Compensation Committee Charter

Composition

The Compensation Committee (“Committee”) is established as a standing committee of the Board of Directors (“Board”) of Credo Petroleum Corporation (“Company”). The membership of the Committee shall consist of at least three directors, who shall then be serving as independent directors of the Board. All members of the Committee shall meet the independence requirements of, and satisfy any other criteria imposed on members of the Committee pursuant to, the federal securities laws and the rules and regulations of the Securities and Exchange Commission (“SEC”), the NASDAQ Stock Market, Inc. (“NASDAQ”) or any other applicable exchange or market on which the Company’s securities are listed. Each member of the Committee shall be free of any relationship that, in the opinion of the board, would interfere with the exercise of his or her independent judgment. All Committee members shall be subject to removal at any time by a majority vote of the Board. In addition, the Committee shall be subject to the provisions of the Company’s Bylaws relating to committees of the Board. The members of the Committee shall exercise their authority in good faith and with the utmost loyalty to the Company, its Board and shareholders.

Meetings and Structure

The Board shall appoint one member of the Committee as Chairperson (“Chair”). He or she shall be responsible for leadership of the Committee and reporting to the Board.

The Committee shall meet as often as it deems necessary to execute its duties and as required by applicable laws, regulations and the NASDAQ standards. Such meeting shall be at the times and places and by such means as the Chair shall determine. A majority of the members of the Committee shall constitute a quorum. Minutes of all Committee meetings will be prepared and filed with the minutes of the Board.

Statement of Policy

This charter governs the operations of the Committee. The Board has delegated to the Committee responsibility for overseeing certain aspects of corporate level officer compensation for the company, including any subsidiaries thereof. The Committee will provide assistance to the directors in fulfilling their responsibilities to the shareholders and to the investment community relating to compensation philosophy, strategies, policies and programs of the Company and its subsidiaries, and to recommend specific compensation actions and awards for corporate level officers and directors of the Company. The Committee shall have the resources and authority appropriate to discharges its duties and responsibilities. The Committee shall have the sole authority to hire outside legal or other experts or advisors to assist the Committee with its work.

Responsibilities

The Committee’s basic responsibility s to assure that the corporate level officers of the Company are compensated effectively in a manner consistent with the compensation philosophy of the Company, performance objectives, internal equity consideration, competitive practice and any other related matters. The Committee shall also communicate to shareholders the Company’s compensation policies and the reasoning behind such policies as required by the Securities and Exchange Commission. More specifically, the Committee will be responsible for the following:

Make recommendations to the Board as to the form and amount of compensation to be paid or awarded to all corporate level officers of the Company, including the Chief Executive Officer (the “CEO”), and to such other officers and employees as delegated from time to time by the Board, and report compensation arrangements with respect to such officers to the Board. This may be done in consultation with the CEO, who may make recommendations to the Committee regarding the compensation of any other executive officer.

Make recommendations to the Board regarding the Company’s incentive compensation plans and stock-based plans with an objective that the Company’s incentive compensation plans and stock-based plans assist in achieving the Company’s objective of attracting, motivating, incentivizing and retaining individuals who are key to the success of the Company.

Review and approve goals and objectives relevant to the CEO (and such other officers as deemed appropriate by the Board), in light of the Company’s current business environment and strategic objectives and make recommendations to the Board related thereto.

Make recommendations to the Board regarding the performance of the Company’s CEO and other designated officers in light of approved goals and objectives, based on objective criteria, which may include, but are not limited to, the Company’s performance and relative shareholder return, earnings per share growth, the value of incentive awards made to executive officers at comparable companies, the awards given to the Company’s executive officers in past years, and any other factors that the Committee, in its direction, may consider appropriate.

Evaluate the need for and the provisions of all employment contracts and all offers of employment that involve a corporate level officer and make recommendations to the Board related thereto.

Issue an annual report on corporate level officer compensation for inclusion in the Company’s proxy statement or annual report on Form 10-K in accordance with applicable rules and regulations.

Review and assess from time-to-time the adequacy of this Charter and the performance of the Committee and recommend to the Board for approval any proposed changes to the Charter or the Committee.

Review from time-to-time and make recommendations to the Board with respect to all forms and amounts of compensation for members of the Board, including equity incentive plans or plan amendments requiring shareholder approval.

Undertake all further actions and discharge all further responsibilities imposed upon the Committee from time-to-time by the Board, the federal securities laws or the rules and regulations of the SEC, NASDAQ or other applicable exchange or market on which the Company’s securities are listed.

Approved by the Directors: October 28, 2010