Drilling Services Agreement

DRILLING SERVICES AGREEMENT

THIS DRILLING SERVICES AGREEMENT ("Agreement"), is made and entered into this 10 th day of November 2006 by and between Apollo Drilling Company, a corporation organized and existing under the laws of the state of Delaware, (Contractor), and Mex Tex Operating Company ("Operator"), a corporation organized and existing under the laws of the state of Texas.

WHEREAS , Operator is engaged in the business of drilling exploratory and development oil and gas wells in Edwards, Sutton and Kimble County; and

WHEREAS , Contractor is in the business of providing drilling services, ancillary equipment a rolling stock associated with the exploration and development of oil and gas wells;

NOW, THEREFORE , in consideration of the mutual promises, conditions, terms and agreements contained in this Agreement, the sufficiency of which is hereby acknowladedged, the parties hereto mutually agree as set forth below:

1. AGREEMENT

a. Operator agrees to contract Contractor92s drilling and workover equipment as described and at the rates and terms set forth in Exhibit A. In addition Operator agrees to lease certain ancillary equipment and rolling stock from Contractor in accordance with the rates and terms set forth in Exhibit B hereto. From time to time the Operator and Contractor will enter into contracts for certain equipment or services and such contracts will become Exhibits to the Agreement. These Exhibits are otherwise referred to herein as a "Contract".

b. In the event of a conflict between the Agreement and an Exhibit/Contract to the Agreement, the provisions of the Agreement shall govern.

e. This Agreement and any Exhibit/Contract thereof shall constitute the entire agreement between the parties with respect to any drilling services and shall supersede any and all prior or contemporaneous agreements or understandings, whether oral or written, between Contractor and Operator.

2. TERM OF THE AGREEMENT

a. This Agreement shall become effective upon execution by a duly authorized representative of each party and shall remain in full force and effect for two (2) years and for additional one year terms thereafter until canceled by either party by giving the other party twelve (12) months written notice of termination in accordance with this Agreement.

3. PERFORMANCE OF THE WORK

a. All work shall be performed in a good and workmanlike manner in strict conformity with the terms, conditions, specifications and requirements contained in the Agreement and related Exhibits.

4. INDEPENDENT CONTRACTOR RELATIONSHIP

a. Contractor is and shall be at all times an independent contractor. Contractor shall have the right to control the manner in which the Work is performed.

b. Neither Contractor nor anyone employed by Contractor shall be deemed for any purpose to be an employee, agent, servant or representative of Operator.

c. Operator shall have no power or authority to direct, supervise or control Contractor with respect to the means, manner or method of performance of the Work or services performed or rendered hereunder, and Contractor, in the exercise of his independent employment and as an independent contractor, shall select the means, manner and method of performance thereof. Contractor is responsible to Operator only for the results to be obtained.

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5. EQUIPMENT, MATERIALS AND SUPPLIES PROVIDED BY CONTRACTOR

a. Contractor shall furnish, operate and maintain at its own risk, cost and expense, all equipment, supplies and materials specified in the Contract or which may be necessary to perform the Work. CONTRACTOR SHALL BE AT ALL TIMES LIABLE AND RESPONSIBLE FOR AND AGREES TO DEFEND, INDEMNIFY AND RELEASE OPERATOR FOR DAMAGE TO OR DESTRUCTION OF CONTRACTOR92S EQUIPMENT AND MATERIALS, REGARDLESS OF HOW SUCH DAMAGE OR DESTRUCTION OCCURS.

6. COMPENSATION, INVOICING AND PAYMENTS

a. Contractor shall be compensated as provided in the Contract, provided that Contractor shall have satisfied Operator that there are no liens or claims on or against Operator or its property by reason of the operations of Contractor.

b. Within 15 days after the end of each calendar month, Contractor shall send to the office of Operator an invoice or invoices covering charges under any Contract for the previous calendar month. Invoicing may be on a job basis in lieu of monthly invoicing. All invoices must be submitted within 90 days of the date the supply or service was provided.

c. Within 10 days of receipt of each properly submitted invoice at said office, Operator shall pay, or cause to be paid, the approved amount of Contractor92s invoice.

d. Should Contractor purchase any equipment, machinery, materials or supplies at Operator92s request under the terms of any Contract, Operator agrees to pay Contractor the actual cost of such items. Contractor agrees to furnish Operator with copies of the supplier92s, vendor92s or other third party92s invoices covering such items.

e. Contractor may from time to time receive payment directly from the well owners in an amount equal to not less than 30% of the proposed AFE for a particular well and will issue a credit memo to Operator for such paid amounts.

7. INSURANCE

a. As a separate and independent obligation and without limiting the indemnity obligation of Contractor or its insurers, at any and all times during the term of the Agreement, Contractor shall, at Contractor92s sole expense, carry insurance for the types of insurance and in minimum amounts as follows:
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