3.	MINERAL RIGHTS AND PROPERTIES

Coleman County – Three Well Rework/Recompletion

On October 14, 2014, the Company entered into a Terms of Farm-out Agreement with Copper Basin Oil & Gas Inc. to acquire a working interest in an oil and gas lease in the J.E. Richey lease, which has 3 fully equipped wells, production flow lines, injection flow line, Tank battery consisting of two 300 BBL tanks, one 210 BBL tank with two separators. The Company agreed to acquire a 75% working interest in the lease including the existing wells and equipment by committing to do the following:

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Re-Work and place back into production two wells

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Re-Complete the third well and place into production

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Pay $50,000 in cash

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Issue to Cooper or its designee(s) 2,000,000 restricted shares of the Company’s common stock

The total consideration that the Company must pay to acquire the 75% working interest is estimated at $336,000, which amount includes all work requirements, and common stock valued at $0.10 based upon our current share price of $0.11 as at October 14, 2014. The Net Revenue Interest is 56.25% and consists of approximately 206.5 acres, more or less, in Coleman County, Texas. This lease has no depth limit.

On March 20, 2015, the Company entered into a multi-well purchase and sale agreement with EF VC2, LLC to sell a 37.5% working interest (“WI”) in the 3 wells for total consideration of $180,000. Under the terms of the agreement both parties will receive a 50.0% of the WI revenue from these three wells until EF VC2 recaptures their investment of $180,000 (defined as “Payout”). After Payout EF VC2 will revert to a 37.5% of the WI revenue for the remaining life of the production from the three wells.

Callahan County Shallow Oil Play

On July 7, 2014, the Company entered into a Terms of Farm-out Agreement with Grasshoppers Unlimited Inc. to acquire a working interest in an oil and gas lease in the Callahan County Shallow Oil Play, which has 3 fully equipped wells, 1 injection well, production flow lines, injection flow line, Tank battery consisting of two 150 BBL tanks with separator, Injection system has a 150 BBL tank with Injection Pump, 8 un-drilled locations. The Company agreed to acquire a 75% working interest in the lease including the existing wells and equipment by committing to do the following:

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Bringing the existing three wells back into production (these three wells have been inactive since November 2012)

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Conducting a H-5 pressure test on the injection well

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Agreeing to drill two (2) new wells prior to August 1, 2015

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Agreeing to drill six (6) new wells prior to August 1, 2016

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Paying $25,000 in cash on or before October 1, 2014

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Issuing to Grasshoppers or its designee(s) 5,000,000 restricted shares of the Company’s common stock

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Enter into an Operating Agreement (A.A.P.L. Model Operating Form 610) with J.V. Rhyne, a licensed oil and gas operator in the State of Texas to operate the wells

The total consideration that we must pay to acquire the 75% working interest is estimated at $275,000, which amount does not include all work requirement and drilling commitments. The common stock is valued at $0.05 per share based upon our current share price of $0.10 as at June 30, 2014. The Net Revenue Interest is 70% and consists of approximately 60 acres, more or less, in Callahan County, Texas. This lease has a depth limit to no more than 1,000 feet.

Callahan/Eastland Mississippi Reef Play

On July 7, 2014, under the same Terms of Farm-out Agreement with Grasshoppers Unlimited Inc., the Company acquired a working interest in a second oil and gas lease known as the Callahan/Eastland Mississippi Reef Play, which is located near the Callahan and Eastland County line in Central Texas. We agreed to acquire 60% of the working interest in this lease by conducting the following:

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Prepare an an independent geological report on the lease

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Agreeing to drill one (1) new well prior to August 1, 2015

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Pay $15,000 in cash on or before October 1, 2014

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Issuing 1,000,000 restricted shares of the Company’s common stock to Grasshoppers or its designees.

The total consideration that we must pay to acquire the 60% working interest is approximately $65,000, which amount does not include the cost of drilling and completing a well on the acreage. The common stock is valued at $0.05 based upon our current share price of $0.10 as at June 30, 2014. The Net Revenue Interest is 75% and consists of approximately 220 acres, more or less, in Callahan County, Texas. This lease has no depth limit requirement. The Company is currently in discussions to amend the terms of the lease.

Winnemucca Mountain Property

On September 14, 2012, the Company entered into an option agreement (as amended and restated on November 15, 2012, February 1, 2013 and August 26, 2013) with AHL Holdings Ltd., a Nevada corporation, and Golden Sands Exploration Inc., a company incorporated under the laws of British Columbia, Canada, wherein the Company acquired an option to purchase a revised 80% interest in and to certain mining claims from AHL Holdings and Golden Sands, which claims form the Winnemucca Mountain Property in Humboldt County, Nevada. This Winnemucca Mountain property is currently comprised of 208 unpatented mining claims covering an area of approximately 3,800 acres.

The aggregate cash fee payable to exercise the option has been increased from $1,715,000 to $1,755,000 and the total number of common shares issuable to exercise the option has been increased from 100,000 to 2,100,000. Lastly, the amended and restated agreement provides that AHL Holdings may elect to receive shares of our common stock in lieu of any cash payments payable pursuant to the agreement at a 75% discount to the then current closing market price.

Effective July 30, 2014, the Company entered into an amended and restated option agreement with AHL Holdings and Golden Sands that materially modifies and replaces the terms of the original option agreement (as amended last on August 26, 2013). Pursuant to this amended and restated agreement, the remaining outstanding obligations are as follows:

To pay Golden Sands:

	a.	$20,000 by January 31, 2015 (extended from January 31, 2014);
	b.	$50,000 by December 31, 2015 (extended from December 31, 2014);
	c.	$150,000 by December 31, 2016 (extended from December 31, 2015);
	d.	$400,000 by December 31, 2017 (extended from December 31, 2016); and
	e.	$1,000,000 by December 31, 2018 (extended from December 31, 2017);

Issue and deliver shares to Golden Sands as follows:

	a.	1,250,000 common shares of our Company on August 26, 2014;
	b.	500,000 shares by August 31, 2015 (extended from September 30, 2013);
	c.	500,000 shares by December 31, 2015 (extended from December 31, 2014); and
	d.	500,000 shares by December 31, 2016 (extended from December 31, 2015);

Incur exploration expenses as follows:

	a.	incur exploration expense of at least $250,000 by December 31, 2015 (increased and extended from $150,000 by July 1, 2014, respectively);
	b.	incur cumulative exploration expense of at least $1,000,000 by December 31, 2016 (increased and extended from $250,000 by December 31, 2014, respectively);
	c.	incur cumulative exploration expense of at least $2,000,000 by December 31, 2017 (extended from December 31, 2016); and
	d.	incur cumulative exploration expense of at least $4,000,000 by December 31, 2018 (extended from December 31, 2017);

Further, we are to:

	a.	prepare a feasibility report pertaining to the property, authored by a qualified person, reasonably acceptable to AHL Holdings and Golden Sands by December 31, 2019 (extended from December 31, 2018);
	b.	deliver to AHL Holdings and Golden Sands a notice of exercise of option and compliance certificate by December 31, 2019 (extended from December 31, 2018);
	c.	deliver to AHL Holdings and Golden Sands technical reports by April 30, 2016 for the period ended December 31, 2015 (extended from September 15, 2014 and for the period July 1, 2014); and

make the following payments to the AHL Holdings:

	i.	$20,000 by April 1, 2013 (paid);
	ii.	$10,000 by April 1, 2015 (extended from April 1, 2014);
	iii.	$20,000 by April 1, 2016 (extended from April 1, 2015);
	iv.	$20,000 by April 1, 2017 (extended from April 1, 2016); and
	v.	$50,000 by each successive April 1 until production commences from the property.

As of January 31, 2016 we have paid $142,500 in option payments, issued 1,850,000 common shares, paid an advance royalty payment of $20,000, and advanced $21,028 for exploration expenditures as required by the amended and restated agreement.