DEEP WELL OIL & GAS INC (Form: 10KSB, Received: 02/23/2007 13:53:01)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KSB

(Mark One)
þ		ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2004

or

o		TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		FOR THE TRANSITION PERIOD FROM ____________ TO ____________

Commission File Number 0-24012

DEEP WELL OIL & GAS, INC.

(formerly ALLIED DEVICES CORPORATION)

(Name of small business issuer in its charter)

Nevada		13-3087510
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

510 Royal Bank Building, 10117 Jasper Avenue, Edmonton, Alberta, Canada		T5J 1W8
(Address of principal executive offices)		(Zip Code)

Issuer’s telephone number: (780) 409-8144

Securities registered under Section 12(b) of the Exchange Act:

Title of each class		Name of each exchange on which registered
None		None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $0.001 par value per share

(Title of class)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No þ

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

The issuer had no revenues for its most recent fiscal year.

The aggregate market value of the registrant’s common stock held by non-affiliates computed by reference to the price at which the common equity was sold on December 29, 2006 was $10,522,788.

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Check whether the issuer has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes o No þ

As of December 30, 2006, the Issuer had approximately 62,929,289 shares of common stock, $0.001 par value per share outstanding.

Transitional Small Business Disclosure Format (check one): Yes o No þ

TABLE OF CONTENTS

		Page Number

GLOSSARY AND ABBREVIATIONS		5

CURRENCY EXCHANGE RATES		7

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION		7

	PART I

ITEM 1.	DESCRIPTION OF BUSINESS	7
	General Overview	7
	Business Development	7
	Business of Issuer	8
	Overview	8
	Operations	9
	Recent Developments	10
	Sales and Marketing	10
	Research and Development	11
	Competition	11
	Canadian Government and Environmental Regulations	11
	Employees	12
	Royalty Agreements	12
	Risk Factors	13
	Reports to Security Holders	16

ITEM 2.	DESCRIPTION OF PROPERTY	16
	Office Leases	16
	Oil & Gas Properties	16
	Acreage	16
	Reserves, Production and Delivery Commitments	17
	Drilling Activity	17
	Present Activities	18

ITEM 3.	LEGAL PROCEEDINGS	18

ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	20

	PART II

ITEM 5.	MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	21
	Market Price Information for Common Stock	21
	Holders of Record	22
	Dividends	22
	Equity Compensation Plan Information	22
	Stock Option Plan	23
	Sales of Unregistered Securities	23

ITEM 6.	MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION	25

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS		28

ITEM 7.	FINANCIAL STATEMENTS	29
	Balance Sheet	29
	Statement of Operations	30
	Statement of Changes in Stockholders’ Equity	31
	Statement of Cash Flows	32
	Notes to Financial Statements	33

ITEM 8.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	42

ITEM 8A.	CONTROLS AND PROCEDURES	42

ITEM 8B.	OTHER INFORMATION	43

	PART III

ITEM 9.	DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT	43

ITEM 10.	EXECUTIVE COMPENSATION	47

ITEM 11.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	49

ITEM 12.	CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS	50

ITEM 13.	EXHIBITS	51

ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	53

SIGNATURES		54

GLOSSARY AND ABBREVIATIONS

The following are defined terms and abbreviations used herein:

API – a scale developed by the American Petroleum Institute for measuring the density or gravity (heaviness) of oil; the higher the number, the lighter the oil.

Barrel – the common unit for measuring petroleum, including heavy oil. One barrel contains approximately 159 L

Battery – equipment to process or store crude oil from one or more wells.

Bbl or Bbls – means barrel or barrels.

Bitumen – is a heavy, viscous form of crude oil, bitumen general has an API gravity of less than 10 degrees.

Cdn – means Canadian dollars.

Celsius – a temperature scale that registers the freezing point of water as 0 degrees and the boiling point as 100 degrees under normal atmospheric pressure. Room temperature is between 20 degrees and 25 degrees Celsius.

Cold Flow – is a production technique where the oil is simply pumped out of the sands using specialized pumps called progressive cavity pumps.

Conventional Crude Oil – Crude oil that flows naturally or that can be pumped without being heated or diluted.

Core – a cylindrical rock sample taken from a formation for geological analysis.

Crude Oil – oil that has not undergone any refining. Crude oil is a mixture of hydrocarbons with small quantities of other chemicals such as sulphur, nitrogen and oxygen. Crude oil varies radically in its properties, namely specific gravity and viscosity.

Cyclic Steam Stimulation – is a thermal in situ recovery method, which consists of a three-stage process involving high-pressure steam injected into the formation for several weeks. The heat softens the oil while the water vapor helps to dilute and separate the oil from the sand grains. The pressure also creates channels and cracks through which the oil can flow to the well. When a portion of the reservoir is thoroughly saturated, the steam is turned off and the reservoir “soaks” for several weeks. This is followed by the production phase, when the oil flows, or is pumped, up the same wells to the surface. When production rates decline, another cycle of steam injection begins. This process is sometimes called “huff-and-puff” recovery.

Darcy (Darcies) – a measure of rock permeability (i.e., the degree to which natural gas and crude oil can move through the rocks).

Density – the heaviness of crude oil, indicating the proportion of large, carbon-rich molecules, generally measured in kilograms per cubic metre (kg/m3) or degrees on the American Petroleum Institute (API) gravity scale.

Development Well – is a well drilled within the proved area of a natural gas or oil reservoir to the depth of a stratigraphic horizon known to be productive.

Diluents – light petroleum liquids used to dilute bitumen and heavy oil so they can flow through pipelines.

Drill Stem Test (DST) – a method of formation testing. The basic drill stem test tool consists of a packer or packers, valves or ports that may be opened and closed from the surface, and two or more pressure-recording devices. The tool is lowered on the drill string to the zone to be tested. The packer or packers are set to isolate the zone from the drilling fluid column.

Enhanced Oil Recovery – any method that increases oil production by using techniques or materials that are not part of normal pressure maintenance or water flooding operations. For example, natural gas can be injected into a reservoir to “enhance” or increase oil production.

Exploratory Well – is a well drilled to find and produce natural gas or oil in an unproved area, to find a new reservoir in a field previously found to be productive of natural gas or oil in another reservoir, or to extend a known reservoir.

Farmout – an arrangement whereby the owner of a lease assigns some portion (or all) of the lease to another company for drilling.

Heavy Oil – oil having an API gravity less than 22.3 degrees.

Horizontal Well – the drilling of a well that deviates from the vertical and travels horizontally through a producing layer.

In situ – In situ methods such as steam injection through horizontal or vertical wells are required if the oil sands deposits are too deep to mine from the surface. In situ means “in place” in Latin.

Lease – a legal document giving an operator the right to drill for or produce oil or gas; also, the land on which a lease has been obtained.

Light Crude Oil – liquid petroleum which has a low density and flows freely at room temperature. Also called conventional oil, has an API gravity of at least 22 degrees and a viscosity less than 100 centipoise (cP).

Oil Sands – are naturally occurring mixtures of bitumen, water, sand and clay that are found mainly in three areas of Alberta - Athabasca, Peace River and Cold Lake. A typical sample of oil sand might contain about 12 percent bitumen by weight.

Pay Zone (Net Oil Pay) – the producing part of a formation.

Permeability – the capacity of a reservoir rock to transmit fluids; how easily fluids can pass through a rock. The unit of measurement is the darcy or millidarcy.

Porosity – the capacity of a reservoir to store fluids, the volume of the pore space within a reservoir, measured as a percentage.

Primary Recovery – the production of oil and gas from reservoirs using the natural energy available in the reservoirs and pumping techniques.

Saturation – the relative amount of water, oil and gas in the pores of a rock, usually as a percentage of volume.

SEC – means United States Securities and Exchange Commission.

Section – in reference to a parcel of land, means an area of land comprising approximately 640 acres.

Solution Gas – natural gas that is found with crude oil in underground reservoirs. When the oil comes to the surface, the gas expands and comes out of the solution.

Steam-Assisted Gravity Drainage (SAGD) – pairs of horizontal wells (an upper well and a lower well) are drilled into an oil sands formation and steam is injected continuously into the upper well. As the steam heats the oil sands formation, the bitumen softens and drains into the lower well, from which it is produced to the surface.

Upgrading – the process that converts bitumen and heavy oil into a product with a density and viscosity similar to conventional light crude oil.

Viscosity – is a measure of a fluids resistance to flow. To simplify, the oil’s viscosity represents the measure for which the oil wants to stay put when pushed (sheared) by moving mechanical components. It varies greatly with temperature. The more viscous the oil the greater the resistance and the less easy it is for it to flow. Centipoise (cp) is the common unit for expressing absolute viscosity. Viscosity matters to producers because the oil’s viscosity at reservoir temperature determines how easily oil flows to the well for extraction.

CURRENCY EXCHANGE RATES

Our accounts are maintained in United States dollars. All dollar amounts herein are stated in United States dollars except where otherwise indicated.

The following table sets forth the rates of exchange for Canadian dollars per US$1.00 in effect at the end of the following periods and the average rates of exchange during such periods, based on the Bank of Canada average noon spot rate of exchange.

Year	2006		2005		2004		2003*
Rate at end of year	$	1.1153	$	1.1611	$	1.2699	$	1.3536
Average rate for the year	$	1.1425	$	1.2231	$	1.3256	$	1.3589

* For the period September 10 to September 30, 2003

Unless the context indicates another meaning, the terms the “Company”, “we”, “us” and “our” refer to Deep Well Oil & Gas, Inc. and its subsidiaries. For definitions of some terms used throughout this report, see “Glossary and Abbreviations”.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Annual Report Form 10-KSB, including all referenced exhibits, may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included or incorporated by reference in this report, including, without limitation, statements regarding the Company’s future financial position, business strategy, budgets, projected revenues, projected costs and plans and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “project,” “estimate,” “anticipate,” “believe,” “plan”, “future”, “strategy”, or “continue”, or the negative thereof or variations thereon or similar terminology. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Various factors could cause actual results to differ materially from those expressed in the forward-looking statements, including those described in, but not limited to “Risk Factors” in this Form 10-KSB. The Company cautions readers not to place reliance on such statements. Unless otherwise required by applicable law, the company assumes no obligations to update these forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors.

PART I

ITEM 1. DESCRIPTION OF BUSINESS

General Overview

Business Development

Deep Well Oil & Gas, Inc. (herein after referred to as “Deep Well”) was originally incorporated on July 18, 1988 under the laws of the state of Nevada as Worldwide Stock Transfer, Inc. On October 25, 1990, Worldwide Stock Transfer, Inc. changed its name to Illustrious Mergers, Inc. On June 18, 1991, a company known as Allied Devices Corporation was merged with and into Illustrious Mergers, Inc., and its name was at that time changed to Allied Devices Corporation. On August 19, 1996 a company called Absolute Precision, Inc., was merged with and into Allied Devices Corporation and it retained its name as Allied Devices Corporation.

On February 19, 2003 Deep Well’s Predecessor Company, Allied Devices Corporation, filed a Petition for Relief under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court in and for the Eastern District of New York titled In re: Allied Devices Corporation, et al ., Chapter 11, Case No. 03-80962-511 (“the Bankruptcy Action”).

On September 10, 2003 after notice to all creditors and a formal hearing, U.S. Bankruptcy Judge Melanie L. Cyganowski issued an “Order Confirming Liquidating Plan of Reorganization” in the Bankruptcy Action (herein after referred to as “Bankruptcy Order”). In conjunction with that Bankruptcy Order, Allied Devices Corporation’s liabilities, among other things, were paid off and extinguished. The Bankruptcy Order, among other things, implemented a change of control and a group of new investors took control of the Predecessor Company and changed its name to Deep Well Oil and Gas, Inc.

Upon emergence from Chapter 11 proceedings, Deep Well adopted fresh-start reporting in accordance with the American Institute of Certified Public Accountants Statement of Position 90-7, Financial Reporting By Entities in Reorganization Under the Bankruptcy Code (SOP 90-7). For financial reporting purposes, Deep Well adopted the provisions of fresh-start reporting effective September 10, 2003. All periods presented prior to September 10, 2003, have been designated Predecessor Company.

On August 18, 2004 Deep Well and Pan Orient Energy Corp. (formerly known as Maxen Petroleum Inc. herein after referred to as “Pan Orient”) jointly participated in a public offering of Crown Oil Sands Rights held by the Alberta Department of Energy, in which the joint parties successfully bid on 3 Peace River Oil Sands Development leases for a total of 31 sections covering 19,609 gross acres (7,936 gross hectares). Deep Well acquired an undivided 80% working interest and Pan Orient acquired an undivided 20% working interest in the joint property.

On June 7, 2005 Deep Well acquired 100% of the common shares of Northern Alberta Oil Ltd. (formerly known as Mikwec Energy Canada, Ltd., herein after referred to as “Northern”) in exchange for 18,208,875 shares of Deep Well’s common stock. Under the terms of the agreement, Deep Well acquired one hundred percent (100%) of Northern’s issued and outstanding common stock and obtained exclusive options to acquire one hundred percent (100%) of Northern’s preferred stock. The agreement provided that one hundred percent (100%) of Northern’s common and preferred shareholders would exchange their Northern shares for newly issued shares of Deep Well’s restricted common stock. Deep Well, through its acquisition of Northern, acquired a net 80% working interest in 3 Peace River Oil Sands Development leases, 1 Oil Sands permit and 1 Petroleum and Natural Gas License for a total of 38.5 sections covering 24,354 gross acres (9,856 gross hectares). Through this acquisition the Company more than doubled its acreage position in the Peace River Oil Sands to 43,964 gross acres (17,792 gross hectares). Of the total acreage, 6.5 sections are classified as the Oil Sands Permit and Petroleum and Natural Gas License and were held by an injunction related to a court proceeding between Northern and Classic Energy Inc. The permit and license have now been released and as of November 21, 2005 were transferred to Northern.

On June 29, 2005 pursuant to the authority contained in the Nevada Revised Statutes and Section 3.11 of the Bylaws of the Company, a new Board of Directors was elected by written consent of a majority of shareholders. The newly elected Board of Directors are Dr. Horst A. Schmid, Mr. Cyrus Spaulding, and Mr. Donald E. H. Jones.

On July 1, 2005 the directors of Deep Well added Mr. Curtis Sparrow back to the Board of Directors.

On September 15, 2005 Deep Well Oil & Gas (Alberta) Ltd. (herein after referred to as “Deep Well Alberta”) a 100% wholly owned subsidiary company of Deep Well, was incorporated in the province of Alberta, Canada. Deep Well Alberta was incorporated in order to hold Deep Well’s Canadian oil sands leases other than the oil sands leases already held by Northern. At the time Deep Well owned 100% of the 6,069,625 issued common shares of Northern but not the preferred shares of Northern. However, on June 7, 2005, the day Deep Well acquired the common shares of Northern, Deep Well entered into option agreements with the preferred shareholders of Northern to acquire 100% of the 432,500 Northern preferred shares in exchange for Deep Well shares.

On April 2, 2006 the directors of Deep Well added Mr. David Roff to the Board of Directors. Mr. Roff accepted the position on April 3, 2006. Mr. Roff was formerly the President and sole Director of Deep Well from September 10, 2003 until his resignation on February 6, 2004.

Business of Issuer

Overview

The Company’s primary interest is on exploration for and production of oil in the Peace River Oil Sands area located in North Central Alberta, Canada. The Company is engaged in the identification, acquisition, exploration and development of oil & gas prospects. Our immediate focus is the leases and permits the Company holds in the Peace River Oil Sands area. The Company’s main objective is to develop its existing land holdings as well as identify and develop other commercially viable oil & gas properties. Exploration and development for commercially viable production of any oil and gas company includes a high degree of risk which careful evaluation, experience and factual knowledge may not eliminate.

Operations

Sawn Lake Heavy Oil Sands Project

The Company beneficially owns an 80% working interest (subject to a Farmout Agreement) in 69.5 contiguous sections (43,964 gross acres or 17,792 gross hectares) in the Sawn Lake block of the Peace River Oil Sands area located in Alberta, Canada. Because of the earlier extensive exploration for light oil, other operators targeting the deeper Slave Point Formation have previously drilled in much of the same area as the Company’s lands. The Company is able to benefit from data collected by others pertaining to the drilling of more than seventy-five wells that penetrated and partially delineated the heart of the Bluesky Formation heavy oil reservoir.

On December 9, 2004 Deep Well signed a Joint Operating Agreement with 1132559 Alberta Ltd. (herein after referred to as “1132559”) under which 1132559 acquired a 10% working interest from Pan Orient in the joint lands covering 3 Peace River Oil Sands Development leases, totaling 31 sections.

On February 25, 2005 Deep Well and Northern signed a Farmout Agreement with Surge Global Energy, Inc. (herein after referred to as “Surge US”) and Signet Energy Inc. (formerly known as Surge Global Energy Canada Ltd., herein after referred to as “Signet”) (collectively, “Surge”). This agreement allows Surge to earn up to a 40% working interest in the farmout lands (50% of the Company’s share). Among other things the agreement called for Surge to drill 10 wells, pay $2,000,000 (less expenses related to financing) as a prospect fee, payable as ninety percent (90%) to Northern and ten percent (10%) to Deep Well, and grant us 33.33% of the shares of Surge US outstanding on the day the agreement was signed.

On February 28, 2005 Deep Well, Northern and Surge, mutually agreed that Deep Well would be responsible for the portion of the 6.5% royalty payable by Surge could be liable for on lands earned under the February 25, 2005 Farmout Agreement. This liability could arise by virtue of a royalty agreement between Northern and Nearshore Petroleum Corporation (“Nearshore”) dated December 13, 2003. Nearshore is a private corporation incorporated in Alberta, Canada, and is owned and controlled by Mr. Steven P. Gawne and his wife, Mrs. Rebekah J. Gawne, who each own 50%. Mr. Steven P. Gawne was formerly the President, Chief Executive Officer and Director of Deep Well Oil & Gas, Inc. from February 6, 2004 to June 29, 2005.

On February 28, 2005 Nearshore, Northern and Surge, mutually agreed that an area of exclusion between Nearshore and Northern was terminated effective February 17, 2005 since the area of exclusion could interfere with the area of mutual interest provisions in the Farmout Agreement with Surge.

On March 3, 2005 Deep Well, Northern and Surge, mutually agreed by letter amending agreement to extend the payment of the prospect fee under Article 13 of the Farmout Agreement dated February 25, 2005, whereby Surge was granted an extension for payment of the prospect fee to the closing date of March 18, 2005.

On March 10, 2005 Deep Well, Northern and Surge, mutually agreed by letter amending agreement that Surge US is only a party to the Farmout Agreement for the purposes of Article 14 of the Farmout Agreement dated February 25, 2005.

On March 10, 2005 Deep Well, Northern and Surge, mutually agreed by letter amending agreement to establish a procedure whereby Signet is to be appointed as the Operator under the Existing Joint Operating Agreements in respect of all Farmout Lands in which Signet earns an interest pursuant to Article 7 of the Farmout Agreement dated February 25, 2005.

On July 14, 2005 the Company and Surge mutually agreed to amend the Farmout Agreement dated February 25, 2005, to extend the date to spud the first well until September 25, 2005.

On September 21, 2005 our farmout partner and operator was issued a permit by the Alberta Energy Utilities Board (herein after referred to as “EUB”) for a test well and on September 28, 2005, Signet, began drilling the Company’s first well at Sawn Lake, Alberta Canada. Signet did not spud the first well by the 25 ^th of September 2005 and we noted them in default of the agreement.

On October 2005 the EUB granted our farmout partner and operator, Signet, an amendment to the original test well permit at Sawn Lake, Alberta Canada, to proceed with the drilling of the Company’s first well at Sawn Lake.

On November 15, 2005 as part of the settlement of the litigation as described in this report, the Company agreed to amend the Farmout Agreement signed on February 25, 2005, between the Company and Surge that had previously been terminated by Deep Well (as previously disclosed on Form 8-K on September 29, 2005). The amendments to the agreement provided that; 1) all conditions of the Farmout Agreement will be deemed to have been satisfied on September 25, 2005; 2) the earning period (the period during which Signet has to drill 10 wells) under the agreement will be extended until February 25, 2008; 3) Signet will have until September 25, 2006 to drill an option well (the second well); 4) an additional 6.5 sections of land will be added to the land subject to the agreement; 5) Signet will pay Deep Well $1,000,000 on November 15, 2005 in satisfaction of the prospect fee outstanding instead of after drilling the second well as stated in the Farmout Agreement, and 6) no shares of Surge US will be issued to Deep Well or Northern,instead the Company will receive 7,550,000 common shares of Signet, a private subsidiary company of Surge US, bringing the Company’s current ownership in its farmout partner to approximately 14%, fully diluted, as of September 30, 2006. Surge US will have a voting proxy on the 7,550,000 shares of Signet until February 25, 2007.

On July 17, 2006 the Company, through its farmout partner and operator, Signet, had been issued the required licenses by the Government of Alberta to drill the next 3 horizontal wells in the Bluesky Formation of the Sawn Lake Heavy Oil Sands project. The next 3 wells to be drilled are within less than one mile (1.6 km) of the first test well already drilled. Seismic and reservoir mapping were undertaken to be used to support and progress work on near and long term plans of development for the Sawn Lake heavy oil project. For further information on drilling and results see “Present Activities” under item 2 “Oil and Gas Properties” herein described in this report.

Recent Developments

In the fiscal years of 2005 and 2006 we completed three private placement transactions and one subscription agreement. For a description of these transactions, see “Sales of Unregistered Securities” under item 5 herein described in this report.

In the second quarter of our 2006 fiscal year, under the terms of the Farmout Agreement dated February 25, 2005, as amended, Signet, our farmout partner and operator, has earned a 40% net working interest in the test well spacing unit of 36-091-13W5 and five additional sections for a total of 6 sections earned, as a result of drilling the first test well of the Sawn Lake Heavy Oil Sands Project.

On October 12, 2006 the 4-32 and 7-30 wells along with the 1-36 well which was production tested earlier in 2006, were suspended. Our farmout partner and operator, Signet, has undertaken a mapping of the reservoir to assist in its delineation for any future development of the Sawn Lake property. The three wells production tested were located in the thickest known oil pay zones of the reservoir. Although the results from the production tests indicated a lack of cold flow production from these locations, the compartmentalized nature of the reservoir and varying characteristics of these compartments may show different results with further evaluation. Such evaluation is more appropriately conducted through drilling and geological programs that are beyond the scope of the current Farmout Agreement. Negotiations to amend the Farmout Agreement are ongoing. As the focus of the operations to date has been on the cold flow productive potential of the formation, no assessment of the in-situ production capability has been made to date. For further information on drilling and results see item 2 “Oil and Gas Properties” herein described in this report.

Sales and Marketing

As we remain in the development stage, we have not yet generated any revenues, nor do we have any customers at this time. The principal target customers for our crude oil production are expected to be refiners, remarketers and other companies, some of which have pipeline facilities near our properties. In the event pipeline facilities are not conveniently available, we intend to truck our oil to storage, refining or pipeline facilities.

Market pricing for bitumen is seasonal with lower prices in and around the calendar year-end being the norm due to lower demand for asphalt and other bitumen derived products. By necessity, bitumen is regularly blended with diluent in order to facilitate its transportation via pipeline to North American markets. As such, the effective field price for bitumen is also directly impacted by the input cost of the diluent required, the demand and price of which is also seasonal in nature (higher in winter as colder temperatures necessitate more diluent for transportation). Consequently, bitumen pricing is notoriously weak in and around December 31 and not reflective of the annual average realized price or the economics of the “business” overall. We have been advised that, to price bitumen, marketers apply formulas that take as a reference point the prices published for crude oil of particular qualities such as “Edmonton light”, “Lloydminster blend”, or the more internationally known “West Texas Intermediate” (herein after referred to as WTI). We also understand that the price of bitumen fluctuates widely during the course of a year, with the lowest prices typically occurring at the end of the calendar year because of decreased seasonal demand for asphalt and other bitumen-derived products coupled with higher prices for diluents added to facilitate pipeline transportation of bitumen.

We intend to sell our oil and gas production under both short-term (less than one year) and long-term (one year or more) agreements at prices negotiated with third parties. Under both short-term and long-term contracts, typically either the entire contract (in the case of short-term contracts) or the price provisions of the contract (in the case of long-term contracts) are renegotiated from intervals ranging in frequency from daily to annual.

We have not yet adopted any specific sales and marketing plans.

Research and Development

The Company had no material research and development costs for the fiscal years ended September 30, 2004 and 2003.

Competition

We operate in a highly competitive environment, competing with major integrated and independent energy companies for desirable oil and natural gas properties, as well as for the equipment, labour and materials required to develop and operate those properties. Many of our competitors have longer operating histories and substantially greater financial and other resources greater than ours. Many of these companies not only explore for and produce crude oil and natural gas, but also carry on refining operations and market petroleum and other products on a worldwide basis. Our larger competitors, by reason of their size and relative financial strength, can more easily access capital markets than we can and may enjoy a competitive advantage, whereas we may incur higher costs or be unable to acquire and develop desirable properties at costs we consider reasonable because of this competition. Larger competitors may be able to absorb the burden of any changes in laws and regulation in the jurisdictions in which we do business and handle longer periods of reduced prices of gas and oil more easily than we can. Our competitors may be able to pay more for productive oil and natural gas properties and may be able to define, evaluate, bid for and purchase a greater number of properties and prospects than we can. Our ability to acquire additional properties in the future will depend upon our ability to conduct efficient operations, evaluate and select suitable properties, implement advanced technologies and consummate transactions in a highly competitive environment.

Competitive conditions may be substantially affected by various forms of energy legislation and/or regulation considered from time to time by the government of Canada and other countries, as well as factors that we cannot control, including international political conditions, overall levels of supply and demand for oil and gas, and the markets for synthetic fuels and alternative energy sources.

Canadian Government and Environmental Regulations

Our business is governed by numerous laws and regulations at various levels of government . These laws and regulations govern the operation and maintenance of our facilities, the discharge of materials into the environment and other environmental protection issues. Under these laws and regulations, we could be liable for personal injury, clean-up costs and other environmental and property damages, as well as administrative, civil and criminal penalties. We do not believe that insurance coverage for the full potential liability of environmental damages is available at a reasonable cost and our operator of the properties with activity on them maintains limited insurance coverage. Accordingly, we could be liable, or could be required to cease production on properties, if environmental damage occurs. The costs of complying with environmental laws and regulations in the future may harm our business. Furthermore, future changes in environmental laws and regulations could occur that result in stricter standards and enforcement, larger fines and liability, and increased capital expenditures and operating costs, any of which could have a material adverse effect on our financial condition or results of operations.

Exploration and Production. Our operations are subject to federal and provincial governmental regulations. Such regulations include requiring licenses for the drilling of wells, regulating the location of wells and the method and ability to produce wells, surface usage and the restoration of land upon which wells have been drilled, the plugging and abandoning of wells and the transportation of production from wells. Our operations are also subject to various conservation regulations, including the regulation of the size of spacing units, the number of wells which may be drilled in a unit, the unitization or pooling of oil and gas properties, the rate of production allowable from oil and gas wells, and the ability to produce oil and gas.

Royalties and Incentives. Each province and the federal government of Canada have legislation and regulations governing land tenure, royalties, production rates and taxes, environmental protection and other matters under their respective jurisdictions. The royalty regime is a significant factor in the profitability of oil and natural gas production. Royalties payable on production from lands other than Crown lands are determined by negotiations between the parties. Crown royalties are determined by government regulation and are generally calculated as a percentage of the value of the gross production with the royalty rate dependent in part upon prescribed reference prices, well productivity, geographical location, field discovery date and the type and quality of the petroleum product produced. From time to time, the governments of Canada, Alberta, British Columbia and Saskatchewan have also established incentive programs such as royalty rate reductions, royalty holidays and tax credits for the purpose of encouraging oil and natural gas exploration or enhanced recovery projects. These incentives generally increase cash flow.

Pricing and Marketing. The price of oil, natural gas and NGLs sold is determined by negotiation between buyers and sellers. An order from the National Energy Board (herein after referred to as “NEB”) is required for oil exports from Canada. Any oil export to be made pursuant to an export contract of longer than one year, in the case of light crude, and two years, in the case of heavy crude, requires an exporter to obtain an export license from the NEB. The issue of such a license requires the approval of the Government of Canada. Natural gas exported from Canada is also subject to similar regulation by the NEB. Natural gas exports for a term of less than two years, or for a term of two to twenty years in quantities of not more than 20,000 Mcf per day, must be made pursuant to an NEB order. Any natural gas exports to be made pursuant to a contract of larger duration (to a maximum of 25 years) or in larger quantities require an exporter to obtain a license from the NEB, which requires the approval of the Government of Canada. Exporters are free to negotiate prices and other terms with purchasers, provided that the export contracts meet certain criteria prescribed by the NEB. The governments of Alberta, British Columbia and Saskatchewan also regulate the volume of natural gas, which may be removed from those provinces for consumption elsewhere based on such factors as reserve availability, transportation arrangements and market considerations.

Environmental Regulation . The oil and natural gas industry is subject to environmental regulation pursuant to local, provincial and federal legislation. Environmental legislation provides for restrictions and prohibitions on releases or emissions of various substances produced or utilized in association with certain oil and gas industry operations. In addition, legislation requires that well and facility sites be monitored, abandoned and reclaimed to the satisfaction of provincial authorities. A breach of such legislation may result in the imposition of fines and penalties. We are committed to meeting our responsibilities to protect the environment and anticipate making increased expenditures of both a capital and expense nature as a result of the increasingly stringent laws relating to the protection of the environment.

The North American Free Trade Agreement . The North American Free Trade Agreement (herein after referred to as “NAFTA”) grants Canada the freedom to determine whether exports to the United States or Mexico will be allowed. In making this determination, Canada must ensure that any export restrictions do not (i) reduce the proportion of energy exported relative to the supply of the energy resource; (ii) impose an export price higher than the domestic price; or (iii) disrupt normal channels of supply. All parties to NAFTA are also prohibited from imposing minimum export or import price requirements.

Kyoto Protocol . The Kyoto Protocol requires Canada to reduce its greenhouse gas emissions to six percent below 1990 levels during the period between 2008 and 2012. The protocol is expected to affect the operation of all industries in Canada, including the oil and gas industry. As details of the implementation of emissions reduction legislation related to this protocol have yet to be finalized, the effect on our operations cannot be determined at this time.

Investment Canada Act . The Investment Canada Act requires notification and/or review by the Government of Canada in certain cases, including but not limited to, the acquisition of control of a Canadian Business by a non-Canadian. In certain circumstances, the acquisition of a working interest in a property which contains recoverable reserves will be treated as the acquisition of an interest in a “business”, and may be subject to either notification or review, depending on the size of the interest being acquired and the asset size of the business.

Employees

The Company currently has one full time employee, one part time employee and four prime subcontractors. For further information on our subcontractors see “Compensation Arrangements for Executive Officers” under item 10 “Executive Compensation” herein described in this report. We expect to hire from time to time, independent consultants and contractors during the stages of implementing our plans.

Royalty Agreements

In 1996, Alberta announced a new generic royalty regime for oil sands based on recommendations from a joint industry/government national task force. Royalty is calculated using a revenue-less-cost calculation. In early project years before capital investment is recovered, the royalty rate is lower than the rate that is applied after capital is recovered. This helps project cash flows in early years. Once capital is recovered, the Province shares in project profits. The oil sands royalty regime applies to all new investments in the oil sands. Prior to a project’s payout date, the applicable royalty is 1% of project gross revenue. After a project payout, the applicable royalty is equivalent to the greater of 25% of net project revenue or 1% of gross revenue. All costs (operating and capital) are 100% deductible in the year in which they are incurred.

Through the acquisition of Northern, Deep Well became a party to the following royalty agreements that were associated with purchase and sale agreements between Northern, Classic Energy Inc. (herein after referred to as “Classic”), Nearshore and 979708 Alberta Ltd. (herein after referred to as “979708”):

Baytex Energy Partnership (herein after referred to as “Baytex”) reserved an overriding royalty interest on the Petroleum & Natural Gas License lands located within our Sawn Lake properties, in consideration of entering into a petroleum, natural gas and related rights conveyance dated December 19, 2002 with 979708. Effective December 1, 2002, 979708 granted to Baytex a 5% non-convertible overriding royalty on 100% production. These properties comprise of 6.5 sections or 4,112 gross acres (1,664 gross hectares) of Petroleum and Natural Gas. We are not planning to produce any non-oil sands lands as of the date of this report. 979708 is a private corporation incorporated in Alberta, Canada, and is 50% owned and controlled by Nearshore. Nearshore is a private corporation incorporated in Alberta, Canada, and is owned and controlled by Mr. Steven P. Gawne and his wife, Mrs. Rebekah J. Gawne, who each own 50% of Nearshore. Mr. Steven P. Gawne was formerly the President, Chief Executive Officer and Director of Deep Well Oil & Gas, Inc. from February 6, 2004 to June 29, 2005.

On December 12, 2003 Nearshore entered into a Royalty Agreement with Northern on 3 Leases, 1 Permit and 1 Petroleum and Natural Gas License located within our Sawn Lake properties Northern granted and assigned a 6.5% gross overriding royalty to Nearshore on the leased substances on the land interests in which Northern holds in the above said Leases. Nearshore is a private corporation incorporated in Alberta, Canada, and is owned and controlled by Mr. Steven P. Gawne and his wife, Mrs. Rebekah J. Gawne, who each own 50% of Nearshore. Mr. Steven P. Gawne was formerly the President, Chief Executive Officer and Director of Deep Well Oil & Gas, Inc. from February 6, 2004 to June 29, 2005.

Risk Factors

An investment in our common stock is speculative and involves a high degree of risk and uncertainty. You should carefully consider the risks described below, together with the other information contained in our reports filed with the SEC, including the consolidated financial statements and notes thereto of our company, before deciding to invest in our common stock. The risks described below are not the only ones facing our company. Additional risks not presently known to us or that we presently consider immaterial may also adversely affect our company. If any of the following risks occur, our business, financial condition and results of operations and the value of our common stock could be materially and adversely affected.

We Are A Development Stage Company Implementing A New Business Plan . We are a development stage company with only a limited operating history upon which to base an evaluation of our current business and future prospects, and we have just begun to implement our business plan. Since our inception, we have suffered recurring losses from operations and have been dependent on new investment to sustain our operations. During the years ended September 30, 2004 and 2003, we reported net losses of $525,754 and $50,000, respectively. In addition, our consolidated financial statements for the year ended September 30, 2003, contained a going concern qualification and we cannot give any assurances that we can achieve profits from operations.

The Successful Implementation Of Our Business Plan Is Subject To Risks Inherent In The Oil Business. Our oil operations are subject to the economic risks typically associated with exploration, development and production activities, including the necessity of significant expenditures to locate and acquire properties and to drill exploratory wells. In addition, the cost and timing of drilling, completing and operating wells is often uncertain. In conducting exploration and development activities, the presence of unanticipated pressure or irregularities in formations, miscalculations or accidents may cause our exploration, development and production activities to be unsuccessful. This could result in a total loss of our investment in a particular property. If exploration efforts are unsuccessful in establishing proved reserves and exploration activities cease, the amounts accumulated, as unproved costs will be charged against earnings as impairments. Our exploitation and development of oil and gas reserves depends upon access to the areas where our operations are to be conducted. We conduct a portion of our operations in regions where we are only able to do so on a seasonal basis. Unless the surface is sufficiently frozen, we are unable to access our properties, drill or otherwise conduct our operations as planned. In addition, if the surface thaws earlier than expected, we must cease our operations for the season earlier than planned. Our operations are affected by road bans imposed from time to time during the break-up and thaw period in the spring. Road bans are also imposed due to snow, mud and rock slides and periods of high water, which can restrict access to our well sites and production facility sites. Our inability to access our properties or to conduct our operations as planned will result in a shutdown or slow down of our operations, which will adversely affect our business.

We Expect Our Operating Expenses To Increase Substantially In The Future And May Need To Raise Additional Funds . We have a history of net losses and expect that our operating expenses will increase substantially over the next 12 months as we continue to implement our business plan. In addition, we may experience a material decrease in liquidity due to unforeseen capital calls or other events and uncertainties. As a result, we may need to raise additional funds, and such funds may not be available on favourable terms, if at all. If we cannot raise funds on acceptable terms, we may not be able to execute on our business plan, take advantage of future opportunities or respond to competitive pressures or unanticipated requirements. This may seriously harm our business, financial condition and results of operations.

Our Ability To Produce Sufficient Quantities Of Oil From Our Properties May Be Adversely Affected By A Number Of Factors Outside Of Our Control . The business of exploring for and producing oil and gas involves a substantial risk of investment loss. Drilling oil wells involves the risk that the wells may be unproductive or that, although productive, that the wells may not produce oil in economic quantities. Other hazards, such as unusual or unexpected geological formations, pressures, fires, blowouts, loss of circulation of drilling fluids or other conditions may substantially delay or prevent completion of any well. Adverse weather conditions can also hinder drilling operations. A productive well may become uneconomic due to pressure depletion, water encroachment, mechanical difficulties, etc., which impair or prevent the production of oil and/or gas from the well.

There can be no assurance that oil will be produced from the properties in which we have interests. Marketability of any oil that we acquire or discover may be influenced by numerous factors beyond our control. The marketability of our production will depend on the proximity of our reserves to and the capacity of, third party facilities and services, including oil and natural gas gathering systems, pipelines, trucking or terminal facilities, and processing facilities. The unavailability or insufficient capacity of these facilities and services could force us to shut-in producing wells, delay the commencement of production, or discontinue development plans for some of our properties, which would adversely affect our financial condition and performance. There may be periods of time when pipeline capacity is inadequate to meet our oil transportation needs. During periods when pipeline capacity is inadequate, we may be forced to reduce production or incur additional expense as existing production is compressed to fit into existing pipelines. Other risk factors include availability of drilling and related equipment, market fluctuations of prices, taxes, royalties, land tenure, allowable production and environmental protection. We cannot predict how these factors may affect our business.

In addition, the success of our business is dependent upon the efforts of various third parties that we do not control. We rely upon various companies to assist us in identifying desirable oil prospects to acquire and to provide us with technical assistance and services. We also rely upon the services of geologists, geophysicists, chemists, engineers and other scientists to explore and analyze oil prospects to determine a method in which the oil prospects may be developed in a cost-effective manner. In addition, we rely upon the owners and operators of oil drilling equipment to drill and develop our prospects to production. Although we have developed relationships with a number of third-party service providers, we cannot assure that we will be able to continue to rely on such persons. If any of these relationships with third-party service providers are terminated or are unavailable on commercially acceptable terms, we may not be able to execute our business plan.

We Do Not Control Our Operations . We do not operate our properties and we therefore have limited influence over the testing, drilling and production operations of our properties. Our lack of control could result in the following:

·	The operator might initiate exploration or development on a faster or slower pace than we prefer;

·	The operator might propose to drill more wells or build more facilities on a project than we have funds for or that we deem appropriate, which could mean that we are unable to participate in the project or share in the revenues generated by the project;

·	If an operator refuses to initiate a project, we might be unable to pursue the project.

Any of these events could materially reduce the value of our properties.

We Are Party To Several Lawsuits And Will Be Adversely Affected If We Are Found To Be Liable In Connection With Any Legal Proceedings. We are party to several lawsuits described in this Form 10-KSB under the heading “Legal Proceedings”. We intend to vigorously defend ourselves against the claims made in the lawsuits, but we cannot predict the outcome of these proceedings, the commencement or outcome of any future proceedings against us, or whether any such proceeding would lead to monetary damages that would have a material adverse effect on our financial position.

Aboriginal Peoples May Make Claims Regarding The Lands On Which Our Operations Are Conducted. Aboriginal peoples have claimed aboriginal title and rights to a substantial portion of western Canada. If any aboriginal peoples file a claim claiming aboriginal title or rights to the lands on which any of our properties are located, and if any such claim is successful, it could have a material adverse effect on our operations.

The Energy Utilities Board (“EUB”) that governs our operations in Alberta, Canada have implemented a new directive (Directive 056) that the Alberta Government issued its First Nations Consultation Policy on Land Management and Resource Development on May 16, 2005. The EUB expects that all industry applicants must adhere to this policy and the consultation guidelines. These requirements and expectations apply to the licensing of all new energy developments and all modifications to existing energy developments, as covered in Directive 056. In the policy, the Alberta Government has developed consultation guidelines to address specific questions about how consultation for land management and resource development should occur in relation to specific activities. Prior to filing an application, the applicant must address all questions, objections, and concerns regarding the proposed development and attempt to resolve them. This includes concerns and objections raised by members of the public, industry, government representatives, First Nations, Métis, and other interested parties. If there are no outstanding concerns/objections and a confirmation of non-objection has been obtained if required. This process can cause significant delays in obtaining a drilling permit for exploration and/or a production well license for both oil and gas.

Market Fluctuations In The Prices Of Oil Could Adversely Affect Our Business . Prices for oil tend to fluctuate significantly in response to factors beyond our control. These factors include, but are not limited to, the continued threat of war in the Middle East and actions of the Organization of Petroleum Exporting Countries and its maintenance of production constraints, the U.S. economic environment, weather conditions, the availability of alternate fuel sources, transportation interruption, the impact of drilling levels on crude oil and natural gas supply, and the environmental and access issues that could limit future drilling activities for the industry.

Changes in commodity prices may significantly affect our capital resources, liquidity and expected operating results. Price changes directly affect revenues and can indirectly impact expected production by changing the amount of funds available to reinvest in exploration and development activities. Reductions in oil and gas prices not only reduce revenues and profits, but could also reduce the quantities of reserves that are commercially recoverable. Significant declines in prices could result in non-cash charges to earnings due to impairment.

Changes in commodity prices may also significantly affect our ability to estimate the value of producing properties for acquisition and divestiture and often cause disruption in the market for oil producing properties, as buyers and sellers have difficulty agreeing on the value of the properties. Price volatility also makes it difficult to budget for and project the return on acquisitions and development and exploitation of projects. We expect that commodity prices will continue to fluctuate significantly in the future.

Risks Related To Our Stock. Our common stock is traded on the pink sheets. There can be no assurance that an active public market will continue for the common stock, or that the market price for the common stock will not decline below its current price. Such price may be influenced by many factors, including, but not limited to, investor perception of us and our industry and general economic and market conditions. The trading price of the common stock could be subject to wide fluctuations in response to announcements of our business developments or our competitors, quarterly variations in operating results, and other events or factors. In addition, stock markets have experienced extreme price volatility in recent years. This volatility has had a substantial effect on the market prices of companies, at times for reasons unrelated to their operating performance. Such broad market fluctuations may adversely affect the price of our common stock.

Our stock price may decline by future sales of our shares or the perception that such sales may occur. If we issue additional shares of common stock in private financings under an exemption from the registration laws, then those shares will constitute “restricted shares” as defined in Rule 144 under the Securities Act. The restricted shares may only be sold if they are registered under the Securities Act, or sold under Rule 144, or another exemption from registration under the Securities Act.

Some of our outstanding restricted shares of common stock are either eligible for sale pursuant to Rule 144 or are required to be registered under the Securities Act for resale by the holders. We are unable to estimate the amount, timing, or nature of future sales of outstanding common stock. Sales of substantial amounts of our common stock in the public market may cause the stock’s market price to decline.

The Company’s common stock is considered to be a “penny stock” because it meets one or more of the definitions in the Exchange Act Rule 3a51-1, a Rule made effective on July 15, 1992. In particular, (i) our stock trades at a price less than five dollars ($5.00) per share; (ii) our common stock does not trade on a “recognized” national exchange; (iii) it is NOT quoted on the NASD’s automated quotation system (herein after referred to as “NASDAQ”), or even if so, has a price less than five dollars ($5.00) per share; OR (iv) it is issued by a company with net tangible assets less than $2,000,000, if in business more than three years continuously, or $5,000,000, if in business less than a continuous three years, or with average revenues of less than $6,000,000 for the past three years. The principal result or effect of being designated a “penny stock” is that securities broker-dealers cannot recommend the stock but must trade in it on an unsolicited basis.

Risks Related to Broker-Dealer Requirements Involving Penny Stocks / Risks Affecting Trading and Liquidity . Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2 promulgated thereunder by the Commission require broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor’s account. These rules may have the effect of reducing the level of trading activity in the secondary market, if and when one develops.

Potential investors in the Company’s common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be “penny stock.” Moreover, Commission Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives. Pursuant to the Penny Stock Reform Act of 1990, broker-dealers are further obligated to provide customers with monthly account statements. Compliance with the foregoing requirements may make it more difficult for investors in the Company’s stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.

Reports to Security Holders

We are a Nevada corporation and our common stock is registered under section 12(g) of the Securities Exchange Act of 1934, as amended. Our annual report on Form 10-KSB, quarterly reports on Form 10-QSB, current reports on From 8-K and amendments to those reports can be accessed at the SEC’s website at www.sec.gov.

ITEM 2. DESCRIPTION OF PROPERTY

Office Leases

The Company currently rents office space on a month by month basis for administrative operations for a nominal fee at 510 Royal Bank Building 10117 Jasper Avenue, Edmonton Alberta T5J 1W8. The Company also has a shared office space for operations in Calgary, Alberta. The sub-lease of the Calgary office location is on month-by-month basis for a nominal fee.

Oil and Gas Properties

Acreage

The Company beneficially owns an 80% working interest (subject to a Farmout Agreement with Signet) in 69.5 contiguous sections (43,964 gross acres or 17,792 gross hectares) in the Sawn Lake block of the Peace River Oil Sands area located in Alberta, Canada. On November 15, 2005, Deep Well and its farmout partner and operator Signet amended the Farmout Agreement and further agreed to acknowledge the original Farmout Agreement. Signet will own a 40% working interest once the obligations under the Farmout Agreement have been satisfied. In accordance with the Farmout Agreement, Signet must drill and complete 10 wells prior to February 25, 2008, at no cost to the Company, to fully earn their 40% working interest in the project. Each well drilled earns Signet 6.0 sections. Signet will be the operator of the Sawn Lake oil sands project. The following table summarizes our gross and net developed and undeveloped oil and natural gas rights under lease as of September 30, 2004.

OIL AND NATURAL GAS RIGHTS as of September 30, 2004

Gross Hectares

Net Hectares

Gross Acres

Net Acres

Developed Acreage

Sawn Lake – Peace River OS Area, Alberta, Canada

None

Total

None

Undeveloped Acreage

Sawn Lake – Peace River OS Area, Alberta, Canada

7,936

6,349 *

19,610

15,688 *

Total

7,936

6,349

19,610

15,688

*80% working interest (pre-farmout)

A developed acre is considered to mean those acres spaced or assignable to productive wells, a gross acre is an acre in which a working interest is owned, and a net acre is the result that is obtained when fractional ownership working interest is multiplied by gross acres. The number of net acres is the sum of the factional working interests owned in gross acres expressed as whole numbers and fractions thereof.

Undeveloped acreage is considered to be those lease acres on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil or natural gas, regardless of whether or not that acreage contains proved reserves, but does not include undrilled acreage held by production under the terms of a lease. As is customary in the oil and gas industry, we can generally retain our interest in undeveloped acreage by drilling activity that establishes commercial production sufficient to maintain the leases or by paying delay rentals during the remaining primary term of such a lease. The oil and natural gas leases in which we have an interest are for varying primary terms, and if production continues from our developed lease acreage beyond the primary term, we are entitled to hold the lease for as long as oil or natural gas is produced.

Reserves, Production and Delivery Commitments

Northern commenced oil and gas exploration activities in August 2004 with the first well being drilled on the project in September 2005. We did not engage in any production activities during the year ended September 30, 2004, 2003 and 2002, nor did we have any proved or probable reserves at the end of such periods, and thus, were not required to provide any of the production data required by Statement of Financial Accounting Standards No. 69. We do not have any obligations under existing delivery commitment contracts or agreements calling for the provision of fixed and determinable quantities of oil and gas over the next three years, and have therefore not filed any information or reports with any federal authority or agency, containing estimates of total, proved developed or undeveloped net oil or gas reserves.

Drilling Activity

The following tables summarize the results of our drilling activities during the years ended September 30, 2004, 2003 and 2002.

Exploratory Wells year ended September 30

2006

2005

2004

Gross

Net

Gross

Net

Gross

Net

Gas

Oil

Oil/Gas

Evaluating

Drilling at end of year

Suspended

Abandoned

Total Exploratory Wells

Development Wells year ended September 30	2006					2005					2004
	Gross		Net			Gross		Net			Gross		Net
Gas		-		-			-		-			-		-
Oil		-		-			-		-			-		-
Oil/Gas		-		-			-		-			-		-
Evaluating		-		-			-		-			-		-
Drilling at end of year		-		-			-		-			-		-
Suspended		2		0.8	**		1		0.4	**		-		-
Abandoned		-		-			-		-			-		-
Total Development Wells		2		0.8			1		0.4			-		-

** 40% working interest

No wells were drilled for the years ended September 30, 2004, 2003 and 2002.

Present Activities

The 1-36 well (1 ^st test well drilled at surface location 1-36-091-13W5) was successfully drilled and completed in late November of 2005 to a depth of 672 meters with a horizontal leg of over 600 meters within the Bluesky oil sands zone. Our farmout partner and operator, Signet, initiated production testing in January 2006 but was delayed due to mechanical issues with the well equipment, scheduling of service rigs, and the imposition of road bans in the area for the spring break-up. Production testing continued after the spring break-up and on March 23, 2006 our farmout partner and operator, Signet, announced that the first horizontal test well, the 1-36 well, on our Sawn Lake property had been drilled and the reservoir had tested positive for cold flow crude oil pumping capability. The well was drilled to a vertical depth of 672 meters followed by a horizontal leg of 630 meters. Initial test results by third parties have concluded that the initial oil samples taken early in the flow period had been analyzed and determined to be 10.7 degree API with 3.1% sulphur. To date Signet has earned their interest in 6.0 sections, by drilling and completing the first well. Currently the well has been suspended for further evaluation.

The 4-32 well (2 ^nd well drilled at surface location 4-32-091-12W5) began drilling on August 13, 2006. This was the first of three additional wells that Signet was to drill over the next 90 days in the Bluesky Formation of the Sawn Lake area. This well was successfully drilled and completion commenced in September 2006 to a vertical depth of 675 meters with a horizontal leg of over 600 meters within the Bluesky oil sands zone. Initial production tests for cold flow pumping capability were negative but the log analysis confirmed 23 meters of net oil pay in the Bluesky reservoir. The API gravity is in the range of 6.7 to 7.6 degrees. The viscosity of the oil is between 263,000 and 475,000 centistokes extrapolated at 20 degrees Celsius, which is approximately the temperature of the formation at Sawn Lake. The viscosity of the oil extrapolated at 105 degrees Celsius is between 172 and 237 centistokes. Therefore at a temperature slightly greater than boiling water, the oil from this reservoir should become mobile and flow similar to that of medium gravity oil. The permeability is in the range of up to 8 Darcies with an average heavy oil saturation of 78 percent. Subsequent to the drilling and logging operations, tubing was run in preparation for potential Bluesky oil production. Currently the well has been suspended for further evaluation.

The 7-30 well (3 ^rd well drilled at surface location 7-30-091-12W5) began drilling on August 31, 2006. This was the second of three additional wells that Signet was to drill over the next 90 days in the Bluesky Formation of the Sawn Lake area. This well was successfully drilled and completion commenced in September 2006 to a vertical depth of 659 meters with a horizontal leg of over 600 meters within the Bluesky oil sands zone. Initial production tests for cold flow pumping capability were negative but the log analysis confirmed 22 meters of net oil pay in the Bluesky reservoir. The API gravity is in the range of 6.2 to 6.8 degrees. The viscosity of the oil is 290,000 centistokes extrapolated at 18 degrees Celsius. The permeability is in the range of up to 8 Darcies with an average heavy oil saturation of 68 percent. Subsequent to the drilling and logging operations, tubing was run in preparation for potential Bluesky oil production. Currently the well has been suspended for further evaluation.

The 13-29 well (proposed 4 ^th well surface location 13-29-091-12W5) was not drilled since it was determined by the operator that it would not provide any additional geological information in its delineation of the Sawn Lake Reservoir beyond that of the two recently drilled wells in the same vicinity.

Further exploratory work will be carried out to determine where the right Bluesky reservoir parameters might exist at Sawn Lake for cold flow and secondary recovery production. In general, the reservoir parameters at the location of the most recently drilled wells show promise and favourable parameters for a successful secondary recovery project. Consideration is also being given to determine the best technology under which oil can be produced from the Sawn Lake Heavy Oil Sands Project, taking into consideration the highly successful methods used by other nearby leaseholders producing from the same Formation. Under the present Farmout Agreement with Signet, Signet must drill 7 more horizontal wells by February 2008 at no cost to the Company, in order to fully earn the 40% working interest in the entire Sawn Lake Project.

ITEM 3. LEGAL PROCEEDINGS

Deep Well Oil & Gas, Inc. vs. Surge Global Energy, Inc.

On October 13, 2005 Surge filed against us with a Notice of Motion filed in Court of Alberta, District of Calgary. The motion among other things, requested a declaration from the Company that Signet has complied with their obligations under a particular Farmout Agreement and a declaration that Signet has earned 50% of the Company’s interest in lands located at LSD 01-36-091-13-W5M.

On October 14, 2005 the Company served Surge with a lawsuit issued in the Alberta Court District of Calgary. The lawsuit among other things, seeks a declaration that the Farmout Agreement has been terminated, an order requesting Signet to reconvey to the Company title documents as defined in the Farmout Agreement, a declaration that Signet has failed to spud a test well pursuant to the terms of the Farmout, an order preventing Signet from entering the Farmout lands pending resolution to the lawsuit as well as other various declaratory and injunctive relief, including damages of $1,000,000 Cdn for trespass and punitive damages of $250,000 Cdn.

On October 21, 2005 the Company and Surge agreed to a consent order in the Court of Alberta, district of Calgary whereby both parties agreed to consolidate their actions. The consolidated action would continue under the Company action and would be tried at the same time.

On November 15, 2005 as part of a restructuring of Signet, both parties mutually agreed to dismiss their lawsuits against each other. The dismissals were part of the Farmout Amending and Farmout Acknowledgement Agreements entered into by the Company and Surge. The Farmout Amendment and Acknowledgement Agreement agreed to, upon Signet receiving a private placement for $8,550,000 Cdn in a convertible debenture and modify the February 25, 2005 Farmout Agreement. The significant amendments were to; 1.) Extend the earning period to February 25, 2008; 2.) Extend the date for which Signet can spud an option well to September 25, 2006; 3.) Recalculate the payment of the 2 ^nd portion of the prospect fee, being $1,000,000 to be paid by Signet to Northern and Deep Well Alberta and omit the conditions under which the $1,000,000 was paid, 4.) Signet issued to Northern and Deep Well Alberta 7,550,000 of its common shares giving the Company a beneficial interest in the Farmee of 31.47% before Signet issued shares under the private placement financing and 22.7% if the convertible debenture is converted on a fully diluted basis, and 5.) The Company must give up the right to acquire shares in Surge US.

I.G.M. Resources Corp. vs. Deep Well Oil & Gas, Inc. et al

On March 10, 2005 I.G.M. Resources Corp. (herein after referred to as “IGM”) filed against Classic, 979708, Deep Well, Nearshore, Steven P. Gawne, Rebekah Gawne, Gawne Family Trust, 1089144 Alberta Ltd., John F. Brown, Diane Lynn McClaflin, Cassandra Doreen Brown, Elissa Alexandra Brown, Brown Family Trust, Priority Exploration Ltd., Northern and Gordon Skulmoski a Statement of Claim in the Court of Queen’s Bench of Alberta Judicial District of Calgary. This suit is part of a series of lawsuits or actions undertaken by IGM against some of the other above defendants.

IGM was and still is a minority shareholder of 979708. 979708 was in the business of discovering, assembling and acquiring oil & gas prospects. In 2002 and 2003, 979708 acquired oil and gas prospects in the Sawn Lake area of Alberta. On or about the 14 ^th of July 2003 all or substantially all the assets of 979708 were sold to Classic. IGM claims the value of the assets sold was far in excess of the value paid for those assets. On April 23, 2004 Northern purchased some of Classic’s assets that are under dispute by IGM. On June 7, 2005 Deep Well acquired all of the common shares of Northern thereby giving Deep Well an indirect beneficial interest in the assets IGM is claiming an interest in.

IGM seeks an order setting aside the transaction and returning the assets to 979708, compensation in the amount of $15,000,000 Cdn, a declaration of trust declaring that Classic, Northern and Deep Well Alberta, hold all of the assets acquired from 979708 and any property acquired by use of such assets or confidential information of 979708, in trust for the Plaintiff.

This lawsuit has been stayed pending the outcome of the other litigation by IGM against the other defendants.

The Company believes the claims are without merit and will vigorously defend them.

Hardie & Kelly vs. Brown et al

On June 2, 2006 Hardie and Kelly, Trustee of the Estate of John Forbes Brown filed against John Forbes Brown, a bankrupt, Diane Lynn McClaflin, 1089144 Alberta Ltd., and Deep Well with an Amended Statement of Claim filed in the Court of Queen’s Bench of Alberta Judicial District of Calgary. John Forbes Brown was a former officer and then sub-contractor of Deep Well before and at the time he was assigned into bankruptcy on into July 12, 2004. The Plaintiff claims, in addition to other issues unrelated to Deep Well, that John Forbes Brown received 4,812,500 Deep Well shares as a result of his employment in Deep Well and that John Forbes Brown improperly assigned these shares to the numbered company as a ruse entered into on the eve of insolvency by John Forbes Brown in order to facilitate the hiding of assets from his creditors and the trustee of his bankruptcy. The Plaintiff further claims that on August 23, 2004 John Forbes Brown advised the Plaintiff that he in fact owned the above shares and did not disclose this ownership in his bankruptcy statement of affairs filed. The Plaintiff further claims that John Forbes Brown would lodge the said shares with his lawyer until such time as these shares could be transferred to the Plaintiff. The Plaintiff further claims that unbeknownst to them John Forbes Brown surreptitiously removed the shares from his lawyer’s office and delivered them to Deep Well so that Deep Well could cancel them. The Plaintiff claims that Deep Well conspired with John Forbes Brown to defraud the creditors of John Forbes Brown by taking receipt and canceling the said shares. The Plaintiff claims that consideration paid by Deep Well for the said shares was invested in the home owned by John Forbes Brown and his wife. The Plaintiff seeks; 1.) An accounting of the proceeds and benefits derived by the dealings of the shares, 2.) The home owned by John Forbes Brown and his wife, to be held in trust on behalf of the Plaintiff and an accounting of proceeds related to this trust, 3.) The Plaintiff seeks damages from the Defendants because of their actions, 4.) A judgment for $15,612,645 Cdn, 5.) An order to sell John Forbes Brown’s home, and 6.) Interest and costs.

The Company plans to vigorously defend itself against the Plaintiff’s claims.

Menno Wiebe and Jacobean Resource International vs. Deep Well Oil & Gas, Inc. et al

On October 23, 2006 Menno Wiebe and Jacobean Resources International served Deep Well, Doe individuals and Roe Corporations with a Complaint and Summons filed in the United States of America, District Court of Clark County, Nevada. The Complaint alleges a breach of contract in which the Plaintiffs are seeking monetary damages in excess of $10,000 plus an order directing Defendants to issue 56,500 shares of Deep Well stock to Plaintiffs. Mr. Menno Wiebe served as Director and Chief Operating Officer of Deep Well from July 6, 2004 until June 29, 2005. Mr. Wiebe claims he was the Chief Operating Officer until October, 2005. The Company believes that it has meritorious defenses to the plaintiff’s claims and intends to enter into mediation, as called for in the contract with Menno Wiebe.

Star Capital Inc. vs. Deep Well Oil & Gas, Inc. et al

On December 21, 2006 Deep Well, Deep Well Alberta and some of the directors of the Company in addition to other individuals were served with an Originating Notice of Motion, filed in the Court of Queen’s Bench of Alberta Judicial District of Calgary, by Star Capital Inc. whereby the Applicant claims that the Respondents; 1.) Failed to provide shareholders with proper or any notice of Annual General Meetings, special meeting of shareholders, or both; 2.) Failed to hold Annual General Meetings in accordance with the provisions of the Alberta Business Corporations Act or, in the alternative, with the Nevada Revised Statutes; 3.) Failed to appoint qualified auditors in accordance with the provisions of the Alberta Business Corporations Act or, in the alternative, the Nevada Revised Statutes; 4.) Failed to prepare and file audited financial statements in accordance with the provisions of the Alberta Business Corporations Act and the Alberta Securities Act or, in the alternative, the Nevada Revised Statutes; 5.) Paid management fees in relation to either or both of Deep Well or Deep Well Alberta to directors, officers and third parties, including the individual Respondents themselves, that are unreasonable, oppressive and have been granted without proper regard for the interests of shareholders; 6.) In the case of the individual Respondents, engaged in wrongful self-dealing that is oppressive, prejudicial to, and unfairly disregards the interests of, shareholders; 7.) Issued capital stock of Deep Well, and instruments for the future purchase of such capital stock, in a manner that is oppressive, unfairly prejudicial to, and unfairly disregards the interests of shareholders; 8.) Failed to disclose, or failing to disclose in a timely manner, material information to the shareholders and the public, including, but not limited to, the fact of the transfer of assets from Deep Well to Deep Well Alberta and the existence of encumbrances of the oil sands assets, such as gross overriding royalties held by the Respondents Gary Tighe and Steve Gawne, which distorts the public market in the securities of the corporate Respondents and is otherwise oppressive, unfairly prejudicial to, and unfairly disregards the interests of shareholders, including the Applicant; 9.) Utilized majority shareholder approval for various transactions, including the appointment of directors, without calling annual or special meetings of shareholders, in a manner which is oppressive, unfairly prejudicial and unfairly disregards the minority shareholders and which is otherwise a breach of the fiduciary duties owed by the directors and officers to the corporations and to the minority shareholders.

The Company plans to vigorously defend itself against the claims.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There was no matter submitted during the fiscal year 2004 covered by this report to a vote of security holders, through the solicitation of proxies or otherwise.

On June 29, 2005 a majority of the shareholders of Deep Well, by written resolution, replaced the Deep Well’s Board of Directors, consisting of Mr. Steven P. Gawne, Mr. Curtis Sparrow, Mr. Leonard F. Bolger, Mr. Menno Wiebe and Dr. Horst A. Schmid, with a new Board of Directors, consisting of Mr. Cyrus Spaulding, Mr. Donald E. H. Jones and Dr. Horst A. Schmid. Dr. Horst A. Schmid was re-appointed to the Board as Chairman and appointed Chief Executive Officer and President. Mr. Cyrus Spaulding was appointed Chief Operating Officer. On July 1, 2005 Mr. Curtis Sparrow accepted a re-appointed to the Board for Directors. Mr. Curtis Sparrow continued to be Chief Financial Officer, Corporate Secretary and Treasurer of the Company.

PART II

ITEM 5.

MARKET FOR THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The common stock of the Predecessor Company of Deep Well was originally listed on NASDAQ as of November 17, 1994, however the predecessor company no longer met listing criteria for NASDAQ and its common stock was delisted to the OTC Bulletin Board on September 16, 2002. Subsequent to this delisting, the Predecessor Company did not, on a timely basis, file a Form 10-Q for the quarter ended December 31, 2002 and accordingly, its stock was delisted to the pink sheets on March 25, 2003.

Market Price Information for Common Stock

Deep Well’s stock is currently quoted on the pink sheets under the trading symbol DWOG. The following table sets forth the high and low sales prices for Deep Well common stock as reported on the pink sheets for the periods indicated below. This table gives effect to both the 2-1 split of March 10, 2004 and the 3-1 split of May 14, 2004. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions:

	High (US$)		Low (US$)
Fiscal 2003
First Quarter	$	0.24	$	0.12
Second Quarter	$	0.13	$	0.01
Third Quarter	$	0.03	$	0.002
Fourth Quarter	$	0.002	$	0.0003

Fiscal 2004
First Quarter	$	0.55	$	0.05
Second Quarter	$	1.30	$	1.05
Third Quarter	$	1.55	$	0.48
Fourth Quarter	$	1.42	$	0.80

Fiscal 2005
First Quarter	$	1.03	$	0.53
Second Quarter	$	0.90	$	0.35
Third Quarter	$	0.58	$	0.30
Fourth Quarter	$	0.68	$	0.31

Fiscal 2006
First Quarter	$	1.31	$	0.37
Second Quarter	$	2.98	$	1.15
Third Quarter	$	2.85	$	1.45
Fourth Quarter	$	1.76	$	0.58

Fiscal 2007
First Quarter	$	0.66	$	0.33

On February 27, 2004 the Board of Directors unanimously approved a forward stock split of Deep Well’s common stock at a ratio of two (2) shares for every one (1) share held. The forward split became effective on March 10, 2004. After the split, Deep Well had 12,337,156 shares of common stock issued and outstanding. Prior to the effective date of the split, Deep Well had 6,168,578 shares of common stock outstanding. In connection with the stock split Deep Well increased its authorized common shares in proportion to the forward stock split. Deep Well’s authorized common stock after the forward stock split consisted of 100,000,000 shares of common stock. Prior to the split, Deep Well was authorized to issue 50,000,000 shares of common stock. In connection with the forward split, Deep Well amended its articles of incorporation with the state of Nevada. Deep Well did not obtain a shareholder vote of the forward stock split and a shareholder vote was not required by Nevada law.

On May 4, 2004 our Board of Directors unanimously approved a forward stock split of our common stock at a ratio of three (3) shares for every one (1) share held. The forward split became effective on May 14, 2004. After the split, Deep Well had 37,011,468 shares of common stock issued and outstanding. Prior to the effective date of the split, Deep Well had 12,337,156 shares of common stock outstanding. In connection with the stock split Deep Well increased its authorized common shares in proportion to the forward stock split. Deep Well’s authorized common stock after the forward stock split consisted of 300,000,000 shares of common stock. Prior to the split, Deep Well was authorized to issue 100,000,000 shares of common stock. In connection with the forward split, Deep Well amended its articles of incorporation with the state of Nevada. Deep Well did not obtain a shareholder vote of the forward stock split and a shareholder vote was not required by Nevada law.

On June 7, 2005 Deep Well completed the acquisition of 6,069,625 shares of common stock, representing 100% of the outstanding common stock of Northern, pursuant to an Exchange Agreement, dated as of July 8, 2004, between the Deep Well, Northern and all shareholders of Northern, as amended by an amending agreement dated April 25, 2005. In addition to the common stock of Northern, Deep Well was granted options to acquire 432,500 shares of preferred stock of Northern and the preferred shareholders of Northern have the ability to require Deep Well to acquire such shares. In accordance with the terms of the Agreements, common shareholders of Northern received three (3) shares of the Deep Well’s restricted common stock for each one (1) share of Northern’s common stock and preferred shareholders of Northern will receive thirty (30) shares of the Deep Well’s restricted common stock for each one (1) share of Northern’s preferred stock held by such shareholders.

Holders of Record

As of January 5, 2007 we had approximately 187 holders of record of our shares of common stock. The Company estimates that investment dealers and other nominees hold common shares for approximately 2,821 beneficial holders.

Dividends

The Company has not paid cash dividends since inception. The Company intends to retain all of its earnings, if any, for use in its business and does not anticipate paying any cash dividends in the foreseeable future. The payment of any future dividends will be at the discretion of the Board of Director’s and will depend upon a number of factors, including future earnings, the success of the company’s business activities, capital requirements, the general financial condition and future prospects of the company, general business conditions and such other factors as the Board of Directors may deem relevant.

Equity Compensation Plan Information

The following table provides information as of September 30, 2004 with respect to shares of Deep Well common stock that may be issued under our existing equity compensation plans.

Equity Compensation Plan Category	(a) Number of Securities to be issued upon exercise of outstanding options, warrants and rights		(b) Weighted-average exercise price of outstanding options, warrants and rights		(c) Number of Securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

Equity compensation plans approved by security holders		None		None		None

Equity compensation plans not approved by security holders		None		None		None

Total		None		None		None

Stock Option Plan

On November 28, 2005 the Board of Directors of Deep Well adopted the Deep Well Oil & Gas, Inc. Stock Option Plan. The Stock Option Plan, which will be administered by the Board, permits options to acquire shares of the Deep Well’s common stock to be granted to directors, senior officers and employees of the Company, as well as certain consultants and other persons providing services to the Company. This Stock Option Plan was adopted to provide an incentive to the retention of directors, officers and employees as well as consultants the Company may wish to retain in the future. The maximum number of common shares that may be reserved for issuance under the Stock Option Plan may not exceed 10% of the Company’s issued and outstanding common shares, subject to adjustment as contemplated by the Stock Option Plan. The aggregate number of common shares with respect to which options may be granted to any one person (together with their associates) in any one year, together with all other incentive plans of the Company, may not exceed 500,000 common shares, and in total may not exceed 2% of the total number of common shares outstanding. On November 28, 2005, the Board granted 375,000 options to acquire common shares to each director of Deep Well and granted 187,500 options to acquire common shares to a director of a subsidiary of Deep Well. The exercise price of such options is $0.71 per share. In each case, the vesting of such director options will occur only if the holder of the options continues to provide services to the Company during the immediate annual period preceding the relevant vesting date. The options will terminate at the close of business five years from the date of grant. In addition, on November 28, 2005, the Board granted 390,000 options to acquire common shares to certain corporations providing consulting services to the Company. Each of such consultants are wholly owned by directors of the Company. The exercise price of such options is $0.71 per share. In each case, the vesting of such consultant options will occur only if the holder of the options continues to provide services to the Company on the relevant vesting date. The options will terminate at the close of business five years from the date of grant.

Sales of Unregistered Securities

On September 10, 2003 in accordance with the terms of the bankruptcy order, Deep Well was, without solicitation of or notice to shareholders, authorized to issue (i) 2,000,000 post-reverse split shares of its restricted common stock, and (ii) 4,000,000 post-reverse split common shares, legend free, at the sole discretion of Deep Well. On September 10, 2003, Deep Well issued 2,000,000 post-reverse split shares of its restricted common stock to members of its new management. The shares were issued pursuant to Section 3 (a)7 of the Securities Act of 1933.

From February 4, 2004 to February 6, 2004 in accordance with the terms of the bankruptcy order, Deep Well issued 4,000,000 post-reverse split, legend free, to 22 purchasers for gross consideration of $50,000, or $0.0125 per share, which was paid into the bankruptcy court by the recipients of the shares. The shares were issued pursuant to Section 3 (a)7 of the Securities Act of 1933.

On March 10, 2005 Deep Well closed on a transaction pursuant to a certain Securities Purchase Agreement (herein after referred to as “SPA”), with two accredited investors pursuant to which we sold an aggregate of (i) 1,875,000 shares of Deep Well’s common stock, par value $.001 per share, at a purchase price of $.40 per share, and (ii) 750,000 warrants to purchase shares of Deep Well common stock, for an aggregate purchase price of $750,000. Deep Well issued the aforementioned securities to the investors pursuant to Rule 506 of Regulation D as promulgated under the Securities Act of 1933, as amended, and/or Section 4(2) of the Act. Each of the warrants is exercisable from March 10, 2005 until March 9, 2010, at an exercise price equal to $0.50 per share. The exercise price of the warrants will be adjusted from time to time upon the occurrence of certain events, as provided in the warrants. In addition, Deep Well entered into a Registration Rights Agreement (herein after referred to as “RRA”) with the investors, dated as of March 10, 2005, pursuant to which Deep Well is obligated to prepare and file a registration statement no later than 45 days after the closing date registering the number of shares of our common stock which is at least equal to (i) the aggregate number of shares of common stock issued under the SPA plus (ii) 125% of the aggregate number of shares of common stock issuable upon exercise of the warrants. Deep Well must use its reasonable best efforts to cause the registration statement to become effective as soon as practicable following the filing, but in no event later than 120 days after the closing date. If the registration statement is not filed within 45 days after the closing date or declared effective within the time specified in the preceding paragraph, Deep Well is required to make payments to the investors equal to 2% of the purchase price and an additional 2% of the purchase price for each subsequent 30-day period as to which the registration statement has not be filed or declared effective. Effective on January 22, 2007, and filed on form 8-K on January 31, 2007, the Company entered into a Settlement Agreement and Release of All Claims (the “Settlement Agreement”) with the investors who were in receipt of the above issued shares with respect to allegations made by the investors that the Company had breached the SPA and the RRA.

The Settlement Agreement provides, without any party acknowledging any liability, for:

the amendment of the SPA to delete certain restrictions on the Company’s ability to enter into any future financings;

	·	the termination of the RRA;

	·	the issuance to the Investors of an aggregate of 1,600,000 (one million six hundred thousand) shares of common stock of the Company (the “Shares”), including the granting of certain piggyback registration rights related thereto; and

	·	the full and final settlement of all existing or potential claims between the Company and the Investors arising under the SPA and the RRA.

The foregoing summary is qualified in its entirety by the terms of the complete Settlement Agreement, which is incorporated herein by reference.

On August 12, 2005 pursuant to subscription agreements, we the Company closed a private placement to three investors of an aggregate of 500,000 units at a price of $0.40 per unit, for total proceeds of $200,000. Each unit consists of one common share and one common share purchase warrant, with each warrant entitling its holder to acquire one share of our common stock at an exercise price of $0.60. The exercise price of the warrants will be adjusted from time to time upon the occurrence of certain events, as provided in the warrants. The warrants expire on August 12, 2008. The units were issued pursuant to Regulation S. In addition, on August 12, 2005, pursuant to a Debt Settlement Agreement, one holder of $84,378.40 of our indebtedness exchanged its indebtedness for 210,946 units at a deemed exchange price of $0.40 per unit. Each unit consists of one common share and one common share purchase warrant, with each warrant entitling its holder to acquire one common share of Deep Well, at an exercise price of $0.60. The exercise price of the warrants will be adjusted from time to time upon the occurrence of certain events, as provided in the warrants. The warrants expire on August 12, 2008. The units were issued pursuant to Section 3(a)(9) of the Securities Act of 1933 Act and Regulation S.

On October 11, 2005 pursuant to subscription agreements, the Company closed a private placement to three investors of an aggregate of 3,150,000 units at a price of $0.40 per unit, for total gross proceeds of $1,260,000. Each unit consists of one common share and one common share purchase warrant, with each warrant entitling its holder to acquire one share of our common stock at an exercise price of $0.60 per common share. The exercise price of the warrants will be adjusted from time to time upon the occurrence of certain events, as provided in the warrants. The warrants expire on October 11, 2008. The units were issued pursuant to Regulation S. In connection with the private placement, a finder’s fee of $36,000 was paid to Nika Management S.A., resulting in total net proceeds to our company from the private placement of $1,224,000.

On January 13, 2006 pursuant to subscription agreements, we closed a private placement to three investors of an aggregate of 51,200 units at a price of $1.50 per unit, for total gross proceeds of $76,800. Each unit consists of one common share and one common share purchase warrant, with each warrant entitling its holder to acquire one share of our common stock at an exercise price of $2.25 per common share. The exercise price of the warrants will be adjusted from time to time upon the occurrence of certain events, as provided in the warrants. The warrants expire on January 13, 2009. The units were issued pursuant to Regulation S. In addition, on January 13, 2006, pursuant to a Debt Settlement Agreement, one holder of $38,293 of our indebtedness exchanged its indebtedness for 21,800 units at a deemed exchange price of $1.50 per unit. Each unit consists of one common share and one common share purchase warrant, with each warrant entitling its holder to acquire one common share of Deep Well, at an exercise price of $2.25. The exercise price of the warrants will be adjusted from time to time upon the occurrence of certain events, as provided in the warrants. The warrants expire on January 13, 2009. The units were issued pursuant to Section 3(a)(9) of the 1933 Act and Regulation S. In connection with the private placement, a finder’s fee of $7,680 was paid to Solomon Group Inc., resulting in total net proceeds to our company from the private placement of $69,120.

On February 23, 2006 pursuant to an exercised option agreement the Company entered into on June 7, 2005, the Company issued 4,707,750 Deep Well common shares in exchange for 156,925 of the outstanding preferred shares of Northern. The common shares were issued pursuant to Section 3(a)(9) of the 1993 Act.

On June 13, 2006 further pursuant to an exercised option agreement the Company entered into on June 7, 2005, the Company issued 2,867,250 Deep Well common shares in exchange for 95,575 of the outstanding preferred shares of Northern. The common shares were issued pursuant to Section 3(a)(9) of the 1993 Act.

On July 28, 2006 a warrantholder of the Company acquired 100,000 common shares upon exercising warrants at an exercise price of $0.60 per common share for total gross proceeds to the Company of $60,000. The common shares were issued pursuant to Section 4(2) under the 1933 Act.

On September 11, 2006 a warrantholder of the Company acquired 50,000 common shares upon exercising warrants at an exercise price of $0.60 per common share for total gross proceeds to the Company of $30,000. The common shares were issued pursuant to Section 4(2) under the 1933 Act.

ITEM 6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

You should read the following discussion and analysis in conjunction with our 2004 audited consolidated financial statements. All statements contained herein that are not historical facts, including, but not limited to, statements regarding the Company’s current business strategy, the Company’s projected sources and uses of cash, and the Company’s plans for future development and operations, are based upon current expectations. These statements are forward-looking in nature and involve a number of risks and uncertainties. Actual results may differ materially. Among the factors that could cause actual results to differ materially are the following: the availability of sufficient capital to finance the Company’s business plans on terms satisfactory to the Company; competitive factors; changes in labor, equipment and capital costs; changes in regulations affecting the Company’s business; future acquisitions or strategic partnerships; general business and economic conditions; and factors described from time to time in the reports filed by the Company with the Securities and Exchange Commission. The Company cautions readers not to place undue reliance on any such forward-looking statements, which statements are made pursuant to the Private Litigation Reform Act of 1995 and, as a result, are pertinent only as of the date made.

Our financial statements and information are reported in U.S. dollars and are prepared based upon American generally accepted accounting principals.

Executive Overview

We are an emerging independent junior oil and gas exploration and development company headquartered in Edmonton, Alberta, Canada. The Company’s immediate corporate focus is to develop the existing land base that it presently controls in the Peace River Oil Sands area in North Central Alberta. The Company beneficially owns an 80% working interest (subject to a Farmout Agreement with Signet) in 69.5 contiguous sections (43,964 gross acres or 17,792 gross hectares) in the Sawn Lake block of the Peace River Oil Sands area located in Alberta, Canada. On February 25, 2005, we entered into a Farmout Agreement. This agreement allows Signet to earn up to a 40% working interest in the farmout lands (50% of the Company’s share). Among other things the agreement called for Signet to drill 10 wells, pay the Company a $2,000,000 US prospect fee and give us 33.33% of the outstanding shares of Surge on the day the agreement was signed. On November 15, 2005, the Company and its farmout partner Signet amended the Farmout Agreement and further agreed to acknowledge the original Farmout Agreement. Signet will own a 40% working interest once the obligations under the Farmout Agreement have been satisfied. In accordance with the Farmout Agreement, Signet, must drill 10 wells prior to February 25, 2008, at no cost to the Company, to fully earn their 40% working interest in the project. In addition, the Company owns approximately 14%, fully diluted, of the common shares of its farmout partner and operator Signet.

Upon emergence from Chapter 11 proceedings on September 11, 2003, Deep Well adopted fresh-start reporting in accordance with the American Institute of Certified Public Accountants Statement of Position 90-7, Financial Reporting By Entities in Reorganization Under the Bankruptcy Code. In connection with the adoption of fresh-start reporting, a new entity was created for financial reporting purposes. For financial reporting purposes, Deep Well adopted the provisions of fresh-start reporting effective September 10, 2003. All periods presented prior to September 10, 2003, have been designated Predecessor Company. Since our inception date we have not earned any revenues from our operations. As of September 30, 2004 we had $499,765 cash on hand and liabilities in the amount of $304,331. Since our inception we have incurred a net loss of $575,754. The net loss is attributable to us having no revenues to offset our expenses from fees related to the creation and operation of our business.

During the fiscal year 2005 we entered into an agreement with Signet Energy Inc., whereby Signet, as operator, is to drill and complete 10 wells prior to February 25, 2008. Under this agreement Signet is obligating to pay our share of the costs associated with the first ten wells drilled on our leases. Currently our working capital is not sufficient to enable us to perform the recommended further exploration and development phases after the initial ten well program, and accordingly further finances will be required by us to continue work on our property.

Under the agreement with Signet, notice to the Company of Signet’s intent to drill the next option well was due on December 16, 2006. At this time, Signet has chosen not to elect to drill additional option wells to earn additional sections pursuant to the amended Farmout Agreement with the Company. Negotiations to amend the current Farmout Agreement are being considered.

Plan of Operations to Date

·	In August 2004 Deep Well acquired 3 Peace River Oil Sands Development leases for a total of 31 sections covering 19,609 gross acres (7,936 gross hectares) with a net working interest of 80%.

·	In September 2004 a $1,000,000 unsecured convertible debenture was issued for net cash of $879,000, after commissions of $121,000.

·	In December 2004 Deep Well signed a Joint Operating Agreement with 1132559 Alberta Ltd.

·	In February 2005 the Company signed a Farmout Agreement with Signet, whereby Signet must drill 10 wells, at no cost to the Company, to earn up to a 40% interest in the joint lands and pay a prospect fee of $2,000,000 ($1,000,000 being deferred).

·	In March 2005 Deep Well raised $750,000 through a security purchase and registration rights agreement.

In June 2005 through an acquisition of Northern, Deep Well more than doubled its oil sands lease holdings, in which Deep Well acquired a net 80% working interest in an additional 3 Peace River Oil Sands Development leases, 1 Oil Sands permit and 1 Petroleum and Natural Gas License for a total of 38.5 sections covering 24,354 gross acres (9,856 gross hectares).

·	In June 2005 a new Board of Directors was elected by written resolution of a majority of shareholders.

·	In July 2005 the directors re-appointed Mr. Curtis Sparrow to the Board.

·	In July 2005 the company moved its corporate head office to Edmonton, Alberta. The Company retained an office in Calgary, Alberta for Operations.

·	In August 2005 the Company raised $200,000 through a private placement and issued shares pursuant to a debt settlement arrangement of $84,378 of our indebtedness.

·	In September 2005 the Company began drilling their first well at Sawn Lake, Alberta Canada.

·	In October 2005 the Company raised $1,260,000 through a private placement.

·	In November 2005 the Company amended the Farmout Agreement with Signet, in which the $1,000,000 deferred portion of the $2,000,000 prospect fee must be paid immediately, along with 7.55 million common shares of Signet. At September 30, 2006, the Company owned 17.84% of the common shares of Signet.

·	In January 2006 the Company raised $76,800 through a private placement and issued shares pursuant to a debt settlement arrangement of $38,293 of our indebtedness.

·	In April 2006 the directors re-appointed Mr. David Roff to the Board.

·	In August and September of 2005 the Company drilled 2 more wells at Sawn lake, Alberta.

·	In October 2006 the first 3 wells drilled by the Company were suspended for further evaluation.

·	In January 2007 the Company entered into a settlement agreement and release of all claims with certain investors.

Plan of Operations over the next 12 months

The Company’s current and near term development plan is to drill in accordance with the current Farmout Agreement, in which our farmout partner and operator, Signet, must drill 7 more horizontal wells by February 25, 2008 at no cost to us in order to fully earn their 40% working interest in the entire Sawn Lake project. Negotiations to amend the current Farmout Agreement are being considered. The early focus of the Company’s drilling program is to define the heavy oil reservoir one section at a time and attempt to initiate production in order to generate an early positive cash flow. Of the ten well program under our Farmout Agreement the initial test well and two additional option wells have been drilled and 7 wells are waiting on drilling. We are further evaluating these wells to determine and consider the best technology under which oil can be produced from the Sawn Lake project.

Reorganization and Raising Capital

On February 19, 2003 the Company filed a Petition for Relief under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court in and for the Eastern District of New York titled In re: Allied Devices Corporation, et al., Chapter 11, Case No. 03-80962-511 “the Bankruptcy Action”. On September 10, 2003, after notice to all creditors and a formal hearing, U.S. Bankruptcy Judge Melanie L. Cyganowski issued an “Order Confirming Liquidating Plan of Reorganization” in the Bankruptcy Action. In conjunction with that Bankruptcy Order, the Company’s liabilities, among other things, were paid off and extinguished.

During fiscal years 2005 and 2006 we financed our business operations through private offerings of our common stock and realized gross proceeds of $2,286,800 from these offerings. In these offerings we sold units comprised of common stock and warrants to purchase additional common stock. At September 30, 2006 we had an aggregate of 4,533,946 outstanding warrants from these offerings with exercise prices ranging from $0.50 to $2.25. If all of the warrants sold in the offerings are exercised per their terms, we may realize aggregate proceeds of approximately $2,765,818. However, the warrant holders have complete discretion as to when, or if, the warrants are exercised and we cannot guarantee that the warrant holders will exercise any of the warrants.

The Company currently lacks the capital resources to carry out its business plan. We anticipate that we will raise funds during the next twelve months through private placements of our common stock under exemptions from the registration requirements provided by Canadian, United States and state and provincial securities laws. The purchasers and manner of issuance will be determined according to our financial needs and the available exemptions. We also note that if we issue more shares of our common stock, then our stockholders may experience dilution in the value per share of their common stock. We may not be able to raise sufficient funding from stock sales for long term operations and, if so, we may be forced to delay our business plans until adequate funding is obtained. We believe debt financing will not be an alternative for funding in the exploration stage of our Company due to the risky nature of business. The lack of tangible assets until such time as an economically viable well can be demonstrated, places debt financing beyond the credit-worthiness required by most banks.

Significant Changes in Number of Employees

The Company currently has one full time employee, one part time employee and four prime subcontractors. For further information on subcontractors see “Compensation Arrangements for Executive Officers” under item 10 “Executive Compensation” herein described in this report. We expect to hire from time to time, independent consultants and contractors during the stages of implementing our plans.

Industry Outlook

Alberta oil sands property has become an increasingly sought after and valuable asset. According to the Alberta Energy Utilities Board, the average price per hectare paid for oil sands leases was about 5.5 times higher in 2005-06 than in 2004-05. In 2004-05, the average price per hectare was $314.04 Cdn; and in 2005-06, it was up to $1,725.22 Cdn per hectare. Oil sands mineral rights for 291,518 hectares were sold in 2004-05, and for a record 741,809 hectares in 2005-06. With very high prices per hectare and the large number of hectares sold, revenues from oil sands lease sales in 2005-06 were at a record high, at almost $1.3 billion Cdn. This was about 14 times higher than in 2004-05, when revenues from oil sands lease sales were about $92 million Cdn. In February 2006 Royal Dutch Shell paid $496 million Cdn for 10 oil sands leases covering 88,576 hectares, this property is located approximately 140 kilometers east of our acreage where we hold an 80% (subject to a Farmout Agreement) working interest in 17,792 gross hectares. In May of 2006 Shell Canada acquired BlackRock Ventures Inc. for approximately $2.4 billion Cdn. In September 2006 Royal Dutch Shell once again purchased an additional 5 oil sands leases for $101 million Cdn.

As the world’s oil supplies become depleted, we believe that there will be more reliance on heavy oil. No assurance can be made or given that we will successfully engage in the oil and gas business or the heavy oil business, nor can any assurance be given that even if we are remotely or relatively successful, that we will have a profit or that our stock will appreciate in value.

Off Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

MADSEN & ASSOCIATES, CPA’S INC.		684 East Vine St. #3
Certified Public Accountants and Business Consultants		Murray, Utah 84107
		Telephone 801-268-2632
		Fax 801-262-3978

Board of Directors

Deep Well Oil & Gas, Inc.

Edmonton, Alberta, Canada

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We have audited the accompanying balance sheet of Deep Well Oil & Gas, Inc. (exploration stage company) at September 30, 2004 and the statements of operations, stockholders’ equity, and cash flows for the year ended September 30, 2004 and the period September 10, 2003 to September 30, 2003 and the period September 10, 2003 (inception of exploration stage) to September 30, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Deep Well Oil & Gas, Inc. at September 30, 2004 and the statements of operations, and cash flows for the year ended September 30, 2004 and the period September 10, 2003 to September 30, 2003 and the period September 10, 2003 (inception of exploration stage) to September 30, 2004 in conformity with accounting principles generally accepted in the United States of America

Salt Lake City, Utah
November 29, 2006	/s/ Madsen & Associates, CPA’s Inc.

DEEP WELL OIL & GAS, INC.

(Exploration Stage Company)

BALANCE SHEET

September 30, 2004

ASSETS
CURRENT ASSETS

Cash	$	499,765
Accounts receivable		17,879
Prepaid expenses		34,641
Total Current Assets		552,285

LOANS RECEIVABLE - related parties		119,790
OIL AND GAS PROPERTIES		111,392

	$	783,467


LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

Accounts payable - related parties	$	128,525
Account payable		64,500
Notes and accrued interest payable		111,306
Total Current Liabilities		304,331

CONVERTIBLE DEBENTURES AND ACCRUED INTEREST		1,004,890

STOCKHOLDERS’ DEFICIENCY
Common stock
300,000,000 shares authorized at $0.001 par value;
31,236,468 shares issued and outstanding		31,236
Capital in excess of par value		18,764
Deficit accumulated during exploration stage - dated
September 10, 2003 - note 1		(575,754	)
Total Stockholders’ Deficiency		(525,754	)

	$	783,467

The accompanying notes are an integral part of these financial statements.

DEEP WELL OIL & GAS, INC.

(Exploration Stage Company)

STATEMENT OF OPERATIONS

For the Year Ended September 30, 2004 and the Period

September 10, 2003 to September 30, 2003 and the Period

September 10, 2003 (inception of exploration stage) to September 30, 2004

	Sept. 30, 2004			Sept. 30, 2003			Sept. 10, 2003 to Sept. 30, 2004
REVENUES	$	-		$	-		$	-
EXPENSES
Administrative		544,199			50,000			594,199
NET LOSS FROM OPERATIONS		(544,199	)		(50,000	)		(594,199	)
OTHER INCOME AND EXPENSE
Interest		(6,421	)		-			(6,421	)
Settlement of debt		24,866			-			24,866
NET LOSS	$	(525,754	)	$	(50,000	)	$	(575,754	)
NET LOSS PER COMMON SHARE
Basic and diluted	$	(0.02	)	$	-
WEIGHTED AVERAGE
OUTSTANDING SHARES - stated in 1,000’s
Basic		31,236			36,020

The accompanying notes are an integral part of these financial statements

DEEP WELL OIL & GAS, INC.

(Exploration Stage Company)

STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Period September 10, 2003 (inception of exploration stage) to September 30, 2004

	Common Stock						Capital Excess of			Accumulated
	Shares			Amount			Par Value			Deficit
Balance September 10, 2003 - note 1		991,912		$	992		$	(992	)	$	-

Issuance of common stock pursuant
to bankruptcy agreement
September 10, 2003		36,019,556			36,019			13,981			-

Net operating loss for the period
September 10 to September 30, 2003		-			-			-			(50,000	)

Return and cancellation of common shares		(5,775,000	)		(5,775	)		5,775			-

Net operating loss for the year ended
September 30, 2004		-			-			-			(525,754	)

Balance September 30, 2004		31,236,468		$	31,236		$	18,764		$	(575,754	)

The accompanying notes are an integral part of these financial statements

DEEP WELL OIL & GAS, INC.

(Exploration Stage Company)

STATEMENT OF CASH FLOWS

For the Year Ended September 30, 2004 and the Period

September 10, 2003 to September 30, 2003 and the Period

September 10, 2003 (inception of exploration stage) to September 30, 2004

	Sept. 30, 2004			Sept. 30, 2003			Sept. 10, 2003 to Sept. 30, 2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(525,754	)	$	(50,000	)	$	(575,754	)
Adjustments to reconcile net loss to net
cash provided by operating activities
Commissions withheld from loan proceeds		121,000			-			121,000
Changes in accounts receivable		(17,879	)		-			(17,879	)
Changes in prepaid expenses		(34,641	)		-			(34,641	)
Changes in accounts payable		204,336			-			204,336


Net Change in Cash From Operations		(252,938	)		-			(302,938	)

CASH FLOWS FROM INVESTING ACTIVITIES
Loans - related parties		(119,790	)		-			(119,790	)
Purchase of oil and gas properties		(111,392	)		-			(111,392	)
		(231,182	)		-			(231,182	)

CASH FLOWS FROM FINANCING ACTIVITIES
Loans - related parties		104,885			-			104,885
Proceeds from issuance of common stock		-			50,000			50,000
Proceeds from debentures net of commissions		879,000			-			879,000
		983,885			50,000			1,033,885

Net change in Cash		499,765			-			499,765

Cash at Beginning of Period		-			-			-

Cash at End of Period	$	499,765		$	-		$	499,765

SUPPLEMENTAL DISCLOSURES

Interest expense	$	6,421

The accompanying notes are an integral part of these financial statements

DEEP WELL OIL & GAS, INC.

NOTES TO FINANCIAL STATEMENTS

September 30, 2004

Note 1. ORGANIZATION

The Company, and its former subsidiaries, were engaged in the manufacture and distribution of standard and custom precision mechanical assemblies and components throughout the United States.

On February 19, 2003 the Company file a petition for bankruptcy in the United States Bankruptcy Court under Chapter 11 in the Eastern District of New York titled “Allied Devices Corporation, Case No. 03-80962-511”. The Company emerged from bankruptcy pursuant to a Bankruptcy Court Order entered on September 10, 2003 with no remaining assets or liabilities.

The terms of the bankruptcy settlement included (1) a reverse common stock split of 30 shares of outstanding stock for one share (2) increasing the authorized common capital stock from 25,000,000 to 50,000,000 shares with a par value of $.001 (3) a change in the name of the Company from “Allied Devices Corporation” to “Deep Well Oil & Gas, Inc.” (4) and the authorization for the issuance of 2,000,000 pre-split restricted common shares and 4,000,000 pre-split common shares in exchange for $50,000, which was paid into the bankruptcy court by the recipients of the shares.

Restated and amended articles of incorporation completing the terms of the bankruptcy have been filed in the state of Nevada.

Upon emergence from bankruptcy proceedings, the Company adopted fresh-start reporting in accordance with the Statement of Position 90-7. In connection with the adoption of fresh-start reporting, a new entity was created, for financial reporting purposes, effective September 10, 2003. In adopting the requirements of fresh-start reporting the company was required to value its remaining assets and liabilities at fair value and eliminate any accumulated deficit with the statement of operations to begin on September 10, 2003. The Company’s current activity is the exploration of oil and gas properties which is not comparable to the Predecessor Company’s operations, therefore, there is no basis for comparisons between the Company’s current activities and the Predecessor Company’s operations.

Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Methods

The Company recognizes income and expenses based on the accrual method of accounting.

Dividend Policy

The Company has not yet adopted a policy regarding payment of dividends.

Financial and Concentrations Risk

The Company does not have any concentration or related financial credit risk except that cash in maintained in banks over the insured amounts of $100,000, however, the amounts are maintained in banks of high quality.

Income Taxes

The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to reverse. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.

Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

On September 30, 2004, the Company had a net operating loss available for carry forward of $575,754. The income tax benefit of approximately $173,000 from the loss carry forward has been fully offset by a valuation reserve because the use of the future tax benefit is undeterminable since the Company has no operations. The loss carryover will expire in 2024.

Revenue Recognition

The Company is in the business of exploring for, developing, producing and selling crude oil and natural gas. Crude oil revenue is recognized when the product is taken from the storage tanks on the lease and delivered to the purchaser. Natural gas revenues are recognized when the product is delivered into a third party pipeline downstream of the lease. Occasionally the Company may sell specific leases and the gain or loss associated with these transactions will be shown separately from the profit or loss from the operations or sales of oil and gas products.

Advertising and Market Development

The Company expenses advertising and market development costs as incurred.

Basic and Diluted Net Income (Loss) Per Share

Basic net income (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common shares and common equivalent shares outstanding as if shares had been issued on the exercise of the common share rights unless, the exercise becomes antidilutive and then only the basic per share amounts are shown in the report.

Financial Instruments

The carrying amounts of financial instruments are considered by management to be their estimated fair values due to their short term maturities.

Foreign Currency Translation

Part of the transactions of the Company were completed in Canadian dollars and have been translated to US dollars as incurred, at the exchange rate in effect at the time, and therefore, no gains or losses are recognized from the translations. US dollars are considered to be the functional currency.

Estimates and Assumptions

Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.

Environmental Requirements

At the report date environmental requirements related to the mineral claims acquired are unknown and therefore an estimate of any future cost cannot be made.

Recent Accounting Pronouncements

The Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.

Note 3. OIL AND GAS PROPERTIES

The Company has acquired a 40% interest in three oil and gas properties, after a farmout agreement on February 25, 2005, located in North Central Alberta, Canada with a life of 15 years for $111,392. The terms include certain commitments related to oil sand leases which require the payments of rents as long as the leases are non-producing. As of September 30, 2004, the payments due under this commitment are as follows:

2005	$	8,469
2006		8,469
2007		8,469
2008		8,469
2009		8,469
Subsequent		84,690

The Company follows the successful efforts method of accounting for costs of oil and gas properties. Under this method, acquisition costs of oil and gas properties and costs of drilling and equipping wells are initially capitalized and if subsequently determined to be unsuccessful, are expensed. All other explorations costs, including geological and geophysical costs and carrying and maintenance costs, are charged to exploration expenses when incurred.

Producing, non-producing, and unproven properties, are assessed annually, or more frequently as economic events indicates, for potential impairment. This consists of comparing the carrying value of the asset with its fair market value, based on the expected future cash flows. Estimates of expected future cash flows represent management’s best estimated based on reasonable assumptions. Proven oil and gas properties are reviewed for impairment on a field-by field basis. Management evaluates the carrying value of non-producing properties and may consider them impaired for lack of drilling activities. No impairment losses were recognized in fiscal 2004.

Capitalized costs of proven oil and gas properties will be expensed using the unit-of-production method when the property is placed in production.

Substantially all of the Company’s oil and gas activities are conducted jointly with others. This report reflects only the Company’s proportionate interest in such activities.

Note 4. NOTES AND ACCRUED INTEREST PAYABLE

The Company has demand, 12% interest bearing loans outstanding of $111,306, including accrued interest payable to September 30, 2004.

Note 5. CONVERTIBLE DEBENTURES AND ACCRUED INTEREST PAYABLE

During September 2004 a $1,000,000 unsecured convertible debenture was issued for net cash of $879,000, after commissions of $121,000. The debenture bears interest at 8.5% per year and is due on September 6, 2007. The debenture is convertible into common shares at the rate of one common share and one common share warrant, at the option of the debenture holder, with the conversion terms for the stock and the warrant shown in the following:

- October 6, 2004 to September 6, 2005 at $1.00 per share

- September 7, 2005 to September 6, 2006 at $1.50 per share

- September 7, 2006 to September 6, 2007 at $2.00 per share

If at any time during the term of the debenture the average bid and ask price of the Company’s common shares is three dollars per share or more for thirty consecutive calendar days, the Company will have the option to convert the outstanding debentures into common stock a the prices above. The amount shown in the balance sheet includes accrued interest payable on September 30, 2004.

Note 5. CONVERTIBLE DEBENTURES AND ACCRUED INTEREST PAYABLE (continued)

The debentures were paid in full during December 2005 with the proceeds from the issuance of common capital stock and the warrants were cancelled as part of the payoff, therefore, no value was recognized for the warrants.

Note 6. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES

Officers, directors, their families, or their controlled entities, have acquired 25% of the Company’s outstanding common capital stock. Included in the accounts payable and accrued liabilities are amounts payable to related parties of $128,525 resulting from directors fees and expenses paid for the Company. The amounts due are unsecured, non-interest bearing and have no fixed terms of repayment.

There are no interest, demand loans due from related parties $119,790.

Note 7. COMMON CAPITAL STOCK

The outstanding common capital stock on February 19, 2003 (the date the Company filed for bankruptcy) was 5,048,742 pre-split shares. As part of the settlement from the bankruptcy the Company completed a reverse stock split, reducing the outstanding shares to 165,233, and the rights to issue 6,000,000 common shares, in exchange for $50,000. (note 1)

On February 27, 2004, (effective March 10, 2004) the Company completed a forward stock split of its common stock at the rate of two shares for each outstanding share and on May 7, 2004 (effective May 14, 2004) a forward stock split of three shares for each outstanding share.

In connection with the stock splits the authorized common shares was increased to 300,000,000 from 50,000,000 with a par value of $.001.

The equivalent post split shares outstanding are shown from inception with a par value of $.001.

Note 8. SUBSEQUENT EVENT

On June 7, 2005, the Company acquired all of the outstanding common capital stock of Northern Alberta Oil Ltd. “Northern”, a privately held Alberta, Canada, Corporation, (formerly Mikwec Energy Canada Ltd.), and six options to acquire all of the outstanding preferred stock, in exchange for 18,208,875 newly issued restricted common shares of the Company, which represents 37% of the outstanding stock of the Company after the acquisition.

The acquisition was reported using the purchase method of accounting. The purchase price was considered to be $2,572,869, based on the estimated fair value of the shares given in exchange, and was allocated among the estimated fair values of the assets and liabilities of Northern on June 7, 2005 as follows:

	Book Value		Fair Value
Current assets	$	42,565	$	42,565
Oil and Gas properties		965,808		2,530,304
Less liabilities		-		-
Total	$	1,008,373	$	2,572,869

Note 8. SUBSEQUENT EVENT (continued)

Included in the following are the unaudited combined pro-forma balance sheets of Deep Well Oil and Gas, Inc. and Northern Alberta Oil Ltd. and the combined statements of operations for the year ended September 30, 2005, as if the acquisition of Northern had taken place on October 1, 2004. The unaudited pro forma financial information is not necessarily indicative of any future results.

	Deep Well Oil & Gas, Inc.			Northern Alberta Oil Ltd.			Pro Forma Adjustments			Notes		Combined Totals
BALANCE SHEETS
ASSETS

Current assets	$	552,285		$	4,891		$	-				$	557,176
Oil and gas properties		119,790			965,808			1,564,496			a)		2,650,094
Loans receivable		111,392			135,043			(84,437	)		b)		161,998

	$	783,467		$	1,105,742		$	1,480,059				$	3,369,268

LIABILITITES

Current and long term liabilities	$	1,309,221		$	1,124,856		$	(84,437	)		b)	$	2,349,640

SHAREHOLDER’S EQUITY		(525,754	)		(19,114	)		1,564,496			a)		1,019,628

	$	783,467		$	1,105,742		$	1,480,059				$	3,369,268

Pro forma adjustments
a) Acquisition of Northern Alberta Oil Ltd.
b) Inter-company transfers


OPERATING STATEMENTS
Expenses
General and administrative	$	681,399		$	815,803							$	1,497,202
Interest expense		91,677			3,914								95,591
Net loss	$	(773,076	)	$	(819,717	)						$	(1,592,793	)

Loss Per Share - Basic and diluted												$	(0.05	)

On June 7, 2005 Deep Well (parent), through its acquisition of Northern (subsidiary), acquired a net 80% working interest in 3 Peace River Oil Sands Development Leases, 1 Oil Sands Permit and 1 Petroleum and Natural Gas License for a total of 38.5 sections covering 24,354 gross acres (9,856 gross hectares). Through this acquisition the Company increased its position in the Peace River Oil Sands to 43,964 gross acres (17,792 gross hectares). Of the total acreage, 6.5 sections are classified as the Oil Sands Permit and Petroleum and Natural Gas License, and was held by an injunction related to a court proceeding involving Northern and Classic Energy Inc. The permit and license have now been released and as of November 21, 2005 were transferred to Northern.

On November 15, 2005, the Company and its subsidiary, entered into an agreement to amend the farmout agreement with Signet Energy Inc. (“Signet”), a private company, owned by Surge Global Energy, Inc. (“Surge US”) (collectively “Surge”). Under this new amended farmout agreement Signet Energy Inc., as operator, assumed the farmout obligations, including completing, at its expense, the drilling of 10 wells to earn up to a 40% working interest in the Sawn Lake Oil Sands Project.

Note 8. SUBSEQUENT EVENT (continued)

On November 15, 2005, as part of the settlement of legal action the Company, and its subsidiary, and surge, agreed to amend the farmout agreement signed on February 25, 2005, between the Company, and Surge, that had previously been terminated by the Company (disclosed on Form 8-K on September 29, 2005). The amendments to the agreement provided that; (1) all conditions of the farmout agreement will be deemed to have been satisfied on September 25, 2005; (2) the earning period (i.e. the period during which Signet has to drill 10 wells) under the agreement will be extended until February 25, 2008; (3) Signet will have until September 25, 2006 to drill an option well; (4) an additional 6.5 sections of land will be added to the land subject to the agreement; (5) Signet will pay the Company $1,000,000 USD on November 15, 2005 in satisfaction of the prospect fee outstanding, instead of after drilling the second well as stated in the farmout agreement, and (6) no shares of Surge US will be issued to the Company. Instead, the Company or its subsidiaries will receive 7,550,000 common shares of Signet Energy Inc., bringing the Company’s ownership in its farmout partner to approximately 14% as of September 30, 2006.

Sales of Unregistered Securities

On March 10, 2005, the Company issued 1,875,000 private placement common shares as $0.40 per share and 750,000 warrants to purchase shares of our common stock, for an aggregate purchase price of $750,000. Each warrant is exercisable from March 10, 2005 until March 9, 2010, at an exercise price of $0.50 per share. The exercise price of the warrants will be adjusted from time to time upon the occurrence of certain events, as provided in the warrants. In addition, we entered into a Registration Rights Agreement with the investors, dated as of March 10, 2005, in which we are obligated to prepare and file a registration statement, no later than 45 days after the closing date, to register the number of shares of our common stock which is at least equal to (i) the aggregate number of shares of common stock issued under the Securities Purchase Agreement plus (ii) 125% of the aggregate number of shares of common stock issuable upon exercise of the warrants. We must use our reasonable best efforts to cause the registration statement to become effective as soon as practicable following the filing, but in no event later than 120 days after the closing date. If the registration statement is not filed within 45 days after the closing date, or declared effective within the time specified, we are required to make payments to the investors equal to 2% of the purchase price and an additional 2% of the purchase price for each subsequent 30-day period to which the registration statement has not be filed or declared effective.

On August 12, 2005, we completed a private placement of 500,000 units at a price of $0.40 per unit, for $200,000. Each unit consists of our common share and one common share purchase warrant, with each warrant entitling its holder to acquire one share of our common stock at an exercise price of $0.60. The exercise price of the warrants will be adjusted from time to time upon the occurrence of certain events, as provided in the warrants. The warrants expire on August 12, 2008. In addition, on August 12, 2005, pursuant to a Debt Settlement Agreement, one holder of $84,378.40 of our indebtedness exchanged its debt for 210,946 units at a price of $0.40 per unit. Each unit consists of one common share and one common share purchase warrant, with each warrant entitling the holder to acquire one common share of the Company at $0.60 per share. The exercise price of the warrants will be adjusted from time to time upon the occurrence of certain events, as provided in the warrants. The warrants expire on August 12, 2008.

On October 11, 2005, we completed a private placement of 3,150,000 units at a price of $0.40 per unit for $1,260,000. Each unit consists of one common share and one common share purchase warrant, with each warrant entitling its holder to acquire one share of our common stock at a price of $0.60 per share. The exercise price of the warrants will be adjusted from time to time upon the occurrence of certain events, as provided in the warrants. The warrants expire on October 11, 2008. In connection with the placement a finder’s fee of $36,000 was paid to Nika Management S.A.

On January 13, 2006, we completed a private placement of 51,200 units at a price of $1.50 per unit, for $76,800. Each unit consists of one common share and one common share purchase warrant, with each warrant entitling its holder to acquire one share of our common stock at an exercise price of $2.25 per common share. The exercise price of the warrants will be adjusted from time to time upon the occurrence of certain events, as provided in the warrants. The warrants expire on January 13, 2009. In addition, on January 13, 2006, pursuant to a Debt Settlement Agreement, one holder of $38,293 of our indebtedness exchanged its debt for 21,800 units at a price of $1.50 per unit. Each unit consists of one common share and one common share purchase warrant, with each warrant entitling its holder to acquire one common share of the Company at a price of $2.25. The exercise price of the warrants will be adjusted from time to time upon the occurrence of certain events, as provided in the warrants. The warrants expire on January 13, 2009. In connection with the private placement, a finder’s fee of $7,680 was paid to Solomon Group Inc.

Note 8. SUBSEQUENT EVENT (continued)

On February 23, 2006, pursuant to an exercise option agreement the Company entered into on June 7, 2005, the Company issued 4,707,750 of its common shares in exchange for 156,925 of the outstanding preferred shares of Northern Alberta Oil Ltd (subsidiary).

On June 13, 2006 pursuant to an exercise option agreement the Company entered into on June 7, 2005, the Company issued 2,867,250 common shares in exchange for 95,575 of the outstanding preferred shares of Northern Alberta Oil Ltd. (subsidiary)

On July 28, 2006 a warrant holder of the Company acquired 100,000 common shares, upon exercising warrants, at an exercise price of $0.60 per share for $60,000.

On September 11, 2006 a warrant holder of the Company exercised 50,000 warrants for 50,000 common shares at an exercise price of $0.60 per common share $30,000.

Compensation to Directors

On November 28, 2005, the Company adopted a stock-based compensation plan, under which each director would receive 75,000 shares upon becoming a director and an additional 100,000 shares for each year or part of a year served as a director. Directors of subsidiaries, who are not already directors of the Company, would receive 37,500 shares upon becoming a director and an additional 50,000 shares for each year or part of a year served as a director.

Since the acquisition of Northern Alberta Oil Ltd. the Company and Northern have entered into the following contracts with the following companies for the services of their officers.

1)	Portwest Investments Ltd., a company owned 100% by Dr. Horst A. Schmid for providing services to the Company as Chief Executive Officer and President for $12,500 Cdn per month.

2)	Concorde Consulting, a company owned 100% by Mr. Curtis J. Sparrow for providing services as Chief Financial Officer to the Company for $15,000 Cdn per month.

3)	Trebax Projects Ltd., a company 100% owned by Mr. Cyrus Spaulding for providing services as Chief Operating Officer for the Company for $130 Cdn per hour.

4)	Brave Consulting, a company 50% owned by Mr. David Roff for providing consulting services to the Company for $8,000 Cdn per month.

On November 28, 2005, the Board granted 390,000 options to each of the first three companies, listed above, to be vested one third each year over three years, to acquire 1,170,000 common shares of the Company at an options price of $0.71 with an expiration date of five years from November 28, 2005.

Note 9. LEGAL ACTIONS

Deep Well Oil & Gas, Inc. vs. Surge Global Energy, Inc.

On October 13, 2005 Surge Global Energy, Inc. and Surge Global Energy (Canada) Ltd. (now known as Signet Energy Inc. “Signet”) collectively, (“Surge”) filed against us with a Notice of Motion filed in Court of Alberta, District of Calgary. The motion among other things, requested a declaration from Deep Well that Signet has complied with their obligations under a particular Farmout agreement and a declaration that Signet has earned 50% of Deep Well’s interest in lands located at LSD 01-36-091-13-W5M.

On October 14, 2005, Deep Well Oil & Gas, Inc. and Northern Alberta Oil Ltd. (collectively “Deep Well”) filed against Surge a lawsuit issued in the Alberta Court District of Calgary. The lawsuit among other things, seeks a declaration that the Farmout Agreement has been terminated, an order requesting Signet to reconvey to Deep Well title documents as defined in the Farmout Agreement, a declaration that Signet has failed to spud a test well pursuant to the terms of the Farmout, an order preventing Signet from entering the Farmout lands pending resolution to the lawsuit as well as other various declaratory and injunctive relief, including damages of $1,000,000 Cdn for trespass and punitive damages of $250,000 Cdn.

Note 9. LEGAL ACTIONS (continued)

On October 21, 2005, Deep Well and Surge agreed to a consent order in the Court of Alberta, district of Calgary whereby both parties agreed to consolidate their actions. The consolidated action would continue under the Deep Well action and would be tried at the same time.

On November 15, 2005, as part of a restructuring of Signet both parties mutually agreed to dismiss their lawsuits against each other. The dismissals were part of the Farmout Amending and Farmout Acknowledgement Agreement entered into by the Company, and its subsidiaries, and Surge. The Farmout Amendment and Acknowledgement Agreement agreed to, Signet receiving a private placement for $8,550,000 Cdn in a convertible debenture and modify the February 25, 2005 Farmout Agreement. The significant amendments were to; 1.) extend the earning period to February 25, 2008; 2.) extend the date for which Signet can spud an option well to September 25, 2006; 3.) recalculate the payment of the 2 ^nd portion of the prospect fee, being $1,000,000 to be paid by Signet to Deep Well’s subsidiaries and omit the conditions under which the $1,000,000 was paid, 4.) Signet issued to Deep Well’s subsidiaries 7,550,000 of its common shares giving Deep Well’s subsidiaries a beneficial interest in Signet of 31.47% before Signet issued shares under the private placement financing and 22.7% if the convertible debenture is converted on a fully diluted basis, and 5.) Deep Well and its subsidiaries give up the right to acquire shares in Surge Global Energy, Inc.

I.G.M. Resources Corp. vs. Deep Well Oil & Gas, Inc. et al

On March 10, 2005, I.G.M. Resources Corp. (“IGM”) filed against Classic Energy Inc., 979708 Alberta Ltd., Deep Well, Nearshore Petroleum Corporation, Mr. Steven P. Gawne, Rebekah Gawne, Gawne Family Trust, 1089144 Alberta Ltd., John F. Brown, Diane Lynn McClaflin, Cassandra Doreen Brown, Elissa Alexandra Brown, Brown Family Trust, Priority Exploration Ltd., Northern Alberta Oil Ltd. and Gordon Skulmoski a Statement of Claim in the Court of Queen’s Bench of Alberta Judicial District of Calgary. This suit is part of a series of lawsuits or actions undertaken by IGM against some of the other above defendants.

IGM was and still is a minority shareholder of 979708 Alberta Ltd. (“979708”). 979708 was in the business of discovering, assembling and acquiring oil & gas prospects. In 2002 and 2003, 979708 acquired oil and gas prospects in the Sawn Lake area of Alberta. On or about the 14 ^th of July, 2003 all or substantially all the assets of 979708 were sold to Classic Energy Inc. IGM claims the value of the assets sold was far in excess of the value paid for those assets. On April 23, 2004 Northern Alberta Oil Ltd. purchased some of Classic Energy Inc.’s assets that are under dispute by IGM. On June 7, 2005 Deep Well acquired all of the common shares of Northern Alberta Oil Ltd. thereby giving Deep Well an indirect beneficial interest in the assets IGM is claiming an interest in.

IGM seeks an order setting aside the transaction and returning the assets to 979708, compensation in the amount of $15,000,000 Cdn, a declaration of trust declaring that Classic Energy Inc., Northern Alberta Oil Ltd and Deep Well Oil & Gas, Inc., hold all of the assets acquired from 979708 and any property acquired by use of such assets or confidential information of 979708, in trust for the Plaintiff.

This lawsuit has been stayed pending the out come of the other litigation by IGM against the other defendants. The Company believes the claims are without merit and will vigorously defend them.

Hardie & Kelly vs. Brown et al

On June 2, 2006, Hardie and Kelly, Trustee of the Estate of John Forbes Brown filed against John Forbes Brown, a bankrupt, Diane Lynn McClaflin, 1089144 Alberta Ltd., and Deep Well an Amended Statement of Claim filed in the Court of Queen’s Bench of Alberta Judicial District of Calgary. John Forbes Brown was a former officer and then sub-contractor of Deep Well before and at the time he was assigned into bankruptcy on into July 12, 2004. The Plaintiff claims, in addition to other issues unrelated to Deep Well, that John Forbes Brown received 4,812,500 Deep Well shares as a result of his employment in Deep Well and that John Forbes Brown improperly assigned these shares to the numbered company as a ruse entered into on the eve of insolvency by John Forbes Brown in order to facilitate the hiding of assets from his creditors and the trustee of his bankruptcy. The Plaintiff further claims that on August 23, 2004 John Forbes Brown advised the Plaintiff that he in fact owned the above shares and did not disclose this ownership in his bankruptcy statement of affairs filed. The Plaintiff further claims that John Forbes Brown would lodge the said shares with his lawyer until such time as these shares could be transferred to the Plaintiff. The Plaintiff further claims that unbeknownst to them John Forbes Brown surreptitiously removed the shares form his lawyer’s office and delivered them to Deep Well so that Deep Well could cancel them. The Plaintiff claims that Deep Well conspired with John Forbes Brown to defraud the creditors of John Forbes Brown by taking receipt and canceling the said shares. The Plaintiff claims that consideration paid by Deep Well for the said shares was invested in the home owned by John Forbes Brown and his wife. The Plaintiff seeks; 1.) an accounting of the proceeds and benefits derived by the dealings of the shares, 2.) The home owned by John Forbes Brown and his wife, to be held in trust on behalf of the Plaintiff and an accounting of proceeds related to this trust, 3.) the Plaintiff seeks damages from the Defendants because of their actions, 4.) a judgment for $15,612,645.Cdn 5.) an order to sell John Forbes Brown’s home, and 6.) interest and costs.

Note 9. LEGAL ACTIONS (continued)

The Company plans to vigorously defend itself against the Plaintiff’s claims.

Menno Wiebe and Jacobean Resource International vs. Deep Well Oil & Gas, Inc. et al

On October 23, 2006, Menno Wiebe and Jacobean Resources International served Deep Well, Doe individuals and Roe Corporations with a Complaint and Summons filed in the United States of America, District Court of Clark County, Nevada. The Complaint alleges a breach of contract in which the Plaintiffs are seeking monetary damages in excess of $10,000 plus an order directing Defendants to issue 56,500 shares of Deep Well Oil & Gas, Inc. stock to Plaintiffs. Mr. Menno Wiebe claims he was the Chief Operating Officer until October 2005. The Company believes that it has meritorious defenses to some of the plaintiff’s claims and intends to enter into mediation, as called for in the contract with Menno Wiebe.

Star Capital Inc. vs. Deep Well Oil & Gas, Inc. Et al

On December 21, 2006 an Originating Notice of motion, was filed in the Court of Queen’s Bench of Alberta Judicial District of Calgary, by Star Capital Inc. (the “Applicant”) against Deep Well, Deep Well Oil & Gas (Alberta) Ltd., and some of the directors of the Company and its subsidiaries in addition to other individuals (the “Respondents”). The Applicant claims that the Respondents; 1.) failed to provide shareholders with proper or any notice of Annual General Meetings, special meeting of shareholders, or both; 2.) failed to hold Annual General Meetings in accordance with the provisions of the Alberta Business Corporations Act, or in the alternative, with the Nevada Revised Statutes; 3.) failed to appoint qualified auditors in accordance with the provisions of the Alberta Business Corporations Act or, in the alternative, Nevada Revised Statutes; 4.) failed to prepare and file audited financial statements in accordance with the provisions of the Alberta Business Corporations Act and the Alberta Securities Act or, in the alternative, Nevada Revised Statutes; 5.) paid management fees in relation to either or both of Deep Well or Deep Well Alberta, to directors, officers and third parties, including the individual Respondents themselves, that are unreasonable, oppressive and have been granted without proper regard for the interests of shareholders; 6.) in the case of the individual Respondents, engaged in wrongful self-dealing that is oppressive, prejudicial to, and unfairly disregards the interests of, shareholders; 7.) issued capital stock of Deep Well, and instruments for the future purchase of such capital stock, in a manner that is oppressive, unfairly prejudicial to, and unfairly disregards the interests of shareholders; 8.) failed to disclose, or failing to disclose in a timely manner, material information to the shareholders and the public, including, but not limited to, the fact of the transfer of assets from Deep Well to Deep Well Alberta and the existence of encumbrances of the oil sands assets, such as gross overriding royalties held by the Respondents Gary Tighe and Steve Gawne, which distorts the public market in the securities of the corporate Respondents and is otherwise oppressive, unfairly prejudicial to, and unfairly disregards the interests of shareholders, including the Applicant; 9.) utilize majority shareholder approval for various transactions, including the appointment of directors, without calling annual or special meetings of shareholders, in a manner which is oppressive, unfairly prejudicial and unfairly disregards the minority shareholders and which is otherwise a breach of the fiduciary duties owed by the directors and officers to the corporations and to the minority shareholders.

The Company plans to vigorously defend itself against the claims.

ITEM 8.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

On August 10, 2004 Deep Well (“the Registrant”) changed accountants from Madsen & Associates, CPA’s Inc. to Deloitte & Touche LLP. The Registrant decided to dismiss Madsen & Associates, CPA’s Inc. as its independent accountants. Madsen & Associates, CPA’s Inc. report on the financial statements for the period from September 10, 2003 to September 30, 2003 as contained in Form 10-K/A, Amendment Number 2, which was filed on May 13, 2004, was not subject to an adverse or qualified opinion or a disclaimer of opinion and were not modified as to uncertainty, audit scope or accounting principles for the period from September 10, 2003 to September 30, 2003 or for either of the past two years. Madsen & Associates, CPA’s Inc. report on the financial statements for the period from September 10, 2003 to September 30, 2003 raises substantial doubt about the Registrant’s ability to continue as a going concern and that continuation of the Registrant as a going concern is dependent upon obtaining additional working capital. The decision to change accountants was approved by the Registrant’s Board of Directors; and during the period from our engagement of Madsen & Associates, CPA’s Inc. on February 9, 2004 to the date we dismissed Madsen & Associates, CPA’s Inc. on August 10, 2004, there were no disagreements with Madsen & Associates, CPA’s Inc. related to accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Madsen & Associates, CPA’s Inc. would have caused Madsen & Associates, CPA’s Inc. to make reference to the subject matter of the disagreement in connection with its report. On August 10, 2004, the Registrant engaged Deloitte & Touche LLP as its independent accountants. The Registrant did not consult with Deloitte & Touche LLP., its new independent accountants, regarding any matter prior to its engagement; and the Registrant has provided to Madsen & Associates, CPA’s Inc., its former accountant, a copy of the disclosures and the Registrant has requested a letter from Madsen & Associates, CPA’s Inc. addressed to the Commission, confirming certain statements made by the Registrant. Changes in the Registrant’s certifying accountant, Letter of Madsen & Associates, CPA’s Inc. has been filed on Form 8-K on August 16, 2004, and incorporated herein by reference..

Effective April 22, 2005 Deloitte & Touche LLP (the “Predecessor Accountant”) resigned as the independent auditors for the Company. Madsen & Associates (the “Successor Accountant”) was appointed as the Company’s new independent accountants. The Company’s Board of Directors approved this action on April 22, 2005. During the last two fiscal years ended September 30, 2004 and 2003 and the subsequent periods to April 22, 2005 (i) there were no disagreements between the Company and Deloitte & Touche LLP on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to the satisfaction of Deloitte & Touche LLP would have caused Deloitte & Touche LLP to make reference to the matter in its reports on the Company’s financial statements, and (ii) Deloitte & Touche LLP’s reports did not contain an adverse opinion or a disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope, or accounting principles. During the last two most recent fiscal years ended September 30, 2004 and 2003 and the subsequent periods to April 22, 2005, there were no reportable events as the term described in Item 304(a)(1)(iv) of Regulation S-B. The Company has not previously consulted with the Successor Accountant regarding the application of accounting principles to a specific completed or contemplated transaction or the type of audit opinion that might be rendered on the Company’s financial statements. Changes in registrant’s certifying accountant, Letter of Deloitte & Touche LLP has been filed on Form 8-K on August 10, 2005, and incorporated herein by reference.

ITEM 8A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of our fiscal year ended September 30, 2004, an evaluation of the effectiveness of our “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934), as amended was carried out by our management with the participation of our principal executive officer and principal financial officer. Based upon that evaluation, our principal executive officer and principal financial officer have concluded that as of the end of that fiscal year, our disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

During the fiscal year ended September 30, 2004, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 8B. OTHER INFORMATION

During the fourth quarter of the fiscal year covered by this Form 10-KSB, Deep Well reported all information that was required to be disclosed in a report on Form 8-K, except for the following:

Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

On February 6, 2004 the Board approved and accepted the amended Bylaws of Deep Well, of which a copy of the amended Bylaws are filed herewith.

On July 6, 2004 the Board added Mr. Menno Wiebe to the Board of Directors and was also appointed Chief Operating Officer. Mr. Wiebe served as Director and Chief Operating Officer for the Company until June 29, 2005.

Unregistered Sales of Equity Securities

On September 9, 2004 a $1,000,000 unsecured convertible debenture was issued for net cash of $879,000, after commissions of $121,000. The debenture bears interest at 8.5% per year and is due on September 6, 2007. The debenture is convertible into common shares at the rate of one common share and one common share warrant, at the option of the debenture holder, with the conversion terms for the stock and the warrant shown in the following:

·	October 6, 2004 to September 6, 2005 at $1.00 per share

·	September 7, 2005 to September 6, 2006 at $1.50 per share

·	September 7, 2006 to September 6, 2007 at $2.00 per share

If at any time during the term of the debenture the average bid and ask price of the Company’s common shares is three dollars per share or more for thirty consecutive calendar days, the Company will have the option to convert the outstanding debentures into common stock a the prices above. The debentures were paid in full during December 2005 with the proceeds from the issuance of common capital stock and the warrants were cancelled as part of the payoff.

Other Events

On February 23, 2006 pursuant to an exercised option agreement the Company entered into on June 7, 2005 and filed on form 8-K on June 10, 2005, the Company issued 4,707,750 Deep Well common shares in exchange for 156,925 of the outstanding preferred shares of Northern. The common shares were issued pursuant to Section 3(a)(9) of the 1993 Act.

On June 13, 2006 further pursuant to an exercised option agreement the Company entered into on June 7, 2005, and filed on form 8-K on June 10, 2005, the Company issued 2,867,250 Deep Well common shares in exchange for 95,575 of the outstanding preferred shares of Northern. The common shares were issued pursuant to Section 3(a)(9) of the 1993 Act.

PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Directors and Executive Officers

The executive officers and directors of Deep Well are as follows:

As at September 30, 2004

Name	Age	Position/Office
Mr. Steven P. Gawne	55	Director President and Chief Executive Officer

Mr. Curtis Sparrow	47	Director Chief Financial Officer, Secretary and Treasurer

Dr. Horst A. Schmid	71	Director and Chairman of the Board

Mr. Leonard F. Bolger	73	Director

Mr. Menno Wiebe	56	Director Chief Operating Officer (July 6, 2004 until June 29, 2005

Mr. John F. Brown	50	Chief Operating Officer (February 9, 2004 until June 7, 2004

As at September 30, 2005

Name	Age	Position/Office
Dr. Horst A. Schmid	72	Director and Chairman of the Board President and Chief Executive Officer

Mr. Curtis Sparrow	48	Director Chief Financial Officer, Secretary and Treasurer

Mr. Cyrus Spaulding	49	Director Chief Operating Officer

Mr. Donald E.H. Jones	52	Director

As at September 30, 2006

Name	Age	Position/Office
Dr. Horst A. Schmid	73	Director and Chairman of the Board President and Chief Executive Officer

Mr. Curtis Sparrow	49	Director Chief Financial Officer, Secretary and Treasurer

Mr. Cyrus Spaulding	50	Director Chief Operating Officer

Mr. Donald E.H. Jones	53	Director

Mr. David Roff	35	Director

Biographies of Directors and Executive Officers

Brief biographies of the executive officers and directors of Deep Well are set forth below. All directors hold office until the next Annual Stockholders’ Meeting or until their death, resignation, retirement, removal, disqualification or until their successors have been elected and qualified. Vacancies in the existing Board may be filled by majority vote of the remaining directors. Officers of the Company serve at the will of the Board of Directors. As of September 30, 2004 there are no written employment contracts outstanding.

Dr. Horst A. Schmid has served as Director and Chairman of the Board since February 6, 2004 to present. Since June 29, 2005 to present he has been the Chief Executive Officer and President of Deep Well. From September 1996 to present, Dr. Schmid has been Director, President and Chief Executive Officer of Portwest Investment Ltd., a private firm, located in Edmonton, Alberta, Canada. Prior to that, Dr. Schmid spent 15 years as Cabinet Minister for the Government of Alberta and 10 years as Commissioner General for Trade and Tourism. During that time he was involved in numerous successful overseas negotiations for the Alberta Oil & Gas Industry, achieving major contracts for Alberta Equipment/Production/Service Companies. Dr. Schmid has also served as independent Director and Chairman of Aspire Capital Inc. since 1998. He is the recipient of many Canadian and International Awards for his accomplishments. Dr. Schmid received an Honorary Law Degree from the University of Alberta.

Mr. Steven P. Gawne served as Deep Well’s President and Chief Executive Officer and a Director from February 6, 2004 until June 29, 2005. Since March 1998, Mr. Gawne has been the President and Director of Nearshore Petroleum Corporation, a private corporation registered in Alberta, Canada that conducts business in oil and gas exploration. From March 2001 to present, Mr. Gawne has been the President of Priority Exploration Ltd., a private corporation registered in Alberta, Canada that also conducts business in oil and gas exploration. From September 1998 to January 2000, Mr. Gawne was a Director and Vice President of Exploration of ENN Hydrocarbons, Ltd., a private corporation registered in Alberta, Canada that conducts business in oil and gas exploration in Alberta, Canada. Mr. Gawne attended the University of Waterloo located in Waterloo, Ontario and majors in Geology.

Mr. Curtis Sparrow served as Director of Deep Well from February 6, 2004 until June 29, 2005. On July 1, 2005, Mr. Sparrow accepted a reappointment back to the Board of Directors. From February 9, 2004 to present Mr. Sparrow has been the Chief Financial Officer, Corporate Secretary and Treasurer of Deep Well. Since before May 1994, Mr. Sparrow has been a self-employed management consultant. Mr. Sparrow has been involved in the oil and gas industry in various capacities for over 25 years. He held directorships and senior officer positions with junior exploration and development companies before becoming a self-employed consultant. He has since participated in the marketing side of the oil and gas industry, and was part of an acquisition team formed to assess and develop a bid for a multi-billion dollar integrated oil company. His experience also includes corporate and project management, international businesses and mining. Mr. Sparrow received his Bachelor of Science Degree in Engineering and Masters Degree in Business Administration from the University of Alberta in May 1978 and May 1992, respectively. Mr. Sparrow is also a registered Professional Engineer .

Mr. Menno Wiebe served as Director and Chief Operating Officer of Deep Well from July 6, 2004 until June 29, 2005. Early in his career Mr. Wiebe participated in the evaluation of the heavy oil sands in the Fort McMurray, Alberta, area as a geologist with Hudson’s Bay Oil and Gas Company Limited. From 1975 to 1983, Mr. Wiebe served roles as a chief geologist and a senior staff geologist with Occidental Petroleum Corporation in postings in Libya, Scotland and the United States. In 1983 Mr. Wiebe joined Bow Valley Industries (SEA) Ltd. and served 4 years in the Jakarta, Indonesia, office as the Exploration Manager, directing extensive drilling programs in the Java Sea and North Sumatra, Indonesia. Mr. Wiebe then joined Husky Oil International Inc. as its regional representative for exploration operations in Indonesia. In 1991, Mr. Wiebe joined Hall-Houston Oil Company, a U.S. based private exploration company, as Vice-President and General Manager, representing the company, and establishing and staffing an office, in Kuala Lumpur, Malaysia for its exploration projects in that region. In 1991, Mr. Wiebe joined Pertacal Energy Inc., an oil & gas exploration company with projects in the UK, France and Yemen, serving in a variety of capacities, including as a consultant, Vice President, President, Chief Executive Officer and a director. Mr. Wiebe obtained his Bachelor of Science Degree in Geology from the University of Manitoba in 1970 and a Masters in Business Administration from the University of Warwick in 1993.

Mr. Leonard F. Bolger served as a Director of Deep Well from February 6, 2004 until June 29, 2005. From January 2000 to present, Mr. Bolger has been the Co-Chairman of Alberta Energy Research Institute. From March 1990 to present, Mr. Bolger has been the Chairman of the Board of Advatech Canada International, Inc., a private housing export and construction firm located in Calgary, Canada. Prior to 1990, Mr. Bolger had 31 years of oil and gas related experience. Mr. Bolger received a Bachelors Degree in Engineering from the University of Toronto in May 1954.

Mr. Cyrus Spaulding has been Deep Well’s Chief Operating Officer and Director from June 29, 2005 to present. Early in his career he joined Husky Oil Operations Ltd. as a reservoir engineering technologist where he provided data analysis on secondary recovery schemes for heavy oil projects. In the mid 1990’s he joined Colt Engineering Corporation as the lead engineer for the Amoco Primrose Commercial SAGD project. He is a registered Professional Engineer with over 17 years experience in the oil and gas industry. He has worked on projects in Canada as well as overseas. His experience includes gas plants, hydrocarbon liquids fractionation plants, heavy oil pilot plants and heavy oil commercial plants. He has also worked with a major oil and gas company in Alberta providing forecasting and analysis on heavy oil projects. Mr. Spaulding is a graduate of Lakehead University

Mr. Donald E. H. Jones has been a Director of Deep Well from June 29, 2005 to present. Mr. Jones brings over 30 years of broad oil, natural gas and petrochemical experience to the Company. His experience spans the manufacturing and service sectors, engineering and project management in the EPC environment. He has also worked at a senior management level for companies with both new and established oil and gas properties. In addition to the above mentioned work experience, Mr. Jones was Project Manager, including field construction, commissioning, and optimization on past SAGD Pilot Facilities which laid the ground work for commercial scale production and processing of heavy oil. A graduate of the University of Calgary, Mr. Jones is a registered Professional Engineer. He has significant domestic and international experience having worked in Canada, Africa, Russia, Kazakhstan and South East Asia.

Mr. David Roff is currently serving as a Director of Deep Well since his reappointed on April 3, 2006. He was the former President and Sole Director of Deep Well from September 10, 2003 until February 6, 2004. Mr. Roff is the co-president of, Brave Consulting, a private consulting and investment corporation and has held this position since 2001. Brave Consulting was engaged by Deep Well in July 2005 until the present to advise on investment strategies and governance. Mr. Roff has extensive experience working with small cap public companies for ten years. Prior to that, Mr. Roff was a management consultant for Coopers & Lybrand Consulting where he advised large financial institutions, investment fund complexes and other organizations on technology and internal control strategies. Mr. Roff is a Chartered Accountant with a B.A. degree from the University of Western Ontario.

Family Relationships

There are no family relationships among the executive officers and directors.

Significant Employees

Mr. John Brown received up to the year ended September 30, 2004 compensation from Deep Well in the amount of $15,379.82 US for his services to Deep Well. On November 15, 2004, the company entered into an employment agreement with Mr. John Brown paying him $10,000 Cdn per month for services to the Company. Mr. John Brown served as Deep Well’s Chief Operating Officer from February 9, 2004 to June 7, 2004.

Mr. Menno Wiebe replaced Mr. John Brown as Chief Operating Officer on July 6, 2004. Mr. Menno Wiebe served as Chief Operating Officer of the Company from July 6, 2004 until June 29, 2005. Mr. Wiebe is claiming $37,985.76 Cdn in his claim against the Company. None of this amount was paid as of the year end. Mr. Cyrus Spaulding replaced Mr. Menno Wiebe as Chief Operating Officer on June 29, 2005.

Involvement in Certain Legal Proceedings

No bankruptcy petition has been filed by or against any business of which any director was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time.

No director has been convicted in a criminal proceeding and is not subject to a pending criminal proceeding (excluding traffic violations and other minor offences).

No director has been subject to any order, judgments, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and

No director has been found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, that has not been reversed, suspended, or vacated.

Audit Committee Financial Expert

We do not have an audit committee financial expert, on our Board of Directors. We believe that the cost related to retaining an audit committee financial expert at this time is prohibitive and that, because, of our limited operations the services of an audit committee financial expert are not warranted at this time.

Identification of Audit Committee

On February 9, 2004 our Board of Directors, in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 as amended, appointed an audit committee. The Board of Directors has designated an audit committee to oversee management’s conduct of our accounting and financial reporting processes. The audit committee reviews our financial reports and other financial information disclosed to the public, the government and various regulatory bodies, our system of internal accounting, our financial controls, and the annual independent audit of our financial statements. The audit committee also oversees compliance with legal and regulatory requirements. On February 9, 2004 to August 14, 2004, the audit committee members were Mr. Curtis Sparrow and Mr. Leonard F. Bolger. Mr. Leonard F. Bolger serves as Chair of the audit committee. On August 14, 2004 the Board of Directors determined that it was necessary to ratify the members of the Audit Committee and therefore the Board of Directors approved the appointment of Dr. Horst A. Schmid and Mr. Leonard F. Bolger as the only two independent members of the Audit Committee.

On February 9, 2004 the Board of Directors appointed a compensation committee, a corporate governance committee and a corporate environmental policy committee.

Section 16 (a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s officers, directors and persons who beneficially own more than 10% of a registered class of the Company’s equity securities to file reports of ownership and changes in ownership with the Securities and Exchange Commission, and to furnish to the Company copies of such reports. Based solely on the review of copies of the forms received, by the Company, during the September 30, 2004 fiscal year, were late in filing of Form 3 for Mr. Steven P. Gawne, Mrs. Rebekah Gawne, Mr. Leonard F. Bolger, Mr. John Brown, Ms. Cassandra Brown, Ms. Elissa Brown, Mr. Curtis Sparrow, Nearshore Petroleum Corporation, 1089144 Alberta Ltd., Dr. Horst A. Schmid and Mr. Menno Wiebe. In addition, Nearshore Petroleum Corporation was late in filing a Form 4 as required under Section 16(a)(2) of the Securities Act.

Code of Ethics

As of September 30, 2004 the Company had not yet adopted a formal code of ethics governing its executive officers and directors. We have not adopted a code of ethics because we have minimal operations. Our Board of Directors will address this issue in the fu ture to determine the adoption of a code of ethics. In the meantime, our management intends to promote honest and ethical conduct, full and fair disclosure in our reports to the SEC, and compliance with applicable governmental laws and regulations.

ITEM 10. EXECUTIVE COMPENSATION

Summary Compensation Table

The following table provides information about the compensation paid to, earned or received during the last three fiscal years ended September 30, 2004, 2003 and 2002 by the executive officers listed below (the “Named Executive Officers”). None of our executive officers received salary and bonus in excess of $100,000 during fiscal 2004.

									Long Term Compensation
			Annual Compensation						Awards				Payouts
Name and Principal Position	Year		Salary		Bonus		Other		Restricted Stock Award (s)		Securities Underlying Options/ SARs		LTIP Payouts		All Other Compensation
Mr. Steven P. Gawne (1)		2004	$	99,704.96 US	$	-	$	-	$	-		-	$	-	$	-
President and		2003		-		-		-		-		-		-		-
Chief Executive Officer		2002		-		-		-		-		-		-		-

Mr. Curtis Sparrow (2)		2004	$	68,471.64 US	$	-	$	-	$	-		-	$	-	$	-
Chief Financial Officer		2003		-		-		-		-		-		-		-
		2002		-		-		-		-		-		-		-

Mr. John F. Brown (3)		2004	$	15,379.82 US	$	-	$	-	$	-		-	$	-	$	-
Chief Operating Officer		2003		-		-		-		-		-		-		-
From February 9, 2004 to		2002		-		-		-		-		-		-		-
June 7, 2004

Mr. Menno Wiebe (4)		2004	$	37,985.76 Cdn	$	-	$	-	$	-		-	$	-	$	-
Chief Operating Officer		2003		-		-		-		-		-		-		-
From July 6, 2004 to		2002		-		-		-		-		-		-		-
June 29, 2005

Mr. David Roff		2004	$	Nil	$	-	$	-	$	-		-	$	-	$	-
President and Chief		2003		Nil		-		-		-		-		-		-
Executive Officer From		2002		-		-		-		-		-		-		-
September 10, 2003 to February 6, 2004

(1) Nearshore Petroleum Corporation, a company owned 50% by Mr. Steven P. Gawne and 50% by his wife, Rebekah Gawne accrued the above fee for Mr. Gawne’s services. $22,053.15 of these fees remained unpaid as of the year end. Mr. Steven P. Gawne ceased to be an officer and director of the company on June 29, 2005. Mr. Steven P. Gawne and Nearshore Petroleum Corporation also received compensation from Northern Alberta Oil Ltd. during fiscal 2004 of $100,000 Cdn and $243,425 Cdn respectively, which is not included above. Nearshore also was granted a royalty by Northern of 6.5% on 4 townships of north central Alberta.

(2) Concorde Consulting, a company owned 100% by Mr. Curtis Sparrow has accrued a fee for consulting services, but none this fee was paid as of the year end. Mr. Curtis Sparrow also accrued a director’s fee for his services on the Board of Directors, but none these fees were paid as of the year end. Mr. Sparrow, nor Concorde received any compensation from Northern during this year end.

(3) Mr. John F. Brown served as Chief Operating Officer of the Company from February 9, 2004 until June 7, 2004. None of the above fees remained unpaid as of the year end. Mr. Brown also received compensation from Northern Alberta Oil Ltd. during fiscal 2004 of $43,261.85 Cdn. Mr. Brown’s daughter also received compensation from Deep Well of $5,816.12. Neither of these amounts are included above.

(4) Mr. Menno Wiebe served as Chief Operating Officer of the Company from July 6, 2004 until June 29, 2005. Mr. Wiebe is claiming the above amount in his claim against the Company. None of this amount was paid as of the year end.

The Board is currently reviewing all compensation paid to executives of the company.

Compensation of Directors

On November 28, 2005 the Company adopted a cash compensation plan where each director is paid the amount of $500 for each meeting of the Board of Directors that they attend, plus, we reimburse each director for actual expenses incurred in connection with Board meeting attendance. The Chairman of the Board is paid $1,000 for each Board meeting plus expenses incurred in connection with Board meeting attendance. None of these Director’s fees were paid in the September 30, 2004 year end.

During fiscal year 2004 there were no stock options granted to any of the named directors or executive officers.

On November 28, 2005 the Company adopted a stock-based compensation plan, under which each director of Deep Well was awarded options to acquire 75,000 shares upon becoming a director and an additional 100,000 shares for each year or part of a year served as a director. Directors of subsidiaries, who are not already directors of Deep Well, were awarded options to acquire 37,500 shares upon becoming a director and an additional 50,000 shares for each year or part of a year served as a director. The exercise price of such options is $0.71 per share. For further information see the Company’s Form 8-K filed with the SEC March 3, 2006.

No named directors or executive officers exercised any stock options during fiscal years 2004, 2005 or 2006.

Compensation Arrangements for Executive Officers

The Company has entered into the following contracts with the following companies for services of certain officers and/or directors of the Company:

1.	Portwest Investments Ltd., a company owned 100% by Dr. Horst A. Schmid for providing services as Chief Executive Officer and President for $12,500 Cdn per month.

2.	Concorde Consulting, a company owned 100% by Mr. Curtis Sparrow for providing services as Chief Financial Officer for $15,000 Cdn per month.

3.	Trebax Projects Ltd., a company 100% owned by Mr. Cyrus Spaulding for providing services as Chief Operating Officer for $130 Cdn per hour.

Brave Consulting, a company 50% owned by Mr. David Roff, a former President of the Company, has been a consultant to Deep Well since July 15, 2005. Brave consulting, a private corporation 50% owned by Mr. Roff and the other 50% is owned by a non-related third party, was paid a fee of $4,000 Cdn per month from July 2005 until October 2005. From November 2005 until present, Brave consulting is being paid a consulting fee of $8,000 Cdn per month

On November 28, 2005 the Board granted 390,000 options to acquire common shares to the above corporations providing consulting services to the Company or its subsidiary. Each of such consulting contractors is a corporation wholly owned by directors or executive officers of the Company. For further information see the Company’s Form 8-K filed with the SEC March 3, 2006.

ITEM 11.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth the number and percentage of the shares of the Company’s Common Stock owned of record and beneficially by each person or entity owning more than 5% of such shares and by all executive officers, officers and directors, as a group at September 30, 2004:

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

As of September 30, 2004

Name and Address of Beneficial Owner

Title of Class

Number of Shares Beneficially Owned

Percentage of Class Beneficially Owned (1)

Nature of Ownership

Nearshore Petroleum Corporation (2)

Suite 3175, 246 Stewart Green SW

Calgary, Alberta T3H 3C8 Canada

Common

4,875,000

15.6 %

Indirect

C. Ruiz Tighe (3)

89 Arbour Ridge Heights NW

Calgary, Alberta T3G 3Z2 Canada

Common

1,947,000

6.2 %

Direct/Indirect

Portwest Investment Ltd. (4)

Suite 510, 10117 Jasper Avenue

Edmonton, Alberta T5J 1W8 Canada

Common

1,950,000

6.2 %

Direct

697580 Alberta Ltd.

1425 Ranchlands Road NW

Calgary, Alberta T3G 1N2

Common

1,800,000

5.8 %

Direct

Rainbow Enterprises Ltd.

First Bourbon House/Bourbon St.

P.O. Box 1695

Castries St. Lucia, British Virgin Islands

Common

1,800,000

5.8 %

Direct

(1) Based on 31,236,468 common shares outstanding on September 30, 2004.

(2) The President as of September 30, 2004, Mr. Steven P. Gawne’s indirect beneficial ownership consists of Nearshore Petroleum Corporation owning 4,875,000 shares. Nearshore Petroleum Corporation is a private corporation registered in Alberta, Canada, which is 50% owned and controlled by Mr. Steven P. Gawne and 50% owned and controlled by his wife, Rebekah Gawne. As a result of Mr. Steven P. Gawne’s and Nearshore’s ownership of 100,000 each of preferred shares of Northern which as a result of the June 7, 2005 acquisition on Northern by the Company at Mr. Gawne’s or Nearshore’s option can convert to 3,000,000 shares of Deep Well common stock each. This means that Mr. Steven P. Gawne’s indirect beneficial ownership could consist of Nearshore Petroleum Corporation owning 7,875,000 shares and Mr. Gawne owning 3,000,000 shares directly.

(3) C. Ruiz Tighe beneficially and indirectly owns 147,000 shares of our common stock held by 1004731 Alberta Ltd., a corporation registered in Alberta, Canada, which is 100% owned by C. Ruiz Tighe. C. Ruiz Tighe directly holds 1,800,000 shares of our common stock.

(4) Portwest Investment Ltd. is a private corporation registered in Alberta, Canada, which is 100% owned by Dr. Horst A. Schmid.

SECURITY OWNERSHIP OF MANAGEMENT

As of September 30, 2004

Name and Address of Beneficial Owner

Title of Class

Number of Shares Beneficially Owned

Percentage of Class Beneficially Owned (1)

Nature of Ownership

Mr. Steven P. Gawne (2)

Director, President and Chief Executive Officer

Suite 3175, 246 Stewart Green SW

Calgary, Alberta T3H 3C8 Canada

Common

4,875,000

15.6 %

Indirect

Mr. Curtis Sparrow

Director, Chief Financial Officer, Corporate Secretary and Treasurer

Suite 510, 10117 Jasper Avenue

Edmonton, Alberta T5J 1W8 Canada

None

Dr. Horst A. Schmid (3)

Director and Chairman of the Board

Suite 510, 10117 Jasper Avenue

Edmonton, Alberta T5J 1W8 Canada

Common

1,950,000

6.2 %

Indirect

Mr. Leonard F. Bolger

Director

Suite 3175, 246 Stewart Green SW

Calgary, Alberta T3H 3C8 Canada

None

Mr. John F. Brown

Chief Operating Officer

Suite 3175, 246 Stewart Green SW

Calgary, Alberta T3H 3C8 Canada

Common

)

Mr. Menno Wiebe (5)

Director and Chief Operating Officer

Bankers Hall W Tower 10 ^th , 888 3rd St SW

Calgary Alberta T2P5C5 Canada

Common

900,000

2.9 %

Direct

All Officers and Directors as a Group

7,725,000

24.7 %

(1) Based on 31,236,468 common shares outstanding on September 30, 2004.

(2) See footnote 2 in the table above.

(3) Our Chairman of the Board of Directors Dr. Horst A. Schmid’s indirect beneficial ownership consists of Portwest Investment Ltd. owning 1,950,000 shares. Portwest Investment Ltd. is a private corporation registered in Alberta, Canada, which is owned and controlled by Dr. Horst A. Schmid.

(4) In the litigation Hardie vs. Brown, Mr. Brown’s receiver claims that Mr. Brown was the beneficial owner of 5,775,000 common shares of the Company.

(5) In the litigation Wiebe vs Deep Well, Mr. Wiebe claims to have an option for an additional 900,000 vested over three years.

Changes in Control

Deep Well is not aware of any arrangement that may result in a change in control of Deep Well or its subsidiary companies.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

For the year ending September 30, 2004 Nearshore Petroleum Corporation, which is 50% owned and controlled by Mr. Steven P. Gawne and 50% owned and controlled by his wife, Rebekah Gawne, invoiced the Company $99,704.96 US for the services of Mr. Steven Gawne. Mr. Steven Gawne and Nearshore Petroleum Corporation also received compensation from Northern during fiscal 2004 of $100,000 Cdn and $243,425 Cdn respectively. Nearshore Petroleum Corporation was also granted a royalty by Northern of 6.5% on 4 townships of north central Alberta within which Northern acquired leases, as filed herewith.

On June 7, 2005, in connection with the Company's acquisition of Northern, the Company entered into Put Call Option Agreements with each of Northern’s preferred shareholders. Pursuant to these agreements, the Company was given the right to acquire the preferred stock of Northern held by the preferred stockholders, and such stockholders were given the right to require the Company to purchase such shares. The option agreements provide that upon exchange, the preferred stockholders of Northern will receive thirty shares of the Company's common stock for each share of Northern’s preferred stock held by such stockholders. Three out of the six option agreements were entered into with affiliates of the Company: Mr. Steven Gawne, Nearshore Petroleum Corporation and Edmonton International Airport Hotel Ltd. (“Edmonton”) (a company wholly owned by Curtis Sparrow). On February 23, 2006, Mr. Steven Gawne and Nearshore partially exercised their rights under the option agreements, and the Company issued 300,000 Deep Well common shares to each of Mr. Gawne and Nearshore in exchange for 20,000 of the outstanding preferred shares of Northern. The common shares were issued pursuant to Section 4(2) of the 1933 Act.

On August 12, 2005 Barbara Spaulding, the wife of Mr. Cyrus Spaulding our current director and Chief Operating Officer, subscribed for 250,000 units of the Company, pursuant to a private placement transaction, for an aggregate price of $100,000. Each unit consists of one common share and one common share purchase warrant, with each warrant entitling its holder to acquire one share of our common stock at an exercise price of $0.60. The exercise price of the warrants will be adjusted from time to time upon the occurrence of certain events, as provided in the warrants. The warrants expire on August 12, 2008. The units were issued pursuant to Regulation S. During the years 2005 and 2006, Barbara Spaulding also subscribed personally for 579,700 common shares of the Company.

On October 11, 2005 Mr. Harvey Roff, the father of Mr. David Roff our current director, subscribed for 25,000 units of the Company, pursuant to a private placement transaction, for an aggregate price of $10,000. Each unit consists of one common share and one common share purchase warrant, with each warrant entitling its holder to acquire one share of our common stock at an exercise price of $0.60 per common share. The exercise price of the warrants will be adjusted from time to time upon the occurrence of certain events, as provided in the warrants. The warrants expire on October 11, 2008. The units were issued pursuant to Regulation S (“Regulation S”).

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

Exhibit No.		Description
2.1		Liquidating Plan of Reorganization of Allied Devices Corporation, now known as Deep Well Oil & Gas, Inc. filed with Form 10-K/A on January 28, 2004, and incorporated herein by reference

2.2		Order and Plan of Reorganization of the U.S. Bankruptcy Court in and for the Eastern District of New York, In re: Allied Devices Corporation, Chapter 11, Case No. 03-80962-511, dated September 10, 2003 filed with Form 10K/A on January 28, 2004, and incorporated herein by reference

3.1		Restated and Amended Articles of Incorporation filed with and accepted by the Secretary of State of Nevada on October 22, 2003 filed with Form 10-K/A on January 28, 2004, and incorporated herein by reference

3.2		Amended Articles of Incorporation filed with the State of Nevada on February 27, 2004 filed with Form 8-K on March 5, 2004, and incorporated herein by reference

3.3		Amended Articles of Incorporation filed with the State of Nevada on May 5, 2004 filed with Form 8-K on March 7, 2004, and incorporated herein by reference


3.4		Registrant’s By-laws, filed herewith

4.1		Form of Warrant issued pursuant to the Securities Purchase Agreement and Registration Rights Agreement dated March 10, 2005, filed with Form 8-K on March 14, 2005, and incorporated herein by reference

4.2		Form of Warrant issued pursuant to the Subscription Agreement dated August 12, 2005 by and among the Company with three investors related to the Private Placement offering, and Debt Settlement Agreement, filed with Form 8-K on August 17, 2005, and incorporated herein by reference

4.3		Form of Warrant issued pursuant to the Subscription Agreement dated October 11, 2005 by and among the Company with three investors related to the Private Placement offering, filed with Form 8-K on October 19, 2005, and incorporated herein by reference

4.4		Form of Warrant issued pursuant to the Subscription Agreement dated January 13, 2006 by and among the Company with three investors related to the Private Placement offering, and Debt Settlement Agreement, filed with Form 8-K on March 6, 2006, and incorporated herein by reference

10.1		Gross Overriding Royalty Agreement dated December 19, 2002 between Baytex Energy Ltd. and 979708 Alberta Ltd., and filed herewith

10.2		Gross Overriding Royalty Agreement dated December 12, 2003 between Mikwec Energy Canada Limited (now known as Northern Alberta Oil Ltd.), and Nearshore Petroleum Corporation, and filed herewith

10.3		Joint Operating Agreement dated April 26, 2004 between Mikwec Energy Canada Limited (now known as Northern Alberta Oil Ltd.), and Maxen Petroleum Inc. (now known as Pan Orient Energy Corp.), and filed herewith

10.4		Consulting Agreement by and between Deep Well and Menno Wiebe dated June 8, 2004, and filed herewith

10.5		Exchange Agreement between Deep Well and Northern (formerly Mikwec) dated July 8, 2004, filed with Form 8-K on November 5, 2004, and incorporated herein by reference

10.6		Employment Letter Agreement by and between Deep Well and John Brown dated November 15, 2004, and filed herewith

10.7		Joint Operating Agreement dated December 9, 2004 between Deep Well and 1132559 Alberta Ltd., and filed herewith

10.8		Farmout Agreement dated February 25, 2005 by and between the Company, Deep Well Oil & Gas, Inc., Northern Alberta Oil Ltd., and Surge Global Energy, Inc., Signet Energy, Inc. (formerly known as Surge Global Energy (Canada) Ltd.), filed herewith

10.9		Assumption of Liabilities and Indemnity Agreement dated February 28, 2005 by and between Deep Well Oil & Gas, Inc. and Signet Energy, Inc. (formerly known as Surge Global Energy (Canada) Ltd.), filed herewith

10.10		Termination Agreement dated February 28, 2005 by and between Nearshore Petroleum Corporation, Northern Alberta Oil Ltd. and Signet Energy, Inc. (formerly known as Surge Global Energy (Canada) Ltd.), filed herewith

10.11		Farmout Amending Agreement dated March 3, 2005 by and between the Company, Deep Well Oil & Gas, Inc., Northern Alberta Oil Ltd., and Surge Global Energy, Inc., Signet Energy, Inc. (formerly known as Surge Global Energy (Canada) Ltd.), filed herewith

10.12		Two Farmout Amending Agreements dated March 10, 2005 by and between the Company, Deep Well Oil & Gas, Inc., Northern Alberta Oil Ltd., and Surge Global Energy, Inc., Signet Energy, Inc. (formerly known as Surge Global Energy (Canada) Ltd.), filed herewith

10.13		Form of Securities Purchase Agreement and Registration Rights Agreement dated March 10, 2005, by and among the Company and each of Provident Premier Master Fund, Ltd. and Grey K Fund LP, filed with Form 8-K on March 14, 2005, and incorporated herein by reference

10.14		Form of Amending Agreement dated as of April 25, 2005, filed with Form 8-K on June 10, 2005, and incorporated herein by reference

10.15		Form of Termination, Option and Put Agreement, filed with Form 8-K on June 10, 2005, and incorporated herein by reference

10.16		Consulting agreement by and between Northern and Portwest Investments Ltd., dated July 1, 2005, and filed herewith

10.17		Consulting agreement by and between Northern and Concorde Consulting, dated July 1, 2005, and filed herewith

10.18		Farmout Amending Agreement dated July 14, 2005 by and between the Company, Deep Well Oil & Gas, Inc., Northern Alberta Oil Ltd., and Surge Global Energy, Inc., Signet Energy, Inc. (formerly known as Surge Global Energy (Canada) Ltd.), filed herewith

10.19		Form of Subscription Agreement dated August 12, 2005 by and among the Company with three investors related to the Private Placement offering, and Debt Settlement Agreement, filed with Form 8-K on August 17, 2005, and incorporated herein by reference

10.20		Consulting agreement by and between the Northern and Trebax Projects Ltd., effective September 1, 2005, and filed herewith

10.21		Form of Subscription Agreement dated October 11, 2005, by and among the Company with three investors related to the Private Placement offering, filed with Form 8-K on October 19, 2005, and incorporated herein by reference

10.22		Farmout Amending Agreement dated November 15, 2005 by and between the Company, Deep Well Oil & Gas, Inc., Northern Alberta Oil Ltd., and Surge Global Energy, Inc., Signet Energy, Inc. (formerly known as Surge Global Energy (Canada) Ltd.), filed herewith

10.23		Farmout Acknowledgement Agreement dated November 15, 2005 by and between the Company, Deep Well Oil & Gas, Inc., Northern Alberta Oil Ltd., and Surge Global Energy, Inc., Signet Energy, Inc. (formerly known as Surge Global Energy (Canada) Ltd.), filed herewith

10.24		Deep Well Oil & Gas, Inc. Stock Option Plan (“The Plan”), effective November 28, 2005, filed with Form 8-K on March 3, 2006, and incorporated herein by reference

10.25		Sample Stock Option Agreements with all Directors, filed herewith

10.26		Sample Stock Option Agreements with all Contractors, filed herewith

10.27		Sample Indemnity Agreement with all Directors, filed herewith

10.28		Form of Subscription Agreement dated January 13, 2006 by and among the Company with three investors related to the Private Placement offering, and Debt Settlement Agreement, filed with Form 8-K on March 6, 2006, and incorporated herein by reference

10.29		Settlement Agreement & Release of All Claims, dated as of January 29, 2007, by and among the Company and Grey K Fund LP, Grey K Offshore Fund Ltd., Provident Premier Master Fund Ltd., Atlas Master Fund Ltd. and Gemini Master Fund, Ltd., filed with From 8-K on January 31, 2007, and incorporated herein by reference.

16.1		Changes in registrant’s certifying accountant, Letter of Madsen & Associates, CPA’s Inc. filed with Form 8-K on August 16, 2004, and incorporated herein by reference

16.2		Changes in registrant’s certifying accountant, Letter of Deloitte & Touche LLP filed with Form 8-K on August 10, 2005, and incorporated herein by reference

21.1		Subsidiaries of Registrant, filed herewith

31.1		Certification of President and Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith

31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith

32.1		Certification of President and Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith

32.2		Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table is a summary of the fees billed to us by Sellers & Andersen, LLC, Madsen & Associates and Deloitte & Touche LLP for professional services for the fiscal years ended September 30, 2004 and September 30, 2003:

Fee Category	Fiscal 2004 Fees		Fiscal 2003 Fees
Audit Fees	$	29,328.94	$	5,950.00
Audit Related Fees		8,646.42		-
Tax Fees		1,016.63		-
All Other Fees		-		-
Total Fees	$	38,991.99	$	5,950.00

Audit Fees

Our board of directors appointed Madsen & Associates, CPA’s Inc. as independent auditors to audit our financial statements for the fiscal year ending September 30, 2004. The aggregate fees billed by Sellers & Andersen, LLC, Madsen & Associates and Deloitte & Touche LLP for professional services rendered for the audit of our annual financial statements included in this annual report on Form 10-KSB for the fiscal year ended September 30, 2004 and the period September 10, 2003 to September 30, 2003 and the period September 10, 2003 (inception of exploration stage) to September 30, 2004, was $29,328.94, $5,950.00 and $35,278.94, respectfully.

Audit Related Fees

The aggregate fees billed of assurance and related services by the independent auditors that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees” are fees disclosed under this category include consultation regarding our correspondence with the SEC and other accounting consulting. Our audit-related and review fees for the fiscal years ended September 30, 2004 and the period September 10, 2003 to September 30, 2003 and the period September 10, 2003 (inception of exploration stage) to September 30, 2004 were $ 8,646.42 , $0 and $ 8,646.42 respectively.

Tax Fees

For the fiscal years ended September 30, 2004 and 2003, the aggregate fees billed for tax compliance, by Sellers & Andersen, LLC, Madsen & Associates and Deloitte & Touche LLP were $1,016.63 and $0, respectively.

All Other Fees

For the fiscal years ended September 30, 2004 and 2003, the aggregate fees billed by Sellers & Andersen, LLC, Madsen & Associates and Deloitte & Touche LLP for other non-audit professional services, other than those services listed above, totaled $0 and $0, respectively.

Audit Committee Pre-Approval Policies and Procedures

The Securities and Exchange Commission has adopted rules that require that before Madsen & Associates, CPA’s Inc. is engaged by us or our subsidiaries to render any auditing or permitted non-audit related service, the engagement be:

·	approved by our audit committee; or

entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee’s responsibilities to management.

Our board of directors, acting as our audit committee, pre-approves all services provided by our independent auditors. Our board of directors does not have records of what percentage of the above fees were pre-approved. All of the above services and fees were reviewed and approved by the audit committee either before or after the respective services were rendered.

The audit committee has considered the nature and amount of the fees billed by Madsen & Associates, CPA’s Inc., and believes that the provision of the services for activities unrelated to the audit is compatible with maintaining Madsen & Associates, CPA’s Inc. independence.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	DEEP WELL OIL & GAS, INC.

	By	/s/ Horst A. Schmid
		Dr. Horst A. Schmid Chairman of the Board


	Date	February 21, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


	By	/s/ Horst A. Schmid
		Dr. Horst A. Schmid Chief Executive Officer and President (Principal Executive Officer)


	Date	February 21, 2007


	By	/s/ Curtis Sparrow
		Mr. Curtis Sparrow Chief Financial Officer (Principal Financial and Accounting Officer)


	Date	February 21, 2007


	By	/s/ David Roff
		Mr. David Roff Director


	Date	February 21, 2007

Exhibit 3.4

BYLAWS

DEEP WELL OIL AND GAS, INC.

A Nevada Corporation

Article I Offices

Section 1.01. Principal office. The principal office for the transaction of business of this Corporation shall be at such location as determined from time to time by the Board of Directors. The principal office of the Corporation may be in any State as determined by the Board of Directors. The Board of Directors has full power and authority to change the principal office from one location to another in any state.

Section 1.02. Other offices. The Corporation may also have offices at such other places, within or without the State of Nevada, where the Corporation is qualified to do business, as the Board of Directors may from time to time designate, or the business of the Corporation may require.

Article II Shareholders' Meetings

Section 2.01. Place of meetings. Meetings of Shareholders shall be held at any place within or without the State of Nevada designated by the Board of Directors pursuant to authority hereinafter granted to the Board. Any meeting is valid wherever held if held by the written consent of a majority of the persons entitled to vote thereat, given either before or after the meeting, in person or proxy and filed with the Corporate Book or Secretary of the Corporation.

Section 2.02. Time of annual meeting. The annual meeting of Shareholders shall be held within the date as fixed from time to time by the Board of Directors.

Section 2.03. (a) Notice of meetings. Notice of all meetings of Shareholders shall be given in writing to Shareholders entitled to notice only if required by Nevada Statutes, by the Secretary or an Assistant Secretary or other person charged with that duty, or, in case of his or her neglect or refusal, or if there is no person charged with the duty of giving notice, by any Director or Shareholder.

(b) Method of notice. A notice may be given by the Corporation to any Shareholder, either personally or by mail or other means of written communication, charges prepaid, addressed to the Shareholder at his or her address appearing on the books of the Corporation or given by the Shareholder to the Corporation for the purpose of notice. If a Shareholder gives no address, notice is duly given if sent by mail or other means of written communication addressed to the place where the principal office of the Corporation is situated, or if published at least once in some newspaper of general circulation in the county in which the office is located.

(c) Time of notice. Notice of any meeting of Shareholders shall be sent to each Shareholder entitled thereto not less than ten nor more than sixty days before the meeting.

(d) Contents of notice. Notice of any meeting of Shareholders shall specify the place, the day, and the hour of the meeting, and, in the case of special meetings, the general nature of the business to be transacted.

Section 2.04. (a) Calling of special meetings. Upon request in writing to the President, Vice President, or Secretary, sent by registered mail or delivered to the officer in person, by any persons entitled to call a meeting of Shareholders, the officer shall cause notice to be given to the Shareholders entitled to vote that a meeting will be held at a time, fixed by the officer, not less than ten or more than 60 days after the receipt of the request. If the notice is not given within seven days after the date of delivery, or the date of mailing of the request, the persons calling the meeting may fix the time of meeting and give the notice in the manner provided in these Bylaws. Nothing contained in this Section shall be construed as limiting, fixing, or affecting the time or date when a meeting of Shareholders called by action of the Board of Directors may be held.

Section 2.05 (a) Quorum of Shareholders. The presence in person or by proxy of the persons entitled to vote a majority of the outstanding voting shares at any meeting constitutes a quorum for the transaction of business. Shares shall not be counted to make up a quorum for a meeting if voting of them at the meeting has been enjoined or for any reason they cannot be lawfully voted at the meeting.

(b) Loss of quorum. The Shareholders present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment notwithstanding the withdrawal of enough Shareholders to leave less than a quorum.

(c) Adjournment for lack of quorum. In the absence of a quorum any meeting of Shareholders may be adjourned from time to time by the vote of a majority of the shares, the holders of which are either present in person or represented by proxy thereat, but no other business may be transacted.

Section 2.06. Determining Shareholders of record. The Board of Directors may fix a time in the future as a record date for the determination of the Shareholders entitled to notice of and to vote at any meeting of Shareholders. The record date so fixed shall not be more than 50 days prior to the date of the meeting. When a record date is so fixed, only Shareholders of record on that date are entitled to notice of and to vote at the meeting, notwithstanding any transfer of any shares on the books of the Corporation after the record date. If the Board of Directors does not fix such a record date, only persons in whose names shares entitled to vote stand on the stock records of the Corporation on the day three days prior to any meeting of the Shareholders are entitled to vote at the meeting.

Section 2.07. Votes per share. In the absence of any contrary provision in any statute relating to the election of Directors or to other particular matters, each Shareholder is entitled to one vote for each share. A fraction of a share shall not be entitled to any voting rights whatsoever.

Section 2.08. Cumulative voting. No Shareholder may cumulate his or her votes.

Section 2.09. (a) Voting by personal representatives. The rights of persons in whose names shares stand on the stock records of the Corporation to vote or execute consents is subject to the provisions of this Section of the Bylaws.

(b) Voting by pledgee, trustee, fiduciary. Shares standing in the name of any person as pledgee, trustee, or other fiduciary may be voted and all rights incident thereto may be exercised only by the pledgee, trustee, or other fiduciary, in person or by proxy, and without proof of authority. However, when a trust company has caused shares to be registered in the name of one or more nominees of the trust company, such shares may be voted and all rights incident thereto may be exercised by such nominee or nominees without proof of authority.

(c) Voting by guardian of incompetent. Shares standing in the name of a person adjudged incompetent may be voted and all rights incident thereto may be exercised only by his or her duly appointed or natural guardian, in person or by proxy.

(d) Voting by executor or administrator. Shares standing in the name of a deceased person may be voted and all rights incident thereto may be exercised only by his or her executor or administrator, in person or by proxy.

(e) Voting by guardian of minor. Shares standing in the name of a minor may be voted and all rights incident thereto may be exercised by his or her duly appointed or natural guardian, in person, or by proxy, or in the absence of such representation by such guardian, by the minor, in person or by proxy, whether or not the Corporation has notice, actual or constructive, of the minority status or the appointment of a guardian, and whether or not a guardian has been in fact appointed.

(f) Voting of shares in name of corporation. Shares standing in the name of a corporation, domestic or foreign, may be voted or represented and all rights incident thereto may be exercised on behalf of the corporation by the persons described in any of the following subdivisions:

(1) Any officer of the corporation authorized by the Bylaws of such corporation.

(2) Any person authorized by Resolution of the Board of Directors or of the Executive Committee of such corporation.

(3) Any person authorized to do so by proxy or power of attorney duly executed by the President or Vice President and Secretary or Assistant Secretary of such corporation.

However, such shares may be voted or represented by the persons described in any subdivision only in the absence of vote or representation by the persons described in a preceding subdivision.

(g) Voting shares in names of two or more persons. Shares standing in the names of two or more persons shall be voted or represented in accordance with the vote or consent of the majority of the persons in whose names the shares stand. If only one such person is present in person or by proxy, he or she may vote all the shares, and all the shares standing in the names of such persons are represented for the purpose of determining a quorum. This Bylaw also applies to the voting of shares by two or more administrators, executors, trustees, or other fiduciaries, unless the instrument or order of court appointing them otherwise directs.

Section 2.11. (a) Proxies. Every person entitled to vote or execute consents shall have the right to do so either in person or by one or more agents authorized by a written proxy executed by such person or his duly authorized agent and filed with the Secretary of the Corporation. Any executor, administrator, guardian, trustee or other fiduciary, may give proxies.

(b) Term of proxies. A proxy is not valid after the expiration of 11 months from the date of its execution, unless the person executing it specifies therein the length of time for which such proxy is to continue in force, which in no case shall exceed seven years from the date of its execution.

(c) Revocation and suspension of proxies. Any proxy duly executed is not revoked, and continues in full force and effect, until an instrument revoking it, or a duly executed proxy bearing a later date, is filed with the Secretary of the Corporation. A proxy is not revoked by the death or incapacity of the maker unless, before the vote is counted or the authority is exercised, written notice of the death or incapacity is given to the Corporation. Notwithstanding that a valid proxy is outstanding, the powers of the proxy holder are suspended, except in the case of a proxy coupled with an interest, which states that fact on its face, if the person executing the proxy is present at the meeting and elects to vote in person.

(d) Voting by two or more proxies. If any instrument of proxy designates two or more persons to act as proxy, in the absence of any provision in the proxy to the contrary, the persons designated may represent and vote the shares in accordance with the vote or consent of the majority of the persons named as such proxies. If only one such proxy is present, he or she may vote all the shares, and all the shares standing in the name of the principal or principals for whom such proxy acts shall be deemed represented for the purpose of obtaining a quorum. The foregoing provisions shall also apply to the voting of shares by proxies for any two or more administrators, executors, trustees, or other fiduciaries, unless an instrument or order of court appointing them otherwise directs.

(e) Director's determination of execution and use of proxies. The Board of Directors may, in advance of any annual or special meeting of the Shareholders, prescribe additional regulations concerning the manner of execution and filing of proxies and the validation of the same, which are intended to be voted at any such meeting.

Section 2.12. Consent of absentees. The actions of the Shareholders taken at any meeting of Shareholders, however called and noticed, are as valid as though taken at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy, signs a written waiver of notice if notice was required to be given, or a consent to the holding of the meeting, or an approval by written consent. Executors, administrators, guardians, trustees, and other fiduciaries entitled to vote shares may sign such waivers, consents, and approvals.

Section 2.13. Action without a meeting. Any action which, under any provision of the Nevada General Corporation Law may be taken at any meeting of the Shareholders, may be taken without a meeting if authorized by a writing signed by a majority of the holders of the capital stock of the corporation outstanding. Such writing shall be filed in the Corporate book or with the Secretary of the Corporation. Under no circumstances shall the Corporation be required to provide any Shareholder with written notice of action taken by written consent unless specifically required by Nevada Law.

Section 2.14. Giving and revocation of consents. Written consents with respect to any shares may be given by and shall be accepted from the persons in whose names the shares stand on the books of the Corporation at the time the respective consents are given, or the personal representatives of such persons, or their proxies. Any Shareholder giving a written consent, or his or her proxy, transferee or personal representative, or their respective proxies, may revoke the consent prior to the time that written consents of the number of shares required to authorize the proposed action have been filed with the Secretary of the Corporation, but may not do so thereafter.

Section 2.15. (a) Appointment of inspectors of election. In advance of any meeting of Shareholders, the Board of Directors may appoint any persons, as inspectors of election to act at such meeting or any adjournment thereof. If inspectors of election are not so appointed, the chairman of any such meeting may, and on the request of any Shareholder or his or her proxy shall, appoint inspectors of election at the meeting. The number of inspectors shall be either one or three. If appointed at a meeting on the request of one or more Shareholders or proxies, the majority of shares present shall determine whether one or three inspectors are to be appointed. In case any person appointed as inspector fails to appear or fails or refuses to act, the vacancy may be filled by appointment by the Board of Directors in advance of the meeting, or at the meeting by the person acting as chairman.

(b) Duties of inspectors. The inspectors of election shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, the authenticity, validity, and effect of proxies, receive votes, ballots, or consents, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes or consents, determine the result, and do such acts as may be proper to conduct the election or vote with fairness to all Shareholders. The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical.

(c) Vote of inspectors. If there are three inspectors of election the decision, act, or certificate of two inspectors is effective in all respects as the decision, act, or certificate of all.

(d) Report of inspectors. On request of the chairman of the meeting or of any Shareholder or his proxy the inspectors shall make a report in writing of any challenge or question or matter determined by them and execute a certificate of any fact found by them. Any report or certificate made by them is prima facie evidence of the facts stated therein.

Section 2.16. Conduct of meetings. At every meeting of the Shareholders, the President, or in his absence the Vice President designated by the President, or in the absence of such designation a chairman (who shall be one of the Vice Presidents, if any is present) chosen by a majority of interest of the Shareholders of the Corporation present in person or by proxy and entitled to vote, shall act as chairman. The Secretary of the Corporation, or in his absence an Assistant Secretary, shall act as Secretary of all meetings of the Shareholders. In the absence at such meeting of the Secretary or Assistant Secretary, the chairman may appoint another person to act as Secretary of the meeting.

Article III Directors

Directors defined. ''Directors,'' when used in relation to any power or duty requiring collective action, means ''Board of Directors.''

Section 3.01 Election. Directors shall be elected by a majority vote of Shareholders except for vacancies which may be filed by the Board of Directors as set forth herein/

Section 3.02. Powers. Subject to limitations of the Articles of Incorporation and of the Nevada Corporations Code as to action which shall be authorized or approved by the Shareholders, all corporate powers shall be exercised by or under authority of, and the business and affairs of this Corporation shall be controlled by a Board of not less than one Director.

Section 3.03. Number of Directors. The number of Directors of this Corporation shall be fixed from time to time by the Board of Directors and may be increased or decreased by Resolution adopted by the Board of Directors from time to time.

Section 3.04. Term of office. Each Directors shall hold office until the next annual meeting of Shareholders or until their successors are elected, whichever is later.

Section 3.05. (a) Vacancies. Vacancies in the Board of Directors shall exist in the case of happening of any of the following events: (1) the death, resignation, or removal of any Director; (2) the authorized number of Directors is increased; or (3) at any annual, regular, or special meeting of Shareholders at which any Director is elected, the Shareholders fail to elect the full authorized number of Directors to be voted for at that meeting.

(b) Declaration of vacancy. The Board of Directors may declare vacant the office of a Director in either of the following cases: (1) if such Director is declared of unsound mind by an order of court; or (2) if within 10 days after notice of such Director's election such Director does not accept the office either in writing or by attending a meeting of the Board of Directors.

(c) Filling vacancies by Directors. Vacancies may be filled by a majority of the remaining Directors, though less than a quorum, or by a sole remaining Director. Each Director so elected shall hold office until his or her successor is elected.

Section 3.06. Removal of Directors. The entire Board of Directors or any individual Director may be removed from office by a vote of a majority vote of the Directors.

Section 3.07. Place of meetings. Regular and Special meetings of the Board of Directors shall be held at any place within or without the State of Nevada which has been designated from time to time by the Board. Any regular or special meeting is valid, wherever held, if held on written consent of a majority of the members of the Board given either before or after the meeting and are filed in the corporate book or with the Secretary of the Corporation.

Section 3.08. (a) Call of special meeting. Special meetings of the Board of Directors of this Corporation shall be called by the President, or, if the President is absent or is unable or refuses to act, by any Vice President or by any Directors.

(b) Notice of special meeting. Written notice of the time and place of special meetings of the Board of Directors shall be delivered personally to each Director, or sent to each Director by mail, facsimile or by other form of written communication, at least three days before the meeting. If the address of a Director is not shown on the records and is not readily ascertainable, notice shall be addressed to such Director at the city or place in which the meetings of the Directors are regularly held. Notice of the time and place of holding an adjourned meeting of a meeting need not be given to absent Directors if the time and place are fixed at the meeting adjourned.

(c) Validation of special meeting. The transactions of any special meeting of the Board of Directors, however called and noticed or wherever held, are as valid as though had at a meeting duly held after regular call and notice, if a quorum is present and if, either before or after the meeting, each of the Directors not present signs a written waiver of notice, a consent to holding the meeting, or an approval of the minutes thereof. All such waivers, consents, or approvals shall be filed with the corporate records or made a part of the minutes of the meeting.

Section 3.09. Quorum. A majority of the authorized number of Directors constitutes a quorum of the Board for the transaction of business.

Section 3.10. Majority action. Every act or decision done or made by a majority of the Directors present at any meeting duly held at which a quorum is present is the act of the Board of Directors.

Section 3.11. Action by consent of board without meeting. Any action required or permitted to be taken by the Board of Directors under any provision of the Nevada General Corporation Law may be taken without a meeting, if a majority of the members of the Board shall individually or collectively consent in writing to such action. Such written consent or consents shall be filed within the minutes of the proceedings of the Board. Such action by written consent shall have the same force and effect as a unanimous vote of such Directors.

Section 3.12. (a) Adjournment. In the absence of a quorum a majority of the Directors present may adjourn from time to time until the time fixed for the next regular meeting of the Board.

(b) Notice of adjourned meeting. Notice of the time and place of holding an adjourned meeting of a meeting need not be given to absent Directors if the time and place are fixed at the meeting adjourned.

Section 3.13. Conduct of meetings. At every meeting of the Board of Directors the Chairman of the Board of Directors, if there shall be such an officer, and if not, the President, or in his or her absence, the Vice President designated by the President, or in the absence of such designation, a chairman chosen by a majority of the Directors present, shall preside. The Secretary of the Corporation shall act as Secretary of the Board of Directors. In case the Secretary shall be absent from any meeting, the chairman may appoint any person to act as Secretary of the meeting.

Section 3.15. Compensation. Directors shall receive such compensation for their services as Directors as shall be determined from time to time by Resolution of the Board. Any Director may serve the Corporation in any other capacity as an officer, agent, employee or otherwise and receive compensation therefor.

Section 3.16. Indemnification of Directors and officers. The Corporation shall pay expenses incurred by, or satisfy any judgment or fine rendered or levied against, a present or former Director, officer, or employee of the Corporation in an action brought by a third party against such person, whether or not the Corporation is joined as a party defendant, to impose a liability or penalty on such person for an act alleged to have been committed by such person while a Director, officer, or employee, or by the Corporation, or by both; provided, the Board of Directors determines in good faith that such Director, officer, or employee was acting in good faith within what he or she reasonably believed to be the scope of his or her employment or authority and for a purpose which he or she reasonably believed to be in the best interests of the Corporation or its Shareholders. Payments authorized hereunder include amounts paid and expenses incurred in settling any such action or threatened action. This Section does not apply to any action instituted or maintained in the right of the Corporation by a Shareholder or holder of a voting trust certificate representing shares of the Corporation. The provisions of this Section shall apply to the estate, executor, administrator, heirs, legatees, or devisees of a Director, officer, or employee, and the term ''person'' where used in the foregoing Section shall include the estate, executor, administrator, heirs, legatees, or devisees of such person.

Article IV Officers Section 4.01. Number and titles. The officers of the Corporation shall be a President and Chief Executive Officer, a Vice President and Chief Operating Officer, a Secretary, and a Treasurer and Chief Financial Officer. The Corporation may also have, at the discretion of the Board of Directors, a Chairman of the Board, one or more additional Vice Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers as may be appointed in accordance with the provisions of Section 4.03 of this Article. One person may hold two or more offices,. In its discretion, the Board of Directors may leave any office unfilled for any period it may fix.

Section 4.02. Election. The officers of the Corporation shall be chosen by the Board of Directors, and each shall hold office until such officer shall resign or shall be removed or otherwise disqualified to serve, or his or her successor shall be elected and qualified.

Section 4.03. Subordinate officers. The Board of Directors may appoint such other officers or agents as the business of the Corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided in the Bylaws or as the Board of Directors may from time to time determine. The Board of Directors may delegate to any officer or committee the power to appoint any such subordinate officers, committees, or agents, to specify their duty and authority to determine their compensation.

Section 4.04. Removal and resignation. Any officer may be removed, either with or without cause, by a majority of the Directors at the time in office, at any regular or special meeting of the Board, or, except in case of an officer chosen by the Board of Directors, by any committee or officer upon whom such power of removal may be conferred by the Board of Directors. Any officer may resign at any time by giving written notice to the Board of Directors or to the President, or to the Secretary of the Corporation. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Section 4.05. Vacancies. If the office of the President, Vice President, Secretary, Treasurer, Assistant Secretary, or Assistant Treasurer becomes vacant by reason of death, resignation, removal, or otherwise, the Board of Directors shall elect a successor who shall hold office for the unexpired term, and/or until his or her successor is elected.

Section 4.06. Chairman of the Board. The Chairman of the Board, if there shall be such an officer, shall, if present, preside at all meetings of the Board of Directors and exercise and perform such other powers and duties as may be from time to time assigned to him by the Board of Directors or prescribed by the Bylaws.

Section 4.07. President. The President shall be the Chief Executive Officer of the Corporation and shall, subject to the control of the Board of Directors, have general supervision, direction, and control of the business and officers of the Corporation, and shall have the general powers and duties of management usually vested in the office of President of a corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors or the Bylaws.

Section 4.08. Vice president. In the absence or disability of the President, the Vice Presidents, in order of their rank as fixed by the Board of Directors or, if not ranked, the Vice President designated by the Board of Directors, shall perform all the duties of the President, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President. The Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors or the Bylaws.

Section 4.09. Secretary. The Secretary shall:

(a) Certify Bylaws. Certify and keep at the principal office of the Corporation the original or a copy of its Bylaws as amended or otherwise altered to date.

(b) M inutes of meetings. Keep at the principal office of the Corporation or such other place as the Board of Directors may order, a book of minutes of all meetings of its Directors and Shareholders, executive committee, and other committees, with the time and place of holding, whether regular or special, and, if special, how authorized, any notice thereof given, the names of those present at Directors' meetings, the number of shares or members present or represented at Shareholders' meetings, and the proceedings thereof.

(c) Notices. See that all notices are duly given in accordance with the provisions of these Bylaws or as required by law. In case of the absence or disability of the Secretary, or refusal or neglect to act, notice may be given and served by an Assistant Secretary or by the President or Vice President or by the Board of Directors.

(d) Custodian of records and seal. Be custodian of the records and of the seal of the Corporation and see that it is engraved, lithographed, printed, stamped, impressed upon or affixed to all certificates for shares prior to their issuance and to all documents, the execution of which on behalf of the Corporation under its seal is duly authorized in accordance with the provisions of these Bylaws.

(e) Share register. Keep at the principal office of the Corporation a share register showing the names of the Shareholders and their addresses; the number and date of certificates issued for the same; and the number and date of cancellation of each certificate surrendered for cancellation.

(f) Reports and statements. See that the books, reports, statements, certificates, and all other documents and records required by law are properly kept and filed.

(g) Exhibit records. Exhibit at all reasonable times to any Directors, or Shareholders, upon application, the Bylaws, the share register, and minutes of proceedings of the Shareholders and Directors of the Corporation.

(h) Other duties. In general, perform all duties incident to the office of Secretary, and such other duties as from time to time may be assigned to him by the Board of Directors.

(j) Absence of secretary. In case of the absence or disability of the Secretary or his refusal or neglect to act, the Assistant Secretary, or if there be none, the Treasurer, acting as Assistant Secretary, may perform all of the functions of the Secretary. In the absence or inability to act, or refusal or neglect to act of both the Secretary, the Assistant Secretary, and Treasurer, any person thereunto authorized by the President or Vice President or by the Board of Directors may perform the functions of the Secretary.

Section 4.10. Assistant secretary. At the request of the Secretary, or in his or her absence or disability, the Assistant Secretary, designated by the Secretary, shall perform all the duties of the Secretary, and when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Secretary. The Assistant Secretary shall perform such other duties as from time to time may be assigned by the Board of Directors, or the Secretary.

Section 4.11. Treasurer. The Treasurer and Chief Financial Officer shall:

(a) Funds--custody and deposit. Have charge and custody of, and be responsible for, all funds and securities of the Corporation, and deposit all such funds in the name of the Corporation in such banks, trust companies or other depositaries as shall be selected by the Board of Directors.

(b) Funds--receipt. Receive, and give receipt for, moneys due and payable to the Corporation from any source whatever.

(c) Funds--disbursement. Disburse or cause to be disbursed, the funds of the Corporation as may be directed by the Board of Directors, taking proper vouchers for such disbursements.

(d) Maintain accounts. Keep and maintain adequate and correct accounts of the Corporation's properties and business transactions, including account of its assets, liabilities, receipts, disbursements, gains, losses, capital, surplus, and shares. Any surplus, including earned surplus, paid-in surplus, and surplus arising from a reduction of stated capital, shall be classified according to source and shown in a separate account.

(e) Exhibit records. Exhibit at all reasonable times the books of account and records to any Shareholder or Director, upon application, during business hours at the office of the Corporation where such books and records are kept. Notwithstanding the foregoing, the Treasurer shall not exhibit the books of account and records to a Shareholder if such Shareholder's purpose for seeking such information is contrary to the best interests of the Corporation.

(f) Reports to President and Directors. Render to the President and Directors, whenever they request it, an account of all transactions as Treasurer and of the financial condition of the Corporation.

(g) Financial reports to Shareholders. Prepare, or cause to be prepared, and certify the financial statements to be included in the annual report to Shareholders and statements of the affairs of the Corporation when requested by Shareholders holding at least 10 percent of the number of outstanding shares of the Corporation.

(h) Bond. Give to the Corporation a bond, if required by the Board of Directors or by the President, in a sum, and with one or more sureties, or a surety company satisfactory to the Board, for the faithful performance of the duties of the office and for the restoration to the Corporation, in case of the death, resignation, retirement, or removal from office, of all books, papers, vouchers, money, or other property of whatever kind in his possession or under his control belonging to the Corporation.

(i) Other duties. In general, perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned by the Board of Directors.

(j) Absence of Treasurer. In case of the absence or disability of the Treasurer or his refusal or neglect to act, the Assistant Secretary or the Secretary acting as Assistant Treasurer, may perform all of the functions of the Treasurer. In the absence or inability to act, or refusal or neglect to act, of both the Treasurer and the Secretary, any person thereunto authorized by the President or Vice President or by the Board of Directors may perform the functions of the Treasurer.

Section 4.12. Assistant Treasurer. The Assistant Treasurer, if required so to do by the Board of Directors, shall respectively give bonds for the faithful discharge of the duties of the office, in such sums, and with such sureties as the Board of Directors shall require. At the request of the Treasurer, or in his or her absence or disability, the Assistant Treasurer designated by the Treasurer shall perform all the duties of the Treasurer, and when so acting, shall have all the powers of, and be subject to all the restrictions, upon the Treasurer. The Assistant Treasurer shall perform such other duties as from time to time may be assigned by the Board of Directors or the Treasurer.

Section 4.13. (a) Executive committees. The Board of Directors may, by Resolution passed by the affirmative vote of a majority of the members constituting the Board of Directors, designate two or more of its number to constitute an Executive Committee and delegate to such Committee, subject to the control of the Board, any of the powers and authority of the Board in the management of the business and affairs of the Corporation, except the power to declare dividends and to adopt, amend, or repeal the Bylaws. The Board of Directors, by such affirmative vote, may at any time modify or revoke any or all of the authority so delegated to such Committee, change the number of such Committee, and fill vacancies in the Committee from the members of the Board. Such Committee shall have power to determine the form of its organization and to establish such rules and regulations covering its proceedings and meetings as it shall see fit; provided, however, that a reasonable notice of all meetings of the Committee shall be given the members thereof, and no acts of the Committee shall be valid unless approved by the affirmative vote or consent of a majority of the Committee. The Committee shall keep regular minutes of its proceedings, and report the same to the Board of Directors from time to time.

(b) Other committees. The Board of Directors, by an affirmative vote of a majority of the members constituting the Board of Directors, may appoint other committees which shall have and may exercise such powers as shall be conferred or authorized by Resolution of the Board. A majority of any such committee may determine its action and fix the time and place of its meetings unless the Board of Directors shall otherwise provide. The Board of Directors, by such affirmative vote, shall have power at any time to change the powers and members of any such committees, to fill vacancies and to dispose of any such committee.

Section 4.14. Salaries. The salaries of the officers shall be fixed from time to time by the Compensation Committee and subject to approval of the Board of Directors, and no officer shall be prevented from receiving such salary by reason of the fact that he is also a Director of the Corporation.

Article V Execution of Instruments and Deposit of Funds

Section 5.01. Authority for execution of contracts and instruments. The Board of Directors, except as otherwise provided in these Bylaws, may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances; and, unless so authorized, no officer, agent, or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable pecuniarily for any purpose or in any amount.

Section 5.02. Instruments containing corporate seal. Unless otherwise specifically determined by the Board of Directors or otherwise required by law, formal contracts of the Corporation, promissory notes, deeds of trust, mortgages, security agreements, and other evidences of indebtedness of the Corporation, and other corporate instruments or documents requiring the corporate seal, and certificates of shares of stock owned by the Corporation, shall be executed, signed, or endorsed by the President or any Vice President and by the Secretary or the Treasurer, or any Assistant Secretary or Assistant Treasurer.

Section 5.03. (a) Bank accounts and deposits. All funds of the Corporation shall be deposited from time to time to the credit of the Corporation with such banks, bankers, trust companies, or other depositories as the Board of Directors may select or as may be selected by any officer or officers, agent or agents of the Corporation to whom such power may be delegated from time to time by the Board of Directors.

(b) Endorsements without countersignature. Endorsements for deposit to the credit of the Corporation in any of its duly authorized depositaries may be made without countersignature by the President or any Vice President, or the Treasurer or any Assistant Treasurer, or by any other officer or agent of the Corporation to whom the Board of Directors, by Resolution, shall have delegated such power, or by hand-stamped impression in the name of the Corporation.

(c) Signing of checks, drafts, etc. All checks, drafts, or other order for payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the Corporation, shall be signed or endorsed by such person or persons and in such manner as shall be determined from time to time by Resolution of the Board of Directors.

Article VI Issuance and Transfer of Shares

Section 6.01. Classes and series of shares. The Corporation may issue one or more classes or series of shares, or both, any of which classes or series may be with par value or without par value, and with full, limited, or no voting rights, and with such other preferences, rights, privileges, and restrictions as are stated or authorized in the Articles of Incorporation. All shares of any one class shall have the same voting rights, conversion, redemption, and other rights, preferences, privileges, and restrictions, unless the class is divided into series. If a class is divided into series, all the shares of any one series shall have the same voting rights, conversion, redemption, and other rights, preferences, privileges, and restrictions. There shall always be a class or series of shares outstanding which has complete voting rights except as limited or restricted by voting rights conferred on some other class or series of outstanding shares.

Section 6.02. Qualification of securities. The Corporation shall not offer or sell in the State of Nevada any security issued by it, whether or not by or through underwriters, unless such sale has been qualified by the Commissioner of Corporations unless the security or the transaction is exempted from qualification.

Section 6.03. (a) Certificates for fully paid shares. The Corporation shall issue shares when fully paid.

(b) Certificates for partly paid shares. The Corporation may issue certificates for shares prior to full payment under such restrictions as the Board of Directors may provide and the Commissioner of Corporations approve. The certificates of shares issued prior to full payment shall state the amount remaining unpaid and the terms of payment thereof. As a condition of transfer on the books of the Corporation of shares issued prior to full payment, full payment of the purchase or subscription price shall be made prior to the transfer.

Section 6.04. (a) Consideration for shares. No shares of stock, with or without par value, shall be issued by the Corporation except in consideration of any or all of the following:

(1) Money paid;

(2) Labor done;

(3) Services actually rendered;

(4) Debts or securities canceled;

(5) Tangible or intangible property actually received by the Corporation;

(6) Amounts transferred from surplus to stated capital on the issue of shares as a dividend;

(7) Amounts transferred from surplus to stated capital on a stock split, reverse stock split, reclassification of outstanding shares into shares of another class, conversion of outstanding shares into shares of another class, exchange of outstanding shares for shares of another class, increase in the per-share par value, or other change affecting outstanding shares, which results in an increase in the aggregate par value of the outstanding shares.

(b) Consideration for no-par shares. The consideration to be received by the Corporation for the issue of shares without par value shall be such as may be determined to be reasonable by the Board of Directors.

Section 6.05. (a) Contents of share certificates. Certificates for shares shall be of such form and style, printed or otherwise, as the Board of Directors may designate, and each certificate shall state all of the following facts:

(1) The certificate number;

(2) The date of issuance;

(3) The name of the record holder of the shares represented thereby;

(4) The number of shares, and a designation, if any, of the class or series, represented thereby;

(5) The par value, if any, of the shares represented thereby, or a statement that the shares are without par value.

(b) Shares in classes or series. If the shares of the Corporation are classified or if any class of shares has two or more series, the certificate shall contain one of the following:

(1) A statement of the rights, preferences, privileges, and restrictions granted to or imposed on the respective classes or series of shares and on the holders thereof as established by the Articles or by any certificate of determination of preferences, and the number of shares constituting each series and the designation thereof;

(2) A summary of such preferences, privileges, and restrictions of proper references to the provisions of the Articles or certificate or certificates of determination of preferences establishing the same;

(3) A statement setting forth the office or agency of the Corporation from which Shareholders may obtain a copy of the statement mentioned in subdivision (1) or the summary mentioned in subdivision (2).

(c) Determination of preferences by Directors. If the Board of Directors has authority to fix the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), the redemption price or prices, or the liquidation preferences of any wholly unissued class or of any wholly unissued series of any class of shares, or the number of shares constituting any unissued series or any class of shares, or designations of such series, or all of them, the certificates shall also contain a statement of that fact.

(d) Preferences, privileges, or restrictions. Each certificate shall also contain the statements required by all of the following subdivisions, as far as they are applicable:

(1) If the shares are redeemable, a statement of that fact and the redemption price;

(2) If the shares are convertible, a general statement of the essential terms and method for conversion;

(3) If the shares are subject to liens or to restrictions on transfer or on voting power, the fact shall be indicated;

(4) If the shares are assessable, or if assessments are collectible by personal action, the fact shall be plainly stated on the face of the certificate.

Section 6.06. Signing certificates--facsimile signatures. All such certificates shall be signed by the President or Vice President and the Secretary or an Assistant Secretary, or be authenticated by facsimiles of the signatures of the President and Secretary or by a facsimile of the signature of the President and the written signature of the Secretary or an Assistant Secretary. Every certificate authenticated by a facsimile of a signature must be countersigned by a transfer agent or transfer clerk, or by the facsimile signature of the transfer agent or transfer clerk, and be registered by an incorporated bank or trust company, either domestic or foreign, as registrar of transfers, before issuance. Even though an officer who signed, or whose facsimile signature has been written, printed or stamped on, a certificate for shares shall have ceased by death, resignation, or otherwise to be an officer of the Corporation before such certificate is delivered by the Corporation, such certificate shall be as valid as though signed by a duly elected, qualified, and authorized officer, if it be countersigned by a signature or facsimile signature of a transfer agent or transfer clerk and registered by an incorporated bank or trust company as registrars of transfers.

Section 6.07. Cancellation and exchange of certificates. When the Articles are amended in any way affecting the statement contained in the certificates for outstanding shares, or, it becomes desirable for any reason to cancel any outstanding certificate for shares and issue a new certificate therefor conforming to the rights of the holder, the Board of Directors may order any holders of outstanding certificates for shares to surrender and exchange them for new certificates within a reasonable time to be fixed by the Board of Directors. The order may provide that a holder of any certificates so ordered to be surrendered is not entitled to vote or to receive dividends or to exercise any of the other rights of Shareholders of record until he has complied with the order, but such order shall operate to suspend such rights only after notice and until compliance.

Section 6.08. (a) Replacement of lost or destroyed certificates. Where the holder of a share certificate claims that the certificate has been lost, destroyed, or wrongfully taken, the Corporation shall issue a new certificate in place of the original certificate if the owner so requests before the Corporation has notice that the share has been acquired by a bona fide purchaser; and files with the Corporation a sufficient indemnity bond; and satisfies any other reasonable requirements imposed by the Board of Directors.

(b) Transfer of shares before replacement. Where a share certificate has been lost, apparently destroyed, or wrongfully taken and the owner fails to notify the Corporation of that fact within a reasonable time after he has notice of it, and the Corporation registers a transfer of the share represented by the security before receiving such a notification, the owner is precluded from asserting against the Corporation any claim for registering the transfer or any claim to a new security.

(c) Transfer after replacement. If, after the issue of a new security as a replacement for a lost, destroyed, or wrongfully taken certificate, a bona fide purchaser of the original certificate presents it for registration of transfer, the Corporation must register the transfer unless registration would result in overissue. In addition to any rights on the indemnity bond, the Corporation may recover the new security from the person to whom it was issued or any person taking under him except a bona fide purchaser.

Section 6.09. Transfer agents and registrars. The Board of Directors may appoint one or more transfer agents or transfer clerks, and one or more registrars which shall be an incorporated bank or trust company, either domestic or foreign, who shall be appointed at such times and places as the requirements of the Corporation may necessitate and the Board of Directors may designate.

Section 6.10. Conditions of transfer. A person in whose name shares of stock stand on the books of the Corporation shall be deemed the owner thereof as regards the Corporation; provided that whenever any transfer of shares shall be made for collateral security, and not absolutely, and written notice thereof shall be given to the Secretary of the Corporation or its transfer agent, if any, such fact shall be stated in the entry of the transfer. When a transfer of shares is requested and there is reasonable doubt as to the right of the person seeking the transfer, the Corporation or its transfer agent, before recording the transfer of the shares on its books or issuing any certificate therefor, may require from the person seeking the transfer reasonable proof of his or her right to the transfer. If there remains a reasonable doubt of the right to the transfer, the Corporation may refuse a transfer unless the person gives adequate security or a bond of indemnity executed by a corporate surety or by two individual sureties satisfactory to the Corporation as to form, amount, and responsibility of sureties. The bond shall be conditioned to protect the Corporation, its officers, transfer agents, and registrars, or any of them, against any loss, damage, expense, or other liability to the owner of the shares by reason of the recordation of the transfer or the issuance of a new certificate for shares.

Article VII Corporate Records, Reports, and Seal

Section 7.01. Minutes of corporate meetings. The Corporation shall keep at the principal office, or such other place as the Board of Directors may order, a book of minutes of all meetings of its Directors and of its Shareholders or members, with the time and place of holding, whether regular or special, and, if special, how authorized, the notice thereof given, the names of those present at Directors' meetings, the number of shares or members present or represented at Shareholders' or members' meetings, and the proceedings thereof.

Section 7.02. Books of account. The Corporation shall keep and maintain adequate and correct accounts of its properties and business transactions, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, surplus, and shares. Any surplus, including earned surplus, paid-in surplus, and surplus arising from a reduction of stated capital, shall be classified according to source and shown in a separate account.

Section 7.03. Share register. The Corporation shall keep at the principal office, or at the office of the transfer agent, a share register, showing the names of the Shareholders and their addresses, the number of classes of shares held by each, and the number and date of certificates issued for shares, and the number and date of cancellation of every certificate surrendered for cancellation. The above specified information may be kept by the Corporation on magnetic tape, or other information storage device related to electronic data processing equipment provided that such card, tape, or other equipment is capable of reproducing the information in clearly legible form for the purposes of inspection as provided in Section 7.04 of these Bylaws.

Section 7.04. (a) Inspection of records by Shareholders. The share register or duplicate share register, the books of account, and minutes of proceedings of the Shareholders and the Board of Directors and of the Executive Committee of the Directors of the Corporation shall be open to inspection upon the written demand of any Shareholder or holder of a voting trust certificate at any reasonable time, for a purpose reasonably related to his or her interests as a Shareholder or as the holder of such voting trust certificate (and not for a purpose contrary to the best interests of the corporation), and shall be exhibited at any time when required by the demand at any Shareholders' meeting of 10 percent of the shares represented at the meeting. Such inspection by a Shareholder or holder of a voting trust certificate may be made in person or by agent or attorney, and the right of inspection includes the right to make extracts. Demand of inspection other than at a Shareholders' meeting shall be made in writing upon the President, Secretary, Assistant Secretary, or General Manager of the Corporation.

(b) Inspection of records by Directors. Every Director shall have the absolute right at any reasonable time to inspect all books, records, documents of every kind, and the physical properties of the Corporation, and also of its subsidiary corporations, domestic or foreign. Such inspection by a Director may be made in person or by agent or attorney, and the right of inspection includes the right to make extracts.

Section 7.05. (a) Annual report to Shareholders. The Board of Directors shall cause an annual report to be sent to the Shareholders not later than 120 days after the close of the fiscal or calendar year.

(b) Contents of annual report. The annual report shall include the following financial statements:

(1) A balance sheet as of such closing date;

(2) A statement of income or profit and loss for the year ended on such closing date.

Such financial statements shall be prepared from the books and shall be in accordance therewith and shall be certified by the President, Secretary, Treasurer, or a public accountant. They shall be prepared in a form sanctioned by sound accounting practice for the particular kind of business carried on by the Corporation.

(1) The bases employed in stating the valuation of the assets and any changes in such bases during the preceding year;

(2) The amount of the surplus, the sources thereof, and any changes therein during the past year;

(3) The number of shares of each class of stock authorized and outstanding and the number of shares, if any, carried as treasury shares, the cost thereof, and the source from which such cost was paid;

(4) The amounts, if any, of loans or advances to or from officers, Shareholders, and employees.

(d) Income statement. The statement of income or profit and loss shall be of such form as to disclose the amount of income or loss, in such classification as may be appropriate to the business of the Corporation, and the additions thereto and deductions therefrom, setting forth in particular the amounts of depreciation, depletion, amortization, interest, and extraordinary income or charges, whether or not included in operating income, and the amount and nature of income from subsidiary corporations.

(e) Special financial reports to Shareholders. Shareholders holding at least 10 percent of the number of outstanding shares of the Corporation may make a written request to the Secretary, Assistant Secretary, or Treasurer of the Corporation for a statement of its affairs in case no full or adequate statement has been given in written form to its Shareholders within the preceding six months.

The statement shall be certified by the President, Secretary, Treasurer, or a public accountant and shall be delivered or mailed to the persons making the request within 30 days thereafter. A copy of the statement shall be kept on file in the principal office of the Corporation for 12 months, and it shall be exhibited at all reasonable times to any Shareholder demanding an examination of it, or a copy shall be mailed to such Shareholder.

The financial statement to Shareholders shall be in the form prescribed for the annual report insofar as such form may be applicable to a balance sheet at a date other than the end of the fiscal year and to a statement of income and profit or loss for a period less than a full fiscal year. The balance sheet shall be as of the end of the calendar month preceding the date of receipt of the written request. The statement of income and profit or loss shall be for the period between the end of the preceding fiscal year and the end of such preceding calendar month.

(f) Request for latest financial statement. Upon the written request of any Shareholder, the Corporation shall mail to him a copy of the last annual, semiannual, or quarterly profit and loss statement and balance sheet, together with a copy of the certificate, if any, of the Corporation's auditors on the statement and balance sheet.

Section 7.06. (a) Record date for dividends or changes in shares. The Board of Directors may fix a time in the future as a record date for the determination of the Shareholders entitled to receive any dividend or distribution, or any allotment of rights, or to exercise rights in respect to any change, conversion, or exchange of shares. The record date so fixed shall be not more than 40 days prior to the date or event for the purposes of which it is fixed. When a record date is so fixed, only Shareholders of record on that date are entitled to receive the dividend, distribution, or allotment of rights, or to exercise the rights, as the case may be, notwithstanding any transfer of any shares on the books of the Corporation after the record date.

(b) Closing stock transfer books. The Board of Directors may close the books of the Corporation against transfers of shares during the whole or any part of the period of not more than 40 days prior to the date when the right to any dividend, distribution, or allotment of rights vests, or the effective date of any change, conversion, or exchange of shares.

Section 7.07. Corporate seal. The Board of Directors may adopt, use, and at will alter, a corporate seal, but failure to affix a seal does not affect the validity of any instrument.

Article VIII Certification, Inspection, and Amendment of Bylaws

Section 8.01. Certification and inspection of bylaws. The Corporation shall keep in its principal office for the transaction of its business the original or a copy of the Bylaws as amended or otherwise altered to date, certified by the Secretary of the Corporation, which shall be open to inspection by the Shareholders at all reasonable times during office hours.

Section 8.02. Adoption, amendment, repeal by Directors. These Bylaws may be adopted, amended, or repealed by the Board of Directors, provided such Bylaws as adopted or amended are not in conflict with the Articles of Incorporation or with law, and provided that the Board of Directors.

Exhibit 10.1

BAYTEX

ENERGY LTD.

December 19, 2002

979708 Alberta Ltd.

800, 605 - 5th Avenue S.W.

Calgary, Alberta

T2P 3H5

Attention: Vice President, Land

Dear Sir or Madam:

Re:

Overriding Royalty Agreement

Townships 91 & 92 Ranges 12 & 13 W5M (the “Lands”)

Sawn Lake Area, Alberta

Baytex Energy Partnership (hereinafter referred to as “Baytex”) reserved an Overriding Royalty Interest in the Lands, in consideration of entering into that certain Petroleum, Natural Gas and Related Rights Conveyance dated December 19, 2002:

1. Definitions :

Each capitalized term used in this Head Agreement will have the meaning given to it in the amended C.A.P.L. 1997 Overriding Royalty Procedure (hereinafter referred to as the “Overriding Royalty Procedure”, and, in addition:

“Royalty Owner” means Baytex Energy Partnership;

“Royalty Payor” means 979708 Alberta Ltd.;

“Royalty Lands” means the lands set forth and described in Schedule “A”.

2. Schedules :

The following schedules are attached hereto and made a part of this Agreement:

Schedule “A” which describes the Royalty Lands, Title Documents, and Encumbrances; and

Suite 2200, 205 - 5TH Ave. S.W., Calgary Alta. T2P 2V7

Tel. (403) 269-4282

Fax (403) 267-0777

Overriding Royalty Agreement

Dated December 19, 2002

Page 2

Schedule “B” which is the Overriding Royalty Procedure.

3. Royalty:

Effective December 1, 2002, Royalty Payor grants to Royalty Owner the following royalty payable on the Royalty Lands:

a 5% non-convertible overriding royalty on 100% production as provided for in Article 2.00 of the Overriding Royalty Procedure.

4. Address for Service :

The Addresses for Service hereunder of each of the respective Parties shall be as follows:

Baytex Energy Partnership

2200, 205 - 5 ^th Avenue S.W.

Calgary, Alberta T2P 2V7

Attention: Vice President Land

Phone: (403) 269-4282

Fax: (403) 267-0771; and

979708 Alberta Ltd.

800, 605 - 5 ^th Avenue S.W.

Calgary, Alberta T2P 3H5

Attention: Vice President. Land

Phone: (403) 260-8776

Fax: (403) 260-6701.

Any Party may change its respective Address for Service by serving written notice to the other Party.

5. Miscellaneous :

Nothing in this Agreement is to be construed as an express or implied covenant by the Royalty Payor to develop the Royalty Lands:

Overriding Royalty Agreement

Dated December 19, 2002

Page 3

6. Limitations Act :

The two year period for seeking a remedial order under section 3(1)(a) of the Limitations Act , S.A. 1996 c. L-15.1, as amended, for any claim (as defined in that Act ) arising in connection with this Agreement is extended to:

for claims disclosed by an audit, two years after the time this Agreement permitted that audit to be performed; or

for all other claims, four years.

7. Counterpart Execution :

This Agreement may be executed in counterpart. All of those executed counterpart pages when taken together will constitute the Agreement.

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

BAYTEX ENERGY PARTNERSHIP

By its managing partner,

BAYTEX ENERGY LTD.		979708 ALBERTA LTD.
(the “Royalty Owner”)		(the “Royalty Payor”)

/s/ Dan Horner		/s/ Michael B. Holley
Dan Horner, LL.B.		Michael B. Holley
Vice President, Land		Director

This is Schedule “A” attached to and forming part of an Overriding Royalty Agreement

dated December 19, 2002 between Baytex Energy Partnership and 979708

Alberta Ltd.

Title Documents	Lands	Interest	Encumbrances

Crown PNG Licence 5495030101	91-13 W5M: Sections N28; 32; 33; 34 92-13 W5M: Sections 3; 4; 5 All PNG Expiry: March 2, 2003	100%	Crown LOR 5% Non-convertible ORR payable to Baytex Energy Partnership by 979708 Alberta Ltd.
Crown PNG Licence 5495040066	91-12 W5M: Sections 9; 10; 15; 16; 17; SE 20; 21; 22 All PNG Expiry: April 13, 2004	100%	Crown LOR 5% Non-convertible ORR payable to Baytex Energy Partnership by 979708 Alberta Ltd.

Schedule B

OVERRIDING ROYALTY PROCEDURE

CAPL

CANADIAN ASSOCIATION OF PETROLEUM LANDMEN

1997

TABLE OF CONTENTS

1.00	DEFINITIONS AND INTERPRETATION
	1.01	Definitions	1
	1.02	Incorporation of Provisions From 1990 CAPL Operating Procedure	2
	1.03	Multiple Royalty Owner Parties	3
	1.04	Multiple Royalty Payor Parties	3
	1.05	Modifications to CAPL Document Form	3

2.00	OVERRIDING ROYALTY
	2.01	Quantification of Overriding Royalty	3
	2.02	Effect of Pooling Or Unitization On Calculation	4
	2.03	Royalty Owner’s Right To Take Overriding Royalty In Kind	4
	2.04	Royalty Payor’s Allowed Deduction If Overriding Royalty Not Taken In Kind	5
	2.05	Royalty Payor To Account To Royalty Owner Monthly	6
	2.06	Royalty Owner’s Lien	6
	2.07	Royalty Wells To Be Produced Equitably	6
	2.08	Royalty Owner’s Rights Upon Surrender	6
	2.09	Audits of Overriding Royalty	6

3.00	WELL INFORMATION TO ROYALTY OWNER
	3.01	Royalty Owner’s Notification	7

4.00	LIABILITY AND INDEMNITY
	4.01	Royalty Payor’s Responsibility	7
	4.02	Royalty Owner’s Responsibility	7

5.00	ASSIGNMENT
	5.01	Incorporation Of Assignment Procedure	7

6.00	DEFAULT
	6.01	Royalty Owner’s Default Remedies	7

7.00	RESERVED FORMATIONS
	7.01	Royalty Owner’s Access To Reserved Formations	8

8.00	DISPUTE RESOLUTION
	8.01	Disputes Initially Referred to Mediation	8

OVERRIDING ROYALTY PROCEDURE

Schedule B attached to and forming part of the PNG & Related Rights Conveyance Agreement dated the 19 ^th day of December A.D. 2002, between/among Baytex Energy Partnership, Baytex Energy Ltd. and 979708 Alberta Ltd.

1.00

DEFINITIONS AND INTERPRETATION

1.01

Definitions

In this Overriding Royalty Procedure:

(a)

“ Agreement ” means the Head Agreement and the Schedules attached to it.

(b)

“ Effective Date ” means December 1, 2002

(c)

“ Facility Fees ” means, as applicable:

(i)

for Facility Usage of facility capacity owned by third parties (other than Affiliates of the Royalty Payor), all costs and expenses paid by the Royalty Payor for that Facility Usage; and

(ii)

for Facility Usage of facility capacity owned by the Royalty Payor (or an Affiliate of the Royalty Payor), an expense equal to a fee (comprised of both operating and return on capital components) in accordance with (1) or (2) below:

(1)

the fee ordinarily chargeable for the same use as the Facility Usage, if that facility is made available for use by third parties; or

(2)

in all other circumstances, a fee sufficient to cover that use of facilities, where the capital recovery component of that fee uses as a guideline the PJVA Jumping Pound-95 methodology and where the operating cost component is calculated and assessed on the basis of facility throughput costs;

provided that any dispute respecting the Facility Usage fee will be resolved under Clause 8.01.

(d)

“ Facility Usage ” means the Royalty Payor’s use of facilities beyond those included in Equipping Costs to make merchantable and to deliver to market Petroleum Substances produced from a Royalty Well, including, as applicable, the gathering, compression, treatment, processing and transportation of those Petroleum Substances, but excluding any basis adjustments made in the determination of the Market Price of natural gas.

(e)

“ Head Agreement ” means the Agreement, other than the Schedules.

(f)

“ Overriding Royalty ” means that interest in a portion of the Petroleum Substances within, upon, under or attributed to the Royalty Lands that is reserved by or granted to the Royalty Owner pursuant to the Head Agreement, as more particularly outlined in Article 2.00.

(g)

“ Overriding Royalty Procedure ” means this Schedule.

(h)

“ Royalty Determination Point ” means the first point at which Petroleum Substances are or can be metered, measured or allocated downstream of the wellhead after, as applicable: (i) any treatment of crude oil for the separation, removal and disposal of basic sediment and water; (ii) any extraction of liquid hydrocarbons from natural gas at the wellhead and any wellsite separation, removal and disposal of basic sediment and water from those liquid hydrocarbons; and (iii) any wellsite dehydration of natural gas.

(i)

“ Royalty Lands ” means the areal, stratigraphic and substance rights described as “Royalty Lands” in Schedule “A” of the Agreement or made subject to the Overriding Royalty in the manner outlined in the Head Agreement, as the case may be, and so much of those rights as remain subject to the Agreement and the Title Documents, excluding any Reserved Formations.

(j)

“ Royalty Owner ” has the meaning set forth in the Head Agreement.

(k)

“ Royalty Payor ” has the meaning set forth in the Head Agreement.

(l)

“ Reserved Formations ” means any rights not included in the Royalty Lands that are held under the Title Documents.

(m)

“ Royalty Well ” means any well from which production is obtained from the Royalty Lands or may be allocated to the Royalty Lands pursuant to a pooling, unit or other arrangement.

(n)

“ Title Documents ” means the documents of title described as “Title Documents” in Schedule “A” to the Agreement, insofar as they relate to the Royalty Lands, and all renewals, extensions, continuations or documents of title issued in substitution or by selection.

1.02

Incorporation Of Provisions From 1990 CAPL Operating Procedure

The following provisions of the standard form 1990 CAPL Operating Procedure are incorporated herein by reference, as may be modified below:

101	(c)	“Affiliate”;
	(m)	“equipping costs”, which are referred to as “Equipping Costs”;
	(s)	“market price”, which is referred to as “Market Price”, in which the phrase “Article VI” is replaced with “Subclause 2.03D” and at the end of which is added: However, for natural gas, this price will be the weighted 1 month spot index price for the specific month in which that natural gas was produced, as reported in the publication titled “Canadian Gas Price Reporter” in the table “Monthly Canadian and U.S. natural gas price summary” under the column for that specific delivery month and the row “Alberta Spot Price-AECO C/NIT C$/GJ”, subject to reasonable basis adjustments between the point of delivery to the applicable pipeline transportation system and the point at which the index price applies, provided that if that publication or that index cease to exist, the price will be determined in accordance with the previous sentence, unless otherwise agreed by the Parties.;
	(v)	“party”, which is referred to as “Party”;
	(y)	“ petroleum substances”, which are referred to as “Petroleum Substances”;
	(bb)	“Regulations”;
	(cc)	“spacing unit”, which is referred to as “Spacing Unit”;
	(dd)	“spud”, which is referred to as “Spud” and in which the phrase “in the AFE” is deleted; and
	(ff)	“working interest”, which is referred to as “Working Interest” and in which the phrase “a production facility or” is deleted.
102	HEADINGS
103	REFERENCES
105	DERIVATIVES
106	USE OF CANADIAN FUNDS
107	CONFLICTS, with “Article 4.00” replacing the phrase “Article IV hereof” in the seventh line.
304	PROPER PRACTICES IN OPERATIONS
305	BOOKS, RECORDS AND ACCOUNTS
306	PROTECTION FROM LIENS

	308	SURFACE RIGHTS
	309	MAINTENANCE OF TITLE DOCUMENTS, with the addition at the end of the first sentence of Subclause 309(b) of: “, provided that the Royalty Payor is not obligated to consult in this manner with a Royalty Owner”.
	2001	WAIVER MUST BE IN WRITING
	2101	PARTIES TO SUPPLY
	2201	SERVICE OF NOTICE
	2202	ADDRESSES FOR NOTICES - The Parties’ Addresses for Service will be as set forth in the Head Agreement.
	2203	RIGHT TO CHANGE ADDRESS
	2403	MULTIPLE ASSIGNMENT NOT TO INCREASE COSTS, with “Overriding Royalty” replacing “working interest” in the first and third lines.
	2601	LIMITATION ON RIGHT OF ACQUISITION
	2801	SUPERSEDES PREVIOUS AGREEMENTS
	2802	TIME OF ESSENCE
	2803	NO AMENDMENT EXCEPT IN WRITING
	2804	BINDS SUCCESSORS AND ASSIGNS, with “5.00” replacing “XXIV” in the first line.
	2805	LAWS OF JURISDICTION TO APPLY
	2806	USE OF NAME
	2807	WAIVER OF RELIEF

In those incorporated provisions, “Operating Procedure” will be read as “Overriding Royalty Procedure”, “joint lands” will be read as “Royalty Lands”, “joint operations” will be read as “operations”, “Joint-Operator” will be read as “Party”, “Operator” will be read as “Royalty Payor” or “Royalty Payor Party designated as the representative of the Royalty Payor”, as the case may be, and “title documents” will be read as “Title Documents”, and references to “Authority for Expenditure”, “for the joint account” and “production facility” will be deleted. Nothing in any of those incorporated provisions will require the Royalty Owner to assume any cost, risk or expense associated with an operation conducted hereunder unless otherwise provided herein or in the Head Agreement.

1.03

Multiple Royalty Owner Parties

If the Royalty Owner comprises more than one Party: (i) information and notices to be provided to the Royalty Owner will be provided individually to each Royalty Owner Party; and (ii) the rights and obligations of the Royalty Owner Parties will accrue proportionately to the Royalty Owner Parties in the percentages set forth in the Head Agreement.

1.04

Multiple Royalty Payor Parties

If the Royalty Payor comprises more than one Party:

(a)

the Royalty Payor’ s obligations and liabilities to the Royalty Owner will be joint and several;

(b)

the Royalty Owner may deal solely with the Royalty Payor Party designated as the Royalty Payor’s representative in the Head Agreement respecting the Head Agreement or this Royalty Procedure, provided that: (i) the Royalty Owner will provide each Royalty Payor Party with notices the Royalty Owner serves to the Royalty Payor; (ii) the Royalty Payor is bound by the acts and elections of that representative acting in that capacity; and (iii) the Royalty Payor may designate another representative by notice to the Royalty Owner; and

(c)

the Royalty Payor’s rights and obligations will accrue proportionately to the Royalty Payor Parties in the percentages set forth in the Head Agreement.

If the Royalty Payor initially comprises one Party and subsequently disposes of a portion of its interest hereunder, those Royalty Payor Parties will designate one of them as their representative under this Clause.

1.05

Modifications To CAPL Document Form

This Overriding Royalty Procedure is the 1997 CAPL Overriding Royalty Procedure. It has been modified only by the completion of the blanks and elections required herein and by those additional changes specifically identified as such in the body of this document or in the Head Agreement. Insofar as there are differences between this Overriding Royalty Procedure and the 1997 CAPL Overriding Royalty Procedure that are not specifically identified, this Overriding Royalty Procedure will be deemed to be modified to apply the applicable provisions of the 1997 CAPL Overriding Royalty Procedure as if they had been included herein.

2.00

OVERRIDING ROYALTY

2.01

Quantification Of Overriding Royalty

The Overriding Royalty is created effective as of the date and in the manner provided in the Head Agreement and this Overriding Royalty Procedure. Subject to the other provisions of this Article, including the modified calculation under Subclause 2.02C for production of Petroleum Substances allocated to the Royalty Lands, the Overriding Royalty (based on a 100% Working Interest) will be determined on a well by well basis at the Royalty Determination Point, and will be as follows:

(a)

for crude oil, 5.00% of the gross monthly production thereof produced from each Royalty Well; and

(b)

for all other Petroleum Substances, Alternate 1 will apply (Specify 1 or 2).

Alternate 1:

5.00% of the gross monthly production thereof produced from each Royalty Well.

Alternate 2:

(i)

if not taken in kind by the Royalty Owner pursuant to Clause 2.03, the gross proceeds from the Royalty Payor‘s sale of % of the gross monthly production thereof produced from each Royalty Well, free and clear, subject to Subclause 2.04C, of all Facility Fees otherwise chargeable pursuant to Clause 2.04; and

(ii)

if taken in kind by the Royalty Owner, % of the gross monthly production thereof produced from each Royalty Well.

To the extent that the Overriding Royalty is reserved by the Royalty Owner from a Working Interest assigned by the Royalty Owner to the Royalty Payor, the Overriding Royalty will be multiplied by the percentage Working Interest held by the Royalty Owner immediately before this Article came into effect.

Notwithstanding the calculation at the Royalty Determination Point under Subclause 2.01A, the Overriding Royalty will not include Petroleum Substances that the Royalty Payor reasonably uses or unavoidably loses in the Royalty Payor’s drilling and production operations for the Royalty Lands. Those drilling and production operations include the proportionate use of those Petroleum Substances in batteries, treaters, compressors, separators, satellites and similar equipment serving Royalty Wells, but do not include the use of Petroleum Substances for any enhanced recovery operations.

2.02

Effect Of Pooling Or Unitization On Calculation

The Royalty Payor may pool the Petroleum Substances in a zone underlying all or a portion of the Royalty Lands to the extent required to form a Spacing Unit in that zone, provided that the pooling allocates production therefrom to the applicable Royalty Lands in the proportion that the surface area of the Royalty Lands placed in the Spacing Unit bears to the total surface area of the Spacing Unit. The Royalty Payor will promptly give notice to the Royalty Owner describing the extent to which the Royalty Lands have been pooled and describing the pooled Spacing Unit.

If the Royalty Payor proposes to pool, unitize or otherwise combine any portion of the Royalty Lands with any other lands, other than as provided in the previous Subclause, the Royalty Payor must promptly send notice of that intention to the Royalty Owner. That notice must include the technical justification for that pooling, unitization or combination and the proposed terms thereof, provided that the Royalty Payor will not be required to provide interpretative data to the Royalty Owner. Unless otherwise required by the Regulations to form a Spacing Unit, the Royalty Payor will not enter into that pooling, unitization or combination without the prior written consent of the Royalty Owner, which consent will not be unreasonably delayed or withheld.

If any portion of the Royalty Lands is pooled, unitized or combined with any other lands pursuant to this Clause, Clause 2.01 will be deemed to be amended to calculate the volume of the Overriding Royalty by applying the percentages set forth in that Clause to the quantity of Petroleum Substances thereby allocated to the affected Royalty Lands.

2.03

Royalty Owner’s Rights To Take Overriding Royalty In Kind

Subject to the provisions of this Clause, the Royalty Payor is appointed as the agent of the Royalty Owner for the handling and disposition of the Overriding Royalty share of Petroleum Substances. All acts of the Royalty Payor under this Clause in the handling and disposition of those Petroleum Substances and the receipt of proceeds of sale therefrom will be as trustee for the Royalty Owner.

The Royalty Owner may, on a minimum of 60 days’ notice to the Royalty Payor, revoke the agency established in Subclause 2.03A and elect to take delivery and separately dispose of the Petroleum Substances comprising the Overriding Royalty at the Royalty Determination Point. This right may be exercised separately for each type of Petroleum Substance, effective at the 1st day of the calendar month next following that minimum 60 day period. The Royalty Owner will supply the Royalty Payor with such information regarding the Royalty Owners arrangements for disposition of those Petroleum Substances as the Royalty Payor may reasonably require to coordinate custody transfer and shipping arrangements for those Petroleum Substances. Failure to provide the Royalty Payor with that information will be deemed to be a failure by the Royalty Owner to take those Petroleum Substances in kind.

If the Royalty Owner takes in kind its Overriding Royalty share of crude oil or liquid products extracted from natural gas at the wellhead, the Royalty Payor will, at the Royalty Payor’s cost, remove basic sediment and water from those Petroleum Substances in accordance with good oilfield practice, so that relevant pipeline specifications can be met. The Royalty Payor will provide the Royalty Owner, at the Royalty Payor’s cost, production tankage capacity for an accumulation of the Overriding Royalty share of those Petroleum Substances consistent with the Royalty Payor’s shipping schedule for its own share of those Petroleum Substances. Subject to Subclause 2.04C, the Royalty Payor will deliver the Overriding Royalty share of those Petroleum Substances to the Royalty Owner, or the Royalty Owner’s nominee, at the Royalty Determination Point, in accordance with usual and customary pipeline and shipping practice, free and clear of all charges. If the Royalty Owner takes its Overriding Royalty share of natural gas in kind, the Royalty Payor will deliver that gas to the Royalty Owner, or the Royalty Owner’s nominee, at the Royalty Determination Point for the relevant well at the Royalty Payor s cost.

Except to the extent otherwise agreed by the Royalty Payor and the Royalty Owner, insofar as the Royalty Payor takes possession of Petroleum Substances comprising the Overriding Royalty as agent of the Royalty Owner, the Royalty Payor will dispose of those Petroleum Substances by:

(b)

purchasing those Petroleum Substances for the Royalty Payors own account (or the account of an Affiliate) at a Market Price and accounting to the Royalty Owner therefor.

(a)

selling those Petroleum Substances at a Market Price and accounting to the Royalty Owner for the proceeds of the sale; or

Insofar as the Royalty Owner has elected to revoke the agency established by Subclause 2.03A, the Royalty Owner may re-establish that agency on a minimum of 60 days’ notice to the Royalty Payor, effective as of the 1st day of the calendar month next following that minimum 60 day period. This right may be exercised separately for each type of Petroleum Substance.

2.04

Royalty Payor’s Allowed Deductions If Overriding Royalty Not Taken In Kind

To the extent that the Royalty Payor disposes of Petroleum Substances comprising the Overriding Royalty on behalf of the Royalty Owner, the Royalty Owner’s share of those Petroleum Substances will be free of any deductions for costs and expenses incurred by the Royalty Payor to and including the Royalty Determination Point. Subject to Subclause 2.04C, the Royalty Owner will be responsible, on a well by well basis, for the following costs and expenses incurred after the Royalty Determination Point with respect to the Royalty Owner’s share of those Petroleum Substances:

(a)

for crude oil and liquid products extracted from natural gas at the wellhead, any associated Facility Fees and any transportation costs to transport those Petroleum Substances from the Royalty Determination Point to the point of sale; and

(b)

for Petroleum Substances other than those described in the preceding Paragraph, the associated Facility Fees if Alternate 2.01A(b)(1) applies.

A cost or expense attributable to more than one Petroleum Substance being sold by the Royalty Payor may only be deducted once.

The deductions applicable pursuant to the preceding Subclause will be subject to Alternate 2

Alternate 1:

The deductions must not exceed those permitted by the Regulations for the calculation of royalties if the lessor under the relevant Title Documents were the Crown in right of the Province in which the Royalty Lands are located.

Alternate 2:

The deductions must not be greater than 40.00 % of the Market Price received by the Royalty Payor from the sale of the Royalty Owner’s Overriding Royalty share of those Petroleum Substances, provided that the Market Price will first be adjusted for any deductions under Subclause 2.04C.

Notwithstanding any other provision of this Article, if the Royalty Payor is required to incur costs to enrich the Overriding Royalty share of Petroleum Substances to increase the heating value or to facilitate transportation or marketing of those Petroleum Substances, those costs will be deductible by the Royalty Payor against the gross proceeds of sale applicable to those enriched Petroleum Substances, with the intention that neither the Royalty Payor nor the Royalty Owner suffer a loss as a result of that enrichment. Enrichment operations, include, without limitation, condensate blending in the case of heavy oil and enrichment by propane or butane in the case of gas with a low heating value.

The Royalty Payor’s right to make the deductions set forth in this Clause pertains to the costs and expenses that would otherwise be incurred by the Royalty Owner to bring those Petroleum Substances to the point of sale if the Royalty Owner were taking those Petroleum Substances in kind. The allowable deductions from the proceeds of sale of the Royalty Owner’s Overriding Royalty share of Petroleum Substances are expressed as cash obligations for convenience of record keeping and audit, and are not to be construed as altering the nature of the Overriding Royalty as an interest in land.

2.05

Royalty Payor To Account To Royalty Owner Monthly

If the Royalty Payor receives funds on account of or as the proceeds of sale of the production of Petroleum Substances comprising the Overriding Royalty, the Royalty Payor will receive the Royalty Owner’s share of those funds as trustee for the Royalty Owner. The Royalty Payor must remit to the Royalty Owner all funds accruing to the Royalty Owner on account of the Overriding Royalty on or before the 25th day of the calendar month next following the calendar month in which those funds were received by the Royalty Payor, provided that for the purpose of the timing of receipt of proceeds in this Clause “received” will be read as “normally received” if the purchaser of those Petroleum Substances fails to pay the Royalty Payor for that production. The Royalty Payor must provide the Royalty Owner with a statement in written or electronic format showing in reasonable detail the manner in which the Royalty Payor calculated that payment, including the unit sale price for those Petroleum Substances, and, if requested by the Royalty Owner, a copy of all reports the Royalty Payor is required to submit under the Regulations for the production of those Petroleum Substances.

2.06

Royalty Owner’s Lien

As of the effective date that the Overriding Royalty is created, the Royalty Owner will have a first and prior lien on the Royalty Payor’ s Working Interest in the Royalty Lands, the Petroleum Substances within, upon or under the Royalty Lands, or produced therefrom, and the wells and other equipment thereon to secure the Overriding Royalty. The Overriding Royalty and that lien are interests in land that attach to the Title Documents.

2.07

Royalty Wells To Be Produced Equitably

The Royalty Payor will not discriminate against the Petroleum Substances produced or producible from the Royalty Lands in the production and marketing of those Petroleum Substances because those Petroleum Substances are subject to the Overriding Royalty. The Royalty Payor will use reasonable efforts to produce Petroleum Substances from a Royalty Well equitably with production from any diagonally or laterally offsetting well producing from the same pool as a Royalty Well, insofar as the Royalty Payor, or its Affiliate, has an interest in that offsetting well.

2.08

Royalty Owner’s Rights Upon Surrender

This optional Clause 2.08 will not apply herein.

If there are multiple Royalty Payor Parties and a Royalty Payor Party proposes to surrender all or a portion of the Royalty Lands to the grantor of the Title Documents, that Royalty Payor Party will comply with the applicable provisions of any agreement otherwise governing the Royalty Payors. To the extent those Royalty Lands are thereafter proposed for surrender or there is only one Royalty Payor, Article XI of the standard form 1990 CAPL Operating Procedure will apply mutatis mutandis between the Royalty Payor and the Royalty Owner, except that the notice and reply periods in Clause 1101 therein are reduced from 60 and 30 days to 20 and 10 days respectively.

2.09

Audits Of Overriding Royalty

The Royalty Owner may, upon reasonable notice to the Royalty Payor and at the Royalty Owner’s own expense, audit the books, records and accounts of the Royalty Payor with respect to the production, disposition or sale of the Overriding Royalty within 24 months next following the end of the applicable calendar year. The Royalty Owner will conduct any such audit in accordance with PASC Joint Venture Audit Protocol Bulletin No. 6 (or any replacement therefor).

Any statement issued by the Royalty Payor to the Royalty Owner respecting the calculation of the Overriding Royalty will be presumed to be true and correct 26 months following the end of the calendar year in which that statement was issued, unless the Royalty Owner takes written exception thereto and requests an adjustment pursuant to this Clause within that 26 month period. If a Party discovers during that period that there was an error in the calculation of the Overriding Royalty and can demonstrate that the error applied both to that period and a prior period, the Royalty Payor will make the required adjustment retroactively to either the inception of that error or such other time as the Parties may agree, provided that any dispute respecting the proposed retroactive adjustment will be resolved pursuant to Clause 8.01. Except to the extent required to confirm the adjustment proposed by the Royalty Payor, the retroactive adjustment contemplated by the previous sentence will not extend the Royalty Owners audit rights beyond the 24 month limitation provided for in Subclause 2.09A.

3.00

WELL INFORMATION TO ROYALTY OWNER

3.01

Royalty Owner’s Notification

The Royalty Payor will supply to the Royalty Owner notice of its intention to drill a Royalty Well on the Royalty Lands prior to the Spudding of that well.

4.00

LIABILITY AND INDEMNITY

4.01

Royalty Payor’s Responsibility

The Royalty Payor will:

(a)

be liable to the Royalty Owner for all losses, costs, damages and expenses whatsoever (whether contractual or otherwise) that the Royalty Owner may suffer, sustain, pay or incur; and, in addition

(b)

indemnify and hold harmless the Royalty Owner and its directors, officers, agents and employees against all actions, causes of action, proceedings, claims, demands, losses, costs, damages and expenses whatsoever that may be brought against or suffered by the Royalty Owner, its directors, officers, agents and employees or that they may sustain, pay or incur;

insofar as they are a direct result of: (i) any act or omission (whether negligent or otherwise) of the Royalty Payor with respect to operations or activities conducted by it or on behalf of it hereunder; (ii) a breach of a provision herein by the Royalty Payor; or (iii) the wilful or wanton misconduct of the Royalty Payor, its employees, agents or contractors. However, this obligation will not apply to the extent that the particular act or omission was done or omitted to be done in accordance with the Royalty Owner s written instructions or written concurrence. Costs described in this Clause will include reasonable legal costs on a solicitor-client basis.

4.02

Royalty Owner’s Responsibility

The provisions of the preceding Clause will apply mutatis mutandis to the Royalty Owners operations, activities and obligations with respect to the Royalty Lands or the Reserved Formations.

5.00

ASSIGNMENT

5.01

Incorporation Of Assignment Procedure

The 1993 CAPL Assignment Procedure is incorporated by reference into the Agreement, and will be deemed to apply as if it had been included as a Schedule to the Agreement. Article XXIV (election 2401A) of the standard form 1990 CAPL Operating Procedure will apply mutatis mutandis to any disposition of Royalty Lands by either the Royalty Owner or the Royalty Payor.

6.00

DEFAULT

6.01

Royalty Owner’s Default Remedies

If the Royalty Payor fails to pay the Overriding Royalty or any other amount required to be paid to the Royalty Owner by the Royalty Payor hereunder, Subclauses 505(b), (c) and (d) of the standard form 1990 CAPL Operating Procedure will apply mutatis mutandis to that default as if the Royalty Owner is the Operator and the Royalty Payor the defaulting Party thereunder, except that the reference in Paragraph 505(b)(vi) of that document to “Subclause (a) of this Clause” will be amended to read “Clause 2.06”. The rights granted to the Royalty Owner in this Clause will be in addition to and not in substitution for any other right or remedy that the Royalty Owner may have under this Agreement.

7.00

RESERVED FORMATIONS

7.01

Royalty Owner’s Access To Reserved Formations

The Royalty Owner may enter upon the Royalty Lands at any time to drill a well to penetrate any Reserved Formations and to produce Petroleum Substances therefrom. The Royalty Owner will conduct its drilling and any resultant producing operations with respect to the Reserved Formations in a manner that will interfere as little as is reasonably possible with drilling or production operations conducted on the Royalty Lands pursuant to this Agreement. Nothing in this Clause, however, permits the Royalty Owner to use a well drilled to the Reserved Formations for the production or testing of Petroleum Substances from any zone contained in the Royalty Lands, unless otherwise agreed by the Parties or permitted under the Agreement.

8.00

DISPUTE RESOLUTION

8.01

Disputes Initially Referred To Mediation

The Parties will attempt to resolve any dispute arising under this Agreement through consultation and negotiation in good faith. If those attempts fail, the applicable Parties will then attempt to resolve that dispute through mediation, with costs of the mediation being shared equally by those Parties. However, any Party to that dispute may terminate the mediation at any time upon reasonable notice to the other Parties. If a dispute arises under a provision of this Overriding Royalty Procedure that makes specific reference to this Clause, a Party must refer that dispute to arbitration for resolution pursuant to the provisions of the Arbitration Act of the Province of Alberta, as amended, after the terminated mediation. Otherwise, a Party may, if it so chooses, resort to judicial proceedings to resolve the dispute after the terminated mediation.

Exhibit 10.2

ROYALTY AGREEMENT

This Agreement dated this 12th day of December, 2003

BETWEEN:

MIKWEC ENERGY CANADA LTD., a body corporate, having an office in the City of Edmonton, in the Province of Alberta (hereinafter referred to as “Grantor”)

OF THE FIRST PART

and

NEARSHORE PETROLEUM CORPORATION, a body corporate, having an office in the City of Calgary, in the Province of Alberta (hereinafter referred to as “Grantee”)

OF THE SECOND PART

WHEREAS Grantee provided Grantor with certain technical information with respect to the said Lands; and

WHEREAS Grantor has agreed to grant to Grantee an overriding royalty on its interest in the Lease(s) and said Lands; and

AND WHEREAS the parties desire to document the gross overriding royalty.

NOW THEREFORE THIS AGREEMENT WITNESSETH that the parties hereto agree as follows:

1.	DEFINITIONS

In this Agreement, including the recitals and the Schedules, unless the context otherwise requires, the following words shall have the meanings ascribed thereto, namely:

(a)	“ Assignment Procedure” shall mean the 1993 CAPL Assignment Procedure attached hereto as Schedule “B”;

(b)	“ Current Market Value” shall mean the price received by the Grantor at the point of measurement for its share of Petroleum Substances produced and marketed from or pursuant to a scheme of pooling or unitization allocated to the said Lands which price shall not be less than that which the Grantor would have received at the wellhead if acting as a reasonably prudent operator having regard to the current market prices, availability to market and economic conditions of the petroleum industry generally;

(c)	“ Effective Date” shall mean December 12, 2003;

(d)	“ Grantor” shall mean Mikwec Energy Canada Ltd.;

(e)	“ Gross Overriding Royalty and/or Royalties” shall mean a non-convertible gross overriding royalty of Six and One Half Percent (6.5%) to Nearshore Petroleum Corporation of all Petroleum Substances produced, saved and marketed from below the Surface from the said Lands;

(f)	“ Lands” shall mean any lands comprising the Petroleum and Natural Gas Licence(s), Oil Sands Leases, Petroleum and Natural Gas Lease(s)and any Oil Sands Licence(s), which may be selected therefrom as described in the attached Schedule “A”;

(g)	“Lease(s)” shall mean any Petroleum and/or Natural Gas Lease(s), Oil Sands Leases, or other title document(s) in or acquired in the area set forth in Schedule “A” and any renewal or extensions thereof or substitution therefore;

(h)	“ Petroleum Substances” shall mean all petroleum, natural gas, heavy oil, related hydrocarbons, sulphur and every other substance an interest in which is granted under the said Lease(s) below the Surface;

(i)	“ Point of Measurement” shall mean the production tankage, in the case of crude oil, shall mean the point of delivery in the case of natural gas and shall mean the point of delivery for all other Petroleum Substances;

(j)	“ Royalty Owner” shall mean Nearshore Petroleum Corporation;

2.	GROSS OVERRIDING ROYALTY

(a)	Grantor hereby grants and assigns Grantee a 6.5% gross overriding royalty on the leased substances on the interest which Grantor holds in the Lease(s). It is understood that the gross overriding royalty applies not only against the initial working interest of Grantor, but also to the interest of any third party which derives its interest from or through the Grantor.

(b)	The gross overriding royalty shall be paid to Grantee during the term of the Lease(s) and any renewal or extension thereof.

3.	DEDUCTIONS

The said Royalty shall be paid on the current market value of the Petroleum Substances without any deductions except the following, namely:

(a)	With respect to crude oil, the said Royalty will bear its proportionate share of the actual costs of transportation to market connection, where sales are not made f.o.b. the tanks serving the said Lease(s), provided that the costs shall not exceed those permitted by the Crown in right of the Province of Alberta.

(b)	With respect to natural gas, the cost of gathering, processing and transporting the said Royalty share of the natural gas may be deducted from the current market value of the natural gas, provided:

(i)	the deduction of gathering, processing, and transportation costs shall not exceed those permitted by the Crown in right of the Province of Alberta in the calculation of Crown Royalty; and

(ii)	such costs may only be deducted to the extent that they are actually incurred and are reasonable and shall never be reduced below fifty (50%) percent of current market value.

If any Petroleum Substances are sold at less than current market value in any transactions (including those transactions which are not at arm’s-length or any transactions involving any arrangement from which the Grantor obtains a collateral advantage in consideration of the reduced price), the gross proceeds of the sale of such Petroleum Substances shall, for the purposes of calculating the said Royalty, not be less than the current market value of those Petroleum Substances when produced from the said Lands as defined by clause 1(b) hereof.

Notwithstanding anything to the contrary herein contained, the Grantor shall be entitled to use, and as a consequence thereof the Grantor shall be free from the obligation of payment or delivery of the Grantee’s Royalty, such part of the Petroleum Substances as is reasonably required for and used by the Grantor in its operations upon the Lands, including treating and preparing Petroleum Substances therefrom for market, but not including injection thereof in connection with any secondary recovery operations.

4.	TAKING IN KIND

(a)	The Royalty Owner shall have the right to take in kind the Royalty Owner’s share of Petroleum Substances. Such right may be exercised separately with respect to crude oil, condensate, liquefied petroleum gases and marketable gas. In the case of crude oil condensate, such right shall only be exercised on a minimum of sixty (60) days notice to the Grantor. In the case of liquefied petroleum gases such rights shall only be exercised on six (6) months notice to the Grantor. If the Royalty Owner, however, signified in writing its consent to the sale of any of the Royalty Owner’s share of Petroleum Substances under a contract made by the Grantor providing for a minimum term in excess of the said respective notice periods, the Royalty Owner’s right to take in kind any petroleum substance subject to such contract shall be suspended during the term of such contract. The Royalty Owner may cease to take in kind any Petroleum Substances upon giving the Grantor the same minimum notice as required in order to permit the Royalty Owner to take such Petroleum Substances in kind as aforesaid. The right to take in kind or to cease to take in kind may be exercised from time to time subject only to the provisions of this clause 4.

(b)	When the Royalty Owner is taking in kind any of the Royalty Owner’s share of the Petroleum Substances, the Royalty Owner shall have the right to use free of charge a proportionate share of the Grantor’s lease tankage and storage facilities to store a maximum of ten (10) days production of the Royalty Owner’s share of crude oil and condensate and five (5) days production of the Royalty Owner’s share of marketable gas which will be delivered by the Grantor at the point of delivery downstream from the plant and to the purchase designated by the Royalty Owner, for the Royalty Owner’s account.

5.	OPERATIONS ON THE LANDS

No royalty shall be payable on Petroleum Substances reasonably used in operations on the said Lands for the production, treating, processing and storing of Petroleum Substances on which the said Royalty is payable to the Royalty Owner hereunder.

Any overriding royalty exemption shall be restricted only to that portion of the production from a test well used as fuel for heaters, treaters, compressors, separators, instruments and similar equipment required to produce Petroleum Substances from the test well spacing unit. Grantor shall not be granted any overriding royalty exemption from production of Petroleum Substances used for reservoir injection or pressure maintenance, secondary and heavy oil recoveries or upgrading schemes, or fuel and/or feedstock for any gas plant, refinery, satellite or battery.

6.	RIGHT TO POOL OR UNITIZE

Grantor is hereby given the right and authority, at any time and from time to time, to pool the said Lands, or any portion thereof to form a production spacing unit or unitize the said Lands or any portion thereof, or any zone or formation underlying the same, on such terms and conditions as the Grantor may determine from time to time. In the event of such pooling or unitization, Grantee’s gross overriding royalty shall be determined on that portion of the production of the leased substances from the area so pooled or unitized which is allocated to that portion of the said Lands which is contributed to the pooled or unitized area pursuant to the pooling or unitization Agreement concerned.

7.	RIGHT TO COMMINGLE

The Grantor shall have the right to commingle Petroleum Substances produced from the said Lands with Petroleum Substances produced from other lands provided methods acceptable to the Royalty Owner are used to determine the proper measurement of individual well production.

Where governmental regulations or orders require segregated production tests of individual wells at intervals not greater than two months, such tests will be deemed acceptable to the Royalty Owner under this clause and no further tests will be required.

8.	DEVELOPMENT OF LANDS

Notwithstanding any provision herein contained, the Grantor shall be under no obligation to Grantee to develop the said Lands or any part thereof to produce the leased substances which may be within, upon or under the said Lands.

9.	RENTALS, RENEWALS AND ROYALTIES

Grantor shall during the term of this Agreement make timely payment of all rentals, renewals or extension fees, payment in lieu of actual production and royalties becoming due or due in respect of the Lease(s), the Lands or the Petroleum Substances.

10.	TAXES

Each party hereto shall be liable for its proportionate share of taxes and other charges levied or assessed against the Petroleum Substances, and in lieu of payment by the Grantee of its share thereof, Grantor may make such payment and deduct the amount thereof from any money payable by it to the Grantee.

11.	RIGHT TO AUDIT

Grantee, upon notice in writing to Grantor, shall have the right to audit the Grantor’s accounts and records relating to the accounting hereunder for any calendar year within the twelve (12) month period next following the end of such calendar year. Any payment made or statement rendered by the Grantor hereunder which is not disputed by the Royalty Owner on or before the last day of the twenty-fourth month following the month for which such statement or payment was rendered shall be deemed to have been correct. Any cost to conduct such audit as granted herein shall be at the sole cost, risk and expense of the Royalty Owner.

12.	ASSIGNMENT OF ROYALTY

Royalty Owner may convey or assign any portion of its interest in the gross overriding royalty payable under the Agreement but the Grantor shall not become liable to make payments in respect of the gross overriding royalty to more than one person. If the interest of Royalty Owner hereunder is at any time owned by more than one person, such persons shall nominate one person to act as a common trustee for receipt of monies payable hereunder and to deal with the Grantor in respect of the said interests. In such event, Grantor shall thereafter make payments to and deal solely with such common trustee in respect of the said interest.

13.	ASSIGNMENT OF WORKING INTEREST

Grantor may at any time, sell or otherwise dispose of all or any of its interest in the said Lands but Grantor covenants that it shall cause any Assignee or successor of the Grantor to deliver to Grantee a written and enforceable undertaking to assume the obligations of Grantor under this Agreement insofar as they relate to such interest and the obligations which accrue pursuant to the terms of this Agreement, whereupon the Grantor shall be relieved of the obligation so assumed.

14.	BOOKS AND ACCOUNTS

Grantor shall maintain complete and accurate records of the leased substances produced, saved and marketed from the said Lands and of the monies received from the sale thereof and shall furnish to Grantee with each payment of the gross overriding royalty hereunder a statement giving sufficient detail for Grantee to ascertain the accuracy of the payment of the gross overriding royalty made therewith.

15.	SALE OF LEASED SUBSTANCES

Any sale of leased substances by Grantor shall include the gross overriding royalty, which shall be sold at a price not less than that for which Grantor is selling its share of production. Not later than the last day of each calendar month, Grantor shall pay to Grantee the proceeds of the sale of the gross overriding royalty during the preceding calendar month. Grantee’s gross overriding royalty share of production shall bear its proportionate share of the costs of any transportation services that are provided with respect thereto prior to the sale thereof.

16.	FORCE MAJEURE

The obligation of the parties, other than the obligations of the Grantor to the Lessor of the Lease(s), its successors and assigns, shall be suspended and there shall be no liability for damages during the time and to the extent that either party is prevented from complying with its obligations under this Agreement in part or in whole by strikes, lockouts, acts of God or the Queen’s enemies, war, blockades, riots, laws, orders or regulations of governmental bodies or agencies, unavoidable accidents, delays in transportation, inability to obtain necessary materials in the open market, or any other cause, except financial, whether similar or dissimilar to those specifically enumerated, beyond the reasonable control of the party affected. The party whose obligations under this Agreement are suspended shall give notice, including reasonably full particulars, of the cause for such suspension, in writing or by telegraph to the other parties within a reasonable time after the occurrence thereof. The performance of such obligations shall begin or be resumed within a reasonable time after such cause has been removed.

17.	CONFIDENTIAL INFORMATION

(a)	Except as provided herein, all data and information of whatsoever nature acquired by the parties from any operations pursuant to this Royalty Agreement or supplied by one party to the other pursuant hereto shall be for the sole and exclusive use and benefit of the parties hereto unless the parties agree to the dissemination of such information or unless a party thereto is required to give such information to any governmental department, body or agency, or any recognized association within the petroleum industry, of which it is a member, that engages in the exchange of factual information relating to the type of operations contemplated by this Royalty Agreement. In no event shall information of any type of character relating to wells drilled on a confidential basis to the parties be disclosed.

(b)	The provisions of this clause shall not apply to disclosures to Affiliates provided that such Affiliate agree to be bound by the terms of this clause.

18.	DURATION OF AGREEMENT

This Agreement shall remain in full force and effect for so long as any interest hereunder is retained by the parties or any assignees thereof.


19.	NOTICES

Whether or not so stipulated herein, all notices, communications and statements (hereinafter called “notices”) required or permitted hereunder shall be in writing. Notices may be served:

(a)	personally, by leaving them with the party on whom they are to be served at the party’s address hereinafter given. Personally served notices shall be deemed received by the addressees when actually delivered provided such delivery shall be during normal business hours; or

(b)	by telegraph (or any other like method by which a written and recorded message may be sent) directed to the party on whom they are to be served at that party’s address hereinafter given. Notices so served shall be deemed received by the addressees thereof eight hours after the time of transmission or at the commencement of the next ensuing normal business day, whichever is the later; or

(c)	by mailing them first class registered post, postage prepaid to the party on whom they are to be served. Notices so served shall be deemed to be received by the addressees on the second day (excluding as the second day, Saturdays, Sundays and statutory holidays) following the mailing thereof in Canada.

The addresses of each of the respective parties hereto shall be as follows:


Mikwec Energy Canada Ltd.
Suite 100, 10187 - 104th Street
Edmonton, Alberta
T5J 0Z9
Attn: President


Nearshore Petroleum Corporation
Suite 3175, 246 Stewart Green S. W.
Calgary, Alberta
T3H 3C8
Attn: President

Any party hereto may change its said address by notice served as aforesaid.

20.	FURTHER ASSURANCES

Each of the parties hereto shall, from time to time, and at all times, do such further acts and deliver all such further assurances, deeds and documents as shall be reasonably required in order to fully perform and carry out the terms of this Agreement.

21.	ENTIRE AGREEMENT

The terms of this Agreement express and constitute the entire agreement between the parties with respect to the matters herein addressed, this Agreement hereby wholly supersedes and replaces all prior agreements and representations, whether oral or in writing, between the Parties, with respect to the subject matter hereof.

22.	TIME OF ESSENCE

Time is of the essence of this Agreement.

23.	WAIVER

No waiver by any party of any breach of any of the covenants, conditions and provisions herein contained shall be effective or be binding upon any of the parties unless the same shall be expressed in writing. Any waiver so expressed shall not limit or affect its right with respect to any other or future breach.

24.	NO AMENDMENT EXCEPT IN WRITING

No amendment or variation of the provisions of this Agreement shall be binding upon any party unless it is evident in writing and executed by all parties.

25.	BINDS SUCCESSORS AND ASSIGNS

This Agreement shall enure to the benefit of and be binding upon the parties hereto, their successors and permitted assigns.

26.	COUNTERPART EXECUTION

This Agreement may be executed in counterparts and when each such party has executed a counterpart, all counterparts taken together shall constitute one agreement.

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


	MIKWEC ENERGY CANADA LTD.

	By:	/s/ Victor Davis

		Victor Davis, President


	NEARSHORE PETROLEUM CORPORATION

	By:	/s/ Steve Gawne

		Steve Gawne, President

SCHEDULE ‘A’

Attached to and forming part of a ROYALTY AGREEMENT dated 12th December, 2003, between Mikwec Energy Canada Ltd. and Nearshore Petroleum Corporation

INCLUSION LANDS - RIGHTS

Township 091 Range 12 West 5: Sections 1 to 36 All P&NG, All Oil Sands

Township 091 Range 13 West 5: Sections 1 to 36 All P&NG, All Oil Sands

Township 092 Range 12 West 5: Sections 1 to 36 All P&NG, All Oil Sands

Township 092 Range 13 West 5: Sections 1 to 36 All P&NG, All Oil Sands

CAPL - 1993

SCHEDULE “B”

ASSIGNMENT PROCEDURE

Attached to and forming part of the Agreement dated the 12th day of December A.D. 2003

BETWEEN: (AMONG)

MIKWEC ENERGY CANADA LTD.

and

NEARSHORE PETROLEUM CORPORATION

ARTICLE 1

DEFINITIONS

1.01	In this Assignment Procedure, the following terms, when capitalized, shall have the meaning assigned to each below:

(a)

“Affiliate” - for the purposes of this Assignment Procedure, means a corporation or partnership that is affiliated with the party in respect of which the expression is being applied, and, for the purpose of this definition a corporation or partnership is affiliated with another corporation or partnership if it directly or indirectly controls or is controlled by that other corporation or partnership, and for the purpose of determining whether a corporation or partnership is so controlled, it shall be deemed that:

(i)

a corporation is directly controlled by another corporation or partnership if the shares of the corporation to which are attached more than 50% of the votes that may be cast to elect directors of the corporation are beneficially owned by that other corporation or partnership and the votes attached to those shares are sufficient, if exercised, to elect a majority of the directors of the corporation;

(ii)

a partnership is directly controlled by a corporation or other partnership it that corporation or partnership beneficially owns more than a 50% interest in the partnership;

(iii)

a corporation or partnership is indirectly controlled by another corporation or partnership if control, as defined above, is exercised through one or more other corporations or partnerships.

Where two or more corporations or partnerships are affiliated at the same time with the same corporation or partnership, they shall be deemed to be Affiliates of each other.

(b)

“Agreement” - means the agreement to which this Assignment Procedure is attached and made a part.

(c)

“Assigned Interest” - means the interest in the Agreement which is the subject of an assignment and which is specified in a Notice of Assignment, but shall not include rights of the Assignor as operator.

(d)

“Assignee” - means the entity named in a Notice of Assignment as the Assignee.

(e)

“Assignment and Novation Agreement” - means an agreement by all parties to the Agreement and a party to whom an interest in the Agreement has been assigned where:

(i)

the assignee assumes the duties and obligations of the assignor for the Assigned Interest; and

(ii)

the assignor is released from its duties for the Assigned Interest; and

(iii)

the assignee is substituted as a party to the Agreement in the place of the assignor to the extent of the Assigned Interest.

(f)

“Assignor” - means the party to the Agreement named in a Notice of Assignment as the Assignor.

(g)

“Binding Date” - means the first day of the second calendar month following the month in which the Notice of Assignment is served in accordance with Article IV below.

(h)

“Notice of Assignment” - means a notice in the form entitled Notice of Assignment attached hereto as Appendix A.

(i)

“Third Party” - means the parties to the Agreement who are not the Assignor.

(j)

“Transfer Date” - means the effective date of the transfer of the Assigned Interest, as specified in the Notice of Assignment.

1.02	In this Assignment Procedure, when a numbered clause or Article is referred to, that clause or Article is of this Assignment Procedure.

ARTICLE II

APPLICATION, CONDITIONS AND FORM OF NOTICE

2.01

(a)

A Notice of Assignment issued in accordance with this Assignment Procedure shall be used in place of an Assignment and Novation Agreement for assignments where the Agreement:

(i)

requires parties to use; or

(ii)

entitles parties to request; or

(iii)

is silent as to the right of any party to request;

an Assignment and Novation Agreement.

(b)

The Notice of Assignment shall be in the form indicated in Appendix A and shall be executed by the Assignor and the Assignee.

2.02	If there is a conflict between the Assignment Procedure and the provisions of the Agreement, the Assignment Procedure shall prevail.

2.03

If the Agreement requires each Third Party’s consent to an assignment but does not specify a time within which each Third Party shall respond or shall be deemed to have responded, then consent of each Third Party to an assignment shall be deemed if it fails to reply within 20 days of receipt of a written request for consent.

2.04

(a)

If the Agreement is silent regarding rights of first refusal or consent from Third Party which relates to an Assigned Interest, then Assignor shall, by notice pursuant to Article IV:

(i)

advise Third Party of:

- its intention to make the disposition;

- a description of the Assigned Interest; and

- the identity of the proposed Assignee, and

(ii)

request Third Party’s written consent to such disposition, which consent shall not be unreasonably withheld.

Consent of each Third Party shall be deemed if it fails to reply to Assignor within 20 days of receipt of the written request for consent.

(b)

Clause 2.04 (a) shall not apply in the following instances, namely:

(i)

an assignment made by way of security for present or future indebtedness, or liabilities (whether contingent, direct or indirect and whether financial or otherwise), the issuance of the bonds or debentures of a corporation, or the performance of the obligations of a guarantor under a guarantee, provided that in the event the security is enforced by a sale or foreclosure, Clause 2.04 (a) shall apply; or

(ii)

an assignment to an Affiliate, or in consequence of a merger or amalgamation with another corporation or pursuant to an assignment made by a party of its entire interest in the Agreement to a corporation in return for shares in that corporation or to a registered partnership in return for an interest in that partnership; or

(iii)

an assignment is required within the terms of the Agreement (such as, but not limited to, abandonment, forfeiture or surrender).

2.05	An assignment of an Assigned Interest shall (subject to Clause 2.06) be effective against Third Party on the Binding Date if:

(a)

all prohibitions, limitations or conditions (such as, but not limited to, a right of first refusal or a requirement for prior consent from Third Party) applying to the Assigned Interest have been complied with and satisfied pursuant to the Agreement, or waived by Third Party, including, if applicable, compliance with Clauses 2.03 and 2.04; and

(b)

following compliance with Clause 2.05(a), a Notice of Assignment is served on Third Party in accordance with Article IV.

2.06

(a)

A Third Party who objects to the Notice of Assignment on the basis of a failure to comply with Clause 2.05 may, prior to the Binding Date, notify (pursuant to Article IV) Assignor and Third Party of its objections.

(b)

If a notice of objection is served pursuant to Clause 2.06(a), the Notice of Assignment to which the notice of objection relates will be of no effect.

(c)

If a Third Party does not object pursuant to Clause 2.06(a), the Notice of Assignment will be effective for purposes of Article Ill, but each Third Party will retain all other rights or remedies arising as a consequence of the failure of Assignor to comply with Clause 2.05, including (without limitation), rights to seek damages for breach of the Agreement and rights to seek specific performance of a right of first refusal.

ARTICLE III

ASSIGNMENT, ASSUMPTION AND DISCHARGE BY NOTICE

3.01	If a Notice of Assignment has become effective in accordance with Clauses 2.05 or 2.06, then Assignor, Assignee and Third Party shall have agreed that:

(a)

Subject to Clause 3.01(d), Assignor and Assignee shall have acknowledged and represented that the Assignor has transferred, assigned and conveyed the Assigned Interest to Assignee as of the Transfer Date.

(b)

Subject to Clause 3.01(d), Assignee shall replace Assignor as a party to the Agreement with respect to the Assigned Interest on and after the Transfer Date.

(c)

Only insofar as Third Party is concerned, notwithstanding the terms and provisions in the “Transfer Agreement” referenced in the Notice of Assignment:

(i)

Subject to Clause 3.01(d), Assignee shall assume and be bound by, observe and perform all terms, obligations and provisions in the Agreement with regard to the Assigned Interest at all times on or after the Transfer Date; and

(ii)

Assignor shall retain and be entitled to all rights, benefits and privileges under the Agreement with respect to the Assigned Interest at all times prior to the Transfer Date; and

(iii)

Subject to Clause 3.01(d), Assignee shall assume and be entitled to all rights, benefits and privileges under the Agreement with respect to the Assigned Interest at all times on and after the Transfer Date.

(d)

In all matters relating to the Assigned Interest subsequent to the Transfer Date and prior to the Binding Date, Assignor acts as trustee for and duly authorized agent of Assignee, and Assignee, for the benefit of Third Party, ratifies, adopts and confirms all acts or omissions of the Assignor in such capacity as trustee and agent. Third Party agrees to recognize and accept Assignor as trustee and agent for Assignee.

(e)

On and after the Transfer Date, Third Party:

(i)

releases and discharges Assignor from the observance and performance of all terms and covenants of the Agreement and all obligations and liabilities which arise or occur on or after the Transfer Data under the Agreement with respect to the Assigned Interest; and

(ii)

does not release and discharge Assignor from any obligation or liability which had arisen or accrued prior to the Transfer Data or which does not relate to the Assigned Interest.

(f)

Subject to the terms and provisions of the “Transfer Agreement” referenced in the Notice of Assignment, Assignee on and after the Transfer Date:

(i)

releases and discharges Assignor from the observance and performance of all terms and covenants of the Agreement and all obligations and liabilities which arise or occur on or after the Transfer Date under the Agreement with respect to the Assigned Interest; and

(ii)

does not release and discharge Assignor from any obligation or liability which had arisen or accrued prior to the Transfer Date or which does not relate to the Assigned Interest.

(g)

The address of Assignee for the purposes of the Agreement and the serving of notices under it shall be the address stated for Assignee in the Notice of Assignment.

(h)

The Agreement shall continue in full force and effect from and after the Transfer Date with Assignee made a party thereto to the extent of the Assigned Interest, subject to Clause 3.01(d). The Agreement is amended as necessary to give effect to the Notice of Assignment and, as so amended, is ratified and confirmed by each party.

3.02	In no event shall errors, inaccuracies or misdescriptions in a Notice of Assignment have any effect on the Third Party or the interests of Third Party in the Agreement, even if Third Party has knowledge of an error, inaccuracy or misdescription.

3.03	Assignor and Assignee shall be solely responsible for any adjustment between themselves with respect to the Assigned Interest as to revenues, benefits, costs, obligations or indemnities which accrue prior to Binding Date.

ARTICLE IV

SERVICE OF NOTICES

4.01

All notices and Notices of Assignment (herein called “notices”) required or permitted by the terms of this Assignment Procedure shall be in writing, subject to the provisions of this Article. This Article applies only to notices served pursuant to this Assignment Procedure. Any notice to be given under this Assignment Procedure shall be deemed to be served properly if served in any of the following modes:

(a)

personally, by delivering the notice to the party on whom it is to be served at that party’s address for service. Personally served notices shall be deemed received by the addressee when actually delivered as aforesaid, if such delivery is during normal business hours, on any day other than a Saturday, Sunday or statutory holiday. If a notice is not delivered during normal business hours, such notice shall be deemed to have been received by such party at the commencement of the day next following the date of delivery, other than a Saturday, Sunday or statutory holiday; or

(b)

by telecopier or telex (or by any other like method by which a written and recorded message may be sent) directed to the party on whom it is to be served at that party’s address for service (however, an original executed copy of a Notice of Assignment shall subsequently be provided to all addressees without delay). A notice so served shall be deemed received by the respective addressees: (i) when actually received by them, if received within the normal business hours on any day other than a Saturday, Sunday or statutory holiday; or (ii) at the commencement of the next ensuing business day following transmission thereof if such notice is not received during such normal business hours; or

(c)

by mailing it first class (air mail if to or from a location outside of Canada) registered post, postage prepaid, directed to the party on whom it is to be served at that party’s address for service. Notices so served shall be deemed to be received by the addressees at noon, local time, on the earlier of the actual date of receipt or the fourth (4th) day (excluding Saturdays, Sundays and statutory holidays) following mailing. However, if postal service is interrupted or operating with unusual or imminent delay, notice shall not be served by such means during such interruption or period of delay.

4.02	The addresses for service of a notice pursuant to this Assignment Procedure shall be as set out (and amended from time to time) in the Agreement.

CAPL - 1993

(Appendix A to the 1993 CAPL ASSIGNMENT PROCEDURE)

NOTICE OF ASSIGNMENT

___________________________________

(For reference only: general land description)

WHEREAS, by agreement (“Transfer Agreement”) dated _________________________, (full name of Assignor[s]), as Assignor, transferred and conveyed effective __________________ (“Transfer Date”) an interest in property as more fully described below to ___________________________(full name of Assignee[s]), as Assignee; and

WHEREAS, Assignor and one or more parties (“Third Party”) are subject to and bound by that certain_______________________ agreement dated_______________, made between, by or among___________________________________________________________________as may have been amended, affecting the land or property therein described (“Master Agreement”); and

WHEREAS, in accordance with the terms and provisions of the Master Agreement, Assignor and Assignee intend to serve notice to Third Party to the Master Agreement of the transfer and conveyance as described in the Transfer Agreement.

NOW, THEREFORE, THIS NOTICE OF ASSIGNMENT WITNESSES THAT in consideration of the mutual advantages to the parties hereto, notice is hereby given, as follows:

1.	Assignor (specify proportions if more than one Assignor):

2.	Assignee (specify proportions if more than one Assignee and include address for service of notice pursuant to Master Agreement):

3.	Current Third Party to Master Agreement:

4.	Assigned Interest: (Check A or B below):

_____A. Transfer Agreement covers ______% of Assignor’s entire undivided right, title and interest in the Master Agreement but shall not include rights of the Assignor as operator (“Assigned Interest”); OR

_____B. Transfer Agreement covers a portion of Assignor’s right, title and interest in the Master Agreement but shall not include rights of the Assignor as operator (“Assigned Interest”). In the event Alternative B is checked, the following is the legal description of all lands and interests transferred and conveyed in the Transfer Agreement (attach schedule if more space is needed):

5.	Subject to Clause 7 of this Notice of Assignment, Assignor and Assignee, in accordance with the terms of the Transfer Agreement, acknowledge that:

(i)

Assignor has transferred and conveyed the Assigned Interest to the Assignee as of the Transfer Date; and

(ii)

Assignee agrees to replace Assignor, on and after the Transfer Date, as a party to the Master Agreement with respect to the Assigned Interest; and

(iii)

Assignee agrees to be bound by and observe all terms, obligations and provisions in the Master Agreement with respect to the Assigned Interest on and after the Transfer Date.

6.	Subject to the terms and provisions of the Transfer Agreement, Assignee on and after the Transfer Date:

(i)

discharges and releases the Assignor from the observance and performance of all terms and covenants in the Master Agreement and any obligations and liabilities which arise or occur under the Master Agreement with respect to the Assigned Interest, and

(ii)

does not release and discharge the Assignor from any obligation or liability which had arisen or accrued prior to the Transfer Date or which does not relate to the Assigned Interest.

Assignee and Assignor agree that in all matters relating to the Master Agreement with respect to the Assigned Interest, subsequent to the Transfer Date and prior to the Binding Date, Assignor acts as trustee for and duly authorized agent of the Assignee and Assignee, for the benefit of the Third Party, ratifies, adopts and confirms all acts or omissions of the Assignor in such capacity as trustee and agent.

This Notice of Assignment shall become binding on all parties to the Master Agreement on the first day of the second calendar month following the month this notice is served on Third Party in accordance with the terms of the Master Agreement (“Binding Date”). In addition, Assignor and Assignee agree that they shall be solely responsible for any adjustment between themselves with respect to the Assigned Interest as to revenues, benefits, costs, obligations or indemnities which accrue prior to the Binding Date.

9.	Assignor represents and certifies that this Notice of Assignment and its service are in compliance with all the terms and provisions of the Master Agreement.

IN WITNESS WHEREOF this Notice of Assignment has been duly executed by the Assignor and Assignee on the date indicated for each below:

Assignor			Assignee

Per:			Per:

Per:			Per:


Date:			Date:

Exhibit 10.3

JOINT OPERATING AGREEMENT

SAWN LAKE AREA, ALBERTA

THIS AGREEMENT made as of April 26, 2004.

AMONG:

MIKWEC ENERGY CANADA LIMITED, a body corporate, having an office at the City of Calgary, in the Province of Alberta (herein referred to as “MIKWEC”)

OF THE FIRST PART

- and -

MAXEN PETROLEUM INC. a body corporate, having an office at the City of Calgary, in the Province of Alberta (herein referred to as “MAXEN”)

OF THE SECOND PART

WHEREAS MIKWEC and MAXEN acquired on April 23, 2004 certain interests in the Joint Lands;

AND WHEREAS the parties wish to provide for the manner of conducting operations on the Joint Lands.

NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual premises and of the covenants contained herein, the parties agree each with the other as follows:

1.	INTERPRETATION

(a)	In this Agreement, unless the context otherwise requires, the definitions contained in clause 101 of the Operating Procedure shall apply, and:

(i)

“Assignment Procedure” means the 1993 CAPL Assignment Procedure as completed and attached as Schedule “C”

(ii)

“Effective Date” means April 23, 2004;

(iii)

“Joint Lands” means the lands described in Schedule “A” hereto, including where the context requires the petroleum substances within, upon or under such lands, or any interest or interests in such lands from time to time remaining subject to this Agreement;

(iv)

“Operating Procedure” means the Operating Procedure as completed and attached as Schedule “B”, together with the Accounting Procedure as completed and annexed thereto as Exhibit “A”

(v)

“Operator” initially means MIKWEC, appointed as such in Clause 5 of this Agreement;

(vi)

“Participating Interest” means the percentage interest of a party set forth in Clause 4 of this Agreement;

(vii)

“Title Document” means the document of title set forth and described in Schedule “A” hereto and any renewal, extension or replacement thereof, including any leases selected from a license or reservation, insofar as they relate in each case to the Joint Lands; and

(b)	The headings of the clauses of this Agreement and the Schedules are inserted for convenience of reference only and shall not affect the meaning or construction thereof.

(c)	Whenever the singular or masculine or neuter is used in this Agreement or the Schedules, the same shall be construed as meaning plural or feminine or body politic or corporate and vice versa as the context requires.

(d)

In the event of any conflict or inconsistency between the provisions of this Agreement and those of any Schedule, the provisions of this Agreement shall prevail. If any term or condition of this Agreement conflicts with a term or condition of any Title Document, then such term or condition of such Title Document shall prevail and this Agreement shall be deemed to be amended accordingly with respect to such Title Document.

SCHEDULES

The following Schedules are attached to and are incorporated into this Agreement:

(a)	Schedule “A” which sets forth and describes the Joint Lands and the Title Document;

(b)	Schedule “B” which is the Operating Procedure together with the Accounting Procedure annexed thereto as Exhibit “A”; and

(c)	Schedule “C” which is the Assignment Procedure.

TITLE

No party warrants title to its Participating Interest in the Title Document or the Joint Lands but each party covenants that it has complied with the terms of the Title Document to the extent necessary to keep it in full force and effect, has good right, full power and authority to enter into this Agreement and represents that it has not as of the Effective Date of this Agreement received any notice of default in respect of any Title Document.

4.	PARTICIPATING INTERESTS

Except as otherwise provided in the Operating Procedure, the parties shall bear all costs and expenses paid or incurred under this Agreement and the Operating Procedure and shall own the Title Document the Joint Lands, all wells thereon and information obtained therefrom and the equipment pertaining thereto and the petroleum substances produced therefrom in accordance with the following respective Participating Interests:

MIKWEC	80%
MAXEN	20%

5.	APPOINTMENT OF OPERATOR

MIKWEC is hereby appointed initial Operator and shall be responsible for the operation and development of the Joint Lands for the joint account and, subject to the terms and provisions of this Agreement and the Operating Procedure, shall have the sole and exclusive control and management of all operations conducted pursuant to this Agreement. MIKWEC hereby accepts such appointment as Operator. The Operator shall account for the Goods and Services Tax (Canada), pursuant to Subsection 273 (1) of the Excise Tax Act, on all purchases and sales occurring on the Joint Lands.

6.	OPERATING PROCEDURE

The parties agree that the Operating Procedure as amended by this Agreement governs the relationship of the parties hereto and applies to all operations conducted in respect of the exploration, development and maintenance of the Joint Lands for the production of petroleum substances.

7.	INFORMATION TO JOINT-OPERATOR

In addition to the information and data required to be provided to the Joint-Operator by the Operator pursuant to the Operating Procedure, the Operator, upon any well reaching total depth, shall supply the Joint- Operator with two (2) copies of a geological (factual) report containing:

(a)	final summary of survey log formation tops;

(b)	detailed drillstem test data, if applicable;

(c)	lithologic core and sample report, if applicable; and

(d)	core, water, gas or oil analyses, if applicable.

8.	ENCUMBRANCES ON INTEREST

If the interest of any party in the Joint Lands is now or hereafter shall become encumbered by any security interest or by any royalty, production payment or other charge of a similar nature, other than the royalties set forth under the terms of the Title Document covering such lands or any compensatory royalty payments, then such security interest, additional royalty, production payment or charge shall be charged to and paid entirely by the party whose interest is or becomes thus encumbered. Any such encumbrance hereafter made or granted by a party shall be expressly made subject to the rights of the other parties hereunder. In no event shall a party hereto acquiring an interest in such lands by virtue of the operation of any provision of the body of this Agreement of the Operating Procedure (except Article XXIV of the Operating Procedure, where applicable) ever be required to assume any part of such interest, royalty, payment or charge.

9.	NEW ROYALTY APPLICATIONS

If any well on the Joint Lands is completed for the taking of production the Operator shall be responsible for making timely application, on behalf of the parties, pursuant to the Regulations, for new royalty status on any petroleum substances and for any royalty holiday or abatement that may be applicable to operations hereunder.

10.	INCENTIVE ASSISTANCE PROGRAM

Incentives of any kind which are generated by operations on the Joint Lands by the parties shall be allocated and shared in accordance with each party’s participation in such operation.

11.	CONFIDENTIAL INFORMATION

Notwithstanding the Operating Procedure, a party may release information obtained in the course of or as a result of operations on the Joint Lands to an industry scouting association in which the party is a participant, or to a lawful governmental authority to the extent required by law, or to a stock exchange on which a party’s shares are listed or traded to the extent required by the rules of such exchange.

12.	TERM OF AGREEMENT

This Agreement is effective from the Effective Date and shall continue for the life of any Title Document in which the parties hold their interest as provided herein and any extensions or renewals of such Title Document whether by production or otherwise and until final settlement of accounts has been made among the parties.

13.	ENTIRE AGREEMENT

The terms of this Agreement express and constitute the entire Agreement among the parties. No implied covenant or liability is created or shall arise by reason of this Agreement or anything herein contained.

14.	COVENANTS RUN WITH THE LAND

All terms and provisions of this Agreement shall run with and be binding upon the Joint Lands during the term hereof.

15.

ENUREMENT

This Agreement shall be binding upon and enure to the benefit of the parties hereto and their respective successors and assigns.

16.	LAWS OF ALBERTA

Parties agree that this Agreement shall for all purposes be construed and interpreted according to the laws of the Province of Alberta, and that the courts having jurisdiction with respect to matters relating to this Agreement shall be the courts of said Province, to the jurisdiction of which courts the parties by their execution of this Agreement do hereby submit.

17.	COUNTERPART EXECUTION

This Agreement may be executed by the parties in counterpart and when each party has executed a counterpart, all counterparts taken together shall constitute one agreement.

IN WITNESS WHEREOF The parties hereto have executed this Agreement as of the day and year first above written.


	MIKWEC ENERGY CANADA LIMITED

	By:	/s/ Vic Davies

		President


	MAXEN PETROLEUM INC.

	By:	/s/ Sam Charanek

		President

This is page 1 of 1 execution page attached to and forming part of a Joint Operating Agreement dated as of April 26, 2004 among MIKWEC ENERGY CANADA LTD. and MAXEN PETROLEUM INC.

SCHEDULE “A”

This is Schedule “A” attached to and forming part of a Joint Operating Agreement dated as of April 26, 2004 among MIKWEC ENERGY CANADA LTD. and MAXEN PETROLEUM INC.

THE JOINT LANDS

Oil Sands Development Lease 7403070365 is described as follows:

Township 91, Range 12: Sections 27, 28, 29, 30, 31, 32,

Township 91, Range 13: Sections 25, 26, 27, 35, 36

Oil Sands (Top of the Peace River to Base of the Pekisko) 100%

Covering 2816 hectares

Oil Sands Development Lease 7403070367 is described as follows:

Township 92, Range 13: Sections 1, 2, 10, 11, 12, 13, 14, 15, 22, 23, 24

Oil Sands (Top of the Peace River to Base of the Pekisko) 100%

Covering 2816 hectares

Oil Sands Development Lease 7403070368 is described as follows:

Township 92, Range 13: Sections 6, 7, 8, 9, 16, 17, 18, 19, 20, 21

Oil Sands (Top of the Peace River to Base of the Pekisko) 100%

Covering 2560 hectares

Oil Sands Permit 7003040812 is described as follows:

Township 91, Range 13: N1/2 Section 28, Sections 32, 33, 34

Township 92, Range 13: Sections 3, 4, 5

Oil Sands (Top of the Peace River to Base of the Pekisko) 100%

Covering 1664 hectares

Petroleum & Natural Gas Lease 5495030101 is described as follows:

Township 91, Range 13: N1/2 Section 28, Sections 32, 33, 34

Township 92, Range 13: Sections 3, 4, 5

Petroleum & Natural Gas (From Surface to Basement) 100%

Covering 1664 hectares

TITLE DOCUMENTS

Crown Agreement Title # 7403070365

Fifteen year term commencing July 9, 2003.

Crown Agreement Title # 7403070367

Fifteen year term commencing July 9, 2003.

Crown Agreement Title # 7403070368

Fifteen year term commencing July 9, 2003.

Crown Agreement Title # 7003040812

Five year term commencing April 9, 2003.

Crown Agreement Title # 5495030101

Five year term commencing March 3, 2003.

ENCUMBRANCES

Crown Royalty payable to the Province of Alberta

A six and one half (6.5%) Gross Overriding Royalty (GOR) payable to Nearshore Petroleum Corporation

SCHEDULE “B”

This is a Summary Schedule “B” attached to and forming part of a Joint Operating Agreement dated as of April 26, 2004 among MIKWEC ENERGY CANADA LTD. and MAXEN PETROLEUM INC.

1990 CAPL OPERATING AGREEMENT

CLAUSE 311 - Insurance Election:	A___	B x

CLAUSE 604 - Marketing Fee:	A x	B ___

CLAUSE 903 - Casing Point Election:	A x	B ___

CLAUSE 1007 - Penalty for Independent Operations:

1) Development 400 %

2) Exploratory 500 %

CLAUSE 903 - Casing Point Election:

180 days

CLAUSE 1010 (iv) - Well Preserving Title:

CLAUSE 2201 - Notice of Service:

MIKWEC ENERGY CANADA LTD.

Suite 3175

246 Stewart Green S.W.

Calgary, Alberta

T3H 3C8

Attention: Manager. Land Administration

Fax: (403) 663-9226

MAXEN PETROLEUM INC.

102 - 325 24 ^th Avenue S.W.

Calgary, Alberta

T2S 3E7

Attention: Manager. Land Administration

Fax: (403) XXX-XXXX

CLAUSE 2401 - Disposition of Interests:	A x	B ___

CLAUSE 2404 - Recognition upon Assignment	A x	B ___

PASC ACCOUNTING PROCEDURE - 1988

CLAUSE 105 (a) Operating Advances: 10%

CLAUSE 109 - Asset Records: replace with The Operator shall maintain detailed asset records of Controllable Material and other tangible assets as it may deem necessary to prevent the potential loss or under utilization of assets.

CLAUSE 110 - Approvals: 2 or more parties, 75%

CLAUSE 202 - Labour
b)	(1) shall not be be chargeable.
	(2) shall not be chargeable.

CLAUSE 203 - Employee Benefits: (b) Non-compulsory 25%

CLAUSE 217 - Warehouse Handling:
	(1) 2.5%, $5,000
	(2) 5%

CLAUSE 302
a) For each Exploration Project
	1.	5% of the first $ 50,000.00
	2.	3% of the next $ 100,000.00
	3.	1% of the cost exceeding the sum of (1) and (2).

b) For each Drilling Well
	1.	5% of the first $ 50,000.00
	2.	3% of the next $ 100,000.00
	3.	1% of the cost exceeding the sum of (1) and (2).

c) For each Construction Project:
	1.	5% of the first $ 50,000.00
	2.	3% of the next $ 100,000.00
	3.	1% of the cost exceeding the sum of (1) and (2).

d) For Operating and Maintenance, per month:
	1.	n/a of the Cost of Operation and Maintenance of the Joint Property; and
	2.	$250 per producing well per month.
	3.	n/a flat rate...

Rates in sub clauses d(2) and d(3) will not be adjusted

Article IV Pricing of Joint Material Purchases, Transfers and Dispositions: $ 35,000

CLAUSE 501 - Periodic Inventory: at its discretion but not less than five (5) year intervals.

FEDERAL GOODS AND SERVICES TAX (GST) ELECTION

Each party authorizes the Operator to make the election jointly and account for GST under subsection 273(1) of the Excise Act.

SCHEDULE “C”

This is a Summary Schedule “C” attached to and forming part of a Joint Operating Agreement dated as of April 26, 2004 among MIKWEC ENERGY CANADA LTD. and MAXEN PETROLEUM INC.

ASSIGNMENT PROCEDURE CAPL - 1993

Attached to and forming part of the Agreement dated April 26, 2004

BETWEEN(AMONG)

MIKWEC ENERGY CANADA LTD.

MAXEN PETROLEUM INC.

ARTICLE I

DEFINITIONS

1.01

In this Assignment Procedure, the following terms, when capitalized, - shall have the meaning assigned to each below:

(i)

a corporation is directly controlled by another corporation or partnership if the shares of the corporation to

which are attached more than 50% of the votes that may be cast to elect directors of the corporation are beneficially owned by that other corporation or partnership and the votes attached to those shares are sufficient, it exercised, to elect a majority of the directors of the corporation;

(ii)

a partnership is directly controlled by a corporation or other partnership if that corporation or partnership beneficially owns more than a 50% interest in the partnership;

(iii)

a corporation or partnership is indirectly controlled by another corporation or partnership if control, as defined above, is exercised through one or more other corporations or partnerships.

Where two or more corporations or partnerships are affiliated at the same time with the same corporation or partnership, they shall be deemed to be Affiliates of each other.

(b)	“Agreement” - means the agreement to which this Assignment Procedure is attached and made a part.

(c)	“Assigned Interest” - means the interest in the Agreement which is the subject of an assignment and which is specified in a Notice of Assignment, but shall not include rights of the Assignor as operator.

(d)	“Assignee” - means the entity named in a Notice of Assignment as the Assignee.

(e)	“Assignment and Novation Agreement” - means an agreement by all parties to the Agreement and a party to whom an interest in the Agreement has been assigned where:

(i)

the assignee assumes the duties and obligations of the assignor for the Assigned Interest; and

(ii)

the assignor is released from its duties for the Assigned Interest; and

(iii)

the assignee is substituted as a party to the Agreement in the place of the assignor to the extent of the Assigned Interest.

(f)	“Assignor” - means the party to the Agreement named in a Notice of Assignment as the Assignor.

(g)	“Binding Date” - means the first day of the second calendar month following the month in which the Notice of Assignment is served in accordance with Article IV below.

(h)	“Notice of Assignment” - means a notice in the form entitled Notice of Assignment attached hereto as Appendix A.

(i)	“Third Party” - means the parties to the Agreement who are not the Assignor.

(j)	“Transfer Date” - means the effective date of the transfer of the Assigned Interest, as specified in the Notice of Assignment.

1.02	In this Assignment Procedure, when a numbered clause or Article is referred to, that clause or Article is of this Assignment Procedure.

ARTICLE II

APPLICATION, CONDITIONS AND FORM OF NOTICE

2.01(a) A Notice of Assignment issued in accordance with this Assignment Procedure shall be used in place of an Assignment and Novation Agreement for assignments where the Agreement:

(i)	requires parties to use; or

(ii)	entitles parties to request; or

(iii)

is silent as to the right of any party to request;

an Assignment and Novation Agreement.

(b)	The Notice of Assignment shall be in the form indicated in Appendix A and shall be executed by the Assignor and the Assignee.

2.02	If there is a conflict between the Assignment Procedure and the provisions of the Agreement, the Assignment Procedure shall prevail.

2.03	If the Agreement requires each Third Party’s consent to an assignment but does not specify a time within which each Third Party shall respond or shall be deemed to have responded, then consent of each Third Party to an assignment shall be deemed if it fails to reply within 20 days of receipt of a written request for consent.

2.04 (a)	If the Agreement is silent regarding rights of first refusal or consent from Third Party which relates to an Assigned Interest, then Assignor shall, by notice pursuant to Article IV:

(i)

advise Third Party of:

its intention to make the disposition;

a description of the Assigned Interest; and

t he identity of the proposed Assignee, and

(ii)

request Third Party’s written consent to such disposition, which consent shall not be unreasonably withheld.

Consent of each Third Party shall be deemed if it fails to reply to Assignor within 20 days of receipt of the written request for consent.

(b) Clause 2.04 (a) shall not apply in the following instances, namely:

(i)

an assignment made by way of security for present or future indebtedness, or liabilities (whether contingent, direct or indirect and whether financial or otherwise), the issuance of the bonds or debentures of a corporation. of the performance of the obligations of a guarantor under a guarantee, provided that in the event the security is enforced by a sale or foreclosure. Clause 2.04 (a) shall apply; or

(ii)

(iii)

an assignment is required within the terms of the Agreement (such as, but not limited to, abandonment, forfeiture or surrender).

2.05	An assignment of an Assigned Interest shall (subject to Clause 2.06) be effective against Third Party on the Binding Date if:

(a)	all prohibitions, limitations or conditions (such as, but not limited to, a right of first refusal or a requirement for prior consent from Third Party) applying to the Assigned Interest have been complied with and satisfied pursuant to the Agreement, or waived by Third Party, including, if applicable, compliance with Clauses 2.03 and 2.04; and

( b)	following compliance with Clause 2.05(a), a Notice of Assignment is served on Third Party in accordance with Article IV.

2.06 (a )

(b)	If a notice of objection is served pursuant to Clause 2.06(a), the Notice of Assignment to which the notice of objection relates will be of no effect.

(c )	If a Third Party does not object pursuant to Clause 2.06(a), the Notice of Assignment will be effective for purposes of Article 11\, but each Third Party will retain all other rights or remedies arising as a consequence of the failure of Assignor to comply with Clause 2.05 , including (without limitation), rights to seek damages for breach of the Agreement and rights to seek specific performance of a right of first refusal.

ARTICLE III

ASSIGNMENT, ASSUMPTION AND DISCHARGE BY NOTICE

3.01	If a Notice of Assignment has become effective in accordance with Clauses 2.05 or 2.06, then Assignor, Assignee and Third Party shall have agreed that:

(a)	Subject to Clause 3.01 (d), Assignor and Assignee shall have acknowledged and represented that the Assignor has transferred, assigned and conveyed the Assigned Interest to Assignee as of the transfer Date.

(b)	Subject to Clause 3.01(d), Assignee shall replace Assignor as a party to the Agreement with respect to the Assigned Interest on and after the Transfer Date.

(c)	Only insofar as Third Party is concerned, notwithstanding the terms and provisions in the “Transfer Agreement” referenced in the Notice of Assignment:

	(i)	Subject to Clause 3.01 (d), Assignee shall assume and be bound by, observe and perform all terms, obligations and provisions in the Agreement with regard to the Assigned Interest at all times on or after the Transfer Date; and

	(ii)	Assignor shall retain and be entitled to all rights, benefits and privileges under the Agreement with respect to the Assigned Interest at all times prior to the Transfer Date; and

	(iii)	Subject to Clause 3.01 (d), Assignee shall assume and be entitled to all rights, benefits and privileges under the Agreement with respect to the Assigned Interest at all times on and after the Transfer Date.

(d)	In all matters relating to the Assigned Interest subsequent to the Transfer Date and prior to the Binding Date, Assignor acts as trustee for and duly authorized agent of Assignee, and Assignee, for the benefit of Third Party, ratifies, adopts and confirms all acts or omissions of the Assignor in such capacity as trustee and agent. Third Party agrees to recognize and accept Assignor as trustee and agent for Assignee.

(e)	On and after the Transfer Date, Third Party:

	(i)	releases and discharges Assignor from the observance and performance of all terms and covenants of the Agreement and all obligations and liabilities which arise or occur on or after the Transfer Date under the Agreement with respect to the Assigned Interest; and

	(ii)	does not release and discharge Assignor from any obligation or liability which had arisen or accrued prior to the Transfer Date or which does not relate to the Assigned Interest.

(f)	Subject to the terms and provisions of the “Transfer Agreement” referenced in the Notice of Assignment, Assignee on and after the Transfer Date:

	(i)	releases and discharges Assignor from the observance and performance of all terms and covenants of the Agreement and all obligations and liabilities which arise or occur on or after the Transfer Date under the Agreement with respect to the Assigned Interest; and

	(ii)	does not release and discharge Assignor from any obligation or liability which had arisen or accrued prior to the Transfer Date or which does not relate to the Assigned Interest.

(g)	The address of Assignee for the purposes of the Agreement and the serving of notices under it shall be the address stated for Assignee in the Notice of Assignment.

(h)	The Agreement shall continue in full force and effect from and after the Transfer Date with Assignee made a party thereto to the extent of the Assigned Interest, subject to Clause 3.01(d). The Agreement is amended as necessary to give effect to the Notice of Assignment and, as so amended, is ratified and confirmed by each party.

3.02	In no event shall errors, inaccuracies or misdescriptions in a Notice of Assignment have any effect on the Third Party or the interests of Third Party in the Agreement, even if Third Party has knowledge of an error, inaccuracy or misdescription.

3.03	Assignor and Assignee shall be solely responsible for any adjustment between themselves with respect to the Assigned Interest as to revenues, benefits, costs, obligations or indemnities which accrue prior to Binding Date.

ARTICLE IV

SERVICE OF NOTICES

4.01	All notices and Notices of Assignment (herein called “notices”) required or permitted by the terms of this Assignment Procedure shall be in writing, subject to the provisions of this Article. This Article applies only to notices served pursuant to this Assignment Procedure. Any notice to be given under this Assignment Procedure shall be deemed to be served properly if served in any of the following modes:

(a)	personally, by delivering the notice to the party on whom it is to be served at that party’s address for service. Personally served notices shall be deemed received by the addressee when actually delivered as aforesaid, if such delivery is during normal business hours, on any day other than a Saturday, Sunday or statutory holiday. If a notice is not delivered during normal business hours, such notice shall be deemed to have been received by such party at the commencement of the day next following the date of delivery, other than a Saturday, Sunday or statutory holiday; or

(b)	by telecopier or telex (or by any other like method by which a written and recorded message may be sent) directed to the party on whom it is to be served at that party’s address for service (however, an original executed copy of a Notice of Assignment shall subsequently be provided to all addressees without delay). A notice so served shall be deemed received by the respective addressees:

	(i)	when actually received by them, if received within the normal business hours on any day other than a Saturday, Sunday or statutory holiday; or

	(ii)	at the commencement of the next ensuing business day following transmission thereof if such notice is not received during such normal business hours; or

(c)	by mailing it first class (air mail if to or from a location outside of Canada) registered post, postage prepaid, directed to the party on whom it is to be served at that party’s address for service. Notices so served shall be deemed to be received by the addressees at noon, local time, on the earlier of the actual date of receipt or the fourth (4th) day (excluding Saturdays, Sundays and statutory holidays) following mailing. However, if postal service is interrupted or operating with unusual or imminent delay, notice shall not be served by such means during such interruption or period of delay.

4.02	The addresses for service of a notice pursuant to this Assignment Procedure shall be as set out (and amended from time to time) in the Agreement.

CAPL - 1993

(Appendix A to the 1993 CAPL ASSIGNMENT PROCEDURE)

NOTICE OF ASSIGNMENT

___________________________________

(For reference only: general land description)

WHEREAS, by agreement (“Transfer Agreement”) dated this ___ day of __________________,200_, ________________________( full name of Assignor[s] ), as Assignor, transferred and conveyed effective on __day of _______________,200_, (“Transfer Date”) an interest in property as more fully described below to ___________________________( full name of Assignees [s] ), as Assignee; and

WHEREAS, Assignor and one or more parties (“Third Party”) are subject to and bound by that certain _______________________ agreement dated__day of _____________,200_, made between, by or among

_____________________________________________________________________________________ as may have been amended, affecting the land or property therein described (“Master Agreement”); and

WHEREAS, in accordance with the terms and provisions of the Master Agreement, Assignor and

Assignee intend to serve notice to Third Party to the Master Agreement of the transfer and conveyance as described in the Transfer Agreement

NOW, THEREFORE, THIS NOTICE OF ASSIGNMENT WITNESSES THAT in consideration of the mutual advantages to the parties hereto, notice is hereby given, as follows:

Assignor (specify proportions if more than one Assignor):

Assignee (specify proportions if more than one Assignee and include address for service of notice pursuant to Master Agreement):

Current Third Party to Master Agreement:

Assigned Interest: (Check A or B below):

Subject to Clause 7 of this Notice of Assignment, Assignor and Assignee, in accordance with the terms of the Transfer Agreement, acknowledge that:

	(i)	Assignor has transferred and conveyed the Assigned Interest to the Assignee as of the Transfer Date; and

	(ii)	Assignee agrees to replace Assignor, on and after the Transfer Date, as a party to the Master Agreement with respect to the Assigned Interest; and

	(iii)	Assignee agrees to be bound by and observe all terms, obligations and provisions in the Master Agreement with respect to the Assigned Interest on and after the Transfer Date.

Subject to the terms and provisions of the Transfer Agreement, Assignee on and after the Transfer

Date:

	(i)	discharges and releases the Assignor from the observance and performance of all terms and covenants in the Master Agreement and any obligations and liabilities which arise or occur under the Master Agreement with respect to the Assigned Interest, and

	(ii)	does not release and discharge the Assignor from any obligation or liability which had arisen or accrued prior to the Transfer Date or which does not relate to the Assigned Interest.

This Notice of Assignment shall become binding on all parties to the Master Agreement on the first day of the second calendar month following the month this notice is served on Third Party in accordance with the terms of the Master Agreement (“Binding Date-). In addition, Assignor and Assignee agree that they shall be solely responsible for any adjustment between themselves with respect to the Assigned Interest as to revenues, benefits, costs, obligations or indemnities which accrue prior to the Binding Date.

Assignor represents and certifies that this Notice of Assignment and its service are in compliance with all the terms and provisions of the Master Agreement.

IN WITNESS WHEREOF this Notice of Assignment has been duly executed by the Assignor and Assignee on the date indicated for each below:

Assignor			Assignee

Per:			Per:

Per:			Per:


Date:			Date:

Exhibit 10.4

DEEP WELL OIL & GAS, INC.

INDEPENDENT CONTRACTOR AGREEMENT

1.	THIS AGREEMENT , made this 8 day of June, 2004 between, Deep Well Oil & Gas, Inc.; hereinafter referred to as “Company”, located at Suite 1804, Sun Life Plaza, 144 Fourth Avenue S. W., Calgary, Alberta and Menno Wiebe, an individual; hereinafter referred to as “Independent Contractor”, collectively referred to as the “Parties”.

RECITALS

2.	Independent Contractor is engaged in providing professional business services, with their principal place of business at 310 Garrison Sq. SW Calgary, Alberta, T2T 6B3. Independent Contractor represents that he or she has complied with all, Federal, Provincial and/or State, and local laws regarding business permits, sales permits, licenses, reporting requirements, tax withholding requirements, and other legal requirements of any kind that may be required to carry out said business and the Scope of Work which is to be performed as an Independent Contractor pursuant to this Agreement. Independent Contractor is or remains open to conducting similar tasks or activities for entities other than the Company and holds himself or herself out to the public to be a separate business entity.

3.	Company desires to engage and contract for the services of independent Contractor to perform certain tasks as set forth below. Independent Contractor desires to enter into this Agreement and perform as an independent contractor for the company and is willing to do so on the terms and conditions set forth below.

NOW, THEREFORE, in consideration of the above recitals and the mutual promises and conditions contained in this Agreement, the Parties agree as follows:

STATUS OF INDEPENDENT CONTRACTOR

4.	This Agreement does not constitute a hiring by either party. It is the parties intention that Independent Contractor shall have an independent contractor status and not be an employee for any purposes, including, but not limited to, the application of the Federal Insurance Contribution Act, the Social Security Act, the Federal Unemployment Tax Act, the provisions of the Internal Revenue Code, the State Revenue and Taxation Code relating to income tax withholding at the source of income, the Workers’ Compensation Insurance Code 40 1(k) and other benefit payments and third party liability claims. Independent Contractor shall retain sole and absolute discretion in the manner and means of carrying out their activities and responsibilities under this Agreement. This Agreement shall not be considered or construed to be a partnership or joint venture, and the Company shall not be liable for any obligations incurred by Independent Contractor unless specifically authorized in writing. Independent Contractor shall not act as an agent of the Company, ostensibly or otherwise, nor bind the Company in any manner, unless specifically authorized to do so in writing.

TASKS, DUTIES, AND SCOPE OF WORK

5.	Independent Contractor agrees to devote as much time, attention, and energy as necessary to complete or achieve the following:

	a.	To provide a Geological Assessment and Economic Analysis Report and Presentation hereinafter referred to as “Report” suitable for the presentation to the Investment Banking Community.
	b.	The specific property referred to in the Report shall be define those lands found within the Sawn Lake Oil Sands Project, Alberta, Canada and controlled by Mikwec Energy Canada Ltd. subject to the terms and conditions of Attachment A, “The Area of Exclusion”.
	c.	To present the Report and to represent the Company with reference to the technical content of the Report at such meetings and demonstrations as may be held from time to time and presented to representatives of the Investment Community as may be required, including those meetings that may occur overseas.
	d.	To improve upon and to update the Report as required from time to time, as economic conditions and/or the Company situation change as the case may be.

6.	The above item 5 to be referred to in this Agreement as the “Scope of Work.” It is expected that the Report contained within the Scope of Work will be substantially completed by June 30, 2004. Further effort by the Independent Contractor on behalf of the Company executing the Scope of Work including such travel time as may be required shall be invoiced to the company on a per incident basis.

7.	Independent Contractor shall additionally perform any and all tasks and duties associated with the Scope of Work set forth above, including but not limited to, work already being performed or related change orders. Independent Contractor shall not be entitled to engage in any activities which are not expressly set forth by this Agreement.

8.	Other Projects, Properties and/or Prospects may, from time to time, be appended to the Independent Contractor’s Tasks, Duties, and Scope of Work by way of execution of a separate Independent Contractor Agreement.

9.	The books and records related to the Scope of Work set forth in this Agreement shall be maintained by the Independent Contractor at the Independent Contractor’s principal place of business and open to inspection by Company during regular working hours. Documents to which Company will be entitled to inspect include, but are not limited to, any and all contract documents, change orders/purchase orders and work authorized by Independent Contractor or Company on existing or potential projects related to this Agreement.

10.	Independent Contractor shall be responsible to the management and directors of Company, but Independent Contractor will not be required to follow or establish a regular or daily work schedule, Independent Contractor shall supply all necessary equipment, materials and supplies. Independent Contractor will not rely on the equipment or offices of Company for completion of tasks and duties set forth pursuant to this Agreement. Any advice given to Independent Contractor regarding the Scope of Work shall be considered a suggestion only, not an instruction. Company retains the right to inspect, stop, or alter the work of Independent Contractor to assure its conformity with this Agreement.

COMPENSATION

11.	Independent Contractor shall be entitled to compensation for performing those tasks and duties related to the Scope of Work as follows:

	a.	Such compensation of CAN$800.00 per day shall become due and payable to Independent Contractor upon receiving an invoice upon completion of the Report.
	b.	Such compensation as may be necessary for further tasks and duties related to the Scope of Work after completion of the Report shall become due and payable to Independent Contractor upon receiving an invoice at a rate of CAN$800.00 per day.
	c.	The minimum per diem invoice-able is one half day.
	d.	While providing such services as described above in the Scope of Work, Independent Contractor shall be entitled to receive, subject to all applicable corporate and regulatory approvals and compliance with any conditions to such approval, options to purchase up to 900,000 common shares of Company exercisable three (3) years from the date of grant at an exercise price per common share equal to US$.75 subject to standard vesting and anti-dilution provisions set forth below.
	e.	Those Options received above shall become vested at a rate of not greater than 1% of 900,000 per calendar quarter for the first 36 months, the first quarter commencing no sooner than first day of the month following the signing date of this Independent Contractor Agreement. After the completion of the 36 month vesting period and if the Independent Contractor Agreement has not been terminated, the remaining unexercised options shall become fully vested.
	f.	The Independent Contractor acknowledges that the common shares of Company issued upon exercise of vested stock options shall be subject to any resale restrictions under applicable United States Securities Laws, and including applicable law in Alberta.
	g.	The Independent Contractor shall be entitled to be reimbursed for any expenses and disbursements as may be incurred in providing the services to Company that have been approved in advance by the President or Vice President of Company.

NOTICE CONCERNING WITHHOLDING OF TAXES

12.	Independent Contractor recognizes and understands that it will receive an IRS 1099 statement and related tax statements, and will be required to file corporate and/or individual tax returns and to pay taxes in accordance with all provisions of applicable Federal and Provincial and/or State laws. Independent Contractor hereby promises and agrees to indemnify Company for any damages or expenses, including attorney’s fees, and legal expenses, incurred by Company as a result of independent contractor’s failure to make such required payments.

AGREEMENT TO WAIVE RIGHTS TO BENEFITS

13.	Independent Contractor hereby waives and foregoes the right to receive any benefits given by Company to its regular employees, including, but not limited to, health benefits, vacation and sick leave benefits, profit sharing plans, such as 40 1(k) plans. This waiver is applicable to all non-salary benefits which might otherwise be found to accrue to the Independent Contractor by virtue of their services to Company, and is effective for the entire duration of Independent Contractor’s agreement with Company. This waiver is effective independently of Independent Contractor’s employment status as adjudged for taxation purposes or for any other purpose.

TERMINATION

14.	This Agreement may be terminated at will prior to the completion or achievement of the Scope of Work by either party giving 30 days written notice. Such termination shall not prejudice any other remedy to which the terminating party may be entitled, either by law, in equity, or under this Agreement.

NON-DISCLOSURE OF TRADE SECRETS, CUSTOMER LISTS AND OTHER PROPRIETARY INFORMATION

15.	Independent Contractor agrees not to disclose or communicate, in any manner, either during or after Independent Contractor’s agreement with Company, proprietary information about Company, its operations, clientele, or any other proprietary information, that relate to the business of Company including, but not limited to, the names of its customers, its marketing strategies, operations, or any other information of any kind which would be deemed confidential, a trade secret, a customer list, or other form of proprietary information of Company. Independent Contractor acknowledges that the above information is material and confidential and that it affects the profitability of Company. Independent Contractor understands that any breach of this provision, or that of any other Confidentiality and Non-Disclosure Agreement, is a material breach of this Agreement. To the extent Independent Contractor feels they need to disclose confidential information, they may do so only after obtaining written authorization from the President or Vice President of the Company.

NON-SOLICITATION COVENANT

16.	Independent Contractors shall not, during the Agreement and for a period of one year immediately following termination of this Agreement, either directly or indirectly, call on, solicit, or take away, or attempt to call on, solicit, or take away, any of the customers or clients of the Company on whom Independent Contractor called or became acquainted with during the terms of this Agreement, either for their own benefit, or for the benefit of any other person, firm, corporation or organization.

NON-RECRUIT COVENANT

17.	Independent Contractor shall not, during this Agreement and for a period of one year immediately following termination of this agreement, either directly or indirectly, recruit any of Company’s employees for the purpose of any outside business.

RETURN OF PROPERTY

18.	On termination of this Agreement, or whenever requested by the parties, each party shall immediately deliver to the other party all property in its possession, or under its care and control, belonging to the other party to them, including but not limited to, proprietary information, customer lists, trade secrets, intellectual property, computers, equipment, tools, documents, plans, recordings, software, electronic data records and all related records or accounting ledgers.

EXPENSE ACCOUNTS

19.	Independent Contractor and the Company agree to maintain separate accounts in regards to all expenses related to performing the Scope of Work. Independent Contractor is solely responsible for payment of expenses incurred pursuant to this Agreement unless provided otherwise in writing by the President or Vice President of the company. Independent Contractor agrees to execute and deliver any agreements and documents prepared by Company and to do all other lawful acts required to establish document and protect such rights.

WORKS FOR HIRE

20.	Independent Contractor agrees that the Scope of Work, all tasks, duties, results, inventions and intellectual property developed or performed pursuant to this Agreement are considered “works for hire” and that the results of said work is by virtue of this Agreement assigned to the Company and shall be the sole property of Company for all purposes, including, but not limited to, copyright, trademark, service mark. patent. and trade secret laws.

LEGAL COMPLIANCE

21.	Independent Contractor is encouraged to treat all company employees, customers, clients, business partners and other affiliates with respect and responsibility. Independent Contractor is required to comply with all laws, ethical codes and company policies, procedures, rules or regulations, including those forbidding sexual harassment, discrimination, and unfair business practices.

LICENSING, WORKERS’ COMPENSATIONAND GENERAL LIABILITY INSURANCE

22.	Independent Contractor agrees to immediately supply the Company with proof of any licensing status required to perform the Scope of Work pursuant to this Agreement, Workers’ Compensation Coverage where required by law and General Liability Insurance, upon request of the Company.

PERSONS HIRED BY INDEPENDENT CONTRACTOR

23.	All persons hired by Independent Contractor to assist in performing the tasks and duties necessary to complete the Scope of Work shall be the employees of Independent Contractor unless specifically indicated otherwise in an agreement signed by all parties. Independent Contractor shall immediately provide proof of Workers’ Compensation insurance and General Liability insurance covering said employees, upon request of the Company.

NOTICES

24.	Any notice to be given hereunder by any party to the other may be affected either by personal delivery in writing, or by mail, registered or certified, postage pre-paid with return receipt requested. Mailed notices shall be addressed to the parties at the addresses appearing in the introductory paragraphs of this Agreement, but each party may change their address by written notice in accordance with this paragraph. Notices delivered personally shall be deemed communicated as of actual receipt; mailed notices shall be deemed communicated as of five (5) days after mailing. Independent Contractor agrees to keep Company current as to their business and mailing addresses, as well as telephone, facsimile, e-mail and pager numbers.

ATTORNEY’S FEES AND COSTS

25.	If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney’s fees, costs and necessary disbursements incurred both before or after judgment in addition to any other relief to which such party may be entitled.


MEDIATION AND ARBITRATION

26.	Any controversy between the parties to this Agreement involving the construction or application of any of the terms, provisions, or conditions of this Agreement, shall on written request of either party served on the other, be submitted first to mediation and then if still unresolved to binding arbitration. Said mediation or binding arbitration shall comply with and be governed by the provisions of the American Arbitration Association for Commercial Disputes unless the Parties stipulate otherwise. The attorneys’ fees and costs of arbitration shall be borne by the losing party, as set forth in paragraph 24 above, unless the Parties stipulate otherwise, or in such proportions, as the arbitrator shall decide.

INDEMNIFICATION

27.	Independent Contractor shall defend, indemnify, hold harmless, and insure Company from any and all damages expenses or liability resulting from or arising out of, any negligence or misconduct on Independent Contractor’s part, or from any breach or default of this Agreement which is caused or occasioned by the acts of Independent Contractor. Independent Contractor shall insure that its employees and affiliates take all actions necessary to comply with the terms and conditions set forth in this Agreement. Independent Contractor shall name Company as an additional insured on all related insurance policies including workers compensation, and general liability.

CONTAINMENT OF ENTIRE AGREEMENT

28.	This Agreement is an independent document and supersedes any and all other Agreements, either oral or in writing, between the parties hereto, except for any separately signed Confidentiality, Trade Secret, Non-Compete or Non-Disclosure Agreements to the extent that these terms are not in conflict with those set forth herein.

REPRESENTATION

29.	Each party of this Agreement acknowledges that no representations, inducements, promises or agreements, orally or otherwise, have been made by any party hereto, or anyone acting on behalf of any party hereto, which are not embodied herein, and that no other agreement, statement or promise not contained in this Agreement shall be valid or binding. Any modification of this Agreement shall be effective only if it is in writing, signed and dated by all parties hereto.

PARTIAL INVALIDITY

30.	If any provision of this Agreement is held by a Court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions shall nevertheless continue in full force and effect without being impaired or invalidated in any way.

LAWS OF NEVADA

31.	The Parties agree that this Agreement shall for all purposes be construed and interpreted according to the laws of the State of Nevada, and that the courts having jurisdiction with respect to matters relating to this Agreement shall be the courts of said State, to the jurisdiction of which courts the parties by their execution of this Agreement do hereby submit.

COUNTERPART EXECUTION

32.	This Agreement may be executed by the parties in counterpart and when each party has executed a counterpart, all counterparts taken together shall constitute one agreement.

Executed this 18th day of June, 2004, at Calgary, Alberta.


	Independent Contractor

	By:	/s/ Menno Wiebe

		Menno Wiebe


	Deep Well Oil & Gas, Inc.

	By:	/s/ Steven Gawne

		Steven Gawne President/CEO

Exhibit 10.6

Deep Well Oil & Gas, Inc.

Suite 510 Royal Bank Building, 10117 Jasper Avenue, Edmonton, AB, T5J 1W8

Reception: 780-409-8144 Fax: 780-409-8146

November 15, 2004

John F. Brown

Via Fax

Dear Mr. Brown,

This letter is to encapsulate our recent conversations and set out the terms of employment for your self. The conditions are:

The effective date would be November 15 , 2004

$10,000 per month paid semi monthly, subject to all the usual governmental withholdings, withhold $250 per pay period to be paid to A. Ron Hardie on your behalf and $278.29 per pay period withheld to repay the employee loan made to you as per our October ₂₁ St Letter.

As part of your base salary you will receive shares in Deep Well Oil & Gas, Inc. We will issue 300,000 common Deep Well Oil & Gas, Inc. common shares in your name to be held by your receiver, A. Ron Hardie. These shares will be subject to any restrictions and withholdings imposed by any regulatory authorities, Securities or Tax, Canadian or US. You will earn these shares at the rate of 100,000 shares per year, earned at the end of each of three years. At the end of each year, any withholdings for tax will be calculated and submitted to the appropriate governments, then the portion going to the receiver will be deducted and then the residual will be received by yourself. The Company (directly or via a nominee) is to get a right of first refusal on the sale of these shares, whether by yourself or the receiver.

At least annual bonuses, either in cash or shares.

Share options in the company.

Benefits plan.

Entering into an employee agreement with the company that would encompass these terms plus what ever other standard terms that company will be having in its employment agreements such as confidentiality etc.

Attached is a copy of the TD-1 Forms for both the Federal Government and the Alberta Governments with their work sheets. We would need you to fill these out.

If you agree with these terms please sign and return a copy of this letter. Yours truly,

/s/ Curtis J. Sparrow_______________

Curtis J. Sparrow

Chief Financial Officer

Deep Well Oil & Gas, Inc.

I agree to and acknowledge the above arrangement as of November 15th, 2004

_______________________________

John F. Brown

Exhibit 10.7

JOINT OPERATING AGREEMENT

SAWN LAKE AREA, ALBERTA

THIS AGREEMENT made as of December 9, 2004.

AMONG:

Deep Well Oil & Gas, Inc., a body corporate, having an office at the City of Calgary, in the Province of Alberta (herein referred to as “DWOG”)

OF THE FIRST PART

- and -

1132559 ALBERTA LTD. a body corporate, having an office at the City of Calgary, in the Province of Alberta (herein referred to as “1132559 ALBERTA”)

OF THE SECOND PART

WHEREAS 1132559 ALBERTA acquired on November 10, 2004 from Maxen Petroleum Inc. certain interests in the Joint Lands;

AND WHEREAS the parties wish to provide for the manner of conducting operations on the Joint Lands.

NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual premises and of the covenants contained herein, the parties agree each with the other as follows:

1.	INTERPRETATION

(a)	In this Agreement, unless the context otherwise requires, the definitions contained in clause 101 of the Operating Procedure shall apply, and:

	(i)	“Assignment Procedure” means the 1993 CAPL Assignment Procedure as completed and attached as Schedule “C”;

	(ii)	“Effective Date” means December 9, 2004;

	(iii)	“Joint Lands” means the lands described in Schedule “A” hereto, including where the context requires the petroleum substances within, upon or under such lands, or any interest or interests in such lands from time to time remaining subject to this Agreement;

	(iv)	“Operating Procedure” means the Operating Procedure as completed and attached as Schedule “B”, together with the Accounting Procedure as completed and annexed thereto as Exhibit “A”

	(v)	“Operator” initially means Deep Well Oil & Gas, Inc., appointed as such in Clause 5 of this Agreement;

	(vi)	“Participating Interest” means the percentage interest of a party set forth in Clause 4 of this Agreement;

	(vii)	“Title Document” means the document of title set forth and described in Schedule “A” hereto and any renewal, extension or replacement thereof, including any leases selected from a license or reservation, insofar as they relate in each case to the Joint Lands; and
(b)	The headings of the clauses of this Agreement and the Schedules are inserted for convenience of reference only and shall not affect the meaning or construction thereof.

(c)	Whenever the singular or masculine or neuter is used in this Agreement or the Schedules, the same shall be construed as meaning plural or feminine or body politic or corporate and vice versa as the context requires.

(d)	In the event of any conflict or inconsistency between the provisions of this Agreement and those of any Schedule, the provisions of this Agreement shall prevail. If any term or condition of this Agreement conflicts with a term or condition of any Title Document, then such term or condition of such Title Document shall prevail and this Agreement shall be deemed to be amended accordingly with respect to such Title Document.

2.	SCHEDULES

	The following Schedules are attached to and are incorporated into this Agreement:

(a)	Schedule “A” which sets forth and describes the Joint Lands and the Title Document;

(b)	Schedule “B” which is the Operating Procedure together with the Accounting Procedure annexed thereto as Exhibit “A”; and

(c)	Schedule “C” which is the Assignment Procedure.

3.	TITLE

	No party warrants title to its Participating Interest in the Title Document or the Joint Lands but each party covenants that it has complied with the terms of the Title Document to the extent necessary to keep it in full force and effect, has good right, full power and authority to enter into this Agreement and represents that it has not as of the Effective Date of this Agreement received any notice of default in respect of any Title Document.

4.	PARTICIPATING INTERESTS

	Except as otherwise provided in the Operating Procedure, the parties shall bear all costs and expenses paid or incurred under this Agreement and the Operating Procedure and shall own the Title Document the Joint Lands, all wells thereon and information obtained therefrom and the equipment pertaining thereto and the petroleum substances produced therefrom in accordance with the following respective Participating Interests:

Deep Well Oil & Gas, Inc.	80%
1132559 Alberta Ltd.	10%
Maxen Petroleum Inc.	10%

5.	APPOINTMENT OF OPERATOR

	Deep Well Oil & Gas, Inc. is hereby appointed initial Operator and shall be responsible for the operation and development of the Joint Lands for the joint account and, subject to the terms and provisions of this Agreement and the Operating Procedure, shall have the sole and exclusive control and management of all operations conducted pursuant to this Agreement. Deep Well Oil & Gas, Inc. hereby accepts such appointment as Operator. The Operator shall account for the Goods and Services Tax (Canada), pursuant to Subsection 273 (1) of the Excise Tax Act, on all purchases and sales occurring on the Joint Lands.

6.	OPERATING PROCEDURE

	The parties agree that the Operating Procedure as amended by this Agreement governs the relationship of the parties hereto and applies to all operations conducted in respect of the exploration, development and maintenance of the Joint Lands for the production of petroleum substances.

7.	INFORMATION TO JOINT-OPERATOR

	In addition to the information and data required to be provided to the Joint-Operator by the Operator pursuant to the Operating Procedure, the Operator, upon any well reaching total depth, shall supply the Joint-Operator with two (2) copies of a geological (factual) report containing:

(a)	final summary of survey log formation tops;

(b)	detailed drillstem test data, if applicable;

(c)	lithologic core and sample report, if applicable; and

(d)	core, water, gas or oil analyses, if applicable.

8.	ENCUMBRANCES ON INTEREST

	If the interest of any party in the Joint Lands is now or hereafter shall become encumbered by any security interest or by any royalty, production payment or other charge of a similar nature, other than the royalties set forth under the terms of the Title Document covering such lands or any compensatory royalty payments, then such security interest, additional royalty, production payment or charge shall be charged to and paid entirely by the party whose interest is or becomes thus encumbered. Any such encumbrance hereafter made or granted by a party shall be expressly made subject to the rights of the other parties hereunder. In no event shall a party hereto acquiring an interest in such lands by virtue of the operation of any provision of the body of this Agreement of the Operating Procedure (except Article XXIV of the Operating Procedure, where applicable) ever be required to assume any part of such interest, royalty, payment or charge.

9.	NEW ROYALTY APPLICATIONS

	If any well on the Joint Lands is completed for the taking of production the Operator shall be responsible for making timely application, on behalf of the parties, pursuant to the Regulations, for new royalty status on any petroleum substances and for any royalty holiday or abatement that may be applicable to operations hereunder.

10.	INCENTIVE ASSISTANCE PROGRAM

	Incentives of any kind which are generated by operations on the Joint Lands by the parties shall be allocated and shared in accordance with each party’s participation in such operation.

11.	CONFIDENTIAL INFORMATION

	Notwithstanding the Operating Procedure, a party may release information obtained in the course of or as a result of operations on the Joint Lands to an industry scouting association in which the party is a participant, or to a lawful governmental authority to the extent required by law, or to a stock exchange on which a party’s shares are listed or traded to the extent required by the rules of such exchange.

12.	TERM OF AGREEMENT

	This Agreement is effective from the Effective Date and shall continue for the life of any Title Document in which the parties hold their interest as provided herein and any extensions or renewals of such Title Document whether by production or otherwise and until final settlement of accounts has been made among the parties.

13.	ENTIRE AGREEMENT

	The terms of this Agreement express and constitute the entire Agreement among the parties. No implied covenant or liability is created or shall arise by reason of this Agreement or anything herein contained.

14.	COVENANTS RUN WITH THE LAND

	All terms and provisions of this Agreement shall run with and be binding upon the Joint Lands during the term hereof.

15.	ENUREMENT

	This Agreement shall be binding upon and enure to the benefit of the parties hereto and their respective successors and assigns.

16.	LAWS OF ALBERTA

	The Parties agree that this Agreement shall for all purposes be construed and interpreted according to the laws of the Province of Alberta, and that the courts having jurisdiction with respect to matters relating to this Agreement shall be the courts of said Province, to the jurisdiction of which courts the parties by their execution of this Agreement do hereby submit.

17.	COUNTERPART EXECUTION

	This Agreement may be executed by the parties in counterpart and when each party has executed a counterpart, all counterparts taken together shall constitute one agreement.

IN WITNESS WHEREOF The parties hereto have executed this Agreement as of the day and year first above written.


	DEEP WELL OIL & GAS, INC.

	By:	/s/ Steven Gawne

		Per: Steven Gawne, Director, President, CEO


	1132559 ALBERTA LTD.

	By:	/s/ William Tighe

		Per: Wm Tighe, Director, President

This is page 1 of 1 execution page attached to and forming part of a Joint Operating Agreement dated as of December 9, 2004 among DEEP WELL OIL & GAS, INC. and 1132559 ALBERTA LTD.

SCHEDULE “A”

This is Schedule “A” attached to and forming part of a Joint Operating Agreement dated as of December 9, 2004 among DEEP WELL OIL & GAS, INC. and 1132559 ALBERTA LTD.

THE JOINT LANDS

Oil Sands Development Lease 7404080870 is described as follows:

Township 92, Range 12 W5M: Sections 15, 16, 17, 18, 19, 20, 21, 28, 29, 30, 31, 32, 33

Oil Sands (Top of the Peace River to Base of the Pekisko) 100%

Covering 3328 hectares

Oil Sands Development Lease 7404080871 is described as follows:

Township 92, Range 12 W5M: Sections 22, 26, 27, 34, 35, 36

Oil Sands (Top of the Peace River to Base of the Pekisko) 100%

Covering 1536 hectares

Oil Sands Development Lease 7404080872 is described as follows:

Township 92, Range 13 W5M: Sections 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36

Oil Sands (Top of the Peace River to Base of the Pekisko) 100%

Covering 3072 hectares

TITLE DOCUMENTS

Crown Agreement Title # 7404080870

Fifteen year term commencing August 19, 2004.

Crown Agreement Title # 7404080871

Fifteen year term commencing August 19, 2004.

Crown Agreement Title # 7404080872

Fifteen year term commencing August 19, 2004.

ENCUMBRANCES

Crown Royalty payable to the Province of Alberta

A six and one half (6.5%) Gross Overriding Royalty (GOR) payable to Nearshore Petroleum Corporation

SCHEDULE “B”

This is a Summary Schedule “B” attached to and forming part of a Joint Operating Agreement dated as of December 9, 2004 among DEEP WELL OIL & GAS, INC. and 1132559 ALBERTA LTD.

1990 CAPL OPERATING AGREEMENT

CLAUSE 311 - Insurance Election:	A___	B x

CLAUSE 604 - Marketing Fee:	A x	B ___

CLAUSE 903 - Casing Point Election:	A x	B ___

CLAUSE 1007 - Penalty for Independent Operations:

1) Development 400 %

2) Exploratory 500 %

CLAUSE 1010 (iv) - Well Preserving Title: 180 Days

CLAUSE 2201 - Notice of Service:

DEEP WELL OIL & GAS, INC.

Suite 2600 Sun Life Plaza

144 - 4th Avenue S.W.

Calgary, Alberta

T2P 3N4

Attention: Manager. Land Administration

Fax: (403) 232-1464

1132559 ALBERTA LTD.

XXXX XXXX N.W.

Calgary, Alberta

T2S 3E7

Attention: Manager. Land Administration

Fax: (403) XXX-XXXX

CLAUSE 2401 - Disposition of Interests:	A x	B ___

CLAUSE 2404 - Recognition upon Assignment	A x	B ___

PASC ACCOUNTING PROCEDURE - 1988

CLAUSE 105 (a) Operating Advances: 10%

CLAUSE 110 - Approvals: 2 or more parties, 75%

CLAUSE 202 - Labour

b) (1) shall not be be chargeable.

(2) shall not be chargeable.

CLAUSE 203 - Employee Benefits: (b) Non-compulsory 25%

CLAUSE 217 - Warehouse Handling:

(1) 2.5%, $5,000

(2) 5%.

CLAUSE 302

a) For each Exploration Project

1. 5% of the first $ 50,000.00

2. 3% of the next $ 100,000.00

3. 1% of the cost exceeding the sum of (1) and (2).

b) For each Drilling Well

1. 3 % of the first $ 50,000.00

2. 2% of the next $ 100,000.00

3. 1% of the cost exceeding the sum of (1) and (2).

c) For each Construction Project:

1. 5% of the first $ 50,000.00

2. 3% of the next $ 100,000.00

3. 1% of the cost exceeding the sum of (1) and (2).

d) For Operating and Maintenance, per month:

1. n/a of the Cost of Operation and Maintenance of the Joint Property; and

2. $250 per producing well per month.

3. n/a flat rate...

Rates in sub clauses d(2) and d(3) will not be adjusted

Article IV Pricing of Joint Material Purchases, Transfers and Dispositions: $ 35,000

CLAUSE 501 - Periodic Inventory: at its discretion but not less than five (5) year intervals.

FEDERAL GOODS AND SERVICES TAX (GST) ELECTION

,Each party authorizes the Operator to make the election jointly and account for GST under subsection 273(1) of the Excise Act.

SCHEDULE “C”

This is a Summary Schedule “C” attached to and forming part of a Joint Operating

Agreement dated as of December 9, 2004 among DEEP WELL OIL & GAS, INC. and 1132559 ALBERTA LTD.

ASSIGNMENT PROCEDURE CAPL - -1993

Attached to and forming part of the Agreement dated March 29, 2004

BETWEEN(AMONG)

DEEP WELL OIL & GAS, INC.

and

1132559 ALBERTA LTD.

ARTICLE I

DEFINITIONS

1.01	In this Assignment Procedure, the following terms, when capitalized, - shall have the meaning assigned to each below:

(a)	“Affiliate” - for the purposes of this Assignment Procedure, means a corporation or partnership that is affiliated with the party in respect of which the expression is being applied, and, for the purpose of this definition a corporation or partnership is affiliated with another corporation or partnership if it directly or indirectly controls or is controlled by that other corporation or partnership, and for the purpose of determining whether a corporation or partnership is so controlled, it shall be deemed that:

	(i)	a corporation is directly controlled by another corporation or partnership if the shares of the corporation to which are attached more than 50% of the votes that may be cast to elect directors of the corporation are beneficially owned by that other corporation or partnership and the votes attached to those shares are sufficient, it exercised, to elect a majority of the directors of the corporation;

	(ii)	a partnership is directly controlled by a corporation or other partnership if that corporation or partnership beneficially owns more than a 50% interest in the partnership;

	(iii)	a corporation or partnership is indirectly controlled by another corporation or partnership if control, as defined above, is exercised through one or more other corporations or partnerships.

Where two or more corporations or partnerships are affiliated at the same time with the same corporation or partnership, they shall be deemed to be Affiliates of each other.

(b)	“Agreement” - means the agreement to which this Assignment Procedure is attached and made a part.

(c)	“Assigned Interest” - means the interest in the Agreement which is the subject of an assignment and which is specified in a Notice of Assignment, but shall not include rights of the Assignor as operator.

(d)	“Assignee” - means the entity named in a Notice of Assignment as the Assignee.

(e)	“Assignment and Novation Agreement” - means an agreement by all parties to the Agreement and a party to whom an interest in the Agreement has been assigned where:

	(i)	the assignee assumes the duties and obligations of the assignor for the Assigned Interest; and

	(ii)	the assignor is released from its duties for the Assigned Interest; and

	(iii)	the assignee is substituted as a party to the Agreement in the place of the assignor to the extent of the Assigned Interest.

(f)	“Assignor” - means the party to the Agreement named in a Notice of Assignment as the Assignor.

(g)	“Binding Date” - means the first day of the second calendar month following the month in which the Notice of Assignment is served in accordance with Article IV below.

(h)	“Notice of Assignment” - means a ‘notice in the form entitled Notice of Assignment attached hereto as Appendix A.

(i)	“Third Party” - means the parties to the Agreement who are not the Assignor.

(j)	“Transfer Date” - means the effective date of the transfer of the Assigned Interest, as specified in the Notice of Assignment.

1.02	In this Assignment Procedure, when a numbered clause or Article is referred to, that clause or Article is of this Assignment Procedure.

ARTICLE II

APPLICATION, CONDITIONS AND FORM OF NOTICE

2.01(a) A Notice of Assignment issued in accordance with this Assignment Procedure shall be used in place of an Assignment and Novation Agreement for assignments where the Agreement:

(i)

requires parties to use; or

(ii)

entitles parties to request; or

(iii)

is silent as to the right of any party to request;

an Assignment and Novation Agreement.

(b)	The Notice of Assignment shall be in the form indicated in Appendix A and shall be executed by the Assignor and the Assignee.

2.02	If there is a conflict between the Assignment Procedure and the provisions of the Agreement, the Assignment Procedure shall prevail.


2.03	If the Agreement requires each Third Party’s consent to an assignment but does not specify a time within which each Third Party shall respond or shall be deemed to have responded, then consent of each Third Party to an assignment shall be deemed if it fails to reply within 20 days of receipt of a written request for consent.

2.04(a)	If the Agreement is silent regarding rights of first refusal or consent from Third Party which relates to an Assigned Interest, then Assignor shall, by notice pursuant to Article IV:

	(i)	advise Third Party of:

		a.	its intention to make the disposition;

		b.	a description of the Assigned Interest; and

		c.	the identity of the proposed Assignee, and

	(ii)	request Third Party’s written consent to such disposition, which consent shall not be unreasonably withheld.

Consent of each Third Party shall be deemed if it fails to reply to Assignor within 20 days of receipt of the written request for consent.

(b) Clause 2.04 (a) shall not apply in the following instances, namely:

	(i)	an assignment made by way of security for present or future indebtedness, or liabilities (whether contingent, direct or indirect and whether financial or otherwise), the issuance of the bonds or debentures of a corporation. of the performance of the obligations of a guarantor under a guarantee, provided that in the event the security is enforced by a sale or foreclosure. Clause 2.04 (a) shall apply; or

	(ii)	an assignment to an Affiliate, or in consequence of a merger or amalgamation with another corporation or pursuant to an assignment made by a party of its entire interest in the Agreement to a corporation in return for shares in that corporation or to a registered partnership in return for an interest in that partnership; or

	(iii)	an assignment is required within the terms of the Agreement (such as, but not limited to, abandonment, forfeiture or surrender).

2.05	An assignment of an Assigned Interest shall (subject to Clause 2.06) be effective against Third Party on the Binding Date if:

(a)	all prohibitions, limitations or conditions (such as, but not limited to, a right of first refusal or a requirement for prior consent from Third Party) applying to the Assigned Interest have been complied with and satisfied pursuant to the Agreement, or waived by Third Party, including, if applicable, compliance with Clauses 2.03 and 2.04; and

(b)	following compliance with Clause 2.05(a), a Notice of Assignment is served on Third Party in accordance with Article IV.

2.06(a)	A Third Party who objects to the Notice of Assignment on the basis of a failure to comply with Clause 2.05 may, prior to the Binding Date, notify (pursuant to Article IV) Assignor and Third Party of its objections.

(b)	If a notice of objection is served pursuant to Clause 2.06(a), the Notice of Assignment to which the notice of objection relates will be of no effect.

(c)	If a Third Party does not object pursuant to Clause 2.06(a), the Notice of Assignment will be effective for purposes of Article 11\, but each Third Party will retain all other rights or remedies arising as a consequence of the failure of Assignor to comply with Clause 2.05, including (without limitation), rights to seek damages for breach of the Agreement and rights to seek specific performance of a right of first refusal.

ARTICLE III

ASSIGNMENT, ASSUMPTION AND DISCHARGE BY NOTICE

3.01	If a Notice of Assignment has become effective in accordance with Clauses 2.05 or 2.06, then Assignor, Assignee and Third Party shall have agreed that:

(a)	Subject to Clause 3.01 (d), Assignor and Assignee shall have acknowledged and represented that the Assignor has transferred, assigned and conveyed the Assigned Interest to Assignee as of the transfer Date.

(b)	Subject to Clause 3.01(d), Assignee shall replace Assignor as a party to the Agreement with respect to the Assigned Interest on and after the Transfer Date.

(c)	Only insofar as Third Party is concerned, notwithstanding the terms and provisions in the “Transfer Agreement” referenced in the Notice of Assignment:

	(i)	Subject to Clause 3.01 (d), Assignee shall assume and be bound by, observe and perform all terms, obligations and provisions in the Agreement with regard to the Assigned Interest at all times on or after the Transfer Date; and

	(ii)	Assignor shall retain and be entitled to all rights, benefits and privileges under the Agreement with respect to the Assigned Interest at all times prior to the Transfer Date; and

	(iii)	Subject to Clause 3.01 (d), Assignee shall assume and be entitled to all rights, benefits and privileges under the Agreement with respect to the Assigned Interest at all times on and after the Transfer Date.

(d)	In all matters relating to the Assigned Interest subsequent to the Transfer Date and prior to the Binding Date, Assignor acts as trustee for and duly authorized agent of Assignee, and Assignee, for the benefit of Third Party, ratifies, adopts and confirms all acts or omissions of the Assignor in such capacity as trustee and agent. Third Party agrees to recognize and accept Assignor as trustee and agent for Assignee.

(e)	On and after the Transfer Date, Third Party:

	(i)	releases and discharges Assignor from the observance and performance of all terms and covenants of the Agreement and all obligations and liabilities which arise or occur on or after the Transfer Date under the Agreement with respect to the Assigned Interest; and

	(ii)	does not release and discharge Assignor from any obligation or liability which had arisen or accrued prior to the Transfer Date or which does not relate to the Assigned Interest.

(f)	Subject to the terms and provisions of the “Transfer Agreement” referenced in the Notice of Assignment, Assignee on and after the Transfer Date:

	(i)	releases and discharges Assignor from the observance and performance of all terms and covenants of the Agreement and all obligations and liabilities which arise or occur on or after the Transfer Date under the Agreement with respect to the Assigned Interest; and

	(ii)	does not release and discharge Assignor from any obligation or liability which had arisen or accrued prior to the Transfer Date or which does not relate to the Assigned Interest.

(g)	The address of Assignee for the purposes of the Agreement and the serving of notices under it shall be the address stated for Assignee in the Notice of Assignment.

(h)	The Agreement shall continue in full force and effect from and after the Transfer Date with Assignee made a party thereto to the extent of the Assigned Interest, subject to Clause 3.01(d). The Agreement is amended as necessary to give effect to the Notice of Assignment and, as so amended, is ratified and confirmed by each party.

3.02	In no event shall errors, inaccuracies or misdescriptions in a Notice of Assignment have any effect on the Third Party or the interests of Third Party in the Agreement, even if Third Party has knowledge of an error, inaccuracy or misdescription.

3.03	Assignor and Assignee shall be solely responsible for any adjustment between themselves with respect to the Assigned Interest as to revenues, benefits, costs, obligations or indemnities which accrue prior to Binding Date

ARTICLE IV

SERVICE OF NOTICES


4.01	All notices and Notices of Assignment (herein called “notices”) required or permitted by the terms of this Assignment Procedure shall be in writing, subject to the provisions of this Article. This Article applies only to notices served pursuant to this Assignment Procedure. Any notice to be given under this Assignment Procedure shall be deemed to be served properly if served in any of the following modes:

(a)	personally, by delivering the notice to the party on whom it is to be served at that party’s address for service. Personally served notices shall be deemed received by the addressee when actually delivered as aforesaid, if such delivery is during normal business hours, on any day other than a Saturday, Sunday or statutory holiday. If a notice is not delivered during normal business hours, such notice shall be deemed to have been received by such party at the commencement of the day next following the date of delivery, other than a Saturday, Sunday or statutory holiday; or

(b)	by telecopier or telex (or by any other like method by which a written and recorded message may be sent) directed to the party on whom it is to be served at that party’s address for service (however, an original executed copy of a Notice of Assignment shall subsequently be provided to all addressees without delay). A notice so served shall be deemed received by the respective addressees:

	(i)	when actually received by them, if received within the normal business hours on any day other than a Saturday, Sunday or statutory holiday; or

	(ii)	at the commencement of the next ensuing business day following transmission thereof if such notice is not received during such normal business hours; or

(c)	by mailing it first class (air mail if to or from a location outside of Canada) registered post, postage prepaid, directed to the party on whom it is to be served at that party’s address for service. Notices so served shall be deemed to be received by the addressees at noon, local time, on the earlier of the actual date of receipt or the fourth (4th) day (excluding Saturdays, Sundays and statutory holidays) following mailing. However, if postal service is interrupted or operating with unusual or imminent delay, notice shall not be served by such means during such interruption or period of delay.

4.02	The addresses for service of a notice pursuant to this Assignment Procedure shall be as set out (and amended from time to time) in the Agreement.

CAPL - 1993

(Appendix A to the 1993 CAPL ASSIGNMENT PROCEDURE)

NOTICE OF ASSIGNMENT

___________________________________

(For reference only: general land description)

WHEREAS, Assignor and one or more parties (“Third Party”) are subject to and bound by that certain _______________________ agreement dated__day of _____________,200_, made between, by or among

_____________________________________________________________________________________ as may have been amended, affecting the land or property therein described (“Master Agreement”); and

NOW, THEREFORE, THIS NOTICE OF ASSIGNMENT WITNESSES THAT in consideration of the mutual advantages to the parties hereto, notice is hereby given, as follows:

1.	Assignor (specify proportions if more than one Assignor):

2.	Assignee (specify proportions if more than one Assignee and include address for service of notice pursuant to Master Agreement):

3.	Current Third Party to Master Agreement:

4.	Assigned Interest: (Check A or B below):

5.	Subject to Clause 7 of this Notice of Assignment, Assignor and Assignee, in accordance with the terms of the Transfer Agreement, acknowledge that:

	(i)	Assignor has transferred and conveyed the Assigned Interest to the Assignee as of the Transfer Date; and

	(ii)	Assignee agrees to replace Assignor, on and after the Transfer Date, as a party to the Master Agreement with respect to the Assigned Interest; and

	(iii)	Assignee agrees to be bound by and observe all terms, obligations and provisions in the Master Agreement with respect to the Assigned Interest on and after the Transfer Date.

6.	Subject to the terms and provisions of the Transfer Agreement, Assignee on and after the Transfer

Date:

	(i)	discharges and releases the Assignor from the observance and performance of all terms and covenants in the Master Agreement and any obligations and liabilities which arise or occur under the Master Agreement with respect to the Assigned Interest, and

	(ii)	does not release and discharge the Assignor from any obligation or liability which had arisen or accrued prior to the Transfer Date or which does not relate to the Assigned Interest.

This Notice of Assignment shall become binding on all parties to the Master Agreement on the first day of the second calendar month following the month this notice is served on Third Party in accordance with the terms of the Master Agreement (“Binding Date-). In addition, Assignor and Assignee agree that they shall be solely responsible for any adjustment between themselves with respect to the Assigned Interest as to revenues, benefits, costs, obligations or indemnities which accrue prior to the Binding Date.

9.	Assignor represents and certifies that this Notice of Assignment and its service are in compliance with all the terms and provisions of the Master Agreement.

IN WITNESS WHEREOF this Notice of Assignment has been duly executed by the Assignor and Assignee on the date indicated for each below:

Assignor			Assignee

Per:			Per:

Per:			Per:


Date:			Date:

Exhibit 10.8

FARMOUT AGREEMENT

THIS AGREEMENT dated as of the 25 ^th day of February 2005.

BETWEEN:

DEEP WELL OIL & GAS, INC. , a Nevada corporation extra-provincially registered in Alberta (“ Deep Well ”) and NORTHERN ALBERTA OIL LTD. , an Alberta corporation (“ Northern ”)

(collectively, the “ Farmor ”)

AND:

SURGE GLOBAL ENERGY (CANADA), LTD. , an Alberta corporation and SURGE GLOBAL ENRGY INC. a Delaware corporation (collectively, the “ Farmee ”)

WHEREAS the Farmee desires the right to acquire an interest in the Title Documents and the Farmout Lands upon the terms and conditions herein set forth.

The Parties agree as follows:

ARTICLE 1

INTERPRETATION

1.1

Each capitalized term used in this Head Agreement will have the meaning given to it in the Farmout & Royalty Procedure and, in addition:

(a)

“ 6.5 Section Block ” means those lands designated as such in Schedule “A”;

(b)

“ 32 Section Block ” means those lands designated as such in Schedule “A”;

(c)

“ 31 Section Block ” means those lands designated as such in Schedule “A”;

(d)

“ Assignment Procedure ” means the 1993 CAPL Assignment Procedure which will be deemed to apply as if it had been included as a separate schedule to this Agreement;

(e)

“ Assumption of Liabilities and Indemnity Agreement ” means agreement entitled Assumption of Liabilities and Indemnity Agreement dated as of February 18, 2005 pursuant to which Farmor undertakes to be solely responsible for the Nearshore ORR as it pertains to the Farmee’s interests in the Farmout Lands and to indemnify and save Farmee harmless from any and all claims and demands made by Nearshore Petroleum Corporation (or any person claiming by, through or under it) in respect of the Nearshore ORR;

(f)

“ Conditions Satisfaction Date ” means the date on which all conditions in Section 2.1 have been satisfied;

(g)

“ Contract Depth ” means, with respect to each well drilled by Farmee under this Agreement, a vertical wellbore to a depth sufficient to penetrate 15 meters into the top of the Wabamun formation or to a subsurface depth of 800 meters whichever shall first occur, followed by a minimum 600 meter horizontal wellbore within the Bluesky Formation;

(h)

“ Earning Period ” means a period of 24 months following the Conditions Satisfaction Date;

(i)

“ Effective Date ” means February 17, 2005;

(j)

“ Encumbrances ” means the royalty interests described under that heading in Schedule “A”;

(k)

“ Existing 32 Section Block JOA ” means the Joint Operating Agreement made as of April 26, 2004 originally between Northern Alberta Oil Ltd. (formerly Mikwec Energy Canada Limited by name change) having an 80% participating interest and Pan Orient Energy Ltd. (formerly Maxen Petroleum Inc. by name change) having a 20% participating interest pertaining to the 32 Section Block;

(l)

“ Existing 31 Section Block JOA ” means the Joint Operating Agreement made as of December 9th, 2004 among Deep Well having an 80% participating interest, Pan Orient Energy Ltd. having a 10% participating interest (Execution Pending) and 1132559 Alberta Ltd. having a 10% participating interest (Executed) pertaining to the 31 Section Block;

(m)

“ Existing JOAs ” means, collectively, the Existing 32 Section Block JOA and the Existing 31 Section Block JOA;

(n)

“ Farmor’s Pre-Farmout Working Interests ” means the interests shown under that heading in Schedule “A”;

(o)

“ Farmout Lands ” means the lands shown under the heading Farmout Lands in Schedule “A”, provided that the “Farmout Lands” shall not include the 6.5 Section Block lands unless or until the Farmor acquires a legal or beneficial interest in the Title Documents that comprise the 6.5 Section Block;

(p)

“ Farmout & Royalty Procedure ” means the 1997 CAPL Farmout & Royalty Procedure including the elections and revisions thereof, which are attached to this Head Agreement as Schedule “B”;

(q)

“ Head Agreement ” means this Agreement other than the Schedules;

(r)

“ Mutual Interest Lands ” means any interest in any single parcel of petroleum and natural gas rights, oil sands leases, and oil sands permits where 50% or more of that parcel, by surface area, is within Townships 91 and 92, Ranges 12 and 13, W5M;

(s)

“ Nearshore ORR “ means the 6.5% overriding royalty granted to Nearshore Petroleum Corporation under the Royalty Agreement dated December 12, 2003 originally entered into between Mikwec Energy Canada Ltd. and Nearshore Petroleum Corporation;

(t)

“ Operating Procedure ” means the 1990 CAPL Operating Procedure together with the 1996 PASC Accounting Procedure including the elections and revisions thereof, which are attached to this Head Agreement as Schedule “C”;

(u)

“ Operator ” means Farmee;

(v)

“ Parties ” means Farmor and Farmee and “ Party ” means either of them, as applicable;

(w)

“ Proved Reserves ” means estimated volumes of crude oil, crude bitumen, oil sands, natural gas and gas condensates, liquids and associated substances which are expected to be retrieved from deposits and used commercially, at the economic and technical conditions applicable at the time and according to current legislation, and includes:

(i)

proved developed reserves, which are amounts of hydrocarbons that are expected to be retrieved through existing wells, facilities and operating methods; and

(ii)

undeveloped proved reserves, which are amounts of hydrocarbons that are expected to be retrieved following new drilling, facilities and operating methods; and

(x)

“ Title Documents ” means the documents of title under the heading Title Documents described in Schedule “A” attached hereto.

1.2

The following Schedules are attached to, and made part of this Agreement:

Schedule “A” -		Description of the Farmout Lands, Farmor’s Pre-Farmout Working Interests, the Title Documents and Encumbrances;

Schedule “B”		Farmout & Royalty Procedure elections and amendments;

Schedule “C”		Operating Procedure elections and amendments;

Schedule 15.1(f)		Outstanding Authorizations for Expenditure

Schedule 15.1(k)		Areas of Mutual Interest

ARTICLE 2

CONDITIONS PRECEDENT TO FARMEE’S OBLIGATIONS

2.1

Farmee’s obligations under this Agreement shall commence once each of the following conditions precedent have been satisfied:

(a)

Farmor having conveyed to Farmee a 40% undivided interest in the Title Documents and Farmee having had transfers accepted for registration evidencing Farmee as a registered lessee of a 40% undivided interest in each of the Title Documents, in each case free and clear of all royalties, burdens, claims, encumbrances and other adverse interests of any nature or kind whatsoever, other than the Encumbrances;

(b)

(1) Farmee shall have received a fully executed copy of the Assumption of Liabilities and Indemnity Agreement;

(2) Farmor shall dedicate proceeds of this agreement to retiring mortgage provided by 258662 Alberta Ltd. (Maximum $1,400,000.00 Canadian)

(c)

Farmor shall use best efforts to obtain a fully executed copy of the Existing 31 Section Block JOA and the terms of such agreement and the parties thereto shall be satisfactory to Farmee, acting reasonably;

(d)

Farmee shall have received a fully executed copy of an agreement between Nearshore Petroleum Corporation and Northern terminating the Non-Disclosure/Area of Exclusion Agreement dated November 19, 2003 between those parties.

(e)

Execution of satisfactory Escrow Agreement and satisfactory evidence of completion of Surge financing or sufficient funds to complete the drilling of the Test Well, as soon as practical following execution hereof.

ARTICLE 3

TEST WELL

3.1

Farmee shall, at its sole cost, risk and expense, and subject to having obtained a rig, all necessary surface access and Regulatory approvals, Spud the Test Well at a location of its choice on the Farmout Lands on or before 150 days following the execution hereof and drill the Test Well to Contract Depth.

3.2

Subject to Article 3.00 of the Farmout & Royalty Procedure and Article 20 of this Agreement, Farmee will earn 50% of Farmor’s Pre-Farmout Working Interest in the section of land on which the Test Well is situated together with 50% of the Farmor’s Pre-Farmout Working Interest in 5 additional sections of the Farmout Lands which are selected by Farmee not later than 90 days following the completion or abandonment, as applicable, of the Test Well.

ARTICLE 4

OPTION WELL

4.1

Within 60 days of rig release of the Test Well, Farmee shall have the right, on notice to Farmor, to elect to undertake the drilling of an Option Well. Farmee shall Spud the Option Well at a location selected by Farmee and Farmor acting reasonably on Farmout Lands not yet earned by Farmee within 60 days of the date of the Farmee’s election notice (conditional upon rig availability, Regulatory approvals and surface access). Farmee shall continuously drill the Option Well to Contract Depth.

4.2

Subject to Article 3.00 of the Farmout & Royalty Procedure and Article 20 of this Agreement, Farmee will earn 50% of Farmor’s Pre-Farmout Working Interest in the section of land on which the Option Well is situated together with 50% of the Farmor’s Pre-Farmout Working Interest in 5 additional sections of the Farmout Lands which are selected by Farmee and Farmor, acting reasonably, not later than 90 days following the completion or abandonment, as applicable, of the Option Well.

ARTICLE 5

ROLLING OPTION TO DRILL

5.1

Farmee shall have a continuous rolling option, during the Earning Period, to elect to drill additional Option Wells on the remaining unearned Farmout Lands in accordance with Article 4 hereof, until all of the Farmout Lands are earned or until Farmee’s right to further earning under this Agreement is terminated. In respect of each Option Well which Farmee wishes to drill, Farmee must elect to drill the next Option Well by giving notice to Farmor within 90 days of rig release of the most recently drilled Option Well. All terms and conditions of this Agreement which apply to the Option Well shall apply, mutatis mutandis , to any additional Option Wells drilled by Farmee hereunder, provided that if Farmee drills a total of 8 Option Wells, it will have earned (to that point in time) a 40% undivided interest in 54 sections of the Farmout Lands. Notwithstanding Section 4.2, if Farmee drills a 9 ^th Option Well, it will earn 50% of the Farmor’s Pre-Farmout Working Interest in the 9.0 remaining sections (which were not earned by the drilling of the Test Well and the prior 8 Option Wells).

ARTICLE 6

EXISTING JOAs AND OPERATIONS NOTICES

6.1

Promptly following each determination by Farmee that it intends to drill a well under this Agreement, Farmor shall issue an operation notice (prepared by Farmee) pursuant to Article X (Independent Operations) of the applicable Existing JOA and, thereafter, promptly advise Farmee whether either or both of the other Joint-Operators under the Existing JOA have elected or not elected (or are deemed to have elected or not elected) to participate or not participate in the drilling of that well. If:

(a)

either or both of such Joint-Operators are participating in the operation, Farmor shall provide all assistance requested by Farmee in respect of such Joint-Operator(s) including, without limitation, (1) by electing to participate in the operation (in order that Farmee can share in any participating interest of a non-participating party), and (2) by issuing and collecting cash calls for costs of operations (to the extent of Farmor’s rights under the applicable Existing JOA); and

(b)

either or both of such Joint-Operators are not participating, Farmee will be required to pay the non-participant’s share of the cost of the operation (to the extent not assumed by another participating party) and Farmee shall be entitled to all benefits associated with such non-participation including, without limitation, the right to receive the full amount of the penalty attributable to such non-participation in accordance with Clause 1007 and the other provisions of the applicable Existing JOA.

ARTICLE 7

OPERATING PROCEDURE

7.1

Upon each occurrence of earning by Farmee in a 6 section block of Farmout Lands (and as between Farmor and Farmee), such Farmout Lands and the related Title Documents (to the extend of such lands) will become subject to the Operating Procedure with Farmee being the initial Operator thereunder. Subject to Section 7.2, the Operating Procedure will govern all future joint operations of the Parties upon or with respect to such earned Farmout Lands and Title Documents.

7.2

Upon each occurrence of earning by Farmee in Farmout Lands governed by an Existing JOA, Farmor and Farmee shall take all necessary steps, using the Assignment Procedure, to have Farmee made a party to the Existing JOA for a 40% participating interest in respect of the earned Farmout Lands.

NORTHERN AS CONTRACT OPERATOR

8.1

Until such time as Farmee either selects another operator to conduct operations on Farmee’s behalf under this Agreement or assumes such activities itself, Farmee and Northern agree that Northern shall conduct such operations on Farmee’s behalf as an independent contract operator. Northern shall be entitled to be reimbursed for all costs and expenses incurred by it in connection with acting as contractor operator, but otherwise, shall not be entitled to be paid a fee for that service). Northern represents and warrants to Farmee that Northern holds all necessary permits and other authorizations required by Northern to hold well licenses in its name and conduct such operations on the Farmout Lands (including, without limitation, those authorizations required from the Alberta Energy and Utilities Board).

8.2

At such time as Farmee elects to replace Northern or use another contract operator, Northern shall transfer the well licenses in its name to the successor designated by Farmee

ARTICLE 9

AREA OF MUTUAL INTEREST

9.1

Article 8.00 of the Farmout & Royalty Procedure will be in effect from Effective date of this agreement until the end of the Earning Period. Subject to that Article, the Parties will have the right to participate in an acquisition of Mutual Interest Lands in the following percentages:

Farmor - 50%

Farmee - 50%.

9.2

Without limiting the generality of Section 9.1, this Article 9 shall apply in respect of any interest acquired by Northern or any of its Affiliates pursuant to the Non-Disclosure/Area of Exclusion Letter Agreement dated April 27, 2004 between Northern and Pan Orient Energy Ltd. (formerly Maxen Petroleum Inc. by name change). Northern shall promptly advise Farmee of any opportunities available to Northern under that agreement and Northern shall, if directed by Farmee, exercise its right to acquire the available interest(s) (on the basis specified in Section 9.1 above).

9.3

Notwithstanding Sections 9.1 and 9.2, and for greater certainty, Article 8.00 of the Farmout & Royalty Procedure shall not apply to the acquisition by the Farmor of the lands comprising the 6.5 Section Block. Upon the Farmor acquiring legal or beneficial title to the 6.5 Section Block, such lands such constitute “Farmout Lands” for the purposes of this Agreement.

ARTICLE 10

RECONVEYANCE OF FARMOUT LANDS

10.1

Promptly following the end of the Earning Period, Farmee shall convey to Deep Well or Northern, as directed by Deep Well, a 40% beneficial interest in those Farmout Lands (if any) in which Farmee has not earned an interest by the end of the Earning Period. In the event Farmee has not earned a majority interest in any of the lands included within a single Title Document, then Farmee shall also transfer to Deep Well or Northern in accordance with their interest as originally held, Farmee’s legal title to a 40% undivided interest in such Title Document. However, if Farmee has earned a majority interest in the lands within a Title Document, Farmee shall be entitled to remain as a registered lessee for that Title Document (as to a 40% undivided interest) but shall hold in trust for Farmor a 40% beneficial interest in any Farmout Lands in that Title Document not earned by Farmee under this Agreement.

10.2

The 40% interests conveyed by Farmee to Farmor pursuant to this Article shall be free and clear of any and all royalties, burdens, claims, encumbrances and other adverse interests created by, through or under Farmee including, without limitation, any encumbrances registered by Farmee’s lender. Farmee shall cause any such lender to provide no interest letters or, if possible, partial discharges and releases, as necessary in respect of any such 40% interests reconveyed by Farmee to Farmor.

ARTICLE 11

ACQUISITION OF SEISMIC DATA

11.1

Upon completion of Farmee’s earning obligations under Article 3 (following the drilling of the Test Well), or at any time thereafter, and if both Parties reasonably agree that further seismic data is required prior to the drilling of any one or more of the Option Wells, then Farmor shall participate with Farmee, each as to an undivided 50% interest (or 40% interest if each of the other Joint-Operators participate), in the shooting of additional seismic data on some or all of the Farmout Lands.

ARTICLE 12

DEEP WELL - AGENT FOR THE FARMORS

12.1

Deep Well is the agent for the Farmor for all purposes under this Agreement. Farmee shall deal solely with Deep Well in respect of all matters relating to the Farmor or either of them. Farmee shall be entitled to rely solely on all communications from Deep Well as having been made by and on behalf of Deep Well and Northern. Northern shall be bound by all decisions, elections and other determinations and communications made or issued by Deep Well under this Agreement and Northern shall not communicate with Farmee under any circumstances whatsoever (and Farmee shall be entitled to disregard any such Northern communications).

12.2

Deep Well and Northern are jointly and severally liable for the performance of all obligations and liabilities of Farmor under this Agreement regardless of whether any particular obligation or liability pertains to either or both of the 32 Section Block or the 31 Section Block.

ARTICLE 13

PROSPECT FEE

13.1

In recognition of the potential play developed by Farmor in respect of the Farmout Lands, Farmee shall pay to Farmor, at the following times and subject to the following legal obligations imposed on Farmee (if any), the aggregate amount of $2,000,000 USD (reduced by the deductions specified herein) as a prospect fee, payable as 90% to Northern and 10% to Deep Well.

(a)

$1,000,000 USD payable 7 business days following the execution and delivery of this Agreement by the Parties such amount to be reduced by the aggregate of the following amounts:

(i)

$50,000 USD reflecting Farmor’s agreement to pay 50% of the commissions associated with the payment of the first tranche of the Gemini Investment Strategies LLC financing (“ Gemini Financing ”);

(ii)

50% of all legal fees, disbursements and associated taxes incurred (to the date of this Agreement) by Farmee and Surge Global Energy, Inc. (“ SRGG ”) in connection with this Agreement and the Gemini Financing (being the legal costs of Farmee’s Calgary counsel and SRGG’s corporate, commercial and securities counsel in Denver and the legal fees of Gemini Investment Strategies LLC); and

(b)

$1,000,000 USD payable upon the completion or abandonment of the first Option Well drilled by Farmee under this Agreement, such amount to be reduced by the following amount, $50,000 USD reflecting Farmor’s agreement to pay 50% of the commissions associated with the payment of the second tranche of the Gemini Financing

In accordance with the Income Tax Act (Canada), Farmee shall if required by Revenue Canada withhold 15% of the amount of the payments made under this Section 13.1 and remit the withheld amount to the Receiver General (Canada) by the time required by the Income Tax Act (Canada) on account of tax payable by Farmor under the Income Tax Act (Canada).

ARTICLE 14

SURGE SHARES

14.1

Pursuant to the Escrow Agreement to be completed by March 31 ^st , 2005 among Farmor, Farmee, and an escrow agent, to be retained by Surge. The appointed escrow agent will hold one or more certificates representing 33 1/3 % of the fully diluted common shares of Surge Global Energy, Inc. (“ Shares ”) outstanding as of February 17 ^th 2005 (approximately 11.6 Million Surge Shares to be issued to Farmor),. The nature of the shares, the conversion mechanism to earn or transfer of these shares, the anti-dilutive provisions, the representations and warranties of the parties regarding these shares, the registration rights and obligations of the parties pertaining to these shares shall all be mutually agreed upon as part of the Escrow Agreement. The Shares are to be held by the escrow agent thereunder for delivery to Farmor when Farmor delivers to Farmee a reserves report (“ Report ”) for the Properties which is in form and substance satisfactory to Deep Well and Farmee, acting reasonably, from a mutually acceptable reservoir engineering firm and which confirms that the Proved Reserves for the Properties exceed $80,000,000 USD. The Report shall:

(a)

use the forward curve price forecast that is being used by that engineering firm for the majority of the reserves studies that it is completing at the time the Report is prepared;

(b)

use a 12.5% discount rate; and

(c)

attribute a value of 100% to the Proved Reserves and no value to probable reserves or undeveloped lands.

The Report shall be addressed to both Deep Well and Farmee both parties shall be jointly responsible for obtaining the Report and paying all costs associated with the preparation and delivery of the Report. For purposes of this Section, Ryder Scott and Sproule Associates are deemed to be reservoir engineering firms that are mutually acceptable to Deep Well and Farmee.

ARTICLE 15

REPRESENTATIONS AND WARRANTIES

15.1

Farmor hereby represents and warrants to Farmee (and acknowledges that Farmee is relying on such representations and warranties) that:

(a)

Deep Well is a body corporate duly incorporated and validly existing under the laws of Nevada and is extra-provincially registered in Alberta, and Northern is a body corporate incorporated and validly existing under the laws of Alberta;

(b)

Farmor has taken all necessary actions and has all requisite power and authority to enter into this Agreement and to perform its obligations under this Agreement and any other agreements to be delivered hereunder and this Agreement constitutes and such other agreements will constitute legal, valid and binding obligations of Farmor, enforceable against Farmor in accordance with and subject to the terms set forth herein and therein;

(c)

The consummation by Farmor of the transactions contemplated herein will not violate or conflict with any of the constating documents, by-laws or governing documents of Farmor, any judgment, decree, order, statute, rule or Regulation applicable to Farmor or any material agreement or instrument to which it is a party or by which it is bound;

(d)

Deep Well is a non-resident of Canada and Northern is not a non-resident of Canada, in each case within the meaning of the Income Tax Act (Canada);

(e)

There are no claims, proceedings, actions, lawsuits, administrative proceedings or governmental investigations in existence, or so far as Farmor is aware, contemplated or threatened against or with respect to the Farmor (or either of them) or any of the Farmout Lands or Title Documents and there is no particular circumstance, matter or thing known to Farmor which could reasonably be anticipated to give rise to any such claim, proceeding, action, lawsuit, proceeding or investigation;

(f)

There are no outstanding authorizations for expenditures, mail ballots, cash calls or other financial commitments with respect to any of the Farmout Lands other than those as itemized on schedule 15.1(f);

(g)

There are no agreements for the purchase or sale of petroleum substances that may be deliverable from any of the Farmout Lands;

(h)

No exploration, development or other material activities of any kind have occurred on any of the Farmout Lands and, as a result, there are no wells, well sites or tangibles located on the surface of or within any of such lands; excepting the 6.5 Section Block referred to in 1.1(a)

(i)

There are no rights of first refusal or other similar rights applicable to any of the Farmout Lands;

(j)

Farmor shall not and has not knowingly withheld any records, files or other documents in its possession relating to the Farmout Lands or Title Documents and which Farmee has requested from Farmor; and

(k)

There are no areas of mutual interest or similar rights pertaining to any of the Farmout Lands that remain in effect as of the Effective Date, excepting those listed on schedule 15.1(k).

15.2

Farmee hereby represents and warrants to Farmor that:

(a)

Farmee is a corporation duly incorporated and validly existing under the laws of Alberta;

(b)

Farmee has taken all necessary actions and has all requisite power and authority to enter into this Agreement and to perform its obligations under this Agreement and any other agreements to be delivered hereunder and this Agreement constitutes and such other agreements will constitute legal, valid and binding and obligations of Farmee, enforceable against Farmee in accordance with and subject to the terms set forth herein and therein;

(c)

The consummation by Farmee of the share transactions contemplated by this Agreement will not violate or conflict with any of the constating documents, by-laws or governing documents of Farmee or any provision of any material agreement or instrument to which Farmee is a party or is bound, or any judgment, decree, order, statute, rule or regulation applicable to Farmee;

ARTICLE 16

ADDRESS FOR SERVICE

16.1

The address for service of notice hereunder for each of Farmor and Farmee shall be as follows:

Farmor:	c/o Deep Well Oil & Gas, Inc	Farmee:	Surge Global Energy (Canada), Ltd.
	Suite 2600, 144 - 4 ^th Avenue SW		Suite 2600, 144 - 4 ^th Avenue SW
	Calgary, AB T2P 3N4		Calgary, AB T2P 3N4
	Attention: Steven Gawne, President		Attention: Fred Kelly, President and CEO
	Facsimile: No. (403) 232-1464		Facsimile No.: (858) 704-5011 and (403) 355-3371

Any Party may change its address for service by written notice to the other Party. Any notice faxed to Farmee must be forwarded to both of the above fax numbers to constitute effective notice hereunder.

ARTICLE 17

LIMITATIONS ACT

17.1

The 2-year period for seeking a remedial order under Section 3 of the Limitations Act (Alberta), as amended, for any claim (as defined in that legislation) arising in connection with this Agreement is extended to:

(a)

for claims disclosed by an audit, 2 years after the time this Agreement permitted that audit to be performed; or

(b)

for all other claims, 4 years.

ARTICLE 18

EARNED INTEREST

18.1

It is the intentions of the Parties that Farmee is incurring significant expenditures to earn a 40% undivided interest in the Farmout Lands (to the extent of Farmee’s drilling operations hereunder). If, immediately prior to the time Farmor conveyed a 40% undivided interest in the Farmout Lands and Title Documents to Farmee, the Farmor had less than a 80% beneficial interest in any of the Farmout Lands or the Title Documents, the Farmee shall nevertheless earn a 40% undivided beneficial interest in and to the Farmout Lands earned hereunder even if the effect is that the Farmor’s residual beneficial interest (after earning by Farmee) is less than a 40% undivided interest in those Farmout Lands.

ARTICLE 19

RIGHT OF FIRST REFUSAL

19.1

Notwithstanding that:

(a)

the Existing JOAs do not provide for a right of first refusal in the event a party wishes to dispose of an interest in any of the lands governed by such agreements; and

(b)

Farmee will made a party to the Existing JOAs (as provided for in Article 7 hereof),

as between Farmor and Farmee, it is agreed that Alternate B of Clause 24.01 of the Operating Procedure will continue to apply, mutatis mutandis , in respect of any disposition that either Farmor or Farmee may wish to make in respect of any of the Farmout Lands, whether any such disposition occurs during the Earning Period or following the termination of the Earning Period.

ARTICLE 20

GENERAL

20.1

This Agreement contains the final and entire agreement of the Parties respecting earning by Farmee of interests in the Farmout Lands from Farmor and, as such and in respect of that subject matter, supercedes all prior agreements, memorandums of understanding, letters of intent, verbal understandings and discussions to the extent specifically relating to such subject matter.

20.2

In the event of any inconsistency or conflict between the provisions of this Head Agreement and those of any Schedule attached hereto, the provisions of this Head Agreement shall prevail.

20.3

The terms, covenants and conditions in this Agreement shall run with, attach to, be binding upon, and form part of the Farmout Lands and the Title Documents, and the estates affected thereby for the duration of this Agreement.

20.4

If any term of this Agreement is or becomes invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of any other term of this Agreement and such invalid, illegal or unenforceable term shall be, as to such jurisdiction, severable from this Agreement.

20.5

This Agreement shall be conclusively deemed for all purposes to be made under, and for all purposes to be governed by and construed in accordance with the laws of the Province of Alberta and of Canada applicable therein and shall be treated in all respects as an Alberta contract. Each of the Parties hereby attorns to the Courts of Alberta at Calgary in respect of any suit, action or proceeding connected with this Agreement.

20.6

Each Party shall from time to time and at all times do all such further acts and execute and deliver all such further documents as may be reasonably required in order to perform and carry out the terms and the intent of this Agreement.

20.7

This Agreement may be executed in any number of separate counterparts with the same effect as if all Parties had signed the same copy of this Agreement. All counterparts shall be construed together and constitute one agreement. Each Party shall be entitled to rely on the delivery of executed facsimile copies of counterpart execution pages of this Agreement and such facsimile copies shall be legally effective to create a valid and binding agreement between the Parties.

20.8

This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns.

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

NORTHERN ALBERTA OIL LTD.		DEEP WELL OIL & GAS, INC.

Per:	/s/ Curtis J. Sparrow	Per:	/s/ Steven Gawne

Per:	President	Per:	President and Chief Executive Officer

SURGE GLOBAL ENERGY Inc..		SURGE GLOBAL ENERGY (CANADA), LTD.

Per:	/s/ Fred W. Kelly	Per:	/s/ Fred W. Kelly

Per:	Chief Executive Officer	Per:	Chief Executive Officer

SCHEDULE “A” attached to and forming part of a Farmout Agreement dated as of the 25 ^th day of February 2005 between Deep Well Oil & Gas, Inc. and Northern Alberta Oil Ltd., as Farmor and Surge Global Energy (Canada), Ltd., as Farmee

FARMOUT LANDS	TITLE DOCUMENTS	FARMOR’S PRE- FARMOUT WORKING INTERESTS	ENCUMBRANCES
32 Section Block *

Township 91, Range 12: Sections 27, 28, 29, 30, 31, 32;Township 91, Range 13: Sections 25, 26, 27, 35, 36 Oil Sands (Top of the Peace River to Base of the Pekisko) Covering 2816 hectares	Alberta Crown Oil Sands Development Lease 7403070365 dated July 10 ^th 2003 and currently standing in the name of Northern Alberta Oil, Ltd. - 80%, Pan Orient Energy Ltd. - 10%, 1132559 Alberta Ltd. 10%	80%	Crown Royalty Nearshore ORR **

Township 92, Range 13: Sections 1, 2, 10, 11, 12, 13, 14, 15, 22, 23, 24 Oil Sands (Top of the Peace River to Base of the Pekisko) Covering 2816 hectares	Alberta Crown Oil Sands Development Lease 7403070367 dated July 10 ^th 2003 and currently standing in the name of Northern Alberta Oil, Ltd. - 80%, Pan Orient Energy Ltd. - 10%, 1132559 Alberta Ltd. - 10%	80%	Crown Royalty Nearshore ORR **

Township 92, Range 13: Sections 6, 7, 8, 9, 16, 17, 18, 19, 20, 21 Oil Sands (Top of the Peace River to Base of the Pekisko) Covering 2560 hectares	Alberta Crown Oil Sands Development Lease 7403070368 dated July10th 2003 and currently standing in the name of Northern Alberta Oil, Ltd. - 80%, Pan Orient Energy Ltd. - 10%, 1132559 Alberta Ltd. - 10%	80%	Crown Royalty Nearshore ORR **

31 Section Block *

Township 92, Range 12: Sections 15, 16, 17, 18, 19, 20, 21, 28, 29, 30, 31, 32, 33 Oil Sands (Top of the Peace River to Base of the Pekisko) Covering 3328 hectares	Alberta Crown Oil Sands Development Lease 7404080870 dated August 19 ^th 2004 and currently standing in the name of Deep Well Oil & Gas, Inc. - 80%, Pan Orient Energy Ltd. - 10%, 1132559 Alberta Ltd. - 10%	80%	Crown Royalty Nearshore ORR **

Township 92, Range 12: Sections 22, 26, 27, 34, 35, 36	Alberta Crown Oil Sands Development Lease 7404080871 dated August 19 ^th 2004 and currently standing in the	80%	Crown Royalty Nearshore ORR **

FARMOUT LANDS	TITLE DOCUMENTS	FARMOR’S PRE- FARMOUT WORKING INTERESTS	ENCUMBRANCES
Oil Sands (Top of the Peace River to Base of the Pekisko) Covering 1536 hectares	name of Deep Well Oil & Gas, Inc. - 80%, Pan Orient Energy Ltd. - 10%, 1132559 Alberta Ltd. - 10%

Township 92, Range 13: Sections 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36 Oil Sands (Top of the Peace River to Base of the Pekisko) Covering 3072 hectares	Alberta Crown Oil Sands Development Lease 7404080872 dated August 19 ^th 2004 and currently standing in the name of Deep Well Oil & Gas, Inc. - 80%, Pan Orient Energy Ltd. - 10%, 1132559 Alberta Ltd. - 10%	80%	Crown Royalty Nearshore ORR **

*6.5 Section Block*

Township 91, Range 13: N ½ Section 28, Sections 32, 33, 34; Township 92, Range 13: Sections 3, 4, 5	Alberta Crown Oil Sands Permit 7003040812 dated · .	TBD	TBD

Oil Sands (Top of the Peace River to Base of the Pekisko)

Covering 1664 hectares

Township 91, Range 13: N ½ Section 28, Sections 32, 33, 34; Township 92, Range 13: Sections 3, 4,5 Petroleum & Natural Gas (from Surface to Basement) Covering 1664 hectares	Alberta Crown Petroleum and Natural Gas Lease 5495030101 dated · .	TBD	TBD

The use of the headings “ 32 Section Block” and “31 Section Block” are intended for convenience of reference only and are not, under any circumstances whatsoever, to be taken into consideration when interpreting this Agreement or when determining a Party’s rights or obligations under this Agreement. Without limiting the generality of the foregoing, Farmee may (but is not required), when selecting any 6 section block of lands in which Farmee earns a 40% undivided interest by the drilling of the Test Well or any Option Well, include lands from each of the 38.5 Section Block and the 31 Section Block in any such 6 section block.

**	Pursuant to the Assumption of Liabilities and Indemnity Agreement, Farmor shall be solely responsible for the payment of the Nearshore ORR as it would otherwise pertain to the interests earned by Farmee in the Farmout Lands.

***	The 6.5 Section Block shall not constitute “Farmout Lands” for the purposes hereof unless or until the Farmor acquires a legal or beneficial interest in the Title Documents that comprise the 6.5 Section Block.

FEBRUARY 24, 2005

SCHEDULE “B” attached to and forming part of a Farmout Agreement dated as of the 25th day of February 2005 between Deep Well Oil & Gas, Inc. and Northern Alberta Oil Ltd., as Farmor and Surge Global Energy (Canada), Ltd., as Farmee

Farmout & Royalty Procedure Elections and Amendments

1.	Effective Date (Subclause 1.01(f) - February 17, 2005)

2.	Payout (Subclause 1.01(t), if Article 6.00 applies) - Alternate ______ - N/A

3.	Incorporation of Clauses from 1990 CAPL Operating Procedure (Clause 1.02)

(l) Insurance (311) Alternate A - o Alternate B - x

4.	Article 4.00 (Option Wells) will x /will not o apply.

5.	Article 5.00 (Overriding Royalty) will o /will not x apply.

6.	Quantification of Overriding Royalty (Subclause 5.01A, if applicable)

(i)

Crude Oil (a)

Alternate

N/A

If Alternate 1 applies

If Alternate 2 applies

min

max

Other (b)

Alternate

N/A

If Alternate 1 applies

If Alternate 2 applies

min

max

7.	Permitted Deductions (Subclause 5.04B, if applicable) - Alternate - N/A

8.	Article 6.00 (Conversion of Overriding Royalty) will o /will not x apply.

• If Article 6.00 applies, conversion to N/A OF Working interest in Subclause 6.04 A.

9.	Article 8.00 (area of Mutual Interest) will x /will not o apply.

10.	Reimbursement of Land Maintenance Costs (Clause 11.02) will o /will not ý apply. If applies, reimbursement of $________.

FEBRUARY 24, 2005

SCHEDULE “C” attached to and forming part of a Farmout Agreement dated as of the 25th day of February 2005 between Deep Well Oil & Gas, Inc. and Northern Alberta Oil Ltd., as Farmor and Surge Global Energy (Canada), Ltd., as Farmee

1990 CAPL OPERATING PROCEDURE

Clause 311

Insurance Election :

II.

Clause 604

Marketing Fee :

III.

Clause 903

Casing Point Election :

IV.

Clause 1004

Replace with the following :

“Notwithstanding anything to the contrary contained in this Operating Procedure, if the Operator is a participating party, it shall carry out the operation for the account of the participating parties; provided that, if the Operator is not a participating party, the participating parties shall, as and among themselves and in accordance with the provisions of Clause 206, mutatis mutandis , appoint an Operator for the operation. If the operation is commenced prior to the time the Operator becomes a participating party, it is specifically understood that nothing in this Clause shall restrict or prohibit the proposing party from actually commencing operations as provided in Clause 1003. The Operator, upon becoming a participating party, shall have the right to take over and carry out the operation for the participating parties.”

Clause 1007

Penalty for Independent Operations:

1.	Development Wells:	400 %

2.	Exploratory Wells:	500 %

VI.

Clause 2202

Title Preserving Well:

180 days

VII.

Clause 2202

Address for Notices:

Farmor:	c/o Deep Well Oil & Gas, Inc	Farmee:	Surge Global Energy (Canada), Ltd.
	•Suite 2600, 144-4 ^th Avenue SW		Suite 2600, 144 - 4 ^th Avenue SW
	•Calgary, AB T2p 3N4		Calgary, AB T2P 3N4
	•Attention Steve Gawne, CEO		Attention: Fred Kelly, CEO

VIII.

Clause 2401

Disposition of Interests :

IX.

Clause 2404

Deleted and replaced with the Assignment Procedure

1996 PASC ACCOUNTING PROCEDURE

I.	Clause 105 Operating Fund: 10% Clause 110 Approvals : 2 or more Owners totaling 65% Clause 112 Expenditure Limitations:

(a)	excess of	$ 25,000.00

(c)	excess of	$ 25,000.00

II.	Clause 201(a) 6 Labour: Delete and replace as follows: “Salaries and wages of the Operator’s employees engaged in production Engineering who are either temporarily or permanently assigned to and directly employed off-site in direct support of Joint Operations.”

II.	Clause 202(b)	Employee Benefits - not to exceed : 25%

	Clause 207	Services: replace “warehouse” with “Warehouse” throughout

	Clause 213(b)	Camp and Housing : shall o /shall not x apply.

	Clause 216	Warehouse handling : 5%

	Clause 221	Allocation Options : n/a

III.

Clause 301(a) Cost : Delete and replace as follows:

“Cost” means total expenditures described in Article II, excluding those expenditures pursuant to Subclause 209(b) and Clause 218 of this Accounting Procedure, and salvage credits for Material retired, the value of injected substances purchased for enhanced recovery and any additional exclusions as approved by the Owners.

IV.

Clause 302

Overhead Rates:

(a)	For each Exploration Project:

	(i)	5% of first	$ 50,000
	(ii)	3% of first	$ 100,000
	(iii)	1% of costs in excess of sum of (i) and (ii)

(b)	For each Drilling Well:

	(i)	5% of first	$ 50,000
	(ii)	3% of first	$ 100,000
	(iii)	1% of costs in excess of sum of (i) and (ii)

(c)	For each Initial Construction Project:

	(i)	5% of first	$ 50,000
	(ii)	3% of first	$ 100,000
	(iii)	1% of costs in excess of sum of (i) and (ii)

(d)	For each Subsequent Construction Project:

	(i)	5% of first	$ 50,000
	(ii)	3% of first	$ 100,000
	(iii)	1% of costs in excess of sum of (i) and (ii)

(e)	For Operation and Maintenance:

	(i)	10% of the cost of the Joint Property; and
	(ii)	$350 per Producing Well per month; or
	(iii)	____ Flat rate per month

	Subclause 302(3)(ii) and 302 (e)(iii) shall o /shall not x apply.

V.	Clause 406	Dispositions: $25,000

	Clause 406	Dispositions: replace “affiliates” with “Affiliates”

VI.	Clause 501	(b) Dispositions: replace “warehouse” with “Warehouse”

SCHEDULE 15.1(f) attached to and forming part of a Farmout Agreement dated as of the 25th day of February 2005 between Deep Well Oil & Gas, Inc. and Northern Alberta Oil Ltd., as Farmor and Surge Global Energy (Canada), Ltd., as Farmee

Outstanding Authorizations for Expenditures, Etc.

SCHEDULE 15.1(k) attached to and forming part of a Farmout Agreement dated as of the 25th day of February 2005 between Deep Well Oil & Gas, Inc. and Northern Alberta Oil Ltd., as Farmor and Surge Global Energy (Canada), Ltd., as Farmee

Areas of Mutual Interest

Exhibit 10.9

ASSUMPTION OF LIABILITIES AND INDEMNITY AGREEMENT made as of February 28, 2005

BETWEEN:

DEEP WELL OIL & GAS, INC. , a Nevada corporation extra-provincially registered In Alberta and NORTHERN ALBERTA OIL LTD. , an Alberta corporation (collectively, “Deep Well”)

AND

SURGE GLOBAL ENERGY (CANADA), LTD., an Alberta corporation (“Surge”)

WHEREAS:

Pursuant to the Royalty Agreement (“Royalty Agreement”) dated December 12, 2003 between Mikwec Energy Canada Ltd. (now Northern Alberta Oil Ltd. by name change) and Nearshore Petroleum Corporation (“Nearshore”), Nearshore was granted a 6.5% gross overriding royalty on petroleum and natural gas rights (including oil sands rights) in Townships 91 and 92, Ranges 12 and 13, W5M (the “GORR”);

2.	Deep Well as farmor and Sure, as farmee entered into a Farmout Agreement dated February 25, 2005 (“Farmout Agreement”) pursuant to which Surge will have the right to earn a 40% undivided interest in some of all the Farmout Lands;

3.	The Farmout Lands are encumbered by the GORR;

4.	The interests that are earned by Surge under the Farmout Agreement (“ Earned Interests ”) will be encumbered by the GORR (which is not acceptable to Surge); and

5.	In order to induce Surge to enter into the Farmout Agreement and to drill wells thereunder, Deep Well has agreed to be responsible for and to assume the obligation to pay the GORR as it pertains to the Earned Interests, and the parties are entering into this Agreement to confirm those arrangements.

In consideration of the foregoing, the sum of ten ($10) dollars paid by Surge to Deep Well, Surge’s agreement to enter into the Farmout Agreement, and other good and valuable consideration (the receipt and adequacy of which is hereby acknowledged by Deep Well for all purposes whatsoever), the parties agree as follows:

1.	Capitalized terms used in this Agreement but not defined herein shall have the meanings given to those terms in the Farmout Agreement.

Deep Well is solely responsible for and shall timely pay (at its sole cost and expense) the GORR and perform all other obligations of any kind or nature whatsoever arising under the Royalty Agreement, in each case as they pertain to the Earned Interests. It is the intentions of the parties that Surge shall have no obligation or liability under any circumstances whatsoever to pay the GORR, perform any obligation under the Royalty Agreement or deal with any person(s) entitled to the GORR. Without limiting the generality of the foregoing, if any owner of an interest in the GORR elects to take its royalty share of production in kind, Deep Well will provide that “in kind” production from is own production or from some other source.

Deep Well shall indemnify and save harmless Surge and each of its Affiliates and each of their respective directors, officers, employees, agents and representatives (collectively, the “ Indemnified Persons ”) from and against any and all claims and demands made by any person(s) claiming to have an interest in or rights under the GORR or the Royalty Agreement and for any and all direct costs, damages and expenses whatsoever which any Indemnified Person may suffer, sustain, pay or incur in connection with any claim(s) by any person(s) in respect of the GORR or the Royalty Agreement (including, without limitation, Surge’s reasonable legal costs on a solicitor and its own client basis).

Notwithstanding that Surge has no obligations in respect of the GORR or the Royalty Agreement, if a claim by any person in respect of any unpaid GORR payment might adversely affect any of the Earned Interests, then Surge shall be entitled, but not obligated, to make payment of the GORR, subject always to all rights to pursue indemnification from Deep Well hereunder, at law, in equity or otherwise and to set-off any amounts Surge pays in respect of the GORR against any amounts otherwise due and payable by Surge to Deep Well under the Farmout Agreement or, under an Existing JOA, except for such right-off, Surge shall not have any right, interest or benefit in the GORR or Royalty Agreement whatsoever.

5.	Deep Well Oil & Gas, Inc. and Northern Alberta Oil Ltd. shall be jointly and severally liable for the obligations of Deep Well under this Agreement.

6.	Deep Well shall not assign this Agreement or any or all of its obligations under this Agreement without the prior written consent of Surge, which consent may be arbitrarily withheld. Surge may assign this Agreement, in whole or in part, to any permitted assignee of any of the Earned Interests.

7.	The obligations of Deep Well under this Agreement are absolute and shall not be lessened or modified in any respect notwithstanding any circumstances whatsoever including, without limitation, any past, present or future changes in the ownership of the GORR.

(a)

No waiver by Surge of any breach (whether actual or anticipated) of any of the covenants, provisions or conditions herein contained shall take effect or be binding upon Surge unless the same is expressed in writing executed by an officer of Surge. Any waiver so given shall extend only to the particular breach so waived and shall not Limit or affect any rights with respect to any other or future breach whether of a similar or dissimilar nature.

(b)

The parties acknowledge and confirm that this Agreement was negotiated and prepared by the parties with the advice of their respective legal counsel to the extent deemed necessary by each of the parties, and was not prepared by one party to the exclusion of the other party and, accordingly, should not be construed against either party by reason of its preparation, negotiation, or drafting.

(c)

(d)

This Agreement shall be conclusively deemed for all purposes whatsoever to be made under and for all purposes to be governed by and construed in accordance with the laws of the Province of Alberta and of Canada applicable therein and shall be treated in all respects as an Alberta law contract. Each party agrees that any action or proceedings with respect to this Agreement shall be brought in the courts of Alberta at Calgary.

(e)

A derivative of a defined term shall have a corresponding meaning herein.

(f)

No amendment or other variation of the provisions of this Agreement shall be binding on the parties or either of them unless it is evidenced in writing executed by an officer of that party.

(g)

Time shall be of the essence hereof.

(h)

Each party shall, from time to time and at all times hereafter, do all such further acts and execute and deliver all such further documents as may be reasonably required by the other party in order to perform and carry out the terms and the intent of this Agreement.

(i)

This Agreement may be executed in any number of separate counterparts with the same effect as if all parties had signed the same copy of this Agreement. All counterparts shall be construed together and constitute one agreement. Each party shall be entitled to rely on the delivery of executed facsimile copies of counterpart execution pages of this Agreement and such facsimile copies shall be legally effective to create a valid and binding agreement between the parties.

(j)

This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.

IN WITNESS WHEREOF each of the parties has caused this Agreement to be executed by its proper officers, duly authorized in that regard, to be effective as of the date first above written.

DEEP WELL OIL & GAS, INC.		NORTHERN ALBERTA OIL LTD.

Per:	/s/ Steven Gawne	Per:	/s/ Curtis Sparrow
Per:	President and CEO	Per:	Director

SURGE GLOBAL ENERGY (CANADA), LTD.

Per:	/s/ Fred W. Kelly
Per:	CEO

Exhibit 10.10

TERMINATION AGREEMENT dated for reference February 28, 2005

AMONG:

NEARSHORE PETROLEUM CORPORATION , an Alberta

corporation (“ Nearshore ”)

AND

NORTHERN ALBERTA OIL LTD. , an Alberta corporation (“ Northern ”)

AND

S URGE GLOBAL ENERGY (CANADA), LTD. , an Alberta corporation (“ Surge ”)

WHEREAS:

Nearshore and Northern (formerly Mikwec Energy Canada Ltd. by change of name) are parties to a “Non-Disclosure/Area of Exclusion Athabasca and Sawn Lake Oil Sand, Alberta Agreement” (“ Nearshore-Northern Agreement ”) dated November 19, 2003 pursuant to which, inter alia, Nearshore is provided with the option to purchase up to 100% of any interests acquired by Northern within the specified of Exclusion Lands (“ Nearshore Rights ”);

2.	Surge plan entered into the Farmout Agreement dated February 25, 2005 with Northern and Deep Well Oil & Gas, Inc. (“Farmout Agreement”);

3.	The Farmout Agreement includes an area of mutual interest provision (“AMI”) and the Nearshore Rights may conflict with Surge’s rights under the AMI; and

4.	Nearshore and Northern will benefit from the execution and performance of the Farmout Agreement and, as a result, have agreed to terminate the Nearshore-Northern Agreement and to enter into this Agreement to confirm such termination to Surge.

NOW THEREFORE, in consideration of ten ($10) USD dollars paid by Surge to each of Nearshore and Northern respectively, Surge’s agreement to enter into the Farmout Agreement, and other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged by each of the parties), the parties agree as follows:

1.	Nearshore and Northern agree with one another, and represent and warrant to Surge, that the Nearshore-Northern Agreement (including, without limitation, the Nearshore Rights) has been terminated by Nearshore and Northern effective as of February 17th 2005.

Nearshore and Northern represent and warrant to each other and to Surge that neither of such parties has assigned or otherwise alienated its interests in the Nearshore-Northern Agreement and that it has all necessary power and authority to enter into this Agreement in order to terminate the Nearshore-Northern Agreement in accordance with the terms hereof.

3.	Nearshore confirms to Surge that it did not acquire, and it is not entitled to acquire, any interests pursuant to the Nearshore-Northern Agreement, and there are no unperformed obligations or liabilities under that agreement.

4.	Nearshore and Northern intend that Surge will rely on this Agreement in order to enter into the Farmout Agreement.

5.	Nearshore forever releases and discharges Northern and Surge from any and all claims of any kind that Nearshore may have, or have had, against Northern or Surge in relation to the Nearshore - Northern Agreement.

(a)

No waiver by Surge of any breach (whether actual or anticipated) of any of the covenants, provisions or conditions herein contained shall take effect or be binding upon Surge unless the same is expressed in writing executed by an officer of Surge. Any waiver so given shall extend only to the particular breach so waived and shall not limit or affect any rights with respect to any other or future breach whether of a similar or dissimilar nature.

(b)

The parties acknowledge and confirm that this Agreement was negotiated and prepared by the parties with the advice of their respective legal counsel to the extent deemed necessary by each of the parties, and was not prepared by one party to the exclusion of any other party and, accordingly, should not be construed against either party by reason of its preparation, negotiation, or drafting.

(c)

(d)

(e)

No amendment or other variation of the provisions of this Agreement shall be binding on the parties or any of them unless it is evidenced in writing executed by an officer of that party.

(t)

Each party shall, from time to time and at all times hereafter, do all such further acts and execute and deliver all such further documents as may be reasonably required by another party in order to perform and carry out the terms and the intent of this Agreement.

(g)

(h)

This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.

IN WITNESS WHEREOF each of the parties has caused this Agreement to be executed by its proper officers, duly authorized in that regard, to be effective as of the date first above written.


	NEARSHORE PETROLEUM CORPORATION

	Per:	/s/ Steven Gawne
	Per:	President


	NORTHERN ALBERTA OIL LTD.

	Per:	/s/ Curtis Sparrow
	Per:	Director


	SURGE GLOBAL ENERGY (CANADA), LTD.

	Per:	/s/ Fred W. Kelly
	Per:	CEO

Exhibit 10.11

Surge Global Energy (Canada) Ltd.	March 3, 2005
2600, 144 - 4 ^th Avenue SW
Calgary, Alberta
T2P 3N4

DEEP WELL OIL & GAS, INC. and

NORTHERN ALBERTA OIL LTD.

2600, 144 - 4 ^th Avenue SW

Calgary, Alberta

T2P 3N4

Attention: Steven Gawne.

RE:

Farmout Agreement Dated February 25, 2005

Extension for Payment of Prospect Fee

Dear Sir:

This Letter will confirm that DEEP WELL OIL & GAS, INC. , a Nevada corporation extra-provincially registered in Alberta (“ Deep Well ”) and NORTHERN ALBERTA OIL LTD. , an Alberta corporation (“ Northern ”) hereby grants a Fifteen (15) Calendar Day extension for the payment of the Prospect Fee (Page8, Article13, Farmout Agreement dated February 25, 2005) to closing date of March 18 ^th 2005.

Yours Truly

/s/ Fred Kelly
Fred Kelly, President, CEO

Agreed to and Accepted this 3 ^rd Day of March 2005 By

/s/ Steven Gawne
Deep Well Oil & Gas, Inc.
Steven Gawne

/s/ Curtis Sparrow
Northern Alberta Oil Ltd.
Curtis Sparrow

Exhibit 10.12

SURGE GLOBAL ENERGY (CANADA), LTD.

SURGE GLOBAL ENERGY, INC.

March 10, 2005

Deep Well Oil & Gas, Inc.

Northern Alberta Oil Ltd.

Re:

Farmout Agreement dated February 25, 2005 between Deep Well Oil & Gas, Inc. and Northern Alberta Oil Ltd., as Farmor, and Surge Global Energy (Canada), Ltd. and Surge Global Energy, Inc., as Farmee (“Farmout Agreement”)

Further to Article 7 of the Farmout Agreement, upon each occurrence of earning by Farmee in Farmout Lands governed by an Existing JOA, Farmee is to be made a party to the applicable Existing JOA for a 40% participating interest in respect of the earned Farmout Lands. As it is the intention of the parties that Surge Global Energy (Canada), Ltd. (“ Surge Canada”) is to be the designated Operator for all of the Farmout Lands in which the Farmee earns an interest pursuant to the Farmout Agreement, the parties have agreed to enter into this letter agreement in order to establish a procedure for Surge Canada to be appointed as the Operator under the Existing JOAs in respect of all Farmout Lands in which the Farmee earns an interest pursuant to the Farmout Agreement.

In order to induce Farmee to drill Option Wells under the Farmout Agreement and to continue assisting Farmor with its efforts to obtain financing and in consideration of $10.00 paid by Farmee to Farmor and other good and valuable consideration (the receipt and adequacy of which is hereby irrevocably acknowledged by Farmor), the Farmor agrees that each time the Farmee becomes a party to an Existing JOA, the party comprising Farmor that is the Operator under that Existing JOA shall promptly resign as Operator thereunder and, thereafter, fully support the appointment of Surge Canada as the replacement Operator (including by voting in favour of Surge Canada as the replacement Operator).

Capitalized terms used but not defined in this letter agreement shall have the meanings given to those terms in the Farmout Agreement.

If the foregoing accurately reflects our agreement on the foregoing matters, kindly execute and return a copy of this letter agreement to Surge Canada for its records.

Yours truly,

SURGE GLOBAL ENERGY (CANADA), LTD.
SURGE GLOBAL ENERGY, INC.

Per:	/s/ Fred Kelly


All of the foregoing is acknowledged, confirmed and agreed to this 10 ^th day of March, 2005

DEEP WELL OIL & GAS, INC.

Per:	/s/ Steven Gawne


NORTHERN ALBERTA OIL LTD.

Per:	/s/ Curtis Sparrow

SURGE GLOBAL ENERGY (CANADA), LTD.

SURGE GLOBAL ENERGY, INC.

March 10, 2005

Deep Well Oil & Gas, Inc.

Northern Alberta Oil Ltd.

Re:

At the time the Farmout Agreement was executed, Surge Global Energy, Inc. (“Surge Inc.”) was added as a Farmee. However, the original intentions of the parties was only to add Surge Inc. as a party to the Farmout Agreement for the purposes of Article 14. As a result, the parties hereby agree and declare that;

1.	Surge Inc. is only a party to the Farmout Agreement for the purposes of Article 14;

2.	Surge Inc. has no rights or obligations under the Farmout Agreement except for those contained in Article 14; and

3.	without limiting the generality of the foregoing, Surge Inc. has no right or obligation to participate in any well or to earn any interest in the Farmout Lands under the Farmout Agreement.

This letter agreement is effective as of February 25,2005.

Capitalized terms used but not defined in this letter agreement shall have the meanings given to those terms in the Farmout Agreement.

If the foregoing accurately reflects our agreement on the foregoing matters, kindly execute and return a copy of this letter agreement to Surge Inc. for its records.

Yours truly,

SURGE GLOBAL ENERGY (CANADA), LTD.
SURGE GLOBAL ENERGY, INC.

Per:	/s/ Fred Kelly


All of the foregoing is acknowledged, confirmed and agreed to this 10 ^th day of March, 2005

DEEP WELL OIL & GAS, INC.

Per:	/s/ Steven Gawne


NORTHERN ALBERTA OIL LTD.

Per:	/s/ Curtis Sparrow

Exhibit 10.16

THIS AGREEMENT MADE AS OF THE 1st DAY OF JULY, 2005

BETWEEN:

NORTHERN ALBERTA OIL LTD.

a body corporate

(hereinafter referred to as "the Company")

OF THE FIRST PART

- and -

PORTWEST INVESTMENTS LTD.

a body corporate

(hereinafter referred to as “the Consultant”)

OF THE SECOND PART

CONSULTING AGREEMENT

WHEREAS the Company is in the business of buying, selling, financing, developing or otherwise dealing with oil and gas properties

AND WHEREAS the Company has agreed to hire the Consultant to provide the services and expertise of DR. Horst A. Schmid (hereinafter referred to as “the Consultant’s Representative”) to manage and supervise all of the Company’s operations, projects or joint ventures as the case may be.

AND WHEREAS the Company considers the Consultant and the Consultant’s Representative to possess a unique background that consists of a special skills and expertise in a combination of areas; such as the oil and gas industry, governmental issues, regulatory, fundraising and the potential for international joint ventures related to the Company’s business.

AND WHEREAS the Company wishes to retain the aforementioned special and unique skills and expertise of the Consultant and the Consultant’s Representative on a continuing long term basis.

AND WHEREAS although the Consultant has been providing some services to the Company’s parent, Deep Well Oil & Gas (hereinafter referred to as “DWOG”), given the recent events with DWOG and that all parties wish to ensure the continued, undistracted services of the Consultant for years into the future.

AND WHEREAS the Company and DWOG recognize that a Change in Control (as hereinafter defined) may result in the departure or distraction of the Company's key management personnel, including the Consultant, to the detriment of the Company and its shareholders;

AND WHEREAS the Board considers that it is imperative and in the best interests of the Company and its shareholders that notwithstanding any Potential Change in Control (as hereinafter defined), the Company be able to rely on the Consultant to continue in its position;

AND WHEREAS to induce the Consultant to remain under contract to the Company and to assure the Company of the continued attention and services of the Consultant notwithstanding any Potential Change in Control, the parties hereto have determined to enter into this Consulting Agreement;

AND WHEREAS it is recognized by all parties that the more completely and longer that the Company dominates the Consultant’s available time and resources, to the detriment of other past, present, and prospective clients, projects and activities of the Consultant, that it becomes increasingly more difficult for the Consultant to retain the level of service to its past and present clients and continue marketing activities to develop new clients, therefore the Consultant’s present and future business prospects will suffer as a result of entering into this Agreement.

NOW THEREFORE , in consideration of the mutual covenants contained herein, the Parties agree as follows:

1	EFFECTIVE DATE

Effective July 1, 2005, the Consultant shall continue to provide the services as in the past and as set out below and the Consultant’s Representative shall continue to assume the responsibilities of; Advisor to, Agent for and Project Manager on behalf of the Company with respect to each and every project undertaken by the Company until termination of this Agreement in accordance with the terms herein. In addition, the Consultant and the Consultant’s Representative will be asked to perform duties for Deep Well Oil & Gas, Inc. who, as of June 7, 2005, acquired all of the common shares of the Company. It is acknowledged that this is an expansion of the services supplied to Deep Well Oil & Gas, Inc. since January.

2	TERMS OF CONTRACT

This Agreement shall remain effective and the Consultant’s Representative shall continue to provide his expertise and service as Advisor, Agent and Project Manager for the Company in regards to all matters undertaken on behalf of the Company until terminated in accordance with the terms herein.

FEES

3.1

The Company will pay fees to the Consultant in the sum of ONE HUNDRED AND FIFTY THOUSAND ($150,000.00) DOLLARS per annum in Canadian currency (the “Fee”) by equal monthly installments of TWELVE THOUSAND FIVE HUNDRED ($12,500.00) DOLLARS (the “Monthly Fee”) each commencing on the last day of July, 2005 and continuing thereafter on the last day of each month up to and including the last day of June, 2006, or until this Agreement is otherwise terminated in accordance with the terms set out herein. These Fees do not include any fees or remuneration that the Consultant or the Consultant’s Representative receive for acting as a director of Deep Well Oil & Gas, Inc.

3.2	the Company (directly or through DWOG) will grant the Consultant the same participation in all benefits or incentive programs, options, incentive options, bonuses, deferred remuneration programs as it offers its most favoured remunerated senior employee, consultant or contractor.

4	EXPENSES

The Company shall reimburse the Consultant, at cost, for all third party, travel, long distance, cellular, meal, meeting, rental, equipment and office expenses incurred on behalf of the Company. Mileage will be charged at $0.50 per kilometer escalating in accordance with the Canadian Revenue Agency guidelines.

TERM

The term of this Agreement shall be for two (2) year commencing July 1, 2005, and shall continue until June 30, 2007. At the end of the term herein, the contract shall automatically renew for an additional six (6) month interval and thereafter on perpetual six (6) month intervals until such time as it may be terminated by either party by way of a written notice delivered to the other party. Such Notice shall be delivered to the other party at least three (3) months (“Notice Period”) prior to the date of termination, and this agreement shall remain in place and enforceable until the end of the Notice Period.

6	INDEPENDENT CONTRACTOR

The Consultant shall perform the services as an independent contractor. Nothing contained in this Agreement shall be deemed to create any association, partnership, joint venture, or relationship of principal and agent or employer and employee between the parties hereto or to provide either party with the right, power or authority, whether express or implied, to create any such duty or obligation on behalf of the other party. The Consultant also agrees that it will not hold itself out as an affiliate of or partner, joint venturer, co-principal or co-employer with the Company, by reason of the Agreement and that the Consultant will not knowingly permit any of its employees, agents or representatives to hold themselves out as, or claim to be employees of the Company by reason of the Agreement.

7	TERMINATION

This Agreement will terminate and cease only upon:

7.1	receipt of written notice as set out in Section 5 herein, or

7.2	upon the death of the Consultant’s Representative, or

7.3	if the Consultant’s Representative becomes physically or mentally disabled to the extent that he can no longer carry out his duties as set forth in this Agreement.

8	TERMINATION AFTER POTENTIAL OR REAL CHANGE IN CONTROL

8.1	For the purposes of this section, the following terms have the meanings indicated:

8.1.1

"Voting Shares" means any shares of capital stock of the Company or DWOG entitled to vote generally in the election of directors of the Company or DWOG;

8.1.2

"Person" includes any individual, firm, partnership, trust, trustee, executor, administrator, legal personal representative, government, governmental body or authority, corporation or other incorporated or unincorporated organization;

8.1.3

"Change in Control" means the occurrence at any time after the date of this Agreement of any change in the holding, direct or indirect, of Voting Shares as a result of which a Person, or group of Persons, or Persons acting jointly or in concert, together with any associate or affiliate of any such Person or Persons, are in a position to exercise effective control of the Company and for the purposes of this Agreement a Person, or group of Persons, or Persons acting jointly or in concert, together with any associate or affiliate of any such Person or Persons, shall be deemed to be in a position to exercise effective control of the Company or DWOG if;

8.1.3.1

any Person, or group of Persons, or Persons acting jointly or in concert, together with any associate or affiliate of any such Person or Persons, (other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or DWOG), is or becomes the beneficial owner, directly or indirectly, of any Voting Shares or other securities of DWOG. which directly or following conversion thereof would entitle the holder thereof to cast more than 15% of the votes outstanding which could be cast in an election of directors of DWOG;

8.1.3.2

pursuant to a single election or appointment or a series of elections or appointments over any period of 24 months from June 7, 2005 and after the date of this Agreement, those individuals who at the beginning of such period constituted the Boards of the Company and DWOG, together with any new or additional director or directors whose election or appointment to the Boards of the Company or DWOG has been approved by those of such individuals then remaining as directors from the original Boards, become for any reason (other than the death, disability or retirement of those individuals, or any of them,) to constitute a minority of the Board of the Company or DWOG;

8.1.3.3

the Board of DWOG by resolution duly adopted by the affirmative vote of a majority of the votes cast by the entire Board of DWOG, determines that for purposes of this Agreement a change in control of DWOG has occurred; or

8.1.3.4

the Company or DWOG disposes of a majority of the capital stock of the Company or DWOG which is entitled to vote generally in the election of directors of the Company or DWOG, as the case may be, or of all or substantially all of the business and assets of the Company or DWOG to any Person other than a Person who is deemed to be an affiliate of the Company or DWOG;

8.1.4

"Potential Change in Control" means the occurrence at any date hereafter of any one of the following events:

8.1.4.1

any Person publicly announces an intention to take actions which, if carried out, would constitute a Change in Control;

8.1.4.2

the Company or DWOG enters into an agreement or proposes to take action which, if carried out, would result in the occurrence of a Change in Control;

8.1.4.3

any Person, or group of Persons, or Persons acting jointly or in concert, together with any associate or affiliate of any such Person or Persons, acquires a holding, direct or indirect, of Voting Shares and/or other securities in excess of the number which, directly or following conversion thereof, would entitle the holders thereof to cast 15% of the votes attaching to all Voting Shares; or

8.1.4.4

the Board of the Company or the Board of DWOG, by resolution duly adopted by the affirmative vote of a majority of the votes cast by the entire board of the Company or DWOG, determines that for purposes of this Agreement a Potential Change in Control has occurred.

8.1.5

"Involuntary Termination" means any one of the following events if such event occurs within 24 months after a Change in Control:

8.1.5.1

any actual or express termination by the Company or DWOG of this Agreement following any Change in Control which is not due to the death of the Consultant’s Representative or a condition of total and continuing disability which renders the Consultant’s Representative incapable of performing his essential job duties as set out in this Section 7.3 of this Agreement;

8.1.5.2

any change in the Consultant's or Consultant’s Representative’s title, reporting relationship, responsibilities or authority as in effect immediately prior to any Change in Control which adversely affects to a material degree his role in the management of the Company or DWOG;

8.1.5.3

any reduction in the Consultant’s Fees paid by the Company as in effect immediately prior to any Change in Control or, if such Fees has been subsequently increased at any time or from time to time, any reduction in such increased Fees;

8.1.5.4

a failure or refusal of the Company to renew this Agreement after any Change in Control shall have occurred;

8.2

Upon the occurrence of a Change in Control or a Potential Change in Control the Consultant shall have the right, exercisable by notice to the Company within three months from the date on which the Change in Control or Potential Change in Control occurs, to terminate this Agreement. The expiry of the Consultant's rights under his Section 8.2 with respect to any particular Change in Control or a Potential Change in Control will not prevent the Consultant from exercising such right of termination with respect to any subsequent occurrence of a Change in Control or a Potential Change in Control.

8.3

Upon the occurrence of an Involuntary Termination the Consultant shall have the right, exercisable by notice to the Company within three months from the date on which the Involuntary Termination occurs, to terminate this Agreement. If the Consultant does not terminate this Agreement with in such period, his right to terminate the Agreement under this Section 8.3 with respect to such Involuntary Termination shall expire but this Agreement will otherwise continue in full force and effect. The expiry of the Consultant's rights under his Section 8.3 with respect to any particular Involuntary Termination will not prevent the Consultant from exercising such right of termination with respect to any subsequent occurrence of an Involuntary Termination.

8.4

If the Consultant terminates this Agreement pursuant to Section 8.2 or 8.3, the Consultant shall, at the request of the Company, continue its services with the Company for a period up to one month following such termination at its then existing Fee level to assist the Company in an orderly transition of management. The amount paid to the Consultant under this Section 8.4 will not reduce the amount payable under Section 8.5

8.5	If the Consultant terminates this Agreement pursuant to Section 8.2 or 8.3, the Company shall, within 10 days of notice to the Company:

8.5.1

pay to the Consultant all outstanding amounts for past Fees and expenses;

8.5.2

an amount equal to the amounts remaining under the Term set out in Section 5 at the rates set out in Section 3.1, and

8.5.3

an additional amount equaling :

[12 + YE] * [CMF ]

Where:

CMF = the Consultant's Monthly Fee at the time of the termination, or the Fees at the time of a Change in Control, if higher.

YE = the number of full years (each year being a period of 12 months) since February 6, 2004

If [12 + YE] exceeds 24, it shall be deemed to equal 24.

8.6	If, in relation to Termination because of a Change in Control, a Potential Change in Control or an Involuntary Termination, a dispute arises regarding:

8.6.1

whether or not an Involuntary Termination has occurred;

8.6.2

the validity, interpretation or enforcement of this Agreement; or

8.6.3

the right of the Consultant to receive any remuneration or payments referred to in this Agreement:

the Company shall, from time to time, on demand by the Consultant, pay all reasonable legal fees and expenses incurred by the Consultant, acting reasonably and in good faith, in contesting or disputing the Company's position or seeking to obtain, enforce or retain any right, benefit or payment provided for in this Agreement;

8.7

The Company shall use its best efforts to require any successor, whether direct or indirect to all or substantially all of the business and/or assets of the Company or DWOG to expressly agree to assume and to perform this Agreement in the same manner that the Company would have been required to perform it if no such succession had occurred. If the Company fails to obtain such Agreement prior to the effective date of such succession, the Consultant shall be entitled to terminate this Agreement and receive the payments and benefits outlined in Section 8.3 as if the Consultant had terminated this Agreement upon an Involuntary Termination.

8.8

The parties confirm that the provisions of this Article 8 are reasonable and that the total amounts payable as outlined herein are reasonable estimates of the damages which will be suffered by the Consultant in the event of a Change in Control, Potential Change in Control or an Involuntary Termination and shall not be construed as a penalty and shall not be reduced if the Consultant shall secure, or shall not pursue, alternative consulting engagements following the termination of this Agreement under this Article 8.

9	CONSULTANT’S DUTIES

The Consultant covenants and agrees that it will provide the services of the Consultant’s Representative on a non-exclusive basis that will:

9.1	serve the needs of the Company as an Advisor, Agent, and Project Manager of the Company’s business.

9.2	serve the needs of DWOG for Chief Executive Officer and President.

10	NOTICE

Notices served in accordance with the provisions of the Agreement shall be in writing and served in person to the other party or mailed postage prepaid:

To the Company:

Suite 510, Royal Bank Building,

10117 Jasper Avenue

Edmonton, Alberta

T5J 1W8

To the Consultant:

Portwest Investments Ltd.

c/o PO Box 1651

Edmonton, AB T6J 2N9

Attention: Dr. Horst A. Schmid

11	INDEMNITY

The Company and DWOG shall continue the existing indemnity for the Consultant and the Consultant’s Representative in the form as attached as Schedule “A”.

12	COMPLETE AGREEMENT

This Agreement expresses the final Agreement between the Consultant and the Company with respect to all matters herein and no representations, inducements, promises or agreements or otherwise between the parties not embodied herein shall be of any force and effect. This Agreement shall not be altered, amended or qualified except by a memorandum in writing, signed by both the Consultant and the Company, and any alteration, amendment or qualification thereof shall be null and void and shall not be binding upon any such party unless made and recorded as aforesaid.

13	RETURN OF PROPERTY

Upon any termination of this Agreement the Consultant shall at once deliver or cause to be delivered to the Company all books, documents effects, money, securities or other property belonging to the Company or for which the Company is liable to others, which are in the possession, charge, control or custody of the Consultant and the Company and DWOG shall at once deliver or cause to be delivered to the Consultant all books, documents effects, money, securities or other property belonging to the Consultant or for which the Consultant is liable to others, which are in the possession, charge, control or custody of the Company or DWOG. Recognizing that both Parties many have an interest in certain notes, papers and documents, then a copy shall be provided to the other Party.

14	ENUREMENT

This Agreement shall enure to the benefit of and be binding upon the permitted successors and assigns of the parties hereto.

15	GOVERNING LAW

This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of Alberta.

16	CONSTRUCTION

In this Agreement, except as otherwise expressly provided, all words and personal pronouns relating thereto shall be read and construed as the number and gender of the party or parties referred to in each case require and the verb shall be read and construed as agreeing with the required word and pronoun.

17	HEADINGS

The division of this Agreement into paragraphs and the use of headings is for convenience of reference only and shall not modify or affect the interpretation or construction of this Agreement or any of its provisions.

TAXES

The Consultant hereby warrants to the Company that it is, or will be, registered for GST and that its GST number will be on all invoices.

IN WITNESS WHEREOF the Parties hereto have properly executed this Agreement as of the effective date first above written.

NORTHERN ALBERTA OIL LTD.

Per: /s/ Moses Ling

PORTWEST INVESTMENTS LTD.

Per: /s/ Horst A. Schmid

Acknowledged to by;

DEEP WELL OIL & GAS, INC.

Per: /s/ Curtis Sparrow

Exhibit 10.17

THIS AGREEMENT MADE AS OF THE 1st DAY OF JULY, 2005

BETWEEN:

NORTHERN ALBERTA OIL LTD.

a body corporate

(hereinafter referred to as "the Company")

OF THE FIRST PART

- and -

EDMONTON INTERNATIONAL AIRPORT HOTEL LTD.

D/B/A CONCORDE CONSULTING

a body corporate

(hereinafter referred to as “the Consultant”)

OF THE SECOND PART

CONSULTING AGREEMENT

WHEREAS the Company is in the business of buying, selling, financing, developing or otherwise dealing with oil and gas properties

AND WHEREAS the Company has agreed to hire the Consultant to provide the services and expertise of Curtis Sparrow (hereinafter referred to as “ the Consultant’s Representative”) to manage and supervise all of the Company’s operations, projects or joint ventures as the case may be.

AND WHEREAS the Company considers the Consultant and the Consultant Representative to possess a unique background that consists of a special skills and expertise in a combination of areas; such as the oil and gas industry, finance, regulatory, and administration areas of the Company’s business.

AND WHEREAS the Company wishes to retain the aforementioned special and unique skills and expertise of the Consultant and the Consultant’s Representative on a continuing long term basis.

AND WHEREAS although the Consultant has been providing similar services to the Company since January, 2005, and before that to the Company’s parent, Deep Well Oil & Gas (hereinafter referred to as “DWOG”), given the recent events with DWOG and that all parties wish to ensure the continued, undistracted services of the Consultant for years into the future.

NOW THEREFORE , in consideration of the mutual covenants contained herein, the Parties agree as follows:

1	EFFECTIVE DATE

Effective July 1, 2005, the Consultant shall continue to provide the services as in the past and as set out below and the Consultant’s Representative shall continue to assume the responsibilities of President, Secretary, and Project Manager on behalf of the Company with respect to each and every project undertaken by the Company until termination of this Agreement in accordance with the terms herein. In addition, the Consultant and the Consultant’s Representative will be asked to perform duties for Deep Well Oil & Gas, Inc. who, as of June 7, 2005, acquired all of the common shares of the Company. It is acknowledged that this is a continuation of the services supplied to the Company since January, 2005 and to Deep Well Oil & Gas, Inc. before that.

2	TERMS OF CONTRACT

This Agreement shall remain effective and the Consultant’s Representative shall continue to provide his expertise and service as President, Secretary, and Project Manager for the Company in regards to all matters undertaken on behalf of the Company until terminated in accordance with the terms herein.

FEES

3.1

The Company will pay fees to the Consultant in the sum of ONE HUNDRED AND EIGHTY THOUSAND ($180,000.00) DOLLARS per annum in Canadian currency (the “Fee”) by equal monthly installments of FIFTEEN THOUSAND ($15,000.00) DOLLARS (the “Monthly Fee”) each commencing on the last day of July, 2005 and continuing thereafter on the last day of each month up to and including the last day of June, 2007, or until this Agreement is otherwise terminated in accordance with the terms set out herein. These Fees do not include any fees or remuneration that the Consultant or the Consultant’s Representative receive for acting as a director of Deep Well Oil & Gas, Inc.

3.2	the Company (directly or through DWOG) will grant the Consultant the same participation in all benefits or incentive programs, options, incentive options, bonuses, deferred remuneration programs as it offers its most favoured remunerated senior employee, consultant or contractor.

4	EXPENSES

TERM

The term of this Agreement shall be for two (2) years commencing July 1, 2005, and shall continue until June 30, 2007. At the end of the term herein, the contract shall automatically renew for an additional six (6) month interval and thereafter on perpetual six (6) month intervals until such time as it may be terminated by either party by way of a written notice delivered to the other party. Such Notice shall be delivered to the other party at least three (3) months (“Notice Period”) prior to the date of termination, and this agreement shall remain in place and enforceable until the end of the Notice Period.

6	INDEPENDENT CONTRACTOR

7	TERMINATION

This Agreement will terminate and cease only upon:

7.1	receipt of written notice as set out in Section 5 herein, or

7.2	upon the death of the Consultant’s Representative, or

7.3	if the Consultant’s Representative becomes physically or mentally disabled to the extent that he can no longer carry out his duties as set forth in this Agreement.

8	TERMINATION AFTER POTENTIAL OR REAL CHANGE IN CONTROL

8.1	For the purposes of this section, the following terms have the meanings indicated:

8.1.1

"Voting Shares" means any shares of capital stock of the Company or DWOG entitled to vote generally in the election of directors of the Company or DWOG;

8.1.2

8.1.3

8.1.3.1

8.1.3.2

8.1.3.3

8.1.3.4

8.1.4

"Potential Change in Control" means the occurrence at any date hereafter of any one of the following events:

8.1.4.1

any Person publicly announces an intention to take actions which, if carried out, would constitute a Change in Control;

8.1.4.2

the Company or DWOG enters into an agreement or proposes to take action which, if carried out, would result in the occurrence of a Change in Control;

8.1.4.3

8.1.4.4

8.1.5

"Involuntary Termination" means any one of the following events if such event occurs within 24 months after a Change in Control:

8.1.5.1

8.1.5.2

8.1.5.3

8.1.5.4

a failure or refusal of the Company to renew this Agreement after any Change in Control shall have occurred;

8.2

8.3

8.4

8.5	If the Consultant terminates this Agreement pursuant to Section 8.2 or 8.3, the Company shall, within 10 days of notice to the Company:

8.5.1

pay to the Consultant all outstanding amounts for past Fees and expenses;

8.5.2

an amount equal to the amounts remaining under the Term set out in Section 5 at the rates set out in Section 3.1, and

8.5.3

an additional amount equaling :

[12 + YE] * [CMF ]

Where:

CMF = the Consultant's Monthly Fee at the time of the termination, or the Fees at the time of a Change in Control, if higher.

YE = the number of full years (each year being a period of 12 months) since February 6, 2004

If [12 + YE] exceeds 24, it shall be deemed to equal 24.

8.6	If, in relation to Termination because of a Change in Control, a Potential Change in Control or an Involuntary Termination, a dispute arises regarding:

8.6.1

whether or not an Involuntary Termination has occurred;

8.6.2

the validity, interpretation or enforcement of this Agreement; or

8.6.3

the right of the Consultant to receive any remuneration or payments referred to in this Agreement:

8.7

The Company shall use its best efforts to require any successor, whether direct or indirect to all or substantially all of the business and/or assets of the Company or DWOG to expressly agree to assume and to perform this Agreement in the same manner that the Company would have been required to perform it if no such succession had occurred. If the Company fails to obtain such Agreement prior to the effective date of such succession, the Consultant shall be entitled to terminate this Agreement and receive the payments and benefits outlined in Section 8.3 Error! Reference source not found. as if the Consultant had terminated this Agreement upon an Involuntary Termination.

8.8

9	CONSULTANT’S DUTIES

The Consultant covenants and agrees that it will provide the services of the Consultant’s Representative on a non-exclusive basis that will:

9.1	serve the needs of the Company for a President, Secretary, and Project Manager of the Company’s business.

9.2	serve the needs of DWOG for Chief Financial Officer and Secretary.

10	NOTICE

Notices served in accordance with the provisions of the Agreement shall be in writing and served in person to the other party or mailed postage prepaid:

To the Company:

Suite 510, Royal Bank Building,

10117 Jasper Avenue

Edmonton, Alberta

T5J 1W8

To the Consultant:

Concorde Consulting

c/o PO Box 21117

Edmonton, AB T6R 2V4

Attention: Curtis Sparrow

11	INDEMNITY

The Company and DWOG shall continue the existing indemnity for the Consultant and the Consultant’s Representative in the form as attached as Schedule “A”.

12	COMPLETE AGREEMENT

13	RETURN OF PROPERTY

14	ENUREMENT

This Agreement shall enure to the benefit of and be binding upon the permitted successors and assigns of the parties hereto.

15	GOVERNING LAW

This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of Alberta.

16	CONSTRUCTION

17	HEADINGS

TAXES

The Consultant hereby warrants to the Company that it is, or will be, registered for GST and that its GST number will be on all invoices.

IN WITNESS WHEREOF the Parties hereto have properly executed this Agreement as of the effective date first above written.

NORTHERN ALBERTA OIL LTD.

Per: /s/ Moses Ling

EDMONTON INTERNATIONAL AIRPORT HOTEL LTD.

D/B/A CONCORDE CONSULTING

Per: /s/ Curtis Sparrow

Acknowledged to by;

DEEP WELL OIL & GAS, INC.

Per: /s/ Horst A. Schmid

Exhibit 10.18

Deep Well Oil & Gas, Inc.

510, Royal Bank Building 10117 Jasper Avenue Edmonton AB T5J 1W8

Telephone: 780-409-9264 Fax: 780-409-9265

Mr. David Perez

Surge Global Energy (Canada), Ltd

Surge Global Energy Inc.

Dear Mr. Perez,

This letter confirms that the Board of Directors of Deep Well Oil & Gas, Inc. has agreed to extend the date specified in Article 3.1 of the Farmout Agreement dated February 25, 2005, between the Farmor and the Farmee, to September 25, 2005 under the following conditions, which are considered accepted with the signature of yourself on this letter.

1). Based on the recommendation of Mr. Ed Howard, the location of the test well(s) are to be located at a different site as originally chosen. One of the reasons for this extension is to give extra time to prepare the new location to spud the well(s).

2). Any assumed and/or real delays caused by either the Farmor or Farmee to execute any agreements, including, but not limited to, any anticipated financing arrangements with financiers such as Promethean, as a result of negotiations and/or discussions by either party and/or its legal representatives are as of this date declared as being irrevelant and the Farmor and Farmee mutually release each party from any and/or real or presumed liabilities whatsoever because of these delays.

Signed in the City of Calgary, Province of Alberta,

this fourteenth day of July in the year two thousand and five

/s/ Horst A. Schmid	/s/ David Perez
Dr. Horst A. Schmid	David Perez
Chairman	Chairman
Board of Directors	Board of Directors
Deep Well Oil & Gas, Inc.	Surge Global Energy (Canada), Ltd. and
	Surge Global Energy Inc.

Exhibit 10.20

Service Agreement - SA-2005-01

THIS AGREEMENT IS MADE BY AND BETWEEN

Northern Alberta Oil Ltd.

510, Royal Bank Building

10117 Jasper Avenue

Edmonton, Alberta T5J 1W8

(hereinafter referred to as “Company”)

AND

Trebax Projects Ltd.

416 Scenic View Bay NW

Calgary, Alberta

T3L 1Z4

(hereinafter referred to as “Contractor”).

WHEREAS

Company is engaged in the exploration and exploitation of petroleum resources, predominantly in the Sawn Lake area of the Province of Alberta, Canada,

AND WHEREAS

Company is desirous of having Contractor provide Services, hereinafter described, in accordance with the terms and conditions and other requirements, as detailed herein,

AND WHEREAS

Contractor has represented and warrants that it is a qualified contractor with the necessary skills, abilities and expertise and is ready, willing and able to provide Services, hereinafter described, in accordance with the terms and conditions and other requirements, as detailed herein,

NOW, THEREFORE,

Company and Contractor, in consideration of the mutual covenants and agreements contained herein, have entered into this Agreement and declare and agree as follows:

1.	The provision of Services shall be carried out by Contractor in strict accordance with all of the provisions of the following documents, which are hereby incorporated into and constitute this Agreement:

·	General Terms and Conditions

·	Compensation

·	Administrative Procedures

·	Scope of Work

2.	This Agreement shall be effective as of September 1, 2005 and shall remain in force, in accordance with the terms and conditions and other requirements, as detailed herein,

3.	This Agreement shall supersede and replace any verbal or written communication heretofore made between Company and Contractor relating to the Services.

IN WITNESS WHEREOF,

Company and Contractor have caused this Agreement to be signed in duplicate original, by duly authorized corporate officers at the places and on the dates indicated below.

For and on behalf of Northern Alberta Oil Ltd.

At the city of	Edmonton	on	30	day of	October	20	05

Signature:	/s/ Curtis Sparrow

Name:	Curtis J. Sparrow

Title:	President

For and on behalf of Trebax Projects Ltd.

At the city of	Calgary	on	12	day of	October	20	05

Signature:	/s/ Cyrus Spaulding

Name:	Cyrus Spaulding

Title:	President

General

Terms and Conditions

Updated - 2005 10 30

TABLE OF CONTENTS

Section	Title	Page

1.0	DEFINITIONS	6
2.0	DOCUMENTS	6
3.0	LANGUAGE	6
4.0	GOVERNING LAW	6
5.0	COMPLIANCE WITH LAWS AND REGULATIONS	6
6.0	TAXES	7
7.0	SAFETY	7
8.0	INSURANCE	7
9.0	LIABILITY AND INDEMNITY	8
9.1	Liability	8
9.2	Indemnification of the Parties	8
9.3	Third Party Indemnification	8
9.4	Patent Indemnity	8
9.5	Consequential Damages	8
10.0	POLLUTION DAMAGES	8
11.0	INSPECTION	9
12.0	AUDIT	9
13.0	ASSIGNMENT	10
14.0	SUBSTITUTION	10
15.0	RIGHT TO DO BUSINESS	10
16.0	TITLE	10
17.0	LIENS AND ENCUMBERANCES	10
18.0	CONFIDENTIAL INFORMATION	11
19.0	PUBLICITY	11
20.0	INDEPENDENT CONTRACTOR	11
21.0	FORCE MAJEURE	11
22.0	TERMINATION	12
22.1	Completion of this Agreement	12
22.2	By Company - Without Cause	12
22.3	By Company - With Cause	12
22.4	Force Majeure Event	13
22.5	Default by Company	13
22.6	Action Upon Termination	13
23.0	SETTLEMENT OF DISPUTES	14

23.1	Arbitration	14
23.2	Appointment of Arbitrators	14
23.3	Arbitration Decision	14
24.0	GRATUITIES	14
25.0	CONFLICT OF INTEREST	14
26.0	COOPERATION	15
27.0	LOCAL CONTENT	15
28.0	CONTINUING OBLIGATION	15
29.0	HEADINGS AND ORDER	15
30.0	WAIVER	15
31.0	AMENDMENT	15

1.0

DEFINITIONS

“Parties” means Company and Contractor.

“Party” means Company or Contractor.

“Services” means any portion or all, depending on the context, of the work, services, duties, obligations and responsibilities of Contractor set out in the Scope of Work section and elsewhere in this Agreement.

“Subcontractor” means an entity that provides, to Contractor, services, material, equipment or other components for resale, or for incorporation into or as a part of, services and related goods to be or being supplied by Contractor, under this Agreement.

“Willful Misconduct” means any deliberate or intentional or conscious or reckless, disregard of any provision of this Agreement, including those requiring compliance with applicable laws, by either Party or its employees, agents, consultants, contractors, Subcontractors or permitted assignees, which is not justifiable by any special circumstance, not including any omission, error of judgment or mistake made, in the exercise in good faith, of any function, authority or discretion conferred upon a Party pursuant to this Agreement.

2.0

DOCUMENTS

Contractor warrants that it has completely reviewed the documents that are incorporated into and constitute this Agreement and, further, warrants that it fully understands the terms, conditions and requirements as it relates to the performance of its obligations under this Agreement.

In the event of conflict between any of the documents attached to and forming an integral part of this Agreement, or conflict between those documents and any applicable laws, statues, decrees, orders, rules or regulations, applicable to the supply of the Services and related goods or use of the goods at their end use location, the most stringent, as determined by Company, shall apply. If Contractor recognizes any such conflict, Contractor shall bring that conflict to the attention of Company, in writing, for resolution.

3.0

LANGUAGE

Contractor shall use the English language for all written and verbal communication related to this Agreement for the supply of the Services and related goods, identified herein.

4.0

GOVERNING LAW

This Agreement shall be construed and interpreted in accordance with the laws of the Province of Alberta, Canada, except as agreed otherwise herein.

5.0

COMPLIANCE WITH LAWS AND REGULATIONS

Insofar as activities directed towards the performance of this Agreement fall within or are subject to the jurisdiction of the laws of Canada, Contractor shall comply in all respects with all applicable laws, statues, decrees, orders, rules or regulations in force in Canada, and of any political subdivision, agency or representatives of the Government of Canada or of the Energy and Utilities Board of the Province of Alberta, or of any duly constituted authority having jurisdiction or authority at any place of performance of this Agreement or in connection with any services pursuant to this Agreement.

In this regard, Contractor agrees that it is responsible to ensure that its employees, agents, consultants, contractors, Subcontractors or permitted assignees act in complete accordance with all applicable laws and regulations.

Further, Contractor shall ensure that its employees, agents, consultants, contractors, Subcontractors or permitted assignees respect local customs and cultural sensitivities and shall not engage in activities, which may be reasonably considered by Company to be detrimental to the maintenance of harmonious relationships between Company and authorities or local inhabitants.

Notwithstanding any other provisions in this Agreement, Contractor shall indemnify Company against all penalties and liabilities of every kind should any of its employees, agents, consultants, contractors, Subcontractors or permitted assignees, fail to comply with applicable laws and regulations and respect local customs.

6.0

TAXES

Contractor shall be solely responsible and liable for the assessment, collection and withholding of, if required, and payment of all corporate, income, excise, royalty, property, sales or other taxes as may apply to the personnel, payroll, invoices, sales, costs, activities, assets, equipment or other property of Contractor or its Subcontractors. Contractor agrees to indemnify and hold Company harmless from and against any fines, fees or other consequences of Contractor failing to perform this obligation.

7.0

SAFETY

Contractor shall comply with and be responsible for the enforcement of all government safety rules and regulations in effect, where the Services are performed. Contractor shall immediately correct any unsafe condition or practices, which Company or competent authority may identify and advise Contractor.

Contractor shall provide all safety equipment for its employees, agents, consultants, contractors, Subcontractors or permitted assignees, who are involved in the performance of the Services and maintain effective safety devices to reduce the occurrence of and mitigate the effects of hazards during the performance of the Services under this Agreement.

All automobiles used in the performance of the Services and shall be in safe operating condition and adequately equipped with safety belts.

Contractor agrees that it is responsible to ensure that its employees, agents, consultants, contractors, Subcontractors or permitted assignees act in complete accordance with all applicable safety requirements of Company and otherwise required by this Agreement.

8.0

INSURANCE

During the performance of the Services under this Agreement, Contractor shall, at its sole expense, insure the personnel and property of Contractor against accident, injury, loss and other such insurance as Contractor deems necessary or as required by the laws and regulations of any place where the Services may be performed. In support of the performance of this Agreement, Contractor shall maintain adequate replacement value insurance for equipment, tools and material owned by Contractor and for any equipment, tools and material of others, particularly those of Company, which are at any time or from time to time in the care and custody of Contractor. All insurance shall be placed and maintained by Contractor, with insurers and in amounts and upon such policy terms and conditions as Company may require.

Within fifteen (15) days of receiving a request from Company, Contractor shall provide to Company, certificates of insurance for the required insurance, in a form satisfactory to Company. Renewal certificates for insurance policies or new certificates for replacement insurance policies, for those policies which become due during the Term of this Agreement shall be obtained by Contractor and copies of such renewal certificates shall be furnished to Company promptly after they become available, in the event that Company had previously requested certificates of the preceding policy.

9.0

LIABILITY AND INDEMNITY

9.1

Liability

Contractor shall bear all risk of injury to its employees, agents, consultants, contractors, Subcontractors or permitted assignees and for loss of or damage to its property, or the property of Company when in the care and custody of Contractor, howsoever caused.

9.2

Indemnification of the Parties

With regard to the Services to be performed under this Agreement, each Party shall indemnify and hold the other Party harmless from and against any and all liabilities for death, illness or injury to it employees, agents, consultants, contractors, Subcontractors or permitted assignees or for loss of or damage to its property or to the property of it employees, agents, consultants, contractors or Subcontractors and against all claims, demands, proceedings and causes of action resulting therefrom, regardless of the cause.

9.3

Third Party Indemnification

With regard to the Services to be performed under this Agreement, each Party shall indemnify and hold the other Party harmless from and against any and all liability for death, illness or injury to any third party or for loss of or damage to the property of any third party and against all claims, demands, proceedings and causes of action resulting therefrom and due to any negligent act or default on its part in the performance of any of its obligations hereunder.

9.4

Patent Indemnity

Contractor agrees to indemnify and hold harmless Company from and against all claims, demands, causes of action, cost, damages and awards, arising out of or in connection with this Agreement, in respect of any direct or indirect infringement of any patent, copyright or trade mark or any pending application for any patent, copyright or trade mark.

9.5

Consequential Damages

Notwithstanding anything herein contained to the contrary, neither Party shall be liable to the other for special, indirect or consequential damages resulting from or arising out of this Agreement or anything done or not done pursuant hereto, including without limitation, loss of profit, loss production or business interruptions, howsoever caused.

10.0

POLLUTION DAMAGES

Notwithstanding any other provision contained in this Agreement, Contractor shall assume all liability for any and all injury or death to persons, loss or damage to property, and in respect of the control and removal of pollution or contamination of the air, land or water arising from spills, leaks or discharge of pollution or contamination and other material in the possession or control of Contractor or its Subcontractors. Contractor and shall indemnify and hold Company, its co-venturers, its and their affiliated companies and its and their respective officers, agents and employees, harmless from and against any and all losses, claims, demands, costs, proceedings, damages, charges and expenses howsoever arising therefrom.

Without relieving Contractor of any of its obligations in this regard, it is agreed that Company may take part to any degree it deems necessary in the control and removal of any pollution or contamination, which is the responsibility of Contractor under the foregoing provisions or which is due to any act or omission of Contractor. Furthermore, Contractor shall reimburse Company for the cost thereof upon the receipt of billing from Company, provided always that the amount may be deducted by Company, from any monies due or which may otherwise become due to Contractor, notwithstanding any other right or remedy, legal or otherwise, that Company may have under this Agreement, or otherwise.

11.0

INSPECTION

Services and goods supplied by Contractor under this Agreement are subject to inspection by Company at any time during the Term of this Agreement. Contractor shall allow Company to exercise this right of inspection at any time. Contractor shall be responsible for making all necessary arrangements to allow Company to exercise this right of inspection.

Where goods supplied are manufactured by others, or otherwise purchased from others for resale by Contractor, Contractor shall be responsible for ensuring that Company will be allowed to exercise this right of inspection, at the point of manufacture of the goods or the point where the goods are stored or stocked. All related cost incurred by any Subcontractor and Contractor to allow Company to exercise this right of inspection is the responsibility of Subcontractor and Contractor and will not be paid by Company. Company will only be responsible for any direct cost incurred by Company, in order that it may exercise this right of inspection.

Services and goods supplied, which are found, during inspection, not to conform to the specifications and other requirements, are subject to rejection by Company. Contractor shall immediately, upon notification of such rejection, re-complete the work or replace the goods at the sole expense of Contractor.

12.0

AUDIT

Contractor agrees that all claims or charges for extra work scope may be audited by Company to determine the appropriateness of the amount claimed or charged.

Accordingly, Contractor shall maintain and cause each of its Subcontractors to maintain a complete, correct and up-to-date set of records, including copies of time sheets, third party invoices and other documentation pertaining to the supply of the Services and related goods, throughout the Term of this agreement and for a period of two (2) years after completion of this Agreement.

Further, Contractor agrees that during the above period, Company or a duly authorized representative of Company shall have the right, at all reasonable times to inspect and audit, the procedures, controls, procurement records relating to the supply of the Services and related goods and accounting records of Contractor and its Subcontractors, related to the performance of this Agreement. Contractor shall be responsible for making all necessary arrangements to allow Company to exercise this right of audit. Contractor shall be responsible for ensuring that Company will be allowed to exercise this right of audit, at each of its Subcontractors.

All related costs incurred by Contractor or its Subcontractors for the purpose of such audit are the responsibility of Contractor or its Subcontractors. Company will only be responsible for any direct cost incurred by Company, in order that it may exercise its right of audit.

13.0

ASSIGNMENT

Contractor agrees that Company may assign this Agreement to an affiliate of Company without the consent of Contractor, provided however, that Company shall remain liable to Contractor for the performance by its obligations under this Agreement.

Company shall not assign this Agreement, in whole or in part, to a party other than an affiliate without having first obtained the written consent of Contractor, which consent shall not be unreasonably withheld.

Contractor shall not assign this Agreement, in whole or in part, or any obligations under this Agreement, without having first obtained the written consent of Company.

Contractor may engage a Subcontractor to perform certain obligations under this Agreement, on behalf of Contractor, provided however, that, despite any agreements or contracts with such Subcontractor, Contractor shall remain liable to Company for the performance of its obligations under this Agreement. Prior to any such agreement to subcontract certain obligations or parts of the Services or work covered by this Agreement, Contractor shall obtain the written consent of Company, which consent shall not be unreasonably withheld.

This Agreement shall inure to the benefit of and be binding upon the successors and permitted assignees of either Party.

14.0

SUBSTITUTION

If as part of the Services, Contractor is required to supply specified goods, Contractor shall supply only those goods specified, unless it has first obtained the written agreement of Company.

15.0

RIGHT TO DO BUSINESS

Contractor warrants that it is in possession of and shall throughout the Term of this Agreement maintain in full force and effect, all licenses and permits necessary to enable it to perform the Services and Contractor further warrants that it has the right to perform the Services under this Agreement.

16.0

TITLE

Contractor warrants that title to goods supplied to Company related to the performance of this Agreement is legitimate and within the legal rights of Contractor and that such goods shall be free of any security interest or other lien or encumbrance, except as expressly agreed and accepted.

17.0

LIENS AND ENCUMBERANCES

Contractor shall promptly pay, when they become due, all obligations for labor, property, equipment, materials and fees and assessments necessary for the performance of the Services. Contractor shall, during the Term of this Agreement, ensure that the work is free and clear of all liens, assessments, fines or other similar levies and shall hold Company harmless in respect of such claims.

Should it be necessary for Company to make any payments stemming from the Services under this Agreement, in order that Company may have access to or use its facilities, Contractor agrees that those amounts may be deducted from the amounts otherwise paid to Contractor for the performance of its obligations, notwithstanding any other right or remedy, legal or otherwise, that Company may have under this Agreement, or otherwise.

18.0

CONFIDENTIAL INFORMATION

All information obtained by Contractor in the performance of this Agreement shall be considered confidential and shall not be divulged by Contractor, its employees, agents, consultants, contractors, Subcontractors or permitted assignees, to any person, firm or corporation, without having first obtained the written consent of Company. This obligation shall remain binding on Contractor, notwithstanding the termination of this Agreement for any reason.

19.0

PUBLICITY

Contractor shall not publish or permit to be published any information about or photographs of the Services or of the business of Company, generally, without having first obtained the written consent of Company. Such consent shall only apply to each specific application and relate only to that application. The accuracy of any information released pursuant to the consent of Company, which was not supplied directly by Company, is the absolute responsibility of Contractor. This obligation shall remain binding on Contractor, notwithstanding the termination of this Agreement for any reason.

20.0

INDEPENDENT CONTRACTOR

In the performance of this Agreement, Contractor warrants that it is an independent contractor and not an agent or employee of Company. Accordingly, the relationship of the Parties in respect of this Agreement shall not be construed to be that of principal and agent or master and servant.

All persons engaged by Contractor in the performance of this Agreement shall at all times during the period of this Agreement be personnel of Contractor and not of Company.

Contractor shall comply with all reasonable directions and instructions, given by Company, provided however, Contractor shall have sole and complete control, supervision and direction over the operation of its property and personnel, except to the extent as may be otherwise mutually agreed in writing by the Parties.

21.0

FORCE MAJEURE

A Force Majeure Event is defined as an event or circumstance that cannot reasonably be anticipated and is beyond the control of Company or Contractor. Each Party shall be excused from the performance of its obligations under this Agreement, from time to time and at any time, but only so long as the Party is prevented from such performance by a Force Majeure Event. A Force Majeure Event may be an act of God or public enemy, war, blockage, civil insurrection, earthquake, flood, fire, labor strike, compliance with any law, rule, order or regulation, which has not been declared by a court of competent jurisdiction to be invalid, or any other cause beyond the reasonable control of such Party. Lack of funds or circumstances resulting from lack of adequate planning, which a Party should have reasonably been expected to perform, shall not be considered beyond the control of such Party.

In the case of suspension of Services due to a Force Majeure Event, the Party affected by the Force Majeure Event shall, within fifteen (15) days from the beginning of any such Force Majeure Event, notify the other Party of such failure of performance and the cause thereof, and shall specify the anticipated period of delay before performance can be resumed. The Party affected by the Force Majeure Event shall take all reasonable measures to overcome any delay and mitigate any damages arising from such Force Majeure Event.

Contractor agrees that it will not seek to claim additional compensation for expenses as a result of a Force Majeure Event. Each Party agrees that it shall bear its own financial consequences of any Force Majeure Event. However, Company may grant Contractor an extension, to the Term of this Agreement, if in its sole opinion, the Force Majeure Event may reasonably be considered to cause or have caused a delay to the timely achievement of the Services to be provided under this Agreement, or otherwise.

22.0

TERMINATION

In the event that this Agreement is terminated under any of the provisions in this clause, Company shall not be liable to Contractor for any payment for any claim by Contractor, for loss of anticipated profits or damages or any reason whatsoever, except as expressly provided for herein. However, in accordance with other provisions of this Agreement, Contractor shall be compensated for Services performed up to the point of termination, regardless of the reason for termination.

22.1

Completion of this Agreement

The obligation for Contractor to provide Services shall terminate upon the completion of the Term of this Agreement.

The obligation for Company to compensate Contractor for Services shall terminate upon the complete and final payment for all Services provided by Contractor prior to the completion of the Term of this Agreement.

22.2

By Company - Without Cause

Company shall, at any time, in its sole discretion, for its own convenience, have the right to terminate this Agreement by providing written notice to Contractor. Company shall have the option of providing written notice of such termination, which may not occur until thirty (30) days from the date of receipt by Contractor of the written notice of termination or a payment in lieu of notice, in the amount equal to the charges that would otherwise accrue for twenty five (25), eight hour days of Services or four hundred (400) total hours of Service.

22.3

By Company - With Cause

Company shall, in its sole discretion, have the right to immediately terminate this Agreement by providing written notice to Contractor, in the event that Contractor commits a material breach of it obligations under this Agreement including, without limitation:

Failure to proceed with the performance of any part of the Services, with due diligence, or to otherwise comply with any of the obligations of Contractor under this Agreement, as a result of a cause within the control of Contractor and failure to comply with or commence and diligently continue remedial action within fifteen (15) days of any reasonable instruction from Company requiring such remedial action, or

Persistent disregard for applicable laws and regulations and safety and environmental requirements, of any competent authority, wherever the Services are performed, and failure to comply with or commence and diligently continue remedial action within fifteen (15) days of any reasonable instruction from Company requiring such remedial action, or

·	Abandonment of this Agreement and failure to comply with or recommence Services within fifteen (15) days of any reasonable instruction from Company requiring recommencement of Services, or

·	Assignment of any part of this Agreement or subcontracting of any part of the Services, without having first obtained the written consent of Company, or

If Contractor is declared bankrupt, becomes insolvent, generally fails to pay its obligations and debts as and when they become due, makes an arrangement, compromise, or composition with it creditors, is placed in liquidation or receivership, or upon any analogous event, or if any legal proceeding for such should be commenced in any court having jurisdiction, or

·	If Contractor fails to maintain any required insurance or bond.

22.4

Force Majeure Event

If the occurrence of a Force Majeure Event causes, or may reasonably be anticipated to cause, suspension of the Services for a period longer than sixty (60) days, either Party may terminate this Agreement, in whole or in part, at its discretion, by giving notice of such termination to the other Party. Should Company be the Party that issues the notice of termination under this clause, Contractor shall be entitled to payment in the amount equal to the charges that would otherwise accrue for twenty five (25), eight hour days of Services or four hundred (400) total hours of Service, in addition to any other payment due and owing to Contractor, under this clause or otherwise.

22.5

Default by Company

Company shall be considered in default if Company fails to perform its payment obligations under this Agreement with respect to any amount for which there is no dispute and if such undisputed amount has not been paid within the time stipulated or if Company is declared bankrupt, becomes insolvent, generally fails to pay its obligations and debts as and when they become due, makes an arrangement, compromise, or composition with it creditors, is placed in liquidation or receivership, or upon any analogous event, or if any legal proceeding for such should be commenced in any court having jurisdiction.

In the event of default by Company and Company failing to remedy such default within fifteen (15) days of receiving notice of such default from Contractor, Contractor shall be entitled to terminate this agreement by notice in writing to Company, notwithstanding any other right or remedy, legal or otherwise, that Contractor may have under this Agreement, or otherwise.

22.6

Action Upon Termination

Upon termination of this Agreement, Contractor shall cease Services and related work immediately upon receipt of notice of termination, or as soon thereafter as is reasonably practicable, and remove all Contractor equipment and material, if any, from Company premises, and cause its employees, agents, consultants, contractors, Subcontractors or permitted assignees to vacate all Company premises, as directed by Company. Where Contractor is in possession of Company equipment, material or articles of any type at the time of receipt of notice of termination, Contractor shall promptly return those articles to Company, as directed by Company. Company shall grant reasonable access to Contractor for this purpose. All work related to the performance of this clause shall be considered Services by Contractor requiring compensation by Company.

23.0

SETTLEMENT OF DISPUTES

Any disputes, controversies, differences or disagreements, which may arise between the Parties out of or in connection with this Agreement shall be settled by mutual agreement.

23.1

Arbitration

If any such dispute, controversy, difference or disagreement cannot be settled within thirty (30) days, by mutual agreement, one of the Parties shall issue notice regarding the need for arbitration (the “Arbitration Notice”) to the other, indicating that the matter shall be settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce, effective at the time.

23.2

Appointment of Arbitrators

Arbitration shall, preferably, be before one arbitrator (the “Sole Arbitrator”) mutually acceptable to the Parties. Otherwise, arbitration shall be before three arbitrators, in which case each Party shall each nominate one arbitrator within thirty (30) days of the Arbitration Notice. The two arbitrators, so nominated, shall in turn nominate a third arbitrator within ten (10) days of the nomination of the later of the two. In the event that they fail to agree on the third arbitrator within the ten (10) days, the third arbitrator shall be nominated, at the request of the most diligent Party, by the International Chamber of Commerce. The three arbitrators so nominated shall constitute the Board of Arbitration. The place of arbitration shall be either Edmonton or Calgary, Alberta, at the discretion of the Party issuing the Arbitration Notice. The arbitration shall be conducted in the English language.

23.3

Arbitration Decision

The arbitration decision of the Board of Arbitration shall have the agreement of the majority of the arbitrators. The arbitration award of either the Sole Arbitrator or the Board of Arbitration shall be issued in writing not later than one hundred and twenty days (120) after the date of the Arbitration Notice. The arbitration award shall be final and binding on the Parties and shall indicate which Party shall bear the cost of the arbitration, or if both, the proportion each Party shall bear. The arbitration award shall be enforceable in any court of competent jurisdiction and the Parties agree not to contest or seek relief from the award in any court.

24.0

GRATUITIES

Contractor shall not pay any commissions or fees, or grant any rebates, to any director, officer, contractor or employee of Company, or to any relative or close associate of those persons or parties, or favor such persons or parties with gifts or entertainment of significant value.

Contractor agrees that any breach of the above clause is sufficient grounds for Company to terminate this Agreement without obligation to the Contractor. Such termination will not affect any other rights Company may have under this Agreement or otherwise.

25.0

CONFLICT OF INTEREST

Contractor warrants that no director, officer, contractor or employee of Company, or any relative of those persons, has any beneficial interest in Contractor, or other companies directly associated with Contractor, either as an inducement to enter into this Agreement or for any commitment in the course of performance of this Agreement or as acknowledgement of any arrangement between Contractor and Company. Contractor further warrants that it shall not provide any beneficial interest in Contractor, or other companies directly associated with Contractor, either as an inducement to enter into this Agreement or for any commitment in the course of performance of this Agreement.

Contractor agrees that any breach of this warranty is sufficient grounds for Company to terminate this Agreement without obligation to the Contractor. Such termination will not affect any other rights Company may have under this Agreement or otherwise.

26.0

COOPERATION

Contractor shall cooperate with Company and other contractors engaged by Company in scheduling its work and methods of performance to suit the overall requirements of Company.

27.0

LOCAL CONTENT

Contractor shall, to the maximum extent practicable in the performance of the Services, give preference to and use labor, both skilled and unskilled, professional personnel, and contractors, from the immediate region of the Company developments.

28.0

CONTINUING OBLIGATION

Notwithstanding the termination of this Agreement, the Parties shall continue to be bound by the provisions of this Agreement, with respect to matters arising and liabilities accrued during the Term of this Agreement.

29.0

HEADINGS AND ORDER

Headings provided in this Agreement are for the ease of reference and shall not be considered when interpreting the meaning of the text of this Agreement. Further, the order of the various terms in this Agreement does not imply any priority or importance one over the other of the various terms.

30.0

WAIVER

Failure of either Party to enforce any one of its rights under this Agreement shall not be deemed or construed to be a waiver on the part of such Party. Company and Contractor agree that none of the requirements of this Agreement shall be considered waived or amended by either Party, unless such waiver is prepared in writing and signed as accepted by both Company and Contractor.

31.0

AMENDMENT

Company and Contractor agree that none of the terms and conditions and other requirements of this Agreement may be changed or deleted or otherwise amended, unless such amendment is prepared in writing and signed as accepted by both Company and Contractor.

Compensation

Updated - 2007 01 04

TABLE OF CONTENTS

Section	Title	Page

1.0	PURPOSE	16
2.0	STATUTORY REQUIREMENTS	18
3.0	PAYMENT FOR SERVICES	18
4.0	PAYMENT FOR EXPENSES	18
4.1	Out of Pocket	18
4.2	Use of Personal Automobile	19
4.3	Third Party Charges	19
4.4	Long Distance Phone, Facsimile and Courier	19
5.0	INCENTIVE PLAN	19
5.1	Stock Option	19
5.2	Bonus Plan	19

1.0

PURPOSE

The purpose of this document is to define in detail the compensation for the Services carried out by Contractor in performance of Services under this Agreement.

2.0

STATUTORY REQUIREMENTS

Contractor agrees to and shall be responsible for paying all Canada Pension Plan, Employment Insurance, Workers Compensation Board, Federal and Provincial Income Taxes, Provincial Sales Tax (PST) and Goods and Services Tax (GST) and other costs due to compensation for Services under this Agreement, unless otherwise stated herein.

Contractor shall provide evidence of registration, by providing its GST number clearly indicated on each invoice.

3.0

PAYMENT FOR SERVICES

Company shall pay Contractor, in full consideration of Services provided, an all-inclusive rate excluding Goods and Services Tax (GST) and Provincial Sales Tax (PST). Company agrees to pay Contractor as follows:

$130 for each hour of Service

If applicable to any Services, the GST and PST shall be in addition to the charge for such Services. Both GST and PST shall be calculated separately at the then prevailing rate and shown separately on invoices.

All invoices for payment of Services shall be supported by a completed and signed time sheet of a format acceptable to Company.

4.0

PAYMENT FOR EXPENSES

Contractor shall submit a completed summary expense report in a format acceptable to Company on the last day of every month for expenses incurred during that month. All expense reports shall be accompanied by original receipts supporting expense claims.

4.1

Out of Pocket

Contractor shall be reimbursed for reasonably incurred expenses in the performance of the Services.

Where the expected cost of expenses in a period are significant, Company shall provide a payment in advance, in an amount equal to the total amount reasonably anticipated to be incurred. The amount of the advance shall be deducted from the amount otherwise due to Contractor for such expenses.

All costs incurred for work permits or other permits necessary for the performance of the Services shall be by Company.

4.2

Use of Personal Automobile

Contractor owned vehicles when used in the performance of Services shall be reimbursed for mileage at a rate of $0.50/km for car, $0.85/km for truck. The costs of all repairs and necessary insurance shall be born by the Contractor.

4.3

Third Party Charges

All third party charges incurred by contractor in the performance of Services shall be invoice to Company at cost plus 15%.

4.4

Travel

While in the performance of Services all travel, meals and accommodation reasonably incurred shall be reimbursed to Contractor. All international air travel and air travel inside the North American continent of four hours duration and greater shall be by unrestricted business class air fare booking.

4.5

Long Distance Phone, Facsimile and Courier

All long distance phone calls, long distance facsimile, and courier charges incurred by Contractor in the performance of services shall be reimbursed by Company.

5.0

INCENTIVE PLAN

5.1

Stock Option

Contractor shall have the right to participate in the same Stock Option Plan offered to Officers of Company or Contractors acting in the capacity as Officers of the Company. The terms of the stock option offered shall be defined in the Stock Option Agreement.

5.2

Bonus Plan

At anytime during performance of this Service Agreement, Company and Contactor may enter into a bonus plan arrangement whereby Contractor is compensated by Company for achieving mutually agreed on goals which are tangible and measurable

Administrative

Procedures

Updated - 2005 10 30

TABLE OF CONTENTS

Section	Title	Page

1.0	PURPOSE	20
2.0	INVOICES	22
3.0	PAYMENT	22
4.0	NOTICE	23

1.0

PURPOSE

The purpose of this document is to outline procedural issues and requirements, which both parties, shall follow in the course of the performance of this Agreement.

2.0

INVOICES

Contractor shall prepare and submit invoices for payment in the same currency as that used in this Agreement. Foreign currencies shall be converted to the same currency as that used in this agreement at the exchange rate on the day the expense had been incurred.

All invoices shall clearly reference this Agreement, by including the agreement number, in the form “Service Agreement - SA-2005-01”.

Invoices shall show the details and total amount for services separate from the details and total amount for allowable expenses.

Contractor shall invoice for Provincial Sales Tax (PST) and Goods and Services Tax (GST) separately and in accordance with the applicable government regulations. The invoice shall clearly indicate PST and GST numbers assigned to Contractor.

Contractor shall submit the original invoice on or about the first day of every month, with all necessary supporting documentation, and a copy of the original invoice and supporting documentation and should be submitted, for payment to:

Northern Alberta Oil Ltd.

510, Royal Bank Building

10117 Jasper Avenue

Edmonton, Alberta T5J 1W8

Attention - Finance

3.0

PAYMENT

Invoice payment terms of Company for such services are "Net 15 days". This means that the total shown on the invoice is to be paid within 15 days from receipt of the invoice, correct in all respects.

If Company disputes an item on an invoice, Company shall, within five (5) days of receipt of the invoice, notify Contractor of the item under dispute, specifying the reason for the dispute. Company will withhold the amount of the item under dispute until settlement of the dispute. All undisputed amounts will be paid in accordance with this Agreement. Should Company fail to notify Contractor of an item which Company disputes within the allowed five day period, all items on the invoice will be considered acceptable to Company as invoiced.

Company will make payment to Contractor by means of electronic transfer directly to the bank account of Contractor or by check, at the option of Contractor. Contractor shall notify Company of its requirement in this regard and the appropriate information to allow Company to act accordingly.

In the event that Company does not pay the undisputed amount within the allowed fifteen days, interest shall be charged at a rate of 1.5% per month, or part thereof, from the date the invoice is received by Company.

4.0

NOTICE

All correspondence shall clearly reference this Agreement, by including the agreement number, in the form “Service Agreement - SA-2005-01”.

All correspondence regarding this Agreement for the supply of services shall be directed as follows:

To Company at:

Northern Alberta Oil Ltd.

c/o Deep Well Oil and Gas, Inc

510, Royal Bank Building

10117 Jasper Avenue

Edmonton, Alberta T5J 1W8

Attention: Contracts Manager

To Contractor at:

Trebax Projects Ltd.

416 Scenic View Bay NW

Calgary, Alberta T3L 1Z4

Attention: Cyrus Spaulding

Scope of Work

Updated - 2005 10 30

TABLE OF CONTENTS

Section	Title	Page

1.0	PURPOSE	24
2.0	POSITION	26
3.0	SKILLS AND EXPERIENCE	26
4.0	RESPONSIBILITY	26
5.0	AUTHORITY	27
4.0	NOMINATED INDIVIDUAL	27
5.0	DUTIES	27
6.0	TERM	27
6.1	Intent to Extend	27
7.0	PRIMARY LOCATION OF WORK	27
8.0	HOURS OF WORK	27
9.0	PROVISION OF EQUIPMENT AND SUPPLIES	28

3.0

PURPOSE

The purpose of this document is to define the Services to be performed under this Agreement, by providing understanding of:

·	The requirements of Contractor in the provision of the Services

·	The nature of the Services to be provided by Contractor, through its Nominated Individual

·	The Position the Nominated Individual is to fill, to provide an understanding of the general nature of the Services

·	The other key requirements for the Position and therefore the Nominated Individual

2.0

POSITION

The details of the Position provided by Contractor are as follows:

Title - Chief Operating Officer (COO)

Reports to - Chief Executive Officer (CEO)

3.0

SKILLS AND EXPERIENCE

The individual who is to fill the Position shall have the following general experience:

·	The COO shall have a broad background of knowledge with hands on experience in no less than three different areas of corporate operations which supports Company’s business.

·	Must be registered or eligible to be registered as a Professional Engineer (P.Eng), in the province of Alberta

·	Experience in managing large facilities projects and consulting engineers

·	Experience in the engineering design and operations of heavy oil facilities.

4.0

RESPONSIBILITY

The Position is responsible for the following:

·	The have such responsibilities and powers and shall hold the office of COO of the Company and perform such duties normally associated with such position and those that the CEO may reasonable request from time to time.

·	The COO shall use his best efforts to promote the interests of the Company, provided however, that nothing herein shall prohibit the COO from engaging in enterprises and activities which do not conflict with his duties and which do not materially affect his performance or that of the Company.

·	At all times act in the best interest of Company and act in a manner which best increases shareholder value in DWOG et al, consistent with the other requirements in this Agreement.

Be responsible for management of the day to day overall corporate operational activities of the Company, and until as such time as it is deemed necessary for Company to have department managers, oversee the Drilling, Production, Exploitation, Engineering and Projects, IT and Communications, Health Safety and Environment and Human Resources, and report them to the CEO.

·	Be responsible for coordination and continuous monitoring and general management of Company operational budget as it best supports the business plan.

·	Support and assist where necessary the CEO in the implementation of board decisions and initiatives that are in the best interest if the Company.

·	To report to the CEO on the status and progress of activities and the associated budgets and schedules.

·	Contracting services and hiring employees as the COO deems necessary to support the Company’s business plan.

5.0

AUTHORITY

The Position shall have the authority to:

·	Allocate resources as the COO sees fit to ensure the approved budget and schedule supports the business plan, including any and all required personnel resources, operational expenditures, and capital expenditures.

·	Ultimate and direct authority with accountability to the CEO, for the overall day to day operations of the company in Drilling, Production, Exploitation, Engineering and Projects, IT and Communications, Health Safety and Environment, and Human Resources.

4.0

NOMINATED INDIVIDUAL

Contractor has nominated Cyrus Spaulding for this position.

Contractor may not remove or replace or substitute the Nominated Individual, without having firstly obtained the written consent of Company.

5.0

DUTIES

The key specific duties of this Position are as follows:

·	Attend senior management and steering committee meetings

·	Compilation of the overall operations budgets

·	Supervision of senior managers

·	Assist with and provide input to the operations committee

6.0

TERM

The Term of this Agreement shall be one year, commencing from the Effective Date of this Agreement, unless terminated according to the other terms of this Agreement.

6.1

Intent to Extend

Sixty (60) days prior to the termination of the term of this Agreement, Company shall notify Contractor if it intends to provide a subsequent agreement for services, following the termination of this Agreement. This will allow the Company and Contractor thirty (30) days to agree to the terms of the subsequent agreement. Accordingly, any agreement that is to effectively extend the term of this Agreement shall be agreed by the parties thirty (30) days prior to the end of the term of this Agreement.

7.0

PRIMARY LOCATION OF WORK

The Primary Location of Work is Calgary and nearby vicinity.

Travel expenses, including use of personal automobile, apply for all work, when ever away from the Primary Location of Work.

HOURS OF WORK

Contractor is free to work any hours that it desires, but they shall be generally consistent with normal business hours. Clearly, Contractor will be expected to be available for business meetings, etc. at times dictated by Company and the demands of the Position.

9.0

PROVISION OF EQUIPMENT AND SUPPLIES

For the satisfactory performance of the Services, Contractor shall provide his Nominated Individual with the following equipment, as a minimum:

·	Computer not more than three years old

·	Computer software, including MS Office Suite, email

·	Internet Service Provider for the purpose of email and internet access

·	Cellular Phone

Printing, photocopying and the like shall be the responsibility of Company, otherwise such matters will be subcontracted and billed as a third party expense.

Company may provide an office where Contractor’s Nominated Individual may work from time to time for the purpose of liason with Company Directors, investors, and others, for the benefit of Company.

EXHIBIT 10.22

FARMOUT AMENDING AGREEMENT

THIS FARMOUT AMENDING AGREEMENT is made effective

as of the 15 ^th day of November, 2005.

AMONG:

NORTHERN ALBERTA OIL LTD. , a body corporate incorporated pursuant to the laws of the Province of Alberta (hereinafter referred to as “ NAOL ”)

- and -

DEEP WELL OIL & GAS (ALBERTA), LTD. , a body corporate incorporated pursuant to the laws of the Province of Alberta (hereinafter referred to as “ Deep Well Alberta ”)

- and -

DEEP WELL OIL & GAS, INC. , a Nevada corporation extra-provincially registered in the Province of Alberta (hereinafter referred to as “ DWOG ”)

(hereinafter NAOL, DWOG and Deep Well Alberta are collectively referred to as the “ Farmor ”)

- and -

SURGE GLOBAL ENERGY (CANADA), LTD. , a body corporate incorporated pursuant to the laws of the Province of Alberta (hereinafter referred to as “ Farmee ”)

- and -

SURGE GLOBAL ENERGY, INC. , a body corporate incorporated pursuant to the laws of the State of Delaware (hereinafter referred to as “ Surge US ”)

RECITALS:

A.	DWOG, NAOL, Farmee and Surge US entered into a farmout agreement dated February 25, 2005, which has been amended from time to time, including, but not limited to, letter amending agreements dated March 10, 2005, March 10, 2005 and July 14, 2005 (the “ Farmout Agreement ”).

Pursuant to and as a condition precedent to the closing of a private placement of gross proceeds in the amount of $8,550,000 CDN to Farmee by MGI Securities Ltd. (the “ Private Placement ”), the Farmor, the Farmee and Surge US have agreed to amend certain terms and conditions of the Farmout Agreement.

NOW THEREFORE in consideration of the respective covenants and agreements of the Parties contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the Parties, it is hereby agreed as follows:

ARTICLE 1

INTERPRETATION

1.1

Definitions

In this agreement the capitalized terms which are used herein and which are defined in the Farmout Agreement shall have the meaning ascribed thereto unless the contrary is otherwise expressly required or unless otherwise defined herein.

ARTICLE 2

AMENDMENTS TO THE FARMOUT AGREEMENT

2.1

Condition Satisfaction Date

Section 1.1(f) “Conditions Satisfaction Date” shall be revised as, “means September 25, 2005;”.

2.2

Earning Period

Section 1.1(h) “Earning Period” shall be revised as, “means the period commencing on September 25, 2005 and ending on February 25, 2008;”.

2.3

Conditions Precedent

Section 2.1(e) of the Farmout Agreement is deleted in its entirety.

2.4

Option Well

The first sentence of Section 4.1 shall be revised as follows:

“Farmee shall have the right, until September 25, 2006, on notice to Farmor, to Spud an Option Well.”

2.5

Reconveyance of Farmout Lands

The first sentence of Section 10.1 shall be revised as follows:

“Within thirty (30) days following the end of the Earning Period, Farmee shall convey to Deep Well, Northern or Deep Well Alberta, as directed by Deep Well, a 40% beneficial interest in those Farmout Lands (if any) in which Farmee has not earned an interest by the end of the Earning Period.”.

ARTICLE 3

OTHER AGREEMENTS

3.1

6 .5 Section Block

Farmor acknowledges and confirms that it has acquired legal and beneficial title to the 6.5 Section Block. In accordance with the second sentence of Section 9.3, and at the closing of the Private Placement, the Farmor shall transfer and convey legal title to the Farmee of a forty (40%) percent undivided interest in and to the 6.5 Section Block.

3.2

Article 13

Upon payment by the Farmee to the Farmor of US$1,000,000.00 at the closing of the Private Placement as contemplated by Section 3.3 below, all amounts payable by the Farmee to the Farmor, or by the Farmor to the Farmee or Surge US under Article 13 of the Farmout Agreement, shall be deemed fully paid and satisfied with no further debts, obligations or amounts owing or outstanding by the Farmee to the Farmor or the Farmor to the Farmee or Surge US in relation to Article 13 of the Farmout Agreement.

3.3

Surge Shares

Article 14: “Surge Shares” is deleted in its entirety and restated as follows:

“At the closing of the Private Placement, Farmee agrees to:

pay to NAOL the sum of Nine Hundred Thousand (US$900,000.00) US Dollars and to Deep Well Alberta the sum of One Hundred Thousand (US$100,000.00) US Dollars; and

ii.

issue to NAOL Six Million Seven Hundred Ninety Five Thousand (6,795,000) common shares of Farmee and to Deep Well Alberta Seven Hundred Fifty Five Thousand (755,000) common shares of Farmee, and which such Farmee common shares shall be fully paid and non-assessable as of November 15, 2005 and shall be subject to the terms and conditions of the Voting Trust Agreement dated November 15, 2005 among NAOL, Deep Well Alberta, and Surge US.”.

ARTICLE 4

MISCELLANEOUS

4.1

Ratification

Other than as amended herein, the terms and provisions of the Farmout Agreement are hereby ratified and confirmed.

4.2

Counterpart Execution

This agreement may be executed by facsimile and counterpart execution, with each such counterpart taken to be an original and all counterparts taken together constituting due execution by the Parties of this agreement.

IN WITNESS WHEREOF the parties hereto have executed this agreement effective as of the day and year first above written.

DEEP WELL OIL & GAS (ALBERTA) LTD.		DEEP WELL OIL & GAS, INC.

Per:	/s/ Horst A. Schmid	Per:	/s/ Horst A. Schmid

NORTHERN ALBERTA OIL LTD.		SURGE GLOBAL ENERGY (CANADA), LTD.

Per:	/s/ Curtis J. Sparrow	Per:	/s/ Fred W. Kelly


SURGE GLOBAL ENERGY, INC.

Per:	/s/ David Perez

Exhibit 10.23

FARMOUT ACKNOWLEDGEMENT AGREEMENT

WHEREAS Deep Well Oil and Gas, Inc. (herein “Deep Well”), Northern Alberta Oil Ltd. (herein “Northern”) (herein Deep Well and Northern collectively referred to as the “Farmors”), Surge Global Energy, Inc. (“Surge U.S.”) and Surge Global Energy (Canada), Ltd. (the “Farmee”) have entered into a farmout agreement dated February 25, 2005, as amended effective November 1, 2005 (the “Farmout Agreement”) with respect to those leases and lands described in Schedule “A” to the Farmout Agreement (known as the Sawn Lake oil sands property);

AND WHEREAS the Farmee is currently negotiating a brokered private placement of secured convertible debentures (the “Debentures”) in the principal amount of up to $10,000,000 CAD (the “Private Placement”);

AND WHEREAS MGI Securities Ltd. (the “Agent”) will act as the Farmee’s exclusive agent in offering the Debentures to subscribers;

AND WHEREAS the Agent, as a condition of the Private Placement, requires the Farmors to confirm and validate the enforceability of the Farmout Agreement;

NOW THEREFORE in consideration for $10.00 paid by the Farmee to each of Surge U.S. and the Farmors and the promises, covenants and agreements contained herein, the validity and sufficiency of such consideration being hereby confirmed, the parties hereby agree as follows:

Deep Well, Northern, Surge U.S., the Farmee and Deep Well Oil & Gas (Alberta) Ltd. (“Deep Well Alberta”) confirm and agree that all of the terms, provisions, rights and obligations set out in the Farmout Agreement remain in full force and effect and the Farmee and Surge U.S. are in good standing and not in default under the agreement. In particular, Deep Well, Deep Well Alberta and Northern confirm, acknowledge and agree that Surge U.S. and the Farmee, as applicable, have complied with Section 3.1 (as amended by valid extension notices), Section 13.1(a) and Section 14.1 of the Farmout Agreement and are not in default under any of those sections or any other provision of the Farmout Agreement. The parties to the Farmout Agreement agree that the “Test Well” (as defined in the Farmout Agreement) has been Spud in accordance with the Farmout Agreement, the Test Well was drilled to the Contract Depth and the Farmee has fully performed all its obligations and undertaking under the Farmout Agreement in respect of the Test Well and Article 3 whereby the Farmee did earn the working interest in the section of land on which the Test Well is situated as provided for in Section 3.2 of the Farmout Agreement, together with the Farmor’s Pre-Farmout Working Interest in 5 additional sections of the Farmout Lands provided they are selected by Farmee by January 31, 2006. Furthermore, Deep Well, Northern, Deep Well Alberta, Surge U.S. and the Farmee represent and warrant to the Agent that all of the conditions precedent set out in Section 2.1 of the Farmout Agreement have been completed. Deep Well, Northern, Deep Well Alberta, Surge U.S. and the Farmee acknowledge that the Agent is relying on the foregoing representations in completing the Private Placement. The Farmors acknowledge and confirm that the Farmee is entitled to rely on the foregoing and this Farmout Acknowledgement Agreement is in order to drill Option Wells under Articles 4 and 5 of the Farmout Agreement.

The terms of this Acknowledgement Agreement are agreed to this 15th day of November, 2005.

DEEP WELL OIL AND GAS, INC,		SURGE GLOBAL ENERGY, INC.

Per:	/s/ Horst A. Schmid	Per:	/s/ David Perez
	Name: Horst A. Schmid		Name: David Perez
	Title: President and CEO		Title:


NORTHERN ALBERTA OIL LTD.		SURGE GLOBAL ENERGY (CANADA), LTD.

Per:	/s/ Curtis J. Sparrow	Per:	/s/ Fred W. Kelly
	Name: Curtis J. Sparrow		Name: Fred W. Kelly
	Title: President		Title:


DEEP WELL OIL AND GAS (ALBERTA) LTD.		MGI SECURITIES LTD.

Per:	/s/ Horst A. Schmid	Per:	/s/ Tony P. Loria
	Name: Horst A. Schmid		Name:Tony P. Loria
	Title: President and CEO		Title:

Exhibit 10.25

DEEP WELL OIL & GAS, INC.

NON-QUALIFIED STOCK OPTION AGREEMENT

This NON-QUALIFIED STOCK OPTION AGREEMENT (the “ Agreement ”) is made this 28 day of November, 2005, by and between Deep Well Oil & Gas, Inc. , a Nevada corporation (the “ Corporation ”) and _____________________, an individual resident of Edmonton, Alberta (“Optionee”).

1.	Grant of Option

	The Corporation hereby grants Optionee the option (the “Option”) to purchase all or any part of an aggregate of 375,000 shares (the “Shares”) of Common Stock of the Corporation at the exercise price of $0.71 per share according to the terms and conditions set forth in this Agreement and in the Deep Well Oil & Gas, Inc. November 28, 2005 Stock Option Plan (the “Plan”). The Option will not be treated as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). The Option is issued under the Plan and is subject to its terms and conditions. A copy of the Plan will be furnished upon request of Optionee.

	The Option shall terminate at the close of business five years from the date hereof (the “Option Termination Date”).

2.	Vesting of Option Rights; Transferability

(A)	This Option shall be exercisable, in whole or in part, according to the following vesting schedule:

	(i)	175,000 Shares immediately,
	(ii)	100,000 Shares on February 6, 2006,
	(iii)	100,000 Shares on February 6, 2007,

subject to Optionee’s continuing to provide services to the Corporation or any Subsidiary as an employee, director or consultant, as the case may be, during the immediate annual period preceding such dates.

(B)	During the lifetime of Optionee, the Option shall be exercisable only by Optionee and shall not be assignable or transferable by Optionee, other than by will or the laws of descent and distribution. Notwithstanding the foregoing, until such time as the Corporation inter-lists on an exchange in Canada, and with the prior written consent of the Corporation, Optionee may transfer the Option to any to a member of the immediate family of such Optionee or to a trust, partnership, limited partnership, limited liability company or other entity formed exclusively for the benefit of such Optionee or members of the immediate family of such Optionee (“Family Member”), provided, however, that

	(i)	Optionee may not receive any consideration for such transfer,
	(ii)	the Family Member must agree in writing not to make any subsequent transfers of the Option other than by will or the laws of the descent and distribution and
	(iii)	the Corporation receives prior written notice of such transfer.

3.	Exercise of Option after Death or Termination of Services or Employment

	Except as otherwise determined by the Board:

(A)	In the event that an Optionee ceases to provide services to the Corporation as a result of termination for cause (as such term is defined at common law), each of the Options held by the Optionee shall cease to be exercisable after the date of termination of employment or services as a director or consultant.

(B)	In the event that an Optionee ceases to provide services to the Corporation for any reason other than termination for cause or death, any vested Option held by Optionee may continue to be exercised by the Optionee to and until the earlier of:

	(i)	the applicable expiration of the Option Period in respect of such Option; and

	(ii)	the period after the date on which Optionee ceases to provide services to the Corporation that is permitted by the applicable laws, policies, rules and regulations of any stock exchange upon which the Underlying Shares are then listed, posted and/or quoted for trading;

(C)	In the event of death, the heirs, administrators or legal representatives of a Optionee, or any person or persons to whom the Option is transferred by will or the applicable laws of descent, may exercise the Optionee's Options within twelve months after the date of the Optionee's death to the extent such Options were by their terms exercisable prior to his death or within the period of twelve months following his death; but for greater certainty no Option shall be exercisable after its stated termination date. In the event that the heirs, administrators or legal representative of an Optionee who has died, or any person or persons to whom the Option is transferred by will or the applicable laws of descent, exercises the Optionee's Option in accordance with the terms of the Plan, the Corporation shall have no obligation to issue the Common Shares until evidence satisfactory to the Corporation has been provided by such persons that persons are entitled to acquire the Common Shares under the Plan.

(D)	Notwithstanding the above, in no case may the Option be exercised to any extent by anyone after the Option Termination Date.

4.	Method of Exercise of Option

	Subject to the foregoing, the Option may be exercised in whole or in part from time to time by serving written notice of exercise on the Corporation at its principal office within the Option period. The notice shall state the number of Shares as to which the Option is being exercised and shall be accompanied by payment of the exercise price. Payment of the exercise price shall be made;

(A)	in cash (including bank check, personal check or money order payable to the Corporation),

(B)	with the approval of the Corporation (which may be given in its sole discretion), by delivering to the Corporation for cancellation shares of the Corporation’s Common Stock already owned by Optionee having a Fair Market Value (as defined in the Plan) equal to the full exercise price of the Shares being acquired,

(C)	with the approval of the Corporation (which may be given in its sole discretion), by electing to have the Corporation retain from the number of Shares to be issued to the Optionee upon the exercise of such Option Shares having a Fair Market Value on the date of exercise equal to the aggregate exercise price payable upon exercise of such Option;

(D)	through a special sale and remittance procedure pursuant to which Optionee (or any other person or persons permitted to exercise the option) shall concurrently provide irrevocable instructions

	(i)	to a Corporation designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable income and employment taxes required to be withheld by the Corporation by reason of such exercise and
	(ii)	to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale; or

(E)	by any combination of the methods of payment described above.

5.	Securities Law Matters .

(A)	Restricted Securities . The Optionee understands and acknowledges that neither the Option nor the Shares have been registered under the United States Securities Act of 1933, as amended (the “Securities Act”), that the Option has been issued to it in reliance on an exemption from the registration requirements of the Securities Act, and that the Option and the Shares are, or will be, as applicable, “restricted securities” as defined in Rule 144 under the Securities Act.

(B)	Accredited Investor. The Optionee represents that it is an “accredited investor” within the meaning of Rule 501(a) under the Securities Act.
(C)	Restrictions on Exercise. The Optionee understands and acknowledges that the Option may be exercised only pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws, and that at the time of any proposed exercise, the Corporation may require an opinion of counsel or other evidence satisfactory to it to the effect that the Shares may be issued pursuant to such exercise without registration under the Securities Act or applicable state securities laws.

(D)	Resale Restrictions . The Optionee understands and acknowledges that notwithstanding anything to the contrary contained in this Agreement, the Option and the Shares may be offered, sold, pledged or otherwise transferred only

	(i)	to the Corporation;
	(ii)	outside the United States in accordance with Rule 904 of Regulation S under the Securities Act and in compliance with applicable Canadian local laws and regulations; or
	(iii)	within the United States, in a transaction that does not require registration under the Securities Act or any applicable state securities laws. In connection with any proposed sale, pledge or other transfer of the Option or the Shares, the Corporation may require an opinion of counsel or other evidence satisfactory to it to the effect that the proposed sale, pledge or other transfer may be effected without registration under the Securities Act or applicable state securities laws.

(E)	Legend . The Optionee understands and acknowledges that upon the original issuance of the Shares, as applicable, and until such time as the same is no longer required under applicable requirements of the Securities Act or state securities laws, the certificates representing the Shares, and all certificates issued in exchange therefor or in substitution thereof, shall bear a legend with respect to the transfer restrictions set forth above.

6.	Miscellaneous

(A)	Plan Provisions Control . In the event that any provision of the Agreement conflicts with or is inconsistent in any respect with the terms of the Plan, the terms of the Plan shall control.

(B)	No Rights of Stockholders . Neither Optionee, Optionee’s legal representative nor a permissible assignee of this Option shall have any of the rights and privileges of a stockholder of the Corporation with respect to the Shares, unless and until such Shares have been issued in the name of Optionee, Optionee’s legal representative or permissible assignee, as applicable.

(C)	No Right to Employment . The grant of the Option shall not be construed as giving Optionee the right to be retained in the employ of, or as giving a director of the Corporation or a Subsidiary (as defined in the Plan) the right to continue as a director of the Corporation or a Subsidiary, nor will it affect in any way the right of the Corporation or a Subsidiary to terminate such employment or position at any time, with or without cause. In addition, the Corporation or Subsidiary may at any time dismiss Optionee from employment, or terminate the term of a director of the Corporation or a Subsidiary, free from any liability or any claim under the Plan or the Agreement. Nothing in the Agreement shall confer on any person any legal or equitable right against the Corporation or any Subsidiary, directly or indirectly, or give rise to any cause of action at law or in equity against the Corporation or a Subsidiary. The Option granted hereunder shall not form any part of the wages or salary of Optionee for purposes of severance pay or termination indemnities, irrespective of the reason for termination of employment. Under no circumstances shall any person ceasing to be an employee of the Corporation or any Subsidiary be entitled to any compensation for any loss of any right or benefit under the Agreement or Plan which such optionee might otherwise have enjoyed but for termination of employment, whether such compensation is claimed by way of damages for wrongful or unfair dismissal, breach of contract or otherwise. By participating in the Plan, Optionee shall be deemed to have accepted all the conditions of the Plan and the Agreement and the terms and conditions of any rules and regulations adopted by the Committee and shall be fully bound thereby .

(D)	Governing Law . The validity, construction and effect of the Plan and the Agreement, and any rules and regulations relating to the Plan and the Agreement, shall be determined in accordance with the internal laws, and not the law of conflicts, of the State of Nevada.

(E)	Severability . If any provision of the Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Agreement under any law deemed applicable by the Committee (as defined in the Plan), such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or the Agreement, such provision shall be stricken as to such jurisdiction or the Agreement, and the remainder of the Agreement shall remain in full force and effect.

(F)	No Trust or Fund Created . Neither the Plan nor the Agreement shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Corporation or any Subsidiary and Optionee or any other person.

(G)	Headings . Headings are given to the Sections and subsections of the Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Agreement or any provision thereof.

(H)	Conditions Precedent to Issuance of Shares ; Repurchase Rights. Shares shall not be issued pursuant to the exercise of the Option unless such exercise and the issuance and delivery of the applicable Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, the requirements of any applicable Stock Exchange or the Nasdaq National Market and the corporate laws of the state of Nevada. As a condition to the exercise of the purchase price relating to the Option, the Corporation may require that the person exercising or paying the purchase price represent and warrant that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Corporation, such a representation and warranty is required by law.

(I)	Withholding. In order to comply with all applicable federal, state or provincial income tax laws or regulations, the Corporation may take such action as it deems appropriate to assure that all applicable federal, state or provincial payroll, withholding, income or other taxes are withheld or collected from Optionee.

(J)	Adjustment to Number of Shares and Exercise Price . Subject to approval if necessary of any relevant stock exchange, the Board will adjust the number of Shares subject to an Option, and the exercise price per Share payable upon exercise of an Option, upon the occurrence of any stock dividend, stock split, reverse stock split, combination of shares, reclassification of shares, recapitalization or other similar corporate transaction with respect to the Shares. Notwithstanding the preceding sentence to the contrary, no such adjustment will be made upon the conversion of any debt instrument, share of preferred stock or other convertible security of the Corporation into Shares.

(K)	Review of Plan. Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof. Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions arising under the Plan or this Option.

(L)	Change of Address . Optionee further agrees to notify the Corporation upon any change in the residence address indicated below.

	IN WITNESS WHEREOF, the Corporation and Optionee have executed this Agreement as of the date set forth in the first paragraph.


	DEEP WELL OIL & GAS, INC.

	By:
	Name:
	Title:


	OPTIONEE

	Name:
	Address:

Exhibit 10.26

DEEP WELL OIL & GAS, INC.

NON-QUALIFIED STOCK OPTION AGREEMENT

This NON-QUALIFIED STOCK OPTION AGREEMENT (the “Agreement”) is made this 28 day of November, 2005, by and between Deep Well Oil & Gas, Inc., a Nevada corporation (the “Corporation”) and _________________., an Alberta Company (“Optionee”).

Whereas the Optionee has entered in to a consulting services agreement with a subsidiary of the Corporation dated July 1, 2005 (“Consulting Agreement”)

1.	Amendment to Existing Agreement

	This Agreement shall be in addition to the and amend it accordingly.

2.	Grant of Option

	The Corporation hereby grants Optionee the option (the “Option”) to purchase all or any part of an aggregate of 390,000 shares (the “Shares”) of Common Stock of the Corporation at the exercise price of $0.71 per share according to the terms and conditions set forth in this Agreement and in the Deep Well Oil & Gas, Inc. November 28, 2005 Stock Option Plan (the “Plan”). The Option will not be treated as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). The Option is issued under the Plan and is subject to its terms and conditions. A copy of the Plan will be furnished upon request of Optionee.

	The Option shall terminate at the close of business five years from the date hereof (the “Option Termination Date”).

3.	Vesting of Option Rights; Transferability

(A)	This Option shall be exercisable, in whole or in part, according to the following vesting schedule:

	(i)	130,000 Shares on July 1, 2006,
	(ii)	130,000 Shares on July 1, 2007,
	(iii)	130,000 Shares on July 1, 2008,

subject to Optionee’s continuing to provide services to the Corporation or any Subsidiary as an employee, director or consultant, as the case may be, provided that the Optionee continues to provide services on such anniversary date.
	(iv)	During the lifetime of the consulting contract with the Optionee, the Option shall be exercisable only by Optionee and shall not be assignable or transferable by Optionee.

4.	Exercise of Option after Death or Termination of Services or Employment

	Except as otherwise determined by the Board:

(A)	In the event that an Optionee ceases to provide services to the Corporation as a result of termination for cause (as such term is defined in clause 22.3 of the Consulting Agreement), each of the Options held by the Optionee shall cease to be exercisable after the date of termination of services as a consultant.

(B)	In the event that an Optionee ceases to provide services to the Corporation for any reason other than termination for cause, any vested Option held by Optionee may continue to be exercised by the Optionee to and until the earlier of:

	(i)	the applicable expiration of the Option Period in respect of such Option; and

	(ii)	the period after the date on which Optionee ceases to provide services to the Corporation that is permitted by the applicable laws, policies, rules and regulations of any stock exchange upon which the Underlying Shares are then listed, posted and/or quoted for trading;

(C)	Notwithstanding the above, in no case may the Option be exercised to any extent by anyone after the Option Termination Date.

5.	Method of Exercise of Option

	Subject to the foregoing, the Option may be exercised in whole or in part from time to time by serving written notice of exercise on the Corporation at its principal office within the Option period. The notice shall state the number of Shares as to which the Option is being exercised and shall be accompanied by payment of the exercise price. Payment of the exercise price shall be made;

(A)	in cash (including bank check, personal check or money order payable to the Corporation),

(B)	with the approval of the Corporation (which may be given in its sole discretion), by delivering to the Corporation for cancellation shares of the Corporation’s Common Stock already owned by Optionee having a Fair Market Value (as defined in the Plan) equal to the full exercise price of the Shares being acquired,

(C)	with the approval of the Corporation (which may be given in its sole discretion), by electing to have the Corporation retain from the number of Shares to be issued to the Optionee upon the exercise of such Option Shares having a Fair Market Value on the date of exercise equal to the aggregate exercise price payable upon exercise of such Option;

(D)	through a special sale and remittance procedure pursuant to which Optionee (or any other person or persons permitted to exercise the option) shall concurrently provide irrevocable instructions
	(i)	to a Corporation designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable income and employment taxes required to be withheld by the Corporation by reason of such exercise and

	(ii)	to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale; or

(E)	by any combination of the methods of payment described above.

6.	Securities Law Matters.

(A)	Restricted Securities . The Optionee understands and acknowledges that neither the Option nor the Shares have been registered under the United States Securities Act of 1933, as amended (the “Securities Act”), that the Option has been issued to it in reliance on an exemption from the registration requirements of the Securities Act, and that the Option and the Shares are, or will be, as applicable, “restricted securities” as defined in Rule 144 under the Securities Act.

(B)	Accredited Investor. The Optionee represents that it is an “accredited investor” within the meaning of Rule 501(a) under the Securities Act.

(C)	Restrictions on Exercise. The Optionee understands and acknowledges that the Option may be exercised only pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws, and that at the time of any proposed exercise, the Corporation may require an opinion of counsel or other evidence satisfactory to it to the effect that the Shares may be issued pursuant to such exercise without registration under the Securities Act or applicable state securities laws.

(D)	Resale Restrictions . The Optionee understands and acknowledges that notwithstanding anything to the contrary contained in this Agreement, the Option and the Shares may be offered, sold, pledged or otherwise transferred only

	(i)	to the Corporation;

	(ii)	outside the United States in accordance with Rule 904 of Regulation S under the Securities Act and in compliance with applicable Canadian local laws and regulations; or

	(iii)	within the United States, in a transaction that does not require registration under the Securities Act or any applicable state securities laws. In connection with any proposed sale, pledge or other transfer of the Option or the Shares, the Corporation may require an opinion of counsel or other evidence satisfactory to it to the effect that the proposed sale, pledge or other transfer may be effected without registration under the Securities Act or applicable state securities laws.

(E)	Legend . The Optionee understands and acknowledges that upon the original issuance of the Shares, as applicable, and until such time as the same is no longer required under applicable requirements of the Securities Act or state securities laws, the certificates representing the Shares, and all certificates issued in exchange therefor or in substitution thereof, shall bear a legend with respect to the transfer restrictions set forth above.

7.	Miscellaneous

(A)	Plan Provisions Control . In the event that any provision of the Agreement conflicts with or is inconsistent in any respect with the terms of the Plan, the terms of the Plan shall control.

(B)	No Rights of Stockholders . Neither Optionee, Optionee’s legal representative nor a permissible assignee of this Option shall have any of the rights and privileges of a stockholder of the Corporation with respect to the Shares, unless and until such Shares have been issued in the name of Optionee, Optionee’s legal representative or permissible assignee, as applicable.

(C)	No Right to Employment . The grant of the Option shall not be construed as giving Optionee the right to be retained in the employ of, or as giving a director of the Corporation or a Subsidiary (as defined in the Plan) the right to continue as a director of the Corporation or a Subsidiary, nor will it affect in any way the right of the Corporation or a Subsidiary to terminate such employment or position at any time, with or without cause. In addition, the Corporation or Subsidiary may at any time dismiss Optionee from employment, or terminate the term of a director of the Corporation or a Subsidiary, free from any liability or any claim under the Plan or the Agreement. Nothing in the Agreement shall confer on any person any legal or equitable right against the Corporation or any Subsidiary, directly or indirectly, or give rise to any cause of action at law or in equity against the Corporation or a Subsidiary. The Option granted hereunder shall not form any part of the wages or salary of Optionee for purposes of severance pay or termination indemnities, irrespective of the reason for termination of employment. Under no circumstances shall any person ceasing to be an employee of the Corporation or any Subsidiary be entitled to any compensation for any loss of any right or benefit under the Agreement or Plan which such optionee might otherwise have enjoyed but for termination of employment, whether such compensation is claimed by way of damages for wrongful or unfair dismissal, breach of contract or otherwise. By participating in the Plan, Optionee shall be deemed to have accepted all the conditions of the Plan and the Agreement and the terms and conditions of any rules and regulations adopted by the Committee and shall be fully bound thereby .

(D)	Governing Law . The validity, construction and effect of the Plan and the Agreement, and any rules and regulations relating to the Plan and the Agreement, shall be determined in accordance with the internal laws, and not the law of conflicts, of the State of Nevada.

(E)	Severability . If any provision of the Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Agreement under any law deemed applicable by the Committee (as defined in the Plan), such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or the Agreement, such provision shall be stricken as to such jurisdiction or the Agreement, and the remainder of the Agreement shall remain in full force and effect.

(F)	No Trust or Fund Created . Neither the Plan nor the Agreement shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Corporation or any Subsidiary and Optionee or any other person.

(G)	Headings . Headings are given to the Sections and subsections of the Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Agreement or any provision thereof.

(H)	Conditions Precedent to Issuance of Shares ; Repurchase Rights . Shares shall not be issued pursuant to the exercise of the Option unless such exercise and the issuance and delivery of the applicable Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, the requirements of any applicable Stock Exchange or the Nasdaq National Market and the corporate laws of the state of Nevada. As a condition to the exercise of the purchase price relating to the Option, the Corporation may require that the person exercising or paying the purchase price represent and warrant that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Corporation, such a representation and warranty is required by law.

(I)	Withholding. In order to comply with all applicable federal, state or provincial income tax laws or regulations, the Corporation may take such action as it deems appropriate to assure that all applicable federal, state or provincial payroll, withholding, income or other taxes are withheld or collected from Optionee.

(J)	Adjustment to Number of Shares and Exercise Price. Subject to approval if necessary of any relevant stock exchange, the Board will adjust the number of Shares subject to an Option, and the exercise price per Share payable upon exercise of an Option, upon the occurrence of any stock dividend, stock split, reverse stock split, combination of shares, reclassification of shares, recapitalization or other similar corporate transaction with respect to the Shares. Notwithstanding the preceding sentence to the contrary, no such adjustment will be made upon the conversion of any debt instrument, share of preferred stock or other convertible security of the Corporation into Shares.

(K)	Review of Plan. Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof. Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions arising under the Plan or this Option.

(L)	Change of Address. Optionee further agrees to notify the Corporation upon any change in the residence address indicated below.

IN WITNESS WHEREOF, the Corporation and Optionee have executed this Agreement as of the date set forth in the first paragraph.


	DEEP WELL OIL & GAS, INC.

	By:
	Name:
	Title:


	OPTIONEE

	Name:
	Address:

Exhibit 10.27

INDEMNITY

NOW THEREFORE IN CONSIDERATION OF ____________________ (hereinafter called the “Indemnified Party”) agreeing to act, or to continue to act, as a director and/or officer of Northern Alberta Oil Ltd. (hereinafter referred to as "NAOL”), NAOL and Deep Well Oil & Gas, Inc. (hereinafter referred to as "DWOG") hereby covenants and agrees to indemnity and hold harmless the Indemnified Party and his or her heirs and legal representatives, from and against all costs, charges, legal fees and expenses, and all claim, demands, actions, or damages, including any amount paid to settle an action or satisfy a Judgment, incurred by the indemnified Party in respect of any civil, criminal or administrative action or proceeding to which the Indemnified Party is made a party by reason of being or having been a director, officer and or employee of NAOL it:

(a) the Indemnified Party acted honestly and In good faith with a view to the best interests of NAOL; and

(b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the Indemnified Party had reasonable grounds for believing his or her conduct was lawful.

If any claim, action, demand or proceeding whatsoever is asserted against the Indemnified Party in respect of which this indemnity might reasonably be considered to be applicable (such claim, action, demand or proceeding being hereafter referred to as a “claim”), the Indemnified Party shall promptly notify NAOL and DWOG in writing of the nature of such claim. and NAOL and/or DWOG shall be entitled (but not required) to participate in the defence of any suit brought to enforce the claim. In any event, NAOL and/or DWOG shall be entitled (but not required) to participate in the selection of legal counsel for the defence of any claim. All legal and other expenses incurred by the Indemnified Party in connection with the defence of a claim shall be paid directly by NAOL and DWOG on a monthly basis.

In the event that the Indemnified Party is required to pay tax or interest, by any applicable Canadian federal or provincial law requiring payment of tax calculated on or with respect to any amount payable as an indemnity pursuant hereto (the amount payable being hereinafter called the "Indemnity”). NAOL and DWOG shall pay to the Indemnified Party forthwith on written demand accompanied by proof of the amount so payable having been given by the Indemnified Party to NAOL and DWOG, the amount by which the aggregate of all taxes and interest payable by the Indemnified Party when the tax or interest payable on or in respect of the Indemnity are included in the calculation of the aggregate of all taxes and interest payable by the Indemnified Party, exceeds the aggregate amount of all taxes, and interest that would be payable by the Indemnified Party if no taxes were payable by the Indemnified Party or in respect of the indemnity.

Expenses incurred by the Indemnified Party against which he is indemnified pursuant hereto shall be paid promptly by NAOL and DWOG upon receipt of a written request and reasonable proof of payment from the Indemnified Party. The Indemnified Party shall be required to refund any advance where a court of competent jurisdiction determines that such indemnification is not available under applicable law.

In the event that any action is instituted by the Indemnified Party hereunder to enforce or interpret any of the terms hereof, the Indemnified Party shall be entitled to be paid all court costs and expenses, including reasonable legal fees, incurred by the Indemnified Party with respect to such action, unless as part of such action, the court of competent jurisdiction determines that material assertions made by the Indemnified Party as a basis for such action were not made in good faith or were frivolous.

This indemnity shall also apply to any future appointments, either as a director or officer, to any of NAOL's subsidiary or affiliated corporations that the Indemnified Party agrees to undertake at NAOL's request.

This indemnity is in addition to and not in substitution for any indemnity which may be available to the officers and/or directors of NAOL by private contract or under the by-laws of NAOL or the Alberta Business Corporations Act.

DATED at the City of Edmonton, in the Province of Alberta, this ____ day of _____, 2005 and

effective as and from the date the Indemnified Party was first elected or appointed as a director and/or officer as documented in NAOL's Minute Book.


	NORTHERN ALSERTA OIL LTD.

	Per:
	Per:


	DEEP WELL OIL & GAS, INC.

	Per:
	Per:
	Witness:

Exhibit 21.1

Subsidiaries of Registrant

Deep Well Oil & Gas (Alberta) Ltd. , was incorporated in the province of Alberta, Canada on September 15, 2005.

Northern Alberta Oil Ltd. , (formerly known as Mikwec Energy Canada Ltd.)was incorporated in the province of Alberta, Canada on September 18, 2003.

Exhibit 31.1

CERTIFICATION

I, Dr. Horst A. Schmid, President and Chief Executive Officer of Deep Well Oil & Gas, Inc. (formerly Allied Devices Corporation), certify that:

1.	I have reviewed this annual report on Form 10-KSB of Deep Well Oil & Gas, Inc. (formerly Allied Devices Corporation);

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.	I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

February 21, 2007

By: /s/ Horst A. Schmid

Dr. Horst A. Schmid

President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, Curtis Sparrow, Chief Financial Officer of Deep Well Oil & Gas, Inc. (formerly Allied Devices Corporation), certify that:

1.	I have reviewed this annual report on Form 10-KSB of Deep Well Oil & Gas, Inc. (formerly Allied Devices Corporation);

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

5.	I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

February 21, 2007

By: /s/ Curtis Sparrow

Curtis Sparrow

Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Deep Well Oil & Gas, Inc. (“the Company”) on Form 10-KSB for the period ended September 30, 2004 filed with the Securities and Exchange Commission on the date hereof (“the Report”), I, Dr. Horst A. Schmid, President and Chief Executive Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: February 21, 2007

By: /s/ Horst A. Schmid

Dr. Horst A. Schmid

President and Chief Executive Officer

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Deep Well Oil & Gas, Inc. (“the Company“) on Form 10-KSB for the period ended September 30, 2004 filed with the Securities and Exchange Commission on the date hereof (“the Report”), I, Curtis Sparrow, Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: February 21, 2007

By: /s/ Curtis Sparrow

Curtis Sparrow

Chief Financial Officer