EXHIBIT 10.1

VERDISYS, INC.
EMPLOYMENT AGREEMENT

DANIEL WILLIAMS
PRESIDENT & CHIEF EXECUTIVE OFFICER

This Employment Agreement ("Agreement") is made and effective as of June ___, 2003 by and between Verdisys, Inc. ("Verdisys" or the "Company"), and Mr. Daniel Williams ("Williams") to serve as President and Chief Executive Officer of the Company.

NOW, THEREFORE, the parties hereto agree as follows:

1. EMPLOYMENT.

Verdisys hereby agrees to employ Dan Williams as its President and Chief Executive Officer. Williams hereby accepts such employment in accordance with the terms of this Agreement and the terms of employment applicable to regular employees of Verdisys. In the event of any conflict or ambiguity between the terms of this Agreement and terms of employment applicable to regular employees, the terms of this Agreement shall control. Election or appointment of Williams to another office or position, regardless of whether such office or position is inferior to Williams' initial office or position, shall not be a breach of this Agreement.

2. DUTIES.

The duties of Williams shall include the performance of all of the duties typical of the office held by President & CEO as described in the bylaws of the Verdisys and such other duties and projects as may be assigned by a superior officer of Verdisys, if any, or the board of directors of the Company. Williams shall devote his entire productive time, ability and attention to the business of the Verdisys and shall perform all duties in a professional, ethical and businesslike manner. Williams will not, during the term of this Agreement, directly or indirectly engage in any other business, either as an employee, employer, consultant, principal, officer, director, advisor, or in any other capacity, either with or without compensation, without the prior written consent of a duly authorized officer of Verdisys.

3. COMPENSATION.

Williams will be paid compensation during this Agreement as follows:

A. A base salary of $170,000 per year during the first twelve months; $190,000 per year during the second twelve months; and $210,000 per year during the third twelve months after the date of this agreement; payable in installments on the 15th and last day of each month according to Verdisys' regular payroll schedule.

B. A Management By Objectives (MBO) plan will be established by the Company, with a bonus of up to $100,000 per year based upon meeting or exceeding objectives.

C. Williams has received stock options under the Company's stock option plan, as approved by the board of directors of the Company. A listing of vested and unvested options, including date of issuance, vesting, term for exercise, and exercise price shall be attached hereto as Exhibit A

and initialed by both parties. Exhibit A shall be updated upon any additional issuance of options to Williams by the Company.

4. BENEFITS.

A. Holidays. Williams will be entitled to 10 paid holidays each calendar year and 5 personal days. Verdisys will notify Williams on or about the beginning of each calendar year with respect to the holiday schedule for the coming year. Personal holidays, if any, will be scheduled in advance subject to requirements of Verdisys. Such holidays must be taken during the calendar year and cannot be carried forward into the next year. Williams is not entitled to any personal holidays during the first six months of employment.

B. Vacation. Williams shall be entitled to 21 days paid vacation each year, accruing if not used to a maximum of 30 days over the period of this contract.

C. Sick Leave. Williams shall be entitled to sick leave and emergency leave according to the regular policies and procedures of Verdisys. Additional sick leave or emergency leave over and above paid leave provided by the Verdisys, if any, shall be unpaid and shall be granted at the discretion of the board of directors.

D. Medical and Group Life Insurance. Verdisys agrees to include Williams in the group medical and hospital plan of Verdisys and to provide term life insurance for Williams at no charge to Williams in the amount of $1,000,000 during this Agreement. Williams shall be responsible for payment of any federal or state income tax imposed upon these benefits.

E. Pension and Profit Sharing Plans. Williams shall be entitled to participate in any pension or profit sharing plan or other type of plan adopted by Verdisys for the benefit of its officers and/or regular employees.

F. Expense Reimbursement. Williams shall be entitled to reimbursement for all reasonable expenses, including travel and entertainment, incurred by Williams in the performance of Williams' duties. Williams will maintain records and written receipts as required by the Verdisys expense policy and reasonably requested by the board of directors to substantiate such expenses.

5. TERM AND TERMINATION.

A. The Initial Term of this Agreement shall commence on 6/01/03 and it shall continue in effect for a period of 36 months. Thereafter, the Agreement shall be renewed upon the mutual agreement of Williams and Verdisys. This Agreement and Williams' employment may be terminated at Verdisys' discretion without cause during the Initial Term, provided that Verdisys shall pay to Williams an amount equal to payment of Williams base salary rate for the remaining period of Initial Term. In the event this Agreement or Williams' employment is terminated by Verdisys at its discretion without cause at any time during the last year of the Initial Term or after the completion of the Initial Term, Williams shall continue to receive bi-monthly payments equal to the then-annual base salary for a period of twelve months after termination.

C. This Agreement may be terminated by Williams at Williams' discretion by providing at least thirty (30) days prior written notice to Verdisys. In the event of termination by Williams pursuant to this subsection, Verdisys may immediately relieve Williams of all duties and immediately terminate this Agreement, provided that Verdisys shall pay Williams at the then applicable base salary rate to the termination date included in original termination notice.

D. In the event that Williams is in breach of any material obligation owed Verdisys in this Agreement, habitually neglects the duties to be performed under this Agreement, engages in any conduct which is dishonest, damages the reputation or standing of Verdisys, or is convicted of any criminal act or engages in any act of moral turpitude, then Verdisys may terminate this Agreement for cause upon five (5) days notice to Williams. In event of termination of the agreement pursuant to this subsection, Williams shall be paid only at the then applicable base salary rate up to and including the date of termination. Williams shall not be paid any incentive salary payments or other compensation, prorated or otherwise.

D. In the event that Verdisys is acquired, is the non-surviving party in a merger, or sells all or substantially all of its assets, this Agreement shall not be terminated and Verdisys agrees to use its best efforts to ensure that the transferee or surviving entity is bound by the provisions of this Agreement.

F. In the event that the Company is acquired, is the non-surviving party in a merger, or sells all or substantially all of its assets and Dan Williams employment under this agreement is terminated without cause at the date of sale or any time thereafter, all unvested options shall be immediately vested upon the date of such termination.

G. This Agreement and Dan Williams employment may be terminated by Verdisys at its sole discretion, without cause, provided that in such case, Dan Williams shall be paid 100% of Dan Williams' then applicable annual base salary. At the election of the Company, such base salary may be paid along with payroll disbursements for one year after the date of such discretionary termination.

If to Verdisys:                                      If to Dan Williams:

Verdisys, Inc.                                       Dan Williams
25025 I-45 North, Suite 530                          12000 Sawmill Rd., #1108
The Woodlands, TX 77380                              The Woodlands, TX 77380

7. FINAL AGREEMENT.

This Agreement terminates and supersedes all prior understandings or agreements on the subject matter hereof. This Agreement may be modified only by a further writing that is duly executed by both parties.

8. GOVERNING LAW.

This Agreement shall be construed and enforced in accordance with the laws of the State of Texas.

9. HEADINGS.

Headings used in this Agreement are provided for convenience only and shall not be used to construe meaning or intent.

10. NO ASSIGNMENT.

Neither this Agreement nor any or interest in this Agreement may be assigned by Williams without the prior express written approval of Verdisys, which may be withheld by Verdisys at Verdisys' absolute discretion.

11. SEVERABILITY.

If any term of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, then this Agreement, including all of the remaining terms, will remain in full force and effect as if such invalid or unenforceable term had never been included.

12. ARBITRATION.

The parties agree that they will use their best efforts to amicably resolve any dispute arising out of or relating to this Agreement. Any controversy, claim or dispute that cannot be so resolved shall be settled by final binding arbitration in accordance with the rules of the American Arbitration Association and judgment upon the award rendered by the arbitrator or arbitrators may be entered in any court having jurisdiction thereof. Any such arbitration shall be conducted in Texas, or such other place as may be mutually agreed upon by the parties. Within fifteen (15) days after the commencement of the arbitration, each party shall select one person to act arbitrator, and the two arbitrators so selected shall select a third arbitrator within ten (10) days of their appointment. Each party shall bear its own costs and expenses and an equal share of the arbitrator's expenses and administrative fees of arbitration.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

VERDISYS, INC.                           WILLIAMS

___________________________              _____________________________
By:  Ron Robinson, Chairman              Daniel Williams

EXHIBIT 10.2

ANDREW WILSON
(CHIEF FINANCIAL OFFICER)

EMPLOYMENT AGREEMENT

This Andrew Wilson Employment Agreement ("Agreement") is made and effective this 6/01/03, by and between Verdisys, Inc. ("Verdisys") and Andrew Wilson, Chief Financial Officer ("CFO").

NOW, THEREFORE, the parties hereto agree as follows:

1. EMPLOYMENT.

Verdisys hereby agrees to employ Andrew Wilson as its (CFO) and Andrew Wilson hereby accepts such employment in accordance with the terms of this Agreement and the terms of employment applicable to regular employees of Verdisys. In the event of any conflict or ambiguity between the terms of this Agreement and terms of employment applicable to regular employees, the terms of this Agreement shall control. Election or appointment of Andrew Wilson to another office or position, regardless of whether such office or position is inferior to Andrew Wilson' initial office or position, shall not be a breach of this Agreement.

2. DUTIES OF ANDREW WILSON.

The duties of Andrew Wilson shall include the performance of all of the duties typical of the office held by CFO as described in the bylaws of the Verdisys and such other duties and projects as may be assigned by a superior officer of the Verdisys, if any, or the board of directors of the Verdisys. Andrew Wilson shall devote his entire productive time, ability and attention to the business of the Verdisys and shall perform all duties in a professional, ethical and businesslike manner. Andrew Wilson will not, during the term of this Agreement, directly or indirectly engage in any other business, either as an employee, employer, consultant, principal, officer, director, advisor, or in any other capacity, either with or without compensation, without the prior written consent of Verdisys.

3. COMPENSATION.

Andrew Wilson will be paid compensation during this Agreement as follows:

A. A base salary of $150,000.00 year one, $180,000.00 year two and $210,000.00 year three payable in installments according to the Verdisys' regular payroll schedule. The anniversary for these salary schedule increases will be fiscal year end of each year.

B. A Management By Objectives (MBO) plan will be made available as additional incentive salary in a separate agreement.

C. Stock Options. Options for 500,000 shares of common stock with a $0.10 per share strike price to transfer over the term of this agreement (these options will be in addition to option agreements already previously in force). All stock options will have an exercise period of 60 months from origination of documents. In the event Verdisys is acquired, or

is the non-surviving party in a merger, or sells all or substantially all of its assets, said options will be immediately accelerated to full vesting availability.

4. BENEFITS.

A. Holidays. Andrew Wilson will be entitled to at least 14 paid holidays each calendar year and 10 personal days. Verdisys will notify Andrew Wilson on or about the beginning of each calendar year with respect to the holiday schedule for the coming year. Personal holidays, if any, will be scheduled in advance subject to requirements of Verdisys. Such holidays must be taken during the calendar year and cannot be carried forward into the next year. Andrew Wilson is not entitled to any personal holidays during the first six months of employment.

B. Vacation. Andrew Wilson shall be entitled to 20 days paid vacation each year. Accruing annually if not used to a maximum of 60 days over the period of this contract.

C. Sick Leave. Andrew Wilson shall be entitled to sick leave and emergency leave according to the regular policies and procedures of Verdisys. Additional sick leave or emergency leave over and above paid leave provided by the Verdisys, if any, shall be unpaid and shall be granted at the discretion of the board of directors.

D. Medical and Group Life Insurance. Verdisys agrees to include Andrew Wilson in the group medical and hospital plan of Verdisys and provide group life insurance for Andrew Wilson at no charge to Andrew Wilson in the amount of $1,000,000.00 during this Agreement. Andrew Wilson shall be responsible for payment of any federal or state income tax imposed upon these benefits.

E. Automobile. Verdisys will provide to Andrew Wilson the use of an automobile of Andrew Wilson's choice at a gross purchase price not to exceed $45,000.00. Verdisys agrees to replace the automobile with a new one at Andrew Wilson's request no more often than once every two years. Verdisys will pay all automobile operating expenses incurred by Andrew Wilson in the performance of Verdisys duties. Verdisys will procure and maintain in force an automobile liability policy for the automobile with coverage, including Andrew Wilson, in the minimum amount of $1,000,000 combined single limit on bodily injury and property damage.

F. Pension and Profit Sharing Plans. Andrew Wilson shall be entitled to participate in any pension or profit sharing plan or other type of plan adopted by Verdisys for the benefit of its officers and/or regular employees.

G. Expense Reimbursement. Andrew Wilson shall be entitled to reimbursement for all reasonable expenses, including travel and entertainment, incurred by Andrew Wilson in the performance of Andrew Wilson' duties. Andrew Wilson will maintain records and written receipt as required by the Verdisys policy and reasonably requested by the board of directors to substantiate such expenses.

5. TERM AND TERMINATION.

A. The Initial Term of this Agreement shall commence on 6/01/03 and it shall continue in effect for a period of 36 months. Thereafter, the Agreement shall be renewed upon the mutual agreement of Andrew Wilson and Verdisys. This Agreement and Andrew Wilson' employment may be terminated at Verdisys' discretion during the Initial Term, provided that Verdisys shall pay to Andrew Wilson an amount equal to payment of Andrew Wilson base salary rate for the remaining period of Initial Term, plus an amount equal to 150% of Andrew Wilson annual base salary. In the event of such termination, Andrew Wilson shall not be entitled to any incentive salary payment or any other compensation then in effect, prorated or otherwise.

B. This Agreement and Andrew Wilson's employment may be terminated by Verdisys at its discretion at any time after the Initial Term, provided that in such case, Andrew Wilson shall be paid 150% of Andrew Wilson's then applicable annual base salary.

C. This Agreement may be terminated by Andrew Wilson at Andrew Wilson' discretion by providing at least thirty (30) days prior written notice to Verdisys. In the event of termination by Andrew Wilson pursuant to this subsection, Verdisys may immediately relieve Andrew Wilson of all duties and immediately terminate this Agreement, provided that Verdisys shall pay Andrew Wilson at the then applicable base salary rate to the termination date included in original termination notice.

D. In the event that Andrew Wilson is in breach of any material obligation owed Verdisys in this Agreement, habitually neglects the duties to be performed under this Agreement, engages in any conduct which is dishonest, damages the reputation or standing of Verdisys, or is convicted of any criminal act or engages in any act of moral turpitude, then Verdisys may terminate this Agreement upon five (5) days notice to Andrew Wilson. In event of termination of the agreement pursuant to this subsection, Andrew Wilson shall be paid only at the then applicable base salary rate up to and including the date of termination. Andrew Wilson shall not be paid any incentive salary payments or other compensation, prorated or otherwise.

E. In the event Verdisys is acquired, or is the non-surviving party in a merger, or sells all or substantially all of its assets, this Agreement shall not be terminated and Verdisys agrees to use its best efforts to ensure that the transferee or surviving entity is bound by the provisions of this Agreement.

If to Verdisys:                                  If to Andrew Wilson:
25025 I-45 North., Suite 525                     201 Tipperary Lane
The Woodlands, TX 77380                          Alameda, Ca. 94502

7. FINAL AGREEMENT.

This Agreement terminates and supersedes all prior understandings or agreements on the subject matter hereof. This Agreement may be modified only be a further writing that is duly executed by both parties.

8. GOVERNING LAW.

This Agreement shall be construed and enforced in accordance with the laws of the state of California.

9. HEADINGS.

Headings used in this Agreement are provided for convenience only and shall not be used to construe meaning or intent.

10. NO ASSIGNMENT.

Neither this Agreement nor any or interest in this Agreement may be assigned by Andrew Wilson without the prior express written approval of Verdisys, which may be withheld by Verdisys at Verdisys' absolute discretion.

11. SEVERABILITY.

If any term of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, then this Agreement, including all of the remaining terms, will remain in full force and effect as if such invalid or unenforceable term had never been included.

12. ARBITRATION.

The parties agree that they will use their best efforts to amicably resolve any dispute arising out of or relating to this Agreement. Any controversy, claim or dispute that cannot be so resolved shall be settled by final binding arbitration in accordance with the rules of the American Arbitration Association and judgment upon the award rendered by the arbitrator or arbitrators may be entered in any court having jurisdiction thereof. Any such arbitration shall be conducted in California, or such other place as may be mutually agreed upon by the parties. Within fifteen (15) days after the commencement of the arbitration, each party shall select one person to act arbitrator, and the two arbitrators so selected shall select a third arbitrator within ten (10) days of their appointment. Each party shall bear its own costs and expenses and an equal share of the arbitrator's expenses and administrative fees of arbitration.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

VERDISYS, INC. ANDREW WILSON

EXHIBIT 10.3

EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement ("Agreement") is made and effective this 1st day of June, 2003 by and between VERDISYS, INC. ("COMPANY") and DAVID MAUZ ("EXECUTIVE").

NOW, THEREFORE, the parties hereto agree as follows:

1. EMPLOYMENT

Company hereby agrees to initially employ Executive as its Chief Operations Officer and Executive hereby accepts such employment in accordance with the terms of this Agreement and the terms of employment applicable to regular employees of Company. In the event of any conflict or ambiguity between the terms of this Agreement and terms of employment applicable to regular employees, the terms of this Agreement shall control. Election or appointment of Executive to another office or position, regardless of whether such office or position is inferior to Executive's initial office or position, shall not be a breach of this Agreement.

2. DUTIES OF EXECUTIVE

The duties of Executive shall include the performance of all of the duties typical of the office held by Executive as described in the bylaws of the Company and such other duties and projects as may be assigned by a superior officer of the Company, if any, or the board of directors of the Company. Executive shall devote his entire productive time, ability and attention to the business of the Company and shall perform all duties in a professional, ethical and businesslike manner. Executive will not, during the term of this Agreement, directly or indirectly engage in any other business, either as an employee, employer, consultant, principal, officer, director, advisor, or in any other capacity, either with or without compensation, without the prior written consent of Company. In addition to the duties described herein, Executive is also authorized and directed to do the following.

3. COMPENSATION

Executive will be paid compensation during this Agreement as follows:

a. A base salary of $140,000.00 (one hundred and forty thousand dollars) year one, $170,000.00 year two and $200,000.00 year three; payable in installments according to the Company's regular payroll schedule. Scheduled increases will happen at the fiscal year end of each year.

b. A Management By Objectives (MBO) plan will be made available as additional incentive salary in a separate agreement.

c. Stock Options. Options for 1,000,000 shares of common stock with a $0.10 per share strike price to transfer immediately upon the execution of this agreement (these options will be in addition to option agreements already previously in force). In addition, executive will receive options for 100,000 shares of common stock per year, transferable on the anniversary of the execution of this agreement every year for the term of this agreement. All previous Verdisys stock options from the period of 7/10/2000 - present, that are not already vested for purchase will become immediately available for vested purchase upon execution of this agreement in accordance with said

               existing stock option agreements. All stock options will have an
               exercise period of 60 months from origination of documents.

         d.    Past due Compensation. Dispensation(s) of all past due
               compensation owed to executive will be negotiated in a separate
               agreement.

4.   BENEFITS

         a.    Holidays. Executive will be entitled to at least 14 paid holidays
               each calendar year and 10 personal days. Company will notify
               Executive on or about the beginning of each calendar year with
               respect to the holiday schedule for the coming year. Personal
               holidays, if any, will be scheduled in advance subject to
               requirements of Company. Such holidays must be taken during the
               calendar year and cannot be carried forward into the next year.
               Executive is not entitled to any personal holidays during the
               first six months of employment.

         b.    Vacation. Following the first six months of employment, Executive
               shall be entitled to 30 days paid vacation each year accruing
               monthly at a rate of 2.5 days per month to a maximum of 180 days.

         c.    Sick Leave. Executive shall be entitled to sick leave and
               emergency leave according to the regular policies and procedures
               of Company. Additional sick leave or emergency leave over and
               above paid leave provided by the Company, if any, shall be unpaid
               and shall be granted at the discretion of the board of directors.

         d.    Medical and Group Life Insurance. Company agrees to include
               Executive in the group medical and hospital plan of Company and
               provide group life insurance for Executive at no charge to
               Executive in the amount of 1,000,000.00 (one million dollars)
               during this Agreement. Executive shall be responsible for payment
               of any federal or state income tax imposed upon these benefits.

         e.    Pension and Profit Sharing Plans. Executive shall be entitled to
               participate in any pension or profit sharing plan or other type
               of plan adopted by Company for the benefit of its officers and/or
               regular employees.

         f.    Automobile. Verdisys will provide to Executive the use of an
               automobile of executive's choice at a gross purchase price not to
               exceed $45,000.00. Verdisys agrees to replace the automobile with
               a new one at executive's request no more often than once every
               two years. Verdisys will pay all automobile operating expenses
               incurred by executive in the performance of Verdisys duties.
               Verdisys will procure and maintain in force an automobile
               liability policy for the automobile with coverage, including
               executive, in the minimum amount of $1,000,000 combined single
               limit on bodily injury and property damage.

         g.    Expense Reimbursement. Executive shall be entitled to
               reimbursement for all reasonable expenses, including travel and
               entertainment, incurred by Executive in the performance of
               Executive's duties. Executive will maintain records and written
               receipt as required by the Company policy and reasonably
               requested by the board of directors to substantiate such
               expenses.

5.   TERM AND TERMINATION

         a.    The Initial Term of this Agreement shall commence on April 1,
               2003 and it shall continue in effect for a period of three years.
               Thereafter, the Agreement

Confidential                                                          11/18/2003

                                     Page 2

               shall be renewed upon the mutual agreement of Executive and
               Company. This Agreement and Executive's employment may be
               terminated at Company's discretion during the Initial Term,
               provided that Company shall pay to Executive an amount equal to
               payment at Executive's base salary rate for the remaining period
               of Initial Term, plus an amount equal to 150% of Executive's base
               salary. In the event of such termination, Executive shall not be
               entitled to any incentive salary payment or any other
               compensation then in effect, prorated or otherwise.

         b.    This Agreement and Executive's employment may be terminated by
               Company at its discretion at any time after the Initial Term,
               provided that in such case, Executive shall be paid 150% of
               Executive's then applicable base salary.

         c.    This Agreement may be terminated by Executive at Executive's
               discretion by providing at least thirty (30) days prior written
               notice to Company. In the event of termination by Executive
               pursuant to this subsection, Company may immediately relieve
               Executive of all duties and immediately terminate this Agreement,
               provided that Company shall pay Executive at the then applicable
               base salary rate to the termination date included in Executive's
               original termination notice.

         d.    In the event that Executive is in breach of any material
               obligation owed Company in this Agreement, habitually neglects
               the duties to be performed under this Agreement, engages in any
               conduct which is dishonest, damages the reputation or standing of
               the Company, or is convicted of any criminal act or engages in
               any act of moral turpitude, then Company may terminate this
               Agreement upon five (5) days notice to Executive. In event of
               termination of the agreement pursuant to this subsection,
               Executive shall be paid only at the then applicable base salary
               rate up to and including the date of termination. Executive shall
               not be paid any incentive salary payments or other compensation,
               prorated or otherwise.

         e.    In the event Company is acquired, or is the non-surviving party
               in a merger, or sells all or substantially all of its assets,
               this Agreement shall not be terminated and Company agrees to use
               its best efforts to ensure that the transferee or surviving
               company is bound by the provisions of this Agreement.

6. NOTICES

Any notice required by this Agreement or given in connection with it, shall be in writing and shall be given to the appropriate party by personal delivery or by certified mail, postage prepaid, or recognized overnight delivery services;

If to Company:
Verdisys, Inc.
25025 I-45 North
Suite 525
The Woodlands, TX 77380

If to Executive:
David C. Mauz
87 Blue Creek Place

Confidential 11/18/2003

The Woodlands, TX 77382

7. FINAL AGREEMENT

This Agreement terminates and supersedes all prior understandings or agreements on the subject matter hereof. This Agreement may be modified only be a further writing that is duly executed by both parties.

8. GOVERNING LAW

This Agreement shall be construed and enforced in accordance with the laws of the state of Texas.

9. HEADINGS

Headings used in this Agreement are provided for convenience only and shall not be used to construe meaning or intent.

10. NO ASSIGNMENT

Neither this Agreement nor any or interest in this Agreement may be assigned by Executive without the prior express written approval of Company, which may be withheld by Company at Company's absolute discretion.

11. SEVERABILITY

If any term of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, then this Agreement, including all of the remaining terms, will remain in full force and effect as if such invalid or unenforceable term had never been included.

12. ARBITRATION

The parties agree that they will use their best efforts to amicably resolve any dispute arising out of or relating to this Agreement. Any controversy, claim or dispute that cannot be so resolved shall be settled by final binding arbitration in accordance with the rules of the American Arbitration Association and judgment upon the award rendered by the arbitrator or arbitrators may be entered in any court having jurisdiction thereof. Any such arbitration shall be conducted in Texas, or such other place as may be mutually agreed upon by the parties. Within fifteen (15) days after the commencement of the arbitration, each party shall select one person to act arbitrator, and the two arbitrators so selected shall select a third arbitrator within ten (10) days of their appointment. Each party shall bear its own costs and expenses and an equal share of the arbitrator's expenses and administrative fees of arbitration.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

_________________________           ___________________________

By:______________________           By: David C. Mauz

Title: __________________           Chief Operations Officer

Verdisys, Inc.                      Verdisys, Inc.

Confidential                                                          11/18/2003

EXHIBIT 10.4

ADVISORY AGREEMENT

THIS ADVISORY AGREEMENT is made this 1st day of July 2003 by and between Verdisys, Inc. (hereinafter referred to as "Company") and Dr. Ron Robinson ("Advisor").

WHEREAS, Company desires to retain Advisor to render consulting and advisory services to Company upon the terms and conditions hereinafter set forth; and

WHEREAS, Advisor desires to accept such engagement, upon the terms and conditions hereinafter set forth.

NOW THEREFORE, in consideration of the promises and mutual agreements hereinafter set forth, the parties agree as follows:

1. ADVISORY SERVICES

Company hereby engages Advisor, and Advisor hereby accepts such engagement from Company, to serve as the Chairman of the Board of Directors of the company and as a general advisor to executive management, and to render such additional services as are pertinent thereto within the scope set forth below. Said time commitment of the advisory services to this agreement is eighty (80) hours per month.

The parties agree that Advisor will render the following services:

A. Serve as the Chairman of Board of the Company;

B. Assist the Company and its executive management in general corporate development and planning;

C. Assist in the procurement of additional customers for the Company;

D. Assist and advise in the acquisition of oil and gas producing properties, and the negotiation of the joint ventures and partnerships for the acquisition of oil and gas properties.

E. Assist in the placement and raising of capital as the Company sees fit.

2. TERM - The term of this engagement shall be for twelve months from the date first set forth above and shall continue month to month thereafter until terminated by either party.

3. COMPENSATION

A. Advisory Fee

The Company shall pay to Advisor the amount of $10,000 per month as an advisory fee for Advisor's services (the "Monthly Retainer"). The Monthly Retainer is due and payable at the rate of one-half on the 15th and one-half on the last day of each month for the duration of this agreement.

4. EXPENSES

Company will reimburse Advisor for pre-approved expenses incurred on the Company's behalf, including but not limited to travel, hotels and other direct costs.

5. TERMINATION

Either party may terminate this agreement by notifying the other party in writing at the address set forth below on ten days notice. However, the Monthly Advisory fee shall continue to be paid for the initial

twelve month period in the event of termination by the Company for any reason other than fraud against the company or voluntary resignation from the board of directors by the Advisor.

Advisor's right to, and Company's obligation of, payment under this paragraph shall survive the termination of this Agreement.

6. NOTICES

All notices hereunder shall be in writing and shall be deemed to have been given at the time when mailed in any general or branch of the United States Post Office enclosed in a registered or certified postage pre-paid envelope, return receipt requested, addressed to the address of the respective parties as stated below, or to such address as such party may have fixed by notice as aforesaid:

If to Company:

Verdisys, Inc.

If to Advisor:

Dr. Ron Robinson
5010 Augusta Circle
College Station, TX 77845

7. WAIVER

Failure to insist upon strict compliance with any of the terms, covenants, or conditions hereof shall not be deemed a waiver of such term, covenant, or condition, nor shall any waiver or relinquishment of any right of power hereunder at any one time or more times be deemed a waiver or relinquishment of such right or power at any other time or times.

8. SEVERABILITY

The invalidity of unenforceability of any term or provision, or any clause or portion thereof, of this Agreement, shall in no way impair or affect the validity or enforceability of any other provision of this Agreement, all of the same which shall remain in full force and effect in accordance with the terms hereof.

9. ENTIRE AGREEMENT

This Agreement embodies the entire understanding between the parties on the matters of Consultation and remuneration for same, any and all prior correspondence, conversations, or memoranda being merged herein and replaced hereby and being without effect herein, and no change, alteration, or modification hereof may be made except in writing signed by both parties hereto.

10. GOVERNING LAW

This Agreement is entered into and intended to be performed in the State of Texas and shall be governed by the laws of the State of Texas.

11. ATTORNEY'S FEES

In the event of litigation arising out of this Agreement, the prevailing party shall be entitled to an award of its reasonable attorney's fees and costs, including any fees incurred on appeal.

12. NO WARRANTIES OR REPRESENTATIONS

All services performed by Advisor pursuant to this Agreement are on a "best efforts" basis. Advisor makes no warranties or representations, express or implied, as to the success of its efforts on Company's behalf.

IN WITNESS WHEREOF, the parties have signed this agreement as of the date first set forth above.

ADVISOR:                                    COMPANY:

Dr. Ron Robinson                            Verdisys, Inc.

______________________________              By__________________________________
Ron Robinson                                    Dan Williams, CEO

EXHIBIT 10.5

ADVISORY AGREEMENT

THIS ADVISORY AGREEMENT ("Agreement"), made as of October 1, 2000 is by and between THEAGZONE, INC., a Delaware corporation (the "Company") and ERIC A. MCAFEE (the "Advisor").

In consideration of the mutual covenants contained in this Agreement, the Company and Advisor agree as follows:

1. CONSULTING PERIOD. The Company will engage Advisor for an initial period commencing October 1, 2000 and ending December 31, 2001 (the "Initial Consulting Period"), and thereafter, the Agreement shall automatically renew for additional periods of six months each (the "Renewal Consulting Periods" (collectively, the "Consulting Period"), unless either party provides written notice of termination to the other at least ten (10) days prior to the expiration of the Initial Consulting Period, or any Renewal Consulting Period.

2. CONSULTING SERVICES. During the Consulting Period, Advisor shall report to the Company's Board of Directors ("Board") and will provide consulting services to the Company as necessary to accomplish the objectives set forth. Specifically, Advisor shall provide the Company with the following (the "Consulting Services"):

(a) Advisory services related to the structure of and referrals to potential investors in financings by the Company;

(b) Sourcing and facilitating the Company's engagement of accounting and law firms as the Board shall direct from time to time;

(c) Advising in the preparation of an S-1 and preparation for an IPO and/or sale of the Company; and

(d) Such other matters as may be determined from time-to-time by the Board with the consent of the Advisor.

Advisor agrees to exercise the highest degree of professionalism and to utilize his expertise and creative talents in performing the Consulting Services.

3. NON-EXCLUSIVE RELATIONSHIP. Company specifically acknowledges that its relationship with Advisor is not exclusive, and that during the Consulting Period Advisor may engage in other work and/or projects on behalf of himself or other persons or entities that are not directly related to the Company, at Advisor's sole discretion.

4. CONSULTING FEES AND ADMINISTRATIVE COSTS. As compensation for consulting services rendered pursuant to this Agreement, Company shall:

(a) Pay Advisor a consulting fee at the monthly rate of $8,500, paid twice each month along with payroll disbursements, without deduction of taxes (the "Consulting Fees").

(b) Reimburse Advisor $1,500 per month for administrative costs and expenses (the "Administrative Costs"), paid along with the Consulting Fees set forth herein.

(c) Reimburse Advisor for legal, accounting, professional and due diligence in an amount equal to three percent of all amounts received in the current bridge financing and the Series B financing by the Company. This amount shall be paid to Advisor at the time of any disbursement from escrow account for each respective offering, and shall be included in any escrow instruction for each financing.

5. BUSINESS EXPENSES. The Company shall reimburse Advisor for the reasonable cost of all corporate travel, hotels, meals and other business expenses Advisor incurs on behalf of the Company pursuant to this Agreement and pursuant to standard company policies. The Company shall have the right to make flight, auto and hotel reservations and pay for such reservations in advance or make arrangements for payment to the travel vendor at time of expense incurrence. No expense in excess of $500 shall be undertaken without express approval by the Company. Advisor shall submit to the Company receipts or other documentation sufficient to reflect any such claimed expenses.

6. INDEPENDENT CONTRACTOR RELATIONSHIP. Advisor's relationship with the Company is that of an independent contractor, and nothing in this Agreement is intended to, or should be construed to, create a partnership, agency, joint venture or employment relationship. Advisor will not be entitled to any of the benefits that the Company may make available to its employees, including, but not limited to, group health or life insurance, profit sharing or retirement benefits. Advisor is solely responsible for, and will file, on a timely basis, all tax returns and payments required to be filed with, or made to, any federal, state or local tax authority with respect to the performance of services and receipt of fees under this Agreement. No part of Advisor's compensation shall be subject to withholding by the Company for the payment of any social security, federal, state or any other employee payroll taxes. The Company will regularly report amounts paid to Advisor by filing Form(s) 1099-MISC with the Internal Revenue Service as required by law.

7. TERMINATION. The Company may terminate that Agreement at any time, without Cause, and Advisor may terminate this Agreement at any time without Good Reason upon giving thirty (20) days written notice to the other party ("Effective Termination Date"). The Company may terminate this Agreement for Cause, and Advisor may terminate this Agreement for Good Reason, upon giving notice to the other party, which shall be the Effective Termination Date in such event.

In the event the Company terminates this Agreement without Cause, or Advisor terminates this Agreement for Good Reason, (a) the Company shall pay Advisor a termination fee equal to the amount of Consulting Fees Advisor would have been entitled to receive had the Advisor continued to perform services hereunder through the end of the Initial Consulting Period or the Renewal Consulting Period in which the Effective Termination Date falls ("Termination Consulting Period").

As used herein, "Cause" shall mean: (a) Advisor's indictment or conviction (including a no contest or guilty plea) of any felony or of any crime involving dishonesty or moral turpitude; or (b) Advisor's participation in a fraud that materially and irreparably damages the Company, with such fraud to be confirmed by the final judgement of a court of competent jurisdiction.

As used herein, "Good Reason" shall mean: (a) the Company makes a general assignment for the benefit of creditors, files a voluntary bankruptcy petition, files a petition or answer seeking a reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any law, there shall have been filed any petition or application for the involuntary bankruptcy of Company, or other similar proceeding, in which an order for relief is entered or which remains undismissed for a period of 30 days or more, or the Company seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of the Company or any material party of its assets; (b) the Company makes material changes to the nature or extent of the Consulting Services without Advisor's express written consent; or (c) the Company fails to pay the compensation and benefits required under this agreement.

8. INDEMNIFICATION. To the fullest extent permitted by applicable law, the Company agrees to indemnify, defend and hold Advisor harmless from any and all claims, actions, costs, expenses, damages and liabilities including, without limitation, reasonable attorneys' fees, hereafter or heretofore arising out of or in connection with his performance of the Consulting Services or other activities on behalf of the Company, or by reason of the fact that he is or was a director or officer of the Company or any affiliate of the Company. Th the fullest extent permitted by applicable law, the Company shall advance to Advisor the anticipated and actual expenses necessary to defending any such action, claim or proceeding. The Company shall not be obligated to indemnify Advisor or defend Advisor against, or hold him harmless from, any claims, damages, expenses or liabilities, including attorneys' fees, resulting from the gros negligence or willful misconduct of the Advisor. For purpose of this paragraph, no act, or failure to act, on the part of the Advisor shall be considered "willful" unless done, or omitted to be done, not in good faith and without reasonable belief by him that his action or omission was in the best interests of the Company, as determined by the final judgement of a court of competent jurisdiction. The duty to indemnify shall survive the expiration or early termination of this Agreement as to any such claims based on facts or conditions that occurred or are alleged to have occurred prior to such expiration or termination.

9. SUCCESSORS AND ASSIGNS. Advisor may not subcontract or otherwise delegate his obligations under this Agreement without the Company's prior written consent. Subject to the foregoing, this Agreement will be for the benefit of the Company's successors and assigns, and will be binding on Advisor's assignees.

10. NOTICE. Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated:
(i) by personal delivery when delivered personally; (ii) by overnight courier upon written verification of receipt; (iii) by telecopy or facsimile transmission upon acknowledgement of receipt of electronic transmission; or (iv) by certified or registered mail, return receipt requested, upon verification of receipt. Notices shall be sent to the following addresses:

If to Advisor:                            If to Company:

Eric A. McAfee                            TheAgZone, Inc.
Berg McAfee Companies                     5260 N. Palm Avenue, Suite 300
10600 N. De Anza Blvd., Suite 250         Fresno, CA 93704
Cupertino, CA 95014                       Attn: CEO

11. GOVERNING LAW. This Agreement shall be governed in all respects by the laws of the State of California, as such laws are applied to agreements entered into and to be performed entirely within California between California residents.

12. SEVERABILITY. Should any provision of this Agreement be held by a court of law to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining provision of this Agreement shall not be affected or impaired thereby.

14. BOARD APPROVAL REQUIRED. The issuance of a warrant provided hereunder shall be effective upon approval by the Board of Directors of the Company. All other terms and conditions set forth herein are immediately effective as to both parties.

15. JURISDICTION. This agreement is subject to the laws and regulations of the State of California, County of Santa Clara.

16. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties relating to this subject matter and supercedes all prior or contemporaneous oral or written agreements concerning such subject matter. This Agreement may only be changed by mutual agreement of authorized representatives of the parties in writing.

    THEAGZONE, INC.                             ADVISOR

    /s/ Kevin Bradshaw                          /s/ Eric A. McAfee
    ---------------------------                 ---------------------------

By: KEVIN BRADSHAW CFO                          ERIC A. McAFEE

    Dated: 11/8/00                              Dated: 11/8/00

EXHIBIT 10.6

[VERDISYS(TM) LOGO] VERDISYS, INC.

25025 I-45 NORTH, SUITE 525
THE WOODLANDS, TX 77380
TOLL FREE: (281) 364-6999
WEB: WWW.VERDISYS.COM FAX: (281) 364-8007

LATERAL DRILLING SERVICE AGREEMENT FOR DELHI AND FRANKLIN FIELDS
NATURAL GAS SYSTEMS CORPORATION AND VERDISYS, INC.

This Lateral Drilling Services Agreement ("AGREEMENT") is dated as of September 22, 2003, by and between Verdisys, Inc., a California corporation ("VERDISYS"), and Natural Gas Systems Corporation, a Delaware corporation ("NGS"). NGS seeks to engage Verdisys to provide development expertise and lateral drilling services, to NGS in the Delhi Gas Field and adjacent Franklin Properties in Delhi, Louisiana (combined, the "DELHI FIELD").

1.0 LATERAL DRILLING

1.1 LOCATION OF SERVICES

Verdisys will provide lateral drilling services in wells in the Delhi Field identified with greater specificity as to location on the attached Term and Pricing Invoice, which may be updated by the constituent corporations from time to time.

1.2 PARAMETERS OF DRILLING

Laterals will be drilled at a depth of no more than 5800' with a horizontal maximum of 300'.

2.0 SERVICE FEES AND ROYALTY

2.1 LATERAL DRILLING SERVICE FEES

Verdisys Lateral Drilling Services ("DRILLING SERVICES") will be billed at the time of commencement of drilling at the package rate set forth in the attached Term and Pricing Invoice. The Drilling Services are for each individual well site pertaining to this Contract. NGS shall be provided the Drilling Services at the minimum number of wells and at the prices identified on the Term and Pricing Invoice attached hereto. Verdisys will bill NGS upon completion of drilling services at each well, including any additional laterals requested, with payment due within thirty (30) days of completion of the well services.

2.2 INITIAL PAYMENT AND PROMISSORY NOTE TO SECURE DELHI FIELD

NGS will enter into the purchase and sale agreement for the Delhi Field and close the purchase of the Delhi Field with an initial payment of $1,000,000.00 no later than September 25, 2003, subject to satisfactory review of the closing documents and review of the related title opinions and environmental audits, and shall make an additional payment of $200,000.00 for the Franklin Properties to be paid no later than October 25, 2003. NGS, as part of the closing, will also enter into a promissory note for $1,500,000.00 payable in twelve equal monthly in installments beginning on January 31st, 2004 to the seller of the Delhi Field (the "NOTE").

2.3 NET PROFITS INTEREST

In addition to the fee for Drilling Services, NGS shall assign to Verdisys a 70% after-payout interest in the Net Profits from the NGS interests in the Delhi Gas Properties (the "Verdisys NPI"). NET PROFITS shall be defined to be the net revenues to the working interests of NGS from the Delhi Field less all gathering fees, product marketing expenses, if any, lease operating

Service Contract - WEBB and Verdisys, Inc. 1

expenses, ongoing capital expenditures in the normal course of business, standard COPAS overhead charges, other royalties and any other related fees and expenses. PAY-OUT will be calculated when NGS has received from 100% of the Net Profits an amount equal to the sum of (i) the Initial Payments, (ii) all payments to service and retire the related Note, (iii) all capital expenditures to develop and otherwise exploit and explore the Delhi Field including all transaction costs of closing, plus (iv) a cash-on-cash return of ten percent (10%) on (i) through (iii). Either Verdisys or NGS may audit the Net Profits calculation upon ten days written notice within normal business hours on an annual basis.

Neither Verdisys nor NGS shall be directly or indirectly liable or obligated in any way to the other party or to any third party for any financing or other payment obligations related to the Drilling Services, including principal, interest, fees or other costs related thereto, except NGS's obligations under the Note. The obligations of Verdisys are specifically limited to compliance with the terms of this agreement related to the assignment of funds by Verdisys to the Drilling Services Financing Escrow Account for the limited time period described herein.

2.4 OPERATIONS

NGS will take over operations of the Delhi Field, but shall give reasonable preference to utilization of either the existing operations staff or other staff knowledgeable of the Delhi Field. NGS shall subcontract to Verdisys the development operations of the Delhi Field subject to a development plan and budget approved by NGS. After Payout, NGS and Verdisys shall mutually agree to any change in the listed operator of the Delhi Field.

3.0 RESPONSIBILITIES OF PARTIES

3.1 VERDISYS SERVICES

Verdisys will provide lateral drilling to a depth of 5800' in the existing well structure with four (4) laterals to a maximum horizontal distance of 300' from the center of the well bore.

3.2 DEVELOPMENT BUDGET

NGS and Verdisys shall mutually agree to an annual development budget with quarterly reviews and adjustments. In the event that a capital expenditure incremental to the development budget is required, then NGS shall provide an officer contact that will review for approval such expenditure within 48 hours of notice with all relevant information. The development budget shall further specify an amount of nonbudget expenditure within certain types of expenditures that shall be within the approval authority of Verdisys for the purpose of timely and reasonable operations.

The determination as to the appropriate number of laterals to be drilled to obtain maximum return from the well will be made by NGS with the advice of the on-site consulting geologist (or if not on-site consulting geologist is present at the site, by any third party consulting geologist mutually acceptable to the parties).

3.3 NGS SUPPORT

NGS agrees to provide sufficient, free and safe access to the Delhi Field and the NGS facilities located thereon to permit timely performance of the Drilling Services and field management. NGS may elect to have Verdisys be responsible for preworking of the well to the described condition set forth in the "Verdisys Statement of Work", and such services will be invoiced to the operator as an operating cost. Verdisys will also provide or subcontract necessary "cleanup"

Service Contract - NGS and Verdisys, Inc. 2

of the well and strata as requested by NGS. NGS shall make such requests of Verdisys with such timing and volume so as to allow efficient operation by Verdisys.

4.0 OTHER AGREEMENTS

2004              250 wells
2005              500 wells
2006              750 wells
2007 - 2013       1,000 wells per year

4.2 RECIPROCAL FIRST RIGHT OF REFUSAL

NGS shall have a thirty (30) day, exclusive first right of refusal to review and enter into an agreement to participate with Verdisys, subject to financing and normal due diligence, on all oil and gas field projects developed or acquired by Verdisys. Verdisys further agrees to advise NGS of anticipated projects at initiation in order for NGS to timely make its election at the reasonably earliest time.

Similarly, Verdisys shall have a thirty (30) day, exclusive first right of refusal to provide Drilling Services on any oil and gas field project developed or acquired by NGS.

5.0 WARRANTIES AND LIMITATIONS

5.1 TERMS AND CONDITIONS

All warranties related to Verdisys Lateral Drilling Services are contained in the separate "Service Level Agreement" (SLA) document included with this Contract.

5.2 PERFORMANCE

Verdisys will provide a minimum of four laterals per well to at a depth not to exceed 5800' with laterals horizontal distance not to exceed 300'.

5.3 INDEMNIFICATION

Verdisys, at its own expense, shall indemnify, release and hold harmless NGS, its subsidiaries, affiliates or assignees, and their directors, officers, employees and agents and defend any action brought against same with respect to any claim, demand, cause of action, debt, loss or liability, including attorneys' fees and court costs, to the extent that it is based upon a claim that the equipment used or Services provided hereunder infringes or violates any patents, copyrights, trade secrets, licenses, or other property rights of any third party. NGS may, at its own expense, assist in such defense if it so chooses, provided that as long as Verdisys can demonstrate sufficient financial resources, Verdisys shall control such defense and all negotiations relative to the settlement of any such claim and further provided that any settlement intended to bind NGS shall not be final without NGS's written consent, which shall not be unreasonably withheld. In the event that Verdisys cannot demonstrate sufficient financial resources to provide such defense, the NGS shall have the right to advance legal expenses and direct such legal defense. NGS shall promptly provide Verdisys with written notice of any claim which NGS believes falls within the scope of this paragraph.

Service Contract - NGS and Verdisys, Inc. 3

Verdisys agrees to indemnify, release, defend and hold harmless NGS for any liability or expense due to claims for personal injury or property damage (i) arising out of the furnishing or performance of the equipment or the Services provided hereunder or (ii) arising out of the fault or negligence of Verdisys, its employees or agents.

6.0 MISCELLANEOUS

6.1 CONFIDENTIALITY

Each party agrees that it shall not disclose to any third party any information concerning the customers, trade secrets, methods, processes or procedures or any other confidential business information of the other party which it learns during the course of its performance of this Contract, without the prior written consent of such other party. Both parties agree to coordinate and receive approval from the other party prior to any public announcement related to the Delhi Field and this Agreement. This obligation will survive the cancellation or other termination of this Contract.

6.2 GOVERNING LAW

This Contract shall be governed by and construed under the laws of the State of Delaware or in such other jurisdiction as may be mutually agreed to by NGS and Verdisys.

6.3 ASSIGNMENT

Either party may assign its rights under this contract with the prior written notice to the other party, except the Drilling Services undertaken by Verdisys herein may only be subcontracted or assigned with the prior consent of NGS. This Contract is binding upon the parties and their successors and assigns.

6.4 AUTHORITY

Each party has all requisite power and authority to execute, deliver and perform this Agreement. All necessary corporate proceedings of each party have been taken to authorize the execution, delivery and performance of this Agreement. This Agreement has been duly authorized, executed and delivered by each party, constitutes the legal, valid and binding obligation of each party, and is enforceable in accordance with its terms. Except as set forth elsewhere herein, no consent, authorization, approval, order, license, certificate, or permit of or from, or declaration or filing with, any federal, state, local or other governmental authority or any court or other tribunal is required by either party for the execution, delivery or performance of this Agreement. No consent of any party to any contract, agreement, instrument, lease, arrangement or understanding to which either party is a signer, or to which any of its properties or assets are subject, is required for the execution, delivery or performance of this Agreement

6.5 FURTHER ACTIONS

At any time and from time to time, each party agrees, at its expense, to take such actions and to execute and deliver such documents as may be reasonably necessary to effectuate the purposes of this Agreement.

6.6 AMENDMENTS

This Agreement sets forth the entire understanding of the parties with respect to the subject matter hereof and supersedes all existing agreements among them concerning such subject matter. This Agreement may be amended prior to the Effective Time (notwithstanding stockholder adoption and approval) by a written instrument executed by the Constituent Corporations with the approval of their respective Boards of Directors.

Service Contract - NGS and Verdisys, Inc. 4

6.7 NOTICES

Any notice or other communication required or permitted to be given hereunder
shall be in writing and shall be mailed by certified mail, return receipt
requested, or by Federal Express or similar overnight delivery or courier
service or delivered in person against receipt to the party to whom it is to be
given at the address of such party set forth in the preamble to this Agreement.
Notices hereunder shall be deemed delivered only upon actual delivery against a
signed receipt.

           NATURAL GAS SYSTEMS CORPORATION:   3 Raydon Lane
                                              Houston, Texas 77024
                                              Fax: 832-201-8839

           VERDISYS:                          Verdisys, Inc.
                                              25025 I-45 North, Suite 525
                                              The Woodlands, TX 77380
                                              Fax: ______________

6.8 WAIVER

Any waiver by any party of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of that provision or of any breach of any other provision of this Agreement. Any waiver must be in writing and be authorized by a resolution of the Board of Directors of the waiving party.

6.9 BINDING EFFECT

The provisions of this Agreement shall be binding upon and inure to the benefit of the Constituent Corporations and their respective successors and assigns and shall inure to the benefit of each indemnity.

6.10 SEVERABILITY

If any provision of this Agreement is invalid, illegal or unenforceable, the balance of this Agreement shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.

6.11 HEADINGS

The headings in this Agreement are solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement.

NATURAL GAS SYSTEMS CORPORATION         VERDISYS, INC.

By: ________________________            By: ________________________

Title: _____________________            Title: _____________________

Date: ______________________            Date: ______________________

Service Contract - NGS and Verdisys, Inc. 5

TERMS AND PRICING INVOICE

Effective Date: , 2003

This Lateral Drilling Service Agreement ("AGREEMENT") is entered into by Verdisys, Inc., a California corporation ("Verdisys") and NATURAL GAS SYSTEMS CORPORATION, A DELAWARE CORPORATION ("CUSTOMER") as of the Effective Date indicated above. This Agreement includes and incorporates the Terms and Pricing Invoice attached hereto and the following Annexes indicated below and executed by the parties:

[ ] Service Level Agreement (SLA)           [ ] Statement of Work

[ ] ___________________________         [ ] ________________________

VERDISYS, INC.                              NGS ________________________
("VERDISYS")                                ("CUSTOMER")

BY: ___________________________             BY: ________________________________

NAME:  ________________________             NAME: ______________________________

TITLE: ________________________             TITLE: _____________________________

DATE:  ________________________             DATE: ______________________________

SALES REPRESENTATIVE OR AGENT             PHONE                   FAX                       EMAIL

PRIMARY BUSINESS CONTACT                                        EMAIL                                 PHONE, WITH AREA CODE

MAILING ADDRESS WITH STREET, CITY, STATE, AND ZIP CODE          FAX, WITH AREA CODE                   CELLULAR, WITH AREA CODE

Selected Services:

BASE PACKAGE: 4 1/2 OR 3 1/2 INCH WELLS (WITH UP TO four(4) LATERALS PER WELL):

Minimum Number of Wells: Fee Per Well Fee per additional laterals:

120 65,000.00 $3,750.00 Up to 12 per zone

ADDITIONAL SERVICES:      Monthly Bandwidth       INSTALLATION FEE PAYMENT TERMS
                          Customer Fee
                          Payment Terms
                          ________

Service Contract - NGS and Verdisys, Inc. 6

EXHIBIT 10.7

[VERDISYS(TM) LOGO]

VERDISYS, INC.
25025 I-45 NORTH, SUITE 525
THE WOODLANDS, TX 77380
TOLL FREE: (281)364-6999
WEB: WWW.VERDISYS.COM FAX: (281) 364-8007

LATERAL DRILLING SERVICE STANDARD AGREEMENT
EDGE CAPITAL GROUP AND VERDISYS, INC.

This Lateral Drilling Services Agreement ("Agreement") is dated as of September 27th, 2003, by and between Verdisys, Inc., a California corporation ("Verdisys"), and Edge Capital Group, a California corporation ("ECG"). Edge Capital Group ("ECG") seeks to engage Verdisys, Inc. ("Verdisys") to provide lateral drilling services in ECG's Franklin Gas Field in Franklin, Louisiana (the "Franklin Field").

1.0 LATERAL DRILLING

1.1 LOCATION OF SERVICES

Verdisys will provide lateral drilling to pay zones within ECG's existing well base in the Franklin Field identified with greater specificity as to location on the attached Term and Pricing Invoice, which may be updated by the constituent corporations from time to time.

1.2 PARAMETERS OF DRILLING

Laterals will be drilled at a depth of no more than 5800' with a horizontal maximum of 300'.

2.0 SERVICE FEES AND ROYALTY

2.1 LATERAL DRILLING SERVICE FEES

Verdisys Lateral Drilling Services ("Drilling Services") will be billed at the time of commencement of drilling at the package rate set forth in the attached Term and Pricing Invoice. The Drilling Services are for each individual well site pertaining to this Contract. ECG shall receive the Drilling Services at the minimum number of wells and at the prices identified on the Term and Pricing Invoice attached hereto. Verdisys will bill ECG upon completion of each individual well, including any additional laterals requested, with payment due upon completion of the well based upon financing provided by a to be determined third party lender. Drilling will be done in eight (8) well segments for a total of 100 wells.

2.2 PAYMENT TO SECURE FRANKLIN FIELD AND FINANCING

ECG hereby agrees to purchase the Franklin Field from Verdisys within ten (10) days of the date of this contract with a payment of $200,000.00. ECG will also be responsible to provide any financial guarantees necessary to establish financing for drilling enhancement revenues paid to Verdisys..

Service Contract - ECG and Verdisys, Inc. 1

2.3 ROYALTY

In addition to the fee for Drilling Services, Verdisys shall receive a 66 2/3% interest in the net operating income from ECG's Franklin Gas Properties (the "Verdisys Royalty"). The Verdisys Royalty will be calculated as 66 2/3% of the net lease after recovery by ECG and/or its third party financing sources of ECG's costs related to the Drilling Services, including principal, interest, fees and costs for financing such Drilling Services; landowner royalties or other royalties to third parties other than ECG or Verdisys; and field operating costs.

To provide for payment of the Verdisys Royalty, ECG will secure for Verdisys a 66 2/3% listing with Shiloh Resources (the "Gatherer") for direct payment of proceeds after the development of the field (horizontally) and Drilling Services has been completed, all costs plus 10% have been received by ECG, Verdisys will then receive said 66 2/3% royalty of said net lease.

Verdisys shall not be directly or indirectly liable or obligated in any way to ECG or to any third party for any financing or other payment obligations related to the Drilling Services, including principal, interest, fees or other costs related thereto. The obligations of Verdisys are specifically limited to compliance with the terms of this agreement related to the assignment of funds by Verdisys to the Drilling Services Financing Escrow Account for the limited time period described herein.

ECG will remain operator, but will subcontract to Verdisys the management and operation of the Franklin field. On a monthly basis, Verdisys will be reimbursed for 33 1/3% of mutually agreed to field operating costs by ECG for the preceding month's expenses, such costs to include management personnel, office costs, pumping, maintenance, repair, and any other costs reasonably related to field production and management.

3.0 RESPONSIBILITIES OF PARTIES

3.1 VERDISYS SERVICES

Verdisys will provide lateral drilling to a depth of 5800' in the existing well structure with four (4) laterals to a maximum horizontal distance of 300' from the center of the well bore.

3.2 THIRD PARTY SERVICES

ECG hereby agrees that to the extent that third party services are reasonably determined by Verdisys as needed to maximize the results of the Drilling Services or the overall output from the Franklin field, ECG will be responsible for twenty percent (25%) of all costs related to these services.

The determination as to the appropriate number of laterals to be drilled to obtain maximum return from the well will be made by the on-site consulting geologist (or if not on-site consulting geologist is present at the site, by any third party consulting geologist mutually acceptable to the parties).

3.3 ECG SUPPORT

ECG agrees to provide sufficient, free and safe access to the Franklin Field and the ECG facilities located thereon to permit timely performance of the Drilling Services and field management. Verdisys is responsible for preworking of the well to the described condition set forth in the "Verdisys Statement of Work", and will bill such services to ECG as an operating cost. Verdisys will also provide or subcontract necessary "cleanup" of the well and strata.

Service Contract - ECG and Verdisys, Inc. 2

4.0 WARRANTIES AND LIMITATIONS

4.1 TERMS AND CONDITIONS

All warranties related to Verdisys Lateral Drilling Services are contained in the separate "Service Level Agreement" (SLA) document included with this Contract.

4.2 PERFORMANCE

Verdisys will provide a minimum of four laterals per well to at a depth not to exceed 5800' with laterals horizontal distance not to exceed 300'.

4.3 INDEMNIFICATION

Verdisys, at its own expense, shall indemnify, release and hold harmless ECG, its subsidiaries, affiliates or assignees, and their directors, officers, employees and agents and defend any action brought against same with respect to any claim, demand, cause of action, debt, loss or liability, including attorneys' fees and court costs, to the extent that it is based upon a claim that the equipment used or Services provided hereunder infringes or violates any patents, copyrights, trade secrets, licenses, or other property rights of any third party. ECG may, at its own expense, assist in such defense if it so chooses, provided that as long as Verdisys can demonstrate sufficient financial resources, Verdisys shall control such defense and all negotiations relative to the settlement of any such claim and further provided that any settlement intended to bind ECG shall not be final without ECG' written consent, which shall not be unreasonably withheld. In the event that Verdisys cannot demonstrate sufficient financial resources to provide such defense, the ECG shall have the right to advance legal expenses and direct such legal defense. ECG shall promptly provide Verdisys with written notice of any claim which ECG believes falls within the scope of this paragraph.

Verdisys agrees to indemnify, release, defend and hold harmless ECG for any liability or expense due to claims for personal injury or property damage (i) arising out of the furnishing or performance of the equipment or the Services provided hereunder or (ii) arising out of the fault or negligence of Verdisys, its employees or agents.

5.0 MISCELLANEOUS

5.1 CONFIDENTIALITY

Each party agrees that it shall not disclose to any third party any information concerning the customers, trade secrets, methods, processes or procedures or any other confidential business information of the other party which it learns during the course of its performance of this Contract, without the prior written consent of such other party. This obligation will survive the cancellation or other termination of this Contract.

5.2 GOVERNING LAW

This Contract shall be governed by and construed under the laws of the State of California.

5.3 ASSIGNMENT

Service Contract - ECG and Verdisys, Inc. 3

Either party may assign its rights under this contract with the prior written notice to the other party, except the management responsibilities undertaken by Verdisys herein may only be subcontracted or assigned with the prior consent of ECG. This Contract is binding upon the parties and their successors and assigns.

5.4 AUTHORITY

Each party has all requisite power and authority to execute, deliver and perform this Agreement. All necessary corporate proceedings of each party have been taken to authorize the execution, delivery and performance of this Agreement. This Agreement has been duly authorized, executed and delivered by each party, constitutes the legal, valid and binding obligation of each party, and is enforceable in accordance with its terms. Except as set forth elsewhere herein, no consent, authorization, approval, order, license, certificate, or permit of or from, or declaration or filing with, any federal, state, local or other governmental authority or any court or other tribunal is required by either party for the execution, delivery or performance of this Agreement. No consent of any party to any contract, agreement, instrument, lease, arrangement or understanding to which either party is a signer, or to which any of its properties or assets are subject, is required for the execution, delivery or performance of this Agreement

5.5 FURTHER ACTIONS

At any time and from time to time, each party agrees, at its expense, to take such actions and to execute and deliver such documents as may be reasonably necessary to effectuate the purposes of this Agreement.

5.6 AMENDMENTS

This Agreement sets forth the entire understanding of the parties with respect to the subject matter hereof and supersedes all existing agreements among them concerning such subject matter. This Agreement may be amended prior to the Effective Time (notwithstanding stockholder adoption and approval) by a written instrument executed by the Constituent Corporations with the approval of their respective Boards of Directors.

ECG:                      Mr. Scott A. Sossen
                          Edge Capital Group, Inc.
                          22349  La Palma Ave. #d110
                          Yorba Linda, California

VERDISYS:                 Verdisys, Inc.
                          25025 I-45 North, Suite 525
                          The Woodlands, TX  77380

5.8 WAIVER

Any waiver by any party of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of that provision or of any breach of any other

Service Contract - ECG and Verdisys, Inc. 4

provision of this Agreement. Any waiver must be in writing and be authorized by a resolution of the Board of Directors of the waiving party.

5.9 BINDING EFFECT

The provisions of this Agreement shall be binding upon and inure to the benefit of the Constituent Corporations and their respective successors and assigns and shall inure to the benefit of each indemnity.

5.10 SEPARABILITY

If any provision of this Agreement is invalid, illegal or unenforceable, the balance of this Agreement shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.

5.11 HEADINGS

The headings in this Agreement are solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement.

EDGE CAPITAL GROUP                  VERDISYS, INC.

By: ______________________          By: ______________________

Title: _____________________        Title: _____________________

Date: ______________                Date: _____________

Service Contract - ECG and Verdisys, Inc. 5

[ ] Service Level Agreement (SLA)             [ ] Statement of Work

[ ] ________________________              [ ] _________________________

VERDISYS, INC.                                Edge Capital Group
("VERDISYS")                                  ("CUSTOMER")

BY: ___________________________________       BY: ______________________________

NAME: Dan Williams                            NAME: Scott Sossen

TITLE: PRESIDENT AND CEO                      TITLE: CEO

DATE: 9/27/03                                 DATE: 9/27/03

SALES REPRESENTATIVE OR AGENT             PHONE            FAX          EMAIL

PRIMARY BUSINESS CONTACT                                   EMAIL                      PHONE, WITH AREA CODE

MAILING ADDRESS WITH STREET, CITY, STATE, AND ZIP CODE     FAX, WITH AREA CODE        CELLULAR, WITH AREA CODE

Minimum Number of Wells:         Fee Per Well            Fee per additional laterals:
--------------------------------------------------------------------------------------
         100                      65,000.00            $3,750.00    Up to 12  per zone

Number of Wells:                 Fee Per Well            Fee per additional laterals:
--------------------------------------------------------------------------------------
                                  65,000.00            $3,750.00    Up to 12  per zone

PAYMENT SOURCE (IF ANY): not applicable

ADDITIONAL SERVICES:     Monthly Bandwidth       INSTALLATION FEE PAYMENT TERMS
                         Customer Fee
                         Payment Terms
                         _____

EXHIBIT 10.8

VERDISYS

Verdisys, Inc.
65 Enterprise
Aliso Viejo, CA 92656
Toll Free: (949) 330-7710
Web: www.verdisys.com

SERVICE CONTRACT
APACHE CORP. AND VERDISYS, INC

September 11, 2002

SCOPE OF PROJECT

Apache Corporation ("Apache") would like to engage Verdisys, Inc. ("Verdisys") to provide high-speed satellite connectivity to remote operations within the United States.

1.0 SATELLITE SYSTEMS

SkyStar VSAT Outdoor Equipment:      SkyStar VSAT Indoor Equipment:
  1.2-m antenna                        IFL cable, RG6 and RG8
  1 W linear TXB                       SkyStar broadband VSAT
  LNB and Feed Assembly

2.0 BANDWIDTH SERVICES (ALL - INCLUSIVE LEASE RENTAL)

2.1 MONTHLY BANDWIDTH SERVICE

Monthly bandwidth services will be billed at a rate of $252.20* on a 36-month contract.

*Bandwidth, Hardware, Install, Shipping & Handling, Training and Taxes all included.

ALL INCLUSIVE LEASE RENTAL PRICING (NO UPFRONT COST)

512 - 250 128 - 60 $252.20*

* Hardware, Bandwidth, Install, Shipping & Handling and Taxes all included.

3.0 RESPONSIBILITIES OF PARTIES

3.1 VERDISYS SUPPORT

Verdisys will provide support for the satellite return systems and the basic connectivity, to the point of connection to Apache's computer, server, port, hub or VPN router.

3.2 APACHE SUPPORT

Apache agrees to provide sufficient, free and safe access to Apache facilities to permit timely installation of products and/or performance of services. Apache is responsible for integration and interconnection of Verdisys products and services with Apache's internal networks.

4.0 WARRANTIES AND LIMITATIONS

4.1 TERMS AND CONDITIONS

All warranties related to Verdisys hardware and Verdisys services are contained in the separate SLA document included with this Contract.

FOR VERDISYS:                               Dan Williams
                                            Verdisys, Inc.
                                            65 Enterprise
                                            Aliso Viejo, CA 92656
                                            (949) 330-7710

FOR APACHE CORP.:                           Norm Hagen
                                            Apache Corp.
                                            2000 Post Oak Blvd., Suite 100
                                            Houston, Texas 77056-4400

SIGNATURES:

APACHE CORP.                                     VERDISYS, INC.
By: Norman G. Hagen                              By: Dan Williams
Signature /s/ Norman G. Hagen                    Signature /s/ Dan Williams
          --------------------                             -------------------
Date: 10/30/2002                                 Date: 11/1/02

Proposal Order and Service Contract - Apache and Verdisys, Inc. 2

EXHIBIT 10.9

[VERISYS LOGO]

Verdisys, Inc.
25025 I-45 North, Suite 525
The Woodlands, TX 77380
Toll Free: (281) 364-8999
Web: www.verdisys.com

SERVICE CONTRACT
and
EQUIPMENT ADDENDUM
NOBLE ENERGY, INC. AND VERDISYS, INC

September 17, 2003

SCOPE OF PROJECT

Noble Energy, Inc. ("Noble") would like to engage Verdisys, Inc. ("Verdisys") to provide high-speed satellite connectivity to offshore sites within the United States.

V-Multi VSAT Outdoor Equipment:   V-Multi VSAT Indoor Equipment:

  1. Non-penetrating mount           1. IFL cable, RG6 and RG8

  2. 1.8M for offshore               2. V-Multi broadband VSAT

  3. 2 W linear TXB                  3. External Power Supply (if necessary)

4. LNB and Feed Assembly

IDU, ODU & antenna                              1.8 m

IDU, ODU complete system                  $  4,195.00
Shipping                                  $    250.00
Installation                              $  1,200.00*
Applicable taxes                          $    356.57

*Noble will provide transportation to the platform

2.0 TERM OF CONTRACT AND BANDWIDTH SERVICES

Bandwidth services ("Services") will be billed quarterly at a the monthly rate depicted below. The term of the Services is 36-months for all sites pertaining to this contract; Billing for each system will commence when system is installed and service provided. Monthly recurring cost will reflect total units installed.

20 V-Multi VSAT Units 512Kbps / 128Kbps $ 142.00 . 35 GB per Month**

** $.38 Per MB charge for bandwidth use over the GB Transfer Allowance.

3.0 RESPONSIBILITIES OF PARTIES

3.1 VERDISYS SUPPORT

Verdisys will provide support for the satellite return systems and the basic connectivity, to the point of connection to Noble's computer, server, port, hub or VPN router.

3.2 NOBLE SUPPORT Noble agrees to provide sufficient, free and safe access to Noble facilities to permit timely installation of products and/or performance of services. Noble is responsible for integration and interconnection of Verdisys products and services with Noble's internal networks.

4.0 WARRANTIES AND LIMITATIONS

4.1 TERMS AND CONDITIONS

All warranties related to Verdisys hardware and Verdisys services are contained in the separate "Service Level Agreement" (SLA) and "Agreement with Verdisys" documents included with this Contract.

4.2 PERFORMANCE

Verdisys will provide business class bandwidth systems with 5 static IP addresses. See attached SLA for network performance outline.

4.3 WARRANTIES

Verdisys hereby warrants and represents as follows:

(a) Ownership. Verdisys is the owner of the equipment and any and all rights to the equipment that it is providing to Noble and it may provide that equipment without violating the rights of any third party, and there is currently no actual or threatened suit by any third party based upon any alleged violation of any such right by Verdisys;

(b) Warranty Period. For a period of three (3) years from the date of this Contract, the equipment shall be (i) free from defects and material and workmanship under normal use and remain in good working order, (ii) function properly and conformity with this warranty and any other warranties that may be contained in the SLA or agreement with Verdisys.

4.4 INDEMNITY

Verdisys, at its own expense shall indemnify, release and hold harmless Noble, its subsidiaries, affiliates or assignees, and their directors, officers, employees and agents and defend any action brought against same with respect to any claim, demand, cause of action, debt, loss or liability, including attorneys' fees and court costs, to the extent that it is based upon a claim that the equipment used of the Services provided hereunder infringes or violates any patents, copyrights, trade secrets, licenses, or other property rights of any third party. Noble may, at its own expense, assist in such defense if it so chooses, provided that as long as Verdisys can demonstrate sufficient financial resources, Verdisys shall control such defense and all negotiations relative to the settlement of any such claim and further provided that any settlement intended to bind Noble shall not be final without Noble's written consent, which shall not be unreasonably withheld. Noble shall promptly provide Verdisys with written notice of any claim which Noble believes falls within the scope of this paragraph.

Verdisys agrees to indemnify, release, defend and hold harmless Noble for any liability or expense due to claims for personal injury or property damage (i) arising out of the furnishing or performance of the equipment or the Services provided hereunder or (ii) arising out of the fault or negligence of Verdisys, its employees or agents.

Service Contract - Noble and Verdisys, Inc. 2

4.5 THIRD PARTY SOFTWARE AND HARDWARE

Verdisys hereby agrees that, to the extent the equipment or Services as provided by Verdisys requires the use of third party rights to hardware and/or software (the "Third Party"), Verdisys shall at its sole cost maintain the rights to use a currently supported version of such Third Party Software or Hardware, and procure similar rights for Noble as necessary for Noble's permitted use thereunder. If such Third Party Software or Hardware is no longer available or supported, or Verdisys cannot procure the rights described in the prior sentence, Verdisys shall promptly and at its sole cost procure replacement software for the Third Party Software or Hardware and the necessary rights therein for Noble so as to provide Noble with uninterrupted functionality of the equipment and services.

4.6 CONFIDENTIALITY

Each party agrees that it shall not disclose to any third party any information concerning the customers, trade secrets, methods, processes or procedures or any other confidential business information of the other party, which it learns during the course of its performance of this Contract, without the prior written consent of such other party. This obligation shall survive the cancellation or other termination of this Contract.

4.7 GOVERNING LAW

This Contract shall be governed by and construed under the laws of the State of Texas.

NOBLE ENERGY, INC.                               VERDISYS, INC.
Noble Energy, Inc.                               Dan Williams, President and CEO
350 Glenborough Suites 100                       Verdisys, Inc.
Houston TX 77067                                 25025 I-45 North, Suite 525
                                                 The Woodlands, TX 77380

NOBLE ENERGY, INC.                               VERDISYS, INC.

By: /s/                                          By: /s/ Dan Williams
    --------------------------------                 ---------------------------
Signature                                        Signature

Date: 9/26/03                                    Date: 9/30/03

Service Contract - Noble and Verdisys, Inc.                                    3

V - INDUSTRIAL SERVICE LEVEL AGREEMENT

PERFORMANCE MEASUREMENT. For each of the Service Level Agreements (SLAs) listed below, the measurements of all applicable durations shall be based on the time stamps generated by the Verdisys trouble ticket tracking and reporting system. As such, individual remote outage durations shall be deemed to start upon opening of an applicable trouble ticket, and shall be deemed closed when the ticket is closed in accordance with Verdisys' trouble resolution procedures.

SLA APPLICABILITY. Verdisys SLAs apply to the relationship between Verdisys and Reseller, Customer or End User as described per this agreement or the "Agreement With Verdisys" document. SLA terms and provisions are transferable upon notification to Verdisys and are considered Confidential Controlled information.

SLA EXCEPTIONS. Verdisys will be relieved of its Service Level Agreements to the extent that any service interruptions are due to any of the following:

- Failure of interruption of service due to the failure or non-performance of any terrestrial backhaul equipment or connections;

- Action or inaction by Reseller, Customer(s), or End User(s), or their employees, invitees, third parties, including, but not limited to, changes in applications and protocols, or transmission parameters from those tested and approved by Verdisys;

- Maintenance Exclusions;

- Reseller, Customer or End Uses scheduled and approved downtime (maintenance, upgrades, etc.);

- Breach of this Agreement by Reseller, Customer or End User;

- Inability to service a Site due to access restrictions of Reseller, Customer(s) or End User(s); and

- Any other cause beyond Verdisys' control to include but not limited to those actions set forth under the Force Majeure provision of this Agreement or the "Agreement With Verdisys"; or failure or unavailability of Reseller's data center or equipment not provided by Verdisys.

Definition        Percentage of time the VSATs, satellite and hub are in service
                  and available to support duplex data communications.

Specification     99.7%

Measurement       Number of total actual Verdisys network minutes per month
                  divided by total possible number of network service minutes,
                  tallied and averaged on a rolling 12-month basis.

Definition        Average time to restore hub to operational service following
                  an outage.

Specification     Six hours

Measurement       Total elapsed time for restoration of all hub outages during a
                  calendar month, measured from event start to event end for
                  each event, divided by the number of discreet events.

Definition        Maximum outage duration for an individual hub outage from
                  event start to event end.

Specification     Twelve hours

Measurement       Total elapsed time from start of outage to restoration of
                  service.

VERDISYS                              6/22/02                                  2

EXHIBIT 10.10

SUMMARY REPORT
UPDATED ASSESSMENT OF THE LANDERS HORIZONTAL JETTING TECHNOLOGY

Prepared For:

VERDISYS, INC.
10600 North De Anza Boulevard, Suite 250 Cupertino, CA 95014

October 13, 2003

DAI Project No. J90203

Prepared By:

October 13, 2003

Mr. Andrew Wilson
Chief Financial Officer
Verdisys, Inc.
10600 North De Anza Boulevard, Suite 250
Cupertino, CA 95014

RE: SUMMARY REPORT
UPDATED ASSESSMENT OF THE LANDERS HORIZONTAL JETTING TECHNOLOGY DAI PROJECT NO. J90203

Dear Mr. Wilson:

An updated assessment of the Landers Horizontal Jetting technology (HJT) developed and patented by Mr. Carl Landers of Landers Horizontal Drill, Inc./Advanced Petroleum Enhancement, Inc. has been completed by Daniel and Associates, Inc. (DAI). This summary report has been prepared in accordance with the proposed scope of work as outlined in DAI Proposal No. P90203 to our Client, Verdisys, Inc., dated September 4, 2003. The proposal was approved by Verdisys, Inc. on September 4, 2003 via email and retainer fee on September 5, 2003.

The assessment was conducted on a best efforts basis and represents a professional opinion after evaluation of information furnished by several parties and a site visit to observe field observations of the horizontal jetting technology used in an actual oilfield project near Oil City, Louisiana.

The opportunity to be of service to Verdisys, Inc. in this important project is greatly appreciated.

Sincerely,

DANIEL & ASSOCIATES, INC.

Noel L. Daniel, LPG
Consulting Geologist

TABLE OF CONTENTS

DISCLAIMER STATEMENT

EXECUTIVE SUMMARY

1.0 INTRODUCTION

2.0 SUMMARY OF THE PATENTED LANDERS HORIZONTAL DRILLING TECHNOLOGY

3.0 UPDATED REVIEW OF THE LANDERS HORIZONTAL DRILLING TECHNOLOGY PERFORMANCE

3.1 UPDATED REVIEW OF THE HORIZONTAL DRILL TECHNOLOGY FROM SELECTED LHD SERVICE PROJECTS

3.2 PREVIOUS REVIEW OF THE HORIZONTAL DRILL TECHNOLOGY FROM SELECTED LHD SERVICE PROJECTS

4.0 MARKET VIABILITY OF THE TECHNOLOGY

5.0 SUMMARY OPINION

5.1 CONCLUSIONS

5.2 RECOMMENDATIONS

APPENDICES

APPENDIX 1-OIL AND GAS WELL PRODUCTION RECORDS FROM VARIOUS STATE GEOLOGIC SURVEY AGENCIES

APPENDIX 2-SELECTED PRODUCTION CURVES FROM HJT TREATED OIL AND GAS WELLS

APPENDIX 3-AFFIDAVITS

APPENDIX 4-RESUME OF NOEL DANIEL

DISCLAIMER STATEMENT

This document was prepared for Verdisys, Inc, the only intended beneficiary of our work. No other party should rely on the information contained herein without prior written consent of Verdisys, Inc.

In preparation of this report, DANIEL & ASSOCIATES, INC. has applied generally accepted professional practices and standards of performance in exercising its professional judgment, skills, and care in a manner consistent with that of other professionals performing similar work under similar conditions. All information, conclusions, and recommendations in this report are necessarily governed by the recommended Scope of Work, availability and reliability of information furnished to DANIEL & ASSOCIATES, INC. by various governmental sources, oil and gas operators, and others. Due to the nature of the work, however, DANIEL & ASSOCIATES, INC. does not assume and specifically disclaims any and all responsibility and/or liability for damages of any kind suffered by any individual or entity arising from DANIEL & ASSOCIATES, INC. professional acts, errors and/or omissions related in any way to the work performed in the preparation of this report or any reliance on this report or action undertaken in reliance on this report. No warranties, expressed or implied, are given or made.

AN UPDATED ASSESSMENT OF THE LANDERS HORIZONTAL DRILLING TECHNOLOGY

DAI PROJECT NO. J90203
OCTOBER 13, 2003

EXECUTIVE SUMMARY

This report summarizes the results of an updated assessment of the Landers Horizontal Drilling Technology (LHD) conducted by Daniel & Associates, Inc. (DAI). DAI was retained by Verdisys, Inc. to prepare the report. The purpose of this project was to review and update the overall performance of the technology since the initial assessment was made by DAI in a report entitled, Project Summary Report, Assessment of the Landers Horizontal Drill Technology, dated August 21, 2000. The assessment was conducted on a best efforts basis and represents a professional opinion after evaluation of information furnished by several documented sources and field observations of the horizontal drilling technology used in an actual oil field project near Oil City, Louisiana.

In conclusion, it is the author's professional opinion that the patented LHD technology has been demonstrated to be technically sound. The technology will not always produce favorable results of increased oil and gas production due to subsurface factors beyond the control of the technology. If the reservoirs have been severely depleted or negatively impacted in some manner, the technology will not benefit the operator. For the most part, the technology should perform favorably in most oil and gas wells that have potential for improved reservoir characteristics. In conjunction with well planned and executed reservoir enhancement treatments, the LHD technology has been successfully demonstrated to enhance oil and gas production in wells that otherwise were under performing. While there is a need for refinement of the technology through continued research and development, it is my opinion that the LHD technology has substantial value as a relatively low cost means of enhancing oil and gas production in the U.S. and the oil producing nations of the world.

This project has resulted in an updated evaluation of the LHD technology market viability and concludes that: 1) the LHD technology can reliably attain the marketplace driven goal of enhanced oil and gas productivity; and 2) the marketplace will respond to the LHD technology if it is reasonably priced.

Based on the author's consideration of information reviewed concerning the LHD technology and market viability, the following recommendations are respectively submitted:

- It is recommended that routine information on every oil and gas well serviced by the LHD technology be recorded in a file format suitable for future reference and evaluation; this will be especially important as the technology grows in usage by the industry; information management will become vital.

- As a service sector product, the LHD technology should be priced to offer benefits to the small independent operator as well as the larger independents and major oil companies; pricing will drive market growth, especially for the next 2-3 years with the smaller independents; as the service continues to demonstrate reliability and positive results, the larger independents and majors will likely become more likely to utilize it; pricing will become secondary as compared to increased productivity.

- It is recommended that a strong marketing program be developed to approach the larger independents and major oil companies; while slow to accept new technologies in the petroleum industry, the larger firms will eventually accept the LHD technology once demonstrated by a few of the more well known firms.

- It is the author's opinion that the greatest strength represented by the LHD technology is to use it to create oil and gas production deals; It is recommended that growth emphasis be placed more on use of the technology to acquire and participate in oil and gas development projects that lend themselves to this technology. The real value of this technology is using it to create future opportunities.

1.0 INTRODUCTION

The purpose of this project was to provide a qualified independent updated assessment for Verdisys, Inc. of the technical viability of the patented Landers Horizontal Drill technology (LHD). The LHD technology was originally developed for the enhancement of oil and gas production in the petroleum industry by Mr. Carl Landers, inventor of the technology. The scope of work implemented by DANIEL & ASSOCIATES, INC. (DAI) for this project consisted of the following key components:

X An updated review of Mr. Landers's patented LHD technology as applicable to the petroleum industry;

X Review of selected past LHD service projects;

X Field observation of an actual LHD oil and gas project in Louisiana;

X Assessment of the LHD service pricing criteria;

X Evaluation of market viability of the technology; and;

X Summary conclusions, recommendations, and professional opinion.

2.0 SUMMARY OF LHDI'S PATENTED HORIZONTAL DRILLING TECHNOLOGY

The development of the Landers Horizontal Drill (LHD), according to Mr. Carl Landers of Landers Horizontal Drill, Inc. (LHDI), the inventor of record, came about directly as a result of the need to drill inexpensive horizontal borings (referred to as lateral borings) through oil well casing or open hole into surrounding reservoir rock. The LHD technology was developed to offer a cost effective, portable, and practical well field service alternative to more expensive, traditional reservoir enhancement technologies including whip-stocking and horizontal drilling. The intent of the LHD technology has been to provide a low cost approach in increasing oil and gas production. The well bore radius can be effectively increased laterally by jetting multiple channels to an approximate distance of 300 feet from the vertical well bore. Reservoir stimulation can be effectively enhanced by applications of traditional formation fracturing and acid treatment applied to each of the laterals.

Patents for the LHD technology by Carl Landers were approved by the U.S. Patent Office in May 9, 1995 (Patent No. 5,413,184) and December 29, 1998 (Patent No. 5,853,056). Both patents cover methodology and apparatus for horizontal well drilling. A partial excerpt summary of the invention from the U.S. Patent document 5,853,056 for the patents is included as follows:

METHOD OF AND APPARATUS FOR HORIZONTAL WELL DRILLING (SUMMARY OF THE INVENTION)

"The present invention is directed to a method and apparatus for penetrating a well casing and surrounding earth strata. Furthermore, the present invention is directed to a method of penetrating a well casing and surrounding earth strata utilizing a two-step process wherein a flexible shaft having a ball cutter on one end thereof is used to make a cut through a well casing and a pre-cut into the earth's strata surrounding the well casing and the second step involves the use of a flexible tube having a nozzle blaster on the end thereof which is then inserted down the well casing into the pre-cut and in combination with a high pressure fluid pumped through the flexible tube and out through the nozzle blaster, a horizontal extension of the pre-cut can then be made up to a distance of more than 200 feet (61 m). The upset tubing can then be turned from the surface 90o to repeat the process in another direction. One can then cut another hole through the casing and repeat the process up to 4 directions on one level. Many levels can be opened with the same procedure. The invention has application in drilling oil, gas, or water, for example."

3.0 UPDATED REVIEW OF THE LANDERS HORIZONTAL DRILLING TECHNOLOGY PERFORMANCE

3.1 PREVIOUS DAI REVIEW OF THE HORIZONTAL DRILL TECHNOLOGY FROM SELECTED LHD SERVICE PROJECTS

The material presented in this section was previously included in the DAI report entitled, Assessment of Horizontal Jetting Technology, dated August 21, 2000, DAI Project No. J81600. It is included again in this report to provide continuity of information in the original report and

information and opinions presented in this report.

The following tabularized petroleum well test results have been obtained from information supplied to Carl Landers from selected customers who have utilized the Lander Horizontal Drill technology in various petroleum reservoirs. These LHD test programs have been conducted by 5 independent oil producers in a wide variety of production depths, reservoir lithologies, and regional locations in the U.S. The reported LHD test results are somewhat varied in results. Generally the LHD process of reservoir enhancement demonstrated the ability to drill horizontal lateral borings at distances in the range of 200-400 feet with noted improvement in petroleum production rates in several of the oil wells as compared to production rates prior to LHD treatment.

3.1 UPDATED REVIEW OF THE LANDERS HORIZONTAL DRILLING TECHNOLOGY FROM SELECTED SERVICE PROJECTS

WELLINGTON OPERATING COMPANY LHD TEST OF THE MUDDY SANDSTONE UNIT #30-6 OIL WELLS

DAI has acquired oil production records from the State of Colorado Department of Oil and Gas for the Wellington Operating Company Muddy Sandstone Unit #30-6 oil wells (3 wells in the unit). A copy of the production records is included in Appendix 2 of this report. The production records were used by DAI to construct an oil production curve for this unit. The production curve is included in Appendix 2. An Affidavit sworn by Mr. Bradley A. Pomeroy, President, Managing Operations Officer, Wellington Operating Company, has been acquired by DAI. The affidavit swears the following:

That he had engaged Landers Horizontal Drill to jet channels and stimulate two (2) wells, the Unit 19-10 and the Unit 40-2, on or about June, 1999. These wells were completed as oil wells in the Wellington Muddy Sandstone Unit, Larimer County, Colorado, over 20 years. Both have been producing continuously since their completion from a depth of approximately 4,700 feet. The wells had been producing up to approximately 5 barrels of oil per day prior to Lander's work. Channels could not be emplaced in the Unit 19-10, probably due to deviation at the Muddy Formation of at least 10o. Eight channels were cut, at two different depths, in the Muddy Formation in the Unit 40-2 in one day. After the stimulation the well was swabbed for a day and a half. Results of the swab runs indicated that oil, gas, and water production had increased significantly. As all producing wells on the south end of the Wellington Unit are not individually gauged and are gathered together, specific per well production dated is not collected; however, field production data indicated that the laterals jetted into the Unit 40-2 well had been successful.

That he had engaged Advanced Petroleum Enhancement, Inc. (Landers Horizontal Drill) to mill holes in casing, jet channels and stimulate the Meyer #3 well on or about June 2000. This well was completed as an oil well in the Fort Collins Oil Field, Larimer, County, Colorado over 20 years ago. The well has been producing intermittently since its completion in the Niobrara Formation (chalk) at a depth of about 3,800 feet. Historic data indicated that this well, when pumping, made less than one barrel of oil per day. Eight channels were cut at two different depths, in the Niobrara Fm. in the Meyer #3 well in one day. An immediate increase in gas from the bore hole was noticed. The well was swabbed for one day and was returned to production. The first day after APE jetted channels, the Meyer #3 well made 40 barrels of oil. The first week saw production of 225 barrels of oil. Although a rapid decline in production occurred and the well eventually returned to pre-jetting rates, the channel jetting procedure was successful. The fractures in the Niobrara chalks, which feed oil to the well bore, tend to close quickly if not located in an extensional structural setting.

The production curve for this well (Appendix 2) supports the production increases as stated in the Affidavit. A copy of this Affidavit is included in Appendix 3.

DRY BONES PRODUCTION LHD TEST OF THE GAM #1 AND #2 OIL WELLS

An Affidavit sworn by Mr. Clarence J. Ballowe, Owner and Partner, Dry Bones Production, has

been acquired by DAI. The affidavit swears the following:

That he engaged Landers Horizontal Drill to recomplete and stimulate two (2) oil wells, the Gam #1 and Gam #2, on or about January 2002. These wells were spudded circa 1960 and are producing in the Annona Chalk Formation (fractured limestone) and located in the Caddo Pine Island Oil Field, northwest Louisiana at a depth of approximately 1,500 feet. The wells had been producing up to approximately 1/10 barrel of oil per day or less. After laterals were drilled by Landers Horizontal Drill, oil production increased approximately ten (10) fold the previous production of said wells. The affiant further declared that to his knowledge, information and belief, the increase in production has essentially remained the same.

A copy of this Affidavit is included in Appendix 3. It appears that the LHD laterals improved the productivity of these 2 wells by a factor of 10. It seems possible that some form of follow-up well treatment such as a CO(2) frac or diesel fuel frac in conjunction with installation of the laterals may have further enhanced oil productivity in this well.

BURLINGTON RESOURCES LHD TEST OF THE UTE 32-11 #402 COAL BED METHANE GAS WELL

DAI has acquired oil production records from the State of Colorado Department of Oil and Gas for the Burlington Resources Ute 32-11 #402 gas well. A copy of the production records is included in Appendix 1 of this report. The production records were used by DAI to construct an oil production curve for this unit. The production curve is included in Appendix 2.

Coal bed gas production from the Ute Indian federal lease is from the Fruitland Coal within the Ignacio Blanco Field. Details of the geology, production depths, and well treatment by the LHD process have not been obtained at the time this report was prepared. However, records indicate that

the Ute 32-11 #402 coal bed methane gas well (API No. 05-067-07622 was tested using the LHD laterals in March 1998. First gas production from the well was in 1990.

Production records for this well indicate that the LHD was not successful in increasing coal bed methane gas production. Although production records for the period prior to January 1999 were not obtained for this well (the period includes the installation date for the LHD laterals installation), a review of the gas production curve does not reflect any noticeable increase in gas productivity following installation of the laterals.

KLM EXPLORATION CO., INC. LHD TEST OF THE WAGNER LEASE #1 OIL WELL

DAI has acquired oil production records from the State of Kansas Geological Survey, Department of Oil and Gas for the KLM Exploration Company, Inc. Wagner No. 1 oil well. A copy of the production records is included in Appendix 2 of this report. The production records were used by DAI to construct an oil production curve for this well. The production curve is included in Appendix 2.

Production from the Wagner lease is from the McLouth Sandstone within the McLouth Oil Field. Details of the geology, production depths, and well treatment by the LHD process have not been obtained at the time this report was prepared. However, records indicate that the Wagner #1 well (API No. 15-087-20415 was tested using the LHD laterals in September 2000. First oil production from the field was in 1988.

The oil production curve for this well illustrates the results of the LHD horizontal jetting test. Oil production was increased from approximately 150 barrels per month in July 2000 to more than 1000 barrels in August 2000. While production rapidly diminished during the next 2-3 months, oil production remained above 300 barrels per month for the next 8-12 months. As of June 2002 production records, the well performance appeared to have stabilized at approximately 250 barrels per month until at least early 2003. No records were available after this period at the time of this report. The LHD jetting test appears to have been successful for this well.

MOON-HINES-TIGRETT OPERATING CO. LHD TEST OF THE BETSY-DIXON 23-6 #1 GAS WELL

DAI has acquired gas production records for the Moon-Hines-Tigrett Operating Company Betsy-Dixon 23-6 #1 gas well from the Alabama State Oil and Gas Board. The LHD laterals were drilled into the Betsy-Dixon 23-6 #1 gas well in August 2002. The well is located in the South Kennedy Field, Lamar County, Alabama. Initial production from this well was recorded as April 1999. Prior to the LHD laterals, gas production from this well had declined to approximately 1,750 MCF per month. Gas is produced from perforations in four Benton sand zones ranging over a depth interval of 2,303-2,964 feet.

As can be seen in the production curve for this well (Appendix 2), upon installation of an unknown number of LHD laterals and unknown followup well treatment, the well responded with a gas production increase to approximately 8,244 Mcf in September 2002. Gas production declined to

4,149 Mcf by May 2003, the most recent available month with production records as of the time this report was prepared.

The response performance in gas production for this well is significant. The LHD jetting test appears to have been successful for this well.

MOON-HINES-TIGRETT OPERATING CO. LHD TEST OF THE LANGSTON 31-7 #1 GAS WELL

DAI has acquired gas production records for the Moon-Hines-Tigrett Operating Company Langston 31-7 gas well from the Alabama State Oil and Gas Board. The LHD laterals were drilled into the Langston 31-7 #1 gas well in December 2001. The well is located in the Bluff Field, Fayette County, Alabama. Initial production from this well was recorded as September 1980. Prior to the LHD laterals, gas production from this well had declined to approximately 2,495 MCF per month. Gas is produced from perforations in two Gilmer sand zones ranging over a depth interval of 1,891-2,056 feet.

As can be seen in the production curve for this well (Appendix 2), upon installation of an unknown number of LHD laterals and unknown followup well treatment, the well responded with a gas production increase to approximately 13,389 Mcf in March 1999. Gas production declined to 3,931 Mcf by May 2003, the most recent available month with production records as of the time this report was prepared. Increased gas production from the LHD laterals resulted in a significant increase in gas reserve value.

The response performance in gas production for this well is significant. The LHD jetting test appears to have been successful for this well.

METRO ENERGY GROUP, INC. LHD TEST OF THE GLASSELL F-6 OIL WELL

On September 26, 2003, the author was invited to observe the drilling of LHD laterals in the Metro Energy Group, Inc. Glassell F-6 oil well. Those in attendance included Don Boyd, consulting petroleum engineer, John Levitts, President of Metro Energy Group, Inc., Rick Holcomb, Partner in Metro Energy Group, Inc., and Carl Landers of Landers Horizontal Drill, Inc.

The test well is located in the Caddo Pine Island Field of northwest Louisiana near Oil City, Louisiana. The well was originally drilled several years ago in the old field to a depth of approximately 1,456 feet in the Annona (Chalk) Formation. Prior to drilling the laterals, the well reportedly had been producing less than 1 barrel of oil per day with some water and trace of gas from the Annona Chalk.

The author observed the drilling of the first LHD lateral at an indicated depth of 1,422 feet and a horizontal jetting of the lateral to an indicated distance of 191 feet. The lateral was completed in approximately 1 hour. An additional 3 laterals were drilled during the next day. The second, third, and fourth laterals were drilled at a depth of 1,456 feet in the Annona Chalk and jetted to indicated horizontal distances of 173 feet, 248 feet, and 250 feet (approximately). The well was not treated with any acid.

On October 3, 2003, the author learned that the well had undergone daily casing swabbing. Initial production estimates were reported at 37-40 barrels per day of total fluid with approximately 27-29 barrels of oil per day. Gas was not measured by estimated at 10,000-12,000 cubic feet per day. The static fluid level in the well prior to LHD installation of the laterals was measured at 960 feet. After installation and swabbing, the fluid level was measured at a depth of 412 feet. The operator has installed a Permaswab unit on the well (automatic swabbing unit). The well is pulling a casing swab every 90 minutes. Field reports indicate the well is yielding in the range of 10-20 barrels of oil per day.

The results of this test are preliminary at the time this report was prepared. However, initial results indicate a favorable well response to installation of the laterals. The operator stated that LHD laterals will be installed in additional wells if favorable results from the test well continue to be demonstrated.

3.2 PREVIOUSLY SELECTED LHD SERVICE PROJECTS

RESULTS OF THE CITIZENS GAS & COKE UTILITY LHD TEST PROGRAM

A five-well test program of the Landers Horizontal Drill technology was completed by Citizens Gas & Coke Utility (Citizens) in 1997 in the Illinois Basin. The results of the test program were reported by Citizens as encouraging but not definitive because too few wells were tested. The complete test results report, Landers Horizontal Drill Test Program, January 1998, was provided to DAI by LHDI and is included in Appendix 4 of the August 2000 DAI report. Citizens stated in

the report that the LHD technology has proven the ability to 1) successfully mill 3/4" holes in production casing; 2) blast horizontal channels of up to 410 feet in length through these holes using a waterjet cutting nozzle; 3) to cut sandstone, limestone, dolomitic-limestone, and shale formations; and 4) to economically enhance oil production in some wells. Of the five test wells, one of the wells had an economic production increase, three wells had uneconomic production increases, and one shale well had horizontal channels successfully placed but was not production tested. Citizens noted that it should be noted that two of the three uneconomic LHD test wells were "long shots". These two wells were highly uneconomic as vertical drilled wells and are not believed by Citizens as representative of the potential market for LHD technology. Table 1 from the original August 21, 2000 DAI report summarizes the results of the LHD test program.

       WELL NAME           PERRY KING #141    PLUMMER "B" #1    SQUIRES ET AL #1          REAGAN #1              ELLETT #4
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       FIELD NAME              Lawrence          Plummer            Plummer                Plummer                Plummer
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        LOCATION           Lawrence Co., IL   Greene Co., IN    Greene Co., IN         Greene Co., IN          Greene Co., IN
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                            Bridgeport A"         Salem            Geneva                New Albany                 Salem
   FORMATION/LITHOLOGY       sandstone          limestone         dolomite                  shale                 limestone
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     LATERAL DEPTH (FT        934 & 938         718 & 719       1,583 & 1,585              1,440                    741
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  DATE LATERALS DRILLED         9/97              9/97              9-10/97                 1997                   10/97
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     NO. OF LATERALS         4 (2 zones)       6 (2 zones)       9 (2 zones)                 4                       5
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  LENGTH OF LATERALS (FT)        300              51-226           100-297                50-410                  60-300
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  DAILY OIL PRODUCTION
    PRIOR TO *LHD
       (BO/BW)                 2-3/18            4.5/300            6/54                 Not Tested              < 1/180
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  DAILY OIL PRODUCTION
  AFTER LHD (BO/BW)            5/120            23.5/938           9.5/59                Not Tested              < 1/180
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     ECONOMIC WELL
       (YES/NO)                  No               Yes                No                 Not determined              No
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                                             Well
                                             enhancement       Laterals drilled    Laterals drilled only    Well initially drilled
                          Heavy oil could    was an            with water rather   to determine if the LHD  structurally low;
                          not be             economic &        than acid;          process could cut        suffered low reservoir
        COMMENTS          economically       technologic       improper acidizing  shale; a technologic     quality; could not be
                          produced           success           job                 success.                 improved.
===================================================================================================================================

RESULTS OF THE SABA PETROLEUM, INC. LHD TEST PROGRAM

A two-well test program of the Landers Horizontal Drill technology was completed by Saba Petroleum, Inc. (Saba) as reported to LHDI in April 1997 in the Richland Field, Orange County, California. The LHD test program by Saba reportedly resulted in a positive change in oil production. In a letter to LHD, dated April 23, 1997, a brief account of the test program was provided. A total of twelve 300 foot horizontal laterals through seven inch diameter slotted casing were made in two oil producing wells at three levels in 4,000-4,700 foot depth range. The targeted reservoir was identified as the Kraemer Zone, Miocene in age. The reservoir consisted of partially consolidated sand/shale. Results indicated that the laterals yielded gassier, lighter gravity oil and an increase fluid level column in the well bore. Saba found the technology to have merit and indicated an interest in using the LHD technology in the future. The Saba letter was provided to DAI by LHDI and is included in Appendix 3 of the August 21, 2000 DAI report.

RESULTS OF THE VOGLER DRILLING COMPANY LHD TEST PROGRAM

A single well test program of the Landers Horizontal Drill technology was completed by Vogler Drilling Company (Vogler) in October 1999 in the Illinois Basin of Muhlenberg County, Kentucky. In a letter to Mr. Landers, dated November 1, 1999, a brief account of the test program was provided. A total of ten laterals were drilled in the Bethel sandstone of the Corley No. 4 well at a depth of 1,545 feet. The laterals reportedly extended to a length of 300 feet. The laterals were drilled with a relative angular horizontal spacing of 36 degrees. The results of the test program of the formerly abandoned well were reported by Vogler as encouraging. After a 9,400 acid fracture job on the zone, the well had an initial production rate of 14 BOPD. At the time of abandonment, the well was producing at 1 BOPD. Vogler stated that in their opinion the well could not have been successfully fractured without the laterals. The Vogler letter is included in Appendix 3 of the August 21, 2000 DAI report and was provided by LHDI to DAI.

As an update to this discussion, DAI has obtained a summary of oil production from the Corley #4 well since the well was serviced by the LHD test program. An oil production summary for this well was obtained from the Kentucky Department of Mines and Minerals. The production information was used to construct an oil production curve and is included in Appendix 1 of this report. The information was available for the reporting ending December 2000. The oil production curve for this well is included in Appendix 2.

The records found for this well indicate that the well was treated by the Landers horizontal drill in October 1999. Production data illustrate the sharp increase in oil production for a period of approximately 3-4 months followed by sustained monthly production of about 3 barrels of oil per day. This result indicates that the laterals drilled into the Bethel sand successfully increased production on a more sustained basis.

RESULTS OF THE DC & B Oil Company and Virsal Oil Company LHD Test Program

A two-well test program in the Hospah Field near Grants, New Mexico of the Landers Horizontal Drill technology was completed by DC & B Oil Company (DC &
B). Additionally, a single gas well test program in Kern County, California of the Landers Horizontal Drill technology was completed by Virsal Oil Company (Virsal). An overview of the programs was reported to LHDI in a memo to Mr. Carl Landers from the W.D. Newsom Consulting Company, dated June 4, 1997. A copy of this memo is included in Appendix 3 of the August 21, 2000 DAI report.

DC & B Oil Company LHD Test Program

According to the memo, two low production oil wells were intentionally selected by the operator to test the LHD technology. Well No. 1 had been shut in as uneconomic at 1/2 BOPD with no water before recompleted with horizontal laterals. A total of four laterals were drilled to a total length of 100 feet at an unspecified depth of less than 1,500 feet. Upon completion, the well initially produced 35 BOPD and gradually leveled off to a production rate of 12 BOPD after 8 months. Well No. 2 had been producing at a rate of 3 BOPD and 150 BWPD. In September 1996 a total of 3 horizontal laterals were drilled to a total length of 300 feet. Upon re-completion, the well reportedly had an initial production of 15 BOPD and leveled off to a production rate of 13 BOPD and 158 BWPD after 8 months of production. This reservoir was indicated to be an active water drive. The operator stated in the memo that the LHD technology produced very economic results with payouts in 45-60 days. The operator expressed an interest using the technology again.

VIRSAL OIL COMPANY LHD TEST PROGRAM

A single gas well previously completed in the Etchegoin formation reservoir and undergone damage from acidization. This well was producing gas at 65-70 MCFPD and 2 BWPD at a depth of 3,300-3,500 prior to the LHD test program. A total of three laterals were drilled in May 1997 at lengths of 10-125 feet in a 6 foot pay zone at depth of 3,350 feet. The laterals were drilled using fresh water with swelling clay inhibitors. Results indicate that the horizontal laterals drilled in the target pay zone produced less gas than expected. The operator suggested that these results indicate that the remaining gas reserves for this well were perhaps contained in the thinner (less permeable) gas sand stringers and not the 6 foot target pay zone. This factor indicates that the reserves in the thinner zones were previously producing the gas and were not impacted by the horizontal laterals.

The well when put back into production resumed production at about 70 MCFPD and 2 BWPD. The operator stated that the LHD performance was good.

ENERGY, INC. LHD TEST OF THE STONE #1 OIL WELL

On July 27, 2000, Energy, Inc. of Marion, Indiana contracted with Landers Horizontal Drill Technology, Inc. to drill at total of seven horizontal laterals in the Stone No. 1 oil well located in the Rich Valley Field, Wabash County, Indiana. As well site geologist for Energy, Inc., the author personally observed the lateral drilling process. The laterals were drilled to a maximum length of 300 feet in an open hole at a depth of 865 feet within the Trenton Formation (Ordovician age). The oil production zone in the well was a dolomite. Prior to drilling the horizontal laterals the Stone No. 1 well was producing approximately 1 BOPD with very little water.

After gamma ray-neutron logging of the well, the laterals were observed to be drilled with very little effort by APEI (LHDI service operator) once the proper drilling pressures were determined largely by trial and error. Each of the laterals was jetted using a weak acetic acid and biocide mixture pumped under 4,000-6,000 psi pressure through the jetting nozzle. The formation penetration rate of the lateral jetting nozzle was observed to be more than 50 feet per minute during jetting of the horizontal laterals. The performance of the two-man service crew was very good. The next day, the well was swabbed and found to have been damaged by a sludge consisting of abundant iron oxides, pyrite, and degraded oil. These materials are probably the result of biologic degradation and sulfur reducing bacteria over the past 100 years from bacterial contamination introduced through past drilling and completion practices.

The well remained shut-in until August 12 at which time a biocide mixture and surfactant was

pumped into the well bore by displacement of formation water at a pressure of approximately 500 psi. This process attempted to clean out the laterals and well bore as much as possible. Subsequent swabbing and bailing yielded a significant amount of drill cuttings and fines. However, the well appeared to yield no more than 1-2 BOPD will virtually no water.

On August 21, the well was acidized using 525 gallons of 15% HCL acid with clay and iron inhibitors with a surfactant. The well acidizing pressure was 400 psi. The well was then swabbed to return the acidizing load. Continued swabbing yielded 10-12 BO with very water. Preliminary results indicated a favorable increase in oil production for this well.

As an update to the DAI report of August 21, 2000, the Stone #1 well has not been found to have increased oil production. While the company believes that the installation of the laterals was successful, the outcome of the laterals and followup treatment was unsuccessful.

4.0 MARKET VIABILITY OF THE LHD TECHNOLOGY

The market viability of the LHD technology in the petroleum service industry was addressed by DAI in the August 2000 report based on the key factors of service pricing criteria and industry operator perception of the service offered by the LHD technology. Since the initial report was written, the key factors are still of major importance in marketing the LHD technology.

An evaluation of the market viability of the LHD technology should still include
1) an assessment of the demonstrated capability of the technology to reliably attain marketplace driven goals; and 2) an assessment of economic feasibility of the technology. The LHD technology must still meet both

primary factors to be viable in the marketplace.

The Landers Horizontal Drill technology was conceived, developed, and patented during a period of time when the U.S. petroleum industry had been decimated by a decade of depressed oil and gas market prices. This factor, along with increasing governmental regulatory influences, has combined to squeeze the profitability out of traditional independent oil and gas producers in the U.S.

MARKET POTENTIAL

Most U.S. oil producers are privately owned companies tending to be much smaller than publicly owned oil and gas producers. For example, in 1992, when the major oil companies produced a per company average of 345,000 barrels per day, the other publicly-traded oil and gas companies produced an average of 10,000 barrels per day, and the remaining oil and gas companies produced an average of only 300 barrels per day. These small private producers are quite numerous accounting for about 7,400 of the nearly 8,000 companies reporting oil and/or gas production in the U.S. in 1992.

The LHD technology has been demonstrated to significantly enhance oil and gas production to depths of approximately 5,800 feet. At the same time, the LHD technology has shown repeatedly it can produce a cost effective approach to turn many marginal, shut-in wells, into profitable producers.

The service product is unique in that it substantially improves production similarly to conventional horizontal drilling, but a fraction of the cost and in significantly less time. At the time the August

2000 DAI report was completed, Mr. Landers believed that the LHD technology was positioned to succeed. The author agrees with his point of view based on what I've seen in this updated assessment. I believe that the LHD technology has been successfully demonstrated to have market viability through field testing by many small petroleum independents. I also believe that the LHD technology has proven to be potentially very profitable and can be done so on a large scale basis through well managed growth.

5.0 SUMMARY OPINION

5.1 CONCLUSIONS

In conclusion, it is the author's professional opinion that the patented LHD technology has been demonstrated to be technically sound. The technology will not always produce favorable results of increased oil and gas production due to subsurface factors beyond the control of the technology. If the reservoirs have been severely depleted or negatively impacted in some manner, the technology will not benefit the operator. For the most part, the technology should perform favorably in most oil and gas wells that have potential for improved reservoir characteristics. In conjunction with well planned and executed reservoir enhancement treatments, the LHD technology has been successfully demonstrated to enhance oil and gas production in wells that otherwise were under performing. While there is a need for refinement of the technology through continued research and development, it is my opinion that the LHD technology has substantial value as a relatively low cost means of enhancing oil and gas production in the U.S. and the oil producing nations of the world.

This project has resulted in an updated evaluation of the LHD technology market viability and concludes that: 1) the LHD technology can reliably attain the marketplace driven goal of enhanced oil and gas productivity; and 2) the marketplace will respond to the LHD technology if it is reasonably priced.

5.2 RECOMMENDATIONS

Based on the author's consideration of information reviewed concerning the LHD technology and market viability, the following recommendations are respectively submitted:

- It is recommended that routine information on every oil and gas well serviced by the LHD technology be recorded in a file format suitable for future reference and evaluation; this will be especially important as the technology grows in usage by the industry; information management will become vital.

- As a service sector product, the LHD technology should be priced to offer benefits to the small independent operator as well as the larger independents and major oil companies; pricing will drive market growth, especially for the next 2-3 years with the smaller independents; as the service continues to demonstrate reliability and positive results, the larger independents and majors will become more likely to utilize the technology; pricing will become secondary as compared to increased productivity.

- It is recommended that a strong marketing program be developed to approach the larger independents and major oil companies; while slow to accept new

technologies in the petroleum industry, the larger firms will eventually accept the LHD technology once demonstrated by a few of the more well known firms.

- It is the author's opinion that the greatest strength represented by the LHD technology is to use it to create oil and gas production deals; It is recommended that growth emphasis be placed more on use of the technology to acquire and participate in oil and gas development projects that lend themselves to this technology. The real value of this technology is using it to create future opportunities.

EXHIBIT 10.11

PLACEMENT AGENCY AGREEMENT

This Placement Agency Agreement (this "Agreement") is made and entered into as of August 26, 2003 (the "Effective Date"), by and between Verdisys, Inc., a California corporation (the "Company"), and Stonegate Securities, Inc., a Texas corporation ("Stonegate").

WHEREAS, the Company desires to retain Stonegate as its non-exclusive placement agent, and Stonegate is willing to act in such capacity, in each case subject to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and Stonegate (each a "Party" and collectively, the "Parties") hereby agree as follows:

1. RETENTION OF STONEGATE; SCOPE OF SERVICES.

(a) Subject to the terms and conditions set forth herein, the Company hereby retains Stonegate to act as the non-exclusive placement agent to the Company during the Contract Period (as defined in
Section 2 below), and Stonegate hereby agrees to be so retained.

(b) As the non-exclusive placement agent to the Company, Stonegate will have the non-exclusive right during the Contract Period to identify for the Company prospective purchasers (collectively, the "Purchasers" and each individually, a "Purchaser") in one or more placements (each , a "Placement", and collectively, the "Placements") of debt and/or equity securities to be issued by the Company, the type and dollar amount being as mutually agreed to by the Parties (the "Securities"). The Company and Stonegate understand that the Company intends to undertake an initial "bridge" Placement of up to $3 million of Securities (the "Bridge Placement"), which Placement shall only qualify as such if it is completed on or prior to September 30, 2003. Thereafter, the Company intends to undertake a second Placement. All provisions of this Agreement applicable to a Placement shall also be applicable to the Bridge Placement, unless otherwise provided herein.

(c) Terms of the Placements shall be as set forth in subscription documents, including any stock purchase or subscription agreement, escrow agreement, registration rights agreement, warrant agreement and/or other documents to be executed and delivered in connection with the Placement (collectively, the "Subscription Documents"). The Placements are intended to be exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), pursuant to Regulation D ("Regulation D") of the rules and regulations of the Securities and Exchange Commission (the "SEC") promulgated under the Securities Act.

(d) Stonegate will act on a best efforts basis and will have no obligation to purchase any of the Securities offered in the Placements. During the Contract Period, Stonegate shall have the non-exclusive right to arrange for all sales of Securities in the Placements, including without limitation the non-exclusive right to identify potential buyers for the Securities. All sales of Securities in the Placements shall be subject to

the approval of the Company, which approval may be withheld in the Company's sole discretion.

2. CONTRACT PERIOD AND TERMINATION.

(a) Stonegate shall act as the Company's non-exclusive placement agent under this Agreement for a period commencing on the Effective Date, and continuing until terminated by either Party upon 30 days notice to the other Party (the "Contract Period").

(b) Upon termination, neither party will have any further obligation under this Agreement, except as provided in Sections 5, 6, 7, 8, 9 and 10 hereof.

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The representations and warranties of the Company made to the Purchasers as set forth in the Subscription Documents are hereby incorporated by reference as of the date of consummation of the sale of the Securities (the "Closing") and all such representations and warranties are hereby deemed made by the Company directly to Stonegate as though set forth in full herein.

4. COVENANTS OF THE COMPANY.

The Company covenants and agrees as follows:

(a) Neither the Company nor any affiliate of the Company (as defined in Rule 501(b) of Regulation D) will sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Securities Act) of the Company which will be integrated with the sale of the Securities in a manner which would require the registration under the Securities Act of the Securities.

(b) Any and all filings and documents required to be filed in connection with or as a result of the Placement pursuant to federal and state securities laws are the responsibility of the Company and will be filed by the Company.

(c) Any press release to be issued by the Company announcing or referring to the Placement shall be subject to the prior review of Stonegate, and each such press release shall, at the request of Stonegate, identify Stonegate as the placement agent. Stonegate shall be permitted to publish a tombstone or similar advertisement upon completion of the Placement identifying itself as the Company's placement agent with respect thereto. This Agreement shall not be filed publicly by the Company without the prior written consent of Stonegate, unless required by applicable law or regulation.

5. FURNISHING OF COMPANY INFORMATION; CONFIDENTIALITY.

(a) In connection with Stonegate's activities hereunder on the Company's behalf, the Company shall furnish Stonegate with all reasonable information concerning the Company and its operations that Stonegate deems necessary or appropriate (the

"Company Information") and shall provide Stonegate with reasonable access to the Company's books, records, officers, directors, employees, accountants and counsel. The Company acknowledges and agrees that, in rendering its services hereunder, Stonegate will be using and relying upon the Company Information without independent verification thereof or independent appraisal of any of the Company's assets and may, in its sole discretion, use additional information contained in public reports or other information furnished by the Company or third parties.

(b) Stonegate agrees that the Company Information will be used solely for the purpose of performing its services hereunder. Subject to the limitations set forth in subsection (c) below, Stonegate will keep the Company Information provided hereunder confidential and will not disclose such Company Information or any portion thereof, except (i) to a third party contacted by Stonegate on behalf of, and with the prior approval of, the Company pursuant hereto who has agreed to be bound by a confidentiality agreement satisfactory in form and substance to the Company, or (ii) to any other person for which the Company's consent to disclose such Company Information has been obtained.

(c) Stonegate's confidentiality obligations under this Agreement shall not apply to any portion of the Company Information which
(i) at the time of disclosure to Stonegate or thereafter is generally available to and known by the public (other than as a result of a disclosure directly or indirectly by Stonegate in violation of this Agreement); (ii) was available to Stonegate on a non-confidential basis from a source other than the Company, provided that such source is not and was not bound by a confidentiality agreement with the Company; (iii) has been independently acquired or developed by Stonegate without violating any of its obligations under this Agreement; or (iv) the disclosure of which is legally compelled (whether by deposition, interrogatory, request for documents, subpoena, civil or administrative investigative demand or other similar process). In the event that Stonegate becomes legally compelled to disclose any of the Company Information, Stonegate shall provide the Company with prompt prior written notice of such requirement so that the Company may seek a protective order or other appropriate remedy and/or waive compliance with the terms of this Agreement.

(d) The obligations of the Parties under this Section 5 shall survive the termination of this Agreement for 12 months.

6. FEES AND EXPENSES.

(a) As compensation for services rendered by Stonegate in connection with the Bridge Placement, the Company agrees to pay Stonegate a fee of five percent (5%) of the gross proceeds from the sale of Securities sold in the Bridge Placement to any Stonegate Contacts (as defined in Section 8 below) (the "Bridge Agency Fee"). The Bridge Agency Fee shall be paid immediately upon the closing of each sale of Securities by the Company in the Bridge Placement.

(b) As compensation for services rendered by Stonegate in connection with a Placement (excluding the Bridge Placement), the Company agrees to pay Stonegate a fee of

eight percent (8%) of the gross proceeds from the sale of Securities sold in the Placement to Stonegate Contacts in the event total gross proceeds are less than $5 million, a fee of seven percent (7%) of the gross proceeds from the sale of Securities sold in the Placement to Stonegate Contacts if total gross proceeds are between $5 million and $10 million, and a fee of six percent (6%) of the gross proceeds from the sale of Securities sold in the Placement to Stonegate Contacts in the event total gross proceeds are in excess of $10 million (the "Agency Fee"). The Agency Fee shall be paid immediately upon the closing of each sale of Securities by the Company

(c) In order to compensate Stonegate for its initial diligence efforts, upon execution of this Agreement by the Parties, the Company shall issue and deliver to Stonegate a certificate evidencing 20,000 shares of the Company's common stock, no par value (the "Shares"). The Shares will not be registered under the Securities Act; provided, however, in the event Purchasers in the Placements are granted registration rights, the holders of the Shares shall automatically be granted identical registration rights.

(d) In addition, the Company shall also promptly reimburse Stonegate for all reasonable out-of-pocket expenses incurred by Stonegate and its directors, officers and employees in connection with the performance of Stonegate's services under this Agreement. For these purposes, "out-of-pocket expenses" shall include, but not be limited to, attorney's fees and costs, long distance telephone, facsimile, courier, mail, supplies, travel and similar expenses. Except for bills for long distance telephone, facsimile, federal express, courier, mail and supplies, Stonegate will not incur any expenses without the prior consent of the Company; and the Parties shall attempt to have the Company direct billed as often as possible for such expenses.

(e) Upon closing of the Bridge Placement, the Company agrees to issue to Stonegate a Securities Purchase Warrant (the "Bridge Representative's Warrant") entitling the holder(s) thereof to purchase an amount of Securities equal to five percent (5%) of the total number of Securities sold in the Bridge Placement to Stonegate Contacts for a period of five (5) years at an exercise price per share equal to the price at which the Securities are sold to Purchasers. The Representative's Warrant shall otherwise be substantially in the form of Exhibit A attached hereto.

(f) Upon closing of any Placement (excluding the Bridge Placement), the Company agrees to issue to Stonegate an additional Representative's Warrant entitling the holder(s) thereof to purchase an amount of Securities equal to ten percent (10%) of the total number of Securities sold in any such Placement to Stonegate Contacts for a period of five (5) years at an exercise price per share equal to the price at which the Securities are sold to Purchasers.

(g) The obligations of the Parties under this Section 6 shall survive the termination of this Agreement for any reason.

7. INDEMNIFICATION.

(a) The Company agrees to indemnify and hold Stonegate harmless from and against any and all losses, claims, damages or liabilities (or actions, including securityholder

actions, in respect thereof) related to or arising out of Stonegate's engagement hereunder or its role in connection herewith, and will reimburse Stonegate for all reasonable expenses (including reasonable costs, expenses, awards and counsel fees and/or judgments) as they are incurred by Stonegate in connection with investigating, preparing for or defending any such action or claim, whether or not in connection with pending or threatened litigation in which Stonegate is a party. The Company will not, however, be responsible for any claims, liabilities, losses, damages or expenses which are finally judicially determined to have resulted primarily from the bad faith, gross negligence or willful misconduct of Stonegate. The Company also agrees that Stonegate shall not have any liability to the Company for or in connection with such engagement, except for any such liability for losses, claims, damages, liabilities or expenses incurred by the Company that result primarily from the bad faith, gross negligence or willful misconduct of Stonegate. In the event that the foregoing indemnity is unavailable (except by reason of the bad faith or gross negligence of Stonegate), then the Company shall contribute to amounts paid or payable by Stonegate in respect of its losses, claims, damages and liabilities in such proportion as appropriately reflects the relative benefits received by, and fault of, the Company and Stonegate in connection with the matters as to which such losses, claims, damages or liabilities relate, and other equitable considerations. The foregoing shall be in addition to any rights that Stonegate may have at common law or otherwise and shall extend upon the same terms to and inure to the benefit of any director, officer, employee, agent or controlling person of Stonegate. The Company hereby consents to personal jurisdiction, service and venue in any court in which any claim which is subject to this agreement is brought against Stonegate or any other person entitled to indemnification or contribution under this subsection (a).

(b) Stonegate agrees to indemnify and hold the Company harmless from and against any and all losses, claims, damages or liabilities (or actions, including securityholder actions, in respect thereof) which are finally judicially determined to have resulted primarily from the bad faith, gross negligence or willful misconduct of Stonegate, and will reimburse the Company for all reasonable expenses (including reasonable costs, expenses, awards and counsel fees and/or judgments) as they are incurred by the Company in connection with investigating, preparing for or defending any such action or claim, whether or not in connection with pending or threatened litigation in which the Company is a party. In the event that the foregoing indemnity is unavailable, then Stonegate shall contribute to amounts paid or payable by the Company in respect of its losses, claims, damages and liabilities in such proportion as appropriately reflects the relative benefits received by, and fault of, the Company and Stonegate in connection with the matters as to which such losses, claims, damages or liabilities relate, and other equitable considerations. The foregoing shall be in addition to any rights that the Company may have at common law or otherwise and shall extend upon the same terms to and inure to the benefit of any director, officer, employee, agent or controlling person of the Company. Stonegate hereby consents to personal jurisdiction, service and venue in any court in which any claim, which is subject to this agreement, is brought against the Company or any other person entitled to indemnification or contribution under this subsection (b).

(c) The obligations of the Parties under this Section 7 shall survive the termination of this Agreement.

8. NON-CIRCUMVENTION.

The Company hereby agrees that, for a period of one year from the end of the Contract Period or other termination of this Agreement, the Company will not enter into any agreement, transaction or arrangement with any of the institutions (including their agents, principals and affiliates and the accounts and funds which they manage or advise) which Stonegate has introduced, directly or indirectly, to the Company as prospective purchasers of the Securities in the Placements (collectively, the "Stonegate Contacts"), regardless of whether a transaction is consummated with such prospective purchasers, unless the Company notifies Stonegate in writing of the agreement, transaction or arrangement, and pays Stonegate a fee equal to the Agency Fee for securities of the Company sold to Stonegate Contacts.

9. GOVERNING LAW.

THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS PROVISIONS THEREOF.

10. ARBITRATION.

Stonegate and the Company will attempt to settle any claim or controversy arising out of this Agreement through consultation and negotiation in good faith and a spirit of mutual cooperation. Any dispute which the parties cannot resolve may then be submitted by either party to binding arbitration in Dallas, Texas under the rules of the American Arbitration Association for resolution. Nothing in this paragraph will prevent either party from resorting to judicial proceedings if (a) good faith efforts to resolve the dispute under these procedures have been unsuccessful or (b) interim relief from a court is necessary to prevent serious and irreparable injury.

11. NO WAIVER.

The failure or neglect of any party hereto to insist, in any one or more instances, upon the strict performance of any of the terms or conditions of this Agreement, or waiver by any party of strict performance of any of the terms or conditions of this Agreement, shall not be construed as a waiver or relinquishment in the future of such term or condition, but the same shall continue in full force and effect.

12. SUCCESSORS AND ASSIGNS.

The benefits of this Agreement shall inure to the benefit of the Parties, their respective successors, assigns and representatives, and the obligations and liabilities assumed in this Agreement by the Parties shall be binding upon their respective successors and assigns. This Agreement may not be assigned by either Party without the express written consent of the other Party, which consent shall not be unreasonably withheld.

13. NOTICES.

All notices and other communications required or permitted to be given under this Agreement shall be in writing and shall be delivered personally or sent by certified mail, return receipt requested, recognized overnight delivery service, or facsimile as follows:

If to the Company:

Verdisys, Inc.
201 Tipperary Lane
Alameda, CA 94502

Facsimile: (408) 873-0550 Attention: Andrew Wilson, Chief Financial Officer

If to Stonegate:

Stonegate Securities, Inc.
5950 Sherry Lane, Suite 410
Dallas, Texas 75225

Facsimile: (214) 987-1981 Attention: Scott Griffith, President

Either Party may change its address or facsimile number set forth above by giving the other Party notice of such change in accordance with the provisions of this Section 13. A notice shall be deemed given (a) if by personal delivery, on the date of such delivery, (b) if by certified mail, on the date shown on the applicable return receipt, (c) if by overnight delivery service, on the day after the date delivered to the service, or (d) if by facsimile, on the date of transmission.

14. NATURE OF RELATIONSHIP.

The Parties intend that Stonegate's relationship to the Company and the relationship of each director, officer, employee or agent of Stonegate to the Company shall be that of an independent contractor and not as an employee of the Company or an affiliate thereof. Nothing contained in this Agreement shall constitute or be construed to be or create a partnership or joint venture between Stonegate and the Company or their respective successors or assigns. Neither Stonegate nor any director, officer, employee or agent of Stonegate shall be considered to be an employee of the Company by virtue of the services provided hereunder.

15. MISCELLANEOUS.

Stonegate's obligations under this Agreement are subject to the following general conditions:

(a) All relevant terms, conditions, and circumstances relating to the Placement will be reasonably satisfactory to Stonegate and its counsel.

(b) Stonegate reserves the right to solicit the assistance of outside dealers ("Dealers") to assist in the offer and sale of the Placements; provided, however, that any such Dealers agree in writing to be bound by the terms of the Placement. It is understood that Stonegate, in its sole discretion, shall be entitled to pay over to any such Dealers any portion of the compensation received by Stonegate hereunder. The Company shall have no financial liability for any fees or expenses of any such Dealers.

16. CAPTIONS.

The Section titles herein are for reference purposes only and do not control or affect the meaning or interpretation of any term or provision hereof.

17. AMENDMENTS.

No alteration, amendment, change or addition hereto shall be binding or effective unless the same is set forth in a writing signed by a duly authorized representative of each Party.

18. PARTIAL INVALIDITY.

If it is finally determined that any term or provision hereof is invalid or unenforceable, (a) the remaining terms and provisions hereof shall be unimpaired, and (b) the invalid or unenforceable term or provision shall be replaced by a term or provision that is valid and enforceable and that comes as close as possible to expressing the intention of the invalid or unenforceable term or provision.

19. ENTIRE AGREEMENT.

This Agreement embodies the entire agreement and understanding of the Parties and supersedes any and all prior agreements, arrangements and understandings relating to the matters provided for herein.

20. COUNTERPARTS.

This Agreement may be executed in one or more counterparts, each of which shall be an original, but all of which together shall be considered one and the same agreement.

IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above by duly authorized representatives of the Company and Stonegate.

VERDISYS, INC.

By: /s/ Andrew Wilson
Title: Chief Financial Officer

STONEGATE SECURITIES, INC.

By: /s/ Scott Griffith
Title: President

EXHIBIT 10.12

VERDISYS, INC.

2003 STOCK OPTION PLAN

1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees, Directors and Consultants and to promote the success of the Company's business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant.

2. DEFINITIONS. As used herein, the following definitions shall apply:

(a) "Administrator" means the Board or any of its Committees as shall be administering the Plan in accordance with Section 4 hereof.

(b) "Applicable Laws" means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where Options are granted under the Plan.

(c) "Board" means the Board of Directors of the Company.

(d) "Cause" means a termination of employment for good cause, as determined by the Administrator in its sole and absolute discretion. Examples include, but are not limited to, poor performance, dishonesty, violation of Company policy, procedures or rules, excessive absenteeism, excessive tardiness, insubordination, misconduct, or the unauthorized use or disclosure of confidential information or trade secrets of the Company.

(e) "Change in Control" means the occurrence of any of the following events:

(i) The consummation of the sale or disposition by the Company of all or substantially all of the Company's assets; or

(ii) The consummation of a merger or consolidation of the Company with any other corporation or business entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

(f) "Code" means the Internal Revenue Code of 1986, as amended.

(g) "Committee" means a committee of Directors appointed by the Board in accordance with Section 4 hereof.

(h) "Common Stock" means the Common Stock of the Company.

(i) "Company" means Verdisys, Inc., a California corporation.

(j) "Consultant" means any natural person who is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services to such entity and who satisfies the requirements of subsection
(c)(1) of Rule 701 under the Securities Act of 1933, as amended.

(k) "Director" means a member of the Board.

(l) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.

(m) "Employee" means any person, including officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3) months following the 91st day of such leave, any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option. Neither service as a Director nor payment of a director's fee by the Company shall be sufficient to constitute "employment" by the Company.

(n) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

(o) "Fair Market Value" means, as of any date, the value of Common Stock determined as follows:

(i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the day of determination; or

(iii) In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator.

(p) "Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.

(q) "Nonstatutory Stock Option" means an Option not intended to qualify as an Incentive Stock Option.

(r) "Option" means a stock option granted pursuant to the Plan.

(s) "Option Agreement" means a written or electronic agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan.

(t) "Optioned Stock" means the Common Stock subject to an Option.

(u) "Optionee" means the holder of an outstanding Option granted under the Plan.

(v) "Parent" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code.

(w) "Plan" means this 2003 Stock Option Plan.

(x) "Service Provider" means an Employee, Director or Consultant.

(y) "Share" means a share of the Common Stock, as adjusted in accordance with Section 12 below.

(z) "Subsidiary" means a "subsidiary corporation," whether now or hereafter existing, as defined in Section 424(f) of the Code.

3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 12 of the Plan, the maximum aggregate number of Shares that may be subject to option and sold under the Plan is 8,000,000 Shares. The Shares may be authorized but unissued, or reacquired Common Stock.

If an Option expires or becomes unexercisable without having been exercised in full, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). However, Shares that have actually been issued under the Plan, upon exercise of an Option, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if Shares of restricted stock issued pursuant to an Option are repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan.

4. ADMINISTRATION OF THE PLAN.

(a) Administrator. The Plan shall be administered by the Board or a Committee appointed by the Board, which Committee shall be constituted to comply with Applicable Laws.

(b) Powers of the Administrator. Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion:

(i) to determine the Fair Market Value;

(ii) to select the Service Providers to whom Options may from time to time be granted hereunder;

(iii) to determine the number of Shares to be covered by each such Option granted hereunder;

(iv) to approve forms of agreement for use under the Plan;

(v) to determine the terms and conditions of any Option granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or the Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

(vi) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws;

(vii) to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by Optionees to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; and

(viii) to construe and interpret the terms of the Plan and Options granted pursuant to the Plan.

(c) Effect of Administrator's Decision. All decisions, determinations and interpretations of the Administrator shall be final and binding on all Optionees.

5. ELIGIBILITY. Nonstatutory Stock Options may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.

6. LIMITATIONS.

(a) Incentive Stock Option Limit. Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted.

(b) At-Will Employment. Neither the Plan nor any Option shall confer upon any Optionee any right with respect to continuing the Optionee's relationship as a Service Provider with the Company, nor shall it interfere in any way with his or her right or the Company's right to terminate such relationship at any time, with or without cause, and with or without notice.

7. TERM OF PLAN. Subject to stockholder approval in accordance with
Section 18, the Plan shall become effective upon its adoption by the Board. Unless sooner terminated under Section 14, it shall continue in effect for a term of ten (10) years from the later of (i) the effective date of the Plan, or
(ii) the date of the most recent Board approval of an increase in the number of shares reserved for issuance under the Plan.

8. TERM OF OPTION. The term of each Option shall be stated in the Option Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof. In the case of an Incentive Stock Option granted to an Optionee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement.

9. OPTION EXERCISE PRICE AND CONSIDERATION.

(a) Exercise Price. The per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator, but shall be subject to the following:

(i) In the case of an Incentive Stock Option

(A) granted to an Employee who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.

(B) granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

(ii) In the case of a Nonstatutory Stock Option

(A) granted to a Service Provider who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.

(B) granted to any other Service Provider, the per Share exercise price shall be no less than 85% of the Fair Market Value per Share on the date of grant.

(iii) Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant to a merger or other corporate transaction.

(b) Forms of Consideration. The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant). Such consideration may consist of, without limitation, (1) cash, (2) check, (3) promissory note, or (4) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company. Notwithstanding the foregoing, the Administrator may permit an Optionee to exercise his or her Option by delivery of a full-recourse promissory note secured by the purchased Shares. The terms of such promissory note shall be determined by the Administrator in its sole discretion.

10. EXERCISE OF OPTION.

(a) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. Except in the case of Options granted to officers, Directors and Consultants, Options shall become exercisable at a rate of no less than 20% per year over five (5) years from the date the Options are granted. Unless the Administrator provides otherwise, vesting of Options granted hereunder to officers and Directors shall be suspended during any unpaid leave of absence. An Option may not be exercised for a fraction of a Share.

An Option shall be deemed exercised when the Company receives (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in
Section 12 of the Plan.

Exercise of an Option in any manner shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(b) Termination of Relationship as a Service Provider. If an Optionee ceases to be a Service Provider, such Optionee may exercise his or her Option within thirty (30) days of termination, or such longer period of time as specified in the Option Agreement, to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Option Agreement). If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(c) Disability of Optionee. If an Optionee ceases to be a Service Provider as a result of the Optionee's Disability, the Optionee may exercise his or her Option within six (6) months of termination, or such longer period of time as specified in the Option Agreement, to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(d) Death of Optionee. If an Optionee dies while a Service Provider, the Option may be exercised within six (6) months following Optionee's death, or such longer period of time as specified in the Option Agreement, to the extent that the Option is vested on the date of death (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement) by the Optionee's designated beneficiary, provided such beneficiary has been designated prior to Optionee's death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Optionee, then such Option may be exercised by the personal representative of the Optionee's estate or by the person(s) to whom the Option is transferred pursuant to the Optionee's will or in accordance with the laws of descent and distribution. If, at the time of death, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

11. LIMITED TRANSFERABILITY OF OPTIONS. Unless determined otherwise by the Administrator, Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or the laws of descent and distribution, and may be exercised during the lifetime of the Optionee, only by the Optionee. If the Administrator in its sole discretion makes an Option transferable, such Option may only be transferred by (i) will,
(ii) the laws of descent and distribution, (iii) instrument to an inter vivos or testamentary trust in which the Option is to be passed to beneficiaries upon the death of the Optionee, or (iv) gift to a member of Optionee's immediate family (as such term is defined in Rule 16a-1(e) of the Exchange Act). In addition, any transferable Option shall contain additional terms and conditions as the Administrator deems appropriate.

12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR CHANGE IN CONTROL.

(a) Changes in Capitalization. Subject to any required action by the stockholders of the Company, the number and type of Shares which have been authorized for issuance under the Plan but as to which no Options have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option, and the number and type of Shares covered by each outstanding Option, as well as the price per Share covered by each such outstanding Option, shall be proportionately adjusted for any increase or decrease in the number or type of issued Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company. The conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number, type or price of Shares subject to an Option.

(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for an Optionee to have the right to exercise his or her Option until fifteen
(15) days prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Option would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option applicable to any Shares purchased upon exercise of an Option shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised, an Option will terminate immediately prior to the consummation of such proposed action.

(c) Merger or Change in Control. In the event of a merger of the Company with or into another corporation, or a Change in Control, each outstanding Option shall be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. If, in such event, the Option is not assumed or substituted, the Optionee shall fully vest in and have the right to exercise the Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Administrator shall notify the Optionee in writing or electronically that the Option shall be fully vested and exercisable for a period of fifteen (15) days from the date of such notice, and the Option shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or Change in Control, the Option confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the

consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of common stock in the merger or Change in Control. If an Optionee is terminated (other than a voluntary termination or a termination for Cause) within two (2) months prior to or twenty-four (24) months following a merger or Change in Control, the Optionee shall fully vest in and have the right to exercise the Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable.

13. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for all purposes, be the date on which the Administrator makes the determination granting such Option, or such later date as is determined by the Administrator. Notice of the determination shall be given to each Service Provider to whom an Option is so granted within a reasonable time after the date of such grant.

14. AMENDMENT AND TERMINATION OF THE PLAN.

(a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.

(b) Stockholder Approval. The Board shall obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

(c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan shall not affect the Administrator's ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination.

15. CONDITIONS UPON ISSUANCE OF SHARES.

(a) Legal Compliance. Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.

(b) Investment Representations. As a condition to the exercise of an Option, the Administrator may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

16. INABILITY TO OBTAIN AUTHORITY. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

17. RESERVATION OF SHARES. The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

18. STOCKHOLDER APPROVAL. Any stockholder approval shall be obtained in the degree and manner required under applicable laws.

19. INFORMATION TO OPTIONEES. The Company shall provide informationin the degree and manner required under applicable laws..

EXHIBIT 10.13

INDEPENDENT CONTRACTOR AGREEMENT

This Independent Contractor Agreement ("Agreement") is made effective as of this 1st day of August, 2003, by and between VERDISYS, INC., a California corporation ("Verdisys") and TERRONNE PETROLEUM CORPORATION ("Contractor").

1. Services Compensation.

(a) Commencement of Services. Verdisys agrees to contract for the Services of Contractor (as defined below), and Contractor agrees to provide the Services to Verdisys on the terms and conditions set forth in this Agreement. Contractor agrees to devote such time as Contractor deems necessary to carry out the Services contemplated hereunder. In the performance of the Services contemplated herein, Contractor is acting as an independent contractor with the authority to control and direct the performance of' the details of the Services, Verdisys being interested only in the results obtained. However, the Services contemplated herein must meet the approval of Verdisys and shall be subject to its general right of inspection and supervision to secure the satisfactory completion thereof.

(b) Description of Services. Contractor shall perform oil field management services for Verdisys, Inc. on all of Verdisys' oil and natural gas fields located in Monroe, Louisiana (the "Services").

(c) Compensation. Contractor will be paid Fourteen Thousand Dollars ($14,000.00) per month for its performance of the Services. Contractor shall invoice Verdisys monthly for services provided during the preceding month. Verdisys shall pay Contractor net thirty (30) days from the date of receipt of each invoice.

(d) Expense Reimbursement: Contractor will not be reimbursed for expenses incurred by Contractor on behalf of Verdisys, unless Contractor receives prior written consent from an officer of Verdisys. The expense reimbursement must be supported by documents and/or receipts.

(e) Performance of Services. Contractor hereby represents that:

(i) the Services performed by Contractor shall be in conformity with all applicable laws, codes, and/or ordinances;

(ii) Contractor shall supply all tools, equipment and/or materials necessary to perform the Services; and

(iii) Contractor has workers compensation insurance for all individuals providing the Services on behalf of Contractor or that Contractor is exempt from the requirements of workers compensation insurance. Contractor agrees to provide certificates evidencing such issuance or such exception upon the request of the Verdisys.

2. Term and Termination. Performance of the services shall commence August 1, 2003 and continue month to month. Contractor's engagement as

an

independent contractor shall be "at will." This means that Contractor or Verdisys, without notice, may terminate this Agreement for any reason or no reason at all, provided that the reason is not otherwise in violation of the law.

3. Trade Secrets. Contractor shall not at any time disclose, or himself use, other than in the performance of his duties under this Agreement, any confidential information, trade secrets or property of Verdisys and/or affiliates of Verdisys whether or not acquired or conceived by Contractor. Contractor hereby acknowledges that such confidential information, trade secrets and property are secret, confidential and unique; that they constitute the exclusive trade secrets and property of Verdisys and/or affiliates of Verdisys; that such trade secrets and property will be made known to Contractor in confidence in connection with the performance of the Services to be provided by Contractor hereunder; and that any use of such trade secrets or property by Contractor other than for the sole and exclusive benefit of Verdisys and/or affiliates of Verdisys would be wrongful and would cause irreparable harm to Verdisys and/or affiliates of Verdisys. The provisions of this paragraph shall survive the termination of this Agreement.

4. Indemnification. Contractor hereby agrees to indemnify, defend and hold Verdisys harmless for any damage, injury or other loss, to either property or person, resulting from Contractor's performance of the Services required hereunder. The provisions of this paragraph shall survive the termination of this Agreement.

5. Relationship of Parties. The parties confirm their intent that Contractor's Services are retained only for the purposes and to the extent set forth in this Agreement. Contractor's relationship with Verdisys shall be and remain that of an independent contractor and not that of an employee. Verdisys is interested only in the results to be achieved, and the conduct, control, and management of the Services to be provided will lie solely with Contractor. Contractor is not to be considered an agent or employee of Verdisys for any purpose, and any employees of Contractor are not to be entitled to any of the benefits that Verdisys provides for its employees. It is further understood that Contractor is free to perform Services for others while under contract with Verdisys. Contractor shall not represent or hold itself out to be an employee of Verdisys. Contractor does not possess the authority to bind Verdisys in any agreements without the express prior written consent of Verdisys.

6. General Provisions.

(a) Notices. All notices or other communications required or permitted under this Agreement shall be in writing and shall be personally delivered, delivered by overnight courier or sent by registered or certified mail, return receipt requested and postage prepaid; to the following addresses (or to such other addresses as a party may give to the other by notice from time to time):

If to Verdisys:                                If to Contractor:

Verdisys, Inc.                                 TerrOnne Petroleum Corporation
201 Tipperary Lane                             2225 Liberty Street
Alameda, CA 94502                              Monroe, LA 71201
Attention: Andrew Wilson, CFO                  Attention: Don Pilgreen

Personally delivered notices shall be effective upon delivery. Notices by mail shall be effective as of the earlier of the date of actual receipt or 72 hours after the date of mailing in the manner described above.

(b) Attorneys' Fees. In the event of the bringing of any action or suit by either party hereto against the other party hereunder alleging a breach of any of the covenants, conditions, agreements or provisions of this Agreement, the prevailing party shall recover all costs and expenses of suit, including reasonable attorneys' fees and fees of expert witnesses.

(c) Assignment. Contractor's rights and obligations under this Agreement may "not be assigned or transferred without the prior written consent of Verdisys, which consent may be withheld for any reason.

(d) Waiver. Either party's failure to enforce any provision of this Agreement, shall not in any way be construed as a waiver of any such provision, or prevent that party thereafter from enforcing each and every other provision of this Agreement.

(e) Withholding. Contractor agrees to assume full responsibility for payment of all sums required for Social Security, self employment withholding taxes and for any other federal, state or local tax or charge which may now be in effect or hereafter enacted or required as a charge on the compensation received by Contractor under this Agreement. No part of Contractor's compensation will be subject to withholding by Verdisys for the payment of any social security, federal, state or any other employee payroll taxes. Verdisys will regularly report amounts paid to Contractor by filing Form 1099-MISC with the Internal Revenue Service as required by law.

(f) Entire Agreement. This Agreement contains the entire agreement between tile parties hereto with respect to the subject matter hereof, and no change, modification, alteration or extension of this Agreement shall be valid except when it is made in writing and duly signed by both of the parties hereto. This Agreement supersedes any and all previous arrangements and Agreements, written or oral, express or implied, if any, which may have been entered in to by and between the parties hereto with respect to the subject matter of this Agreement and any and all such previous arrangements and agreements, if any, are hereby cancelled and terminated in all respects.

(g) Governing Law. This Agreement shall be governed by and construed in accordance with the Laws of Texas.

(h) Venue. In the event of any litigation hereunder, any such action shall he brought in a state or federal court of competent jurisdiction located in ____________ County, Texas.

(i) Time of Essence. Time is of the essence of each and every term, condition, obligation and provision hereof.

(j) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument. A party may execute this Agreement and transmit its signature by facsimile, which shall be fully binding, and the party taking such actions shall deliver a manually signed original as soon as is practicable.

(k) Headings. Headings at the beginning of each paragraph and subparagraph are solely for the convenience of the parties and are not part of this Agreement.

(l) Construction. Whenever the context of this Agreement requires the same, the singular shall include the plural and the masculine shall include the feminine. This Agreement. shall not be construed as if it had been prepared by one of the parties, but rather as if both parties had prepared the same. Unless otherwise indicated, all references to paragraphs and subparagraphs are to this Agreement. In the event the day on which Verdisys or Contractor is required to take any action under the terms of this Agreement is not a business day, the action shall be taken on the next succeeding business day.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year first above written.

"Verdisys" Verdisys, Inc., a California corporation

"Contractor"

TerrOnne Petroleum Corporation

EXHIBIT 10.14

AMENDMENT NUMBER 1

TO

OPERATIONS AGREEMENT

LATERAL DRILLING SERVICE STANDARD AGREEMENT

EDGE CAPITAL GROUP AND VERDISYS, INC.

This AMENDMENT NUMBER 1 TO THE ORIGINAL AGREEMENT dated June 16, 2003, ("Amendment") is entered by and between Verdisys, Inc., a California corporation ("Verdisys"), and Edge Capital Group, a California corporation ("ECG") Edge Capital Group ("ECG") engaged Verdisys, Inc. ("Verdisys") to provide operating expertise, and lateral drilling services, to ECG's in the Monroe Gas Field in Monroe, Louisiana (the "Monroe Field"), which ECG has acquired.

WHEREAS, ECG has arranged financing with Solarcom, Inc., however, ECG may replace the financing with another third party lender as ECG has the financial capability to secure financing. Whereas, this Amendment retroactively requires Edge to pay for drilling and related services under Section 2.1 by eliminating the condition to obtain financing.

NOW, THEREFORE, in consideration of the rights, obligations and interests included under this Agreement, both parties agree as follows:

2.0 SERVICE FEES AND ROYALTY

2.1 LATERAL DRILLING SERVICE FEES

Service Contract - ECG and Verdisys, Inc.

Verdisys Lateral Drilling Services ("Drilling Services") will be billed at the time of commencement of drilling at the package rate set forth in the Term and Pricing Invoice (Addendum "B"). The Drilling Services are for each individual well site pertaining to this Contract. ECG shall receive the initial Drilling Services for eight (8) wells. Payment to Verdisys shall occur approximately thirty days later. Thereafter, additional funding to Verdisys will be supplied for a minimum of wells equal to the lesser of either: (i) eight (8) wells at a time, or (ii) in the event that the projected number of laterals to be drilled per well would cause the cost of 8 wells to exceed an aggregate payment of $500,000.00, then that maximum number of wells which would be as close to, but not in excess of $500,000.00.

3.0 RESPONSIBILITIES OF PARTIES

3.2 THIRD PARTY SERVICES

ECG hereby agrees that to the extent that mutually agreeable third party services are needed to maximize the results of the Drilling Services or the overall output from the Monroe field, ECG will be responsible for thirty-three and one-third percent (331/3%) of all costs related to these services. Third Party costs are anticipated to not exceed $3,000.00 per well and shall be paid directly to Verdisys. In the event that the parties can not agree as to whether certain third party services are necessary to maximize the results of the Drilling Services, the on-site consulting geologist (or

Service Contract - ECG and Verdisys, Inc.

if no on-site consulting geologist is present at the site, by any third party consulting geologist mutually acceptable to the parties) shall make the final determination as to whether such third party services are necessary to maximize the results of the Drilling Services.

The determination as to the appropriate number of laterals to be drilled to obtain maximum return from the well will be made by the on-site consulting geologist (or if no on-site consulting geologist is present at the site, by any third party consulting geologist mutually acceptable to the parties).

ECG:                          EDGE CAPITAL GROUP

22349 LA PALMA AVE. SUITE D110

YORBA LINDA, CALIFORNIA 92887

VERDISYS:                     VERDISYS, INC.

                              25025 I-45 NORTH, SUITE 525

                              THE WOODLANDS, TX 77380

5.8 WAIVER

Service Contract - ECG and Verdisys, Inc.

Any waiver by any party of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of that provision or of any breach of any other provision of this Agreement. Any waiver must be in writing and be authorized by a resolution of the Board of Directors of the waiving party.

5.9 BINDING EFFECT

The provisions of this Agreement shall be binding upon and inure to the benefit of the Constituent Corporations and their respective successors and assigns and shall inure to the benefit of each indemnity.

5.12 COUNTERPARTS

This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, this Agreement has been approved by resolutions duly adopted by the Board of Directors of each party and has been signed by duly authorized officers of each party, all as of the date first above written.

EDGE CAPITAL GROUP

By:     /S/Scott Sossen
   ----------------------------

Title:        CEO
      -------------------------

Date:    June 19, 2003
     --------------------------

VERDISYS, INC.

By:      /s/Dan Williams
   ----------------------------

Title:      President
      -------------------------

Date:     June 19, 2003
     --------------------------

Service Contract - ECG and Verdisys, Inc.

EXHIBIT 10.14.1

Letter from Edge Executive

To: Verdisys

I, Scott Sossen, CEO of Edge Capital, acknowledge that Verdisys, Inc has performed under the contract dated June 16, 2003 as amended, and I accept the work performed under the contract through the period ended September 30, 2003. I acknowledge that Edge Capital owes Verdisys $1,696,000 at September 30, 2003 and is due and payable. I hereby commit Edge Capital to pay such amount within the next two weeks.