Freeman House, No. 21/22 Marina, Lagos, Nigeria

Nigeria

OML 14, Stubb Creek Field

The Shell Petroleum Development Company of Nigeria Limited

Stubb Creek Field

Stubb Creek Field

Oil, natural gas.

Universal Energy Resources Limited

Nigerian National Petroleum Corporation

The initial term of this contract is 60 months.

Farmout Agreement

Universal Energy Resources shall be fully and solely responsible for the handling and disposal of all natural gas produced in an environmentally responsible manner in accordance with all-applicable laws and regulations of Nigeria. Universal Energy Resources assumes full responsibility for all costs, expenses and liability arising out of (a) the enforcement or threat of enforcement of any law or regulation regarding any waste material, or (b) any environmental clean-up related directly or indirectly to operations.

Nigerian National Petroleum Company and The Shell Petroleum Development Company of Nigeria shall have access and the right to inspect or audit all of Universal Energy Resources' books, records, and inventories up to twice a year. Universal Energy Resources must be provided 15 days notice of such inspection or audit. Universal Energy Resources shall establish a program for regular health safety and environmental audits, and shall grant Nigerian National Petroleum Company and The Shell Petroleum Development Company of Nigeria the right to observe operations, or conduct health safety and environmental audits at their own cost. If such an audit reveals any potential environmental issue which may affect Nigerian National Petroleum Company and The Shell Petroleum Development Company of Nigeria's reputation or petroleum operations, Universal Energy Resources shall at its own cost follow any instructions to remedy the issue.

Each Party shall prepare and file the requisite income and other tax reports and returns required of such party in accordance with the Regulations.

Universal Energy Resources shall pay an overriding royalty as consideration for this contract. Universal Energy Resources shall pay (a) For crude oil production in Stubb Creek Field, Universal Energy Resources shall pay: 2.5% of the daily production up to 2,000 Bopd; 3.0% of the value of daily production from 2,001 to 5,000 Bopd; 5.5% of the value of daily production from 5,001 to 10,000 Bopd; 7.5% of the value of daily production between 10,001 and 15,000 Bopd. For production in excess of 15,000 Bopd, the override royalty shall be negotiated and agreed between the parties. (b) For the purposes of this article, the daily production shall mean the entire daily production of crude oil from the marginal field. (c) With respect to the production of natural gas, Universal Energy Resources shall pay 0 % of the value of production between 0 and 20 million standard cubic feet per day; for production higher than 20 million standard cubic feet per-day, the parties shall agree on terms and conditions of such production.

In the event of a dispute that cannot be resolved amicably, the parties shall settle the matter through binding arbitration. The arbitration shall take place in Lagos, Nigeria. The proceedings shall be conducted in English. Each party will appoint one arbitrator, the third arbitrator will be chosen by the two appointed arbitrators. The costs of the proceedings shall be divided equally among the parties, with each party bearing the costs of its own attorney's fees and of any witnesses. The arbitral proceedings are to be kept strictly confidential.

Shell shall not assign or transfer all or part of its rights and obligations of this contract without consent.

The contract may be immediately terminated if: (a) Universal Energy Resources declares bankruptcy or goes insolvent, or if it is found to have willfully violated Nigerian laws or regulations regarding petroleum operations, financial transactions, and/or commercial operations during the term of the contract; (b) the Department of Petroleum Resources determines that Universal Energy Resources' operations are not being conducted in compliance with applicable Nigerian petroleum laws and regulations or environmental, health and safety regulations, and Universal Energy Resources fails to comply within 90 days of receiving written notice of non-compliance; (c) Universal Energy Resources assigns its interests under the contract without prior written consent of the government; (d) it is established that Universal Energy Resources intentionally extracts petroleum outside the area covered by this contract, except where unavoidable or otherwise provided under Nigerian law; (e) if Universal Energy Resources is unable to remedy or remove the cause of a material breach (as outlined in Art. 19) after a 90 day notice period.

All information acquired pursuant to this contract shall be considered confidential, and shall not be disclosed to any entity not party to the contract without written consent of the other parties, except: to party affiliates; to governmental agencies as required by law; where required to comply with the law, legal proceedings, or a court order; where necessary for the work of contractors, consultants or attorneys hired by parties; to a bank or financial institution where necessary to obtain funding to fulfill a parties obligations under the contract; where required under applicable securities regulation, but written party consent is required for any public disclosure or shareholder report not required by such regulation; to a party's employees, associates and partners for the purposes implementing the contract, subject to each party taking precautions to ensure the information remains confidential.

Universal Energy Resources Limited acknowledges that Nigerian National Petroleum Corporation and The Shell Petroleum Development Company of Nigeria have no duty or responsibility in the event of nationalization, expropriation, or confiscation.

Nigerian law governs.

If any party is rendered unable by force majeure to fulfill its contractual obligations in whole or in part, then the obligations of the party shall be suspended during the continuance of the inability. The party claiming force majeure shall notify the other party of the situation within 24 hours after the occurrence, and keep the other party informed of all significant developments. the affected party shall use all reasonable endeavors to remove or overcome the force majeure situation as quickly as possible in an economic manner. Covered force majeure situations include, but are not limited to, any act, event, happening, or occurrence due to natural causes, acts or perils of navigation, fire, hostilities, war (declared or undeclared), blockade, labour disturbances, riots, insurrection, civil commotion including acts of hostilities by local communities, quarantine restrictions, epidemics, storms, floods, earthquakes, blow-out, lightning, acts of or orders of Government, and other acts of God.

War and confiscation Risk: Nigerian National Petroleum Corporation and The Shell Petroleum Development Company bear no duties or responsibilities to Universal Resources Limited n the event of (a) war, insurrection, civil commotion, hostilities, sabotage, violence, seizure, riot, rebellion, blockage, revolution and embargo; (b) nationalization, expropriation, confiscation, sequestration