>Falcon should thank their lucky stars for the direction this deal is heading.

So should John Gustavson....it looks to me like if the area is unitized, he gets an additional 2% overriding royalty on everything within a 30 mile radius outside of the original licenses. You would almost think they saw this coming back in 2004.

EXPLORATION AND DEVELOPMENT AGREEMENT

Between

MAKO ENERGY CORPORATION
and

PROSPECT RESOURCES, INC.

July 9, 2004

7. AREA OF MUTUAL INTEREST:

(a) Formation: The Parties hereby create and establish an Area of Mutual Interest ("AMI") consisting of all oil and gas mineral acres within thirty (30) miles from any and every point on the boundary lines of the Licenses, excluding all lands within the boundaries which are subject to the terms of the Licenses. That is, licenses owned by third parties as of the date of this Agreement or thereafter, which are within the exterior boundaries of either license are also within the AMI.

(b) Notice and Assignment: Within ten (10) days of obtaining any interest in oil and gas production, revenues, or non-producing properties within the AMI, the Party obtaining such interest shall deliver to the other Party notice thereof, consideration paid, and copies of all pertinent documents, including but not limited to licenses, leases, assignments, and other instruments related to the interest obtained. The Party obtaining the interest shall assign to the other Party a 2% of eight-eighths overriding royalty interest, in a mutually acceptable form, in all such interests obtained, as full and final consideration under this Section 7.