THIS AGREEMENT is executed this 13th day of February, 1999 by ENERGAS RESOURCES, INC.
("Energas"), a British Columbia, Canada, corporation and MANKTO INVESTMENTS, L.L.C. ("Mankato"),
an Oklahoma limited liability company.
(a) Energas is engaged in the oil and gas exploration business and has expertise in developing oil and gas drilling
(b) Mankato desires to advance funds to Energas so that Energas may develop and acquire oil and gas drilling
prospects, all as set forth in this agreement.
1. Advance of Funds.
1.1 From time to time upon execution of this agreement, Mankato shall advance to Energas sums of money for
Energas to use as it sees fit for geological, geophysical, land, legal, engineering and leasehold acquisition costs
("Predrilling Costs") relating to oil and gas drilling prospects within the continental United States. The total amount
of the funds to be advanced to Energas by Mankato shall be $500,000 ("the Initial Fund"). The Initial Fund shall
be paid over to Energas by Mankato no later than the 1st day of April, 1999 ("the Initial Fund Advance Date").
1.2 Energas unconditionally promises to repay the Initial Fund to Mankato on or before the earlier of either (a)
three years from the Initial Fund Advance Date or (b) thirty days after the Initial Fund has been utilized for
Predrilling Costs on ten separate oil and gas drilling prospects and an initial test well has been commenced on
each of such ten prospects. Provided, however, at Mankato's option, no less than six months prior to the
expiration of three years from the Initial Fund Advance Date (assuming the requirement for ten prospects set forth
in (b) has not occurred) Mankato may give Energas written notice that it is extending the three year period an
additional two years). In the event the Initial Fund has not been advanced by Mankato to Energas on or before
the Initial Fund Advance Date, Mankato and Energas shall amend this agreement, in writing, by eit