AVENUE GROUP INC
SECOND AGREEMENT AMENDING FARMIN
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>secondagreement-farmin.txt
<DESCRIPTION>SECOND AGREEMENT AMENDING FARMIN
<TEXT>

                                  EXHIBIT 10.1
                                  ------------

                            SECOND AGREEMENT AMENDING

                        FARMIN & PARTICIPATION AGREEMENT

                                IN RELATION TO: -

                 31 EXPLORATION LICENSES AND 2 PRODUCTION LEASES

                            COVERING 3,042,624 ACRES

                  HELD BY MEMBERS OF THE SAYER GROUP CONSORTIUM

                            IN THE REPUBLIC OF TURKEY

                             DATED 14 NOVEMBER 2002


<PAGE>


THIS AGREEMENT is made as of 31 July 2003

BETWEEN:

(1)      ALADDIN MIDDLE EAST LTD ('AME'), a corporation organised and existing
         under the laws of the State of Delaware in the U.S.A., having offices
         in the city of Ankara and in the city of Wichita, Kansas, which is the
         designated Operator of all Sayer Group Consortium Exploration Licenses
         and Production Leases in Turkey, ERSAN PETROL SANAYII A.S. ('ERSAN'), a
         corporation existing under the laws of the Republic of Turkey, having
         its head office in the city of Ankara, TRANSMEDITERRANEAN OIL COMPANY
         LTD. ('TMO'), a corporation existing under the laws of the British
         Columbia, Canada, having head office in the city of Vancouver, Canada,
         GUNEY YILDIZI PETROL URETIM SONDAJ MUTEAHHITLIK VE TICARET A.S.
         ('GYP'), a corporation existing under the laws of the Republic of
         Turkey, having head office in the city of Adiyaman (hereinafter
         collectively referred to as the SAYER GROUP CONSORTIUM ('SGC')); and

(2)      AVENUE ENERGY INC., a corporation organised and existing under the laws
         of the State of Delaware in the U.S.A., having offices at Sherman Oaks,
         CA, USA at 15303 Ventura Blvd., 9th Fl. Sherman Oaks, CA, USA and in
         Australia at 34-36 Punt Road, Windsor, Melbourne, Australia,
         (hereinafter referred to as 'AVENUE'); and

(3)      AVENUE GROUP INC., a corporation organised and existing under the laws
         of the State of Delaware in the U.S.A., having offices at Sherman Oaks,
         CA, USA at 15303 Ventura Blvd., 9th Fl. Sherman Oaks, CA, USA and in
         Australia at 34-36 Punt Road, Windsor, Melbourne, Australia, (formerly
         called IT Technology Inc., and hereinafter referred to as 'AVENUE
         GROUP'); and

(4)      MIDDLE EAST PETROLEUM SERVICES LIMITED a corporation organised and
         existing under the laws of the Isle of Man, United Kingdom, having its
         registered office at Norton House, Farrants Way, Castletown, Isle of
         Man, 1M9 1NR, British Isles and its representative office at Hobart
         7000, Tasmania, Australia (hereinafter referred to as 'MEPS').

(AME, ERSAN, TMO, GYP, Avenue, Avenue Group and MEPS are referred to herein
collectively as the 'PARTIES' and individually as a 'Party').

RECITALS:

(A)      The Parties are parties to a Farmin and Participation Agreement dated
         14 November 2002 (as amended by an Agreement Amending Farmin &
         Participation Agreement dated 14 November 2002, and as supplemented by
         Memorandum of Understanding between the parties dated 22 May 2003, the
         'FARMIN AND PARTICIPATION AGREEMENT').

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(B)      Avenue has validly exercised the Tosun Option and the Karakilise Option
         and is now registered as a Petroleum Right Holder and as the holder of
         a 45% Participating Interest in the Tosun Licence and the Karakilise
         Licence.

(C)      Pursuant to clause 4.4 of the Farmin and Participation Agreement,
         Avenue has paid to AME the sum of US$500,000 and is due to pay to AME a
         further US$1,500,000 on the dates and in the instalments set out in
         Part B of Schedule G to the Farmin and Participation Agreement.

(D)      Avenue is in a position, upon execution of this Agreement by all of the
         Parties, to pay the second instalment of US$500,000 payable under
         clause 4.4 of the Farmin and Participation Agreement, but the Parties
         wish to modify the arrangements regarding payment of the additional
         US$1,000,000 and to provide for a corresponding adjustment to the level
         of Participating Interest held by Avenue in the Karakilise Licence in
         the event it contributes less than the full US$1,000,000.

(E)      SGC and MEPS wish to enter into negotiations with Tethys Oil AB, a
         corporation organised and existing under the laws of Sweden having its
         principal office in the city of Stockholm ('TETHYS'), with a view to
         agreeing the terms of a farmout to Tethys of an interest in certain of
         the Exploration Licenses the subject of the Option in clause 6.1 of the
         Farmin and Participation Agreement, and has requested the approval of
         Avenue to such an arrangement.

(F)      The Parties wish to amend the Farmin and Participation Agreement in
         order to accommodate the requests referred to in recitals (D) and (E)
         above and to make certain other modifications thereto, as more
         particularly set out in this Agreement.

NOW, THEREFORE, for and in consideration of the terms, conditions and covenants
herein set forth, the Parties agree as follows:

1.       DEFINITIONS AND INTERPRETATION

1.1      Unless otherwise defined in this Agreement, terms defined in clause 1.1
         of the Farmin and Participation Agreement have the same meanings where
         used in this Agreement.

1.2      Clause 1.2 of the Farmin and Participation Agreement shall apply as if
         set out in full herein.

2.       CONDITION PRECEDENT

         a.1.     CONDITION

                  Clause 3 of this Agreement is conditional upon and shall not
                  take effect unless and until Avenue has paid to AME the second
                  instalment of US$500,000 payable under clause 4.4 of the
                  Farmin and Participation Agreement in respect of the dry-hole
                  drilling costs of the Karakilise-1 Well.

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2.2      EFFECT OF PAYMENT

         If the condition in clause 2.1 is satisfied, neither AME nor any other
         Party shall have, and each of them irrevocably waives, any rights or
         remedies under or arising out of the Farmin and Participation Agreement
         in respect of the failure of Avenue to make the payment referred to in
         clause 2.1 within 5 Business Days after spudding of the Karakilise-1
         Well.

3.       AMENDMENTS TO FARMIN AND PARTICIPATION AGREEMENT

3.1      GENERAL

         The Parties hereby agree to amend the Farmin and Participation
         Agreement as set out in this clause 3. Each Party acknowledges and
         agrees that the Farmin and Participation Agreement, as amended by this
         clause 3, is in full force and effect.

3.2      AMENDMENTS TO CLAUSE 4

         Clauses 4.4 to 4.6 of the Farmin and Participation Agreement are
         deleted and the text of Schedule A to this Agreement is inserted in
         their place as new clauses 4.4 to 4.7.

3.3      AMENDMENTS TO CLAUSE 6

         (a)      Clauses 6.1 and 6.2 of the Farmin and Participation Agreement
                  are deleted and replaced with the following:

                  '6.1 GRANT OF OPTION

                           (a)      In consideration of US$1 (the receipt and
                                    sufficiency of which SGC hereby acknowledge)
                                    and subject to the terms and conditions of
                                    this Agreement, the SGC Participants in
                                    relation to the relevant SGC Interests
                                    hereby grant to Avenue the option to
                                    acquire, free from Encumbrances, a
                                    Participating Interest, in a percentage to
                                    be determined in accordance with clause
                                    6.1(b), in all (but not some only) of the
                                    Exploration Licenses and Production Leases
                                    identified in Schedule 'A' other than:

                                    (i)      the Tosun Licence, the Karakilise
                                             Licence and the Kahta Lease; and

                                    (ii)     Exploration Licenses
                                             AR/TMO-EPS/GYP/3794 and 3795 in
                                             Petroleum District X1-Siirt,
                                             Exploration Licence AR/EPS-GYP/3748
                                             in Petroleum District
                                             XI-Diyarbakir, and Exploration
                                             Licenses AR/AME-EPS/3700, 3701,
                                             3702, 3703, 3704 and 3705 in
                                             Petroleum District XVII-Izmir (each
                                             a 'TETHYS LICENCE' and collectively
                                             the 'TETHYS LICENSES').

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<PAGE>

                           (b)      The Option in clause 6.1(a) relates to a 45%
                                    Participating Interest in the relevant SGC
                                    Interests, provided that if:

                                    (i)      Avenue has transferred or is
                                             required to transfer to AME
                                             pursuant to clause 4.7 a Percentage
                                             Interest in the Karakilise Licence;
                                             and

                                    (ii)     Avenue has not waived the Option
                                             granted to it under clause 6.6(c)
                                             at or prior to the time when the
                                             Option in clause 6.1(a) is
                                             exercised,

                                    then the percentage value of the
                                    Participating Interest to which the option
                                    in clause 6.1(a) applies shall equal 45%
                                    less the percentage value of the
                                    Participating Interest in the Karakilise
                                    Licence transferred or to be transferred to
                                    AME pursuant to clause 4.7.

                  6.2 EXERCISE OF OPTION

                           (a)      Avenue shall not be entitled to exercise the
                                    Option granted under clause 6.1:

                                    (i)      before the earlier of (A) the Final
                                             Exercise Date (as defined in clause
                                             4.4(c)(ii)) and (B) the date upon
                                             which the Cumulative Farmin Payment
                                             equals US$2,000,000; or

                                    (ii)     after the date which is 60 days
                                             after the completion or permanent
                                             or indefinite abandonment of the
                                             Karakilise-1 Well.

                           (b)      Exercise of the Option granted under clause
                                    6.1 shall be effected by the giving to AME
                                    of a written notice signed by or on behalf
                                    of Avenue stating that Avenue is exercising
                                    that Option.'

         (b)      Clause 6.4 of the Farmin and Participation Agreement is
                  deleted and replaced with the following:

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<PAGE>

                  '6.4 PAYMENT AT CLOSING

                           At closing of the Option granted under clause 6.1,
                           Avenue shall be required to pay to AME on behalf of
                           SGC, in full and final satisfaction of Avenue's
                           obligations to contribute to the application fees and
                           holding costs associated with the SGC Interests the
                           subject of clause 6.1, an amount equal to US$315,000
                           multiplied by a fraction the numerator of which is
                           the percentage figure of the Participating Interests
                           in relevant SGC Interests transferred to Avenue
                           pursuant to clause 6.1 (expressed as an absolute
                           number rather than a percentage), and the denominator
                           of which is 45.'

         (c)      Clause 6.5 of the Farmin and Participation Agreement is
                  amended by adding the following as a new clause 6.5(c):

                  '(c)     Notwithstanding anything in clause 6.5(a) or 6.5(b)
                           to the contrary:

                           (i)      for the purposes of clause 6.5(b), the
                                    removal of the Tethys Licenses from the
                                    Option granted under clause 6.1, as given
                                    effect by the Second Amendment to the Farmin
                                    and Participation Agreement made between the
                                    parties hereto dated as of 31 July 2003,
                                    shall be treated as a reduction of 'the
                                    acreage under SCG Interests in which Avenue
                                    or its Nominated Affiliate have a
                                    Participating Interest' in an amount equal
                                    to the acreage of the Tethys Licenses, and
                                    the Tethys Licenses shall be disregarded for
                                    the purpose of any future determination of
                                    the monthly administration fee payable under
                                    clause 6.5(a); and

                           (ii)     if the Participating Interests in relevant
                                    SGC Interests transferred to Avenue pursuant
                                    to clause 6.1 is less than 45%, the amount
                                    of the monthly administration fee otherwise
                                    payable under clause 6.5(a) (after any
                                    adjustment to be made pursuant to clause
                                    6.5(b) or 6.5(c)(i)) shall be reduced in the
                                    proportion that percentage value of the
                                    Participating Interests so transferred to
                                    Avenue bears to 45%.'

         (d)      There shall be added to the Farmin and Participation Agreement
                  a new clause 6.6, the text of which is set out in Schedule B
                  to this Agreement.

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3.4      AMENDMENTS TO CLAUSE 9

         (a)      Clause 9.1(c) of the Farmin and Participation Agreement is
                  deleted and replaced with the following:

                  '(c)     The terms of any Joint Operating Agreement to be
                           entered into at closing of an Acquisition pursuant to
                           clause 6.1 shall be the same, mutatis mutandis, as
                           the terms of the Tosun JOA (incorporating the
                           amendments thereto made pursuant to the Agreement
                           Amending Farmin and Participation Agreement dated 20
                           December 2002), provided that if Avenue acquires less
                           than a 45% Participating Interest in the relevant SGC
                           Interests adjustments equivalent to those set out in
                           paragraphs (a) to (e) of clause 4.6 shall be made.
                           Unless the Participants in a relevant SGC Interest
                           agree otherwise, a separate Joint Operating Agreement
                           shall be entered into in relation to each of the
                           prospects or fields referenced in Schedule 'A'
                           relating to the SGC Interests comprised in that
                           prospect or field.'

         (b)      Clauses 9.3(b) and (c) of the Farmin and Participation
                  Agreement are deleted and replaced with the following:

                  '(b)     Subject to clauses 7.6, 8.2 and 8.3, the
                           Participating Interests in the relevant SGC Interests
                           shall be held and, subject to clause 9.3(d), the Net
                           Pre-tax Revenue derived by the Operator or the
                           Participants from the Joint Operations associated
                           with any SGC Interest (including the sale of crude
                           oil by AME on behalf of the relevant Participants)
                           shall accrue to the Participants in that SGC Interest
                           in proportion to their respective Participating
                           Interests in the relevant SGC Interest. For the
                           purposes of this clause 9.3(b) and of clause 9.4(c)
                           below, a Participating Interest held in trust for, or
                           otherwise on behalf of, one Party by another shall be
                           treated as being held by the first-mentioned Party
                           (i.e., the beneficiary) only.

                  (c)      Except as otherwise provided in this Agreement,
                           Avenue shall bear a portion of the Joint Operating
                           Expenses properly incurred after the date of this
                           Agreement in relation to a relevant SGC Interest
                           equal to the sum of:

                           (i)      the Participating Interest held by it the
                                    relevant SG Interest; and

                           (ii)     five per cent (5%),

                           and the balance of such Joint Operating Expenses
                           shall be borne by the SGC Participants in the
                           relevant SGC Interest. For the avoidance of doubt,
                           MEPS shall not be required to fund the Joint
                           Operating Expenses in relation to any SGC Interest.'

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<PAGE>

3.5      AMENDMENTS TO SCHEDULE G

         Part A of Schedule G to the Farmin and Participation Agreement is
         deleted and replaced with Attachment 'A' to this Agreement. Part B of
         Schedule G to the Farmin and Participation Agreement, and the
         definition of the term 'Karakilise Payment Schedule' in clause 1.1 of
         that agreement, are deleted.

3.6      MISCELLANEOUS

         The following additional amendments are made to the Farmin and
         Participation Agreement (clause numbers below refer to clauses in the
         Farmin and Participation Agreement):

         (a)      the following new definition is inserted into clause 1.1 (in
                  appropriate alphabetical order):

                           KARAKILISE MULTIPLIER means the absolute value of the
                           Participating Interest that is or will be held by
                           Avenue in the Karakilise Licence immediately after
                           completion of any transfer made or to be made by
                           Avenue to AME pursuant to clause 4.7; by way of
                           example, if the relevant Participating Interest has a
                           value of 45%, the Karakilise Multiplier equals 45).

         (b)      if Avenue is required, pursuant to clause 4.7 of the Farmin
                  and Participation Agreement to transfer to AME a Participating
                  Interest in the Karakilise Licence, then in paragraph (b) of
                  the definition of 'Sunk Costs' there shall be deemed to be
                  inserted after the words 'deemed in the aggregate to equal'
                  the words:

                           'a percentage equal to 100 multiplied by a fraction
                           the numerator of which is 100 minus the sum of 5%
                           plus the Percentage Interest held by AVENUE
                           immediately after giving effect to the transfer
                           required under clause 4.7 of the Farmin and
                           Participation Agreement, and the denominator of which
                           is the sum of 5% plus the Percentage Interest held by
                           AVENUE immediately after giving effect to the said
                           transfer, of';

         (c)      for the purposes of the closing of any Acquisition made
                  pursuant to clause 6.1 of the Farmin and Participation
                  Agreement, the references to '45%' in clauses 7.2(b)(i),
                  8.2(a)(i) and 8.3 of the Farmin and Participation Agreement
                  shall be deemed to refer to the actual Participating Interest
                  the subject of the relevant Acquisition; and

         (d)      Clause 15.4 (Withholding Tax) of the Farmin and Participation
                  Agreement is deleted and replaced with the following:

                  15.4 WITHHOLDING TAX

                           Notwithstanding any other provision of this Agreement
                           to the contrary, in relation to any SGC Interest in


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                           which Avenue or its Nominated Affiliate holds a
                           Participating Interest, as between the SGC
                           Participants in that SGC Interest and Avenue or its
                           Affiliates, any Withholding Tax incurred in relation
                           to the Joint Operating Expenses or other costs
                           charged to the joint account of the Participants in
                           that SGC Interest, or the payments by such
                           Participants in relation thereto (including payments
                           by Avenue or its Nominated Affiliate under any of
                           clauses 2 to 7 (both inclusive) of this Agreement)
                           shall ultimately be borne by the SGC Participants
                           having an interest in the relevant SGC Interest, and
                           by Avenue or (if applicable) its Nominated Affiliate,
                           as between them in proportion to their relative
                           Participating Interests; if necessary, appropriate
                           adjusting payments shall be made from time to time to
                           give effect to the foregoing. For the purposes of the
                           foregoing, a Participating Interest held in trust
                           for, or otherwise on behalf of, a Party by another
                           Party pursuant to clause 4.7, 7.6 or 8.3 shall be
                           treated as held by the first-mentioned Party only.

4.       GENERAL

         Clauses 13 (Assignment and encumbrances), 14 (Confidentiality), 17
         (Notices) and 18 (General) of the Farmin and Participation Agreement
         shall apply to this Agreement as if set out in full herein.


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<PAGE>

                                   SCHEDULE A



Pursuant to clause 3.2 of this Agreement, the following are inserted into the
Farmin and Participation Agreement as new clauses 4.4 to 4.7:

4.4      PAYMENTS IN RESPECT OF KARAKILISE FARMIN

         (a)      No amount shall be payable at closing of the Karakilise
                  Option.

         (b)      Avenue has paid or must pay to AME, as an initial contribution
                  to the dry-hole costs associated with the drilling of the
                  Karakilise-1 Well:

                  (i)      US$500,000, payable on or before the 30th day prior
                           to spudding of the Karakilise-1 Well (receipt of
                           which sum is hereby acknowledged by AME); and

                  (ii)     a further US$500,000, payable forthwith upon the
                           execution and delivery by all of the Parties of the
                           Second Amendment to the Farmin and Participation
                           Agreement made between the parties hereto dated as of
                           31 July 2003, being the sum referred to in clause 2.1
                           of that agreement.

         (c)      Avenue shall have the right, but not the obligation, to pay to
                  AME, as a further contribution to the dry-hole costs
                  associated with the drilling of the Karakilise-1 Well, up to
                  an additional US$1,000,000. Such additional contribution may
                  be made in one or more instalments, each of which must:

                  (i)      be in the amount of US$250,000 or an integral
                           multiple thereof; and

                  (ii)     be made by not later than 5 Business Days after the
                           giving of a notice from Avenue to AME of its
                           intention to make such payment, such notice to be
                           given by not later than 4 Business Days after the
                           date (the 'FINAL EXERCISE DATE') upon which AME
                           notifies Avenue that the Karakilise-1 Well has
                           reached the 9 5/8th inch casing point, prognosed at a
                           depth of approximately 8,700 feet (depending on the
                           depth at which the Sayindere Formation is
                           intersected) and that AME is preparing to run such
                           casing.

         (d)      Notwithstanding any provision of this Agreement to the
                  contrary, in no event shall Avenue be under an obligation to
                  contribute in excess of the sums referred to in clause 4.4(b)
                  and (if applicable) clause 4.5 in respect of the costs
                  associated with the drilling of the Karakilise-1 Well. AME
                  represents, warrants and undertakes to Avenue that the
                  performance by AME of its obligation under clause 9.4(a)(ii)
                  to undertake and complete the Karakilise Drilling Program in
                  accordance with Schedule G will satisfy in full the


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<PAGE>

                  obligations of the licensees under the Karakilise Licence
                  (whether arising under the terms of that licence, under the
                  Petroleum Law, or otherwise) in relation to the drilling of an
                  initial exploration well on the Karakilise Licence area, and
                  that no other drilling or other exploratory activities are or
                  will be required on the part of such licensees in respect of
                  the drilling of an initial exploration well on the Karakilise
                  Licence area in order to prevent the revocation of the
                  Karakilise Licence.

4.5      OBLIGATIONS AT DISCOVERY

         In the event that a discovery of hydrocarbons is made in relation to
         the Karakilise-1 Well which AME and Avenue, acting reasonably, agree
         merits further appraisal, AME shall, as contractor for the Participants
         in the Karakilise Licence and in accordance with the Karakilise
         Drilling Program, undertake all requisite logging, running of a
         completion string, cementing and perforating at the Karakilise-1 Well.
         The aggregate amount which AME may invoice or otherwise charge to the
         Participants in the Karakilise Licence in respect of such works shall
         not exceed US$500,000, of which Avenue's share shall be a percentage
         determined in accordance with clause 9.3(c). For the avoidance of
         doubt, in no event shall Avenue's contribution to the aforesaid charges
         exceed US$250,000.

4.6      JOINT OPERATING AGREEMENT

         AME, Ersan and Avenue shall promptly agree the terms of and enter into
         a separate Joint Operating Agreement relating exclusively to the
         Karakilise Licence. The terms of such Joint Operating Agreement shall
         be the same, mutatis mutandis, as the terms of the Tosun JOA
         (incorporating the amendments thereto made pursuant to the Agreement
         Amending Farmin & Participation Agreement dated 20 December 2002),
         provided that if Avenue is required pursuant to clause 4.7 to transfer
         to AME any of its Participating Interest in the Karakilise Licence:

         (a)      the percentage figure in Articles 5.10.1 and 8.4.5 shall be
                  seventy percent (70%) rather than fifty five percent (55%);

         (b)      the reference in Article 9.2.1(iv) to '45%' shall be
                  substituted with a reference to '35%';

         (c)      in paragraph (c) of the definition of 'Sunk Costs', there
                  shall be inserted after the words 'deemed in the aggregate to
                  equal' the words 'a percentage equal to 100 multiplied by a
                  fraction the numerator of which is 100 minus the sum of 5%
                  plus the Percentage Interest held by AVENUE immediately after


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<PAGE>

                  giving effect to the transfer required under clause 4.7 of the
                  Farmin and Participation Agreement, and the denominator of
                  which is the sum of 5% plus the Percentage Interest held by
                  AVENUE immediately after giving effect to the said transfer,
                  of';

         (d)      Article 3.2.4 shall be revised to reflect that Avenue shall
                  remain obliged to carry 50% of MEPS's 10% carried interest in
                  the Karakilise Licence notwithstanding that it holds a
                  Participating Interest of less than 45%, and that the other
                  Parties (excluding MEPS) shall carry the remaining 50% of
                  MEPS's carried interest as between them in proportion to their
                  relative Participating Interests;

         (e)      a provision shall be included to the effect that,
                  notwithstanding any other provision of the Joint Operating
                  Agreement to the contrary, all decisions of the Parties to the
                  Joint Operating Agreement, or of the Operating Committee, in
                  relation to the following matters shall have no effect and not
                  be implemented unless and until Avenue has given its prior
                  consent in writing thereto:

                  (i)      the relinquishment of all or any part of the acreage
                           under the Karakilise Licence, except as may be
                           required in accordance with the Petroleum Law in
                           connection with the creation of a Production Lease;

                  (ii)     the renewal of the Karakilise Licence; and

                  (iii)    approving or authorising any Joint Operations that go
                           beyond or are not a necessary incident to the minimum
                           work obligations for the time being under the
                           Karakilise Licence.

4.7      RE-TRANSFER TO SGC

         If, at the end of the fifth Business Day after the Final Exercise Date,
         the cumulative amount paid by Avenue under clause 4.4 (the cumulative
         amount so paid being herein referred to as the 'CUMULATIVE FARMIN
         PAYMENT') is less than US$2,000,000:

         (a)      Avenue shall promptly execute in favour of and deliver to AME
                  an instrument transferring to AME, subject to registration
                  with the GDPA, a Participating Interest in the Karakilise
                  Licence equal to 45% multiplied by a fraction the numerator of
                  which is US$2,000,000 minus the Cumulative Farmin Payment and
                  the denominator of which is US$2,000,000;

         (b)      pending approval of any such assignment by the GDPA, Avenue
                  shall hold the Participating Interest to be transferred in
                  trust for AME and privately recognise the right, title and


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<PAGE>

                  interest of AME in and to the Participating Interest so held
                  in trust and deal with AME as the owner and holder thereof;
                  and

         (c)      an appropriate adjusting payment shall be made to Avenue
                  pursuant to clause 15.4, such that the proportion of any
                  Withholding Tax borne by Avenue in relation to the Karakilise
                  Licence (including in relation to the period prior to the end
                  of the fifth Business Day after the Final Exercise Date) shall
                  be calculated based on the reduced Participating Interest to
                  be held by Avenue in the Karakilise Licence following
                  completion of the transfer referred to in clause 4.7(a).


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<PAGE>

                                   SCHEDULE B

Pursuant to clause 3.3(d) of this Agreement, the following is inserted into the
Farmin and Participation Agreement as new clauses 6.6:


6.6      TETHYS FARMIN AND LICENSES

         (a)      Subject to clause 6.6(f), AME (on behalf of itself and the SGC
                  Participants having an interest in the Tethys Licence) is
                  hereby authorised to negotiate the terms of and, subject to
                  clause 6.6(b), enter with either Tethys Oil AB, a corporation
                  organised and existing under the laws of Sweden having its
                  principal office in the city of Stockholm ('TETHYS'), or a
                  wholly owned subsidiary of Tethys having adequate technical
                  and financial capability, (the relevant party to the agreement
                  being referred to as the 'FARMINEE') into:

                  (i)      a farmin agreement (the 'TETHYS FARMIN AGREEMENT')
                           under which the relevant Parties holding
                           Participating Interests in the Tethys Licenses agree
                           to transfer to the Farminee an equal Participating
                           Interest in all or any of the Tethys Licenses in
                           which the Farminee agrees to participate, in exchange
                           for which the Farminee agrees at its cost and expense
                           to perform specified exploratory work on the Tethys
                           Licence areas; and

                  (ii)     a Joint Operating Agreement relating to the Tethys
                           Licenses (the 'TETHYS JOA'),

                  provided that no more than one Tethys Farmin Agreement may be
                  entered into pursuant to this clause 6.6(a) unless both or (as
                  the case may be) all such Tethys Farmin Agreements are entered
                  into on the same date, and no Tethys JOA may be entered into
                  pursuant to this clause 6.6(a) other than contemporaneously
                  with the Tethys Farmin Agreement to which it relates.

         (b)      The Tethys Farmin Agreement and the Tethys JOA shall be on
                  such terms as SGC, in its discretion, considers fit, provided
                  that, unless Avenue waives the Option referred to in clause
                  6.6(c) or fails to exercise that Option by the final date
                  permitted under clause 6.6(c) (the 'FINAL EXERCISE DATE'),
                  such agreements must:

                  (i)      be in writing, in the English language and on arm's
                           length commercial terms;

                  (ii)     comprise the entire agreement between the Tethys and
                           its Affiliates, of the one part, and all or any of
                           the SGC (of the other part), in relation to the
                           Tethys Licenses;

                                       13
<PAGE>

                  (iii)    be on terms:

                           (A)      such that the benefit (subject to the
                                    burden) of the arrangement (including any
                                    carry granted by the Farminee in favour of
                                    all or any of the relevant SGC Participants)
                                    is made available to Avenue in the event of
                                    its exercise of the option conferred under
                                    clause 6.6(c) and in its capacity as the
                                    holder of a Participating Interest in the
                                    Tethys Licenses;

                           (B)      that are consistent with and facilitate the
                                    requirements of clauses 6.6(c) and (d);

                           (C)      that will not discriminate between Avenue,
                                    of the one part, and all or any of the SGC
                                    Participants, of the other part (provided
                                    that the appointment of AME as operator on
                                    reasonable and customary arm's length terms
                                    shall not of itself be treated as
                                    discriminatory);

                  (iv)     not be entered into prior to Avenue having been
                           provided with a copy of the proposed form of the
                           agreement and afforded a reasonable opportunity (and
                           in any case not less than 3 Business Days) to comment
                           on the same (it being recognised, however, that AME
                           is under no obligation to accommodate Avenue's
                           requirements in relation to the terms of the
                           agreement, provided that the requirements of
                           sub-paragraphs (i) to (iii) above are satisfied); and

                  (v)      not be amended, supplemented or otherwise modified in
                           any way that might adversely affect the rights and
                           interests of Avenue (whether actual, contingent or
                           prospective) in relation to the Tethys Licenses.

         (c)      Subject to the terms and conditions of this Agreement, the SGC
                  Participants in relation to the relevant Tethys Licenses
                  hereby grant to Avenue the option to acquire, free from
                  Encumbrances, a Participating Interest in the Tethys Licenses.
                  Exercise of this option shall be effected by the giving to AME
                  of a written notice signed by or on behalf of Avenue stating
                  that Avenue is exercising that Option, which notice may given
                  no later than the date which is 60 days after the completion
                  or permanent or indefinite abandonment of the Karakilise-1
                  Well.

         (d)      At closing of the option referred to in clause 6.6(c):

                  (i)      the percentage of the Participating Interest in a
                           Tethys Licence to be transferred to Avenue shall be:

                                       14
<PAGE>

                           (A)      if the Farminee has not, at such time,
                                    acquired a Participating Interest in the
                                    relevant Tethys Licence, the Percentage
                                    Interest that is or will be held by Avenue
                                    in the Karakilise Licence immediately after
                                    completion of any transfer made or to be
                                    made by Avenue to AME pursuant to clause
                                    4.7; or

                           (B)      if by that time the Farminee has acquired a
                                    Participating Interest in the relevant
                                    Tethys Licence, a proportion (expressed as a
                                    percentage) of the total Participating
                                    Interests held by the SGC Participants in
                                    the relevant Tethys Licence immediately
                                    after completion of the transfer of such
                                    Participating Interest to the Farminee (and
                                    excluding any part thereof held in trust for
                                    MEPS) equal to the product of (1) 50% and
                                    (2) a fraction the numerator of which is the
                                    Karakilise Multiplier and the denominator of
                                    which is 45;

                  (ii)     the consideration payable by Avenue to AME (on behalf
                           of the relevant SGC Participants) shall be the
                           product of US$135,000 and a fraction, the numerator
                           of which is the Karakilise Multiplier and the
                           denominator of which is 45;

                  (iii)    Avenue, in its capacity as the holder of a
                           Participating Interest the relevant Tethys Licenses,
                           must execute an agreement or agreements by which it
                           agrees to be bound by and to become a party to any
                           Tethys Farmin Agreement or the Tethys JOA which has
                           then been entered into in accordance with clause
                           6.6(a);

                  (iv)     AME shall procure that the other parties to such
                           agreements execute an agreement or agreements under
                           which, subject to execution by Avenue of the
                           agreement of agreements referred to in paragraph
                           (iii) above, Avenue becomes a party to and entitled
                           to the benefit of such agreements; and

                  (v)      if any consideration has passed from the Farminee or
                           Tethys to any member of SGC in relation to its
                           acquisition or prospective acquisition of an interest
                           in a Tethys Licence, AME (on behalf of SGC) shall pay
                           to Avenue an amount equal to the product of:

                           (A)      the aggregate of (1) the total amount of the
                                    cash consideration so paid and (2) the
                                    aggregate value to the relevant member of
                                    SGC of any consideration so passed other
                                    than in cash; and

                                       15
<PAGE>

                           (B)      50%; and

                           (C)      a fraction, the numerator of which is the
                                    Karakilise Multiplier and the denominator of
                                    which is 45.

         (e)      For the avoidance of doubt (and without limitation to the
                  operation in accordance with its terms of any provision of
                  this Agreement not referred to below):

                  (i)      clauses 7.1 to 7.6, 8.1, 8.3, 8.4, 8.6, 9.1(d), 9.2,
                           10, 13 and 14 apply; and

                  (ii)     subject to clause 6.6(g), clauses 7.6, 9.1(c),
                           9.1(e), 9.1(f), 9.1(g), 9.3, 9.5, 15.1, 15.3 and 15.4
                           do not apply,

                  to the Tethys Licenses (including any activities conducted
                  thereon or in relation thereto) and the option conferred under
                  clause 6.6(c).

         (f)      The authorisation conferred by clause 6.6(a) shall immediately
                  cease (but without prejudice the validity of any Tethys Farmin
                  Agreement or Tethys JOA that has been entered into before that
                  date in accordance with clause 6.6(a)) on the date that is
                  three Business Days prior to the Final Exercise Date.
                  Thereafter, no arrangement of the kind described in clause
                  6.6(a) shall be entered into with Tethys or any other person
                  in relation to a Tethys Licence without obtaining the prior
                  consent of Avenue, unless:

                  (i)      the Option in clause 6.6(c) has lapsed; or

                  (ii)     the Option in clause 6.6(c) has been exercised and
                           closed, and neither Avenue nor an Affiliate of Avenue
                           continues to hold or be entitled to a Participating
                           Interest in the relevant Tethys Licence.

         (g)      Notwithstanding clause 6.6(e)(ii), each of the clauses of this
                  Agreement referred to in clause 6.6(e)(ii) shall apply to any
                  Tethys Licence (including any activities conducted thereon or
                  in relation thereto), and the related option over that Tethys
                  Licence conferred under clause 6.6(c), if:

                  (i)      SGC does not enter into a Tethys Farmin Agreement in
                           relation to that Tethys License by the date that is
                           three Business Days prior to the Final Exercise Date;
                           and

                  (ii)     Avenue exercises the option conferred under clause
                           6.6(c).


                                       16
<PAGE>


IN WITNESS WHEREOF the parties have executed this Agreement as of the date above
written



ALADDIN MIDDLE EAST LTD.

By:  /s/ OYMAN SAYER

Mr Oyman Sayer

Executive Vice-President and

General Manager



ERSAN PETROL SANAYII A.S.

By: /s/ OYMAN SAYER

Mr Oyman Sayer

Chairman of the Board



TRANSMEDITERRANEAN OIL COMPANY LTD

By:  /s/ OYMAN SAYER

Mr Oyman Sayer

Executive Vice-President and

General Manager



GUNEY YILDIZI PETROL URETIM SONDAJ MUTEAHHITLIK VE TICARET A.S

By: /s/ OYMAN SAYER

Mr Oyman Sayer

Chairman of the Board



MIDDLE EAST PETROLEUM SERVICES LTD.

By:  /s/ CEM SAYER

Mr Cem Sayer

Authorised Signatory


                                       17
<PAGE>




AVENUE ENERGY INC.

By:  /s/ JONATHAN HERZOG

Mr Jonathan Herzog

President



AVENUE GROUP INC.

By: /s/ JONATHAN HERZOG

Mr Jonathan Herzog

Executive Vice President


                                       18
<PAGE>


                                  ATTACHMENT A

                           KARAKILISE DRILLING PROGRAM



             [see attached Spudding Statement Form dated 05.06.2003]





                                       19


</TEXT>
</DOCUMENT>
