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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 14pt; FONT-FAMILY: Times New Roman"><strong>UNITED
      STATES</strong></font></div>
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      AND EXCHANGE COMMISSION </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Washington,
      D.C. 20549 </strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 14pt; FONT-FAMILY: Times New Roman"><strong>FORM
      8-K</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CURRENT
      REPORT </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Pursuant
      to Section 13 or 15(d) of the Securities Exchange Act of 1934
</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Date
      of Report (Date of earliest event reported): September 8,
      2006</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
      <hr style="COLOR: black" align="center" noshade size="1" width="15%">
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 14pt; FONT-FAMILY: Times New Roman"><strong>FOOTHILLS
      RESOURCES, INC.</strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>(Exact
      name of registrant as specified in its charter) </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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      <hr style="COLOR: black" align="center" noshade size="1" width="15%">
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    <div>
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          <tr>
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            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="left" valign="middle" width="25%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="left" valign="middle" width="25%">&#160;</td>
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          <tr>
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            </td>
            <td align="left" valign="bottom" width="1%">
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            <td valign="top" width="25%" style="border-bottom: black thin solid;">
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>(State
                or other jurisdiction</strong></font></div>
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                incorporation)</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="1%">
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            </td>
            <td valign="top" width="25%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>(Commission
                File Number)</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>(I.R.S.
                Employer</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Identification
                Number)</strong></font></div>
            </td>
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          <tr>
            <td valign="middle" width="39%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>4540
                California Avenue, Suite 550</strong></font></div>
            </td>
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            <td valign="middle" width="37%">&#160;</td>
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          <tr>
            <td valign="top" width="39%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Bakersfield,
                California</strong></font></div>
            </td>
            <td valign="bottom" width="2%">&#160;</td>
            <td valign="top" width="37%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>93309</strong></font></div>
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          <tr>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>(Address
                of principal executive offices)</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td valign="top" width="37%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>(Zip
                Code)</strong></font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(661)
      716-1320</strong></font></div>
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      telephone number, including area code) </strong></font></div>
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      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions (see General Instruction A.2. below): </font></div>
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                CFR
                230.425) </font></div>
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                material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
                240.14a-12) </font></div>
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                communications pursuant to Rule 14d-2(b) under the Exchange Act (17
                CFR
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            </td>
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          <tr>
            <td align="left" valign="top" width="3%">
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                communications pursuant to Rule 13e-4(c) under the Exchange Act (17
                CFR
                240.13e-4(c)) </font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      1.01</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Entry
      into a Material Definitive Agreement.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      September 8, 2006 (the &#8220;Closing Date&#8221;), Foothills Texas, Inc. (&#8220;Foothills
      Texas&#8221;), a wholly owned subsidiary of Foothills Resources, Inc. (the &#8220;Company&#8221;),
      executed certain agreements related to an equity financing transaction and
      a
      debt financing transaction. These agreements provided the Company with
      sufficient capital to allow Foothills Texas to consummate its purchase of
      certain properties in southeastern Texas on the Closing Date. For a discussion
      of the acquisition, the debt financing transaction, and the equity financing
      transaction, please see Items 2.01 and 3.02 of this Current Report on Form
      8-K,
      which disclosure is incorporated herein by reference. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      2.01 </strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Completion
      of Acquisition or Disposition of Assets.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>The
      TARH Acquisition</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      previously disclosed in the Current Report on Form 8-K filed by the Company
      with
      the Securities and Exchange Commission (the &#8220;SEC&#8221;) on June 27, 2006, Foothills
      Texas, executed two definitive purchase and sale agreements with TARH E&amp;P
      Holdings L.P. (&#8220;TARH&#8221;), each dated as of June 21, 2006 (the &#8220;Purchase and Sale
      Agreements&#8221;). The Purchase and Sale Agreements set forth the terms and
      conditions by which Foothills Texas would acquire four producing properties
      in
      southeastern Texas (the &#8220;TARH Acquisition&#8221;) - the Goose Creek, Goose Creek East,
      Saratoga and Cleveland Fields properties (the &#8220;TARH Properties&#8221;). The Purchase
      and Sale Agreements were filed as Exhibits 10.1 and 10.2 to the Company&#8217;s
      Current Report on Form 8-K filed on June 27, 2006. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      the
      Closing Date, Foothills Texas completed the TARH Acquisition, paying aggregate
      cash consideration to TARH of $57.5 million and equity consideration of
      1,605,345 shares of the Company&#8217;s common stock, par value $0.001 per share (the
&#8220;Common Stock&#8221;). Prior to the Closing Date, on June 22, 2006, August 14, 2006
      and</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">August
      23, 2006, Foothills Texas made cash payments of $3,099,000, $1,549,500 and
      $774,750 to TARH in accordance with the Purchase and Sale Agreements. After
      adjustment for preliminary purchase price adjustments as provided in the
      Purchase and Sale Agreements, the cash consideration paid TARH on September
      8,
      2006 was $51,894,500. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has agreed to register the Common Stock issued to TARH in the TARH
      Acquisition pursuant to the terms of a Registration Rights Agreement, dated
      as
      of the Closing Date, by and between the Company and TARH (the &#8220;TARH Registration
      Agreement&#8221;). Under the terms of the TARH Registration Agreement, the Company has
      agreed to file a registration statement with the SEC to register the Common
      Stock issued in connection with the TARH Acquisition. The registration statement
      must be filed no later than 90 calendar days from the Closing Date. Under the
      TARH Registration Agreement, the Company shall use reasonable efforts to cause
      the registration statement to be declared effective by the SEC no later than
      120
      calendar days after the filing date unless such registration statement is
      reviewed by the SEC, in which case the Company will have 150 calendar days
      in
      which to cause the registration statement to be declared effective by the SEC.
      The Company is obligated under the TARH Registration Agreement to maintain
      the
      effectiveness of the registration statement until all shares registered
      thereunder are sold by the holders or until the two-year holding period of
      Rule
      144(k) under the Securities Act is satisfied, whichever is earlier. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
      the
      TARH Registration Agreement, the Company will be subject to customary penalties
      if the registration statement is not declared effective by the SEC by the
      required date, or if the Company fails to maintain the effectiveness of the
      registration statement for the required period of time. The foregoing
      description of the TARH Registration Agreement is qualified in its entirety
      by
      reference to the TARH Registration Agreement, attached to this Current Report
      as
      Exhibit 10.1 and incorporated herein by reference. </font></div><br>
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        </div>
      </div>
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    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>The
      Credit Facility</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      finance the TARH Acquisition, the Company executed a Credit and Guaranty
      Agreement with J. Aron &amp; Company (the &#8220;Lender&#8221;), dated as of the Closing
      Date (the &#8220;Credit Agreement&#8221;), providing for a credit facility (the &#8220;Facility&#8221;)
      under which the Company borrowed $42.5 million. A copy of the Credit Agreement
      is filed herewith as Exhibit 10.2 and incorporated herein by reference.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Facility will terminate and all amounts borrowed under the Facility will be
      due
      and payable four years following the Closing Date. The Facility will bear
      interest at a rate of LIBOR plus 700 basis points. The Company is required
      to
      make monthly interest and principal payments on the Facility equal to the
      adjusted net cash flow attributed to the TARH Properties. The Facility will
      be
      secured by liens and security interests on substantially all of the assets
      of
      the Company and its subsidiaries, including 100% of the value of all oil and
      gas
      reserves. Copies of the related security documents, each dated as of the Closing
      Date, are filed as Exhibits 10.3 through 10.6 to this Current Report on Form
      8-K
      and incorporated herein by reference. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      the
      Closing Date, the Company issued to Goldman, Sachs &amp; Co. (&#8220;Goldman Sachs&#8221;),
      an affiliate of the Lender, a warrant to purchase 3,000,000 shares of Common
      Stock for five years at an exercise price of $2.75 per share. A copy of the
      warrant is filed herewith as Exhibit 4.1 and incorporated herein by reference.
      In addition, the Company conveyed to the Lender a 5% overriding royalty interest
      in all oil and gas leases associated with the TARH Properties, but excluding
      new
      exploration projects of other formations on the TARH Properties to the extent
      they are distinct from operations included in the Lender&#8217;s approved plan of
      development and the related engineering report for the TARH Acquisition and
      are
      funded through equity capital. A copy of the Conveyance of Overriding Royalty
      Interest is attached as Exhibit 10.7 to this Current Report on Form 8-K and
      incorporated herein by reference. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      3.02</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Unregistered
      Sale of Equity Securities.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      raise
      funds to consummate the TARH Acquisition, the Company completed a private
      offering (the &#8220;Offering&#8221;) of units of its Common Stock and warrants to acquire
      its Common Stock (the &#8220;Units&#8221;). Each Unit sold by the Company in the Offering
      consists of one share of Common Stock and a warrant to acquire one-half share
      of
      Common Stock for five years at an exercise price of $2.75 per share. On the
      Closing Date, the Company received $22,500,000 in proceeds from the Offering.
      The Company intends to continue to solicit investors and anticipates conducting
      a second offering to sell additional Units. On the Closing Date, the Company
      sold 10,000,000 Units, issuing to investors in the Offering 10,000,000 shares
      of
      Common Stock and warrants to acquire 5,000,000 shares of Common Stock. Of this
      total, Goldman Sachs purchased 3,333,333 Units in the Offering for a purchase
      price of $7,499,999, in connection with the Facility. A copy of the warrant
      issued to Goldman Sachs in connection with the Offering is attached to this
      Current Report on Form 8-K as Exhibit 4.2 and incorporated herein by
      reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Offering was exempt from the registration requirements of the Securities Act
      of
      1933, as amended (the &#8220;Securities Act&#8221;), pursuant to Section 4(2) of the
      Securities Act and Rule 506 of Regulation D promulgated by the SEC. The Units
      were offered and sold to &#8220;accredited investors,&#8221; as that term is defined under
      Rule 501 of Regulation D, some of which were institutional investors, and to
      fewer than 35 non-accredited investors, in compliance with Rule 506. Sanders
      Morris Harris Inc. acted as placement agent in the Offering and for its services
      through the Closing Date, received compensation from the Company of $1,050,000,
      plus a warrant to acquire 466,666 shares of Common Stock at $2.25 per share.
      Sanders Morris Harris Inc. did not receive compensation for Goldman Sachs&#8217;
purchase of 3,333,333 Units in the Offering. </font></div><br>
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        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
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        </div>
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    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Each
      of
      the investors in the Offering executed a subscription agreement, securities
      purchase agreement and registration rights agreement, all dated as of the
      Closing Date. Forms of these agreements are attached to this Current Report
      on
      Form 8-K as Exhibits 10.8, 10.9 and 10.10, respectively, and incorporated herein
      by reference. A form of the warrant issued to investors pursuant to the Offering
      is attached to this Current Report on Form 8-K as Exhibit 4.3, and incorporated
      herein by reference. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the Registration Rights Agreement among the Company and the investors in
      the
      Offering, dated as of the Closing Date, (the &#8220;Investor Registration Agreement&#8221;)
      the Company has committed to file a registration statement covering the shares
      of Common Stock issued in connection with the Offering, and the shares of Common
      Stock underlying the warrants, within 30 calendar days from the Closing Date.
      The Company shall use reasonable efforts to cause such registration statement
      to
      become effective no later than 120 days after the date it is filed, unless
      such
      registration statement is subject to review by the SEC, in which case the
      Company will have 150 days from the filing date in which to have the
      registration statement declared effective. The Company will be required to
      maintain the effectiveness of such registration statement until all shares
      registered thereunder have been sold or until the holding period of Rule 144(k)
      under the Securities Act has been satisfied with respect to all of the shares
      of
      Common Stock (including the shares underlying the warrants) issued in the
      Offering, whichever is earlier. The Investor Registration Agreement provides
      that the Company will be liable for customary penalties if the registration
      statement is not declared effective on the date by which the Company is required
      to cause it to become effective, or if the Company fails to maintain the
      effectiveness of the registration statement for the required period.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      foregoing description of the Investor Registration Agreement is qualified in
      its
      entirety by reference to the Investor Registration Agreement, which is attached
      as Exhibit 10.10 to this Current Report on Form 8-K and incorporated herein
      by
      reference. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
        8.01. Other Events.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
        addition to the information contained in reports filed with the Securities
        and
        Exchange Commission, further information regarding Foothills can be found
        on the
        Company's website at www.foothills-resources.com. </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        information on the Company's website is not incorporated into this Current
        Report on Form 8-K. The Company does not undertake to update the information
        as
        posted on its website; however, the Company may post additional information
        included in future press releases and Forms 8-K, as well as posting periodic
        Exchange Act reports.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      9.01</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Financial
      Statements and Exhibits.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)
      </font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Financial
      Statements of Business Acquired.</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      registrant intends to amend this Current Report on Form 8-K to include financial
      statements required under this Item 9.01 as soon as they are prepared, but
      in no
      event later than 71 calendar days after the deadline for filing this
      report.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)
      </font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Exhibits.</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td valign="top" width="13%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Exhibit
                No.</u></strong></font></div>
            </td>
            <td valign="top" width="64%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Description</u></strong></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.1</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Warrant
                issued to Goldman, Sachs &amp; Co. in connection with the Credit
                Agreement, dated as of September 8, 2006. </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.2</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Warrant
                issued to Goldman, Sachs &amp; Co. in the Offering, dated as of September
                8, 2006.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.3</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Warrant issued to the Investors in the Offering. </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.1</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Registration
                Rights Agreement, dated as of September 8, 2006, by and between Foothills
                Resources, Inc. and TARH E&amp;P Holdings, L.P. </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.2</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Credit
                and Guaranty Agreement, dated as of September 8, 2006, by and among
                Foothills Resources, Inc., certain subsidiaries of Foothills Resources,
                Inc., Various Lenders and J. Aron &amp; Company. </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.3</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pledge
                and Security Agreement, First Lien, dated as of September 8, 2006,
                by and
                between Foothills Resources, Inc., Foothills California, Inc., Foothills
                Texas, Inc. and Foothills Oklahoma, Inc. as Grantors and J. Aron
&amp;
                Company.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
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        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.4</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pledge
                and Security Agreement, Second Lien, dated as of September 8, 2006,
                by and
                between Foothills Resources, Inc., Foothills California, Inc., Foothills
                Texas, Inc. and Foothills Oklahoma, Inc. as Grantors and J. Aron
&amp;
                Company.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.5</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Deed
                of Trust, Mortgage, Assignment, Security Agreement, Fixture Filing
                and
                Financing Statement, First Lien, dated September 8, 2006, from Foothills
                Texas, Inc. to John K. Howie, as Trustee, and J. Aron &amp; Company, as
                Agent.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.6</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Deed
                of Trust, Mortgage, Assignment, Security Agreement, Fixture Filing
                and
                Financing Statement, Second Lien, dated September 8, 2006, from Foothills
                Texas, Inc. to John K. Howie, as Trustee, and J. Aron &amp; Company, as
                Agent.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.7</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Conveyance
                of Overriding Royalty Interest, dated as of September 8, 2006, from
                Foothills Texas, Inc. to MTGLQ Investors, L.P.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.8</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Subscription Agreement and Investor Questionnaire, dated as of
                September 8, 2006, by and among Foothills Resources, Inc. and the
                investors in the Offering.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.9</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Securities Purchase Agreement, dated as of September 8, 2006,
                by and
                among Foothills Resources, Inc. and the investors in the Offering.
                </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.10</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Registration Rights Agreement, dated as of September 8, 2006,
                by and
                among Foothills Resources, Inc. and the investors in the Offering.
                </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SIGNATURES</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 234pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br>
      <div align="left">
        <table border="0" cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td align="left" valign="top" width="55%">&#160;</td>
              <td align="left" valign="top" width="45%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Foothills
                  Resources, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="55%">&#160;</td>
              <td align="left" valign="top" width="45%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="55%">&#160;</td>
              <td align="left" valign="top" width="45%">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="top" width="55%">&#160;</td>
              <td align="left" valign="top" width="45%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                  /s/ W. Kirk Bosch&#233;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="55%">&#160;</td>
              <td align="left" valign="top" width="45%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Name:
                  W. Kirk Bosch&#233;</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="55%">&#160;</td>
              <td align="left" valign="top" width="45%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Title:
                  Chief Financial Officer</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="55%">&#160;</td>
              <td align="left" valign="top" width="45%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="55%">&#160;</td>
              <td align="left" valign="top" width="45%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date:
                  September 11, 2006</font></div>
              </td>
            </tr>

        </table>
      </div><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXHIBIT
      INDEX</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td valign="top" width="13%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Exhibit
                No.</u></strong></font></div>
            </td>
            <td valign="top" width="64%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Description</u></strong></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.1</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Warrant
                issued to Goldman, Sachs &amp; Co. in connection with the Credit
                Agreement, dated as of September 8, 2006. </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.2</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Warrant
                issued to Goldman, Sachs &amp; Co. in the Offering, dated as of September
                8, 2006.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.3</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Warrant issued to the Investors in the Offering. </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.1</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Registration
                Rights Agreement, dated as of September 8, 2006, by and between Foothills
                Resources, Inc. and TARH E&amp;P Holdings, L.P. </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.2</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Credit
                and Guaranty Agreement, dated as of September 8, 2006, by and among
                Foothills Resources, Inc., certain subsidiaries of Foothills Resources,
                Inc., Various Lenders and J. Aron &amp; Company. </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.3</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pledge
                and Security Agreement, First Lien, dated as of September 8, 2006,
                by and
                between Foothills Resources, Inc., Foothills California, Inc., Foothills
                Texas, Inc. and Foothills Oklahoma, Inc. as Grantors and J. Aron
&amp;
                Company.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.4</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pledge
                and Security Agreement, Second Lien, dated as of September 8, 2006,
                by and
                between Foothills Resources, Inc., Foothills California, Inc., Foothills
                Texas, Inc. and Foothills Oklahoma, Inc. as Grantors and J. Aron
&amp;
                Company.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.5</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Deed
                of Trust, Mortgage, Assignment, Security Agreement, Fixture Filing
                and
                Financing Statement, First Lien, dated September 8, 2006, from Foothills
                Texas, Inc. to John K. Howie, as Trustee, and J. Aron &amp; Company, as
                Agent.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.6</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Deed
                of Trust, Mortgage, Assignment, Security Agreement, Fixture Filing
                and
                Financing Statement, Second Lien, dated September 8, 2006, from Foothills
                Texas, Inc. to John K. Howie, as Trustee, and J. Aron &amp; Company, as
                Agent.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.7</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Conveyance
                of Overriding Royalty Interest, dated as of September 8, 2006, from
                Foothills Texas, Inc. to MTGLQ Investors, L.P.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.8</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Subscription Agreement and Investor Questionnaire, dated as of
                September 8, 2006, by and among Foothills Resources, Inc. and the
                investors in the Offering.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.9</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Securities Purchase Agreement, dated as of September 8, 2006,
                by and
                among Foothills Resources, Inc. and the investors in the Offering.
                </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.10</font></div>
            </td>
            <td align="left" valign="top" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Registration Rights Agreement, dated as of September 8, 2006,
                by and
                among Foothills Resources, Inc. and the investors in the Offering.
                </font></div>
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{"company-data": {"conformed-name": "FOOTHILLS RESOURCES INC", "cik": "0001133494", "assigned-sic": "1311", "irs-number": "000000000", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-31547", "film-number": "061084930"}, "business-address": {"street1": "4540 CALIFORNIA AVENUE", "street2": "SUITE 550", "city": "BAKERSFIELD", "state": "CA", "zip": "93309", "phone": "(832) 567-0766"}, "mail-address": {"street1": "4540 CALIFORNIA AVENUE", "street2": "SUITE 550", "city": "BAKERSFIELD", "state": "CA", "zip": "93309"}}
Unassociated Document
UNITED
      STATES
SECURITIES
      AND EXCHANGE COMMISSION
Washington,
      D.C. 20549
FORM
      8-K
CURRENT
      REPORT
Pursuant
      to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
      of Report (Date of earliest event reported): September 8,
      2006
FOOTHILLS
      RESOURCES, INC.
(Exact
      name of registrant as specified in its charter)
Nevada
001-31546
98-0339560
(State
                or other jurisdiction
of
                incorporation)
(Commission
                File Number)
(I.R.S.
                Employer
Identification
                Number)
4540
                California Avenue, Suite 550
Bakersfield,
                California
93309
(Address
                of principal executive offices)
(Zip
                Code)
(661)
      716-1320
(Registrant's
      telephone number, including area code)
Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions (see General Instruction A.2. below):
¨
Written
                communications pursuant to Rule 425 under the Securities Act (17
                CFR
                230.425)
¨
Soliciting
                material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
                240.14a-12)
¨
Pre-commencement
                communications pursuant to Rule 14d-2(b) under the Exchange Act (17
                CFR
                240.14d-2(b))
¨
Pre-commencement
                communications pursuant to Rule 13e-4(c) under the Exchange Act (17
                CFR
                240.13e-4(c))
Item
      1.01
Entry
      into a Material Definitive Agreement.
On
      September 8, 2006 (the "Closing Date"), Foothills Texas, Inc. ("Foothills
      Texas"), a wholly owned subsidiary of Foothills Resources, Inc. (the "Company"),
      executed certain agreements related to an equity financing transaction and
      a
      debt financing transaction. These agreements provided the Company with
      sufficient capital to allow Foothills Texas to consummate its purchase of
      certain properties in southeastern Texas on the Closing Date. For a discussion
      of the acquisition, the debt financing transaction, and the equity financing
      transaction, please see Items 2.01 and 3.02 of this Current Report on Form
      8-K,
      which disclosure is incorporated herein by reference.
Item
      2.01
Completion
      of Acquisition or Disposition of Assets.
The
      TARH Acquisition
As
      previously disclosed in the Current Report on Form 8-K filed by the Company
      with
      the Securities and Exchange Commission (the "SEC") on June 27, 2006, Foothills
      Texas, executed two definitive purchase and sale agreements with TARH E&P
      Holdings L.P. ("TARH"), each dated as of June 21, 2006 (the "Purchase and Sale
      Agreements"). The Purchase and Sale Agreements set forth the terms and
      conditions by which Foothills Texas would acquire four producing properties
      in
      southeastern Texas (the "TARH Acquisition") - the Goose Creek, Goose Creek East,
      Saratoga and Cleveland Fields properties (the "TARH Properties"). The Purchase
      and Sale Agreements were filed as Exhibits 10.1 and 10.2 to the Company's
      Current Report on Form 8-K filed on June 27, 2006.
On
      the
      Closing Date, Foothills Texas completed the TARH Acquisition, paying aggregate
      cash consideration to TARH of $57.5 million and equity consideration of
      1,605,345 shares of the Company's common stock, par value $0.001 per share (the
"Common Stock"). Prior to the Closing Date, on June 22, 2006, August 14, 2006
      and
August
      23, 2006, Foothills Texas made cash payments of $3,099,000, $1,549,500 and
      $774,750 to TARH in accordance with the Purchase and Sale Agreements. After
      adjustment for preliminary purchase price adjustments as provided in the
      Purchase and Sale Agreements, the cash consideration paid TARH on September
      8,
      2006 was $51,894,500.
The
      Company has agreed to register the Common Stock issued to TARH in the TARH
      Acquisition pursuant to the terms of a Registration Rights Agreement, dated
      as
      of the Closing Date, by and between the Company and TARH (the "TARH Registration
      Agreement"). Under the terms of the TARH Registration Agreement, the Company has
      agreed to file a registration statement with the SEC to register the Common
      Stock issued in connection with the TARH Acquisition. The registration statement
      must be filed no later than 90 calendar days from the Closing Date. Under the
      TARH Registration Agreement, the Company shall use reasonable efforts to cause
      the registration statement to be declared effective by the SEC no later than
      120
      calendar days after the filing date unless such registration statement is
      reviewed by the SEC, in which case the Company will have 150 calendar days
      in
      which to cause the registration statement to be declared effective by the SEC.
      The Company is obligated under the TARH Registration Agreement to maintain
      the
      effectiveness of the registration statement until all shares registered
      thereunder are sold by the holders or until the two-year holding period of
      Rule
      144(k) under the Securities Act is satisfied, whichever is earlier.
Under
      the
      TARH Registration Agreement, the Company will be subject to customary penalties
      if the registration statement is not declared effective by the SEC by the
      required date, or if the Company fails to maintain the effectiveness of the
      registration statement for the required period of time. The foregoing
      description of the TARH Registration Agreement is qualified in its entirety
      by
      reference to the TARH Registration Agreement, attached to this Current Report
      as
      Exhibit 10.1 and incorporated herein by reference.
The
      Credit Facility
To
      finance the TARH Acquisition, the Company executed a Credit and Guaranty
      Agreement with J. Aron & Company (the "Lender"), dated as of the Closing
      Date (the "Credit Agreement"), providing for a credit facility (the "Facility")
      under which the Company borrowed $42.5 million. A copy of the Credit Agreement
      is filed herewith as Exhibit 10.2 and incorporated herein by reference.
The
      Facility will terminate and all amounts borrowed under the Facility will be
      due
      and payable four years following the Closing Date. The Facility will bear
      interest at a rate of LIBOR plus 700 basis points. The Company is required
      to
      make monthly interest and principal payments on the Facility equal to the
      adjusted net cash flow attributed to the TARH Properties. The Facility will
      be
      secured by liens and security interests on substantially all of the assets
      of
      the Company and its subsidiaries, including 100% of the value of all oil and
      gas
      reserves. Copies of the related security documents, each dated as of the Closing
      Date, are filed as Exhibits 10.3 through 10.6 to this Current Report on Form
      8-K
      and incorporated herein by reference.
On
      the
      Closing Date, the Company issued to Goldman, Sachs & Co. ("Goldman Sachs"),
      an affiliate of the Lender, a warrant to purchase 3,000,000 shares of Common
      Stock for five years at an exercise price of $2.75 per share. A copy of the
      warrant is filed herewith as Exhibit 4.1 and incorporated herein by reference.
      In addition, the Company conveyed to the Lender a 5% overriding royalty interest
      in all oil and gas leases associated with the TARH Properties, but excluding
      new
      exploration projects of other formations on the TARH Properties to the extent
      they are distinct from operations included in the Lender's approved plan of
      development and the related engineering report for the TARH Acquisition and
      are
      funded through equity capital. A copy of the Conveyance of Overriding Royalty
      Interest is attached as Exhibit 10.7 to this Current Report on Form 8-K and
      incorporated herein by reference.
Item
      3.02
Unregistered
      Sale of Equity Securities.
To
      raise
      funds to consummate the TARH Acquisition, the Company completed a private
      offering (the "Offering") of units of its Common Stock and warrants to acquire
      its Common Stock (the "Units"). Each Unit sold by the Company in the Offering
      consists of one share of Common Stock and a warrant to acquire one-half share
      of
      Common Stock for five years at an exercise price of $2.75 per share. On the
      Closing Date, the Company received $22,500,000 in proceeds from the Offering.
      The Company intends to continue to solicit investors and anticipates conducting
      a second offering to sell additional Units. On the Closing Date, the Company
      sold 10,000,000 Units, issuing to investors in the Offering 10,000,000 shares
      of
      Common Stock and warrants to acquire 5,000,000 shares of Common Stock. Of this
      total, Goldman Sachs purchased 3,333,333 Units in the Offering for a purchase
      price of $7,499,999, in connection with the Facility. A copy of the warrant
      issued to Goldman Sachs in connection with the Offering is attached to this
      Current Report on Form 8-K as Exhibit 4.2 and incorporated herein by
      reference.
The
      Offering was exempt from the registration requirements of the Securities Act
      of
      1933, as amended (the "Securities Act"), pursuant to Section 4(2) of the
      Securities Act and Rule 506 of Regulation D promulgated by the SEC. The Units
      were offered and sold to "accredited investors," as that term is defined under
      Rule 501 of Regulation D, some of which were institutional investors, and to
      fewer than 35 non-accredited investors, in compliance with Rule 506. Sanders
      Morris Harris Inc. acted as placement agent in the Offering and for its services
      through the Closing Date, received compensation from the Company of $1,050,000,
      plus a warrant to acquire 466,666 shares of Common Stock at $2.25 per share.
      Sanders Morris Harris Inc. did not receive compensation for Goldman Sachs'
purchase of 3,333,333 Units in the Offering.
Each
      of
      the investors in the Offering executed a subscription agreement, securities
      purchase agreement and registration rights agreement, all dated as of the
      Closing Date. Forms of these agreements are attached to this Current Report
      on
      Form 8-K as Exhibits 10.8, 10.9 and 10.10, respectively, and incorporated herein
      by reference. A form of the warrant issued to investors pursuant to the Offering
      is attached to this Current Report on Form 8-K as Exhibit 4.3, and incorporated
      herein by reference.
Pursuant
      to the Registration Rights Agreement among the Company and the investors in
      the
      Offering, dated as of the Closing Date, (the "Investor Registration Agreement")
      the Company has committed to file a registration statement covering the shares
      of Common Stock issued in connection with the Offering, and the shares of Common
      Stock underlying the warrants, within 30 calendar days from the Closing Date.
      The Company shall use reasonable efforts to cause such registration statement
      to
      become effective no later than 120 days after the date it is filed, unless
      such
      registration statement is subject to review by the SEC, in which case the
      Company will have 150 days from the filing date in which to have the
      registration statement declared effective. The Company will be required to
      maintain the effectiveness of such registration statement until all shares
      registered thereunder have been sold or until the holding period of Rule 144(k)
      under the Securities Act has been satisfied with respect to all of the shares
      of
      Common Stock (including the shares underlying the warrants) issued in the
      Offering, whichever is earlier. The Investor Registration Agreement provides
      that the Company will be liable for customary penalties if the registration
      statement is not declared effective on the date by which the Company is required
      to cause it to become effective, or if the Company fails to maintain the
      effectiveness of the registration statement for the required period.
The
      foregoing description of the Investor Registration Agreement is qualified in
      its
      entirety by reference to the Investor Registration Agreement, which is attached
      as Exhibit 10.10 to this Current Report on Form 8-K and incorporated herein
      by
      reference.
Item
        8.01. Other Events.
In
        addition to the information contained in reports filed with the Securities
        and
        Exchange Commission, further information regarding Foothills can be found
        on the
        Company's website at www.foothills-resources.com.
The
        information on the Company's website is not incorporated into this Current
        Report on Form 8-K. The Company does not undertake to update the information
        as
        posted on its website; however, the Company may post additional information
        included in future press releases and Forms 8-K, as well as posting periodic
        Exchange Act reports.
Item
      9.01
Financial
      Statements and Exhibits.
(a)
Financial
      Statements of Business Acquired.
The
      registrant intends to amend this Current Report on Form 8-K to include financial
      statements required under this Item 9.01 as soon as they are prepared, but
      in no
      event later than 71 calendar days after the deadline for filing this
      report.
(d)
Exhibits.
Exhibit
                No.
Description
4.1
Warrant
                issued to Goldman, Sachs & Co. in connection with the Credit
                Agreement, dated as of September 8, 2006.
4.2
Warrant
                issued to Goldman, Sachs & Co. in the Offering, dated as of September
                8, 2006.
4.3
Form
                of Warrant issued to the Investors in the Offering.
10.1
Registration
                Rights Agreement, dated as of September 8, 2006, by and between Foothills
                Resources, Inc. and TARH E&P Holdings, L.P.
10.2
Credit
                and Guaranty Agreement, dated as of September 8, 2006, by and among
                Foothills Resources, Inc., certain subsidiaries of Foothills Resources,
                Inc., Various Lenders and J. Aron & Company.
10.3
Pledge
                and Security Agreement, First Lien, dated as of September 8, 2006,
                by and
                between Foothills Resources, Inc., Foothills California, Inc., Foothills
                Texas, Inc. and Foothills Oklahoma, Inc. as Grantors and J. Aron
&
                Company.
10.4
Pledge
                and Security Agreement, Second Lien, dated as of September 8, 2006,
                by and
                between Foothills Resources, Inc., Foothills California, Inc., Foothills
                Texas, Inc. and Foothills Oklahoma, Inc. as Grantors and J. Aron
&
                Company.
10.5
Deed
                of Trust, Mortgage, Assignment, Security Agreement, Fixture Filing
                and
                Financing Statement, First Lien, dated September 8, 2006, from Foothills
                Texas, Inc. to John K. Howie, as Trustee, and J. Aron & Company, as
                Agent.
10.6
Deed
                of Trust, Mortgage, Assignment, Security Agreement, Fixture Filing
                and
                Financing Statement, Second Lien, dated September 8, 2006, from Foothills
                Texas, Inc. to John K. Howie, as Trustee, and J. Aron & Company, as
                Agent.
10.7
Conveyance
                of Overriding Royalty Interest, dated as of September 8, 2006, from
                Foothills Texas, Inc. to MTGLQ Investors, L.P.
10.8
Form
                of Subscription Agreement and Investor Questionnaire, dated as of
                September 8, 2006, by and among Foothills Resources, Inc. and the
                investors in the Offering.
10.9
Form
                of Securities Purchase Agreement, dated as of September 8, 2006,
                by and
                among Foothills Resources, Inc. and the investors in the Offering.
10.10
Form
                of Registration Rights Agreement, dated as of September 8, 2006,
                by and
                among Foothills Resources, Inc. and the investors in the Offering.
SIGNATURES
Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.
Foothills
                  Resources, Inc.
By:
/s/ W. Kirk Bosché
Name:
                  W. Kirk Bosché
Title:
                  Chief Financial Officer
Date:
                  September 11, 2006
EXHIBIT
      INDEX
Exhibit
                No.
Description
4.1
Warrant
                issued to Goldman, Sachs & Co. in connection with the Credit
                Agreement, dated as of September 8, 2006.
4.2
Warrant
                issued to Goldman, Sachs & Co. in the Offering, dated as of September
                8, 2006.
4.3
Form
                of Warrant issued to the Investors in the Offering.
10.1
Registration
                Rights Agreement, dated as of September 8, 2006, by and between Foothills
                Resources, Inc. and TARH E&P Holdings, L.P.
10.2
Credit
                and Guaranty Agreement, dated as of September 8, 2006, by and among
                Foothills Resources, Inc., certain subsidiaries of Foothills Resources,
                Inc., Various Lenders and J. Aron & Company.
10.3
Pledge
                and Security Agreement, First Lien, dated as of September 8, 2006,
                by and
                between Foothills Resources, Inc., Foothills California, Inc., Foothills
                Texas, Inc. and Foothills Oklahoma, Inc. as Grantors and J. Aron
&
                Company.
10.4
Pledge
                and Security Agreement, Second Lien, dated as of September 8, 2006,
                by and
                between Foothills Resources, Inc., Foothills California, Inc., Foothills
                Texas, Inc. and Foothills Oklahoma, Inc. as Grantors and J. Aron
&
                Company.
10.5
Deed
                of Trust, Mortgage, Assignment, Security Agreement, Fixture Filing
                and
                Financing Statement, First Lien, dated September 8, 2006, from Foothills
                Texas, Inc. to John K. Howie, as Trustee, and J. Aron & Company, as
                Agent.
10.6
Deed
                of Trust, Mortgage, Assignment, Security Agreement, Fixture Filing
                and
                Financing Statement, Second Lien, dated September 8, 2006, from Foothills
                Texas, Inc. to John K. Howie, as Trustee, and J. Aron & Company, as
                Agent.
10.7
Conveyance
                of Overriding Royalty Interest, dated as of September 8, 2006, from
                Foothills Texas, Inc. to MTGLQ Investors, L.P.
10.8
Form
                of Subscription Agreement and Investor Questionnaire, dated as of
                September 8, 2006, by and among Foothills Resources, Inc. and the
                investors in the Offering.
10.9
Form
                of Securities Purchase Agreement, dated as of September 8, 2006,
                by and
                among Foothills Resources, Inc. and the investors in the Offering.
10.10
Form
                of Registration Rights Agreement, dated as of September 8, 2006,
                by and
                among Foothills Resources, Inc. and the investors in the Offering.