American Energy Production Inc(fka AENP)

[furax2000]

Form 8-K for AMERICAN ENERGY PRODUCTION INC

1-Aug-2007

http://biz.yahoo.com/e/070801/amep.ob8-k.html

ntry into a Material Definitive Agreement, Financial Statements a

Item 1.01 Entry into a Material Definitive Agreement
Effective July 25, 2007, Bent Arch Petroleum, Inc. ("Bend Arch"), a wholly-owned subsidiary of Registrant, executed a Modification and Extension Agreement (the "Agreement") in relation to a $2,000,000 Promissory Note (Note") that became due and payable on the same date. The Note is issued to Proco Operating Co., Inc. ("Proco"), a company controlled by the brother of the Company's Chief Executive Officer and a director. The purpose of the Note is to secure payment for oil and gas leases and wells located in Comanche and Eastland counties in the State of Texas sold to Bend Arch by Proco on June 15, 2004. The Note replaced a $2,000,000 convertible debenture dated January 5, 2004.

The original term of the Note included (i) the payment of interest at a rate of eight percent (8%) per annum (ii) principal and interest due and payable on July 25, 2007 (iii) no prepayment penalty (iv) payment made in excess of sixty (60) days after the due date of July 25, 2007 is a default of the Note and Bend Arch will forfeit all ownership of the related leases and wells and relinquish operations on the lease and wells to Proco, and (v) upon a default of the Note, Bend Arch will vacate the leases with no rights of ownership and execute the necessary documents to transfer the leases and wells to Proco or its assigns.

The Agreement modifies the terms of the Note as follows:
· The maturity date of the Note is extended to September 25, 2007.

· Bend Arch covenants that as long as the Note is outstanding and unpaid, no transfer, assignment or sale of the underlying leases and wells securing the payment of the Note will be allowed without the written approval of Proco.

The documents comprising the above items are filed as Exhibit 99.1 and 99.2 to this Current Report on Form 8-K.





Item 9.01. Financial Statements and Exhibits
(d) Exhibits

99.1 Modification and Extension Agreement dated July 25, 2007

99.2 Promissory Note dated June 15, 2004 by and between Bend Arch Petroleum, Inc. and Proco Operating Co., Inc.