Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - MegaWeest Energy Corp. - Exhibit 4.25

EXECUTIVE EMPLOYMENT AGREEMENT

THIS AGREEMENT made effective as of the 2nd day of January,
2007.

BETWEEN:

  
    
      
        MEGAWEST ENERGY CORP., a body corporate duly
          incorporated under the laws of the Province of British Columbia with
          an office in the City of Calgary, in the Province of Alberta (hereinafter
          called the “Corporation”)

      

    

  

- and -

  
    
      
        F. GEORGE ORR, a resident of the City of Surrey,
          in the Province of British Columbia (hereinafter called the “Chief
          Financial Officer of the Corporation” and/or the “Executive”)

      

    

  

          WHEREAS
the Corporation wishes to employ the Executive and the Executive wishes to be
employed by the Corporation as the Chief Financial Officer of the Corporation;
and

          AND
WHEREAS the Corporation and the Executive wish to clarify the terms of the
Executive’s employment with the Corporation.

          NOW
THEREFORE, THIS AGREEMENT WITNESSETH that in consideration of the mutual
covenants herein contained, and for other good valuable consideration (the
receipt and sufficiency of which is hereby acknowledged), the parties hereto
agree as follows:

ARTICLE 1 
DEFINITIONS AND INTERPRETATION

                              1.1      Definitions

In this Agreement, unless there is
something in the context or subject matter inconsistent therewith, the following
defined terms shall have the meanings hereinafter set forth:

	 	(a) 	
      “Affiliate” has the meaning set forth in the
      Business Corporations Act (British Columbia); provided that the
      Corporation and each of its Affiliates shall at all times be deemed to be
      Affiliates of the Corporation;

	 	 	 
	 	(b) 	
      “Annual Salary” means the annual salary of the
      Executive as defined in Schedule “A”;

	 	 	 
	 	(c) 	
      “Associate” has the meaning set forth in the
      Business Corporations Act (British Columbia);

	 	 	 
	 	(d) 	
      “Benefits” means the benefits and entitlements set
      out in Schedule “B”;

	 	 	 
	 	(e) 	
      “Board of Directors” means the Board of Directors
      of the Corporation;

	 	 	 
	 	(f) 	
      “Change of Control” means the occurrence of any
      of:

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	 	(i) 	
      the purchase or acquisition of Common Shares of the
      Corporation and/or securities convertible into Common Shares of the
      Corporation or carrying the right to acquire Common Shares of the
      Corporation (“Convertible Securities”) as a result of which a
      Person, group of Persons or Persons acting jointly or in concert, or any
      Affiliates or Associates of any such Person, group of Persons or any of
      such Persons acting jointly or in concert (collectively the
      “Holders”) beneficially own or exercise control or direction over
      Common Shares and/or Convertible Securities of the Corporation such that,
      assuming after the conversion of the Convertible Securities beneficially
      owned by the Holders thereof, would have the right to cast more than 50%
      of the votes attached to all Common Shares of the Corporation; provided
      that, the acquisition of Common Shares or Convertible Securities of the
      Corporation pursuant to the issuance of securities from treasury which
      results in a Holder beneficially owning or exercising control or direction
      over 50% of the votes attached to all Common Shares of the Corporation
      (assuming conversion of the Convertible Securities beneficially owned by
      Holders thereof) where the Board of Directors continues to be supportive
      of the direction of the Corporation under the management of the Chief
      Executive Officer shall not constitute a “Change of
  Control”;

	 	 	 	 
	 	(ii) 	
      approval by the shareholders of:

	 	 	 	 
	 		(A) 	
      an amalgamation, arrangement, merger or other
      consolidation or combination of the Corporation with another entity
      pursuant to which the shareholders of the Corporation immediately
      thereafter do not own securities of the successor or continuing entity
      which would entitle them to cast more than 50% of the votes attaching to
      all of the Common Shares,

	 	 	 	 
	 		(B) 	
      a liquidation, dissolution or winding-up of the
      Corporation,

	 	 	 	 
	 		(C) 	
      the sale, lease or other disposition of all or
      substantially all of the assets of the Corporation,

	 	 	 	 
	 		(D) 	
      the election at a meeting of the Corporation’s
      shareholders of a number of directors, who were not included in the slate
      for election as directors approved by the prior Board of Directors, and
      would represent a majority of the Board of Directors, or

	 	 	 	 
	 		(E) 	
      the appointment of a number of directors which would
      represent a majority of the Board of Directors and which were nominated by
      any holder of voting shares of the Corporation or by any group of holders
      of voting shares of the Corporation acting jointly or in concert and not
      approved by the Corporation’s prior Board of
Directors;

	 	(g) 	
      “Common Shares” means the common shares of the
      Corporation;

	 	 	 
	 	(h) 	
      “Confidential Information” means information,
      data, technology, material or other property, of any kind and in whatever
      form, that is confidential or proprietary to the Corporation or any
      Affiliate or Associate, including without limitation: engineering reports,
      geological information, maps, well data, prospect data and seismic
      information or any other information, the disclosure of which could be
      reasonably expected to materially adversely affect the Corporation or any
      Affiliate or Associate or which the

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      Corporation or any Affiliate or Associate is obliged by
      contract or law to treat as confidential. “Confidential
      Information” does not include information which is or becomes
      generally available to the public, other than as a result of a disclosure
      in violation of this Agreement, information which the Executive can
      conclusively establish was already lawfully in the possession of the
      Executive prior to the Executive’s employment with the Corporation or
      information, the disclosure of which is required by regulation or
    law;

	 	 	 
	 	(i) 	
      “Constructive Dismissal” shall mean the occurrence
      of any of the following events:

	 	(i) 	
      a material change (other than those which are clearly
      consistent with a promotion) in the Executive’s position or duties, title
      or office, which includes any removal of the Executive from or any failure
      to re-elect or re-appoint the Executive to any such positions or offices,
      provided that, such term shall not include a change consistent with the
      Corporation splitting a position into one or more positions in conjunction
      with a corporate reorganization based on the demands of such position so
      long as there is no reduction in the Executive’s Annual Salary or a
      material reduction in Benefits or other remuneration or responsibilities
      taken as a whole; or

	 	 	 
	 	(ii) 	
      a reduction by the Corporation in the Executive’s Annual
      Salary or any material change in the basis upon which the Executive’s
      Annual Salary is determined, provided however it is understood there may
      be economic circumstances wherein the Executive and the Corporation agree
      that it would be in the best interest of the Corporation to temporarily
      reduce the Executive’s Annual Salary and the annual salary of other
      executives of the Corporation on a pro rata basis, conditional on
      reinstatement at some agreed time in the future and that such an event
      will not be considered as a Constructive
Dismissal.

Provided, however, “Constructive
Dismissal” shall expressly be deemed not to include the following:

	 	(i) 	
      the occurrence of any of the aforesaid events with the
      consent of the Executive; or

	 	 	 
	 	(ii) 	
      termination of the employment of the Executive for Just
      Cause, Death or Disability or for the reasons described in Section
    4.5;

	 	(j) 	
      “Date of Termination” shall mean the date of
      cessation of the Executive’s employment with the Corporation, regardless
      of the reason for cessation of employment;

	 	 	 	 
	 	(k) 	
      “Disability” shall mean the Executive’s inability
      to perform the material and substantial duties of his employment on a
      full-time basis for a period of six (6) cumulative months out of any
      18-month period where such inability arises as a result of sickness or
      injury;

	 	 	 	 
	 	(l) 	
      “Effective Date” shall be the effective date of a
      Change of Control;

	 	 	 	 
	 	(m) 	
      “Just Cause” means any act or course of conduct
      which at law constitutes just cause and shall include, without
      limitation:

	 	 	 	 
	 		(i) 	
      the continued failure by the Executive to substantially
      perform his duties according to the terms of his employment (other than
      any such failure resulting

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      from the Executive’s Disability) after the Corporation
      has given the Executive reasonable notice of such failure and a reasonable
      opportunity to correct it;

	 	 	 
	 	(ii) 	
      a breach of any provision in Article 5 (provided that the
      Corporation acts in good faith in determining that such a breach
      constitutes Just Cause) or a material breach of any other provision of
      this Agreement;

	 	 	 
	 	(iii) 	
      the conviction of the Executive of an indictable offence
      or fraud; or

	 	 	 
	 	(iv) 	
      fraud, theft or wilful misconduct by the Executive that
      relates to or affects the Corporation or the Executive’s employment with
      the Corporation;

	 		
      The Executive’s employment shall not be considered as
      being terminated for Just Cause unless and until there shall have been
      delivered to the Executive a copy of a resolution duly adopted by the
      affirmative vote of not less than two-thirds of the entire membership of
      the Board (not counting the Executive, if the Executive shall then be a
      member of the Board) at a meeting of the Board called and held for the
      purpose (after reasonable notice to the Executive and an opportunity for
      the Executive, together with his counsel, to be heard before the Board),
      finding that in the good faith opinion of the Board the Executive was
      guilty of the conduct constituting Just Cause and specifying the
      particulars thereof. Once the Executive receives notice of a meeting of
      the Board of Directors to remove him for Just Cause he may at any time
      prior to the Date of Termination elect to terminate his employment Without
      Constructive Dismissal pursuant to Section 4.3. Should the Executive
      dispute the Board of Directors’ decision that Just Cause existed for a
      termination, the Executive shall have the right to have the matter
      resolved by arbitration, as set forth in Article 6, by delivering written
      notice to the Corporation within seven (7) days of the Board of Directors’
      decision. The Corporation and the Executive agree that should the
      Executive dispute whether Just Cause existed for the termination, that the
      employment shall not be considered terminated until resolved by
      arbitration as set forth in Article 6. The Corporation and the Executive
      agree to use their best efforts to expedite any such arbitration. In the
      event an arbitrator determines that Just Cause did not exist for a
      termination purportedly for Just Cause, the termination will be deemed to
      have been a termination without Just Cause and the Executive will be
      entitled to receive any payments he would have received had his
      termination been specified as one without Just Cause under Section
    4.3.

	 	 	 
	 		
      “Perquisites” means the perquisites set out in
      Schedule “C”;

	 	 	 
	 	(n) 	
      “Person” means any individual, corporation,
      limited liability corporation, limited or general partnership, joint
      venture, association, joint-stock corporation, trust, plan, unincorporated
      organization or government or any agency or political subdivisions
      thereof;

	 	 	 
	 	(o) 	
      “Stock Option Plan” means the Corporation’s stock
      option plan (the “Plan”) which was made effective on the 28th
      day of September, 2004 and received shareholder approval for
      reconfirmation on the 20th day of October, 2006, Amended and
      Restated on February 19, 2007 by way of a resolution of the disinterested
      shareholders of the Corporation adopting and reconfirming the
  Plan.

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ARTICLE 2 
EMPLOYMENT

                              2.1      Engagement

Subject to the terms and conditions hereof, the Corporation
shall employ the Executive as the Chief Financial Officer of the Corporation,
its Affiliates and Associates (as requested). The Executive hereby accepts such
employment in accordance with the terms and conditions of this Agreement. The
Executive agrees to perform those duties and functions and have those
responsibilities which are normally associated with his position, in addition to
carrying out such other duties and responsibilities as are assigned to him from
time to time by the Board of Directors.

                              2.2      Performance

The Executive shall devote the necessary energy, skill and best
commercial efforts to the performance of his duties hereunder, in a manner which
will faithfully and diligently further the business and interests of the
Corporation. The Executive shall at all times comply with all applicable laws
and all policies and instructions of the Corporation in effect from time to time
unless any such policies are in direct conflict with the terms of this
Agreement, in which case, the terms of this Agreement shall govern to the extent
of the conflict.

                              2.3      Term

This Agreement shall be for an indefinite period and may be
terminated by the Executive or the Corporation in accordance with Article 4
hereof.

ARTICLE 3 
REMUNERATION AND BENEFITS 

                              3.1      Annual
Salary

As consideration for the services provided herein, the
Corporation shall pay to the Executive his Annual Salary, as defined in Schedule
“A”, (less all applicable statutory withholdings and deductions) in arrears by
semi-monthly instalments during the term of this Agreement.

                              3.2      Discretionary
Bonus

During the term of this Agreement and at the discretion of the
Board of Directors, the Executive may also be paid a discretionary bonus, cash
or otherwise, as additional remuneration for his services under this Agreement
with the discretionary bonus entitlement to be determined at such a time as
bonuses are scheduled for determination consistent with the Corporation’s bonus
program or policy. 

                              3.3      Stock
Options

	 	(a) 	
      The Corporation shall issue 1,000,000 Common Share
      options to the Executive in his capacity as Chief Financial Officer with
      an exercise price of $0.50 per Common Share under the terms and conditions
      of the Corporation’s Stock Option Plan, to be issued upon commencement of
      employment, and shall be fully vested and may be exercised at any time by
      the both before and after termination by the Executive or his legal heirs
      until January 5, 2011. The options may also at the Executive’s or his
      legal heir’s election be exercised on a cashless basis. Upon written
      request by the Executive the Corporation

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      agrees to register for resale the shares underlying the
      options or shares issued pursuant to the options at its
expense.;

	 	 	 
	 	(b) 	
      During the term of this Agreement and at the discretion
      of the Board of Directors acting on the recommendations of the Human
      Resources Committee (or any replacement committee), the Executive may be
      granted additional options to purchase Common Shares in accordance with
      the Corporation’s Stock Option Plan, as additional remuneration for his
      services under this Agreement.

	 	 	 
	 	(c) 	
      All issuances set out above shall be subject to
      applicable stock exchange approvals and shall be made in accordance with
      applicable securities legislation.

                              3.4      Expenses

The Corporation shall reimburse the Executive for all
reasonable travelling and other expenses actually and properly incurred by him
in connection with his duties hereunder in accordance with the Corporation’s
policies, provided that such expenses shall be subject to annual tabling before
the Board of Directors, and such expenses may be subject to further verification
by the Audit Committee of the Board of Directors. For all such expenses, the
Executive shall furnish the Corporation with such statements, receipts or other
reasonable documentation and within the applicable time period as may be
reasonably required by the Corporation.

                              3.5      Benefits

The Executive shall participate in all Benefits that the
Corporation provides for its executives, unless such Benefits are relinquished
by the Executive. The Corporation shall provide Benefits in accordance with the
formal plan documents or policies, and any issues with respect to entitlement or
payment of Benefits shall be governed by the terms of such documents or policies
establishing the Benefit in issue.

                              3.6      Perquisites

The Executive shall be entitled to participate in and receive
the perquisites set out in Schedule “C” to this Agreement.

ARTICLE 4 
TERMINATION OF EMPLOYMENT 

                              4.1     
Death

The Executive’s employment and this Agreement shall be deemed
terminated on death, at which time the Executive’s personal representatives
shall be entitled to receive the amount of unpaid Annual Salary to and including
the date of death, any bonus declared but not yet paid, plus all expense
reimbursements (in each case less applicable withholdings and deductions). Any
options to purchase Common Shares shall be treated in the manner set forth in
Section 3.3 (a) except that the options shall expire on the earlier of their
expiry date or eighteen months after the death of the Executive.

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                              4.2      Disability

	 	(a) 	
      The Executive shall cooperate in all respects with the
      Corporation if a question arises as to whether the Executive has a
      Disability. The Executive shall, as reasonably requested by the
      Corporation, submit to an examination by a medical doctor or other health
      care specialist mutually selected by the Corporation and the Executive
      (or, if they cannot agree on the selection of the doctor or specialist, a
      doctor or specialist appointed by the Court of Queen’s Bench in Calgary,
      Alberta). If the Corporation and the Executive are unable to agree on
      whether a Disability exists, the determination of the specialist selected
      pursuant hereto shall be determinative.

	 	 	 	 	 
	 	(b) 	
      In the event of a Disability of the Executive, the
      Executive’s employment with the Corporation shall be deemed to be
      frustrated and, unless the Board of Directors determines otherwise, shall
      automatically terminate. If the Executive’s employment is terminated by
      reason of Disability, then:

	 	 	 	 	 
	 		(i) 	
      the Corporation shall pay the Executive:

	 	 	 	 	 
	 			(A) 	
      the amount of unpaid Annual Salary to and including the
      Date of Termination, any declared but unpaid bonus;

	 	 	 	 	 
	 			(B) 	
      outstanding expense reimbursements;

	 	 	 	 	 
	 			(C) 	
      upon receipt of an executed Release in the form of the
      Release attached as Schedule “D” to this Agreement, a severance payment
      equal to the amount payable to the Executive pursuant to Section
      4.4(b)(iv);

	 	 	 	 	 
	 				
      (in each case, less applicable withholdings and
      deductions); and

	 	 	 	 	 
	 		(ii) 	
      any outstanding options to purchase Common Shares shall
      be treated in the manner set forth in Section 3.3
(a).

                              4.3      Termination
by the Corporation for Just Cause and Termination by the Executive Without
Constructive Dismissal

	 	(a) 	
      The Corporation may terminate the Executive’s employment
      for Just Cause. The Executive may terminate his employment with the
      Corporation Without Constructive Dismissal for any reason upon the earlier
      of thirty (30) days written notice and immediately upon delivery of
      written notice should the Board of Directors call a meeting to remove the
      Executive for Just Cause.

	 	 	 
	 	(b) 	
      If the Executive’s employment is terminated either by the
      Corporation for Just Cause or by the Executive Without Constructive
      Dismissal, the Corporation shall pay to the Executive, within five (5)
      business days following the Date of Termination, the amount of unpaid
      Annual Salary to and including the Date of Termination, any declared but
      unpaid bonus, and expense reimbursements (in each case less applicable
      statutory withholdings and deductions). Any vested options to purchase
      common shares shall be treated in the manner set forth in Section 3.3 (a)
      except that in the case of termination for Just Cause they shall expire as
      at the date of Date of Termination.

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                              4.4      Termination
by the Corporation Without Just Cause or Termination by the
Executive for Constructive Dismissal

	 	(a) 	
      The Corporation may, in its absolute discretion,
      immediately terminate the Executive’s employment at any time without Just
      Cause for any reason provided that such termination without just cause is
      approved beforehand by a majority of the Board of Directors. At any time
      within 30 days following an event that constitutes a Constructive
      Dismissal hereunder, the Executive may terminate his employment with the
      Corporation upon thirty (30) days written notice.

	 	 	 
	 	(b) 	
      If the Executive’s employment is terminated either by the
      Corporation without Just Cause or by the Executive for Constructive
      Dismissal, then the Corporation shall pay to the
  Executive:

	 	(i) 	
      the amount of unpaid Annual Salary to and including the
      Date of Termination;

	 	 	 	 
	 	(ii) 	
      all expense reimbursements;

	 	 	 	 
	 	(iii) 	
      any bonus that has been declared by the Board of
      Directors but not yet paid; and

	 	 	 	 
	 	(iv) 	
      within five (5) business days of receipt of an executed
      release in the form of the Release attached as Schedule ”D” to this
      Agreement, payment of the following, in each case less all applicable
      statutory withholdings and deductions (collectively, the “Termination
      Amount”):

	 	 	 	 
	 		(A) 	
      a severance payment in the amount of one (1) years Annual
      Salary, representing compensation for loss of employment; plus

	 	 	 	 
	 		(B) 	
      the sum of $10,000, less applicable withholdings and
      deductions, representing compensation for the loss of Benefits and
      Perquisites.

	 	(c) 	
      If the Executive’s employment is terminated either by the
      Corporation without Just Cause or by the Executive for Constructive
      Dismissal, then any options to purchase Common Shares shall be treated in
      the manner set forth in Section 3.3 (a).

                              4.5      Change
of Control

	 	(a) 	
      In the event of a Change of Control of the
      Corporation:

	 	 	 	 
	 		(i) 	
      the Corporation shall have the option, within seven (7)
      days of the Effective Date, to terminate the employment of the Executive
      effective immediately; and

	 	 	 	 
	 		(ii) 	
      the Executive shall have the option, within fourteen (14)
      days of the Effective Date, to terminate his employment with the
      Corporation upon providing thirty (30) days written notice (which notice
      may be provided at any time during such 14-day period following the
      Effective Date).

	 	 	 	 
	 	(b) 	
      If the Executive’s employment is terminated by either the
      Corporation or the Executive pursuant to Section 4.5(a) above,
  then:

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	 	(i) 	
      the Corporation shall pay to the Executive, upon receipt
      of an executed release in the form of the Release attached as Schedule “D”
      to this Agreement, the Termination Amount payable to the Executive
      pursuant to Section 4.4(b); and

	 	 	 
	 	(ii) 	
      any outstanding options to purchase Common Shares shall
      be governed in the manner set forth in Section 3.3
(a)..

	 	(c) 	
      If neither the Corporation nor the Executive elects to
      exercise the option to terminate the Executive’s employment pursuant to
      Section 4.5(a) above, the Executive’s employment shall continue in
      accordance with the terms of this Agreement, or on such other terms as
      mutually agreed by the Corporation and the
Executive.

                              4.6     
Payment of Termination Amount

	 	(a) 	
      The Termination Amounts payable to the Executive pursuant
      to Sections 4.4(b) or 4.5(b) shall not be reduced in any respect in the
      event that the Executive shall secure or shall not reasonably pursue
      alternative employment following the termination of the Executive’s
      employment.

	 	 	 
	 	(b) 	
      The Executive will be entitled to elect to contribute a
      portion of the Termination Amount payable to the Executive pursuant to
      Sections 4.4(b) or 4.5(b) to a registered retirement savings plan as
      permitted under the Income Tax Act (Canada) and the Corporation shall
      cooperate in the payment of such contributions, subject to applicable
      eligibility limits.

                              4.7      Resignation
from Offices and Directorships

Unless otherwise requested by the Corporation, effective on the
Date of Termination, the Executive shall resign from all offices and
directorships in the Corporation and its Affiliates or Associates, save and
except directorships of the Corporation or Affiliates and Associates that are
public companies, and the Executive shall not be entitled to receive any payment
or compensation for loss of office or directorship or otherwise by reason of the
resignation except as noted to in this agreement. If the Executive fails to
resign as aforesaid, the Corporation is irrevocably authorized to remove him
from all offices and directorships held, save and except Directorships of the
Corporation or Affiliates or Associates which are public companies, and to sign
any documents on his behalf and do any things necessary or requisite to give
effect to such documents or resignation

                              4.8     
Options to Purchase Common Shares

Subject to the provisions of this Article 4 providing for
accelerated vesting of the Executive’s options to purchase Common Shares in
certain circumstances, in the event of termination of the Executive’s
employment, any options to purchase Common Shares must be exercised in
accordance with conditions set forth in Section 3.3 (a).

                              4.9      Return
of Property

On the Date of Termination, the Executive shall promptly
surrender to the Corporation all information in whatever form (including all
Confidential Information) and any other documents, materials, data, property,
information and equipment belonging to the Corporation or relating to the
Corporation’s business in his possession, custody or control, and the Executive
shall not thereafter retain or deliver to any other Person any of the foregoing
or any summary or memorandum thereof. 

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ARTICLE 5
COMPETING INTERESTS, CONFIDENTIALITY AND
NON-SOLICITATION

                              5.1      No
Breach of Proprietary Rights of Third Parties

	 	(a) 	
      The Executive represents and warrants to the Corporation
      that (i) the Executive’s employment with the Corporation and his
      performance of this Agreement will not breach any agreement or other
      obligation with respect to the confidential or proprietary information of
      a third party; and (ii) the Executive is not bound by any written or oral
      agreement with any third party that conflicts with the Executive’s
      employment with the Corporation or his obligations hereunder.

	 	 	 
	 	(b) 	
      The Executive agrees that, during his employment with the
      Corporation and in the performance of his obligations hereunder, he shall
      not improperly bring to the Corporation or use any trade secrets or
      confidential or proprietary information of any third party or otherwise
      knowingly infringe on the proprietary rights of any third
  party.

                              5.2     
Non-Solicitation and Other Prohibited Actions

During the Executive’s employment with the Corporation or if a
resolution duly adopted by the affirmative vote of not less than two-thirds of
the entire membership of the Board (not counting the Executive, if the Executive
shall then be a member of the Board) at a meeting of the Board called and held
for the purpose (after reasonable notice to the Executive and an opportunity for
the Executive, together with his counsel, to be heard before the Board), finding
that in the good faith opinion of the Board the Executive was guilty of the
conduct constituting Just Cause then for a period of twelve (12) months after
thereafter, the Executive shall not, without the prior written consent of the
Board of Directors of the Corporation (i) directly or (ii) knowingly and
indirectly: 

	 	(a) 	
      commence an offer of any nature or kind whatsoever for
      any securities or property or assets of the Corporation or any of its
      Affiliates or Associates, including without limitation a tender or
      exchange offer;

	 	 	 
	 	(b) 	
      solicit proxies from holders of securities of the
      Corporation or form, join or in any way participate with a “control
      person” (as such term is defined under the Securities Act
      (Alberta)) with respect to the equity of the Corporation or any of its
      Affiliates or Associates;

	 	 	 
	 	(c) 	
      engage in any discussions or negotiations, conclude any
      understandings or enter into any agreement, or otherwise act in concert,
      with any third party to propose or effect any takeover bid, amalgamation,
      merger, arrangement or other business combination with respect to the
      Corporation or any of its Affiliates or Associates or substantially all of
      the assets of the Corporation or any of its Affiliates or Associates or to
      propose or effect any acquisition or purchase of any assets of the
      Corporation or any of its Affiliates or Associates;

	 	 	 
	 	(d) 	
      institute any shareholder proposal in respect of the
      Corporation or otherwise attempt to influence or control the conduct of
      the security holders of the Corporation; or

	 	 	 
	 	(e) 	
      take any action in furtherance of any of the
      foregoing,

- 11 -

whether for or on his behalf or for any
entity in which he shall have a direct or indirect interest (or any Affiliate or
Associate of any such entity) whether as a proprietor, partner, co-venturer,
financier, investor or stockholder, director, officer, employer, employee,
servant, agent, representative or otherwise

                              5.3     
Confidentiality

	 	(a) 	
      During the period of his employment with the Corporation
      and at any time thereafter, the Executive shall receive and hold all
      Confidential Information absolutely secret, undisclosed, in trust and in
      confidence, and shall comply with the Corporation’s policies and
      guidelines and use his best efforts for the protection of Confidential
      Information.

	 	 	 
	 	(b) 	
      The Executive shall not reveal or disclose to any Person
      outside the Corporation or use for his own benefit, whether by private
      communication or by public address or publication or otherwise, any
      Confidential Information without the Corporation’s specific written
      authorization or except as required by a mandatory provision of applicable
      law, provided however, that prior to any unauthorized use or
      disclosure of Confidential Information that is required by law, the
      Executive shall give the Corporation reasonable prior notice of any
      disclosure of Confidential Information required by law and, if requested
      by the Corporation, shall use reasonable efforts to obtain a protective
      order or similar protection for the Corporation and shall permit and
      cooperate with any effort by the Corporation to obtain such an order. The
      Executive shall take such action as is reasonably necessary to ensure that
      no other employee, agent, contractor or associate of the Corporation, or
      any family member of the Executive or other person discloses or permits
      the disclosure of any Confidential Information.

	 	 	 
	 	(c) 	
      All originals, copies and other forms of Confidential
      Information, however and whenever produced, shall be the sole property of
      the Corporation, not to be removed from the premises or custody of the
      Corporation, except in the normal course of business, without in each
      instance first obtaining written consent or authorization of the
      Corporation.

	 	 	 
	 	(d) 	
      This Agreement and all information and documents
      concerning the substance and terms of this Agreement shall be Confidential
      Information and shall be maintained in confidence and shall not be
      disclosed to any other Person without the Corporation’s specific written
      authorization or as required by law.

                              5.4     
Acknowledgement

          The
Executive acknowledges and agrees that:

	 	(a) 	
      he will receive or will become eligible to receive
      substantial benefits and compensation as a result of his employment by the
      Corporation and its subsidiaries under this Agreement, which benefits and
      compensation are offered to him only because and on condition of his
      willingness to commit his commercial best efforts and loyalty to the
      Corporation, including abiding by the terms and restrictions in this
      Article 5;

	 	 	 
	 	(b) 	
      as a result of the acquisition of Confidential
      Information, the Executive will occupy a position of trust and confidence
      with the Corporation and its Affiliates and Associates;

	 	 	 
	 	(c) 	
      the Executive’s position of trust and knowledge of
      Confidential Information would enable the Executive to put the Corporation
      at a significant competitive disadvantage if the Executive breaches the
      restrictions in this Article 5;

- 12 -

	 	(d) 	
      irreparable damage would result to the Corporation if the
      provisions of this Article 5 hereof are not specifically enforced, and the
      Executive waives all defences to the strict enforcement thereof by the
      Corporation;

	 	 	 
	 	(e) 	
      the Corporation shall be entitled to any appropriate
      legal, equitable, or other remedy, including injunctive relief, in respect
      of any failure or continuing failure on his part to comply with Article
      5;

	 	 	 
	 	(f) 	
      the restrictions contained in this Article 5 are
      reasonable and valid based on the nature of the Executive’s position with
      the Corporation; and

	 	 	 
	 	(g) 	
      any breach of this Article 5 shall constitute grounds for
      termination of the Executive’s employment for Just
Cause.

                              5.5      Survival

Notwithstanding the termination of this Agreement and the
Executive’s employment, the provisions of this Article 5 shall survive such
termination and be continuing obligations.

ARTICLE 6
ARBITRATION

                              6.1     
Definition

Any controversy, dispute, or claim arising out of, relating to,
or concerning this Agreement, the breach of this Agreement, the employment of
the Executive, or the termination of the Executive’s employment will be resolved
pursuant to this Article 6. Without limiting the generality of the foregoing,
this includes all claims, whether arising in respect of contractual or
extra-contractual liability. Any such controversy, dispute, or claim will be
referred to a single arbitrator pursuant to the British Columbia Commercial
Arbitration Act (the "Commercial Arbitration Act"), which arbitration will
occur in Vancouver, British Columbia. This Article 6 will be deemed to be a
submission to arbitration by the parties hereto in accordance with the
Commercial Arbitration Act, provided that, if the provisions of the
Commercial Arbitration Act differ from in this Article 6, the provisions of this
Article 6 will prevail. Any demand for resolution of such a matter must be
served on the other party within the period covered by the applicable statute of
limitations.

                              6.2     
Enforcement

This Article 6 will be specifically enforceable. Judgment upon
any award rendered by the arbitrator may be entered in any court having
jurisdiction.

                              6.3      Authority

The arbitrator will have no authority to extend, modify, or
suspend any of the terms of this Agreement. The arbitrator must make his award
in writing and must accompany it with an opinion discussing the evidence and
setting forth the reasons for the award.

                              6.4      Decision

The decision of arbitrator within the scope of the submission
will be final and binding on both parties, and any right to judicial action on
any matter subject to resolution by arbitration hereunder hereby is waived
unless otherwise required by applicable law, except suit to enforce an 

- 13 -

award by the arbitrator or in the event resolution by an
arbitrator is not available for any reason.

                              6.5      Expenses

The Corporation shall pay the arbitrator’s fees and charges;
however, each party shall bear its or his own costs and expenses with respect to
the arbitration of any controversy, dispute, or claim under this Article 6,
including, but not limited to, any legal fees or expenses. Notwithstanding the
foregoing, in the event that the Corporation is the losing party (as determined
by the arbitrator), the Corporation shall bear both its costs and expenses and
the costs and expenses of the Executive with respect to the arbitration of any
controversy, dispute, or claim under this Article 6, including, but not limited
to, any legal fees or expenses.

ARTICLE 7
GENERAL

                              7.1      Enurement

This Agreement shall enure to the benefit of and be binding
upon the Corporation, its successors and permitted assigns, and the Executive
and his executors, administrators, personal representatives and assigns. Neither
the Executive nor the Corporation may assign its rights hereunder to another
Person without the consent of the other party. 

                              7.2      Notices

Any notice required or permitted to be given under this
Agreement shall be in writing and shall be properly given if delivered
personally, by telecopy, by prepaid courier service or by certified or prepaid
registered mail, addressed as follows (or to such other address provided by one
party to the other party):

	Executive: 	15276 – 83 rd Ave. 
	 	 
	  	Surrey, B.C. V3S-8M7 
	 	 
	  	Telecopy; 604-606-7980 
	 	 
	With Copy To: 	Monita Faris 
	 	 
	  	Suite 1010 West Pender
  
	 	 
	  	Vancouver, B.C. V6C-1H2
  
	 	 
	  	Telecopy; 604-606-7980 
	 	 
	Corporation: 	MegaWest Energy Corp. 
	  	10th Floor,
      815-8th Ave. SW 
	  	Calgary, Alberta, T2P 3P2 
	 	 
	  	Attn:      David Sealock
  
	 	 
	  	Telecopy; 403-984-6343
  

- 14 -

	With Copy To: 	Clark Wilson LLP 
	  	Barristers and Solicitors 
	  	Patent & Trade-mark Agents
  
	  	800 – 855 West Georgia Street
  
	  	Vancouver, British Columbia V6C
      3H1 
	  	 
	  	Attn:       Virgil Hlus
    
	  	 
	  	Telecopy; 604-687-6314
  

Any such notice shall be deemed to be received (i) on the date
of delivery, if delivered by hand, (ii) one (1) business day after delivery, if
delivered by courier, (iii) one (1) business day following receipt of an
appropriate electronic confirmation, if sent by telecopy, and (iv) five (5)
business days following the date of mailing, if mailed.

                              7.3     
Governing Law

This Agreement shall be governed by and construed in accordance
with the laws in force in the Province of Alberta.

                              7.4      Entire
Agreement

This Agreement shall constitute the entire agreement between
the Executive and the Corporation in respect of the matters set forth herein.
Except as otherwise specified herein or in writing by the Corporation after the
date hereof, to the extent of any conflict or inconsistency between the terms of
this Agreement and any other agreement or document between the Executive and the
Corporation or otherwise related to the Executive’s employment with the
Corporation, this Agreement shall govern to the extent of such inconsistency or
conflict.

                              7.5     
Severability

The provisions of this Agreement shall be deemed severable. If
any provision of this Agreement shall be held unenforceable by any court of
competent jurisdiction, such provision shall be modified to the extent necessary
to be enforceable, and the remaining provisions shall remain in full force and
effect.

                              7.6      Amendments
and Waivers

All modifications, amendments and supplements to this Agreement
must be made in writing and signed by both parties. No waiver by any party
hereto of any provision hereof or of any breach of this Agreement shall be
effective or binding unless such waiver is in writing, and any such waiver shall
not limit or affect such party’s rights with respect to any future breach.

                              7.7      Counterparts

This Agreement may be signed in two (2) counterparts, each of
which shall be deemed an original and both of which shall together constitute
the same instrument.

                              7.8     
Legal Advice

The Executive acknowledges having had the opportunity to seek
independent legal advice in connection with negotiation and execution of this
Agreement.

- 15 -

IN WITNESS WHEREOF this Agreement has been executed by the
parties hereto.

	 		MEGAWEST
      ENERGY CORP. 
	 	  	  
	 	By: 	/s/ George Stapleton, II 
	 	  	(Authorized Signatory) 
	 	  	  
	 	  	  
	 	  	  
	 		/s/ George Orr 
	 		F. GEORGE
      ORR 

SCHEDULE “A”

ANNUAL SALARY AND REMUNERATION

 

	1. 	
      The Annual Salary of the Executive shall be Cdn. $138,000
      (statutory vacation pay included) commencing as at January 2, 2007, paid
      semi-monthly, less all applicable statutory deductions; and

	 	 
	2. 	
      Participation in the corporate executive level bonus
      program as promulgated by the board of directors from time to
  time.

SCHEDULE “B”

BENEFITS

The Executive shall be entitled to receive the following
Benefits during the term of his employment under this Agreement, unless such
Benefits are relinquished by the Executive with his consent:

	
      1. . 
	
      Any other benefits which may be made available to
      employees or other executives of the Corporation from time to time during
      the term of this Agreement, including but not limited to life or
      disability insurance and directors and officers liability and errors and
      omissions insurance; 

SCHEDULE “C”

PERQUISITES

The Executive shall be entitled to receive the following
Perquisites during the term of his employment under this Agreement:

	1. 	
      Reimbursement of all reasonable expenses incurred by the
      Executive in carrying out his duties including but not limited to travel
      expenses (accommodation and meals) and entertainment expenses. Travel
      shall be reimbursed on the basis of business class (or equivalent) for
      flights over 4 hours and accommodation at suitable hotels;

	 	 
	3. 	
      As required, laptop, cell phone, Blackberry, all to be
      provided by the Corporation to the Executive at the Corporation’s expense;
      and

	 	 
	4. 	
      Directors and Officers Liability Insurance and Errors and
      Omissions Insurance with a minimum coverage of up to $2,000,000.00 per
      occurrence.

SCHEDULE “D”

RELEASE

1.      RELEASE

From and after the Effective Date (defined below) and in
consideration of the sum of __________________________Dollars $
___________________, less amounts withheld and paid to the Canada Revenue Agency
pursuant to the provisions of the Income Tax Act (Canada) (the “Severance
Amount”), and other good and valuable consideration, the receipt of which is
hereby acknowledged, I,____________________________________________ , do for
myself and my heirs, executors, administrators, personal representatives and
assigns (hereinafter collectively referred to as “I”) forever release, remise
and discharge MegaWest Energy Corp. and its subsidiaries, successors,
predecessor companies (collectively the “Corporation”) and the Corporation’s
directors, shareholders, employees, agents, insurers and assigns from any and
all actions, causes of actions, contracts (whether express or implied), claims
and demands for damages, suits, debts, sums of money, indemnity, expenses,
interest, costs and claims of any and every kind and nature whatsoever, at law
or in equity, which I ever had or now have, or which I or my heirs, successors
or personal representatives may hereafter have, by reason of or existing out of
any causes whatsoever existing up to and inclusive of the date of this Release,
including but without limiting the generality of the foregoing: 

	 	(a) 	
      my employment with the Corporation;

	 	 	 
	 	(b) 	
      the termination of my employment with the
    Corporation;

	 	 	 
	 	(c) 	
      the Executive Employment Agreement dated effective
      January 2, 2007 between the Corporation and me (the “Executive Employment
      Agreement”);

	 	 	 
	 	(d) 	
      any claims which I may have arising under or relating to
      the Alberta Employment Standards Code or the Alberta Human
      Rights, Citizenship and Multiculturalism Act or similar Codes or Acts
      in British Columbia, including the Human Rights Code of British
      Columbia;

	 	 	 
	 	(e) 	
      any and all claims for damages, salary, wages,
      termination pay, severance pay, , bonuses, expenses, allowances, ,
      insurance or any other benefits (or loss thereof) arising out of my
      employment with the Corporation; and

	 	 	 
	 	(f) 	
      all such further costs, expenses or damages which may
      properly be alleged to arise in respect of the cessation of my employment
      with the Corporation.

Notwithstanding anything contained herein, this Release shall
not extend to or affect, or constitute a release of any right that I may have in
respect of:

	 	(a) 	
      any corporate indemnity existing by statute, contract or
      pursuant to any of the constating documents of the Corporation provided in
      my favour in respect of my having acted at any time as a director or
      officer of the Corporation;

	 	 	 
	 	(b) 	
      my entitlement to any insurance maintained for the
      benefit or protection of the directors and/or officers of the Corporation,
      including without limitation, any directors’ and officers’ liability
      insurance; or

- 2 -

	 	(c) 	
      my entitlement to any amounts pursuant to Article 4 of
      the Executive Employment Agreement.

2.        NO
ADMISSION

I acknowledge that the payment of the Severance Amount to me
pursuant to the above paragraph does not constitute any admission of liability
by or on behalf of the Corporation.

3.        INDEMNITY FOR
TAXES

I further agree that, for the aforesaid payment, I will save
harmless and indemnify the Corporation from and against all claims, taxes or
penalties and demands which may be made by the Minister of National Revenue
requiring the Corporation to pay income tax under the Income Tax Act
(Canada) (or by any other government authority under any similar legislation in
any country or subdivision thereof), in respect of income tax payable in excess
of the income tax previously withheld; and in respect of any and all claims,
charges, taxes or penalties and demands which may be made on behalf of or
related to the Employment Insurance Commission or the Canada Pension Commission
(or by any other similar government authority in any country or subdivision
thereof) under the applicable statutes and regulations, with respect to any
amount which may, in the future, be found to be payable by the Corporation on my
behalf.

4.        EMPLOYMENT
STANDARDS CODE

I acknowledge receipt of all wages, , general holiday pay,
bonuses, benefits, pay in lieu of notice of termination of employment, severance
and other compensation that I am entitled to by virtue of the Alberta Employment
Standards Code (or under any similar legislation in any country or subdivision
thereof) or pursuant to any other labour standards legislation or common law,
and I further confirm that there are no entitlements, overtime pay or wages due
and owing to myself by the Corporation.

5.        BENEFITS AND
INSURANCE CLAIMS

I acknowledge and agree that all of my employment benefits will
cease on _______________ and I further acknowledge and agree that I have no
further claim against the Corporation for benefits or damages arising from the
cessation of benefits. I fully accept sole responsibility to replace those
benefits that I wish to continue and to exercise conversion privileges where
applicable with respect to benefits. In the event that I become disabled, I
covenant not to sue the Corporation for insurance or other benefits, or for loss
of benefits. I hereby release the Corporation from any further obligations or
liabilities arising from my employment benefits.

6.        HUMAN
RIGHTS

I acknowledge that I have not been discriminated against on any
grounds under the Alberta Human Rights, Citizenship and Multiculturalism Act
or the Human Rights Code of British Columbia (or under any similar
legislation in any country or subdivision thereof). I agree not to file a human
rights complaint against the Corporation arising from my employment or
termination of employment. If a human rights complaint involving my employment
or termination of employment with the Corporation is filed, I agree to instruct
the applicable Human Rights Commission (or any other similar government
authority in any country or subdivision thereof) to stay or withdraw the
complaint.

- 3 -

7.       
NON-DISCLOSURE

I agree that I will not divulge or disclose, directly or
indirectly, the contents of this Release or the terms of settlement relating to
my ceasing to be employed with the Corporation to any person, including but
without limiting the generality of the foregoing, to employees or former
employees of the Corporation, except my legal and financial advisors and my
immediate family, on the condition that they maintain the confidentiality
thereof, except as may be required by law.

8.        COMPLIANCE WITH
EMPLOYMENT AGREEMENT

I continue to be bound by the provisions of Article 5 of my
Employment Agreement notwithstanding the termination of my employment and the
Employment Agreement. I agree that I will comply with the restrictions set forth
in Article 5 of my Employment Agreement for the applicable time periods set
forth therein. I acknowledge and agree that such restrictions are reasonable and
properly required for the adequate protection of the business of the Corporation
and in the event that the time limit is deemed to be unreasonable by a court of
competent jurisdiction, I agree to the reduction of the time limit to a period
as the court shall deem to be reasonable.

9.        FURTHER
CLAIMS

I agree that I will not make claim or take proceedings against
any other person or entity that might claim contribution or indemnity under the
provisions of any statute or otherwise against the Corporation or any individual
or entity discharged through this Release.

10.       UNDERSTANDING

I hereby declare that I have had the opportunity to seek
independent legal advice with respect to the matters addressed in this Release
and the terms of settlement which have been agreed to by the Corporation and me,
and I fully understand this Release and the terms of settlement. I hereby
voluntarily accept the terms for the purpose of making full and final
compromise, adjustment and settlement of all claims as aforesaid.

11.       COMPLETE
AGREEMENT

I understand and agree that this Release contains the entire
agreement between the Corporation and me regarding my termination and that the
terms of this Release are contractual and not a mere recital.

DATED at Calgary, Alberta this _____ day of , 200____.

 

	 	 	 
	Witness 	 	F. GEORGE ORR 

SCHEDULE “E”

CURRENT STOCK OPTION PLAN OF THE CORPORATION

 

(See Attached)Filed by Automated Filing Services Inc. (604) 609-0244 - MegaWest Energy Corp. - Exhibit 4.26

THIS WARRANT (THE "WARRANT") RELATES TO AN OFFERING OF
SECURITIES IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS
DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "1933 ACT"). NONE OF THE SECURITIES TO WHICH THIS
WARRANT RELATES HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE
SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD,
DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED
HEREIN) EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933
ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS. UNLESS PERMITTED UNDER SECURITIES
LEGISLATION, THE HOLDER OF THE SECURITIES MUST NOT TRADE THE SECURITIES BEFORE
THE DATE WHICH IS FOUR MONTHS PLUS ONE DAY FROM THE CLOSING DATE. 

THESE UNITS WILL EXPIRE AND BECOME NULL AND VOID 
AT 5:00
P.M. (VANCOUVER TIME) ON FEBRUARY 28, 2008. 

Right to Purchase 375,000 UNITS of
MEGAWEST ENERGY CORP. (subject to adjustment as provided herein) 

MEGAWEST ENERGY CORP. 

SPECIAL UNITS PURCHASE WARRANT 

	No. 022807- FU02 	Issue Date: February 28, 2007

          This
Special Units Purchase Warrant will only be issued pursuant to finders
arrangements relating to private placements provided to MEGAWEST ENERGY CORP.
The following terms shall apply to this Special Units Purchase Warrant: 

          MEGAWEST
ENERGY CORP., a corporation organized under the laws of the Province of Alberta,
Canada (the “Company”), hereby certifies that, for value received, GUNDYCO ITF
POWERONE CAPITAL MARKETS LIMITED A/C#515-50006-14, 161 Bay Street, 10th Floor,
Toronto, Ontario (the “Holder”) shall have the right to purchase from MEGAWEST
ENERGY CORP. (hereinafter called the “Company”), at any time until 5:00 p.m.,
E.S.T on February 28, 2008, 375,000 (THREE HUNDRED SEVENTY FIVE THOUSAND) units
of securities of the Company at a price of USD$1.00 per unit (the “Exercise
Price”), upon and subject to the terms and conditions set forth herein.

          Each
unit shall consist of one (1) fully paid and nonassessable share of Common Stock
(“Common Share”) and one (1/2) share purchase warrant with each full share
purchase warrant allowing the purchase of one (1) share of Common Stock at
US$1.30 per share until February 28, 2008 (“Warrant Share”)(see Schedule C),
with both Common Shares and Warrant Shares in such stock as existing on the date
of issuance of this Note (in aggregate, a “Unit”). 

          The
Holder or its assigns is entitled, subject to the terms set forth below, to
purchase from the Company at any time until 5:00 p.m., E.S.T on February 28,
2008, 375,000 (THREE HUNDRED SEVENTY FIVE THOUSAND) Units at a per share
purchase price of USD$1.00. The aforedescribed purchase price per Unit, as
adjusted from time to time as herein provided, is referred to herein as the
"Purchase Price." The number and character of such shares of Common Stock and
the Purchase Price are subject to adjustment as provided herein.

          As
used herein the following terms, unless the context otherwise requires, have the
following respective meanings:

1

          (a)      The
term “Company” shall include MEGAWEST ENERGY CORP. and any corporation which
shall succeed or assume the obligations of MEGAWEST ENERGY CORP. hereunder.

          (b)     
The term “Common Stock” includes (a) the Company's Common Stock, no par value
per share, as authorized on the date of the Subscription Agreement, and (b) any
other securities into which or for which any of the securities described in (a)
may be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise. 

          (c)      The
term “Other Securities” refers to any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which the
holder of the Warrant at any time shall be entitled to receive, or shall have
received, on the exercise of the Warrant, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant to
Section 4 or otherwise.

          1.      Exercise
of Warrant. 

                    1.1.     
Number of Units Issuable upon Exercise. From and after the Issue Date
through and including the Expiration Date, the Holder hereof shall be entitled
to receive, upon exercise of this Warrant in whole in accordance with the terms
of subsection 1.2 or upon exercise of this Warrant in part in accordance with
subsection 1.3, shares of Common Stock of the Company, subject to adjustment
pursuant to Section 4. 

                    1.2.     
Full Exercise. This Warrant may be exercised in full by the Holder hereof
by delivery of an original or facsimile copy of the form of subscription
attached as Schedule A hereto (the “Subscription Form") duly executed by such
Holder and surrender of the original Warrant within four (4) business days of
exercise, to the Company at its principal office or at the office of its Warrant
Agent (as provided hereinafter), accompanied by payment, in cash, wire transfer
or by certified or official bank check payable to the order of the Company, in
the amount obtained by multiplying the number of Units for which this Warrant is
then exercisable by the Purchase Price then in effect.

                    1.3.      Partial
Exercise. This Warrant may be exercised in part (but not for a fractional
share) by surrender of this Warrant in the manner and at the place provided in
subsection 1.2 except that the amount payable by the Holder on such partial
exercise shall be the amount obtained by multiplying (a) the number of whole
Units designated by the Holder in the Subscription Form by (b) the Purchase
Price then in effect. On any such partial exercise, the Company, at its expense,
will forthwith issue and deliver to or upon the order of the Holder hereof a new
Warrant of like tenor, in the name of the Holder hereof or as such Holder (upon
payment by such Holder of any applicable transfer taxes) may request, the whole
number of Units for which such Warrant may still be exercised. 

                    1.4.     
Company Acknowledgment. The Company will, at the time of the exercise of
the Warrant, upon the request of the Holder hereof acknowledge in writing its
continuing obligation to afford to such Holder any rights to which such Holder
shall continue to be entitled after such exercise in accordance with the
provisions of this Warrant. If the Holder shall fail to make any such request,
such failure shall not affect the continuing obligation of the Company to afford
to such Holder any such rights. 

2

                    1.5     
Delivery of Stock Certificates, etc. on Exercise. The Company agrees that
the Common Shares purchased upon exercise of this Warrant along with an equal
amount of Warrants respecting the Warrant Shares deemed to be issued to the
Holder hereof as the record owner of such Common Shares and Warrants as of the
close of business on the date on which this Warrant shall have been surrendered
and payment made for such Units of securities as defined herein shall be
delivered to the Holder. As soon as practicable after the exercise of this
Warrant in full or in part, and in any event within four (4) business days
thereafter, the Company at its expense (including the payment by it of any
applicable issue taxes) will cause to be issued in the name of and delivered to
the Holder hereof, or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct in compliance with applicable securities
laws, a certificate or certificates for the number of duly and validly issued,
fully paid and nonassessable shares of Common Stock and Warrant for Warrant
Shares (or Other Securities) to which such Holder shall be entitled on such
exercise.

          2.      Adjustment
for Reorganization, Consolidation, Merger, etc. 

                    2.1.      Reorganization,
Consolidation, Merger, etc. In case at any time or from time to time, the
Company shall (a) effect a reorganization, (b) consolidate with or merge into
any other person or (c) transfer all or substantially all of its properties or
assets to any other person under any plan or arrangement contemplating the
dissolution of the Company, then, in each such case, as a condition to the
consummation of such a transaction, proper and adequate provision shall be made
by the Company whereby the Holder of this Warrant, on the exercise hereof as
provided in Section 1, at any time after the consummation of such
reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Stock (or
Other Securities) issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property (including cash) to
which such Holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such Holder had so
exercised this Warrant, immediately prior thereto, all subject to further
adjustment thereafter as provided in Section 3. 

                    2.2.      Continuation
of Terms. Upon any reorganization, consolidation, merger or transfer (and
any dissolution following any transfer) referred to in this Section 3, this
Warrant shall continue in full force and effect and the terms hereof shall be
applicable to the Other Securities and property receivable on the exercise of
this Warrant after the consummation of such reorganization, consolidation or
merger or the effective date of dissolution following any such transfer, as the
case may be, and shall be binding upon the issuer of any Other Securities,
including, in the case of any such transfer, the person acquiring all or
substantially all of the properties or assets of the Company, whether or not
such person shall have expressly assumed the terms of this Warrant as provided
in Section 4.

          3.      Extraordinary
Events Regarding Common Stock. In the event that the Company shall (a)
subdivide its outstanding shares of Common Stock, or (b) combine its outstanding
shares of the Common Stock into a smaller number of shares of the Common Stock,
then, in each such event, the Purchase Price shall, simultaneously with the
happening of such event, be adjusted by multiplying the then Purchase Price by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such event and the denominator of which shall
be the number of shares of Common Stock outstanding immediately after such
event, and the product so obtained shall thereafter be the Purchase Price then
in effect. The Purchase Price, as so adjusted, shall be readjusted in the same
manner upon the happening of any successive event or events described herein in
this Section 4. The number of Units that the Holder of this Warrant shall
thereafter, on the exercise hereof as provided in Section 1, be entitled to
receive shall be adjusted to a number determined by multiplying the number of
Units that would otherwise (but for the provisions of this Section 4) be
issuable on such exercise by a fraction of which (a) the numerator is the
Purchase Price that would otherwise (but for the provisions of 

3

this Section 4) be in effect, and (b) the denominator is the
Purchase Price in effect on the date of such exercise. 

          4.     
Certificate as to Adjustments. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on the
exercise of the Warrants, the Company at its expense will promptly cause its
Chief Financial Officer or other appropriate designee to compute such adjustment
or readjustment in accordance with the terms of the Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (a) the consideration received or receivable by the Company for any
additional Units (or Other Securities) issued or sold or deemed to have been
issued or sold, (b) the number of Units (or Other Securities) outstanding or
deemed to be outstanding, and (c) the Purchase Price and the number of Units to
be received upon exercise of this Warrant, in effect immediately prior to such
adjustment or readjustment and as adjusted or readjusted as provided in this
Warrant. The Company will forthwith mail a copy of each such certificate to the
Holder of the Warrant and any Warrant Agent of the Company (appointed pursuant
to Section 10 hereof). 

          5.     
Reservation of Stock, etc. Issuable on Exercise of Warrant; Financial
Statements. The Company will at all times reserve and keep available, solely
for issuance and delivery on the exercise of the Warrants, all shares of Common
Stock respecting the Common Shares and the Warrant Shares (or Other Securities)
from time to time issuable on the exercise of the Warrant. This Warrant entitles
the Holder hereof to receive copies of all financial and other information
distributed or required to be distributed to the holders of the Company's Common
Stock.

          6.      Assignment;
Exchange of Warrant. Subject to compliance with applicable securities laws,
this Warrant, and the rights evidenced hereby, may be transferred by any
registered holder hereof (a "Transferor"). On the surrender for exchange of this
Warrant, with the Transferor's endorsement in the form of Schedule B attached
hereto (the “Transferor Endorsement Form") and together with an opinion of
counsel reasonably satisfactory to the Company that the transfer of this Warrant
will be in compliance with applicable securities laws, the Company at its
expense, twice, only, but with payment by the Transferor of any applicable
transfer taxes, will issue and deliver to or on the order of the Transferor
thereof a new Warrant or Warrants of like tenor, in the name of the Transferor
and/or the transferee(s) specified in such Transferor Endorsement Form (each a
"Transferee"), calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock called for on the face or faces of the Warrant
so surrendered by the Transferor. No such transfers shall result in a public
distribution of the Warrant. 

          7.      Replacement
of Warrant. On receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant and, in the case of
any such loss, theft or destruction of this Warrant, on delivery of an indemnity
agreement or security reasonably satisfactory in form and amount to the Company
or, in the case of any such mutilation, on surrender and cancellation of this
Warrant, the Company at its expense, twice only, will execute and deliver, in
lieu thereof, a new Warrant of like tenor. 

          8.     
Registration Rights. The Holder of this Warrant has been granted certain
registration rights by the Company. The Issuer agrees to file a US resale
registration statement (the “Registration Statement”) on the underlying
securities within the Units within four months of closing and that any delay in
filing the Registration Statement or failing to respond to SEC comments on the
Registration Statement within twenty business days of receipt shall be subject
to a penalty of 2% per month. If the Registration Statement has not gone
effective beforehand penalties shall end twelve months after closing. 

4

          9.     
Maximum Exercise. The Holder shall not be entitled to exercise this
Warrant on an exercise date, in connection with that number of shares of Common
Stock which would be in excess of the sum of (i) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates on an exercise date,
and (ii) the number of shares of Common Stock issuable upon the exercise of this
Warrant with respect to which the determination of this limitation is being made
on an exercise date, which would result in beneficial ownership by the Holder
and its affiliates of more than 4.99% of the outstanding shares of Common Stock
on such date. For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. Subject to
the foregoing, the Holder shall not be limited to aggregate exercises which
would result in the issuance of more than 4.99% . The restriction described in
this paragraph may be waived, in whole or in part, upon sixty-one (61) days
prior notice from the Holder to the Company. The Holder may allocate which of
the equity of the Company deemed beneficially owned by the Subscriber shall be
included in the 4.99% amount described above and which shall be allocated to the
excess above 4.99% . 

          10.      Transfer
on the Company's Books. Until this Warrant is transferred on the books of the
Company, the Company may treat the registered holder hereof as the absolute
owner hereof for all purposes, notwithstanding any notice to the contrary.

          11.      Notices.
All notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be: 

                    (i)     
if to the Company to: MEGAWEST ENERGY CORP., 1010-789 West Pender Street,
Vancouver, British Columbia, Canada V6C 1H2, Attn: George Orr, telecopier
number: (604) 606-7980, with an additional copy only by telecopier only to:
George Orr, Suite 1010 – 789 West Pender, Vancouver, British Columbia, Canada
V6C-1H2, telecopier number: (604) 606-7980, and

                    (ii)     
if to the Holder, to the address and telecopier number listed on the first
paragraph of this Warrant, with an additional copy by telecopier only to:
______________________________

          13.     
Currency. All references to currency herein shall mean the currency of
the United States of America. 

5

          14.     
Miscellaneous. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This Warrant shall be construed and enforced in accordance with and
governed by the laws of Alberta, Canada. Any dispute relating to this Warrant
shall be adjudicated in Alberta, Canada. The headings in this Warrant are for
purposes of reference only, and shall not limit or otherwise affect any of the
terms hereof. The invalidity or unenforceability of any provision hereof shall
in no way affect the validity or enforceability of any other provision.

          IN
WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.

MEGAWEST ENERGY CORP.

 

By: /s/ Brad
Kitchen 
                    Name:
Brad
Kitchen 
                    Title:
Director 

 

Witness: 

/s/ signed 

6

Schedule A 

FORM OF SUBSCRIPTION 
(to be signed only on exercise of
Warrant) 

TO: MEGAWEST ENERGY CORP.

The undersigned, pursuant to the provisions set forth in the
attached Warrant (FWPO-02-2007), hereby irrevocably elects to purchase (check
applicable box): 

___________ Units of the Common Shares and Warrants reflecting
the Warrant Shares covered by such Warrant; or 

___ the maximum number of Units covered by such Warrant.

The undersigned herewith makes payment of the full purchase
price for such shares at the price per share provided for in such Unit, which is
USD$1.00 per Unit. Such payment takes the form of USD$__________ in lawful money
of the United States. 

The undersigned requests that the certificates for such shares
be issued in the name of, and delivered to
_____________________________________________________
whose address is
_____________________________________________________________________________________

                               
_____________________________________________________________________________________

Number of Shares of Common Stock Beneficially Owned on the date
of exercise: Less than five percent (5%) of the outstanding Common Stock of
MEGAWEST ENERGY CORP. 

The undersigned represents and warrants that all offers and
sales by the undersigned of the securities issuable upon exercise of the within
Warrant shall be made pursuant to registration of the Common Stock under the
Securities Act of 1933, as amended (the "Securities Act"), or pursuant to an
exemption from registration under the Securities Act. 

	Dated: ___________________ 	
	 	(Signature must conform to name of holder as
  
	 	specified on the face of the Warrant) 
	 	
	 	
	 	
	 	(Address) 

7

Schedule B 

FORM OF TRANSFEROR ENDORSEMENT 
(To be signed only on
transfer of Warrant) 

          For
value received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading "Transferees" the right represented by
the within Warrant to purchase the percentage and number of shares of Common
Stock of MEGAWEST ENERGY CORP. to which the within Warrant relates specified
under the headings "Percentage Transferred" and "Number Transferred,"
respectively, opposite the name(s) of such person(s) and appoints each such
person Attorney to transfer its respective right on the books of MEGAWEST ENERGY
CORP. with full power of substitution in the premises. 

	Transferees 	Percentage Transferred 	Number Transferred 
	 	 	 
	 	 	 
	 	 	 

	Dated: ______________ , ______________ 	
	 	(Signature must conform to name of holder as
      specified 
	 	on the face of the warrant) 
	 	  
	Signed in the presence of: 	
		
	___________________________________ 	
	       
      (Name) 	
	 	(address) 
	 	
	ACCEPTED AND AGREED: 	
	[TRANSFEREE] 	
	 	(address) 
	 	
	___________________________________ 	
	         (Name) 	

1

SCHEDULE “C” 

  
    
      
        FORM OF WARRANT FORMING PART OF THE UNIT COMPRISED
          IN THIS WARRANT. 

        “UNLESS PERMITTED UNDER SECURITIES LEGISLATION,
          THE HOLDER OF THE SECURITIES SHALL NOT TRADE THE SECURITIES BEFORE [DATE
          THAT IS FOUR MONTHS AND A DAY AFTER THE CLOSING.] 

      

    

  

AND 

THESE SECURITIES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO MEGAWEST ENERGY CORP. THAT SUCH REGISTRATION IS NOT REQUIRED.”

Right to Purchase _187,500
Shares of Common Stock of MEGAWEST ENERGY CORP. (subject to adjustment as
provided herein) 

COMMON STOCK PURCHASE WARRANT 

	No. FWPO-02-2007 	Issue Date:
      ______________________________________

          MEGAWEST
ENERGY CORP., a corporation organized under the laws of the province of Alberta,
Canada (the “Company”), hereby certifies that, for value received,
_____________________________________________________________________________________

_____________________________________________________________________________________
or its assigns (the “Holder”), is entitled, subject to the terms set forth
below, to purchase from the Company at any time after an event of conversion of
amounts relating to the Unit Agreement (the “Issue Date”) until 5:00 p.m., E.S.T
on February 28, 2008 (the “Expiration Date”), up to 187,500 fully paid and
nonassessable shares of Common Stock at a per share purchase price of
USD$1.30 The aforedescribed purchase price per share, as adjusted from
time to time as herein provided, is referred to herein as the "Purchase Price."
The number and character of such shares of Common Stock and the Purchase Price
are subject to adjustment as provided herein. The Company may reduce the
Purchase Price without the consent of the Holder. Capitalized terms used and not
otherwise defined herein shall have the meanings set forth in that certain
Subscription Agreement and Unit Agreement, both dated January 5, 2007, entered
into by the Company and Holder of the Finders Warrants. 

          As
used herein the following terms, unless the context otherwise requires, have the
following respective meanings:

          (a)      The
term “Company” shall include MEGAWEST ENERGY CORP. and any corporation which
shall succeed or assume the obligations of MEGAWEST ENERGY CORP. hereunder.

          (b)      The
term “Common Stock” includes (a) the Company's Common Stock, no par value per
share, as authorized on the date of the Subscription Agreement, and (b) any
other securities into which or 

2

for which any of the securities described in (a) may be
converted or exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise. 

          (c)      The
term “Other Securities” refers to any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which the
holder of the Warrant at any time shall be entitled to receive, or shall have
received, on the exercise of the Warrant, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant to
Section 5 or otherwise.

          (d)      The
term “Warrant Shares” shall mean the Common Stock issuable upon exercise of this
Warrant. 

1.      Exercise of Warrant.

                    1.1.     
Number of Shares Issuable upon Exercise. From and after the Issue Date
through and including the Expiration Date, the Holder hereof shall be entitled
to receive, upon exercise of this Warrant in whole in accordance with the terms
of subsection 1.2 or upon exercise of this Warrant in part in accordance with
subsection 1.3, shares of Common Stock of the Company, subject to adjustment
pursuant to Section 4. 

                    1.2.      Full
Exercise. This Warrant may be exercised in full by the Holder hereof by
delivery of an original or facsimile copy of the form of subscription attached
as Exhibit A hereto (the “Subscription Form") duly executed by such Holder and
surrender of the original Warrant within four (4) business days of exercise, to
the Company at its principal office or at the office of its Warrant Agent (as
provided hereinafter), accompanied by payment, in cash, wire transfer or by
certified or official bank check payable to the order of the Company, in the
amount obtained by multiplying the number of shares of Common Stock for which
this Warrant is then exercisable by the Purchase Price then in effect.

                    1.3.     
Partial Exercise. This Warrant may be exercised in part (but not for a
fractional share) by surrender of this Warrant in the manner and at the place
provided in subsection 1.2 except that the amount payable by the Holder on such
partial exercise shall be the amount obtained by multiplying (a) the number of
whole shares of Common Stock designated by the Holder in the Subscription Form
by (b) the Purchase Price then in effect. On any such partial exercise, the
Company, at its expense, will forthwith issue and deliver to or upon the order
of the Holder hereof a new Warrant of like tenor, in the name of the Holder
hereof or as such Holder (upon payment by such Holder of any applicable transfer
taxes) may request, the whole number of shares of Common Stock for which such
Warrant may still be exercised. 

                    1.4.      Fair
Market Value. Fair Market Value of a share of Common Stock as of a
particular date (the "Determination Date") shall mean:

                                   (a)      If
the Company's Common Stock is traded on an exchange or is quoted on the National
Association of Securities Dealers, Inc. Automated Quotation ("NASDAQ"), National
Market System, the NASDAQ SmallCap Market or the American Stock Exchange, LLC,
then the closing or last sale price, respectively, reported for the last
business day immediately preceding the Determination Date; 

                                   (b)      If
the Company's Common Stock is not traded on an exchange or on the NASDAQ
National Market System, the NASDAQ SmallCap Market or the American Stock
Exchange, Inc., but is traded in the over-the-counter market, then the average
of the closing bid and ask prices reported for the last business day immediately
preceding the Determination Date; 

3

                              (c)      Except
as provided in clause (d) below, if the Company's Common Stock is not publicly
traded, then as the Holder and the Company agree, or in the absence of such an
agreement, by arbitration in accordance with the rules then standing of the
American Arbitration Association, before a single arbitrator to be chosen from a
panel of persons qualified by education and training to pass on the matter to be
decided; or 

                              (d)      If
the Determination Date is the date of a liquidation, dissolution or winding up,
or any event deemed to be a liquidation, dissolution or winding up pursuant to
the Company's charter, then all amounts to be payable per share to holders of
the Common Stock pursuant to the charter in the event of such liquidation,
dissolution or winding up, plus all other amounts to be payable per share in
respect of the Common Stock in liquidation under the charter, assuming for the
purposes of this clause (d) that all of the shares of Common Stock then issuable
upon exercise of all of the Warrants are outstanding at the Determination Date.

                    1.5.      Company
Acknowledgment. The Company will, at the time of the exercise of the
Warrant, upon the request of the Holder hereof acknowledge in writing its
continuing obligation to afford to such Holder any rights to which such Holder
shall continue to be entitled after such exercise in accordance with the
provisions of this Warrant. If the Holder shall fail to make any such request,
such failure shall not affect the continuing obligation of the Company to afford
to such Holder any such rights. 

                    1.6.      Trustee
for Warrant Holders. In the event that a bank or trust company shall have
been appointed as trustee for the Holder of the Warrants pursuant to Subsection
3.2, such bank or trust company shall have all the powers and duties of a
warrant agent (as hereinafter described) and shall accept, in its own name for
the account of the Company or such successor person as may be entitled thereto,
all amounts otherwise payable to the Company or such successor, as the case may
be, on exercise of this Warrant pursuant to this Section 1.

                    1.7     
Delivery of Stock Certificates, etc. on Exercise. The Company agrees that
the shares of Common Stock purchased upon exercise of this Warrant shall be
deemed to be issued to the Holder hereof as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within four (4) business days thereafter, the Company at its expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Holder hereof, or as such Holder
(upon payment by such Holder of any applicable transfer taxes) may direct in
compliance with applicable securities laws, a certificate or certificates for
the number of duly and validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such Holder shall be entitled on
such exercise, plus, in lieu of any fractional share to which such Holder would
otherwise be entitled, cash equal to such fraction multiplied by the then Fair
Market Value of one full share of Common Stock, together with any other stock or
other securities and property (including cash, where applicable) to which such
Holder is entitled upon such exercise pursuant to Section 1 or otherwise.

          2.      Cashless
Exercise. 

                              (a)     
If a Registration Statement (as defined in the Subscription Agreement)
(“Registration Statement”) is effective and any other applicable securities laws
allow, the Holder may sell its shares of Common Stock upon exercise hereof
pursuant to the Registration Statement, this Warrant may be exercisable in whole
or in part for cash only as set forth in Section 1 above. If no such
Registration Statement is available during the time that such Registration
Statement is required to be effective pursuant to the terms of the Subscription
Agreement, then payment upon exercise may be made at the option of the Holder
either in (i) cash, wire transfer or by certified or official bank check payable
to the order of the Company equal to the applicable aggregate Purchase Price,
(ii) by delivery of Common Stock issuable upon exercise of the Warrants in
accordance with Section (b) below or (iii) by a 

4

combination of any of the foregoing methods, for the number of
Common Stock specified in such form (as such exercise number shall be adjusted
to reflect any adjustment in the total number of shares of Common Stock issuable
to the holder per the terms of this Warrant) and the holder shall thereupon be
entitled to receive the number of duly authorized, validly issued, fully-paid
and non-assessable shares of Common Stock (or Other Securities) determined as
provided herein. 

                              (b)      If
the Fair Market Value of one share of Common Stock is greater than the Purchase
Price (at the date of calculation as set forth below), in lieu of exercising
this Warrant for cash, the holder may elect to receive shares equal to the value
(as determined below) of this Warrant (or the portion thereof being cancelled)
by surrender of this Warrant at the principal office of the Company together
with the properly endorsed Subscription Form in which event the Company shall
issue to the holder a number of shares of Common Stock computed using the
following formula: 

X=Y (A-B)

         A 

	 	Where 	X= 	the number of shares of Common
      Stock to be issued to the holder 
	 	  	  	  
			
      Y= 
	
      the number of shares of Common Stock purchasable under
      the Warrant or, if only a portion of the Warrant is being exercised, the
      portion of the Warrant being exercised (at the date of such calculation)
      

	 	  	  	  
			
      A= 
	
      the Fair Market Value of one share of the Company’s
      Common Stock (at the date of such calculation) 

	 	  	  	  
	 	  	B= 	Purchase Price (as adjusted to
      the date of such calculation) 

          For
purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood
and acknowledged that the Warrant Shares issued in a cashless exercise
transaction shall be deemed to have been acquired by the Holder, and the holding
period for the Warrant Shares shall be deemed to have commenced, on the date
this Warrant was originally issued pursuant to the Unit Agreement. 

          3.      Adjustment
for Reorganization, Consolidation, Merger, etc. 

                    3.1.     
Reorganization, Consolidation, Merger, etc. In case at any time or from
time to time, the Company shall (a) effect a reorganization, (b) consolidate
with or merge into any other person or (c) transfer all or substantially all of
its properties or assets to any other person under any plan or arrangement
contemplating the dissolution of the Company, then, in each such case, as a
condition to the consummation of such a transaction, proper and adequate
provision shall be made by the Company whereby the Holder of this Warrant, on
the exercise hereof as provided in Section 1, at any time after the consummation
of such reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Stock (or
Other Securities) issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property (including cash) to
which such Holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such Holder had so
exercised this Warrant, immediately prior thereto, all subject to further
adjustment thereafter as provided in Section 4. 

                    3.2.     
Dissolution. In the event of any dissolution of the Company following the
transfer of all or substantially all of its properties or assets, the Company,
prior to such dissolution, shall at its expense deliver or cause to be delivered
the stock and other securities and property (including cash, where applicable)
receivable by the Holder of the Warrants after the effective date of such
dissolution pursuant to this Section 3 to a bank or trust company (a "Trustee")
having its principal office in New York, NY, as trustee for the Holder of the
Warrants.

5

                    3.3.     
Continuation of Terms. Upon any reorganization, consolidation, merger or
transfer (and any dissolution following any transfer) referred to in this
Section 3, this Warrant shall continue in full force and effect and the terms
hereof shall be applicable to the Other Securities and property receivable on
the exercise of this Warrant after the consummation of such reorganization,
consolidation or merger or the effective date of dissolution following any such
transfer, as the case may be, and shall be binding upon the issuer of any Other
Securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, whether or
not such person shall have expressly assumed the terms of this Warrant as
provided in Section 4. In the event this Warrant does not continue in full force
and effect after the consummation of the transaction described in this Section
3, then only in such event will the Company's securities and property (including
cash, where applicable) receivable by the Holder of the Warrants be delivered to
the Trustee as contemplated by Section 3.2. 

          4.      Extraordinary
Events Regarding Common Stock. In the event that the Company shall (a) issue
additional shares of the Common Stock as a dividend or other distribution on
outstanding Common Stock, (b) subdivide its outstanding shares of Common Stock,
or (c) combine its outstanding shares of the Common Stock into a smaller number
of shares of the Common Stock, then, in each such event, the Purchase Price
shall, simultaneously with the happening of such event, be adjusted by
multiplying the then Purchase Price by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
event and the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such event, and the product so obtained shall
thereafter be the Purchase Price then in effect. The Purchase Price, as so
adjusted, shall be readjusted in the same manner upon the happening of any
successive event or events described herein in this Section 4. The number of
shares of Common Stock that the Holder of this Warrant shall thereafter, on the
exercise hereof as provided in Section 1, be entitled to receive shall be
adjusted to a number determined by multiplying the number of shares of Common
Stock that would otherwise (but for the provisions of this Section 4) be
issuable on such exercise by a fraction of which (a) the numerator is the
Purchase Price that would otherwise (but for the provisions of this Section 4)
be in effect, and (b) the denominator is the Purchase Price in effect on the
date of such exercise. 

          5.      Certificate
as to Adjustments. In each case of any adjustment or readjustment in the
shares of Common Stock (or Other Securities) issuable on the exercise of the
Warrants, the Company at its expense will promptly cause its Chief Financial
Officer or other appropriate designee to compute such adjustment or readjustment
in accordance with the terms of the Warrant and prepare a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of
Common Stock (or Other Securities) issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding, and (c) the Purchase Price and the
number of shares of Common Stock to be received upon exercise of this Warrant,
in effect immediately prior to such adjustment or readjustment and as adjusted
or readjusted as provided in this Warrant. The Company will forthwith mail a
copy of each such certificate to the Holder of the Warrant and any Warrant Agent
of the Company (appointed pursuant to Section 11 hereof). 

          6.     
Reservation of Stock, etc. Issuable on Exercise of Warrant; Financial
Statements. The Company will at all times reserve and keep available, solely
for issuance and delivery on the exercise of the Warrants, all shares of Common
Stock (or Other Securities) from time to time issuable on the exercise of the
Warrant. This Warrant entitles the Holder hereof to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Company's Common Stock.

6

          7.      Assignment;
Exchange of Warrant. Subject to compliance with applicable securities laws,
this Warrant, and the rights evidenced hereby, may be transferred by any
registered holder hereof (a "Transferor"). On the surrender for exchange of this
Warrant, with the Transferor's endorsement in the form of Exhibit B attached
hereto (the “Transferor Endorsement Form") and together with an opinion of
counsel reasonably satisfactory to the Company that the transfer of this Warrant
will be in compliance with applicable securities laws, the Company at its
expense, twice, only, but with payment by the Transferor of any applicable
transfer taxes, will issue and deliver to or on the order of the Transferor
thereof a new Warrant or Warrants of like tenor, in the name of the Transferor
and/or the transferee(s) specified in such Transferor Endorsement Form (each a
"Transferee"), calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock called for on the face or faces of the Warrant
so surrendered by the Transferor. No such transfers shall result in a public
distribution of the Warrant. 

          8.     
Replacement of Warrant. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant and,
in the case of any such loss, theft or destruction of this Warrant, on delivery
of an indemnity agreement or security reasonably satisfactory in form and amount
to the Company or, in the case of any such mutilation, on surrender and
cancellation of this Warrant, the Company at its expense, twice only, will
execute and deliver, in lieu thereof, a new Warrant of like tenor. 

          9.      Registration
Rights. The Holder of this Warrant has been granted certain registration
rights by the Company. These registration rights are set forth in the
Subscription Agreement. The terms of the Subscription Agreement are incorporated
herein by this reference. 

          10.     
Maximum Exercise. The Holder shall not be entitled to exercise this
Warrant on an exercise date, in connection with that number of shares of Common
Stock which would be in excess of the sum of (i) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates on an exercise date,
and (ii) the number of shares of Common Stock issuable upon the exercise of this
Warrant with respect to which the determination of this limitation is being made
on an exercise date, which would result in beneficial ownership by the Holder
and its affiliates of more than 4.99% of the outstanding shares of Common Stock
on such date. For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. Subject to
the foregoing, the Holder shall not be limited to aggregate exercises which
would result in the issuance of more than 4.99% . The restriction described in
this paragraph may be waived, in whole or in part, upon sixty-one (61) days
prior notice from the Holder to the Company. The Holder may allocate which of
the equity of the Company deemed beneficially owned by the Subscriber shall be
included in the 4.99% amount described above and which shall be allocated to the
excess above 4.99% . 

          11.      Transfer
on the Company's Books. Until this Warrant is transferred on the books of
the Company, the Company may treat the registered holder hereof as the absolute
owner hereof for all purposes, notwithstanding any notice to the contrary.

          12.      Notices.
All notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day 

7

during normal business hours where such notice is to be
received) or (b) on the second business day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:

                               (i)      if
to the Company to: 1010-789 West Pender Street, Vancouver, British Columbia,
Canada V6C 1H2, Attn: George Orr, telecopier number: (604) 606-7980, with an
additional copy only by telecopier only to: George Orr, Suite 1010 – 789 West
Pender, Vancouver, British Columbia, Canada V6C-1H2, telecopier number: (604)
606-7980, and

                              (ii)      if
to the Holder, to the address and telecopier number listed on the first
paragraph of this Warrant, with an additional copy by telecopier only to:
______________________________

          13.      Currency.
All references to currency herein shall mean the currency of the United States
of America. 

          14.      Miscellaneous.
This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought. This
Warrant shall be construed and enforced in accordance with and governed by the
laws of Alberta, Canada. Any dispute relating to this Warrant shall be
adjudicated in Alberta, Canada. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
The invalidity or unenforceability of any provision hereof shall in no way
affect the validity or enforceability of any other provision.

 

IN WITNESS WHEREOF, the Company has executed this Warrant as of
the date first written above.

MEGAWEST ENERGY CORP.

 

By: _____________________________________________________
               Name:
George
Orr 
               Title:
Director 

Witness: 

____________________________________

8

Exhibit A 

FORM OF SUBSCRIPTION 
(to be signed only on exercise of
Warrant) 

TO: MEGAWEST ENERGY CORP.

The undersigned, pursuant to the provisions set forth in the
attached Warrant (No.____), hereby irrevocably elects to purchase (check
applicable box): 

___   ________  shares of the Common Stock
covered by such Warrant; or 

___ the maximum number of shares of Common Stock covered by
such Warrant pursuant to the cashless exercise procedure set forth in Section 2.

The undersigned herewith makes payment of the full purchase
price for such shares at the price per share provided for in such Warrant, which
is $___________ . Such payment takes the form of (check applicable box or
boxes): 

___ $__________ in lawful money of the United States; and/or

___ the cancellation of such portion of the attached Warrant as
is exercisable for a total of  _______ shares of Common Stock (using a Fair
Market Value of $_______ per share for purposes of this calculation); and/or

___ the cancellation of such number of shares of Common Stock
as is necessary, in accordance with the formula set forth in Section 2, to
exercise this Warrant with respect to the maximum number of shares of Common
Stock purchasable pursuant to the cashless exercise procedure set forth in
Section 2. 

The undersigned requests that the certificates for such shares
be issued in the name of, and delivered to
_____________________________________________________ whose address is

_____________________________________________________________________________________

_____________________________________________________________________________________

Number of Shares of Common Stock Beneficially Owned on the date
of exercise: Less than five percent (5%) of the outstanding Common Stock of
MEGAWEST ENERGY CORP. 

The undersigned represents and warrants that all offers and
sales by the undersigned of the securities issuable upon exercise of the within
Warrant shall be made pursuant to registration of the Common Stock under the
Securities Act of 1933, as amended (the "Securities Act"), or pursuant to an
exemption from registration under the Securities Act. 

	Dated:___________________ 	
	 	(Signature must conform to name of holder as
  
	 	specified on the face of the Warrant) 
	 	  
	 	
	 	  
	 	(Address) 

9

Exhibit B 

FORM OF TRANSFEROR ENDORSEMENT 
(To be signed only on
transfer of Warrant) 

               For
value received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading "Transferees" the right represented by
the within Warrant to purchase the percentage and number of shares of Common
Stock of MEGAWEST ENERGY CORP. to which the within Warrant relates specified
under the headings "Percentage Transferred" and "Number Transferred,"
respectively, opposite the name(s) of such person(s) and appoints each such
person Attorney to transfer its respective right on the books of MEGAWEST ENERGY
CORP. with full power of substitution in the premises. 

	Transferees 	Percentage Transferred 	Number Transferred 
	 	 	 
	 	 	 
	 	 	 

	Dated: ______________, ______________ 	 
		(Signature must conform to name of holder as
      specified 
		on the face of the warrant) 
	  	 
	Signed in the presence of: 	 
	  	 
	___________________________________	 
	               
         (Name) 	 
		(address) 
	  	 
	ACCEPTED AND AGREED: 	 
	[TRANSFEREE] 	 
		(address)  
	  	 
	___________________________________	 
	               
         (Name)

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