December 1, 2006
 
Mr. Keith Miles
Vice President Operations
Endeavor Energy Corp.      
300 - 407 2nd Street SW
Calgary, Alberta T2P 2Y3

Re: Acadia North, Empress and 3D Seismic area Lands.

 
Dear Mr. Miles:
 
This letter of intent (the “Letter of Intent”) sets forth our understanding of
the mutual intentions of the parties regarding the proposed transaction between
Quest Canada Corp., (“Quest”) and Endeavor Energy Corp, (“Endeavor”).

Each party understands and acknowledges that this is a binding Letter of Intent
and this Letter of Intent does create a binding contract, which will be subject
to more definitive agreements. Both parties agree to complete definitive
agreements within fifteen business days of execution of the Letter of Intent.

1.  Structure of Transaction.
 
1.1  Endeavor Data Acquisition. Endeavor will acquire from Quest a non-Exclusive
License of 3D Seismic data owned by Quest Canada covering 10 square miles. The
license fee to be paid by Endeavor to Quest will be Two Hundred and Fifty
Thousand Dollars ($250,000 US), (the “Licensing Fee”). The Licensing Fee shall
be payable to Quest Canada upon execution of this Letter of Intent and release
of the data by an escrow agent. A complete inventory of the data is attached
hereto as Exhibit “A”. Endeavor is entitled and will receive repayment of risk
capital of $250,000 by Endeavor from the production of the first production gas
well, to the extent there is production from the new wells drilled. Endeavor
agrees to pay all costs associated with interpreting the data which shall be for
internal use only and completed within 60 days of delivery of the data. Quest
shall have ownership of all results of the interpretation and internal documents
that pertain to the seismic area surveyed.
 
1.2  Structure of Future Participation.  Endeavor warrants and represents that
it has the financial capability to complete the drilling estimates should it
elect to proceed with the project. Endeavor agrees to commence drilling
operations within 6 months of interpretation of the seismic data.
 
 
In addition to the non-exclusive licensing fee, Quest shall receive the right to
participate in all future operations derived from (i) the existing lands owned
and or controlled by Quest attached hereto as Exhibit “B” and (ii) and on any
lands acquired, farmed out and/or joint ventured or where Endeavors officers,
directors, or affiliates receive an economic benefit from the properties covered
within the 3D seismic area and 1 mile outside of the surveyed area (“Covered
Properties”). Quest shall have a thirty (30) day option period prior to each
drilling opportunity to participate in one of the following forms:
 

·  
a GORR in an amount equal to 10% for properties we own and 5% for other
properties within the Covered Properties, with no additional capital commitment

 

·  
a NCOR% in an amount equal to 15% for all properties within the Covered
Properties, with no additional capital commitment, except for the portion of the
Covered Properties that is 1 mile outside of the surveyed area shall be at a
GORR of 5%

 

·  
or as a 50-50 joint venture in which Quest provides 50% of the capital required
for all properties within the Covered Properties, except for the portion of the
Covered Properties that is 1 mile outside of the surveyed area shall be at a
GORR of 5% . In the event Quest elects to participate, Quest will be notified
within 30 days of spud, and AFE will be sent followed by Cash Call, Cash Call
must be paid with in 7 business days of receipt.

 
1.3  Minimum Guarantee.  Endeavor agrees to drill one natural gas well on any
Exhibit B lands in the Viking zone within 6 months from the completion of the
interpretation of the 3D seismic data and commits to a minimum drilling capital
commitment/expenditure of $1,000,000 US within 12 months from the completion of
the interpretation of the 3D seismic data, subject to successful interpretation
of the 3D seismic data. If Endeavor chooses not to proceed with this drilling
commitment, for whatever reason, then Endeavor, including its affiliates,
officers and directors, will forfeit all rights it has under this agreement;
excluding the new wells and re-works on existing wells to the extent Endeavor
expends funds on the properties, which Endeavor shall maintain; within the
Covered Properties, and shall return all copies of the 3D seismic data and its
interpretation. To the extent that the $1,000,000 US has been expended within
the time frames identified above, Endeavor shall retain all of its rights under
this agreement.
 
1.4 Maintenance of Existing and Future properties. All properties currently
owned by Quest shall remain in Quests name, Endeavor will become operator of
record and abide by the CAPL operators guidelines, subject to amendments or
modifications that are acceptable to both Quest and Endeavor. Endeavor will be
responsible for bearing the costs associated with these properties.
 
1.5  Definitive Agreements. After Quest’s receipt of a fully-executed Letter of
Intent from Endeavor, Quest’s counsel will commence preparation of definitive
agreements which will effectuate the transactions and arrangements contemplated
herein (the “Definitive Agreements”). The Definitive Agreements will contain the
provisions outlined above, comprehensive representations and warranties,
covenants, conditions, and indemnifications which will all survive the closing.
 
2.  Additional Terms.
 
2.1  Due Diligence. Commencing on the date of execution by Endeavor, both
parties shall have the opportunity for a due diligence review and investigation
of each other and the operations of the businesses, which shall include, among
other things, review and investigation of the operational, legal, financial,
environmental, employment, and other matters. Each party shall fully cooperate
with each other in the conduct of such review and investigation as part of the
due diligence process and will promptly furnish to each other and its
representatives such financial, operating data and other information as
reasonably requested.
 
2.2  Expenses. Quest and Endeavor shall each pay their own fees and expenses and
those of their agents, advisors, attorneys and accountants with respect to the
negotiation of this Letter of Intent, the negotiation of the Definitive
Agreements and, if Definitive Agreements are executed, the closing of the
transactions contemplated by the Definitive Agreements.
 
3.  Public Announcement. Quest and Endeavor agree not to issue any press release
or make any public announcement of the transactions contemplated herein without
prior written mutual consent, except where a public announcement is otherwise
required by law.
 
Miscellaneous.
 
3.1  Governing Law. This Letter of Intent shall be governed and construed in
accordance with the laws of the State of California. The agreed upon CAPL
agreement shall be governed and construed in accordance with the laws of
Alberta, Canada.
 
3.2  Attorneys’ Fees. If any legal action or any other proceeding is brought for
the enforcement of this Letter of Intent or as a result of this Letter of
Intent, the prevailing party shall be entitled to recover from the
non-prevailing party its reasonable attorneys’ fees and other costs incurred in
connection with said action or proceeding and any appeal.
 
 
Kindly execute the signature line below to acknowledge your agreement to the
terms outlined above and return it to us via facsimile. I look forward to a long
and mutually beneficial relationship. Please do not hesitate to contact me with
any questions.
 

Best Regards,

/s/ Phil Scott

Phil Scott, CFA
Chief Financial Officer

 
Agreed and accepted:

/s/ Keith Miles
____________________________
Keith Miles
Vice President of Operations

Exhibit “A”
3-D Seismic Data Inventory

Quest Oil Corporation
                   
2005/2006 Acadia North 3-D Seismic Acquisition Program
             
Data Tape Log
                                                                               
 
Project
Job #
Tape #
Date
Crew #
Line
File
Line
Flag
Format
S.Rate
R.Len
AramAries
LC/HC
Acadia North 2006 3D
0
1
1/4/2006
AR-34
3D
1-107
121-117
172-168
SEG-Y
2.00 mS
3000mS
2.508
LC:3 HC:205Hz
 
0
2
1/4/2006
AR-34
3D
108-132
117-121
167-161
SEG-Y
2.00 mS
3000mS
2.508
LC:3 HC:205Hz
 
0
3
1/4/2006
AR-34
3D
133-224
121-109
160-156
SEG-Y
2.00 mS
3000mS
2.508
LC:3 HC:205Hz
 
0
4
1/4/2006
AR-34
3D
225-308
109-115
155-149
SEG-Y
2.00 mS
3000mS
2.508
LC:3 HC:205Hz
 
1358
5
1/5/2006
AR-34
3D
309-370
115-107
150-143
SEG-Y
2.00 mS
3000mS
2.508
LC:3 HC:205Hz
 
1358
6
1/5/2006
AR-34
3D
371-471
107-105
144-135
SEG-Y
2.00 mS
3000mS
2.508
LC:3 HC:205Hz
 
1358
7
1/5/2006
AR-34
3D
472-548
105-109
134-122
SEG-Y
2.00 mS
3000mS
2.508
LC:3 HC:205Hz
 
1358
8
1/5/2006
AR-34
3D
549-613
109-113
121-122
SEG-Y
2.00 mS
3000mS
2.508
LC:3 HC:205Hz
 
1358
9
1/5/2006
AR-34
3D
614-693
113-117
120-105
SEG-Y
2.00 mS
3000mS
2.508
LC:3 HC:205Hz
 
1358
10
1/5/2006
AR-34
3D
694-793
117-105
104-101
SEG-Y
2.00 mS
3000mS
2.508
LC:3 HC:205Hz
                                                       
Project
Job #
Tape #
Date
Crew#
Line
SP
File
Format
S.Rate
R.Len
AramAries
LC/HC
 
Acadia North 2005 3D
1352
1
12/30/2005
AR-34
101
101-112
1-60
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
2
12/30/2005
AR-34
121
111-115
61-158
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
3
12/30/2005
AR-34
115
116-105
159-179
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
4
12/31/2005
AR-34
3D
104-113
180-281
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
5
12/31/2005
AR-34
 
112-116
282-352
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
6
12/31/2005
AR-34
 
117-113
353-444
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
7
1/1/2005
AR-34
 
112-129
445-526
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
8
1/1/2005
AR-34
 
128-126
527-554
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
9
1/1/2005
AR-34
 
125-127
555-616
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
10
1/1/2005
AR-34
103
126-135
617-709
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
11
1/1/2005
AR-34
119
135-135
709-769
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
12
1/1/2005
AR-34
133
136-142
770-845
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
13
1/1/2005
AR-34
123
141-143
846-902
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
14
1/1/2005
AR-34
3D
124-141
903-972
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
15
1/2/2005
AR-34
 
140-158
973-1051
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
16
1/2/2005
AR-34
 
157-153
1052-1108
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
17
1/2/2005
AR-34
127
152-160
1109-1184
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
18
1/2/2005
AR-34
137
161-166
1185-1263
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
19
1/2/2005
AR-34
127
167-167
1264-1320
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
20
1/2/2005
AR-34
119
168-176
1321-1391
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
21
1/2/2005
AR-34
3D
177-161
1392-1474
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
22
1/3/2005
AR-34
 
162-172
1475-1533
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
23
1/3/2005
AR-34
113
173-176
1534-1590
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
24
1/3/2005
AR-34
3D
175-180
1591-1649
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
25
1/3/2005
AR-34
129
181-191
1650-1733
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
26
1/3/2005
AR-34
135
190-185
1734-1819
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
27
1/3/2005
AR-34
125
185-191
1820-1893
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
28
1/3/2005
AR-34
119
190-199
1894-1965
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
29
1/3/2005
AR-34
111
198-191
1966-2054
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
   
1352
30
1/3/2005
AR-34
3D
190-186
2056-2078
SEG-Y
2.00 mS
3000mS
2.508
LC: 3 HC: 205Hz
 

 

Exhibit “B”
Quest Canada Lands

PNG Lease No.
Lands
   
0405090031
Section 23
25-2-W4M
   
0405110388
Section 11
26-2-W4M
   
0405110389
Section 12
26-2-W4M
   
0406030069
Sections 1,2
26-2-W4M
   
0401030100
Section 22
25-2-W4M
   
0401030101
Section 34
25-2-W4M
   
0503080787
Sections 10,15,22,23
24-2-W4M