DATED 9 JULY 2009 MIE HOLDINGS CORPORATION as Lender INTERCOMPANY LOAN AGREEMENT

Exhibit 10.16

DATED 9 JULY 2009

MI ENERGY CORPORATION
as Borrower

and

MIE HOLDINGS CORPORATION
as Lender

INTERCOMPANY LOAN AGREEMENT

CONTENTS

Clause		Page
1. Definitions			1
2. Advances			1
3. Interest			2
4. Repayment			2
5. Payments			2
6. Governing Law			2

THIS AGREEMENT is made on 9 July 2009

BETWEEN:

(1)		MI ENERGY CORPORATION, a corporation organised and existing under the laws of the Cayman Islands and having an office at: c/o M&C Corporate Services Limited, X.X. Xxx 000 XX, Xxxxxx House, South Church Street, Xxxxxx Town, Grand Cayman, Cayman Islands (the “Borrower”); and
(2)		MIE HOLDINGS CORPORATION, an exempted company incorporated with limited liability in the Cayman Islands (the “Lender”).

IT IS AGREED as follows:

1.		DEFINITIONS
		“Advance” means an advance (as from time to time reduced by repayment or prepayment) made or to be made by the Lender hereunder.
		“Availability Period” means the period from and including the date of this Agreement to and including the day falling 30 days after the date of this Agreement.
		“Borrowing Base Facility Agreement” means the facility agreement dated 29 October 2007 between, amongst others, the Lender as borrower and Standard Bank Asia Limited as arranger, agent and security trustee (as amended by a waiver and amendment letter dated 23 November 2007, as amended and restated by a new first amendment and restatement agreement dated 12 January 2009, and as may be further amended, varied, novated or supplemented from time to time).
2.		ADVANCES
2.1		On the Borrower’s request but subject to Clause 2.2 below, the Lender agrees that it shall make Advances to the Borrower at the time and in the amount specified in such request. Provided that:

	2.1.1		the proposed date for the making of the Advance falls within the Availability Period;
	2.1.2		the total aggregate amount of Advances made by the Lender hereunder shall not exceed $50,000,000; and
	2.1.3		all Advances shall be applied by the Borrower solely towards capital expenditure in connection with the Borrower’s drilling operations and related working capital payables.

2.2 The Lender shall not be obliged to comply with a request made pursuant to Clause 2.1 if, following the receipt thereof, the board of directors of the Lender determines either:

	2.2.1		that the Lender is insolvent; or
	2.2.2		that compliance with such request would prejudice the Lender’s ability to pay its debts as they fall due.

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3.		INTEREST
3.1		Interest (if any) shall be payable on the amount of an Advance outstanding at the rate per annum which agreed upon between the Borrower and the Lender from time to time and shall be calculated on the basis of a 360 day year and the number of days elapsed.
3.2		Interest (if any) on an Advance shall be payable at such times as may be agreed between the Borrower and the Lender.
4.		REPAYMENT
		Each Advance (together with any interest accrued thereon and other amounts due or owing to the Lender in connection with such Advance) shall be repayable by the Borrower on the date falling six years after the date of this Agreement, or, following the occurrence of an Event of Default (as such term is defined in the Borrowing Base Facility Agreement) under the Borrowing Base Facility Agreement, on demand of the Lender provided that the Borrower may prepay any Advance in whole or in part at any time without premium or penalty.
5.		PAYMENTS
		Unless required by law and unless the Borrower and the Lender agree otherwise, all payments made by the Borrower hereunder shall be made free and clear of and without any deduction for or on account of any tax, set-off or counterclaim.
6.		AMENDMENTS
		This Agreement may be amended by the Borrower and the Lender but, until the Secured Obligations (as defined in the Borrowing Base Facility Agreement) have been satisfied in full, only with the prior written consent of the Agent acting on the instructions of the Majority Lenders (as each such term is defined under the Borrowing Base Facility Agreement). The Agent shall be entitled to enforce and enjoy the benefit of this Clause.
7.		GOVERNING LAW
		This Agreement shall be governed by English Law.

AS WITNESS the hands of the duly authorised representatives of the parties hereto the day and year first before written.

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SIGNATURE PAGE TO
INTERCOMPANY LOAN AGREEMENT BETWEEN
MI ENERGY CORPORATION AND
MIE HOLDINGS CORPORATION

The Borrower

MI ENERGY CORPORATION

	By:	/s/ Zhao Jiangwei
	Name:
	Title

The Lender

MIE HOLDINGS CORPORATION

	By:	/s/ Xxxxx Xxxxxx
	Name:
	Title