FIRST AMENDMENT TO LOAN AGREEMENT

FIRST AMENDMENT

TO

LOAN AGREEMENT

THIS FIRST AMENDMENT TO LOAN AGREEMENT ( “Amendment”) is entered into as of the 28^th day of December 2009, but effective as of December 15, 2009, by and among ESCONDE RESOURCES, LP, a Texas limited partnership, whose address is 3327 West Wadley Avenue, Suite 3-267, Midland, Texas 79707 (the “Borrower”); ESCONDE ENERGY, LLC, a Texas limited liability company, whose address is also 3327 West Wadley Avenue, Suite 3-267, Midland, Texas 79707 (the “Guarantor”); and AMERICAN STATE BANK, a Texas banking association, whose address is 620 N. Grant, Odessa, Texas ###-###-#### (the “Bank”).

NOTICE IS TAKEN OF THE FOLLOWING:

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 Loan Agreement as follows:

Unless otherwise specifically defined herein, all defined terms used in this Amendment shall have their respective meanings set forth in the Loan Agreement.

1

2. Amendments.

Interest under the Note shall accrue at an annual rate equal to the American State Bank Base Rate, plus two and one-half percentage points (2.5%), but in no event to be less than six and one-half percentage points (6.5%), and in no event to exceed the “Highest Lawful Rate” as defined in the Note. 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 Saturday, Sunday or legal holiday for commercial banks under the laws of the State of Texas.

Should this debt not be paid in full on or before February 1, 2010, Bank has the right to engage updated third party engineering.

To evidence its continuing guaranty of the Loans, as modified and extended under the terms of this Amendment, Guarantor has executed this Amendment.

2

THIS WRITTEN AGREEMENT AND ANY OTHER INSTRUMENTS EXECUTED BY THE PARTIES 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.}

3

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

BORROWER:

ESCONDE RESOURCES LP, a Texas

Limited Partnership

/s/      Paul W. Heard—
Paul W. Heard, Managing Member

/s/ Ronnie L. Steinocher      

Ronnie L. Steinocher, Managing Member

GUARANTOR:

ESCONDE RESOURCES LLC, a Texas

Limited Liability Company

4