Document:

Exhibit
10.2

PARTICIPATION
AGREEMENT

LLOG GC 141 PROSPECT

This Participation Agreement (“Agreement”) is entered
into and made effective this 1st day of March, 2008 (“Effective Date”) by and
between LLOG
Exploration Offshore, Inc. (“LLOG”), whose mailing address is 11700
Old Katy Road, Suite 295, Houston, Texas 77079 and Ridgewood Energy Corporation, (“Ridgewood”),
whose mailing address is 11700 Old Katy Road, Suite 280, Houston, Texas 77079,
herein referred to collectively as “Parties” and individually as a “Party”.

WITNESSETH

WHEREAS, LLOG has acquired leasehold
interests to OCS Oil and Gas lease OCS-G 21785 covering Green Canyon Block 141,
acquired by LLOG from Westport Oil & Gas Corporation and Anadarko
Production Company (hereinafter referred to as the “Prospect”), and 

WHEREAS, pursuant to that certain Offer to
Participate dated February 11, 2008 and that certain conditional letter of
acceptance dated February 15, 2008 by and between LLOG and Ridgewood covering
the Prospect, Ridgewood has advised LLOG of its desire to participate in the
drilling of the initial exploratory well on the Prospect, and

WHEREAS, LLOG and Ridgewood desire to set
forth the terms and conditions under which Ridgewood shall participate in the
initial exploratory well and receive an assignment of an interest in the Leases
comprising the Prospect, all as more fully provided for herein, and

NOW, THEREFORE, for and in consideration of
the sum of Ten Dollars ($10.00) and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and confessed,
together with the mutual covenants, conditions, and obligations contained
herein, LLOG and Ridgewood do hereby enter into this Agreement under the
following terms and conditions:

ARTICLE
I

DEFINITIONS

1.1     AFE:
shall mean the Authorization for Expenditure for the initial exploratory well
on the Prospect, a copy of which is attached hereto as Exhibit “A-1”.

1.2     Contract
Area: shall mean all of Green Canyon Block 141 and the
South-half of the South-half (S/2 S/2) of Green Canyon Block 97.

1.3     Initial
Exploratory Well (“IEW”): shall mean the first well or its
substitute well(s), as provided for in Article III below, to be drilled within
the Contract Area to the Objective Depth.

1

1.4     Lease(s): shall
mean the Federal OCS Oil and Gas Leases described as OCS-G 21785, Green Canyon
Block 141.

1.5     Objective
Depth: shall
mean a true vertical depth of at least 14,900 feet true vertical depth (15,706’
measured depth), or to a depth sufficient to test the Lentic 1 section, as
defined hereinafter, whichever is deeper. For the purposes of this Agreement,
the Lentic 1 section shall be deemed drilled to a sufficient depth when the IEW
has been drilled to a depth sufficient to evaluate the seismic trough amplitude
event observed at 4.250 seconds on Inline 1777 and Crossline 2071 of the TGS
Diamond 3-D Seismic Survey. Such Lentic 1 section is also identified as the
stratigraphic equivalent of the Lentic 1 section found in the Conoco OCS_G 5093
#1 well located in Green Canyon Block 142 at the interval from 14190’ to 14830’
true vertical depth.

1.6     Operating
Agreement: shall mean the Green Canyon Block 141 Prospect
Operating Agreement attached hereto as Exhibit “B” to be executed among the
working interest owners effective as of March 1, 2008.

1.7     Well Plan:
shall mean the Well Plan for the IEW attached hereto as Exhibits “A-2”, “A-3”
and “A-4”.

1.8     Capitalized terms used throughout this
Agreement and not defined in Sections 1.1 through 1.7 above, shall have the
meanings ascribed to them elsewhere in this Agreement or in the Exhibits
attached hereto.

Article II

EXHIBITS

     The
following Exhibits are attached hereto and made a part of this Agreement: 

	
 

	
 

	
 

	
 

	
Exhibit
  “A-1”

	
Authority
  for Expenditure OCS-G 21785 #2 Well

	
 

	
 

	
 

	
 

	
Exhibit “A-2”

	
Well Schematic for OCS-G 21785 #2 Well

	
 

	
 

	
 

	
 

	
Exhibit “A-3”

	
Directional Survey for OCS-G 21785 #2 Well

	
 

	
 

	
 

	
 

	
Exhibit “A-4”

	
Pore Pressure, Fracture Pressure for OCS-G 21785 #2
  Well

	
 

	
 

	
 

	
 

	
Exhibit “B”

	
Operating Agreement

	
 

	
 

	
 

	
 

	
Exhibit “C”

	
Geologic and Data Information Requirements of
  Ridgewood

	
 

	
 

	
 

	
 

	
Exhibit “D”

	
Form of Assignment of Record Title Interest

	
 

	
 

	
 

	
 

	
Exhibit “E”

	
Existing Burdens on the Contract Area

2

Article III

IEW Participation

          3.1     Subject to rig availability, permitting
and any regulatory approvals by the MMS, on or before April 30, 2008, LLOG as
Operator shall commence the drilling of the IEW at a location that is 7726’ FWL
and 1364’ FSL of OCS-G 31694, Green Canyon Block 97 and drill the IEW to the
Objective Depth in accordance with the AFE and Well Plan. Ridgewood shall bear
and pay twenty-five percent (25%) of the costs and expenses of the IEW.
Ridgewood, having reviewed the Well Plan and AFE with all particulars (i.e.
casing program, mud system, logging/evaluation program, and TD criteria),
hereby acknowledges its agreement with the IEW well design, including but not
limited to, well location (surface and bottom-hole) and the projected
penetration point into the objective interval and does hereby approve such Well
Plan and AFE for the IEW and elects to participate therein for its 25% working
interest. 

          3.2     In the event in the drilling of the IEW
there should be encountered rock salt, heaving shale, excessive water flow,
excessive pressure, igneous or other impenetrable formation or conditions which
would render impracticable and preclude drilling the IEW to the Objective
Depth, then and in such event any party to the Operating Agreement described in
Article IV below may propose within one hundred and twenty (120) days
following rig release for such well the drilling of a substitute well
(“Substitute Well”) provided same is drilled to the same objective zone or
zones as the IEW. If a Substitute Well is proposed under the Operating
Agreement and Ridgewood is a participating Party, this Participation Agreement
shall remain in full force and effect as though the Substitute Well was the
IEW. If a Substitute Well is proposed under the Operating Agreement and
Ridgewood is not a participating Party, this Participation Agreement shall
terminate and the terms of the Operating Agreement shall apply and govern the
interests of the Parties.

Article IV

Operating Agreement and Area of Mutual Interest

          4.1     All operations on the Contract Area
shall be governed by the Operating Agreement attached hereto as Exhibit “B”. The
Parties to the Operating Agreement may, by agreement amongst them, amend the
Operating Agreement from time to time. The Parties agree that all provisions of
the Operating Agreement shall apply to all operations conducted after the
Effective Date within the Contract Area, except as otherwise provided in this
Agreement. Should any conflict or inconsistency exist between the Operating
Agreement and this Agreement as to the matters addressed herein, or in the
event this Agreement addresses matters not included in the Operating Agreement,
this Agreement shall prevail.

          4.2     LLOG
shall provide Ridgewood with any and all raw well data and information obtained
and/or results of analyses performed through the conduct of the drilling of any
wells by LLOG on the Contract Area in which Ridgewood is a participant, as
further provided for in Exhibit “C”, and any additional data and/or information
that Ridgewood may become entitled to pursuant to the terms of the Operating
Agreement. All data delivered to Ridgewood as provided in this Section 4.3
shall be delivered to Ridgewood pursuant to the Operating Agreement.

3

          4.3     LLOG and Ridgewood
hereby create an Area of Mutual Interest (“AMI”) covering the South-half of the
South-half (S/2 S/2) of Green Canyon Block 97. This AMI shall terminate three
(3) years after the Effective Date, unless earlier terminated by the terms
herein. If a Party acquires an interest or a right to acquire an interest in
Green Canyon Block 97 (the “Acquiring Party”), the interests of the Parties
shall be seventy five percent (75%) to LLOG if Ridgewood is the Acquiring Party
and twenty five percent (25%) to Ridgewood if LLOG is the Acquiring Party.
Under any circumstance, within fifteen (15) days after the date on which the
Acquiring party acquired the interest (or the right to acquire the interest),
it shall notify the non-Acquiring party in writing of such acquisition. The
notice shall describe the interest acquired and the actual costs, burdens
and/or obligations reserved or to be reserved to acquire such interest. Upon
receipt of such notice, the non-Acquiring party shall have thirty (30) days
after receipt of the notice to exercise its right to acquire its share of such
interest. Upon receipt of the non-Acquiring party’s share of the costs or upon
receipt of the non-Acquiring party’s written acceptance of the burdens or
obligations which must be incurred to earn the interest, the Acquiring party
shall assign the appropriate interest to the non-Acquiring party. 

Article V.

Reimbursement of Land Sunk Costs and Assignment of Leases

          5.1     Within five (5)
business days of Ridgewood’s execution of this Participation Agreement,
Ridgewood agrees to pay LLOG $248,075.00, which represents Ridgewood’s
proportionate share of the Lease bonuses, rentals and geological and
geophysical costs (“Land Sunk Costs”) incurred by LLOG prior to the Effective
Date for each Prospect. 

          5.2     Within five (5)
business days of the receipt by LLOG of Ridgewood’s payment as set forth in
Article 5.1 above, LLOG shall execute and deliver or cause to be executed and
delivered to Ridgewood an assignment of an undivided twenty-five percent (25%)
record title interest in Lease OCS-G 21785 covering Green Canyon Block 141.
Thereafter ownership of the Leases in the Contract Area shall be as follows:

	
 

	
 

	
 

	
 

	
LLOG

	
75%

	
 

	
Ridgewood Energy Corporation

	
25%

The form of assignments into Ridgewood shall be
similar to the form of Assignment attached hereto as Exhibit “D”. Ridgewood
shall bear its proportionate 25% share of the Lease royalty and its proportionate
25% share of the overriding royalty burdens on the Leases, such overriding
royalty interest burdens being more fully described on Exhibit “E” attached
hereto.

          5.3     Any
assignment(s) of record title interest delivered by the Parties pursuant to
this Agreement shall be delivered without warranty of title, whether express or
implied, except as to persons lawfully claiming by, through or under the
assignor, but not otherwise, and shall be free and clear of all burdens or
other encumbrances on the leasehold, except for the assignor’s share of the
lessor’s royalty, overriding royalty and those existing burdens as set forth in
Exhibit “E” attached hereto. Further, any such assignment(s) delivered by the
Parties pursuant to this Agreement shall be subject to the terms of this
Agreement, the MC 489 Agreement and the Operating Agreement.

4

          5.4     The
assignment(s) of record title interest executed pursuant to this Agreement
require approval by the MMS. The assignee under any assignment(s) of record
title interest executed pursuant to this Agreement shall promptly (i) file of
record any assignment of record title interest in the appropriate governmental
records and (ii) file for approval with the MMS (or other applicable
governmental agencies) all assignment documents for the assigned interest.
Should approval of the MMS (or any other similar governmental agency having
jurisdiction) be denied, the Party receiving notice of such denial agrees to
provide the other Party with written notice of such occurrence, along with a
copy of all associated written communications, and the Parties agree to develop
a revised form of assignment in an effort to meet the MMS’ or other appropriate
agency’s requirements for approval. In the alternative, each Party shall
execute and deliver, or cause to be executed and delivered, such other
documents and take such other actions as a Party may reasonably request in an
effort to comply with any such approval requirements. Ridgewood shall execute
the necessary “Designation of Operator” form (MMS Form 1123) designating LLOG
as the operator of the Leases and as designated applicant for oil spill
financial responsibility for the Leases, along with any other documents
required to allow LLOG to serve as operator of the Leases.

          5.5     Either Party’s rights
and obligations hereunder may be assigned to a willing and financially able
party subject to the terms and conditions of the Operating Agreement. This
Agreement shall be binding upon and inure to the benefit of the Parties and
their respective heirs, successors, representatives and assigns and shall
constitute a covenant running with the lease comprising the Contract Area.

ARTICLE VI

APPLICABLE LAW

          6.1     THIS AGREEMENT AND ALL OPERATIONS
CONDUCTED HEREUNDER BY THE PARTIES SHALL BE SUBJECT TO ALL VALID APPLICABLE
LAWS, RULES, REGULATIONS AND ORDERS, INCLUDING ALL FEDERAL LAWS, RULES,
REGULATIONS AND ORDERS (“FEDERAL LAW”). TO THE EXTENT REQUIRED BY FEDERAL LAW,
THE LAWS OF THE STATE ADJACENT TO THE CONTRACT AREA SHALL APPLY. THIS AGREEMENT
SHALL OTHERWISE BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE
LAWS OF THE STATE OF TEXAS, EXCLUSIVE OF ANY PROVISIONS THAT WOULD DIRECT THE
APPLICATION OF THE SUBSTANTIVE LAW OF ANY OTHER JURISDICTION.

5

ARTICLE VII
NOTICES

          7.1     Any
notices, communications, or documents that either of the Parties desire to give
to the other Party or that may be required to be delivered to the other Party
pursuant to this Agreement shall be in writing and sent via telecopy, delivered
in person or sent certified mail, postage prepaid, return receipt requested,
addressed to the Parties at the following respective addresses stated for each:

	
 

	
 

	
 

	
 

	
LLOG Exploration Offshore, Inc. 

	
 

	
11700 Old Katy Road, Suite 295

	
 

	
Houston, Texas 77079

	
 

	
Attention:

	
Michael Altobelli

	
 

	
Telephone:

	
(281) 752-1105

	
 

	
Facsimile:

	
(281) 296-0219

	
 

	
 

	
 

	
 

	
Ridgewood Energy Corporation

	
 

	
11700 Old Katy Road, Suite 280

	
 

	
Houston, Texas 77079

	
 

	
Attention:

	
Randy Bennett

	
 

	
Telephone:

	
(281) 293-9384

	
 

	
Facsimile

	
(281) 203-7705

For purposes hereof, if facsimile or personal delivery
is not possible, refusal by any Party hereto to accept correspondence sent by
certified mail or two (2) unsuccessful attempts by the U.S. Postal Service to
serve any communication sent by certified mail shall be deemed receipt of such
correspondence. Any notice delivered on Saturday, Sunday, a legal holiday or
after 4:15 p.m. on any other day, in the office of the recipient, shall be
deemed to have been delivered on the business day next following the date of
actual receipt. Either Party may change its address for notices by written
notice to the other of them in accordance with this Section.

ARTICLE VIII
TERM

          8.1     The term of this
Agreement shall commence on the Effective Date, and shall terminate upon the
earlier of: (i) December 31, 2008 should the IEW not be commenced by such date,
or (ii) the date the IEW reaches the Objective Depth, or (iii) the expiration
of the Operating Agreement, or (iv) by the mutual agreement of the Parties,
whichever event occurs first. Upon termination of this Agreement any and all
future operations to be conducted on the Lease(s) for the joint benefit of the
Parties shall be conducted under the Operating Agreement.

ARTICLE
IX

RENTALS

          9.1     LLOG shall make all rental payments on
behalf of the Parties for the Contract Area during the term of this Agreement.
LLOG shall use reasonable care to make proper and timely payment of all rentals
accruing under the terms of the lease(s) in the Contract Area. Upon receipt by
Ridgewood of proper evidence of any such payments and LLOG’s invoice for
Ridgewood’s twenty-five percent (25%) interest share of such rental payments
accruing from and after the Effective Date, Ridgewood shall reimburse LLOG for
its twenty-five percent (25%) interest share of such rentals. In the event LLOG
fails to make proper payment of any rental accruing under the terms of the
Lease(s) where such payment is required to continue the Lease(s) in force, LLOG
shall not be liable to Ridgewood for any resulting damages or any loss which
results from such non-payment, unless such non-payment results from LLOG’s
gross negligence or willful misconduct. After the execution and delivery of the
assignments referenced in Article V, the applicable terms in the Operating
Agreement shall control as to the payment of rentals.

6

ARTICLE X

MISCELLANEOUS PROVISIONS

          10.1    This Agreement together
with the instruments referred to herein and the Exhibits attached hereto,
embody the entire agreement between the Parties with regard to the subject
matter hereof, and supersede all other prior agreements, arrangements,
understandings, negotiations and discussions, whether oral or written between
the Parties relating to the subject matter hereof and there are no warranties,
representations or other agreements between the Parties in connection with the
subject matter hereof except as specifically set forth in this Agreement or in
subsequent documents delivered pursuant thereto. This Agreement may be
supplemented, altered, amended, modified or revoked only in writing, signed by all
Parties hereto.

          10.2    Except for the
definition headings contained in Article 1, all of the captions, numbering
sequences and paragraph headings used in this Agreement are inserted for
convenience only and shall in no way define, limit or describe the scope or
intent of this Agreement or any part thereof, nor shall they have any legal
effect other than to aid in a reasonable interpretation of this Agreement.

          10.3    Each Party has had the benefit of independent representation with
respect to the subject matter of this Agreement. This Agreement, though drawn by one Party, shall be considered for all
purposes as prepared through the joint efforts of the Parties, and shall not be
construed against one Party or the other as a result of the preparation,
submittal or other events of negotiation, drafting or execution hereof.

          10.4    Each of the Exhibits attached to this Agreement are incorporated into
this Agreement by reference as fully as if the text of each Exhibit were set
forth within the body of this Agreement.

          10.5    In the event of any conflicts or inconsistencies between the provisions
of this Agreement and any other agreement, including any agreement referenced
herein to be executed by the Parties hereafter, the provisions of this
Agreement shall control to the extent of such conflict.

          10.6    The Parties agree that prior to making any public announcement or
statement with respect to the transactions or operations contemplated by this
Agreement, the Party desiring to make such public announcement shall obtain the
prior written approval of the other Party to the text of such announcement or
statement, which approval shall not be unreasonably withheld; provided,
however, that any Party shall have the right, for any reason, to deny approval
in the event the announcement or statement specifically names or otherwise
identifies said Party. Nothing contained in this Article 10.6 shall be
construed to require any Party to obtain approval to disclose information to
any State or Federal governmental authority or agency, to the extent required
by applicable law or by any applicable rules, regulations or orders of any
governmental authority or agency having jurisdiction, or as necessary to comply
with any disclosure requirements of applicable securities laws or any applicable
stock exchanges, or if otherwise permitted under the terms of the Operating
Agreement.

7

          10.7    This
Agreement may be executed by signing the original or a counterpart hereof. If
this Agreement is executed in multiple counterparts, each counterpart shall be
deemed an original and all of which when taken together shall constitute but
one and the same Agreement with the same effect as if all Parties had signed
the same instrument. This Agreement may also be ratified by separate instrument
referring to this Agreement and adopting by reference all the provisions of
this Agreement. A ratification shall have the same effect as an execution of
the original Agreement.

          10.8    This Agreement is
subject to the arbitration provisions of the Operating Agreement.

          10.9    If any provision of this Agreement is for any reason held to violate any
applicable law, governmental rule or regulation, or if the provision is held to
be unenforceable or unconscionable, then such provision shall be deemed null
and void; but the invalidity of that specific provision shall not be held to
invalidate the remaining provisions of this Agreement. All other provisions in
the entirety of this Agreement (including all Exhibits) shall remain in full
force and effect unless the removal of the invalid provision destroys the
legitimate purposes of this Agreement, in which event this Agreement shall be
canceled and terminated. In the event any provision of this Agreement is or
shall become unenforceable because of changes in applicable laws, or interpretations
thereof, or should this Agreement fail to include a provision that is required
as a matter of law, the validity of the other provisions of this Agreement
shall not be affected. If those circumstances should arise, the Parties shall
negotiate in good faith the required modifications to this Agreement to place
themselves in the same position (insofar as possible), as they would have been
in but for the change in applicable laws or interpretations thereof. If they
cannot agree, the matter shall be submitted to arbitration.

          10.10   This Agreement does not
benefit or create any rights in any person or entity not a party to this
Agreement. It is expressly agreed that the duties, obligations and liabilities
of the Parties are several and not joint, and nothing contained herein shall be
construed to create or impose a partnership duty, obligation or liability on
any of the Parties. Further, each Party represents that upon execution of this
Agreement it has secured all necessary management approvals or other corporate
approvals necessary to make this Agreement a fully binding contract.

          10.11   Waiver:
No waiver by either Party of any default by the other Party in the performance
of any provision, condition or requirement herein shall be deemed to be a
waiver of, or in any manner a release of the other Party from, performance of
any other provision, condition or requirement herein, nor deemed to be a waiver
of, or in any manner a release of the other Party from, future performance of
the same provision, condition or requirement; nor shall any delay or omission
of either Party to exercise any right hereunder in any manner impair the
exercise of any such right or any like right accruing to it thereafter.

8

          10.13   
Pre-Spud. LLOG will hold a pre-spud meeting for the benefit of the
participating party(s) on or before April 10, 2008.

EXECUTED as of the dates shown below, but effective
for all purposes as of the Effective Date.

	
 

	
 

	
LLOG
  Exploration Offshore, Inc.

	
 

	
 

	
By:

	
 

	
 

	

	
Name:

	
Michael Altobelli

	
Title:

	
Land Manager – GOM Deepwater

	
Date:

	
 

	
 

	

	
 

	
 

	
Ridgewood Energy Corporation

	
 

	
 

	
By

	
 

	
 

	

	
Name:

	
W. Greg Tabor

	
Title:

	
Executive Vice President

	
Date: 

	
 

	
 

	

9

Exhibit
“A-1”

Attached to and made a part of that certain Participation Agreement effective 

March 1, 2008 by and between LLOG Exploration Offshore, Inc. and 

Ridgewood Energy Corporation.

AFE FOR OCS-G 21785 #2

10

Exhibit
“A-2”

Attached to and made a part of that certain Participation Agreement effective

March 1, 2008 by and between LLOG Exploration Offshore, Inc. and

Ridgewood Energy Corporation.

WELL SCHEMATIC FOR OCS-G 21785 #2

11

Exhibit
“A-3”

Attached to and made a part of that certain Participation Agreement effective 

March 1, 2008 by and between LLOG Exploration Offshore, Inc. and 

Ridgewood Energy Corporation.

DIRECTIONAL SURVEY FOR OCS-G 21785 #2 

12

Exhibit
“A-4”

Attached to and made a part of that certain Participation Agreement effective 

March 1, 2008 by and between LLOG Exploration Offshore, Inc. and 

Ridgewood Energy Corporation.

PORE PRESSURE, FRACTURE PRESSURE FOR OCS-G 21785 #2

13

Exhibit “B”
Attached to and made a part of that
certain Participation Agreement effective

March 1, 2008 by and between LLOG Exploration Offshore, Inc. and 

Ridgewood Energy Corporation.

OPERATING AGREEMENT

14

Exhibit
“C”

Attached to and made a part of that certain
Participation Agreement effective

March 1, 2008 by and between LLOG Exploration Offshore, Inc. and

Ridgewood Energy Corporation.

GEOLOGIC AND DATA INFORMATION
REQUIREMENTS OF RIDGEWOOD

	
 

	
 

	
WELL:

	
OCS-G-21785 No. 2

	
LOCATION:

	
Green Canyon Block 141

	
OPERATOR:

	
LLOG Exploration Offshore, Inc.

	
ADDRESS:

	
11700 Old Katy Road, Suite 295

  Houston, Texas 77079

Ridgewood Energy Corporation (Ridgewood) requests the
following data:

	
 

	
 

	
 

	
 

	
DAILY REPORTS

	
 

	

	
 

	
BY FAX OR 

	
 

	
 

	
EMAIL:

	
Daily drilling reports by 8:00 AM to:

	
 

	
 

	
 

	
 

	
 

	
FAX: 281-

	
 

	
 

	
Mudlogs, LWD/MWD logs by 8:00 AM to ATTN: _____________ , FAX: 281-_______,
  (VOICE MAIL __________)

	
 

	
 

	
Cement Bond Logs by email
  to:

	
 

	
 

	
 

	
 

	
BY MAIL:

	
All preliminary (field) and final logs, reports and
  other data and correspondence to the above address to the attention of ___________ or as appropriate.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
ENGINEERING AND REGULATORY DATA

	
 

	
 

	
 

	
COPIES

	
 

	
ITEM

	
 

	
FIELD

	
 

	
FINAL

	
 

	

	

	

	

	

	
 

	
Drilling Prognosis (complete drilling program)

	
 

	
 

	
 

	
2

	
 

	
Authority for Expenditure (AFE)

	
 

	
 

	
 

	
1

	
 

	
Location Plat and Elevation

	
 

	
 

	
 

	
1

	
 

	
Application for Permit to Drill, Approved Drilling
  Permit

	
 

	
 

	
 

	
1

	
 

	
Directional Wall Plot (if directional well)

	
 

	
2

	
 

	
N/A

	
 

	
Daily Drilling Report (Email or Fax Daily)

	
 

	
1

	
 

	
 

	
 

	
DST/Potential Test Reports, Reservoir Fluid Analyses

	
 

	
1

	
 

	
2

	
 

	
Directional Survey Report and Digital data (CD)

	
 

	
1

	
 

	
2

	
 

	
Completion/End of Well Reports

	
 

	
 

	
 

	
2

	
 

	
Other MMS/Government Reports and Correspondence

	
 

	
 

	
 

	
1

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
GEOLOGIC DATA

	
 

	
 

	
 

	
COPIES

	
 

	
ITEM

	
 

	
FIELD

	
 

	
FINAL

	
 

	

	

	

	

	

	
 

	
Geological Prognosis

	
 

	
 

	
 

	
1

	
 

	
Mudlogs, Pressure Logs & Show Rpts (Fax or
  Email Daily)

	
 

	
1

	
 

	
4

	
 

	
Mudlogs, Pressure Logs – Film

	
 

	
 

	
 

	
1

	
 

	
LWD Logs (Fax or Email Daily)

	
 

	
1

	
 

	
4

	
 

	
Wireline Logs (Email or Fax: 281-847-6006)

	
 

	
1

	
 

	
 

	
 

	
Open Hole Logs (LWD & Wireline) – Prints

	
 

	
2

	
 

	
4

	
 

	
Open Hole Logs (LWD & Wireline) – Film

	
 

	
 

	
 

	
1

	
 

	
Open Hole Logs (LWD & Wireline) – CD
  (LAS/DLIS/PDS/EMF)

	
 

	
 

	
 

	
2

	
 

	
Core/Sidewall Core Analyses - CD

	
 

	
1

	
 

	
2

	
 

	
Geochemical Analyses of cuttings, gas, liquid
  samples

	
 

	
1

	
 

	
2

	
 

	
Paleontological Analyses

	
 

	
1

	
 

	
2

	
 

	
Velocity Survey/VSP Data

	
 

	
1

	
 

	
2

	
 

	
Mudlogging Final Report (incl. LAS digital data)

	
 

	
 

	
 

	
2

15

	
 

	
 

	
 

	
 

	
 

	
WELL CUTTINGS SAMPLES

	
 

	
 

	
 

	
TYPE

	
 

	
SETS

	
 

	

	

	

	
 

	
Wet Samples

	
 

	
1

	
 

	
Washed and Dried Samples

	
 

	
None

	
 

	
Canned Geochemical Samples

	
 

	
None

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
NOTIFICATION LIST

	
 

	
NAME/TITLE

	
 

	
OFFICE PHONE

	
 

	
Home Phone

	
 

	
EMAIL

	
 

	
CELL/PAGER

	

	

	

	

	

	

	

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
_________ (Geologist)

	
 

	
281-_______

	
 

	
281-

	
 

	
 

	
 

	
 

	
__________ (Res. Eng.)

	
 

	
281-________

	
 

	
281-304-8495

	
 

	
 

	
 

	
 

	
___________ (Drlg. Eng.)

	
 

	
281-________

	
 

	
281-

	
 

	
 

	
 

	
 

	
__________ (Ops. Eng.)

	
 

	
281-________

	
 

	
281-356-6687

	
 

	
 

	
 

	
 

          Please
notify ___________ or one of the above contacts prior to any unscheduled coring
or logging.

          Ridgewood
requests the following on the subject well:

	
 

	
 

	
 

	
 

	
I.

	
General Requirements

	
 

	
 

	
 

	
 

	
 

	
 

	
A.

	
In accordance with the
  Operating Agreement, Ridgewood, at its own risk and expense, through its
  representative, shall have complete and immediate access at all times to the
  well or wells and the records and information collected in relation thereto.
  Ridgewood may observe the conduct of operations, if desired. In this regard,
  Operator will provide Ridgewood transportation on a space-available basis to
  and from said well or wells on regularly scheduled trips at the sole risk of
  Ridgewood.

	
 

	
 

	
 

	
 

	
 

	
 

	
B.

	
Ridgewood shall be notified in
  sufficient time to allow a representative to be present for all logging,
  testing, and coring operations and shall be notified when a show of oil or
  gas deemed worthy of evaluation is detected during operations. Such notice
  shall be given to one of the parties listed on the notification list.

	
 

	
 

	
 

	
 

	
II.

	
Drill Cuttings, Cores, and Fluid Samples 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
A.

	
Ridgewood requests a set of wet
  samples. Please have samples shipped to: 

	
 

	
 

	
 

	
 

	
______________________.

	
 

	
 

	
 

	
 

	
______________________
  

	
 

	
 

	
 

	
 

	
Houston,
  Texas ______

	
 

	
 

	
 

	
 

	
Phone:
  __________ Fax: ___________ 

	
 

	
 

	
 

	
 

	
Email:
  

16

	
 

	
 

	
 

	
 

	
 

	
 

	
B.

	
If requested, and pending
  availability, the Operator shall provide Ridgewood with a sample of fluids
  recovered from wireline or conventional well tests. An accompanying
  transmittal letter for each sample should contain the well name, fluid type,
  test number, depth interval, date and time of collection, and any other
  pertinent data.

	
 

	
 

	
 

	
 

	
 

	
 

	
C.

	
Ridgewood shall be furnished a
  copy of all analyses performed by third-party vender(s) on cuttings, whole
  core or sidewall core samples, and fluid samples. Upon request, and pending
  availability, the Operator shall provide Ridgewood with a split of all whole
  core, rotary sidewall cores, and percussion sidewall cores for additional
  testing or analyses.

	
 

	
 

	
 

	
 

	
III.

	
Mudlogs, LWD/MWD Logs, Wireline Logs, Core Analyses, and
  Reports

	
 

	
 

	
 

	
 

	
 

	
 

	
A.

	
The 1” mud log, the 1” LWD/MWD
  log, and the mudlogger’s report should be faxed or emailed daily to Ridgewood
  as noted on page 1. On directional or deviated wells, both measured-depth
  (MD) and true-vertical-depth (TVD) logs are requested.

	
 

	
 

	
 

	
 

	
 

	
 

	
B.

	
Prior to any unscheduled
  wireline logging, Operator shall notify Ridgewood so that Ridgewood may elect
  to have a representative present on location. 

	
 

	
 

	
 

	
 

	
 

	
 

	
C.

	
A graphical format of the
  wireline logs should be provided to Ridgewood as soon as possible after each
  log run. Email distribution of raster image files, faxing (LogNet-style),
  INSITE-ANYWHERE and Petrolink have been used successfully on past wells.
  

	
 

	
 

	
 

	
 

	
 

	
 

	
D.

	
Ridgewood should be provided
  with a final composite of the merged LAS files on wireline/LWD/MWD log
  digital data as soon as possible at the end of the well or after the final
  logging run. In addition, the digital data should be available as soon as
  possible after each intermediate log run.

	
 

	
 

	
 

	
 

	
 

	
 

	
E.

	
Ridgewood’s log and report
  requirements are listed on page 1.

	
 

	
 

	
 

	
 

	
IV.

	
Cement Bond Logs 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
A.

	
Ridgewood requests a copy
  of any Cement Bond Log be mailed and emailed to the attention of:

	
 

	
 

	
 

	
 

	
 

	
 

	
Mr. ____________

	
 

	
 

	
 

	
 

	
 

	
Ridgewood Energy
  Corporation

	
 

	
 

	
 

	
 

	
 

	
11700 Old Katy Road,
  Suite 280

	
 

	
 

	
 

	
 

	
 

	
Houston, Texas 77079

	
 

	
 

	
 

	
 

	
Email address:

	
____________________

17

Exhibit
“D”

Attached to and made a part of that certain Participation
Agreement effective 

March 1, 2008 by and between LLOG Exploration Offshore, Inc. and 

Ridgewood Energy Corporation.

***Block #***]

OCS-G
_____ 

(FORM OF)

ASSIGNMENT OF RECORD TITLE INTEREST

	
 

	
 

	
UNITED
  STATES OF AMERICA

	
§

	
OUTER
  CONTINENTAL SHELF

	
§

	
OFFSHORE
  LOUISIANA

	
§

          For
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and in consideration of the covenants and agreements of Assignee
herein contained, and subject to the terms and conditions hereinafter set
forth, LLOG
Exploration Offshore, Inc., a Louisiana corporation, whose address
is 433 Metairie Road, Suite 600, Metairie, Louisiana 70005 (“Assignor”), hereby
sells, transfers, assigns, conveys and delivers unto and Ridgewood Energy Corporation.,
whose address is 11700 Old Katy Road, Suite 280, Suite 280, Houston, Texas
77079 (“Assignee”), effective as of                 
          
       ,
at 7:00 a.m., local time where the Lease is located the “Effective Time”),           
              percent of
eight-eighths (       % of 8/8ths) record title interest in and
to the following oil and gas lease (the “Assigned Interest” ):

	
 

	
 

	
 

	
 

	
Serial Number OCS-G ___________________: Oil and Gas
  Lease of Submerged Lands under the Outer Continental Shelf Lands Act dated
  effective _________________, issued by the United States of America, as
  lessor, to _____________, as lessee, covering all of Block
  ____________, Mississippi Canyon, OCS Official Protraction Diagram, NG 15-2,
  containing approximately 5,760.00 acres, more or less (the “Lease”)

	
 

	
 

	
 

	
 

	
 

	

TO HAVE AND TO HOLD the Assigned Interest unto
  Assignee, its successors and assigns forever.

	
 

          This
Assignment of Record Title Interest is made free and clear of all burdens and
encumbrances on the Lease, except for the lessor’s royalty and those existing
burdens and encumbrances set forth in Exhibit “A” attached hereto in existence
as of the Effective Time and is delivered and accepted without any warranty of
title, express or implied, except as to persons lawfully claiming by, through
or under Assignor, but not otherwise, or other representations or warranties.
Assignee shall have the rights of full substitution and subrogation in and to
any and all rights and actions of warranty which the Assignor has or may have
against all preceding owners of the Assigned Interest. 

          Assignee
hereby accepts this Assignment of Record Title Interest subject thereto and
hereby assumes and agrees to fully discharge, comply with and perform its share
of all duties, liabilities, obligations, both express and implied, imposed on
the lessee of the Lease and to comply with all applicable state, federal and
local laws and the rules and regulations of all state and federal regulatory
and administrative bodies having jurisdiction over the Lease premises or
operations for and the production of oil and gas therefrom. 

          This
Assignment of Record Title Interest is subject to that certain Participation
Agreement dated effective March 1, 2008 by and between Assignor and Assignee
and that certain Operating Agreement dated effective July _, 2007 by and
between Assignor and Assignee.

18

          This
Assignment of Record Title Interest is subject to the approval of the Minerals
Management Service of the United States Department of the Interior and/or any
other governmental department or agency having jurisdiction, which approval(s)
Assignee shall earnestly seek to secure by promptly filing this Assignment of
Record Title Interest with the appropriate offices of same.

          The
provisions hereof shall bind and inure to the benefit of Assignee and Assignor
and their respective affiliates, heirs, devisees, legal representatives,
successors and assigns. 

          EXECUTED
this _______ day of _____ 2008, but effective as of the above-stated Effective
Time.

	
 

	
 

	
 

	
WITNESSES:

	
ASSIGNOR:

	
 

	
 

	
 

	
 

	
LLOG
  Exploration Offshore, Inc. 

	
 

	
 

	
 

	
 

	
By:

	
 

	

	
 

	

	
 

	
Name:

	
 

	
 

	
 

	

	
 

	
Title: 

	
 

	

	
 

	

	
 

	
 

	
 

	
WITNESSESS:

	
ASSIGNEE:

	
 

	
 

	
 

	
 

	
Ridgewood
  Energy Corporation

	
 

	
 

	
 

	
 

	
By:

	
 

	

	
 

	

	
 

	
Name:

	
 

	
 

	
 

	

	
 

	
Title: 

	
 

	
 

	
 

	

	

	
 

	
 

19

	
 

	
 

	
STATE
  OF LOUISIANA

	
§

	
COUNTY
  OF __________

	
§

On this ___ day of _____ 2008, before me appeared
Kemberlia Ducote to me personally known, who, being by me duly sworn, did say
that she is the Secretary of LLOG Exploration Offshore, Inc., a Louisiana
corporation, and that the said instrument was signed on behalf of said
corporation by authority of its Board of Directors and appearer herein
acknowledged said instrument to be the free act and deed of said corporation.

          GIVEN
under my hand and seal of office the day and year last above written.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
NOTARY PUBLIC in and for the aforesaid

	
 

	
 

	
 

	
County and State

	
 

	

	
 

	
 

	
 

	
 

	
 

	
 

	
State Notarial No.

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
My Commission expires

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
STATE
  OF TEXAS

	
§

	
COUNTY
  OF HARRIS

	
§

On this ___ day of _____ 2008, before me appeared
___________ to me personally known, who, being by me duly sworn, did say that
he is the ________ of Ridgewood Energy Corporation, a _____________
corporation, and that the said instrument was signed on behalf of said
corporation by authority of its Board of Directors and appearer herein acknowledged
said instrument to be the free act and deed of said corporation.

          GIVEN
under my hand and seal of office the day and year last above written.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
NOTARY PUBLIC in and for the aforesaid

	
 

	
 

	
 

	
County and State

	
 

	

	
 

	
 

	
 

	
 

	
 

	
 

	
State Notarial No.

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
My Commission expires

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

20

Exhibit “E”

Attached
to and made a part of that certain Participation Agreement effective

March 1,
2008 by and between LLOG Exploration Offshore, Inc. and

Ridgewood
Energy Corporation.

EXISTING
BURDENS ON THE CONTRACT AREA

OCS-G 21785, Green Canyon Block
141

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
WI

	
 

	
 

	
NRI

	
 

	
 

	
 

	

	
 

	
 

	

	
LLOG EXPLORATION

	
 

	
 

	
1.00000000

	
 

	
 

	
0.79125000

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
MMS ROYALTY

	
 

	
 

	
 

	
 

	
 

	
0.12500000

	
WESTPORT GENERATORS

	
 

	
 

	
 

	
 

	
 

	
0.00200000

	
KERR-MCGEE ORRI

	
 

	
 

	
 

	
 

	
 

	
0.00112500

	
WESTPORT DATA VENDOR

	
 

	
 

	
 

	
 

	
 

	
 

	
BLUE STREAK EXPLORATION

	
 

	
 

	
 

	
 

	
 

	
0.02000000

	
 

	
 

	
 

	

	

	

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
1.00000000

	
 

	
 

	
1.00000000

21Exhibit 10.3  

PARTICIPATION AGREEMENT

REDACTED Prospect

          This
Participation Agreement is made and entered into this 1st day of May, 2008, by
and between PetroQuest Energy, L.L.C. (“PetroQuest”), and CL&F Resources LP
(CL&F), collectively sometimes hereinafter sometimes referred to as “Lease
Owners” and Ridgewood Energy Corporation (“Ridgewood”) and Bayou Bend Offshore,
Ltd. (“Bayou Bend”), hereinafter sometimes referred to individually as
“Participant” or collectively as “Participants”, and the parties hereto also
being referred to individually as “Party” or collectively as the “Parties”.  

WITNESSETH:

          WHEREAS,
Lease Owners own leasehold rights in and to those certain Federal Oil and Gas
Leases more fully described on Exhibit “A” (the “Contract Area”), and Lease
Owners warrant, by through and under themselves, but not otherwise, that they
own sufficient working interests to be able to deliver to Participants an
assignment of the After Casing Point interest as set forth in Article 3.1 below
and a corresponding net revenue interest proportionate to the interest to be
earned by Participants in the production from the wells to be drilled pursuant
to this Agreement on the Federal Oil and Gas Leases more fully described on
Exhibit “A”, and 

          WHEREAS,
Participants desire to join Lease Owners in the development of certain
prospects in and under the Contract Area, 

          NOW,
THEREFORE, for and in consideration of One Hundred Dollars ($100.00) in hand
paid, and other good and valuable consideration, the Parties agree as follows: 

ARTICLE I

1.1     Lease
Owners own a one hundred percent (100%) Interest in the Contract Area. Lease
Owners represent that the leases covering REDACTED and REDACTED are currently
in full force and effect. Lease Owners further represent that they have the
right and authority to grant assignments within the Contract Area, as
contemplated herein, to the Participants equal to their After Casing Point
Percentages in the Initial Test Well as set out in Article 3.1. Lease Owners
agree that no relinquishment of any portion of the lease covering REDACTED and
REDACTED within the Contract Area will be made without the approval of the
Parties hereto while this Agreement is in effect. 

ARTICLE II

2.1     Pursuant
to the terms and conditions herein, Lease Owners and Participants commit to
participate in the drilling of the REDACTED (Initial Test Well) within the
Contract Area which shall be commenced on or before June 30, 2008, subject only
to rig availability and receipt of all required regulatory permits and/or
applications. Such Test 

Well shall be
drilled in accordance with the provisions of the Agreement. PetroQuest shall be
designated as Operator of the Initial Test Well. All provisions governing
operations in connection with the Initial Test Well shall also apply to any
Additional Wells, if drilled hereunder. 

          Notwithstanding
anything herein to the contrary, PetroQuest shall be designated as Operator for
any and all operations conducted pursuant to this Agreement on the Contract
Area. 

2.2.1  Initial Test Well 

          Lease
Owners and Participants shall diligently prosecute the drilling of the Initial
Test Well on the Contract Area to the lesser of: (a) a depth of 16,375’
MD/16,200’TVD, or (b) a depth sufficient to test the stratigraphic equivalent
of the Big A-4 Sand, as seen between the depths of 15,600’ MD and 15,700’ MD on
the induction focused log in the REDACTED (the “Objective Depth”). The Initial
Test Well will be drilled from a surface location on REDACTED to the Objective
Depth with an approximate target location at the Objective Depth having
REDACTED Coordinates of X= REDACTED and Y= REDACTED. 

2.2     The
Initial Test Well on REDACTED will be drilled under a turnkey drilling contract
with Applied Drilling Technology Inc. (“ADTI”), to be entered into no later
than June 30, 2008. If a decision is made to complete any test well for
production, PetroQuest shall solicit a turnkey completion proposal from ADTI
for consideration by the participating Parties. However, nothing in this
Agreement shall purport to require the Parties to complete said well under such
turnkey completion proposal. The total cost and expense associated with
drilling the Initial Test Well (inclusive of the ADTI turnkey drilling
contract) is estimated to be $12,796,455 as reflected in the Drill & Log
Well Cost Estimates attached hereto as Exhibit “B”, which includes, but is not
limited to, the costs of permitting, drilling and logging the Initial Test Well
to the Objective Depth, and the Insurance coverage as shown in Exhibit “B” to
the attached Joint Operating Agreement (collectively referred to as the
“REDACTED Before Casing Point Costs”). The estimated cost to overdrive a
caisson and complete the initial test well is $5,737,000. The estimated
facilities and hook-up costs are $6,000,000, which includes, but is not limited
to, the costs of the installation of a two well braced caisson structure with
heliport and the installation of a 6” pipeline to the REDACETD “A” Platform for
the tie-in to REDACTED for processing and transportation to sales (“Initial
Test Well Facilities Cost Estimate”). The costs will be reflected in the
Initial Test Well Completion Cost Estimate and Initial Test Well Facilities
Cost Estimate and are collectively referred to as the “REDACTED After Casing
Point Costs”. All turnkey costs represented above shall be subject to
adjustment based on the differences in rig rates and maritime vessel day rates
used in the calculation of the locked-in price included in the turnkey contract
executed with ADTI. 

2

2.3.    This
Agreement is subject to PetroQuest entering into a turnkey drilling contract
with ADTI for the drilling of the initial test well. Notwithstanding anything
herein to the contrary, however, it is the intent of the parties to deal in
good faith, and accordingly, in no event shall PetroQuest be obligated to
drill, or cause to be drilled, a well under this Agreement in which it makes a
good faith determination that the turnkey bid submitted by ADTI is unreasonable
or uneconomical in PetroQuest’s and CL&F’s sole discretion. This
determination and the consequences thereof shall apply to any well drilled
pursuant to this Agreement.

2.4     Concurrent
with the execution of this Participation Agreement, Participants and Lease
Owners agree to execute the Offshore Operating Agreement attached hereto as
Exhibit “C” and dated even with this Agreement, which shall govern all
operations hereunder, to the extent not in conflict with the terms and
provisions of the Agreement. Said Offshore Operating Agreement shall designate
PetroQuest as Operator. 

2.5     Notwithstanding
anything to the contrary herein, this Participation Agreement between Lease
Owners and Participants is subject to that certain Offer Letter dated April 24,
2008, as amended by e-mail of April 28, 2008 and Letter Agreement dated April
29, 2008, by and between Lease Owners and Ridgewood. In the event of any
conflict between the terms and conditions of the Offer Letter, as amended, and
the Participation Agreement, the terms and conditions of the Offer Letter, as
amended, shall prevail. 

ARTICLE III

3.1     Participants’
participation in drilling of the Initial Test Well on the REDACTED Prospect
shall be on a promoted basis with each Participant paying its Before Casing
Point Percentage of all costs associated with the drilling of said well to
“Casing Point”, subject to the “Promote Cap” as provided for below. Subject to
each Participant’s election at Casing Point, the After Casing Point Costs shall
be shared and paid for on a “ground floor” basis in accordance with each
Participant’s After Casing Point Percentages. Pursuant to the foregoing and the
other provisions of this Agreement, Participants’ Before Casing Point
Percentages and After Casing Point Percentages for the Initial Test Well and
the Optional Test Well are set forth as follows:

3

REDACTED
Prospect (Initial Test Well)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
*Before Casing Point Percentage 

	
 

	
After Casing Point Percentage 

	
 

	
 

	

	
 

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
PETROQUEST

	
 

	
 

	
16.66667

	
%

	
 

	
 

	
25.00

	
%

	
CL&F

	
 

	
 

	
16.66667

	
%

	
 

	
 

	
25.00

	
%

	
RIDGEWOOD

	
 

	
 

	
*53.33333

	
%

	
 

	
 

	
40.00

	
%

	
BAYOU BEND

	
 

	
 

	
*13.33333

	
%%

	
 

	
 

	
10.00

	
%

	
TOTAL

	
 

	
 

	
100.00000

	
%

	
 

	
 

	
100.00

	
%

* “Promote Cap” – Participants obligation to pay a disproportionate
share of the Initial Test Well’s drilling well costs provided for above, it’s
Before Casing Point Percentage, shall be limited to and capped at either: 1)
the drilling well costs incurred to reach Casing Point as defined below, or 2)
the drilling well costs incurred up to 110% of the formal AFE DHC estimate,
whichever occurs first. Thereafter, any and all subsequent costs associated
with but not limited to, drilling, completion, hookup, pipeline and/or
facilities, or plugging and abandonment, if applicable, shall be at
Participant’s After Casing Point Percentage.

3.2     Within
five (5) days after the receipt of an invoice from PetroQuest and commencement
of drilling operations for the Initial Test Well, the Participants shall pay to
PetroQuest for the benefit of Lease Owners a Prospect Fee as reimbursement for
general leasehold, seismic and prospect generation costs directly associated
with the REDACTED Prospect. Ridgewood (40%) shall pay the amount of
$1,111,542.40 and Bayou Bend (10%) shall pay the amount of $277,855.60 which
represents their respective shares of the gross costs of $2,778,856. Said
payments shall be made by electronic wire transfer for the account of
PetroQuest in accordance with wiring instructions to be provided by PetroQuest.

          Upon
receipt of a cash call from PetroQuest for the AFE’d Before Casing Point Costs,
Participants shall remit by electronic wire transfer no later than five (5)
days after receipt of PetroQuest’s cash call, the applicable amount for the
account of PetroQuest in accordance with wiring instructions to be provided by
PetroQuest. Late payments shall bear interest at the rate 2% per month or at
such lesser maximum legal interest rates allowed. In the event Participant’s
payments are not received within the times provided herein, PetroQuest shall
send written notice to Participant of its failure to pay and such notice shall
further contain notice that Participant has a 48 hour remedy period beyond the
five (5) day period within which to make the past due payment, and failure to
pay a delinquent cash call shall subject the defaulting Party, at PetroQuest’s
sole discretion, to (1) relinquishment of its rights to earn an interest in the
operation subject to such default, (2) relinquishment of its interest in
subsequent wells not yet earned hereunder, and (3) the automatic withdrawal
from this Agreement for such unearned wells. Interests previously earned by the
defaulting Party shall not be affected. In addition, Lease Owners shall be
entitled to recover monetary damages equal to the defaulting Party’s respective
share of any AFE approved by such Party, together with reasonable attorney’s
fees and court costs to recover same should the matter result in arbitration
and/or litigation. In no event,

4

however, shall the Parties ever be liable hereunder to each other for
punitive, consequential or speculative damages as a result of failure to pay a
cash call. 

          At such
time as a Party has proposed the completion of a test well, received the
response of the other Parties, and has entered into a turnkey completion
contract (if applicable) PetroQuest shall be entitled to cash call the
participating Parties in the completion attempt for their After Casing Point
Percentages of the After Casing Point Costs, following the same procedure as
outlined above for cash calling the Before Casing Point Costs, except that a
cash call for a completion operation shall be paid by electronic wire transfer
into the account of PetroQuest within forty eight (48) hours of receiving the
cash call notice, excluding weekends and holidays. 

          Any and all
other joint expenses incurred under the terms of the Agreement shall be
invoiced to the Participants by PetroQuest and they shall remit their
applicable share of such expenses within 30 days after receipt of same. 

3.3     For the
purposes of this Agreement, “Casing Point” is defined as the point at which the
test well has been drilled to the Objective Depth, all partner approved open
hole logging, coring and testing has been conducted, all drilling and
evaluation information has been provided to the participants and a proposal is
made by PetroQuest to either (i) attempt a completion, (ii) sidetrack the well
to another bottom hole location not deeper than the stratigraphic equivalent of
the Objective Depth, (iii) deepen the well or (iv) plug and abandon the well. 

3.4     At such
time as Casing Point or the Promote Cap has been reached, whichever occurs
first, then any further drilling necessary to reach Casing Point, or if having
reached Casing Point, any subsequent proposed operation is made to attempt a
completion or conduct another operation in the test well as described above,
the Parties shall each have the right to participate in such proposal (or other
written proposal) in accordance with each Party’s After Casing Point
Percentage, pursuant to the provisions of Section 10.6 of the Offshore
Operating Agreement. Those Parties not participating in a proposal having
priority as provided in Section 10.6 of the Offshore Operating Agreement shall
be deemed to have forever relinquished all of their rights and interest in the
subject test well. In the event less than all of the Parties participate in the
completion of the test well, the Parties participating therein shall mutually
agree as to the sharing of any nonparticipating Party’s interest in the test
well; provided however, the Lease Owners shall proportionately have first
priority to assume and acquire all or a portion of such non-participating
Party’s interest. Notwithstanding the foregoing, all Parties participating in
the completion of the test well shall share the costs of plugging and
abandoning the test well according to each Party’s After Casing Point
Percentage ownership in the completed well. No Party shall be required to take
any portion of a non-participating Party’s interest.

5

3.5     Upon the reimbursement by Participants
of the Prospect Fee identified in Article 5.2 hereof, the Lease Owners shall
deliver to the Participants, within ten (10) days of receipt of the Prospect
Fee, an assignment conveying an undivided interest in the Contract Area equal
to each the Participant’s After Casing Point Percentage. Said assignment shall
be in accordance with the form attached hereto as Exhibit “D”. Participants’
rights shall be limited to rights in the well and production therefrom, subject
to the encumbrances listed on Exhibit “A” hereto, as well as their
proportionate share of plugging and abandonment liability; however, should
Participant fail to pay its share of all dry hole costs incurred to reach the
Objective Depth in the Initial Test Well, it shall immediately re-assign all of
its interest in the Contract Area to the Lease Owners. 

          All
operations associated with any Additional Well(s) proposed hereunder shall be
governed in accordance with the attached Offshore Operating Agreement where not
in conflict with this Agreement. 

3.6     If, prior to reaching the Objective
Depth in any test well being drilled by ADTI under a turnkey drilling contract,
ADTI encounters conditions that prohibit it from reaching Objective Depth in the
turnkey drilling contract (including conditions which would cause the
conversion from the turnkey price to a day-rate price), then in such event the
Parties shall have the option of ceasing further operations and abandoning such
well and in such event the participating Parties shall have the option for 90
days following abandonment of said well to commence the drilling of a
substitute well, to be located and drilled in such a manner as to test the same
geologic prospect that the test well was designed to encounter (the “Substitute
Well”). In such event a Party participating in the abandoned well shall propose
same in writing to the other participating Parties and they shall each have the
option of participating in the drilling of such Substitute Well with such
participation being at their After Casing Point Percentages. In the event less
than all of the Parties participate in the Substitute Well, the Parties
participating therein shall mutually agree as to the sharing of any
non-participating Party’s interest in the Substitute Well. Any participating
Party that does not elect within 15 days after receipt of a proposal (or 48
hours if a drilling rig continues on location from the preceding attempt to
drill the test well) to participate in the Substitute Well, shall be deemed to
have relinquished all its rights in the Substitute Well. The Substitute Well
shall otherwise be treated for all purposes in this Agreement as though it were
the test well for which it is a substitute. 

          In the
event any well being drilled under this Agreement through a turnkey drilling
contract with ADTI encounters conditions that would cause the conversion from
the turnkey price to a day-rate price as provided in the turnkey drilling
contract and PetroQuest advises the participating Parties that it intends to
continue drilling the well under a day-rate price, then, in such event, each
participating Party shall have 48 hours after receipt of such notice to elect
whether or not to continue its participation in the well under the day-rate
price. Any Party electing not to continue its participation in the well 

6

shall remain liable for its share of all costs incurred and/or accrued
up to the time of its election to discontinue its participation. Failure of any
Party to timely make its election shall be deemed to be an election to continue
its participation in the well under the day-rate price. 

3.7     THE PARTICIPANTS AND PETROQUEST AND CL&F
SHALL SEVERALLY SHARE AND ASSUME THEIR RESPECTIVE PRORATA SHARES, ACCORDING TO
THEIR BEFORE OR AFTER CASING POINT PERCENTAGES, AS THE CASE MAY BE, OF ANY AND
ALL CLAIMS, LOSSES, AND EXPENSES (INCLUDING, WITHOUT LIMITATION ALL COSTS,
DEMANDS, DAMAGES, SUITS, JUDGMENTS, FINES, PENALTIES, LIABILITIES, DEBTS,
ATTORNEYS’ FEES, AND CAUSES OF ACTION OF WHATSOEVER NATURE OR CHARACTER,
WHETHER KNOWN OR UNKNOWN, AND INCLUDING, WITHOUT LIMITATION, CLAIMS, LOSSES AND
EXPENSES FOR PROPERTY DAMAGE, BODILY INJURY, ILLNESS, DISEASE, DEATH, POLLUTION
OR LOSS OF SERVICES, WAGES, CONSORTIUM OR SOCIETY) DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATED TO PETROQUEST’S OR ITS SUBSIDIARIES’ OR AFFILIATES’
(THE “PETROQUEST GROUP”) OPERATIONS (INCLUDING OPERATIONS OR SERVICES CONDUCTED
BY ANY CONTRACTOR OR SUBCONTRACTOR ON BEHALF OF PETROQUEST) HEREUNDER,
EXPRESSLY INCLUDING ANY NEGLIGENCE, FAULT OR STRICT LIABILITY (OF WHATEVER
NATURE OR CHARACTER) OF THE PETROQUEST GROUP, BUT EXPRESSLY EXCLUDING THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PETROQUEST GROUP. NEITHER PARTICIPANT
NOR PETROQUEST OR CL&F SHALL BE BOUND JOINTLY, SEVERALLY OR IN SOLIDO WITH
EACH OTHER.

          Except as
otherwise provided, the foregoing provision shall survive the termination of
this Agreement or any assignment of interest from PetroQuest. 

ARTICLE IV

4.1     Except as otherwise expressly provided
herein, the provisions of this Agreement shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the Parties hereto. 

4.2     The Agreement shall have separate and
individual application to each Party to the affect that the Participants,
PetroQuest and CL&F shall only be liable for its individual Before Casing
Point Percentage or After Casing Point Percentage, as the case may be and they
shall not as between themselves, by operation of the Agreement be deemed to be
individually and severally liable for the obligations and duties included
herein. 

4.3     Participants shall earn an interest
in, and be responsible and liable for, all wells, platforms, facilities,
pipelines or other equipment installed on the Contract Area after the effective
date of this agreement. but not for the REDACTED “A” Platform, test separator
and pipeline riser located on REDACTED, which were in place prior to the
effective date of this Agreement. Should the REDACTED “A” platform, test
separator and pipeline riser require any repair or upgrade in order to flow the
REDACTED production to REDACTED, each Participant will be responsible for its
proportionate share thereof. 

7

4.4     This
Agreement, including all Exhibits attached hereto, constitutes the full and
entire understanding and agreement between the Parties relating to the matters
herein, and except as otherwise provided herein, supersedes any previous
agreements or understandings, written or oral, in effect between the Parties
relating hereto. In the event of any conflict between the terms and conditions
of this Agreement and the Offshore Operating Agreement attached hereto as
Exhibit “C”, the terms and conditions of this Agreement shall prevail.

4.5     PetroQuest,
as Operator under the Agreement will obtain and continue in force during the
period of operations thereunder, for the benefit of itself and any Participant
so electing in writing within five (5) days after signing the Offshore
Operating Agreement policies of insurance as specified in Exhibit “B” to the
attached Offshore Operating Agreement. Should any Participant elect to provide
its own insurance coverage for some, but not all of the items identified in
Exhibit “B”, Paragraph 2 A-G to the Offshore Operating Agreement, it shall
notify Operator in writing within five (5) days after signing the Offshore
Operating Agreement and prior to commencement of well operations hereunder, and
the Participant shall provide an insurance certificate to PetroQuest to confirm
the equivalent coverages within fifteen (15) days after making its election.
Failure to provide an insurance certificate within the specified time frame
will cause PetroQuest to carry the insurance for the interest of Participant
and invoice Participant for its proportionate share of the cost of insurance. 

4.6     This
Agreement shall be governed by and construed in accordance with the laws of the
State of Louisiana.

4.7     This
Agreement is not intended to and shall not be construed to create any mining
partnership, commercial partnership, any other partnership or an association
for profit between or among the Parties.

4.8     All
notices, requests, demands, and other communications provided for or permitted
hereunder shall be in writing (including telex and telecopy communications) and
shall be sent by mail, telex, telecopier or hand delivered to the address
provided in Exhibit “A”. Said notices, requests, demands and communications
shall be effective upon delivery.

4.9     Unless
otherwise indicated, references to Article, Section or Subsection numbers
pertain to this Agreement, and references to Exhibits pertain to the Exhibits
attached hereto and incorporated herewith.

4.10   The
Parties agree that all geophysical, geological, engineering, technical, and
production tests or other data obtained from all wells drilled under the
Agreement shall be maintained as confidential information for a period of two
(2) years from the effective date

8

hereof, or
until such information is made public by an appropriate governmental authority,
or unless all Parties agree in writing to a lesser period of time.
Notwithstanding any provision of the Agreement to the contrary, any Party may
disclose without the consent of the other Parties any information (1) to an
outside party with which it is engaged in a bona fide negotiation to contract
for oil or gas sales or transportation agreements, (2) to a governmental agency
when required by such agency, (3) to reputable financial institutions or
similar entities in connection with a bona fide financial transaction, (4) to
accredited engineering firms for the purpose of evaluation on a confidential
basis, (5) to parent, subsidiary, affiliated companies, or its drilling fund
investors and (6) to reputable and financially responsible third parties with
whom a party is engaged in a bona fide effort to (i) sell all or a portion of
the subject property, (ii) effect a merger or consolidation or other transaction
in which such third party proposes to acquire all or a controlling share of the
stock in a party hereto or (iii) purchase all or substantially all of the
assets of a Party hereto or affiliates of Parties hereto; provided that any
third party permitted access to confidential data shall agree in writing not to
communicate such information to anyone and shall further agree to make no use
of such information adverse to the Parties hereto within the area covered by
such information during the period of time such information remains
confidential hereunder. 

4.11     PetroQuest
shall provide the participating Parties with daily drilling information and a
copy of all logs and other test information from the Test Well by sending such
information to the representatives of each participating Parties designated for
receipt of such information. 

4.12     All
obligations imposed on each Party, except for payment of money for liabilities
and costs either incurred or accrued, shall be suspended and all periods of
time for exercising any rights hereunder shall be extended while compliance is
prevented, in whole or in part, by Force Majeure. “Force Majeure” shall mean a
labor dispute; explosion; fire; storm; flood; war; civil disturbance; act of
God; laws; governmental rules, regulations, orders, action or delay; inability
to secure materials after reasonable efforts; or any other similar cause beyond
the reasonable control of the Party claiming relief hereunder; provided,
however, that such Party shall promptly take all reasonable action to remove
the Force Majeure, and provided further, that no Party shall be required
against its will to settle any labor dispute.

9

IN WITNESS
WHEREOF, THIS AGREEMENT IS MADE EFFECTIVE AS OF THE DATE FIRST ABOVE WRITTEN.

	
 

	
 

	
 

	
 

	
 

	
WITNESS:

	
 

	
 

	
PETROQUEST ENERGY, L.L.C.

	
 

	

	

	
 

	
 

	
 

	
Print Name:

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	

	

	
 

	

	

	
Print Name:

	
 

	
 

	
By:

	
Bryan D.
 Martiny

	
 

	

	
 

	
Title: 

	
General
 Manager - Land

	
 

	
 

	
 

	
 

	
 

	
WITNESS:

	
 

	
 

	
CL&F RESOURCES LP

	
 

	
 

	
 

	
By: Piquant,
 Inc., its General Partner

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
Print Name:

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	

	

	
 

	

	

	
Print Name:

	
 

	
 

	
By:

	
C. O. Bolt

	
 

	

	
 

	
Title: 

	
President

	
 

	
 

	
 

	
 

	
WITNESS:

	
 

	
 

	
RIDGEWOOD ENERGY CORPORATION

	
 

	

	

	
 

	
 

	
 

	
Print Name:

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	

	

	
 

	

	

	
Print Name:

	
 

	
 

	
By:

	
 

	
 

	

	
 

	
Title:

	
 

	
 

	
 

	
 

	
 

	
 

	
WITNESS:

	
 

	
 

	
BAYOU BEND OFFSHORE, LTD.

	
 

	

	

	
 

	
 

	
 

	
Print Name:

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	

	

	
 

	

	

	
Print Name:

	
 

	
 

	
By:

	
 

	
 

	

	
 

	
Title:

	
 

10

STATE OF
LOUISIANA

PARISH OF
LAFAYETTE

          BEFORE ME, on this ____day
of _____________, 2008 the undersigned Notary Public, on this day personally
appeared Bryan D. Martiny, who, being by me duly sworn, did say that he is the
General Manager - Land for PetroQuest Energy, L.L.C. and that said instrument
was signed in behalf of said limited liability company by authority of its
Board of Directors and said Bryan D. Martiny acknowledged said instrument to be
the free act and deed of said limited liability company.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
Notary
 Public

	
 

	
 

	
 

	
 

	
 

	
My
 commission Expires

	
 

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
 

	
STATE OF 

	
 

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
COUNTY OF

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

BEFORE ME, on this ____day of _______, 2008, the undersigned Notary
Public, on this day personally appeared ________________, who being by me duly
sworn, did say that he is the __________________ of _____________________ and
that said instrument was signed in behalf of said corporation by authority of
its Board of Directors and said _____________________ acknowledged said instrument
to be the free act and deed of said corporation.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
Notary
 Public

	
 

	
 

	
 

	
 

	
 

	
My
 Commission Expires

	
 

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
 

	
STATE OF

	
 

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
COUNTY OF

	
 

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

BEFORE ME, on this ____day of _______, 2008, the undersigned Notary
Public, on this day personally appeared ________________, who being by me duly
sworn, did say that he is the __________________ of _____________________ and
that said instrument was signed in behalf of said corporation by authority of
its Board of Directors and said _____________________ acknowledged said
instrument to be the free act and deed of said corporation.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
Notary
 Public

	
 

	
 

	
 

	
 

	
 

	
My
 Commission Expires

	
 

	
 

	
 

	
 

	
 

	
 

	

11

	
 

	
 

	
 

	
 

	
 

	
 

	
STATE OF

	
 

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
COUNTY OF

	
 

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

BEFORE ME, on this ____day of _______, 2008, the undersigned Notary
Public, on this day personally appeared ________________, who being by me duly
sworn, did say that he is the __________________ of _____________________ and
that said instrument was signed in behalf of said corporation by authority of
its Board of Directors and said _____________________ acknowledged said
instrument to be the free act and deed of said corporation.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

	

	
 

	
 

	
 

	
 

	
Notary
 Public

	
 

	
 

	
 

	
 

	
 

	
My
 Commission Expires

	
 

	
 

	
 

	
 

	
 

	
 

	

12

EXHIBIT “A”

Attached to and made a part of that certain
Participation Agreement, 

dated May 1, 2008, by and between PetroQuest Energy, L.L.C., CL&F Resources
LP, 

Ridgewood Energy Corporation and Bayou Bend Offshore, Ltd., covering 

REDACTED Prospect

	
 

	
 

	
I.

	
CONTRACT AREA: Those certain Federal Oil
 and Gas Leases described as follows:

	
 

	
 

	
 

	
REDACTED

	
 

	
 

	
 

	
CONTRACT AREA ENCUMBRANCES:

	
 

	
 

	
 

	
REDACTED

	
 

	
 

	
II.

	
ADDRESSES OF THE PARTIES:

	
 

	
 

	
 

	
PETROQUEST ENERGY, L.LC.

	
 

	
400 E.
 Kaliste Saloom Road, Suite 6000

	
 

	
Lafayette,
 LA 70508

	
 

	
Attn: Peter
 Gulotta, Jr.

	
 

	
Phone: (337)
 232-7028

	
 

	
Fax: (337)
 234-4699

	
 

	
 

	
 

	
CL&F
 Resources LP

	
 

	
450 Gears
 Road, Suite 700

	
 

	
Houston,
 Texas 77067-4534

	
 

	
Attn: Tammy
 Willis

	
 

	
Phone:
 281-873-3021

	
 

	
Fax:
 281-872-4398

	
 

	
 

	
 

	
Ridgewood Energy
 Corporation

	
 

	
11700 Old
 Katy Road, Suite 280

	
 

	
Houston,
 Texas 77079

	
 

	
Attn: Mr. W.
 Greg Tabor

	
 

	
Phone:
 281-293-8449

	
 

	
Fax:
 281-293-7705

	
 

	
 

	
 

	
Bayou Bend
 Offshore, Ltd.

	
 

	
228 St.
 Charles Avenue, Suite 724

	
 

	
New Orleans,
 Louisiana 70130

	
 

	
Attn: Mr.
 William J. Dwyer

	
 

	
Phone:
 504-561-1151

	
 

	
Fax:
 504-561-1153

EXHIBIT “B”

WELL COST ESTIMATES

EXHIBIT “C”

JOINT OPERATING AGREEMENT

EXHIBIT “D”

Form of ASSIGNMENT

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