Effective as of September 30, 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) Section 2.1 of the Letter Agreement was amended by replacing each reference to "September 30, 2009" to "October 16, 2009" so that the amended
Section reads as follows:

"2.1 Forbearance. Upon and subject to the terms and conditions hereof, the Administrative Agent and the Lenders agree to forbear from exercising their rights and remedies as a result of the Specified Defaults [the Company's failure to repay the Borrowing Base Deficiency of $8,484,296 on August 25, 2009] under the Loan Documents, including any rights or remedies arising thereunder pursuant to applicable law, to (i) accelerate the outstanding principal balance of the Loans and (ii) commence foreclosure proceedings under the Security Instruments, during the period from the Amendment Effective Date to and including the earlier of (a) the occurrence of any Default or Event of Default other than the Specified Defaults, or (b) 5:00 p.m., October 16, 2009 (Dallas, Texas time) (the "Forbearance Period"). Upon the earlier of the occurrence of any Default or Event of Default other than the Specified Defaults, or October 16, 2009, the Administrative Agent's and the Lenders' agreement herein to forbear from exercising such rights and remedies available to them shall immediately terminate, and the Administrative Agent and the Lenders shall immediately be entitled to exercise any and all rights and remedies available to them, individually or collectively, under the Loan Documents, at law or in equity or otherwise, including, without limitation, the right (without prior notice or opportunity to cure of any kind) to accelerate the Loans, exercise rights of offset over all accounts of the Borrower and its Subsidiaries, commence foreclosure proceedings and/or seek the appointment of a receiver."

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.

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 October 16, 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.