RESCISSIONAGREEMENT

1.

RESCISSION:  The Purchase and Sale Agreement pertaining to certain oil and/or gas assets entered into between Buyer and Seller effective October 22, 2009, a copy of which is attached hereto as Exhibit "A" ("Purchase and Sale Agreement"), is hereby rescinded in full and rendered null and void as if it were never entered into between Buyer and Seller.

2.

NO FURTHER RIGHTS:  Buyer and Seller each agrees that it shall have no further rights, entitlements, liabilities or obligations with respect to the Purchase and Sale Agreement and each expressly assumes and agrees to pay for all of its respective costs, fees, expenses and damages, if any, incurred in connection with the Purchase and Sale Agreement and this Rescission Agreement ("Claims"). Buyer and Seller each further expressly, fully and completely releases the other with respect to all Claims it has, had or may have against the other.

3.

FURTHER COOPERATION:  Buyer and Seller each shall execute, acknowledge, and deliver to the other all documents, and take all such acts which from time to time reasonably may be requested by the other party in order to carry out the purposes and intent of this Rescission Agreement.

4.

AUTHORITY:  The parties represent to each other that each has the full authority to enter into this Agreement.

5.

COMPLETE AGREEMENT: This is the complete agreement of the Parties hereto regarding the subject matter of this Agreement, superseding all others.  No term or provision of this Agreement may be added, changed, modified, deleted or waived, in whole or in part, without the express, signed written consent of Buyer and Seller.

6.

GOVERNING LAW: This Agreement is made in Houston, Texas and is to be construed and enforced in accordance with the laws of the State of Texas applicable to contracts between residents of the State of Texas that are to be wholly performed within Texas and without regard to the choice of law or conflicts of law principles of Texas or any other jurisdiction.  All parties to this Agreement hereby irrevocably and unconditionally consent to the arbitration and venue provisions set forth in Paragraph No. 12 below and hereby irrevocably and unconditionally waive any defense of an inconvenient forum to the maintenance of arbitration as specified below, any objection to venue with respect to any such arbitration and any right of jurisdiction or venue on account of the place of residence or domicile of any party hereto.

7.

PARTIES BOUND:  This Agreement shall be binding on Buyer and Seller, their respective agents, representatives, assignees, successors, executors and administrators.

8.

THIRD PARTY BENEFICIARIES: Except as expressly provided herein, this Agreement is solely between and for the benefit of Buyer and Seller, and no individual or entity that is not a signatory to this Agreement may enforce or claim any benefit under any of the provisions hereof.

9.

FURTHER ASSURANCES:  Buyer and Seller shall execute all such other documents and do such other things as may be reasonably required in order to effectuate, evidence, and/or confirm the intended purpose of this Agreement.

10.

CUMULATIVE REMEDIES:  The rights and remedies provided herein are cumulative and not exclusive of any rights or remedies provided by law or in equity, and may be pursued separately, successively, or concurrently.

11.

REPRESENTATIONS AND WARRANTIES:  Buyer and Seller each represents and warrants to the other that, as of the Effective Date:  (i) it has all requisite power and authority to enter into this Agreement and perform its obligations hereunder; (ii) the execution, delivery, and performance of its obligations under this Agreement have been duly authorized by it and this Agreement has been duly executed and delivered by its authorized representative; (iii) its execution and delivery of, and the performance of its obligations under, this Agreement will not (a) result in a breach of, or constitute a default under, any agreement, lease, or instrument (including any organizational instrument or document) to which it is a party or by which it or its properties may be bound or affected, or (b) violate any applicable legal requirement, including any law, rule, regulation, statute, ordinance, writ, order, or determination of an arbitrator or a court or other governmental authority; (iv) no litigation, investigation, or other legal, administrative, or arbitration proceeding is pending or, to the best of its best knowledge, threatened against it or any of its properties or revenues, existing or future, which if adversely determined could prevent the performance of or have a material adverse effect on its ability to perform its obligations hereunder; and (v) its obligations under this Agreement are legal, valid, and binding against it, except to the extent enforcement may be limited by applicable bankruptcy, insolvency, reorganization, or other similar legal requirements affecting creditor's rights generally and by principles of equity.

12.

13.

NOTICE: Any notice required to be given under this Agreement shall be (i) sent by certified mail, return receipt requested; (ii) faxed as set forth herein; (iii) e-mailed as set forth herein or (iv) hand delivered.  Notice shall be effective upon the earlier of actual receipt by the Party to whom said notice is sent or the expiration of three (3) business days if sent by certified mail, return receipt requested.  Notice sent by fax or e-mail shall be effective upon receipt by the Party to whom said notice is sent if received on regular business days between the hours of 9:00 a.m. and 5:00 p.m.; provided, however, that notice received by fax or e-mail after 5:00 p.m. and before 9:00 a.m. the next business day shall be deemed to have been received at 9:00 a.m. the first business day following receipt of said notice.  Hand delivered notice shall be effective only upon actual receipt by the Party to whom said notice is sent.  Notices sent hereunder shall be addressed as follows.

14.

SEVERABILITY:  If any term or provision hereof is held to be unenforceable, in whole or in part, by any court, arbitration panel or other entity having valid jurisdiction to construe or enforce this Agreement, then said term or provision shall be amended or deleted as necessary, and the remaining portions of this Agreement shall continue in full force and effect.

15.

TIME:  Time shall be of the essence of this Agreement.

16.

HEADINGS: All headings used herein are for convenience only and shall not be used or referred to in the construction, amendment or interpretation of any term or provision of this Agreement.

17.

AMBIGUITY:  If an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by all parties to this Agreement, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

18.

GENDER AND TENSE: Unless the text specifically requires otherwise, the masculine shall include the feminine, the feminine shall include the masculine, the singular shall include the plural and the plural shall include the singular.

19.

ASSIGNMENT:  Neither Buyer nor Seller may assign this Agreement or any of its rights and obligations hereunder, whether voluntarily, involuntarily, or by operation of law, to any person or entity without the other Party’s prior, written consent.

20.

COUNTERPART AND FACSIMILE SIGNATURES:  This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.  Execution and delivery of this Agreement by exchange of facsimile copies bearing the facsimile signature of a party hereto shall constitute a valid and binding execution and delivery of this Agreement by such party.  Such facsimile copies shall constitute enforceable original documents.

21.

ACKNOWLEDGEMENT: EACH PARTY SPECIFICALLY ACKNOWLEDGES AND AGREES (1) THAT IT HAS READ THIS AGREEMENT AND IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS HEREOF, AND (2) THAT IT IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT.  EACH PARTY FURTHER AGREES THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILTIY OF ANY SUCH PROVISIONS OF THIS AGREEMENT ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISIONS OR THAT SUCH PROVISIONS ARE NOT “CONSPICUOUS’.  IN ADDITON, EACH PARTY ACKNOWLEDGES AND AGREES THAT NO CONSIDERATION SHALL BE GIVEN TO THE FACT OR PRESUMPTION THAT ONE PARTY HAD A GREATER OR LESSER ROLE IN THE DRAFTING OF THIS AGREEMENT, OR ANY PORTION THEREOF, AND THAT EXAMPLES SHALL NOT BE CONSTRUED TO LIMIT, EXPRESSLY OR BY IMPLICATION, THE MATTER THEY ILLUSTRATE.

22.

EFFECTIVE DATE: This Agreement is executed in multiple originals effective the date first set forth above.