<PAGE>   1
                                                                    EXHIBIT 10.3


                         AGREEMENT OF PURCHASE AND SALE



                TIMBERWOLF PRODUCTION FUND #4 LIMITED PARTNERSHIP

                                     - AND -

                               GEOCAN ENERGY INC.

                          (CARSON CREEK AREA, ALBERTA)


<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
ARTICLE I
         INTERPRETATION
          ....................................................................1
         1.1    DEFINITIONS...................................................1
         1.2    INCORPORATION OF SCHEDULES....................................6
         1.3    SCHEDULE REFERENCES...........................................7
         1.4    HEADINGS......................................................7
         1.5    GENDER........................................................7
         1.6    REFERENCES....................................................7

ARTICLE II
         SALE
          ....................................................................7
         2.1    SALE..........................................................7

ARTICLE III
         CONSIDERATION
          ....................................................................8
         3.1    PRICE.........................................................8
         3.2    MANNER OF PAYMENT.............................................8
         3.3    ROLLOVER ELECTION.............................................8
         3.4    ALLOCATION....................................................9

ARTICLE IV
         INFORMATION AND DATA
          ....................................................................9
         4.1    GENERALLY.....................................................9

ARTICLE V
         ADJUSTMENTS
          ...................................................................10
         5.1    OPERATIONS...................................................10
         5.2    RENTALS......................................................10
         5.3    INVENTORY....................................................10
         5.4    ACCOUNTS RECEIVABLE..........................................11
         5.5    GOODS AND SERVICES TAX.......................................11
         5.6    ADJUSTMENT PROCEDURE.........................................12

ARTICLE VI
         EFFECTIVE TIME
          ...................................................................12
         6.1    EFFECTIVE TIME...............................................12

ARTICLE VII
         CLOSING TIME AND PLACE
          ...................................................................12
         7.1    PLACE........................................................12
         7.2    TIME.........................................................12
</TABLE>


<PAGE>   3

                                       ii


<TABLE>
<S>                                                                         <C>
ARTICLE VIII
         INTERIM PERIOD
          ...................................................................12
         8.1    MAINTENANCE OF ASSETS........................................12
         8.2    CONDUCT OF BUSINESS..........................................13
         8.3    INTERIM AGENCY, LIABILITY AND INDEMNITY......................13

ARTICLE IX
         TITLE RECORDS
          ...................................................................14
         9.1    GENERALLY....................................................14

ARTICLE X
         CONFIDENTIAL INFORMATION
          ...................................................................15
         10.1   GENERALLY....................................................15

ARTICLE XI
         CONSENTS AND APPROVALS
          ...................................................................15
         11.1   GENERALLY....................................................15
         11.2   PURCHASE RIGHTS..............................................16
         11.3   ALLOCATION OF PURCHASE PRICE.................................16

ARTICLE XII
         TITLE OBJECTIONS
          ...................................................................16
         12.1   GENERALLY....................................................16
         12.2   VALUE ALLOCATION.............................................17
         12.3   RIGHTS OF FIRST REFUSAL......................................18

ARTICLE XIII
         CONVEYANCES
          ...................................................................18
         13.1   GENERALLY....................................................18
         13.2   SUBORDINATE DOCUMENTS........................................18

ARTICLE XIV
         VENDOR'S REPRESENTATIONS
          ...................................................................18
         14.1   GENERALLY....................................................18
         14.2   LIMITATION...................................................24
         14.3   SUBROGATION..................................................25

ARTICLE XV
         PURCHASER'S REPRESENTATIONS
          ...................................................................25
         15.1   GENERALLY....................................................25
         15.2   SUBROGATION..................................................27
</TABLE>


<PAGE>   4

                                       iii


<TABLE>
<S>                                                                        <C>
ARTICLE XVI
         NO MERGER
          ..................................................................27
         16.1   GENERALLY...................................................27

ARTICLE XVII
         INDEMNITY RE: OPERATIONS
          ..................................................................27
         17.1   GENERALLY...................................................27
         17.2   SUBROGATION RE: THIRD PARTIES...............................28
         17.3   ROYALTIES...................................................28
         17.4   WELL ABANDONMENT AND RECLAMATION............................28
         17.5   ENVIRONMENTAL DAMAGE........................................29

ARTICLE XVIII
         BREACH
          ..................................................................29
         18.1   SURVIVAL....................................................29
         18.2   TIME LIMITATION.............................................29

ARTICLE XIX
         VENDOR'S CLOSING CONDITIONS
          ..................................................................29
         19.1   GENERALLY...................................................29

ARTICLE XX
         PURCHASER'S CLOSING CONDITIONS
          ..................................................................31
         20.1   GENERALLY...................................................31

ARTICLE XXI
         COVENANTS RE: CLOSING
          ..................................................................32
         21.1   GENERALLY...................................................32

ARTICLE XXII
         TERMINATION
          ..................................................................32
         22.1   GENERALLY...................................................32

ARTICLE XXIII
         MISCELLANEOUS
          ..................................................................33
         23.1   NO DUPLICATION OF REMEDIES..................................33
         23.2   FURTHER ASSURANCES..........................................33
         23.3   ASSIGNMENT..................................................33
         23.4   REPORTING ISSUER STATUS.....................................33
         23.5   SIGNS AND NOTIFICATIONS.....................................34
         23.6   CONSTRUCTION AND ATTORNMENT.................................34
         23.7   TIME........................................................34
</TABLE>


<PAGE>   5


                                       iv

<TABLE>
<S>                                                                        <C>
         23.8   PUBLIC ANNOUNCEMENT.........................................35
         23.9   PRIOR AGREEMENTS AND AMENDMENTS.............................35
         23.10  ENUREMENT...................................................35
         23.11  ADDRESSES...................................................35
         23.12  COUNTERPART EXECUTION.......................................36
</TABLE>


<PAGE>   6


                         AGREEMENT OF PURCHASE AND SALE

                          (CARSON CREEK AREA, ALBERTA)


                  THIS AGREEMENT made as of the 11th day of September, 1998.


BETWEEN:


                  TIMBERWOLF PRODUCTION FUND #4 LIMITED PARTNERSHIP, an Alberta
                  limited partnership by its General Partner, TIMBERWOLF
                  RESOURCES LTD., a body corporate, having an office within the
                  City of Calgary, in the Province of Alberta, (hereinafter
                  called the "Vendor")

                                     - and -

                  GEOCAN ENERGY INC., a body corporate, having an office within
                  the City of Calgary, in the Province of Alberta, (hereinafter
                  called the "Purchaser")


WITNESSETH THAT:


                  WHEREAS Vendor desires to sell and convey the Assets to
Purchaser and Purchaser desires to purchase and receive the Assets from Vendor,
in each case upon the terms and conditions herein set forth;

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

                                    ARTICLE 1
                                 INTERPRETATION

1.1               DEFINITIONS

                  In this Agreement (including the recitals hereto, this Article
and each Schedule) the words and phrases set forth below shall have the meanings
ascribed thereto below, namely:


<PAGE>   7
                                     - 2 -


         (a)      "ADJUSTMENT PROCEDURE" means the provisions comprising
                  Schedule "D";

         (b)      "A.F.E." means an authority for expenditures, unit budget,
                  mail ballot or cash call or any other approval to conduct an
                  operation, create or incur a financial obligation or accept a
                  risk;

         (c)      "ASSETS" means the Petroleum and Natural Gas Rights, the
                  Tangibles and the Miscellaneous Interests;

         (d)      "CLOSING" means the transfer of the Assets by Vendor to
                  Purchaser (or unaffected Assets, if a closing occurs in
                  accordance with Clause 12.1) and the payment by Purchaser to
                  Vendor of the Purchase Price (or portion thereof, if paid in
                  accordance with Clause 12.1) and the completion of all matters
                  incidental thereto as herein provided for;

         (e)      "CLOSING TIME" means the time and day determined pursuant to
                  Clause 7.2;

         (f)      "CONVEYANCE" means an agreement (or agreements, if a closing
                  occurs in accordance with Clause 12.1) in the form or
                  substantially in the form of Schedule "C";

         (g)      "DOLLAR" or "$" means a dollar of the lawful money of Canada;

         (h)      "EFFECTIVE TIME" means 8:00 a.m., local time at Calgary,
                  Alberta, on the lst day of July, 1998;

         (i)      "FACILITIES" means the interest of Vendor in all facilities
                  described in Schedule "B";

         (j)      "GATHERING SYSTEM" means the gathering system described in
                  Schedule "B";

         (k)      "INFORMATION AND DATA" means the data, information and
                  documentation provided by Vendor to Purchaser in respect of
                  the Assets, whether pursuant to a solicitation of interest or
                  otherwise;

         (l)      "LAND SCHEDULE" means Schedule "A";
<PAGE>   8

                                     - 3 -


         (m)      "MISCELLANEOUS INTERESTS": means the interest of Vendor
                  corresponding to the interests set forth in the Land Schedule
                  or Schedule "B", as the case may be in and to all property,
                  assets and rights, other than Petroleum and Natural Gas
                  Rights, the Said Lands, the Said Leases or the Tangibles
                  (excluding materials and supplies used or useful in connection
                  with the operations relating to the Petroleum and Natural Gas
                  Rights, the Said Lands, the Said Leases or the Tangibles, or
                  any interest therein, that is owned at the Closing Time by
                  Vendor where the costs thereof have not been charged to the
                  joint account of the owners of the Petroleum and Natural Gas
                  Rights by the operator thereof), and to which Vendor is
                  entitled at the Effective Time including, but not in
                  limitation of the generality of the foregoing, such interests
                  of Vendor in:

                  (i)      all contracts, agreements, documents, production
                           sales contracts, books and records relating to the
                           Petroleum and Natural Gas Rights, the Said Lands, or
                           the Tangibles, and any and all rights in relation
                           thereto;

                  (ii)     all engineering and production data and information
                           (excluding the Proprietary Seismic) related to the
                           Petroleum and Natural Gas Rights and the Tangibles in
                           the custody of Vendor or to which it is entitled,
                           excluding interpretive data, forecasts or reports;

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

                  (iv)     existing well bores and downhole casing;

         (n)      "PARTIES" means the parties to this Agreement and "PARTY"
                  means any one of them;

         (o)      "PERMITTED ENCUMBRANCES" means:

                  (i)      the encumbrances identified in Schedule "A" under the
                           heading "Encumbrances";

<PAGE>   9

                                     - 4 -


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

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

                  (iv)     liens imposed by statute securing the payment of
                           taxes which are not due at the relevant time 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;

                  (vi)     the terms and conditions of the Said 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 Said 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

<PAGE>   10

                                     - 5 -


                  (xii)    liens granted in the ordinary course of business
                           to a public utility, municipality or governmental
                           authority in connection with the operations conducted
                           with respect to the Assets;

         (p)      "PETROLEUM AND NATURAL GAS RIGHTS" means the interests of
                  Vendor set forth in the Land Schedule in and to the Said
                  Leases and the Said Lands;

         (q)      "PETROLEUM SUBSTANCES" means petroleum, natural gas, related
                  hydrocarbons and any other substances, whether liquid, solid
                  or gaseous, the rights to which accrue to the holder of the
                  rights to petroleum, natural gas or related hydrocarbons;

         (r)      "PLACE OF CLOSING" means the offices of Vendor;

         (s)      "PRIME RATE" means the prime lending rate used from time to
                  time by the Province of Alberta Treasury Branches, Main
                  Branch, Calgary, Alberta, for loans made in Canada in Canadian
                  Dollars to the bank's preferred commercial borrowers;

         (t)      "PROPRIETARY SEISMIC" means all surveyors' ground elevation
                  records, all shot point maps, all drillers' logs, all
                  shooters' records and all seismograph records, seismograph
                  magnetic tapes, monitor records, field records and record
                  sections obtained in any seismograph survey conducted on the
                  Said Lands or any geological or geophysical studies or further
                  appraisals of same conducted on the Said Lands and owned by
                  Vendor or to which Vendor is entitled;

         (u)      "SAID LANDS" means in respect of the lands described in the
                  Land Schedule, the Petroleum Substances within, upon or under
                  those lands, together with the right to explore for and
                  recover Petroleum Substances insofar only as they are granted
                  by the Said Leases;

         (v)      "SAID LEASES" means collectively the leases, reservations,
                  permits, licences, certificates of title or other documents of
                  title set forth and described in the Land Schedule (or any
                  replacement thereof, renewal thereof or leases derived
                  therefrom) by virtue of which the holder thereof is entitled
                  to drill for, win, take, own and remove the Petroleum
                  Substances within, upon or under all or any part of the Said
                  Lands;

<PAGE>   11

                                     - 6 -


         (w)      "TAKE OR PAY OBLIGATIONS" means the outstanding obligations of
                  the 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 or in consideration of future
                  deliveries of Petroleum Substances;

         (x)      "TANGIBLES" means the Facilities and interests of Vendor
                  corresponding to the interests set forth in the Land Schedule
                  in and to all tangible depreciable property and assets situate
                  in, on or about the Said Lands, including the Wells,
                  appurtenant thereto or used in connection therewith or with
                  production, gathering, processing, transmission or treatment
                  operations or on the Said Lands or relative thereto or
                  appurtenant to or used in connection with all producing,
                  shut-in or injection wells located on the Said Lands and,
                  without limitation of the generality of the foregoing,
                  includes the interest of Vendor in the Facilities;

         (y)      "TITLE DEFECT" shall have the meaning ascribed thereto in
                  Clause 12.1 hereof; and

         (z)      "WELLS" means those wells described and listed in Schedule
                  "G".

1.2               INCORPORATION OF SCHEDULES

                  The following Schedules are attached to and incorporated as
part of this Agreement:

         (a)      Schedule "A" - Land Schedule;
         (b)      Schedule "B" - Facilities;
         (c)      Schedule "C" - Conveyance;
         (d)      Schedule "D" - Adjustment Procedure;
         (e)      Schedule "E" - Production Sales Contracts;
         (f)      Schedule "F" - Authorizations for Expenditures ("A.F.E.'s");
                    and
         (g)      Schedule "G" - Wells.



<PAGE>   12

                                      - 7 -


1.3               SCHEDULE REFERENCES

                  Whenever any provision of any Schedule to this Agreement
conflicts with any provision in the body of this Agreement, the provisions of
the body of this Agreement shall prevail.

1.4               HEADINGS

                  The headings of articles and clauses herein and in the
Schedules are inserted for conveyance of reference only and shall not affect or
be considered in the construction or interpretation of the provisions hereof.

1.5               GENDER

                  In this Agreement, words importing persons include companies
and vice versa and words importing the masculine gender include the feminine and
neuter gender and vice versa.

1.6               REFERENCES

                  Except as otherwise provided for herein, "this Agreement",
"hereto", "herein", "hereof", "hereunder" and similar expressions refer to this
agreement and not to any particular section, subsection, paragraph,
subparagraph, clause, subclause, schedule or other portion thereof.

                                   ARTICLE II
                                      SALE

2.1               SALE

                  Vendor agrees to sell and convey the Assets to Purchaser and
Purchaser agrees to purchase and receive the Assets from Vendor, all in
accordance with and subject to the terms and conditions set forth in this
Agreement.


<PAGE>   13

                                      - 8 -


                                   ARTICLE III
                                  CONSIDERATION

3.1               PRICE

                  The price to be paid by Purchaser to Vendor for the Assets
shall be, subject to adjustments as herein provided for, ONE MILLION AND THIRTY
THOUSAND ($1,030,000.00) DOLLARS (hereinafter called the "Purchase Price").

3.2               MANNER OF PAYMENT

                  The Purchase Price shall be paid as follows:

         (a)      $177,500 payable at the Place of Closing on the Closing Date
                  by certified cheque or bank draft;

         (b)      that issuance of a promissory note in the principal amount of
                  $177,500 with interest at the rate of Prime payable by
                  Purchaser to Vendor on January 15, 1999 or on such other date
                  as may be mutually agreed upon in writing by the Parties; and

         (c)      the balance by the issuance to Vendor on at the Place of
                  Closing on the Closing Date of 1,500,000 Class "A" common
                  shares (the "Shares") of Purchaser at an assigned value of
                  $0.45 per Share.

3.3               ROLLOVER ELECTION

                  The Parties hereby agree that the acquisition of the Assets
shall be under the provisions of Section 85(2) of the Income Tax Act (Canada),
R.S.C. 1995 5th Supplemental C-1 and the regulations thereunder, as amended (the
"Act") and covenant and agree to elect jointly under Section 85(2) of the Act,
in the prescribed form and within the prescribed time for the purposes of the
Act, with respect to the sale by Vendor to Purchaser of the Assets and shall
therein agree in respect of the Assets that the "agreed amount" for the purposes
of Section 85(2) of the Act shall be as follows:

<TABLE>
<S>                                                             <C>
         (a)      to Petroleum and Natural Gas Rights              $  314,999.00
         (b)      to Tangibles                                     $  309,000.00
         (c)      to Proprietary Seismic                           $   11,000.00
         (d)      to Miscellaneous Interests                       $        1.00
                                                                   -------------
                  TOTAL:                                           $  635,000.00
</TABLE>


<PAGE>   14


                                      - 9 -


3.4               ALLOCATION

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

<TABLE>
<S>                                                             <C>
         (a)      to Petroleum and Natural Gas Rights:          $   709,999
         (b)      to Tangibles:                                 $   309,000
         (c)      Proprietary Seismic                           $    11,000
         (d)      to Miscellaneous Interests:                   $      1.00
                                                                -----------
                  TOTAL:                                        $ 1,030,000
</TABLE>

                                   ARTICLE IV
                              INFORMATION AND DATA

4.1               GENERALLY

                  Vendor has made available to Purchaser the Information and
Data. Vendor does not make any representation, warranty or covenant, either
expressly or by implication herein or collateral hereto, with respect to the
Information and Data or any information therein or other contents thereof or any
other information provided to Purchaser relative to any of the Assets including,
without limitation, information in respect of the marketing and sale of
Petroleum Substances or transportation of such substances to the Purchaser
thereof. Purchaser acknowledges that it has made its own independent
investigation, analysis, evaluation and verification of Vendor's interests in
the Assets, including Purchaser's own estimate and appraisal of the extent and
value of the reserves of Petroleum Substances attributable to the Said Lands and
of the condition, suitability, composition and capacity of the Tangibles.


<PAGE>   15

                                     - 10 -


                                    ARTICLE V
                                   ADJUSTMENTS

5.1               OPERATIONS

                  All benefits and obligations of every kind and nature relating
to operations conducted with respect to the production of Petroleum Substances
from the Said Lands and sale thereof accruing to or in respect of the Assets, or
that are attributable to or otherwise affect the Assets, including capital
expenditures arising out of A.F.E.'s approved by Vendor prior to Closing,
maintenance costs, development costs and operating costs and the proceeds from
the sale of production, shall be apportioned between Vendor and Purchaser as of
the Effective Time. All costs incurred in connection with work performed or
goods or services provided in respect of the Assets shall be deemed to have
accrued as of the date the work was performed or the goods or services were
delivered to the Said Lands, regardless of the time such costs become payable.
Advances made by Vendor to operators relative to operations on the Said Lands
prior to the Effective Time in excess of the costs of such operations shall be
adjusted pursuant to this Article in favour of Vendor. Deposits made by Vendor
relative to operations on the Said Lands shall either be returned to Vendor and
replaced by Purchaser or adjusted pursuant to this Article.

5.2               RENTALS

                  Surface lease rentals, mineral lease rentals, municipal taxes
and any similar payments made by or on behalf of Vendor to preserve any of the
Said Leases or any surface leases or any of the Assets shall be apportioned
between Vendor and Purchaser as of the Effective Time. After Closing, all
rentals and similar payments required to preserve any of the Said Leases which
relate to the Said Lands or any surface leases shall be paid by Purchaser.

5.3               INVENTORY

                  All Petroleum Substances produced prior to the Effective Time
and beyond the wellhead do not comprise part of the Assets and shall remain the
property of Vendor and the proceeds from the sale thereof whether prior to or
after the Effective Time shall accrue and belong to Vendor. Vendor shall
reimburse Purchaser for any reasonable charges paid by Purchaser for storage of
such inventory by Vendor. If, on the date of the final statement of adjustments,
such substances have not been sold, the Parties may agree upon an


<PAGE>   16

                                     - 11 -


appropriate payment to be made to compensate Vendor for the assignment of the
remaining inventory to Purchaser.

5.4               ACCOUNTS RECEIVABLE

                  Purchaser shall provide all reasonable assistance to Vendor
with respect to the collection from others of any receivable by Vendor which
relate to the Assets and which accrued prior to the Effective Date.

5.5               GOODS AND SERVICES TAX

                  The Parties acknowledge that the Purchase Price does not
include any goods and services tax ("GST") that may be payable by Purchaser
pursuant to the Excise Tax Act (Canada)(the "Act") in respect of the purchase of
the Assets by Purchaser, but they also acknowledge that GST should not be
payable in respect of such purchase by virtue of the provisions of Section
167(1) of the Act. In connection therewith:

         i.       Purchaser is now, and will until the completion of the Closing
                  continue to be, a registrant under the Act;

         ii.      Vendor is now, and will until the completion of the Closing
                  continue to be, a registrant under the Act;

         iii.     Vendor and Purchaser shall, at Closing, prepare and jointly
                  execute the election prescribed under Section 167(1) of the
                  Act, and upon completion of the Closing Purchaser shall file
                  such election in the manner and within the time prescribed
                  therefor; and

         iv.      Purchaser shall, in the event of an assessment by Revenue
                  Canada denying the use of Section 167(1) of the Act, reimburse
                  Vendor for any and all GST, interest and penalties assessed in
                  respect of the purchase of the Assets.

<PAGE>   17


                                     - 12 -


5.6               ADJUSTMENT PROCEDURE

                  All adjustments provided for in this Agreement shall be
effected pursuant to the Adjustment Procedure as set forth and described in
Schedule "D" attached hereto.

                                   ARTICLE VI
                                 EFFECTIVE TIME

6.1               EFFECTIVE TIME

                  The transfer and assignment of the Assets from Vendor to
Purchaser shall be effective as of the Effective Time.

                                   ARTICLE VII
                             CLOSING TIME AND PLACE

7.1               PLACE

                  Closing shall take place at the Place of Closing.

7.2               TIME

                  Closing shall take place at 2:00 p.m. on the 29th day of
October, 1998, or at such other time or upon such other day as may be agreed by
Purchaser and Vendor.

                                  ARTICLE VIII
                                 INTERIM PERIOD

8.1               MAINTENANCE OF ASSETS

                  From the Effective Time until Closing, Vendor shall, to the
extent that the nature of its interests permits, and subject to all agreements
applicable to the Assets:


<PAGE>   18


                                     - 13 -


         (a)      maintain the Assets in a proper and prudent manner in
                  accordance with generally accepted oil and gas industry
                  practices;

         (b)      pay or cause to be paid all costs and expenses relating to the
                  Assets; and

         (c)      perform and comply with all covenants and conditions contained
                  in the Said Leases and all other agreements relating to the
                  Assets.

8.2               CONDUCT OF BUSINESS

                  In the period from the Effective Time until the Closing Time,
Vendor shall conduct or cause to be conducted, in accordance with generally
accepted industry practices, such activities relative to the Assets as can
reasonably be regarded as being in the ordinary course of business for Vendor.
Vendor shall not conduct any activities with respect to the Assets which cannot
reasonably be regarded as being in the ordinary course of business of Vendor
without the prior written consent of Purchaser. It is agreed that where Vendor
desires to approve an A.F.E. as submitted by an operator where Vendor's share of
the costs thereunder is expected to exceed Twenty-Five Thousand ($25,000.00)
Dollars or renegotiate, amend, vary or alter any contract for the sale of
Petroleum Substances, Vendor shall:

         (a)      notify Purchaser of any such A.F.E. or any material changes to
                  any such contract for the sale of Petroleum Substances;

         (b)      permit Purchaser to consult with Vendor in respect of such
                  A.F.E. or changes; and

         (c)      be entitled to approve such A.F.E. or make any of the changes,
                  notwithstanding Purchaser's disagreement (if any), if Vendor
                  is dealing at arm's length with the remaining parties to the
                  contract and, acting in good faith, believes such approval or
                  changes are reasonable.

8.3               INTERIM AGENCY, LIABILITY AND INDEMNITY

                  Upon Closing of the transaction, Vendor shall be deemed, for
the period from the Effective Time to Closing, to have been the agent of
Purchaser with respect to all operations and other activities with respect to
the Assets and Purchaser ratifies, adopts and confirms all actions relative to
the Assets which Vendor


<PAGE>   19

                                     - 14 -


takes or refrains from taking, in accordance with this Article, as agent for
Purchaser with the intent and purpose that all actions relative to the Assets
taken or refrained from being taken by Vendor during this period shall be deemed
for all purposes as having been taken or refrained from being taken by
Purchaser. In the event that, upon Closing, Purchaser does not become recognized
as a party to any agreement relative to the Petroleum and Natural Gas Rights,
then Vendor shall serve as Purchaser's agent with respect to such agreement
until Purchaser is recognized as a party thereto, taking or refraining from
taking only such actions with respect to such agreement as Purchaser shall
direct in writing. Purchaser shall:

         (a)      be liable to Vendor for all damages, losses, expenses and
                  claims; and, in addition,

         (b)      indemnify and hold Vendor harmless against all damages,
                  losses, expenses and claims;

incurred by Vendor as a result of Vendor acting as the agent of Purchaser
pursuant to this Article including, without limitation, any and all third party
costs incurred by Vendor, Vendor's cost of insurance attributable to such
activities and any claims of third parties.

                                   ARTICLE IX
                                  TITLE RECORDS

9.1               GENERALLY

                  Vendor shall, during the period following the date upon which
this Agreement is executed by all Parties hereto until the Closing Time, make
such of the Said Leases, agreements and other documents and correspondence,
including title and unit opinions, affecting the title of the Vendor to the
Assets as are in the possession of Vendor, or to which Vendor has access,
available to Purchaser and its authorized representatives at the offices of
Vendor for such inspection as Purchaser requires, and Vendor will deliver copies
of such records to Purchaser promptly after Closing.


<PAGE>   20


                                     - 15 -


                                    ARTICLE X
                            CONFIDENTIAL INFORMATION

10.1              GENERALLY

                  Purchaser shall consider as confidential, shall not
communicate to others and shall use its best efforts to prevent those within its
employ or control from communicating to others prior to the Closing Time and, in
the event only that the transaction contemplated by this Agreement does not
close for any reason whatsoever, subsequent to the Closing Time, all information
which Purchaser receives from Vendor pursuant to this Agreement other than
information which:

         (a)      was in the possession of Purchaser prior to its receipt or
                  acquisition from Vendor;

         (b)      at the time of disclosure, is in the public domain;

         (c)      after disclosure, becomes part of the public domain by
                  publication or otherwise, through no act or omission on the
                  part of Purchaser; or

         (d)      is required to be disclosed pursuant to the applicable
                  legislation, regulations or rules or by the direction of any
                  court, tribunal or administrative body having jurisdiction.

                                   ARTICLE XI
                             CONSENTS AND APPROVALS

11.1              GENERALLY

                  Prior to Closing, each of the Parties hereto shall use all
reasonable efforts to obtain and deliver to the other Party hereto all necessary
consents, permissions and approvals by shareholders, limited partners, third
parties and governmental and regulatory authorities applicable to it in
connection with the transaction herein provided for, including, without
restricting the generality of the foregoing, those notices specified in Clause
11.2 herein. Vendor agrees to provide reasonable assistance to Purchaser, at
Purchaser's cost and expense, required in connection with such application.

<PAGE>   21


                                     - 16 -


11.2              PURCHASE RIGHTS

                  If any of the Assets are subject to a preferential right of
purchase, right of first refusal or similar restriction made effective by virtue
of this Agreement, then Vendor shall promptly serve all notices as are required
under the preferential right of purchase, right of first refusal or similar
right provisions. Each such notice shall include a request for a waiver of the
right to purchase any of the Assets and shall specify that portion of the
Purchase Price which Purchaser attributes to the particular Asset or portion
thereof to which the preferential right of purchase, right of first refusal or
similar restriction applies.

11.3              ALLOCATION OF PURCHASE PRICE

                  Purchaser shall forthwith upon execution of this Agreement and
from time to time thereafter as requested by Vendor, provide to Vendor a
reasonable and bona fide allocation of the Purchase Price to any particular
portion of the Assets; including, without limitation, any of the Said Leases,
Said Lands or the Tangibles to which a preferential right of purchase, right of
first refusal or similar restriction applies.

                                   ARTICLE XII
                                TITLE OBJECTIONS

12.1              GENERALLY

                  From time to time, in any event no later than the close of
business on October 9, 1998, Purchaser shall give Vendor written notice of all
defects of which Purchaser is aware (other than any matters specified in the
Land Schedule) which materially and adversely affect the title of Vendor to the
Assets and which Purchaser does not waive (all of which are herein referred to
as "Title Defects"). Prior to the Closing Time, Vendor shall diligently make all
reasonable efforts to cure or remove all Title Defects. If all Title Defects are
not cured or removed at or before the Closing Time, Purchaser may elect at or
before Closing Time to:

         (a)      with the agreement of Vendor, grant a further period of time
                  within which Vendor may cure or remove the uncured Title
                  Defects; or

         (b)      subject to Clause 12.3, waive the uncured Title Defects and
                  proceed with Closing; or

<PAGE>   22


                                     - 17 -


         (c)      proceed with the Closing of the sale of the Assets which are
                  not affected by Title Defects, which Closing shall be
                  completed at the Closing Time in accordance with this
                  Agreement and the portion of the Purchase Price payable for
                  such portion of the Assets shall be paid by Purchaser to
                  Vendor at the Closing Time. Vendor shall make all reasonable
                  efforts or cure or remove the remaining Title Defects within
                  two (2) months following the Closing Time. Vendor shall give
                  written notice to Purchaser within this period identifying
                  each of the Assets which Vendor has cured or removed Title
                  Defects from, if any. Purchaser shall give written notice to
                  Vendor identifying each Asset in respect of which Title
                  Defects have been waived by Purchaser, cured or removed to the
                  reasonable satisfaction of Purchaser within three (3) days
                  after receipt of Vendor's notice and the Closing of the sale
                  of the cured Assets shall occur on the second normal business
                  day after receipt by Vendor of Purchaser's notice. At such
                  time, Purchaser shall pay to Vendor the portion of the
                  Purchase Price equal to the value of the cured Assets. If
                  Vendor is unable to cure or remove any of the remaining Title
                  Defects within two (2) months of the Closing Time, Vendor and
                  Purchaser shall be released from all obligations hereunder to
                  buy and sell any such portion of the Assets that are still
                  subject to the remaining Title Defects or Purchaser may waive
                  the remaining Title Defects and proceed with the closing of
                  the sale of the remaining Assets. Failure by Purchaser to make
                  such election at or before Closing Time shall be irrefutably
                  and conclusively deemed to be an election to waive all uncured
                  Title Defects. In the event that the value, determined
                  pursuant to Clause 12.2, of those Assets affected with Title
                  Defects which Purchaser does not waive, equals or exceeds an
                  amount equal to Five Percent (5%) of the Purchase Price,
                  either Purchaser or Vendor may, by notice to the other party,
                  declare this Agreement rescinded and of no effect, whereupon
                  both Parties shall take all actions and steps necessary to
                  return the Parties to the position that they would have been
                  in with respect to the ownership of the Assets as if this
                  Agreement had not been entered into.

12.2              VALUE ALLOCATION

                  If it is necessary to allocate a value for the purposes of
Clause 12.1 to any particular portion of the Assets, the Parties shall allocate
values as can be agreed upon, acting reasonably, and having due regard for the
proportion of value placed upon that portion of the Assets by recent independent
engineering reports which may have been prepared for the purpose of the sale
contemplated herein.

<PAGE>   23


                                     - 18 -


12.3              RIGHTS OF FIRST REFUSAL

                  Each preferential right of purchase, right of first refusal
and similar right applicable to the Assets shall constitute a Title Defect for
the purpose of Clause 12.1 until such right is waived or exercised by the holder
thereof, lapses or is extinguished. Purchaser may not waive as a Title Defect
the existence or operation of any preferential right of purchase, right of first
refusal or similar right to purchase any of the Assets. In the event that a
preferential right of purchase, right of first refusal or similar right is
exercised, the value allocated to the portion of the Assets subject to the
exercised right shall be deducted from the Purchase Price to be paid pursuant to
Clause 3.1.

                                  ARTICLE XIII
                                   CONVEYANCES

13.1              GENERALLY

                  At Closing and thereafter, the Vendor shall execute and
deliver to Purchaser such transfers, assignments, conveyances (including the
Conveyance), novations, notices and other documents with respect to the Assets
as may have been prepared by Vendor and as may be reasonably required by
Purchaser. Vendor shall co-operate with Purchaser's efforts to secure execution
of such documents by the parties thereto other than Vendor and Purchaser.

13.2              SUBORDINATE DOCUMENTS

                  All documents executed and delivered pursuant to the
provisions of this Article or otherwise pursuant to this Agreement are
subordinate to the provisions of this Agreement and the provisions of this
Agreement shall govern and prevail in the event of a conflict between the
provisions of any such document and the provisions of this Agreement.

                                   ARTICLE XIV
                            VENDOR'S REPRESENTATIONS

14.1              GENERALLY

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


<PAGE>   24


                                     - 19 -


         (a)      Corporate Standing

                  Vendor is, and at the Closing Time shall continue to be a
                  limited partnership duly formed under the laws of the Province
                  of Alberta and Timberwolf Resources Ltd., the General Partner
                  of the Vendor, is a corporation duly organized, validly
                  existing and in good standing under the laws of the Province
                  of Alberta;

         (b)      Requisite Authority

                  Vendor has all requisite corporate power and authority to
                  enter into this Agreement and to perform the obligations of
                  Vendor under this Agreement;

         (c)      No Conflicts

                  The consummation by Vendor of the transaction contemplated
                  herein will not violate, nor be in conflict with, any
                  provision of any agreement or instrument to which Vendor is a
                  party or by which Vendor is bound or any judgment, decree,
                  order, law, statute, rule or regulation applicable to Vendor;

         (d)      Title

                  Although Vendor does not warrant title to the Assets, it does
                  represent, warrant and covenant that Vendor has done no act or
                  thing whereby the Assets may be cancelled or determined and
                  that the Assets are now, and will be at the Closing Time and
                  the Effective Time, free and clear of all liens, charges,
                  encumbrances and adverse claims created by, through or under
                  Vendor, except such thereof as are Permitted Encumbrances.

         (e)      Quiet Enjoyment

                  Subject to the rents, covenants, conditions and stipulations
                  in the Said 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

<PAGE>   25


                                     - 20 -


                  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)      Execution and Enforceability of Documents

                  This Agreement has been duly executed and delivered by Vendor
                  and all other documents (including the Conveyance) executed
                  and delivered by Vendor pursuant hereto shall have been duly
                  executed and delivered by Vendor. This Agreement does, and
                  such documents (including the Conveyance) will, constitute
                  legal, valid and binding obligations of Vendor enforceable in
                  accordance with their respective terms, subject to bankruptcy,
                  insolvency, preference, reorganization, moratorium and other
                  similar laws affecting creditor's rights generally and the
                  discretion of courts with respect to equitable or
                  discretionary remedies and defences;

         (g)      Finders' Fees or Consulting Fees

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

         (h)      No Lawsuits or Claims

                  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;

         (i)      Good Standing Under Agreements

                  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)      Tax Resident

                  Vendor is not a non-resident of Canada within the meaning of
                  Section 116 of the Income Tax Act (Canada);


<PAGE>   26


                                     - 21 -


         (k)      Taxes

                  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 or will be paid by Vendor;

         (l)      Outstanding A.F.E.'s

                  Other than as set forth in Schedule "F", there are no A.F.E.'s
                  approved by Vendor with respect to the Assets for which Vendor
                  has not been completely billed as at the date hereof and there
                  are no outstanding cash calls with respect to the Assets and
                  Schedule "F" hereto sets forth the amount not yet billed
                  pursuant to each such A.F.E. and the amount of each
                  outstanding cash call;

         (m)      Good Oil and Gas Field Practice

                  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)      Independent Operations Penalties

                  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, except as
                  disclosed in Schedule "A" hereto;


<PAGE>   27

                                     - 22 -


         (o)      Reduction of Interest

                  Except as otherwise expressly noted in Schedule "A" hereto,
                  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)      Production Sales Contracts

                  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 or agreements which are disclosed in
                  Schedule "E" hereto;

         (q)      Take or Pay

                  The Assets and Petroleum Substances produced therefrom are not
                  subject to Take or Pay Obligations;

         (r)      Offset Wells

                  To the best of Vendor's information, there are not in
                  existence any obligations arising under any of the Said Leases
                  or otherwise with respect to the Said Lands to drill thereon a
                  well located in a spacing unit offsetting any other well,
                  whether or not that other well is located on the Said Lands;

         (s)      Tangibles

                  To the best of Vendor's information, the Tangibles have been
                  constructed, installed, maintained and operated in accordance
                  with good oil and gas industry practices and in compliance
                  with all applicable rules and regulations and the Facilities
                  are owned by Vendor;

<PAGE>   28


                                     - 23 -


         (t)      Compliance

                  To the best of Vendor's information, Vendor has been and is in
                  material compliance with all laws, regulations and orders
                  relating to the Assets and Vendor has not received notice of
                  non-compliance and does not know of any facts which could give
                  rise to a notice of non- compliance with any such laws,
                  regulations or orders which would have a material adverse
                  effect on the Assets;

         (u)      Well Abandonment

                  Vendor has not expressly authorized any abandonment of any
                  Well which abandonment has not been completed and Vendor is
                  not presently required by good oilfield practice to abandon
                  any Well and there are no abandoned Wells in respect of which
                  reclamation certificates have not been obtained;

         (v)      Disclosure

                  To the best of Vendor's information, Vendor has made available
                  to Purchaser all documents, data and information in its
                  possession or control pertaining to the Assets relevant to
                  Purchaser's investigation, analysis and evaluation of the
                  Assets. To the best of Vendor's information, Vendor has not
                  withheld from Purchaser any documents, data or information
                  reasonably required that would make the documents, data and
                  information made available to Purchaser misleading;

         (w)      Preferential Rights

                  No person, firm or corporation has any preferential right of
                  purchase to acquire any interest in the Assets.

         (x)      Delay Rentals

                  To the best of Vendor's information, Vendor has paid or caused
                  to be paid within applicable time limits all relevant
                  deposits, rentals and royalties and has performed and observed
                  or caused to be performed and observed all obligations and
                  covenants required to keep the Said

<PAGE>   29


                                     - 24 -


                  Leases and all documents of title respecting the Said Lands
                  and any of them in full force and effect; and

         (y)      Environmental Matters

                  Vendor is not aware of and has not received:

                  (i)      any orders or directions from any governmental or
                           regulatory authority which relate to environmental
                           matters and which require any work, repairs,
                           construction or capital expenditures with respect to
                           the Assets, where such orders or directions have not
                           been complied with in all material respects; and

                  (ii)     any demand or notice issued by any governmental or
                           regulatory authority 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 at the Closing
                           Time;

                  except as have been specifically disclosed by Vendor by notice
                  to Purchaser and Vendor has made available to Purchaser all
                  information within Vendor's possession, and has not knowingly
                  withheld any such information from Purchaser relevant to any
                  environmental damage or contamination or other environmental
                  problems pertaining to the Assets.

14.2              Limitation

                  Vendor makes no representation or warranty whatsoever except
as and to the extent expressly set forth in Clause 14.1. Vendor disclaims any
liability and responsibility for any representation or warranty which may have
been made or alleged to have been made and which are contained in any instrument
or document relative hereto or the transactions herein provided for, or
contained in any statement or information made or communicated (orally or in
writing) to Purchaser including, without limitation of the generality of the
foregoing, any opinion, information or advice which may have been provided to
Purchaser by any officer, shareholder, director, employee, agent, consultant or
representative of Vendor. Without limiting the generality of the foregoing,
Vendor makes no representations or warranties or covenants as to:

<PAGE>   30


                                     - 25 -


         (a)      its title in or to the Assets except as, and only to the
                  extent, set forth in Subclause 14.1(d);

         (b)      the amounts, quality, recoverability or deliverability of
                  reserves of Petroleum Substances attributable to the Said
                  Lands;

         (c)      the quality, fitness, condition or merchantability of all or
                  any of the Tangibles;

         (d)      any geological or other interpretations or economic
                  evaluations of the Assets; and

         (e)      estimates of prices or future cash flows arising from the sale
                  of reserves of Petroleum Substances attributable to the Said
                  Lands or estimates of other revenues attributable to the
                  Assets or the availability or continued availability of
                  transportation to sell such Petroleum Substances.

14.3              SUBROGATION

                  The representations, warranties and covenants of Vendor
contained in this Agreement or made or given pursuant or collateral hereto are
made for the exclusive benefit of Purchaser and are not transferable by
Purchaser and may not be made the subject of any right of subrogation by
Purchaser in favour of any other entity.

                                   ARTICLE XV
                          PURCHASER'S REPRESENTATIONS

15.1              GENERALLY

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

         (a)      Corporate Standing

                  Purchaser is, and at the Closing Time shall continue to be, a
                  company duly organized, validly existing and in good standing
                  under the laws of the Province of Alberta;



<PAGE>   31


                                     - 26 -


         (b)      Requisite Authority

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

         (c)      No Conflicts

                  The consummation by Purchaser of the transactions contemplated
                  by this Agreement will not violate, nor be in conflict with,
                  the provisions of any agreement or instrument to which
                  Purchaser is a party or by which Purchaser is bound, or any
                  judgment, decree, order, law, statute, rule or regulation
                  applicable to Purchaser;

         (d)      Execution and Enforceability of Documents

                  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. This Agreement does, and such documents will,
                  constitute legal, valid and binding obligations of Purchaser
                  enforceable in accordance with their respective terms, subject
                  to bankruptcy, insolvency, preference, reorganization,
                  moratorium and other similar laws affecting creditor's rights
                  generally and the discretion of courts with respect to
                  equitable or discretionary remedies and defences;

         (e)      Finder's Fees of Consulting Fees

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

         (f)      Investment Canada

                  Purchaser is not a non-Canadian within the meaning and for the
                  purposes of the Investment Canada Act; and

<PAGE>   32


                                     - 27 -


         (g)      Good Standing

                  Purchaser is a reporting issuer in the Province of Alberta in
                  good standing, its Class "A" common shares are listed for
                  trading on the Alberta Stock Exchange, Purchaser is not
                  subject to any cease trade order, whether interim or final and
                  to the best of Purchaser's information, Purchaser is not in
                  default of the requirements of the Alberta Stock Exchange or
                  the Alberta Securities Commission.

15.2              SUBROGATION

                  The representations, warranties and covenants of Purchaser
contained in this Agreement or made or given pursuant to collateral hereto are
made for the exclusive benefit of Vendor and are not transferable by Vendor and
may not be made the subject of any right of subrogation by Vendor in favour of
any other entity.

                                   ARTICLE XVI
                                    NO MERGER

16.1              GENERALLY

                  The covenants, representations and warranties set forth in
Clauses 14.1 and 15.1 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 covenants, representations and warranties
in such assignments, transfers or documents notwithstanding any rule of law,
equity or statute to the contrary and all such rules are hereby waived.

                                  ARTICLE XVII
                            INDEMNITY RE: OPERATIONS

17.1              GENERALLY

                  Subject to the provisions of Article VIII and except as
otherwise expressly provided for herein, Vendor shall continue to remain liable
for and, in addition, shall indemnify Purchaser from and against any


<PAGE>   33


                                     - 28 -


liability, loss, costs, penalties, fines, court costs, legal (on a solicitor and
client basis), accountant, and other professional expenses, claims or damages
arising out of or pertaining to operations conducted by Vendor with respect to
the Assets and accruing prior to the Effective Time and Purchaser shall be
liable to Vendor and, in addition, shall indemnify Vendor from and against any
liability, loss, costs, penalties, fines, court costs, legal (on a solicitor and
client basis), accountant, and other professional expenses, claims or damages
arising out of or pertaining to operations conducted by Purchaser with respect
to the Assets from and subsequent to the Effective Time; excepting in each case
any liability, loss, costs, claims or damages to the extent that the same are
reimbursed by insurance or caused by the negligence of the other Party hereto.
Such indemnities shall be deemed to apply to all assignments, transfers,
conveyances, novations and other documents conveying the Assets to Purchaser.

17.2              SUBROGATION RE: THIRD PARTIES

                  Each party shall have the full right of substitution and
subrogation in and to all covenants and warranties by others heretofore given in
respect of the Assets or any part thereof.

17.3              ROYALTIES

                  Purchaser shall honour and observe all the rights and
obligations attaching to and shall pay all royalties and other encumbrances set
forth in the Land Schedule due with respect to the production of Petroleum
Substances attributable to the Assets from and after the Effective Time, and
Purchaser shall be liable to Vendor and, in addition, shall indemnify Vendor
from any claim with respect to non-observance or non-payment of such
obligations.

17.4              WELL ABANDONMENT AND RECLAMATION

                  At Closing, Purchaser assumes liability for all well
abandonment and reclamation costs attributable to the Assets and Purchaser shall
be liable to Vendor and, in addition, shall indemnify Vendor from and against
any liability, loss, costs, penalties, fines, court costs, legal (on a solicitor
and client basis), accountant and other professional expenses, claims or
damages, including consequential damages arising out of or relating to such well
abandonment and reclamation or the failure by Purchaser to carry out such well
abandonment and reclamation.


<PAGE>   34


                                     - 29 -


17.5              ENVIRONMENTAL DAMAGE

                  At Closing, Purchaser assumes liability for all environmental
damage attributable to the Assets and Purchaser shall be liable to Vendor and,
in addition, shall indemnify Vendor from and against


any liability, loss, costs, penalties, fines, court costs, legal (on a solicitor
and client basis), accountant and other professional expenses, claims or
damages, including consequential damages, arising out of or relating to
environmental damage attributable to the Assets.

                                  ARTICLE XVIII
                                     BREACH

18.1              SURVIVAL

                  Notwithstanding anything to the contrary herein expressed or
implied and notwithstanding the Closing and deliveries of covenants,
representations and warranties in any other agreements or documents at Closing
or prior or subsequent thereto or investigations by the Parties or their
counsel, the covenants, representations and warranties set forth in Clauses 14.1
and 15.1 shall survive Closing for the benefit of the Parties.

18.2              TIME LIMITATION

                  No claim for breach of the covenants, representations and
warranties set forth in this Agreement or for misrepresentation herein or
pursuant or with respect hereto or for indemnification of Purchaser pursuant
hereto shall be made or be enforceable, whether by legal proceedings or
otherwise howsoever, unless written notice of the claim setting out reasonable
details of the full particulars of the claim is given by the claimant to the
other Party within eighteen (18) months of the Closing Time.

                                   ARTICLE XIX
                           VENDOR'S CLOSING CONDITIONS

19.1              GENERALLY

                  The obligation of Vendor to complete the sale of the Assets to
Purchaser pursuant to this Agreement is subject to the satisfaction at or prior
to the Closing Time of the following conditions precedent:

<PAGE>   35


                                     - 30 -


         (a)      Representations True

                  All representations and warranties of Purchaser contained in
                  this Agreement shall be true in all material respects at and
                  as of the Effective Time and the Closing Time and Purchaser
                  shall have performed and satisfied all agreements required by
                  this Agreement to be performed and satisfied by Purchaser at
                  or prior to the Closing Time.

         (b)      Payment

                  Purchaser shall have tendered to Vendor the cash portion of
                  the Purchase Price, a promissory note for the balance of the
                  cash portion of the Purchase Price payable by Purchaser to
                  Vendor pursuant hereto and the Shares at the Closing Time;

         (c)      Conveyance

                  Purchaser shall have executed and delivered the Conveyance;
                  and

         (d)      Opinion of Vendor's Solicitors

                  Vendor's solicitors shall be satisfied that all corporate and
                  regulatory requirements applicable to Purchaser and the
                  enforceability of this Agreement and the Conveyance have been
                  obtained.

The foregoing conditions shall be for the benefit of Vendor and may, without
prejudice to any of the rights of Vendor hereunder (including reliance upon or
enforcement of the representations, warranties or covenants which are preserved
dealing with or similar to the condition waived), be waived by Vendor in
writing, in whole or in part, at any time. In case any of the conditions
precedent shall not be complied with, or waived by Vendor, at or before the
Closing Time, Vendor may rescind or terminate this Agreement by written notice
to Purchaser.

<PAGE>   36

                                     - 31 -


                                   ARTICLE XX
                         PURCHASER'S CLOSING CONDITIONS

20.1              GENERALLY

                  The obligation of Purchaser to complete the purchase of the
Assets from Vendor pursuant to this Agreement is subject to the satisfaction at
or prior to the Closing Time of the following conditions precedent:

         (a)      Representations True

                  All representations and warranties of Vendor contained in this
                  Agreement shall be true in all material respects at and as of
                  the Effective Time and the Closing Time and Vendor shall have
                  performed and satisfied all agreements required by this
                  Agreement to be performed and satisfied all agreements
                  required by this Agreement to be performed and satisfied by
                  Vendor at or prior to the Closing Time;

         (b)      Conveyance

                  Vendor shall have executed and delivered the Conveyance.

         (c)      Opinion of Purchaser's Solicitors

                  Purchaser's solicitors shall be satisfied that all corporate
                  and regulatory requirements applicable to Vendor and the
                  enforceability of this Agreement and the Conveyance have been
                  obtained;

         (d)      Waiver of Preferential Rights

                  Vendor shall have delivered to Purchaser evidence reasonably
                  satisfactory to Purchaser that all preferential rights of
                  purchase have lapsed, been waived or duly exercised; and

<PAGE>   37


                                     - 32 -


         (e)      Material Adverse Change

                  Purchaser shall be satisfied that there has not been a
                  material adverse change in the physical condition of the
                  Assets from the Effective Time to the Closing Time which
                  Purchaser agrees shall exclude any material adverse changes in
                  the Assets due to changes in the prices at which Petroleum
                  Substances may be sold.

The foregoing conditions shall be for the benefit of Purchaser and may, without
prejudice to any of the rights of Purchaser hereunder (including reliance upon
or enforcement of warranties or covenants which are preserved dealing with or
similar to the condition or conditions waived), be waived by Purchaser in
writing, in whole or in part, at any time, provided Purchaser may not waive the
existence and operation of any preferential right to purchase any of the Assets.
In case any of the conditions precedent shall not be complied with, or waived by
Purchaser, at or before the Closing Time, Purchaser may rescind and terminate
this Agreement by written notice to Vendor.

                                   ARTICLE XXI
                              COVENANTS RE: CLOSING

21.1              GENERALLY

                  Each of the Parties covenants and agrees with the other Party
to use all reasonable efforts until Closing, to take or refrain from taking all
actions with the intent that the Closing conditions herein shall be satisfied,
the representations and warranties herein made by it shall be true and correct,
and all covenants and agreements herein made by it shall have been performed.

                                  ARTICLE XXII
                                   TERMINATION

22.1              GENERALLY

                  In the event that this Agreement is terminated pursuant to any
of the provisions hereto, each Party hereto shall be released from all
obligations hereunder and each Party shall take all reasonable action to return
each of the other Parties hereto to the position relative to the Assets which
such Party occupied prior


<PAGE>   38


                                     - 33 -


to the execution hereof, it being understood that Vendor and Purchaser will each
bear all costs incurred by it prior to such termination. Any termination as
aforesaid shall be without liability of any Party to any other Party or to any
of such other Party's shareholders, directors, officers, employees, agents,
consultants or representatives.

                                  ARTICLE XXIII
                                  MISCELLANEOUS

23.1              NO DUPLICATION OF REMEDIES

                  A Party shall not be liable to the other Party except as
provided for herein, for any misrepresentation herein, pursuant hereto or with
respect hereof or for breach of any warranty or covenant herein in the event
that, with respect to the subject of the misrepresentation or breach of warranty
or covenant, provision is made herein for indemnity by one Party to the other
Party or for adjustment by one Party in favour of the other Party or for another
specific right or remedy.

23.2              FURTHER ASSURANCES

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

23.3              ASSIGNMENT

                  Prior to Closing, Purchaser shall not assign all or any part
of this Agreement or any of the rights or obligations of Purchaser under this
Agreement, without the prior written consent of Vendor, which consent may be
arbitrarily withheld by Vendor.

23.4              REPORTING ISSUER STATUS

                  Purchaser shall use reasonable efforts to maintain its status
as a reporting issuer not in default of the requirements of the Securities Act
(Alberta) or of the Alberta Stock Exchange for a period of one (1) year from
Closing.


<PAGE>   39


                                     - 34 -


23.5              SIGNS AND NOTIFICATIONS

                  After Closing, Vendor may remove any signs which indicate
Vendor's ownership or operation of the Assets. It shall be the responsibility of
Purchaser, where necessary, to erect or install any signs that may be required
by governmental agencies indicating Purchaser to be the operator of the Assets
and to notify other working interest owners, gas, suppliers, contractors,
governmental agencies and any other third party of Purchaser's interest in the
Assets.

23.6              CONSTRUCTION AND ATTORNMENT

                  This Agreement 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 accepts the jurisdiction of the Courts of the
Province of Alberta and all courts of appeal therefrom.

23.7              TIME

                  Time shall be of the essence of this Agreement.

<PAGE>   40


                                     - 35 -


23.8              PUBLIC ANNOUNCEMENT

                  Each of the Parties shall cooperate with the other in relaying
information concerning this Agreement and the transactions herein provided for,
and shall furnish to, discuss with, and obtain written approval from the other
Party of drafts of all press and other releases prior to publication, which
approval may be reasonably withheld; provided that nothing contained herein
shall prevent either Party, at any time, from furnishing any information to any
governmental agency or regulatory authority or to the public if required by
applicable law.

23.9              PRIOR AGREEMENTS AND AMENDMENTS

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

23.10             ENUREMENT

                  This Agreement shall be binding upon and shall enure to the
benefit of the Parties and their respective successors, receivers,
receiver-managers, trustees and permitted assigns, as set out herein.

23.11             ADDRESSES

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

                  PURCHASER:      GEOCAN ENERGY INC.
                                  Elveden House
                                  Suite 800, 717 - 7th Avenue S.W.
                                  Calgary, Alberta
                                  T2P 0Z3
                                  Attention:  Mr. Bradley Farris
                                  Telephone:  (403) 261-3851
                                  Facsimile:  (403) 261-3834

<PAGE>   41


                                     - 36 -


                  VENDOR:         TIMBERWOLF PRODUCTION FUND #4
                                  LIMITED PARTNERSHIP
                                  Elveden House
                                  Suite 800, 717 - 7th Avenue S.W.
                                  Calgary, Alberta
                                  T2P 0Z3
                                  Attention:  Mr. Wayne Wadley
                                  Telephone:  (403) 261-3835
                                  Facsimile:  (403) 261-3834

Either of the Parties may from time to time change its address for service
herein by giving written notice to the other Party. Any notice may be served by
personal service upon a Party or by instantaneous electronic means to the number
for notice hereunder. Any notice given by service upon a Party and any notice
given by instantaneous electronic means shall be deemed to be given to and
received by the addressee on the day (except Saturdays, Sundays, and statutory
holidays) of service or after the sending thereof with appropriate answerback
acknowledgment.

23.12             COUNTERPART EXECUTION

                  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 (1) agreement.

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

                                      TIMBERWOLF PRODUCTION FUND #4 LIMITED
                                      PARTNERSHIP, by its general partner,
                                      TIMBERWOLF RESOURCES LTD.


                                      Per:
                                           ------------------------------------

                                      Per:
                                           ------------------------------------


                                      GEOCAN ENERGY INC.


                                      Per:
                                           ------------------------------------

                                      Per:
                                           ------------------------------------


<PAGE>   42

                                  SCHEDULE "A"


                  attached to and forming part of an Agreement of Purchase and
                  Sale made as of this 11th day of September, 1998 between
                  Timberwolf Production Fund #4 Limited Partnership, as Vendor,
                  and Geocan Energy Inc., as Purchaser.

================================================================================


                                  LAND SCHEDULE

<TABLE>
<CAPTION>
                              WORKING
SAID LANDS                    INTEREST %              SAID LEASES                ENCUMBRANCES
----------                    ----------              -----------                ------------
<S>                           <C>                     <C>                       <C>                   <C>
061-12-5 E34                  10.0000%                117793                     ACR                   15% GORR
061-12-5 W34                  10.0000%                121795                     ACR                   15% GORR
061-11-5 W07                  10.0000%                126245                     ACR                   15% GORR
061-11-5 S18                  10.0000%                                           ACR                   15% GORR
061-12-5 S13                  10.0000%                                           ACR                   15% GORR
061-11-5 S03                  0.25000%                0587090203                 ACR
061-11-4 N03                  0.25000%                0588020434                 ACR
061-11-5 E07                  10.0000%                0595060094                 ACR
061-11-5 N18                  10.0000%                0595060095                 ACR
061-12-5 N13                  10.0000%                0595060096                 ACR
062-12-5 N21                  10.0000%                0595060097                 ACR
061-11-5 05, 06, 08           10.0000%                0595090507                 ACR
061-12-5 S01                  10.0000%                0595090509                 ACR
062-12-5 N20                  10.0000%                0595090518                 ACR
063-11-5 S & NE 08            10.0000%                0595090529                 ACR
061-12-5 02, 03               10.0000%                0596030190                 ACR
</TABLE>


"ACR"  means Alberta Crown Royalty

<PAGE>   43

                                  SCHEDULE "B"


                  attached to and forming part of an Agreement of Purchase and
                  Sale made as of this 11th day of September, 1998 between
                  Timberwolf Production Fund #4 Limited Partnership, as Vendor,
                  and Geocan Energy Inc., as Purchaser.

================================================================================

The Vendor's working interests for the Wells listed in Schedule "G", which,
without limiting the generality hereof, includes all associated Well equipment,
all surface or downhole well equipment, wellbore or casing associated with each
Well.


Gathering System and Surface Facilities

         (a)      Danoil Carson Creek East Gathering System
                  WI - 10.00%

         (b)      Carson Creek East Sour Gas Processing Facility
                  WI - 0.1832%



"WI"     means working interest

<PAGE>   44

                                  SCHEDULE "C"


                  attached to and forming part of an Agreement of Purchase and
                  Sale made as of this 11th day of September, 1998 between
                  Timberwolf Production Fund #4 Limited Partnership, as Vendor,
                  and Geocan Energy Inc., as Purchaser.

================================================================================

                                   CONVEYANCE

                          (Carson Creek Area, Alberta)


                  THIS CONVEYANCE dated the ___ day of October, 1998

BETWEEN:

                  TIMBERWOLF PRODUCTION FUND #4 LIMITED PARTNERSHIP, an
                  Alberta limited partnership by its General Partner,
                  TIMBERWOLF RESOURCES LTD., a body corporate, having an office
                  in the City of Calgary, in the Province of Alberta.

                  (hereinafter called "Vendor")

                                     - and -

                  GEOCAN ENERGY INC., a body corporate, having an office in the
                  City of Calgary, in the Province of Alberta,

                  (hereinafter called "Purchaser").

WITNESSES THAT:

                  WHEREAS Vendor has agreed to sell and assign to Purchaser and
Purchaser has agreed to purchase and acquire from Vendor, the Assets;

                  NOW THEREFORE for the consideration provided in the Agreement
of Purchase and Sale and in consideration of the premises hereto and the
covenants and agreements hereinafter set forth and contained, the Parties hereto
covenant and agree as follows:

                                    ARTICLE 1

1. In this Conveyance, including the premises hereto and this Article, the
definitions set forth in the Agreement of Purchase and Sale are adopted herein
by reference and, in addition:

                  "Agreement of Purchase and Sale" means that certain Agreement
                  between Vendor and Purchaser dated the 11th day of September,
                  1998, pursuant to which Vendor has agreed to sell and assign
                  to Purchaser, and Purchaser has agreed to purchase and acquire
                  from Vendor, the Assets (as defined in the Agreement of
                  Purchase and Sale).

<PAGE>   45

                                        2

                                    ARTICLE 2
                                   CONVEYANCE

2. Vendor, pursuant to and for the consideration provided for in the Agreement
of Purchase and Sale, the receipt and sufficiency of such consideration being
hereby acknowledged by Vendor, hereby sells, assigns, transfers, conveys and
sets over to Purchaser its entire right, title, estate and interest in and to
the Assets, to have and to hold the same, together with all benefit and
advantage to be derived therefrom.

                                    ARTICLE 3
                                 EFFECTIVE TIME

3. This Conveyance shall be effective as of the 1st day of July, 1998.

                                    ARTICLE 4
                                   CONDITIONS

4. All conditions required by the Agreement of Purchase and Sale to be satisfied
at or prior to the Closing Date have been satisfied or, if not satisfied, have
been waived by Vendor and Purchaser.

                                    ARTICLE 5
                                    ENUREMENT

5. This Conveyance shall be binding upon and shall enure to the benefit of each
of the Parties hereto and their respective successors and assigns.

                                    ARTICLE 6
                              SUBORDINATE DOCUMENT

6. The parties hereto acknowledge that except as herein otherwise provided, all
of the provisions of the Agreement of Purchase and Sale shall apply and are
hereby incorporated by reference in so far as they relate to the Assets.

                                    ARTICLE 7
                               FURTHER ASSURANCES

7. Each Party hereto will, from time to time and at all times hereafter at the
request of the other Party, but without further consideration, do all such
further acts and execute and deliver all such further documents as shall be
reasonably required in order to fully perform and carry out the terms hereof and
to more effectively vest in Purchaser the Assets.

                                    ARTICLE 8
                                  MISCELLANEOUS

8.1 This Conveyance shall be governed by and shall be construed in accordance
with the laws of the Province of Alberta, and the Courts of the Province of
Alberta shall have exclusive jurisdiction with respect to all legal proceedings
arising out of this Conveyance.

<PAGE>   46

                                        3


8.2 The Article headings contained in this Conveyance have been inserted for
convenience of reference only and form no part of this Conveyance and shall not
in any way affect the meaning or interpretation of this Conveyance.

                  IN WITNESS WHEREOF the Parties have hereunto executed and
delivered this Agreement as of the day and year first above written.


                                      TIMBERWOLF PRODUCTION FUND #4 LIMITED
                                      PARTNERSHIP, by its General Partner,
                                      TIMBERWOLF RESOURCES LTD.,


                                      Per:
                                           ------------------------------------

                                      Per:
                                           ------------------------------------

                                      GEOCAN ENERGY INC.


                                      Per:
                                           ------------------------------------

                                      Per:
                                           ------------------------------------


<PAGE>   47


                                  SCHEDULE "D"

                  attached to and forming part of an Agreement of Purchase and
                  Sale made as of this 11th day of September, 1998 between
                  Timberwolf Production Fund #4 Limited Partnership, as Vendor,
                  and Geocan Energy Inc., as Purchaser.

================================================================================

                              ADJUSTMENT PROCEDURE

ADJUSTMENT DETAILS

                  Subject to the provisions of the Agreement of Purchase and
Sale which this Schedule "D" is attached to and made a part of, the following
Adjustment Procedure shall apply:

1.                FOR CLOSING

                  On or before the forty-fifth day after the Closing Time, or as
otherwise agreed by the Parties, Vendor shall deliver to Purchaser a written
interim statement of all adjustments and payments to be made pursuant to the
provisions of this Agreement and shall make available to representatives of
Purchaser all information necessary for such representatives to understand and
confirm the calculations in such statement. Vendor and Purchaser shall cooperate
in settling and agreeing to the amounts of the adjustments and payments to be
made pursuant to the provisions hereof on an interim basis.

2.                POST CLOSING

                  Within the one hundred and twenty (120) day period following
the Closing Time, Vendor and Purchaser shall cause their representatives to
cooperate in preparing, on the basis of information available within such
period, a final statement of all adjustments and payments to be made pursuant to
the provisions of this Agreement and upon agreement as to the amounts of all
such adjustments and payments to be made pursuant to this Agreement, the net
amount thereof shall be remitted by the party to this Agreement who, in the net
result, is obliged to make payment.

3.                DELAYED MATTERS

                  The Parties to this Agreement foresee that certain adjustments
will be necessary from time to time after the period referred to in Clause 2 of
this Adjustment Procedure and each of the Parties hereto agrees to co-operate in
calculating and confirming the amount of any payment as may be necessary as a
result thereof and agrees to make payment in the event of becoming obliged
thereby to make payment.

4.                LIMITATION

                  Notwithstanding the provisions of Clauses 1, 2, and 3 of this
Adjustment Procedure, no adjustments shall be made pursuant to the provisions of
this Adjustment Procedure pertaining to any matter with respect to which a Party
hereto has not given to the other Party hereto a written notice requesting an
adjustment within the two (2) year period following Closing.

<PAGE>   48


                                        2


5.                PAYMENT

         (a)      Following Closing:

                  (i)      revenues received by Vendor, if any, net of
                           applicable actual (or estimated) expenses shall be
                           paid by Vendor to Purchaser within fifteen (15) days
                           of receipt of such net revenues by Vendor; and

                  (ii)     actual expenses paid by Vendor which exceed the
                           revenues received by Vendor shall be paid by
                           Purchaser to Vendor within fifteen (15) days of
                           receipt of notification by Vendor to Purchaser of the
                           amount of such net excess expenses.

                  The net amount of either revenues or expenses shall be
remitted by the party to this agreement who, in the net result, is obliged to
make such payment. If such payment is not made by Vendor or Purchaser within the
times set forth in Subclause 5(a)(i) or (ii) above, whichever is applicable,
then the interest rate shall be the Prime Rate plus Two Percent (2%) for the
period subsequent to the final statement of adjustments.

6.                AUDIT

                  Purchaser shall have the right, exercisable within the period
referred to in Clause 4 of this Adjustment Procedure, upon fifteen (15) days'
prior written notice, to examine copy, and audit, at the sole expense of
Purchaser, the records of Vendor relative to the Assets for the purposes of
effecting adjustments pursuant to this Agreement.

7.                ARBITRATION

                  Any controversy arising under or out of this Adjustment
Procedure may be submitted to arbitration by either Vendor or Purchaser by
written notice to the other Party and the following principles shall apply to
any and each such arbitration:

         (a)      Appointment of Arbitrator(s):

                  Upon written demand of either Vendor or Purchaser,
                  representatives of Purchaser and Vendor shall meet and attempt
                  to appoint a single arbitrator. In the event that such
                  representatives are unable to agree on a single arbitrator,
                  then upon written demand by either Vendor or Purchaser, each
                  shall, within ten (10) days of such demand, name an arbitrator
                  and the two (2) arbitrators so named shall promptly thereafter
                  choose a third. If either Vendor or Purchaser shall fail to
                  name an arbitrator within ten (10) days from such demand, then
                  the second arbitrator shall be appointed by any Justice of the
                  Court of Queen's Bench of Alberta. If the two (2) arbitrators
                  shall fail within ten (10) days from their appointment to
                  agree upon and appoint the third arbitrator, then such third
                  arbitrator shall be appointed by any Justice of the Court of
                  Queen's Bench of Alberta.

<PAGE>   49


                                        3


         (b)      Qualification of Arbitrator(s):

                  The arbitrator or arbitrators selected to act hereunder shall
                  be qualified by education, experience and training to pass
                  upon the particular question or questions in dispute.

         (c)      Proceedings:

                  The arbitrator or arbitrators chosen shall proceed immediately
                  to hear and determine the question or questions in dispute.
                  The decision of the single arbitrator shall be made within
                  forty-five (45) days after his or her appointment, subject to
                  any reasonable delay due to unforeseen circumstances. Where
                  there are three (3) arbitrators, the decision of the
                  arbitrators, or a majority of them, shall be made within
                  forty-five (45) days after the appointment of the third
                  arbitrator, subject to any reasonable delay due to unforeseen
                  circumstances. In the event the single arbitrator or the
                  arbitrators, or a majority of them, fail to make a decision
                  within the period herein prescribed, then either party thereto
                  may elect to have a new single arbitrator or arbitrators
                  chosen in the manner herein prescribed, as if none had
                  previously been selected.

         (d)      Decision:

                  The decision of the single arbitrator or the decision of the
                  arbitrators, or a majority of them, shall be drawn up in
                  writing and signed by the single arbitrator or by the
                  arbitrators, or a majority of them, and shall be final and
                  binding upon the Parties hereto as to any question or
                  questions so submitted to arbitration, and the Parties hereto
                  shall be bound by such decision and bound to perform the terms
                  and conditions thereof.

         (e)      Compensation:

                  The liability between the Parties hereto for the payment of
                  the compensation and expenses of the single arbitrator or the
                  arbitrators shall be determined by the arbitrator or
                  arbitrators, as the case may be.

         (f)      Governing Law:

                  Arbitration pursuant hereto shall be governed in all respects
                  not addressed herein by the provisions of The Arbitration Act
                  (Alberta) and the regulations thereunder.

<PAGE>   50

                                  SCHEDULE "E"

                  attached to and forming part of an Agreement of Purchase and
                  Sale made as of this 11th day of September, 1998 between
                  Timberwolf Production Fund #4 Limited Partnership, as Vendor,
                  and Geocan Energy Inc., as Purchaser.

================================================================================

                           PRODUCTION SALES CONTRACTS



Progas netback price amending agreement dated November 1, 1997.

<PAGE>   51


                                  SCHEDULE "F"


                  attached to and forming part of an Agreement of Purchase and
                  Sale made as of this 11th day of September, 1998 between
                  Timberwolf Production Fund #4 Limited Partnership, as Vendor,
                  and Geocan Energy Inc., as Purchaser.

================================================================================

                  AUTHORIZATIONS FOR EXPENDITURES ("A.F.E.'S")


<TABLE>
<CAPTION>
                  AFE NO.                                        AMOUNT
                  -------                                        ------
<S>                                                             <C>
                  AFE #85005                                     $ 4,500.00
                  AFE #85003                                     $ 9,525.00
                  AFE #82003                                     $15,216.70
                                                                 ----------

                       Total:                                    $29,241.70
</TABLE>


<PAGE>   52

                                  SCHEDULE "G"


                  attached to and forming part of an Agreement of Purchase and
                  Sale made as of this 11th day of September, 1998 between
                  Timberwolf Production Fund #4 Limited Partnership, as Vendor,
                  and Geocan Energy Inc., as Purchaser.

================================================================================

                                     WELLS*



<PAGE>   53

<TABLE>
<CAPTION>
Unique Well Identifier                     Well Name                                 License No.
----------------------                     ---------                                 -----------

<S>                                        <C>                                       <C>
00/1-3-61-11 W5/0                          Bankeno Whitecourt                        131708
00/12-7-61-11 W5/2                         Danoil et al Carson                       179118
00/6-18-61-11 W5/2                         Danoil et al Carson                       198390
00/3-13-61-12 W5/0                         Danoil et al Carson                       191112
00/7-8-63-11 W5/0                          Danoil Judy Creek                         214 720
00/13-5-61-11 W5/0                         Danoil Whitecourt                         184 162
00/8-34-61-12 W5/0                         Danoil et al Carson N.                    183 231
00/14-12-61-12 W5/0                        Danoil et al Carson                       188 642
</TABLE>


o        Includes all surface and downhole equipment, well bore and well casing
         associated with each such Well.