Participation Agreement Morgan County Tennessee

MEO is prepared to bring GNOS in as a participant in the ▇▇▇▇▇▇ Highpoint Project Lands on the condition that GNOS sign the AFE pertaining to the ▇▇▇▇ ▇▇▇▇▇ #2 Well as to 10% of the anticipated US $3,000,000 in gross costs and in this regard advance US $300,000 to MEO prior to the close of business August 9, 2007.

GNOS will reimburse MEO on or before the close of business August 8, 2007 $25,000 for 5% of the Prior Expenditures incurred by MEO in acquiring and developing the ▇▇▇▇▇▇ Highpoint Project Lands.

MEO will invoice GNOS for its 5% share, on a straight up pro rata basis, for all new costs incurred after August 7th, 2007 as per the terms and conditions defined in the “Farm-In Agreement including additional costs relating to land acquisition, evolving drilling strategy, ongoing data gathering from well site geology, ‘Telluric Survey Work, aerial photography, imagery, seismic, and any other field technical; :non technical, or administrative costs undertaken and/or warranted by the Operator.

Upon GNOS paying the US $325,000 outlined in Clauses 1 & 2 hereof as well as 5% of any cost overruns, if any, attributable to the ▇▇▇▇ ▇▇▇▇▇ #2 Well GNOS will have earned an undivided net 5% working interest in the ▇▇▇▇▇▇ Highpoint Project Lands along with an undivided 5% interest in the ▇▇▇▇ ▇▇▇▇▇ #1 Well. Drilling Activity Updates will not be provided until full payment is received. In the event MEO is able to drill, complete, equip and tie-in the ▇▇▇▇ ▇▇▇▇▇ #2 Well for less than US $3,000,000 GNOS’s 10% unexpended share of the AFE will be applied against additional costs as contemplated in Clause 3 hereof or refunded to GNOS if GNOS has paid all outstanding costs as contemplated in Clause 3 hereof.

MEO will immediately confirm that it has approval from its Board of Directors to proceed with this transaction.

Monies paid by GNOS will be held in trust at MEO’s Bank of Montreal US Account until full payment is made and then transfer of these monies will be made to the First Savings and Trust Bank in Oneida Tennessee.

Both parties must be aware of unforeseen regulatory implications should there be any delay in full funding prior to spud date therefore exposing this agreement to possible disapproval by a Regulatory Authority. It is the intent of MEO to expedite paperwork with GNOS to avoid such possibility and ensure approval.

MEO understands that GNOS may wish to increase their participation to a higher percentage W.I. in the ▇▇▇▇▇▇ Highpoint Project on a straight up basis after the ▇▇▇▇ ▇▇▇▇▇ #2 Well (▇▇▇▇▇▇ Highpoint #1) is drilled. MEO will endeavor to assist on, a best efforts basis.

If MEO presents to GNOS a new AFE and an information package for a follow-up well to be drilled on other ▇▇▇▇▇▇ Highpoint Project Lands GNOS will have 10 days from the date of presentation of the aforesaid information to: sign the AFE and return it to MEO. In the event GNOS elects not to participate as to its earned 5% working interest GNOS will forfeit its interest in the proposed drilling spacing unit to MEO. Conversely if GNOS signs the AFE and does not forward 100% of its share of the funds attributable to the subject AFE to MEO within 7 days of the proposed spud date, GNOS will again forfeit its interest in the proposed drilling spacing unit to MEO.

GNOS is welcome to utilize any information on MEO’s web site at ▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇ for the purpose of building information on their own Web Site, subject to prior permission and approval. MEO simply wishes to try and ensure that MEO does not inadvertently compromise any regulatory rules of the TSX Venture Exchange, or other regulatory authority. In this regard GNOS agrees that prior to issuing any Press Releases relating to this Participation Agreement GNOS will forward a Draft of the applicable Press Release to MEO, for their approval which approval may not be unreasonably withheld by MEO.

The parties hereto agree to forthwith enter into more formal documentation incorporating the terms and conditions contained herein.

MEO agrees to create an Area of Mutual Interest covering the County of ▇▇▇▇▇▇ in the State of Tennessee pursuant to which GNOS will have the right to participate as to an undivided 5% interest in acquiring additional lands and leases with MEO.