AMENDMENT NO. 1 TO AMENDED AND RESTATED CREDIT AGREEMENT

Exhibit 10.7

Amendment No. 1 to
Amended and Restated Credit Agreement

This FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “ Amendment ”), effective (subject to Section 2 below) as of June 30, 2008 (the “ Amendment Effective Date ”), by and among NGAS RESOURCES, INC., a corporation organized under the laws of the Province of British Columbia (“ Holdings ”), DAUGHERTY PETROLEUM, INC., a Kentucky corporation (the “ Borrower ”), the several banks and other financial institutions or entities from time to time party to the Credit Agreement referred to below (the “ Lenders ”), and KEYBANK NATIONAL ASSOCIATION, a national banking association (“ KeyBank ”), as Administrative Agent for the Lenders (in such capacity, the “ Administrative Agent ”).

PRELIMINARY STATEMENTS:

Holdings, the Borrower, the Lenders and the Administrative Agent have entered into an Amended and Restated Credit Agreement dated as of May 30, 2008 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”); capitalized terms defined therein and used herein having the meanings specified therein unless otherwise defined herein.

Holdings, the Borrower, the Lenders and the Administrative Agent desire to amend Section 2.02(e) of the Credit Agreement to increase the Conforming Borrowing Base from $75,000,000 to $80,000,000 and to extend the date on which the Borrowing Base is to equal the Conforming Borrowing Base from June 30, 2008 to December 31, 2008.

Holdings, the Borrower, the Lenders and the Administrative Agent have agreed to make the amendments as provided herein upon and subject to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE XI Amendments to Credit Agreement . The Credit Agreement is, as of the Amendment Effective Date, but subject to the satisfaction of the conditions precedent set forth in Section 2 hereof, hereby amended as follows:

Section 11.01. Section 2.02(e) of the Credit Agreement is amended by deleting such Section in its entirety and replacing it with the following:

“(e) Conforming Borrowing Base . The Conforming Borrowing Base is $80,000,000. The Conforming Borrowing Base shall be utilized solely for purposes of determining the Conforming Borrowing Base Usage under and for purposes of this Agreement. The amount of the Conforming Borrowing Base may be redetermined on or about October 1, 2008, by the Administrative Agent and the Lenders in the same manner as the Borrowing Base may be redetermined on or about such date as provided in this Section 2.02. Notwithstanding the foregoing, beginning on December 31, 2008 and continuing through the Termination Date, the Borrowing Base shall be an amount which is equal to the Conforming Borrowing Base, as redetermined in accordance with Section 2.02, unless all of the Lenders agree in writing that the Conforming Borrowing Base should thereafter be maintained at an amount which is lower than the amount of the Borrowing Base then in effect.

Section 11.02. Schedule 1.01A of the Credit Agreement is hereby deleted in its entirety and replaced with Schedule 1.01A attached hereto.

ARTICLE XII Conditions of Effectiveness . This Amendment shall become effective as of the Amendment Effective Date, subject to the satisfaction (or waiver in writing by the Administrative Agent) of the following conditions precedent:

Section 12.01. the Administrative Agent shall have received this Amendment duly executed by Holdings, the Borrower and all of the Lenders, and acknowledged and consented to by the Guarantors.

Section 12.02. the Administrative Agent shall have received a certificate of a Responsible Officer of each Loan Party, in form satisfactory to the Administrative Agent, certifying as of the Amendment Effective Date:

(a) the names and true signatures of the officers of such Loan Party authorized to execute and deliver, in the name of and on behalf of such Loan Party, this Amendment;

(b) copies of the resolutions (or similar authorizing documents) of the board of directors or other governing body of such Loan Party approving and authorizing the execution, delivery and performance by such Loan Party of this Amendment; and

(c) other documents and matters as the Administrative Agent may reasonably request;

Section 12.03. the Borrower shall have paid all reasonable accrued and unpaid fees, costs and expenses of the Administrative Agent and the Lenders in connection with this Amendment and any other agreements, instruments or documents related hereto, and the transactions contemplated hereby and thereby to the extent due and payable, including, without limitation, the reasonable fees and out of pocket expenses of legal counsel for the Administrative Agent;

Section 12.04. the Administrative Agent shall have received, for the ratable account of the Lenders, payment by the Borrower of a fee for the increase of the Commitment in immediately available funds in the amount of $140,000; and

Section 12.05. the Administrative Agent and each Lender shall have received copies of all other documents, instruments and certificates which the Administrative Agent, any Lender or its or their counsel may reasonably request in connection herewith.

ARTICLE XIII Borrowing Base . The Lenders and the Borrower agree that the amount of the Borrowing Base from and after the Amendment Effective Date up to the next redetermination will be $90,000,000. This provision does not limit the right of the parties to initiate interim redeterminations of the Borrowing Base in accordance with Section 2.02(c).

ARTICLE XIV Representations and Warranties . The Borrower hereby represents and warrants to the Administrative Agent and the Lenders as follows:

Section 14.01. The Borrower is a corporation duly incorporated, validly existing and in good standing under the laws of the Commonwealth of Kentucky.

Section 14.02. The execution, delivery and performance by the Borrower of this Amendment is within the Borrower’s general corporate powers, has been duly authorized by all necessary action on the part of such Borrower and does not contravene (i) such Borrower’s Organizational Documents, or (ii) any Requirement of Law or any Contractual Obligation binding on or affecting the Borrower or any of its assets or properties, or result in, or require, the creation or imposition of any Lien or other charge, encumbrance or preferential arrangement of any nature (other than pursuant to the Security Documents) upon or with respect to any of the properties now owned or hereafter acquired by such Borrower.

Section 14.03. No authorization, approval or other action by, and no notice