BLAST ENERGY SERVICES, INC. (Form: 8-K, Received: 03/06/2008 16:56:24)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 8-K

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CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): February 26, 2008

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Blast Energy Services, Inc.

(Exact name of registrant as specified in its charter)

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California (State or Other Jurisdiction of Incorporation)
333-64122 (Commission File Number)			22-3755993 (I.R.S. Employer Identification No.)
14550 Torrey Chase Boulevard, Suite 330 Houston, Texas (Address of Principal Executive Offices)			77014-1022 (Zip Code)

(281) 453-2888

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

⁪ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

⁪ Soliciting material pursuant to Rule 14a-12 under the exchange Act (17 CFR 250.14a-12)

⁪ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 250.14d-2(b))

⁪ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 250.13e-4(c))

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

On January 19, 2007, Blast Energy Services, Inc. and its wholly owned subsidiary Eagle Domestic Drilling Operations LLC (collectively “Blast,” the “Company,” “we” and “us”) filed voluntary petitions with the US Bankruptcy Court or the Southern District of Texas – Houston Division, under Chapter 11 of Title 11 of the US Code, as previously reported in our Form 8-K filings.

On February 26, 2008, the Bankruptcy Court entered an order confirming our Second Amended Plan of Reorganization (the “Plan”). This ruling allows the Company to emerge from Chapter 11 bankruptcy.

The overall impact of the confirmed Plan is for Blast to emerge with unsecured creditors fully paid, have no debt service scheduled for at least two years, and keep equity shareholders’ interests intact. The major components of the Plan, which was overwhelmingly approved by creditors and shareholders, are detailed in the following paragraphs.

Under the terms of this confirmed Plan, the Company has raised $4.0 million in cash proceeds from the sale of convertible preferred securities to Clyde Berg and McAfee Capital, two parties related to the Company’s largest shareholder, Berg McAfee Companies (as described in Item 3.02 below). The proceeds from the sale of the securities were used to pay 100% of the unsecured creditor claims, all administrative claims, and all statutory priority claims, for a total amount of approximately $2.4 million. The remaining $1.6 million will be used to execute an operational plan, including but not limited to, reinvesting in the Satellite Services and Down-hole Solutions businesses and pursue an emerging Digital Oilfield Services business.

The sale of the convertible preferred securities was conditioned on approval of the Plan and as such, the securities will be issued after the Merger is affected, the Company is redomiciled in the State of Texas (as described below in Item 5.03) and the Preferred Stock is authorized, which are still in process.

This Plan also preserves the equity interests of our existing shareholders. Furthermore, the Company will continue to prosecute the litigation against Quicksilver Resources and Hallwood Petroleum/Hallwood Energy. Blast has previously estimated these legal recoveries to be in the range of $15 million to $45 million (gross). Trial dates are currently expected to be May 20, 2008 and September 15, 2008 for Hallwood and Quicksilver, respectively.

Under the terms of the Plan, the Company will carry three secured obligations:

·	A $2.1 million interest-free senior obligation with Laurus Master Fund, Ltd., which is secured by the assets of the Company and is payable only by way of a 65% portion of the proceeds that may be received for the customer litigation lawsuits or any asset sales that may occur in the future;

·	A $125,000 note to McClain County, Oklahoma for property taxes, which can also be paid from the receipt of litigation proceeds, or if not paid, it will convert into a six-percent interest bearing note commencing in February 27, 2010; and

A pre-existing secured $1.12 million note with Berg McAfee Companies has been extended for an additional three years from the effective date of the Plan, February 27, 2008 at eight-percent (8%) interest, and contains an option to be convertible into Company stock at the rate of one share of common stock for each $0.20 of the note outstanding.

No other claims exist on the future operating cash flows of the Company.

Laurus Settlement Agreement

We previously reached an agreement with Laurus Master Fund, Ltd. (“Laurus”), on the terms of an asset purchase agreement intended to offset the full amount of the $40.6 million senior note, accrued interest and default penalties owed to Laurus. Under the terms of this agreement, only five land drilling rigs and associated spare parts was sold to repay Laurus’ note, accrued interest and default penalties on the note. We had previously requested authority to consummate the agreement with Laurus from Thornton as defined below, which proposed sale was originally objected to by Thornton Oilfield Holdings LLC and various other entities controlled by Rodney D. Thornton (collectively “Thornton Entities”), at the time a significant shareholder of the Company.

The Settlement provided that Thornton Entities shall dismiss their lawsuits against us in Oklahoma and New York, respectively, and they shall support the proposed sale of our rigs to Laurus or its designee Boom Drilling LLC. The Settlement also provides that we agreed to pay Laurus $2.1 million as a reimbursement which payment is secured by all of our assets which Laurus had security interests in at the time we entered bankruptcy (the “Bankruptcy Assets”), and that we and Laurus shall split the proceeds 35%/65%, respectively, from the sale of any Bankruptcy Assets, and; we have the right to purchase 900,000 shares of our common stock currently held by Second Bridge, a Thornton Entity, for $900.

The Settlement was heard by the Bankruptcy court on May 10, 2007, was approved by the court at that time and the rig sale was completed shortly thereafter.

Management Conversions

The Company’s Directors converted unsecured claims for unpaid directors fees totaling approximately $164,000, into shares of the Company’s common stock at the rate of one share of common stock for each $0.20 of the deferred amount owed. Such conversions will result in the issuance of the following shares to our current and former Directors, which issuances are still in process:

John Block	92,500
Roger P. (Pat) Herbert	120,000
Scott Johnson	72,500
Joseph Penbera	202,500
Jeff Pendergraft	55,000
Fred Ruiz	100,000
O. James Woodward III	177,500

Management Warrants

Under the Plan, the Company’s Board of Directors was given the authority to enter into long-term warrant agreements with the Company’s senior management, and grant such senior management the right to purchase up to 4,000,000 warrants to purchase shares of the Company’s common stock at $0.20 per share, for a period of five years. No warrant grants have been issued to date.

Debtor-in-Possession (DIP) Loan

The Bankruptcy court approved the Company’s ability to draw $800,000 from Berg McAfee and related entities to finance the Company on a temporary basis. The Plan allows Berg McAfee to convert the outstanding balance of the DIP loan into Company’s common stock on the effective date of the Plan at the rate of one share of common stock for each $0.20 of the DIP loan outstanding. No amount of this loan has been converted into stock to date.

ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.

In connection with the approval of the Plan, the Company currently has the three outstanding secured Notes described above, and has sold an aggregate of $4,000,000 in Series A Preferred Stock, as described in greater detail below.

Item 3.02 Unregistered Sales of Equity Securities.

In January 2008, the Company sold the rights to an aggregate of 1,000,000 units each consisting of four shares of Series A Convertible Preferred Stock, which Preferred Stock is explained in greater detail below under Item 5.03 and one three year warrant with an exercise price of $0.10 per share (the “Units”), for an aggregate of $2,000,000 or $2.00 per Unit, to Clyde Berg, an individual. The sale of the Units was conditioned on approval of the Plan and as such, the Units will be issued after the Merger is affected, the Company is redomiciled (as described below) and the Preferred Stock is authorized. The shares of common stock issuable in connection with the exercise of the warrants and in connection with the conversion of the Preferred Stock were granted registration rights in connection with the sale of the Units. We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933 for the above, since the foregoing did not involve a public offering, the recipient took the securities for investment and not resale and we took appropriate measures to restrict transfer.

In January 2008, the Company sold the rights to an aggregate of 1,000,000 Units, for an aggregate of $2,000,000 or $2.00 per Unit, to McAfee Capital, LLC, a limited liability company. The sale of the Units was conditioned on approval of the Plan and as such, the Units will be issued after the Merger is affected, the Company is redomiciled (as described below) and the Preferred Stock is authorized. The shares of common stock issuable in connection with the exercise of the warrants and in connection with the conversion of the Preferred Stock were granted registration rights in connection with the sale of the Units. We claim an exemption from registration afforded by Section 4(2) of the Securities Act of 1933 for the above, since the foregoing did not involve a public offering, the recipient took the securities for investment and not resale and we took appropriate measures to restrict transfer.

ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTOR; APPOINTMENT OF PRINCIPAL OFFICERS.

In connection with the approval of the Plan, O. James Woodward III, Fred Ruiz and Scott Johnson resigned from their positions as Directors of the Company on or about February 26, 2008, and the Company’s current Vice Chairman, H. Roger “Pat” Herbert became Chairman of the Board of Directors.

ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL YEAR.

In connection with the approval of the Plan, the Bankruptcy Court, and the Board of Directors of the Company approved a change in domicile of the Company from California to Texas. This will be effected by the Company creating a wholly owned subsidiary, Blast Energy Services, Inc., in the State of Texas, which the Company will merge with and into, the result of which will be that the Company will become a Texas corporation (the “Merger”). Following the Merger, the Company will have 200,000,000 authorized shares of stock, of which 180,000,000 shares will be common stock, $0.001 par value per share, and 20,000,000 shares will be preferred stock, $0.001 par value per share. The Certificate of Formation of the resulting Texas corporation will also allow the Company’s Board of Director to issue “blank check” preferred stock with rights and privileges as it may decide in its sole discretion, but which shares must have voting rights. The Company also authorized 8,000,000 shares of Series A Convertible Preferred Stock in connection with the Merger, which are described in greater detail below. In connection with the Merger, the Company adopted new Bylaws (attached hereto as Exhibit 3.3).

Series A Convertible Preferred Stock

The 8,000,000 shares of Series A Preferred Stock of the Company (the “Preferred Stock”) accrue interest at the rate of 8% per annum, in arrears for each month that the Preferred Stock is outstanding. The Company has the right to repay any or all of the accrued dividends at any time by providing the holders of the Preferred Stock at least five days written notice of their intent to repay such dividends. In the event the Company receives a “Cash Settlement,” defined as an aggregate total cash settlement received by the Company, net of legal fees and expenses, in connection with either (or both) of the Company’s pending litigation proceedings with (i) Hallwood Petroleum, LLC and Hallwood Energy, LP (Adversary Proceeding No. 07-03282 in the US Bankruptcy Court in Houston); and/or (ii) Quicksilver Resources, Inc (Adversary Proceeding No. 07-03292 in the US Bankruptcy Court in Houston), in excess of $4,000,000, the Company is required to pay any and all outstanding dividends within thirty days in cash or stock at the holder’s option. If the dividends are not paid within thirty days of the date the Cash Settlement is received, a “Dividend Default” occurs.

Additionally, the Preferred Stock (and any accrued and unpaid dividends on such Preferred Stock) have optional conversion rights, which provide the holders of the Preferred Stock the right, at any time, to convert the Preferred Stock into shares of the Company’s common stock at a conversion price of $0.50 per share.

In addition, the Preferred Stock automatically converts into shares of the Company’s common stock at a conversion price of $0.50 per share, if the Company’s common stock trades for a period of more than twenty consecutive trading days at greater than $3.00 per share and the average trading volume of the Company’s common stock exceeds 50,000 shares per day.

The Preferred Stock has the right to vote at any shareholder vote, the number of common shares of voting stock that the Preferred Stock is then convertible into.

The Preferred Stock may be redeemed at the sole option of the Company upon the receipt by the Company of a Cash Settlement from the pending litigation in excess of $7,500,000, provided that the holders, at their sole option, may have six months from the date of the Company’s receipt of the Cash Settlement to either accept the redemption of the Preferred Stock or convert such Preferred Stock into shares of the Company’s common stock.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

Exhibit Number	Description of Exhibit
2.1*	Plan of Merger
2.2*(1)	Articles of Merger (California and Texas)
3.1*(1)	Certificate of Formation Texas
3.2*(1)	Certificate of Designation of Series A Preferred Stock Texas
3.3*(1)	Bylaws of Blast Energy Services, Inc., Texas
10.1*	Second Amended Plan of Reorganization
10.2*	First Amended Plan of Reorganization
10.3*	Subscription Agreement and Related Exhibits with Clyde Berg
10.4*	Subscription Agreement and Related Exhibits with McAfee Capital, LLC
10.5*	Laurus Master Fund, Ltd. $2.1 million Security Agreement
10.6*	Berg McAfee Companies $1.12 million Note
10.7(2)	Settlement Agreement

* Filed herewith

(1) These filings have not been made as of the date of this report.

(2) Filed as an exhibit to our report on Form 8-K, filed with the Commission on May 14, 2007, and incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	BLAST ENERGY SERVICES, INC. (Registrant)
Dated: March 6, 2008	By:	/s/ John MacDonald
		John MacDonald
		Chief Financial Officer

EXHIBIT 2.1

PLAN OF MERGER FOR

BLAST ENERGY SERVICES, INC. and

BLAST ENERGY SERVICES, INC.

THIS PLAN OF MERGER (“Plan'') is entered into on February 27, 2008 by Blast Energy Services, Inc. (“Acquired Corporation”), a corporation incorporated under the laws of California and Blast Energy Services, Inc. (“Surviving Corporation”), a corporation incorporated under the laws of Texas.

ARTICLE 1

PLAN OF MERGER

Adoption of Plan

1.01. A plan of merger of Acquired Corporation and Surviving Corporation under the provisions of Section 1110 of the California Corporations Code, Section 10.002 of the Texas Business Organizations Code and Section 368(a)(1)(A) of the Internal Revenue Code is adopted as follows:

(a) On the effective date of the merger as set forth in Article 1.02 of the Plan of Merger, Acquired Corporation will be merged into Surviving Corporation, to do business and be governed by the laws of Texas.

(b) Surviving Corporation's name will be: Blast Energy Services, Inc.

(c) When this Plan becomes effective, the existence of Acquired Corporation as a distinct entity will cease. At that time, Surviving Corporation will succeed to all the rights, title, and interests to all property owned by Acquired Corporation, without reversion or impairment, without any further act, and without any transfer or assignment having occurred, but subject to any existing liens or other encumbrances on the property. Surviving Corporation also will be subject to all the debts and obligations of Acquired Corporation as the primary obligor, except as otherwise provided by law or contract, and only Surviving Corporation will be liable for the debt or obligation.

(d) Surviving Corporation will carry on business with the assets of the parties to the merger, as these corporations existed immediately prior to the merger.

(e) The shareholders of Acquired Corporation will surrender all of their shares or other securities in the manner set forth in this Plan.

(f) In exchange for the shares of Acquired Corporation surrendered by its shareholders, Surviving Corporation will issue and transfer to those shareholders, on the basis set forth in this Plan, shares of its common stock or other securities.

(g) Prior to the Plan, Surviving Corporation is a wholly owned subsidiary of Acquired Corporation.

Effective Date

1.02. The effective date of the merger (“Effective Date”), will be the date when a certificate of merger is issued by the Secretary of State of the State of Texas.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES

Acquired Corporation

2.01. As a material inducement to Surviving Corporation to execute this Plan and perform its obligations under this Plan, Acquired Corporation represents and warrants to Surviving Corporation as follows:

(a) Acquired Corporation is a corporation duly organized, validly existing, and in good standing under the laws of California, with corporate power and authority to own, lease, and operate property and carry on its business as it is now being conducted. A copy of the certificate of incorporation and the bylaws of Acquired Corporation, including all amendments, effective as of the date of this Plan, have been delivered to Surviving Corporation, and are complete and correct.

(b) Acquired Corporation has an authorized capitalization of 100,000,000 shares, consisting on the date immediately prior to the effective date of this Plan of 100,000,000 shares of common stock, $0.001 par value per share, of which 51,127,404 shares are validly issued, outstanding, and fully paid, and no shares of preferred stock are authorized. A copy of the Articles of Incorporation of Blast Energy Services, Inc., a California corporation, is attached hereto as Exhibit A .

(c) Acquired Corporation has furnished Surviving Corporation with Acquired Corporation's audited balance sheet as of September 30, 2007 (the “Balance Sheet Date”) and the related audited statement of income for the year ended December 31, 2006 as well as the unaudited financial statements for the three and nine months ending September 30, 2007. The financial statements referred to in this subparagraph (c):

(i) Are in accordance with the books and records of Acquired Corporation;

(ii) Fairly represent the financial condition of the Acquired Corporation as of the described dates and the results of its operations as of and for the periods specified; and

(iii) Contain and reflect, (A) reserves for all liabilities, and costs in excess of expected receipts and (B) all discounts and refunds in respect of service and products already rendered or sold that are reasonably anticipated and based on events or circumstances in existence or likely to occur in the future with respect to any of Acquired Corporation's contracts or commitments.

(iv) Specifically, but not by way of limitation, the Balance Sheet all of the debts, liabilities, and obligations of any nature, whether absolute, accrued, or contingent, of Acquired Corporation at the Balance Sheet Date, including appropriate reserves for all taxes due at such date but not yet payable.

(d) All required federal, state, and local tax returns of Acquired Corporation have been accurately prepared and timely filed, and Acquired Corporation has paid all federal, state, and local taxes required to be paid with respect to the periods covered by such returns. Acquired Corporation has not been delinquent in the payment of any tax, assessment, or governmental charge. Acquired Corporation has never had any tax deficiency proposed or assessed against it. Neither the federal income tax returns nor state franchise tax returns of the Acquired Corporation have ever been audited by governmental authorities.

(e) Acquired Corporation has the following securities outstanding: 51,127,404 shares of common stock, and no shares of preferred stock.

(f) Since the Balance Sheet Date, there has not been any material adverse change in the financial condition, business, and assets or other properties of the Acquired Corporation that alters or impairs its ability to conduct its business, including labor difficulties, market conditions, or any other event of any character.

(g) To its knowledge, no actions, suits, or other legal proceedings are pending or threatened against Acquired Corporation before or by any federal, state, or municipal court, department, board, bureau, or agency.

Surviving Corporation

2.02. As a material inducement to Acquired Corporation to execute and perform its obligations under this plan, Surviving Corporation represents and warrants to Acquired Corporation as follows:

(a) Surviving Corporation is a corporation duly organized, validly existing, and in good standing under the laws of Texas, with corporate power and authority to own property and carry on its business as it is now being conducted.

(b) Surviving Corporation has an authorized capitalization on the date of this Plan of 200,000,000 shares, consisting on the date of this Plan of 180,000,000 shares of common stock, $.001 par value per share, of which one (1) share is validly issued, outstanding, and fully paid, and 20,000,000 shares of preferred stock, $0.001 par value per share, of which no shares have been issued. A copy of the Articles of Incorporation of Blast Energy Services, Inc., a Texas corporation, is attached hereto as Exhibit B.

As of the date of this Plan, one (1) share of the common stock is validly issued and outstanding, fully paid, and nonassessable, which share will be cancelled concurrently with the parties entry into this Plan of Merger.

Securities Law

2.03. The parties to the merger warrant to arrange mutually for and manage all necessary procedures under the requirements of federal, Texas and California securities laws and the related supervisory commissions to ensure that this Plan is properly processed to comply with all federal and state registration requirements, or to take full advantage of any lawful and applicable exemptions from registration.

ARTICLE 3

TERMS, CONDITIONS, AND PROCEDURES PRIOR TO EFFECTIVE DATE

Submission to Shareholders and Filing

3.01. This Plan has been approved by the Board of Directors and creditors of the Acquired Company pursuant to a First Amended Joint Plan of Reorganization (the “Plan of Reorganization”) submitted to the United State Bankruptcy Court for the Southern District of Texas, and the Plan of Reorganization provides that no further action by the stockholders of the Acquired Company is required. One share out of the one outstanding share or 100% of the shares eligible to vote of the Surviving Corporation approved this Plan.

Conditions Precedent to Obligations of Acquired Corporation

3.02. Except as expressly waived in writing by Acquired Corporation, all of the obligations of Acquired Corporation are subject to Surviving Corporation's satisfaction of each of the following conditions on or before the Effective Date:

(a) The representations and warranties made by Surviving Corporation to Acquired Corporation in Article 2 of this Plan will be deemed to have been repeated on the Effective Date and will on that date be true and correct in all material respects. If Surviving Corporation discovers any material error, misstatement, or omission in those representations and warranties on or before the Effective Date, it must report that discovery immediately to Acquired Corporation and must either correct the error, misstatement, or omission or obtain a written waiver from Acquired Corporation.

(b) Surviving Corporation must have performed and complied with all applicable covenants, agreements and conditions required by this Plan on or before the Effective Date.

(c) No action or proceeding by any governmental body or agency must have been threatened, asserted, or instituted to restrain or prohibit the carrying out of the transactions contemplated by this Plan.

(d) All corporate and other proceedings and actions taken in connection with the transactions contemplated and all certificates, opinions, agreements, instruments, and documents must be satisfactory in form and substance to counsel for the Acquired Corporation.

Conditions Precedent to Obligations of Surviving Corporation

3.03. Except as waived in writing by Surviving Corporation, all of the obligations of Surviving Corporation under this Plan are subject to fulfillment of each of the following conditions on or before the Effective Date,:

(a) The representations and warranties of Acquired Corporation in this Plan and in any document delivered under this Plan are deemed to have been repeated in full on the Effective Date and must on that date be true and correct in all material respects. If Acquired Corporation discovers any material error, misstatement, or omission in those representations and warranties on or before the Effective Date, it must report that discovery immediately to Surviving Corporation and must either correct the error, misstatement, or omission or obtain a written waiver from Surviving Corporation.

(b) Acquired Corporation must have performed and complied with all applicable covenants, agreements and conditions in this Plan on or before the Effective Date.

(c) No action or proceeding by any governmental body or agency will have been threatened, asserted, or instituted to restrain or prohibit the completion of the transactions contemplated by this Plan.

Interim Conduct of Business; Limitations

3.04. (a) Except as limited by this paragraph 3.04, pending consummation of the merger, each of the parties to the merger will carry on its business in substantially the same manner as prior to the date of this Plan and will use its best efforts to maintain its business organization intact, to retain its present employees, and to maintain its good will in relationships with suppliers and others transacting business with the entity.

(b) Except with the prior consent in writing of Surviving Corporation, pending consummation of the merger, Acquired Corporation will not enter into any transaction other than those involved in carrying on its ordinary course of business.

Expenses

3.05. (a) If the merger set forth in this Plan is consummated, Surviving Corporation will pay all costs and expenses of the merger.

(b) If the merger set forth in this Plan is not consummated, each party to this Plan will pay its own costs and expenses incident to the contemplated merger.

ARTICLE 4

MANNER AND BASIS OF CONVERTING SHARES

Manner of Converting Shares

4.01. The holders of shares of Acquired Corporation will receive one (1) share of stock promptly after the Effective Date. First American Stock Transfer will issue one share for each share of Acquired Corporation owned by shareholders of record so that shareholders of Acquired Corporation will end up with one (1) share in Surviving Corporation for every share they previously owned in Acquired Corporation. Shareholders may send their shares in Acquired Corporation to the transfer agent to be reissued in the name of Surviving Corporation.

Basis of Converting Shares

4.02. (a) The shareholders of Acquired Corporation will be entitled to receive one (1) share of common stock of Surviving Corporation, each of $0.001 par value, to be distributed on the basis of one (1) share for each one (1) share of common stock of Acquired Corporation.

Capital Structure of Surviving Corporation

4.03. (a) There is currently one (1) outstanding share of common stock of Surviving Corporation, which will be cancelled concurrently with the transactions contemplated herein.

(b) After the Effective Date, Surviving Corporation will have a total of 200,000,000 shares of authorized stock, which consists of 180,000,000 shares of common stock which are of a par value of $.001 per share and 20,000,000 shares of preferred stock which are of a par value of $.001 per share. After the Effective Date, Surviving Corporation will have 51,127,404 shares of common stock issued and outstanding and no shares of preferred stock issued and outstanding.

ARTICLE 5

DIRECTORS AND OFFICERS

Directors and Officers of Surviving Corporation

5.01. The present board of directors of Acquired Corporation will serve as the board of directors of Surviving Corporation until the next annual meeting or until their successors have been elected and qualified.

5.02. All persons who on the Effective Date are executive or administrative officers of Acquired Corporation will become officers of Surviving Corporation until its board of directors determines otherwise. Surviving Corporation's board of directors may elect or appoint additional officers as it deems necessary.

ARTICLE 6

ARTICLES OF INCORPORATION AND BYLAWS

Articles of Incorporation of Surviving Corporation

6.01. The Articles of Incorporation of the Surviving Corporation shall replace the Articles of Incorporation of the Acquired Corporation at the Effective Date. Such Articles of Incorporation, as existing on the Effective Date, will continue in full force until altered, amended, or repealed as provided in such Articles of Incorporation, the Bylaws or as provided by law. The Articles of Incorporation of Blast Energy Services, Inc., a California corporation, will cease to exist.

Surviving Corporation's Bylaws

6.02. The Bylaws of the Surviving Corporation shall replace the Bylaws of the Acquired Corporation at the Effective Date. Such Bylaws, as existing on the Effective Date, will continue in full force until altered, amended, or repealed as provided in such Bylaws, the Articles of Incorporation or as provided by law. The Bylaws of Blast Energy Services, Inc., a California corporation, will cease to exist.

ARTICLE 7

SURVIVAL OF WARRANTIES AND INDEMNIFICATION

Nature and Survival of Representations and Warranties

7.01. All statements contained in any memorandum, certificate, letter, document, or other instrument delivered by or on behalf of Acquired Corporation, Surviving Corporation, or the shareholders of any party to the Plan of Merger will be deemed representations and warranties made by such parties, respectively, to each other under this Plan. The representations and warranties of the parties and the shareholders will survive for a period of three (3) years following the Effective Date and will survive despite any inspections, examinations, or audits made on behalf of the parties and the shareholders.

Indemnification

7.02. On or before the Effective Date, Acquired Corporation will obtain from its shareholders an agreement to indemnify and hold harmless Surviving Corporation against all damages, as defined in this paragraph 7.02. The term “Damages,” as used in this paragraph, includes any claim, action, demand, loss, cost, expense, liability, penalty, and other damage, including but not limited to, counsel fees and other costs and expenses incurred in attempting to avoid damages or in enforcing this indemnity agreement, resulting to Surviving Corporation from:

(a) Any inaccurate representation made by or on behalf of the Acquired Corporation or its shareholders in or under this Plan;

(b) Breach of any of the warranties in or under this Plan made by or on behalf of Acquired Corporation or its shareholders;

(c) Breach or default in the performance by Acquired Corporation of any applicable obligations specified in this Plan; or

(d) Breach or default in the performance by Acquired Corporation's shareholders of any of the applicable obligations specified in the agreement delivered by them to Surviving Corporation under this Plan.

The shareholders will reimburse Surviving Corporation on a pro rata basis according to the number of shares owned by each for any payment made or loss suffered by Surviving Corporation at any time after the Effective Date, based on the judgment of any court of competent jurisdiction or under a bona fide compromise or settlement of claims, demands, or actions, regarding any damages described in this paragraph. Shareholders must discharge their obligations to Surviving Corporation by the payment of cash on demand. The shareholders will have the opportunity to defend any claim, action, or demand asserted against Surviving Corporation for which Surviving Corporation claims indemnity against the shareholders, provided that: (i) the defense is conducted by counsel reasonably approved by Surviving Corporation; (ii) the defense is expressly assumed in writing within ten (10) days after written notice of the claim, action, or demand is given to the shareholders; and (iii) Surviving Corporation's counsel may participate at all times and in all proceedings, formal and informal, relating to the defense, compromise, and settlement of the claim, action, or demand, at the expense of Surviving Corporation.

ARTICLE 8

ABANDONMENT

Circumstances Allowing Termination and Abandonment

8.01. This Plan may be terminated and the merger may be abandoned at any time before the Effective Date, even after the Certificate of Merger has been filed with the Texas Secretary of State.

(a) The board of directors of any party to the merger may abandon this Plan before the Certificate of Merger is filed with the Texas Secretary of State.

(b) To abandon this Plan after the Certificate of Merger has been filed with the Texas Secretary of State, an officer or authorized representative must file a statement with the Secretary of State executed on behalf of each party to the merger declaring that the Plan has been abandoned in accordance with the terms of this Plan and Section 11.05 of the California Corporations Code or Section 10.201 of the Texas Business Organizations Code. The statement must be filed before the Effective Date of the merger.

(c) Regardless of whether the Certificate of Merger has been filed with the Texas Secretary of State or the California Secretary of State, this Plan may be abandoned under the following conditions:

(i) The number of shareholders dissenting from the merger is so large that the merger is deemed inadvisable or undesirable in the opinion of the board of directors of either party to the merger.

(ii) Any material litigation or proceeding has been instituted or threatened against another party to the merger or any of its assets, that renders the merger inadvisable or undesirable in the opinion of the board of directors of either party to the merger.

(iii) Any legislation has been enacted that, in the opinion of the board of directors of either party to the merger, renders the merger inadvisable or undesirable.

(iv) After the date of execution of this Plan there has been, in the opinion of the board of directors of either party to the merger, any materially adverse change in the business or condition, financial or otherwise, of another party to the merger.

(d) At the election of Surviving Corporation's board of directors if, without the prior consent in writing of Surviving Corporation, Acquired Corporation has entered into any transaction other than those involved in the ordinary course of business.

Notice of and Liability on Termination of Plan

8.02. If an election is made to abandon this Plan under paragraph 8.01:

(a) An officer or authorized representative of the party whose board of directors has made the election must give immediate written notice of the election to the other party to the merger.

(b) When notice has been properly effected as provided in subparagraph (a), and when an appropriate statement has been filed with the Secretary of State of Texas and the Secretary of State of California, pursuant to this section 8.02(b), this Plan will terminate and the proposed merger will be abandoned. Except for payment of its own costs and expenses incident to this Plan, there will be no liability on the part of either party to the merger as a result of the abandonment.

ARTICLE 9

ENFORCEMENT AND INTERPRETATION

Further Assurances and Assignments

9.01. Acquired Corporation agrees that when requested by Surviving Corporation or by its successors or assigns, Acquired Corporation will execute and deliver or cause to be executed and delivered all deeds and other instruments necessary to consummate the transaction that is the subject of this Plan. Acquired Corporation also agrees to take or cause to be taken any further actions, assignments, or assurances that are necessary to vest, perfect, and conform title of Surviving Corporation to all the property, rights, privileges, powers, and franchises referred to in Article 1 of this Plan, and otherwise necessary to carry out the intent and purposes of this Plan.

Notices

9.02. Any notice or other communication required or permitted by this Plan, with the exception of the filing of a statement of abandonment under paragraph 8.01(b), will be deemed to be given when deposited in the United States mails for transmittal by certified or registered mail, postage prepaid, or when deposited with a public telegraph company for transmittal, charges prepaid, addressed:

(a) In the case of Acquired Corporation, to: 14550 Torrey Chase Blvd, Suite 330, Houston, Texas 77014, or to any other person or address that Acquired Corporation may designate in writing on proper notice to Surviving Corporation.

(b) In the case of Surviving Corporation, to: 14550 Torrey Chase Blvd, Suite 330, Houston, Texas 77014, or to any other person or address that Surviving Corporation may designate in writing on proper notice to Acquired Corporation.

Entire Agreement and Counterparts

9.03. This instrument and any exhibits attached to and incorporated into the instrument contain the entire agreement between the parties with respect to the transaction contemplated by this Plan. It may be executed in any number of counterparts; however, all counterparts taken together will constitute one original.

Controlling Law

9.04. The validity, interpretation, and performance of this Plan is controlled by and construed under the laws of Texas, the state in which this Plan is being executed.

Faxed Copies

9.05. For purposes of this plan, a faxed signature will constitute an original signature.

[Remainder of page left intentionally blank. Signature page follows.]

IN WITNESS WHEREOF, (i) the Surviving Corporation has caused this Plan to be signed by the Chief Financial Officer of the Surviving Corporation and attested by the Secretary of the Surviving Corporation pursuant to authorization contained in a resolution adopted by the Directors of the Surviving Corporation approving this Plan and (ii) the Acquired Corporation has caused this Plan to be signed by the Chief Financial Officer of the Acquired Corporation and attested by the Secretary of the Acquired Corporation pursuant to authorization contained in a resolution adopted by the Directors of the Acquired Corporation approving this Plan.

BLAST ENERGY SERVICES, INC.,

a California corporation

ATTEST : By: /s/John MacDonald

John MacDonald, Chief Financial Officer and Secretary

BLAST ENERGY SERVICES, INC.,

a Texas corporation

ATTEST : By: /s/John MacDonald

John MacDonald, Chief Financial Officer and Secretary

The undersigned, John MacDonald, as Secretary of Blast Energy Services, Inc., a Texas corporation, hereby certifies that the foregoing Merger was duly approved by the affirmative vote of the Directors and Sole Shareholder.

WITNESS my hand this the 27 th day of February 2008.

/s/John MacDonald

John MacDonald, Secretary

The undersigned, John MacDonald, as Secretary of Blast Energy Services, Inc., a California corporation, hereby certifies that the foregoing Merger was duly adopted by the unanimous consent of the directors of Blast Energy Services, Inc.

WITNESS my hand this the 27 th day of February 2008

/s/John MacDonald

John MacDonald, Secretary

EXHIBIT 2.2

CERTIFICATE OF MERGER

BLAST ENERGY SERVICES, INC.

A California corporation

INTO

BLAST ENERGY SERVICES, INC.

A Texas corporation as the surviving

Corporation, pursuant to Section 10.152

of the Texas Business Organizations Code

This Certificate of Merger made this 27th day of February, 2008 by Blast Energy Services, Inc., a California corporation herein after called the “California Company” and Blast Energy Services, Inc. a Texas corporation, herein after called the “Texas Company”, the two corporations being herein after sometimes called the Constituent Companies.

WHEREAS, the Board of Directors of each of the Constituent Companies deem it advisable and generally to the welfare of the Constituent Companies that the California Company merge with and into the Texas Company under and pursuant to the provisions of Section 1110 of the California Corporations Code and Section 10.152 of the Texas Business Organizations Code and in accordance with Section 368(a)(1)(A) of the Internal Revenue Code of 1986 as amended in order to change the domicile of the California Company to the State of Texas (referred to herein as the “Merger” or the “Plan of Merger”); and

WHEREAS, the California Company, being a corporation duly organized under the laws of the State of California having been incorporated in September 2000 and merged with another California corporation in April 2003, has authorized capital stock consisting of 100,000,000 shares of Common Stock at $.001 par value per share. As of September 30, 2007 (the Record Date”), there were 51,127,404 shares outstanding of Common Stock, all of which were entitled to vote on the merger. This Merger has been approved by the Board of Directors and creditors of the California Company pursuant to a Second Amended Joint Plan of Reorganization (the “Plan of Reorganization”) submitted to the United State Bankruptcy Court for the Southern District of Texas, and the Plan of Reorganization provides that no further action by the stockholders of the California Company is required;

WHEREAS, the Texas Company is a corporation duly organized under the laws of the State of Texas having been incorporated on February 27, 2008, has authorized capital stock consisting of 200,000,000 shares, 180,000,000 of which are Common Stock $.001 par value each, one (1) share of which is issued and outstanding and entitled to vote on the Merger, and 20,000,000 shares of Preferred Stock with $0.001 par value, of which no shares are issued or outstanding. One (1) share (or 100%) of the outstanding shares of Common Stock voted “FOR” the Merger; and

WHEREAS, as to Blast Energy Services, Inc., the Plan of Merger was duly authorized by all action required by the laws under which it was formed or organized or by its constituent documents.

WHEREAS, the laws of the States of California and Texas permit such a merger, and the Constituent Companies desire to merge under and pursuant to the provisions of the laws of their respective states.

NOW THEREFORE, in consideration of the premises and of the mutual agreements and covenants herein contained, and of the mutual benefits hereby provided, it is agreed by and between the parties hereto as follows:

1.	MERGER: The California Company shall be and hereby is merged into the Texas Company.

2.	EFFECTIVE DATE: This Plan of Merger shall become effective immediately upon filing in the office of the Texas Secretary of State’s Office, the time of such effectiveness being herein after called the “Effective Date.”

(a)	For all purposes of the laws of the State of California, this Plan of Merger and the merger herein provided for shall become effective and the separate existence of the California Corporation, except insofar as it may be continued by statute, shall cease on the Effective Date.

(b)

For all purposes of the laws of the State of Texas, this Plan of Merger and the merger herein provided for shall become effective and the separate existences of the California Company except insofar as they may be continued by statute, shall cease on the date; this Plan of Merger shall have been recorded in the office of the Secretary of State of the State of Texas.

(c)	The corporate identity, existences, purposes, powers, objects, franchises, rights and immunities of the California Company shall be continued in and merged into the Texas Company, the Surviving Company, and shall be fully vested therewith.

(d)	On the Effective Date the Constituent Companies shall so become a single corporation.

SURVIVING CORPORATION: The Texas Company shall survive the merger herein contemplated and shall continue to be governed by the laws of the State of Texas and the separate corporation existence of the California Company shall cease forthwith upon the Effective Date, provided however, that the Texas Company may be served with process in the State of California in any proceeding for the enforcement of the rights of a dissenting shareholder of the California Company against the Texas Company. The Texas Company will be responsible for the payment of all fees and franchise taxes and will be obligated to pay such fees and taxes if they are not timely paid.

4.	ARTICLES OF INCORPORATION: The Articles of Incorporation of the Texas Company as presently exist shall be the Articles of Incorporation of the Surviving Company at the Effective Date.

5.	BYLAWS: The By-Laws of the Texas Company as presently exist shall be the By-Laws of the Surviving Company on the Effective Date.

BOARD OF DIRECTORS AND OFFICERS: The members of the board of directors and officers of the Surviving Company immediately after the Effective Date of the merger shall be those persons who were the members of the board of directors and the officers, respectively, of the California Company immediately prior to the Effective Date of the merger, and such persons shall serve in such offices, respectively, for the terms provided by law or in the By-Laws, or until their respective successors are elected and qualified.

AUTHORITY TO CONDUCT BUSINESS: The Texas Company represents that it has not filed an application for authority to do business in California. The Surviving Company will conduct no such business in California without filing and having such application approved. The Surviving Company will file its application for authority to conduct business in any States it plans to do business in immediately upon completion of the Merger.

8.	CONVERSION OF SHARES: The manner of converting shares of the California Company into shares of the Surviving Company shall be as follows:

(a)

Immediately upon the Effective Date of Merger, each share of stock of the California Company outstanding shall automatically become and be converted into common stock of the Surviving Company at the rate of one (1) share of common stock of the Surviving Company for each one (1) share of the common stock of the California Company. Each outstanding certificate representing shares of the common stock of the California Company shall thereupon be deemed, for all corporate purposes, to evidence the ownership of the number of fully paid, nonassessable shares of common stock of the Texas Company the “Surviving Company” into which such shares of common stock of the California Company shall be so converted.

RIGHTS OF SHAREHOLDERS: After the Effective Date of Merger, any holder of a certificate or certificates which theretofore represented shares of the common stock of the California Company may, but shall not be required to surrender the same to the Transfer Agent of the Surviving Corporation and shall thereupon be entitled to receive in exchange therefore a certificate representing the number of shares of common of the Surviving Corporation in the amount of shares as set forth in section 8 herein above.

10.	AUTHORIZATION: The parties hereto acknowledge and respectively represent that this Merger Agreement is authorized by the laws of the respective jurisdictions of the Constituent Companies and that the matter was approved by the Board of Directors of each Company.

11.

FURTHER ASSURANCES OF TITLE: As and when requested by the Surviving Corporation or by its successors or assigns, the California Company will execute and deliver or cause to be executed and delivered all such deeds and instruments and will take or cause to be taken all such further action as the Surviving Corporation may deem necessary or desirable in order to vest in and confirm to the Surviving Corporation title to and possession of any property of any of the Constituent Companies acquired by the Surviving Corporation by reason or as a result of the merger herein provided for and otherwise to carry out the intent and purposes hereof, and the officers and directors of the California Company and the officers and directors of the Surviving Corporation are fully authorized in the name of the respective Constituent Companies or otherwise to take any and all such action.

12.

SERVICE OF PROCESS ON SURVIVING CORPORATION: The Surviving Corporation agrees that it may be served with process in the State of California in any proceeding for enforcement of any obligation of the California Company as well as for the enforcement of any obligation of the Surviving Corporation arising from the merger, including any suit or other proceeding to enforce the right of any shareholder as determined in appraisal proceedings pursuant to the provisions of the Business Organizations Code irrevocably appoints the Secretary of State of California as its agent to accept service of process in any suit or other proceeding. Copies of such process shall be mailed to Surviving Company’s Resident Agent: Corporation Service Company, 701 Brazos, Suite 1050, Austin, TX 78701, until further notice.

13.

ABANDONMENT: This Plan of Merger may be abandoned (a) by either Constituent Corporation, acting by its Board of Directors, at any time prior to its adoption by the shareholders of both Constituent Companies as provided by law, or (b) by the mutual consent of the Constituent Companies, acting each by its Board of Directors, at any time after such adoption by such shareholders and prior to the Effective Date of the merger. In the event of abandonment of the Plan of Merger pursuant to (a) above, notice thereof shall be given by the Board of Directors of the Constituent Company so terminating to the other Constituent Company, and thereupon, or abandonment pursuant to (b) above, this Plan of Merger shall become wholly void and of no effect and there shall be no further liability or obligation hereunder on the part of either of the Constituent Companies or its Board of Directors or Shareholders.

IN WITNESS WHEREOF, each of the corporate parties hereto pursuant to authority duly granted by its Board of Directors, has caused this Plan of Merger to be executed by its respective officers and its corporate seal affixed thereto.

BLAST ENERGY SERVICES, INC. BLAST ENERGY SERVICES, INC.

A Texas Corporation A California corporation

By: /s/John MacDonald By: /s/John MacDonald

John MacDonald, John MacDonald

Chief Financial Officer Chief Financial Officer

STATE OF TEXAS §

COUNTY OF HARRIS §

This instrument was acknowledged before me Carol B Gantt this 27th day of February 2008 by John MacDonald , as set forth under his respective signature.

Witness my hand and official seal.

/s/ Carol B Gantt

Signature

STATE OF TEXAS §

COUNTY OF HARRIS §

This instrument was acknowledged before me Carol B Gantt this 27th day of February 2008 by John MacDonald , as set forth under his respective signature.

Witness my hand and official seal.

/s/ Carol B Gantt

Signature

EXHIBIT 3.1

Certificate of Formation

For-profit Corporation

.F orm 201 (Revised 1/06)

Return in duplicate to: Secretary of State P.O. Box 13697 Austin, TX 78711-3697 512463-5555 FAX: 512/463-5709 Filing Fee; $300

Article 1 - Entity Name and Type

The filing entity being formed is a for-profit corporation. The name of the entity is: Blast Energy Services, Inc.

Article 2 - Registered Agent and Registered Office

(Select and complete either A or B and complete C)

[ X ] A. The initial registered agent is an organization (cannot be entity named above) by the name of: Corporation Service Company - DBA CSC - Lawyers Inco

[ ] B. The initial registered agent is an individual resident of the state whose name is set forth below:

C. The business address of the registered agent and the registered office address is:

701 Brazos, Suite 1050; Austin, TX 78701

Article 3 - Directors

(A minimum of 1 director is required.)

The number of directors constituting the initial board of directors and the names and addresses of the person or persons who are to serve as directors until the first annual meeting of shareholders or until their successors are elected and qualified are as follows:

Director 1
See Article VII of attached "Certificate of Formation (Continued)"
First Name	M.I.	Last Name			Suffix

Street or Mailing Address	City		State	Zip Code		Country

Article 4 - Authorized Shares

The total number of shares the corporation is authorized to issue is:

200,000,000; also see Article VI of attached Certificate of Formation (Continued)" for further disclosures

or [ X ] A. The par value of each of the authorized shares is: $0.001

[ ] B. The shares shall have no par value.

If the shares are to be divided into classes, you must set forth the designation of each class, the number of shares of each class, the par value (or statement of no par value), and the preferences, limitations, and relative rights of each class in the space provided for supplemental information on this form.

Article 5 - Purpose

The purpose for which the corporation is formed is for the transaction of any and all lawful business for which a for-profit corporation may be organized under the Texas Business Organizations Code.

Supplemental Provisions/ Information

See attached "Certificate of Formation of Blast Energy Services, Inc. (Continued)"

Organizer

The name and address of the organizer: John MacDonald

14550 Torrey Chase Blvd, Suite 330

Houston TX 77014

Effectiveness Of Filing

A. [X ]This document becomes effective when the document is filed by the secretary of state.

B. [ ] This document becomes effective at a later date, which is not more than ninety (90) days from the date of signing. The delayed effective date is:

C. [ ] This document takes effect upon the occurrence of a future event or fact, other than the

passage of time. The 90 th day after the date of signing is:

The following event or fact will cause the document to take effect in the manner described below:

Execution

The undersigned signs this document subject to the penalties imposed by law for the submission of a materially false or fraudulent instrument.

Date: February 27, 2008

Signature of organizer

/s/ John MacDonald

John MacDonald

CERTIFICATE OF FORMATION

BLAST ENERGY SERVICES, INC.

(Continued)

ARTICLE VI.

The total number of shares of stock that the Corporation shall have authority to issue is 200,000,000, consisting of 180,000,000 shares of common stock, par value $0.001 per share (“Common Stock”), and 20,000,000 shares of preferred stock par value $0.001 per share (“Preferred Stock”).

The Corporation is hereby prohibited from issuing any non-voting Common Stock or Preferred Stock.

Shares of Preferred Stock of the Corporation may be issued from time to time in one or more series, each of which shall have such distinctive designation or title as shall be determined by the Board of Directors of the Corporation (“Board of Directors”) prior to the issuance of any shares thereof. Preferred Stock shall have such voting powers, full or limited, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in such resolution or resolutions providing for the issue of such class or series of Preferred Stock as may be adopted from time to time by the Board of Directors prior to the issuance of any shares thereof. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all the then outstanding shares of the capital stock of the corporation entitled to vote generally in the election of the directors (the “Voting Stock”), voting together as a single class, without a separate vote of the holders of the Preferred Stock, or any series thereof, unless a vote of any such holders is required pursuant to any Preferred Stock Designation.

ARTICLE VII.

The governing Board of the Corporation shall be styled as a “Board of Directors,” and any member of said Board shall be styled as a “director.”

The number of members constituting the first Board of Directors of the Corporation is two (2); and the name and the post office address of said members is as follows:

Name	Address
JOHN R. BLOCK	14550 TORREY CHASE BLVD, SUITE 330 HOUSTON, TEXAS 77014
ROGER P. (PAT) HERBERT	14550 TORREY CHASE BLVD, SUITE 330 HOUSTON, TEXAS 77014
JOSEPH J. PENBERA, PH.D.	14550 TORREY CHASE BLVD, SUITE 330 HOUSTON, TEXAS 77014
JEFFREY R. PENDERGRAFT	14550 TORREY CHASE BLVD, SUITE 330 HOUSTON, TEXAS 77014

The number of directors of the Corporation may be increased or decreased in the manner provided in the Bylaws of the Corporation; provided, that the number of directors shall never be less than one. In the interim between elections of directors by stockholders entitled to vote, all vacancies, including vacancies caused by an increase in the number of directors and including vacancies resulting from the removal of directors by the stockholders entitled to vote which are not filled by said stockholders, may be filled by the remaining directors, though less than a quorum.

ARTICLE VIII.

No fully paid shares of any class of stock of the Corporation shall be subject to any further call or assessment in any manner or for any cause. The good faith determination of the Board of Directors of the Corporation shall be final as to the value received in consideration of the issuance of fully paid shares.

ARTICLE IX.

The Corporation shall have perpetual existence.

ARTICLE X.

The holders of a majority of the outstanding shares of stock which have voting power shall constitute a quorum at a meeting of stockholders for the transaction of any business unless the action to be taken at the meeting shall require a greater proportion.

In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to fix the amount to be reserved as working capital over and above its paid-in capital stock, and to authorize and cause to be executed, mortgages and liens upon the real and personal property of the Corporation.

ARTICLE XI.

The personal liability of the directors of the Corporation is hereby eliminated to the fullest extent permitted by the Texas Business Organizations Code, as the same may be amended and supplemented.

ARTICLE XII.

The Corporation shall, to the fullest extent permitted by the Texas Business Organizations Code, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said Law from and against any and all of the expenses, liabilities, or other matters referred to in or covered by said Law, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any Bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person.

ARTICLE XIII.

The Corporation reserves the right to amend, alter, change, or repeal any provision contained in these Articles of Incorporation in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.

ARTICLE XIV.

Stockholders of the Corporation shall not have cumulative voting rights nor preemptive rights.

ARTICLE XV.

The Stockholders of the Corporation may take action without holding a meeting, providing notice, or taking a vote if stockholders having at least the minimum number of votes that would be necessary to take the action that is the subject of the consent at a meeting, in which each stockholder entitled to vote on the action is present and votes, signs a written consent or consents stating the action taken. A written consent or consents must include the date each owner or member signed the consent and is effective to take the action that is the subject of the consent only if the consent or consents are delivered to the Corporation not later than the 60th day after the date the earliest dated consent is delivered to the Corporation. The Corporation shall promptly notify each stockholder who did not sign a consent of the action that is the subject of the consent.

Signed this 27th day of February 2008.

BLAST ENERGY SERVICES, INC.

By:_ /s/John MacDonald ___________

John MacDonald, Incorporator

EXHIBIT 3.2

CERTIFICATE OF DESIGNATIONS

BLAST ENERGY SERVICES, INC.

ESTABLISHING THE DESIGNATIONS, PREFERENCES,

LIMITATIONS AND RELATIVE RIGHTS OF ITS

SERIES A CONVERTIBLE PREFERRED STOCK

Pursuant to Section 21.155 of the Texas Business Organizations Code, Blast Energy Services, Inc., a corporation organized and existing under the State of Texas (the "Company"),

DOES HEREBY CERTIFY that pursuant to the authority conferred upon the Board of Directors by the Certificate of Incorporation of the Company, and pursuant to Section 21.155 of the Texas Business Organizations Code, the Board of Directors, by unanimous written consent of all members of the Board of Directors on February 27, 2008, duly adopted a resolution providing for the issuance of a series of Eight Million (8,000,000) shares of Series A Convertible Preferred Stock, which resolution is and reads as follows:

RESOLVED, that pursuant to the authority expressly granted to and invested in the Board of Directors of Blast Energy Services, Inc. (the "Company" ) by the provisions of the Certificate of Incorporation of the Company, a series of the preferred stock, par value $0.001 per share, of the Company be, and it hereby is, established; and

FURTHER RESOLVED, that the series of preferred stock of the Company be, and it hereby is, given the distinctive designation of "Series A Convertible Preferred Stock"; and

FURTHER RESOLVED, that the Series A Convertible Preferred Stock shall consist of Eight Million (8,000,000) shares; and

FURTHER RESOLVED, that the Series A Convertible Preferred Stock shall have the powers and preferences, and the relative, participating, optional and other rights, and the qualifications, limitations, and restrictions thereon set forth below (the “Designation”):

SECTION 1. DESIGNATION OF SERIES; RANK. The shares of such series shall be designated as the "Series A Convertible Preferred Stock" (the "Preferred Stock" ) and the number of shares initially constituting such series shall be up to Eight Million (8,000,000) shares. Any subsequent issues of Preferred Stock shall be Series B and so forth, which series will rank behind Series A.

SECTION 2. DEFINITIONS. For purposes of this Designation, the following definitions shall apply:

(a) “Automatic Conversion Price” means $3.00 per share (as adjusted to reflect any stock dividends, distributions, combinations, reclassifications and other similar transactions effected by the Company in respect to its Common Stock).

(b) “Cash Settlement” means an aggregate total cash settlement received by the Company, net of legal fees and expenses, in connection with either (or both) of the Company’s pending litigation proceedings with (i) Hallwood Petroleum, LLC and Hallwood Energy, LP (Adversary Proceeding No. 07-03282 in the US Bankruptcy Court in Houston); and/or (ii) Quicksilver Resources, Inc (Adversary Proceeding No. 07-03292 in the US Bankruptcy Court in Houston).

(c) "Closing Sales Price" means, for any security as of any date, the last sales price of such security on the principal trading market where such security is listed or traded as reported by Bloomberg Financial Markets (or a comparable reporting service of national reputation selected by the Company if Bloomberg Financial Markets is not then reporting closing sales prices of such security) (collectively, "Bloomberg " ), or if the foregoing does not apply, the last reported sales price of such security on a national exchange or in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no such price is reported for such security by Bloomberg, the average of the bid prices of all market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc., in each case for such date or, if such date was not a trading day for such security, on the next preceding date that was a trading day. If the Closing Sales Price cannot be calculated for such security on any of the foregoing bases, the Closing Sales Price of such security on such date shall be the fair market value as reasonably determined by an investment banking firm selected by the Company, with the costs of such appraisal to be borne by the Company.

(d) “Common Stock” means the Company’s $0.001 par value common stock.

(e) "Distribution" shall mean the transfer of cash or other property without consideration whether by way of dividend or otherwise (other than dividends on Common Stock payable in Common Stock), or the purchase or redemption of shares of the Company for cash or property other than: (i) repurchases of Common Stock issued to or held by employees, officers, directors or consultants of the Company or its subsidiaries upon termination of their employment or services pursuant to agreements providing for the right of said repurchase, (ii) repurchases of Common Stock issued to or held by employees, officers, directors or consultants of the Company or its subsidiaries pursuant to rights of first refusal contained in agreements providing for such right, (iii) repurchase of capital stock of the Company in connection with the settlement of disputes with any shareholder, (iv) any other repurchase or redemption of capital stock of the Company approved by the holders of (a) a majority of the Common Stock and (b) a majority of the Preferred Stock of the Company voting as separate classes.

(f) “Dividend Default” shall mean the failure of the Company to pay dividends when due pursuant to the terms of this Designation, as further described in Sections 3(c)(i) and 3(d)(i) herein.

(g) "Dividend Rate" shall mean an annual rate of 8% of the Original Issue Price per share for the Series A Convertible Preferred Stock.

(h) "Liquidation Preference" shall mean equal the Original Issue Price per share for the Series A Convertible Preferred Stock (as appropriately adjusted for any Recapitalizations).

(i) "Original Issue Date" shall mean the date upon which the first of such shares of Preferred Stock is first issued.

(j) "Original Issue Price" shall mean $0.50 per share for the Series A Convertible Preferred Stock (as appropriately adjusted for any Recapitalizations).

(k) "Recapitalization" shall mean any stock dividend, stock split, combination of shares, reorganization, recapitalization, reclassification or other similar event.

SECTION 3. DIVIDENDS.

(a)	Dividends in General.

(i) Cash dividends shall accrue on the Series A Preferred Stock, monthly in arrears, for each month that such Preferred Stock is outstanding, based on the Original Issue Price, from the Original Issue Date, at the Dividend Rate, until such dividends are paid in full as provided below, and/or converted into Common Stock pursuant to Section 5, below (“ Dividends ”).

(b)	Optional Payment of Dividends.

(i) The Company shall have the right but not the obligation to pay any or all accrued Dividends at any time in its sole option by providing any holder and/or all holders written notice of their intent to repay such Dividends at least five (5) business days prior to such repayment date. The process for handling the mechanics of converting Dividends into stock shall be substantially the same as those described in paragraphs 5(a)(iii) and 5(c) below.

(c)	Additional Dividend policies.

(i) In any calendar year, the holders of outstanding shares of Preferred Stock shall be entitled to receive Dividends, when, as and if declared by the Board of Directors, out of any assets at the time legally available therefor, at the Dividend Rate specified for such shares of Preferred Stock payable in preference and priority to any declaration or payment of any Distribution on Common Stock of the Company in such calendar year. No Distributions shall be made with respect to the Common Stock until all declared Dividends on the Preferred Stock have been paid or set aside for payment to the Preferred Stock holders. Payment of any Dividends to the holders of the Preferred Stock shall be on a pro rata, pari passu basis in proportion to the Dividend Rates for each series of Preferred Stock. The right to receive Dividends on shares of Preferred Stock shall be cumulative, and such Dividends shall accrue to holders of Preferred Stock if such Dividends are not declared or paid in any calendar year. If the Board of Directors declares Dividends for the Preferred Stock pursuant to this Section and such Dividends are for any reason not paid to the holders of the Preferred Stock, a Dividend Default shall occur.

(ii) Non-Cash Distributions. Whenever a Distribution provided for in this Section 3 shall be payable in property other than cash, the value of such Distribution shall be deemed to be the fair market value of such property as determined in good faith by the Board of Directors.

(iii) Other Distributions. Subject to the terms of these Certificate of Designations, and to the fullest extent permitted by the Texas Business Organizations Code, the Company shall be expressly permitted to redeem, repurchase or make distributions on the shares of its capital stock in all circumstances other than where doing so would cause the Company to be unable to pay its debts as they become due in the usual course of business.

(d)	Mandatory Payment of Series A Dividends.

(i) Notwithstanding anything contained in Section 3(b) above, in the event the Company receives a Cash Settlement in excess of $4,000,000, the Company shall pay any and all accrued outstanding Dividends within thirty (30) days of the receipt of such Cash Settlement in cash or stock at the holder’s option. If the required Cash Settlement is received by the Company, and such Dividends are not paid to the holders of the Preferred Stock within the time period set forth above, a Dividend Default shall occur.

SECTION 4. LIQUIDATION PREFERENCE

(a) Liquidation Preference. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, the holders of the Preferred Stock shall be entitled to receive, prior and in preference to any Distribution of any of the assets of the Company to the holders of the Common Stock by reason of their ownership of such stock, an amount per share for each share of Preferred Stock held by them equal to the sum of (i) the Liquidation Preference specified for such share of Preferred Stock, and (ii) all declared but unpaid Dividends (if any) on such share of Preferred Stock. If upon the liquidation, dissolution or winding up of the Company, the assets of the Company legally available for distribution to the holders of the Preferred Stock are insufficient to permit the payment to such holders of the full amounts specified in this Section 4(a), then the entire assets of the Company legally available for distribution shall be distributed with equal priority and pro rata among the holders of the Preferred Stock in proportion to the full amounts they would otherwise be entitled to receive pursuant to this Section 4(a).

(b) Remaining Assets. After the payment to the holders of Preferred Stock of the full preferential amounts specified above, the entire remaining assets of the Company legally available for distribution by the Company shall be distributed with equal priority and pro rata among the holders of the Common Stock in proportion to the number of shares of Common Stock held by them.

(c) Reorganization. For purposes of this Section 4, a liquidation, dissolution or winding up of the Company shall be deemed to be occasioned by, or to include, (a) the acquisition of the Company by another entity by means of any transaction or series of related transactions to which the Company is a party (including, without limitation, any stock acquisition, reorganization, merger or consolidation but excluding any sale of stock for capital raising purposes) that results in the voting securities of the Company outstanding immediately prior thereto failing to represent immediately after such transaction or series of transactions (either by remaining outstanding or by being converted into voting securities of the surviving entity or the entity that controls such surviving entity) a majority of the total voting power represented by the outstanding voting securities of the Company, such surviving entity or the entity that controls such surviving entity, or (b) a sale, lease or other conveyance of all or substantially all of the assets of the Company.

(d) Valuation of Non-Cash Consideration. If any assets of the Company distributed to shareholders in connection with any liquidation, dissolution, or winding up of the Company are other than cash, then the value of such assets shall be their fair market value as determined in good faith by the Board of Directors. In the event of a merger or other acquisition of the Company by another entity, the Distribution date shall be deemed to be the date such transaction closes.

SECTION 5. CONVERSION RIGHTS. The holders of the Series A Preferred Stock shall have conversion rights as follows (the "Conversion Rights"):

(a) Right to Convert.

(i) Each share of Preferred Stock shall be convertible, at the option of the holder thereof with five days written notice to the Company , at any time after the date of issuance of such share at the office of the Company or any transfer agent for the Preferred Stock, into that number of fully-paid, non-assessable shares of Common Stock determined by dividing the Original Issue Price for the relevant series by the Conversion Price for such series.

(ii) Any accrued and unpaid Dividends shall be convertible at the option of the holder, at any time, with five days written notice to the Company, at any time after the date such Dividend has accrued, into that number of fully-paid, non-assessable shares of Common Stock determined by dividing the amount of accrued Dividends for any series of Preferred Stock which the holder desires to convert by the Conversion Price for such series (Section 5(a)(i) and Section 5(a)(ii), collectively the "Optional Conversion") .

(iii) In order to effect the Optional Conversion under this Paragraph 5(a), the holder must provide the Company a written notice of conversion ("Notice of Conversion"). The “ Conversion Price ” per share of each series of Preferred Stock shall initially be the Original Issue Price of such series and shall be subject to adjustment as provided herein. The number of shares of Common Stock into which each share of Preferred Stock of a series may be converted is hereinafter referred to as the "Conversion Rate" for each such series. Upon any decrease or increase in the Conversion Price for any series of Preferred Stock, as described in this Section 5, the Conversion Rate for such series shall be appropriately increased or decreased.

(iv) The Conversion Rate for the Series A Preferred Stock shall be one for one with Common Stock and the Conversion Price shall be $0.50 per share.

(b) Automatic Conversion.

(i) Series A Preferred. Unless otherwise prohibited by any law, rule or regulation applicable to the Company, when the Closing Sales Price of the Company’s Common Stock exceeds the Automatic Conversion Price for more than twenty (20) consecutive trading days (each a “ Trading Day ”), and the average trading volume of the Company’s Common Stock exceeds 50,000 shares per day (as adjusted to reflect any stock Dividends, distributions, combinations, reclassifications and other similar transactions effected by the Company in respect to its Common Stock) during each of the Trading Days, the Preferred Stock shall automatically convert into shares of Common Stock at the Conversion Rate (the “ Automatic Conversion ”).

(ii) The Company and the holders of the Preferred Stock shall follow the applicable conversion procedures set forth in this Section 5 (including the requirement that the holders deliver the Preferred Stock Certificates representing the Preferred Stock being converted to the Company); provided, however, the holders of Preferred Stock subject to Automatic Conversion shall not be required to deliver a Notice of Conversion to the Company. Nothing set forth in this Section 5(b) shall prevent any holder of Preferred Stock from exercising its right to convert pursuant to Section 5(a).

(c) Mechanics of Conversion. In order to effect an Optional Conversion, a holder shall: (i) fax (or otherwise deliver) a copy of the fully executed Notice of Conversion to the Company (Attention: Corporate Secretary) and (ii) surrender or cause to be surrendered the original certificates representing the Preferred Stock being converted (the "Preferred Stock Certificates"), duly endorsed, along with a copy of the Notice of Conversion as soon as practicable thereafter to the Company, and/or a breakdown of the accrued Dividends which the holder desires to convert. Upon receipt by the Company of a facsimile copy of a Notice of Conversion from a holder, the Company shall promptly send, via facsimile, a confirmation to such holder stating that the Notice of Conversion has been received, the date upon which the Company expects to deliver the Common Stock issuable upon such conversion and the name and telephone number of a contact person at the Company regarding the conversion. The Company shall not be obligated to issue shares of Common Stock upon a conversion unless either the Preferred Stock Certificates or breakdown of accrued Dividends converted are delivered to the Company as provided above, or the holder notifies the Company that such Preferred Stock Certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Company to indemnify the Company from any loss incurred by it in connection with such certificates.

(d) Delivery of Common Stock Upon Conversion. Upon the surrender of Preferred Stock Certificates accompanied by a Notice of Conversion, the Company (itself, or through its transfer agent) shall, no later than the fifth business day following the date of such surrender (or, in the case of lost, stolen or destroyed certificates, after provision of indemnity pursuant to Section 5(c) above (the "Delivery Period"), issue and deliver (i.e., deposit with a nationally recognized overnight courier service postage prepaid) to the holder or its nominee (x) that number of shares of Common Stock issuable upon conversion of such shares of Preferred Stock being converted and (y) a certificate representing the number of shares of Preferred Stock not being converted, if any. Notwithstanding the foregoing, if the Company's transfer agent is participating in the Depository Trust Company ("DTC") Fast Automated Securities Transfer program, and so long as the certificates therefor do not bear a legend and the holder thereof is not then required to return such certificate for the placement of a legend thereon, the Company shall cause its transfer agent to promptly electronically transmit the Common Stock issuable upon conversion to the holder by crediting the account of the holder or its nominee with DTC through its Deposit Withdrawal Agent Commission system ("DTC Transfer"). If the aforementioned conditions to a DTC Transfer are not satisfied, the Company shall deliver as provided above to the holder physical certificates representing the Common Stock issuable upon conversion. Further, a holder may instruct the Company to deliver to the holder physical certificates representing the Common Stock issuable upon conversion in lieu of delivering such shares by way of DTC Transfer.

(e) Taxes. The Company shall pay any and all taxes that may be imposed upon it with respect to the issuance and delivery of the shares of Common Stock upon the conversion of the Preferred Stock; provided, however, that the Company shall not be required to pay any tax which may be payable in respect to any transfer involved in the issue and delivery of shares of Common Stock upon conversion in a name other than that in which the shares of the Preferred Stock so converted were registered, and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Company the amount of any such tax, or has established, to the satisfaction of the Company, that such tax has been paid..

(f) Fractional Shares. If any conversion of Preferred Stock or accrued Dividends would result in the issuance of a fractional share of Common Stock (aggregating all shares of Preferred Stock being converted pursuant to a given Notice of Conversion), such fractional share shall be payable in cash based upon the Closing Sales Price of the Common Stock at such time, and the number of shares of Common Stock issuable upon conversion of the Preferred Stock shall be the next lower whole number of shares. If the Company elects not to, or is unable to, make such a cash payment, the holder shall be entitled to receive, in lieu of the final fraction of a share, one whole share of Common Stock.

(g) Adjustments for Subdivisions or Combinations of Common Stock. In the event the outstanding shares of Common Stock shall be subdivided (by stock split, by payment of a stock dividend or otherwise), into a greater number of shares of Common Stock, without a corresponding subdivision of the Preferred Stock, the Conversion Price of each series of Preferred Stock in effect immediately prior to such subdivision shall, concurrently with the effectiveness of such subdivision, be proportionately adjusted. In the event the outstanding shares of Common Stock shall be combined (by reclassification or otherwise) into a lesser number of shares of Common Stock, without a corresponding combination of the Preferred Stock, the Conversion Prices in effect immediately prior to such combination shall, concurrently with the effectiveness of such combination, be proportionately adjusted.

(h) Adjustments for Subdivisions or Combinations of Preferred Stock. In the event the outstanding shares of Preferred Stock or a series of Preferred Stock shall be subdivided (by stock split, by payment of a stock dividend or otherwise), into a greater number of shares of Preferred Stock, the Dividend Rate, Original Issue Price and Liquidation Preference of the affected series of Preferred Stock in effect immediately prior to such subdivision shall, concurrently with the effectiveness of such subdivision, be proportionately adjusted. In the event the outstanding shares of Preferred Stock or a series of Preferred Stock shall be combined (by reclassification or otherwise) into a lesser number of shares of Preferred Stock, the Dividend Rate, Original Issue Price and Liquidation Preference of the affected series of Preferred Stock in effect immediately prior to such combination shall, concurrently with the effectiveness of such combination, be proportionately adjusted.

(i) Adjustments for Reclassification, Exchange and Substitution. Subject to Section 4 above ("Liquidation Rights"), if the Common Stock issuable upon conversion of the Preferred Stock shall be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification or otherwise (other than a subdivision or combination of shares provided for above), then, in any such event, in lieu of the number of shares of Common Stock which the holders would otherwise have been entitled to receive each holder of such Preferred Stock shall have the right thereafter to convert such shares of Preferred Stock into a number of shares of such other class or classes of stock which a holder of the number of shares of Common Stock deliverable upon conversion of such series of Preferred Stock immediately before that change would have been entitled to receive in such reorganization or reclassification, all subject to further adjustment as provided herein with respect to such other shares.

(j) No Impairment. The Company will not through any reorganization, transfer of assets, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company but will at all times in good faith assist in the carrying out of all the provisions of this Section 5 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of Preferred Stock against impairment. Notwithstanding the foregoing, nothing in this Section 5(j) shall prohibit the Company from amending its Certificate of Incorporation with the requisite consent of its shareholders and the Board of Directors.

(k) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price pursuant to this Section 5, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request at any time of any holder of Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Conversion Price at the time in effect and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of Preferred Stock.

(I) Waiver of Adjustment of Conversion Price. Notwithstanding anything herein to the contrary, any downward adjustment of the Conversion Price of any series of Preferred Stock may be waived, either prospectively or retroactively and either generally or in a particular instance, by the consent or vote of the holders of a majority of the outstanding shares of such series, voting separately as a class. Any such waiver shall bind all future holders of shares of such series of Preferred Stock.

(m) Notices of Record Date. In the event that this Company shall propose at any time:

(i) to declare any Distribution upon its Common Stock, whether in cash, property, stock or other securities, whether or not a regular cash dividend and whether or not out of earnings or earned surplus;

(ii) to effect any reclassification or recapitalization of its Common Stock outstanding involving a change in the Common Stock; or

(iii) to voluntarily liquidate or dissolve or to enter into any transaction deemed to be a liquidation, dissolution or winding up of the Company pursuant to Section 3(c);

then, in connection with each such event, this Company shall send to the holders of the Preferred Stock at least 10 business days' prior written notice of the date on which a record shall be taken for such Distribution (and specifying the date on which the holders of Common Stock shall be entitled thereto and, if applicable, the amount and character of such Distribution) or for determining rights to vote in respect of the matters referred to in (ii) and (iii) above.

Such written notice shall be given by first class mail (or express courier), postage prepaid, addressed to the holders of Preferred Stock at the address for each such holder as shown on the books of the Company and shall be deemed given on the date such notice is mailed.

The notice provisions set forth in this section may be shortened or waived prospectively or retrospectively by the vote or written consent of the holders of a majority of the Preferred Stock, voting together as a single class.

(n) Reservation of Stock Issuable Upon Conversion. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock and Preferred Stock solely for the purpose of effecting the conversion of the shares of the Preferred Stock (including those issuable upon exercise of warrants), such number of its shares of Common Stock and Preferred Stock as shall from time to time be sufficient to effect the conversion of all then outstanding shares of the Preferred Stock, warrants and other securities; and if at any time the number of authorized but unissued shares of Common Stock and Preferred Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Preferred Stock, warrants and other securities, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock and Preferred Stock to such number of shares as shall be sufficient for such purpose.

SECTION 6. VOTING. The shares of Series A Preferred Stock shall have the same voting rights as those accruing to the Common Stock and shall vote based upon the number of underlying shares of Common Stock that the holder owns at the effective date of the vote, unless a Dividend Default has occurred and is continuing (as described herein).

SECTION 7. MANDATORY REDEMPTION RIGHTS. The shares of Series A Preferred Stock shall have mandatory redemption rights as follows:

(a) The shares of Series A Preferred Stock shall be redeemed at the sole option of the Company upon the receipt by the Company of a Cash Settlement in excess of $7,500,000, provided that the holder of the Preferred Stock, at the holder’s option, shall have six (6) months from the date the holder receives notice by the Company of the Company’s receipt of the Cash Settlement to: (i) accept the redemption of principal and accrued and unpaid Dividends on the Preferred Stock in cash, and/or (ii) to convert any or all of the Preferred Stock into shares of Common Stock at the Conversion Price then in effect.

SECTION 8. PROTECTIVE PROVISIONS.

(a) Subject to the rights of series of Preferred Stock which may from time to time come into existence, so long as any shares of Series A Convertible Preferred Stock are outstanding, this Company shall not without first obtaining the approval (by written consent, as provided by law) of the holders of a majority of the then outstanding shares of Preferred Stock, voting together as a class:

(i.) Increase or decrease (other than by redemption or conversion) the total number of authorized shares of Series A Convertible Preferred Stock;

(ii.) Effect an exchange, reclassification, or cancellation of all or a part of the Series A Convertible Preferred Stock, including a reverse stock split, but excluding a stock split;

(iii.) Effect an exchange, or create a right of exchange, of all or part of the shares of another class of shares into shares of Series A Convertible Preferred Stock;

(iv.) Alter or change the rights, preferences or privileges of the shares of Series A Convertible Preferred Stock so as to affect adversely the shares of such series, including the rights set forth in this Designation;

For clarification, issuances of additional authorized shares of Series A Preferred under the terms herein, shall not require the authorization or approval of the existing shareholders of Preferred Stock.

(b) Upon the occurrence of and the continuance of a Dividend Default, the holders of the Preferred Stock shall have the right, voting as a group, to elect immediately, by consent to action without meeting, two (2) Directors to the Company’s Board of Directors (the “Nominee Directors”), which Nominee Directors, the Company’s then current Board of Directors agrees to second and approve, and which then Directors agree to take whatever action necessary to increase the number of the Company’s Directors to allow for the appointment of the Nominee Directors.

SECTION 9. PREEMPTIVE RIGHTS. Holders of Preferred Stock and holders of Common Stock shall not be entitled to any preemptive, subscription or similar rights in respect to any securities of the Company, except as specifically set forth herein or in any other document agreed to by the Company.

SECTION 10. REPORTS. The Company shall mail to all holders of Preferred Stock those reports, proxy statements and other materials that it mails to all of its holders of Common Stock.

SECTION 11. NOTICES. In addition to any other means of notice provided by law or in the Company's Bylaws, any notice required by the provisions of this Designation to be given to the holders of Preferred Stock shall be deemed given if deposited in the United States mail, postage prepaid, and addressed to each holder of record at such holder's address appearing on the books of the Company.

IN WITNESS WHEREOF, the Company has caused this statement to be duly executed by its Chief Financial Officer this 27th day of February, 2008.

BLAST ENERGY SERVICES, INC.

By:_ /s/John MacDonald

JOHN MACDONALD,

CHIEF FINANCIAL OFFICER

EXHIBIT 3.3

BYLAWS

BLAST ENERGY SERVICES, INC.

a Texas corporation

ARTICLE 1.

DEFINITIONS

1.1 Definitions . Unless the context clearly requires otherwise, in these Bylaws:

(a)	" Board " means the board of directors of the Company.

(b)	" Bylaws " means these bylaws as adopted by the Board and includes amendments subsequently adopted by the Board or by the Stockholders.

(c)	" Articles of Incorporation " means the Articles of Incorporation and/or Certificate of Formation filing of Blast Energy Services, Inc., as filed with the Secretary of State of the State of Texas and includes all amendments thereto and restatements thereof subsequently filed.

(d)	" Company " means Blast Energy Services, Inc., a Texas corporation.

(e)

" Section " refers to sections of these Bylaws.

(f)

" Stockholder " means stockholders of record of the Company.

1.2 Offices . The title of an office refers to the person or persons who at any given time perform the duties of that particular office for the Company.

ARTICLE 2.

OFFICES

2.1 Principal Office . The Company may locate its principal office within or without the state of incorporation as the Board may determine.

2.2 Registered Office . The registered office of the Company required by law to be maintained in the state of incorporation may be, but need not be, the same as the principal place of business of the Company. The Board may change the address of the registered office from time to time.

2.3 Other Offices . The Company may have offices at such other places, either within or without the state of incorporation, as the Board may designate or as the business of the Company may require from time to time.

ARTICLE 3.

MEETINGS OF STOCKHOLDERS

3.1 Annual Meetings . The Stockholders of the Company shall hold their annual meetings for the purpose of electing directors and for the transaction of such other proper business as may come before such meetings at such time, date and place as the Board shall determine by resolution.

3.2 Special Meetings . The Board, the Chairman of the Board, the President or a committee of the Board duly designated and whose powers and authority include the power to call meetings may call special meetings of the Stockholders of the Company at any time for any purpose or purposes. Special meetings of the Stockholders of the Company may also be called by the holders of at least 30% of all shares entitled to vote at the proposed special meeting.

3.3 Place of Meetings . The Stockholders shall hold all meetings at such places, within or without the State of Texas, as the Board or a committee of the Board shall specify in the notice or waiver of notice for such meetings.

3.4 Notice of Meetings . Except as otherwise required by law, the Board or a committee of the Board shall give notice of each meeting of Stockholders, whether annual or special, not less than 10 nor more than 50 days before the date of the meeting. The Board or a committee of the Board shall deliver a notice to each Stockholder entitled to vote at such meeting by delivering a typewritten or printed notice thereof to him personally, or by depositing such notice in the United States mail, in a postage prepaid envelope, directed to him at his address as it appears on the records of the Company, or by transmitting a notice thereof to him at such address by telegraph, telecopy, cable or wireless. If mailed, notice is given on the date deposited in the United States mail, postage prepaid, directed to the Stockholder at his address as it appears on the records of the Company. An affidavit of the Secretary or an Assistant Secretary or of the Transfer Agent of the Company that he has given notice shall constitute, in the absence of fraud, prima facie evidence of the facts stated therein.

Every notice of a meeting of the Stockholders shall state the place, date and hour of the meeting and, in the case of a special meeting, also shall state the purpose or purposes of the meeting. Furthermore, if the Company will maintain the list at a place other than where the meeting will take place, every notice of a meeting of the Stockholders shall specify where the Company will maintain the list of Stockholders entitled to vote at the meeting.

3.5 Stockholder Notice . Subject to the Articles of Incorporation, the Stockholders who intend to nominate persons to the Board of Directors or propose any other action at an annual meeting of Stockholders must timely notify the Secretary of the Company of such intent. To be timely, a Stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Company not less than 50 days nor more than 90 days prior to the date of such meeting; provided, however, that in the event that less than 75 days' notice of the date of the meeting is given or made to Stockholders, notice by the Stockholder to be timely must be received not later than the close of business on the 15th day following the date on which such notice of the date of the annual meeting was mailed. Such notice must be in writing and must include a (i) a brief description of the business desired to the brought before the annual meeting and the reasons for conducting such business at the meeting; (ii) the name and record address of the Stockholder proposing such business; (iii) the class, series and number of shares of capital stock of the Company which are beneficially owned by the Stockholder; and (iv) any material interest of the Stockholder in such business. The Board of Directors reserves the right to refuse to submit any such proposal to stockholders at an annual meeting if, in its judgment, the information provided in the notice is inaccurate or incomplete.

3.6 Waiver of Notice . Whenever these Bylaws require written notice, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall constitute the equivalent of notice. Attendance of a person at any meeting shall constitute a waiver of notice of such meeting, except when the person attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. No written waiver of notice need specify either the business to be transacted at, or the purpose or purposes of any regular or special meeting of the Stockholders, directors or members of a committee of the Board.

3.7 Adjournment of Meeting . When the Stockholders adjourn a meeting to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Stockholders may transact any business which they may have transacted at the original meeting. If the adjournment is for more than 30 days or, if after the adjournment, the Board or a committee of the Board fixes a new record date for the adjourned meeting, the Board or a committee of the Board shall give notice of the adjourned meeting to each Stockholder of record entitled to vote at the meeting.

3.8 Quorum . Except as otherwise required by law, the holders of a majority of all of the shares of the stock entitled to vote at the meeting, present in person or by proxy, shall constitute a quorum for all purposes at any meeting of the Stockholders. In the absence of a quorum at any meeting or any adjournment thereof, the holders of a majority of the shares of stock entitled to vote who are present, in person or by proxy, or, in the absence therefrom of all the Stockholders, any officer entitled to preside at, or to act as secretary of, such meeting may adjourn such meeting to another place, date or time.

If the chairman of the meeting gives notice of any adjourned special meeting of Stockholders to all Stockholders entitled to vote thereat, stating that the minimum percentage of stockholders for a quorum as provided by Texas law shall constitute a quorum, then, except as otherwise required by law, that percentage at such adjourned meeting shall constitute a quorum and a majority of the votes cast at such meeting shall determine all matters.

3.9 Organization . Such person as the Board may have designated or, in the absence of such a person, the highest ranking officer of the Company who is present shall call to order any meeting of the Stockholders, determine the presence of a quorum, and act as chairman of the meeting. In the absence of the Secretary or an Assistant Secretary of the Company, the chairman shall appoint someone to act as the secretary of the meeting.

3.10 Conduct of Business . The chairman of any meeting of Stockholders shall determine the order of business and the procedure at the meeting, including such regulations of the manner of voting and the conduct of discussion as he deems in order.

3.11 List of Stockholders . At least 10 days before every meeting of Stockholders, the Secretary shall prepare a list of the Stockholders entitled to vote at the meeting or any adjournment thereof, arranged in alphabetical order, showing the address of each Stockholder and the number of shares registered in the name of each Stockholder. The Company shall make the list available for examination by any Stockholder for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting will take place or at the place designated in the notice of the meeting.

The Secretary shall produce and keep the list at the time and place of the meeting during the entire duration of the meeting, and any Stockholder who is present may inspect the list at the meeting. The list shall constitute presumptive proof of the identity of the Stockholders entitled to vote at the meeting and the number of shares each Stockholder holds.

A determination of Stockholders entitled to vote at any meeting of Stockholders pursuant to this Section shall apply to any adjournment thereof.

3.12 Fixing of Record Date . For the purpose of determining Stockholders entitled to notice of or to vote at any meeting of Stockholders or any adjournment thereof, or Stockholders entitled to receive payment of any dividend, or in order to make a determination of Stockholders for any other proper purpose, the Board or a committee of the Board may fix in advance a date as the record date for any such determination of Stockholders. However, the Board shall not fix such date, in any case, more than 60 days nor less than 10 days prior to the date of the particular action.

If the Board or a committee of the Board does not fix a record date for the determination of Stockholders entitled to notice of or to vote at a meeting of Stockholders, the record date shall be at the close of business on the day next preceding the day on which notice is given or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held or the date on which the Board adopts the resolution declaring a dividend.

3.13 Voting of Shares . Each Stockholder shall have one vote for every share of stock having voting rights registered in his name on the record date for the meeting. The Company shall not have the right to vote treasury stock of the Company, nor shall another corporation have the right to vote its stock of the Company if the Company holds, directly or indirectly, a majority of the shares entitled to vote in the election of directors of such other corporation. Persons holding stock of the Company in a fiduciary capacity shall have the right to vote such stock. Persons who have pledged their stock of the Company shall have the right to vote such stock unless in the transfer on the books of the Company the pledgor expressly empowered the pledgee to vote such stock. In that event, only the pledgee, or his proxy, may represent such stock and vote thereon.

A plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote shall determine all elections and, except when the law or Articles of Incorporation require otherwise, the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote shall determine all other matters.

Where a separate vote by a class or classes is required, a majority of the outstanding shares of such class or classes, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter and the affirmative vote of the majority of shares of such class or classes present in person or represented by proxy at the meeting shall be the act of such class.

The Stockholders may vote by voice vote on all matters. Upon demand by a Stockholder entitled to vote, or his proxy, the Stockholders shall vote by ballot. In that event, each ballot shall state the name of the Stockholder or proxy voting, the number of shares voted and such other information as the Company may require under the procedure established for the meeting.

3.14 Inspectors . At any meeting in which the Stockholders vote by ballot, the chairman may appoint one or more inspectors. Each inspector shall take and sign an oath to execute the duties of inspector at such meeting faithfully, with strict impartiality, and according to the best of his ability. The inspectors shall ascertain the number of shares outstanding and the voting power of each; determine the shares represented at a meeting and the validity of proxies and ballots; count all votes and ballots; determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors; and certify their determination of the number of shares represented at the meeting, and their count of all votes and ballots. The certification required herein shall take the form of a subscribed, written report prepared by the inspectors and delivered to the Secretary of the Company. An inspector need not be a Stockholder of the Company, and any officer of the Company may be an inspector on any question other than a vote for or against a proposal in which he has a material interest.

3.15 Proxies . A Stockholder may exercise any voting rights in person or by his proxy appointed by an instrument in writing, which he or his authorized attorney-in-fact has subscribed and which the proxy has delivered to the Secretary of the meeting pursuant to the manner prescribed by law.

A proxy is not valid after the expiration of 13 months after the date of its execution, unless the person executing it specifies thereon the length of time for which it is to continue in force (which length may exceed 12 months) or limits its use to a particular meeting. Each proxy is irrevocable if it expressly states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power.

The attendance at any meeting of a Stockholder who previously has given a proxy shall not have the effect of revoking the same unless he notifies the Secretary in writing prior to the voting of the proxy.

3.16 Action by Consent . Any action required to be taken at any annual or special meeting of stockholders of the Company or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing setting forth the action so taken, shall have been signed by the holder or holders of all the shares entitled to vote with respect to the action that is the subject of the consent. Delivery made to the Company's registered office shall be by hand or by certified or registered mail, return receipt requested.

Every written consent shall bear the date of signature of each stockholder who signs the consent, and no written consent shall be effective to take the corporate action referred to therein unless, within 50 days of the earliest dated consent delivered in the manner required by this section to the Company, written consents signed by a sufficient number of holders to take action are delivered to the Company by delivery to its registered office, its principal place of business or an officer or agent of the Company having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Company's registered office shall be by hand or by certified or registered mail, return receipt requested.

Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

ARTICLE 4.

BOARD OF DIRECTORS

4.1 General Powers . The Board shall manage the property, business and affairs of the Company.

4.2 Number . The number of directors who shall constitute the Board shall equal not less than 1 nor more than 10, as the Board or majority stockholders may determine by resolution from time to time.

4.3 Election of Directors and Term of Office . The Stockholders of the Company shall elect the directors at the annual or adjourned annual meeting (except as otherwise provided herein for the filling of vacancies). Each director shall hold office until his death, resignation, retirement, removal, or disqualification, or until his successor shall have been elected and qualified.

4.4 Resignations . Any director of the Company may resign at any time by giving written notice to the Board or to the Secretary of the Company. Any resignation shall take effect upon receipt or at the time specified in the notice. Unless the notice specifies otherwise, the effectiveness of the resignation shall not depend upon its acceptance.

4.5 Removal . Stockholders holding a majority of the outstanding shares entitled to vote at an election of directors may remove any director or the entire Board of Directors at any time, with or without cause.

4.6 Vacancies . Any vacancy on the Board, whether because of death, resignation, disqualification, an increase in the number of directors, or any other cause may be filled by a majority of the remaining directors, a sole remaining director, or the majority stockholders. Any director elected to fill a vacancy shall hold office until his death, resignation, retirement, removal, or disqualification, or until his successor shall have been elected and qualified.

4.7 Chairman of the Board . At the initial and annual meeting of the Board, the directors may elect from their number a Chairman of the Board of Directors. The Chairman shall preside at all meetings of the Board and shall perform such other duties as the Board may direct. The Board also may elect a Vice Chairman and other officers of the Board, with such powers and duties as the Board may designate from time to time.

4.8 Compensation . The Board may compensate directors for their services and may provide for the payment of all expenses the directors incur by attending meetings of the Board or otherwise.

ARTICLE 5.

MEETINGS OF DIRECTORS

5.1 Regular Meetings . The Board may hold regular meetings at such places, dates and times as the Board shall establish by resolution. If any day fixed for a meeting falls on a legal holiday, the Board shall hold the meeting at the same place and time on the next succeeding business day. The Board need not give notice of regular meetings.

5.2 Place of Meetings . The Board may hold any of its meetings in or out of the State of Texas, at such places as the Board may designate, at such places as the notice or waiver of notice of any such meeting may designate, or at such places as the persons calling the meeting may designate.

5.3 Meetings by Telecommunications . The Board or any committee of the Board may hold meetings by means of conference telephone or similar telecommunications equipment that enable all persons participating in the meeting to hear each other. Such participation shall constitute presence in person at such meeting.

5.4 Special Meetings . The Chairman of the Board, the President, or one-half of the directors then in office may call a special meeting of the Board. The person or persons authorized to call special meetings of the Board may fix any place, either in or out of the State of Texas as the place for the meeting.

5.5 Notice of Special Meetings . The person or persons calling a special meeting of the Board shall give written notice to each director of the time, place, date and purpose of the meeting of not less than three business days if by mail and not less than 24 hours if by telegraph or in person before the date of the meeting. If mailed, notice is given on the date deposited in the United States mail, postage prepaid, to such director. A director may waive notice of any special meeting, and any meeting shall constitute a legal meeting without notice if all the directors are present or if those not present sign either before or after the meeting a written waiver of notice, a consent to such meeting, or an approval of the minutes of the meeting. A notice or waiver of notice need not specify the purposes of the meeting or the business which the Board will transact at the meeting.

5.6 Waiver by Presence . Except when expressly for the purpose of objecting to the legality of a meeting, a director's presence at a meeting shall constitute a waiver of notice of such meeting.

5.7 Quorum . A majority of the directors then in office shall constitute a quorum for all purposes at any meeting of the Board. In the absence of a quorum, a majority of directors present at any meeting may adjourn the meeting to another place, date or time without further notice. No proxies shall be given by directors to any person for purposes of voting or establishing a quorum at a directors’ meetings.

5.8 Conduct of Business . The Board shall transact business in such order and manner as the Board may determine. Except as the law requires otherwise, the Board shall determine all matters by the vote of a majority of the directors present at a meeting at which a quorum is present. The directors shall act as a Board, and the individual directors shall have no power as such.

5.9 Action by Consent . The Board or a committee of the Board may take any required or permitted action without a meeting if all members of the Board or committee consent thereto in writing and file such consent with the minutes of the proceedings of the Board or committee.

ARTICLE 6.

COMMITTEES

6.1 Committees of the Board . The Board may designate, by a vote of a majority of the directors then in office, committees of the Board. The committees shall serve at the pleasure of the Board and shall possess such lawfully delegable powers and duties as the Board may confer.

6.2 Selection of Committee Members . The Board shall elect by a vote of a majority of the directors then in office a director or directors to serve as the member or members of a committee. By the same vote, the Board may designate other directors as alternate members who may replace any absent or disqualified member at any meeting of a committee. In the absence or disqualification of any member of any committee and any alternate member in his place, the member or members of the committee present at the meeting and not disqualified from voting, whether or not he or they constitute a quorum, may appoint by unanimous vote another member of the Board to act at the meeting in the place of the absent or disqualified member.

6.3 Conduct of Business . Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except as the law or these Bylaws require otherwise. Each committee shall make adequate provision for notice of all meetings to members. A majority of the members of the committee shall constitute a quorum, unless the committee consists of one or two members. In that event, one member shall constitute a quorum. A majority vote of the members present shall determine all matters. A committee may take action without a meeting if all the members of the committee consent in writing and file the consent or consents with the minutes of the proceedings of the committee.

6.4 Authority . Any committee, to the extent the Board provides, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company, and may authorize the affixation of the Company's seal to all instruments which may require or permit it. However, no committee shall have any power or authority with regard to amending the Articles of Incorporation, adopting an agreement of merger or consolidation, recommending to the Stockholders the sale, lease or exchange of all or substantially all of the Company's property and assets, recommending to the Stockholders a dissolution of the Company or a revocation of a dissolution of the Company, or amending these Bylaws of the Company. Unless a resolution of the Board expressly provides, no committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a certificate of ownership and merger.

6.5 Minutes . Each committee shall keep regular minutes of its proceedings and report the same to the Board when required.

ARTICLE 7.

OFFICERS

7.1 Officers of the Company . The officers of the Company shall consist of a Chief Executive Officer, President, a Chief Financial Officer, a Chief Operating Officer, a Secretary, a Treasurer and such Vice Presidents, Assistant Secretaries, Assistant Treasurers, and other officers as the Board may designate and elect from time to time. The same person may hold at the same time any two or more offices.

7.2 Election and Term . The Board shall elect the officers of the Company. Each officer shall hold office until his death, resignation, retirement, removal or disqualification, or until his successor shall have been elected and qualified.

7.3 Compensation of Officers . The Board shall fix the compensation of all officers of the Company. No officer shall serve the Company in any other capacity and receive compensation, unless the Board authorizes the additional compensation.

7.4 Removal of Officers and Agents . The Board may remove any officer or agent it has elected or appointed at any time, with or without cause.

7.5 Resignation of Officers and Agents . Any officer or agent the Board has elected or appointed may resign at any time by giving written notice to the Board, the Chairman of the Board, the President, or the Secretary of the Company. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified. Unless otherwise specified in the notice, the Board need not accept the resignation to make it effective.

7.6 Bond . The Board may require by resolution any officer, agent, or employee of the Company to give bond to the Company, with sufficient sureties conditioned on the faithful performance of the duties of his respective office or agency. The Board also may require by resolution any officer, agent or employee to comply with such other conditions as the Board may require from time to time.

7.7 President . The President shall be the chief operating officer of the Company and, subject to the Board's control, shall supervise and direct all of the business and affairs of the Company. When present, he shall sign (with or without the Secretary, an Assistant Secretary, or any other officer or agent of the Company which the Board has authorized) deeds, mortgages, bonds, contracts or other instruments which the Board has authorized an officer or agent of the Company to execute. However, the President shall not sign any instrument which the law, these Bylaws, or the Board expressly require some other officer or agent of the Company to sign and execute. In general, the President shall perform all duties incident to the office of President and such other duties as the Board may prescribe from time to time.

7.8 Vice Presidents . In the absence of the President or in the event of his death, inability or refusal to act, the Vice Presidents in the order of their length of service as Vice Presidents, unless the Board determines otherwise, shall perform the duties of the President. When acting as the President, a Vice President shall have all the powers and restrictions of the Presidency. A Vice President shall perform such other duties as the President or the Board may assign to him from time to time.

7.9 Secretary . The Secretary shall (a) keep the minutes of the meetings of the Stockholders and of the Board in one or more books for that purpose, (b) give all notices which these Bylaws or the law requires, (c) serve as custodian of the records and seal of the Company, (d) affix the seal of the corporation to all documents which the Board has authorized execution on behalf of the Company under seal, (e) maintain a register of the address of each Stockholder of the Company, (f) sign, with the President, a Vice President, or any other officer or agent of the Company which the Board has authorized, certificates for shares of the Company, (g) have charge of the stock transfer books of the Company, and (h) perform all duties which the President or the Board may assign to him from time to time.

7.10 Assistant Secretaries . In the absence of the Secretary or in the event of his death, inability or refusal to act, the Assistant Secretaries in the order of their length of service as Assistant Secretary, unless the Board determines otherwise, shall perform the duties of the Secretary. When acting as the Secretary, an Assistant Secretary shall have the powers and restrictions of the Secretary. An Assistant Secretary shall perform such other duties as the President, Secretary or Board may assign from time to time.

7.11 Treasurer . The Treasurer shall (a) have responsibility for all funds and securities of the Company, (b) receive and give receipts for moneys due and payable to the corporation from any source whatsoever, (c) deposit all moneys in the name of the Company in depositories which the Board selects, and (d) perform all of the duties which the President or the Board may assign to him from time to time.

7.12 Assistant Treasurers . In the absence of the Treasurer or in the event of his death, inability or refusal to act, the Assistant Treasurers in the order of their length of service as Assistant Treasurer, unless the Board determines otherwise, shall perform the duties of the Treasurer. When acting as the Treasurer, an Assistant Treasurer shall have the powers and restrictions of the Treasurer. An Assistant Treasurer shall perform such other duties as the Treasurer, the President, or the Board may assign to him from time to time.

7.13 Delegation of Authority . Notwithstanding any provision of these Bylaws to the contrary, the Board may delegate the powers or duties of any officer to any other officer or agent.

7.14 Action with Respect to Securities of Other Corporations . Unless the Board directs otherwise, the President shall have the power to vote and otherwise act on behalf of the Company, in person or by proxy, at any meeting of stockholders of or with respect to any action of stockholders of any other corporation in which the Company holds securities. Furthermore, unless the Board directs otherwise, the President shall exercise any and all rights and powers which the Company possesses by reason of its ownership of securities in another corporation.

7.15 Vacancies . The Board may fill any vacancy in any office because of death, resignation, removal, disqualification or any other cause in the manner which these Bylaws prescribe for the regular appointment to such office.

ARTICLE 8.

CONTRACTS, LOANS, DRAFTS,

DEPOSITS AND ACCOUNTS

8.1 Contracts . The Board may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name and on behalf of the Company. The Board may make such authorization general or special.

8.2 Loans . Unless the Board has authorized such action, no officer or agent of the Company shall contract for a loan on behalf of the Company or issue any evidence of indebtedness in the Company's name.

8.3 Drafts . The President, any Vice President, the Treasurer, any Assistant Treasurer, and such other persons as the Board shall determine shall issue all checks, drafts and other orders for the payment of money, notes and other evidences of indebtedness issued in the name of or payable by the Company.

8.4 Deposits . The Treasurer shall deposit all funds of the Company not otherwise employed in such banks, trust companies, or other depositories as the Board may select or as any officer, assistant, agent or attorney of the Company to whom the Board has delegated such power may select. For the purpose of deposit and collection for the account of the Company, the President or the Treasurer (or any other officer, assistant, agent or attorney of the Company whom the Board has authorized) may endorse, assign and deliver checks, drafts and other orders for the payment of money payable to the order of the Company.

8.5 General and Special Bank Accounts . The Board may authorize the opening and keeping of general and special bank accounts with such banks, trust companies, or other depositories as the Board may select or as any officer, assistant, agent or attorney of the Company to whom the Board has delegated such power may select. The Board may make such special rules and regulations with respect to such bank accounts, not inconsistent with the provisions of these Bylaws, as it may deem expedient.

ARTICLE 9.

CERTIFICATES FOR SHARES AND THEIR TRANSFER

9.1 Certificates for Shares . Every owner of stock of the Company shall have the right to receive a certificate or certificates, certifying to the number and class of shares of the stock of the Company which he owns. The Board shall determine the form of the certificates for the shares of stock of the Company. The Secretary, transfer agent, or registrar of the Company shall number the certificates representing shares of the stock of the Company in the order in which the Company issues them. The President or any Vice President and the Secretary or any Assistant Secretary shall sign the certificates in the name of the Company. Any or all certificates may contain facsimile signatures. In case any officer, transfer agent, or registrar who has signed a certificate, or whose facsimile signature appears on a certificate, ceases to serve as such officer, transfer agent, or registrar before the Company issues the certificate, the Company may issue the certificate with the same effect as though the person who signed such certificate, or whose facsimile signature appears on the certificate, was such officer, transfer agent, or registrar at the date of issue. The Secretary, transfer agent, or registrar of the Company shall keep a record in the stock transfer books of the Company of the names of the persons, firms or corporations owning the stock represented by the certificates, the number and class of shares represented by the certificates and the dates thereof and, in the case of cancellation, the dates of cancellation. The Secretary, transfer agent, or registrar of the Company shall cancel every certificate surrendered to the Company for exchange or transfer. Except in the case of a lost, destroyed, stolen or mutilated certificate, the Secretary, transfer agent, or registrar of the Company shall not issue a new certificate in exchange for an existing certificate until he has canceled the existing certificate.

9.2 Transfer of Shares . A holder of record of shares of the Company's stock, or his attorney-in-fact authorized by power of attorney duly executed and filed with the Secretary, transfer agent or registrar of the Company, may transfer his shares only on the stock transfer books of the Company. Such person shall furnish to the Secretary, transfer agent, or registrar of the Company proper evidence of his authority to make the transfer and shall properly endorse and surrender for cancellation his existing certificate or certificates for such shares. Whenever a holder of record of shares of the Company's stock makes a transfer of shares for collateral security, the Secretary, transfer agent, or registrar of the Company shall state such fact in the entry of transfer if the transferor and the transferee request.

9.3 Lost Certificates . The Board may direct the Secretary, transfer agent, or registrar of the Company to issue a new certificate to any holder of record of shares of the Company's stock claiming that he has lost such certificate, or that someone has stolen, destroyed or mutilated such certificate, upon the receipt of an affidavit from such holder to such fact. When authorizing the issue of a new certificate, the Board, in its discretion may require as a condition precedent to the issuance that the owner of such certificate give the Company a bond of indemnity in such form and amount as the Board may direct.

9.4 Regulations . The Board may make such rules and regulations, not inconsistent with these Bylaws, as it deems expedient concerning the issue, transfer and registration of certificates for shares of the stock of the corporation. The Board may appoint or authorize any officer or officers to appoint one or more transfer agents, or one or more registrars, and may require all certificates for stock to bear the signature or signatures of any of them.

9.5 Holder of Record . The Company may treat as absolute owners of shares the person in whose name the shares stand of record as if that person had full competency, capacity and authority to exercise all rights of ownership, despite any knowledge or notice to the contrary or any description indicating a representative, pledge or other fiduciary relation, or any reference to any other instrument or to the rights of any other person appearing upon its record or upon the share certificate. However, the Company may treat any person furnishing proof of his appointment as a fiduciary as if he were the holder of record of the shares.

9.6 Treasury Shares . Treasury shares of the Company shall consist of shares which the Company has issued and thereafter acquired but not canceled. Treasury shares shall not carry voting or dividend rights.

ARTICLE 10.

INDEMNIFICATION

10.1	Definitions . In this Article:

(a)

2.1.1

" Indemnitee " means (i) any present or former Director, advisory director or officer of the Company, (ii) any person who while serving in any of the capacities referred to in clause (i) hereof served at the Company's request as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, and (iii) any person nominated or designated by (or pursuant to authority granted by) the Board of Directors or any committee thereof to serve in any of the capacities referred to in clauses (i) or (ii) hereof.

(b) " Official Capacity " means (i) when used with respect to a Director, the office of Director of the Company, and (ii) when used with respect to a person other than a Director, the elective or appointive office of the Company held by such person or the employment or agency relationship undertaken by such person on behalf of the Company, but in each case does not include service for any other foreign or domestic corporation or any partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise.

(c) " Proceeding " means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative, any appeal in such an action, suit or proceeding, and any inquiry or investigation that could lead to such an action, suit or proceeding.

10.2 Indemnification . The Company shall indemnify every Indemnitee against all judgments, penalties (including excise and similar taxes), fines, amounts paid in settlement and reasonable expenses actually incurred by the Indemnitee in connection with any Proceeding in which he was, is or is threatened to be named defendant or respondent, or in which he was or is a witness without being named a defendant or respondent, by reason, in whole or in part, of his serving or having served, or having been nominated or designated to serve, in any of the capacities referred to in Section 10.1, if it is determined in accordance with Section 10.4 that the Indemnitee (a) conducted himself in good faith, (b) reasonably believed, in the case of conduct in his Official Capacity, that his conduct was in the Company's best interests and, in all other cases, that his conduct was at least not opposed to the Company's best interests, and (c) in the case of any criminal proceeding, had no reasonable cause to believe that his conduct was unlawful; provided, however, that in the event that an Indemnitee is found liable to the Company or is found liable on the basis that personal benefit was improperly received by the Indemnitee the indemnification (i) is limited to reasonable expenses actually incurred by the Indemnitee in connection with the Proceeding and (ii) shall not be made in respect of any Proceeding in which the Indemnitee shall have been found liable for willful or intentional misconduct in the performance of his duty to the Company. Except as provided in the immediately preceding proviso to the first sentence of this Section 10.2, no indemnification shall be made under this Section 10.2 in respect of any Proceeding in which such Indemnitee shall have been (a) found liable on the basis that personal benefit was improperly received by him, whether or not the benefit resulted from an action taken in the Indemnitee's Official Capacity, or (b) found liable to the Company. The termination of any Proceeding by judgment, order, settlement or conviction, or on a plea of nolo contendere or its equivalent, is not of itself determinative that the Indemnitee did not meet the requirements set forth in clauses (a), (b) or (c) in the first sentence of this Section 10.2. An Indemnitee shall be deemed to have been found liable in respect of any claim, issue or matter only after the Indemnitee shall have been so adjudged by a court of competent jurisdiction after exhaustion of all appeals therefrom. Reasonable expenses shall, include, without limitation, all court costs and all fees and disbursements of attorneys for the Indemnitee. The indemnification provided herein shall be applicable whether or not negligence or gross negligence of the Indemnitee is alleged or proven.

10.3 Successful Defense . Without limitation of Section 10.2 and in addition to the indemnification provided for in Section 10.2, the Company shall indemnify every Indemnitee against reasonable expenses incurred by such person in connection with any Proceeding in which he is a witness or a named defendant or respondent because he served in any of the capacities referred to in Section 10.1, if such person has been wholly successful, on the merits or otherwise, in defense of the Proceeding.

10.4 Determinations . Any indemnification under Section 10.2 (unless ordered by a court of competent jurisdiction) shall be made by the Company only upon a determination that indemnification of the Indemnitee is proper in the circumstances because he has met the applicable standard of conduct. Such determination shall be made (a) by the Board of Directors by a majority vote of a quorum consisting of Directors who, at the time of such vote, are not named defendants or respondents in the Proceeding; (b) if such a quorum cannot be obtained, then by a majority vote of a committee of the Board of Directors, duly designated to act in the matter by a majority vote of all Directors (in which designated Directors who are named defendants or respondents in the Proceeding may participate), such committee to consist solely of two (2) or more Directors who, at the time of the committee vote, are not named defendants or respondents in the Proceeding; (c) by special legal counsel selected by the Board of Directors or a committee thereof by vote as set forth in clauses (a) or (b) of this Section 10.4 or, if the requisite quorum of all of the Directors cannot be obtained therefor and such committee cannot be established, by a majority vote of all of the Directors (in which Directors who are named defendants or respondents in the Proceeding may participate); or (d) by the shareholders in a vote that excludes the shares held by Directors that are named defendants or respondents in the Proceeding. Determination as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination that indemnification is permissible is made by special legal counsel, determination as to reasonableness of expenses must be made in the manner specified in clause (c) of the preceding sentence for the selection of special legal counsel. In the event a determination is made under this Section 10.4 that the Indemnitee has met the applicable standard of conduct as to some matters but not as to others, amounts to be indemnified may be reasonably prorated.

10.5 Advancement of Expenses . Reasonable expenses (including court costs and attorneys' fees) incurred by an Indemnitee who was or is a witness or was, is or is threatened to be made a named defendant or respondent in a Proceeding shall be paid by the Company at reasonable intervals in advance of the final disposition of such Proceeding, and without making any of the determinations specified in Section 10.4, after receipt by the Company of (a) a written affirmation by such Indemnitee of his good faith belief that he has met the standard of conduct necessary for indemnification by the Company under this Article and (b) a written undertaking by or on behalf of such Indemnitee to repay the amount paid or reimbursed by the Company if it shall ultimately be determined that he is not entitled to be indemnified by the Company as authorized in this Article. Such written undertaking shall be an unlimited obligation of the Indemnitee but need not be secured and it may be accepted without reference to financial ability to make repayment. Notwithstanding any other provision of this Article, the Company may pay or reimburse expenses incurred by an Indemnitee in connection with his appearance as a witness or other participation in a Proceeding at a time when he is not named a defendant or respondent in the Proceeding.

10.6 Employee Benefit Plans . For purposes of this Article, the Company shall be deemed to have requested an Indemnitee to serve an employee benefit plan whenever the performance by him of his duties to the Company also imposes duties on or otherwise involves services by him to the plan or participants or beneficiaries of the plan. Excise taxes assessed on an Indemnitee with respect to an employee benefit plan pursuant to applicable law shall be deemed fines. Action taken or omitted by an Indemnitee with respect to an employee benefit plan in the performance of his duties for a purpose reasonably believed by him to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the Company.

10.7

Other Indemnification and Insurance . The indemnification provided by this Article shall (a) not be deemed exclusive of, or to preclude, any other rights to which those seeking indemnification may at any time be entitled under the Company's Articles of Incorporation, any law, agreement or vote of shareholders or disinterested Directors, or otherwise, or under any policy or policies of insurance purchased and maintained by the Company on behalf of any Indemnitee, both as to action in his Official Capacity and as to action in any other capacity, (b) continue as to a person who has ceased to be in the capacity by reason of which he was an Indemnitee with respect to matters arising during the period he was in such capacity, (c) inure to the benefit of the heirs, executors and administrators of such a person and (d) not be required if and to the extent that the person otherwise entitled to payment of such amounts hereunder has actually received payment therefor under any insurance policy, contract or otherwise.

10.8 Notice . Any indemnification of or advance of expenses to an Indemnitee in accordance with this Article shall be reported in writing to the shareholders of the Company with or before the notice or waiver of notice of the next shareholders' meeting or with or before the next submission to shareholders of a consent to action without a meeting and, in any case, within the 12-month period immediately following the date of the indemnification or advance.

10.9 Construction . The indemnification provided by this Article shall be subject to all valid and applicable laws, including, without limitation, the Texas Business Organizations Code, and, in the event this Article or any of the provisions hereof or the indemnification contemplated hereby are found to be inconsistent with or contrary to any such valid laws, the latter shall be deemed to control and this Article shall be regarded as modified accordingly, and, as so modified, to continue in full force and effect.

10.10 Continuing Offer, Reliance, etc. The provisions of this Article (a) are for the benefit of, and may be enforced by, each Indemnitee of the Company, the same as if set forth in their entirety in a written instrument duly executed and delivered by the Company and such Indemnitee and (b) constitute a continuing offer to all present and future Indemnitees. The Company, by its adoption of these Bylaws, (a) acknowledges and agrees that each Indemnitee of the Company has relied upon and will continue to rely upon the provisions of this Article in becoming, and serving in any of the capacities referred to in Section 10.1 of this Article, (b) waives reliance upon, and all notices of acceptance of, such provisions by such Indemnitees and (c) acknowledges and agrees that no present or future Indemnitee shall be prejudiced in his right to enforce the provisions of this Article in accordance with its terms by any act or failure to act on the part of the Company.

10.11 Effect of Amendment . No amendment, modification or repeal of this Article or any provision hereof shall in any manner terminate, reduce or impair the right of any past, present or future Indemnitees to be indemnified by the Company, nor the obligation of the Company to indemnify any such Indemnitees, under and in accordance with the provisions of the Article as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

ARTICLE 11.

TAKEOVER OFFERS

In the event the Company receives a takeover offer, the Board of Directors shall consider all relevant factors in evaluating such offer, including, but not limited to, the terms of the offer, and the potential economic and social impact of such offer on the Company's stockholders, employees, customers, creditors and community in which it operates.

ARTICLE 12.

NOTICES

12.1 General . Whenever these Bylaws require notice to any Stockholder, director, officer or agent, such notice does not mean personal notice. A person may give effective notice under these Bylaws in every case by depositing a writing in a post office or letter box in a postpaid, sealed wrapper, or by dispatching a prepaid telegram addressed to such Stockholder, director, officer or agent at his address on the books of the Company. Unless these Bylaws expressly provide to the contrary, the time when the person sends notice shall constitute the time of the giving of notice.

12.2 Waiver of Notice . Whenever the law or these Bylaws require notice, the person entitled to said notice may waive such notice in writing, either before or after the time stated therein.

ARTICLE 13.

MISCELLANEOUS

13.1 Facsimile Signatures . In addition to the use of facsimile signatures which these Bylaws specifically authorize, the Company may use such facsimile signatures of any officer or officers, agents or agent, of the Company as the Board or a committee of the Board may authorize.

13.2 Corporate Seal . The Board may provide for a suitable seal containing the name of the Company, of which the Secretary shall be in charge. The Treasurer, any Assistant Secretary, or any Assistant Treasurer may keep and use the seal or duplicates of the seal if and when the Board or a committee of the Board so directs.

13.3 Fiscal Year . The Board shall have the authority to fix and change the fiscal year of the Company.

ARTICLE 14.

AMENDMENTS

14.1 Subject to the provisions of the Articles of Incorporation, the Stockholders or the Board may amend or repeal these Bylaws at any meeting.

The undersigned hereby certifies that the foregoing constitutes a true and correct copy of the Bylaws of the Company as adopted by the Directors on the 27th day of February 2008.

Executed as of this 27 th day of February 2008.

/s/John MacDonald

John MacDonald,

Secretary

EXHIBIT 10.1

UNITED STATES BANKRUPTCY COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

In re:	§
	§
BLAST ENERGY SERVICES, INC.	§	Case No. 07-30424-H4-11
	§
EAGLE DOMESTIC DRILLING	§	Case No. 07-30426-H4-11
OPERATIONS LLC	§
Debtors	§	Jointly Administered Chapter 11
	§	under Case No. 07-30424-H4-11

SECOND AMENDED JOINT PLAN OF REORGANIZATION OF

BLAST ENERGY SERVICES, INC., DEBTOR AND

EAGLE DOMESTIC DRILLING OPERATIONS LLC, DEBTOR

Dated: December 3, 2007

DEBTORS’ SECOND AMENDED JOINT PLAN OF REORGANIZATION

This Second Amended Joint Plan of Reorganization is proposed by Blast Energy Services, Inc., Debtor (“Blast”) and Eagle Domestic Drilling Operations LLC, Debtor (“Eagle”) for reorganization of their financial affairs pursuant to chapter 11 of the Bankruptcy Code. This Second Amended Joint Plan is being filed as required by and pursuant to the terms of the Agreed Order Granting Continuance of Confirmation Hearing entered by the Bankruptcy Court on November 28, 2007 (docket number 759). EXCEPT AS EXPRESSLY SET FORTH BELOW, THIS SECOND AMENDED JOINT PLAN OF REORGANIZATION DOES NOT REPLACE OR MODIFY THE TERMS OF THE FIRST AMENDED JOINT PLAN OF REORGANIZATION FILED SEPTEMBER 11, 2007, AND THE TECHNICAL AMENDMENTS TO THE FIRST AMENDED JOINT PLAN OF REORGANIZATION FILED OCTOBER 5, 2007, AND WHICH HAVE BEEN PREVIOUSLY SUBMITTED TO, AND ACCEPTED BY, THE EAGLE AND BLAST CREDITORS .

All capitalized terms not otherwise defined by this Second Amended Joint Plan of Reorganization shall have the meanings ascribed to them in the First Amended Joint Plan of Reorganization. To fully understand the Plan this Second Amended Joint Plan of Reorganization must be read and considered in conjunction with the First Amended Joint Plan of Reorganization and the Technical Amendments to the First Amended Joint Plan of Reorganization.

1.	The following Definitions in Article I are deleted in their entirety:

Collateral Agreements

1.25 Convenience Claim

2.	The definition of Plan Documents at 1.60 is modified by deleting the words “the Eagle Junior Secured Notes, the Blast Junior Secured Notes, the Collateral Agreements”.

3.	Paragraphs 3.1 (iii) and (iv) are deleted.

4.	Paragraph 3.1 (v) is modified by deleting “$234,000” and replacing that number with “$308,000”.

5.	Paragraph 3.1(vi) is modified by deleting “$917,000” and replacing that number with “$950,000”.

6.	Paragraphs 3.3(v) and (vi) are deleted.

7.	Paragraphs 4.2(v) and (vi) are deleted.

8.	Paragraph 4.2(vii) is deleted in its entirety and is replaced with the following:

“(vii) Class 7—Eagle Unsecured Claims . Except to the extent that a holder of an Allowed Class 7 Unsecured Claim has agreed to receive other lesser treatment, such holder shall receive in the Distribution Date in full and final satisfaction of its Claim Cash equal to 100% of such holder’s Allowed Unsecured Claim.

This Class is impaired”

9.	Paragraph 4.2(viii) is deleted in its entirety and is replaced with the following:

“(viii) Class 8—Blast Unsecured Claims . Except to the extent that a holder of an Allowed Class 8 Unsecured Claim has agreed to receive other lesser treatment, such holder shall receive in the Distribution Date in full and final satisfaction of its Claim Cash equal to 100% of such holder’s Allowed Unsecured Claim.

This Class is impaired”

10.	Paragraphs 7.1 (iii) and (iv) are deleted.

11.	Paragraph 7.1 (v) is modified by deleting “$234,000” and replacing that number with “$308,000”.

12.	Paragraph 7.1(vi) is modified by deleting “$917,000” and replacing that number with “$950,000”.

13.	Paragraph 8.1(i) is amended by deleting “$3,000,000” and replacing that number with “$4,000,000”.

14.	Paragraph 8.1(xv) is amended by deleting “$3,000,000” and replacing that number with “$4,000,000”.

15.	Paragraphs 8.4 and 8.5 are deleted in their entirety.

16.	Paragraph 9.5 is modified by deleting the words “the Eagle Junior Secured Notes, the Blast Junior Secured Notes, the Collateral Agreements”.

17.	Paragraph 9.6 is modified by deleting the language of that paragraph and replacing it with the following: “The initial directors of Reorganized Blast shall be the following Persons: John R. Block, Scott W. Johnson, Roger P. (Pat) Herbert, Joseph J. Penbera Ph. D. and Jeffrey R. Pendergraft.”

18.	Paragraph 10.4(i) is modified by adding the phrase “and gross negligence” after the phrase “other than for willful misconduct”.

19.	Paragraph 10.5 is modified by adding the phrase “and gross negligence” after the phrase “other than for willful misconduct”.

20.	Paragraph 14.7 is modified by deleting the contact information for H. Rey Stroube, III and substituting the following: “18510 Kingsland Boulevard, Houston, Texas 77094, Facsimile: (281) 599-3011, Email: rstroube@comcast.net.”

21.	Annex 1 and Annex 2 are deleted in their entirety.

Signatures

This Plan may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which shall be deemed one and the same instrument.

Blast Energy Services, Inc

By: ______________________________

Eagle Domestic Drilling Operations LLC

By: ______________________________

By:

H. Rey Stroube, III

State Bar No. 19422000

18510 Kingsland Blvd.

Houston, Texas 77094

Telephone: (281) 599-3011

rstroube@comcast.net (e-mail)

ATTORNEY FOR BLAST ENERGY SERVICES, INC.

EAGLE DOMESTIC DRILLING OPERATIONS LLC DEBTORS.

EXHIBIT 10.2

UNITED STATES BANKRUPTCY COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

In re:	§
	§
BLAST ENERGY SERVICES, INC.	§	Case No. 07-30424-H4-11
	§
EAGLE DOMESTIC DRILLING	§	Case No. 07-30426-H4-11
OPERATIONS LLC	§
Debtors	§	Jointly Administered Chapter 11
	§	under Case No. 07-30424-H4-11

FIRST AMENDED JOINT PLAN OF REORGANIZATION OF

BLAST ENERGY SERVICES, INC., DEBTOR AND

EAGLE DOMESTIC DRILLING OPERATIONS LLC, DEBTOR

Dated: September 11, 2007

TABLE OF CONTENTS

ARTICLE 1 DEFINITIONS AND RULES OF CONSTRUCTION

1.1

“Administrative Claim”

1.2

“Administrative Claims Bar Date”

1.3

“Administrative Expense”

1.4

“Affiliate”

1.5

“Allowed”

1.6

“Allowed Amount”

1.7

“Asset Purchase Agreement”.

1.8

“Ballot”

1.9

“Bankruptcy Code”

1.10

“Bankruptcy Court”

1.11

“Bankruptcy Rules”

1.12

“Bar Date”

1.13

“Berg McAfee”.

1.14

“Business Day”

1.15

“Cash”

1.16

“Chapter 11 Costs”

1.17

“Claim”

1.18

“Class”

1.19

“Collateral Agreements”.

1.20

“Common Stock”

1.21

“Confirmation” or “Confirmation of the Plan”

1.22

“Confirmation Date”

1.23

“Confirmation Hearing”

1.24

“Confirmation Order”

1.25

“Convenience Claim”

1.26

“Convertible Preferred Stock”.

1.27

“Corporate Documents”

1.28

“Creditors Committee”

1.29

“Debtors” or “Debtors-in-Possession”

1.30

“DIP Loan”

1.31

“Directors”.

1.32

“Disallowed”

1.33

“Disbursing Agent”

1.34

“Discharge Injunction”

1.35

“Disclosure Statement”

1.36

“Disputed Claim”

1.37

“Disputed Claims Reserve”

1.38

“Distribution Date”

1.39

“Effective Date”

1.40

“Entity”

1.41

“Estates”

1.42

“Existing Equity Interests”

1.43

“Final Order”

1.44

“Hallwood Litigation”.

1.45

“Injunction”

1.46

“Intercompany Claims”

1.47

“Interest”

1.48

“Investor”.

1.49

“Laurus”

1.50

“Laurus Collateral”

1.51

“Laurus Lien”

1.52

“Laurus Retained Claim”.

1.53

“Laurus Retained Claim Documents”.

1.54

“Laurus Secured Debt”

1.55

“Lien”

1.56

“Net Proceeds”

1.57

“Person”

1.58

“Petition Date”

1.59

“Plan”

1.60

“Plan Documents”

1.61

“Priority Claim”

1.62

“Priority Tax Claim”

1.63

“Private Placement Agreements”

1.64

“Proof of Claim”

1.65

“Pro Rata”

1.66

“Quicksilver Litigation”

1.67

“Rejected Executory Contracts”

1.68

“Reorganization Cases”

1.69

“Reorganized Debtor” or “Reorganized Blast” or “Reorganized Eagle”

1.70

“Rigs”

1.71

“Sale Order”

1.72

“Schedules”

1.73

“Secured Claim”

1.74

“Settlement Agreement”

1.75

“Tax-Qualified Plan”

1.76

“Timely Filed”

1.77

“United States Trustee”

1.78

“Unsecured Claim”

ARTICLE 2 TREATMENT OF ADMINISTRATIVE CLAIMS AND PRIORITY TAX CLAIMS

2.1

Administrative Claims

2.2

Priority Tax Claims

2.3

Berg McAfee DIP

ARTICLE 3 CLASSIFICATION OF CLAIMS AND INTERESTS

3.1

Generally

3.2

Unclassified Claims

3.3

Classes

ARTICLE 4 TREATMENT OF CLAIMS AND INTERESTS

4.1

Unclassified Claims

4.2

Classes of Claims and Interests.

ARTICLE 5 TREATMENT OF EXECUTORY CONTRACTS, AND UNEXPIRED LEASES

5.1

Assumption and Rejection of Unexpired Leases and Executory Contracts

5.2

Continuation of Employee Compensation and Benefit Programs.

5.3

Rejection Damages Claims

5.4

Assumption Claims

5.5

Employee Benefit and Welfare Programs

ARTICLE 6 ACCEPTANCE OR REJECTION OF THE PLAN

6.1

Each Impaired Class Entitled to Vote Separately

6.2

Acceptance By Impaired Classes of Claims

6.3

Acceptance By Impaired Class of Interests

6.4

Presumed Acceptance of Plan

6.5

Cramdown

ARTICLE 7 CONDITIONS TO CONFIRMATION AND EFFECTIVENESS; REQUIRED NOTICES

7.1

Conditions to Confirmation

7.2

Conditions to Effectiveness

7.3

Effect of Nonoccurrence of Conditions to Effective Date

7.4

Notice to Bankruptcy Court

ARTICLE 8 DESCRIPTION OF SECURITIES ISSUED UNDER PLAN

8.1

Convertible Preferred Stock.

8.2

Creditor Stock.

8.3

Newly Authorized Blast Common Stock

8.4

Eagle Junior Secured Note

8.5

Blast Junior Secured Note

8.6

Management Warrants

ARTICLE 9 MEANS FOR IMPLEMENTATION OF THE PLAN

9.1

Substantive Consolidation

9.2

Conversion of Blast

9.3

Revesting of Assets

9.4

Management Contracts

9.5

Effectuating Documents

9.6

Initial Directors of Reorganized Blast

9.7

Management of Reorganized Blast and Reorganized Eagle

9.8

Authority to Prosecute or Settle Litigation

9.9

Further Authorizations

iii

9.10

Transfer Taxes

9.11

Payment of United States Trustee’s Fees

9.12

Recordable Order

9.13

Effectuating Documents and Further Transactions

9.14

Limited Liability Company and Corporate Action

9.15

Dissolution of Committees

9.16

Survival of Indemnification Obligations

9.17

Compromise and Settlement

ARTICLE 10 INJUNCTIONS, RELEASES AND DISCHARGE

10.1

Discharge and Release

10.2

Discharge Injunction

10.3

Discharge of Disallowed Claims and Disallowed Interests

10.4

Releases of Officers and Directors.

10.5

Exoneration

ARTICLE 11 MATTERS INCIDENT TO PLAN CONFIRMATION

11.1

Term of Certain Injunctions and Automatic Stay.

11.2

No Liability for Tax Claims

11.3

Compliance with Tax Requirements

ARTICLE 12 PROVISIONS GOVERNING DISTRIBUTIONS AND RESOLUTION OF DISPUTED CLAIMS

12.1

Plan Distributions

12.2

Interest on Claims

12.3

Unclaimed Property

12.4

Withholding of Taxes

12.5

Disputed Claims and Determination of Disputed Claims

12.6

Objection Deadline

12.7

Prosecution of Objections

12.8

Distribution Reserve

12.9

Distribution After Resolution of Disputed Claims

ARTICLE 13 RETENTION OF JURISDICTION

13.1

Jurisdiction

13.2

General Retention

13.3

Specific Purposes

13.4

Failure of Bankruptcy Court to Exercise Jurisdiction

ARTICLE 14 MISCELLANEOUS

14.1

Revocation of Plan

14.2

Modification of Plan

14.3

Modification of Payment Terms

14.4

Section 1145 Exemption

14.5

Entire Agreement

14.6

Severability

14.7

Rules of Construction

14.8

Successors and Assigns

14.9

Headings

14.10

Administrative Claims Bar Date

14.11

Governing Law

14.12

Consent to Jurisdiction

14.13

Setoffs

14.14

Non-Debtor Waiver of Rights

14.15

Professional Fees

14.16

Filing of Additional Documents

14.17

Notices

Annex 1 Eagle Junior Secured Note

Annex 2 Blast Junior Secured Note

DEBTORS’ FIRST AMENDED JOINT PLAN OF REORGANIZATION

This First Amended Joint Plan of Reorganization is proposed by Blast Energy Services, Inc., Debtor (“Blast”) and Eagle Domestic Drilling Operations LLC, Debtor (“Eagle”) for reorganization of their financial affairs pursuant to chapter 11 of the Bankruptcy Code. The Plan is facilitated by, and submitted in connection with, the compromise and settlement of several of the Claims that were being asserted against Blast and Eagle as well as a $3,000,000 private placement of preferred equity described below. The satisfaction of these Claims will be accomplished by the integration of the terms of the Settlement Agreement and the Sale Order in this Plan, sale of certain of Eagle’s assets and the compromise and settlement of certain Claims and Interests as more fully described below. ALL HOLDERS OF CLAIMS AND INTERESTS ARE URGED TO READ WITH CARE THIS PLAN, INCLUDING, IN PARTICULAR, THE CONDITIONS PRECEDENT TO THE CONFIRMATION OF THE PLAN (set forth in Article 3 below), AND, WHEN APPROVED, THE DEBTORS’ JOINT DISCLOSURE STATEMENT IN EVALUATING HOW THIS PLAN WILL AFFECT THEIR CLAIMS OR INTERESTS.

DEFINITIONS AND RULES OF CONSTRUCTION

Unless the context requires otherwise, the following terms shall have the following meanings when used with the initial letter capitalized. Such meanings shall be equally applicable to both the singular and plural forms of such terms. Any term used in capitalized form that is not defined herein but that is defined in the Bankruptcy Code or the Bankruptcy Rules shall have the meaning ascribed to such term by the Bankruptcy Code or the Bankruptcy Rules (with the Bankruptcy Code controlling in the case of a conflict or ambiguity). The rules of construction set forth in section 102 of the Bankruptcy Code shall apply in construction of the Plan Documents. All references to the “Plan” herein shall be construed, where applicable, to include references to this Plan and all of its exhibits, appendices, schedules, and annexes (and any amendments hereto and thereto made in accordance with the Bankruptcy Code).

A. “Administrative Claim”

means any claim for the payment of an Administrative Expense.

B. “Administrative Claims Bar Date”

means that date established pursuant to Article 14.10 of the Plan, as may be extended from time to time by order of the Bankruptcy Court, as the deadline for filing Administrative Claims.

C. “Administrative Expense”

means (a) any cost or expense of administration as defined by section 503(b) of the Bankruptcy Code (b) any fee or charge assessed against an Estate under 28 U.S.C. § 1930, and (c) any Claim allowed pursuant to 11 U.S.C. § 503.

D. “Affiliate”

shall have the meaning in section 101(2) of the Bankruptcy Code.

E. “Allowed”

means when used in respect of a Claim, Interest or Administrative Expense, or a group thereof, (a) such amount of the Claim, Interest or Administrative Expense or group thereof which is (i) determined and allowed by a Final Order pursuant to 11 U.S.C. §§ 502 or 503, as applicable, (ii) allowed under the Plan, or (iii) allowed under a stipulation or settlement with the Reorganized Debtor entered into after the Effective Date; and (b) if not “Allowed” in accordance with subsection (a) above, a Claim, Interest or Administrative Expense that has not been Disallowed and is not subject to a pending objection, also will be deemed “Allowed” as follows:

if no proof of Claim or Interest has been Timely Filed, (A) a Claim also is deemed “Allowed” in the amount and of the type of the Claim or group of Claims which have been scheduled by the Debtor in its Schedules as liquidated in amount and not disputed or contingent and (B) an Interest also is deemed “Allowed” in the number and of the type of the Interests which have been listed by the Debtor in its List of Equity Security Holders; or

if a proof of Claim or Interest is Timely Filed, (A) a Claim also is deemed “Allowed” in the amount and of the type of the Claim or group of Claims reflected in the proof(s) of Claim and (B) an Interest also is deemed “Allowed” in the number and of the type of the Interest or group of Interests reflected in the proof(s) of Interest, provided however , (C) until, but only until, the Objection Deadline, (x) a Claim will be deemed a Disputed Claim, and not be deemed “Allowed” under this subsection, unless there exists a corresponding Claim of the same type listed in the Debtor’s Schedules (and only up to the amount listed in the Debtor’s Schedules), which is not listed as disputed, contingent, or unliquidated, and (y) an Interest will be deemed a Disputed Claim, and not be deemed “Allowed” under this subsection, unless there exists a corresponding Interest of the same type listed in the Debtor’s List of Equity Security Holders (and only up to the number listed); and

an Administrative Expense shall be deemed “Allowed” if (A) either incurred in the ordinary course of business or a request for payment of the Administrative Expense is Timely Filed, and (B) the Reorganized Debtor elects to pay it, provided that (C) the Reorganized Debtor does not object to it by the Objection Deadline.

F. “Allowed Amount”

means the amount at which a Claim is Allowed.

G. “Asset Purchase Agreement” means that certain agreement dated May 14, 2007, whereby, among other things, Eagle agreed to convey all of its right, title and interest in the Rigs to Laurus or its assignee, which conveyance resulted in the partial satisfaction of the Laurus Secured Debt.

H. “Ballot”

means the ballot distributed to holders of Claims or Interests entitled to vote on the Plan.

I. “Bankruptcy Code”

means title 11 of the United States Code, 11 U.S.C. §§ 101, et seq. , as in effect on the Petition Date, together with all amendments and modifications thereto as subsequently made applicable to the Reorganization Cases.

J. “Bankruptcy Court”

means the United States Bankruptcy Court for the Southern District of Texas, Houston Division or such other court as may have jurisdiction over the Reorganization Cases.

K. “Bankruptcy Rules”

means the Federal Rules of Bankruptcy Procedure and the local rules of the Bankruptcy Court, as in effect on the Petition Date, together with all amendments and modifications thereto which were subsequently made applicable to the Reorganization Cases.

L. “Bar Date”

means June 19, 2007.

M. “Berg McAfee” means the Berg McAfee Companies LLC, its designee and/or any third party investor participating with the Berg McAfee in this Plan.

N. “Business Day”

means any day other than a Saturday, Sunday or legal holiday (as such term is defined in Bankruptcy Rule 9006(a)).

O. “Cash”

means lawful currency of the United States of America and its equivalents.

P. “Chapter 11 Costs”

means the Allowed Claims of all professionals employed in the Reorganization Cases and the Debtors’ cases under chapter 11 of the Bankruptcy Code pursuant to sections 327, 328 or 1103 of the Bankruptcy Code relating to services incurred after the Petition Date and prior to and including the Effective Date.

Q. “Claim”

shall have the meaning ascribed to such term in section 101(5) of the Bankruptcy Code.

R. “Class”

means a category of Claims or Interests, as classified in Article 3 of the Plan.

S. “Collateral Agreements” means all documents required for the granting and perfection of the security interests relating to the Eagle Junior Secured Notes and the Blast Junior Secured Notes, which will include a collateral agent agreement, among other things.

T. “ Common Stock ” means the shares of authorized common stock of Blast par value of $0.001

U. “Confirmation” or “Confirmation of the Plan”

means the approval of this Plan by the Bankruptcy Court at the Confirmation Hearing.

V. “Confirmation Date”

means the date on which the Confirmation Order is entered on the docket of the Bankruptcy Court.

W. “Confirmation Hearing”

means the hearing(s) which will be held before the Bankruptcy Court in which the Debtors will seek Confirmation of this Plan.

X. “Confirmation Order”

means the order of the Bankruptcy Court confirming the Plan.

Y. “Convenience Claim”

means any Allowed Unsecured Claim otherwise entitled to treatment under Class 5 or Class 6 of the Plan, which is $10,000 or less when aggregated with all other Unsecured Claims of such holder, or, in the alternative, is reduced by election of such holder on such holder’s Ballot, together with all other Unsecured Claims of such holder, to an aggregate Unsecured Claim of $10,000. No Convenience Claim shall exceed $10,000.

Z. “ Convertible Preferred Stock ” means the preferred stock to be issued to the Investor pursuant to the terms of the Private Placement Agreements and this Plan.

AA. “Corporate Documents”

means the constituent organizational documents of any Debtor or a Reorganized Debtor, including, but not limited to, certificates of incorporation, bylaws, or limited liability company agreements.

BB. “Creditors Committee”

means the Official Committee of Unsecured Creditors appointed by the United States Trustee in the Reorganization Cases.

CC. “Debtors” or “Debtors-in-Possession”

means Blast Energy Services, Inc. and Eagle Domestic Drilling Operations LLC or either of them.

DD. “DIP Loan” means the secured loan made by Berg McAfee to the Debtors pursuant to section 364(d)(1) of the Bankruptcy Code.

EE. “Directors” means, and includes, each person who was a member of the Blast board of directors on the Petition Date.

FF. “Disallowed”

means, with respect to a Claim, Interest, Administrative Expense, or portion thereof, that it is determined by a Final Order that the Claim, Interest, Administrative Expense or portion thereof is not allowed under 11 U.S.C. §§ 502 or 503.

GG. “Disbursing Agent”

means Reorganized Blast or, as the case may be, any Person designated by the Debtors or Reorganized Blast to make distributions required under the Plan.

HH. “Discharge Injunction”

means the injunction described in Article 10.2 of the Plan.

II. “Disclosure Statement”

means the Disclosure Statement with Respect to this Plan including all exhibits, appendices, schedules, and annexes attached thereto, as submitted by the Debtors pursuant to section 1125 of the Bankruptcy Code and approved by the Bankruptcy Court, as such Disclosure Statement may be amended, supplemented, or modified from time to time.

JJ. “Disputed Claim”

means (a) a Claim, Interest or Administrative Expense that is subject to a pending objection; or (b) until the Objection Deadline,

a Claim for which a corresponding Claim has not been listed in the Debtor’s Schedules or for which the corresponding Claim is listed in the Debtor’s Schedules with a differing amount (to the extent of such difference), with a differing classification, or as disputed, contingent, or unliquidated,

a Claim which a Debtor in good faith believes is held by a holder either (A) from which property is recoverable by the applicable Debtor under any of Bankruptcy Code §§ 542, 543, 550 or 553 or (B) that is a transferee of a transfer avoidable under Bankruptcy Code §§ 522(f), 522(h), 544, 545, 547, 548, 549 or 724(a) unless the holder has paid the amount, or turned over any such property for which such holder is liable under the terms of Bankruptcy Code §§ 522(i), 542, 543, 550, or 553; and

an Interest for which a corresponding Interest has not been listed in the Debtor’s List of Equity Security Holders or has been listed in a different number (to the extent of such difference).

KK. “Disputed Claims Reserve”

shall mean one or more interest bearing accounts to be established and held in trust by the Disbursing Agent for the purpose of holding Cash that would otherwise have been distributed with respect to Disputed Claims if such Claims were Allowed.

LL. “Distribution Date”

means, when used with respect to an Allowed Claim, the date which is as soon as reasonably practicable after the latest of: (a) the Effective Date, (b) the date on which such Claim is due and owing in accordance with its terms or as provided for in any Plan Document, or (c) the first Business Day of the next calendar quarter after the date upon which the Claim becomes Allowed, unless the Claim becomes Allowed within fifteen (15) Business Days before the first Business Day of the next calendar quarter, in which case the Distribution Date shall be the first Business Day of the next succeeding calendar quarter; provided, however , that the Disbursing Agent shall have the authority, in its sole discretion, to make earlier distributions if deemed appropriate by it.

MM. “Effective Date”

means, and shall occur on, the first Business Day immediately following the first day upon which all of the conditions to occurrence of the Effective Date contained in Article 7.2 of the Plan have been satisfied or waived.

NN. “Entity”

means any corporation, general or limited liability partnership, limited liability company, joint venture, association, governmental agency or body, or unincorporated group or body.

OO. “Estates”

means the estates created for the Debtors by section 541 of the Bankruptcy Code upon the commencement of the Reorganization Cases.

PP. “Existing Equity Interests”

means the issued and outstanding capital stock of Blast, and any warrants or options to purchase such capital stock or conversion rights with respect thereto, or the limited liability member interests in Eagle as of the Effective Date.

QQ. “Final Order”

means (1) an order of the Bankruptcy Court as to which the time to appeal, petition for writ of certiorari, or move for reargument or rehearing has expired and as to which no appeal, petition for writ of certiorari, or other proceedings for reargument or rehearing shall then be pending or, (2) in the event that an appeal, writ of certiorari, reargument, or rehearing thereof has been sought, such order of the Bankruptcy Court shall have been affirmed by the highest court to which such order was appealed, or such writ of certiorari shall have been denied and the time to take any further appeal, to petition for writ of certiorari or to move for reargument or rehearing shall have expired; provided, however , that no order shall fail to be a Final Order solely because of the possibility that a motion pursuant to Rule 60 of the Federal Rules of Civil Procedure may be filed with respect to such order.

RR. “Hallwood Litigation” means the court proceedings ongoing between Hallwood Energy and Hallwood Petroleum against Eagle Domestic Drilling Operations LLC pertaining to an early termination and resulting breach of two IADC standard form drilling contracts, and any counterclaims asserted or to be asserted by Eagle.

SS. “Injunction”

means any of the injunctions granted under the terms of Article 10 of the Plan and any injunction contained in the Confirmation Order.

TT. “Intercompany Claims”

means Claims by and between Blast and Eagle.

UU. “Interest”

means any equity interest in the Debtors within the meaning of section 101(16) of the Bankruptcy Code.

VV. “ Investor ” means the Persons or Entities that subscribe to the Private Placement Agreements, purchases the Convertible Preferred Stock and provides the exit funding contemplated by the Private Placement Agreements.

WW. “Laurus ” means Laurus Master Fund, Ltd.

XX. “Laurus Collateral” means those assets of the Debtors that are described and defined as collateral for Laurus in (i) the pre-petition debt and security agreements, including the Master Security Agreement, dated as of August 25, 2006, by and between the Debtors and Laurus and (ii) the Settlement Agreement and the Sale Order, and which collateral includes, without limitation, the Hallwood Litigation and the Quicksilver Litigation and any recoveries or proceeds thereof.

YY. “Laurus Lien” means the Lien on the Laurus Collateral that is retained by Laurus pursuant to the terms of the Settlement Agreement and Sale Order and which will remain as a first priority fully perfected Lien on such assets of the Reorganized Debtors after the Effective Date as security for the payment in full of the Laurus Retained Claim, subject to the limitations and carve-outs set forth in the Sale Order.

ZZ. “Laurus Retained Claim” has the meaning ascribed to such term in Section 4.2(ii) of the Plan.

AAA. “Laurus Retained Claim Documents” means such collateral and perfection documents as required by Laurus to further document, perfect, confirm, continue, enforce or protect the Laurus Lien.

BBB. “Laurus Secured Debt” means the debt obligation owed by the Debtors to Laurus pursuant to loan documents executed by the Debtors on or about August 25, 2006 and which was Allowed as a first priority secured claim against the Debtors in its full amount by order of the Court entered on March 2, 2007.

CCC. “Lien”

means, with respect to any asset or property, any mortgage, lien, pledge, charge, security interest, encumbrance or other security device of any kind pertaining to or affecting such asset or property.

DDD. “Net Proceeds” means, with respect to the Hallwood Litigation and the Quicksilver Litigation, any amounts received by Eagle or Reorganized Eagle from any judgment or settlement after deduction of such fees and expenses of the Debtors’ special litigation counsel as approved by the Bankruptcy Court.

EEE. “Person”

means any person, individual, Entity, or other entity or being of whatever kind, whether or not operating or existing for profit, including, but not limited to, any “person” as such term is defined in section 101(41) of the Bankruptcy Code, but excluding any Governmental Unit as defined therein.

FFF. “Petition Date”

means January 19, 2007.

GGG. “Plan”

means this First Amended Joint Plan of Reorganization for the Debtors, and any amendments thereto made in accordance with the Bankruptcy Code.

HHH. “Plan Documents”

means the Plan, the Disclosure Statement, the Settlement Agreement, the Sale Order, the Management Warrants, the Private Placement Agreements, the Convertible Preferred Stock, the Laurus Retained Claim Documents, the Eagle Junior Secured Notes, the Blast Junior Secured Notes, the Collateral Agreements and all documents, attachments and exhibits thereto, and any other documents that aid in effectuating the Plan, including, but not limited to, the Asset Purchase Agreement and the Bill of Sale executed by Eagle in connection therewith, and as required by the Settlement Agreement.

III. “Priority Claim”

means any Claim (other than an Administrative Expense Claim or a Priority Tax Claim) to the extent such Claim is entitled to a priority in payment under section 507(a) of the Bankruptcy Code.

JJJ. “Priority Tax Claim”

means any Claim to the extent that such Claim is entitled to a priority in payment as provided for in section 507(a)(8) of the Bankruptcy Code.

KKK. “ Private Placement Agreements ” means the documents that establish the terms and conditions for the issuance of the Convertible Preferred Stock to the Investor, including a subscription agreement, a warrant agreement and a registration rights agreement.

LLL. “Proof of Claim”

means any proof of claim filed with the Bankruptcy Court with respect to a Debtor pursuant to Bankruptcy Rules 3001 or 3002.

MMM. “Pro Rata”

means with respect to Claims, the proportion that the amount of an Allowed Claim in a particular Class bears to the aggregate amount of all Claims in such class, exclusive of Disallowed Claims, but including Disputed Claims.

NNN. “Quicksilver Litigation” means the court proceedings ongoing between Quicksilver Resources, Inc. against Eagle Domestic Drilling Operations LLC pertaining to an early termination and resulting breach of three IADC standard form drilling contracts and any counterclaims asserted and to be asserted by Eagle.

OOO. “Rejected Executory Contracts”

means (a) any and all executory contracts and unexpired leases which are listed on the “ Schedule of Rejected Executory Contracts ” that will be attached to the Disclosure Statement as a supplement prior to the Confirmation Hearing, all of which contracts and leases shall be rejected on the Effective Date, (b) any and all such contracts and leases rejected by order of the Bankruptcy Court prior to the Effective Date, and (c) any and all such contracts and leases which are the subject of any motion to reject pending on the Confirmation Date that is ultimately granted by Final Order.

PPP. “Reorganization Cases”

means the cases of the Debtors under chapter 11 of the Bankruptcy Code.

QQQ. “Reorganized Debtor” or “Reorganized Blast” or “Reorganized Eagle” means, on and after the Effective Date, Blast Energy Services, Inc. or Eagle Domestic Drilling Operations LLC, as is appropriate in the context.

RRR. “Rigs”

means the five land based oil and gas drilling rigs and associated equipment owned by Eagle on the Petition Date and conveyed to Laurus pursuant to the Asset Purchase Agreement and the Bill of Sale, the sale and conveyance of which enabled the settlement of the Laurus Secured Debt and the promulgation and confirmation of this Plan.

SSS. “Sale Order” means the “Order Under 11 U.S.C. Sections 105(A) And 363 and Fed. R. Bankr. P. 2002 And 6004 Authorizing and Approving (I) Asset Purchase Agreement; (II) Asset Sale Free And Clear Of Liens, Claims, Interests And Encumbrances; and (III) Certain Related Relief” entered by the Court on May_11, 2007 authorizing the Asset Purchase Agreement.

TTT. “Schedules”

means the schedules, statements and lists filed by the Debtors with the Bankruptcy Court pursuant to Bankruptcy Rule 1007, as they have been and may be amended or supplemented from time to time.

UUU. “Secured Claim”

means any Claim that is (a) secured in whole or part, as of the Petition Date, by a Lien which is valid, perfected and enforceable under applicable law and is not subject to avoidance under the Bankruptcy Code or applicable non-bankruptcy law, or (b) subject to setoff under section 553 of the Bankruptcy Code, but, with respect to both (a) and (b) above, only to the extent of the value, net of any senior Lien, of the Estates’ interests in the assets or property securing any such Claim or the amount subject to setoff, as the case may be.

VVV. “Settlement Agreement” means the agreement among the numerous signatory parties, including the Debtors, Laurus and the Class 10 Interest holder, approved by order of the Bankruptcy Court dated May 11, 2007, whereby, in connection with the Plan and in order to facilitate the confirmation of the Plan, Eagle and Blast settled and compromised substantial Claims and Interests, which settlement was, in part, facilitated by the transfer of title to the Rigs and in conjunction with the treatment and payment of the Class 2 Secured Claims and the purchase of the Class 11 Interests as provided for in this Plan.

WWW. “Tax-Qualified Plan”

means a tax-qualified plan under ERISA, including the Blast Energy Services, Inc. 401(k) Plan.

XXX. “Timely Filed”

with respect to a Claim, Interest or Administrative Expense, means, that a proof of such Claim or Interest or request for payment of such Administrative Expense was filed with the Bankruptcy Court within such applicable period of time fixed by the Plan, statute, or pursuant to both Bankruptcy Rule 3003(c)(3) and a Final Order (e.g., the Bar Date).

YYY. “United States Trustee”

means the United States Trustee for the Southern District of Texas.

ZZZ. “Unsecured Claim”

means any Claim (regardless of whether such Claim is covered by insurance) that is neither secured nor entitled to priority under the Bankruptcy Code or by a Final Order of the Bankruptcy Court, including, but not limited to: (a) any claim arising from the rejection of an executory contract or unexpired lease under section 365 of the Bankruptcy Code, and (b) any portion of a Claim to the extent the value of the holder’s interest in the applicable Estate’s interest in the property securing such Claim is less than the amount of the Claim, or to the extent that the amount of the Claim subject to setoff is less than the amount of the Claim, as determined pursuant to section 506(a) of the Bankruptcy Code.

II.

TREATMENT OF ADMINISTRATIVE CLAIMS AND PRIORITY TAX CLAIMS

A. Administrative Claims.

Each holder of an Allowed Administrative Claim ( except any holder that agrees in writing prior to the Confirmation Date to different treatment ) shall receive the unpaid Allowed Amount of its Administrative Claim, in Cash, in full satisfaction, settlement, release, extinguishment, and discharge of such Claim, on the Effective Date or as provided in a Final Order; provided, however , that Allowed Administrative Claims representing post-petition liabilities incurred in the ordinary course of business by any of the Debtors shall be paid by Reorganized Blast in accordance with the terms and conditions of the agreements establishing or giving rise to such liabilities.

B. Priority Tax Claims.

Each Allowed Priority Tax Claim, if any, shall be paid (i) in equal annual installments of principal and interest by deferred Cash payments commencing on the tenth (10th) Business Day after January 1, 2008, and the date such Priority Tax Claim is Allowed, or as soon thereafter as is practicable, final payment being made on January 19, 2012, with simple interest from the Effective Date at the rate in effect under 26 U.S.C. § 6621(b)(3) on the Confirmation Date; provided that any such Claim may be prepaid without penalty or premium at any time in whole or from time to time in part at the option of the Debtors or the Reorganized Debtor, as the case may be, with simple interest from the later of the Effective Date or the date on which the Claim is allowed at the rate in effect under 26 U.S.C. § 6621(b)(3) on the Confirmation Date or (ii) as the holder of such Allowed Priority Tax Claim and the Debtors or the Reorganized Debtor, as the case may be, otherwise may agree.

C. Berg McAfee DIP.

The Berg McAfee DIP Loan Claim, which is a secured Administrative Claim, shall be deemed fixed and allowed as of the Effective Date and on the Effective Date, shall be paid in full by converting the outstanding balance of the Berg McAfee DIP Loan into shares of Reorganized Blast Common Stock at the rate of $0.20 per share.

III.

CLASSIFICATION OF CLAIMS AND INTERESTS

A. Generally.

Claims and Interests against the Debtors shall be treated in accordance with the classification scheme set forth in this Article 3. A Claim or Interest is classified in a particular Class only to the extent that the Claim or Interest qualifies within the description of the Class and shall be classified in a different Class to the extent the Claim or Interest qualifies within the description of that different Class. The payment and treatment of Claims and Interests set forth in this Article 3, as well as the payment of Administrative and Priority Claims described in Article 2, is subject to the following preconditions each of which must be satisfied in order for a Confirmation Order to be entered:

The total amount of all Administrative Claims shall not exceed $1,075,000

The total amount of all Priority Claims shall not exceed $ 190,000

The total amount of Claims to be included in Class 5 shall not exceed $74,000

The total amount of Claims to be included in Class 6 shall not exceed $33,000

The total amount of Claims to be included in Class 7 shall not exceed $234,000

The total amount of Claims to be included in Class 8 shall not exceed $917.000

Prior to the date of the Confirmation Hearing the Debtors will file and request hearings on the allowance or estimation of disputed Claims in order to determine whether the above stated preconditions to Confirmation can be satisfied. If, in the Debtors’ determination the stated preconditions cannot be satisfied, the Debtors, in their sole discretion, may withdraw this Plan.

B. Unclassified Claims.

In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Claims and Priority Tax Claims are not classified and are excluded from the following Classes and shall be paid in accordance with the provisions set forth in Article 2 of the Plan.

C. Classes.

The following constitute the Classes of Claims against and Interests in the Debtors:

Class 1 - Allowed Priority Claims . Class 1 consists of all Allowed Priority Claims against the Debtors.

Class 2 - Allowed Secured Claim of Laurus . Class 2 consists of all Allowed Secured Claims of Laurus.

Class 3 - Allowed Secured Claims of Berg McAfee . Class 3 consists of all Allowed Claims of Berg McAfee.

Class 4 - Allowed Secured Claims . Class 4 consists of all Allowed Secured Claims not treated in any other Class.

Class 5 - Allowed Eagle Convenience Claims . Class 5 consists of all Allowed Eagle Convenience Claims

Class 6 - Allowed Blast Convenience Claims . Class 6 consists of all Allowed Convenience Claims with the exception of the Claims of Creditors in Class 12.

Class 7- Allowed Eagle Unsecured Claims . Class 7 consists of all Allowed Eagle Unsecured Claims.

Class 8 – Allowed Blast Unsecured Claim. Class 8 consists of all Allowed Blast Unsecured Claims with the exception of the Claims of Creditors in Class 12.

Class 9 - Interests in the Debtor Blast . Class 9 consists of all Interests, including all Existing Equity Interests, in the Debtor Blast, excluding the stock owned by the Class 11 Interest holder.

Class 10 – Interests in the Debtor Eagle . Class 10 consists of all Interests in the Debtor Eagle.

Class 11 - Second Bridge, LLC Interest. Class 11 consists of the Interest owned and held by Second Bridge, LLC evidenced by 900,000 shares of Blast common stock.

Class 12 – Directors’ Unsecured Claim. Class 12 consists of all Allowed Unsecured Claims held by the Directors.

IV.

TREATMENT OF CLAIMS AND INTERESTS

Claims and Interests shall be treated in the manner set forth in this Article 4.

A. Unclassified Claims.

Each holder of an Allowed Administrative Claim or an Allowed Priority Tax Claim shall receive the treatment set forth in Article 2 of the Plan.

B. Classes of Claims and Interests.

Class 1 - Priority Claims . On the Distribution Date, each holder of an Allowed Priority Claim against the Debtors shall receive either (a) the Allowed Amount of its Priority Claim, in Cash or (b) such other, lesser treatment as may be agreed to in writing between such holder and the Debtors or the Disbursing Agent. This Class is unimpaired.

Class 2 - Secured Claim of Laurus . The Allowed Secured Claim of Laurus against the Debtors shall be fully satisfied by (a) transfer of the Rigs pursuant to the Settlement Agreement and Asset Purchase Agreement and (b) payment of $2,100,000 (the “Laurus Retained Claim”) pursuant to the terms of the Settlement Agreement and the Sale Order and from the sources and in the manner provided for in the Settlement Agreement and the Sale Order. The Laurus Retained Claim shall remain joint and several obligations of Reorganized Blast and Reorganized Eagle after the Effective Date and shall be secured by the Laurus Lien on the Laurus Collateral.

Any rights and claims of Laurus under the Asset Purchase Agreement, the Settlement Agreement and the Sale Order shall not be extinguished, released, altered, impaired or discharged under the Plan or the Confirmation Order. This Class is unimpaired.

Class 3 - Secured Claim of Berg McAfee . On the Effective Date, the Berg McAfee Secured Claims will be fully satisfied by issuance of a new note to Berg McAfee that contains the following provisions:

(i) Principal amount: $1,120,000

(ii) Term: due date three years from the Effective Date;

(iii) Interest rate of 8.0% per annum;

(iv) Interest payable: at end of term in Reorganized Blast Common Stock at the rate of $0.20 per share.

(v) Principal payable: at end of term

(vi) Right to convert to registered shares of Reorganized Blast Common Stock at a conversion price of $0.20 per share.

This Class is impaired.

Class 4 - Secured Claims . For voting purposes and to comply with section 1122(a) of the Bankruptcy Code, each Allowed Secured Claim shall be deemed to be in its own subclass. On the Distribution Date, at the election of the Debtor, the holder of each Allowed Secured Claim shall, on account of such Secured Claim, either (i) be paid in Cash in full, (ii) have surrendered to it, without representation or warranty, the collateral securing its Claim, or (iii) receive a note, secured by the Lien securing its Allowed Secured Claim, in the principal amount of its Allowed Secured Claim which provides for deferred Cash payments totaling the Allowed amount of such Secured Claim, of a value, as of the Effective Date at least equal to the value of such holder’s interest in the Estate’s interest in such property as determined by Final Order of the Bankruptcy Court. Any holder of an Allowed Secured Claim may agree to accept less favorable treatment. In the case of option (ii), in the event that any such Claim is not completely satisfied by such distribution, the deficiency amount will constitute a deficiency claim and will be classified as a General Unsecured Claim in Class 7 or Class 8 and will receive the same treatment as provided to other Claims in Class 7 or Class 8 as the case may be.

This Class is impaired.

Class 5 – Eagle Convenience Claims . In full and final satisfaction of its Claim, each holder of an Allowed Eagle Convenience Claim against Eagle shall receive Cash on the Distribution Date equal to 75% of such Allowed Convenience Claim. Election by the holder of an Allowed Unsecured Claim(s) otherwise treated under Class 7 of the Plan to reduce the Claim(s) of such holder to a total of no more than $10,000 and to receive distribution as a Class 5 Eagle Convenience Claim shall constitute a waiver of the right to recover any amount in excess of $10,000 against any Person who otherwise might be liable for such sum. Notwithstanding the foregoing proposal for payment of Allowed Eagle Convenience Claims, in the event that each holder of a Class 5 Claim does not vote to accept the Plan all Allowed Eagle Convenience Claims will be reclassified as Class 7 Eagle Unsecured Claims and such Allowed Claims will be paid as a Class 7 Claim, and no separate Eagle Convenience Claims payments will be made. The determination of whether a Claim is a Class 5 Claim shall be made by the Debtors prior to the Confirmation Date using the information in the Debtors’ Schedule of Liabilities and the Claims Register in these cases.

This Class is impaired.

Class 6 – Blast Convenience Claims . In full and final satisfaction of its Claim, each holder of an Allowed Blast Convenience Claim against Blast shall receive Cash on the Distribution Date equal to 75% of such Allowed Blast Convenience Claim. Election by the holder of an Allowed Unsecured Claim(s) otherwise treated under Class 8 of the Plan to reduce the Claim(s) of such holder to no more than $10,000 and to receive distribution as a Class 6 Blast Convenience Claim shall constitute a waiver of the right to recover any amount in excess of $10,000 against any Person who otherwise might be liable for such sum. Notwithstanding the foregoing proposal for payment of Allowed Blast Convenience Claims, in the event that each holder of Class 6 Claims does not vote to accept the Plan all Allowed Blast Convenience Claims will be reclassified as Class 8 Blast Unsecured Claims and such Allowed Claims will be paid as a Class 8 Claim, and no separate Blast Convenience Claims payments will be made. The determination of whether a Claim is a Class 6 Claim shall be made by the Debtors prior to the Confirmation Date using the information in the Debtors’ Schedule of Liabilities and the Claims Register in these cases.

This Class is impaired.

Class 7 – Eagle Unsecured Claims . Except to the extent that a holder of an Allowed Class 7 Unsecured Claim has agreed to receive other lesser treatment, such holder shall receive on the Distribution Date in full and final satisfaction of its Claim the following :

(vii) Cash equal to 35% of such holder’s Allowed Unsecured Claim;

(viii) An Eagle Junior Secured Note equal to 65% of such holder’s Allowed Unsecured Claim.

(ix) Payments on the Eagle Junior Secured Note will be made in accordance with the terms outlined in Annex 1 to the Plan.

At or prior to the Confirmation Hearing, Blast will appoint a collateral agent to administer the Lien securing the payment of the Eagle Junior Secured Note and the rights of the Class 7 Creditors with respect thereto.

This Class is impaired.

Class 8 – Blast Unsecured Claims . Except to the extent that a holder of an Allowed Class 8 Unsecured Claim has agreed to receive other lesser treatment, such holder shall receive on the Distribution Date in full and final satisfaction of its Claim the:

(x) Cash equal to 35% of such holder’s Allowed Unsecured Claim;

(xi) A Blast Junior Secured Note equal to 65% of such holder’s Allowed Unsecured Claim.

(xii) Payments on the Blast Junior Secured Note will be made in accordance with the terms outlined in Annex 2 to the Plan.

(xiii) At or prior to the Confirmation Hearing Blast will appoint a collateral agent to administer the Lien securing the payment of the Blast Junior Secured Note and the rights of the Class 8 Creditors with respect thereto.

This Class is impaired.

Class 9 - Interests . All Interests, including all Existing Equity Interests, in the Debtor Blast shall not be modified or impaired unless agreed to in writing by the Debtor Blast and any such Interest holder, and except with respect to the issuance of new shares of Blast common stock or new warrants as provided for in this Plan.

This Class is not impaired.

Class 10 - Interests . All Interests, including all Existing Equity Interests, in the Debtor Eagle shall not be impaired.

This Class is not impaired.

Class 11 - Second Bridge LLC Interest. In accordance with and as required by the terms of the Settlement Agreement, 900,000 shares of Blast common stock owned and held by Second Bridge, LLC will, on the Effective Date, be purchased by Reorganized Blast for Nine Hundred Dollars ($ 900.00). Such repurchased shares shall be returned to treasury.

Class 12 – Directors’ Unsecured Claims. In full and final satisfaction of a Director’s Allowed Unsecured Claim each such holder’s Allowed Unsecured Directors’ Claim shall be converted to Blast common stock at the rate of $ 0.20 per share. Any holder of an Allowed Class 12 Directors’ Unsecured Claim shall receive his shares of Blast common stock on or before thirty (30) days following the Distribution Date.

This Class is impaired.

TREATMENT OF EXECUTORY CONTRACTS,

AND UNEXPIRED LEASES

A. Assumption and Rejection of Unexpired Leases and Executory Contracts.

On and effective as of the Effective Date, with the exception of those contracts and leases set forth on schedule 5.1, all executory contracts and unexpired leases listed on the Schedules filed by the Debtors (including any amendments, revisions, or modifications thereto), excluding Rejected Executory Contracts, will be assumed. Executory contracts and leases entered into after the Petition Date will be performed by Reorganized Blast in the ordinary course of business.

B. Continuation of Employee Compensation and Benefit Programs.

On the Effective Date, Blast shall transfer sponsorship of the 2003 Blast Stock Option Plan to Reorganized Blast. All Tax-Qualified Plans of the Debtors shall continue in full force and effect on the Effective Date as obligations of Reorganized Blast, except as such plans may be modified, amended, or terminated in accordance with their terms or applicable policies, procedures or law.

C. Rejection Damages Claims.

Any Claims arising out of the rejection of an executory contract or unexpired lease must be filed with the Bankruptcy Court no later than the earlier of (a) thirty (30) days after the Effective Date, or (b) thirty (30) days after the date of any Final Order approving a Debtor’s rejection of such contract or lease. Any Claim not so filed shall be forever barred and may not be asserted against any of the Debtors, the Reorganized Debtor, or their properties or their Estates. Each Claim resulting from such rejection shall constitute a either a Class 5 Claim, a Class 6 Claim, a Class 7 Claim or a Class 8 Claim, depending on the Allowed Claim amount and the Debtor that is the party to the executory contract as the case may be.

D. Assumption Claims.

All cure and compensation payments which may be required by section 365(b)(1) and (2) of the Bankruptcy Code under any executory contracts and unexpired leases which are assumed shall constitute Administrative Claims and shall be treated under Article 2.1 of the Plan; provided, however , in the event of a dispute regarding the amount of any such payments, the cure of any other defaults, the ability of the Reorganized Debtor to provide adequate assurance of future performance or any other matter pertaining to assumption, the Reorganized Debtor shall make such payments and cure such other defaults and provide adequate assurance of future performance only following the entry of a Final Order resolving such dispute. The Debtors may provide prior notice in writing to a party to an executory contract or unexpired lease (with copy to counsel to the Creditors Committee) to be assumed hereunder setting forth the amount of any cure or compensation payments it intends to pay and any adequate assurance of future performance it intends to provide. If a party to such executory contract or unexpired lease has not filed an appropriate pleading with the Bankruptcy Court on or before the tenth (10th) day after mailing of such notice disputing the terms for assumption set forth in the Debtors’ notice and requesting a hearing thereon, then such party shall be deemed to have accepted such terms for assumption and waived its right to dispute such matters.

E. Employee Benefit and Welfare Programs.

All employee benefit and welfare programs of the Debtors, including programs subject to Section 1114 of the Bankruptcy Code, entered into before or after the Petition Date (and not subsequently terminated) are vested, and shall be deemed to be, and shall be treated as though they are, executory contracts that are assumed under this Article 5, and the Debtors’ obligations shall continue.

VI.

ACCEPTANCE OR REJECTION OF THE PLAN

A. Each Impaired Class Entitled to Vote Separately.

The holders of Claims or Interests in one or more impaired Class of Claims or Interests shall be entitled to vote separately to accept or reject the Plan.

B. Acceptance By Impaired Classes of Claims.

Pursuant to section 1126(c) of the Bankruptcy Code, an impaired Class of Claims shall have accepted the Plan if (a) the holders of at least two-thirds in dollar amount of the Allowed Claims actually voting in such Class have voted to accept the Plan and (b) more than one-half in number of such Allowed Claims actually voting in such Class have voted to accept the Plan. However, the vote of a holder of a Claim that is designated pursuant to section 1126(e) of the Bankruptcy Code may not be counted to determine acceptance or rejection of the Plan.

C. Acceptance By Impaired Class of Interests.

Pursuant to section 1126(d) of the Bankruptcy Code, an impaired Class of Interests shall have accepted the Plan if the holders of at least two-thirds in amount of the Allowed Interests actually voting in such Class (other than Interests held by any holder designated pursuant to section 1126(e) of the Bankruptcy Code) have voted to accept the Plan.

D. Presumed Acceptance of Plan.

Classes 2, 10 and 11 are not impaired. Under section 1126(f) of the Bankruptcy Code, the holders of Claims or Interests in such Classes are conclusively presumed to have voted to accept the Plan.

E. Cramdown.

The Debtors will request the Bankruptcy Court to confirm the Plan in accordance with section 1129(b) of the Bankruptcy Code in the event any other Class of Claims votes to reject the Plan on the basis that the Plan is fair and equitable and does not discriminate unfairly as to holders of any Class of Claims.

VII.

CONDITIONS TO CONFIRMATION AND

EFFECTIVENESS; REQUIRED NOTICES

A. Conditions to Confirmation.

Confirmation of the Plan shall not occur unless the Bankruptcy Court shall have made such findings and determinations regarding the Plan as shall enable the entry of the Confirmation Order, and any other order entered in conjunction therewith, in form and substance acceptable to the Debtors, and Laurus. Additionally, Confirmation of the Plan is subject to and may not occur unless each of the following preconditions is satisfied prior to the date of the Confirmation Hearing:

The total amount of all Administrative Claims shall not exceed $1,075,000.

The total amount of all Priority Claims shall not exceed $190,000.

The total amount of Claims to be included in Class 5 shall not exceed $74,000.

The total amount of Claims to be included in Class 6 shall not exceed $33,000.

The total amount of Claims to be included in Class 7 shall not exceed $234,000.

The total amount of Claims to be included in Class 8 shall not exceed $917,000.

The determination of whether such preconditions have been satisfied shall be made in the Debtors’ sole discretion. If, in the Debtors’ determination the stated preconditions cannot be satisfied, the Debtors, in their sole discretion, may withdraw this Plan.

B. Conditions to Effectiveness.

Notwithstanding any other provision of the Plan or the Confirmation Order, the Effective Date of the Plan shall not occur unless and until each of the following conditions has been satisfied or, if applicable, waived, in writing, by the Debtors and Laurus:

Confirmation Order . The Confirmation Order shall have become a Final Order; provided , however , that the Effective Date may occur at a point in time when the Confirmation Order is not a Final Order at the option of the Debtors, and Laurus, unless the effectiveness of the Confirmation Order has been stayed or vacated, in which case the Effective Date may be, again at the option of the Debtors, and Laurus, the first Business Day immediately following the expiration or other termination of any stay of effectiveness of the Confirmation Order.

Plan Documents . The Amended and Restated Blast Certificate of Incorporation and the Plan Documents necessary or appropriate to implement the Plan, shall be in final form and ready for execution or shall have been executed and be ready for delivery.

United States Trustee’s Fees . The fees of the United States Trustee then owing by the Debtors shall have been paid in full.

Private Placement Agreements . The Debtors shall have delivered the Convertible Preferred Stock and received the proceeds of the Private Placement Agreements in an amount satisfactory to provide for payment of the Plan obligations required on the Effective Date and to provide for the working capital needs of Reorganized Blast.

C. Effect of Nonoccurrence of Conditions to Effective Date.

Each of the conditions to the Effective Date must be satisfied or duly waived, as provided above, within 90 days after the Confirmation Date. If each condition to the Effective Date has not been satisfied or duly waived, as described above, within 90 days after the Confirmation Date, then upon motion by any party in interest made before the time that each of such conditions has been satisfied or duly waived and upon notice to such parties in interest as the Bankruptcy Court may direct, the Confirmation Order shall be vacated by the Bankruptcy Court. Notwithstanding the filing of such motion, however, the Confirmation Order may not be vacated if each of the conditions to the Effective Date is either satisfied or duly waived before the Bankruptcy Court enters an order granting such motion. If the Confirmation Order is vacated for failure to satisfy a condition to the Effective Date, the Plan shall be deemed null and void in all respects, including, without limitation, the discharge of Claims and termination of Interests pursuant to section 1141 of the Bankruptcy Code and the assumptions, assumptions and assignments or rejections of executory contracts and unexpired leases pursuant to the Plan, and nothing contained in the Plan will (i) constitute a waiver or release of any Claims by or against, or any Interests in, the Debtors or (ii) prejudice in any manner the rights of the Debtors.

D. Notice to Bankruptcy Court.

Promptly after the Effective Date, Reorganized Blast or the Disbursing Agent shall file with the clerk of the Bankruptcy Court a notice that the Plan has become effective; provided , however , that failure to file such notice shall not affect the effectiveness of the Plan or the rights and substantive obligations of any entity hereunder.

VIII.

DESCRIPTION OF SECURITIES ISSUED UNDER PLAN

A. Convertible Preferred Stock.

Subscription Amount: $3,000,000;

Type of security: Cumulative Convertible Preferred;

Dividend: 8% cumulative; payable at the option of Reorganized Blast in cash or, if sufficient cash is not available on due date, in Common Stock at a conversion price of $0.50 per share;

Payment: Following the Effective Date;

Conversion price: $0.50 per share;

Conversion Timing: Upon five days notice at investor’s option;

Automatic conversion: When share price exceeds $3 per share at an average volume of 50,000 shares/day for more than 20 consecutive trading days;

Warrant Term: Three (3) years;

Warrant Coverage: 25% based on number of shares purchased

Warrant Exercise Price: $0.10 per share;

Mandatory Redemption: At Blast’s option based on receipt of proceeds from Hallwood Litigation or Quicksilver Litigation with six (6) months prior notice to Investor; during the notice period the Investor can accept redemption or convert the Convertible Preferred Stock to Common Stock at a conversion price of $0.50 per share;

Redemption Notice: Three months;

Redemption Rights: Investor can either (a) accept principal and interest in cash, or (b) to partially or entirely convert into common stock at $0.50 per share;

Seniority: Senior only to Blast Common Stock;

Funding: $ 3,000,000 in cash to be funded on the Effective Date of a plan of reorganization proposed by Blast.

B. Creditor Stock.

Stock Issuance . Subject to Confirmation of the Plan and compliance with the requirements of the Bankruptcy Code and the terms of the Plan, Blast shall issue such new shares of Reorganized Blast Common Stock as are necessary to comply with the terms of this Plan.

C. Newly Authorized Blast Common Stock .

Authorized Shares . The Amended and Restated Certificate of Incorporation of Reorganized Blast shall provide that Reorganized Blast will have the authority to issue up to one hundred eighty million (180,000,000) shares of its Common Stock and twenty million (20,000,000) shares of its Convertible Preferred Stock.

Par Value . The Blast common stock shall have a par value of $0.001.

Voting . The holders of shares of Blast common stock shall be entitled to vote upon all matters submitted to a vote of the stockholders of Reorganized Blast and shall be entitled to one vote for each share of Blast common stock held.

Dividend Rights . Holders of shares of Blast common stock shall be entitled to receive dividends, if, when and as declared by Reorganized Blast’s Board of Directors.

Transferability . The Blast Common Stock shall be freely transferable, subject to compliance with applicable securities laws.

D. Eagle Junior Secured Note .

Issuance . Subject to Confirmation of the Plan and compliance with the requirements of the Bankruptcy Code and the terms of the Plan, Reorganized Blast shall execute and deliver to each Class 7 Creditor that is the holder of an Allowed Eagle Unsecured Claim the Eagle Security Agreement and an Eagle Junior Secured Note, which notes shall be in the principal amount of 65% of each such holder’s Allowed Eagle Unsecured Claim.

Maturity . The Eagle Junior Secured Note shall mature on the fifth anniversary of the Effective Date (“Maturity Date”). Any remaining unpaid amount of either principal or interest shall be due and payable in full on the Maturity Date.

Security . The Eagle Junior Secured Note shall be secured by a Lien on the proceeds of the Hallwood Litigation and Quicksilver Litigation , which Lien is subject and subordinate to the fees and expenses payable to Special Litigation Counsel and the Laurus Lien . No exercise of any rights or remedies with respect to the collateral unless and until the Laurus Retained Claim is paid in full.

Interest . The Eagle Junior Secured Note shall bear interest at a rate of eight percent (8%) per annum, payable semi-annually and calculated on the basis of a 365 day year and the actual number of days elapsed.

Principal Repayment . Prior to the Maturity Date principal payments shall be made from 25% of the Net Proceeds of the Hallwood Litigation and the Quicksilver Litigation to which the Debtors are entitled pursuant to the Settlement Agreement and the Sale Order within ten (10) business days from the receipt of any such Net Proceeds, and no sooner than simultaneously with payments to Laurus on account of the Laurus Retained Claim. After the Laurus Retained Claim is paid in full payments will be made on the Eagle Junior Secured Notes from 90% of the Net Proceeds within ten (10) business days from the receipt of any such Net Proceeds.

Optional Prepayments . At any time and from time to time, Reorganized Blast at its option may prepay the Eagle Junior Secured Note without premium or penalty.

Other Provisions . Set forth in Annex 1 to the Plan is a further description of the principal terms of the Eagle Junior Secured Note.

E. Blast Junior Secured Note .

Issuance . Subject to Confirmation of the Plan and compliance with the requirements of the Bankruptcy Code and the terms of the Plan, Reorganized Blast shall execute and deliver to each Class 8 Creditor that is the holder of an Allowed Blast Unsecured Claim the Blast Security Agreement and an Blast Junior Secured Note, which notes shall be in the aggregate principal amount of 65% of each such holder’s Allowed Blast Unsecured Claim.

Maturity . The Blast Junior Secured Note shall mature on the fifth anniversary of the Effective Date (“Maturity Date”).

Security . The Blast Junior Secured Note shall be secured by a Lien on the proceeds of the Hallwood Litigation and Quicksilver Litigation, which Lien is subject and subordinate to the fees and expenses payable to Special Litigation Counsel, the Laurus Lien, and the Eagle Junior Secured Note. No exercise of any rights or remedies with respect to the collateral unless and until the Laurus Retained Claim is paid in full.

Interest . The Blast Junior Secured Note shall bear interest at a rate of eight percent (8%) per annum, payable semi-annually after the Laurus Retained Claim is paid in full and calculated on the basis of a 365 or 366 day year and the actual number of days elapsed.

Principal Repayment . Prior to the Maturity Date and after the Eagle Junior Secured Notes are paid in full, but prior to the payment in full of the Laurus Retained Claim principal payments shall be made from 25% of the Net Proceeds of the Hallwood Litigation and the Quicksilver Litigation to which the Debtors are entitled pursuant to the Settlement Agreement and the Sale Order within ten (10) business days from the receipt of any such Net Proceeds, and no sooner than simultaneously with payments to Laurus on account of the Laurus Retained Claim. After the Laurus Retained Claim and the Eagle Junior Secured Notes are paid in full, payments will be made on the Blast Junior Secured Notes from 90% of the Net Proceeds within ten (10) business days from the receipt of any such Net Proceeds. Optional Prepayments . At any time and from time to time, Reorganized Blast at its option may prepay the Blast Junior Secured Note without premium or penalty.

Other Provisions . Set forth in Annex 1 to the Plan is a further description of the principal terms of the Blast Junior Secured Note.

F. Management Warrants .

Issuance . Subject to Confirmation of the Plan and compliance with the requirements of the Bankruptcy Code and the terms of the Plan, the Reorganized Blast Board of Directors shall, at its sole discretion, allocate the Management Warrants to Reorganized Blast’s senior management from time to time after the Distribution Date.

Number. 4 million

Term . The Management Warrants shall be exercisable at any time from the Distribution Date to and through the fifth (5 th ) anniversary of the Effective Date.

Exercise Price . The Management Warrants shall be exercisable at an exercise price per share equal to $0.20.

IX.

MEANS FOR IMPLEMENTATION OF THE PLAN

A. Substantive Consolidation.

The Debtors’ Estates shall not be substantively consolidated. All obligations of the Debtors under the Plan to holders of Claims shall be the liability of either Eagle or Blast, and shall not be the joint and several obligations of the Debtors, except with respect to the Laurus Retained Claim which shall remain a joint and several obligations.

B. Conversion of Blast .

Prior to or as of the Effective Date, Blast shall be converted into a Texas corporation and Eagle shall remain a Texas limited liability company. Upon the conversion of Blast into a Texas corporation there will be no name change. Blast’s amended and restated certificate of incorporation and bylaws shall be filed as Plan Documents. Consistent with section 1123(a)(6) of the Bankruptcy Code, the amended and restated certificate of incorporation of Reorganized Blast shall prohibit, among other things, the issuance of nonvoting equity securities as part of the Reorganization Cases.

C. Revesting of Assets.

On the Effective Date each of the remaining assets of each of the Debtors’ Estates and title thereto shall be deemed held, and simultaneously therewith, revest in Reorganized Blast and Reorganized Eagle, respectively . Thereafter, Reorganized Blast and Reorganized Eagle may operate their respective businesses and may use, acquire, and dispose of property free of any restrictions of the Bankruptcy Code, the Bankruptcy Rules, and the Bankruptcy Court. As of the Effective Date all property of Reorganized Blast and Reorganized Eagle shall be free and clear of all Claims and Interests, except as specifically provided in the Plan or the Confirmation Order.

D. Management Contracts.

On the Effective Date, Reorganized Blast will execute employment contracts with on substantially the same terms and conditions as their prior employment agreements with Blast.

E. Effectuating Documents.

Final or near-final versions of the Plan Documents, including the Private Placement Agreements, Reorganized Blast Convertible Preferred Stock, the Management Warrants, the Eagle Junior Secured Note, the Blast Junior Secured Note, the Collateral Agreements and the Laurus Retained Claim Documents shall be filed by the Debtors with the Bankruptcy Court on or before a date, as determined by the Debtors, that is as soon as practicable but in no event later than five (5) calendar days before the commencement of the Confirmation Hearing. The Plan Documents shall be in form and content acceptable to the Debtors and Laurus. On or before the Effective Date, all documents necessary to effectuate this Plan shall be executed and delivered, and where appropriate, filed with appropriate governmental authorities.

F. Initial Directors of Reorganized Blast.

The initial directors of Reorganized Blast shall be those individuals identified in the pleading to be filed by the Debtors with the Bankruptcy Court, not later than fifteen (15) days prior to the initial date of the Confirmation Hearing, each of whom shall serve for the initial term indicated therein next to the name of such individual.

G. Management of Reorganized Blast and Reorganized Eagle.

Except as otherwise provided in the Plan, all existing corporate officers of Blast and Eagle shall serve as corporate officers of Reorganized Blast and the Reorganized Eagle in the same capacities under terms similar to their existing offices and employment contracts, if any.

H. Authority to Prosecute or Settle Litigation.

Neither the Debtors nor Reorganized Blast nor any representative of their Estates shall commence and/or prosecute any avoidance or recovery actions under sections 544, 545, 547, 548, 549, or 550 of the Bankruptcy Code, and on the Effective Date, all such avoidance actions shall be deemed waived, released, and forever barred. The disputed matters with Saddle Creek Energy Development, the Hallwood Litigation, and the Quicksilver Litigation, shall be prosecuted, settled, or compromised as deemed appropriate by the board of directors of Reorganized Blast in an exercise of its business judgment under applicable corporate law; provided however that until the Laurus Retained Claim is paid in full, any settlement or compromise of either the Hallwood Litigation or the Quicksilver Litigation, will require the prior written consent of Laurus. Net Proceeds, if any, from such causes of action or the settlement thereof shall be distributed and used as provided for in this Plan, the Settlement Agreement and the Sale Order.

I. Further Authorizations.

The Debtors and Reorganized Blast, if and to the extent necessary, may seek such orders, judgments, injunctions, and rulings that any of them deems necessary to further carry out the intentions and purposes of, and give full effect to the provisions of, the Plan.

J. Transfer Taxes.

Pursuant to section 1146 of the Bankruptcy Code, the issuance, transfer, or exchange of any of the securities issued under, or the transfer of any other assets or property pursuant to, or in connection with, the Plan or the making or delivery of an instrument of transfer under or in connection with the Plan, including, but not limited to, the sale of the Rigs, shall not be taxed under any law imposing a stamp tax, transfer tax, sales tax or other similar tax.

K. Payment of United States Trustee’s Fees.

On the Effective Date, the Debtors shall pay all fees to the United States Trustee as required by applicable laws of the United States.

L. Recordable Order.

Upon Confirmation of the Plan, the Confirmation Order shall be deemed to be in recordable form, and shall be accepted by any recording officer for filing and recording purposes without further or additional orders when certified by the Clerk of the Bankruptcy Court.

M. Effectuating Documents and Further Transactions.

The Chief Executive Officer, President, or any managing member of the Debtors and/or Reorganized Blast or other officer authorized under Corporate Documents to perform such function, shall be authorized to execute, deliver, file, or record such contracts, instruments, releases, indentures, and other agreements or documents and take or direct such actions as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan. The Secretary of the Debtors and/or Reorganized Blast shall be authorized to certify or attest to any of the foregoing actions.

N. Limited Liability Company and Corporate Action.

All matters provided for under the Plan involving the organizational structure of the Debtors, Reorganized Eagle or Reorganized Blast, or any manager, limited liability company or corporate action to be taken by, or required of, the Debtors or Reorganized Blast, shall be deemed to have occurred and be effective as provided herein, and shall be authorized and approved in all respects without any requirement for further action by the members, stockholders or directors of any of such entities.

O. Dissolution of Committees.

To the extent not dissolved earlier, the Creditors Committee, and any other committee appointed by the United States Trustee pursuant to section 1102 of the Bankruptcy Code in these Reorganization Cases shall be dissolved on the Effective Date.

P. Survival of Indemnification Obligations.

Notwithstanding any other provision of the Plan, all obligations of the Debtors to indemnify their and their Affiliates’ current and former members or directors, and current officers, employees, or agents and representatives, including, without limitation, (i) indemnification obligations arising under the certificate of incorporation and bylaws of the Debtors, (ii) indemnification obligations arising by contract, and (iii) indemnification obligations arising under applicable, non-bankruptcy law, shall be assumed pursuant to this Plan, survive Confirmation of the Plan and shall be performed as obligations of Reorganized Blast, irrespective of whether such indemnification was owed at time of Confirmation or only became owing in the future, and irrespective, further, of whether indemnification is owed in connection with an event occurring before, on, or after the Petition Date. Reorganized Blast shall not amend any of its Corporate Documents in a manner to affect adversely any Person benefited by such indemnities. Reorganized Blast shall maintain insurance in an amount consistent with past practices to fund indemnification obligations under this provision of the Plan.

Q. Compromise and Settlement.

Pursuant to Bankruptcy Rule 9019(a), the Plan incorporates and is intended to serve as a compromise and settlement of various Claims against the Debtors and/or claims that they may have against other persons, including Intercompany Claims. The Debtors expressly reserve the right (with Bankruptcy Court approval, following appropriate notice and opportunity for a hearing) to compromise and settle Claims against them and claims that they may have against other persons up to and including the Effective Date. After the Effective Date, such right shall pass to the Reorganized Debtors pursuant to the Plan.

INJUNCTIONS, RELEASES AND DISCHARGE

A. Discharge and Release.

Except as specifically provided in the Plan or in the Confirmation Order, effective on the Effective Date, consummation of the Plan shall discharge and release the Debtors, Reorganized Blast and Reorganized Eagle from any and all Claims and demands including any Claim of a kind specified in section 502(g), 502(h), or 502(i) of the Bankruptcy Code, whether or not (i) a Proof of Claim based on such Claim was filed or deemed filed under section 501 of the Bankruptcy Code, or such Claim was listed on the Schedules of the Debtor, (ii) such Claim is or was Allowed under section 502 of the Bankruptcy Code, or (iii) the holder of such Claim has voted on or accepted the Plan; provided, however, that no Claim of a governmental unit within the meaning of section 101(27) of the Bankruptcy Code for or related to environmental remediation shall be included within the scope of this discharge.

B. Discharge Injunction.

Except as specifically provided in the Plan Documents to the contrary, the satisfaction, release, and discharge set forth in Article 10.1 of the Plan also shall operate as an injunction prohibiting and permanently enjoining the commencement or continuation of any action, the employment of process or any act to collect, recover from, or offset (a) any Claim against or Interest in the Debtors, Reorganized Blast or Reorganized Eagle by any Entity and (b) any cause of action, whether known or unknown, based on the same subject matter as any Claim or Interest.

C. Discharge of Disallowed Claims and Disallowed Interests.

On and after the Effective Date, the Debtors shall be fully and finally discharged of any liability or obligation on a Disallowed Claim or a Disallowed Interest, and any order creating a Disallowed Claim or a Disallowed Interest that is not a Final Order as of the Effective Date solely because of an Entity’s right to move for reconsideration of such order pursuant to section 502 of the Bankruptcy Code or Bankruptcy Rule 3008 shall nevertheless become and be deemed to be a Final Order on the Effective Date. The Confirmation Order, except as otherwise provided herein, or unless the Bankruptcy Court orders otherwise, shall constitute an order: (a) disallowing all Claims and Interests to the extent such Claims and Interests are not allowable under any provision of section 502 of the Bankruptcy Code, including, but not limited to, time-barred Claims and Interests, and Claims for unmatured interest, and (b) disallowing or subordinating, as the case may be, any Claims, or portions of Claims, for penalties or non-compensatory damages.

D. Releases of Officers and Directors.

On the Effective Date, the Debtors, on their own behalf and on behalf of their Estates, shall be deemed, without need for further action, to have granted an unconditional release to all current officers and current and former members or directors of any of the Debtors or their Affiliates for any and all claims, obligations, suits, judgments, damages, rights, causes of action, and liabilities, other than for willful misconduct, arising under the Bankruptcy Code or during the Reorganization Cases whether known or unknown, accruing or related to acts or omissions in the course of performing their respective duties occurring after the Petition Date and prior to the Effective Date.

The terms of this provision shall be effectuated by a permanent injunction which shall be included in the Confirmation Order.

E. Exoneration.

Unless a claim for any of the following is initiated prior to the date of the Confirmation Hearing, the Persons identified in 10.4 above shall not be liable, other than for willful misconduct, to any holder of a Claim or Interest or to any Person or with respect to any action, omission, forbearance from action, decision, or exercise of discretion taken at any time after the Petition Date and prior to the Effective Date in connection with: (a) the management or operation of the Debtors, or the discharge of their duties under the Bankruptcy Code or applicable non-bankruptcy law, (b) the implementation of any of the transactions provided for, or contemplated in, the Plan or the Plan Documents, (c) any action taken in connection with either the enforcement of the Debtors’ rights against any Entities or the defense of Claims asserted against the Debtors with regard to the Reorganization Cases, (d) any action taken in the negotiation, formulation, development, proposal, disclosure, Confirmation, or implementation of the Plan, or (e) the administration of the Plan or the assets and property to be distributed pursuant to the Plan. In any action, suit or proceeding by any holder of a Claim or Interest or any other Entity contesting any action by, or non-action of, the Debtors, Reorganized Blast, Reorganized Eagle, and of their respective stockholders, directors, officers, agents, employees, members, attorneys, accountants, financial advisors, and representatives, the reasonable attorneys’ fees and costs of the prevailing party shall be paid by the losing party and as a condition to going forward with such action, suit, or proceeding at the outset thereof, all parties thereto shall be required to provide appropriate proof and assurances of their capacity to make such payments of reasonable attorneys’ fees and costs in the event they fail to prevail.

The provisions of Section 10.5 above and the exoneration from liability contained therein shall not be binding upon Laurus with respect to the Laurus Retained Claim.

10.6. Asset Purchase Agreement; Settlement Agreement; Sale Order . Notwithstanding anything to the contrary in this Article 10 or the Plan, any rights and claims of Laurus under the Asset Purchase Agreement, the Settlement Agreement and the Sale Order shall not be extinguished, released, altered, impaired or discharged under or pursuant to the Plan or the Confirmation Order and shall remain obligations of the Reorganized Debtors.

XI.

MATTERS INCIDENT TO PLAN CONFIRMATION

A. Term of Certain Injunctions and Automatic Stay.

All of the injunctions and/or automatic stays provided for in or in connection with the Reorganization Cases, whether pursuant to section 105, section 362 or any other provision of the Bankruptcy Code or other applicable law, in existence immediately prior to Confirmation shall remain in full force and effect until the Injunctions become effective, and thereafter if so provided by the Plan, the Confirmation Order, or by their own terms. In addition, on and after the Confirmation Date, the Debtors may seek such further orders as they may deem necessary to preserve the status quo during the time between Confirmation and the Effective Date.

Each of the Injunctions shall become effective on the Effective Date and shall continue in effect at all times thereafter. Notwithstanding anything to the contrary contained elsewhere in the Plan, all actions in the nature of those to be enjoined by the Injunctions shall be enjoined during the period between the Confirmation Date and the Effective Date.

B. No Liability for Tax Claims.

Unless a taxing authority has asserted a Claim against a Debtor before the bar date established therefor, no Claim of such authority shall be Allowed against the Debtors, Reorganized Blast or for taxes, penalties, interest, additions to tax, or other charges arising out of the failure, if any, of the Debtors or any other Person to have paid taxes or to have filed any tax return (including, but not limited to, any income tax return or franchise tax return) in or for any prior year or arising out of an audit of any return for a period before the Petition Date.

C. Compliance with Tax Requirements

. In connection with the Plan, Reorganized Blast and the Disbursing Agent shall comply with all applicable withholding and reporting requirements imposed by federal, state, and local taxing authorities. Creditors may be required to provide certain tax information as a precondition to distributions under the Plan.

XII.

PROVISIONS GOVERNING DISTRIBUTIONS

AND RESOLUTION OF DISPUTED CLAIMS

A. Plan Distributions.

The Disbursing Agent shall make all distributions required under the Plan. Distributions shall be made on the Distribution Date (unless otherwise provided in a Plan Document or ordered by the Bankruptcy Court) with respect to all Claims. Distributions to be made on the Distribution Date shall be deemed actually made on the Distribution Date if made either (a) on the Distribution Date or (b) as soon as practicable thereafter.

B. Interest on Claims.

Unless otherwise specifically provided for in the Plan or the Confirmation Order, or required by applicable bankruptcy law, post-petition interest shall not accrue or be paid on Claims, and no holder of a Claim shall be entitled to interest accruing on or after the Petition Date on any Claim. Interest shall not accrue or be paid upon any Disputed Claim in respect of the period from the Petition Date to the date a final distribution is made thereon if and after such Disputed Claim becomes an Allowed Claim.

C. Unclaimed Property.

Any Cash, assets, and other property to be distributed under the Plan that remains unclaimed (including by an Entity’s failure to negotiate a check issued to such Entity) or is otherwise not deliverable to the Entity entitled thereto on the later of (a) one year after distribution or (b) 120 calendar days after the order allowing such Entity’s Claim becomes a Final Order, shall become vested in, and shall be transferred and delivered to, Reorganized Blast for use in its discretion on the thirtieth (30th) day after Reorganized Blast or the Disbursing Agent files a notice with the Bankruptcy Court setting forth information regarding the holders whose distributions are unclaimed or undeliverable and the amount of such distributions (if Cash) or a description of the property to be distributed. In such event, such Entity’s Claim or Interest shall no longer be deemed to be Allowed and such Entity shall be deemed to have forever waived its rights to such payments or distributions under the Plan pursuant to section 1143 of the Bankruptcy Code.

D. Withholding of Taxes.

The Disbursing Agent shall withhold from any assets or property distributed under the Plan any assets or property which must be withheld for foreign, federal, state, and local taxes payable with respect thereto or payable by the Person entitled to such assets to the extent required by applicable law.

E. Disputed Claims and Determination of Disputed Claims.

Only Claims that are Allowed shall be entitled to distributions under the Plan. A Claim which is not a Disputed Claim in its entirety shall be considered a Disputed Claim only to the extent of the portion thereof which is disputed, and shall be considered an Allowed Claim as to the undisputed portion thereof. The Debtors reserve the right to contest and object to any Claims asserted against the Debtors, including any Claims not listed in the Debtors’ Schedules, listed therein as disputed, contingent and/or unliquidated in amount or listed therein at a lesser amount than asserted in a Proof of Claim.

F. Objection Deadline.

As soon as practicable, but in no event later than thirty (30) days after the Effective Date, unless otherwise ordered by the Bankruptcy Court, Reorganized Blast and Reorganized Eagle shall file objections to Claims with the Bankruptcy Court; provided, however, that Reorganized Blast or Reorganized Eagle may seek to extend such period (or to extend further any extended period) for cause.

G. Prosecution of Objections.

After the Effective Date, only Reorganized Blast and Reorganized Eagle, in their sole discretion, shall have authority to file objections to Claims and to litigate to judgment, settle, or withdraw such objections to Disputed Claims. The failure of the Debtors prior to Confirmation to object to a Claim for purposes of voting on the Plan shall in no way be deemed to be a waiver of the right of the Reorganized Debtors to object to such Claim in whole or in part.

H. Distribution Reserve.

Notwithstanding all references in the Plan to Claims that are Allowed, in undertaking the calculations concerning Allowed Claims under the Plan, including the determination of the amount or number of distributions due to the holders of Allowed Claims, each Disputed Claim shall be treated as if it were an Allowed Claim, except that if the Bankruptcy Court estimates, pursuant to Section 502(c) of the Bankruptcy Code, the likely portion of a Disputed Claim to be Allowed or authorized or otherwise determines the amount or number which would constitute a sufficient reserve for a Disputed Claim (which estimates and determinations may be requested by the Debtor, the Reorganized Blast, Reorganized Eagle or the Disbursing Agent), such estimated amount or number as determined by the Bankruptcy Court shall be used as to such Claim for purposes of both reserve and distribution. The Cash distributions due in respect of Disputed Claims based on the calculations required by the Plan shall be reserved for the holders of Disputed Claims and deposited in the Disputed Claims Reserve.

I. Distribution After Resolution of Disputed Claims.

After an objection to a Disputed Claim is withdrawn, resolved by agreement, or determined by Final Order, the distributions due on account of any resulting Allowed Claim shall be made by the Disbursing Agent, provided that any distribution of Cash shall be made from the Disputed Claims Reserve. Such distribution shall be made on the Distribution Date or as otherwise provided in the Plan.

Should a finally Allowed Claim of a holder otherwise entitle the holder to a Cash distribution in an amount in excess of the undistributed assets in the Disputed Claims Reserve, unless the Reorganized Debtor elects to pay such holder sooner, the holder shall receive, for the shortfall in the reserve to pay amounts already due, a three (3) year straight note from Reorganized Blast for such amount bearing five percent (5%) per annum simple interest from the date of the resolution of the Disputed Claim and in no event shall such holder have recourse to any payments or distributions theretofore made to or for the benefit of any holder of a Claim hereunder.

After an objection to such a Disputed Claim is sustained in whole or in part by a Final Order or by agreement such that the Disputed Claim is Disallowed in whole or in part, (1) any amount held in the Disputed Claims Reserve in respect of the particular Disputed Claim (in excess of the distributions due on account of any resulting Allowed Claim) shall be returned by the Disbursing Agent to the Reorganized Debtors shall become the property of the Reorganized Debtors and may be used by the Reorganized Debtors in any manner not inconsistent with this Plan.

XIII.

RETENTION OF JURISDICTION

A. Jurisdiction.

Until the Reorganization Cases are closed, the Bankruptcy Court shall retain the fullest and most extensive jurisdiction permissible, including all jurisdiction necessary to ensure that the purposes and intent of the Plan are carried out. Except as otherwise provided in the Plan, the Bankruptcy Court shall retain jurisdiction to hear and determine all Claims against and Interests in the Debtors, and to adjudicate and enforce all other causes of action that may exist on behalf of the Debtors.

o General Retention.

Following the Confirmation of the Plan, the administration of the Reorganization Cases will continue until the Effective Date. The Bankruptcy Court shall also retain jurisdiction for the purpose of classification of any Claim and the re-examination of Claims which have been Allowed for purposes of voting, and the determination of such objections as may be filed with the Bankruptcy Court with respect to any Claim.

B. Specific Purposes.

In addition to, and without limitation of, the foregoing, the Bankruptcy Court shall retain jurisdiction for the following specific purposes after Confirmation:

to modify the Plan after Confirmation pursuant to the provisions of the Bankruptcy Code and the Bankruptcy Rules;

to correct any defect, cure any omission, reconcile any inconsistency, or make any other necessary changes or modifications in or to the Plan, any Plan Documents, or the Confirmation Order as may be necessary to carry out fully the purposes and intent of the Plan, including the adjustment of the date(s) of performance under the Plan Documents in the event that the Effective Date does not occur as provided herein so that the intended effect of the Plan may be substantially realized thereby;

to assure the performance by the Disbursing Agent of the obligations to make distributions under the Plan;

to enforce and interpret the terms and conditions of the Plan Documents;

to enter such orders or judgments, including, but not limited to, injunctions (i) as are necessary to enforce the title, rights, and powers of the Debtors, Reorganized Blast and Reorganized Eagle and (ii) unless otherwise provided in the Plan, as are necessary to enable holders of Claims to pursue their rights against any Entity that may be liable therefor pursuant to applicable law or otherwise, including, but not limited to, Bankruptcy Court orders;

to hear and determine any motions or contested matters involving taxes, tax refunds, tax attributes, tax benefits, and similar or related matters with respect to the Debtors, Reorganized Eagle or Reorganized Blast arising on or prior to the Effective Date, arising on account of transactions contemplated by the Plan Documents, or relating to the period of administration of the Reorganization Cases;

to allow, disallow, determine, liquidate, classify, estimate or establish the priority or secured or unsecured status of any Claim or Interest, including the resolution of any request for payment of any Administrative Expense, the resolution of any objections to the allowance or priority of Claims or Interests, or the resolution of any dispute as to the treatment necessary to reinstate a Claim pursuant to the Plan;

to hear and determine disputes and controversies with respect to the validity, perfection, or enforceability of any pre-petition or post-petition Liens;

to hear and determine all applications for compensation of professionals and reimbursement of expenses under sections 330, 331, or 503(b) of the Bankruptcy Code;

to hear and determine any causes of action arising during the period from the Petition Date through the Effective Date;

to hear and determine any cause of action in any way related to the Plan Documents or the transactions contemplated thereby, against the Debtors, Reorganized Blast, Reorganized Eagle and their respective officers, directors, stockholders, employees, members, attorneys, accountants, financial advisors, representatives, and agents;

to hear and determine the Hallwood Litigation and the Quicksilver Litigation;

to hear and determine any and all motions pending as of Confirmation for the rejection, assumption, or assumption and assignment of executory contracts or unexpired leases and the allowance of any Claim resulting therefrom, and resolve any matters related thereto;

to hear and determine such other matters and for such other purposes as may be provided in the Confirmation Order;

(xv) to hear and determine all questions and disputes regarding, and to enforce terms and provisions of, the Settlement Agreement, the Asset Purchase Agreement and the Sale Order;

to consider and act on the compromise and settlement of any Claim against or Interest in the Debtors or their Estates including, without limitation, any disputes relating to the Administrative Claims Bar Date and the Bar Date; and

to hear and determine all questions and disputes regarding title to the assets of the Debtors or their Estates.

C. Failure of Bankruptcy Court to Exercise Jurisdiction.

If the Bankruptcy Court abstains or exercises discretion not to hear any matter within the scope of its jurisdiction, nothing herein shall prohibit or limit the exercise of jurisdiction by any other tribunal having competent jurisdiction over such matter.

XIV.

MISCELLANEOUS

A. Revocation of Plan.

The Debtors reserve the right to revoke and withdraw the Plan before the entry of the Confirmation Order. If the Debtors revoke or withdraw the Plan, or if Confirmation does not occur, then, with respect to all parties in interest, the Plan shall be deemed null and void and nothing contained herein shall be deemed to constitute a waiver or release of any Claims by or against the Debtors or any other Entity or to prejudice in any manner the rights of the Debtors or such Entity in any further proceedings involving the Debtors.

B. Modification of Plan.

The Debtors may propose amendments to or modifications of the Plan under section 1127 of the Bankruptcy Code at any time prior to the Confirmation Date. After Confirmation, the Debtors, Reorganized Eagle and/or Reorganized Blast may remedy any defects or omissions or reconcile any inconsistencies in the Plan or the Confirmation Order or any other order entered for the purpose of implementing the Plan in such manner as may be necessary to carry out the purposes and intent of the Plan as long as the interests of holders of Allowed Claims are not adversely affected.

C. Modification of Payment Terms.

The Debtors, Reorganized Eagle and/or Reorganized Blast reserve the right to modify the treatment of any Allowed Claim, as provided in section 1123(a)(4) of the Bankruptcy Code, at any time after the Effective Date upon the consent of the holder of such Allowed Claim.

D. Section 1145 Exemption.

The provisions of Section 5 of the Securities Act of 1933 and any state and local laws requiring registration for offer or sale of a security do not apply to any securities issued pursuant to the Plan and for the considerations stated in Section 1145(a) of the Bankruptcy Code. unless the transferor of any such securities is deemed to be an “underwriter” within the meaning of the provisions of section 1145(b) of the Bankruptcy Code. However, any securities being issued under the Plan, whether Common Stock, Convertible Preferred Stock, Warrants or options, that are not issued in exchange for an existing Claim or Interest are not entitled to the benefits of the exemptions provided for in Section 1145 of the Bankruptcy Code.

E. Entire Agreement.

The Plan Documents set forth the entire agreement and undertakings relating to the subject matter thereof and supersede all prior discussions and documents. No Entity shall be bound by any terms, conditions, definitions, warranties, understandings, or representations with respect to the subject matter hereof, other than as expressly provided for herein or as may hereafter be agreed to by the parties in writing.

F. Severability.

If, prior to Confirmation, any term or provision of the Plan is held by the Bankruptcy Court to be invalid, void or unenforceable, the Bankruptcy Court, at the request of the Debtors, shall have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void or unenforceable, and such term or provision shall then be applicable as altered or interpreted. Notwithstanding any such holding, alteration or interpretation, the remainder of the terms and provisions of the Plan shall remain in full force and effect and shall in no way be affected, impaired or invalidated by such holding, alteration or interpretation. The Confirmation Order shall constitute a judicial determination and shall provide that each term and provision of the Plan, as it may have been altered or interpreted in accordance with the foregoing, is valid and enforceable pursuant to its terms.

G. Rules of Construction.

Where used in the Plan, a word or phrase appearing in the singular shall be interpreted as appearing in the plural, and vice versa, if the context or circumstances require.

H. Successors and Assigns.

The terms of the Plan shall be binding on and inure to the benefit of successors and assigns of the original parties bound to or entitled to benefits under such Plan.

I. Headings.

Headings are utilized in the Plan for convenience and reference only and shall not constitute a part of the Plan for any other purpose.

J. Administrative Claims Bar Date.

Unless otherwise ordered by the Bankruptcy Court, the bar date for Administrative Claims shall be the first Business Day that is forty-five (45) days after the Effective Date. Claimants holding Administrative Claims against the Debtors not paid on the Effective Date must submit a Request for Payment of Administrative Expense on or before such bar date. The notice of Confirmation to be delivered pursuant to Bankruptcy Rules 2002 and 3020(c) will set forth such date and constitute notice of the Administrative Claims Bar Date. Reorganized Blast, Reorganized Eagle and any other party in interest will have thirty (30) days after the Administrative Claims Bar Date to review and object to such Claims before a hearing for determination of such Administrative Claims is held by the Bankruptcy Court, provided that such thirty day period of review may be extended by the Bankruptcy Court upon the request of Reorganized Blast.

K. Governing Law.

Except to the extent that federal law (including, but not limited to, the Bankruptcy Code and the Bankruptcy Rules) is applicable or where the Plan provides otherwise, the rights and obligations arising under the Plan shall be governed by, and construed and enforced in accordance with, the laws of the State of Texas, without giving effect to its principles of conflicts of law.

L. Consent to Jurisdiction.

Upon default under the Plan, the Debtors and Reorganized Blast consent to the jurisdiction of the Bankruptcy Court, or any successor thereto, and agree that it shall be the preferred forum for all proceedings relating to such default.

M. Setoffs.

Subject to the limitations provided in section 553 of the Bankruptcy Code, the Debtors and/or Reorganized Debtor may, but shall not be required to, setoff against any Claim and the payments or other distributions to be made pursuant to the Plan in respect of such Claim, claims of any nature whatsoever that the Debtors may have against the holder of such Claim, but neither the failure to do so nor the allowance of any Claim hereunder shall constitute a waiver or release by the Debtors of any such claim that the Debtors may have against such holder. With respect to any Intercompany Claims, the payments or other distributions to be made pursuant to the Plan in respect of any pre-petition Claim of an Affiliate of the Debtors shall be setoff against any post-petition Claim of the Debtors, provided however, if such setoff results in a net Claim owing from an Affiliate to a Debtor such Debtor waives and releases such Claim against the Affiliate.

N. Non-Debtor Waiver of Rights.

Non-debtor parties shall have the right to voluntarily waive any rights, benefits or protections that are afforded to them under the provisions of the Plan or any order issued in furtherance of the Plan, and such waiver shall supersede such rights, benefits or protections. Any such waiver shall only be effective if such party expressly and specifically waives in writing one or more of such rights, benefits or protections.

O. Professional Fees.

Subject to Article 9.15 of the Plan, payment of fees and expenses incurred after the Effective Date in connection with the Chapter 11 Cases of the Debtors and their Affiliates by professionals retained pursuant to sections 327, 328, and 1103 of the Bankruptcy Code shall not be subject to approval by the Bankruptcy Court and may be paid by Reorganized Blast in the ordinary course as those obligations become due.

P. Filing of Additional Documents.

On or before the Effective Date, the Debtors may file with the Bankruptcy Court such other agreements and/or other documents as may be necessary to further evidence the terms and conditions of the Plan.

Q . Notices

. All notices, requests, or demands in connection with the Plan shall be in writing and shall be mailed or electronically transmitted to:

If to the Debtors-in-Possession or Reorganized Debtor:

Blast Energy Services, Inc.

Attn: John O’Keefe

14550 Torrey Chase Boulevard

Suite 330

Houston, TX 77014

Email: john@blast-es.com

with a copy to:

H. Rey Stroube, III

710 Buckingham Drive

Houston, Texas 77024

Facsimile: (713) 688-4331

Email: rstroube@houston.rr.com

If to the Creditors Committee:

Akin Gump Strauss Hauer & Feld LLP

Attn : S. Margie Venus

1111 Louisiana Street, 44 th Floor

Houston, Texas 77002

Facsimile: (713) 236-0822

Email: svenus@akingump.com

If to the United States Trustee:

Office of the United States Trustee

Attn : Ellen Hickman

U.S. Department of Justice

515 Rusk Avenue, Third Floor

Houston, Texas 77002

Facsimile: (713) 718-4680

Email: ellen.hickman @usdoj.gov

If to Laurus to:

Laurus Master Fund Ltd.

Attn: Brendan Phalen

335 Madison Avenue, 10th Floor

New York, NY 10017

Telephone: 212-541-5800

Facsimile: 212-541-4434

with a copy to:

Stuart Komrower, Esq.

Cole, Schotz, Meisel, Forman & Leonard, P.A.

25 Main Street

Hackensack, NJ 07601

201.525.6331 direct dial

201.678-6331 direct fax

and

Warner Stevens, L.L.P.

301 Commerce Street, Suite 1700

Fort Worth, Texas 76102

Attention: Michael D. Warner, Esq.

Telephone: 817-810-5250

Facsimile: 817-810-5255

Dated: September 11, 2007

Signatures

This Plan may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which shall be deemed one and the same instrument.

Blast Energy Services, Inc

By: /s/ John O’Keefe

Eagle Domestic Drilling Operations LLC

By: /s/ John O’Keefe

By: H. Rey Stroube, III

H. Rey Stroube, III

State Bar No. 19422000

710 Buckingham Drive

Houston, Texas 77024

Telephone: (713) 688-4331

rstroube@houston.rr.com (e-mail)

ATTORNEY FOR BLAST ENERGY SERVICES, INC.

EAGLE DOMESTIC DRILLING OPERATIONS LLC, DEBTORS.

ANNEX 1

EAGLE JUNIOR SECURED NOTE

$ 234,000 Total Indebtedness

1. Borrower	Reorganized Blast
2. Amount	$234,000, approximately
3. Collateral	Lien on proceeds of the Hallwood Litigation and Quicksilver Litigation subject and subordinate to the Laurus Lien. No exercise of any rights or remedies with respect to the collateral unless and until the Laurus Retained Claim is paid in full.
4. Maturity	5 years after the effective date of Blast’s Plan any remaining unpaid principal or interest is due and payable
5. Repayment	Prior to the Maturity Date principal payments shall be made from 25% of the Net Proceeds of the Hallwood Litigation and the Quicksilver Litigation within ten (10) business days from the receipt of any such Net Proceeds. After the Laurus Retained Claim is paid in full payments, will be made on the Eagle Junior Secured Notes from 90% of the Net Proceeds within ten (10) business days from the receipt of any such Net Proceeds.
6. Interest rate	8% per annum; interest payable semi-annually .
7. Optional Prepayment	Blast may prepay the Eagle Junior Secured Notes at any time, without premium or penalty.
9. Covenants	Affirmative and negative covenants customary for a credit and note structure of this type, including, but not limited to, incurrence of indebtedness, debt to net worth ratio, fixed charge coverage ratio, distributions, sale of assets, encumbrances, and merger and consolidation.
10. Assignability	none
11. Payment Dates	within ten (10) business days after receipt of Net Proceeds

ANNEX 2

BLAST JUNIOR SECURED NOTE

$ 917,000 Total Indebtedness

1. Borrower	Reorganized Blast
2. Amount	$917,000, approximately
3. Collateral	Lien on proceeds of the Hallwood Litigation and Quicksilver Litigation subject and subordinate to the Laurus Lien, and to the Lien securing the Eagle Junior Secured Note. No exercise of any rights or remedies with respect to the collateral unless and until the Laurus Retained Claim is paid in full.
4. Maturity	5 years after the effective date of Blast’s Plan any remaining unpaid principal or interest is due and payable
5. Repayment	Prior to the Maturity Date and after the Eagle Junior Secured Notes are paid in full, but prior to the payment in full of the Laurus Retained Claim principal payments shall be made from 25% of the Net Proceeds of the Hallwood Litigation and the Quicksilver Litigation within ten (10) business days from the receipt of any such Net Proceeds. After the Laurus Retained Claim and the Eagle Junior Secured Notes are paid in full, payments will be made on the Blast Junior Secured Notes from 90% of the Net Proceeds within ten (10) business days from the receipt of any such Net Proceeds.
6. Interest rate	8% per annum; interest payable semi-annually after the Laurus Retained Claim is paid in full.
7. Optional Prepayment	Blast may prepay the Blast Junior Secured Notes at any time, without premium or penalty.
9. Covenants	Affirmative and negative covenants customary for a credit and note structure of this type, including, but not limited to, incurrence of indebtedness, debt to net worth ratio, fixed charge coverage ratio, distributions, sale of assets, encumbrances, and merger and consolidation.
10. Assignability	none
11. Payment Dates	periodic, depending on litigation recoveries

EXHIBIT 10.3

SUBSCRIPTION AGREEMENT

BLAST ENERGY SERVICES, INC.

1 . SUBSCRIPTION . This Agreement has been executed by Clyde Berg, an individual having a principal place of business in Cupertino, California (“Purchaser” or “Shareholder”) in connection with the offering of units consisting of Four (4) shares of Convertible Series A Preferred Stock and One (1) Warrant with an exercise price of $0.10 per share (collectively referred to hereinafter as the "Units") of Blast Energy Services, Inc., a corporation organized under the laws of the State of California (hereinafter referred to as the "Company"). Purchaser hereby subscribes to purchase 1,000,000 Units at $2.00 per Unit for a total amount of $ 2,000,000.

2 . REPRESENTATIONS BY THE UNDERSIGNED . The undersigned represents and warrants as follows (please select only one from (i) through (iii) below [selecting more than one from (i) though (iii) below will invalidate this subscription]):

(i) __ X__ I am an Accredited Investor because I meet one of the following items:

·	is a natural person who has an individual net worth, or joint net worth with that person's spouse of more than $1,000,000; or

·	is a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or

·	is a bank as defined in Section 3(a)(2) of the 1933 Act or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act whether acting in its individual or fiduciary capacity; or

·	any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; or

·	is an insurance company as defined in Section 2(13) of the 1933 Act; or

·	is an investment company registered under the Investment Company Act of 1940; or

·	a business development company as defined in Section 2(a)(48) of the Investment Company Act of 1940; or

·	is a Small Business Investment Company licensed by the U. S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; or

is an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a "plan fiduciary" (as defined in Section 3(21) of such act) which is either a bank, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directive plan, its investment decisions are made solely by persons that are accredited investors; or

·	is a "private business development company" as defined in Section 202(a)(22) of the Investment Advisors Act of 1940; or

·	is an organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000; or

·	any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Units, whose purchase is directed by a sophisticated person as defined in the rules and regulations of the 1933 Act; or

·	is an entity in which all of the equity owners fall within one of the categories set forth above; or

·	is otherwise an Accredited Investor as defined in Section 501 of Regulation D as adopted by the Securities and Exchange Commission.

(ii) _____

I am not an Accredited Investor. In the event the Investor is not an Accredited Investor, such Investor will not be able to purchase any shares in the Company’s offering, and this Subscription and the Investor’s funds (if any) shall be returned to Investor and this Subscription and all rights associated therewith shall be cancelled by the Company.

(iii)_____

I reside outside of the United States and am not a “U.S. person” as such term is defined under Regulation S as promulgated by the Securities and Exchange Commission (“SEC”) under authority of the Securities Act of 1933, as amended (the “1933 Act”).

(1) A “U.S. person” is defined by Regulation S as:

·	Any natural person resident in the United States;

·	Any partnership or corporation organized or incorporated under the laws of the United States;

·	Any estate of which any executor or administrator is a U.S. person;

·	Any trust of which any trustee is a U.S. person;

·	Any agency or branch of a foreign entity located in the United States;

·	Any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person;

·	Any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident in the United States; and

Any partnership or corporation if organized or incorporated under the laws of any foreign jurisdiction; and formed by a U.S. person principally for the purpose of investing in securities not registered under the Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a)) who are not natural persons, estates or trusts.

(2) At the time the buy order for the Units was originated, Purchaser was outside the United States;

(3) Purchaser is purchasing the Shares for his, her or its own account and not on behalf of any U.S. person, and the sale has not been pre-arranged with a purchaser in the United States; and

(4) All offering documents received by the Purchaser include statements to the affect that the securities have not been registered under the 1933 Act and may not be offered or sold in the United States or to U.S. persons unless the securities are registered under the 1933 Act or an exemption from the registration requirement is available.

[Remainder of page left intentionally blank.]

The undersigned further represents and warrants as follows:

(a)

Subscriber represents and warrants that it is in receipt of and that it has carefully read and reviewed the following items:

(i)	The Company’s Form 10-KSB for the period ended December 31, 2006 (the “Form 10-K”); which discloses that the Company is currently under Chapter 11 protection of the U.S. Bankruptcy Code; and

(ii)

All other documents filed by the Company with the SEC subsequent to the Company’s Form 10-K and prior to the date of this Agreement, including without limitation, the “Risk Factors” in the Form 10-K (collectively the “SEC Filings”). The Form 10-K and Risk Factors are accessible on the EDGAR website on www.SEC.gov;

(iii)

The Company’s Series A Convertible Preferred Stock Designation (the “Designation”); and

(iii)

A draft of the Company’s Disclosure Statement and Plan of Reorganization (the “Plan”). The Plan, the 10-K the Designation and the SEC Filings shall be referred to herein as the “Disclosure Documents.”

(b)

Subscriber has been furnished with and has carefully read the Disclosure Documents including the Risk Factors listed therein and is familiar with the terms of the Offering. With respect to individual or partnership tax and other economic considerations involved in this investment, Subscriber is not relying on the Company (or any agent or representative). Subscriber has carefully considered and has, to the extent Subscriber believes such discussion necessary, discussed with Subscriber’s legal, tax, accounting and financial advisers the suitability of an investment in the Shares for Subscriber’s particular tax and financial situation.

(c)

Subscriber has had an opportunity to inspect relevant documents relating to the organization and operations of the Company. Subscriber acknowledges that all documents, records and books pertaining to this investment which Subscriber has requested have been made available for inspection by Subscriber and Subscriber’s attorney, accountant or other adviser(s).

(d)	Subscriber and/or Subscriber’s advisor(s) has/have had a reasonable opportunity to ask questions of and receive answers and to request additional relevant information from a person or persons acting on behalf of the Company concerning the Offering.

(e)

Subscriber is not subscribing for the Securities as a result of any offering circular, or subsequent to any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any form of general solicitation.

(f)

The undersigned recognizes that the Units have not been registered under the Securities Act of 1933, as amended (“Act”), nor under the securities laws of any state and, therefore, cannot be resold unless resale of is registered under the Act or unless an exemption from registration is available; no public agency has passed upon the fairness of the terms of the offering; the undersigned may not sell the Units without registering them under the Act and any applicable state securities laws unless exemptions from such registration requirements are available with respect to any such sale;

(g)

The undersigned is acquiring the Units for his, her or its own account for long-term investment and not with a view toward resale, fractionalization or division, or distribution thereof, and he, she or it does not presently have any reason to anticipate any change in his, her or its circumstances, financial or otherwise, or particular occasion or event which would necessitate or require his, hers or its sale or distribution of the Units. No one other than the undersigned has any beneficial interest in said securities;

(h)

The undersigned recognizes that the investment herein is a speculative venture and that the total amount of funds tendered to purchase Units is placed at the risk of the business and may be completely lost. The purchase of Units as an investment involves special risks;

(i)

The undersigned realizes that the Shares cannot readily be sold as they will be restricted securities and therefore the Units must not be purchased unless the undersigned has liquid assets sufficient to assure that such purchase will cause no undue financial difficulties and the undersigned can provide for current needs and possible personal contingencies;

(j)

The undersigned confirms and represents that he, she or it is able (i) to bear the economic risk of his, her or its investment, (ii) to hold the Units for an indefinite period of time, and (iii) to afford a complete loss of his, her or its investment. The undersigned also represents that he, she or it has (i) adequate means of providing for his, her or its current needs and possible personal contingencies, and (ii) has no need for liquidity in this particular investment;

(k)

The undersigned understands that the ability to transfer the Units will be restricted which includes restrictions against transfers unless the transfer is effected in compliance with the 1933 Act and applicable state securities laws (including investment suitability standards); that the Company will consent to a transfer of the Units only if the transferee represents that such transferee meets the suitability standards required of an initial subscriber and that the Company has the right, in its sole discretion, to refuse to consent to the transfer of the Units;

(l)

All information which the undersigned has provided to the Company concerning the undersigned's financial position and knowledge of financial and business matters is correct and complete as of the date hereof, and if there should be any material change in such information prior to acceptance of this Agreement by the Company, the undersigned will immediately provide the Company with such information;

(m)

The undersigned has carefully considered and has, to the extent he, she or it believes such discussion necessary, discussed with his, her or its professional, legal, tax and financial advisors, the suitability of an investment in the Units for his, her or its particular tax and financial situation and that the undersigned and his, her or its advisers, if such advisors were deemed necessary, have determined that the Units are a suitable investment for him, her or it;

(n)

The undersigned has not become aware of this offering and has not been offered Units by any form of general solicitation or advertising, including, but not limited to, advertisements, articles, notices or other communications published in any newspaper, magazine, or other similar media or television or radio broadcast or any seminar or meeting where, to the undersigned's knowledge, those individuals that have attended have been invited by any such or similar means of general solicitation or advertising; and

(o)

The undersigned is a bona fide resident or operates its principal place of business as set forth in this Subscription Agreement and Acknowledgment of Investment.

(p)

The Purchaser acknowledges that he, she or it will receive Warrants to purchase shares of Common Stock in the form of Exhibit A attached to this Subscription Agreement.

(q)

Investor acknowledges that he, she, or it is receiving “piggy-back” registration rights in connection with the shares of common stock which the Series A Preferred Stock is convertible into and the shares of common stock which the Warrants are exercisable for, which “piggy-back” registration rights are evidenced by the Registration Rights Agreement attached hereto as Exhibit B .

3. THE UNDERSIGNED FURTHER CERTIFIES THAT HE, SHE OR IT UNDERSTANDS THAT:

(a)	THIS SUBSCRIPTION IS SUBJECT TO THE APPROVAL OF THE COMPANY’S PLAN OF REORGANIZATION, AND THE ISSUANCE, BY THE BANKRUPTCY COURT OF A CONFIRMATION ORDER, AS WELL AS THE COMPANY’S SUCCESSFUL DESIGNATION OF THE SERIES A PREFERRED STOCK (THE “APPROVAL”).

(b)	THE COMPANY SHALL BE ABLE TO CANCEL THIS SUBSCRIPTION AND RETURN THE SUBSCRIBER’S FUNDS PAID IN CONNECTION WITH SUCH SUBSCRIPTION IN THE COMPANY’S SOLE DISCRETION IF ANY TIME WITHIN THE PERIOD OF THIRTY (30) DAYS FOLLOWING THE APPROVAL, (THE “DEADLINE”).

(c)	THIS SUBSCRIPTION SHALL AUTOMATICALLY BE REJECTED BY THE COMPANY AND ALL SUBSCRIPTION FUNDS RETURNED TO THE SUBSCRIBER IN THE EVENT THE APPROVAL DOES NOT OCCUR PRIOR TO DECEMBER 31, 2007.

(d)

THIS SUBSCRIPTION SHALL BE AUTOMATICALLY ACCEPTED AS OF THE DATE OF THE DEADLINE, IN THE EVENT THE APPROVAL HAS OCCURRED PRIOR TO DECEMBER 31, 2007, AND THIS SUBSCRIPTION HAS NOT OTHERWISE BEEN CANCELLED BY THE COMPANY PURSUANT TO SECTION (B) ABOVE. IN THE EVENT THIS SUBSCRIPTION IS NOT REJECTED AND/OR CANCELLED PRIOR TO THE DEADLINE, THE EFFECTIVE DATE OF THIS SUBSCRIPTION AND ANY WARRANTS GRANTED IN CONNECTION HEREWITH SHALL BE SUCH DEADLINE DATE.

(e)

The Subscription hereunder is irrevocable by Investor, that, except as required by law, Investor is not entitled to cancel, terminate or revoke this Agreement or any agreements of Investor hereunder and that this Subscription Agreement and such other agreements shall survive the death or disability of Investor and shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, legal representatives and permitted assigns. If Investor is more than one person, the obligations of Investor hereunder shall be joint and several and the agreements, representations, warranties and acknowledgments herein contained shall be deemed to be made by and be binding upon each such person and his or her heirs, executors, administrators, successors, legal representatives and permitted assigns.

(f)	No federal or state agency has made any findings or determination as to the fairness of the terms of this Offering for investment purposes; or any recommendations or endorsements of the Units, Shares or Warrants.

(g)

The Offering is intended to be exempt from registration under the Securities Act by virtue of Section 4(2) of the Securities Act and the provisions of Rule 506 of Regulation D thereunder, which is in part dependent upon the truth, completeness and accuracy of the statements made by the Investor herein.

(h)	It is understood that in order not to jeopardize the Offering’s exempt status under Section 4(2) of the Securities Act and Regulation D, any transferee may, at a minimum, be required to fulfill the investor suitability requirements thereunder.

(i)	No person or entity acting on behalf, or under the authority, of Investor is or will be entitled to any broker’s, finder’s or similar fee or commission in connection with this Subscription.

(j)

Investor acknowledges that the information furnished in this Agreement by the Company to Investor or its advisers in connection with the Offering, is confidential and nonpublic and agrees that all such written information which is material and not yet publicly disseminated by the Company shall be kept in confidence by Investor and neither used by Investor for Investor’s personal benefit (other than in connection with this Subscription), nor disclosed to any third party, except Investor’s legal and other advisers who shall be advised of the confidential nature of such information, for any reason; provided, however, that this obligation shall not apply to any such information that (i) is part of the public knowledge or literature and readily accessible at the date hereof, (ii) becomes a part of the public knowledge or literature and readily accessible by publication (except as a result of a breach of this provision) or (iii) is received from third parties (except third parties who disclose such information in violation of any confidentiality agreements or obligations, including, without limitation, any subscription agreement entered into with the Company). The representations, warranties and agreements of Investor and the Company contained herein and in any other writing delivered in connection with the Offering shall be true and correct in all material respects on and as of the date of such Subscription as if made on and as of the date the Company executes this Agreement and shall survive the execution and delivery of this Agreement.

(k)

IN MAKING AN INVESTMENT DECISION, INVESTOR MUST RELY ON ITS OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE COMMON SHARES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

4. Indemnification . It is acknowledged that the meaning and legal consequences of the representations and warranties contained in this Agreement are understood and the undersigned hereby agrees to indemnify and hold harmless the Company and each purchaser of Units from and against any and all loss, damage, and liability due to or arising out of a breach of any of the representations and warranties made in this Agreement. The representations and warranties contained herein are intended to and shall survive delivery of the Agreement.

5. Restrictions on Transferability of Units . The undersigned hereby agrees that the Shares and Warrants being purchased by him, her or it and any agreement or certificate evidencing such securities shall be stamped or otherwise imprinted with a conspicuous legend in substantially the following form:

" The securities represented by this certificate have not been registered under the Securities Act of 1933 or any state securities act. The securities have been acquired for investment and may not be sold, transferred, pledged or hypothecated unless (i) they shall have been registered under the Securities Act of 1933 and any applicable state securities act, or (ii) the corporation shall have been furnished with an opinion of counsel, satisfactory to counsel for the corporation, that registration is not required under any such acts ."

6. Purchase Payment . The purchase price shall be paid to the Company in cash, check or via wire transfer simultaneously with the undersigned entry into this Agreement.

7. Effect of Facsimile and Photocopied Signatures . This Agreement may be executed in several counterparts, each of which is an original. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. A copy of this Agreement signed by one party and faxed to another party shall be deemed to have been executed and delivered by the signing party as though an original. A photocopy of this Agreement shall be effective as an original for all purposes.

[Remainder of page left intentionally blank. Signature page follows.]

8. Number of Units Purchased . The undersigned hereby subscribes to purchase

1,000,000 Units (each consisting of four (4) shares of the Company’s Series A Preferred Stock and one (1) warrant to purchase one share of the Company’s common stock at an exercise price of $0.10 per share) for an aggregate purchase price of $2,000,000 ($2.00 per Unit).

This Agreement is executed this the 30 th day of January, 2008, at Cupertino, CA.

“PURCHASER”

Name (please print); Clyde Berg

If entity named above, By:

Its:

Number of Preferred Shares: 4,000,000 Check enclosed in the amount of $2,000,000

Subscribed For: 1,000,000 Units

Social Security or Taxpayer I.D. Number [required]: XXX-XX-XXXX

Business Address (including zip code): XXXXXXXXXXXXXXXX

Business Phone: (XXX) XXX-XXXX

Residence Address (including zip code):

Residence Phone: ( )

All communications to be sent to:

X Business or

Residence Address

Please indicate on the following page the form in which you will hold title to your interest in the Shares and Warrants. PLEASE CONSIDER CAREFULLY. ONCE YOUR SUBSCRIPTION IS ACCEPTED, A CHANGE IN THE FORM OF TITLE CONSTITUTES A TRANSFER OF THE INTEREST IN THE SHARES AND/OR WARRANTS AND MAY THEREFORE BE RESTRICTED BY THE TERMS OF THIS SUBSCRIPTION, THE SHARES AND/OR WARRANTS AND MAY RESULT IN ADDITIONAL COSTS TO YOU. Subscribers should seek the advice of their attorneys in deciding in which of the forms they should take ownership of the interest in the Shares, because different forms of ownership can have varying gift tax, estate tax, income tax, and other consequences, depending on the state of the investor's domicile and his or her particular personal circumstances.

Please select one of the following forms of ownership:

X	INDIVIDUAL OWNERSHIP (one signature required)

JOINT TENANTS WITH RIGHT OF SURVIVORSHIP AND NOT AS TENANTS IN COMMON (both or all parties must sign)

COMMUNITY PROPERTY (one signature required if interest held in one name, i.e., managing spouse; two signatures required if interest held in both names)

TENANTS IN COMMON (both or all parties must sign)

GENERAL PARTNERSHIP (fill out all documents in the name of the PARTNERSHIP, by a PARTNER authorized to sign, and include a copy of the Partnership Agreement)

LIMITED PARTNERSHIP (fill out all documents in the name of the LIMITED PARTNERSHIP, by a GENERAL PARTNER authorized to sign, and include a copy of the Limited Partnership Agreement and any other document showing that the investment is authorized)

LIMITED LIABILITY COMPANY (fill out all documents in the name of the LIMITED LIABILITY COMPANY, by a member authorized to sign, and include a copy of the LIMITED LIABILITY COMPANY’s Operating Agreement and any other documents necessary to show the investment is authorized.)

CORPORATION (fill out all documents in the name of the CORPORATION, by the President or other officer authorized to sign, and include a copy of the Corporation's Articles and certified Corporate Resolution authorizing the signature)

TRUST (fill out all documents in the name of the TRUST, by the Trustee, and include a copy of the instrument creating the trust and any other documents necessary to show the investment by the Trustee is authorized. The date of the trust must appear on the Notarial where indicated.)

Subject to acceptance by the Company, the undersigned has completed this Subscription Agreement to evidence his/her subscription for participation in the Shares of the Company, this 30 th day of January, 2008, Cupertino, CA.

/s/Clyde Berg

Subscriber

Clyde Berg

Printed name

If an entity, on behalf of:

______________________________________

Subscriber’s position with entity:

______________________________________

The Company has accepted this subscription this ____ day of __________ 2007, subject to Section 3(a), (b) and (c).

Blast Energy Services, Inc., a California Corporation

By /s/John O’Keefe

Its: CEO

Printed Name: John O’Keefe

Exhibit A

BLAST ENERGY SERVICES, INC.

WARRANT AGREEMENT

Date: January 31, 2008

To Whom It May Concern:

BLAST ENERGY SERVICES, INC. (the “Company”), for value received, hereby agrees to issue common stock purchase warrants entitling Clyde Berg (“Holder”) and his/her/its assigns to purchase an aggregate of 1,000,000 shares of the Company’s common stock (“Common Stock”). Such warrant is evidenced by a warrant certificate in the form attached hereto as Schedule 1 (such instrument being hereinafter referred to as a “Warrant,” and such Warrant and all instruments hereafter issued in replacement, substitution, combination or subdivision thereof being hereinafter collectively referred to as the “Warrant”). The Warrant is issued to Holder in connection with Holder’s subscription for Units in the Company in connection with the Subscription Agreement in Blast Energy Services, Inc. which this Warrant is attached to as Exhibit A . The number of shares of Common Stock purchasable upon exercise of the Warrant is subject to adjustment as provided in Section 5 below. The Warrant will be exercisable by the Warrant Holder (as defined below) as to all or any lesser number of shares of Common Stock covered thereby, at an initial purchase price of US $0.10 per share (the “Purchase Price”), subject to adjustment as provided in Section 5 below, for the exercise period defined in Section 3(a) below. The term “Warrant Holder” refers to the person whose name appears on the signature page of this agreement and any transferee or transferees of any of them permitted by Section 2(a) below. The Subscription for this Warrant was accepted by the Company on January 31, 2008, which gives this Warrant an effective date of January 31, 2008.

1.	Representations and Warranties .

The Company represents and warrants to you as follows:

(a)

Corporate and Other Action . The Company has all requisite power and authority (corporate and other), and has taken all necessary corporate action, to authorize, execute, deliver and perform this Warrant Agreement, to execute, issue, sell and deliver the Warrant and a certificate or certificates evidencing the Warrant, to authorize and reserve for issue and, upon payment from time to time of the Purchase Price, to issue, sell and deliver, the shares of the Common Stock issuable upon exercise of the Warrant (“Shares”), and to perform all of its obligations under this Warrant Agreement and the Warrant. The Shares, when issued in accordance with this Warrant Agreement, will be duly authorized and validly issued and outstanding, fully paid and nonassessable and free of all liens, claims, encumbrances and preemptive rights. This Warrant Agreement and, when issued, each Warrant issued pursuant hereto, has been or will be duly executed and delivered by the Company and is or will be a legal, valid and binding agreement of the Company, enforceable in accordance with its terms. No authorization, approval, consent or other order of any governmental entity, regulatory authority or other third party is required for such authorization, execution, delivery, performance, issue or sale.

(b)

No Violation . The execution and delivery of this Warrant Agreement, the consummation of the transactions herein contemplated and the compliance with the terms and provisions of this Warrant Agreement and of the Warrant will not conflict with, or result in a breach of, or constitute a default or an event permitting acceleration under, any statute, the Articles of Incorporation or Bylaws of the Company or any indenture, mortgage, deed of trust, note, bank loan, credit agreement, franchise, license, lease, permit, or any other agreement, understanding, instrument, judgment, decree, order, statute, rule or regulation to which the Company is a party or by which it is bound.

2.	Transfer .

(a)

Transferability of Warrant . You agree that the Warrant is being acquired as an investment and not with a view to distribution thereof and that the Warrant may not be transferred, sold, assigned or hypothecated except as provided herein. You further acknowledge that the Warrant may not be transferred, sold, assigned or hypothecated unless pursuant to a registration statement that has become effective under the Securities Act of 1933, as amended (the “Act”), setting forth the terms of such offering and other pertinent data with respect thereto, or unless you have provided the Company with an acceptable opinion from acceptable counsel that such registration is not required. Certificates representing the Warrant shall bear an appropriate legend. Notwithstanding the foregoing, any request to transfer the Warrant must be accompanied by the Form of Assignment and Transfer attached hereto as Schedule 2 executed by the Warrant Holder.

(b)

Registration of Shares . You agree not to make any sale or other disposition of the Shares except pursuant to a registration statement which has become effective under the Act, setting forth the terms of such offering, the underwriting discount and commissions and any other pertinent data with respect thereto, unless you have provided the Company with an acceptable opinion of counsel acceptable to the Company that such registration is not required. Certificates representing the Shares, which are not registered as provided in this Section 2, shall bear an appropriate legend and be subject to a “stop-transfer” order.

3.	Exercise of Warrant, Partial Exercise .

(a)	Exercise Period . This Warrant shall expire and all rights hereunder shall be extinguished three years (3) years from the date first written above.

(b)

Exercise in Full . Subject to Section 3(a), a Warrant may be exercised in full by the Warrant Holder by surrender of the Warrant, with the Form of Subscription attached hereto as Schedule 3 executed by such Warrant Holder, to the Company, accompanied by payment as determined by 3(d) below, in the amount obtained by multiplying the number of Shares represented by the respective Warrant by the Purchase Price per share (after giving effect to any adjustments as provided in Section 5 below).

(c)

Partial Exercise . Subject to Section 3(a), each Warrant may be exercised in part by the Warrant Holder by surrender of the Warrant, with the Form of Subscription attached hereto as Schedule 3 at the end thereof duly executed by such Warrant Holder, in the manner and at the place provided in Section 3(b) above, accompanied by payment as determined by 3(d) below, in amount obtained by multiplying the number of Shares designated by the Warrant Holder in the Form of Subscription attached hereto as Schedule 3 to the Warrant by the Purchase Price per share (after giving effect to any adjustments as provided in Section 5 below). Upon any such partial exercise, the Company at its expense will forthwith issue and deliver to or upon the order of the Warrant Holder a new Warrant of like tenor, in the name of the Warrant Holder subject to Section 2(a), calling in the aggregate for the purchase of the number of Shares equal to the number of such Shares called for on the face of the respective Warrant (after giving effect to any adjustment herein as provided in Section 5 below) minus the number of such Shares designated by the Warrant Holder in the aforementioned form of subscription.

(d)	Payment of Purchase Price . The Purchase Price may be made by any of the following or a combination thereof, at the election of the Warrant Holder:

(i)

in cash;

(ii)

by wire transfer; or

(iii)

by certified or cashier’s check, or money order.

4.	Delivery of Stock Certificates on Exercise .

Any exercise of the Warrant pursuant to Section 3 shall be deemed to have been effected immediately prior to the close of business on the date on which the Warrant together with the Form of Subscription and the payment for the aggregate Purchase Price shall have been received by the Company. At such time, the person or persons in whose name or names any certificate or certificates representing the Shares or Other Securities (as defined below) shall be issuable upon such exercise shall be deemed to have become the holder or holders of record of the Shares or Other Securities so purchased. As soon as practicable after the exercise of any Warrant in full or in part, and in any event within Ten (10) business days thereafter, the Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of, and delivered to the purchasing Warrant Holder, a certificate or certificates representing the number of fully paid and nonassessable shares of Common Stock or Other Securities to which such Warrant Holder shall be entitled upon such exercise, plus in lieu of any fractional share to which such Warrant Holder would otherwise be entitled, cash in an amount determined pursuant to Section 6(e). The term “Other Securities” refers to any stock (other than Common Stock), other securities or assets (including cash) of the Company or any other person (corporate or otherwise) which the Warrant Holder at any time shall be entitled to receive, or shall have received, upon the exercise of the Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to Section 5 below or otherwise.

5.	Adjustment of Purchase Price and Number of Shares Purchasable .

The Purchase Price and the number of Shares are subject to adjustment from time to time as set forth in this Section 5.

(a)

In case the Company shall at any time after the date of this Warrant Agreement (i) declare a dividend on the Common Stock in shares of its capital stock, (ii) subdivide the outstanding Common Stock, (iii) combine the outstanding Common Stock into a smaller number of Common Stock, or (iv) issue any shares of its capital stock by reclassification of the Common Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), then in each case the Purchase Price, and the number and kind of Shares receivable upon exercise, in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination, or reclassification shall be proportionately adjusted so that the holder of any Warrant exercised after such time shall be entitled to receive the aggregate number and kind of Shares which, if such Warrant had been exercised immediately prior to such record date, he would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination, or reclassification. Such adjustment shall be made successively whenever any event listed above shall occur.

(b)

No adjustment in the Purchase Price shall be required if such adjustment is less than US $0.01; provided, however , that any adjustments which by reason of this subsection (b) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 5 shall be made to the nearest cent or to the nearest one-thousandth of a share, as the case may be.

(c)

Upon each adjustment of the Purchase Price as a result of the calculations made in subsection (a) of this Section 5, the Warrant outstanding prior to the making of the adjustment in the Purchase Price shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of Shares (calculated to the nearest thousandth) obtained by (i) multiplying the number of Shares purchasable upon exercise of the Warrant immediately prior to adjustment of the number of Shares by the Purchase Price in effect prior to adjustment of the Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.

6.	Further Covenants of the Company .

(a)

Dilution or Impairments . The Company will not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger or dissolution, avoid or seek to avoid the observance or performance of any of the terms of the Warrant or of this Warrant Agreement, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Warrant Holder against dilution or other impairment. Without limiting the generality of the foregoing, the Company:

(i)

shall at all times reserve and keep available, solely for issuance and delivery upon the exercise of the Warrant, all shares of Common Stock (or Other Securities) from time to time issuable upon the exercise of the Warrant and shall take all necessary actions to ensure that the par value per share, if any, of the Common Stock (or Other Securities) is at all times equal to or less than the then effective Purchase Price per share; and

(ii)	will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock or Other Securities upon the exercise of the Warrant from time to time outstanding.

(b)

Title to Stock . All Shares delivered upon the exercise of the Warrant shall be validly issued, fully paid and nonassessable; each Warrant Holder shall, upon such delivery, receive good and marketable title to the Shares, free and clear of all voting and other trust arrangements, liens, encumbrances, equities and claims whatsoever; and the Company shall have paid all taxes, if any, in respect of the issuance thereof.

(c)

Exchange of Warrant . Subject to Section 2(a) hereof, upon surrender for exchange of any Warrant to the Company, the Company at its expense will promptly issue and deliver to or upon the order of the holder thereof a new Warrant or like tenor, in the name of such holder or as such holder (upon payment by such Warrant holder of any applicable transfer taxes) may direct, calling in the aggregate for the purchase of the number of Shares called for on the face of the Warrant surrendered. The Warrant and all rights thereunder are transferable in whole or in part upon the books of the Company by the registered holder thereof, subject to the provisions of Section 2(a), in person or by duly authorized attorney, upon surrender of the Warrant, duly endorsed, at the principal office of the Company.

(d)

Replacement of Warrant . Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Company, at the expense of the Warrant Holder, will execute and deliver, in lieu thereof, a new Warrant of like tenor.

(e)	Fractional Shares . No fractional Shares are to be issued upon the exercise of any Warrant, but the Company shall round any fraction of a share to the nearest whole Share.

7.	Other Warrant Holders: Holders of Shares .

The Warrant is issued upon the following terms, to all of which each Warrant Holder by the taking thereof consents and agrees: (a) any person who shall become a transferee, within the limitations on transfer imposed by Section 2(a) hereof, of a Warrant properly endorsed shall take such Warrant subject to the provisions of Section 2(a) hereof and thereupon shall be authorized to represent himself, herself or itself as absolute owner thereof and, subject to the restrictions contained in this Warrant Agreement, shall be empowered to transfer absolute title by endorsement and delivery thereof to a permitted bona fide purchaser for value; (b) any person who shall become a holder or owner of Shares shall take such shares subject to the provisions of Section 2(b) hereof; (c) each prior taker or owner waives and renounces all of his equities or rights in such Warrant in favor of each such permitted bona fide purchaser, and each such permitted bona fide purchaser shall acquire absolute title thereto and to all rights presented thereby; and (d) until such time as the respective Warrant is transferred on the books of the Company, the Company may treat the registered holder thereof as the absolute owner thereof for all purposes, notwithstanding any notice to the contrary.

8.	Miscellaneous .

All notices, certificates and other communications from or at the request of the Company to any Warrant Holder shall be mailed by first class, registered or certified mail, postage prepaid, to such address as may have been furnished to the Company in writing by such Warrant Holder, or, until an address is so furnished, to the address of the last holder of such Warrant who has so furnished an address to the Company, except as otherwise provided herein. This Warrant Agreement and any of the terms hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Texas. The headings in this Warrant Agreement are for purposes of reference only and shall not limit or otherwise affect any of the terms hereof. This Warrant Agreement, together with the forms of instruments annexed hereto as schedules, constitutes the full and complete agreement of the parties hereto with respect to the subject matter hereof. For purposes of this Warrant Agreement, a faxed signature shall constitute an original signature.

IN WITNESS WHEREOF, the Company has caused this Warrant Agreement to be executed on this 31 st day of January, 2008, in Houston, TX, by its proper corporate officers, thereunto duly authorized.

BLAST ENERGY SERVICES, INC.

By /s/John O’Keefe

Its: CEO

Printed Name: John O’Keefe

Exhibit A

SCHEDULE 1

WARRANT

THIS WARRANT AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER: (A) THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN SECTIONS 3 AND 4 OF SUCH ACT AND REGULATION S PROMULGATED THEREUNDER; OR (B) ANY STATE SECURITIES LAWS IN RELIANCE UPON APPLICABLE EXEMPTIONS THEREUNDER. THIS WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS WARRANT MUST BE ACQUIRED FOR INVESTMENT ONLY FOR THE ACCOUNT OF THE INVESTOR, AND NEITHER THE WARRANT NOR THE UNDERLYING STOCK MAY BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE PROVISIONS OF REGULATION S AND OTHER LAWS OR PURSUANT TO REGISTRATION UNDER THE ACT OR AN AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS INVOLVING THIS WARRANT OR THE SECURITIES TO BE ISSUED UPON ITS EXERCISE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.

To Purchase 1,000,000 Shares

of Common Stock

BLAST ENERGY SERVICES, INC.

This certifies that, for value received, the hereafter named registered owner is entitled, subject to the terms and conditions of this Warrant, until the expiration date, to purchase the number of shares (the “Shares”) set forth above of the common stock (“Common Stock”), of BLAST ENERGY SERVICES, INC. (the “Company”) from the Company at the purchase price per share hereafter set forth below, on delivery of this Warrant to the Company with the exercise form duly executed and payment of the purchase price (in cash or by certified or bank cashier’s check payable to the order of the Company) for each Share purchased. This Warrant is subject to the terms of the Warrant Agreement between the parties thereto dated as of January 31,2008, the terms of which are hereby incorporated herein. Reference is hereby made to such Warrant Agreement for a further statement of the rights of the holder of this Warrant.

Registered Owner: Clyde Berg Date: January 31, 2008

Purchase Price

Per Share: US $0.10

Expiration Date:

Subject to Section 3(a) of the Warrant Agreement, 5:00 p.m. Central Standard Time.

WITNESS the signature of the Company’s authorized officer:

BLAST ENERGY SERVICES, INC.

By /s/John O’Keefe

Its: CEO

Printed Name: John O’Keefe

Exhibit A

SCHEDULE 2

FORM OF ASSIGNMENT AND TRANSFER

For value received, the undersigned hereby sells, assigns and transfers unto __________________________________ the right represented by the enclosed Warrant to purchase _________________ shares of Common Stock of

BLAST ENERGY SERVICES, INC. to which the enclosed Warrant relates, and appoints Attorney to transfer such right on the books of BLAST ENERGY SERVICES, INC. with full power of substitution in the premises.

The undersigned represents and warrants that the transfer of the enclosed Warrant is permitted by the terms of the Warrant Agreement pursuant to which the enclosed Warrant has been issued, and the transferee hereof, by his, her or its acceptance of this Agreement, represents and warrants that he, she or it is familiar with the terms of said Warrant Agreement and agrees to be bound by the terms thereof with the same force and effect as if a signatory thereto.

Dated:______________

____________________________________________

(Signature must conform in all respects to name of holder

as specified on the face of the enclosed Warrant)

____________________________________________

(Address)

Signed in the presence of:

____________________________________

Exhibit A

SCHEDULE 3

FORM OF SUBSCRIPTION

( To be signed only upon exercise of Warrant )

To BLAST ENERGY SERVICES, INC.:

The undersigned, the holder of the enclosed Warrant, hereby irrevocably elects to exercise the purchase right represented by such Warrant for, and to purchase thereunder,* shares of Common Stock of BLAST ENERGY SERVICES, INC. and herewith makes payment of US $_______________ therefore, and requests that the certificate or certificates for such shares be issued in the name of and delivered to the undersigned.

The undersigned hereby certifies that the undersigned is not a U.S. person and the warrant is not being exercised on behalf of a U.S. person, or, if applicable, the undersigned has attached an opinion of counsel to the effect that the warrant and the securities to be delivered upon exercise thereof have been registered under the Securities Act of 1933, as amended or are exempt from registration thereunder.

Dated:______________

____________________________________________

(Signature must conform in all respects to name of holder

as specified on the face of the enclosed Warrant)

____________________________________________

(Address)

___________________________

(*) Insert here the number of shares called for on the face of the Warrant or, in the case of a partial exercise, the portion thereof as to which the Warrant is being exercised, in either case without making any adjustment for additional Common Stock or any other stock or other securities or property which, pursuant to the adjustment provisions of the Warrant Agreement pursuant to which the Warrant was granted, may be delivered upon exercise.

EXHIBIT 10.4

SUBSCRIPTION AGREEMENT

BLAST ENERGY SERVICES, INC.

1 . SUBSCRIPTION . This Agreement has been executed by McAfee Capital LLC, a limited liability company having a principal place of business in Cupertino, California (“Purchaser” or “Shareholder”) in connection with the offering of units consisting of Four (4) shares of Convertible Series A Preferred Stock and One (1) Warrant with an exercise price of $0.10 per share (collectively referred to hereinafter as the "Units") of Blast Energy Services, Inc., a corporation organized under the laws of the State of California (hereinafter referred to as the "Company"). Purchaser hereby subscribes to purchase 1,000,000 Units at $2.00 per Unit for a total amount of $ 2,000,000.

(i) __ X__ I am an Accredited Investor because I meet one of the following items:

·	is a natural person who has an individual net worth, or joint net worth with that person's spouse of more than $1,000,000; or

·	is a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or

·	is a bank as defined in Section 3(a)(2) of the 1933 Act or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act whether acting in its individual or fiduciary capacity; or

·	any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; or

·	is an insurance company as defined in Section 2(13) of the 1933 Act; or

·	is an investment company registered under the Investment Company Act of 1940; or

·	a business development company as defined in Section 2(a)(48) of the Investment Company Act of 1940; or

·	is a Small Business Investment Company licensed by the U. S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; or

·	is a "private business development company" as defined in Section 202(a)(22) of the Investment Advisors Act of 1940; or

·	is an organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000; or

·	any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Units, whose purchase is directed by a sophisticated person as defined in the rules and regulations of the 1933 Act; or

·	is an entity in which all of the equity owners fall within one of the categories set forth above; or

·	is otherwise an Accredited Investor as defined in Section 501 of Regulation D as adopted by the Securities and Exchange Commission.

(ii) _____

(iii)_____

(1) A “U.S. person” is defined by Regulation S as:

·	Any natural person resident in the United States;

·	Any partnership or corporation organized or incorporated under the laws of the United States;

·	Any estate of which any executor or administrator is a U.S. person;

·	Any trust of which any trustee is a U.S. person;

·	Any agency or branch of a foreign entity located in the United States;

·	Any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person;

·	Any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident in the United States; and

(2) At the time the buy order for the Units was originated, Purchaser was outside the United States;

(3) Purchaser is purchasing the Shares for his, her or its own account and not on behalf of any U.S. person, and the sale has not been pre-arranged with a purchaser in the United States; and

[Remainder of page left intentionally blank.]

The undersigned further represents and warrants as follows:

(a)

Subscriber represents and warrants that it is in receipt of and that it has carefully read and reviewed the following items:

(i)	The Company’s Form 10-KSB for the period ended December 31, 2006 (the “Form 10-K”); which discloses that the Company is currently under Chapter 11 protection of the U.S. Bankruptcy Code; and

(ii)

(iii)

The Company’s Series A Convertible Preferred Stock Designation (the “Designation”); and

(iii)

(b)

(c)

(d)	Subscriber and/or Subscriber’s advisor(s) has/have had a reasonable opportunity to ask questions of and receive answers and to request additional relevant information from a person or persons acting on behalf of the Company concerning the Offering.

(e)

(f)

(g)

(h)

(i)

(j)

(k)

(l)

(m)

(n)

(o)

The undersigned is a bona fide resident or operates its principal place of business as set forth in this Subscription Agreement and Acknowledgment of Investment.

(p)

The Purchaser acknowledges that he, she or it will receive Warrants to purchase shares of Common Stock in the form of Exhibit A attached to this Subscription Agreement.

(q)

3. THE UNDERSIGNED FURTHER CERTIFIES THAT HE, SHE OR IT UNDERSTANDS THAT:

(a)	THIS SUBSCRIPTION IS SUBJECT TO THE APPROVAL OF THE COMPANY’S PLAN OF REORGANIZATION, AND THE ISSUANCE, BY THE BANKRUPTCY COURT OF A CONFIRMATION ORDER, AS WELL AS THE COMPANY’S SUCCESSFUL DESIGNATION OF THE SERIES A PREFERRED STOCK (THE “APPROVAL”).

(b)	THE COMPANY SHALL BE ABLE TO CANCEL THIS SUBSCRIPTION AND RETURN THE SUBSCRIBER’S FUNDS PAID IN CONNECTION WITH SUCH SUBSCRIPTION IN THE COMPANY’S SOLE DISCRETION IF ANY TIME WITHIN THE PERIOD OF THIRTY (30) DAYS FOLLOWING THE APPROVAL, (THE “DEADLINE”).

(c)	THIS SUBSCRIPTION SHALL AUTOMATICALLY BE REJECTED BY THE COMPANY AND ALL SUBSCRIPTION FUNDS RETURNED TO THE SUBSCRIBER IN THE EVENT THE APPROVAL DOES NOT OCCUR PRIOR TO DECEMBER 31, 2007.

(d)

(e)

(f)	No federal or state agency has made any findings or determination as to the fairness of the terms of this Offering for investment purposes; or any recommendations or endorsements of the Units, Shares or Warrants.

(g)

(h)	It is understood that in order not to jeopardize the Offering’s exempt status under Section 4(2) of the Securities Act and Regulation D, any transferee may, at a minimum, be required to fulfill the investor suitability requirements thereunder.

(i)	No person or entity acting on behalf, or under the authority, of Investor is or will be entitled to any broker’s, finder’s or similar fee or commission in connection with this Subscription.

(j)

(k)

6. Purchase Payment . The purchase price shall be paid to the Company in cash, check or via wire transfer simultaneously with the undersigned entry into this Agreement.

[Remainder of page left intentionally blank. Signature page follows.]

8. Number of Units Purchased . The undersigned hereby subscribes to purchase

This Agreement is executed this the 30 th day of January, 2008, at Cupertino, CA.

“PURCHASER”

Name (please print): McAfee Capital LLC

If entity named above, By: Eric McAfee

Its: President

Number of Preferred Shares: 4,000,000 Wire transfer in the amount of $2,000,000

Subscribed For: 1,000,000 Units

Social Security or Taxpayer I.D. Number [required]: XXX-XX-XXXX

Business Address (including zip code): XXXXXXXXXXXXXXXX

Business Phone: (XXX) XXX-XXXX

Residence Address (including zip code)

Residence Phone: ( )

All communications to be sent to:

X Business or

Residence Address

Please select one of the following forms of ownership:

INDIVIDUAL OWNERSHIP (one signature required)

JOINT TENANTS WITH RIGHT OF SURVIVORSHIP AND NOT AS TENANTS IN COMMON (both or all parties must sign)

COMMUNITY PROPERTY (one signature required if interest held in one name, i.e., managing spouse; two signatures required if interest held in both names)

TENANTS IN COMMON (both or all parties must sign)

GENERAL PARTNERSHIP (fill out all documents in the name of the PARTNERSHIP, by a PARTNER authorized to sign, and include a copy of the Partnership Agreement)

X	LIMITED LIABILITY COMPANY (fill out all documents in the name of the LIMITED LIABILITY COMPANY, by a member authorized to sign, and include a copy of the LIMITED LIABILITY COMPANY’s Operating Agreement and any other documents necessary to show the investment is authorized.)

_McAfee Capital LLC_____________________

Subscriber

__ _by: Eric McAfee ________________________

Printed name

If an entity, on behalf of:

____ /s/Eric McAfee _____________________________

Subscriber’s position with entity:

_____ President _______________________________

The Company has accepted this subscription this 30 th day of January 2008, subject to Section 3(a), (b) and (c).

Blast Energy Services, Inc., a California Corporation

By__ /s/John O’Keefe_ ________________

Its: _ CEO ____________________________

Printed Name: __John O’Keefe ___________

Exhibit A

BLAST ENERGY SERVICES, INC.

WARRANT AGREEMENT

Date: January 30, 2008

To Whom It May Concern:

1.	Representations and Warranties .

The Company represents and warrants to you as follows:

(a)

(b)

2.	Transfer .

(a)

(b)

3.	Exercise of Warrant, Partial Exercise .

(a)	Exercise Period . This Warrant shall expire and all rights hereunder shall be extinguished three years (3) years from the date first written above.

(b)

(c)

(d)	Payment of Purchase Price . The Purchase Price may be made by any of the following or a combination thereof, at the election of the Warrant Holder:

(i)

in cash;

(ii)

by wire transfer; or

(iii)

by certified or cashier’s check, or money order.

4.	Delivery of Stock Certificates on Exercise .

5.	Adjustment of Purchase Price and Number of Shares Purchasable .

The Purchase Price and the number of Shares are subject to adjustment from time to time as set forth in this Section 5.

(a)

(b)

(c)

6.	Further Covenants of the Company .

(a)

(i)

(ii)	will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock or Other Securities upon the exercise of the Warrant from time to time outstanding.

(b)

(c)

(d)

(e)	Fractional Shares . No fractional Shares are to be issued upon the exercise of any Warrant, but the Company shall round any fraction of a share to the nearest whole Share.

7.	Other Warrant Holders: Holders of Shares .

8.	Miscellaneous .

IN WITNESS WHEREOF, the Company has caused this Warrant Agreement to be executed on this 30 st day of January, 2008, in Houston, TX, by its proper corporate officers, thereunto duly authorized.

BLAST ENERGY SERVICES, INC.

By_ /s/John O’Keefe _______________

Its: _ CEO ________________________

Printed Name: John O’Keefe _________

Exhibit A

SCHEDULE 1

WARRANT

To Purchase 1,000,000 Shares

of Common Stock

BLAST ENERGY SERVICES, INC.

This certifies that, for value received, the hereafter named registered owner is entitled, subject to the terms and conditions of this Warrant, until the expiration date, to purchase the number of shares (the “Shares”) set forth above of the common stock (“Common Stock”), of BLAST ENERGY SERVICES, INC. (the “Company”) from the Company at the purchase price per share hereafter set forth below, on delivery of this Warrant to the Company with the exercise form duly executed and payment of the purchase price (in cash or by certified or bank cashier’s check payable to the order of the Company) for each Share purchased. This Warrant is subject to the terms of the Warrant Agreement between the parties thereto dated as of January 30,2008, the terms of which are hereby incorporated herein. Reference is hereby made to such Warrant Agreement for a further statement of the rights of the holder of this Warrant.

Registered Owner: McAfee Capital LLC Date: January 30, 2008

Purchase Price

Per Share: US $0.10

Expiration Date:

Subject to Section 3(a) of the Warrant Agreement, 5:00 p.m. Central Standard Time.

WITNESS the signature of the Company’s authorized officer:

BLAST ENERGY SERVICES, INC.

By___ /s/ John OKeefe _________________

Its: __ CEO ___________________________

Printed Name: __ John O’Keefe ___________

Exhibit A

SCHEDULE 2

FORM OF ASSIGNMENT AND TRANSFER

Dated:______________

____________________________________________

(Signature must conform in all respects to name of holder

as specified on the face of the enclosed Warrant)

____________________________________________

(Address)

Signed in the presence of:

____________________________________

Exhibit A

SCHEDULE 3

FORM OF SUBSCRIPTION

( To be signed only upon exercise of Warrant )

To BLAST ENERGY SERVICES, INC.:

Dated:______________

____________________________________________

(Signature must conform in all respects to name of holder

as specified on the face of the enclosed Warrant)

____________________________________________

(Address)

___________________________

EXHIBIT 10.5

SECURITY AGREEMENT, dated as of February 27, 2008 (this " Agreement "), made by BLAST ENERGY SERVICES, INC., a Texas corporation (“ Blast ”), and EAGLE DOMESTIC DRILLING OPERATIONS LLC, a Texas limited liability company (“ Eagle ”; Blast and Eagle are referred to herein individually as a “ Grantor ” and collectively as the “ Grantors ”) in favor of LAURUS MASTER FUND, LTD (the " Secured Party ").

Recitals

A) On February 26 2008, the United States Bankruptcy Court for the Southern District of Texas (the “ Bankruptcy Court ”) entered its order confirming the Second Amended Joint Plan of Reorganization of Blast Energy Services, Inc. Debtor, and Eagle Domestic Drilling Operations LLC Debtor (the “ Plan ”) filed by Blast and Eagle.

B) The Plan, among other things, implemented the terms and agreements between the Grantors and the Secured Party that were embodied in the Settlement Agreement and the Sale Order.

C) Pursuant to the Plan, the Settlement Agreement and the Sale Order, the Secured Party has retained against the Grantors a first priority secured claim in the amount of $2.1 million (the “ Laurus Retained Claim ”). The obligation of the Grantors to pay the Laurus Retained Claim is, pursuant to the Plan, the Settlement Agreement, the Sale Order and the Confirmation Order, secured by the Laurus Collateral.

D) The execution and delivery of this Agreement to the Secured Lender is a condition to the effectiveness of the Plan.

ACCORDINGLY, the Grantors and the Secured Party (and each of their respective successors or assigns) hereby agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01. Definition of Terms Used Herein . Unless the context otherwise requires, all capitalized terms used but not defined herein shall have the meanings set forth in the Plan and all references to the Uniform Commercial Code shall mean the Uniform Commercial Code as in effect in the State of Texas from time to time; provided, in the event, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Laurus' Security Interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of Texas, the term “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions of this Agreement relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions; provided further, to the extent that the Uniform Commercial Code is used to define any term herein and such term is defined differently in different Articles or Divisions of the Uniform Commercial Code, the definition of such term contained in Article or Division 9 shall govern.

SECTION 1.02. Definition of Certain Terms Used Herein . As used herein, the following terms shall have the following meanings:

" Account Debtor " shall mean any person who is or who may become obligated to the Grantor under, with respect to or on account of an Account.

" Accounts " shall mean any and all right, title and interest of each Grantor existing as of the Petition Date in and to all "accounts", as such term is defined in the Uniform Commercial Code, and any other payment intangibles or rights to payment, and including without limitation, any amounts owed to each Grantor by Hallwood, Quicksilver and Saddle Creek.

" Chattel Paper " shall mean all "chattel paper", as such term is defined in the Uniform Commercial Code, owned by each Grantor as of the Petition Date.

" Collateral " shall mean all (a) Accounts, (b) Documents, (c) Equipment, (d) General Intangibles, (e) Inventory, (f) Chattel Paper, (g) Goods, (h) Intellectual Property, (i) Commercial Tort Claims, (j) Investment Property, (k) Letter of Credit Rights and Supporting Obligations, (l) Instruments, and (m) any Proceeds. Collateral shall also mean and shall include, to the extent not included in the above categories, all rights, title and interest of the Grantors in and to (i) the contracts with Hallwood, Quicksilver and Saddle Creek executed on or prior to the Petition Date, (ii) all claims and causes of action against Hallwood, Quicksilver and Saddle Creek, including the Hallwood Litigation, the Quicksilver Litigation and the Saddle Creek Litigation, and (iii) all Proceeds of the foregoing, including any and all payments or recoveries, including from any settlement, received by the Grantors from the Hallwood Litigation, the Quicksilver Litigation and the Saddle Creek Litigation.

" Commercial Tort Claims " shall mean all "commercial tort claims", as such term is defined in the Uniform Commercial Code, held or owned by each Grantor as of the Petition Date, including to the extent applicable all claims and causes of action held and/or asserted by either Grantor in connection with the Hallwood Litigation, the Quicksilver Litigation and the Saddle Creek Litigation.

“ Confirmation Order ” shall mean the order of the Bankruptcy Court entered by the Bankruptcy Court on February 26, 2008 entitled Order Confirming Second Amended Joint Plan of Reorganization of Blast Energy Services, Inc. Debtor and Eagle Domestic Drilling Operations LLC Debtor.

" Copyright License " shall mean any written agreement executed on or prior to the Petition Date granting any right to any third party under any Copyright owned by either Grantor or which either Grantor otherwise has the right to license, or granting any right to either Grantor under any Copyright owned by any third party, and all rights of the Grantors under any such agreement.

" Copyrights " shall mean all of the following owned by either Grantor as of the Petition Date: (a) all copyright rights in any work subject to the copyright laws of the United States or any other country, whether as author, assignee or transferee, and (b) all registrations and applications for registration of any such copyright in the United States or any other country, including registrations, recordings, supplemental registrations and pending applications for registration in the United States Copyright Office.

" Documents " shall mean all instruments, files, books, records, ledger sheets, data processing records, computer software, manuals and documents covering or relating to any of the Collateral, owned by either Grantor as of the Petition Date.

" Equipment " shall mean all machinery, equipment, cables, furniture and furnishings, and all tangible present and future personal property similar to any of the foregoing, including embedded software, motor vehicles, office equipment, tools, parts and supplies of every kind and description (as well as all such types of property leased by either Grantor and all of such Grantor's rights and interests with respect thereto) and all improvements, additions, accessions or appurtenances thereto, that were owned by the Grantors on the Petition Date. The term Equipment shall include Fixtures.

“ Event of Default ” shall mean (a) the failure of the Grantors to pay when and as due the amounts due and to be paid to the Secured Party on account of the Laurus Retained Claim as required by the terms of the Sale Order, the Plan and the Confirmation Order, (b) any event shall occur under any agreement, document or instrument, including under the Note and Security Agreement provided in the Plan in favor of Berg McAfee (Class 3 under the Plan), which allows any person or entity to declare an event of default under any such agreement, document, instrument, Note or Security Agreement and/or to foreclose, or commence to foreclose, on the Collateral, and/or (c) the failure of either Grantor to perform or observe, in any material respect, any covenant set forth in this Agreement.

" Fixtures " shall mean all items of Equipment, owned as of the Petition Date, of either Grantor that become so related to particular real estate that an interest in them arises under any real estate law applicable thereto.

" General Intangibles " shall mean all general intangibles, choses in action and causes of action and all other intangible personal property of either Grantor of every kind and nature held or owned as of the Petition Date, including all payment intangibles, software, rights and interests in partnerships, limited partnerships, limited liability companies and other unincorporated entities, corporate or other business records, indemnification claims, contracts and contract rights (including rights under customer contracts, leases, whether entered into as lessor or lessee, and other agreements), Intellectual Property, goodwill, registrations, franchises, permits, tax refund claims, commercial tort claims, goodwill and any letter of credit, guarantee, claim, security interest or other security, whether voluntary or involuntary, held by or granted to either Grantor to secure payment by an Account Debtor of any Account.

" Goods " shall mean all "goods", as such term is defined in the Uniform Commercial Code, owned by either Grantor as of the Petition Date.

“ Hallwood ” shall mean Hallwood Petroleum LLC and Hallwood Energy, LP and their respective affiliates.

“ Hallwood Litigation ” shall mean the court proceedings ongoing as of the date of this Agreement, Adversary case no. 07-03282, in the Bankruptcy Court, or any similar proceedings, between Hallwood and Eagle pertaining to an early termination and resulting breach of two IADC standard form drilling contracts, and any claims, causes of action and counterclaims asserted or to be asserted by Eagle against Hallwood in such proceedings.

" Intellectual Property " shall mean all intellectual and similar property of either Grantor of every kind and nature owned or licensed as of the Petition Date, including inventions, permits, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets, confidential or proprietary technical and business information, know-how, show-how or other data or information, software and databases and all embodiments or fixations thereof and related documentation, registrations and franchises, and all additions, improvements and accessions to, and books and records describing or used in connection with, any of the foregoing, and including, without limitation, all rights, title and interest of the Grantors in, to and with respect to the Abrasive Fluid Jet technology, any Patents or patent applications with respect thereto, and that certain Abrasive Fluid Jet Technology Purchase Agreement, dated August 25, 2005, between the Grantors and Alberta Energy Partners.

" Instruments " shall mean all "instruments", as such term is defined in the Uniform Commercial Code, owned by either Grantor as of the Petition Date.

" Inventory " shall mean all inventory, goods and merchandise of either Grantor, owned as of the Petition Date, held for sale or lease, or furnished or to be furnished by either Grantor under contracts of service, or consumed in either Grantor’s respective business, including raw materials, intermediates, work in process, packaging materials, finished goods, semi-finished inventory, scrap inventory, manufacturing supplies and spare parts, all such goods that have been returned to or repossessed by or on behalf of either Grantor and all documents of title representing such collateral.

" Investment Property " shall mean all "investment property", as such term is defined in the Uniform Commercial Code, owned by either Grantor as of the Petition Date, and all interests of Blast in Eagle, including all rights, title and interest of Blast in and to any membership interests, and any distributions with respect thereto, in Eagle.

" Letter-of-Credit Rights " shall mean all "letter-of-credit rights", as such term is defined in the Uniform Commercial Code, owned by either Grantor as of the Petition Date.

" License " shall mean any Patent License, Trademark License, Copyright License or other license or sublicense to which either Grantor is a party executed on or prior to the Petition Date (other than those license agreements in existence on the date hereof and those license agreements entered into after the date hereof, which by their terms prohibit assignment or a grant of a security interest by the Grantor as licensee thereunder so long as such prohibition remains in effect and is valid notwithstanding the provisions of the Uniform Commercial Code or the provisions of any other applicable federal or state law ).

" Obligations " shall mean the payment by the Grantors, when and as due, of the Laurus Retained Claim.

" Patent License " shall mean any written agreement, executed on or prior to the Petition Date, granting to any third party any right to make, use or sell any invention on which a Patent, owned by either Grantor or which either Grantor otherwise has the right to license, is in existence, or granting to either Grantor any right to make, use or sell any invention on which a Patent is in existence, and all rights of either Grantor under any such agreement, including all such agreements and licenses related to a method of an apparatus for horizontal well drilling, patent registration numbers 5,413,184 and 5,853,056.

" Patents " shall mean all of the following owned by either Grantor as of the Petition Date: (a) all letters patent of the United States or any other country, all registrations and recordings thereof, and all applications for letters patent of the United States or any other country, including registrations, recordings and pending applications in the United States Patent and Trademark Office or any similar offices in any other country, including patent application # 60/527,308 relating to a method and apparatus for Jet-Fluid Abrasive Cutting and any patent issued with respect thereto and (b) all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof, and the inventions disclosed or claimed therein, including the right to make, use and/or sell the inventions disclosed or claimed therein.

“ Petition Date ” shall mean January 19, 2007.

" Proceeds " shall mean all proceeds and products of any of the Collateral, including, but not limited to, any consideration received from the sale, exchange, license, lease or other disposition of any asset or property that constitutes Collateral, any value received as a consequence of the possession of any Collateral and any payment received from any insurer or other person or entity as a result of the destruction, loss, theft, damage or other involuntary conversion of whatever nature of any asset or property which constitutes Collateral, and shall include (a) any claim of either Grantor against any third party for (and the right to sue and recover for and the rights to damages or profits due or accrued arising out of or in connection with) or with respect to (i) any Intellectual Property, including for infringement or breach, and (ii) a commercial tort and (b) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral.

“ Quicksilver ” shall mean Quicksilver Resources, Inc. and its affiliates.

“ Quicksilver Litigation ” shall mean the court proceedings ongoing as of the date of this Agreement, Adversary case no. 07-03292, in the Bankruptcy Court, or any similar proceedings, between Quicksilver and Eagle pertaining to an early termination and resulting breach of three IADC standard form drilling contracts, and any claims, causes of action and counterclaims asserted or to be asserted by Eagle against Quicksilver in such proceedings.

“ Saddle Creek ” shall mean Saddle Creek Energy Development, LP.

“ Saddle Creek Litigation ” shall mean all claims and causes of action against Saddle Creek, including with respect to the litigation commenced by the Grantors in the Bankruptcy Court, relating to or involving that certain IADC Day Rate Drilling Contract dated October 24, 2006, as amended.

“ Sale Order ” shall mean the “Order Under 11 U.S.C. Sections 105(A) And 363 and Fed. R. Bankr. P. 2002 And 6004 Authorizing and Approving (I) Asset Purchase Agreement; (II) Asset Sale Free And Clear Of Liens, Claims, Interests And Encumbrances; and (III) Certain Related Relief” entered by the Court on May 11, 2007

" Security Interest " shall have the meaning assigned to such term in Section 2.01.

“ Settlement Agreement ” shall mean the global settlement agreement among the numerous signatory parties, including the Grantors and the Secured Party, approved by order of the Bankruptcy Court entered on May 11, 2007.

" Supporting Obligations " shall mean all "supporting obligations", as such term is defined in the Uniform Commercial Code, owned by either Grantor as of the Petition Date.

" Trademark License " shall mean any written agreement, executed on or prior to the Petition Date, granting to any third party any right to use any Trademark owned by either Grantor or which either Grantor otherwise has the right to license, or granting to either Grantor any right to use any Trademark owned by any third party, and all rights of either Grantor under any such agreement.

" Trademarks " shall mean all of the following owned by either Grantor as of the Petition Date: (a) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, all registrations and recordings thereof, and all registration and recording applications filed in connection therewith, including registrations and registration applications in the United States Patent and Trademark Office, any State of the United States or any similar offices in any other country or any political subdivision thereof, and all extensions or renewals thereof, (b) all goodwill associated therewith or symbolized thereby and (c) all other assets, rights and interests that uniquely reflect or embody such goodwill.

ARTICLE II

SECURITY INTEREST

SECTION 2.01. Security Interest . As security for the payment in full of the Obligations, each Grantor hereby grants to the Secured Party, its successors and assigns, a continuing security interest in all of each such Grantor's right, title and interest in, to and under the Collateral (the " Security Interest "). Without limiting the foregoing, the Secured Party is hereby authorized to file one or more financing statements (including fixture filings), amendments thereto, continuation statements, filings with the United States Patent and Trademark Office or United States Copyright Office (or any successor office or any similar office in any other country) or other documents, including a copy of the Sale Order and the Confirmation Order, for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interest granted by the Grantors, without the signature of the Grantors, and naming the Grantors as debtor and the Secured Party as secured party. The Secured Party is authorized to include any information required by part 5 of Article 9 of the Uniform Commercial Code, or its equivalent in any other applicable jurisdiction, for the sufficiency or filing office acceptance of any financing statement, amendment or continuation statement.

SECTION 2.02. No Assumption of Liability . The Security Interest is granted as security only and shall not subject the Secured Party to, or in any way alter or modify, any obligation or liability of either Grantor with respect to or arising out of the Collateral.

ARTICLE III

COVENANTS

SECTION 3.01. Change of Name; Location of Collateral; Records; Place of Business . (a) Each Grantor agrees promptly to notify the Secured Party in writing of any change (i) in its corporate name or in any trade name used to identify it in the conduct of its business or in the ownership of its properties, (ii) its state of incorporation, (iii) in the location of its chief executive office, its principal place of business, any office in which it maintains books or records relating to Collateral owned by it or any office or facility at which Collateral owned by it is located (including the establishment of any such new office or facility), (iv) in its identity or corporate structure, (v) in its organizational number or (vi) in its Federal Taxpayer Identification Number. Each Grantor agrees not to effect or permit any change referred to in the preceding sentence unless it shall have given the Secured Party ten (10) Business Days prior written notice of such change and shall promptly execute all documents that are required in order for the Secured Party to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral. Each Grantor agrees promptly to notify the Secured Party if any material portion of the Collateral owned or held by such Grantor is damaged or destroyed.

SECTION 3.02. Further Assurances . Each Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Secured Party may from time to time reasonably request to better assure, preserve, protect and perfect the Security Interest and the rights and remedies created hereby.

SECTION 3.03. First Priority Lien/Other Liens/Disposition of Collateral . As provided in the Sale Order, Plan and Confirmation Order, the Security Interest provided for in this Agreement is a continuing first priority fully perfected security interest in and lien against the Collateral. Each Grantor shall not make or permit to be made an assignment, pledge or hypothecation of the Collateral or shall grant any other lien or security interest in respect of the Collateral, except for the liens and security interests authorized in the Plan and the Confirmation Order. Unless and until the Secured Party shall notify the Grantors that an Event of Default shall have occurred and be continuing, each Grantor shall be entitled to sell, convey, lease, assign, transfer or otherwise dispose of any Collateral, subject to the consent rights of the Secured Party set forth in the Plan and the Confirmation Order and provided that the proceeds of any such sale, conveyance, lease, assignment, transfer or disposition are distributed to the Secured Party in the manner and amount as provided in the Sale Order, the Plan and the Confirmation Order.

ARTICLE IV

REMEDIES

SECTION 4.01. Remedies upon Default . In addition to all other rights and remedies granted to the Secured Party under this Agreement, upon the occurrence and continuance of an Event of Default, the Obligations shall become immediately due and payable and the Secured Party may exercise all rights and remedies of a secured party under the Uniform Commercial Code or other applicable law. Without limiting the generality of the foregoing, upon the occurrence and during the continuance of an Event of Default, each Grantor agrees to deliver each item of Collateral to the Secured Party on demand, and it is agreed that the Secured Party shall have the right to take any of or all the following actions at the same or different times: (a) with respect to any Collateral consisting of Intellectual Property, on demand, to cause the Security Interest to become an assignment, transfer and conveyance of any of or all such Collateral by the Grantor to the Secured Party (other than Licenses that are not assignable), and/or to issue any license or sublicense, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis, to use any such Collateral throughout the world on such terms and conditions and in such manner as the Secured Party shall determine (other than in violation of any then-existing licensing arrangements to the extent that waivers cannot be obtained), and (b) with or without legal process and with or without prior notice or demand for performance, to take possession of the Collateral and without liability for trespass to enter any premises where the Collateral may be located for the purpose of taking possession of or removing the Collateral and, generally, to exercise any and all rights afforded to a secured party under the Uniform Commercial Code or other applicable law. Without limiting the generality of the foregoing, each Grantor agrees that the Secured Party shall have the right, subject to the mandatory requirements of applicable law, to sell or otherwise dispose of all or any part of the Collateral, at any public or private sale or at any broker's board or on any securities exchange, for cash, upon credit or for future delivery as the Secured Party shall deem appropriate. The Secured Party shall be authorized at any such sale (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Secured Party shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any such sale shall hold the property sold absolutely, free from any claim or right on the part of either Grantor, and each Grantor hereby waives (to the extent permitted by law) all rights of redemption, stay, valuation and appraisal which either Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.

The Secured Party shall give the Grantors 10 days' written notice (which the Grantors agree is reasonable notice within the meaning of the Uniform Commercial Code) of the Secured Party's intention to make any sale of Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker's board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Secured Party may fix and state in the notice (if any) of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Secured Party may (in its sole and absolute discretion) determine. The Secured Party shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Secured Party may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Secured Party until the sale price is paid by the purchaser or purchasers thereof, but the Secured Party shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by law, private) sale made pursuant to this Section, the Secured Party may bid for or purchase, free (to the extent permitted by law) from any right of redemption, stay, valuation or appraisal on the part of either Grantor (all said rights being also hereby waived and released to the extent permitted by law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to the Secured Party from the Grantors as a credit against the purchase price, and the Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to the Grantors therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Secured Party shall be free to carry out such sale pursuant to such agreement and the Grantors shall not be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Secured Party shall have entered into such an agreement all Events of Default shall have been remedied and the Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, the Secured Party may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver.

SECTION 4.02. Application of Proceeds . The Secured Party shall apply the proceeds of any collection or sale of the Collateral, as well as any Collateral consisting of cash, as follows:

FIRST, to the payment of all costs and expenses incurred by the Secured Party in connection with such collection or sale or with the exercise of any right or remedy hereunder, including all court costs and the reasonable fees and expenses of its agents and legal counsel;

SECOND, to the payment in full of the Obligations; and

THIRD, to the Grantors, and its successors or assigns, or as a court of competent jurisdiction may otherwise direct.

ARTICLE V

MISCELLANEOUS

SECTION 5.01. Notices . All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing, first class mail postage prepaid, and shall be mailed or electronically transmitted to:

The Grantors:

Blast Energy Services, Inc.

Attn: John O’Keefe

14550 Torrey Chase Boulevard

Suite 330

Houston, TX 77014

Email: john@blast-es.com

with a copy to:

H. Rey Stroube, III

18510 Kingsland Boulevard

Houston, Texas 77094

(281) 599-3011 (phone & fax)

rstroube3@earthlink.net

If to the Secured Party to:

Laurus Master Fund Ltd.

Attn: Brendan Phalen

335 Madison Avenue, 10th Floor

New York, NY 10017

Telephone: 212-541-5800

Facsimile: 212-541-4434

Email: bphalen@laurusfunds.com

with a copy to:

Stuart Komrower, Esq.

Cole, Schotz, Meisel, Forman & Leonard, P.A.

25 Main Street

Hackensack, NJ 07601

201.525.6331 direct dial

201.678-6331 direct fax

Email: skomrower@coleschotz.com

SECTION 5.02. Security Interest Absolute . All rights of the Secured Party hereunder, the Security Interest and all obligations of each Grantor hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of any agreement with respect to any of the Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from any other agreement or instrument, (c) any exchange, release or non-perfection of any security interest or lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee, securing or guaranteeing all or any of the Obligations, or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, either Grantor in respect of the Obligations.

SECTION 5.03. Survival of Agreement . All covenants, agreements, representations and warranties made by each Grantor herein shall be considered to have been relied upon by the Secured Party and shall survive the execution and delivery to the Secured Party of this Agreement, regardless of any investigation made by the Secured Party or on its behalf, and shall continue in full force and effect until this Agreement shall terminate.

SECTION 5.04. Binding Effect; Several Agreement . This Agreement shall become effective as to each Grantor upon entry of the Confirmation Order and when a counterpart hereof executed on behalf of each Grantor shall have been delivered to the Secured Party and a counterpart hereof shall have been executed on behalf of the Secured Party, and thereafter shall be binding upon each Grantor and the Secured Party and their respective successors and assigns, and shall inure to the benefit of the Grantors, the Secured Party and their respective successors and assigns, except that the Grantors shall not have the right to assign or transfer its rights or obligations hereunder or any interest herein or in the Collateral (and any such assignment or transfer shall be void) except as expressly contemplated by this Agreement.

SECTION 5.05. GOVERNING LAW . THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS.

SECTION 5.06. VENUE . The Grantors and the Secured Creditor consent and agree that the Bankruptcy Court shall have exclusive jurisdiction to hear and determine, while the bankruptcy cases of the Grantors are still pending, any claims and disputes between the Grantors and the Secured Creditor pertaining to this Agreement or any matter arising out of or related to this Agreement. To the extent the Bankruptcy Court declines to exercise such jurisdiction or no longer has such jurisdiction, the Grantors and the Secured Creditor consent and agree that any federal court located in the County of Harris, State of Texas shall have exclusive jurisdiction to hear and determine any claims and disputes between the Grantors and the Secured Creditor pertaining to this Agreement or any matter arising out of or related to this Agreement, provided, that nothing in this Agreement shall be deemed or operate to preclude the Secured Creditor from bringing suit or taking other legal action in any other jurisdiction to collect, the Obligations, to realize on the Collateral or any other security for the Obligations, or to enforce a judgment or other court order in favor of the Secured Creditor. Each Grantor expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and each Grantor hereby waives any objection which it may have based upon lack of personal jurisdiction, improper venue or forum non conveniens. Each Grantor hereby waives personal service of the summons, complaint and other process issues in any such action or suit and agrees that service of such summons, complaint and other process may be made by registered or certified mail addressed to such Grantor at the address set forth in Section 5.01 and that service so made shall be deemed completed upon the earlier of such Grantor’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid.

SECTION 5.07. Waivers; Amendment . (a) No failure or delay of the Secured Party in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Secured Party hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provisions of this Agreement or consent to any departure by the Grantors therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on either Grantor in any case shall entitle each such Grantor to any other or further notice or demand in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Secured Party and the Grantors with respect to which such waiver, amendment or modification is to apply.

SECTION 5.08. WAIVER OF JURY TRIAL . EACH PARTY HERETO. HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.08.

SECTION 5.09. Severability . In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 5.10. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract (subject to Section 5.04), and shall become effective as provided in Section 5.04. Delivery of an executed signature page to this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.

SECTION 5.11. Headings . Article and Section headings used herein are for the purpose of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

SECTION 5.12. Termination . (a) This Agreement and the Security Interest shall terminate when all the Obligations have been indefeasibly paid in full, at which time the Secured Party shall either deliver to the Grantors in proper form for filing, at the Grantors’ expense, all Uniform Commercial Code termination statements and similar documents which the Grantors shall reasonably request to evidence such termination or an authenticated record authorizing the Grantors to prepare and file the same. Any execution and delivery of termination statements or documents pursuant to this Section 5.12 shall be without recourse to or warranty by the Secured Party.

(b) This Security Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against either Grantor for liquidation or reorganization, should either Grantor become insolvent or make an assignment for the benefit of any creditor or creditors or should a receiver or trustee be appointed for all or any significant part of either Grantor’s assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

SECTION 5.13. Conflict . In the event of any conflict between the terms of this Agreement and the terms of the Sale Order, the Plan or the Confirmation Order, the terms of the Sale Order, the Plan or the Confirmation Order shall control.

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

BLAST ENERGY SERVICES, INC.,

as Grantor,

By: /s/ John O’Keefe

Name: John O’Keefe

Title: CEO

EAGLE DOMESTIC DRILLING OPERATIONS LLC,

as Grantor,

By: /s/John MacDonald

Name: John MacDonald

Title: CFO

LAURUS MASTER FUND, LTD.

as Secured Party,

By: /s/Scott Bluestein

Name: Scott Bluestein

Title:

EXHIBIT 10.6

BLAST ENERGY SERVICES, INC.

$1,120,000 SECURED PROMISSORY NOTE

$1,120,000

Houston, Texas

February 27, 2008

BLAST ENERGY SERVICES, INC., a Texas corporation (hereinafter called the "Company," which term includes any successor entities), for value received, hereby promises to pay to Berg McAfee Companies, LLC (hereinafter called "Holder"), or his heirs, devisees, or assigns, up to the principal sum of One Million One Hundred and Twenty Thousand and No/100 dollars ($1,120,000), together with interest on the amount of such principal sum from time to time outstanding, payable in accordance with the terms set forth below.

The obligations of the Company contained in this Note are secured by a Security Agreement between the Company and the Holder dated July 15, 2005, as may be amended or modified (the "Security Agreement").

ARTICLE I

DEFINITIONS

1.1 Definitions . For all purposes of this Note, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (b) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles as promulgated from time to time by the Association of Independent Certified Public Accountants; and (c) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Note as a whole and not to any particular Article, Section or other subdivision.

“ Base Amount ” shall mean a principal amount outstanding under the Note of $1,200,000.

"Board of Directors" means the board of directors of the Company as elected from time to time or any duly authorized committee of the Board of Directors.

"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which U.S. banking institutions are authorized or obligated by law or executive order to be closed.

"Default" means any event which is, or after notice or passage of time would be, an Event of Default.

"Event of Default" has the meaning specified in Section 3.1.

"Maturity Date" , when used with respect to this Note, means February 27, 2011 (or such earlier date upon which this Note becomes due and payable under Section 3.2).

"Note" means this $1,120,000 Promissory Note, as hereafter amended, modified, substituted or replaced.

"Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, estate, other entity, unincorporated organization or government or any agency or political subdivision thereof.

I. ARTICLE II

PAYMENTS

2.1 Interest . From the date of this Note through the Maturity Date, interest on the principal amounts outstanding under the Note shall accrue at the rate equal to eight percent (8%) per annum calculated on the basis of a 360-day year from the date of this Note through the Maturity Date.

2.2 Payment of Principal and Interest . The principal and all accrued interest under this Note shall be due and payable in full on the Maturity Date.

2.3 Prepayments . The Company may prepay this Note, in whole or in part, without penalty or discount, upon five days' prior written notice given to Holder pursuant to Section 5.5. All payments made under this Note shall be applied first to accrued interest, and the balance, if any, to principal.

2.4 Manner of Payment .

2.4.1 Cash payments of principal on this Note will be made by delivery of checks to Holder or wire transfers pursuant to instructions from Holder. If the date upon which the payment of principal is required to be made pursuant to this Note occurs other than on a Business Day, then such payment of principal shall be made on the next occurring Business Day following said payment date and shall include interest through said next occurring Business Day.

2.4.2 Payment of interest on this Note will be made in Reorganized Blast Common Stock at the rate of $0.20 per share.

2.5 Security . This Note is secured by the collateral defined in the Security Agreement.

ARTICLE III

REMEDIES

3.1 Events of Default . An "Event of Default" occurs if:

(a) the Company defaults in the payment or mandatory prepayment of the principal or interest on this Note when such principal or interest becomes due and payable and such default remains uncured for a period of ten (10) Business Days; or

(b) the Company defaults in the performance of any covenant made by the Company, and such default remains uncured for a period of thirty (30) Business Days in this Note (other than a default in the performance of a covenant specifically addressed elsewhere in this Section 3.1) or the Security Agreement; or

(c) any representation or warranty made by the Company in the Security Agreement, or this Note or in any certificate furnished by the Company in connection with the consummation of the transaction contemplated thereby or hereby, is untrue in any material respect as of the date of making thereof and such default remains uncured for a period of ten (10) Business Days; or

(d) after the date hereof, a court of competent jurisdiction enters (i) a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or (ii) a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of the property of the Company or ordering the winding up or liquidation of the affairs of the Company and any such decree or order of relief or any such other decree or order remains unstayed for a period of 30 days from its date of entry; or

(e) after the date hereof, the Company commences a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or any other case or proceeding to be adjudicated a bankrupt or insolvent, or the Company files a petition, answer or consent seeking reorganization or relief under any applicable federal or state law, or the Company makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts generally as they become due; or

(f) the Company (1) merges or consolidates with or into any other Person (unless the Company is the surviving or acquiring party or if the merger or consolidation is to effect a re-domicile of the Company); (2) dissolves or liquidates; or (3) sells all or substantially all of its assets except where such action by the Company would not have a material adverse effect on the financial condition or business of the Company.

3.2 Acceleration of Maturity . This Note and all accrued interest shall automatically become immediately due and payable if an Event of Default described in Sections 3.1(d), 3.1(e) or 3.1(f) occurs and, this Note shall, at the option of the Holder in its sole discretion, become immediately due and payable if any other Event of Default occurs, and in every such case the Holder of the Note may declare the principal and interest on the Note to be due and payable immediately.

ARTICLE IV

COVENANTS

The Company covenants and agrees that, so long as this Note is outstanding:

4.1 Payment of Principal and Accrued Interest . The Company will duly and punctually pay or cause to be paid the principal sum of this Note, together with interest accrued thereon from the date hereof to the date of payment, in accordance with the terms hereof.

4.2 Existence . The Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate or Company existence, rights (charter and statutory) and franchises.

4.3 Taxes; Claims; etc . The Company will promptly pay and discharge all lawful taxes, assessments, and governmental charges or levies imposed upon it or upon its income or profits, or upon any of its properties, real, personal, or mixed, before the same shall become in default, as well as all lawful claims for labor, materials, and supplies or otherwise which, if unpaid, might become a lien or charge upon such properties or any part thereof, and which lien or charge will have a material adverse effect on the business of the Company; provided, however, that the Company shall not be required to pay or cause to be paid any such tax, assessment, charge, levy, or claim prior to institution of foreclosure proceedings if the validity thereof shall concurrently be contested in good faith by appropriate proceedings and if the Company shall have established reserves deemed by the Company adequate with respect to such tax, assessment, charge, levy, or claim.

4.4 Maintenance of Existence and Properties . The Company will keep its material properties in good repair, working order, and condition, ordinary wear and tear excepted, so that the business carried on may be properly conducted at all times in accordance with prudent business management.

4.5 Information and Records . The Company shall maintain its books and records in accordance with U.S. generally accepted accounting principles, applied on a consistent basis.

4.6 Notice of Defaults . The Company will promptly notify the Holder in writing of the occurrence of any Event of Default under this Note.

4.7 Compliance with Laws . The Company will promptly comply in all material respects with all laws, ordinances and governmental rules and regulations to which it is subject, the violation of which would materially and adversely affect the Company.

ARTICLE V

MISCELLANEOUS

5.1 Consent to Amendments . This Note may be amended, and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, if and only if the Company shall obtain the written consent to such amendment, action or omission to act from the holders of a majority of the aggregate principal amount of this Note.

5.2 Benefits of Note; No Impairment of Rights of Holder of Senior Indebtedness . Nothing in this Note, express or implied, shall give to any Person, other than the Company, Holder, and their successors any benefit or any legal or equitable right, remedy or claim under or in respect of this Note.

5.3 Successors and Assigns . All covenants and agreements in this Note contained by or on behalf of the Company and the Holder shall bind and inure to the benefit of the respective successors and assigns of the Company and the Holder.

5.4 Restrictions on Transfer . Holder shall not transfer this Note except with the prior written consent of the Company, such consent not to be unreasonably withheld. Any lender to which Holder grants a security interest in this Note shall be entitled to exercise all remedies to which it is entitled by contract or by law, including (without limitation) transferring this Note into its own name or into the name of any purchaser at any sale undertaken in connection with enforcement by such lender of its remedies.

5.5 Notice; Address of Parties . Except as otherwise provided, all communications to the Company or Holder provided for herein or with reference to this Note shall be deemed to have been sufficiently given or served for all purposes (i) upon receipt if sent by hand delivery or overnight courier, (ii) upon receipt if sent by facsimile, or (iii) on the third business day after being sent as certified or registered mail, postage and charges prepaid, to the following addresses: if to the Company at 14550 Torrey Chase Boulevard, Suite 330, Houston, Texas 77014-1022, Attn: John O’Keefe, or at any other address designated by the Company in writing to Holder; if to Holder: Eric A. McAfee at 10600 N de Anza Blvd Suite 250, Cupertino, CA 95014, or at any other address designated by Holder to the Company in writing.

5.6 Separability Clause . In case any provision in this Note shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions in such jurisdiction shall not in any way be affected or impaired thereby; provided, however, such construction does not destroy the essence of the bargain provided for hereunder.

5.7 Governing Law; Arbitration . This Note shall be governed by, and construed in accordance with, the internal laws of the State of Texas (without regard to principles of choice of law). All claims arising from or related in any way to this Agreement shall be submitted to and resolved by binding arbitration with the American Arbitration Association (“AAA”) through its office in Harris County, Texas. Except as to injunctions and other provisional relief, this section on mandatory arbitration applies to any dispute, claim or controversy arising out of or related in any way to this Agreement, including but not limited to its enforceability, validity, or interpretation. The arbitration shall be conducted under rules of the AAA which are incorporated herein unless expressly contradicted by the language of this paragraph. One neutral arbitrator shall be used. The arbitrator shall provide a written decision setting forth his or her essential findings and conclusions on which the award is based and judicial review of the arbitration award shall be allowed to the extent required by any applicable federal, state or local law. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. This paragraph shall be governed by the Federal Arbitration Act. Consistent with the expedited nature of arbitration, each party to any arbitration filed under this paragraph will, upon the written request of the other party, promptly provide the other with copies of documents relevant to the issues raised by any claim or counterclaim. Additionally, each party shall allow any other party to depose witnesses under that party's control and shall cooperate with the other party in scheduling depositions. Any dispute regarding discovery, or the relevance or scope thereof, shall be determined by the arbitrator. All discovery shall be completed within 90 days following the appointment of the arbitrator, unless the arbitrator finds that there is good cause for extending the discovery period. Without waiving any remedy under this Agreement, either party may seek from any court having jurisdiction injunctive relief or any interim or provisional relief that is necessary to protect the rights or property of that party, pending the arbitrator’s final determination on the merits. Any provision of this section on mandatory arbitration that is found to be unconscionable shall be severed and this section on mandatory arbitration shall be enforced without the severed provision.

5.8 Usury . It is the intention of the parties hereto to conform strictly to the applicable laws of the State of Texas and the United States of America, and judicial or administrative interpretations or determinations thereof regarding the contracting for, charging and receiving of interest for the use, forbearance, and detention of money (hereinafter referred to in this Section 5.8 as "Applicable Law"). The Holder shall have no right to claim, to charge or to receive any interest in excess of the maximum rate of interest, if any, permitted to be charged on that portion of the amount representing principal which is outstanding and unpaid from time to time by Applicable Law. Determination of the rate of interest for the purpose of determining whether this Note is usurious under Applicable Law shall be made by amortizing, prorating, allocating and spreading in equal parts during the period of the actual time of this Note, all interest or other sums deemed to be interest (hereinafter referred to in this Section 5.8 as "Interest") at any time contracted for, charged or received from the Company in connection with this Note. Any Interest contracted for, charged or received in excess of the maximum rate allowed by Applicable Law shall be deemed a result of a mathematical error and a mistake. If this Note is paid in part prior to the end of the full stated term of this Note and the Interest received for the actual period of existence of this Note exceeds the maximum rate allowed by Applicable Law, Holder shall credit the amount of the excess against any amount owing under this Note or, if this Note has been paid in full, or in the event that it has been accelerated prior to maturity, Holder shall refund to the Company the amount of such excess, and shall not be subject to any of the penalties provided by Applicable Law for contracting for, charging or receiving Interest in excess of the maximum rate allowed by Applicable Law. Any such excess which is unpaid shall be canceled.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed on the date first above written.

BLAST ENERGY SERVICES, INC.

By: /s/John O’Keefe

John O’Keefe

Chief Executive Officer