DEVELOPMENT AGREEMENT

THIS DEVELOPMENT AGREEMENT (“Agreement”), made and entered into effective as of January 1, 2007 (the “Effective Date”), by and between BP AMERICA PRODUCTION COMPANY (“BP”), a Delaware corporation, with an office at 501 Westlake Park Boulevard, Houston, Texas 77079, and TRUE NORTH ENERGY CORP. (“Company”), a Nevada corporation, with an office at 1200 Smith Street, 16th Floor, Houston, Texas 77002 (individually, a “Party” and collectively, the “Parties”).

WHEREAS, BP owns those certain oil, gas and mineral leases set forth in Exhibit “A” (the "Leases") covering the Contract Area; and

WHEREAS, subject to the terms, provisions and conditions set forth below, Company will pay a disproportionate 11.67% of the Drilling Costs for the BP America Production Company - A. Major Heirs No. 1 well (the “Initial Well”) to be drilled at the location shown on the plat attached as Exhibit “C”, and in return BP will assign to Company an 8.75% interest in the Initial Well and the BP Interests, all as further provided in this Agreement.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements hereinafter contained, to be kept and performed by the Parties, it is hereby agreed by and between the Parties as follows:

Each capitalized term in this Agreement has the meaning given to it in this Article. All defined terms include the singular and the plural. All references to: Articles and Sections refer to Articles and Sections in this Agreement, and Exhibits refer to Exhibits attached to this Agreement.

1.1 “Additional Well” means a well, other than the Initial Well or a Substitute Well, drilled on the Contract Area after Company earns its proportionate share of the BP Interests in accordance with Section 4.1.

1.2 “Affiliate” of a Party means (i) the parent company thereof or (ii) any Person directly or indirectly controlled by, controlling, or under common control with that party (for the purposes of this definition, ownership of fifty percent (50%) or more of the stock, equity or property of such Person, or having the right to appoint fifty percent (50%) or more of the members or owner representatives of such Person are examples of forms of control).

1.3 “AFE” means an Authority for Expenditure prepared by a Party for the purpose of estimating the costs to be incurred in conducting an operation on a well subject to this Agreement and for providing such other information as may be specifically set forth elsewhere in this Agreement.

1.4 “Agreement” has the meaning given to it in the preamble.

1.5 “BP” has the meaning given to it in the preamble.

1.6 “BP Interests” means the Leases to the extent they are contained within the Contract Area.

1.7 “BP GROUP” means the following Persons, individually and collectively: BP and its Affiliates and the officers, directors, employees, agents, and representatives of all of those Persons.

1.8 “Carried Interests” has the meaning given to it in Section 5.7.

1.9 “Casing Point” means the time when (a) a well has been drilled to the Objective Zone, (b) all logs, tests, and evaluations have been completed and the results thereof have been furnished to the Parties, and (c) a recommendation has been made whether to run and set production casing and attempt to Complete the well as a producer or to abandon the well as a dry hole.

1.10 “Company” has the meaning given to it in the preamble.

1.11 “Complete” or “Completion” or “Completing” means a single operation intended to complete a well as a producer of oil and/or gas in one or more Zone(s), including, but not limited to, the setting of pipe/production lining and casing tie-back, installing tubing, wellhead and tree, perforating, plugging back, well stimulation, and testing.

1.12 “Completion Costs” means the actual costs and expenses incurred in Completing a well subject to this Agreement.

1.13 “Contract Area” means the geographic area (covering all depths) defined by the following Units, as they may be amended from time to time: (a) the 640-acre Moore Sams Field 18,100’ TUSC RA SUW, created by the State of Louisiana Office of Conservation Order No. 1063-A-1, effective November 29, 1979; (b) the 640-acre Moore Sams Field 18,100’ TUSC RA SUCC, created by the State of Louisiana Office of Conservation Order No. 1063-A-2, effective February 20, 1980; and (c) the 640-acre Moore Sams Field 18,100’ TUSC RA SUDD, created by the State of Louisiana Office of Conservation Order No. 1063-A-2, effective February 20, 1980. The “Contract Area”, as it exists now, is outlined in red on the plat attached as Exhibit “B”, but in the event of any conflict between the definition set forth in the preceding sentence and Exhibit “B”, the definition set forth in the preceding sentence shall govern and control.

1.14 “Data” means 3D seismic data, in whatever form (reels, paper, film, tape, magnetic or electronic, covering the Contract Area.

1.15 “Data Owner” means a Third Party who owns the Data.

1.16 “Drilling Costs” means the actual costs and expenses incurred in drilling a well subject to this Agreement beginning with the initiation of preliminary site preparation activities through and including logging, testing and evaluating the well prior to recommending whether to attempt a Completion. Drilling Costs shall include, but shall not be limited to, the costs and expenses associated with permitting, preparing the site, drilling to the Objective Zone, and evaluating any Zone(s) in such well to which a Completion may be attempted, as well as any unplanned or unforeseen events such as fire, explosion, or loss of well control. Drilling Costs shall also include brokerage, abstracting, and reasonable attorney fees related to the preparation of drilling title opinions for such well. Drilling Costs shall not include the cost to plug and abandon any well, including a dry hole, and shall not include any Completion Costs.

1.17 “Estimated Drilling Costs” has the meaning given to it in Section 2.1.

1.18 “Effective Date” has the meaning given to it in the preamble.

1.19 “Exhibits” has the meaning given to it in Section 16.6.

1.20 “Force Majeure” has the meaning given to it in Section 9.1.

1.21 “Initial Well” has the meaning given to it in the recitals.

1.22 “Insurance Requirements” has the meaning given to it in Exhibit “G”.

1.23 “Leases” has the meaning given to it in the recitals.

1.24 “Objective Zone”, with respect to the Initial Well, means the base of the Tuscaloosa C-1 sand, being the stratigraphic equivalent of the base of the Tuscaloosa C-1 sand as seen at 18,484 feet (electrical log measurement) for the Amarex - Major Heirs No. 1 well, located in Section 47, Township 4 South, Range 10 East, Pointe Coupee Parish, Louisiana, or eighteen thousand, five hundred feet measured depth (18,500’ MD), whichever occurs first in the Initial Well. The term “Objective Zone”, with respect to any Substitute Well or Additional Well, means the deepest Zone to which the Substitute Well or Additional Well is proposed to be drilled as provided in the relevant AFE for such well.

1.25 “Operating Agreement” has the meaning given to it in Section 5.5.

1.26 “Partial Assignment” has the meaning given to it in Section 4.1.

1.27 “Partial Interest” has the meaning given to it in Section 4.2.

1.28 “Party” and “Parties” have the meaning given to them in the preamble.

1.29 “Person” means any individual or entity, in the broadest sense possible, including but not limited to a corporation, partnership, limited partnership, limited liability company, trust, trustee, association or unincorporated organization.

1.30 “Plants” has the meaning given to it in Section 5.6.

1.31 “Properties” mean all of BP’s right, title and interest (real or immovable, personal or movable, mixed, contractual or otherwise), as of the Effective Date, in, to and under or derived from the following:

1.32 “Rig Release Date” has the meaning given to it in Section 3.2.

1.33 “Seismic Use Agreements” means those agreements between BP and the Data Owner governing BP’s rights and obligations concerning the Data.

1.34 “Substitute Well” means a well proposed within one (1) year of the Rig Release Date and drilled by BP within the Contract Area, all in accordance with Section 3.2.

1.35 “Third Party” means a Person other than a Party or an Affiliate of a Party.

1.36 “Unit” means a compulsory unit established by the Commissioner of the Office of Conservation within the State of Louisiana Department of Natural Resources pursuant to Chapter 39 of Part XIX of Title 43 of the Louisiana Administrative Code, as same may be amended from time to time.

1.37 “Well Information” has the meaning give to it in Section 2.2

1.38 “Zone” or “Zone(s)” means a stratum of earth containing or thought to contain a common accumulation of oil and/or gas separately producible from any other common accumulation of oil and/or gas.

2.1  BP has commenced drilling operations for the Initial Well, and, except as provided elsewhere in this Agreement, BP shall continue drilling the Initial Well with due diligence to the Objective Zone and perform all logging and testing operations to which the Parties agree. Company shall pay 11.67% of the Drilling Costs of the Initial Well, regardless of whether the Initial Well is successfully drilled to the Objective Zone. BP has estimated that Drilling Costs will be approximately FOURTEEN MILLION, EIGHT HUNDRED SIXTY TWO THOUSAND DOLLARS ($14,862,000) (the “Estimated Drilling Costs”) for the Initial Well. Company shall pay its share of Estimated Drilling Costs, being ONE MILLION, SEVEN HUNDRED THIRTY FOUR THOUSAND, THREE HUNDRED NINETY FIVE DOLLARS ($1,734,395), at execution of this Agreement via wire transfer according to the wiring instructions set forth in Exhibit “I”, but Company will pay its share of actual Drilling Costs in accordance with this Article II and Section 5.4.

2.2 When and if Casing Point is reached in the Initial Well, BP shall give written notice to Company of such occurrence, and such notice shall state whether BP proposes to attempt to Complete the Initial Well as a producer, whether in the Objective Zone or in a shallower Zone, or to abandon the Initial Well as a dry hole. The notice shall be accompanied by all well information and data set forth in Exhibit “D” (the “Well Information”), unless such information has been previously furnished to Company.

2.3 If BP proposes to Complete the Initial Well and Company timely elects to participate in such Completion attempt in accordance with Section 2.2(A), Company shall pay 8.75% of the Completion Costs associated with the Initial Well and 8.75% of the cost of any newly acquired surface equipment associated with the Initial Well beyond the wellhead connections (including but not limited to stock tanks, separators, treaters, pumping equipment, piping, and metering devices).

2.4 If BP proposes to Complete the Initial Well and Company elects not to participate in such Completion attempt, or is deemed not to participate, BP may nonetheless continue with such operation and carry Company’s proportionate part of Completion Costs. If the Completion attempt is ultimately not successful, BP shall abandon the Initial Well in accordance with Section 2.6 or propose to Complete the Initial Well in another Zone under the provisions of Section 2.2 (and Company shall be given another election to participate in such newly proposed Completion). If the Completion attempt results in the production of oil and/or gas in paying quantities, the Initial Well shall be operated by BP at the expense and for the account of BP and other parties who agreed to participate in the Completion attempt. By electing not to participate in any Completion attempt, or being deemed not to participate in any Completion attempt, Company shall be deemed to have relinquished to BP, and BP shall own and be entitled to receive, all of Company’s interest in the Initial Well and share of production therefrom until the proceeds of the sale of such share, calculated at the well, or market value thereof if such share is not sold (after deducting applicable ad valorem, production, severance, windfall profits, and excise taxes, royalty, overriding royalty and other interests payable out of or measured by the production from the Initial Well accruing with respect to such interest until it reverts), shall equal the total of the following:

2.5 Company shall bear its proportionate part, being eight and three quarters percent (8.75%), of any severance, production and gathering taxes and any other taxes imposed or measured by the volume or value of production from the Initial Well, including, but only by way of illustration, excise taxes and windfall profit taxes, whether enacted by federal, state or local authority.

2.6 The Initial Well shall be plugged and abandoned in accordance with applicable regulations and at the cost, risk and expense of the parties who participated in the cost of drilling the Initial Well. Company’s proportionate share of the cost, risk and expense to plug and abandon the Initial Well shall be eight and three quarters percent (8.75%).

3.1  If, prior to reaching Casing Point in the Initial Well, BP should encounter geological or mechanical conditions which render further operations impracticable or economically infeasible, in the sole reasonable opinion of BP, BP shall (i) give written notice of such occurrence to Company, and (ii) such notice shall state whether BP proposes to attempt to Complete the Initial Well in a shallower Zone or to abandon the Initial Well as a dry hole.

3.2 If BP does not drill the Initial Well to the Objective Zone, Company shall have the right, but not the obligation, for a period of one (1) year from the date the drilling rig used to drill the Initial Well is removed from the well site location for the Initial Well (the “Rig Release Date”), to participate in the drilling of a Substitute Well. BP shall have no obligation to drill a Substitute Well, and Company shall have no right to propose a Substitute Well. If and when BP elects to drill a Substitute Well, BP shall provide Company with an AFE for the Substitute Well. The AFE for the Substitute Well shall include, at a minimum, the surface and bottomhole location of the Substitute Well, the Objective Zon