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PETROLEUM, NATURAL GAS AND RELATED RIGHTS CONVEYANCE

THIS AGREEMENT MADE this 18th day of September, 2008.

BETWEEN:

Nation Energy Inc.,
A body corporate having an office and carrying on business
in the City of Vancouver, in the Province of British Columbia
("Nation")

- and -

Netco Energy Inc.,
A body corporate having an office and carrying on business
in the City of Vancouver, in the Province of British Columbia
("Netco")

(Nation and Netco hereinafter referred to as “Vendor”)

- and -

EnCana Oil & Gas Partnership,
a general partnership, having an office in the
City of Calgary, in the Province of Alberta
(hereinafter referred to as "Purchaser")

     NOW THEREFORE in consideration of the premises and the mutual covenants,
warranties, representations, agreements and payments herein set forth and
provided for, the parties agree as follows:

ARTICLE 1
INTERPRETATION

1.1

In this Agreement, including the recitals and Schedules the words and phrases
set forth below shall have the meaning ascribed thereto below, namely:

      (a)

"Assets" means the Petroleum and Natural Gas Rights underlying the Lands,
granted by the title documents including without limitation, the Tangibles and
the Miscellaneous Interests;

      (b)

"Closing" means the transfer by Vendor to Purchaser of the Assets and the
payment by Purchaser to Vendor of the purchase consideration therefore and the
completion of all matters incidental thereto;

      (c)

"Closing Time" means 2:00 p.m. local time at Calgary, Alberta, on September 30,
2008 or such other date as mutually agreed by Vendor and Purchaser;

      (d)

"Effective Time" means 8:01 a.m. local time at Calgary, Alberta on June 1, 2008;

      (e)

“Environmental Damages” has the meaning given thereto in Article 9.1;

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  (f)

“Facilities” means the facilities set forth and described in Schedule “B” and
used or useful in the production, processing, transmission or treatment of
Petroleum Substances, including, without limitation, pipelines, flow lines,
dehydrators, gathering systems, batteries, and plants;

          (g)

"Lands" means the lands set forth and described in Schedule "A" and includes the
Petroleum Substances within, upon or under such lands, together with the right
to explore for and recover same insofar as such are granted by Leases to such
lands;

          (h)

"Leases" means collectively the leases, reservations, permits, licenses or other
documents of title by virtue of which the holder thereof is entitled to drill
for, win, take, own or remove the Petroleum Substances underlying all or any
part of the Lands and any lands with which the Lands may be pooled or unitized
and any document of title issued in substitution for amendment of or in addition
to any of them;

          (i)

"Miscellaneous Interests" means the interest of Vendor in and to all property,
assets and rights, other than Petroleum and Natural Gas Rights and Tangibles, to
the extent they pertain to the Petroleum and Natural Gas Rights, the Lands, the
Leases or the Tangibles and to which Vendor is entitled at the Effective Time,
including, but not in limitation of the generality of the foregoing, the entire
interest of Vendor in:

          (i)

all contracts, agreements, documents, production sales contracts, books and
records of Vendor, relating to the Petroleum and Natural Gas Rights, the Lands
or any lands with which the Lands have been pooled or unitized, or the Tangibles
and any and all rights in relation thereto excluding any of the foregoing that
pertain to seismic, geological or geophysical matters, Vendor’s tax and
financial records and economic evaluation;

          (ii)

all subsisting rights to enter upon, use and occupy the surface of any of the
Lands or any lands with which the same have been pooled or unitized and any
Lands upon which the Tangibles are located or any lands which are used to gain
access to any of the foregoing; and

          (iii)

the Wells, including the existing wellbores and downhole casing related thereto.

          (j)

“Nation Payable” means the amounts owed by Nation to EnCana, as successor in
interest to Olympia, pursuant to a Participation Agreement dated November 21,
2001 between Nation Energy Inc. and Olympia Energy Inc. and further defined in
Schedule “E”;

          (k)

"Permitted Encumbrances" means:

          (i)

any encumbrances, overriding royalties, reduction in interest and other burdens
identified in Schedule “A”;

          (ii)

easements, rights of way, servitudes or other similar rights in land including,
without limiting the generality of the foregoing, rights of way and servitudes
for railways, sewers, drains, gas and oil pipelines, gas and

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      water mains, electric light, power, telephone, telegraph or cable
television conduits, poles, wires and cables;           (iii)

the right reserved to or vested in any government or other public authority by
the term of any Lease or by any statutory provision to terminate any Leases or
to require annual or other periodic payments as a condition of the continuance
thereof;

          (iv)

taxes on Petroleum Substances or the income or revenue therefrom and
governmental requirements as to production rates on the operations of any
property or otherwise affecting the value of any property;

          (v)

contracts for the sale of Petroleum Substances comprising part of the Assets as
identified in Schedule “C”;

          (vi)

the terms and conditions of the Leases;

          (vii)

rights reserved to or vested in any municipality or governmental, statutory or
public authority to control or regulate any of the Assets in any manner, and all
applicable laws, rules and orders of any governmental authority;

          (viii)

undetermined or inchoate liens incurred or created as security in favour of the
person conducting the operation of any of the Assets for Vendor’s proportion of
the costs and expenses of such operations which costs and expenses are not
delinquent as of the Closing Time;

          (ix)

the reservations, limitations, provisos and conditions in any original grants
from the Crown of any of the Lands or interests therein and statutory exceptions
to title;

          (x)

agreements and plans relating to pooling or unitization;

          (xi)

provisions for penalties and forfeitures under agreements as a consequence of
non-participation in operations; and

          (xii)

liens granted in the ordinary course of business to a public utility,
municipality or governmental authority in connection with operations conducted
with respect to the Assets for which payment is not due.

          (l)

"Petroleum and Natural Gas Rights" means the entire interests of Vendor in and
to the Leases and the Lands, including without limitation, the interests set out
in Schedule “A”;

          (m)

“Petroleum Substances” means petroleum, natural gas and related hydrocarbons and
all substances associated therewith or any of them insofar as the same are
granted by the Leases;

          (n)

"Place of Closing" means the offices of Vendor;

          (o)

"Take or Pay Obligations" means the outstanding obligations of Vendor arising in
connection with payments made to Vendor, or its predecessors in interest, under
or in respect of gas purchase contracts or other contracts for the sale of
Petroleum Substances, which payments were made in lieu of or in consequence of
the buyers under such contracts not taking delivery of Petroleum Substances

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    or in consideration of future deliveries of Petroleum Substances and which
obligations include obligations to deliver Petroleum Substances after the
Effective Time or to repay such payments after the Effective Time;       (p)

"Tangibles" means the Facilities and any and all tangible depreciable property
and assets other than the Facilities which are located within or upon the Lands
and which are used or are intended to be used to produce, process, gather,
treat, measure, make marketable or inject Petroleum Substances or any of them or
in connection with water injection or removal operations that pertain to the
Petroleum and Natural Gas Rights, including without limitation any and all
buildings, production equipment, pipeline connections, meters, generators,
motors, compressors, treaters, dehydrators, scrubbers, separators, pumps, tanks,
boilers and communication equipment; and

      (q)

"Wells" means all wells located on the Lands or on lands with which the Lands
have been pooled or unitized including well bore and all equipment appurtenant
thereto and including without limitation those Wells, all as set forth in
Schedule "A" under the heading “Wells”.

      1.2

Appended hereto is:

     

Schedule "A" Description of Lands, Leases, Vendor's Interests, Encumbrances and

     

Wells

     

Schedule “B” Facilities

     

Schedule “C” Land Dedication Agreements, Transportation Agreements and
Production Sale Contracts

     

Schedule "D" Authorization for Expenditures

     

Schedule “E” Nation Payable Assignment

     

The Schedules hereto are incorporated into and made part of this Agreement by
this reference as fully as though contained in the body of this Agreement.

      1.3

The headings of Articles herein are inserted for convenience or reference only
and shall not affect or be considered to affect the construction of the
provisions hereof.

ARTICLE 2
CONVEYANCE

2.1

Vendor does hereby sell, assign, transfer, convey and set over unto Purchaser,
its entire right, title, estate and interest in and to the Assets on the terms
and conditions set forth in this Agreement effective as of the Closing Time, and
Purchaser hereby purchases and accepts directly from Vendor the Assets, to have
and to hold the same together with all benefits and advantages to be derived
therefrom, absolutely, subject to the terms and conditions of the Leases and any
other agreements relating thereto.

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ARTICLE 3
PRICE

3.1

Subject to adjustment as herein provided for, the Purchase Price to be paid by
Purchaser to Vendor for the Assets shall be the sum of $1,600,000.00 (the
"Purchase Price") which sum shall be paid by Purchaser to Vendor immediately
upon execution of this Agreement by cheque or bank draft. Nation’s GST
registration number is 100272806 RT, Netco’s GST registration number is
897814661 RT and Purchaser’s GST registration number is 896761046 RT.

    3.2

The Purchase Price shall be allocated amongst the Assets as follows:

          Nation Share     Netco Share      

                (a)

Petroleum and Natural Gas Rights

  $  657,000.00   $  303,000.00     (b)

Tangibles

  $  437,999.00   $  201,999.00     (c)

Miscellaneous Interests

  $  1.00   $  1.00     (d)

Tax

  $  21,899.95   $  10,099.95      

                 

TOTAL

  $  1,116,899.95   $  515,099.95  

3.3

No Interest shall accrue on the Purchase Price.

    3.4

The outstanding Nation Payable, as further defined in Schedule “E”, shall be
terminated as part of the consideration paid to the Vendor.

ARTICLE 4
CLOSING TIME AND PLACE

4.1

Closing shall take place at the Place of Closing at the Closing Time.

ARTICLE 5
RENTALS

5.1

Rentals, lease payments, related taxes and any similar payments made by Vendor
to preserve any of the Leases shall not be apportioned between Vendor and
Purchaser. After Closing all rentals and similar payments required to preserve
any of the Leases which relate to the Lands shall be paid by Purchaser.

ARTICLE 6
ADJUSTMENTS

6.1

All benefits and obligations of every kind and nature accruing, payable, paid,
received or Payable with respect to the Assets (including, without limitation,
maintenance, development, capital and operating costs, advances, proceeds from
the sale of production, accounts receivable and incentives accruing pursuant to
the Regulations) shall be apportioned between Purchaser and Vendor, as of the
Effective Time, in accordance with generally accepted accounting principles,
subject to the provisions of this Agreement, including without limitation,
Article 9. All costs of whatever nature pertaining to work performed or to be
performed or goods or services provided with respect to the Assets prior to
Effective Time shall be borne by Vendor, notwithstanding that such costs may be
due and payable in whole or in part after Effective Time.

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6.2

Petroleum Substances which were produced, but not sold as of the Effective Time
shall be credited to Vendor.

    6.3

An interim accounting and adjustment shall be conducted for Closing, based on
Vendor’s and Purchaser’s good faith estimate of all adjustments to be made for
the transactions herein pursuant to this Article, and a final accounting and
adjustment shall be conducted within 90 days of the Closing Time. The Parties
shall not be obligated to make any adjustments after such 90 day period unless
such adjustment has been specifically requested, by notice, within such period.
All adjustments shall be settled by payment by the party required to make
payment hereunder within 15 days of being notified of the determination of the
amount owing.

    6.4

During the 90 day period following the Closing Time, Purchaser may audit the
books, records and accounts of Vendor respecting the Assets, for the purpose of
effecting adjustments pursuant to this Article. Such audit shall be conducted
upon reasonable notice to Vendor at Vendor’s offices during Vendor’s normal
business hours, and shall be conducted at the sole expense of Purchaser. Any
claims of discrepancies disclosed by such audit shall be made in writing to
Vendor within 60 days following the completion of such audit, and Vendor shall
respond in writing to any claims of discrepancies within 90 days of the receipt
of such claims. To the extent that the Parties are unable to resolve any
outstanding claims of discrepancies disclosed by such audit within 60 days of
Vendor’s response thereto, then such party may serve the other party written
notice that it wishes such matter referred to arbitration.

    6.5

No adjustment shall be made pursuant to this Article 6 more than 12 months after
the Closing Time, except for adjustments arising from crown royalty audits or,
joint venture audits, provided that written notice in respect of any such
adjustment is promptly served by the party requesting an adjustment upon the
other party hereto.

    6.6

At any time in the next 4 years, should Purchaser require an audited operating
statement with respect to the Assets, pursuant to Securities Act disclosure
requirements, for a period during which the Assets were owned by Vendor, Vendor
shall provide access to the records of Vendor relevant to preparation of such an
operating statement during such period. Such access shall be provided by Vendor
to an independent auditing firm selected by Purchaser subject to the entering by
the auditing firm of a confidentiality agreement reasonably required by Vendor.
Vendor shall not be required to provide direct access to Vendor's records to
Purchaser or any employees, consultants or other representatives of Purchaser.
If the independent auditors require the assistance of Vendor's personnel to
find, collect or interpret the necessary information from Vendor's records,
Vendor shall cause such assistance to be provided and Purchaser shall pay
reasonable hourly costs to Vendor as compensation for the time devoted by such
personnel.

ARTICLE 7
VENDOR'S REPRESENTATIONS

7.1

Subject in all cases to Permitted Encumbrances the Vendor hereby represents,
warrants and covenants to and with Purchaser that:

      (a)

Vendor is a general partnership or a body corporate, duly organized and validly
existing under the laws of its jurisdiction of formation, and duly registered
and authorized to carry on business in the jurisdiction(s) in which the Lands
are located;

      (b)

Vendor has all requisite power and authority to enter into this Agreement and to
perform Vendor's obligations under this Agreement;

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  (c)

the execution and delivery of this Agreement and each and every agreement or
document to be executed and delivered hereunder and the consummation of the
transactions contemplated herein will not violate, nor be in conflict with, any
provision of any agreement or instrument to which Vendor is a party or is bound,
or any judgement, decree, order, statute, rule or regulation applicable to
Vendor or of the constating documents or by-laws of Vendor;

        (d)

Vendor does not warrant title to the Assets but does represent and warrant that
it has done no act or thing, nor is aware of any act or thing having been done,
whereby any of its interest in and to the Assets may be reduced, cancelled or
determined, nor has it encumbered or alienated the Assets or any interest
therein, other than those more specifically set out as encumbrances in Schedule
"A";

        (e)

subject to the rents, covenants, conditions and stipulations in the Leases and
any agreements pertaining to the Assets and on the lessee's or holder's part
thereunder to be paid, performed and observed, Purchaser may enter into and
upon, hold and enjoy the Assets for the residue of their respective terms and
all renewals or extensions thereof for Purchaser's own use and benefit without
any interruption of or by Vendor or any other person whomsoever claiming or to
claim by, through or under Vendor, and Vendor binds itself to warrant and defend
all and singular the Assets against all persons whomsoever claiming or to claim
the same or any part thereof or any interest therein by, through or under
Vendor;

        (f)

this Agreement has been duly executed and delivered by Vendor and all documents
required hereunder to be executed and delivered by Vendor have been duly
executed and delivered and this Agreement and such documents constitute legal,
valid and binding obligations of Vendor enforceable in accordance with their
respective terms;

        (g)

Vendor has not incurred any obligation or liability contingent or otherwise, for
brokers' or finders' fees in respect of this transaction for which Purchaser
shall have any obligation or liability;

        (h)

Vendor is not a non-resident of Canada within the meaning of the Income Tax Act
(Canada);

        (i)

to the best of Vendor’s information, Vendor is in good standing under all
material agreements and instruments having application to the Assets to which
Vendor is a party or is bound;

        (j)

to the best of Vendor's information, there are no claims, proceedings, actions
or lawsuits in existence, threatened or asserted against or with respect to the
Assets or the interests of Vendor therein which would have material adverse
effect on the Assets or the value thereof;

        (k)

all ad valorem, property, production, severance and similar taxes and
assessments based on or measured by the ownership of the Assets or the
production of Petroleum Substances from the Lands or the receipt of proceeds
therefrom payable by it to the Closing Time and for all prior years have been
properly paid and discharged;

        (l)

other than as set forth in Schedule "D" there are no AFE's received by Vendor
with respect to the Assets where the obligation of Vendor is greater than
$10,000.00;

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  (m)

to the best of Vendor's information, the Wells have been drilled and, if
completed, completed and operated in accordance with good oil and gas industry
practices and in compliance with all applicable rules and regulations;

          (n)

the interests of Vendor in the Wells are not presently subject to independent
operations penalties due to the failure of Vendor to participate in an
independent operation;

          (o)

except as otherwise expressly noted in Schedule "A", the Assets are not subject
to reduction by virtue of the conversion or other alteration of the interest of
any third party under existing agreements created by, through or under Vendor;

          (p)

other than as set forth in Schedule "C" there are no production sales agreements
under which Vendor, or any party acting on its behalf, is obligated to sell or
deliver to any party, any Petroleum Substances allocable to the Petroleum and
Natural Gas Rights, except for agreements terminable by the seller without
penalty on less than ninety (90) days' notice;;

          (q)

there are no outstanding Take or Pay Obligations binding on the Assets;

          (r)

no tangible depreciable property and assets which are used, were used or are
intended to be used in producing, processing, gathering, treating, measuring,
making marketable or injecting the Petroleum Substances or any of them or in
connection with water injection or removal operations that pertain to the
Petroleum and Natural Gas Rights, has been removed from its location since the
Effective Time, nor has Vendor alienated or encumbered any such tangible
depreciable property and assets since such date;

          (s)

Vendor has not received notice from any Third Party claiming an interest in and
to the Assets adverse to the interest of Vendor and Vendor has no reason to
believe that any such claim may be made;

          (t)

Vendor has not received notice of default and is not, to the knowledge,
information and belief of Vendor, in any default under any obligation,
agreement, document, order, writ, injunction or decree of any court or of any
commission or administrative agency, which might result in impairment or loss of
the interest of Vendor in and to the Assets or which might otherwise adversely
affect the Assets;

          (u)

in respect of the Assets that are operated by Vendor, if any, Vendor holds all
valid licenses, permits and similar rights and privileges that are required and
necessary under applicable law to operate the Assets as presently operated;

          (v)

the Tangibles operated by Vendor, if any, are in good and operable condition,
reasonable wear and tear excepted, and the Tangibles operated by Third Parties,
if any, are in good and operable condition, reasonable wear and tear excepted,
to the knowledge, information and belief of Vendor;

          (w)

Vendor is not aware of and has not received:

          (i)

any orders or directives which relate to environmental matters and which require
any work, repairs, construction or capital expenditures with respect to the
Assets, where such orders or directives have not been complied with in all
material respects; or

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  (ii)

any demand or notice issued with respect to the breach of any environmental,
health or safety law applicable to the Assets, including without limitation,
respecting the use, storage, treatment, transportation or disposition of
environmental contaminants, which demand or notice remains outstanding on the
date hereof; and

          (x)

Vendor has made available to Purchaser all information in the possession of
Vendor or to which Vendor has access relevant to environmental damage or
contamination or other environmental problems pertaining to the Assets and any
other agreements and documents to which the Assets are subject that are in
possession of Vendor or to which Vendor has access.

Vendor makes no representations or warranties except as expressly set forth in
this Article 7.1 and, in particular, and without limitation, Vendor hereby
expressly negates any representation or warranties by it (except those contained
hereto), whether contained in any information memorandum or otherwise, with
respect to:

  (a)

any data or information supplied by Vendor in connection therewith;

        (b)

the quality, quantity or recoverability of Petroleum Substances within or under
the Lands or any lands pooled therewith;

        (c)

the value of the Assets or the future cash flow therefrom; and

        (d)

the quality, condition, fitness or merchantability of any tangible depreciable
equipment or property, interests in which are comprised in the Assets.

Except to the extent that it has relied upon the representations and warranties
contained in Article 7.1, Purchaser acknowledges and confirms that it has
performed its own due diligence and it has not relied on any data, information
or advise from Vendor with respect to any or all of the matters specifically
enumerated in this paragraph in connection with the purchase of the Assets
pursuant hereto. In addition, Purchaser specifically acknowledges and confirms
that in agreeing to enter into and to consummate the transactions contemplated
herein, it has relied, and will continue to rely, upon its own engineering and
other evaluations and projections as the same relate to the Assets and on its
own inspection of all other physical property and assets which comprise the
Assets.

ARTICLE 8
PURCHASER'S REPRESENTATIONS

8.1

Purchaser hereby represents, warrants and covenants to and with Vendor that:

      (a)

Purchaser is a general partnership duly organized and validly existing under the
laws of its jurisdiction of formation, and duly registered and authorized to
carry on business in the jurisdiction(s) in which the Lands are located;

      (b)

Purchaser has all requisite power and authority to enter into this Agreement and
to purchase and pay for the Assets on the terms described herein and to perform
its other obligations under this Agreement;

      (c)

the execution and delivery of this Agreement and each and every agreement or
document to be executed and delivered hereunder and the consummation of the
transactions contemplated herein will not violate, nor be in conflict with, any
provision of any agreement or instrument to which Purchaser is a party or is

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bound, or any judgement, decree, order, statute, rule or regulation applicable
to Purchaser or of the constating documents or by-laws of Purchaser;

        (d)

this Agreement has been duly executed and delivered by Purchaser and all
documents required hereunder to be executed and delivered by Purchaser shall
have been duly executed and delivered and this Agreement does, and such
documents will, constitute legal, valid and binding obligations of Purchaser
enforceable in accordance with their respective terms;

        (e)

Alberta Energy & Utilities Board (“AEUB”) will not reject the transfer by the
Vendor to the Purchaser of any of the well licences held by Vendor pertaining to
the Assets due to the Vendor failing the AEUB’s Licences Liability Rating
criteria in effect.

        (f)

Purchaser has not incurred any obligation or liability, contingent or otherwise,
for brokers' or finders' fees in respect of this transaction for which Vendor
shall have any obligation or liability; and

        (g)

Purchaser is not a "non-Canadian person" within the meaning of the Investment
Canada Act.

ARTICLE 9
INDEMNITY

9.1

Purchaser shall indemnify and hold Vendor harmless from all liabilities, losses,
claims and damages (including those arising directly and indirectly, those
comprising fees on a solicitor and client basis and future profits) to which
Vendor may become subject both before and after the Effective Time relating to
Environmental Damages, except for any claims which Purchaser may have for the
breach of a representation or warranty made by Vendor pursuant to Article 7.1.
It is acknowledged that Purchaser has been provided with the right and the
opportunity to conduct due diligence investigations with respect to
Environmental Damages.

     

“Environmental Damages” shall mean any of the following operations and/or
circumstances, irrespective of whether or not that operation or circumstance
occurred or was conducted before or after the Effective Time:

      (a)

surface, underground, air, groundwater and surface contamination;

      (b)

abandonment and site restoration conducted for any well;

      (c)

general restoration and reclamation;

      (d)

breach of, or failure to comply with any governmental requirements governing the
ownership and operation of the Assets;

      (e)

removal or omission to remove any foundations, structures and equipment from and
in the area of the Assets.

     

Purchaser acknowledges and agrees that it shall not be entitled to any rights or
remedies under the common law, equity or statute pertaining to such
Environmental Damages relative to Vendor including, without limitation, the
right to name Vendor as a third party to any action commenced by any person
against Purchaser and that it shall be solely and completely responsible for any
and all losses (both direct and indirect), costs, claims,

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damages, expenses or liabilities (including future profits) relating to and
arising out of Environmental Damages pertaining to the Assets. Nothing herein
contained shall prejudice any claims or remedies that Vendor may have against
Purchaser in relation to such claim or remedy outside this contract including
rights and remedies under the common law or statute.

      9.2

Purchaser acknowledges that it is acquiring the Assets on an “as is” basis, as
of the Effective Date. Purchaser acknowledges that it is familiar with the
condition of the Assets, including the past and present use of the Lands and the
Tangibles, that Vendor has provided Purchaser with a reasonable opportunity to
inspect the Assets at the sole cost, risk and expense of Purchaser (insofar as
Vendor could reasonably provide such access) and that Purchaser is not relying
upon any representation or warranty of Vendor as to the condition, environmental
or otherwise, of the Assets, except as is specifically made pursuant to Article
7.1. Provided that Closing has occurred, Purchaser further agrees that, as of
the Effective Date, it shall:

      i.

be solely liable and responsible for any and all losses, costs, damages and
expenses which Vendor may suffer, sustain, pay or incur; and

      ii.

indemnify and save Vendor and its directors, officers, servants, agents and
employees harmless from any and all claims, liabilities, actions, proceedings,
demands, losses, costs, damages and expenses whatsoever which may be brought
against or suffered by Vendor, its directors, officers, servants, agents or
employees or which they may sustain, pay or incur;

     

as a direct result of any matter or thing arising out of, resulting from,
attributable to or connected with any liabilities pertaining to the
Environmental Damages for the Assets, including, without limitation, damage from
or removal of hazardous or toxic substances, clean-up, well abandonment and
reclamation. Purchaser shall be solely responsible for all environmental
liabilities respecting the Lands, the abandonment of all wells on the Lands and
the reclamation of the Lands as between Vendor and Purchaser, and hereby
releases Vendor from any claims Purchaser may have against Vendor with respect
to all such liabilities and responsibilities, except for any claims which
Purchaser may have for the breach of a representation or warranty made by Vendor
pursuant to Article 7.1.

ARTICLE 10
NO MERGER AND SURVIVAL

10.1

The covenants, representations and warranties set forth in Articles 7 and 8
shall be deemed to apply to all assignments, conveyances, transfers and
documents conveying any of the Assets from Vendor to Purchaser and there shall
not be any merger of any covenant, representation or warranty in such
assignments, transfers or documents notwithstanding any rule of law, equity or
statute to the contrary and all such rules are hereby waived.

    10.2

Notwithstanding anything to the contrary herein expressed or implied, it is
expressly agreed and understood that the covenants, representations and
warranties set forth in Articles 7 and 8 are true on the date hereof and at the
Effective Time and notwithstanding the Closing or deliveries of covenants,
representations and warranties in any other agreements at Closing or prior or
subsequent thereto or investigations by the parties hereto or their counsel, the
covenants, representations and warranties set forth in Articles 7 and 8 shall
survive Closing for the benefit of the parties hereto for a period of two years
from the Effective Time.

11

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10.3

No claim for breach of covenants, representations and warranties set forth in
Articles 7 and 8 or for misrepresentation herein or for indemnification pursuant
hereto shall be made or be enforceable by legal proceedings or otherwise unless
written notice of the claim setting out reasonable details of the claim is given
by the claimant to the other party within a period of two years from the
Effective Time.

ARTICLE 11
FURTHER ASSURANCES

11.1

At Closing and thereafter as may be necessary or desirable, and without further
consideration, the parties hereto shall execute, acknowledge and deliver such
other instruments and shall take such other action as may be necessary to carry
out their respective obligations under this Agreement.

ARTICLE 12
MISCELLANEOUS

12.1

The Agreement herein shall, in all respects, be subject to and be interpreted,
construed and enforced in accordance with the laws in effect in the Province of
Alberta. Each party hereto irrevocably attorns to the exclusive jurisdiction of
the courts of the Province of Alberta and all courts of appeal therefrom.

    12.2

Any arbitration conducted hereunder shall be conducted in accordance with the
Alberta Arbitration Act.

    12.3

Time shall be of the essence of this Agreement.

    12.4

Except with respect to those matters where it may be specifically otherwise
provided hereunder, the two-year period for seeking a remedial order under
section 3(1)(a) of the Limitations Act, R.S.A. 2000 c. L-12, as amended, for any
claim (as defined in that Act) arising in connection with this Agreement is
extended to four years.

    12.5

The address for notices of each of the parties hereto shall be as follows:

Purchaser: EnCana Oil & Gas Partnership   Vendor: Nation Energy Inc.     150 -
9th Avenue S.W.     1100 – 609 West Hastings Street     Calgary, Alberta T2P 2S5
    Vancouver, BC V6B 4W4     Attention: Land Department     Attention:

Land Manager

    Fax: (403) 645-3033     Fax:

(604) 688-4712

             

          Vendor: Netco Energy Inc.

            1100 – 609 West Hastings Street             Vancouver, BC V6B 4W4  
          Attention:

Land Manager

            Fax:

(604) 688-4712

 

Any of the parties hereto may from time to time change its address for service
herein by giving written notice to the other party hereto. Any notice may be
served by personal service upon a party hereto or by fax. Any notice given by
service upon a party hereto shall be deemed to be given on the date of such
service.

12

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12.6

This Agreement shall supersede and replace any and all prior agreements between
the parties hereto relating to the sale and purchase of the Assets and may be
amended only by written instrument signed by all parties hereto.

    12.7

This instrument states the entire agreement between the parties hereto.

    12.8

This Agreement shall be binding upon and shall enure to the benefit of the
parties hereto and their respective successors, receivers, receiver-managers,
trustees and permitted assigns.

    12.9

The assignment and conveyance effected by this Agreement is made with full right
of substitution and subrogation of Purchaser in and to all covenants,
representations, warranties and indemnities previously given or made by others
in respect of the Assets or any part or portion thereof.

    12.10

This Agreement may be executed in as many counterparts as are necessary and when
a counterpart has been executed by each party, all counterparts together shall
constitute one agreement.

     IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the date first above written.

EnCana Oil & Gas Partnership   Nation Energy Inc.           Per:   Per:        
        Netco Energy Inc.                 Per:

Name Responsibility Initials Date James Hall Contracts Landman     Jeff Collins
Area Landman (PRA)     Doug Guild Joint Interest (Med Hat)     Heather Telasky
Area Landman )Mikwan)     Danielle Parrotta Legal       Accounting     Harold
D’Adamo Tax     Steve Roberts Joint Interest     Eileen Picco Marketing    
Stephen Skarstol Environmental     Kevin George
Primary Responsibility
(BU Group Lead, Land)

13

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SCHEDULE "A"
attached to and forming part of a Petroleum, Natural Gas and Related Rights
Conveyance dated the 22nd day of August, 2008 between EnCana Oil & Gas
Partnership, Netco Energy Inc. and Nation Energy Inc.

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Description of Lands, Leases, Vendor's Interests, Encumbrances and Wells

Leases
Lands
Vendor’s
Working Interest Encumbrances
CR Licence
5403040483
Expiry: April 3,
2012
(M087718A) T59 R2 W6M: Sec 4, 5, 8, 9

P&NG To Base CARDIUM

Nation 15%

LOR CR SS

Well: 100/08-09
CR Licence
5403040483
Expiry: April 3,
2012
(M087718A) T59 R2 W6M: Sec 16

P&NG To Base CARDIUM

Nation 0% BPPO,
15% APPO

LOR CR SS

Well: 102/01-16
CR Licence
5498010029
Cont: Section 15

(M043725D) T59 R2 W6M: Sec 9

P&NG Below Base CARDIUM
To Base BLUESKY-
BULLHEAD Nation 25% BPO,
15% APO

LOR CR SS

Well: 100/09-09
CR Licence
5498010029
Cont: Section 15

(M043725A) T59 R2 W6M: Sec 16

P&NG Below Base CARDIUM
To Base BLUESKY-
BULLHEAD Nation 0% BPO,
6% APO
Netco 15% BPO,
9% APO
LOR CR SS

Well: 100/01-16
CR Licence
5497110012
Cont: Section 15

(M043378B) T59 R2 W6M: Sec 11

P&NG Below Base CARDIUM
To Base BLUESKY-
BULLHEAD 15%

LOR CR SS

Well: 100/07-11
CR Licence
5497110012
Cont: Section 15

(M043378C,K) T59 R2 W6M: Sec 10, 15

P&NG Below Base CARDIUM
To Base SPIRIT RIVER
Nation 0% BPO,
6% APO
Netco 15% BPO,
9% APO,
LOR CR SS

Well: 100/13-10
CR Licence
5497110012
Expiry:
November 13,
2008
(M043378D,L) T59 R2 W6M: Sec 10, 15

P&NG Below Base SPIRIT
RIVER To Base BLUESKY-
BULLHEAD
Nation 6%,
Netco 9%

LOR CR SS

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Wells: 100/08-09-059-02W6/02 Aband Cardium Gas   100/08-09-059-02W6/03 Capable
Cardium Gas   102/08-09-059-02W6/00 Cardium Gas   100/09-09-059-02W6/03 Cadomin
Gas   100/09-09-059-02W6/04 Dunvegan Gas   100/01-16-059-02W6/00 Nikanassin Gas
  100/01-16-059-02W6/02 Cadomin Gas   100/01-16-059-02W6/03 Gething Gas  
100/01-16-059-02W6/04 Bluesky Gas   100/01-16-059-02W6/05 Dunvegan Gas  
100/01-16-059-02W6/06 Cardium Gas   102/01-16-059-02W6/00 Potential Cardium Gas
  100/13-10-059-02W6/00 Falher Gas   100/13-10-059-02W6/02 Dunvegan Gas  
100/13-10-059-02W6/03 Gething Gas

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SCHEDULE "B"
attached to and forming part of a Petroleum, Natural Gas and Related Rights
Conveyance dated the 22nd day of August, 2008 between EnCana Oil & Gas
Partnership, Netco Energy Inc. and Nation Energy Inc.

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Facilities

7-36 Compressor Station (Nation 0%, BPO, 7.6% APO, Netco 19% BPO, 11.4% APO) 1.
1500 BHP Compressor Package 2. 400 barrel condensate tank 3. 400 barrel water
tank 4. 10mmcfd inset separator/dehydrator 5. Flare stack 6. Cathodic protection
on all pipelines 7. Pig launchers/receivers on pipelines 8. MCC building    

Wellsites

1. 10mmcfd inlet separator at 9-9-59-2W6M 2. 10mmcfd inlet separator at
13-10-59-2W6M 3. 2mmcfd inlet separator at 13-10-59-2W6M 4. 10mmcfd inlet
separator at 1-16-59-2W6M

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SCHEDULE "C"
attached to and forming part of a Petroleum, Natural Gas and Related Rights
Conveyance dated the 22nd day of August, 2008 between EnCana Oil & Gas
Partnership, Netco Energy Inc. and Nation Energy Inc.

LAND DEDICATION AGREEMENTS, TRANSPORTATION AGREEMENTS AND PRODUCTION SALES
CONTRACTS

None

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SCHEDULE "D"
attached to and forming part of a Petroleum, Natural Gas and Related Rights
Conveyance dated the 22nd day of August, 2008 between EnCana Oil & Gas
Partnership, Netco Energy Inc. and Nation Energy Inc.

AUTHORIZATION FOR EXPENDITURES

None

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SCHEDULE "E"
attached to and forming part of a Petroleum, Natural Gas and Related Rights
Conveyance dated the 22nd day of August, 2008 between EnCana Oil & Gas
Partnership, Netco Energy Inc. and Nation Energy Inc.

NATION PAYABLE ASSIGNMENT

--------------------------------------------------------------------------------

 NATION PAYABLE ASSIGNMENT Party:

EnCana Oil & Gas Partnership ("EnCana")

Party:

Churchill Energy Inc. ("Churchill")

Re:

Purchase and Sale Agreement Bolton (Smoky) Area, Alberta between Churchill, as
vendor, and EnCana, as purchaser (the "Sale Agreement")

And Re:

Participation Agreement dated November 21, 2001 between Nation Energy, Inc.
("Nation") and Olympia Energy Inc. (predecessor in interest to Churchill) (the
"Participation Agreement"), together with the 1990 CAPL Operating Procedure
attached as a schedule thereto (the "Applicable Operating Procedure")

And Re:

Amounts owing by Nation to Churchill as of May 30, 2008 on account of operations
conducted prior to the date hereof under the Participation Agreement in relation
to the wells located at 1-16-59-2 W6M well, 13-10-59-2 W6M and 9-9-59-2 W6M (the
"Nation Payable")

Date:

May 30, 2008

     WHEREAS the Nation Payable is due and owing by Nation to Churchill as a
result of operations conducted by Churchill, as operator, and Nation, as
joint-operator, under the Participation Agreement in relation to the wells
located at 1-16-59-2 W6M, 13-10-59-2 W6M and 9-9-59-2 W6M.

     AND WHEREAS, prior to entering into the Sale Agreement, Churchill, in its
capacity as operator and as a joint-operator subrogated to the operator's
rights, as contemplated in Article 506 of the Applicable Operating Procedure,
has treated Nation's failure to pay the Nation Payable as an immediate and
automatic assignment to Churchill of the proceeds of the sale of Nation's share
of petroleum substances produced from the lands governed by the Participation
Agreement, as contemplated in Article 505(b)(v) of the Applicable Operating
Procedure.

     AND WHEREAS pursuant to the Sale Agreement, EnCana has acquired the
interest of Churchill in and to the Participation Agreement and the interest of
Churchill in the lands governed thereby.

     AND WHEREAS Churchill wishes to assign the Nation Payable to EnCana, and
EnCana has agreed to accept the Nation Payable in order to recover all amounts
owing thereunder, as a subrogated claimant of such amount for the purposes of
Article 506 of the Applicable Operating Procedure.

     NOW THEREFORE THIS AGREEMENT WITNESSES and the Parties hereto agree as
follows:

1.

Churchill hereby acknowledges it has, prior to the execution of the Sale
Agreement, provided notice to Nation of Churchill's election, as operator, to
treat Nation's failure to pay the Nation Payable as an immediate and automatic
assignment to Churchill of the proceeds of the sale of Nation's share of
petroleum substances produced from the lands governed by the Participation
Agreement that it is exercising the right granted in Article 505(b)(v) of the
Applicable Operating Procedure.

    2.

Churchill hereby assigns and conveys the Nation Payable to EnCana and EnCana
hereby takes and accepts the Nation Payable from Churchill, upon and subject to
the terms of this assignment.

    3.

As consideration for the Nation Payable, EnCana hereby agrees to pay to
Churchill, all proceeds of the sale of Nation's petroleum substances from the
lands governed by the Participation Agreement recovered by EnCana from Nation
from time to time, not to exceed the amount of the Nation Payable as of the date
hereof (the "Nation Payable Recovery Amounts").

    4.

EnCana agrees that as long as one or more of the wells located on the lands (or
lands pooled or unitized therewith) governed by the Participation Agreement are
producing in paying quantifies, EnCana will use all reasonable commercial
efforts to recover the Nation Payable pursuant to the provisions of Article
505(b)(v).

--------------------------------------------------------------------------------

5.

EnCana shall pay any Nation Payable Recovery Amounts received by it from time to
time to Churchill within fifteen (15) days of receipt thereof by EnCana.

    6.

For the accounting period ending March 31, 2008, the amount of the Nation
Payable was $396,545.32. Churchill will work with EnCana to determine the amount
of the Nation Payable as at May 30, 2008 to account for accrued interest and
lease rentals for the April, 2008 and May, 2008 accounting months, as well
amounts recovered by Churchill for the April, 2008 and May, 2008 accounting
months.

    7.

Churchill will have the right, until full payment of the Nation Payable by
Nation to EnCana, at its sole cost and expense, on reasonable notice to EnCana
and during normal business office hours, to audit the records of EnCana for the
purpose of verifying any Nation Payable Recovery Amounts. Any claims of
discrepancies disclosed by the audit that the parties are unable to resolve will
be resolved pursuant to Article 9.00 of the Property Transfer Procedure
incorporated by reference into the Sale Agreement, and such clause is
incorporated by reference herein and modified, as necessary, for that purpose.

     IN WITNESS WHEREOF the Parties have executed this Agreement as of the date
and time first set out above.

CHURCHILL ENERGY INC.   ENCANA OIL & GAS PARTNERSHIP       Per:   Per:  

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