2nd AMENDED AND RESTATED AGREEMENT OF BUSINESS PRINCIPLES

2 ^nd AMENDED AND RESTATED AGREEMENT OF BUSINESS PRINCIPLES

THIS AGREEMENT made effective as of the 1st day of September, 2003 between Enterra and JED and effective as of the 1st day of August, 2004 among Enterra, JED and JMG.

AMONG:

ENTERRA ENERGY TRUST , a trust

having an office in Calgary, Alberta ( A Enterra @ )

OF THE FIRST PART

- and -

JED OIL INC. , a corporation having an

office in Calgary, Alberta ( A JED @ )

OF THE SECOND PART

- and -

JMG EXPLORATION, INC. a corporation

having an office in Calgary, Alberta ( A JMG @ )

OF THE THIRD PART

WHEREAS:

A.

Enterra was formed as a royalty trust by the reorganization of Enterra Energy Corp. on November 25, 2003;

B.

JED was incorporated by principals of Enterra under the laws of the Province of Alberta on September 3, 2003 for the purpose of being an oil and gas development company; under a joint business plan pursuant to which JED would be the operator and developer of Enterra = s assets with some development;

C.

JMG was incorporated by principals of Enterra and JED under the laws of the State of Nevada on July 16, 2004 for the purpose of being an exploration company, under a joint business plan pursuant to which JMG would be the operator and explorer of Enterra = s assets with no development;

D.

the parties desire to enter into this Agreement to provide for their rights and obligations to each other;

NOW THEREFORE for consideration of $10.00 and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1.

Principles of Joint Business Plan

The general principles of the Joint Business Plan of Enterra, JED and JMG reflect the circumstance that Enterra is a royalty trust whose primary purpose is providing an income stream to its unitholders, JED is an oil and gas development company and JMG is an oil and gas exploration company.  Accordingly the parties have agreed on the following principles (the A Principles @ ) :

(a)

Operatorship: (i) Enterra hereby appoints JED the operator or contract operator of all assets in which Enterra is now the operator and which have development, including the contract operator of assets in which JED has no working interests, and agrees to appoint JED the operator or contract operator of any and all future assets which have development acquired by Enterra in which Enterra has the right to be or appoint the operator.

(ii) Enterra hereby agrees to appoint JMG the operator or contract operator of any and all future assets which have no current development acquired by Enterra in which Enterra has the right to be or appoint the operator.

(b)

Enterra Acquisitions and Farmouts: (i) Enterra hereby agrees that working interests in any assets with production it acquires in the future which require additional drilling ( A Enterra = s Acquired Interests @ ) will be offered to be farmed out to JED on the basis that JED will pay 100% of all costs allocable to Enterra = s Acquired Interests (including any required tie-ins and facility costs related to such additional drilling) to earn 70% of Enterra = s Acquired Interests in the producing zones of the spacing units of all new wells drilled and Enterra retains a carried interest of 30% of Enterra = s Acquired Interests.

(ii) Enterra hereby agrees that Enterra = s Acquired Interests in any assets without production it acquires in the future will be offered to be farmed out to JMG on the basis that JMG will pay 100% of all costs allocable to Enterra = s Acquired Interests (including any required tie-ins and facility costs) to earn 70% of Enterra = s Acquired Interests in the producing zones of the spacing units of all new wells drilled and Enterra retains a carried interest of 30% of Enterra = s Acquired Interests.

(c)

JED Dispositions: In the event that JED desires to sell any assets, other than assets earned under farmouts from Enterra and JMG pursuant to subclause 1(e), (either before or after receipt of a third party offer) it shall first offer such assets to Enterra.

(i)  

In the event that JED has received a bona fide third party offer for such assets, it shall offer such assets to Enterra on the same terms and conditions as such third party offer (or a cash equivalent purchase price if the offer is not for cash), and Enterra shall have 30 days from receipt of such notice to exercise its right of first refusal and close the purchase of the assets on the same terms and conditions as set out in the notice of the offer; following which JED shall be free for 60 days to sell such assets to such third party on terms no less favorable to JED that those set out in the offer.

(ii)  

In the event that JED desires to sell assets for which it has not received a bona fide offer from a third party, it shall offer such assets for sale to Enterra , on an area by area, play of project basis: (A) for each area, play or project that has production, at a price equal to the estimated present value as determined by an independent engineering report prepared by a mutually agreeable engineering firm utilizing such firm = s current fluctuating pricing deck and discounted by the Current Percentage Discount Rate; and (B) for each area, play or project has not been developed, at a cost equal to the estimated value of the undeveloped land as determined by an independent valuation prepared by a mutually agreeable valuation firm, plus any actual expenses by JED other than land acquisition costs, such as seismic data, etc.;  and Enterra shall have 30 days from determination of the purchase price to close such purchase.  If Enterra does not close the purchase withing 30 days from determination of the purchase price, JED shall be free for 6 months to sell such assets to another party at any price negotiated in good faith with such other party that is not less than the price at which Enterra could have acquired such assets, without triggering Enterra = s right of first refusal set out in subclause 1(c)(i).  For purposes of this Agreement, the term A Current Percentage Discount Rate @ means the discount rate in the independent engineering report which is closest to the 10 year bond rate established from time to time by the government of the United States of America for government savings bonds plus five percent (5%) provided that the Current Percentage Discount Rate shall be a minimum of 10%.

And in the event that JED desires to sell any assets earned under farmouts from Enterra and/or JMG pursuant to subclause 1(e), (either before or after receipt of a third party offer) it shall first offer such assets to Enterra and/or JMG at a price determined pursuant to either subclause (i) or (ii) above, as applicable to the circumstances.  If JED has earned such assets under farmouts from both Enterra and JMG, the offer to sell shall be proportional to the interest earned from each.

(d)

JMG Dispositions: In the event that JMG desires to sell any assets (either before or after receipt of a third party offer) it shall first offer such assets to Enterra.

(i)  

In the event that JMG has received a bona fide third party offer for such assets, it shall offer such assets to Enterra on the same terms and conditions as such third party offer (or a cash equivalent purchase price if the offer is not for cash), and Enterra shall have 30 days from receipt of such notice to exercise its right of first refusal and close the purchase of the assets on the same terms and conditions as set out in the notice of the offer; following which JMG shall be free for 60 days to sell such assets to such third party on terms no less favorable to JMG that those set out in the offer.

(ii)  

In the event that JMG desires to sell assets for which it has not received a bona fide offer from a third party, it shall offer such assets for sale to Enterra , on an area by area, play of project basis: (A) for each area, play or project that has production, at a price equal to the estimated present value as determined by an independent engineering report prepared by a mutually agreeable engineering firm utilizing such firm = s current fluctuating pricing deck and discounted by the Current Percentage Discount Rate; and (B) for each area, play or project has not been developed, at a cost equal to the estimated value of the undeveloped land as determined by an independent valuation prepared by a mutually agreeable valuation firm, plus any actual expenses by JMG other than land acquisition costs, such as seismic data, etc.;  and Enterra shall have 30 days from determination of the purchase price to close such purchase.  If Enterra does not close the purchase withing 30 days from determination of the purchase price, JMG shall be free for 6 months to sell such assets to another party at any price negotiated in good faith with such other party that is not less than the price at which Enterra could have acquired such assets, without triggering Enterra = s right of first refusal set out in subclause 1(c)(i).  For purposes of this Agreement, the term A Current Percentage Discount Rate @ means the discount rate in the independent engineering report which is closest to the 10 year bond rate established from time to time by the government of the United States of America for government savings bonds plus five percent (5%) provided that the Current Percentage Discount Rate shall be a minimum of 10%.

(e)

Enterra and JMG Farmouts: Enterra and JMG hereby agree that when assets acquired by JMG have been sufficiently drilled to establish the existence of commercially viable hydrocarbons, on an area by area, play or project basis, JMG = s working interests, and Enterra = s working interests acquired from JMG pursuant to subclause 1(d), if any, will be offered to be farmed out to JED on the basis that JED will pay 100% of all costs allocable to both farmors = working interests (including any required tie-ins and facility