Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Park Place Energy Corp. - Exhibit 10.6

Alberta 

ENERGY 

OIL SANDS LEASE 

NO. 7406080084 

Term Commencement Date: August 10, 2006 

	Lessee: 	  
	 	 
	SCOTT LAND & LEASE LTD. 	100.0000000% 

- 2 - 

     OSLF 
29-06-06 

          WHEREAS
Her Majesty is the owner of the minerals in respect of which rights are granted
under this Lease; 

          THEREFORE,
subject to the terms and conditions contained in this Lease, Her Majesty grants
to the Lessee, insofar as Her Majesty has the right to grant the same, the
exclusive right to drill for, win, work and recover the Leased Substances within
the Location, together with the right to remove from the Location any Leased
Substances recovered, for the term of fifteen (15) years computed from the Term
Commencement Date and, subject to the Mines and Minerals Act, for so long
after the expiration of that term as this Lease is permitted to continue under
the Mines and Minerals Act, 

          RESERVING
AND PAYING to Her Majesty, 

	 	(a) 	
      in respect of each year during which this Lease remains
      in effect, a clear yearly rental computed at the rate prescribed by, and
      payable in accordance with, the Mines and Minerals Act,
  and

	 	 	 
	 	(b) 	
      the royalty on all Leased Substances recovered pursuant
      to this Lease, that is now or may hereafter from time to time be
      prescribed by, and that is payable in accordance with, the Mines and
      Minerals Act, such royalty to be calculated free of any deductions
      except those that are permitted under the Mines and Minerals
      Act.

	
      1(1) 
	
      In this Lease, a reference to the Mines and Minerals
      Act or to any other Act of the Legislature of Alberta referred to in
      section 2(2)(b) of this Lease shall be construed as a reference to
  

	 	(a) 	
      that Act, as amended from time to time,

	 	 	 
	 	(b) 	
      any replacement of all or part of that Act from time to
      time enacted by the Legislature, as amended from time to time,
  and

	 	 	 
	 	(c) 	
      any regulations, orders, directives or other subordinate
      legislation from time to time made under any enactment referred to in
      clause (a) or (b), as amended from time to
time.

	(2) 	
      In this Lease,

	 	 	 
		(a) 	
      "Her Majesty" means Her Majesty in right of Alberta, as
      represented by the Minister of Energy of the Province of
Alberta;

	 	 	 
		(b) 	
      "Leased Substances" means the minerals described under
      the heading "Description of Location and Leased Substances" in the
      Appendix to this Lease;

- 3 - 

OS LF 
29-06-06 

	 	(c) 	
      "Location" means the subsurface area or areas underlying
      the surface area of the Tract and described in the Appendix to this Lease
      under the heading "Description of Location and Leased
  Substances";

	 	 	 
	 	(d) 	
      "Term Commencement Date" means the date shown on the
      first page of this Lease as the Term Commencement Date;

	 	 	 
	 	(e) 	
      "Tract" means the tract or tracts of land described under
      the heading "Description of Location and Leased Substances" in the
      Appendix to this Lease;

	2. 	
      This Lease is granted upon the following
    conditions:

	(1) 	
      The Lessee shall pay to Her Majesty the rental and
      royalty reserved under this Lease.

	 	 	 
	(2) 	
      The Lessee shall comply with the provisions of

	 	 	 
		(a) 	
      the Mines and Minerals Act, and

	 	 	 
		(b) 	
      the Oil Sands Conservation Act or any other Acts
      of the Legislature of Alberta that prescribe, apply to or affect the
      rights and obligations of a lessee of oil sands rights that are the
      property of Her Majesty, or that relate to, apply to or affect the Lessee
      in the conduct of its operations or activities under this
  Lease.

	(3) 	
      The provisions of the Acts referred to in subsection (2)
      of this section are deemed to be incorporated into and to form part of
      this Lease.

	 	 
	(4) 	
      In the event of conflict between a provision of this
      Lease and a provision referred to in subsection (2) of this section, the
      latter provision prevails.

	 	 
	(5) 	
      The Lessee shall not claim or purport to exercise any
      rights, prerogatives, privileges or immunities that would otherwise exempt
      the Lessee from compliance with any of the provisions of the Mines and
      Minerals Act or of any other Act of the Legislature of Alberta
      referred to in subsection (2)(b) of this section.

	 	 
	(6) 	
      The Lessee shall keep Her Majesty indemnified
    against

	 	(a) 	
      all actions, claims and demands brought or made against
      Her Majesty by reason of anything done or omitted to be done, whether
      negligently or otherwise, by the Lessee or any other person in the
      exercise or purported exercise of the rights granted and duties imposed
      under this Lease, and

	 	 	 
	 	(b) 	
      all losses, damages, costs, charges and expenses that Her
      Majesty sustains or incurs in connection with any action, claim or demand
      referred to in clause (a).

OSLF 
29-06-06 

	(7) 	
      In the event that any Leased Substances obtained or
      produced from the Location are lost or cannot be accounted for due to or
      as a result of the wrongful act or omission, neglect, carelessness, wilful
      default or fraud of the Lessee or of any other person conducting
      operations or activities pursuant to or under the authority of this Lease,
      the Lessee shall compensate Her Majesty for the fair value as determined
      by Her Majesty of Her Majesty's royalty share of the quantity of the
      Leased Substances so lost or unaccounted for.

	 	 	 
	(8) 	
      The use in this Lease of the words "Lessee", "Lease",
      "Leased Substances" or "rental," or of any other words or
    expressions,

	 	 	 
		(a) 	
      does not create any implied covenant or implied liability
      on the part of Her Majesty, and

	 	 	 
		(b) 	
      does not create the relationship of landlord and tenant
      between Her Majesty and the Lessee for any purpose.

	 	 	 
	(9) 	
      This Lease is also subject to the special provisions, if
      any, contained in the Appendix to this Lease.

- 5 - 

APPENDIX 

TO 

15 YEAR PEACE RIVER OIL SANDS LEASE NO. 7406080084 

TERM COMMENCEMENT DATE: 

AUGUST 10, 2006 

AGGREGATE AREA: 

768 HECTARES 

DESCRIPTION OF LOCATION AND LEASED SUBSTANCES: 

5-22-078: 3;4;9 

OIL SANDS BELOW THE TOP OF THE PEACE RIVER FM AS 
DESIGNATED
IN DRRZD 40 
INTERVAL: 3 760.00 - 4 008.00 FEET 
KEY WELL:
00/07-09-076-08W6/0 
LOG TYPE: BOREHOLE COMPENSATED SONIC 

TO THE BASE OF THE BLUESKY-BULLHEAD 
AS DESIGNATED IN DRRZD
21 
INTERVAL: 2 754.00 - 3 043.00 FEET 
KEY WELL: 00/10-32-081-01W6/0

LOG TYPE: DUAL INDUCTION SPHERICALLY FOCUSED 

 

SPECIAL PROVISIONS: NILFiled by Automated Filing Services Inc. (604) 609-0244 - Park Place Energy Corp. - Exhibit 10.7

	BOUNTY DEVELOPMENTS LTD.
      	1250, 340 – 12 Ave. S.W. 
	  	Calgary, AB 
	  	T2R 1L5 
	  	Tel (403) 264-4994 
	  	Fax (403) 266-6031 
	  	pclark@bountydev.com
      

September 22, 2006 

	Damascus Energy Inc. 	Park Place Energy Inc. 
	22 Barclay Walk S.W., 	1220-666 Burrard St. 
	Calgary, Alberta T2P 4V9 	Vancouver, B.C. V6C 2X8 
	  	  
	Attention: Michael Vandale 	Attention: David Stadnyk

	RE: 	Seismic Option Agreement
    
	  	West Half of Section 13,
      Township 87, Range 7 W6M 
	  	Worsley Area, Alberta
  
	  	Bounty file: AM-209-003
  
	 	 

Bounty Developments Ltd. (“Bounty”) is the holder of an
undivided 100% Working Interest in the Title Documents covering the Farmout
Lands described in Schedule “A” and has agreed to option its interests in the
Farmout Lands to Damascus (“Damascus”) and Park Place Energy Inc. (“Park Place”)
on the following terms and conditions. 

	1. 	
      DEFINITIONS

	 	 	 
		
      Each capitalized term used in this Head Agreement will
      have the meaning given to it in the Farmout & Royalty Procedure, and,
      in addition:

	 	 	
       

		(a) 	
      “Contract Depth” means a depth of -1600 metres subsea or
      15 metres into the Precambrian, whichever first occurs;

	 	 	
       

		(b) 	
      “Farmee” means Damascus as to a 50% interest and Park
      Place as to a 50% interest;

	 	 	
       

		(c) 	
      “Farmor” means Bounty;

	 	 	
       

	 	(d)	
      “Title Documents” mean the title documents described as
      “Title Documents” in Schedule “A” and all renewals, extensions,
      continuations or documents of titles issued in substitution therefrom.
    

 

	 	(e) 	
      “Mutual Interest Lands” means Sections 1, 2, 11, 12, E13,
      14, S23 and S24 in 87-7 W6, and Sections 6, 7, and 18 in 87-6
  W6.

	2. 	
      SCHEDULES

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

	 	 	 
		(a) 	
      Schedule “A”, which describes the Title Documents, the
      Farmout Lands and the Encumbrances;

	 	 	 
		(b) 	
      Schedule “B”, which is the election sheet for the 1997
      CAPL Farmout & Royalty Procedure (the “Farmout and Royalty Procedure”)
      which, along with the elections, is incorporated by reference as fully as
      if it were attached hereto;

	 	 	 
		(c) 	
      Schedule “C”, which specifies the types of drilling
      information to be supplied by the Farmee to the Farmor pursuant to the
      Farmout & Royalty Procedure;

	 	 	 
		(d) 	
      Schedule”D”, which is the election sheet for the 1990
      CAPL Operating Procedure (the “Operating Procedure”) and the 1996 PASC
      Accounting Procedure (the “Accounting Procedure”) which, along with the
      elections, are incorporated by reference as fully as if they were attached
      hereto;

	 	 	 
		(e) 	
      Schedule “E”, which is a copy of the Gross Overriding
      Royalty Agreements with Berry Consultants Inc.;

	 	 	 
		(f) 	
      Schedule “F”, which is a copy of the Gross Overriding
      Royalty Agreements with Tlell Developments
Inc.

	3. 	
      SEISMIC PROGRAM

	a) 	
      The parties hereby confirm that, pursuant to a prior
      agreement but as part of the Farmee’s consideration under this Agreement,
      that on or before November 1, 2006, Farmee, at its sole cost and risk,
      commenced (and has now completed) shooting a minimum 10 square kilometres
      three dimensional seismic program over the Farmout Lands which shall be
      sufficient to fully evaluate the Farmout Lands (the “Seismic Program”).
      which shall be reasonable under the circumstances.

	 	 
	b) 	
      From the Seismic Program, Farmee shall provide Farmor, at
      no cost and as soon as available, with a copy of: all field data including
      survey information; processed data, including stacked data; interpreted
      data; and a copy of shot point base maps and bin overlay maps. Farmor
      shall hold such data confidential and for its sole use and
  benefit.

	 	 
	c) 	
      Farmee shall retain 100% of the trading rights and sole
      ownership of the Seismic Program.

2

4.        ELECTION
TO DRILL 

Providing that Farmee has fulfilled its obligations and is not
in default under clause 3 of this Agreement, on or before November 1, 2006,
Farmee shall have the right to elect as follows: 

	a) 	
      to drill the Test Well on the Farmout Lands pursuant to
      clause 5 hereof; or

	 	 
	b) 	
      terminate this agreement and therefore relinquish any
      right to earn an interest in the Farmout Lands.

5.       
TEST WELL 

	a) 	
      As between the parties comprising Farmee, all operations
      with respect to the Test Well shall be subject to the provisions of the
      Operating Procedure as amended by the Head Agreement. Damascus shall be
      appointed initial Operator.

	 	 	 	 
		
      If the Farmee elects to drill the Test Well pursuant to
      clause 4, it shall spud the Test Well at a mutually agreeable location on
      the Farmout Lands within 90 days of making such election and shall then
      diligently and continuously drill the Test Well to Contract Depth at its
      sole cost. In the event surface access to the drill site cannot be
      reasonably obtained by the required date because of surface conditions,
      weather conditions, rig availability or regulatory approval, Farmee shall,
      before the required date, advise Farmor in writing, of the reasons why
      access cannot be obtained. Farmor shall, thereupon, grant an extension to
      the commencement date which shall be reasonable under the circumstances.
      If production of petroleum substances in paying quantities is indicated,
      Farmee shall equip the Test Well and thereafter use its best efforts to
      produce and dispose of the said substances.

	 	 	 	 
		b) 	
      Farmee shall be solely responsible for the costs to
      drill, complete, evaluate, equip and tie in or abandon the Test
    Well.

	 	 	 	 
		c) 	
      Subject to Article 3.00 of the Farmout & Royalty
      Procedure, the Farmee will earn the following interests in the Farmout
      Lands after complying with the provisions of this clause:

	 	 	 	 
			(i) 	
      a 100% Working Interest in the Farmout Lands, subject to
      the Farmee’s Overriding Royalty reserved in Article 5.00 of the Farmout
      and Royalty Procedure which overriding royalty shall be convertible to a
      45% Working Interest after Payout.

	 	 	 	 
		d) 	
      50% of the cost of the Seismic Program shall be added to
      the Payout account for the Test Well.

3

	6. 	
      OPERATING PROCEDURE

	 	 	 
		
      The Operating Procedure and Accounting Procedure shall
      govern joint operations on the Farmout Lands earned under this
      agreement.

	 	 	 
	7. 	
      AREA OF MUTUAL INTEREST

	 	 	 
		a) 	
      Article 8.00 of the Farmout and Royalty Procedure will be
      in effect from the Effective Date until July 31, 2007. Subject to Article
      8.00, the Parties will have the right to participate in an acquisition of
      Mutual Interest Lands in the following percentages:

	 	 	 
			
      Farmor-50%

	 	 	 
			
      Farmee-50%.

		
      The Encumbrances will apply to the Mutual Interest Lands
      and shall be paid by the Parties in proportion to their participating
      interest.

	 	 
	8. 	
      AMENDMENT TO THE LIMITATIONS ACT

	 	 
		
      The two year period for seeking a remedial order under
      section 3(1)(a) of the Limitations Act, s.a. 1996 c. L-15.1, 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 years after the
      time this agreement permitted that audit to be performed ; or

	 	 	 
	 	b. 	
      for all other claims, four
years.

	9. 	
      ADDRESSES FOR NOTICES

	 	 
		
      The parties’ Addresses for notices are:

	 	 
		
      Bounty Developments Ltd.

		
      1250, 340 – 12th Avenue S.W. 
Calgary, AB
      T2R 1L5

	 	 
		
      Attention: Jon P. Clark

	 	 
		
      Damascus Energy Inc.

		
      22 Barclay Walk S.W., 
Calgary, Alberta T2P
  4V9

	 	 
		
      Attention: Michael Vandale

	 	 
		
      Park Place Energy Inc.

		
      1220-666 Burrard St.

4

		
      Vancouver, BC. V6C 2X8

	 	 
		
      Attention: David Stadnyk

	 	 
	10. 	
      MISCELLANEOUS

	 	a) 	
      Each of the parties represents and warrants that it now
      has or is entitled to have good right, full power and absolute authority
      to enter into this Agreement.

	 	 	 
	 	b) 	
      In the event of a conflict between any term or condition
      of this Head Agreement and any Schedule attached hereto, the term or
      condition of this Head Agreement shall prevail.

	 	 	 
	 	c) 	
      Any reference in this Head Agreement to “hereunder”,
      “herein” and “hereof” refer to the provision of this Head Agreement and
      unless otherwise stated, any reference to a clause, subclause, or Schedule
      refers to the clauses, subclauses or Schedule of this Head
    Agreement.

	 	 	 
	 	d) 	
      The following clauses of the 1990 CAPL Operating
      Procedure are incorporated into and apply mutatis mutandis to this Head
      Agreement:

	 	102 	HEADINGS 
	 	103(b) 	REFERENCES 
	 	2101 	PARTIES TO SUPPLY 
	 	2301 	WAIVER OF PARTITION OF SALE

	 	2601 	LIMITATION ON RIGHT OF
      ACQUISITION 
	 	2801 	SUPERSEDES PREVIOUS AGREEMENTS
  
	 	2802 	TIME OF ESSENCE 
	 	2803 	BINDS SUCCESSORS AND ASSIGNS
  
	 	2804 	LAWS OF JURISDICTION TO APPLY
  

11.       
COUNTERPART EXECUTION 

This Agreement may be executed in counterpart. All of those
executed counterpart pages when taken together will constitute the Agreement.

If this reflects your understanding of the terms and conditions
agreed upon respecting this Agreement, please sign and return one counterpart
execution page to complete our copy of this Agreement. 

Yours very truly, 

BOUNTY DEVELOPMENTS LTD. 

/s/ Jon P. Clark 

Jon P. Clark 
Exploration Manager 

5

Agreed to this 5 day of Oct., 2006 

 

DAMASCUS ENERGY INC. 

Per: /s/ Michael Vandale 

PARK PLACE ENERGY INC. 

Per: /s/ David Stadnyk 

6

Schedule “A” Attached to
an                      
Agreement dated effective the 29th 
day of May, 2006 between Bounty
Developments Ltd., Damascus Energy Inc. and 
Park Place Energy Inc. 

	Farmout Lands 	Title Documents 	Encumbrances 
	  	  	  
	Twp. 87, Rge. 7 W6 M: 	Alberta Crown PNG Lease 	Crown Royalty 
	West Half of Section 13 	No.0506020313 	  
	PNG 	  	1% Gross 
	  	  	Overriding Royalty 
	  	  	to Berry 
	  	  	Consultants Inc. 
	  	  	  
	  	  	1% Gross 
	  	  	Overriding Royalty 
	  	  	to Tlell 
	  	  	Developments Inc. 

7

Schedule “B” Attached to an Agreement dated effective the
29th day of 
May, 2006 between Bounty Developments Ltd., Damascus Energy Inc.
and 
Park Place Energy Inc. 

1997 CAPL FARMOUT & ROYALTY PROCEDURE ELECTIONS AND
AMENDMENTS 

	Subclause 1.01 (f) 	- 	Effective
      Date                   
       -                      
      May 29, 2006 
	  		 
	Subclause 1.01 (t) 	- 	Payout
      -                   
      Alternate                    
      *A 
	  	  	(if Article 6.00 applies)
  

*50% of the cost of the Seismic Program shall be added to the
Payout account for the Test Well. 

	Subclause 1.01
      (bb)               
      - 	Delete the following from the definition:

	 	 
		“which area will be determined as of the
      drilling rig release date of that Earning Well” 
	 	 
	Clause 1.02 - 	Incorporation of Provisions from 1990 CAPL
      Operating Procedure 
	 	(i) Insurance (311) Alternate B 
	 	 
	Article 4.00 (Option Wells) 	will_____ /will not X apply. 
	 	 
	Article 5.00 (Overriding Royalty) 	                   
      will X /will not _______apply. 

Subclause 5.01A, Quantification of Overriding Royalty
(if applicable). 

	 	(i) 	
      Crude oil (a) - Alternate 2 
If Alternate 1 applies,
      _n/a__ % 
If Alternate 2 applies, 1/23.8365, min 5%, max
    15%

	 	 	 
	 	(ii) 	
      Other (b) - Alternate 1 
If Alternate 1
      applies, 15 % 
If Alternate 2 applies, n/a % in (i) and
      n/a % in (ii)

Subclause 5.04B, Permitted Deductions (if applicable).
Alternate 1 only

Article 6.00 (Conversion of Overriding Royalty) will X
/will not_____apply. 
Conversion to 45% of Working Interest in Subclause
6.04A

Article 8.00 (Area of Mutual Interest) will X apply.

Article 11.02 (Reimbursement of Land Maintenance Costs)

will _____/will not __X__ apply. If applies, reimbursement of
$___n/a______ 

8

Schedule “C” Attached to an Agreement dated effective the
29th day of 
May, 2006 between Bounty Developments Ltd., Damascus Energy Inc.
and 
Park Place Energy Inc. 

BOUNTY DEVELOPMENTS LTD. 
WELL REQUIREMENT SHEET 

	PRIOR TO SPUD 	COPIES 	 	AFTER DRILLING 	COPIES 
	  	  	 	  	  
	Survey Plat 	1 		Digital Logs (Sonic log – LAS
      Format) 	1 
	  	  	 	Field Prints Logs 	1 
	Appl. for Licence 	1 	 	Final Prints Logs 	1 
	Well Licence 	1 	 	Final Analyses 	1 
	AFE or Well Cost Est. 	1 	 	Core 	1 
	Prognosis 	1 	 	DST’s 	1 
	  	  	 	Oil, Gas or Water 	1 

	DURING DRILLING 	  	 	DRILLING REPORT 	  
	  	  	 	  	  
	Daily drilling report 	1 	 	Casing details 	1 
	Geologic report 	1 	 	Cored intervals & recoveries 	1 
	  	  	 	Comp/Abandon data 	1 
	  	  	 	Formation tops 	1 
	  	  	 	Sample/core desc. 	1 

	NOTICES 	  	 	COMPLETION REPORT 	  
	  	  	 	  	  
	24 hr comp/abandon 	1 	 	Daily 	1 
	Notice of intention to: 	  	 	Production tests 	1 
	           
             Core 	1 	 	Production data 	1 
	               
         Test 	1 	 	New well reports 	1 
	  	  	 	Samples: Access to Operator’s
      set 	  

SPECIAL REQUIREMENTS BEFORE
ABANDONMENT:                  
See DST Charts 

Mail to Bounty at address for service 

TELEPHONE: 

	Daily drilling, geological and completion reports to: 	Fax: 	266-6031 
	Weekend or night reports to Jon Clark 	Home ph: 	243-5214 
	  	e-mail: 	  
	  	jonclark@bountydev.com

9

Schedule “D” Attached
  to an Agreement dated effective the 29th day of 

  May, 2006 between Bounty Developments Ltd., Damascus Energy Inc. and 

  Park Place Energy Inc. 

CAPL OPERATING PROCEDURE - 1990

	Clause 311 	Insurance Election: A 
	Clause 604 	Marketing Fee: deleted 
	Clause 903 	Casing Point Election: A 
	Clause 1007 	Penalty for Independent Operations: 
	  	1. Development Wells: 300% 
	  	2. Exploratory Wells: 500% 
	Clause 1010 	Exceptions to Clause 1007: (iv) 180 days 
	Clause 2401 	Disposition of Interests: A 
	Clause 2404 	Recognition Upon Assignment: 
	  	CAPL Assignment Procedure to take precedence
  

	Clause 302. Overhead Rates: 	(a) 		Exploration Project: n/a percent OR
  
	  	  	1. 	5% ; $50,000. 
	  	  	2. 	3% ; $100,000. 
	  	  	3. 	1% 
	  	(b) 		Drilling of a Well: n/a percent OR

	  	  	1. 	3%; $ 50,000. 
	  	  	2. 	2%; $l00,000. 
	  	  	3. 	1% 
	  	(c) 		Initial Construction Project: n/a
      percent OR 
	  	  	1. 	3%; $ 50,000. 
	  	  	2. 	2%; $100,000. 
	  	  	3. 	1% 
	  	(d) 		Construction Project: n/a percent OR
  
	  	  	1. 	5% of the first $ 50,000. 
	  	  	2. 	3% of the next $100,000. 
	  	  	3. 	1% 
	  	(e) 		Operation and Maintenance: 
	  	  	1. 	n/a ; 
	  	  	2. 	$250. per Producing well per month; or 
	  	  	3. 	n/a 
	  		 	 
	  	  	  	Subclause 302(e)(2) and 302(e)(3) hereof shall not
    
	Clause 406. Dispositions 		 	$10,000.00 

10

Schedule “E” Attached to an Agreement dated effective the
29th day of 
May, 2006 between Bounty Developments Ltd., Damascus Energy Inc.
and 
Park Place Energy Inc. 

OVERRIDING ROYALTY AGREEMENT 

THIS AGREEMENT made as of the 1st day of January,
2006 

BETWEEN: 

  
    
      
        BERRY CONSULTANTS INC. a body corporate, having
          an office at the City of Calgary in the Province of Alberta (hereinafter
          referred to as the "Royalty Owner") 

      

    

  

OF THE FIRST PART 

- and - 

  
    
      
        BOUNTY DEVELOPMENTS LTD., a body corporate,
          having an office at the City of Calgary in the Province of Alberta (hereinafter
          referred to as the "Grantor") 

      

    

  

OF THE SECOND PART 

          WHEREAS
the Grantor holds an interest in the Royalty Lands and Leases as hereinafter
defined; and WHEREAS, in consideration of good and valuable consideration
received, the Grantor has agreed to grant and to pay to the Royalty Owner an
Overriding Royalty effective as of the date hereof, the terms and conditions of
which are provided for in this agreement. 

          NOW
THEREFORE this Agreement witnesseth that in consideration of the mutual
covenants and agreements set forth and contained herein, the parties agree as
follows: 

1.      DEFINITIONS 

In this Agreement, including this clause, unless the context
otherwise requires: 

	(a) 	
      "Condensate" means a mixture of mainly pentanes and
      heavier hydrocarbons that may be contaminated with sulphur compounds, that
      is recovered or is recoverable at a Well from an underground reservoir and
      that may be gaseous in its virgin reservoir state but is liquid at the
      condition under which its volume is measured or
  estimated;

11

	(b) 	
      "Crude Oil" means a mixture mainly of pentanes and
      heavier hydrocarbons that may be contaminated with sulphur compounds, that
      is recovered or is recoverable at a Well from an underground reservoir and
      that is liquid at the conditions under which its volume is measured or
      estimated, and includes all other hydrocarbon mixtures so recovered or
      recoverable except natural gas or Condensate;

	(c) 	
      "Current Market Value" means the price at which Petroleum
      Substances are sold by the Grantor calculated at the Royalty Determination
      Point, which price is not unreasonable having regard to market conditions
      applicable to similar production in arm's length transactions at the time
      of such disposition including, without restricting the generality of the
      foregoing, such factors as the volumes available, the kind and quality of
      Petroleum Substances to be sold, the effective date of the sale, the term
      of the sale agreement, the point of sale of the Petroleum Substances and
      the type of transportation service available for the delivery of the
      Petroleum Substances to be sold;

	 	 
	(d) 	
      "Leases" means the respective documents of title and any
      extension or renewal of such documents pursuant to which the Grantor holds
      an interest in the Royalty Lands;

	 	 
	(e) 	
      "Overriding Royalty" means the overriding royalty granted
      pursuant to Clause 2 hereof;

	 	 
	(f) 	
      "Petroleum Substances" means Crude Oil, Condensate,
      natural gas and related hydrocarbons and all other substances produced in
      association therewith but only to the extent that the same are granted by
      the Leases;

	 	 
	(g) 	
      "Raw Gas" has the meaning prescribed by the
      Regulations;

	 	 
	(h) 	
      "Regulations" means all statutes, laws, rules, orders,
      regulations or directives in effect from time to time and made by any
      governmental authority having jurisdiction over the Royalty Lands and the
      operations to be conducted thereon;

	 	 
	(i) 	
      "Royalty Determination Point" means the first point of
      measurement downstream from the wellhead after the initial treatment of
      the produced substances for the separation and removal of basic sediment
      and water from the Petroleum Substances;

	 	 
	(j) 	
      "Royalty Lands" means the specified undivided working
      interest(s) in the lands set forth in Schedule "A";

	 	 
	(k) 	
      "Spacing Unit" means the area allocated to a Well (or the
      area which would be allocated to a well, but for a plan of unitization)
      pursuant to the Regulations for the purpose of producing Petroleum
      Substances; and

	 	 
	(l) 	
      "Well" means any well on the Royalty Lands or on lands
      pooled with the Royalty Lands.

12

2.      GRANT OF OVERRIDING
ROYALTY 

Grantor hereby grants to the Royalty Owner an interest in
respect of the Petroleum Substances within, upon or under the Royalty Lands
equal to one (1%) percent of the gross monthly production produced from the
Royalty Lands. 

3.      QUANTIFICATION OF
OVERRIDING ROYALTY 

If Royalty Owner does not take possession of and separately
dispose of its share of Petroleum Substances, the Overriding Royalty shall be
quantified and paid on the gross proceeds of the sale of such Petroleum
Substances without any deductions, except the following, namely: 

	(a) 	
      with respect to Crude Oil and Condensate, a proportionate
      share of the actual costs of transportation from the Royalty Determination
      Point to market connection;

	 	 
	(b) 	
      with respect to Petroleum Substances other than Crude Oil
      and Condensate, a proportionate share of the cost of transportation,
      gathering and processing, providing that such costs are no greater than
      those allowed from time to time by the Crown in the right of the Province
      of Alberta in calculating its royalty.

4.      OVERRIDING ROYALTY
TAKEN IN KIND 

	(a) 	
      The Royalty Owner shall have the right to take in kind
      the Royalty Owner's share of Petroleum Substances. Such right may be
      exercised separately with respect to Condensate, Crude Oil, Raw Gas, and
      any other individual Petroleum Substance. In the case of Crude Oil and
      Condensate, such right when exercised shall be done on a minimum of thirty
      (30) days notice to the Grantor. In the case of all other Petroleum
      Substances such right when exercised shall be done on a minimum of six (6)
      months notice to the Grantor. If the Royalty Owner, however, signifies in
      writing its consent to the sale of any of the Royalty Owner's share of
      Petroleum Substances under a contract made by the Grantor providing for a
      minimum term in excess of the said respective notice periods, the Royalty
      Owner's right to take in kind any Petroleum Substances subject to such
      contract shall be suspended during the term of such contract. The Royalty
      Owner may cease to take in kind any Petroleum Substances upon giving the
      Grantor the same minimum notice as provided above for the Royalty Owner to
      take such Petroleum Substances in kind as aforesaid. The right to take in
      kind or to cease to take in kind may be exercised from time to time
      subject only to the foregoing provisions of this Subclause.

	 	 
	(b) 	
      When the Royalty Owner is taking in kind the Royalty
      Owner's share of any Petroleum Substances, the Grantor shall at no cost to
      the Royalty Owner remove basic sediment and water therefrom in accordance
      with good oilfield practice, and:

13

	 	(i)	
      in respect to Crude Oil and Condensate: the Grantor shall
      deliver the Royalty Owner's share to the Royalty Owner, or its nominee, at
      the tank outlets, or comparable delivery point, in accordance with usual
      and customary pipeline and shipping practice, free and clear of all
      charges whatsoever except to the extent that the Royalty Determination
      Point is an earlier point in which case the costs of moving product from
      the Royalty Determination Point to the delivery point will be deductible
      by the Grantor from the Overriding Royalty. The Royalty Owner shall have
      the right to use free of charge a share of the Grantor's lease tankage and
      storage facilities to store a maximum of ten (10) days accumulation of the
      Royalty Owner's share of Crude Oil and Condensate; and

	 	 	 
	 	(ii) 	
      in respect to Raw Gas: the Grantor shall deliver the
      Royalty Owner's share to the Royalty Owner, or its nominee, at the Royalty
      Determination Point of the relevant well, provided that to the extent the
      Royalty Owner so requests on reasonable notice to the Grantor and the
      Grantor can reasonably comply with such request, the Grantor shall gather,
      compress, transport, treat and process such share of Raw Gas along with
      the Grantor's share of Raw Gas from the applicable well or wells and
      deliver to the Royalty Owner at their relevant plant outlet, the Royalty
      Owner's Overriding Royalty share of marketable gas and other Petroleum
      Substances obtained from such share of Raw Gas, in which event, the
      Royalty Owner shall be responsible for:

	 	A. 	
      its proportionate share of the costs of gathering,
      compressing, transporting, treating and processing such Raw Gas where the
      Grantor or an Affiliate thereof does not own such facilities; or

	 	 	 
	 	B. 	
      where the Grantor or an Affiliate thereof owns such
      facilities, such fee as may be agreed upon by the Grantor and the Royalty
      Owner for the use of such facilities to make marketable the Royalty
      Owner's Overriding Royalty share of Raw Gas.

5.      CONDUCT OF
OPERATIONS 

	(a) 	
      Grantor shall be entitled to use a proportionate share of
      the Royalty Owner's share of Petroleum Substances as may be reasonably
      necessary for its drilling and production operations with respect to the
      Royalty Lands, excluding Petroleum Substances used for tertiary recovery
      operations. Grantor shall not be liable to Royalty Owner for Petroleum
      Substances which are unavoidably lost. Petroleum Substances so used or
      lost shall be excluded when quantifying the Overriding
  Royalty.

14

	(b) 	
      The Grantor shall have the right to commingle Petroleum
      Substances produced from the Royalty Lands with Petroleum Substances
      produced from other lands, provided reasonable methods are used to
      determine the proper measurement of production of Petroleum Substances
      from the Royalty Lands.

	 	 
	(c) 	
      Nothing contained in this Agreement shall be a deemed or
      implied covenant by the Grantor to develop the Royalty Lands.

	 	 
	(d) 	
      The Grantor shall carry on (or cause to be carried on)
      all operations on the Royalty Lands diligently and in a good and
      workmanlike manner consistent with good oilfield
  practice.

6.      MAINTENANCE OF LEASES

Grantor shall comply with all the covenants and conditions
contained in the Leases insofar as they relate to the Royalty Lands and shall do
all things necessary to maintain the Leases in full force and effect during the
term of this Agreement including, without limitation, timely payment of all
rentals, all renewal and extension fees, all taxes, all payments in lieu of
actual production and royalties due or becoming due in respect of the Royalty
Lands and the Leases. 

7.      POOLING 

The Grantor shall have the authority to pool the Petroleum
Substances in a zone underlying all or a portion of the Royalty Lands to the
extent required to form a Spacing Unit in such zone, but only if such pooling
allocates to that portion of the Royalty Lands included in the Spacing Unit that
proportion of the total production of Petroleum Substances from the Spacing Unit
which the surface area of that portion of the Royalty Lands placed in the
Spacing Unit bears to the total surface area of the Spacing Unit. The Grantor
shall thereafter give written notice to the Royalty Owner describing the extent
to which the Royalty Lands are being pooled and describing the Spacing Unit with
respect to which they are so pooled. 

8.      UNITIZATION 

The Grantor shall not include the Royalty Lands or any part or
parts thereof in a Unit Agreement or a Unit Operating Agreement for the unitized
development and/or operation thereof with other lands without the consent of the
Royalty Owner, which shall not be unreasonably withheld. Upon any such
unitization, the Overriding Royalty shall be quantified on the basis of the
production allocated to each Spacing Unit on the Royalty Lands under the plan of
unitization and not upon the basis of actual production from the Royalty Lands.
Further, each Spacing Unit for which production is allocated shall be deemed to
have on Well thereon, regardless of the actual number of Wells. 

15

9.      BOOKS AND RECORDS

	(a) 	
      The Grantor shall keep true and current books, records
      and accounts showing the quantity of Petroleum Substances produced from or
      allocated to the Royalty Lands and the sales and disposition made thereof
      from time to time. The books, records, vouchers and accounts maintained by
      the Grantor shall be open to inspection at all reasonable times during
      business hours by any officer, agent or employee appointed or authorized
      by the Royalty Owner, in writing, to examine the same. All information
      obtained by the Royalty Owner pursuant to this clause shall be treated as
      confidential and shall not be disclosed to third persons without the prior
      written consent of the Grantor.

	 	 
	(b) 	
      By the last day of each month, beginning with the first
      month following the month in which production of Petroleum Substances from
      the Royalty Lands is obtained after the date hereof, Grantor shall submit
      to Royalty Owner a statement showing the quantity and kind of Petroleum
      Substances produced, deemed to be produced or allocated to, saved and sold
      from or used off the Royalty Lands in the immediately preceding calendar
      month, together with a quantification of Royalty Owner's share of
      Petroleum Substances for such immediately preceding calendar month. When
      Royalty Owner does not take and separately dispose of its share of
      Petroleum Substances, the said statement shall also include the sale price
      for such Petroleum Substances and the gross proceeds received therefrom,
      accompanied by a cheque payable to Royalty Owner for its share of such
      proceeds. A copy of Grantor's governmental production statement for the
      month for which the Overriding Royalty is quantified as aforesaid and
      also, with respect to Crown Leases, a copy of the government royalty
      statement with respect to the Leases, shall accompany each royalty
      statement to Royalty Owner. Any information contained in such governmental
      production statement or royalty statement need not be repeated in the
      statement to Royalty Owner.

	 	 
	(c) 	
      Royalty Owner, upon notice to Grantor, shall have the
      right to audit Grantor's accounts and records for any given calendar year,
      insofar as they relate to any matter or item relating to this Agreement
      bearing on the Overriding Royalty, within the twenty-four (24) month
      period following the end of that calendar year. any payment made or
      statement rendered by Grantor hereunder which is not disputed by Royalty
      Owner on or before the last day of the twenty-sixth (26th) month following
      the end of the calendar year shall be deemed to be
  correct.

10.      ASSIGNMENT BY GRANTOR

The Grantor may assign any legal or equitable interest in this
Agreement, the Royalty Lands, the Leases or any portion or portions thereof and
in the event of such assignment, the Grantor shall continue to be bound by all
of the conditions and provisions of this Agreement as if there had been no
assignment until such 16

time as the Royalty Owner shall have been served with a written
undertaking by the assignee (or assignees) directly enforceable by the Royalty
Owner, to perform and be bound thereafter by all of the terms and provisions of
this Agreement to the same extent and degree with respect to the interest which
has been assigned to it, as it would have been if such assignee (or assignees)
had been a party to this Agreement instead of the Grantor. 

11.      ASSIGNMENT BY ROYALTY
OWNER 

The Royalty Owner may at any time assign its interest in the
Overriding Royalty upon notice thereof to the Grantor, provided that if at any
time the Overriding Royalty should become owned by more than one party, the
Grantor shall have the right to require the assignees of the Overriding Royalty
to appoint in writing an agent to represent all of the assignees of the
Overriding Royalty and to receive all statements and payments (if any) of the
Overriding Royalty. If the assignees of the Overriding Royalty fail to appoint
an agent hereunder within thirty (30) days of any request to do so by Grantor,
Grantor may withhold the Overriding Royalty until such time as an agent is
appointed. 

12.      ROYALTY OWNER'S LIEN

	(a) 	
      The Royalty Owner shall be entitled to and shall have a
      first and paramount lien upon the Grantor's share of all Petroleum
      Substances from time to time produced from the Royalty Lands to secure the
      payment of the Overriding Royalty. Such lien shall not operate to release
      the Grantor from personal liability for monies due to the Royalty Owner.
      Such lien shall not attach to the Grantor's share of Petroleum Substances
      sold or otherwise disposed of from the Royalty Lands, but immediately upon
      default occurring in payment by the Grantor of monies payable to the
      Royalty Owner such lien shall operate as an assignment to the Royalty
      Owner of the consideration thereafter payable to the Royalty Owner for the
      Petroleum Substances sold, up to the amount owed to the Royalty Owner and
      not so paid by the Grantor.

	 	 
	(b) 	
      Service of a copy of this agreement upon any purchaser of
      Petroleum Substances together with written notice from the Royalty Owner
      shall constitute written authorization on the part of the Grantor for such
      purchaser to pay the Royalty Owner the proceeds from any sale or sales of
      the Grantor's share of Petroleum Substances up to the amount owed to the
      Royalty Owner by the Grantor, and such purchaser is authorized to rely
      solely upon the statement of the Royalty Owner as to the amount owed to
      the Royalty Owner by the Grantor.

13.      NOTICES 

	(a) 	
      Whether or not so stipulated herein, delivery of all
      notices and communications (hereinafter called "notices") required or
      permitted hereunder shall be in writing. Notices may be
  given:

17

	 	(i) 	
      personally, by delivering the notice to the party on whom
      it is to be served at that Party's address for service, which notice shall
      be deemed received by the addressee when actually delivered as aforesaid
      if such delivery is during normal business hours provided that if a notice
      is not delivered during the addressee's normal business hours, such notice
      shall be deemed to have been received by such party at the commencement of
      the next ensuing business day following the date of delivery; or

	 	 	 
	 	(ii) 	
      by facsimile (or by any other like method by which a
      written or recorded message may be sent) directed to the party on whom it
      is to be served at that party's address for service, which notice shall be
      deemed received by the respective addressees thereof: (i) when actually
      received by it, if received within normal business hours; or (ii) at the
      commencement of the next ensuing business day following transmission
      thereof, if such notice is not received during such normal business hours;
      or

	 	 	 
	 	(iii) 	
      by mailing them first class mail (air mail if to or from
      a location outside Canada) double registered post, postage prepaid,
      directed to the party on whom it is to be served, at that party's address
      for service, which notice 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)
      following the mailing thereof; provided that, if postal service is
      interrupted or operating with unusual or imminent delay, notice shall not
      be served by such means during such interruption or period of
  delay.

	(b) 	
      Where, in this Agreement, a time period is established
      within which a party must respond, elect or otherwise communicate with
      respect to a notice so received the time shall commence to run when the
      notice is deemed to be received as hereinbefore provided. Any time period
      which expires on a Saturday, Sunday or statutory holiday shall be extended
      to expire on the next normal business day.

	 	 
	(c) 	
      The address of each of the respective parties hereto
      shall be as follows:

Bounty Developments Ltd. 
1250, 340
- 12 Avenue S.W. 
Calgary, Alberta 
T2R 1L5 

Berry Consultants Inc. 
1250, 340 –
12th Avenue S.W. 
Calgary, Alberta 
T2R 1L5 

18

	(d) 	
      Any party may change its address for service by notice to
      the other parties.

14.      TERM 

This Agreement shall remain in force and effect so long as the
Grantor or any successor in interest retains an interest in the Royalty Lands.

15.      GENERAL 

	 	(a) 	
      The parties will from time to time and at all times
      hereafter, without further consideration, do such further acts and deliver
      all such further assurances, deeds and documents as shall reasonably be
      required in order to fully perform and carry out the terms of this
      Agreement.

	 	 	 
	 	(b) 	
      This Agreement constitutes the entire agreement between
      the parties with respect to the subject matter of this Agreement and
      supersedes all prior contracts, agreements and understandings between the
      parties in this regard. No modification or alteration of this Agreement
      shall be binding unless executed in writing by these parties. There are no
      representations, warranties, collateral agreements or conditions affecting
      this transaction other than as are expressed or referred to herein in
      writing.

	 	 	 
	 	(c) 	
      The terms and conditions of this Agreement shall be
      binding upon and shall enure to the benefit of the parties hereto and
      their respective successors and assigns.

	 	 	 
	 	(d) 	
      Time is of the essence of this Agreement.

	 	 	 
	 	(e) 	
      The headings contained in this Agreement are intended for
      convenience of reference only and shall form no part of this
    Agreement.

	 	 	 
	 	(f) 	
      The words herein contained which impart the singular
      number or the masculine gender shall be read and construed as applying to
      the plural and each and every corporate, male or female party thereto and
      to its and their heirs, executors, administrators, successors and assigns,
      as the case or context requires.

	 	 	 
	 	(g) 	
      This Agreement shall be governed by and interpreted in
      accordance with the laws of the Province of Alberta. The parties hereby
      irrevocably attorn to the jurisdiction of the Courts of the Province of
      Alberta for the determination of all matters arising hereunder.

	 	 	 
	 	(h) 	
      The Schedules attached to this Agreement are incorporated
      by reference as fully as though contained in the body
  hereof.

19

Wherever any term or condition,
expressed or implied, of such Schedules conflicts or is at variance with any
terms or conditions of this Agreement, such term or condition of this Agreement
shall prevail. 

IN WITNESS WHEREOF the parties have executed this Agreement as
of the date first above written. 

	
      BOUNTY DEVELOPMENTS LTD. 

       

      __________________________________________________
	
      BERRY CONSULTANTS INC. 

       

      __________________________________________________

20

Schedule “A” 
Attached to and Forming Part of Gross
Overriding 
Royalty Agreement dated January 1, 2006 
between Bounty
Developments Ltd. and Berry Consultants Inc. 

 

	LEASES 	ROYALTY LANDS 	INTEREST 
	Alberta Crown PNG Lease 	Twp. 87, Rge. 7 W6 M: West 	  
	No.0506020313 	Half of Section 13 PNG 	100%, subject to 
	  	  	Crown Lessor 
	  	  	Royalty 

21

Schedule “F” Attached to an Agreement dated effective the
29th day of 
May, 2006 between Bounty Developments Ltd., Damascus Energy Inc.
and 
Park Place Energy Inc. 

OVERRIDING ROYALTY AGREEMENT 

THIS AGREEMENT made as of the 1st day of January,
2006 

BETWEEN: 

  
    
      
        TLELL DEVELOPMENTS INC. a body corporate, having
          an office at the City of Calgary in the Province of Alberta (hereinafter
          referred to as the "Royalty Owner") 

      

    

  

OF THE FIRST PART 

- and - 

  
    
      
        BOUNTY DEVELOPMENTS LTD., a body corporate,
          having an office at the City of Calgary in the Province of Alberta (hereinafter
          referred to as the "Grantor") 

      

    

  

OF THE SECOND PART 

          WHEREAS
the Grantor holds an interest in the Royalty Lands and Leases as hereinafter
defined; and WHEREAS, in consideration of good and valuable consideration
received, the Grantor has agreed to grant and to pay to the Royalty Owner an
Overriding Royalty effective as of the date hereof, the terms and conditions of
which are provided for in this agreement. 

          NOW
THEREFORE this Agreement witnesseth that in consideration of the mutual
covenants and agreements set forth and contained herein, the parties agree as
follows: 

1.      DEFINITIONS 

In this Agreement, including this clause, unless the context
otherwise requires: 

	(a) 	
      "Condensate" means a mixture of mainly pentanes and
      heavier hydrocarbons that may be contaminated with sulphur compounds, that
      is recovered or is recoverable at a Well from an underground reservoir
      and

22

		
      that may be gaseous in its virgin reservoir state but is
      liquid at the condition under which its volume is measured or
      estimated;

	 	 
	(b) 	
      "Crude Oil" means a mixture mainly of pentanes and
      heavier hydrocarbons that may be contaminated with sulphur compounds, that
      is recovered or is recoverable at a Well from an underground reservoir and
      that is liquid at the conditions under which its volume is measured or
      estimated, and includes all other hydrocarbon mixtures so recovered or
      recoverable except natural gas or Condensate;

	 	 
	(c) 	
      "Current Market Value" means the price at which Petroleum
      Substances are sold by the Grantor calculated at the Royalty Determination
      Point, which price is not unreasonable having regard to market conditions
      applicable to similar production in arm's length transactions at the time
      of such disposition including, without restricting the generality of the
      foregoing, such factors as the volumes available, the kind and quality of
      Petroleum Substances to be sold, the effective date of the sale, the term
      of the sale agreement, the point of sale of the Petroleum Substances and
      the type of transportation service available for the delivery of the
      Petroleum Substances to be sold;

	 	 
	(d) 	
      "Leases" means the respective documents of title and any
      extension or renewal of such documents pursuant to which the Grantor holds
      an interest in the Royalty Lands;

	 	 
	(e) 	
      "Overriding Royalty" means the overriding royalty granted
      pursuant to Clause 2 hereof;

	 	 
	(f) 	
      "Petroleum Substances" means Crude Oil, Condensate,
      natural gas and related hydrocarbons and all other substances produced in
      association therewith but only to the extent that the same are granted by
      the Leases;

	 	 
	(g) 	
      "Raw Gas" has the meaning prescribed by the
      Regulations;

	 	 
	(h) 	
      "Regulations" means all statutes, laws, rules, orders,
      regulations or directives in effect from time to time and made by any
      governmental authority having jurisdiction over the Royalty Lands and the
      operations to be conducted thereon;

	 	 
	(i) 	
      "Royalty Determination Point" means the first point of
      measurement downstream from the wellhead after the initial treatment of
      the produced substances for the separation and removal of basic sediment
      and water from the Petroleum Substances;

	 	 
	(j) 	
      "Royalty Lands" means the specified undivided working
      interest(s) in the lands set forth in Schedule "A";

	 	 
	(k) 	
      "Spacing Unit" means the area allocated to a Well (or the
      area which would be allocated to a well, but for a plan of unitization)
      pursuant to the Regulations for the purpose of producing Petroleum
      Substances; and

23

	(l) 	
      "Well" means any well on the Royalty Lands or on lands
      pooled with the Royalty Lands.

2.      GRANT OF OVERRIDING
ROYALTY 

Grantor hereby grants to the Royalty Owner an interest in
respect of the Petroleum Substances within, upon or under the Royalty Lands
equal to one (1%) percent of the gross monthly production produced from the
Royalty Lands. 

3.      QUANTIFICATION OF
OVERRIDING ROYALTY 

If Royalty Owner does not take possession of and separately
dispose of its share of Petroleum Substances, the Overriding Royalty shall be
quantified and paid on the gross proceeds of the sale of such Petroleum
Substances without any deductions, except the following, namely: 

	(a) 	
      with respect to Crude Oil and Condensate, a proportionate
      share of the actual costs of transportation from the Royalty Determination
      Point to market connection;

	 	 
	(b) 	
      with respect to Petroleum Substances other than Crude Oil
      and Condensate, a proportionate share of the cost of transportation,
      gathering and processing, providing that such costs are no greater than
      those allowed from time to time by the Crown in the right of the Province
      of Alberta in calculating its royalty.

4.      OVERRIDING ROYALTY
TAKEN IN KIND 

	(a) 	
      The Royalty Owner shall have the right to take in kind
      the Royalty Owner's share of Petroleum Substances. Such right may be
      exercised separately with respect to Condensate, Crude Oil, Raw Gas, and
      any other individual Petroleum Substance. In the case of Crude Oil and
      Condensate, such right when exercised shall be done on a minimum of thirty
      (30) days notice to the Grantor. In the case of all other Petroleum
      Substances such right when exercised shall be done on a minimum of six (6)
      months notice to the Grantor. If the Royalty Owner, however, signifies in
      writing its consent to the sale of any of the Royalty Owner's share of
      Petroleum Substances under a contract made by the Grantor providing for a
      minimum term in excess of the said respective notice periods, the Royalty
      Owner's right to take in kind any Petroleum Substances subject to such
      contract shall be suspended during the term of such contract. The Royalty
      Owner may cease to take in kind any Petroleum Substances upon giving the
      Grantor the same minimum notice as provided above for the Royalty Owner to
      take such Petroleum Substances in kind as aforesaid. The right to take in
      kind or to cease to take in kind may be exercised from time to time
      subject only to the foregoing provisions of this Subclause.

	 	 
	(b) 	
      When the Royalty Owner is taking in kind the Royalty
      Owner's share of any Petroleum Substances, the Grantor shall at no cost to
      the Royalty

24

Owner remove basic sediment and water
therefrom in accordance with good oilfield practice, and: 

	 	(i)	
      in respect to Crude Oil and Condensate: the Grantor shall
      deliver the Royalty Owner's share to the Royalty Owner, or its nominee, at
      the tank outlets, or comparable delivery point, in accordance with usual
      and customary pipeline and shipping practice, free and clear of all
      charges whatsoever except to the extent that the Royalty Determination
      Point is an earlier point in which case the costs of moving product from
      the Royalty Determination Point to the delivery point will be deductible
      by the Grantor from the Overriding Royalty. The Royalty Owner shall have
      the right to use free of charge a share of the Grantor's lease tankage and
      storage facilities to store a maximum of ten (10) days accumulation of the
      Royalty Owner's share of Crude Oil and Condensate; and

	 	 	 
	 	(ii) 	
      in respect to Raw Gas: the Grantor shall deliver the
      Royalty Owner's share to the Royalty Owner, or its nominee, at the Royalty
      Determination Point of the relevant well, provided that to the extent the
      Royalty Owner so requests on reasonable notice to the Grantor and the
      Grantor can reasonably comply with such request, the Grantor shall gather,
      compress, transport, treat and process such share of Raw Gas along with
      the Grantor's share of Raw Gas from the applicable well or wells and
      deliver to the Royalty Owner at their relevant plant outlet, the Royalty
      Owner's Overriding Royalty share of marketable gas and other Petroleum
      Substances obtained from such share of Raw Gas, in which event, the
      Royalty Owner shall be responsible for:

	 	A. 	
      its proportionate share of the costs of gathering,
      compressing, transporting, treating and processing such Raw Gas where the
      Grantor or an Affiliate thereof does not own such facilities; or

	 	 	 
	 	B. 	
      where the Grantor or an Affiliate thereof owns such
      facilities, such fee as may be agreed upon by the Grantor and the Royalty
      Owner for the use of such facilities to make marketable the Royalty
      Owner's Overriding Royalty share of Raw Gas.

5.      CONDUCT OF
OPERATIONS 

	(a) 	
      Grantor shall be entitled to use a proportionate share of
      the Royalty Owner's share of Petroleum Substances as may be reasonably
      necessary for its drilling and production operations with respect to the
      Royalty Lands, excluding Petroleum Substances used for tertiary recovery
      operations. Grantor shall not be liable to Royalty Owner for Petroleum
      Substances which are unavoidably lost. Petroleum Substances so used or
      lost shall be excluded when quantifying the Overriding
  Royalty.

25

	(b) 	
      The Grantor shall have the right to commingle Petroleum
      Substances produced from the Royalty Lands with Petroleum Substances
      produced from other lands, provided reasonable methods are used to
      determine the proper measurement of production of Petroleum Substances
      from the Royalty Lands.

	 	 
	(c) 	
      Nothing contained in this Agreement shall be a deemed or
      implied covenant by the Grantor to develop the Royalty Lands.

	 	 
	(d) 	
      The Grantor shall carry on (or cause to be carried on)
      all operations on the Royalty Lands diligently and in a good and
      workmanlike manner consistent with good oilfield
  practice.

6.      MAINTENANCE OF
LEASES 

Grantor shall comply with all the covenants and conditions
contained in the Leases insofar as they relate to the Royalty Lands and shall do
all things necessary to maintain the Leases in full force and effect during the
term of this Agreement including, without limitation, timely payment of all
rentals, all renewal and extension fees, all taxes, all payments in lieu of
actual production and royalties due or becoming due in respect of the Royalty
Lands and the Leases. 

7.      POOLING 

The Grantor shall have the authority to pool the Petroleum
Substances in a zone underlying all or a portion of the Royalty Lands to the
extent required to form a Spacing Unit in such zone, but only if such pooling
allocates to that portion of the Royalty Lands included in the Spacing Unit that
proportion of the total production of Petroleum Substances from the Spacing Unit
which the surface area of that portion of the Royalty Lands placed in the
Spacing Unit bears to the total surface area of the Spacing Unit. The Grantor
shall thereafter give written notice to the Royalty Owner describing the extent
to which the Royalty Lands are being pooled and describing the Spacing Unit with
respect to which they are so pooled. 

8.      UNITIZATION 

The Grantor shall not include the Royalty Lands or any part or
parts thereof in a Unit Agreement or a Unit Operating Agreement for the unitized
development and/or operation thereof with other lands without the consent of the
Royalty Owner, which shall not be unreasonably withheld. Upon any such
unitization, the Overriding Royalty shall be quantified on the basis of the
production allocated to each Spacing Unit on the Royalty Lands under the plan of
unitization and not upon the basis of actual production from the Royalty Lands.
Further, each Spacing Unit for which production is allocated shall be deemed to
have on Well thereon, regardless of the actual number of Wells. 

9.      BOOKS AND RECORDS

26

	(a) 	
      The Grantor shall keep true and current books, records
      and accounts showing the quantity of Petroleum Substances produced from or
      allocated to the Royalty Lands and the sales and disposition made thereof
      from time to time. The books, records, vouchers and accounts maintained by
      the Grantor shall be open to inspection at all reasonable times during
      business hours by any officer, agent or employee appointed or authorized
      by the Royalty Owner, in writing, to examine the same. All information
      obtained by the Royalty Owner pursuant to this clause shall be treated as
      confidential and shall not be disclosed to third persons without the prior
      written consent of the Grantor.

	 	 
	(b) 	
      By the last day of each month, beginning with the first
      month following the month in which production of Petroleum Substances from
      the Royalty Lands is obtained after the date hereof, Grantor shall submit
      to Royalty Owner a statement showing the quantity and kind of Petroleum
      Substances produced, deemed to be produced or allocated to, saved and sold
      from or used off the Royalty Lands in the immediately preceding calendar
      month, together with a quantification of Royalty Owner's share of
      Petroleum Substances for such immediately preceding calendar month. When
      Royalty Owner does not take and separately dispose of its share of
      Petroleum Substances, the said statement shall also include the sale price
      for such Petroleum Substances and the gross proceeds received therefrom,
      accompanied by a cheque payable to Royalty Owner for its share of such
      proceeds. A copy of Grantor's governmental production statement for the
      month for which the Overriding Royalty is quantified as aforesaid and
      also, with respect to Crown Leases, a copy of the government royalty
      statement with respect to the Leases, shall accompany each royalty
      statement to Royalty Owner. Any information contained in such governmental
      production statement or royalty statement need not be repeated in the
      statement to Royalty Owner.

	 	 
	(c) 	
      Royalty Owner, upon notice to Grantor, shall have the
      right to audit Grantor's accounts and records for any given calendar year,
      insofar as they relate to any matter or item relating to this Agreement
      bearing on the Overriding Royalty, within the twenty-four (24) month
      period following the end of that calendar year. any payment made or
      statement rendered by Grantor hereunder which is not disputed by Royalty
      Owner on or before the last day of the twenty-sixth (26th) month following
      the end of the calendar year shall be deemed to be
  correct.

10.      ASSIGNMENT BY GRANTOR

The Grantor may assign any legal or equitable interest in this
Agreement, the Royalty Lands, the Leases or any portion or portions thereof and
in the event of such assignment, the Grantor shall continue to be bound by all
of the conditions and provisions of this Agreement as if there had been no
assignment until such time as the Royalty Owner shall have been served with a
written undertaking by 

27

the assignee (or assignees) directly enforceable by the Royalty
Owner, to perform and be bound thereafter by all of the terms and provisions of
this Agreement to the same extent and degree with respect to the interest which
has been assigned to it, as it would have been if such assignee (or assignees)
had been a party to this Agreement instead of the Grantor. 

11.      ASSIGNMENT BY ROYALTY
OWNER 

The Royalty Owner may at any time assign its interest in the
Overriding Royalty upon notice thereof to the Grantor, provided that if at any
time the Overriding Royalty should become owned by more than one party, the
Grantor shall have the right to require the assignees of the Overriding Royalty
to appoint in writing an agent to represent all of the assignees of the
Overriding Royalty and to receive all statements and payments (if any) of the
Overriding Royalty. If the assignees of the Overriding Royalty fail to appoint
an agent hereunder within thirty (30) days of any request to do so by Grantor,
Grantor may withhold the Overriding Royalty until such time as an agent is
appointed. 

12.      ROYALTY OWNER'S LIEN

	(a) 	
      The Royalty Owner shall be entitled to and shall have a
      first and paramount lien upon the Grantor's share of all Petroleum
      Substances from time to time produced from the Royalty Lands to secure the
      payment of the Overriding Royalty. Such lien shall not operate to release
      the Grantor from personal liability for monies due to the Royalty Owner.
      Such lien shall not attach to the Grantor's share of Petroleum Substances
      sold or otherwise disposed of from the Royalty Lands, but immediately upon
      default occurring in payment by the Grantor of monies payable to the
      Royalty Owner such lien shall operate as an assignment to the Royalty
      Owner of the consideration thereafter payable to the Royalty Owner for the
      Petroleum Substances sold, up to the amount owed to the Royalty Owner and
      not so paid by the Grantor.

	 	 
	(b) 	
      Service of a copy of this agreement upon any purchaser of
      Petroleum Substances together with written notice from the Royalty Owner
      shall constitute written authorization on the part of the Grantor for such
      purchaser to pay the Royalty Owner the proceeds from any sale or sales of
      the Grantor's share of Petroleum Substances up to the amount owed to the
      Royalty Owner by the Grantor, and such purchaser is authorized to rely
      solely upon the statement of the Royalty Owner as to the amount owed to
      the Royalty Owner by the Grantor.

13.      NOTICES 

	 	(a) 	
      Whether or not so stipulated herein, delivery of all
      notices and communications (hereinafter called "notices") required or
      permitted hereunder shall be in writing. Notices may be
  given:

28

	 	(i) 	
      personally, by delivering the notice to the party on whom
      it is to be served at that Party's address for service, which notice shall
      be deemed received by the addressee when actually delivered as aforesaid
      if such delivery is during normal business hours provided that if a notice
      is not delivered during the addressee's normal business hours, such notice
      shall be deemed to have been received by such party at the commencement of
      the next ensuing business day following the date of delivery; or

	 	 	 
	 	(ii) 	
      by facsimile (or by any other like method by which a
      written or recorded message may be sent) directed to the party on whom it
      is to be served at that party's address for service, which notice shall be
      deemed received by the respective addressees thereof: (i) when actually
      received by it, if received within normal business hours; or (ii) at the
      commencement of the next ensuing business day following transmission
      thereof, if such notice is not received during such normal business hours;
      or

	 	 	 
	 	(iii) 	
      by mailing them first class mail (air mail if to or from
      a location outside Canada) double registered post, postage prepaid,
      directed to the party on whom it is to be served, at that party's address
      for service, which notice 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)
      following the mailing thereof; provided that, if postal service is
      interrupted or operating with unusual or imminent delay, notice shall not
      be served by such means during such interruption or period of
  delay.

	 	(b) 	
      Where, in this Agreement, a time period is established
      within which a party must respond, elect or otherwise communicate with
      respect to a notice so received the time shall commence to run when the
      notice is deemed to be received as hereinbefore provided. Any time period
      which expires on a Saturday, Sunday or statutory holiday shall be extended
      to expire on the next normal business day.

	 	 	 
	 	(c) 	
      The address of each of the respective parties hereto
      shall be as follows:

Bounty Developments Ltd.
 1250, 340
- 12 Avenue S.W. 
Calgary, Alberta 
T2R 1L5 

Berry Consultants Inc. 
1250, 340 –
12th Avenue S.W. 
Calgary, Alberta 
T2R 1L5 

29

	 	(d) 	
      Any party may change its address for service by notice to
      the other parties.

14.      TERM 

This Agreement shall remain in force and effect so long as the
Grantor or any successor in interest retains an interest in the Royalty Lands.

15.      GENERAL 

	 	(a) 	
      The parties will from time to time and at all times
      hereafter, without further consideration, do such further acts and deliver
      all such further assurances, deeds and documents as shall reasonably be
      required in order to fully perform and carry out the terms of this
      Agreement.

	 	 	 
	 	(b) 	
      This Agreement constitutes the entire agreement between
      the parties with respect to the subject matter of this Agreement and
      supersedes all prior contracts, agreements and understandings between the
      parties in this regard. No modification or alteration of this Agreement
      shall be binding unless executed in writing by these parties. There are no
      representations, warranties, collateral agreements or conditions affecting
      this transaction other than as are expressed or referred to herein in
      writing.

	 	 	 
	 	(c) 	
      The terms and conditions of this Agreement shall be
      binding upon and shall enure to the benefit of the parties hereto and
      their respective successors and assigns.

	 	 	 
	 	(d) 	
      Time is of the essence of this Agreement.

	 	 	 
	 	(e) 	
      The headings contained in this Agreement are intended for
      convenience of reference only and shall form no part of this
    Agreement.

	 	 	 
	 	(f) 	
      The words herein contained which impart the singular
      number or the masculine gender shall be read and construed as applying to
      the plural and each and every corporate, male or female party thereto and
      to its and their heirs, executors, administrators, successors and assigns,
      as the case or context requires.

	 	 	 
	 	(g) 	
      This Agreement shall be governed by and interpreted in
      accordance with the laws of the Province of Alberta. The parties hereby
      irrevocably attorn to the jurisdiction of the Courts of the Province of
      Alberta for the determination of all matters arising hereunder.

	 	 	 
	 	(h) 	
      The Schedules attached to this Agreement are incorporated
      by reference as fully as though contained in the body
  hereof.

30

Wherever any term or condition,
expressed or implied, of such Schedules conflicts or is at variance with any
terms or conditions of this Agreement, such term or condition of this Agreement
shall prevail. 

IN WITNESS WHEREOF the parties have executed this Agreement as
of the date first above written. 

	
      BOUNTY DEVELOPMENTS LTD. 

       

      ______________________________________________
	
      TLELL DEVELOPMENTS INC. 

       

      ______________________________________________

31

Schedule "A" 
Attached to and Forming Part of Gross
Overriding 
Royalty Agreement dated January 1, 2006 
between Bounty
Developments Ltd. and Tlell Developments Inc. 

 

	LEASES 	ROYALTY LANDS 	INTEREST 
	Alberta Crown PNG Lease 	Twp. 87, Rge. 7 W6 M: West 	  
	No.0506020313 	Half of Section 13 PNG 	100%, subject to 
	  	  	Crown Lessor 
	  	  	Royalty 

32

33

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00127-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00127-of-00352.parquet"}]]