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Carma Bayshore LLC <br />Tyler Packard <br />September 19, 2007 <br />Page 3 <br />CARMA 11-35: 1980'FSL 1980'FWL <br />CARMA 12-35: 1980'FSL 660'FWL <br />CARMA 14-35: 660'FSL 1980'FWL <br />respectively. <br />4. You will pay KMG $525,000 ($75,000 per well) to help defray the cost of drilling <br />directionally to the wells described in Paragraph 4. This money will be paid on a <br />per well basis with the first 50% of the money to be paid when <br />Anadarko/Kerr-McGee receives each approved state drilling permit. The second <br />50% will be paid upon receipt of an invoice for each well. <br />5. KMG will not compensate you for any and all surface damages, including <br />the use of oil and gas operations areas, access ways, surface facilities such as tank <br />batteries and separators, flowlines, and gathering lines. No other surface damages <br />will be due or paid. <br />6. You will execute any COGCC property line waivers if necessary, as well as other <br />Oil and Gas Conservation Commission waivers that may be necessary to drill in the <br />locations specified in Paragraph 1, 2 and 3 of this surface agreement within three <br />weeks of the execution of this agreement. <br />7. After the execution of this letter, KMG will seek to enter into a final surface use <br />agreement with you as soon as reasonably possible, however, this letter grants <br />KMG your consent to begin operations on your property before that agreement is <br />finalized. KMG may use this letter to show the COGCC that we have held <br />consultation and that you have agreed to the surface locations described above. <br />8. Carma Bayshore LLC ("CARMA") expressly acknowledges that this Agreement <br />satisfies Ken-McGee Oil & Gas Onshore LP's ("Kerr-McGee") obligation under <br />COGCC rules to consult in good faith with the surface owner regarding the <br />proposed oil and gas operations. CARMA further expressly acknowledges that this <br />obligation of Kerr-McGee to accommodate CARMA's use of the surface of the <br />described lands, existing or future, and waives any statutory or common law claims <br />to the contrary.