Document:

EX-10.19

FIRST MODIFICATION AND AMENDMENT

OF

TERM NOTE

THIS FIRST MODIFICATION AND AMENDMENT OF TERM NOTE (this “Modification”) is entered into as of
the 28th day of December 2009, effective as of December 15, 2009, by and between, by and
between ESCONDE RESOURCES LP, a Texas limited partnership, whose address is 3327 West Wadley Ave.,
Suite 3-267, Midland, TX 79707 (the “Maker”), and AMERICAN STATE BANK, a Texas banking
association, whose address is 620 N. Grant, Odessa, Texas 79761-4797 (the “Bank”).

NOTICE IS TAKEN OF THE FOLLOWING:

	A.	 	Reference is made to that certain Loan Agreement, dated as of September 1, 2009, by and among
Maker, as Borrower; Esconde Energy, LLC, as Guarantor (the “Guarantor”); and the Bank, as
Lender (the “Loan Agreement”).

	B.	 	Pursuant to the terms of the Loan Agreement, the Maker has previously executed and delivered
to the Bank a Term Note, dated as of September 1, 2009 (the “Note”).

	B.	 	The Maker, the Guarantor, and the Bank have now entered into that certain First Amendment to
Loan Agreement, dated of even date herewith (the “First Amendment”). Under the First
Amendment, the Maker, the Guarantor, and the Bank agree to extend the maturity date of the
Note to March 1, 2010. In order to evidence this agreement and the terms of the First
Amendment, the parties have agreed to enter into this Modification in order to evidence that
agreement.

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

	 	1.	 	Amendments.

	 	A.	 	Paragraph 1 of the Existing Note is hereby amended by deleting it
in its entirety and substituting the following:

1. For value received, ESCONDE RESOURCES LP, a Texas limited
partnership, (the “Maker”), promises to pay to the order of AMERICAN STATE
BANK, a Texas banking association (the “Bank”), at its offices at 620 N.
Grant Avenue, Odessa, Texas 79761, in lawful money of the United States of
America, the sum of THREE HUNDRED NINE THOUSAND SIX HUNDRED EIGHTY-ONE AND
EIGHTY-SEVEN/100 DOLLARS ($309,681.87), together with interest on the
principal amount from time to time outstanding hereunder, from the date of
disbursement of such principal until maturity, at a variable rate of interest
per annum (the “Variable Rate”) equal to the “American State Bank Base Rate”,
as defined below, plus two and one-half percentage points (2.5%), but shall
never be less than six and one-half percentage points (6.50%), and shall in
no event to exceed the “Highest Lawful Rate,” as defined below, with
adjustments to the VariableRate to be made on the same date as the
effective date of any change in the American State Bank Base Rate and
adjustments due to changes in the Highest Lawful Rate to be made on the
effective date of any change in the Highest Lawful Rate.

	 	B.	 	Paragraph 7 of the Note is hereby amended by deleting it in its
entirety and substituting the following:

	 	7.	 	The principal balance of this Note shall be due
and payable on or before March 1, 2010.

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

	 	8.	 	Interest, computed on the unpaid principal
balance of this Note shall be due and payable as it accrues monthly,
commencing on January 15, 2010, and thereafter on the fifteenth day of
each and every succeeding month during the term hereof, until maturity,
March 1, 2010, when the entire amount of this Note, principal and
accrued, unpaid interest, shall be due and payable.

2. Effectiveness:

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

	 	B.	 	All references to the Note herein or in any other document or
instrument between the Maker and Bank will hereinafter be construed to be
references to the Note as modified by this Modification.

3. Counterparts:

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

4. Notice of Final Agreement:

THIS FIRST MODIFICATION AND AMENDMENT OF TERM NOTE AND THOSE INSTRUMENTS EXECUTED
CONTEMPORANEOUSLY HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

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

1

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

	 	 	 	 	 	 	 
	Address:	 	ESCONDE RESOURCES LP, a Texas Limited Partnership	 	 
	3327 West Wadley Avenue, Suite 3-267

Midland, Texas 79707

	 	

By:
	 	

Esconde Energy LLC, its general
	 	

partner

	 	 	 	By:
Pierce-Hamilton Energy Partners LP,
Managing Member

By: Muscoda Hill Energy LLC, its general
partner

	 	 	 	 	 
	 	 	By:/s/ Lisa P. Hamilton
	 	 	Lisa P. Hamilton	 	 
	 	 	President	 	 
	By:
	 	/s/ Paul Heard

	 	

	 	 	 

	 	 
	 	 	Paul Heard

Managing Member

	 	

	By:
	 	/s/ Ronnie L. Steinocher

	 	

	 	 	 

	 	 
	 	 	Ronnie L. Steinocher

Managing Member

	 	

	 	 	
 
	 	MAKER

By its signature, Bank acknowledges the truth of the notice hereinabove.

AMERICAN STATE BANK

	 	 	 
	By:
	 	/s/ Mike Marshall

	 	 	 

	 	 	Mike Marshall

	 	 	President

BANK

2EX-10.20

AMERICAN STATE BANK

620 NORTH GRANT AVENUE

ODESSA, TEXAS

79761

August 1, 2008

Permian Legend Petroleum LP

3327 West Wadley Avenue, Suite 3, #267

Midland, Texas 79707

	 	 	 
	Attention:
	 	Lisa P. Hamilton, Manager

Ronnie L. Steinocher, Manager

Permian Legend, LLC

3327 West Wadley Avenue, Suite 3, #267

Midland, Texas 79707

	 	 	 
	Attention:
	 	Lisa P. Hamilton, Manager

Ronnie L. Steinocher, Manager

Mr. Ronnie L. Steinocher

2100 West Wadley Avenue, #21

Midland, Texas 79707

Ms. Lisa P. Hamilton

3327 West Wadley Avenue, Suite 3, #267

Midland, Texas 79707

	 	 	 	RE: Loans to be advanced by American State Bank to Permian Legend Petroleum LP

Ladies and Gentlemen:

American State Bank, a state banking association (alternatively, “ASB” or the “Bank”), hereby
commits to provide to Permian Legend Petroleum LP, a Texas limited partnership (the “Borrower”), a
term loan in the original principal amount of One Million Six Hundred Seventy-Five Thousand Six
Hundred Forty-Nine and No/100 Dollars ($1,675,649.00) (the “Loan”). The Loan will be evidenced by
a Term Note, of even date herewith, in the original face amount of One Million Six Hundred
Seventy-Five Thousand Six Hundred Forty-Nine and No/100 Dollars ($1,675,649.00), executed by the
Borrower in favor of the Bank (the “Note”). The Loan will be collateralized by Deeds of Trust and
Financing Statements covering oil and gas properties owned by Borrower in Nolan, Reagan, Runnels,
and Taylor Counties, Texas (collectively, the “Deeds of Trust”). As provided in the Deed of Trust,
proceeds of production will be payable directly to the Bank, pursuant to letters in lieu to be
executed by the Borrower simultaneously with the execution of this Agreement (the “Letters in
Lieu”). The Bank will deduct the payments due under the Note from the proceeds of production. In
addition, the Loan will be collateralized by unlimited Guaranty Agreements (the “Guaranty
Agreements”) to be executed by Permian Legend, LLC, a Texas limited liability company (“Permian
LLC”); Ronnie L. Steinocher, an individual (“Steinocher”), and Lisa P. Hamilton, an individual
(“Hamilton”)(collectively, the “Guarantors”). The Deeds of Trust, the Letters in Lieu, the
Guaranty Agreements, and any associated financing statements are collectively referred to herein as
the “Security Instruments”.

I. TERMS

Agreement

This Agreement, dated as of August 1, 2008, and any extensions, renewals, or modifications hereof.

Borrower

Permian Legend Petroleum LP

Guarantors

Permian Legend LLC

Ronnie L. Steinocher

Lisa P. Hamilton

Bank

American State Bank

Commitment

The lesser of the following amounts: (a) the face amount of the Note; or (b) the Borrowing Base
then in effect.

Rate

Interest under the Note shall accrue at an annual rate equal to the American State Bank Base Rate,
plus one percent (1.0%). For purposes of this Agreement, the “American State Bank Base Rate” shall
mean the rate announced by Bank as its base lending rate as of the beginning of each Business Day,
as hereinafter defined, (and for holidays or weekends, the American State Bank Base Rate shall be
the American State Bank Base Rate as of the close of business on the most recent Business Day
immediately preceding such weekend or holiday) before all sums payable hereunder have been paid in
full. Without notice to the Borrower or any other person, the American State Bank Base Rate may
change from time to time pursuant to the preceding sentence. The American State Bank Base Rate is
a reference rate and does not necessarily represent the lowest or best rate actually charged to any
customer. The Bank may make commercial loans or other loans at rates of interest at, above, or
below the American State Bank Base Rate. “Business Day” shall mean any day other than a Saturday,
Sunday or legal holiday for commercial banks under the laws of the State of Texas.

Security

The Loans shall be secured by the Security Instruments.

Structure

Funds will be available under the Note according to its terms. The maturity date of the Note is
October 15, 2008.

Borrowing Base

The “Borrowing Base” shall mean the amount of credit available under the Revolver Note at any time
during the Revolver Period, as determined by the Bank, exercising its sole and absolute discretion
based upon, among other considerations, a determination by the Bank of the value of the oil and gas
reserves and other assets of the Borrower.

Effective the date hereof, the Borrowing Base is set at One Million Six Hundred Seventy-Five
Thousand Six Hundred Forty-Nine and No/100 Dollars ($1,675,649.00). The Borrower acknowledges that
$50,000.00 of the Borrowing Base shall be used to issue a letter of credit on Borrower’s behalf to
the Texas Railroad Commission as a plugging bond, such letter of credit to be issued on the Bank’s
standard letter of credit forms and upon Borrower’s request. Advances made under the letter of
credit shall be considered advances under the Loan. The Bank shall redetermine the Borrowing Base
on a semi-annual basis, beginning as of April 15, 2009, or at such other time as the Bank, acting
in its sole discretion, so elects. If any redetermination results in a change in the Borrowing
Base, the Bank shall promptly notify the Borrower of the change. If a redetermination results in
no change in the Borrowing Base, then no notification shall be necessary. Should the Bank
determine that the Borrowing Base is less than the principal amount then outstanding, the Borrower
shall, within thirty (30) days after receipt of written notice from the Bank, take either of the
following steps that may be required by the Bank: (i) by instruments satisfactory in form and
substance to the Bank, provide the Bank with additional collateral with value in amounts
satisfactory to the Bank in order to increase the Borrowing Base by an amount at least equal to
such excess; or (ii) prepay the principal of the Note (together with accrued interest on the
principal amount so prepaid) in an amount at least equal to such excess.

The Borrower may request in writing an increase in the Borrowing Base, such request to be
accompanied by a description and evaluation of any additional collateral to be provided to the
Bank. The Bank may evaluate such request for an increase in its sole and absolute discretion, and
in conjunction with such evaluation, may conduct a full credit analysis of the Borrower and the
existing or additional collateral.

Purpose

Funds from the Loans will be used to acquire various oil and gas properties. No proceeds from the
Loans shall be used for the purpose of purchasing or carrying margin stock in violation of
Regulations G, U, or X of the Board of Governors of the Federal Reserve System.

Maturity Date

As stated, the maturity date of the Loan is October 15, 2008.

II. REPRESENTATIONS AND WARRANTIES

A. Good Standing and Identity. Borrower is a limited partnership, duly organized and
in good standing under the laws of the State of Texas. The legal name of Borrower and its address
are reflected in the address of this Agreement. Permian LLC is a limited liability company, duly
organized and in good standing under the laws of the State of Texas, and whose legal name and
address are reflected in the address of this Agreement. Steinocher and Hamilton are both
individuals, residing in the State of Texas. The Borrower and the Guarantors all have the power to
own their property and to carry on their business in each jurisdiction in which they operate.

B. Authority and Compliance. The Borrower has full power and authority to enter into
this Agreement, to make the borrowing hereunder, to execute and deliver the Note, and to incur the
obligations provided for herein. No consent or approval of any public authority is required as a
condition to the validity of this Agreement, the Note, and the Security Instruments, and Borrower
is in compliance with all laws and regulatory requirements to which it is subject.

C. Litigation. There are no proceedings pending or, to the knowledge of Borrower,
threatened before any court or administrative agency that will or may have a material adverse
effect on the financial condition or operations of Borrower, except as disclosed to the Bank in
writing prior to the date of this Agreement.

D. Ownership of Assets. As of the date of this Agreement, Borrower has good title to
those interests covered by the Security Instruments and any other collateral pledged and the other
collateral is owned free and clear of liens. Borrower will at all times maintain its tangible
property, real and personal, in good order and repair, taking into consideration reasonable wear
and tear.

E. Taxes. All income taxes and other taxes due and payable through the date of this
Agreement have been paid prior to becoming delinquent.

F. Financial Statements. The books and records of the Borrower properly reflect the
financial condition of the Borrower in all material respects, and there has been no material change
in Borrower’s financial condition as represented in its most recent financial statements.

G. Hazardous Wastes and Substances. To the best knowledge of the Borrower, the
Borrower and its properties are in compliance with applicable state and federal environmental laws
and regulations and the Borrower is not aware of and has not received any notice of any violation
of any applicable state or federal environmental law or regulation and there has not heretofore
been filed any complaint, nor commenced any administrative procedure, against the Borrower or any
of its predecessors, alleging a violation of any environmental law or regulation. Currently and
from time to time, the Borrower, in the course of its regular business (oil and gas exploration and
production), may use or generate on a portion of its properties materials which are Hazardous
Materials, as hereinafter defined. The Borrower has and will make a good faith attempt to comply
with all applicable statutes and regulations in the use, generation and disposal of such materials.
To the best of its knowledge, the Borrower has not otherwise installed, used, generated, stored or
disposed of any hazardous waste, toxic substance, asbestos or related material (“Hazardous
Materials”) on its properties. For the purposes of this Agreement, Hazardous Materials shall
include, but shall not be limited to, substances defined as “hazardous substances” or “toxic
substances” in the Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended, 42 U.S.C. §9061, et seq., Hazardous Materials Transportation Act, 49 U.S.C. §1802,
et seq., and the Resource Conservation and Recovery Act, 42 U.S.C. §6901, et seq.,
or as “hazardous substances,” “hazardous waste” or “pollutant or contaminant” in any other
applicable federal, state or local environmental law or regulation. No underground storage tanks
or facilities exist upon any property owned by Borrower, and to the knowledge of Borrower, none of
such property has ever been used for the treatment, storage, recycling, or disposal of any
Hazardous Materials.

III. CONDITIONS PRECEDENT

The provisions of this Agreement will serve as the proposed terms of the borrowing
arrangements. Prior to any funds being made available, Borrower will execute and deliver to the
Bank, in form and substance satisfactory to the Bank, this Agreement, the Note, and the Security
Instruments (collectively, the “Loan Documents”). In addition to the Borrower’s execution and
delivery of the Loan Documents, as a condition precedent to the initial advance under the Loan, the
Borrower will obtain and submit to the Bank a duly executed Subordination Agreement (the
“Subordination Agreement”), under which Baseline Capital, Inc. (“Baseline”) agrees to subordinate
any and all indebtedness owed by the Borrower to Baseline to any and all indebtedness, including
future advances, owed by the Borrower to the Bank. The Subordination Agreement shall provide that
as long as no Event of Default has occurred under this Agreement, the Borrower may continue to make
payments to Baseline pursuant to the documents and agreements between Baseline and Borrower. Upon
the occurrence of an Event of Default under this Agreement, the Borrower shall cease to make any
payments of principal or interest to Baseline. The Loan Documents are subject to the terms of the
Subordination Agreement in all respects.

IV. COVENANTS

Unless the Bank shall otherwise consent in writing, and so long as any debt remains
outstanding or the commitment still available, the Borrower and the Guarantors shall comply with
the following:

A. Borrower’s Affirmative Covenants.

1. Within ninety (90) days of the end of each calendar year-end, beginning with the
year ending on December 31, 2008, the Borrower shall submit to the Bank company-prepared
financial statements reflecting its financial performance during the previous calendar year.

2. Within forty-five (45) days of each fiscal quarter-end, with the next
fiscal quarter ending as of September 30, 2008, the Borrower will provide to Bank
company-prepared financial statements, in form and substance satisfactory to Bank,
reflecting its financial performance, for the previous fiscal quarter.

3. Within thirty (30) days of transmitting any tax return to any governmental
authority, the Borrower and each Guarantor shall submit to the Bank copies of such returns.

4. The Borrower will maintain a Cash Flow Coverage Ratio of at least 1.15 to 1.0,
measured annually. For purposes of this Agreement, “Cash Flow Coverage Ratio” means with
respect to any period of calculation thereof, the ratio of the sum of (i) the net income (or
loss) from continuing operations of Borrower during such period (excluding extraordinary
income but including extraordinary expenses) calculated after any and all distributions to
partners, plus (ii) interest and depreciation expenses of Borrower during such period, plus
(iii) intangible drilling costs, all determined in accordance with tax basis accounting
principles consistently applied, to debt service payments scheduled for the same period.

5. The Borrower will provide to the Bank on or before April 15, 2009 an updated
engineering evaluation of the oil and gas properties covered by the Deeds of Trust, such
evaluation to be in form and substance satisfactory to the Bank.

6. Within sixty (60) days of the execution of this Agreement, the Borrower shall
provide to the Bank evidence of its title to those properties identified in the Deeds of
Trust as the “Mortgaged Properties” that establishes, to the satisfaction of the Bank
(acting in its sole discretion), that the Borrower holds good title to the Mortgaged
Properties, that interests that the Borrower has represented it owns or will acquire in
those Mortgaged Properties are owned, or have been so acquired, and that the Bank’s lien
against the Mortgaged Properties is first in priority.

7. The Borrower and Guarantors will provide to the Bank such oil and gas information as
the Bank may reasonably request from time to time.

8. Within sixty (60) days of the execution of this Agreement, the Borrower and
Guarantors will establish all of their primary operating accounts with the Bank.

9. The Borrower and Guarantors will comply with all laws, regulations, and governmental
requirements applicable to any of their properties, business operations, and transactions.

10. The Borrower and Guarantors will promptly pay any reasonable costs incurred by the
Bank in connection with the preparation or enforcement of this Agreement, the Note, the
Security Instruments, and any other documentation executed concurrently herewith.

11. The Borrower and Guarantors will remain in substantial compliance with any and all
environmental laws and regulations, and will not place or permit to be placed any Hazardous
Materials on any of its properties in violation of applicable state and federal
environmental laws. In the event that the Borrower or any of the Guarantors should discover
any Hazardous Materials on any of its properties that could result in a breach of the
foregoing covenant, the Borrower or the Guarantors shall notify the Bank within three (3)
days after such discovery. The Borrower and Guarantors shall dispose of all material
amounts of Hazardous Materials that is generated only at facilities or with carriers that
maintain valid governmental permits under the Resource Conservation and Recovery Act, 42
U.S.C. §6901. In the event of any notice or filing of any procedure against the Borrower or
any of the Guarantors alleging a violation of any environmental law or regulation, the
Borrower and Guarantors shall give notice to the Bank within five (5) days after receiving
notice of such notice or filing.

12. The Borrower and Guarantors will provide such other information as the Bank may
reasonably request from time to time in its sole discretion.

B. Negative Covenants.

1. Neither the Borrower nor any of the Guarantors shall make any change in its present
accounting method or change its present fiscal year.

2. The Borrower and Guarantors will not make any substantial change in the nature of
their business as now conducted.

3. The Borrower and Guarantors will not sell, contract to sell, convey, assign,
transfer, mortgage, pledge, hypothecate, encumber, or in any way alienate their interest in
any of the properties covered by the Deeds of Trust, without the consent of the Bank.

V. EVENTS OF DEFAULT

The occurrence and continuing existence for ten (10) days following notification by ASB to the
Borrower of any one of the following shall constitute an Event of Default under this Agreement and
the Note:

A. Borrower or Guarantors fail to pay when due any principal, interest, or other amount
payable under this Agreement, or any promissory notes executed or guaranteed by the Borrower or
Guarantors in favor of the Bank;

B. Any representation or warranty made by the Borrower or Guarantors hereunder or in any
related collateral security or other documents entered into with the Bank proves to be at any time
false or incorrect in any significant respect;

C. The Borrower or Guarantors fail to observe or perform any covenant, obligation, agreement,
or other provision contained herein or in any other contract or instrument executed in connection
herewith;

D. Any default or defined Event of Default shall occur under any security agreement, deed of
trust, promissory note, loan agreement or other contract or instrument executed by the Borrower or
Guarantors pursuant to, or as required by, this Agreement;

E. Any final judgment or judgments for the payment of money is rendered against Borrower or
Guarantors and is not be satisfied or discharged at least thirty (30) days prior to the date on
which any of his assets could be lawfully sold to satisfy such judgment or judgments, unless
Borrower or Guarantors bring litigation to stay same; or

F. Borrower or Guarantors or any of their affiliated companies: (a) becomes insolvent, or
suffers or consents to, or applies for the appointment of a receiver, trustee, custodian or
liquidator for itself or any of its property, or generally fails to pay its debts as they become
due, or makes a general assignment for the benefit of creditors; or (b) files a voluntary petition
in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement with
creditors or any other relief under the Bankruptcy Reform Act, Title 11 of the United States Code,
as recodified from time to time (“Bankruptcy Code”), or as now or hereafter in effect, or any
involuntary petition or proceeding pursuant to said Bankruptcy Code or any other applicable state
or federal law relating to bankruptcy or reorganization or other relief for debtors is filed or
commenced against Borrower; or c) files any answer admitting the jurisdiction of the court and the
material allegations of any such involuntary petition; or (d) is adjudicated as bankrupt, under
said Bankruptcy Code or any other state or federal law relating to bankruptcy, reorganization, or
other relief for debtors.

VI. REMEDIES

If any Event of Default shall occur, any term hereof or of the Note to the contrary
notwithstanding, the entire outstanding principal balance then due under the Note, shall at the
Bank’s option become immediately due and payable. In addition, the obligation, if any, of the Bank
to permit further borrowings hereunder shall immediately cease and terminate and the Bank shall
have all rights, powers, and remedies available under this Agreement, the Note, or other contracts
or instruments executed in connection herewith, or accorded by law, including without limitation
the right to resort to any or all of the collateral and to exercise any or all of its rights,
powers, or remedies at any time and from time to time after the occurrence of an Event of Default.

ONCE AN EVENT OF DEFAULT HAS OCCURRED, ASB MAY PURSUE THE REMEDIES PROVIDED FOR IN THIS
AGREEMENT, THE NOTE, AND THE SECURITY INSTRUMENTS WITHOUT PRESENTMENT, DEMAND, PROTEST, NOTICE OF
ACCELERATION, NOTICE OF INTENT TO ACCELERATE, NOTICE OF PROTEST OR NOTICE OF DISHONOR, OR ANY OTHER
NOTICE OF ANY KIND, ALL OF WHICH ARE EXPRESSLY WAIVED BY BORROWER AND GUARANTORS.

Should Borrower or any of the Guarantors be in default of, or fail to comply with any covenant
contained in this Loan Agreement, and if Borrower or any of the Guarantors shall fail to cure such
default or fail to comply with such covenant, within ten (10) days after the receipt of written
notice of such default or failure to comply, then, Bank may at Bank’s option, increase the interest
rate provided for in the Note to reflect the increased monitoring by Bank and increased risk to
Bank as a result of Borrower’s or Guarantor’s non-compliance. Bank may increase the interest rate
an additional one percent for failure to comply with reporting requirements regarding financial
statement and other information as required by this Agreement, and an additional one percent for
Borrower’s or any Guarantor’s non-compliance with performance standards detailed in the financial
covenants contained in this Agreement. Nothing in this paragraph shall require or obligate Bank to
exercise this option to increase the interest rate on the Note in lieu of any other remedy
available to Bank, including that of acceleration of the Note. If the interest rate on the Note is
increased as provided for in this paragraph, and thereafter Borrower or Guarantors achieve
compliance with all of its reporting requirements and covenants contained in this Agreement, then
Bank, upon Borrower’s or Guarantors’ written request, will reinstate the interest rate provided for
in the Note.

All rights, powers, and remedies of the Bank in connection with this Agreement, the promissory
notes or any other contract or instrument on which the Borrower or Guarantors may at any time be
obligated to the Bank (or any holder thereof) are cumulative and not exclusive and will be in
addition to any other rights, powers, or remedies provided by law or equity, including without
limitation the right to set off any liability owing by the Bank to the Borrower or Guarantors
(including sums deposited in any deposit account of Borrower or Guarantors with the Bank, excluding
those deposit accounts held by Borrower or Guarantors as agent for any third party) against any
liability of the Borrower or Guarantors to the Bank.

VII. WAIVER

No delay, failure, or discontinuance by the Bank, or any holder of the promissory notes, in
exercising any right, power, or remedy under this Agreement, the Note or any other contract or
instrument on which the Borrower or Guarantors may at any time be obligated to the Bank (or any
holder thereof) shall affect or operate as waiver of such right, power or remedy. Any waiver,
permit, consent, or approval of any kind by the Bank (or any holder of the promissory notes), or of
any provisions or conditions of, or any breach or default under this Agreement, the Note, or any
other contract or instrument on which the Borrower or Guarantors may at any time be obligated, must
be in writing and shall be effective only to the extent set forth in such writing.

VIII. NOTICES

All notices, requests, and demands given to or made upon the respective parties must be in
writing and shall be deemed to have been given or made: (a) at the time of personal delivery
thereof, (b) or two days after any of the same are deposited in the U.S. Mail, first class and
postage prepaid, addressed as follows:

	 	 	 
	Borrower:
	 	Permian Legend Petroleum LP

3327 West Wadley Avenue, Suite 3, #267

Midland, Texas 79707

	Guarantors:
	 	Permian Legend Petroleum LLC

3327 West Wadley Avenue, Suite 3, #267

Midland, Texas 79707

	 	 	Mr. Ronnie L. Steinocher

2100 West Wadley Avenue, #21

Midland, Texas 79707

	 	 	Ms. Lisa P. Hamilton

3327 West Wadley Avenue, Suite 3, #267

Midland, Texas 79707

	ASB:
	 	American State Bank

Attention: Mike Marshall

620 North Grant Avenue

Odessa, Texas 79761

or other such address as any party may designate by written notice to all other parties.

IX. SUCCESSORS AND ASSIGNS

This Agreement shall be binding on and inure to the benefit of the heirs, executors,
administrators, legal representatives, successors, and assigns of the parties, provided, however,
that this Agreement may not be assigned by the Borrower without the prior written consent of the
Bank. The Bank reserves the right to sell, assign, transfer, negotiate, or grant participation in
all or any part of, or any interest in, the Bank’s rights and benefits under this Agreement, the
Note or any contracts or instruments relating thereto. In connection therewith, the Bank may
disclose all documents and information which the Bank now has or may hereafter acquire relating to
the loan or the promissory notes, the Borrower, his business, or any collateral required hereunder.

X. SEVERABILITY OF PROVISIONS

If any of the provisions of this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or any remaining provisions of this Agreement.

	XI.	 	VENUE AND JURISDICTION

Any suit, action or proceeding against the Borrower arising out of or relating to this
Agreement or any judgment entered by any court in respect thereof, may be brought or enforced in
the courts of the State of Texas, County of Ector, or in the United States District Court for the
Western District of Texas, as ASB in its sole discretion may elect, and Borrower hereby submit to
the nonexclusive jurisdiction of such courts for the purpose of any such suit, action or
proceeding. The Borrower hereby irrevocably consent to service of process in any suit, action or
proceeding in any of said courts by the mailing thereof by the Bank by registered or certified
mail, postage prepaid, to the Borrower, at the addresses set forth herein.

THE BORROWER AND GUARANTORS HEREBY IRREVOCABLY WAIVE ANY OBJECTIONS THAT THEY MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT BROUGHT IN ANY OF SAID COURTS AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.

FURTHER, THE BORROWER AND GUARANTORS HEREBY IRREVOCABLY WAIVE ANY RIGHT GRANTED BY STATUTE,
RULE OR COURT OR OTHERWISE TO HAVE SUCH SUIT, ACTION, PROCEEDING, OR ISSUE TRIED BY A JURY. THE
BORROWER AND GUARANTORS HAVE WAIVED THE RIGHT TO TRIAL BY JURY KNOWINGLY AND VOLUNTARILY, AND SUCH
WAIVER SHALL BE INTERPRETED TO ENCOMPASS INDIVIDUALLY AND COLLECTIVELY EACH INSTANCE AND EACH
INSTANCE AS TO WHICH THE RIGHT TO TRIAL BY JURY MIGHT OTHERWISE ACCRUE. THE BORROWER AND
GUARANTORS HEREBY AGREE THAT THE BANK MAY INCLUDE A COPY OF THIS PARAGRAPH IN ANY PLEADING OR OTHER
DOCUMENTATION IN ORDER TO EVIDENCE THE WAIVER PROVIDED HEREUNDER.

XII. MISCELLANEOUS

A. Texas Law Applicable. This Agreement, the Note, the Security Instruments, and any
contracts or instruments relating thereto, shall be governed by and construed in accordance with
the laws of the State of Texas, except to the extent that the Bank has greater rights or remedies
under federal law or the law of any jurisdiction in which the collateral properties are located, in
which case such choice of Texas law shall not be deemed to deprive the Bank of such rights and
remedies under federal law or the law of any jurisdiction in which the collateral properties are
located, in which case such choice of Texas law shall not be deemed to deprive the Bank of such
rights and remedies as may be available under such law.

B. Discretionary Reviews. American State Bank reserves the right to periodically
conduct a review of the Borrower’s ability to perform under the terms of the Note and to limit or
restrict future advances under the Note.

C. No Obligation to Renew.  Borrowers and Guarantors expressly recognize and
acknowledge that the Loan to be advanced by the Bank pursuant to this Agreement will mature on
October 15, 2008. Although certain of the covenants and agreements stated above refer to dates
following the final maturity date, such references should not be construed as the Bank’s agreement
to extend or renew the Loan.

C. Notice of Final Agreement. THIS AGREEMENT, THE NOTE, ANY CONTRACTS OR INSTRUMENTS
RELATING THERETO, REPRESENT THE ENTIRE AGREEMENT BETWEEN THE PARTIES, AND IT IS EXPRESSLY
UNDERSTOOD THAT ALL PRIOR CONVERSATIONS OR MEMORANDA BETWEEN THE PARTIES REGARDING THE TERMS OF
THIS AGREEMENT SHALL BE SUPERSEDED BY THIS AGREEMENT. ANY AMENDMENT, APPROVAL, OR WAIVER BY ASB OF
THE TERMS OF THIS AGREEMENT, THE NOTE AND ANY CONTRACTS OR INSTRUMENTS RELATING THERETO, MUST BE IN
WRITING OR CONFIRMED WRITING, AND SHALL BE EFFECTIVE ONLY TO THE EXTENT SPECIFICALLY SET FORTH IN
SUCH WRITING. THIS AGREEMENT, IN CONJUNCTION WITH THE NOTE AND ANY CONTRACTS OR INSTRUMENTS
RELATING THERETO, SHALL SERVE TO EVIDENCE THE TERMS OF THE ENTIRE AGREEMENT BETWEEN THE PARTIES.

Please acknowledge your acceptance of and agreement to the terms of this Agreement by dating
and executing where indicated.

Very truly yours,

AMERICAN STATE BANK

By:       /s/ W. Allen Pruitt—

W. Allen Pruitt

President — Midland

AGREED TO AND ACCEPTED AS OF THE

1st DAY OF AUGUST 2008

BORROWER:

PERMIAN LEGEND PETROLEUM LP, a Texas limited partnership

BY: PERMIAN LEGEND LLC, its general partner

By:       /s/ Lisa P. Hamilton—

Lisa P. Hamilton

Manager

By:       /s/ Ronnie L. Steinocher—

Ronnie L. Steinocher

Manager

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00169-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00169-of-00352.parquet"}]]