Effective as of September 15, 2009, (the "Effective Date"), Teton Energy Corporation the "Company") entered into a letter agreement (the "Letter Agreement") with JPMorgan Chase Bank, N.A. ("JPMorgan Chase"), as administrative agent, and each of the financial institutions identified therein (hereinafter collectively referred to as the "Lenders") amending the Third Amendment to the Second Amended and Restated Credit Agreement and Forbearance Agreement which was entered into effective as of August 26, 2009 (the "Third Amendment"). All capitalized terms not defined herein shall have the meaning set forth in the Letter Agreement and Third Amendment incorporated by reference therein.

Under the terms of the Letter Agreement:

(a) The Company, the Administrative Agent, and each of the Lenders agreed to forbear from exercising their rights and remedies as a result of the Specified Default (the Company's failure to repay the Borrowing Base Deficiency of $8,484,296 on August 25, 2009) under the Loan Documents to (i) accelerate the outstanding principal balance of the Loans; and (ii) to commence foreclosure proceedings under the Security Instruments, during the period from the Effective Date until the earlier of (A) the occurrence of any Default or Event of Default other than the Specified Defaults, or (B) 5:00 p.m., September 30, 2009 (Dallas, Texas time).

(b) The definition of Indebtedness was revised to include amounts owing or to be owed by the Company, its Subsidiaries or Guarantors created or arising in connection with treasury management services provided to the Company, its Subsidiaries or Guarantors by any Lender or its Affiliates; and

(c) The Company agreed to extend, from September 15, 2009 to September 30, 2009, the date to obtain fully executed account control agreements in a form and substance satisfactory to the Administrative Agent and the Majority Lenders covering all of the Company's and its subsidiaries' deposit accounts including, without limitation, accounts held at Wells Fargo Bank, N.A.

The Company, from time to time, enters into commodity hedge agreements to mitigate a portion of the potential exposure to adverse market changes in the prices of oil and natural gas, with JPMorgan Chase. There are no other material relationships between the Company or its affiliates and JPMorgan Chase or the lenders, other than in respect to the Third Amendment, as amended.

The foregoing summary of the Letter Agreement is qualified in its entirety by reference to the definitive transaction document, a copy of which is attached as Exhibit 10.1 to this Current Report.

The information included in Item 1.01 of this Current Report is hereby incorporated by reference into this Item 2.03.

On September 16, 2009, the Company received notice from the Listing Qualifications department of The NASDAQ Stock Market ("NASDAQ") indicating that the Company is not in compliance with the $1.00 minimum bid price requirement for continued listing set forth in NASDAQ Marketplace Rule 5550(a)(2).

The NASDAQ notice indicated that, in accordance with NASDAQ Marketplace Rule 5810(c)(3)(A), the Company will be provided a grace period of 180 calendar days (until March 15, 2010) to regain compliance. If, at any time during this grace period the bid price of the Company's common stock closes at $1.00 per share or more for a minimum of ten consecutive business days, NASDAQ Staff will provide the Company with written notification that it has achieved compliance with Rule 5550(a)(2), and the matter will be closed.

If the Company does not regain compliance with Rule 5550(a)(2) prior to March 15, 2010, NASDAQ Staff will provide the Company with written notification that its securities are subject to delisting from The NASDAQ Capital Market. At that time, the Company may appeal the delisting determination to a Hearing Panel.

Alternatively, if the Company fails to regain compliance with Rule 5550(a)(2) prior to March 15, 2010, but meets all of the other applicable standards for initial listing on the NASDAQ Capital Market, with the exception of the minimum bid price, then the Company will have an additional 180 calendar days to regain compliance with Rule 5550(a)(2).

A copy of the Company's press release announcing the receipt of the NASDAQ letter is attached hereto as Exhibit 99.1.

The Company is also reporting that the forbearance period related to the interest payment due on the Company's outstanding 10.75% Senior Secured Convertible Debentures (the "Debentures") has been extended through and including September 30, 2009.

The Company intends to continue to work with the holders of the Debentures towards a more permanent solution, however, there can be no assurance that the Company will be successful in doing so, in which case the Company may, among other options, be required to seek protection under the United States Bankruptcy Code.

(a) Financial statements of businesses acquired

N/A

(b) Pro forma financial information

N/A

(c) Shell company transactions

N/A

(d) Exhibits

 Exhibit No.    Description

       10.1     Letter Agreement amending Third Amendment to Second
                Amended and Restated Credit Agreement and Forbearance
                Agreement.
       99.1     Press Release dated September 21, 2009.