices and communications shall be deemed to have
been  duly given: at the time delivered by hand, if personally delivered; at the
time of transmittal, if sent via electronic mail; upon actual receipt if sent by
registered  or  certified  mail,  return  receipt requested, or regular mail, if
mailed; when receipt acknowledged, if sent via telecopy; and upon actual receipt
when  delivered  to  an  air  courier  guaranteeing  overnight  delivery.

                                       18
<PAGE>
     Section  8.06     Entire  Agreement.  This  Agreement  and  the  other
                       -----------------
Transaction Documents are intended by the Parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and  understanding  of  the Parties hereto and thereto in respect of the subject
matter  contained  herein  and  therein.  There  are  no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein  with  respect to the rights granted by the Company or the Purchaser set
forth  herein  and  therein.  This Agreement and the other Transaction Documents
supersede  all  prior  agreements  and  understandings  between the Parties with
respect  to  such  subject  matter.

     Section  8.07     Governing  Law.  This  Agreement  will  be  construed  in
                       --------------
accordance with and governed by the Laws of the State of Texas without regard to
principles  of  conflicts  of  Laws.

     Section 8.08     Execution in Counterparts.  This Agreement may be executed
                      -------------------------
in  two  or  more  counterparts,  all  of  which  when  taken  together shall be
considered  one  and  the  same  agreement  and  shall  become  effective  when
counterparts have been signed by each party and delivered to the other party, it
being  understood  that both parties need not sign the same counterpart.  In the
event  that  any  signature  is delivered by facsimile transmission or by e-mail
delivery  of  a ".pdf" format data file, such signature shall create a valid and
binding  obligation of the party executing (or on whose behalf such signature is
executed)  with  the  same  force  and  effect  as  if  such facsimile or ".pdf"
signature  page  were  an  original  thereof.

     Section  8.09     Termination.
                       -----------

          (a)     Notwithstanding  anything  herein  to  the  contrary,  this
Agreement  may  be  terminated  at  any  time  at  or  prior  to  the  Closing:

              (i)     by  the  mutual written consent of the Purchaser and the
     Company;

              (ii)     by the written consent of the Purchaser or by the Company
     ,  (A)  if  any  representation  or  warranty  of the other party set forth
     in this Agreement shall be untrue in any material respect when made, or (B)
     upon  a  breach in any material respect of any covenant or agreement on the
     part  of  the other party set forth in this Agreement (either clause (A) or
                                                                   ---------
     (B)  above being  a "Terminating  Breach");  provided, that, each
     ---                  -------------------
     Terminating  Breach  would  cause  the  conditions  to  the non-terminating
     party's  obligations not to be satisfied and such Terminating Breach is not
     cured  within 30 days after written notice from the non-breaching party; or

          (b)     Notwithstanding  anything  herein  to  the  contrary,  this
Agreement  shall automatically terminate at any time at or prior to the Closing:

              (i)     if  a  statute, rule, order, decree or regulation shall
     have  been  enacted  or  promulgated,  or  if  any  action  shall have been
     taken  by  any  Governmental  Authority  of  competent  jurisdiction  which
     permanently  restrains,  precludes,  enjoins  or  otherwise  prohibits  the
     consummation  of  the  transactions contemplated by this Agreement or makes
     the  transactions  contemplated  by  this  Agreement  illegal;  or

                                       19
<PAGE>
              (ii)     if  the Closing shall not have occurred on or before
     February  9,2007.

          (c)     In  the event of the termination of this Agreement as provided
in  Section  8.09(a)  or  Section 8.09(b), this Agreement shall forthwith become
    ----------------      ---------------
null and void.  In the event of such termination, there shall be no liability on
the  part  of  any  party  hereto,  except  as  set forth in Article VII of this
Agreement  and  except  with  respect  to  the  requirement  to  comply with any
confidentiality  agreement in favor of the Company; provided that nothing herein
shall  relieve  any  party  from any liability or obligation with respect to any
willful  breach  of  this  Agreement.

     Section  8.10     Expenses.  If any action at law or equity is necessary to
                       --------
enforce  or  interpret  the  terms  of the Transaction Documents, the prevailing
party  shall  be entitled to reasonable attorney's fees, out-of-pocket costs and
necessary  disbursements in addition to any other relief to which such party may
be  entitled.

     Section 8.11     Change of Control.  The provisions of this Agreement shall
                      -----------------
apply  to  the  full  extent set forth herein with respect to any and all common
stock  of  the  Company  or  any  successor or assign of the Company (whether by
merger,  consolidation,  sale  of  assets  or  otherwise) which may be issued in
respect of, in exchange for or in substitution of, the Purchased Securities, the
Note  Shares  or  the  Warrant  Shares.

     Section  8.12     Recapitalization Affecting the Purchased Securities.  The
                       ---------------------------------------------------
Purchased  Securities,  the  Note  Shares  and  the  Warrant  Shares  shall  be
appropriately  adjusted  for  combinations,  recapitalizations  and  the  like
occurring  after  the  date  of  this  Agreement.

                           [SIGNATURE PAGES TO FOLLOW]

                                       20
<PAGE>
     IN WITNESS WHEREOF, the Parties hereto execute this Agreement, effective as
of  the  date  first  above  written.

                                        PETROSEARCH ENERGY CORPORATION

                                        By:    /s/ Richard D. Dole
                                              ----------------------------------
                                        Name:  Richard D. Dole
                                              ----------------------------------
                                        Title: Chief Executive Officer
                                               and President
                                              ----------------------------------

                                        Address:
                                                --------------------------------

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

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

                                        RCH PETRO INVESTORS, LP

                                        By: RR Advisors, LLC,
                                            its general partner

                                            By:    /s/ Robert Raymond
                                                  ------------------------------
                                            Name:  Robert Raymond
                                                  ------------------------------
                                            Title: Sole Member
                                                  ------------------------------

                                            Address:
                                                    ----------------------------

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

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

                               Signature Page to
                      Note and Warrent Purchase Agreement
<PAGE>

                                                                    EXHIBIT 3.12
                                                                    ------------
                       Preemptive and Registration Rights
                       ----------------------------------

                                  EXHIBIT 3.12
<PAGE>
                                                                       Exhibit A
                                                                       ---------

                                      Note
                                      ----

                                 Attached Hereto

                                   Exhibit A
<PAGE>

                                                                       Exhibit B
                                                                       ---------

                                     Warrant
                                     -------

                                 Attached Hereto

                                   Exhibit B
<PAGE>
                                                                       Exhibit C
                                                                       ---------

                          PLEDGE AND SECURITY AGREEMENT
                          -----------------------------

                                 Attached Hereto

                                   Exhibit C
<PAGE>
                                                                       EXHIBIT D
                                                                       ---------

                      FORM OF REGISTRATION RIGHTS AGREEMENT
                      -------------------------------------

                                 Attached hereto

                                   EXHIBIT D
<PAGE>
                                                                       Exhibit E
                                                                       ---------

                         PETROSEARCH ENERGY CORPORATION

                              OFFICER'S CERTIFICATE

          Pursuant  to Section 6.02 of the Note and Warrant Purchase Agreement,
dated  as  of  February  1,  2007  (the  "Purchase  Agreement"),  by  and  among
                                          ------------------
Petrosearch  Energy  Corporation,  a Nevada corporation ("the Company"), and RCH
                                                          -----------
Petro Investors, LP, a Delaware limited partnership relating to the issuance and
sale  by  the  Company  to the Purchaser of Note of the Company, the undersigned
hereby  certifies  on  behalf  of  the  Company,  as  follows:

          (A)  The  Company  has performed and complied in all material respects
     with  the covenants and agreements contained in the Purchase Agreement that
     are  required  to be performed and complied with by the Company on or prior
     to  the  date  hereof.

          (B)  The representations and warranties of the Company contained in
     the  Purchase  Agreement  that  are  qualified  by  materiality  or Company
     Material Adverse Effect (as defined in the Purchase Agreement) are true and
     correct  as of the date of the Purchase Agreement and as of the date hereof
     and  all  other  representations and warranties are true and correct in all
     material  respects  as  of the date of the Purchase Agreement and as of the
     date  hereof,  except  that  representations made as of a specific date are
     true  and  correct  as  of  such  date  only.

          (C)  Since  the  date  of  the Purchase Agreement, no Company Material
     Adverse  Effect  (as defined in the Purchase Agreement) has occurred and is
     continuing.

DATED:  FEBRUARY  __,  2007             PETROSEARCH  ENERGY  CORPORATION

                                        By:    /s/ Richard D. Dole
                                              ----------------------------------
                                        Name:  Richard D. Dole
                                              ----------------------------------
                                        Title: Chief Executive Officer
                                               and President
                                              ----------------------------------

                                   Exhibit E
<PAGE>
                                                                       EXHIBIT F
                                                                       ---------

                            Opinion of Company Counsel
                            -------------------------

                                    [To Come]

                                   EXHIBIT F
<PAGE>
                                                                       EXHIBIT G
                                                                       ---------
                             RCH PETRO INVESTORS, LP

                              OFFICER'S CERTIFICATE

          Pursuant  to  Section 6.03 of the Note and Warrant Purchase Agreement,
dated as of February 1, 2007 (the "Purchase Agreement") by and among Petrosearch
                                   ------------------
Energy  Corporation,  a  Nevada  corporation,  and  RCH  Petro  Investors, LP, a
Delaware limited partnership (the "Purchaser") relating to the issuance and sale
by  the  Company to the Purchaser of Note of the Company, the undersigned hereby
certifies  on  behalf  of  the  Company,  as  follows

          (A)  The Purchaser has performed and complied in all material respects
     with  the covenants and agreements contained in the Purchase Agreement that
     are required to be performed and complied with by the Purchaser on or prior
     to  the  date  hereof.

          (B)  The  representations and warranties of the Purchaser contained in
     the  Purchase  Agreement  that  are  qualified  by materiality or Purchaser
     Material Adverse Effect (as defined in the Purchase Agreement) are true and
     correct  as of the date of the Purchase Agreement and as of the date hereof
     and  all  other  representations and warranties are true and correct in all
     material  respects  as  of the date of the Purchase Agreement and as of the
     date  hereof,  except  that  representations made as of a specific date are
     true  and  correct  as  of  such  date  only.

          (C)  Since  the  date of the Purchase Agreement, no Purchaser Material
     Adverse  Effect  (as defined in the Purchase Agreement) has occurred and is
     continuing.

DATED:  FEBRUARY  __,  2007             RCH  PETRO  INVESTORS,  LP

                                        By: RR Advisors, LLC,
                                            its general partner

                                        By: /s/ Robert Raymond
                                           -------------------------------------
                                            Robert Raymond, Sole Member

                                   EXHIBIT GNEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE
HAVE  BEEN  REGISTERED  WITH  THE  SECURITIES  AND  EXCHANGE  COMMISSION  OR THE
SECURITIES  COMMISSION  OF  ANY  STATE  IN  RELIANCE  UPON  AN  EXEMPTION  FROM
REGISTRATION  UNDER  THE  SECURITIES  ACT  OF  1933, AS AMENDED (THE "SECURITIES
ACT"),  AND,  ACCORDINGLY,  MAY  NOT  BE  OFFERED  OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER  THE  SECURITIES ACT OR PURSUANT TO AN
AVAILABLE  EXEMPTION  FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS  OF  THE  SECURITIES  ACT  AND  IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES  LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH  EFFECT,  THE  SUBSTANCE  OF  WHICH  SHALL  BE REASONABLY ACCEPTABLE TO THE
COMPANY.

Original Issue Date:                                         February 7, 2007

Original Conversion Price (subject to adjustment herein):          $1.00

8% Senior Secured Convertible Note #1                         $10,000,000.00

                       8% SENIOR SECURED CONVERTIBLE NOTE
                       ----------------------------------

     FOR  VALUE  RECEIVED, PETROSEARCH ENERGY CORPORATION, a Nevada corporation,
(the  "COMPANY"),  having  its  principal place of business at 675 Bering Drive,
Suite  200,  Houston,  Texas  77057,  promises  to pay to the order of RCH PETRO
INVESTORS,  LP,  a  Delaware limited partnership, or its registered assigns (the
"HOLDER"),  the  principal  sum  of  TEN  MILLION  AND  NO/100  DOLLARS  (US
$10,000,000.00)  on  the  three  (3) year anniversary of the Original Issue Date
hereof  or  such  earlier  date as this 8% Senior Secured Convertible Note (this
"CONVERTIBLE NOTE") is required or permitted to be repaid as provided hereunder,
whether  by  acceleration or otherwise (such three (3) year anniversary date, or
such  earlier  date,  the "MATURITY DATE"), and to pay interest to the Holder on
the  aggregate  unconverted  and  then  outstanding  principal  amount  of  this
Convertible  Note  in  accordance  with  the  provisions  hereof.

     This  Convertible  Note  is  a duly authorized and validly issued 8% Senior
Secured  Convertible  Note of the Company (collectively, the "CONVERTIBLE NOTE")
designated  as  its  8%  Senior  Secured  Convertible Note by the Company in the
aggregate  principal amount of $10,000,000, issued in registered form under that
certain  Note  and  Warrant  Purchase  Agreement  (together with all amendments,
supplements  and  modifications thereto in accordance with the terms hereof from
time  to  time,  herein  called  the  "PURCHASE  AGREEMENT"), dated of even date
herewith,  by  and among the Company and the Holder, to which Purchase Agreement
reference  is  hereby  made for additional rights, duties and obligations of the
Company  and  the  Holder.  This  Convertible  Note is secured by the Collateral
described  herein  and  is  subject  to  the  following  additional  provisions:

                                        1
<PAGE>
     Section  1.     Definitions.  For  the  purposes hereof, in addition to the
     ----------      -----------
terms  defined  elsewhere  in  this  Convertible Note, (a) capitalized terms not
otherwise  defined  herein  shall  have  the  meanings set forth in the Purchase
Agreement  and  (b)  the  following  terms  shall  have  the following meanings:

          "Affiliate"  means,  with  respect  to  a  specified Person, any other
           ---------
     Person,  whether  now  in  existence  or  hereafter  created,  directly  or
     indirectly  controlling,  controlled  by or under direct or indirect common
     control  with  such  specified  Person.  For  purposes  of this definition,
     "control" (including, with correlative meanings, "controlling," "controlled
     by,"  and  "under  common control with") means the power to direct or cause
     the  direction  of  the management and policies of such Person, directly or
     indirectly, whether through the ownership of voting securities, by contract
     or  otherwise.

          "Barnett  Petrosearch"  means  Barnett  Petrosearch,  L.L.C.,  a Texas
           --------------------
     limited  liability  company.

          "Barnett  Shale  Project"  means the project located in the Fort Worth
           -----------------------
     basin  of Texas comprised a 2 million acre, 8-county contract area directed
     by  the  Partnership  (as  defined in the Pledge and Security Agreement) in
     which  the  Company  indirectly  owns  a  5.54455%  interest.

          "Bankruptcy  Event" means any of the following events: (a) the Company
           -----------------
     or  any Significant Subsidiary thereof commences a case or other proceeding
     under  any  bankruptcy,  reorganization,  arrangement,  adjustment of debt,
     relief of debtors, dissolution, insolvency or liquidation or similar law of
     any  jurisdiction  relating  to  the  Company or any Significant Subsidiary
     thereof;  (b)  there  is  commenced  against the Company or any Significant
     Subsidiary thereof any such case or proceeding that is not dismissed within
     60  days  after commencement; (c) the Company or any Significant Subsidiary
     thereof  is  adjudicated  insolvent  or  bankrupt or any order of relief or
     other  order  approving  any  such  case  or proceeding is entered; (d) the
     Company  or  any  Significant Subsidiary thereof suffers any appointment of
     any  custodian  or  the like for it or any substantial part of its property
     that  is  not  discharged  or  stayed  within  60  calendar days after such
     appointment;  (e) the Company or any Significant Subsidiary thereof makes a
     general  assignment  for  the  benefit of creditors; (f) the Company or any
     Significant Subsidiary thereof calls a meeting of its creditors with a view
     to  arranging  a  composition, adjustment or restructuring of its debts; or
     (g)  the  Company  or  any  Significant  Subsidiary  thereof, by any act or
     failure  to  act,  expressly  indicates  its  consent  to,  approval  of or
     acquiescence in any of the foregoing or takes any corporate or other action
     for  the  purpose  of  effecting  any  of  the  foregoing.

          "Business  Day"  means  any day except Saturday, Sunday, any day which
           -------------
     shall  be  a federal legal holiday in the United States or any day on which
     banking institutions in the State of New York are authorized or required by
     law  or  other  governmental  action  to  close.

                                        2
<PAGE>
          "Capital  Lease"  means  a  lease  with respect to which the lessee is
           --------------
     required  concurrently  to  recognize  the  acquisition of an asset and the
     incurrence  of  a  liability  in  accordance  with  GAAP.

          "Collateral"  has  the  meaning  set  forth in the Pledge and Security
           ----------
     Agreement  and  includes  without  limitation  the  following:

               (a)     25%  of  the  membership  interests (ownership interests)
          owned  by the Company in Exploration Holding (the "EXPLORATION HOLDING
          MEMBERSHIP  INTEREST");

               (b)     all  products  and  proceeds of the foregoing Exploration
          Holding  Membership  Interest,  including,  without  limitation,  all
          revenues,  distributions,  dividends,  stock dividends, securities and
          other  property, rights, and interests that the Company is at any time
          entitled  to  receive  on  account  of  the  same.

          "Collateral Value" means 25% of the Fair Market Value of all assets of
           ----------------
     Barnett  Petrosearch  (as long as Barnett Petrosearch continues to be owned
     directly,  or  indirectly,  by  the  Company).

          "Common  Stock" means the common stock, par value $0.001 per share, of
           -------------
     the  Company  and  stock  of  any other class of securities into which such
     securities  may  hereafter  be  reclassified  or  changed  into.

          "Exchange  Act" means the Securities Exchange Act of 1934, as amended,
           -------------
     and  the  rules  and  regulations  promulgated  thereunder.

          "Exploration  Holding"  means Exploration Holding Co., L.L.C., a Texas
           --------------------
     limited  liability  company.

          "Fair  Market  Value"  means the amount at which property would change
           -------------------
     hands between a willing buyer and a willing seller, neither being under any
     compulsion  to  buy  or  sell  and  both having reasonable knowledge of the
     relevant  facts.

          "GAAP"  means  generally  accepted accounting principles in the United
           ----
     States  set  forth  in  the  opinions  and pronouncements of the Accounting
     Principles Board and the American Institute of Certified Public Accountants
     and  statements  and  pronouncements  of the Financial Accounting Standards
     Board  or such other principles as may be approved by a significant segment
     of  the  accounting profession in the United States, that are applicable to
     the  circumstances  as  of the date of determination, consistently applied.

          "Guarantee" means, as to any Person, (a) any obligation, contingent or
           ---------
     otherwise,  of  such  Person  guaranteeing or having the economic effect of
     guaranteeing any Indebtedness or other obligation payable or performable by
     another  Person  (the "primary obligor") in any manner, whether directly or
                            ---------------
     indirectly,  and  including  any  obligation  of  such  Person,  direct  or
     indirect,  (i)  to  purchase  or  pay  (or  advance or supply funds for the
     purchase  or  payment  of)  such  Indebtedness or other obligation, (ii) to
     purchase  or  lease

                                        3
<PAGE>
     property, securities or services for the purpose of assuring the obligee in
     respect  of  such  Indebtedness  or  other  obligation  of  the  payment or
     performance  of  such  Indebtedness  or other obligation, (iii) to maintain
     working  capital, equity capital or any other financial statement condition
     or  liquidity  or level of income or cash flow of the primary obligor so as
     to enable the primary obligor to pay such Indebtedness or other obligation,
     or  (iv)  entered  into for the purpose of assuring in any other manner the
     obligee  in respect of such Indebtedness or other obligation of the payment
     or  performance  thereof or to protect such obligee against loss in respect
     thereof (in whole or in part), or (b) any Lien on any assets of such Person
     securing  any Indebtedness or other obligation of any other Person, whether
     or  not such Indebtedness or other obligation is assumed by such Person (or
     any  right,  contingent or otherwise, of any holder of such Indebtedness to
     obtain any such Lien). The amount of any Guarantee shall be deemed to be an
     amount  equal  to  the stated or determinable amount of the related primary
     obligation,  or portion thereof, in respect of which such Guarantee is made
     or,  if  not  stated  or  determinable,  the maximum reasonably anticipated
     liability  in  respect  thereof as determined by the guaranteeing Person in
     good  faith.  The  term  "Guarantee" as a verb has a corresponding meaning.
                               ---------

          "Indebtedness"  means  as to the Company at a particular time, without
           ------------
     duplication,  all of the following, whether or not included as indebtedness
     or  liabilities  in  accordance  with  GAAP:

               (i)  all  obligations  of  the Company for borrowed money and all
          obligations of the Company evidenced by bonds, debentures, notes, loan
          agreements  or  other  similar  instruments;

               (ii)  all direct or contingent obligations of the Company arising
          under  letters  of credit (including standby and commercial), bankers'
          acceptances,  bank  guaranties,  surety bonds and similar instruments;

               (iii)  net  obligations  of  the Company under any Swap Contract;

               (iv)  all obligations of the Company to pay the deferred purchase
          price  of  property  or services (other than trade accounts payable in
          the  ordinary course of business that are not unpaid for more than 120
          days  after the date on which such trade account payable was created);

               (v)  indebtedness (excluding prepaid interest thereon) secured by
          a  Lien on property owned or being purchased by the Company (including
          indebtedness  arising under conditional sales or other title retention
          agreements),  whether or not such indebtedness shall have been assumed
          by  the  Company  or  is  limited  in  recourse;

               (vi)  Capital  Lease Obligations and Synthetic Lease Obligations;

               (vii) all obligations of the Company to purchase, redeem, retire,
          defease  or  otherwise  make  any  payment  in  respect  of any equity
          interest in the Company or any other entity or company, valued, in the
          case  of  a  redeemable  preferred  interest,  at  the  greater of its
          voluntary  or  involuntary  liquidation  preference  plus

                                        4
<PAGE>
          accrued and unpaid dividends (but excluding undeclared dividends where
          the  Company  is  not  required  to  declare  such  dividends);  and

               (viii)  all  Guarantees  of  the Company in respect of any of the
          foregoing.

          "Initial  Registration  Statement" means the registration statement on
           --------------------------------
     Form  SB-2  registering  the  Note  Shares, as provided in the Registration
     Rights  Agreement.

          "Lien"  means any mortgage, pledge, hypothecation, assignment, deposit
           ----
     arrangement, encumbrance, lien (statutory or other), charge, or preference,
     priority  or  other  security  interest  or preferential arrangement in the
     nature  of  a security interest of any kind or nature whatsoever (including
     any  conditional  sale  or  other  title retention agreement, any easement,
     right  of  way  or  other  encumbrance  on  title to real property, and any
     financing lease having substantially the same economic effect as any of the
     foregoing).

          "Note Shares" means the shares of Common Stock (i) to which the Holder
           -----------
     is  entitled  upon  conversion  of this Convertible Note and (ii) that have
     been  issued  in lieu of cash interest payments under this Convertible Note
     at  the time of filing the applicable Registration Statement (as defined in
     the  Registration Rights Agreement) or Piggyback Registration Statement (as
     defined  in  the  Registration  Rights  Agreement).

          "Optional  Redemption  Amount"  means  the  sum  of  (i)  110%  of the
           ----------------------------
     principal  amount  of  the  Convertible  Note then outstanding and (ii) all
     accrued  but  unpaid  interest.

          "Original  Issue  Date"  means  the  date of the first issuance of the
           ---------------------
     Convertible  Note,  regardless of any transfers of any Convertible Note and
     regardless  of  the  number  of instruments which may be issued to evidence
     such  Convertible  Note.

          "Outstanding  Principal"  means  the  outstanding principal balance of
           ----------------------
     this  Convertible Note at the time and excludes any principal that has been
     converted  into shares of Common Stock of the Company pursuant to the terms
     of  this  Convertible  Note,  if,  and  to  the extent that, the Holder has
     received its Note Shares from the Company with respect to any such excluded
     converted  principal.

          "Partnership"  means the DDJET Limited, LLP, a Texas limited liability
           -----------
     limited  partnership as further described in the recitals to the Pledge and
     Security  Agreement.

          "Partnership Interest" means the 5.54455% limited partnership interest
           --------------------
     in  the  Partnership  owned  by  Barnett  Petrosearch.

          "Permitted  Amount"  means  the  amount  by which the Collateral Value
           -----------------
     exceeds  the  Outstanding  Principal.

          "Person"  means  an  individual  or  corporation,  partnership, trust,
           ------
     incorporated  or  unincorporated  association,  joint  venture,  limited
     liability  company,  joint  stock  company,  government  (or  an  agency or
     subdivision  thereof)  or  other  entity  of  any  kind.

                                        5
<PAGE>
          "Pledge  and  Security  Agreement"  means  the  Pledge  and  Security
           --------------------------------
     Agreement,  dated  of  even  date  herewith,  by and between the Company as
     pledgor  and  the  Holder  as  secured  party.

          "Purchase  Agreement"  shall  have  the meaning set forth on page 1 of
           -------------------
     this  Convertible  Note.

          "Prime  Rate"  shall  mean  the "prime rate" as published in the money
           -----------
     rates  section  of  the  Wall  Street  Journal  (Southwest  Edition)
                              -------------------------------------------

          "Proved Reserves" means collectively, the Proved Developed Oil and Gas
           ---------------
     Reserves  and  Proved  Undeveloped  Reserves  of  the  Company  and  its
     subsidiaries,  as  such terms are defined in Sec. 210.4-10(a) of Regulation
     S-X.

          "PV-10 Value" means the estimated future gross revenue to be generated
           -----------
     from the production of Proved Reserves of the Company and its subsidiaries,
     net  of estimated production and future development costs, using prices and
     costs  in  effect  at  the  determination  date,  without  giving effect to
     non-property  related expenses such as general and administrative expenses,
     debt  service  and  future income tax expense or to depreciation, depletion
     and  amortization,  discounted  using  an  annual  discount  rate  of  10%.

          "Registration  Rights  Agreement"  means  the  Registration  Rights
           -------------------------------
     Agreement,  dated  as  of  the  date  of  the Purchase Agreement, among the
     Company and the original Holders, as amended, modified or supplemented from
     time  to  time  in  accordance  with  its  terms.

          "Registration Statement" means a registration statement that registers
           ----------------------
     the  resale  of  the  Note  Shares  and  names  such  Holder  as a "selling
     stockholder" therein, and meets the requirements of the Registration Rights
     Agreement.

          "SEC"  means  the  United  States  Securities and Exchange Commission.
           ---

          "Securities Act" means the Securities Act of 1933, as amended, and the
           --------------
     rules  and  regulations  promulgated  thereunder.

          "Significant Subsidiary" shall mean (i) Exploration Holding or Barnett
           ----------------------
     Petrosearch  and  (ii)  any  other  Significant Subsidiary (as such term is
     defined  in  Rule  1-02(w)  of  Regulation  S-X ) but, at the option of the
     Company,  shall  exclude  any  Significant  Subsidiary  (other  than  the
     Significant  Subsidiaries  listed  in  foregoing  clause  (i)),  which  has
     Indebtedness  for  which  recourse  is  exclusive to the assets of any such
     Significant  Subsidiary and as to which there is no recourse to the Company
     or  to  the  Company's other subsidiaries, from the Indebtedness incurrence
     test  set  forth  in  Section  7(a)(i)  hereof.

                                        6
<PAGE>
          "Swap  Contract"  means  (a) any and all rate swap transactions, basis
           --------------
     swaps, credit derivative transactions, forward rate transactions, commodity
     swaps,  commodity  options,  forward commodity contracts, commodity futures
     contracts,  equity  or equity index swaps or options, bond or bond price or
     bond  index  swaps  or  options  or  forward  bond or forward bond price or
     forward  bond  index  transactions,  interest rate options, forward foreign
     exchange  transactions,  cap  transactions,  floor  transactions,  collar
     transactions,  currency  swap  transactions,  cross-currency  rate  swap
     transactions,  currency  options,  spot  contracts,  or  any  other similar
     transactions  or  any  combination  of  any of the foregoing (including any
     options  to  enter  into  any  of  the  foregoing), whether or not any such
     transaction  is governed by or subject to any master agreement, and (b) any
     and  all transactions of any kind, and the related confirmations, which are
     subject  to the terms and conditions of, or governed by, any form of master
     agreement published by the International Swaps and Derivatives Association,
     Inc.,  any  international  foreign  exchange master agreement, or any other
     master  agreement  (any  such  master  agreement, together with any related
     schedules,  a  "Master  Agreement"),  including  any  such  obligations  or
                     -----------------
     liabilities  under  any  Master  Agreement.

          "Synthetic Lease Obligation" means the monetary obligation of a Person
           --------------------------
     under  a  so-called  synthetic,  off-balance  sheet or tax retention lease.

          "Trading  Day"  means  a  day on which the principal Trading Market is
           ------------
     open  for  business.

          "Trading Market" means the following markets or exchanges on which the
           --------------
     Common  Stock  is listed or quoted for trading on the date in question: the
     American  Stock  Exchange,  the  Nasdaq  Capital  Market, the Nasdaq Global
     Market, the Nasdaq Global Select Market, the New York Stock Exchange or the
     OTC  Bulletin  Board.

          "VWAP"  means,  for any date, the price determined by the first of the
           ----
     following  clauses  that applies: (a) if the Common Stock is then listed or
     quoted  on a Trading Market, the daily volume weighted average price of the
     Common  Stock  for such date (or the nearest preceding date) on the Trading
     Market  on  which  the Common Stock is then listed or quoted for trading as
     reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York
     City time) to 4:02 p.m. (New York City time); (b) if the OTC Bulletin Board
     is  not  a  Trading Market, the volume weighted average price of the Common
     Stock  for  such  date  (or the nearest preceding date) on the OTC Bulletin
     Board;  (c)  if  the Common Stock is not then quoted for trading on the OTC
     Bulletin  Board and if prices for the Common Stock are then reported in the
     "Pink  Sheets"  published by Pink Sheets, LLC (or a similar organization or
     agency  succeeding  to  its functions of reporting prices), the most recent
     bid  price  per  share of the Common Stock so reported; or (d) in all other
     cases, the fair market value of a share of Common Stock as determined by an
     independent  appraiser  selected in good faith by the Holder and reasonably
     acceptable  to  the  Company.

                                        7
<PAGE>
     Section  2.     Interest.
     ----------      --------

          a)     Payment  of  Interest. Interest shall accrue at the rate of the
                 ---------------------
     lesser  of  (i)  eight  percent  (8%)  per  annum;  and  (ii)  the  maximum
     nonusurious  interest rate under applicable law (except that interest shall
     accrue  at the 8.5% per annum interest rate described below (limited by the
     maximum  nonusurious  rate) in the specified circumstance) on the principal
     balance  of  this Convertible Note from time to time outstanding commencing
     on  the  Original  Issue  Date.  Accrued  interest  from  such time through
     February  28,  2007  shall be paid by the Company to the Holder on March 1,
     2007.  Thereafter,  commencing  on  April 1, 2007, the Company shall pay in
     cash  to  the  Holder,  on  the  aggregate unconverted and then outstanding
     principal  amount  of  this Convertible Note, accrued interest quarterly in
     arrears  and  continuing  on each July 1, October 1, January 1, and April 1
     thereafter  throughout  the  term  of  this  Convertible Note and shall pay
     accrued  interest on each Conversion Date (as to that principal amount then
     being converted), on each Redemption Date (as to that principal amount then
     being  redeemed)  and  on the Maturity Date (each of the foregoing dates of
     payment, an "INTEREST PAYMENT DATE"). If any Interest Payment Date is not a
     Business  Day,  then  the  applicable  payment  shall  be  due  on the next
     succeeding  Business  Day  and  the  amount  of  the accrued interest shall
     include such additional Business Day or Days. At the sole discretion of the
     Company,  interest  shall accrue at the rate of the lesser of (i) eight and
     1/2  percent  (8.5%)  per  annum;  or  (ii) the maximum nonusurious rate of
     interest  under  applicable law, if, and to the extent that Company opts to
     pay  such  interest in Common Stock of the Company priced using the closing
     price  of  the  last  Trading Day of each quarter immediately preceding the
     quarterly Interest Payment Date, or the date preceding the Conversion Date,
     each  Redemption  Date  or the Maturity Date. All cash payments of interest
     payments  shall  be  paid  to  the  Holder in accordance with wire transfer
     instructions  provided  by the Holder to the Company. All interest payments
     made with Common Stock shall be made by delivery to the Holder by overnight
     courier  to  the  address  for the Holder provided under Section 11 hereof.

          b)     Default  Interest. The Company  further  agrees  that  if  the
                 ------------------
     Company  shall  default  in  the payment of any payment required hereunder,
     whether  payment  of principal, interest, or fees or otherwise, and whether
     paid  in cash or with Common Stock, the Company promises to pay, on demand,
     interest  on  any  such unpaid amounts, from the date the payment is due to
     the  date of actual payment, at the rate (the "DEFAULT RATE") of the lesser
     of  (i)  the  Prime  Rate  plus  5.00%  per  annum;  and  (ii)  the maximum
     nonusurious  rate  permitted  by  applicable  law.

          c)     Interest  Calculations.  Interest  shall  be  calculated on the
                 ----------------------
     basis  of a 360-day year, consisting of twelve 30 calendar day periods, and
     shall  accrue  daily commencing on the Original Issue Date until payment in
     full  of  the  principal sum, together with all accrued and unpaid interest
     and  other  amounts which may become due hereunder, has been made. Interest
     shall  cease  to  accrue  with  respect  to any principal amount converted,
     provided that the Company actually delivers the Note Shares within the time
     period  required  by  Section  4(c)(iii) herein. Interest hereunder will be
     paid  to  the  Person  in

                                        8
<PAGE>
     whose  name  this  Convertible  Note  is  registered  on the records of the
     Company  regarding registration and transfers of this Convertible Note (the
     "CONVERTIBLE  NOTE  REGISTER").

          d)     Prepayment.  Except  for  Company's  right  to  redeem  this
                 ----------
     Convertible Note in accordance with the provisions of Section 6 hereof, the
     Company  may  not  prepay  any  portion  of  the  principal  amount of this
     Convertible  Note,  without  the  prior  written  consent  of  the  Holder.

          e)     Maturity.  On  the  Maturity  Date,  the  outstanding principal
                 ---------
     balance  on  this  Convertible  Note,  together with all accrued and unpaid
     interest  shall  be paid by the Company to the Holder in cash in accordance
     with  wire  transfer  instructions previously provided by the Holder to the
     Company  for  use  in  connection  with  cash  interest  payments.

     Section  3.      Registration  of  Transfers  and  Exchanges.
     -----------      -------------------------------------------

          a)     Different Denominations. This Convertible Note is exchangeable,
                 -----------  from  time  to  time,  for  Convertible  Note  in
     different  denominations  and  in  the  names  of  one  or  more  different
     designees, nominees or assignees, in an aggregate principal amount equal to
     the  aggregate  principal balance outstanding on the Convertible Note being
     exchanged at the time, as requested by the Holder surrendering the same. No
     service  charge  will  be  payable  for  such  exchanges,  transfers,  or
     registrations  of  transfers.

          b)     Investment  Representations.  This  Convertible  Note  has been
                 ---------------------------
     issued subject to certain investment representations of the original Holder
     set  forth  in  the  Purchase Agreement and may be transferred or exchanged
     only  in  compliance with the Purchase Agreement and applicable federal and
     state  securities  laws  and  regulations.

          c)     Reliance on Convertible Note Register. Prior to due presentment
                 -------------------------------------
     to  the  Company for transfer of this Convertible Note, the Company and any
     agent  of  the  Company may treat the Person in whose name this Convertible
     Note  is  duly  registered  on  the  Convertible Note Register as the owner
     hereof  for the purpose of receiving payment as herein provided and for all
     other  purposes,  whether  or  not  this  Convertible  Note is overdue, and
     neither  the  Company nor any such agent shall be affected by notice to the
     contrary.

     Section  4.       Conversion.
     -----------       ----------

          a)     Voluntary  Conversion.  This  Convertible  Note  shall  be
                 ---------------------
     convertible, in whole or in part, into shares of Common Stock at a price of
     $1.00  per share at the option of the Holder at the earlier to occur of (i)
     one  year  after  the  Original  Issue  Date or (ii) three months after the
     Initial  Registration  Statement  becomes effective with the Securities and
     Exchange  Commission.  The Holder shall effect conversions by delivering to
     the Company a Notice of Conversion, the form of which is attached hereto as
     Annex A (a "NOTICE OF CONVERSION"), specifying therein the principal amount
     -------
     of  this  Convertible  Note  to  be  converted  and  the date on which such
     conversion  shall  be  effected  (such  date,

                                        9
<PAGE>
     the  "CONVERSION  DATE"). If no Conversion Date is specified in a Notice of
     Conversion,  the  Conversion  Date  shall  be  the date that such Notice of
     Conversion  is deemed delivered hereunder. To effect conversions hereunder,
     the  Holder  shall not be required to physically surrender this Convertible
     Note  to the Company unless the entire principal amount of this Convertible
     Note,  plus all accrued and unpaid interest thereon, has been so converted.
     Conversions  hereunder  shall  have  the effect of reducing the outstanding
     principal  amount  of  this  Convertible  Note  in  an  amount equal to the
     applicable  conversion  of  principal.  The  Holder  and  the Company shall
     maintain  records showing the principal amount(s) converted and the date of
     such  conversion(s).  The Company may deliver an objection to any Notice of
     Conversion  within  two  (2)  Business  Days  of delivery of such Notice of
     Conversion  based  on  an  inaccuracy  in  such Notice but not on any other
     basis.  In  the  event  of  any  dispute or discrepancy, the records of the
     Holder  shall  be  controlling and determinative in the absence of manifest
     error. THE HOLDER, AND ANY ASSIGNEE BY ACCEPTANCE OF THIS CONVERTIBLE NOTE,
     ACKNOWLEDGE  AND AGREE THAT, BY REASON OF THE PROVISIONS OF THIS PARAGRAPH,
     FOLLOWING  CONVERSION OF A PORTION OF THIS CONVERTIBLE NOTE, THE UNPAID AND
     UNCONVERTED PRINCIPAL AMOUNT OF THIS CONVERTIBLE NOTE WILL BE LESS THAN THE
     AMOUNT  STATED  ON  THE  FACE  HEREOF.

          b)     Conversion  Price.  The  conversion  price  in  effect  on  any
                 -----------------
     Conversion  Date  shall  be  $1.00  per  share  (the  "CONVERSION  PRICE").

          c)     Mechanics  of  Conversion.
                 -------------------------

               i.     Note  Shares Issuable Upon Conversion of Principal Amount.
                      ---------------------------------------------------------
          The  number  of  shares  of  Common  Stock  issuable upon a conversion
          hereunder shall be determined by the quotient obtained by dividing (x)
          the  outstanding  principal  amount  of  this  Convertible  Note to be
          converted  by  (y)  the  Conversion  Price.

               ii.     Delivery  of  Certificate Upon Conversion. Not later than
                       -----------------------------------------
          three (3) Trading Days after each Conversion Date (the "SHARE DELIVERY
          DATE"),  the  Company  shall deliver, or cause to be delivered, to the
          Holder  (A) a certificate or certificates representing the Note Shares
          which,  shall  bear  an  appropriate  restrictive  legend  and trading
          restrictions  as  required  by the Purchase Agreement representing the
          number of shares of Common Stock being acquired upon the conversion of
          this  Convertible  Note  and (B) a bank check in the amount of accrued
          and  unpaid interest (if the Company has elected or is required to pay
          accrued  interest  in  cash).

               iii.     Failure  to Deliver Certificates.  If in the case of any
                        --------------------------------
          Notice  of  Conversion  such  certificate  or  certificates  are  not
          delivered  to  or  as  directed  by the applicable Holder by the fifth
          Trading Day after the Conversion Date, the Holder shall be entitled to
          elect  by  written  notice to the Company at any time on or before its
          receipt  of  such  certificate  or  certificates,  to  rescind  such
          Conversion,  in  which  event the Company shall promptly return to the
          Holder  any original Convertible Note delivered to the Company and the
          Holder  shall  promptly  return

                                       10
<PAGE>
          the  Common  Stock  certificates  representing the principal amount of
          this  Convertible  Note  tendered  for  conversion  to  the  Company.

               iv.     Obligation  Absolute.  The Company's obligations to issue
                       --------------------
          and  deliver  the Note Shares upon conversion of this Convertible Note
          in  accordance  with  the terms hereof are absolute and unconditional,
          irrespective  of  any  action or inaction by the Holder to enforce the
          same,  any waiver or consent with respect to any provision hereof, the
          recovery  of  any judgment against any Person or any action to enforce
          the  same,  or  any  setoff,  counterclaim,  recoupment, limitation or
          termination,  or  any  breach  or  alleged breach by the Holder or any
          other  Person  of  any  obligation  to the Company or any violation or
          alleged  violation  of  law  by  the  Holder  or any other Person, and
          irrespective  of  any  other  circumstance which might otherwise limit
          such  obligation  of  the Company to the Holder in connection with the
          issuance  of  such  Note Shares; provided, however, that such delivery
                                           --------  -------
          shall  not  operate  as a waiver by the Company of any such action the
          Company  may  have  against  the  Holder.

               v.     Reservation  of  Shares  Issuable  Upon  Conversion.  The
                      ---------------------------------------------------
          Company covenants that it will at all times reserve and keep available
          out of its authorized and unissued shares of Common Stock for the sole
          purpose  of  issuance  upon  conversion  of  this Convertible Note and
          payment of interest on this Convertible Note, each as herein provided,
          free  from  preemptive  rights or any other actual contingent purchase
          rights  of Persons other than the Holder (and the other holders of the
          Convertible  Note),  not  less than such aggregate number of shares of
          the  Common  Stock  as  shall (subject to the terms and conditions set
          forth  in the Purchase Agreement) be issuable (taking into account the
          adjustments  and restrictions of Section 5) upon the conversion of the
          outstanding  principal  amount of this Convertible Note and payment of
          interest  hereunder.  The  Company covenants that all shares of Common
          Stock that shall be so issuable shall, upon issue, be duly authorized,
          validly  issued, fully paid and nonassessable and, if the Registration
          Statement  is  then  effective  under  the  Securities  Act,  shall be
          registered  for  public  sale  in  accordance  with  such Registration
          Statement.

               vi.     Fractional  Shares.  Upon  a  conversion  hereunder  the
                       ------------------
          Company shall not be required to issue stock certificates representing
          fractions  of  shares of Common Stock, but may if otherwise permitted,
          make  a  cash  payment  in  respect  of  any final fraction of a share
          calculated  by  the  Company to be equal to the then fair value of one
          share  of  Common  Stock of the Company, as determined by the Board of
          Directors  of  the  Company in good faith, multiplied by such fraction
          computed  to  the nearest whole cent. If the Company elects not, or is
          unable,  to  make such a cash payment, the Holder shall be entitled to
          receive,  in  lieu  of the final fraction of a share, 1 whole share of
          Common  Stock.

               vii.     Transfer Taxes.  The issuance of certificates for shares
                        --------------
          of  the  Common  Stock on conversion of this Convertible Note shall be
          made  without charge to the Holder hereof for any documentary stamp or
          similar  taxes  that  may

                                       11
<PAGE>
          be  payable  in respect of the issue or delivery of such certificates,
          provided  that  the  Company shall not be required to pay any tax that
          may be payable in respect of any transfer involved in the issuance and
          delivery  of any such certificate upon conversion in a name other than
          that  of  the  Holder  of  this  Convertible Note so converted and the
          Company  shall  not  be required to issue or deliver such certificates
          unless  or until the person or persons requesting the issuance thereof
          shall  have  paid  to the Company the amount of such tax or shall have
          established  to the satisfaction of the Company that such tax has been
          paid.

     Section  5.     Certain  Adjustments.
     ----------      --------------------

          a)     Stock  Dividends and Stock Splits.  If the Company, at any time
                 ---------------------------------
     while  this  Convertible  Note is outstanding: (A) pays a stock dividend or
     otherwise makes a distribution or distributions payable in shares of Common
     Stock  on shares of Common Stock or any security of the Company convertible
     into  Common  Stock  (which,  for avoidance of doubt, shall not include any
     shares of Common Stock issued by the Company upon conversion of, or payment
     of interest on, the Convertible Note); (B) subdivides outstanding shares of
     Common Stock into a larger number of shares; (C) combines (including by way
     of a reverse stock split) outstanding shares of Common Stock into a smaller
     number  of  shares;  or  (D)  issues, in the event of a reclassification of
     shares  of  the  Common  Stock, any shares of capital stock of the Company,
     then  the  Conversion  Price shall be multiplied by a fraction of which the
     numerator  shall  be  the  number  of shares of Common Stock (excluding any
     treasury  shares  of the Company) outstanding immediately before such event
     and  of which the denominator shall be the number of shares of Common Stock
     outstanding  immediately  after such event. Any adjustment made pursuant to
     this  Section  shall become effective immediately after the record date for
     the  determination  of  stockholders  entitled  to receive such dividend or
     distribution  and  shall  become  effective immediately after the effective
     date  in  the  case  of  a  subdivision,  combination or re-classification.

          b)     Pro  Rata Distributions. If the Company, at any time while this
                 -----------------------
     Convertible Note is outstanding, distributes to all holders of Common Stock
     (and  not to the Holder) evidences of its indebtedness or assets (including
     cash and cash dividends) or rights or warrants to subscribe for or purchase
     any security, then in each such case the Conversion Price shall be adjusted
     by  multiplying  such  Conversion  Price in effect immediately prior to the
     record  date  fixed  for  determination of stockholders entitled to receive
     such  distribution by a fraction of which the denominator shall be the VWAP
     determined  as  of  the  record  date  mentioned  above,  and  of which the
     numerator  shall be such VWAP on such record date less the then fair market
     value  at  such  record  date  of the portion of such assets or evidence of
     indebtedness  so  distributed  applicable  to  one outstanding share of the
     Common Stock as determined by the Board of Directors of the Company in good
     faith.  In  either  case  the adjustments shall be described in a statement
     delivered  to  the  Holder describing the portion of assets or evidences of
     indebtedness  so  distributed or such subscription rights applicable to one
     share  of  Common  Stock.  Such  adjustment shall be made whenever any such
     distribution  is  made  and  shall  become  effective immediately after the
     record  date  mentioned  above.

                                       12
<PAGE>
          c)     Fundamental  Transaction.
                 ------------------------

               (i)     If,  at  any  time  while  this  Convertible  Note  is
          outstanding,  (A)  the  Company effects any merger or consolidation of
          the  Company  with or into another Person, (B) the Company effects any
          sale of all or substantially all of its assets in one transaction or a
          series of related transactions, (C) any tender offer or exchange offer
          (whether  by  the  Company or another Person) is completed pursuant to
          which  holders  of  Common  Stock  are permitted to tender or exchange
          their  shares  for  other  securities,  cash  or  property, or (D) the
          Company  effects  any  reclassification  of  the  Common  Stock or any
          compulsory  share  exchange  pursuant  to  which  the  Common Stock is
          effectively  converted into or exchanged for other securities, cash or
          property  (in  any such case, a "FUNDAMENTAL TRANSACTION"), then, upon
          any  subsequent  conversion of this Convertible Note, the Holder shall
          have  the  right to receive, for each Conversion Share that would have
          been issuable upon such conversion immediately prior to the occurrence
          of  such  Fundamental  Transaction,  the  same  kind  and  amount  of
          securities, cash or property as it would have been entitled to receive
          upon  the  occurrence  of such Fundamental Transaction if it had been,
          immediately  prior  to  such  Fundamental Transaction, the holder of 1
          share of Common Stock (the "ALTERNATE CONSIDERATION"). For purposes of
          any  such  conversion, the determination of the Conversion Price shall
          be  appropriately  adjusted  to  apply to such Alternate Consideration
          based  on the amount of Alternate Consideration issuable in respect of
          1  share  of  Common  Stock  in  such Fundamental Transaction, and the
          Company  shall  apportion  the  Conversion  Price  among the Alternate
          Consideration  in a reasonable manner reflecting the relative value of
          any different components of the Alternate Consideration. If holders of
          Common  Stock  are  given  any  choice  as  to the securities, cash or
          property  to be received in a Fundamental Transaction, then the Holder
          shall  be  given  the same choice as to the Alternate Consideration it
          receives  upon  any conversion of this Convertible Note following such
          Fundamental  Transaction.  To  the  extent necessary to effectuate the
          foregoing provisions, any successor to the Company or surviving entity
          in  such  Fundamental  Transaction  shall  issue  to  the Holder a new
          Convertible  Note  consistent  with  the  foregoing  provisions  and
          evidencing  the  Holder's  right to convert such Convertible Note into
          Alternate  Consideration. The terms of any agreement pursuant to which
          a  Fundamental  Transaction  is effected shall include terms requiring
          any  such  successor or surviving entity to comply with the provisions
          of  this  Section 5(c) and insuring that this Convertible Note (or any
          such  replacement  security)  will  be  similarly  adjusted  upon  any
          subsequent  transaction  analogous  to  a  Fundamental  Transaction.

               (ii)     Any  successor to the Company or any surviving entity in
          a  Fundamental Transaction shall (i) assume, prior to such Fundamental
          Transaction,  all  of  the  obligations  of  the  Company  under  this
          Convertible  Note,  the  Purchase  Agreement,  the Pledge and Security
          Agreement, the Registration Rights Agreement and the other transaction
          documents  pursuant  to  written  agreements  in  form  and  substance
          satisfactory  to  the  Holder  (such  approval  not  to  be

                                       13
<PAGE>
          unreasonably  withheld  or delayed) and (ii) issue to the Holder a new
          Convertible  Note  of  such  successor  entity  evidenced by a written
          instrument  substantially  similar  in  form  and  substance  to  this
          Convertible  Note,  including,  without limitation, having a principal
          amount  and  interest  rate  equal  to  the  principal  amount and the
          interest  rate  of this Convertible Note and having similar ranking to
          this  Convertible Note, which shall be satisfactory to the Holder (any
          such  approval  not  to  be  unreasonably  withheld  or  delayed). The
          provisions  of  this Section 5(c) shall apply similarly and equally to
          successive  Fundamental  Transactions  and  shall  be  applied without
          regard  to  any  limitations  of  this  Convertible  Note.

          d)     Calculations.  All  calculations  under this Section 5 shall be
                 ------------
     made to the nearest cent or the nearest 1/100th of a share, as the case may
     be.  For  purposes  of this Section 5, the number of shares of Common Stock
     deemed  to be issued and outstanding as of a given date shall be the sum of
     the  number of shares of Common Stock (excluding any treasury shares of the
     Company)  issued  and  outstanding.

          e)     Notice  to  the  Holder.
                 -----------------------

               i.     Adjustment  to  Conversion Price.  Whenever the Conversion
                      --------------------------------
          Price  is  adjusted  pursuant  to any provision of this Section 5, the
          Company  shall promptly mail to each Holder a notice setting forth the
          Conversion  Price  after  such  adjustment  and  setting forth a brief
          statement  of the facts requiring such adjustment and the calculations
          undergirding  such  adjustment.

               ii.     Notice to Allow Conversion by Holder.  If (A) the Company
                       ------------------------------------
          shall  declare a dividend (or any other distribution in whatever form)
          on  the  Common  Stock,  (B)  the  Company  shall  declare  a  special
          nonrecurring cash dividend on or a redemption of the Common Stock, (C)
          the Company shall authorize the granting to some or all holders of the
          Common  Stock  of  rights or warrants to subscribe for or purchase any
          shares  of  capital  stock  of  any  class  or  of any rights, (D) the
          approval  of  any  stockholders  of  the  Company shall be required in
          connection  with  any  reclassification  of  the  Common  Stock,  any
          consolidation  or  merger to which the Company is a party, any sale or
          transfer  of all or substantially all of the assets of the Company, of
          any  compulsory  share  exchange whereby the Common Stock is converted
          into  other  securities,  cash  or  property  or (E) the Company shall
          authorize  the  voluntary  or  involuntary dissolution, liquidation or
          winding  up  of  the  affairs  of the Company, then, in each case, the
          Company  shall  cause  to be filed at each office or agency maintained
          for  the  purpose  of  conversion  of this Convertible Note, and shall
          cause  to  be  delivered to the Holder at its last address as it shall
          appear  upon  the Convertible Note Register, at least 10 calendar days
          prior  to  the  applicable  record  or  effective  date  hereinafter
          specified,  a  notice  stating (x) the date on which a record is to be
          taken  for  the  purpose  of  such dividend, distribution, redemption,
          rights  or warrants, or if a record is not to be taken, the date as of
          which the holders of the Common Stock of record to be entitled to such
          dividend,  distributions,  redemption,  rights  or  warrants are to be
          determined  or  (y)  the  date  on  which  such  reclassification,
          consolidation,  merger,

                                       14
<PAGE>
          sale,  transfer  or  share exchange is expected to become effective or
          close,  and  the  date  as of which it is expected that holders of the
          Common  Stock  of record shall be entitled to exchange their shares of
          the  Common  Stock  for securities, cash or other property deliverable
          upon  such  reclassification, consolidation, merger, sale, transfer or
          share  exchange,  provided  that the failure to deliver such notice or
          any  defect  therein  or  in the delivery thereof shall not affect the
          validity  of  the  corporate  action  required to be specified in such
          notice. The Holder is entitled to convert this Convertible Note during
          the  10-day  period  commencing on the date of such notice through the
          effective  date  of  the  event  triggering  such  notice.

     Section  6.     Redemption  At  Election  Of  Company.
     ----------      -------------------------------------

          a)     Redemption  at  Election of Company.  Subject to the provisions
                 -----------------------------------
     of  this  Section  6, the Company may redeem part or all of the outstanding
     Convertible  Note at the later of (i) such time as the Holder has the right
     to convert this Convertible Note into Common Stock pursuant to the terms of
     this  Convertible  Note and (ii) twelve (12) months from the Original Issue
     Date (the "REDEMPTION PERIOD"), provided however that such redemption right
     only  applies  if,  upon receiving notice of redemption, (x) the Holder has
     the right to convert any or all of the amount the Company intends to redeem
     at  the  Conversion  Price,  (y)  the  Company  intends  to  redeem  at the
     applicable Conversion Price, and (z) the Registration Statement registering
     the  Note Shares to be redeemed is effective. During the Redemption Period,
     the Company may deliver a notice to the Holder (the "REDEMPTION NOTICE") of
     its  irrevocable  election  to  redeem  some or all of the then outstanding
     principal  amount  of  this Convertible Note for cash in an amount equal to
     the  Optional  Redemption  Amount ("REDEMPTION AMOUNT") on the 20th Trading
     Day  following  the  date  the  Redemption  Notice  is  received  by Holder
     ("REDEMPTION  DATE"),  and the Redemption Amount shall be payable to Holder
     in  full  on  the  Redemption  Date  unless  Holder  elects  to convert its
     Convertible  Note  prior to such Redemption Date. The Company covenants and
     agrees  that it will honor all Notices of Conversion tendered from the time
     of delivery of the Redemption Notice through the date the Redemption Amount
     is  paid  in  full.

          b)     Redemption  Procedure.  The  Redemption Amount payment shall be
                 ---------------------
     payable  in  cash  on  the Redemption Date. Notwithstanding anything herein
     contained  to the contrary, if any portion of the Redemption Amount remains
     unpaid  after  such  date,  the  Holder may elect, by written notice to the
     Company  given  at  any  time thereafter, to invalidate such Redemption, ab
                                                                              --
     initio,  and,  with  respect to the Company's failure to pay the Redemption
     ------
     Amount,  the  Company  shall  have  no  further  right  to  exercise  such
     Redemption. Notwithstanding anything to the contrary in this Section 6, the
     Company's  determination  to  redeem in cash shall be applied ratably among
     the  Holders  of  Convertible  Note.  The  Holder  may elect to convert the
     outstanding  principal amount of the Convertible Note pursuant to Section 4
     prior  to actual payment in cash for any redemption under this Section 6 by
     the  delivery  of  a  Notice  of  Conversion  to  the  Company.

     Section  7.     Negative  Covenants  and  Representations.
     ----------      -----------------------------------------

                                       15
<PAGE>
          a)     As  long  as  any  portion  of  this  Convertible  Note remains
     outstanding  and  the  Company  has any obligations to the Holder under the
     Convertible Note, the Purchase Agreement, the Pledge and Security Agreement
     and any agreements executed in connection therewith, the Company shall not,
     and  shall  not  permit any of its Significant Subsidiaries to, directly or
     indirectly:

     i)   Incur  Indebtedness  (including  the  Indebtedness  evidenced  by this
          Convertible  Note) in excess of fifty percent (50%) of the PV-10 Value
          of  the  Company's  (or  such  Significant  Subsidiary's) total Proved
          Reserves, plus the Fair Market Value of the leases and pipeline assets
          associated  with  the  Barnett  Shale  Project;

     ii)  Amend  its  charter  documents,  including,  without  limitation,  its
          certificate of incorporation or formation, and its articles and bylaws
          or  limited  liability  agreement  or  other  operating  agreement, as
          applicable,  in  any  manner that materially and adversely affects any
          rights of the Holder, without the prior written consent of the Holder;

     iii) Create,  incur,  assume or permit to exist any Lien on or with respect
          to  any  of  the  assets  or  property  of  any character now owned or
          hereafter  acquired  by  the  Company,  Exploration Holding or Barnett
          Petrosearch,  except  for  Liens  on  assets  and property that in the
          aggregate  are equal to or less than the Permitted Amount, without the
          prior  written  consent  of  the  Holder;

     iv)  Sell,  transfer,  or  otherwise  dispose  of  any  of  its  membership
          interests  or  partnership interests in Exploration Holding or Barnett
          Petrosearch  without  the  prior  written  consent  of  the  Holder;

     v)   (A)  Pay  any  dividends  or  make  any  distributions  on  its equity
          securities; (B) purchase, redeem, retire, defease or otherwise acquire
          for  value any of its equity securities; (C) return any capital to any
          holder  of its equity securities; (D) make any distribution of assets,
          equity  securities,  obligations  or  securities  to any holder of its
          equity  securities;  or  (E)  set  apart any sum for any such purpose;
          provided,  however,  that the Company may repurchase its capital stock
          at  cost  from directors, officers, employees and consultants upon the
          exercise  of its right of repurchase upon termination of such person's
          employment  with  or  services  to the Company; and provided, further,
          however,  that  the Company and its subsidiaries shall be permitted to
          take  the  actions described in clauses (A)-(D) as long as, and to the
          extent  that,  after  taking  such actions, (Y) no Event of Default or
          event  which  with  the  passage of time or the giving of notice would
          constitute  an  Event  of  Default  shall  have  occurred, and (Z) the
          Collateral  Value  equals  or  exceeds  the  Outstanding  Principal.

     vi)  Enter  into any contractual obligation with any Affiliate or engage in
          any other transaction with any Affiliate except upon terms at least as
          favorable  to Company or such Subsidiary as an arms-length transaction
          with  unaffiliated  Person,

                                       16
<PAGE>
          provided,  however,  that  this  negative  covenant shall not apply to
          contractual  obligations  with  Affiliates  and  transactions  with
          Affiliates  involving  costs  or  liabilities  to  the Company or such
          Subsidiary  in  the  Permitted  Amount.

               As  to  Section 7(a)(i), on each quarterly Interest Payment Date,
          the Company shall certify to the Holder, in a form satisfactory to the
          Holder,  that no Event of Default, or event which, with the passage of
          time  or  the  giving  of notice would become an Event of Default, has
          occurred.  Such certificate shall demonstrate the Company's compliance
          with  the  Indebtedness  incurrence  test  set forth in subsection (a)
          foregoing  and  shall  set  forth  the  calculations  demonstrating
          compliance.  Such  quarterly valuations shall be based on management's
          valuations  where  and  to  the  degree  that  such  managers have the
          expertise  to  make  such  estimates  under  SEC  guidelines  and such
          valuations  will  be  true  and correct, to the best of such manager's
          ability,  and  conducted  in  accordance  with  any  SEC  guidelines.
          Additionally,  on  an  annual  basis,  the  Company  shall  conduct an
          independent  reserve  audit by an audit company of recognized national
          standing  and  experience in the area and provide the Holder a copy of
          the  results of such audit and its PV-10 Proved Reserves as filed with
          the  SEC,  together  with  management's  valuation  of  the leases and
          pipeline  assets  associated with the Barnett Shale Project. In making
          calculations of the Indebtedness incurrence test under Section 7(a)(i)
          hereof,  the  Company  shall not be entitled (i) to include either the
          assets  or  the  Indebtedness  of any Significant Subsidiary which the
          Company  has  elected  to  exclude  from  the  test (which Significant
          Subsidiary  must also meet the other requirements of the definition of
          Significant  Subsidiary  in  order to be excluded); or (ii) to include
          the  Fair  Market  Value of the leases and pipelines assets associated
          with  the  Barnett  Shale Project, unless and only to the extent that,
          the Company is a direct or indirect owner thereof by virtue of Barnett
          Petrosearch's  Partnership  Interest  therein.  In  the event that the
          Holder  disagrees  with  management's  valuations  of  the  leases and
          pipeline assets associated with the Barnett Shale Project provided for
          in  this  paragraph,  the  Holder  shall be entitled, at the Company's
          expense,  to an appraisal thereof by an appraiser selected or approved
          by  the  Holder.

          b)     The  Company  represents,  warrants  and covenants (i) that the
     Company  owns 100% of the membership interests in Exploration Holding; (ii)
     that  Exploration  Holding owns 100% of the membership interests in Barnett
     Petrosearch;  (iii) that Barnett Petrosearch owns the Partnership Interest;
     (iv)  that the sole asset of Barnett Petrosearch on the Original Issue Date
     is  the  Partnership  Interest; and (v) that after the Original Issue Date,
     the  only  assets  that  Barnett  Petrosearch,  L.L.C.  will  own  are  the
     Partnership  Interest  with  Exxon Mobil Corporation and others relating to
     the  development  of  the  Barnett  Shale  geologic  regions.

     Section  8.     Default  By  Company.
     ----------      --------------------

          a)     "EVENT  OF  DEFAULT"  means,  wherever  used herein, any of the
     following events (whatever the reason for such event and whether such event
     shall  be  voluntary  or

                                       17
<PAGE>
     involuntary  or  effected  by operation of law or pursuant to any judgment,
     decree  or  order  of  any  court,  or any order, rule or regulation of any
     administrative  or  governmental  body):

               i.     any  default in the payment of (A) the principal amount of
          any  Convertible  Note  or  (B) interest, liquidated damages and other
          amounts  owing  to  a  Holder  on  any  Convertible  Note or under the
          Purchase  Agreement, as and when the same shall become due and payable
          (whether  on a Conversion Date or the Maturity Date or by acceleration
          or otherwise) which default, solely in the case of an interest payment
          or  other default under clause (B) above, is not cured within five (5)
          Trading  Days;

               ii.     the  Company  shall fail the Indebtedness incurrence test
          set  forth  in Section 7(a)(i) hereof, provided that the Company shall
          have  90 days to meet such test if Company's failure to meet such test
          was  as  a  result of mark-to-market matters out of the control of the
          Company,  as  for  example fluctuations in the price of the commodity;

               iii.     the  Company  breaches its obligations to deliver shares
          of  Common  Stock  to  the  Holder  upon  conversion;

               iv.     any  covenant  or  agreement  contained  in  the Purchase
          Agreement  or  the  Convertible  Note  other than those covered by the
          Events  of  Defaults  described  in  foregoing  clause (i)-(iii),which
          failure is not cured, if possible to cure, within the earlier to occur
          of  (A)  60 days after notice of such failure sent by the Holder or by
          any  other  Holder  and  (B)  90  days after the Company has become or
          should  have  become  aware  of  such  failure;

               v.     any  representation  or  warranty made in this Convertible
          Note, the Purchase Agreement, any written statement pursuant hereto or
          thereto  or  any other report, financial statement or certificate made
          or  delivered  to  the  Holder  or any other Holder shall be untrue or
          incorrect  in  any material respect as of the date when made or deemed
          made  provided however, that in the event that the untrue or incorrect
          representation  or  warranty is of the type capable of being cured and
          is  cured  by  the  Company within the time frame set forth in Section
          8(a)(iv)  above, then it shall be deemed to be cured and non-material;

               vi.     the  Company  or  any  Significant  Subsidiary  shall  be
          subject  to  a  Bankruptcy Event or shall fail to pay its debts in the
          aggregate  amount  of  $500,000 or more, as they become due, or within
          120  days  of  the  stated  due  date,  (except  as  to debts that are
          legitimately  in  dispute  as to which the Company is taking action to
          resolve  the  dispute  and  as  to  which  reserves  are  set aside in
          accordance  with  and  to  the  extent  required  by  GAAP);

               vii.     the Company or any Significant Subsidiary shall default,
          which default shall not be cured within any applicable cure period, on
          any  of  its  obligations

                                       18
<PAGE>
          under  any  mortgage,  credit  agreement  or other facility, indenture
          agreement,  factoring  agreement or other instrument under which there
          may  be  issued,  or  by  which there may be secured or evidenced, any
          indebtedness  for  borrowed  money  or  money  due under any long term
          leasing  or  factoring  arrangement  that  (a)  involves an obligation
          greater  than  $500,000, whether such indebtedness now exists or shall
          hereafter be created, and (b) results in such indebtedness becoming or
          being  declared  due  and  payable prior to the date on which it would
          otherwise  become  due  and  payable;

               viii.     any  monetary  judgment,  writ or similar final process
          shall  be  entered  or  filed  against  the  Company,  any Significant
          Subsidiary  or  any  of  their respective property or other assets for
          $500,000  or  more,  and  such judgment, writ or similar final process
          shall  remain  unvacated,  unbonded  or  unstayed  for  a period of 45
          calendar  days;

               ix.      any  Event  of  Default  under  the  Pledge and Security
          Agreement,  the  Registration Rights Agreement, or any other agreement
          executed  in  connection  with  this  Convertible  Note  occurs;  or

               x.     any  tax  lien in the amount of $500,000 or more, is filed
          against  the  Company or Exploration Holding or on any property of the
          Company  or  Exploration  Holding  for  any  past-due  tax obligations
          (except  as  to tax liens that are legitimately in dispute as to which
          the  Company  is  taking action to resolve the dispute and as to which
          reserves  are  set aside in accordance with and to the extent required
          by  GAAP).

          b)     Remedies Upon Event of Default. If any Event of Default occurs,
                 ------------------------------
     the outstanding principal amount of this Convertible Note, plus accrued but
     unpaid  interest,  liquidated  damages  (if any) and other amounts owing in
     respect  thereof  through  the  date  of acceleration, shall become, at the
     Holder's  election,  immediately  due and payable in cash; provided however
     that  in  the  case  of  an Event of Default under Section 8(a)(vi) hereof,
     acceleration  shall  be  automatic,  without  action  by the Holder and the
     indebtedness  evidenced  by  this Convertible Note shall be immediately due
     and payable. If an Event of Default occurs, the Holder shall be entitled to
     pursue  all  rights  and  remedies  with  respect  to the Collateral and to
     foreclose on it, take possession, and otherwise realize on it in accordance
     with  the  Pledge  and  Security  Agreement.  In  connection  with  such
     acceleration described herein, the Holder need not provide, and the Company
     hereby  waives,  any  presentment,  demand,  protest,  notice  of intent to
     accelerate,  notice  of acceleration, and other notice of any kind, and the
     Holder  may  immediately and without expiration of any grace period enforce
     any  and  all  of  its rights and remedies hereunder and all other remedies
     available  to  it  under applicable law. Such acceleration may be rescinded
     and  annulled  by  Holder  at  any  time prior to payment hereunder and the
     Holder shall have all rights as a holder of the Convertible Note until such
     time,  if any, as the Holder receives full payment pursuant to this Section
     8(b).  No such rescission or annulment shall affect any subsequent Event of
     Default  or  impair  any  right  consequent  thereon.

                                       19
<PAGE>
     Section  9.     Registration  Rights.  The  Company  shall  comply with its
                     --------------------
obligations  under  the Purchase Agreement and the Registration Rights Agreement
executed  in  connection  therewith.

     Section 10.     Senior Status/ Release/Partial Release of Collateral.  This
                     ----------------------------------------------------
Convertible  Note  is  a  senior  secured  note and is pari passu with all other
senior indebtedness of the Company.  This Convertible Note is secured by a first
and  prior  security interest in a twenty-five percent (25%) membership interest
in  Exploration Holding and certain other Collateral as defined in and evidenced
by  the  Pledge and Security Agreement.  The Holder shall execute and deliver to
the  Company  a  full  release  of the Collateral in the case of clauses (a)-(c)
following,  or  a  partial  release of the Collateral in the case of clause (d),
upon  the  occurrence  of  the following:  (a) payment in full of all principal,
interest  and other sums due and owing to the Holder under this Convertible Note
in  accordance  with  its  terms  and  fulfillment  of all obligations under the
Purchase Agreement and the Pledge and Security Agreement and any other agreement
executed  in  connection  herewith;  (b)  redemption  by  the  Company  of  the
Convertible  Note  under the redemption terms set forth in this Convertible Note
and  fulfillment  of all obligations under the Purchase Agreement and the Pledge
and  Security Agreement and any other agreement executed in connection herewith;
(c)  conversion  in  full of this Convertible Note by Holder under the terms set
forth  in  this  Convertible  Note  and fulfillment of all obligations under the
Purchase Agreement and the Pledge and Security Agreement and any other agreement
executed in connection herewith; or (d) as long as no Event of Default, or event
which with the passage of time or the giving of notice would constitute an Event
of  Default,  occurs,  if  (i)  the Company's shares of Common Stock trade above
$1.50 for a period of ten (10) consecutive Trading Days, (ii) the Holder has the
right  to  convert this Convertible Note under Section 4(a) hereof and (iii) the
Initial  Registration  Statement  registering  the  Note  Shares  is  effective,
provided  that, to the extent that only a portion of the Note Shares represented
by a percentage is subject to the effective Initial Registration Statement, then
that  same percentage of the Collateral shall be released by the Holder from the
lien  and security interest created under the Pledge and Security Agreement.  By
way  of  example,  if 70% of the Note Shares are subject to an effective Initial
Registration  Statement  (and  the  other conditions in clause (d) foregoing are
met),  then 70% of the Collateral (generally, 70% of the 25% membership interest
in  Exploration  Holding  )  shall  be  released by the Holder from the lien and
security  interest  created  under the Pledge and Security Agreement. The Holder
shall,  at the cost and expense of the Company, and to the extent the Holder has
not  exercised  any  of  its remedies in accordance with the Pledge and Security
Agreement, (a) release from the lien and security interest created by the Pledge
and  Security  Agreement  and  reassign  to  the  Company  the percentage of the
Collateral  (and any property or rights assigned by the Company to the Holder by
the Pledge and Security Agreement or by any agreement or agreements supplemental
hereto with respect thereto) required to be released by this Section, and (b) do
and  execute  all  such  acts, things and instruments as are necessary to effect
such partial release or partial reassignment including the return to the Company
of  the  certificates  evidencing the released Pledged Securities (as defined in
the  Pledge  and  Security  Agreement,  hereafter  the  "PLEDGED  SECURITIES"),
including,  without  limitation,  where  appropriate,  a  partial release of any
financing  statement; provided however, that, notwithstanding the foregoing, the
Holder  shall  not  be  required  to  redeliver  any  certificates  representing
Collateral  to  be  released to the Company, unless simultaneously therewith the
Holder shall receive from the Company (Y) a certificate representing the Pledged
Securities  that  will  remain subject to the lien and security interest created
under  the  Pledge  and  Security Agreement, and (Z) a blank units power related
thereto.

                                       20
<PAGE>
     Section  11.     Miscellaneous.
     -----------      -------------

          a)     Notices.  Any  and  all  notices  or  other  communications  or
                 -------
     deliveries  to  be  provided  by  the  Holder hereunder, including, without
     limitation,  any  Notice  of  Conversion, shall be in writing and delivered
     personally,  by  facsimile,  or  sent  by a nationally recognized overnight
     courier service, addressed to the Company, at the address set forth on page
     1  hereof,  facsimile  number  (713)  961-9338, Attn: David Collins or such
     other  facsimile  number  or  address  as  the Company may specify for such
     purpose  by  notice to the Holder delivered in accordance with this Section
     11.  Any  and  all  notices  or  other  communications  or deliveries to be
     provided  by  the  Company  hereunder  shall  be  in  writing and delivered
     personally,  by  facsimile,  or  sent  by a nationally recognized overnight
     courier  service  addressed  to the Holder at the following address: c/o RR
     Advisors, LLC, 200 Crescent Court, Suite 1060, Dallas, TX 75201-1834, Attn:
     Robert Raymond, facsimile number (214) 871-8683 or at such other address or
     facsimile  number  as  the Holder may specify for such purpose by notice to
     the  Company  delivered  in  accordance with this Section 11. Any notice or
     other  communication  or  deliveries  hereunder  shall  be deemed given and
     effective  on  the earliest of (i) the date of transmission, if such notice
     or  communication  is  delivered  via  facsimile  at  the  facsimile number
     specified  in this Section 11 prior to 5:30 p.m. (New York City time), (ii)
     the  date immediately following the date of transmission, if such notice or
     communication  is delivered via facsimile at the facsimile number specified
     in  this  Section  11 between 5:30 p.m. (New York City time) and 11:59 p.m.
     (New  York  City time) on any date, (iii) the second Business Day following
     the  date  of  mailing,  if sent by nationally recognized overnight courier
     service,  or  (iv)  upon actual receipt by the party to whom such notice is
     required  to  be  given.

          b)     Absolute  Obligation.  Except  as expressly provided herein, no
                 --------------------
     provision  of this Convertible Note shall alter or impair the obligation of
     the  Company, which is absolute and unconditional, to pay the principal of,
     liquidated damages and accrued interest, as applicable, on this Convertible
     Note  at  the  time,  place,  and rate, and in the coin or currency, herein
     prescribed.  This  Convertible  Note  is  a  direct  debt obligation of the
     Company.  This Convertible Note ranks pari passu with all other Convertible
                                           ---- -----
     Note  now  or  hereafter  issued  under  the  terms  set  forth  herein.

          c)     Lost  or  Mutilated Convertible Note.  If this Convertible Note
                 ------------------------------------
     shall  be  mutilated,  lost, stolen or destroyed, the Company shall execute
     and  deliver,  in  exchange and substitution for and upon cancellation of a
     mutilated  Convertible  Note,  or in lieu of or in substitution for a lost,
     stolen  or  destroyed  Convertible  Note,  a  new  Convertible Note for the
     principal  amount  of  this  Convertible Note so mutilated, lost, stolen or
     destroyed,  but  only  upon  receipt  of  evidence  of  such loss, theft or
     destruction  of  such  Convertible  Note,  and  of  the  ownership  hereof,
     reasonably  satisfactory  to  the  Company and if requested by the Company,
     indemnity  also  reasonably  satisfactory  to  the  Company.

          d)     Governing  Law.  All  questions  concerning  the  construction,
                 --------------
     validity,  enforcement and interpretation of this Convertible Note shall be
     governed by and construed and enforced in accordance with the internal laws
     of  the  State  of  Texas,

                                       21
<PAGE>
     without  regard  to  the principles of conflict of laws thereof. Each party
     agrees  that  all  legal  proceedings  concerning  the  interpretation,
     enforcement  and defense of the Convertible Note (whether brought against a
     party  hereto  or  its  respective  Affiliates,  directors,  officers,
     shareholders,  employees  or  agents)  shall  be commenced in the state and
     federal  courts  sitting  in  the  City  of  Houston,  Texas  (the "Houston
                                                                         -------
     Courts").  Each  party  hereto  hereby irrevocably submits to the exclusive
     ------
     jurisdiction  of  the  Houston  Courts  for the adjudication of any dispute
     hereunder  or  in  connection herewith or with any transaction contemplated
     hereby  or  discussed herein, and hereby irrevocably waives, and agrees not
     to  assert  in  any  suit,  action  or proceeding, any claim that it is not
     personally subject to the jurisdiction of such Houston Courts, or that such
     Houston  Courts  are improper or inconvenient venue for such proceeding. If
     either  party  shall  commence  an  action  or  proceeding  to  enforce any
     provisions  of  this  Convertible  Note,  then the prevailing party in such
     action  or  proceeding  shall  be  reimbursed  by  the  other party for its
     attorney's fees and other costs and expenses incurred in the investigation,
     preparation  and  prosecution  of  such  action  or proceeding. The Company
     agrees  to  reimburse  the  Holder  on  demand  for all costs, expenses and
     charges  (including,  without  limitation,  fees and charges of counsel and
     court  costs)  in  connection  with the preparation or modification of this
     Convertible Note, the Purchase Agreement, the Pledge and Security Agreement
     and  the  other  agreements  executed  in  connection  herewith,  and  the
     collection,  performance  or  enforcement  of this Convertible Note and all
     such agreements, and the defense or prosecution of any rights of the Holder
     pursuant  to  this  Convertible  Note  and  such  agreements.

          e)     Waiver.  Any waiver by the Company or the Holder of a breach of
                 ------
     any provision of this Convertible Note shall not operate as or be construed
     to  be  a  waiver of any other breach of such provision or of any breach of
     any other provision of this Convertible Note. The failure of the Company or
     the  Holder to insist upon strict adherence to any term of this Convertible
     Note  on  one or more occasions shall not be considered a waiver or deprive
     that  party of the right thereafter to insist upon strict adherence to that
     term  or any other term of this Convertible Note. Any waiver by the Company
     or  the  Holder  must  be  in  writing.

          f)     Severability.  If  any  provision  of  this Convertible Note is
                 ------------
     invalid,  illegal  or  unenforceable,  the balance of this Convertible Note
     shall  remain in effect, and if any provision is inapplicable to any Person
     or  circumstance,  it  shall  nevertheless  remain  applicable to all other
     Persons  and  circumstances.

          g)     Usury  Savings  Clause.  It is the intention of the Company and
                 ----------------------
     the  holder  of this Convertible Note to comply with applicable usury laws;
     accordingly,  it  is  agreed  that  notwithstanding  any  provisions to the
     contrary  in this Convertible Note, in no event shall this Convertible Note
     and/or  any  other  instrument or document executed in connection with this
     Convertible  Note  require  or  permit  the  payment,  charge or receipt of
     interest,  as defined under applicable usury laws, in excess of the maximum
     amount permitted by such laws. If any such excess of interest is contracted
     for,  charged,  taken, reserved or received under this Convertible Note, or
     if  the  maturity of the indebtedness evidenced by this Convertible Note is
     accelerated,  in  whole  or  in  part,  or  in  the  event  that

                                       22
<PAGE>
     all  or part of the principal of or interest on this Convertible Note shall
     be  prepaid, so that under any of such circumstances the amount of interest
     contracted for, charged, taken, reserved or received under this Convertible
     Note  on  the  amount  of  principal actually outstanding from time to time
     under  this  Convertible  Note  shall exceed the maximum amount of interest
     permitted  by  applicable  usury  laws,  then  in  any  such  event (a) the
     provisions  of  this  paragraph  shall  govern and control, (b) neither the
     Company nor any other party now or hereafter liable for the payment of this
     Convertible  Note  shall be obligated to pay the amount of such interest to
     the extent that it is in excess of the maximum amount of interest permitted
     to  be  contracted for by, charged to, taken, reserved or received from the
     party  obligated  thereon  under applicable usury laws, (c) any such excess
     which  may  have been collected either shall be applied as a credit against
     the  then  unpaid  principal amount on this Convertible Note or refunded to
     the  party  paying  the  same,  at the holder's option, (d) any such excess
     which  may have been charged shall be canceled ab initio and be of no force
     or  effect,  and  (e) the effective rate of interest shall be automatically
     reduced  to  the maximum lawful rate of interest permitted under applicable
     usury  laws as now or hereafter construed by the courts having jurisdiction
     thereof.  It  is  further agreed that, without limitation of the foregoing,
     all  calculations  of  the rate of interest contracted for, charged, taken,
     reserved  or  received  under this Convertible Note, which are made for the
     purpose of determining whether such rate exceeds the maximum lawful rate of
     interest  shall  be made, to the extent permitted by applicable usury laws,
     by  amortizing,  prorating,  allocating and spreading in equal parts during
     the  period  of  the full stated term of the indebtedness evidenced by this
     Convertible  Note,  all  interest  at  any  time contracted for, charged or
     received  from  the Company or otherwise by the holder or holders hereof in
     connection  with  this  Convertible  Note.

          h)     Waiver.  The  Company  covenants  (to  the  extent  that it may
                 -------
     lawfully do so) that it shall not at any time insist upon, plead, or in any
     manner  whatsoever  claim  or  take the benefit or advantage .of, any stay,
     extension  or  usury  law  or other law which would prohibit or forgive the
     Company  from  paying all or any portion of the principal of or interest on
     this  Convertible  Note as contemplated herein, wherever enacted, now or at
     any  time  hereafter  in  force,  or  which may affect the covenants or the
     performance  of  this  Convertible Note and the related agreements, and the
     Company  (to  the extent it may lawfully do so) hereby expressly waives all
     benefits  or  advantage of any such law, and covenants that it will not, by
     resort  to any such law, hinder, delay or impede the execution of any power
     herein  granted  to the Holder, but will suffer and permit the execution of
     every  such  as  though  no  such  law  has  been  enacted.

          i)     Next  Business  Day.  Whenever  any payment or other obligation
                 -------------------
     hereunder  shall  be  due  on a day other than a Business Day, such payment
     shall  be  made  on  the  next  succeeding  Business  Day.

          j)     Business  Purpose.  The  Company  agrees,  represents,  and
                 -----------------
     acknowledges  that  the  purposes  of consideration furnished by the Holder
     will  be  used  for  solely  for  business, commercial, investment or other
     similar  purposes  and  not  personal,  family  or  agricultural  purposes.

                                       23
<PAGE>
          k)     Headings.  The  headings  contained  herein are for convenience
                 --------
     only,  do  not  constitute a part of this Convertible Note and shall not be
     deemed  to  limit  or  affect  any  of  the  provisions  hereof.

                   [SIGNATURES APPEAR ON THE FOLLOWING PAGE.]

                                       24
<PAGE>
     IN WITNESS WHEREOF, the Company has caused this Convertible Note to be duly
executed  by  a  duly  authorized  officer as of the date first above indicated.

                                   PETROSEARCH ENERGY CORPORATION

                                   By: /s/ Richard D. Dole
                                      ------------------------------------------
                                        Name: Richard D. Dole
                                        Title: Chief Executive Officer and
                                               President

                            Signature page to Notes
<PAGE>
                                    ANNEX A

                              NOTICE OF CONVERSION

     The  undersigned  hereby  elects  to  convert principal under the 8% Senior
Secured  Convertible  Note  due  February  ___  2010  of  Petrosearch  Energy
Corporation,  a Nevada corporation (the "Company"), into shares of common stock,
                                         -------
par value $0.001 per share (the "Common Stock"), of the Company according to the
                                 ------------
conditions  hereof, as of the date written below.  If shares of Common Stock are
to be issued in the name of a person other than the undersigned, the undersigned
will  pay  all  transfer  taxes  payable  with respect thereto and is delivering
herewith  such  certificates and opinions as reasonably requested by the Company
in  accordance  therewith.  No  fee  will  be  charged  to  the  Holder  for any
conversion,  except  for  such  transfer  taxes,  if  any.

     The  undersigned agrees to comply with the prospectus delivery requirements
under  the  applicable  securities  laws  in connection with any transfer of the
aforesaid  shares  of  Common  Stock.

Conversion  calculations:

                         Date  to  Effect  Conversion:
                                                        ------------------------

                         Principal  Amount  of Convertible Note to be Converted:

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

                         Number of shares of Common Stock to be issued:
                                                                         -------

                         Signature:
                                   ---------------------------------------------

                         Name:
                              --------------------------------------------------

                         Address:
                                  ----------------------------------------------

                                       26
<PAGE>
                                   SCHEDULE 1

                              CONVERSION SCHEDULE

The  8%  Senior Secured Convertible Note due February  __, 2010 in the aggregate
principal  amount  of  $10,000,000  is issued by Petrosearch Energy Corporation.
This  Conversion Schedule reflects conversions made under Section 4 of the above
referenced  Convertible  Note.

                                     Dated:

<TABLE>
<CAPTION>
---------------------  ----------  --------------  ----------------
                                     Aggregate
                                     Principal
Date of Conversion     Amount of       Amount
(or for first entry,   Conversion    Remaining     Company Attest
Original Issue Date)               Subsequent to
                                     Conversion
                                    (or original
                                     Principal
                                      Amount)
---------------------  ----------  --------------  ----------------
<S>                    <C>         <C>             <C>

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

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

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

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

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

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

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

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

---------------------  ----------  --------------  ----------------
</TABLE>

                                   Schedule 1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00116-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00116-of-00352.parquet"}]]