FOURTH MODIFICATION AND AMENDMENT OF TERM NOTE

FOURTH MODIFICATION AND AMENDMENT

OF

TERM NOTE

THIS FOURTH MODIFICATION AND AMENDMENT OF TERM NOTE (this “Modification”) is entered into as of the 15^th day of May 2009, effective as of May 1, 2009, by and between PERMIAN LEGEND PETROLEUM, LP, a Texas limited partnership, whose address is 3327 West Wadley Avenue, Suite 3, No. 267 (the “Maker”); and AMERICAN STATE BANK, a Texas banking association, whose address is 620 North Grant, Odessa, Texas ###-###-#### (the “Bank”).

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 Existing Note as follows:

Unless otherwise specifically defined herein, all defined terms used in this Modification shall have their respective meanings set forth in the Existing Note.

2. Amendments.

1. For value received, PERMIAN LEGEND PETROLEUM LP, a Texas limited partnership (the “Maker”), promises to pay to the order of AMERICAN STATE BANK, a state 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 ONE MILLION FOUR THOUSAND SEVEN HUNDRED AND FORTY-SIX AND SIXTY-FIVE/100 DOLLARS ($1,004,746.65), 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 in the Existing Note, plus two percentage points (2.0%), but in no event to exceed the “Highest Lawful Rate”, as defined in the Existing Note, with adjustments to the Variable Rate 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.

2. This Note is executed pursuant to the terms of that certain Loan Agreement, dated as of August 1, 2008, as amended under that certain First Amendment to Loan Agreement, dated as of October 15, 2008, that certain Second Amendment to Loan Agreement, dated as of January 2, 2009, that certain Third Amendment to Loan Agreement, dated as of March 17, 2009, but effective February 15, 2009, and that certain Fourth Amendment to Loan Agreement, dated as of May 15, 2009, effective as of May 1, 2009, all by and among the Maker, the Guarantors, and the Bank (as so amended, the “Loan Agreement”). In the event of a conflict between the terms of this Note and the terms of the Loan Agreement, the terms of the Loan Agreement shall be deemed to be controlling. Capitalized terms not otherwise defined herein are defined in the Loan Agreement.

7. From the date of this Modification, until the Extended Maturity Date, payments of interest only, calculated at the lesser rate of the Variable Rate and the Highest Lawful Rate, shall be due on or before the first day of each month, with the next of such payments to be due and payable on or before June 1, 2009, the next of such payments to be due on or before July 1, 2009, and all of the outstanding principal, accrued, but unpaid interest, and any outstanding costs, fees, or expenses due pursuant to the terms of the Loan Agreement, to be paid as of the Extended Maturity Date of July 15, 2009.

3. Effectiveness:

4. Counterparts:

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

5. Notice of Final Agreement:

THIS FOURTH MODIFICATION AND AMENDMENT OF TERM NOTE, THE FOURTH AMENDMENT, 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.

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

MAKER:

PERMIAN LEGEND PETROLEUM LP,

A Texas Limited Partnership

By:       /s/ Ronnie L. Steinocher—
Ronnie L. Steinocher

Manager

BANK:

AMERICAN STATE BANK

By:       /s/ Mike Marshall—
Mike Marshall
Executive Vice President

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