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Unassociated Document

    EXHIBIT
      10.15

    

    BILL
      OF
      SALE AND ASSIGNMENT OF CONTRACTUAL RIGHTS

    

      
        	
                STATE
                  OF TEXAS

              	
                §

              
	 	
                §

              
	
                COUNTIES
                  OF CARSON

              	
                §

              
	
                 

              	§
	
                AND
                  GRAY

              	
                §

              

      

    

     

    THIS
      BILL
      OF SALE AND ASSIGNMENT OF CONTRACTUAL RIGHTS (the “Bill of Sale”) is made and
      entered into as of the 9th
      day of
      August 2007, by and among CHANCELLOR GROUP, INC., a Nevada corporation, whose
      address is 216 S. Price Road, Pampa, Texas 79065 ("Chancellor"), GRYPHON
      PRODUCTION COMPANY, LLC, a Texas limited liability company, whose address is
      P.O. Box 742, Pampa, Texas 79066 ("Gryphon Production"), and GRYPHON FIELD
      SERVICES, LLC, a Texas limited liability company, whose address is P.O. Box
      742,
      Pampa, Texas 79066 ("Gryphon Field Services") (collectively, with Chancellor
      and
      Gryphon Production, individually and collectively, the “Seller”), and CAPWEST
      RESOURCES, INC., a Texas corporation, whose address is 508 West Wall Street,
      Suite 1100, Midland, Texas 79701 (the “Purchaser”). The Seller and the Purchaser
      are sometimes hereinafter collectively referred to as the
“Parties”.

    

    NOTICE
      IS
      TAKEN OF THE FOLLOWING:

    

    
      	
              A.

            	
              The
                Parties have previously entered into that certain Loan Agreement,
                dated as
                of April 13, 2007 (the “Loan Agreement”). Pursuant to the terms of the
                Loan Agreement, the Purchaser has agreed to advance to the Seller
                an
                advance term loan, in the original principal amount of Ten Million
                and
                No/100 Dollars ($10,000,000.00) (the “Loan”). The Loan is evidenced by
                that certain Advancing Line of Credit/ Term Note, in the original
                principal amount of Ten Million and No/100 Dollars ($10,000,000.00),
                executed by Seller, as Maker, in favor of the Purchaser (the “Note”), and
                the Seller’s performance under that Note is secured by those certain Deeds
                of Trust, Mortgages, Security Agreements, Assignments of Production
                and
                Financing Statements, to be recorded in Carson and Gray Counties,
                Texas,
                among other documents (the “Deeds of Trust”). Additionally, the Parties
                have entered into that certain First Amendment to Loan Agreement,
                dated of
                even date herewith (the “First Amendment”).

            

    

    

    
      	
              B.

            	
              The
                parties have also entered into that certain Bill of Sale and Assignment
                of
                Contractual Rights, also dated as of April 13, 2007, and recorded
                respectively in Volume 45, Page 206 of the Official Public Records
                of
                Carson County, Texas and Volume 861, Page 1700 of the Official Public
                Records of Gray County, Texas (the “Original Bill of Sale”). Under the
                terms of the Original Bill of Sale, the Seller conveyed to the Purchaser
                an additional fifteen percent (15.0%) of the Gross Oil and Gas Proceeds,
                as defined therein. This Bill of Sale conveys an interest that is
                in
                addition to, but not in lieu of, the interest conveyed under the
                Original
                Bill of Sale. As so amended, the Loan Agreement, the Note, and the
                Deeds
                of Trust are collectively referred to as the “Loan
                Papers.”

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    
      	
              B.

            	
              The
                Parties have agreed to enter into this Bill of Sale in furtherance
                of the
                terms, conditions and obligations between the Parties, as more
                particularly set forth in the Loan
                Papers.

            

    

    

    
      	
              C.

            	
              The
                Parties make reference to the Loan Papers and incorporate the same
                herein
                by reference insofar as the same relate to this Bill of Sale for
                all
                purposes, counterparts of said Loan Papers, being in the possession
                of
                each of the Parties.

            

    

    

    NOW
      THEREFORE, for and in consideration of Ten Dollars ($10.00) in hand paid by
      Purchaser, the receipt of which is acknowledged by Seller, and the mutual
      promises contained in the Loan Papers, Seller hereby sells, assigns, transfers,
      and sets over to Purchaser, its successors and assigns, to commence as set
      out
      below, a personal property interest in contractual rights, and not an interest
      in real property, equal to five percent (5%) of the Gross Oil and Gas Proceeds
      (as the phrase “Gross Oil and Gas Proceeds” is defined herein), derived and
      produced from Seller's Mineral Interests in those certain oil and gas leases
      and
      wells located in Carson and Gray Counties, Texas, and more particularly
      described on Exhibit “A” attached hereto and incorporated herein for all
      purposes, Seller's Mineral Interests therein, as of the date hereof, being
      also
      set forth on Exhibit “A” (collectively, the “Mortgaged Property”).

    

    For
      purposes of this Bill of Sale, “Gross Oil and Gas Proceeds” means for any
      period, the aggregate amount of all revenue paid to and received by Borrower
      and
      derived from any disposition of oil, gas, or associated hydrocarbons, and any
      revenues derived from the sale or settlement of crude oil or natural gas options
      attributable to the Mortgaged Properties, less all: (a) amounts attributable
      to
      production, severance, excise, ad valorem, windfall profits or any other tax
      or
      assessment against the Mortgaged Properties or levied on or measured by
      production; (b) payments due to other working interest owners in the Mortgaged
      Property; (c) payments due to the owners (other than Borrower) of any royalties,
      overriding royalties, net profits interests (other than the interest of CapWest
      Resources, Inc. in overriding royalty interests and Contractual Rights, as
      provided for under the Subordinate Loan Agreement), production payments and
      any
      other similar interests which are payable out of or attributable to any
      production of such oil, gas, or associated hydrocarbons in existence as of
      the
      date of this Agreement; and (d) payments for delay rentals, shut-in royalty
      payments and other similar types of payments to lessors or similar parties
      reasonably required to maintain the Mortgaged Properties in effect.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    Seller
      represents to Purchaser that it is the owner of an undivided interest in the
      Mortgaged Property, and has the authority and power to make this Bill of Sale
      to
      Purchaser of five percent (5%) of the Gross Oil and Gas Proceeds (the
“Contractual Rights”) derived and produced from Seller’s Mineral Interests in
      the Property.

    

    The
      Contractual Rights assigned shall be paid within ten (10) days of the receipt
      of
      such proceeds by Seller, the payments to Purchaser to commence effective the
      first day of the month following Payout all as more particularly set forth
      in
      the Loan Agreement of even date herewith, and this Bill of Sale shall be
      recorded in accordance with the terms and conditions of said Loan Agreement,
      and
      as provided below.

    

    Purchaser
      shall have and hold said Contractual Rights unto Purchaser, its successor and
      assigns. For the same consideration Seller covenants with and warrants to
      Purchaser that the Contractual Rights are free and clear of all liens and
      encumbrances, and that Seller will warrant and forever defend the title thereto
      unto Purchaser, its successors and assigns, against all persons whomsoever
      lawfully having or claiming an interest therein by, through or under Seller,
      but
      none other.

    

    The
      Loan
      Papers are incorporated herein by reference for a more particular description
      of
      the Contractual Rights, their manner of computation, certain provisions
      governing the sale of the Contractual Rights by Purchaser or in combination
      with
      the sale of Seller's Mineral Interests in the Property and for all other
      pertinent purposes. To the extent there is a conflict between the terms of
      this
      Bill of Sale and the terms of the Loan Papers or the Loan Papers contain terms
      pertaining to the Contractual Rights not contained herein, the terms of the
      Loan
      Papers shall control.

    

    This
      Bill
      of Sale maybe executed in any number of counterparts, each of which shall be
      deemed to be an original, and each of which can be recorded in the county
      records, but all of which taken together shall constitute one and the same
      instrument. Seller and Purchaser agree that Purchaser shall gather all such
      counterparts and is authorized to take the same apart and reassemble the parts
      into one complete counterpart, copies of which will be delivered to
      Seller.

    

    As
      stated, the contractual interest conveyed under this Bill of Sale is in addition
      to, and not in lieu of, the interest conveyed under the Original Bill of Sale.
      This Bill of Sale is executed and delivered on the day and year first written
      above, but effective as of the date of recording of this Bill of Said under
      the
      terms of the Loan Agreement.

    

    {The
      remainder of this page is intentionally left blank. Signature page
      follows.}

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      	 	 	 
	 	CHANCELLOR
              GROUP, INC.
	 	 
	216
              S. Price Road
              Pampa,
                Texas 79065 

            	 
 	 
 
	 	By:  	/s/ Bradley
              Fischer
	 	
              
Bradley
              W. Fischer
	 	President

    

    
      

        	 	 	 
	 	GRYPHON
                PRODUCTION COMPANY, LLC
	 	 
	
                P.O.
                  Box 742

                Pampa,
                  Texas 79066

              	 
 	 
 
	 	By:  	/s/ Bradley
                Fischer
	 	
                
Bradley
                W. Fischer
	 	President

      

    

    
      
        

          	 	 	 
	 	GRYPHON
                  FIELD SERVICES, LLC
	 	 
	
                  P.O.
                    Box 742

                  Pampa,
                    Texas 79066

                	 
 	 
 
	 	By:  	/s/ Bradley
                  Fischer
	 	
                  
Bradley
                  W. Fischer
	 	President

        

      

      
        
          

            	 	 	 
	 	 	SELLER
	 	 	 
	 	CAPWEST
                    RESOURCES, INC. 
	 	 
	
                    508
                      West Wall Street, Suite 1100

                    Midland,
                      Texas 79701

                  	 
 	 
 
	 	By:  	/s/ Mark
                    McKinney
	 	
                    
MARK
                    D. MCKINNEY
	 	President
	 	 
	 	PURCHASER

          

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
              THE
                STATE OF                  
                 TX                     
                 

            	
              §

            
	
               

            	
              §

            
	
              COUNTY
                OF
                                
                GRAY                       
                 

            	
              §

            

    

    

    This
      instrument was acknowledged before me on the 21day
      of
      August 2007 by BRADLEY FISCHER, President of CHANCELLOR GROUP, INC., a Nevada
      corporation, on behalf of said corporation.

    
      	 	 	 
	 	 
	 
 	 
 	 
 
	 	  	/s/ Brandi
              Wyatt
	 	
              
Notary
              Public, State of 
	 	 

      
        	
                THE
                  STATE OF                  
                   TX                     
                   

              	
                §

              
	
                 

              	
                §

              
	
                COUNTY
                  OF
                                  
                  GRAY                       
                   

              	
                §

              

      

    

     

    This
      instrument was acknowledged before me on the 21
      day
      of
      August 2007 by BRADLEY FISCHER, President of GRYPHON PRODUCTION COMPANY, LLC,
      a
      Texas limited liability company, on behalf of said company.

    
      	 	 	 
	 	 
	 
 	 
 	 
 
	 	  	/s/ Brandi
              Wyatt
	 	
              
Notary
              Public, State of 
	 	 

    

    
      
        	
                THE
                  STATE OF                  
                   TX                     
                   

              	
                §

              
	
                 

              	
                §

              
	
                COUNTY
                  OF
                                  
                  GRAY                       
                   

              	
                §

              

      

    

    

    This
      instrument was acknowledged before me on the 21
      day
      of
      August 2007 by BRADLEY FISCHER, President of GRYPHON FIELD SERVICES, LLC, a
      Texas limited liability company, on behalf of said company.

    
      	 	 	 
	 	 
	 
 	 
 	 
 
	 	  	/s/ Brandi
              Wyatt
	 	
              
Notary
              Public, State of 
	 	 

    

     

    
      
        	
                THE
                  STATE OF TEXAS

              	
                §

              
	
                 

              	
                §

              
	
                COUNTY
                  OF MIDLAND

              	
                §

              

      

    

    

    This
      instrument was acknowledged before me on the 28th
      day
      of
      August 2007, by MARK D. MCKINNEY, President of CAPWEST RESOURCES, INC., a Texas
      corporation, on behalf of said corporation.

    
      
        	 	 	 
	 	 
	 
 	 
 	 
 
	 	  	/s/ Sandy
                Pruitt
	 	
                
Notary
                Public, State of TexasUnassociated Document

    EXHIBIT
      10.16

    

    FIRST
      MODIFICATION AND AMENDMENT

    

    TO

    

    ADVANCING
      LINE OF CREDIT/TERM NOTE

    

    THIS
      FIRST MODIFICATION AND AMENDMENT TO ADVANCING LINE OF CREDIT/TERM NOTE (this
      “Modification”) is entered into as of the 9th
      day of
      August 2007, by and among CHANCELLOR GROUP, INC., a Nevada corporation, whose
      address for purposes of this Agreement is 216 S. Price Road, Pampa, Texas 79065
      (“Chancellor”), GRYPHON PRODUCTION COMPANY, LLC, a Texas limited liability
      company, whose address for purposes of this Agreement is P. O. Box 742, Pampa,
      Texas 79066 (“Production”), and GRYPHON FIELD SERVICES, LLC, a Texas limited
      liability company, whose address for purposes of this Agreement is P. O. Box
      742, Pampa, Texas 79066 (“Field Services”)(Chancellor, Production, and Field
      Services being collectively referred to herein as the “Maker”), and CAPWEST
      RESOURCES, INC., a Texas corporation, whose address for purposes of this
      Agreement is 508 West Wall Street, Suite 1100, Midland, Texas 79701 (the
      ALender@).

    

    NOTICE
      IS
      TAKEN OF THE FOLLOWING:

    

    
      	
              A.

            	
              Maker
                and Lender have previously entered into that certain Loan Agreement,
                dated
                as of April 13, 2007 (the “Loan Agreement”). Capitalized terms not
                otherwise defined, or re-defined herein, are defined in the Loan
                Agreement.

            

    

    

    
      	
              B.

            	
              The
                Loan Agreement provides for an advancing line of credit/term loan
                in the
                amount of Ten Million and No/100 Dollars ($10,000,000.00), with an
                existing Borrowing Base in the amount of Three Million Seven Hundred
                Thousand ($3,700,000.00) (the “Loan”). The Loan is evidenced by an
                Advancing Line of Credit/Term Note, dated as of April 13, 2007, executed
                by the Maker in favor of the Lender (the “Note”). The Note is
                collateralized by second lien Deeds of Trust covering oil and gas
                properties in Carson and Gray Counties, Texas (collectively, the
“Deeds of
                Trust”), as well as equipment
                and other personal property identified in and covered by the Security
                Agreement, and the Warrants. 

            

      	 	 

      	C.	The Maker and the Bank have now entered into that
              certain
              First Amendment to Loan Agreement, dated of even date herewith (the
“First
              Amendment”). Pursuant to the terms of the First Amendment, the Maker and
              the Bank have agreed to enter into this Modification in order to effect
              the amendments in the Note, to which they have now
              agreed.

    

     

    NOW,
      THEREFORE, for and in consideration of the premises and other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged,
      the
      parties hereto agree to amend the terms of the Loan Agreement as
      follows:

    

    
      	
              1.

            	
              Definitions.

            

    

    

    Unless
      otherwise specifically defined herein, all defined terms used in this
      Modification shall have their respective meanings set forth in the Loan
      Agreement. Capitalized terms not otherwise defined herein shall have the same
      definitions assigned to them under the terms of the Loan Agreement.

    

    2. Amendments.

    

    Paragraph
      8 of the Note is hereby amended by deleting it in its entirety and substituting
      the following:

    

    On
      or
      before August 20, 2007, Maker shall pay to Lender all accrued, but unpaid,
      interest payments, specifically including, but not limited to, those interest
      payments due as of July 30, 2007. Further, the Maker shall pay to Lender the
      regularly scheduled interest payment due on or before August 30, 2007. If Maker
      tenders these interest payments as agreed, then Lender agrees to accept monthly
      payments of interest only, beginning on September 30, 2007 and continuing
      through December 31, 2007. Beginning on January 31, 2008, Maker
      shall make payments of outstanding principal and interest, on a monthly basis,
      in an amount equal to the greater of: (a) fifty-one percent (51%) of Borrower’s
      Gross Oil and Gas Proceeds, as defined in the Loan Agreement, or (b) the accrued
      interest due on a monthly basis under the terms of this Note, the first such
      payment to be made on January 31, 2008, and thereafter on the last Business
      Day
      of each succeeding month until May 15, 2010, the date of final maturity
      hereunder at which point all outstanding principal and accrued interest shall
      be
      due. All payments shall be first applied to: (a) the payment of accrued interest
      and principal due and owing on the Senior Debt; (ii) to the payment of accrued
      interest due and owing on the Subordinate Facility; and (iii) to principal
      due
      and outstanding under the Subordinate Debt. Following full and final payment
      of
      the Senior Debt, payments will continue to be due to the Subordinate Lender
      on
      the last day of each month. Interest shall be computed and paid by Borrower
      upon
      the actual amount advanced to Borrower. Adjustments in the Variable Rate may
      be
      made by Lender, from time to time, as the Prime Rate may change. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
3. Effectiveness.

    

    
      	 	
              A.

            	
              Except
                to the extent specifically amended and supplemented hereby, all of
                the
                terms, conditions and provisions of the Note shall remain unmodified,
                and
                the Note, as amended and supplemented by this Modification, is ratified
                and confirmed as being in full force and
                effect.

            

    

    

    
      	 	
              B.

            	
              All
                references to the Note herein or in any other document or instrument
                between Borrower and Lender shall hereinafter be construed to be
                references to the Note as modified by this
                Modification.

            

    

     

    
      	4.	Counterparts:
              This Modification may be executed in any number of counterparts, each
              of
              which when executed and delivered shall be deemed an original, but
              all of
              which constitute one instrument. In making proof of this Modification,
              it
              shall not be necessary to produce or account for more than one counterpart
              thereof signed by each of the parties hereto.

      	 	 

      	
              5.

            	
              Notice
                of Final Agreement:

            

    

    

    THIS
      WRITTEN AGREEMENT AND ANY OTHER INSTRUMENTS EXECUTED BY THE PARTIES
      CONTEMPORANEOUSLY HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
      AND
      MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
      ORAL
      AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
      PARTIES.

     

    {The
      remainder of this page is intentionally left blank. Signature page
      follows.}

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have executed this Modification as of the
      date and year first above written.

     

    
      	 	 	 
	 	MAKER:
	 	 
	 	CHANCELLOR GROUP, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Bradley
              Fischer
	 	
              
BRADLEY
              FISCHER
	 	President

    

    
      	 	 	 
	 	GRYPHON
              PRODUCTION
              COMPANY, LLC
	 	 
	 
 	 
 	 
 
	 	By:  	/s/ Bradley
              Fischer
	 	
              
BRADLEY
              FISCHER
	 	President

    

    
      
        	 	 	 
	 	GRYPHON
                FIELD
                SERVICES, LLC
	 	 
	 
 	 
 	 
 
	 	By:  	/s/ Bradley
                Fischer
	 	
                
BRADLEY
                FISCHER
	 	President

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