Document:

EXHIBIT 10.45

                               AMENDMENT NUMBER 1
                                       TO
                     INVESTOR REGISTRATION RIGHTS AGREEMENT

     THIS AMENDMENT AGREEMENT (the "Amendment") is entered into as of October
18, 2005, between STARTECH ENVIRONMENTAL CORPORATION, a corporation organized
and existing under the laws of the State of Colorado (the "Company"), and
CORNELL CAPITAL PARTNERS, LP, a Delaware limited partnership (the "Investor").

     WHEREAS, on September 15, 2005, the Company and the Investor entered into a
series of financing agreements (the "Transaction Documents"), including without
limitation that certain Investor Registration Rights Agreement (the
"Agreement"), pursuant to which, among other things, the Investor agreed to
register for resale shares of common stock of the Company issuable upon
conversion of an aggregate principal amount of Two Million Three Hundred
Thousand Dollars ($2,300,000) of convertible debentures; and

     WHEREAS, the parties hereto desire to amend the Agreement to extend certain
deadlines contained therein.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the parties do hereby agree, subject to the
terms and conditions hereinafter set forth, as follows:

I.   Amendments.

     A. The foregoing recitals are hereby incorporated herein by reference and
acknowledged as true and correct by the parties hereto.

     B. Section 2(a). Section 2(a) of the Agreement is deleted in its entirety
and the following language shall replace Section 2(a) of the Agreement:

     Subject to the terms and conditions of this Agreement, the Company shall
prepare and file, no later than forty (40) days after the First Closing Date (as
such term is defined in the Securities Purchase Agreement dated September 15,
2005) (the "Scheduled Filing Deadline"), with the SEC a registration statement
on Form S-1 or SB-2 (or, if the Company is then eligible, on Form S-3) under the
Securities Act (the "Initial Registration Statement") for the resale by the
Investors of the Registrable Securities, which includes at least 1,250,000
shares of Common Stock to be issued upon conversion of the Convertible
Debentures and 650,000 shares of the Common Stock underlying the Warrant of even
date herewith. The Company shall cause the Registration Statement to remain
effective until the earlier of (A) all of the Registrable Securities have been
sold and (B) the date on which the Registrable Securities may be sold without
any volume restrictions pursuant to Rule 144(k) of the Securities Act. Prior to
the filing of the Registration Statement with the SEC, the Company shall furnish
a copy of the Initial Registration Statement to the Investors for their review
and comment. The Investors shall furnish comments on the Initial Registration
Statement to the Company within twenty-four (24) hours of the receipt thereof
from the Company.

     C. Section 2(b). Section 2(b) of the Agreement is deleted in its entirety
and the following language shall replace Section 2(b) of the Agreement:

     Effectiveness of the Initial Registration Statement. The Company shall use
its best efforts (i) to have the Initial Registration Statement declared
effective by the SEC no later than one hundred thirty (130) days after the First
Closing Date (as such term is defined in the Securities Purchase Agreement dated
September 15, 2005) (the "Scheduled Effective Deadline") and (ii) to insure that
the Initial Registration Statement and any subsequent Registration Statement
remains in effect until all of the Registrable Securities have been sold,
subject to the terms and conditions of this Agreement. It shall be an event of
default hereunder if the Initial Registration Statement is not filed by the
Scheduled Filing Deadline or declared effective by the SEC by the Scheduled
Effective Deadline.

                                       1
<PAGE>

II.  Miscellaneous.

     A.   Except as provided hereinabove, all of the terms and conditions
          contained in the Agreement shall remain unchanged and in full force
          and effect.

     B.   This Amendment is made pursuant to and in accordance with the terms
          and conditions of the Agreement.

     C.   All capitalized but not defined terms used herein shall have those
          meanings ascribed to them in the Agreement.

     D.   All provisions in the Agreement and any amendments, schedules or
          exhibits thereto in conflict with this Amendment shall be and hereby
          are changed to conform to this Amendment.

                [REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]

                                        2
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by the undersigned, thereunto duly authorized, as of the date first set
forth above.

                                            COMPANY:
                                            STARTECH ENVIRONMENTAL CORPORATION

                                            By: /s/  Peter J. Scanlon
                                            ------------------------------------
                                            Name:    Peter J. Scanlon
                                            Title:   CFO

                                            CORNELL CAPITAL PARTNERS, LP
                                            By:  Yorkville Advisors, LP
                                            Its:  General Partner

                                            By: /s/  Mark Angelo
                                            ------------------------------------
                                            Name     Mark Angelo
                                            Title:   Portfolio Manager

                                        3Cascade Energy, Inc. - Exhibit 10.4

1048136 ALBERTA
LTD.
c/o 2760 – 200 Granville Square 
200 Granville
Street 
Vancouver, British Columbia 
Canada V6C 1S4

July 22, 2005

Cascade Energy, Inc. 
3405 Folsom Blvd. 
Suite 820

Folsom, CA 95630

Attention: Mr. Sam Johal, President

Dear Sir:

Re: Farmout Proposal – Empress Prospect, Province of
Alberta

     This Agreement outlines the terms
upon which 1048136 Alberta Ltd. (“1048136”) will assign and grant to Cascade
Energy, Inc. a farmin opportunity on certain lands comprising a part of the
“Empress Prospect”, located in the Province of Alberta.

     Pursuant to an agreement (the
“Acadia Farmout and Option Agreement") dated the 21st day of January,
2005, between Hanna Oil & Gas Company-Canada Inc., Firefly Resources Ltd.
and Moraine Resources Ltd. (collectively referred to herein as the “Original
Farmor”) and Vega Resources Ltd. (“Vega”), Vega can earn an interest in certain
title documents and the lands associated therewith (all as more particularly
described in Schedule “A” of the Acadia Farmout and Option Agreement) by
performing the obligations contained in the Acadia Farmout and Option
Agreement.

     Pursuant to a subsequent
agreement (the “Vega Participation Agreement") dated the 28th day of
January, 2005, between Vega and 1048136 Alberta Ltd. (“1048136”), 1048136 can
earn 100% of the interests that Vega can otherwise earn under the Acadia Farmout
and Option Agreement (subject to the royalty reserved unto Vega by the Vega
Participation Agreement) by performing the obligations contained in the Vega
Participation Agreement. A true copy of the Vega Participation Agreement (which
has a true copy of the Acadia Farmout and Option Agreement attached thereto as a
schedule) is attached hereto as Appendix “A”.

     Subject to compliance with the
terms and conditions hereof, 1048136 will grant to Cascade Energy, Inc
(“Cascade”) the right to a earn 49% of the interests that 1048136 

2

can otherwise earn under the Vega Participation Agreement in
relation to Section 15 of those lands referred to and defined in
the Acadia Farmout and Option Agreement as the “Farmout Lands”.

1.     Interpretation

	 	(a) 	 The headings of the clauses of this Agreement are inserted
        for convenience of reference only and shall not affect the meaning or
        construction thereof.

	 	 	 
	 	(b) 	 The terms and expressions used herein shall have the
        same meanings as are ascribed to such terms and expressions in the Vega
        Participation Agreement and the Acadia Farmout and Option Agreement, as
        the case may be.

	 	 	 
	 	(c) 	 Wherever the plural or masculine or neuter is used the
        same shall be construed as meaning singular or feminine or body politic
        or corporate, or vice versa as the context so requires.

2.     Appointment of
Operator

     1048136 is appointed Operator, as
between 1048136 and Cascade, with respect to all operations conducted
hereunder.

3.     Acadia Farmout and Option
Agreement/Vega Participation Agreement

     Except as modified by the terms
of this Agreement, the terms and conditions of the Acadia Farmout and Option
Agreement and Vega Participation Agreement, as applicable, shall control all
operations of the parties and shall be deemed to be incorporated herein by
reference.

4.     Trust Conditions and
Term

     1048136 agrees that, to the
extent that the assignment to Cascade of a portion of 1048136’s rights and
obligations respecting Section 15 of the Farmout Lands under the Vega
Participation Agreement is not formally recognized and recorded by Vega or the
Original Farmor, as the case may be, 1048136 shall hold Cascade’s interests in
the Vega Participation Agreement, Acadia Farmout and Option Agreement, and
Farmout Lands, as the case may be, in trust for Cascade and shall ensure that
all performance by Cascade under the terms of this Agreement, as assignee of
some of the obligations of 1048136 under the Vega Participation Agreement, is
noted, recorded and properly credited. If requested by Cascade, 1048136 agrees
to record this trust in writing pursuant to a trust agreement (in a form similar
to the form attached to the Acadia Farmout and Option Agreement as Schedule “E”,
amended as applicable to reflect the interests of Cascade in the Farmout Lands,
as they exist from time to time) until such time as the interests of Cascade in
the Option Lands, may be formally recorded.

3

5.     Participating
Interest

Cascade shall drill one (1) well (the “Earning Well”) on the
Section 15 of the Farmout Lands and shall spud the Earning Well not later than
30-days after the full execution of this Agreement (as noted on the execution
page hereof) in order to earn 49% of the interests that 1048136 may earn in
Section 15 of the Farmout Lands.

6.     Grants and Credits

Any credits or grants allowed under any acts, rules,
regulations or other laws of the Province of Alberta and/or Canada shall be
shared by the parties hereto, as to 49% of such credits or grants to Cascade,
and 51% to 1048136.

7.     Assignment by
Cascade

Cascade shall not assign its rights under this Agreement in
whole or in part without first obtaining the written consent of 1048136.
Notwithstanding any assignment by the Cascade, 1048136 will remain entitled to
look to Cascade for performance of any duties and obligations required to be
carried out by it under this Agreement, unless otherwise agreed to in writing by
1048136.

8.     Other Encumbrances

If the interest of either party in Section 15 of the Farmout
Lands shall hereafter become encumbered by any royalty, production payment or
other charge of a similar nature, other than the royalties as set forth under
the Acadia Farmout and Option Agreement or Vega Participation Agreement, such
royalty, production payment or other charge shall be charged to and paid
entirely by the party whose interest is or becomes thus encumbered.

9.     Warranty of Title

1048136 makes no representation or warranties as to the status
of title to the Farmout Lands and such title must be independently verified by
Cascade.

During the term of this Agreement, no party shall do or cause
to be done any act nor make or cause to be made any omission whereby Section 15
of the Farmout Lands becomes encumbered in such a way as to adversely affect the
interests of the other parties, or become subject to termination or
forfeiture.

10.     No Partnership

The rights, duties, obligations and liabilities of the parties
shall be several and not joint or collective, it being the parties' express
purpose and intention that nothing herein shall be construed as creating a
partnership of any kind or imposing upon any party hereto any partnership duty,
obligation or liability to the other party other than as specifically set forth
herein.

4

11.     Notice Periods

The parties will endeavor on a bona-fide basis to meet at least
ten (10) days prior to the date when either any election must be made or any
notice must be made pursuant to the underlying agreements, for the purposes of
discussing such election or notice in order to enable 1048136, as required, on
behalf of the parties, to comply with the provisions of the Vega Participation
Agreement and Vega to comply with the provisions of the Acadia Farmout and
Option Agreement, as the case may be.

12.     Further Assurance

Each of the parties shall at all times do all such further acts
and deliver all such further deeds and documents as shall be reasonably required
in order to fully perform and carry out the terms of this Agreement.

13.     Notice

Notwithstanding anything to the contrary contained herein, all
notices required or permitted hereunder shall be in writing. Any notice to be
given hereunder shall be deemed to be served properly if served in any of the
following modes:

	 	a) 	 personally, by delivering the notice to the party on
        which it is to be served at that Party's address for service; or

	 	 	 
	 	b) 	 by telecopy or telex (or by any other like method by
        which a written message may be sent) directed to the party on which it
        is to be served at that party's address for service. A notice so served
        shall be deemed to be received by the addressee when actually received
        by it, if received within normal business hours on any day other than
        a Saturday, Sunday or statutory holiday in British Columbia or at the
        commencement of the next ensuing business day following transmission if
        such notice is not received during such normal business hours; or

	 	 	 
	 	c) 	 by mailing it first class (air mail if to or from a
        location outside of Canada) registered post, postage prepaid, directed
        to the party on which it is to be served at that party's address for service.
        Notices so served shall be deemed to be received by the addressee at noon,
        local time, on the earlier of the actual date of receipt or the fourth
        day (excluding Saturdays, Sundays and statutory holidays in British Columbia)
        following the mailing thereof. However, if postal service is (or is reasonably
        anticipated to be) interrupted or operating with unusual delay, notice
        shall not be served by such means during such interruption or period of
        delay.

14.     Address for Service

The address for service of notices hereunder of each of the
parties shall be as follows:

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	1048136: 	c/o Harder & Company 
	  	Suite 2760 – 200 Granville Square 
	 	200 Granville Street 
	  	Vancouver, B.C. V6C 1S4 
	  	Facsimile: (604) 682-4467 
	  	  
	Cascade: 	3405 Folsom Blvd. 
	  	Suite 820 
	 	Folsom, CA 95630
	 	Sam Johal, President
	  	Facsimile: (916) 608-8747 

A party may change its address for service by notice to the
other party, and such changed address for service thereafter shall be effective
for all purposes of this Agreement.

15.     Insurance

Cascade shall carry insurance with a reputable insurance
company in the manner and in the amounts set out in the Operating Procedure.

16.     Successors and
Assigns

This Agreement shall enure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted
assigns.

17.     Proper Law

This Agreement and the relationship between the parties shall
be construed and determined according to the laws of the Province of British
Columbia, and the courts having original jurisdiction with respect to any matter
or thing arising directly or indirectly relating to this Agreement shall be the
courts of the Province of British Columbia.

18.     Supercession

This Agreement supercedes and replaces all other agreements,
documents, writings and verbal understandings between the parties with respect
to the subject matter of this Agreement.

6

19.     Counterparts

This Agreement may be executed in counterparts and by
facsimile.

IN WITNESS WHEREOF each of the parties hereto has caused this
Agreement to be executed as of the day and year first noted below.

	1048136 ALBERTA LTD. 	CASCADE ENERGY. INC. 
	per: /s/ Scott Marshall	per: /s/ Chris Foster
	per:__________________________ 	per:_____________________________ 
	May , 2005 	May , 2005 

7

SCHEDULE A

to the Agreement between 1048136 Alberta Ltd. and Cascade
Energy, Inc. 
(dated July 22, 2005)

Copy of Vega Participation Agreement 

-attached hereto-

PARTICIPATION AGREEMENT

THIS AGREEMENT made this 28th day of January 2005

BETWEEN:

  
    
      
        VEGA RESOURCES LTD., a body corporate, having
          an office in the City of Calgary in the Province of Alberta 

      

    

  

(herein called the "Grantor")

OF THE FIRST PART

AND

  
    
      
        1048136 ALBERTA LTD., a body corporate, having
          its registered and records office in the City of Calgary in the Province
          of Alberta

      

    

  

(hereinafter called the "Participant")

OF THE SECOND PART

WHEREAS pursuant to an Agreement (hereinafter referred to as
  "the Farmout Agreement") dated the 21st day of January, 2005, and
  made between Hanna Oil and Gas Company -Canada, Inc, Firefly Resources Ltd.
  and Moraine Resources Ltd. (hereinafter collectively referred to as the “Farmor”)
  and the Grantor (hereinafter sometimes referred to as the “Farmee”),
  it is provided that the Farmee, by performing certain obligations contained
  in the Farmout Agreement, will become entitled to earn an interest in certain
  title documents and the lands associated therewith, all as more particularly
  described in the Farmout Agreement (a true and correct copy of which is attached
  hereto as Schedule "A");

AND WHEREAS the Participant desires to participate with the Grantor
  as if the Participant had been the Farmee in the Farmout Agreement, by assuming
  a share of the obligations therein contained and an interest in the lands thereunder.

NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration
  of the premises and of the covenants and agreements of the parties hereinafter
  set forth, the parties do hereby covenant and agree as follows:

1.          INTERPRETATION

	 	(a) 	The headings of the clauses of this Agreement are
        inserted for convenience of reference only and shall not affect the meaning
        or construction thereof. 

	 	 	 
	 	(b) 	The terms and expressions used herein shall have
        the same meanings as are ascribed to such terms and expressions under
        the Farmout Agreement. 

2

	 	(c) 	Wherever the plural or masculine or neuter is used
        the same shall be construed as meaning singular or feminine or body politic
        or corporate, or vice versa as the context so requires. 

2.          APPOINTMENT
  OF OPERATOR

             The
  Participant is appointed Operator, as between the Grantor and the Participant,
  with respect to all operations conducted hereunder; however, the Grantor shall
  have the joint authority with the Participant to deal with the Farmor on behalf
  of the parties in respect of matters arising out of the Farmout Agreement.

3.          FARMOUT
  AGREEMENT

            Except
  as modified by the terms of this Agreement, the Terms and conditions of the
  Farmout Agreement together with its operating provisions shall control the operation
  of the parties and shall be deemed to be incorporated herein.

4.          TRUST
  CONDITIONS AND TERM

             The
  Grantor agrees that, to the extent that the present assignment of the Grantor’s
  rights and obligations under the Farmout Agreement is not formally recognized
  and recorded by the Farmor, the Grantor shall hold the Participant’s interests
  in the Farmout Agreement, Farmout Lands and Option Lands, as the case may be,
  in trust for the Participant and shall ensure that all performance by the Participant
  under the terms of this Agreement and the Farmout Agreement are noted and recorded
  as the due performance of the Farmee under the Farmout Agreement. If requested
  by the Participant, the Grantor agrees to record this trust in writing pursuant
  to a trust agreement (in the form attached to the Farmout Agreement as Schedule
  “E”, amended as applicable to reflect the interests of the Participant
  in the Farmout Lands and Option Lands, as they exist from time to time) until
  such time as the interests of the Participant in the Farmout Agreement, Farmout
  Lands and Option Lands, as applicable, may be formally recorded.

5.          PARTICIPATING
  INTEREST

             The
  Participant shall assume all of the obligations of the Grantor under the Farmout
  Agreement, including the drilling of the Test Well, and the Participant shall
  thereby be entitled to 100% of the benefits and interests earned by the Farmee
  under the Farmout Agreement,, subject to the payment to the Grantor of a $15,000
  fee for geological consulting and prospect engineering services (to be paid
  upon the execution of this Agreement) and the reservation of a 3% Gross Over-Riding
  Royalty by the Grantor, as more particularly set out in Schedule “B”
  attached hereto..

6.          OPTION
  WELL(S)

	 	(a) 	If the Participant, in its absolute discretion, wishes
        to proceed with the drilling of the Option Well (s), the provisions of
        clause 5 hereto will apply to the Options Well (s) drilled on the Farmout
        Lands and/or Option Lands, as the case may be. 

3

	 	(b) 	If the Participant does not wish to proceed with
        the drilling of certain Option Well (s), then the Grantor shall be free
        to do so independently, provided there is no resulting liability to the
        Participant. The Grantor shall be solely responsible for all costs, expenses
        and liabilities thereby incurred and shall be entitled to all benefits
        and interests pursuant to the Farmout Agreement that are earned as a result.
      

7.          SELETION
  OF WELL LOCATIONS

             The
  parties agree to meet from time to time to discuss ongoing operations under
  the Farmout Agreement including selection of well locations. Notwithstanding
  such discussions, should the parties fail to agree on the location of an earning
  well then the Participant’s choice shall be binding upon the parties.

8.          GRANT
  AND CREDITS

             Any
  credits or grants allowable under any acts, rules, regulations or other laws
  of the Province of Alberta and/or Canada shall be shared by the parties in accordance
  with the manner in which the parties bear the cost of operations which give
  rise to the generation of such credits or grants.

9.          ASSIGNMENT
  BY PARTICIPANT

             The
  Participant shall not assign its rights under this Agreement in whole or in
  part without first obtaining the written consent of Grantor which consent may
  not be unreasonably withheld. Notwithstanding any assignment by the Participant,
  the Grantor will always look to the Participant for performance of any duties
  and obligations required to be carried out by the Participant under this Agreement
  during the Test Well phase of the Farmout Agreement, unless otherwise agreed
  to in writing by Grantor.

10.         OTHER
  ENCUMBERANCES

              If
  the interest of either party in the Farmout Lands hereafter shall become encumbered
  by any royalty, production payment or other charge of a similar nature, other
  than the royalties as set forth under the Farmout Agreement, such royalty, production
  payment or other charge shall be charged to and paid entirely by the party whose
  interest is or becomes thus encumbered.

11.         
  WARRANTY OF TITLE

              The
  Grantor makes no representation or warranties as to its or Farmor's title to
  the Farmout Lands and Option Lands but covenants that they are encumbered only
  to the extent noted in the Farmout Agreement.

              During
  the term of this Agreement, no party shall do or cause to be done any act nor
  make or cause to be made any omission whereby the Farmout Lands or Option Lands
  become encumbered in such a way as to adversely affect the interests of the
  other parties, or become subject to termination or forfeiture.

4

12.         NO PARTNERSHIP

              The
  rights, duties, obligations and liabilities of the parties shall be several
  and not joint or collective, it being the parties' express purpose and intention
  that nothing herein shall be construed as creating a partnership of any kind
  or imposing upon any party hereto any partnership duty, obligation or liability
  to the other party.

13.         NOTICE
  PERIODS

              The
  parties will endeavor on a bonafide basis to meet at least five (5) days prior
  to the date when either any election must be made or any notice must be sent
  to the Farmor, for the purposes of discussing such election or notice in order
  to enable Grantor, on behalf of the parties, to comply with the provisions of
  the Farmout Agreement.

14.         FURTHER
  ASSURANCE

     Each of the parties shall at all
  times do all such further acts and deliver all such further deeds and documents
  as shall be reasonably required in order to fully perform and carry out the
  terms of this Agreement.

15.         NOTICE

              Notwithstanding
  anything to the contrary contained herein, all notices required or permitted
  hereunder shall be in writing. Any notice to be given hereunder shall be deemed
  to be served properly if served in any of the following modes:

	 	a) 	personally, by delivering the notice to the Party
        on which it is to be served at that Party's address for service; or 

	 	 	 
	 	b) 	by telecopy or telex (or by any other like method
        by which a written message may be sent) directed to the party on which
        it is to be served at that Party's address for service. A notice so served
        shall be deemed to be received by the addressee when actually received
        by it, if received within normal business hours on any day other than
        a Saturday, Sunday or statutory holiday in Alberta or at the commencement
        of the next ensuing business day following transmission if such notice
        is not received during such normal business hours; or 

	 	 	 
	 	c) 	by mailing it first class (air mail if to or from
        a location outside of Canada) registered post, postage prepaid, directed
        to the Party on which it is to be served at that Party's address for service.
        Notices so served shall be deemed to be received by the addressee at noon,
        local time, on the earlier of the actual date of receipt or the fourth
        (4th) day (excluding Saturdays, Sundays and statutory holidays
        in Alberta) following the mailing thereof. However, if postal service
        is (or is reasonably anticipated to be) interrupted or operating with
        unusual delay, notice shall not be served by such means during such interruption
        or period of delay.

5

16.         ADDRESS
  FOR SERVICE

               The
  address for service of notices hereunder of each of the Parties shall be as
  follows:

	 	Grantor: 	Vega Resources Ltd. 
	 	  	5008 Varsity Drive N.W. 
	 	  	Calgary, Alberta T3A 1A5 
	 	  	Facsimile: (403) 286-2139 
	 	  	  
	 	Participant: 	1048136 Alberta Ltd. 
	 	  	c/o 1800, 999 W. Hastings Street 
	 	  	Vancouver, B.C. V6C 2W2 
	 	  	Facsimile: (604) 682-4467 

             
  A Party may change its address for service by notice to the other Party,
  and such changed address for service thereafter shall be effective for all purposes
  of this Agreement.

17.         INSURANCE

             
  The parties shall individually carry insurance with a reputable insurance
  company in the manner and in the amounts set out in the Operating Procedure.
  To the extent of its cost sharing interest, the Participant agrees to be covered
  by Grantor's "Control of Well" insurance and Grantor agrees to make suitable
  arrangements in that regard. Participant will bear and pay its proportionate
  share of such coverage at cost.

18.         SUCCESSORS
  AND ASSIGNS

             
  This Agreement shall enure to the benefit of and be binding upon the
  parties hereto and their respective successors and permitted assigns.

19.        PROPER LAW

              This
  Agreement and the relationship between the parties shall be construed and determined
  according to the laws of the Province of Alberta, and the courts having original
  jurisdiction with respect to any matter or thing arising directly or indirectly
  relating to this Agreement shall be the courts of the Province of Alberta.

20.         SUPERCESSION

             
  This Agreement supercedes and replaces all other agreements, documents,
  writings and verbal understandings between the parties with respect to the subject
  matter of this Agreement.

6

21.         COUNTERPARTS

               This
  Agreement may be executed in counterparts and by facsimile.

IN WITNESS WHEREOF the parties hereto have caused this Agreement
  to be executed as of the day and year first written above.

	VEGA RESOURCES LTD. 	 	1048136 ALBERTA LTD. 
	 	 	 	 	 
	 per:
	  
	 	 per:
	
	 	  	 	 	  
	 per:
		 	 per:
	  

7

SCHEDULE A

to the Participation Agreement between Vega Resources Ltd. and
  

  1048136 Alberta Ltd., dated January 28, 2005

Copy of Farmout Agreement 

- attached hereto -

8

FARMOUT and OPTION AGREEMENT

Empress Area, Alberta 

Made as of the 21st day of January, 2005 

BETWEEN:

HANNA OIL AND GAS COMPANY-CANADA, INC., a body corporate
  with an office in the City of Calgary, Alberta (“Hanna”)

-and-

FIREFLY RESOURCES LTD. a body corporate with an office
  in the City of Calgary, Alberta (“Firefly”)

-and-

MORAINE RESOURCES LTD. a body corporate with an office
  in the City of Calgary, Alberta (“Moraine”)

(Hanna, Firefly and Moraine are hereinafter collectively referred
  to as “Farmor”)

-and-

VEGA RESOURCES LTD., a body corporate with an office in
  the City of Calgary, Alberta (“Vega”)

WHEREAS Farmor is prepared to grant Vega the right to earn an
  interest in the Farmout Lands and the Option Lands in which Farmor holds an
  undivided one hundred percent (100%) working interest, on the terms and conditions
  herein provided. 

In consideration of the mutual covenants contained in this Agreement
  the Parties agree as follows: 

1.      DEFINITIONS

In this Head Agreement the definitions in the Farmout & Royalty
  Procedure shall apply, unless the context otherwise requires, and, the words
  below shall have the meanings indicated:

“Agreement” means the
  Head Agreement and the Schedules attached to it. 

“Contract Depth” means
  a depth sufficient to penetrate fifteen metres (15 m) into the Paleozoic formation
  or nine hundred and fifty meters (950 m) subsurface, whichever first occurs;

9

“Earning Well” means
  the Test Well and the Option Well(s), as the case may be; 

“Effective Date” means
  January 21, 2005; 

“Farmee” means Vega;

“Farmor” means Hanna
  as to a 56% interest, Firefly as to a 24% interest and Moraine as to 20%;

“Farmout & Royalty Procedure”
  means the 1997 CAPL Farmout & Royalty Procedure which is hereby modified
  by the 1997 CAPL Farmout & Royalty Procedure election and amendment sheet
  attached hereto as Schedule “B”; 

“Farmout Lands” means
  the areal, stratigraphic and substance rights described as “Farmout Lands”
  in Schedule “A” of the Agreement or so much of those rights as remain
  subject to the Agreement and the Title Documents, excluding any Reserved Formations;

“Head Agreement” means
  the Agreement, other than the Schedules;

“Lessor Royalty” means
  a lessor royalty under a Title Document;

“Operating Procedure”
  means the standard form 1990 CAPL Operating Procedure and 1996 PASC Accounting
  Procedure with elections attached hereto as Schedule “C”;

“Option Lands” means
  the areal, stratigraphic and substance rights described as “Option Lands”
  in Schedule “A” of the Agreement or so much of those rights as remain
  subject to the Agreement and the Title Documents, excluding any Reserved Formations;

“Option Well” means
  the well or wells, in addition to the Test Well, that the Farmee has the option
  to drill, pursuant to clause 6 entitled ROLLING OPTION WELL(s) of the
  Head Agreement, to earn a Working Interest in the Farmout Lands and/or the Option
  Lands, as the case may be;

“Pre-Farmout Working Interests”
  means the undivided Working Interests of the Parties the Farmout Lands and Option
  Lands, prior to any earning hereunder, as described in Schedule “A”;

“Test Well” means the first
  well drilled under the Head Agreement as provided for in clause 4 entitled TEST
  WELL of the Head Agreement; 

“Title Documents” means
  the documents of title described as “Title Documents” in Schedule
  “A” to the Agreement, insofar as they relate to the Farmout Lands,
  the Option Lands and all renewals, extensions, continuations or documents of
  title issued in substitution or by selection.

“Trust Agreement” means
  the form of trust agreement attached hereto as Schedule “E”.

10

“Well Requirement Sheet”
  means the document specifying the type of information required to be supplied
  by the Farmee to the Farmor pursuant to the Farmout & Royalty Procedure
  and attached hereto as Schedule “D”. 

2.      INCORPORATION OF PROVISIONS
  FROM THE FARMOUT & ROYALTY PROCEDURE

Except as otherwise set out herein and unless the context otherwise
  requires, clause 1.02 of the Farmout & Royalty Procedure which incorporates
  certain provisions of the Operating Procedure is hereby incorporated into the
  Head Agreement, except that any reference to “Operating Procedure”
  or “Farmout & Royalty Procedure” shall mean the Head Agreement.
  The following clauses are not incorporated as a conflicts clause and superseding
  clause are provided for in the clauses entitled “Supersedes Previous Agreements”
  and “Conflicts” of the Head Agreement”:

107 (Conflicts)

  2801 (Supersedes Previous Agreements). 

3.      SCHEDULES

The schedules described below are attached to and form part of
  this Agreement.

Schedule “A”    describes the Farmout
  Lands, Option Lands, Title Documents, Encumbrances and Pre-Farmout Working Interests;

Schedule “B”     is the 1997 CAPL
  Farmout & Royalty Procedure and the 1997 CAPL Farmout & Royalty Procedure
  election 

                              
  and amendment sheet; 

Schedule “C”     is the Operating
  Procedure; 

Schedule “D”     is the Well Requirement
  Sheet; 

Schedule “E”      is the Trust
  Agreement.

4.      TEST WELL

Farmee shall, on or before March 15, 2005, subject to surface
  access, regulatory approvals and rig availability, commence drilling a well
  (hereinafter referred to as the “Test Well”) at a location of its
  choice on the Farmout Lands and shall continuously and diligently drill the
  Test Well to Contract Depth and complete, cap or abandon same at its sole cost,
  risk and expense. Farmee shall conduct all operations hereunder in accordance
  with good oilfield practices and in strict compliance with the terms of the
  Title Documents, this Agreement and the Regulations.

5.      INTEREST EARNED

Subject to Article 3.00 of the Farmout & Royalty Procedure
  and Clause 4 herein and provided Farmee is not in default under this Agreement,
  Farmee will earn 100% of the Farmor’s Pre-Farmout Working Interests in
  four (4) sections of the Farmout Lands from surface to base of the 

11

deepest formation fully penetrated and evaluated, subject to
  the Overriding Royalty reserved by Farmor under the Farmout & Royalty Procedure.
  The said four (4) sections shall be selected with fourteen (14) days of rig
  release of the Test Well, which selection must conform to the Department of
  Energy Regulations governing lease selection from a PNG License. 

6.      ROLLING OPTION
  WELL(s) 

If the Farmee has drilled the Test Well, has earned as provided
  for in clause 5 herein, and is not otherwise in default under this Agreement,
  the Farmee will have the right and option, for thirty (30) days from rig release
  of the last Earning Well drilled on the Farmout Lands or Option Lands, as the
  case may be, in which to elect in writing to Farmor to: 

	(a) 	drill a well (hereinafter referred to as the “Option
        Well”) at a location of its choice on four pre-selected unearned
        sections of the Farmout Lands, which Option Well must be spudded by Farmee
        no later than forty five (45) days after its election, subject to surface
        access, rig availability and regulatory approvals. Farmee shall continuously
        and diligently drill the Option Well to Contract Depth and complete, cap
        or abandon same at its sole cost, risk and expense. Farmee shall conduct
        all operations hereunder in accordance with good oilfield practices and
        in strict compliance with the terms of the Title Documents, this Agreement
        and the Regulations; or 

	 	 
	(b) 	drill an Option Well at a location of its choice
        on the Option Lands, which Option Well must be spudded by Farmee no later
        than sixty (60) days after its election, subject to surface access, rig
        availability and regulatory approvals. Farmee shall continuously and diligently
        drill the Option Well to Contract Depth and complete, cap or abandon same
        at its sole cost, risk and expense. Farmee shall conduct all operations
        hereunder in accordance with good oilfield practices and in strict compliance
        with the terms of the Title Documents, this Agreement and the Regulations.
      

Failure by Farmee to elect to drill an Option Well in accordance
  with the provisions of subclause (a) or (b) above shall be deemed to be an election
  to surrender its rights to drill an Option Well and to earn an interest in the
  unearned Farmout Lands and Option Lands.

7.      OPTION WELL EARNING

	(a) 	In the event Farmee elects to drill an Option Well
        pursuant to clause 6 (a) herein, Farmee will, subject to Article 3.00
        of the Farmout & Royalty Procedure and clause 6 (a) herein and provided
        Farmee is not in default under this Agreement, will earn 100% of the Farmor’s
        Pre-Farmout Working Interests in four (4) sections of the unearned Farmout
        Lands from surface to base of the deepest formation fully penetrated and
        evaluated, subject to the Overriding Royalty reserved by Farmor under
        the Farmout & Royalty Procedure. The said four (4) sections shall
        be selected with fourteen (14) days of rig release of the Option Well,
        which selection must conform to the Department of Energy Regulations governing
        lease selection from a PNG License. 

	 	 
	(b) 	In the event Farmee elects to drill an Option Well
        pursuant to clause 6 (b) herein, Farmee will, subject to Article 3.00
        of the Farmout & Royalty Procedure and clause 6 (b) herein 

12

and provided Farmee is not in default
  under this Agreement, earn one hundred (100%) percent of the Farmor’s Pre-Farmout
  Working Interest from surface to the base of the deepest formation penetrated
  and evaluated, in that section of the Option Lands in which the Option Well
  was drilled, subject to the Overriding Royalty and rights of conversion reserved
  by Farmor as set out in the Farmout & Royalty Procedure. 

For clarification, the Option Lands
  earned pursuant to sub-clauses 7(b) above shall be held as follows:

	  	Before Payout 	After Payout 
	 	 	 
	Farmee 	100% 	60.0% 
	 	 	 
	Hanna 	GOR 	22.4% 
	 	 	 
	Firefly 	GOR 	9.6% 
	 	 	 
	Moraine 	GOR 	8.0% 

8.      AREA OF MUTUAL INTERST

The Parties hereto agree that Section 8-24-2W4 shall be an Area
  of Mutual Interest (“AMI”). The AMI shall have a term of the later
  of one (1) year from rig release of the last Earning Well drilled hereunder
  or the termination of earning by Farmee as provided for in this agreement. The
  Parties interest in the AMI shall be Farmee 60%, Hanna 22.4%, Firefly 9.6% and
  Moraine 8.0% .

9.      TRUST AGREEMENT

Farmor shall assign to Farmee the entire interest earned in the
  Farmout Lands, but if such assignment is not possible or practical, it shall
  hold such interests in trust for Farmee in accordance with the Trust Agreement.

8.      ASSIGNMENT

	(a) 	Until Farmee has earned the entire interest it is
        entitled to earn hereunder or its right to earn any further interest hereunder
        has terminated or expired, Farmee may not assign this Agreement, either
        in whole or in part. 

	 	 
	(b) 	Once Farmee has earned the entire interest it is
        entitled to earn hereunder or its right to earn any further interest hereunder
        has terminated or expired, 2401(A) of the standard form 1990 CAPL Operating
        Procedure shall apply to all dispositions of Working Interests hereunder
        and any reference to “party” therein shall mean “Party”.
      

9.      LIMITATIONS

The two (2) year period for seeking a remedial order under section
  3(1)(a) of the Limitations Act, S.A. 2000 c. L-12, as amended, for any claim
  (as defined in that Act) arising in connection with this agreement is extended
  to: (a) for claims disclosed by an audit, two (2) years after the time this
  agreement permitted that audit to be performed, and (b) for all other claims,
  four (4) years. 

13

10.      ADDRESS FOR NOTICE

The address for service of notices hereunder for each Party is:

	 	Hanna Oil and Gas Company- 	  
	 	Canada, Inc. 	Firefly Resources Ltd. 
	 	1400, 715 – 5th Avenue SW 	1400, 715 – 5th Avenue SW 
	 	Calgary, AB T2P 2X6 	Calgary, AB T2P 2X6 
	 	Attn: Land Department 	Attn: Ken Havard, President 
	 	Fax: (403) 265-1870 	Fax: (403) 269-2557 
	 	  	  
	 	Moraine Resources Ltd. 	Vega Resources Ltd. 
	 	1411, 715 – 5th Avenue SW 	5008 Varsity Drive NW 
	 	Calgary, AB T2P 2X6 	Calgary, AB T3A 1A5 
	 	Attn: William Turnbull, President 	Attn: Richard Johnson 
	 	Fax: (403) 265-1870 	Fax: (403) 286-2139 

11.      SUPERSEDES PREVIOUS AGREEMENTS

This Agreement supersedes all other agreements, documents, writings
  and verbal understandings between the Parties with respect to the Farmout Lands
  and the Option Lands and contains the entire agreement between the Parties with
  respect thereto. 

12.      CONFLICTS

	(a) 	If any provision in the Head Agreement conflicts
        with any provision in an exhibit or schedule attached hereto (other than
        any Title Document), the provision of the Head Agreement shall prevail.
      

	 	 
	(b) 	If there is a conflict between any provision of the
        Agreement and the Regulations or Title Documents, the Regulations or Title
        Documents, as the case may be, shall govern, except that: (i) as between
        the Parties in their capacities or as Working Interest owners, the Working
        Interests shall prevail if there is a difference between the Working Interests
        and the registered interests in the Title Documents; and (ii) the allocation
        of responsibility for losses as provided herein shall govern the relationship
        of the Parties. 

	 	 
	(c) 	If there is a conflict as provided in any subclause
        above, the Agreement (excluding Title Documents) shall be modified accordingly
        to the extent necessary to resolve such conflict, and, as so modified,
        shall continue in full force and effect. 

14

13.      JURISDICTION

This Agreement shall be subject to and interpreted, construed
  and enforced in accordance with the laws in effect in the Province of Alberta.
  Each Party accepts the jurisdiction of the courts of the Province of Alberta
  and all courts of appeal therefrom.

IN WITNESS WHEREOF the parties have executed this Agreement
  on the date first set out above.

	HANNA OIL AND GAS COMPANY- 	 	FIREFLY RESOURCES LTD. 
	CANADA, INC. 	 	 	  
	 	  	 	 	  
	 	  	 	 	  
	 	  	 	 	  
	Per:	  	 	Per:	  
	 	Chuck Gusa, Manager 	 	 	Kenneth Havard, President 
	 	  	 	 	  
	 	  	 	 	  
	MORAINE RESOURCES LTD. 	 	VEGA RESOURCES LTD. 
	 	  	 	 	  
	 	  	 	 	  
	 	  	 	 	  
	Per:	  	 	Per:	  
	 	William (Bill) Turnbull, President 	 	 	Name & Title 

This is the execution page of a Farmout and Option Agreement dated
  January 21, 2005 between 

  Hanna Oil and Gas Company-Canada, Inc., Firefly Resources Ltd., Moraine Resources
  Ltd 

  and Vega Resources Ltd.

15

SCHEDULE “A”

  Attached to and made a part of a Farmout and Option Agreement dated January
  21, 2005 between 

  Hanna Oil and Gas Company-Canada, Inc., Firefly Resources Ltd., Moraine Resources
  Ltd and 

  Vega Resources Ltd.

	  	Title Documents 	Encumbrances 	Pre-Farmout Working Interests 
	Farmout Lands 	  	  	  	  
	  	  	  	  	  
	Twp 24 Rge 2W4M: 	Alberta Crown 	Alberta Crown 	Hanna 	56% 
	Section’s 9, 10, 11, 12, 	PNG License 	Royalty 	 Firefly 	24% 
	13, 14, 15, 16, 22 & 23 	#5303080787 	  	Moraine 	20% 
	All PNG Rights 	  	  	  	  
	  	  	  	  	  
	Twp 24 Rge 2W4M: 	  	  	  	  
	Section 17 	  	  	  	  
	All PNG Rights below 	  	  	  	  
	base Viking formation 	  	  	  	  
	  	  	  	  	  
	Twp 24 Rge 2W4M: 	  	  	  	  
	Section 21 	  	  	  	  
	All PNG Rights to base 	  	  	  	  
	Viking formation 	  	  	  	  
	Twp 24 Rge 2W4M: 	Alberta Crown 	Alberta Crown 	Hanna 	56% 
	Section 21 	PNG Lease 	Royalty 	Firefly 	24% 
	All PNG Rights below 	#0400080023 	  	Moraine 	20% 
	base Viking formation to 	  	  	  	  
	basement 	  	  	  	  
	  	  	  	  	  
	  	Title Documents 	Encumbrances 	Pre-Farmout Working Interests 
	Option Lands 	  	  	  	  
	Twp 24 Rge 2W4M: 	Alberta Crown 	Alberta Crown 	Hanna 	56% 
	Section 5 	PNG Lease 	Royalty 	Firefly 	24% 
	All PNG rights below base 	#0403010070 	  	Moraine 	20% 
	Medicine Hat formation to 	  	  	  	  
	basement 	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	Twp 24 Rge 2W4M: 	Alberta Crown 	Alberta Crown 	Hanna 	56% 
	Section 6 	PNG Lease 	Royalty 	Firefly 	24% 
	All PNG rights below base 	#0401110453 	  	Moraine 	20% 
	Medicine Hat formation to 	  	  	  	  
	basement 	  	  	  	  
	  	  	  	  	  
	Twp 24 Rge 2W4M: 	Alberta Crown 	Alberta Crown 	Hanna 	56% 
	Section 7 	PNG Lease 	Royalty 	Firefly 	24% 
	All PNG rights 	#0402010037 	  	Moraine 	20% 

16

SCHEDULE “B”

  Attached to and made a part of a Farmout and Option Agreement dated January
  21, 2005 between Hanna Oil 

  and Gas Company-Canada, Inc., Firefly Resources Ltd., Moraine Resources Ltd
  and Vega Resources Ltd.

1997 CAPL FARMOUT AND ROYALTY PROCEDURE

ELECTIONS AND AMENDMENTS

	1. 	EFFECTIVE DATE [Subclause
        1.01(f)]: January 21, 2005 

	 	 
	2. 	PAYOUT [Subclause 1.01(t)]
        Alternate A – With respect to the Option Lands only
      

	 	 
	3. 	INCORPORATION OF CLAUSES
        FROM 1990 CAPL OPERATING PROCEDURE 

	 	 
	  	[Clause 1.02] 

	 	 
	  	Clause 311 (Insurance) –
        Alternate A. 

	 	 
	  	          
        Add Subclause 311h 

	 	 
	             
          	“In addition
        to the policies of insurance required under Clause 311A of the Operating
        Procedure, Farmee shall obtain and maintain control of well insurance
        to the extent of a minimum of three million dollars ($3,000,000)
        with respect to each well drilled hereunder and each such policy
        shall also include the waivers of subrogation required by Clause
        311A of the Operating Procedure. All costs of insurance maintained by
        Farmee pursuant to this Clause shall be borne solely by Farmee and,
        upon request of Farmor, Farmee shall promptly provide Farmor with
        evidence that such insurance is maintained by Farmee, including
        a copy of any particular policy of insurance if so requested by
        Farmor.” 

	 	 
	4. 	OPTION WELLS [Article
        4.00] 

	 	 
	  	This optional Article 4.00
        will X / will not __ apply herein. 

	 	 
	5. 	OVERRIDING ROYALTY [Article
        5.00] 

	 	 
	  	This optional Article 5.00
        will X / will not __ apply herein. 

	 	 
	6. 	QUANTIFICATION OF OVERRIDING
        ROYALTY [Clause 5.01] 

	 	 
	  	for crude oil, Alternate 1
        will apply 

	 	 
	  	Alternate 1: 15%
        of gross monthly production; or 

	  	Alternate 2: (divisor); not
        less than __% and not more than __% 

	 	   

	  	for all other Petroleum Substances,
        Alternate 1 will apply 

17

 

	 	 Alternate 1: 15% of gross monthly
        production; or

        Alternate 2: if not taken in kind: ____% of gross monthly production;
        or 

        if taken in kind ____% of gross monthly production

	 	 
	7. 	ROYALTY PAYOR’S ALLOWED DEDUCTIONS
        OF OVERRIDING ROYALTY NOT TAKEN IN KIND [Subclause
        5.04B] 

	  	  
	  	DEDUCTIONS (5.04 B) Alternates: 

	  	1 only                               __
      

	  	2 only                               __

	  	1 and 2                             X
      

	  	neither 1 nor 2                __
      

	  	  
	  	Alternate 2 - 20% 

	  	Marketing Fees are not an allowed deduction.
      

	  	  
	8. 	ROYALTY OWNER’S RIGHTS UPON SURRENDER
        [Subclause 5.08] 

	  	  
	  	Add new paragraph: 

	  	  
	             
                	“Surrender in this Clause shall
        include the Royalty Payor’s intention not to make application
        to continue a Title Document beyond its primary term. The Royalty
        Owner shall have the right for fifteen (15) days from the date of such
        surrender notice to request an assignment from the Royalty Payor
        of the interest that it desires to surrender. From and after the
        date of such surrender or assignment the Royalty Payor shall be
        discharged of, from and against any and all obligations with respect
        to the interests so surrendered or assigned to the extent that such
        obligations are attributable to the period commencing with the
        date of the surrender or assignment, and the lands and the leases
        as hereinbefore defined, shall thereafter be deemed to exclude
        the interests so surrendered or assigned. The provisions of this Clause
        shall be subject to the Title Documents covering the lands and
        in the event of conflict, the provisions of the Title Documents
        shall prevail.” 

	  	  
	9. 	CONVERSION OF OVERRIDING ROYALTY [Article
        6.00] 

	  	  
	  	This optional Article 6.00 will X
        / will not __ apply herein with respect to the Option Lands
        only. 

	  	  
	10. 	OPERATIONS AT CONVERSION [Clause
        6.04] 

	  	  
	  	If Article 6.00 applies, conversion will
        be to 40% of the Working Interest by Farmor. This Article
        applies only to the Option Lands. 

	  	  
	11. 	AREA OF MUTUAL INTEREST [Article
        8.00] 

	  	  
	  	This optional Article 8.00 will X/
        will not apply herein. 

	  	  
	12. 	LIABILITY AND INDEMNITY [Article
        10.00] 

18

		Add: 

		“10.03 Survives Termination 

		This Article shall survive the termination of the
        Agreement until Farmee has fully and properly abandoned all well sites,
        surface and subsurface facilities on the Farmout Lands or used in connection
        with production from the Farmout Lands in accordance with the regulations
        and has fully restored the surface for such well sites, surface and subsurface
        facilities in accordance with the regulations.” 

	 	 
	13. 	LAND MAINTENANCE COSTS [Clause 11.02] 

	 	 
		This optional Clause 11.02 will X / will not
        __ apply herein. 

		The Farmee will pay the Farmor $__________with 30
        days of Effective Date. 

	 	 
		Add: 

	 	 
		“Farmee shall be responsible for all rentals
        on a per diem basis payable on the Title Documents from the Effective
        Date until Farmee has earned an interest in the Farmout Lands and or the
        Option Lands or until Farmee’s right to earn any further interest
        is terminated or surrendered. Thereafter Farmee and Farmor shall pay all
        rentals and taxes on those Farmout Lands and Option Lands that Farmee
        has earned an interest in proportionate to the working interests they
        hold in such Farmout Lands and Option Lands.” 

19

SCHEDULE “C”

  Attached to and made a part of a Farmout and Option Agreement dated January
  21, 2005 between Hanna Oil 

  and Gas Company-Canada, Inc., Firefly Resources Ltd., Moraine Resources Ltd
  and Vega Resources Ltd.

 

OPERATING PROCEDURE ELECTIONS

1990 CAPL OPERATING PROCEDURE

Clause 311 - Insurance: Alternate A __ B X

Clause 604 - Marketing Fee: Alternate A X_ B
  ___

  (if 'B' is selected add specific options for petroleum, NG, NGL & sulphur)

Clause 903 - Less than All Parties Participate: Alternate
  A _ X_ B ___

Clause 1007 - Penalty Where Independent Well Results in
  Production: 

                               
   1007 (a) (iv) - Development Wells 300% 

                                 1007
  (a) (iv) - Exploratory Wells    500%

Clause 1010 (a) iv - exception:           
   180 days

Clause 2202 - Addresses for Notices:

	 	Hanna Oil and Gas 	Firefly Resources Ltd. 
	 	Company-Canada, Inc. 	1400, 715 –5th Avenue SW 
	 	1400, 715 –5th Avenue SW 	Calgary AB 
	 	Calgary AB 	T2P 2X6 
	 	T2P 2X6 	Attn: President 
	 	Attn: Land Dept. 	  
	 	  	  
	 	Moraine Resources Ltd. 	Vega Resources Ltd. 
	 	1411, 715 – 5th Avenue SW 	5008 Varsity Drive NW 
	 	Calgary, AB 	Calgary AB 
	 	T2P 2X6 	T3A 1A5 
	 	Attn: President 	Attn: Land Dept. 

Clause 2401 - Right to Assign/Sell/Dispose: Alternate
  A _ X_ B ___

Clause 2404 - Recognition upon Assignment: deleted in
  its entirety and replaced with 1993 CAPL Assignment Procedure 

1996 PASC ACCOUNTING PROCEDURE

Clause 105 - Operating Fund: 10%

  Clause 110 - Approvals: 2 or more parties totalling 75%

20

Clause 112 - Expenditure Limitations: (a) excess of $25,000
  (c) excess of $25,000 

Clause 202(b) Employee Benefits: (b) exceed 22%
  

Clause 213 - Camp & Housing: shall not 

Clause 216 - Warehouse Handling: 5% 

Clause 302 - Overhead Rates:

	 	(a) 	For each Exploration Project: 
	 		(1) 	5 % of the first $ 50,000; plus 
	 		(2) 	3 % of the next $100,000; plus 
	 		(3) 	1 % of cost exceeding the sum of (1) and (2) 
	 	 	 	 
	 	(b) 	For each Drilling Well: 
	 		(1) 	3 % of the first $ 50,000; plus 
	 		(2) 	2 % of the next $100,000; plus 
	 		(3) 	1 % of cost exceeding the sum of (1) and (2) 
	 	 	 	 
	 	(c) 	For each Initial Construction Project: 
	 		(1) 	5 % of the first $ 50,000; plus 
	 		(2) 	3 % of the next $100,000; plus 
	 		(3) 	1 % of cost exceeding the sum of (1) and (2) 
	 	 	 	 
	 	(d) 	For each Subsequent Construction Project: 
	 		(1) 	5% of the first $50,000; plus 
	 		(2) 	3% of the next $100,000; plus 
	 		(3) 	1% of the cost exceeding the sum of (1) and (2) 
	 	 	 	 
	 	(e) 	For Operation and Maintenance: 
	 		(1) 	- _% of the cost; and 
	 		(2) 	$250.00/producing well/month; 
	 		(3) 	$____Flat rate per month. 
	 		Rates for e(2) and e(3) will not be adjusted each
      July 

Clause 406 - Dispositions: $25,000

21

SCHEDULE “D”

  Attached to and made a part of a Farmout and Option Agreement dated January
  21, 2005 between Hanna Oil 

  and Gas Company-Canada, Inc., Firefly Resources Ltd., Moraine Resources Ltd
  and Vega Resources Ltd.

WELL DATA REQUIREMENT SHEET

WELL NAME: __________________ LOCATION ________________________

	1. 	INFORMATION REQUIRED PRIOR TO DRILLING: PLEASE MAIL THE NOTICES
      TO: 

  	Hanna
        Oil and Gas Company-Canada, Inc. 

        1400, 715 – 5th Avenue SW 

        Calgary, AB T2P 2X6 

        Attention: Chuck Gusa, Manager 

          	Moraine Resources Ltd. 

        1411, 715 – 5th Avenue S.W. 

        Calgary, AB T2P 2X6 

        Attention: William (Bill) Turnbull, 

        President 

	Firefly
        Resources Ltd. 

        1400, 715 – 5th Avenue SW 

        Calgary, AB T2P 2X6 

        Attention: Kenneth Havard, President 	  

          

          

          

	 	                                                                                                     	# of Copies to each company 
	 	  	             
      Required 
	 	  	  
	 	Survey Plan 	            
          1 
	 	Application for Well Licence 	             
         1 
	 	Well Licence 	             
         1 
	 	Drilling Program and Geological Prognosis 	                 1
    

	2. 	DAILY E-MAIL DAILY REPORTS TO: 

  	Hanna
        - Chuck Gusa 

        hanna@pngland.com 	Moraine - William (Bill) Turnbull 

        williamturnbull@yahoo.com 

	Firefly - Kenneth Havard 

        firefly@pngland.com 	  

          

	3. 	INFORMATION REQUIRED DURING & AFTER DRILLING:
      PLEASE MAIL TO THE ABOVE ADDRESSES 

	 	  	# of Copies to each Company 
	 	  	             
      Required 
	 	Daily Written Reports 	                 1
    
	 	Logs: Field Prints 	                 1
    
	 	           Final
      Digits 	                 1
    
	 	Core and Sample Descriptions 	                 1
    
	 	Drill Stem Test Reports 	                 1
    
	 	Core Analyses: Preliminary 	                 1
    

22

	 	Final 	 
	 	Oil, Water and Gas Analyses 	                 1
    
	 	Abandonment Report (AEUB Forms) 	                 1
    
	 	Well Status Reports(AEUB Forms) 	                 1
    
	 	Pressure Surveys, Completion Reports 	                 1
    
	 	Production Reports 	                 1
    
	 	  	
	 	Access to Well Site Operations 	Yes     X No
    

	4. 	FORMATION SAMPLES: ACCESS TO OPERATOR'S CUTTINGS 
	  	  
	  	  
	5. 	NOTICES REQUIRED: 
	  	     24 hours notice of intention to
      spud 
	  	 Immediate notice of oil or gas shows X Yes No
    
	  	     24 hours notice of intention to
      log, core or test 
	  	     24 hours notice of completion or
      abandonment 
	  	  
	  	 Please direct all notices to the attention of: 
	  	 Chuck Gusa, Manager - Hanna Oil and Gas Company-Canada,
      Inc. 
	  	 Kenneth Havard, President - Firefly Resources Ltd. 
	  	 William (Bill) Turnbull, President – Moraine Resources
      Ltd. 
	  	  
	6. 	 ADDITIONAL REQUIREMENTS AND REMARKS 

	 	Chuck Gusa 	Home Phone # (403) 288-9652 
	 	  	Cell # (403) 660-9029 
	 	  	Office # (403) 269-4182 
	 	  	E-Mail: hanna@pngland.com 
	 	  	  
	 	Kenneth Havard 	Office # 237-8778 
	 	  	E-Mail: firefly@pngland.com 
	 	  	  
	 	William (Bill) Turnbul 	         Office
      # (403) 263-1933 
	 	 	         E-Mail:
      williamturnbull@yahoo.com

23

SCHEDULE “E”

  Attached to and made a part of a Farmout and Option Agreement dated January
  21, 2005 between Hanna Oil 

  and Gas Company-Canada, Inc., Firefly Resources Ltd., Moraine Resources Ltd
  and Vega Resources Ltd.

 

TRUST AGREEMENT

THIS AGREEMENT made the ___ day of _______, 19_________

BETWEEN:

  
    
      
        ____________________, a body corporate, having
          an office at the City of Calgary, in the Province of Alberta

                       (“Trustee”)

      

    

  

-and-

  
    
      
        ____________________, a body corporate, having
          an office at the City of Calgary, in the Province of Alberta

                       (“Beneficiary”)

      

    

  

Trustee is the lessee under a lease (the “Lease”) granting
  to lessee certain petroleum or natural gas rights or both which may be found
  within, upon or under certain lands (the” Lands”). The Lease and Lands
  are described in Schedule “A” hereto.

Trustee and Beneficiary are parties to an agreement (the “Agreement")
  described in Schedule “A” hereto whereby Beneficiary is entitled to
  certain interests in the Lease and Trustee agrees to hold the interest (the
  “Trust Interest”) of the Beneficiary in the Lease in trust on the
  terms and conditions set out below.

In consideration of the mutual promises, covenants and conditions
  and in consideration of the sum of $10.00, receipt of which is hereby acknowledged,
  the parties agree as follows:

	1. 	The effective date of this Declaration
        is the date first written above. 

	 	 	 
	2. 	Trustee hereby acknowledges and agrees
        that from the date of this agreement and for the balance of the unexpired
        term of the Lease and subject to the Agreement and this agreement; 

	 	 	 
		(a) 
	it holds the Trust Interest in trust for Beneficiary;
      

	 	 	 
		(b) 
	all benefit accruing to the Trust Interest, if and
        when received by Trustee, shall be held by Trustee, its successors and
        assigns, for the benefit of Beneficiary; and 

24

		(c) 
	it will not transfer, encumber, or in any other way
        dispose of the Trust Interest except with the written consent of Beneficiary
        or with the prior written consent of Beneficiary, which consent shall
        not be unreasonably withheld, PROVIDED HOWEVER, Trustee may dispose of
        the Trust Interest without Beneficiary’s consent if Trustee disposes
        of all its beneficial interest in the Lease and the party acquiring such
        interest agrees, in writing, to hold the Trust Interest in trust for Beneficiary
        and be bound by the terms of this Agreement in respect thereto. 

	 	 	 
	3. 	Trustee does not purport to hold in trust
        and does not warrant to Beneficiary any better title to the Trust Interest
        than it has now or is entitled to receive. 

	 	 	 
	4. 	Where applicable, Trustee shall use its
        reasonable efforts, notwithstanding any restrictions on assignment contained
        in the Lease, to have the operator under the applicable operating agreement
        recognize and deal directly with Beneficiary. 

	 	 	 
	5. 	 (a)
	 Beneficiary shall forthwith upon being
        invoiced by Trustee reimburse Trustee for the annual rental payments under
        the Lease, provided that all invoices delivered by Trustee to Beneficiary
        are in respect of annual rental payments that are payable or have been
        paid by Trustee. 

	 	 	 
		(b) 
	Trustee shall use its reasonable efforts to keep
        Beneficiary apprised of all notices, operations and other matters insofar
        as they relate to the Trust Interest. 

	 	 	 
	6. 	When requested to do so by Beneficiary
        Trustee shall, subject to all applicable laws and all applicable agreements,
        assign the Trust Interest to an assignee specified by Beneficiary or execute
        a further trust agreement(s) in favor of such assignee as Beneficiary
        may designate in writing. 

	 	 	 
	7. 	(a) 
	Trustee shall not be liable to Beneficiary for any
        loss or damage arising from any act or omission of Trustee so long as
        Trustee acts in good faith and performs its obligations diligently and
        in a timely manner in maintaining the Trust Interest, including, but not
        limited to, making all payments required to maintain the Lease in good
        standing and registering or transferring caveats necessary to protect
        Trustee’s and Beneficiary’s interest in the Lease. 

	 	 	 
		(b) 
	Beneficiary hereby agrees to indemnify Trustee against
        all actions, claims, suits, costs, demands, losses, damages and expenses
        of any nature that may be brought against or suffered by Trustee or which
        Trustee may sustain, pay or incur by reason of any matter or thing whether
        directly or indirectly arising out of or in any way attributable to Trustee
        holding the Trust Interest in trust pursuant to this agreement except
        where caused by Trustee’s gross negligence or wilful misconduct.
      

	 	 	 
	8. 	Each party shall without further consideration
        do all such further acts and execute and deliver all such further documents
        reasonably required to fully perform the terms of this agreement. 

	 	 	 
	9. 	This agreement shall enure to the benefit
        of and is binding upon the parties hereto and their respective successors
        and assigns. 

	 	 	 
	10. 	If a term of this agreement conflicts with
        a term of the Agreement the term of the Agreement shall prevail and this
        agreement shall be deemed to be amended accordingly. 

25

IN WITNESS of the foregoing the parties have executed and delivered
  this agreement as of the date first written above.

	 	TRUSTEE: 
	 	 	 
	 	 	 
	 	 	 
	 	Per:	
	 	 	Print Name/Title: 
	 	 	 
	 	 	 
	 	 	Print Name/Title: 
	 	 	 
	 	 	 
	 	BENEFICIARY: 
	 	 	 
	 	 	 
	 	 	 
	 	Per:	
	 	 	
	 	 	 
	 	 	Print Name/Title: 

EXECUTION PAGE TO TRUST AGREEMENT DATED THE ___ DAY OF ______19__
  , BETWEEN _______________________________________ AND ___________________________________.

This is Schedule “A” attached to and forming part
  of the Trust Agreement 

  between ____________________ and ____________________dated ________, 19 ____.

 

the Lease: 

 

the “Agreement” 

 

the Lands: 

 

the Trust Interest:

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