JOINT VENTURE AGREEMENT

Page 11

JOINT EXPLORATION AGREEMENT

October 1, 2005

        This Joint Exploration Agreement (this “Agreement”) is entered into as of the 1st day of October, 2005, by and among Harding Company, a Texas corporation (“Harding”), and Providence Resources, LLC, a Texas limited liability company (“Providence”). Harding and Providence are sometimes hereinafter collectively referred to as the “Parties” or in the singular as a “Party”. This Agreement sets forth the terms and conditions under which the Parties will jointly acquire, explore, develop, and operate certain oil and gas and related mineral interests and properties from time to time in Comanche and Hamilton Counties, Texas.

        In consideration of the mutual covenants herein contained, the Parties hereby agree as follows:

1.     PURPOSE AND TERM

1.1 Purpose. The purpose of this Agreement is to set forth the understanding of the Parties and to establish the relationship pursuant to which they will jointly acquire, explore, develop and produce (and/or plug if necessary) certain oil and gas leases, fee interests and other oil and gas and related mineral interests and properties (“Mineral Interests”) within the Area of Mutual Interest (“AMI”), further defined in Article 9 below, and depicted on Exhibit “A” attached hereto and made a part hereof for all purposes. Any Mineral Interest acquired, explored, developed and produced (or plugged if necessary) by any Party to this Agreement in the AMI during the term of this Agreement shall be governed by the provisions of this Agreement.

1.2 Term. The term of this Agreement shall be divided into two (2) phases:

1.3 Phase I and/or Phase II may be extended for six-month periods thereafter or as otherwise mutually agreed to by the Parties hereto.

1.4 Notwithstanding the foregoing, if Providence should fail to meet its funding obligation in Section 3.1(b) of this Agreement by the date specified in said Section 3.1(b) (or such other date as the Parties shall mutually agree), this Agreement shall be immediately terminated. In that event, any payments made by Providence to Harding pursuant to Section 3.1(a) below shall be retained by Harding and be applied to the purchase of 500 acres of Mineral Interests within the AMI, with the specific acreage to be as mutually agreed by the Parties or, if the Parties cannot so agree, by a neutral third party mutually selected by Harding and acceptable to Providence. It is agreed, however, that notwithstanding a termination under this Section 1.2, the provisions of this Agreement shall continue in full force as to any Drilling Unit (as hereinafter defined) created pursuant to Section 5.3 hereof, and as to the terms of the AMI in Article 9 hereof.

2.     PHASE I: PURCHASE AND SALE

2.1 Purchase and Sale. Harding agrees to sell and assign the “Acquired Interests” to Providence and Providence agrees to purchase and pay Harding for the Acquired Interests in the manner described in Article 3 below. As used in this Agreement, the term “Acquired Interests” means:

up to an aggregate of 5,000 net mineral acres; provided, however, that as soon as is reasonably practicable after execution of this Agreement (in the case of Mineral Interests described in Clause (a) above) or after acquisition of Mineral Interests of the type described in Clause (b) above, Harding shall provide or make available to Providence, for each parcel proposed to be included in the Acquired Interests, all title opinions and other title-related materials and information, all surveys, plat maps, geophysical or geological data, and all other data or information in Harding’s possession relating to such parcel (collectively, “Parcel information”), and Providence shall be afforded a reasonable opportunity after review of such Parcel Information to accept or reject each such parcel; provided further that if Providence consummates the purchase of the Acquired Interests without objecting to the inclusion of a given parcel as to which it was provided all Parcel information at least 30 days prior to such consummation, it shall be deemed to have accepted that parcel.

        Any sale of Mineral Interests pursuant to this Section 2.1 shall be subject to the royalties and overriding royalties affecting such Mineral Interests as of the date of execution of this Agreement (in the case of Mineral Interests discussed under Clause (a) above) or as of the date of execution of the underlying lease or other conveyance document pursuant to which the Mineral Interest is acquired (in the case of Mineral Interests discussed under Clause (b) above), in each such case aggregating not more than 24% of 8/8ths, and further subject to the terms and conditions set forth in this Agreement.

2.2 Interests Reserved.

2.3 Purchase Price. The purchase price for Harding’s Interest in the Acquired Interests (the “Purchase Price”) shall be calculated by multiplying $500 times the total net mineral acres contained in the Acquired Interests as of November 29, 2005, which shall be paid by Providence to Harding as follows:

    (a)        On the date of execution of this Agreement (the “Closing Date”): $250,000; and

    (b)        On or before November 29, 2005: The balance of the Purchase Price.

2.4 Assignment of Acquired Interests. Simultaneously with the payment specified in Section 2.3(b), Harding shall execute and deliver to Providence a recordable assignment document in form and substance reasonably acceptable to Providence, covering Providence’s ownership interest in the Acquired Interests, subject to any required consent to such assignment that may be contained in the applicable leases. Such assignment shall be made without warranty of title, except as to those claiming by, through, or under Harding, but not otherwise, and shall be free and clear of all liens, claims or encumbrances except for (i) Providence’s proportionate part of valid and existing royalties and the overriding royalty interests and carried working interest described in Section 2.2 of this Agreement and (ii) any required consents of lessors, which consents Providence shall work diligently to obtain as promptly as possible after the Closing Date. If Harding is unable to obtain any such consent to the assignment to Providence by the 30th day following the Closing Date, Providence shall have the right, but not the obligation, to assign the applicable Mineral Interest back to Harding, in which event Harding shall promptly refund to Providence the portion of the Purchase Price attributable to the re-conveyed Mineral Interest.

3.     OTHER PHASE I OBLIGATIONS

3.1 Acreage Acquisition Program. During Phase I (but after November 29, 2005), Harding shall work to acquire additional Mineral Interests within the AMI. Providence shall have the right and option to purchase any such additional Mineral Interests for a purchase price equal to 100% of the lease acquisition and bonus costs plus an additional $150 per net mineral acre. Harding shall notify Providence of the acquisition of any parcel of Mineral Interests within the AMI promptly following such acquisition, including with such notice all Parcel Information.

        Providence shall have a period of 30 days after receipt of such notice and Parcel Information to furnish Harding written notice of its election whether or not to acquire the parcel; provided, however, if a well in search of oil or gas is being drilled within one mile of such parcel at the time the notice is given, Providence shall have a period of 48 hours after receipt of the notice (exclusive of Saturdays, Sundays and legal holidays) within which to elect to acquire the parcel, provided further, however, that the 48-hour election period shall not apply unless Harding shall (i) give the notice to Providence within two days after the date on which Harding acquired the parcel, exclusive of Saturdays, Sundays or legal holidays, (ii) furnish Providence with the approximate location of the well then being drilled and the name of the operator or drilling contractor drilling the well, and (iii) specifically advise Providence that it shall have a period of 48 hours (exclusive of Saturdays, Sundays and legal holidays) within which to elect to acquire the parcel.

        Closing of the purchase and sale of any parcel accepted by Providence pursuant to this Section 3.1 shall occur at the offices of Harding within ten days of the date Providence notifies Harding it accepts the parcel, or at such other place or time as the parties shall agree. At the closing Providence shall pay for the parcel in cash or other immediately available funds and Harding shall transfer the parcel to Providence using a recordable assignment document consistent with that contemplated in Section 2.4 above.

        Any parcel purchased by Providence pursuant to this Section 3.1 shall be conveyed subject to the same overriding royalty interest and carried working interest applicable to Acquired Interests, as discussed in Section 2.2 above. It is the objective of the Parties to add 10,000 net mineral acres pursuant to this Section 3.1.

3.2 Seismic Obligation. Harding shall engage a mutually acceptable seismic data contractor, to acquire, process and interpret approximately 8 square miles of 3-D seismic over and across the Acquired Interests. Providence shall fund 100% of Harding’s cost of acquiring, processing and interpreting such seismic data, up to $350,000 (or such greater amount as Providence shall approve in writing in advance). Payment shall be made to Harding within 15 days of receipt of Harding’s Authority for Expenditure (“AFE”) for the seismic program, provided such AFE is submitted to Providence no more than 30 days prior to scheduled commencement of work and is accompanied by a schedule of work provided or approved by the seismic contractor.

3.3 Drilling Obligation. Providence shall fund 100% of the costs of drilling four wells (“Obligatory Wells”) in the AMI in accordance with the provisions of Article 4 below. Three of the Obligatory Wells shall be vertical wells drilled to test the Marble Falls Formation and the fourth O