PETROHAWK [LOGO GOES HERE]
ENERGY CORPORATION
JULY 14, 2003
VIA EMAIL AND OVERNIGHT DELIVERY
MI MIKE NEWPORT PRESIDENT
MAINLAND
RESOURCES, INC
117314 SH 249, SUITE 306
HOUSTON, TEXAS 77064
RE LETTER
AGREEMENT RELATING
TO DEVELOPMENT OF ACREAGE IN DESOTO PARISH,
LOUISIANA
DEAR MR. NEWPORT:
PETROHAWK ENERGY CORPORATION AND/OR ITS AFFILIATES (HEREINAFTER REFERRED TO AS
"HAWK") IS PLEASED TO PROVIDE YOU THIS "LETTER AGREEMENT" SETTING FORTH OUR
UNDERSTANDING OF A
JOINT DEVELOPMENT
PROJECT BETWEEN
MAINLAND RESOURCES INC
AND/OR ITS AFFILIATES
( MAINLAND) AND HAWK.
IT IS OUR INTENT THAT
THIS LETTER
AGREEMENT SHALL BE BINDING ON BOTH PARTIES TO THE EXTENT SET FORTH
HEREIN.
HAWK HAS UTILIZED
INFORMATION PROVIDED
BY MAINLAND FOR PURPOSES OF MAKING THIS
OFFER. THIS PROPOSAL IS BASED ON THE ASSUMPTION THAT MAINLAND OWNS
ALL RIGHTS TO
ALL DEPTHS BELOW THE BASE OF THE COTTON VALLEY FORMATION (WHICH SHALL INCLUDE
THE HAYNESVILLE SHALE
FORMATION,) PURSUANT
TO THE OIL AND GAS LEASES (TOTALING
APPROXIMATELY 2,695 NET ACES.) AS DESCRIBED ON EXHIBIT A (THE
'LEASES') AND OWNS
AT LEAST A 75.00% NET REVENUE INTEREST IN THE LEASES HAWK WILL BE
SUBJECT TO THE
TERMS OF THAT CERTAIN
LETTER AGREEMENT
DATED DECEMBER 11,
2007 BY AND BETWEEN
PERMIAN BASIN ACQUISITION FUND AND KINGSLEY RESOURCES INC (THE
'PERMIAN-KINGSLEY
AGREEMENT") PARAGRAPH
6 TO THE PERMIAN-KINGSLEY AGREEMENT CREATED AN AMI
CONSISTING OF SECTIONS 11 12.13.14.15.16 20 21.22.23 OF
T13N-RMW AND SECTION 7,
T13N-R13W DESOTO
PARISH LOUISIANA THE AMI SHALL BE FOR A TERM OF SIX YEARS FROM
DECEMBER 11, 2007. IN THE EVENT ANY ADDITIONAL LEASES ARE ACQUIRED BY
MAINLAND
(SUCCESSOR IN TITLE) TO KINGSLEY RESOURCES INC. PETROLEUM BASIN
ACQUISITION FUND
WILL RECEIVE A 2% ORRI. HAWK AND MAINLAND WILL ENTER INTO AN AMI COVERING
THIS
SAME AREA.
MAINLAND AND HAWK HAVE AGREED TO THE FOLLOWING
1. ASSETS
TO BE TRANSFERRED TO HAWK BY MAINLAND. MAINLAND WILL
TRANSFER 60% OF THE
LEASES TO HAWK AT CLOSING BUT ONLY AS THE
LEASES RELATE TO ALL
DEPTHS BELOW THE BASE
OF THE COTTON
VALLEY
FORMATION. THIS
TRANSFER WILL INCLUDE 60% OF MAINLAND'S INTEREST
IN RIGHTS OF WAY
EASEMENTS SERVITUDES AND 60% OF ALL CONTRACT
RIGHTS AND ALL OTHER
1000 Louisiana. Suite 5600 Houston. TX 7 7002
Ph. 032 204 2700 Fax: 032 204 2800
<PAGE>
MR. MIKE NEWPORT
MAINLAND RESOURCES, INC.
PAGE 2
RELATED REAL
PROPERTY PERTAINING TO THE OWNERSHIP OF SUCH
PROPERTIES,
INCLUDING ANY
OVERRIDING
ROYALTY INTEREST, FEE
INTEREST, NET PROFITS INTEREST, PRODUCTION PAYMENTS, REVERSIONARY
INTERESTS AND OTHER
INTERESTS IN THE OIL
AND GAS IN PLACE OR THE
PRODUCTION THEREOF
FROM THE AFFECTED
LANDS. COLLECTIVELY, THE
ASSETS TO BE
TRANSFERRED MAY BE
REFERRED TO HEREIN AS
"ACQUIRED
PROPERTIES". HAWK WILL
BE ALLOWED TO COPY ALL
LEASE, TITLE AND
OTHER FILES RELATED TO
THE ACQUIRED
PROPERTIES.
MAINLAND WILL
RETAIN ALL RIGHTS ABOVE THE BASE OF THE COTTON VALLEY
FORMATION.
2. CARRIED
INTEREST OBLIGATION. IN CONSIDERATION OF THE TRANSFERS SET
FORTH IN PARAGRAPH
1 ABOVE, HAWK WILL PAY 100% OF ALL COSTS
(AS
SUCH COSTS RELATE TO
THE INTERESTS
OWNED BY HAWK AND
MAINLAND)
ASSOCIATED
WITH THE FIRST WELL DRILLED BELOW THE BASE OF THE
COTTON VALLEY
FORMATION ON THE LEASES. THE FIRST WELL (GRIFFITH
#1-H) WILL BE LOCATED 330 FNL & 510 FWL IN SECTION 11.
T13N-R14W.
HAWK WILL ATTEMPT TO DRILL A 4575' LATERAL TO A BOTTOM HOLE
LOCATION AT 380 FWL AND 380 FSL IN SECTION 11. THE LOCATION PLAT
DESCRIBING THE INITIAL
SURFACE LOCATION AND
LATERAL ARE ATTACHED
HERETO AS EXHIBIT B. SUCH COSTS SHALL INCLUDE, BUT NOT BE LIMITED
TO, DRILLING,
COMPLETING, TITLE OPINIONS AND FRACTURE STIMULATING
AND SHALL INCLUDE
ALL COSTS UP TO AND INCLUDING THE PIPELINE
CONNECTION, IN
ADDITION, HAWK WILL
PAY 80% OF ALL COSTS (AS SUCH
COSTS RELATE TO THE
INTERESTS OWNED BY
HAWK AND MAINLAND) OF THE
SECOND WELL
DRILLED ON THE
LEASES BELOW THE BASE OF THE COTTON
VALLEY FORMATION AND MAINLAND SHALL PAY 20% OF SUCH COSTS. FOR
THE
THIRD AND ALL
SUBSEQUENT WELLS
DRILLED ON THE LEASES
BELOW THE
BASE OF THE
COTTON VALLEY FORMATION, HAWK SHALL PAY 60% AND
MAINLAND SHALL PAY 40%
OF SUCH COSTS (AS SUCH COSTS RELATE TO THE
INTERESTS OF HAWK AND
MAINLAND).
HAWK WILL ATTEMPT TO LOG ALL
DEPTHS IN AND TO EACH WELL DRILLED AND PROVIDE THE RESULTS OF
ALL
LOGS TO MAINLAND.
MAINLAND WILL PAY FOR THE INCREMENTAL COST OF
LOGGING THE ZONES ABOVE THE BASE OF THE COTTON VALLEY
FORMATION.
3. ASSIGNMENT.
MAINLAND, AT CLOSING, SHALL CONVEY THE ACQUIRED
PROPERTIES TO HAWK BY A MUTUALLY ACCEPTABL
