EXHIBIT 4.10

               PURCHASE AND SALE AGREEMENT DATED DECEMBER 18, 2003
                      BETWEEN CALEX AND PNP PETROLEUM INC.










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                           PURCHASE AND SALE AGREEMENT




                                 By and between





                               PNP PETROLEUM, INC.





                                    As Seller



                                       And





                          CALIFORNIA EXPLORATION, INC..




                                    As Buyer



                              As of the 18th day of
                                  December 2002



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                           PURCHASE AND SALE AGREEMENT


This Purchase and Sale Agreement (this  "Agreement") dated as of the 18th day of
December  2002,  is by and  between  PNP  Petroleum,  Inc. a Texas  corporation,
("Seller") and California Exploration, Inc., a Nevada corporation ("Buyer").

     IN CONSIDERATION OF the agreements and covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and in reliance upon the representations  and warranties  contained
herein,  Seller and Buyer  agree,  upon the terms and subject to the  conditions
contained herein, as follows:

                                    ARTICLE I

                                PURCHASE AND SALE

PURCHASE  AND SALE OF THE  ASSETS.  Seller  agrees to sell,  assign,  convey and
deliver to Buyer,  and Buyer  agrees to  purchase  and  acquire  from  Seller at
Closing (hereinafter  defined), but effective as of 12:01 a.m. C.S.T. on January
1, 2003 (the "Effective Date") a net three percent (3%) of the right,  title and
working  interest  of Seller in and to the  following  properties  described  in
Sections 1.1 through 1.7 (collectively, the "Assets"):

     1.1. LEASES.  A net three  percent  (3%) of the  right,  title and  working
          interest in the properties,  described on Exhibit "A", attached hereto
          and made a part hereof,  whether such  properties are in the nature of
          fee interests,  leasehold interests,  licenses,  concessions,  working
          interests,  farmout  rights,  royalty,  overriding  royalty  or  other
          non-working or carried  interests,  operating  rights or other mineral
          rights of every  nature and any rights that arise by  operation of law
          or otherwise,  in all such  properties  and lands covered  thereby and
          pooled,  unitized,  communitized or consolidated  with such properties
          (the  "Leases").  In addition,  Buyer shall be entitled to a net three
          percent  (3%) of the right,  title and working  interest in and to any
          and  all  Leases  that  have  been  acquired  pursuant  to  any of the
          Contracts.

     1.2. WELLS.  A net three  percent  (3%) of the  right,  title  and  working
          interest in the oil,  condensate  or natural gas wells,  water  source
          wells, and other water and other types of injection and disposal wells
          either  located on the  Leases  (including,  but not  limited to those
          described on the attached  Exhibit "B") or on lands pooled or unitized
          therewith  or held  for use in  connection  with  the  Leases  under a
          Surface  Contract  (as  hereinafter   defined),   whether   producing,
          operating  or shut-in  (the  "Wells")  (the  Leases  and Wells  herein
          collectively referred to as the "Oil and Gas Properties").

     1.3. SEVERED SUBSTANCES.  A net three percent (3%) of the, right, title and
          working  interest in all severed  crude oil,  natural gas,  casinghead
          gas, drip gasoline, natural gasoline,  petroleum, natural gas liquids,
          condensate,   products,  liquids  and  other  hydrocarbons  and  other
          minerals or materials of every kind and description  produced from the
          Oil  and  Gas  Properties  and  either  (a) in  storage  tanks  on the
          Effective  Date or (b)  sold  on or  after  the  Effective  Date  (the
          "Substances").

     1.4. CONTRACTS.  A net three  percent (3%) of the right,  title and working
          interest in all contracts,  commitments,  agreements, and arrangements
          that in any way relate to the


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          properties  described  in  Sections  1.1.  through  1.7.,   inclusive,
          including,  without  limitation,  all leases,  easements,  privileges,
          right-of-way  agreements,   permits,  servitudes,  licenses  or  other
          agreements  relating to the use or ownership of surface and subsurface
          properties and structures  that are used or held for use in connection
          with the exploration and production of Substances from the Oil and Gas
          Properties,  and all  existing  or proposed  unitization,  pooling and
          communitization agreements, declarations and orders to the extent they
          relate to or affect  the  Leases,  all  options,  farmout  agreements,
          exploration agreements,  operating agreements, area of mutual interest
          agreements, all oil, gas liquids,  condensate,  casinghead gas and gas
          sales,  purchase,  exchange,  gathering,  transportation,  production,
          storage,  treatment and processing  contracts,  or other contracts for
          the disposal of Substances  therefrom or in  connection  therewith and
          any and all amendments,  ratifications or extensions of the foregoing,
          together  with (i) all  rights,  privileges,  and  benefits  of Seller
          thereunder arising on or after the Effective Date, (ii) all claims for
          take-or-pay  or other  similar  payments  arising  before or after the
          Effective  Date and (iii)  rights of  subrogation  for any claims that
          arise on or after the Effective  Date under any insurance  policy held
          by Seller that covers the properties described in Sections 1.1 through
          1.7,  inclusive (all such contracts,  insofar and only insofar as such
          contracts affect the properties described in Sections 1.1 through 1.7,
          inclusive, referred to hereinafter as the "Contracts").

     1.5. EQUIPMENT.  A net three  percent (3%) of the right,  title and working
          interest in all the personal  property,  fixtures,  equipment  leases,
          improvements, oil field equipment and physical facilities or interests
          therein that are used or held for use in connection with the ownership
          or  operation  of the  Oil  and  Gas  Properties,  including,  without
          limitation,  tanks and tank batteries,  disposal  facilities,  storage
          facilities,   buildings,   structures,  field  separators  and  liquid
          extractors,  compressors,  pumps,  pumping  units,  valves,  fittings,
          machinery and parts, engines, boilers, meters, apparatus,  implements,
          tools,  appliances,  cables,  wires, towers,  casing, tubing and rods,
          gathering lines or other pipelines,  field gathering systems,  and all
          other similar fixtures and equipment (the "Equipment").

     1.6. INFORMATION AND DATA. To the extent in the possession of Seller or any
          agent,  employee or affiliate of Seller,  copies of all (a) abstracts,
          title opinions,  title reports, title policies,  lease and land files,
          surveys,   analyses,   compilations,   correspondence,   filings  with
          regulatory  agencies,  other documents and  instruments  that directly
          relate to the  properties  described  in  Sections  1.1  through  1.7,
          inclusive; (b) reproducible copies of computer databases that directly
          relate to the  properties  described  in  Sections  1.1  through  1.7,
          inclusive;  (c)  geophysical,  geological,  engineering,  exploration,
          production,   seismic  and  other  technical   data,   magnetic  field
          recordings,   digital  processing  tapes,  field  prints,   summaries,
          reports,  maps,  studies  and other  analyses,  whether  written or in
          electronically  reproducible form, that directly relate to the Oil and
          Gas Properties;  and (d) all other books, records and files containing
          financial,  title or other  information  that  directly  relate to the
          properties  described  in Sections  1.1 through  1.7,  inclusive  (the
          "Data").

     1.7. PAYMENT  RIGHTS.  A net three  percent  (3%) of the  right,  title and
          working  interest  in  all  (a)  accounts,   instruments  and  general
          intangibles (as such terms are defined in the Uniform  Commercial Code
          of Texas)  arising from the sale or other  disposition on or


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<PAGE>


          after the  Effective  Date of any of the Assets  described in Sections
          1.1 through 1.6,  inclusive;  and (b) liens and security  interests in
          favor  of  Seller  under  any law,  rule or  regulation  or under  the
          Contracts  arising from the sale or other  disposition on or after the
          Effective Date of any of the Assets  described in Sections 1.1 through
          1.6, inclusive (the "Payment Rights").


                                   ARTICLE II

                                 PURCHASE PRICE

     2.1  PURCHASE   PRICE.   Buyer  agrees  to  pay  to  Seller,   at  closing,
          twenty-three  and one-half  percent  (23.5%) of the proposed  workover
          budget for Phases 1-3, as outlined on the  attached  Exhibit  "C". The
          net amount due from Buyer at closing  shall be $43,500 (the  "Purchase
          Price").  Seller has already commenced said workover program and it is
          understood and agreed that Buyer shall only be  responsible  for a net
          three percent (3%) of any amount over the outlined $186,500 budget for
          Phases  1-3 and a net  three  percent  (3%) of any  future  operations
          proposed and approved under the terms of the operating agreement.


                                   ARTICLE III

                    REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Buyer as follows:

     3.1. ORGANIZATION. Seller is a corporation duly organized, validly existing
          and in good standing under the laws of the state Texas

     3.2. POWER AND CONFLICTS.  Seller has full corporate power and authority to
          carry on its  business  as  presently  conducted,  to enter  into this
          Agreement and to perform its obligations under this Agreement.  Seller
          has the  necessary  power  and  authority  to  sell  the  Assets.  The
          execution  and delivery of this  Agreement by Seller does not, and the
          consummation of the transactions  contemplated by this Agreement shall
          not, (a) violate or be in conflict with, or require the consent of any
          person or entity under, any provision of the articles of incorporation
          or bylaws or other governing  documents of Seller,  (b) conflict with,
          result in a breach of, constitute a default (or an event that with the
          lapse of time or notice, or both would constitute a default) under, or
          require any consent,  authorization or approval under any agreement or
          instrument to which Seller is a party or to which any of the Assets or
          Seller is bound,  (c) violate any provision of or require any consent,
          authorization  or approval  under any  judgment,  decree,  judicial or
          administrative  order,  award,  writ,  injunction,  statute,  rule  or
          regulation  applicable to Seller, or (d) result in the creating of any
          lien, charge or encumbrance on any of the Assets.

     3.3. AUTHORIZATION. The execution and delivery of this Agreement have been,
          and the performance of this Agreement and the transaction contemplated
          hereby shall be at the time required to be performed  hereunder,  duly
          and validly  authorized by all requisite  corporate action on the part
          of the Seller.



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     3.4. ENFORCEABILITY. This Agreement has been duly executed and delivered on
          behalf of Seller and constitutes the valid and binding  obligations of
          Seller   enforceable   in  accordance   with  its  terms,   except  as
          enforceability may be limited by applicable bankruptcy, reorganization
          or  moratorium  statutes,  equitable  principles or other similar laws
          affecting the rights of creditors generally ("Equitable Limitations").
          At the Closing, all documents and instruments required hereunder to be
          executed and  delivered by Seller shall be duly executed and delivered
          and shall constitute  legal,  valid and binding  obligations of Seller
          enforceable in accordance with their terms,  except as  enforceability
          may be limited by Equitable Limitations.

     3.5. LITIGATION AND CLAIMS. No claim,  dispute,  demand,  filing,  cause of
          action,  administrative  proceeding,  lawsuit or other  litigation  is
          pending or, to the knowledge of Seller,  threatened  against Seller or
          the Assets that could now or hereafter  adversely affect the ownership
          or operation of any of the Assets.  No written or oral notice from any
          governmental  body or any other person has been received by Seller (a)
          claiming any violation or  repudiation  of the Assets or any violation
          of any law, environmental, conservation or other ordinance, code, rule
          or regulation or (b) requiring,  or calling  attention to the need for
          any work, repairs,  construction,  alternations or installations on or
          in  connection  with  the  Assets  with  which  Seller  has not  fully
          complied.

     3.6. COMPLIANCE  WITH LAW AND PERMITS.  Seller has  obtained all  necessary
          governmental  certificates,   consents,  permits,  licenses  or  other
          authorizations  that are required  for the  ownership of the Assets by
          Seller and no  violations  exist or have been recorded with respect of
          such licenses, permits or authorizations.

     3.7. STATUS OF CONTRACTS.  All of the Contracts  that relate to the Oil and
          Gas  Properties  (a) are in full  force and  effect,  and (b)  neither
          Seller  nor,  to the  knowledge  of  Seller,  any  other  party to the
          Contracts (i) is in breach of or default, or with the lapse of time or
          the giving of notice,  or both,  would be in breach or  default,  with
          respect to any of its  obligations  thereunder to the extent that such
          breaches  or  defaults  have  an  adverse  effect  on the  Oil and Gas
          Properties  or (ii) has  given or  threatened  to give  notice  of any
          default under or inquiry into any possible default under, or action to
          alter,  terminate,  rescind or procure a judicial  reformation  of any
          Contract to the extent that such default has an adverse  effect on the
          Oil and Gas Properties.

     3.8. PRODUCTION BURDENS,  TAXES, EXPENSE AND REVENUES.  To the knowledge of
          Seller,  all rentals,  royalties,  excess royalty,  overriding royalty
          interest  and other  payments  due under or with respect to the Assets
          have been properly and timely paid, including, but not limited to, the
          distribution  of all  proceeds  of  production  for which  Seller  has
          received  payment  from  the  Purchaser;  all  ad  valorem,  property,
          production,  severance  and other  taxes  based on or  measured by the
          ownership of the Assets or the production of Substances therefrom have
          been  properly and timely paid.  All expenses  payable by Seller under
          the terms of the Contracts have been properly and timely paid when due
          except  for  such  expenses  as are  being  currently  paid  prior  to
          delinquency in the ordinary course of business.

     3.9. STATUS  OF  EQUIPMENT.  The Wells and  Equipment  are in good  repair,
          working  order  and  operating  condition  and  are  adequate  for the
          operation of the Oil and Gas Properties as currently  being  operated;
          however,  the Wells and Equipment are being  delivered in "as is-where
          is" condition.


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     3.10.LEASES.  With  respect to the Leases and to the  knowledge  of Seller:
          (a) the Leases have been maintained in all material respects according
          to their terms,  in material  compliance  with the agreements to which
          the Leases are subject; (b) the Leases are presently in full force and
          effect and (c) no other party to any Lease is under material breach or
          default with respect to any of its material obligations thereunder.

     3.11.ACCURACY OF  REPRESENTATIONS.  No representation or warranty by Seller
          in this  Agreement or any  agreement  or document  delivered by Seller
          pursuant to this Agreement  contains an untrue statement of a material
          fact or  omits  to  state  a  material  fact  necessary  to  make  the
          statements contained in any such representation or warranty,  in light
          of the circumstances under which it was made, not misleading. There is
          no fact known to Seller that materially and adversely  affects (or may
          materially and adversely affect) the operation, prospects or condition
          of any  portion  of the  Assets  that has not  been set  forth in this
          Agreement.

                                   ARTICLE IV.

                     REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller that:

     4.1. ORGANIZATION.  Buyer is a corporation duly organized, validly existing
          and in good standing under the laws of the State of Nevada.

     4.2  POWER AND CONFLICTS.  Buyer has full corporate  power and authority to
          carry on its  business  as  presently  conducted,  to enter  into this
          Agreement,  to  purchase  the  Assets on the terms  described  in this
          Agreement and to perform its other  obligations  under this Agreement.
          The  execution  and delivery of this  Agreement by Buyer does not, and
          the  consummation of the  transactions  contemplated by this Agreement
          shall not, (a) violate or be in conflict  with, or require the consent
          of any  person or entity  under,  any  provision  of the  articles  of
          incorporation  or bylaws or other  governing  documents of Buyer,  (b)
          conflict  with,  result in a breach of,  constitute  a default  (or an
          event that with the lapse of time or notice,  or both would constitute
          a default)  under, or require any consent,  authorization  or approval
          under any  agreement  or  instrument  to which  Buyer is a party or is
          bound,  or (c)  violate  any  provision  of or  require  any  consent,
          authorization  or approval  under any  judgment,  decree,  judicial or
          administrative  order,  award,  writ,  injunction,  statute,  rule  or
          regulation applicable to Buyer.

     4.3  AUTHORIZATION.  Buyer's  execution and delivery of this Agreement have
          been, and Buyer's  performance of this Agreement and the  transactions
          contemplated  hereby  shall be at the time  required  to be  performed
          hereunder,  duly and validly  authorized  by all  requisite  corporate
          action on the part of the Buyer.

     4.4. ENFORCEABILITY. This Agreement has been duly executed and delivered on
          behalf of Buyer and constitutes a legal,  valid and binding obligation
          of  Buyer  enforceable  in  accordance  with  its  terms,   except  as


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          enforceability  may  be  limited  by  Equitable  Limitations.  At  the
          Closing, all documents required hereunder to be executed and delivered
          by Buyer shall be duly  executed and  delivered  and shall  constitute
          legal,   valid  and  binding   obligations  of  Buyer  enforceable  in
          accordance with their terms,  except as enforceability  may be limited
          by Equitable Limitations.

     4.5. CLAIMS AND LITIGATION.  There is no suit, action, claim, investigation
          or inquiry by any person or entity or by any administrative  agency or
          governmental   body  and  no  legal,   administrative  or  arbitration
          proceeding pending, or to Buyer's knowledge,  threatened against Buyer
          or any affiliate of Buyer that has or will  materially  affect Buyer's
          ability to consummate the transactions contemplated by this Agreement.

     4.6. ACCURACY OF REPRESENTATIONS. No representation or warranty by Buyer in
          this  Agreement  or any  agreement  or  document  delivered  by  Buyer
          pursuant  to  this  Agreement  contains  or  will  contain  an  untrue
          statement of a material fact or omits or will omit to state a material
          fact  necessary  to  make  the   statements   contained  in  any  such
          representation or warranty,  in light of the circumstances under which
          it was made, not misleading.


                                    ARTICLE V

                                  TITLE MATTERS

SELLER'S TITLE: Seller makes no representations or warranties as to its title to
the Oil and Gas Properties, except those created by, through or under Seller.







                                   ARTICLE VI

                                     CLOSING


     6.1  THE CLOSING.  The  assignment  and purchase of the Assets  pursuant to
          this Agreement  shall be consummated  (the "Closing") at 10100 Reunion
          Place,  Suite 305, San  Antonio,  Texas 78216 at the offices of Seller
          before  5:00 p.m.  on or  before  the 20th day of  December  2002 (the
          "Closing Date").

     6.2  PAYMENT OF PURCHASE PRICE.  At the Closing,  Buyer shall pay to Seller
          the Purchase Price by wire transfer.  The wire transfer should be sent
          to the account of PNP Petroleum, Inc. at the following:

              First Union National Bank Routing number:  051400549
              Roanoke Virginia
              Beneficiary 1st Clearing Corporation       5050000000631
              PNP Petroleum                      Acct:   67396239


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                                   ARTICLE VII

                          SURVIVAL AND INDEMNIFICATION

     7.1  SURVIVAL. All representations,  warranties,  covenants, agreements and
          indemnities  of or by  the  parties  shall  survive  the  Closing  and
          execution and delivery of the assignments contemplated hereby.

     7.2  SELLER'S INDEMNIFICATION. To the extent permitted by law, Seller, from
          and after  Closing,  shall  indemnify  and hold  harmless  Buyer,  its
          affiliates,  officers,  directors,  employees, agents, consultants and
          representatives  from and  against  any and all  damage,  loss,  cost,
          expense, obligation, claim or liability,  including reasonable counsel
          fees  and  reasonable   expenses  of   investigating,   defending  and
          prosecuting  litigation  (collectively,  the  "Damages"),  suffered by
          Buyer as a result of any  obligation  or liability  of Seller  arising
          from ownership or operation of the Assets prior to the Effective Date.

     7.3  BUYER'S  INDEMNIFICATION.  To the extent permitted by law, Buyer, from
          and after  Closing,  shall  indemnify  and hold harmless  Seller,  its
          affiliates,  officers, directors,  employees,  consultants, agents and
          representatives  from and  against  any and all  Damages  suffered  by
          Seller as a result of the  following:  (a) any liability or obligation
          arising from its  operation  of the Assets on and after the  Effective
          Date   (other   than   Damages   resulting   from  a  breach   of  any
          representation,  warranty  or  covenant  of Seller  contained  in this
          Agreement),  (b) the breach of any representation or warranty of Buyer
          set forth in this  Agreement;  and (c) the  breach  of, or  failure to
          perform or  satisfy  any of the  covenants  of Buyer set forth in this
          Agreement.


                                  ARTICLE VIII

                                  MISCELLANEOUS


     8.1  "BUSINESS  DAY"  shall  mean a day other  than the days  that  banking
          institutions  are required or permitted to be closed under the laws of
          the State of Texas.

     8.2  GOVERNING  LAW.  This  Agreement  shall be governed  and  construed in
          accordance  with the laws of the State of Texas without  giving effect
          to any principles of conflicts of laws.

     8.3  INTEGRATION.  This Agreement and the Exhibit  attached  hereto entered
          into by the parties under the  provisions of this  Agreement set forth
          the entire  agreement and  understanding  of the parties in respect of
          the   transaction   contemplated   hereby  and   supersede  all  prior
          agreements,  prior arrangements and prior  understandings  relating to
          the subject matter hereof. No representation,  promise,  inducement or
          statement  of  intention  has been made by Seller or Buyer that is not
          embodied in this Agreement or in the documents referred to herein, and
          neither  Seller nor Buyer  shall be bound by or liable for any alleged
          representation,  promise,  inducement or statement of intention not so
          set forth.



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     8.4  HEADINGS.  The Section  headings  contained in this  Agreement are for
          convenient  reference only and shall not in any way affect the meaning
          or interpretation of this Agreement.

     8.5  INVALID  PROVISIONS.  If any provision of this Agreement is held to be
          illegal,  invalid  or  unenforceable  under  present  or  future  laws
          effective  during  the  term  hereof,  such  provision  shall be fully
          severable;  this Agreement  shall be construed and enforced as if such
          illegal, invalid or unenforceable provision had never comprised a part
          hereof, and the remaining provisions of this Agreement shall remain in
          full  force  and  effect  and shall not be  affected  by the  illegal,
          invalid  or  unenforceable  provision  or by its  severance  from this
          Agreement.





EXECUTED as of the date first set forth above.

                                                   SELLER:

                                                   PNP PETROLEUM, INC.


                                                   By /s/ Phil Zaccaria
                                                   -----------------------------
                                                   Phil Zaccaria

                                                   BUYER:

                                                   CALIFORNIA EXPLORATION, INC.


                                                   By /s/ Nick DeMare
                                                   -----------------------------
                                                   Nick DeMare



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                                   EXHIBIT "A"

                   ATTACHED TO AND MADE A PART OF THAT CERTAIN
               PURCHASE AND SALE AGREEMENT DATED DECEMBER 18, 2002
                      WEST RANCH FIELD, SOUTHWEST EXTENSION



          NOTE: Except where indicated otherwise, all recording references given
          below are to the  indicated  Records  of the  County  Clerk of Jackson
          County,  Texas.  Lot numbers given below refer to Lots located  within
          the Second  Subdivision  of the J. M. Bennett Ranch,  Jackson  County,
          Texas,  as same  appears  of record in Volume 2, page 43, Map and Plat
          Records, Jackson County, Texas.

1.   TURNER "D" LEASE:

Oil Gas and Mineral Lease dated December 1, 1936,  from E. A. TURNER,  et ux, as
Lessor,  to C. E. HUNGERFORD as Lessee,  covering 120 acres, more or less, being
all of Lot 26 and the West one half  (1/2) of Lot 27,  appearing  of  record  at
Volume 99; page 272, et seq, Deed Records. Said Lease is subject to the terms of
that  certain  Assignment  and Bill of Sale from Mobil  Producing  Texas and New
Mexico,  Inc. to R. H.  Engelke,  effectively  dated Ap~ 1,1991,  recorded in at
Volume 743 page 875, et seq,  Deed  Records,  and to that certain  Amendment and
Ratification  from Zelda  Turner,  et al,  countemart  copies of which appear of
record  beginning  at  Volume  744,  Page  1003,  et seq of  the  Deed  Records.
(90-180-11)


2.   SCHUECH "E" LEASE

Oil Gas and Mineral  Lease dated January 5, 1937,  from D. W. SCHUECH,  et ux as
Lessor,  to C. E. HUNGERFORD as Lessee,  covering 80 acres,  more or less! being
all of Lot 31, and  appearing  of record at Volume 99,  page 292,  et seq,  Deed
Records.  Said Lease is subject to that certain Assignment and Bill of Sale from
Mobil Producing Texas and New Mexico,  Inc. to R. H. Engelke,  effectively dated
April 1, 1991,  and  appearing of record at Volume 743, page 875, et seq, of the
Deed Records (90-180-10)


3.   TURNER "C" LEASE:

Oil Gas and Mineral  Lease dated March 30, 1990!  between Mrs. E. A. Turner,  et
al, Lessor,  and R. H. Engelke,  Lessee,  covering 120.0 acres of land,  more or
less, being all of Lot 22,  containing 80.0 acres of land, more or less, and the
East or Northeast  Half of Lot 27,  containing  40 acres of land,  more or less,
recorded in Volume 731,  page 886,  Deed  Records.  Said Lease is subject to the
terms of that certain  Amendment  and  Ratification  from Zelda  Turner,  et al,
countemart  copies of which appear of record beginning at Volume 744, Page 1028,
et seq of the Deed Records. (89-180-7)


                                      -76-
<PAGE>


4.   BENNETT BAY PASTURE LEASE:

Oil, Gas and Mineral Lease dated October 11, 1979, from John M. Bennett, Jr.1 et
al., as Lessor, to R. H Engelke, as Lessee, recorded in Volume 684, Page 7, Deed
Records, Jackson County, Texas, covering 480 acres of land, more or less, out of
the Ramon Musquiz Grant, A-59, Jackson County,  Texas,  INSOFAR AND ONLY INSOFAR
as said  Lease  covers a 40-acre  tract  described  in a Partial  Release  dated
September  23,  1987,  and  appearing  of record at Volume 702,  Page 159,  Deed
Records. (79-164-2)

5.   SCHUECH "B" LEASES (ALL COVERING LOT 23):

Each of the following six leases  covers 80 acres of land,  more or less,  being
all of Lot 23.

     a.   Oil, Gas and Mineral  Lease dated  December 3, 1981,  from John Daniel
          Stepan,  et ux. as Lessor,  to R. H. Engelke,  as Lessee,  recorded in
          Volume 611, Page 626, Deed Records. (81-168-2A)

     b.   Oil, Gas and Mineral Lease dated December 3.. 1981,  from Vera Frances
          Stepan  Rozsypal,  et vir,  as Lessor,  to R. H.  Engelke,  as Lessee,
          recorded ill Volume 611, Page 630, Deed Records. (81-168-2B)

     c    Oil, Gas and Mineral Lease dated December 2, 1981,  from Irma Schuech,
          as Lessor, to R. H. Engelke,  as Lessee,  recorded in Volume 611, Page
          634, Deed Records. (81-168-2C)

     d.   Oil, Gas and Mineral Lease dated  December 2, 1981,  from Christine V.
          Schattel,  et al., as Lessor, to RH. Engelke,  as Lessee,  recorded in
          Volume 612, Page 70, Deed Records. (81-168-2D)

     e.   Oil, Gas and Mineral  Lease dated  December 17, 1981,  from The United
          States  National Bank of  Galveston,  Trustee for Abe and Annie Seibel
          Foundation, as Lessor, to R. H. Engelke, as Lessee, recorded in Volume
          612, Page 251, Deed Records. (BI-168-2E)

     f.   Oil, Gas and Mineral Lease dated  September 23, 1983, from Al A. Brown
          and Charles Goodall, as Lessors, to R. H. Engelke, as Lessee, recorded
          in Volume 636, Page 100, Deed Records. (81-168-2F)

6.   BENNETT "G" LEASE:

Oil, Gas and Mineral Lease dated January 6, 1982, from John M. Bennett,  Jr., et
al. as Lessor,  to R. H. Engelke,  as Lessee,  recorded in Volume 612, Page 254,
Deed  Records,  covering  80 acres of land,  more or less,  being all of Lot 24.
(81-168-4)



                                      -77-
<PAGE>


7.   BENNETT "R" LEASES:

Each of the  following  four  leases are  subject  to  subject  to that  certain
Assignment and Bill of Sale from Mobil Producing  Texas and New Mexico,  Inc. to
R. H.  Engelke,  effectively  dated  January31  1991 and  appearing of record at
Volume 743, page 864 et seq, of the Deed Records of Jackson County,  Texas. Each
lease covers the 194.54 acres,  more or less,  out of Lot 46, more  particularly
described in each lease.

     a.   Oil Gas and Mineral  Lease as  amended,  dated  February 1 1989,  from
          Robert L. E Aston Individually and as  Attorney-in-Fact  for Elizabeth
          Easton  Tilghman,  as Lessor,  to Mobil  Producing  Texas & New Mexico
          Inc.,  as Lessee,  appearing of record at Volume 717, page 994, et seq
          of the Deed Records. (90-182-2(a))

     b.   Oil Gas and Mineral Lease, as amended dated February 1,1989, from John
          Bennett  Lupe  Individually  and as  Attorney-in-Fact  for Molly  Lupe
          Lasater,  as Lessor,  to Mobil  Producing  Texas & New Mexico Inc., as
          Lessee,  appearing of record at Volume 717,  page ~0l0, et seq, of the
          Deed Records. (90-182-2(b))

     c.   Oil Gas and Mineral Lease,  as amended,  dated February 1, 1989,  from
          John M. Bennett,  Jr., as Attorney-in-Fact for Eleanor Bennett Marlow,
          John Stephen  Bennett,  and Carolyn  Bennett Wood as Lessor,  to Mobil
          Producing  Texas & New Mexico Inc., as Lessee,  appearing of record at
          Volume 717, page 1002, et seq, of the Deed Records. (90-182-2(c))

     d.   Oil Gas and Mineral Lease,  as amended,  dated February 1, 1989,  from
          Thomas C. Musgrave,  III,  Individually  and as  Attorney-in-Fact  for
          Jamie  Musgrave Hall and Josephine  Bennett  Musgrave,  as Lessor,  to
          Mobil  Producing  Texas & New Mexico  Inc.,  as Lessee,  appearing  of
          record  at  Volume  717,  page  1018,  et seq,  of the  Deed  Records.
          (90-182-2(d))

8.   THE PHILLIPPI LEASES:

Each of the following four (4) leases covering Lot 26, containing 8G acres, more
or less.

     a.   Oil, Gas and Mineral Lease, as amended,  dated October22 1991, between
          William G. Phillippi,  Lessor, and R. H. Engelke,  Lessee, recorded in
          Volume 758, Page 14, Deed Records. (90-180-13(a))

     b.   Oil,  Gas and  Mineral  Lease,  as  amended,  dated  December 1, 1995,
          between  S.  Keith  Engelke,  Lessor,  and R. H.  Engelke,  Lessee,  a
          Memorandum  of which  appears of record at Volume 66, Page 979, of the
          Official Records.



                                      -78-
<PAGE>


     c.   Oil,  Gas and  Mineral  Lease,  as  amended,  dated  October 22~ 1991,
          between Lola  Phillippi,  et al,  Lessor,  and R. H. Engelke,  Lessee,
          recorded in Volume 753, Page 609, Deed Records. (90-180-13(c))

     d.   Oil, Gas and Mineral Lease, as amended, dated October 22,1991, between
          Charlene  Phillippi,  et al, Lessor,  and R. H. Engelke,  Lessee,  and
          recorded in Volume 752 Page 964, Deed Records. (90-180-~3(d))

9.   Oil Gas and Mineral Lease, as amended,  dated October 1, 1992, from Darrell
     Lee Mudd.,  as Lessor,  to RH. Engelke,  as Lessee.  appearing of record at
     Volume 766, page 617, of the Deed Records.

10.  Schuech Oil Unit 8 as Designated by Unit Designation appearing of record at
     Volume 159,  Page 1041 of the Official  Records of Jackson  County,  Texas,
     covering  40 acres  more or less as the  pooled  leases  cover  the oil and
     casinghead  gas found in the  stratigraphic  equivalent  of the  subsurface
     interval  from  6821  feet to 6827 feet (as such  interval  appears  in the
     electric Log of the R.H.  Engelke Well No.1, Irma Schuech  L(pound)B~ Lease
     on Lot 23 of the Second  Subdivision  of the J.M.  Bennett  Ranch,  Jackson
     County, Texas).

11.  Oil, Gas and Mineral  lease dated June 7, l 999 from Vera Frances  Rozsypal
     et. al. to R.H.  Engelke,  covering 80 acres more or jess, being all of Lot
     30 more particularly described in said Lease , recorded in Volume 142, Page
     724 of the Official Records of Jackson County, Texas.

12.  Oil, Gas and Mineral  lease dated June 7, 1999 from Vera  Frances  Rozsypal
     et. al. to R.H.  Engelke,  covering 80 acres more or less, being all of Lot
     33,  more  particularly  described  in said Lease , recorded in Volume 142,
     Page 700 of the Official Records of Jackson County Texas.

13.  Oil, Gas and Mineral lease dated June 7, 1999 from Vera Frances Rozsypal et
     al. to R.H.  Engelke,  covering 80 acres more or less, being all of Lot 37,
     more particularly  described in said Lease recorded in Volume 142, Page 718
     of the Official Records of Jackson County, Texas.

14.  Oil, Gas and Mineral  lease dated June 7, 1999 from Vera  Frances  Rozsypal
     et. al. to R.H.  Engelke,  covering 69.07 acres more or less,  being all of
     Lot 40, more particularly  described in said Lease, recorded in Volume 142,
     Page 706.

15.  Oil, Gas and Mineral  lease dated June 7, 1999 from Vera  Frances  Rozsypal
     et.  al.  to R.H.  Engelke,  covering  40  acres  more or less,  being  the
     Southwest  112 of Lot 29,  more  particularly  described  in  said  Lease ,
     recorded in Volume 142, Page 712.

16.  Oil, Gas and Mineral  Lease,  as amended,  dated June 21,  1999,  from Greg
     Schaeffer,  Successor  Guardian of the Estate of Russell Schaefer1 N.C.M to
     R.H.  Engelke,  covering  149.07  acres  being  all of  Lots 32 and 39 more
     particularly described in said Lease1 recorded in Volume, 144, Page 967.


                                      -79-
<PAGE>




17.  Oil, Gas and Mineral  lease dated  October 6, 1999,  from Cal Parley's Boys
     Ranch to R.H.  Engelke,  covering  the 40  acres,  more or less,  being the
     Northeast 1/2 of Lot 29 more particularly  described in said Lease recorded
     in Volume 147, Page 416.

18.  Oil, Gas and Mineral lease dated June 11, 2001 from  Clementine L. Schattel
     Schroeder  to S.  Keith  Engelke  covering  SQ,  more or  less,  being  the
     Southeast  1/2 of Lot 19  more  particularly  described  in  said  Lease  ,
     recorded in Volume 183, Page 561










                                      -80-
<PAGE>


                                   EXHIBIT "B"



                   ATTACHED TO AND MADE A PART OF THAT CERTAIN
              PURCHASE AND SALE AGREEMENT DATED DECEMBER 18, 2002,
                      WEST RANCH FIELD, SOUTHWEST EXTENSION



WELL NAME                  API #            FIELD NAME                 LEASE #

Bennett, John M. #3        42-239-31728     Bay Pasture                06321

Bennett, John M. G-1       42-239-31956     TW Frio 7400               08309

Bennett, J. M. R-2         42-239-03066     TW Frio 41-A               08253

Bennett, J.M. R-1          42-239-06035     WR Greata                  05203

Bennett, J.M. G-2          42-239-32275     TW Frio 7830               06668

Bennett, J.M R-9           42-239-03072     WR Bennview                04297

Bennett, J. M. R-4         42-239-03068     WR 5100                    08321

Bennett, J.M. Q-1          42-239-03802     WR Frio 6400               07098

Mudd, D. L. #1             42-239-32168     WR 6840                    08578

Schuech Unit 8 (B-1)       42-239-31930     WR Frio 6840               08535

Schuech, D. W. E-6         42-239-03036     WR Ward                    01674

Schuech, D. W. E-7         42-239-03073     WR Ward                    01674

Schuech, D. W. E-1         42-239-03035     WR Ward                    01674

Schuech, D. W. E-3         42-239-03033     WR Ward                    01674

Schuech, D. W. E-5         42-239-03339     WR Glasscock               01637

Schuech, Irma B-7          42-239-32610     WR Frio 6200               08219

Schuech, Irma B-2          42-239-31987     TW Frio 5830               152485



                                      -81-
<PAGE>


Schuech, Irma B-4          42-239-30155     WR Glasscock               08219

Schuech Unit 1             42-239-32313     WR Frio 7400               08111

Schuech Unit 9             42-239-32142     WR Frio 6200               08626

Turner E.A. C-1            42-239-32037     WR Ward                    07877

Turner E.A. C-2            42-239-32197     WR Frio 5100               07889

Turner E.A. C-3            42-239-32202     WR Frio 7020               120228

Turner E.A. C-4            42-239-32681     WR Frio 6200               08171

Turner E.A. D-1            42-239-03077     WR Frio 6220               172154

Turner E.A. D-2            42-239-03083     WR Glasscock               01639



WELL NAME                  API #            FIELD NAME                 LEASE #

Turner E.A. D-3            42-239-03074     WR Frio 5915               172144

Turner E.A. D-4            42-239-03079     WR Ward                    01676

Turner E.A. D-5            42-239-03080     WR Ward                    01676

Turner E.A. D-6            42-239-03081     WR Frio 5100               08362

Turner E.A. D-9            42-239-32237     WR Glasscock               01639






                                      -82-
<PAGE>


                                    EXHIBIT C


               ATTACHED HERETO AND MADE A PART HEREOF THAT CERTAIN
               PURCHASE AND SALE AGREEMENT DATED DECEMBER 18, 2002


                               PNP PETROLEUM, INC.



                                WEST RANCH FIELD

                              West Ranch Properties


                              JACKSON COUNTY, TEXAS


                               REVIEW AND SUMMARY


                                      -83-
<PAGE>


                                Table of Contents





West Ranch Field History......................................................1

Planned Development Stages....................................................1
   Phase 1:...................................................................1
   Phase 2:...................................................................1
   Phase 3:...................................................................1
   Phase 4:...................................................................2
   Phase 5:...................................................................2
   Phase 6:...................................................................2
   Phase 7:...................................................................2

Capital Expenditures..........................................................2

Marketing.....................................................................2

Terms.........................................................................2

Proposed Schedule of Work 2002 - 2003.........................................3




                                      -84-
<PAGE>



                               PNP PETROLEUM, INC.
                          10100 Reunion Place, Ste. 305
                            San Antonio, Texas 78216


West Ranch Field History
Properties Overview



     The West  Ranch  Field is  located  approximately  25  miles  southeast  of
Victoria,  in Jackson County,  Texas.  The field was discovered in 1938 by Mobil
Oil and has  produced  in excess of 300 BCF gas and 300 MMBO  from  hundreds  of
wells.

     The  geology of West Ranch  consists of typical  Gulf Coast sand  sequences
with numerous stacked sand pays of both Miocene and Frio age rocks. Over 25 main
producing sands have been  identified  within the West Ranch  production  limits
with the Greta,  Glasscock,  41-A,  98-A and Ward sands being the most  prolific
producers.  These sands are historically high permeability,  high porosity sands
capable of producing high fluid rates.

     In the early 1980's the previous operator,  Hank Engelke,  became active in
the  region  through  acquisition  of a few  old  producing  well  bores.  After
reworking  geological  structure and net sand maps,  Hank was able to extend the
southwest  production  limits  of the field by the  drilling  of  infield  wells
targeting structural highs.

     Through a friendly  foreclosure  process,  PNP will be able to obtain clean
title in the properties  and is scheduled to take over  operations on January 1,
2002.

     The property  includes 35 wells  currently  producing  40-60 bopd through 6
active  producers  on gas lift.  After a detailed  engineering  analysis  of the
property, PNP has developed a plan, which focuses on the re-establishing of shut
in wells to active status, add compression, salt water handling and disposal and
will quickly add value to the property while minimizing capital expense.

Planned Development Stages

PHASE 1:
     During the first 30 days, PNP will focus on increasing the  compression and
ability to use make up gas from the  Florida  Pipeline  system  through  Reliant
Field Services.  Next,  turning on four more wells to continue to increase daily
production.

PHASE 2:
     The  second  30 days will  consist  of  optimization  of the field gas lift
system and production  facilities while systemically testing 1 well on sub pump.
A total of three  new  wells  will be added as well as  construction  of  larger
flowlines  on the Schuech E Lease.  The Turner D-2 and D-9 will be tested in the
Glasscock.

PHASE 3:
     The third 30 days will  consist of  continued  field  optimization,  adding
compression  up to 8 mmscfpd and  increasing  the SWD  capabilities.  We plan on
moving in  pumping  units on the Mudd 1 and  Schuech  B-1 and  recompleting  the
Schuech E-1 to the Glasscock.



                                      -85-
<PAGE>


PHASE 4:
     The fourth 30 days will  include the  re-completing  of the Schuech B-5 and
Turner C-4 wells into the Ward Sand.  Both will be  equipped  with  larger  3.5"
tubing for high volume lifting capacities.

PHASE 5:
     The fifth 30 days will include two plug back  re-completions in the Bennett
R-2 and R-10.

PHASE 6:
     The sixth 30 days will  include two  re-completions  in the Bennett R-1 and
G-1 wells.

PHASE 7:
     The seventh 30 days will include the plug back re-completion of the Schuech
B-2 well into the Glasscock sand and include 3/5" tubing and a submersible pump.


Capital Expenditures
     At this time, it is estimated that the total project  capital  expenditures
will be approximately $ 451,000 with Phases 4-7 completed out of cashflow.


Marketing
     West Ranch Field lies on a major pipeline system  consisting of HPL's 20" ,
Valero's 24", and Eastern Gas 24" pipelines to only name a few. Currently, Flint
Hills LP  purchases  the crude oil at Upper Gulf Coast Index plus $ 3.25 per bbl
and Florida Pipeline is our gas sales interconnect at the spot market.


Terms
     PNP is offering working  interest in the properties.  PNP is offering 5% WI
for  $49,995  and 10% for  $99,990 in the entire  project  plus its share of the
current proposed $ 186,500 workover  budget.  (This budget is estimated  through
the third Phase above.)

     PNP had developed  additional projects for future investment  opportunities
including development of EOR and Gas Storage Projects.




                                      -86-
<PAGE>

PROPOSED SCHEDULE OF WORK 2002 - 2003

WEST RANCH PROPERTIES
PROPOSED SCHEDULE OF WORK 2002 - 2003
<TABLE>
<CAPTION>

                                            PROJECTED   CUM              CUM                CUM      LIFT
WELL               ZONE           MO/YR        BOPD     BOPD    BWPD     BWPD        FG       FG      GAS

<S>              <C>           <C>            <C>       <C>    <C>     <C>         <C>     <C>     <C>
Bennett 3          Bay Pasture   Sep-02           8        8      20        0         0        0        0
Bennett R4         5100          Sep-02          14       22     800      800        10       10      500
Mudd 1             6840          Sep-02          11       33      40      840        10       20      200
Schuech B1         6840          Sep-02          11       44      40      880        20       40      250
Schuech E6         Ward          Sep-02           6       50     600     1480        20       60      350
Schuech E7         Ward          Sep-02           8       58     800     2280        20       80      500
Add Compression    4.0 mmcfd     Sep-02           0       58       0     2280                 80
Turner C5          5100          Sep-02          11       69     800     3080         0       80      500
Turner D5          Ward          Sep-02          15       84    1500     4580        50      130      600
----------------------------------------------------------------------------------------------------------
Schuech E3         Glasscock     Oct-02          13       97    1300     5880        15      145      350
Schuech E6         Ward          Oct-02           8      105     800     6680        20      165       50
Schuech E7         Ward          Oct-02           7      112     700     7380        20      185      100
Turner C1          Ward          Oct-02          30      142    3000    10380        60      245        0
Turner D1          Ward          Oct-02          15      157    1500    11880        30      275      600
----------------------------------------------------------------------------------------------------------
Mudd 1             6840          Nov-02           5      162      10    11890        40      315     -200

Schuech B1         6840          Nov-02           5      167      10    11900        40      355     -250

Add Compression    8.0 mmcfd     Nov-02           0      167       0    11900                355

Add SWD well       +15k bwpd     Nov-02           0      167       0    11900                355

Schuech E1         Glasscock     Nov-02          15      182    1500    13400        15      370      500
----------------------------------------------------------------------------------------------------------
Schuech B5         Ward          Dec-02          30      212    3000    16400        60      430      800
Turner C4          Ward          Dec-02          30      242    3000    19400        60      490      800
----------------------------------------------------------------------------------------------------------
Bennett R2         4200          Jan-03           0      242     300    19700       150      640      300
Bennett R10 (1A)   Ward          Jan-03          24      266    1200    20900        48      688      300
----------------------------------------------------------------------------------------------------------
Bennett R1         5100          Feb-03          14      280    1000    21900        10      698      500
Bennett G1         7765          Feb-03          30      310    1000    22900        60      758      500
----------------------------------------------------------------------------------------------------------
Schuech B2         Glasscock     Mar-03          30      340    3000    25900        30      788        0

</TABLE>

LOE                              Compression           $0.10 per MCF

                                 SWD                   $0.01 per bbl

                                 Ovhd/misc            $1,000 per well



                                      -87-
<PAGE>


OTHER CAPITAL ITEMS                DATE             EST COST

Overflow tank at Bennett         Oct-02              $2,500

Flowline jumper on Turner C5     Dec-02             $10,000


                                      -88-
<PAGE>