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                         REVOLVING CREDIT LOAN AGREEMENT



      THIS REVOLVING CREDIT LOAN AGREEMENT, is made this 30th day of June, 2005,

by and between Kestrel Energy, Inc. (the "Borrower"), a Colorado corporation,

and Samson Oil & Gas N.L., an Australian corporation ("Lender").



                                    RECITALS



      A. WHEREAS, Borrower is desirous of borrowing sums from time to time up to

an aggregate amount of Three Million Five Hundred Thousand Dollars ($3,500,000)

from Lender in the form of a revolving line of credit; and



      B. WHEREAS, Lender is willing to provide the above-described loans to

Borrower on the terms and conditions hereinafter set forth.



            NOW, THEREFORE, in consideration of the foregoing and the mutual

covenants herein contained, the parties agree as follows:



      1. Terms of Revolving Credit. Subject to the terms and conditions of this

Agreement, Lender hereby agrees to establish a revolving credit facility

(hereinafter, the "Revolving Credit") in the maximum amount of Three Million

Five Hundred Thousand Dollars ($3,500,000) in favor of Borrower on the following

terms and conditions:



            a. The term of the Revolving Credit shall begin on the date hereof

and shall end on the earlier to occur of three (3) years from the date of this

agreement or the date which is mutually agreed upon by the Lender and the

Borrower (the "Repayment Date").



            b. Concurrently herewith, Borrower shall execute a Revolving Credit

Master Note of even date herewith in the form attached hereto as Exhibit A in

favor of Lender in the face amount of $3,500,000 (the "Note"), payable on the

Repayment Date.



            c. Advances under the Revolving Credit may be made, upon request of

Borrower in accordance with the terms of this Agreement, at any time prior to

the Repayment Date upon receipt by Lender of a request therefor signed by

Borrower. At no time shall the aggregate obligation of Borrower to Lender exceed

Three Million Five Hundred Thousand Dollars ($3,500,000) plus accrued but unpaid

interest on amounts previously received. Borrower may at any time prior to the

Repayment Date repay all or any part of said loans under the Revolving Credit

and subsequently receive further advances, consistent with the terms and

conditions hereof.



            d. Principal amounts due under the Revolving Credit shall bear

interest and principal and interest shall be payable in accordance with the

terms of the Note.



            e. Borrower may prepay under the Note at any time in any amount

without premium or penalty.



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            f. Amounts borrowed under the Revolving Credit shall be used for the

purposes specified in Section 8.a(2) of this Agreement.



      2. Fees and Expenses. Borrower agrees to bear all legal expenses required

for the preparation of this Agreement, the Note, and other documents in

connection with this Revolving Credit and the making, protection, enforcement

and collection of all amounts advanced under the Revolving Credit. These costs

do not include, however, the fees of separate counsel for Lender, if any, or the

costs and expenses incurred in enforcing the rights of Lender under this

Agreement except upon the occurrence of an Event of Default (hereinafter

defined).



      3. Promise to Pay and Conversion Rights. Borrower promises to pay to

Lender when due, whether by normal maturity, acceleration or otherwise, the

entire outstanding principal amount of the Revolving Credit together with

interest, and all other amounts payable by Borrower to Lender hereunder,

including costs of collection. Borrower also agrees that Lender may elect to

convert all or any portion of the unpaid principal and interest owed under this

Agreement and the Note into shares of the Borrower's common stock at a

conversion price of $1.50 per share (the "Conversion Price").



      4. Events of Default; Acceleration. Any or all of the liabilities of

Borrower to the Lender in connection with the Revolving Credit shall, at

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