EXHIBIT 10.1
                                                                    ------------





                           PURCHASE AND SALE AGREEMENT

                                       for

                             REEF MARKETING, L.L.C.

                                     - and -

                           REEF INTERNATIONAL, L.L.C.
                                (jointly, "Reef")


                                 by and between


                         TIDELANDS OIL & GAS CORPORATION
                                   ("Seller")


                                     - and -


                            IMPACT INTERNATIONAL, LLC
                                   ("Impact")

                                     - and -

                             COAHUILA PIPELINE, LLC
                                  ("Coahuila")

                                (jointly "Buyer")



                              Dated: April 16, 2003





<PAGE>

                           PURCHASE AND SALE AGREEMENT


         This  Purchase  and Sale  Agreement  (the  "Agreement")  is  dated  and
effective this ____ day of April,  2003, at 7:59 a.m.,  Central Daylight Savings
Time (the "Effective  Time"),  by and among TIDELANDS OIL & GAS  CORPORATION,  a
Nevada corporation, 13330 Leopard, Suite 26, Corpus Christi, Texas 78410, herein
called  "Seller,"  IMPACT  INTERNATIONAL,  LLC,  an Oklahoma  limited  liability
company,  601 South Boulder,  Suite 700, Tulsa,  Oklahoma 74119 ("Impact"),  and
COAHUILA  PIPELINE,  LLC,  an  Oklahoma  limited  liability  company,  601 South
Boulder,  Suite 700, Tulsa,  Oklahoma 74119 ("Coahuila"),  herein jointly called
"Buyer."

                                    RECITALS:

         A. Immediately  prior to the Effective Time,  Seller owned 100% of Reef
International,  L.L.C. ("Reef International") and Reef Marketing,  L.L.C. ("Reef
Marketing"), herein jointly called "Reef."

         B. Reef  Marketing is a party to (i) that  Memorandum of  Understanding
with Compania  Nacional de Gas, S.A. de C.V.  ("Conagas")  and Gas Servicios del
Norte  de  Mexico,  S. de R.L.  de C.V.  ("Gas  Servicios"),  a copy of which is
attached  hereto as Exhibit A-1,  (ii) that Gas  Purchase  and Sales  Agreement,
wherein Reef Marketing is seller, and Gas Servicios is buyer, a copy of which is
attached  hereto as Exhibit A-2, and (iii) that Gas Purchase  Agreement with The
Exploration  Company,  wherein Reef  Marketing is purchaser and The  Exploration
Company  is  seller,  a  copy  of  which  is  attached  hereto  as  Exhibit  A-3
(collectively, the "Gas Contracts").

         C. Reef International is the holder of (i) certain licenses and permits
issued by various federal and state  governmental  authorities within the United
States of  America  and the State of Texas,  as more  particularly  set forth in
Exhibit B-1, respecting both the Gas Project and Liquids Project, as hereinafter
defined  (collectively,  the "U.S.  Permits"),  and (ii)  certain  licenses  and
permits issued by various governmental  authorities within the country of Mexico
and respecting the Gas Project, as hereinafter defined, as more particularly set
forth in Exhibit B-2 (collectively,  the "Mexico Permits"). For purposes hereof,
the U.S.  Permits  and Mexico  Permits  shall  sometimes  be jointly  called the
"Permits."

         D. Buyer and Seller intend to jointly pursue, develop,  construct,  and
operate an international  pipeline  crossing from Eagle Pass,  Texas, to Piedras
Negras,  Mexico,  consisting  of (i) a  twelve-inch  pipeline  for  transporting
natural gas (the "Gas Project"), and (ii) a six-inch pipeline for transporting a
90%  propane/10%  butane mixture,  together with loading,  unloading and storage
facilities (the "Liquids Project").  For the purposes of this Agreement, the Gas
Project and Liquids Project shall sometimes be jointly called the "Project."

<PAGE>

         E. Seller desires to sell to Buyer,  and Buyer desires to purchase from
Seller, an undivided 75% membership  interest in Reef,  subject to the terms and
provisions of this Agreement.

         F.  Effective  immediately  following  the  sale  contemplated  in  the
Agreement,  Buyer and Seller  intend (i) to form Reef  Ventures,  L.P.,  a Texas
limited  partnership  ("Reef  Ventures")  by  executing  an Agreement of Limited
Partnership executed on even date herewith,  (ii) to contribute their respective
membership interests in Reef to Reef Ventures, and (iii) to use Reef Ventures as
the vehicle for pursuing and completing the Project.

                              W I T N E S S E T H:

1.       Interest to be Purchased and Sold.  Buyer agrees to purchase and Seller
         agrees to sell, for the consideration hereinafter set forth and subject
         to the terms and  provisions  herein  contained,  all right,  title and
         interest of Seller in and to an undivided  75%  membership  interest in
         both Reef Marketing and Reef International (the "Sold Interest"), to be
         shared  by  Impact  and  Coahuila  in  the   proportions  99%  and  1%,
         respectively.

2.       Purchase Price.

         (a)      The purchase  price for the Sold Interest shall be One Million
                  Nine Hundred  Sixty-Thousand  Eight  Hundred  Sixty-Seven  and
                  23/100  Dollars  ($1,960,867.23)  (such  amount  being  herein
                  called the "Purchase Price"). The Purchase Price shall be paid
                  at Closing as provided in subparagraphs (b) through (d) below.

         (b)      At Closing,  Impact shall pay or cause to be paid  ninety-nine
                  percent (99%) or One Million Nine Hundred  Forty-One  Thousand
                  Two Hundred Fifty-Eight and 56/100 Dollars  ($1,941,258.56) of
                  the  Purchase  Price,  in cash or certified  funds,  to Seller
                  pursuant to the Closing Statement,  as defined in subparagraph
                  (d) below.

         (c)      At Closing, Coahuila shall pay or cause to be paid one percent
                  (1%),  or  Nineteen  Thousand  Six  Hundred  Eight and  67/100
                  Dollars  ($19,608.67)  of  the  Purchase  Price,  in  cash  or
                  certified funds, to Seller pursuant to the Closing  Statement,
                  as defined in subparagraph (d) below.

         (d)      The  parties  intend  that all  creditors  of Reef and certain
                  creditors  of  Tidelands  will  be paid at  Closing  from  the
                  Purchase Price. All such creditors to be paid at Closing,  the
                  dollar amounts owed to each and wire  instructions  for direct
                  payment to each are set forth in Exhibit C hereto. At Closing,
                  the  parties  will  sign a  closing  statement  (the  "Closing
                  Statement")  prepared  by Buyer and  delivered  to Seller  not
                  later  than  two (2)  business  days  prior  to  Closing,  and
                  approved by Seller not later than one (1)  business  day prior
                  to  Closing,  which  statement  will (i)  provide  for Buyer's
                  direct  payment of portions of the Purchase Price to the third
                  parties  and in the  amounts  set forth in Exhibit C, and (ii)
                  provide  for the balance of the  Purchase  Price to be paid to
                  Seller  pursuant  to wire  instructions  provided to Buyer not
                  later than three (3) business days prior to Closing.


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<PAGE>

3.       Representations of Seller.

         (a)      Representations.  Seller  hereby  represents  and  warrants to
                  Buyer that:

                  (i)      Organization   and   Qualifications.   Seller   is  a
                           corporation  duly  incorporated  and in good standing
                           under  the  laws  and  jurisdiction  of the  State of
                           Nevada,  and is  qualified  to do business  and is in
                           good standing in those  jurisdictions where necessary
                           in order to carry out the purposes of this Agreement.
                           Reef Marketing is a limited  liability company formed
                           under  the laws of the  State  of  Texas  and is duly
                           qualified to do business and in good  standing in the
                           State  of  Texas.  Reef  International  is a  limited
                           liability  company formed under the laws of the State
                           of Texas and is duly  qualified to do business and in
                           good standing in the State of Texas.

                  (ii)     Due  Authorization.  Seller  has full  power to enter
                           into and perform its obligations under this Agreement
                           and has taken all proper action to authorize entering
                           into this Agreement and  performing  its  obligations
                           hereunder.

                  (iii)    Approvals. Neither the execution and delivery of this
                           Agreement,  nor the  consummation of the transactions
                           contemplated  hereby,  nor the  compliance  with  the
                           terms  hereof,  will result in any default  under any
                           agreement or  instrument to which Seller or Reef is a
                           party,  or  violate  any  order,  writ,   injunction,
                           decree,  statute,  rule or  regulation  applicable to
                           Seller or Reef.

                  (iv)     Valid,   Binding  and  Enforceable.   This  Agreement
                           constitutes  (and the Assignment  provided for herein
                           to be delivered at Closing  will,  when  executed and
                           delivered,  constitute) the legal,  valid and binding
                           obligation of Seller,  enforceable in accordance with
                           its terms.

                  (v)      Litigation.  Except as  disclosed  on the  disclosure
                           schedule   attached   hereto   as   Exhibit   D  (the
                           "Disclosure  Schedule"),  there are no pending suits,
                           actions, or other proceedings  (including arbitration
                           proceedings)  in which Seller and Reef,  or either of
                           them, are a party (or, to Seller's  knowledge,  which
                           have been threatened to be instituted  against Seller
                           and/or Reef) which affect  Seller  and/or Reef in any
                           material respect or affect the execution and delivery
                           of  this  Agreement  or  the   consummation   of  the
                           transactions contemplated hereby.

                  (vi)     Financial  Statements.   Exhibit  E  sets  forth  the
                           consolidated,  unaudited balance sheets of Seller and
                           Reef  as  of  December  31,  2002,  and  the  related
                           statements of income and retained earnings,  together
                           with the notes thereto (collectively,  the "Financial
                           Statements").  The December 31, 2002 balance sheet is


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<PAGE>

                           hereinafter  referred to as the "Balance  Sheet." The
                           Financial   Statements,   together   with  all  other
                           financial  statements of Seller and/or Reef delivered
                           by Seller to Buyer,  are correct and  complete in all
                           material respects and fairly present the consolidated
                           financial   position,   results  of  operations   and
                           stockholders'  equity of Seller and/or Reef as of the
                           dates and for the periods  indicated.  The  Financial
                           Statements  delivered  to Buyer  were  prepared  in a
                           manner consistent with generally accepted  accounting
                           principles consistently applied.

                  (vii)    Absence of Undisclosed Liabilities. As of the Closing
                           Date,  Seller and Reef will not have any  liabilities
                           or  obligations,  secured  or  unsecured,  accrued or
                           contingent,  known or unknown, except for the lawsuit
                           set forth in the  Disclosure  Schedule  and except as
                           and to the extent  reflected  or reserved  against in
                           the most  recent of the  Financial  Statements  or as
                           disclosed in this Agreement and the Exhibits  hereto;
                           and,  Seller does not know of any valid basis for the
                           assertion  against  them  of any  such  liability  or
                           obligation.

                  (viii)   Interim  Operations.  Since the date of the Financial
                           Statements,  the business of Seller and Reef has been
                           conducted  only  in the  ordinary  and  usual  course
                           consistent with past practice.  Since the date of the
                           Balance  Sheet,  there have not been,  to the best of
                           Seller's information and belief, any material adverse
                           changes in the financial condition, assets or results
                           of operations  of either  Seller or Reef.  Seller and
                           Reef are not  aware of any  circumstances  unique  to
                           them  which  may cause  either of them to suffer  any
                           material   adverse   change   in   their   respective
                           businesses and operations.

                  (ix)     Permits.

                           (a)      The  Permits  (i)  constitute  all  material
                                    licenses,     permits    and    governmental
                                    authorizations   necessary   to   construct,
                                    implement, own, operate, manage and maintain
                                    the Gas Project,  and (ii) are in full force
                                    and effect.

                           (b)      The  Permits  (i)  constitute  all  material
                                    licenses,    permits,    and    governmental
                                    authorizations  from the  United  States and
                                    State  of  Texas   necessary  to  construct,
                                    implement,   own,   operate,   manage,   and
                                    maintain the Liquids  Project,  and (ii) are
                                    in full force and effect.

                           (c)      Reef  International  is in  full  compliance
                                    with  all  terms  and   conditions   of  the
                                    Permits,  the  failure  with which to comply
                                    would have a  materially  adverse  effect on
                                    (i)    Reef    International,     as    Reef
                                    International is currently operated, or (ii)
                                    the Project.  Seller and Reef International,
                                    or either  of them,  have not  received  any
                                    notice of any past, present or future events
                                    or  conditions   which  may  interfere  with
                                    continued compliance with the Permits.


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<PAGE>

                  (x)      Taxes.

                           (a)      Company  and Reef  have  duly  filed all tax
                                    reports and returns required to be filed and
                                    have duly  paid all taxes and other  charges
                                    due or claimed to be due by federal,  state,
                                    local or foreign taxing authorities.

                           (b)      The  reserves  for  taxes  reflected  in the
                                    Balance   Sheet,   if  any,  are  reasonably
                                    believed by Seller to be adequate  and there
                                    are no tax liens  upon  Reef,  or any of its
                                    assets,  except liens for current  taxes not
                                    yet due.

                           (c)      No issue  has been  raised  by the  Internal
                                    Revenue   Service   (the   "IRS")   in   any
                                    examination  of Reef's or  Seller's  federal
                                    income tax returns which reasonably could be
                                    expected to result in a proposed  deficiency
                                    for any period not so  examined  by the IRS.
                                    Furthermore, no state of facts exists or has
                                    existed which would  constitute  grounds for
                                    the assessment of any tax liability  against
                                    Reef or Seller  with  respect to the periods
                                    which have not been audited by the IRS.

                  (xi)     Liens and  Encumbrances.  The assets of Reef are free
                           and  clear of all liens  and  encumbrances.  Further,
                           there  are  no   claims,   pending   liabilities   or
                           contingent liabilities against Reef or Seller not set
                           forth  on  the   Disclosure   Schedule   which  could
                           adversely affect the Properties  and/or Sold Interest
                           from and after the Effective Time.

                  (xii)    Bankruptcy.  Seller  and Reef or  either of them have
                           not:

                           (a)      made a general  assignment of the benefit of
                                    creditors;

                           (b)      filed any voluntary  petition for bankruptcy
                                    or  suffered  the filing of any  involuntary
                                    petition by creditors;

                           (c)      suffered  the  appointment  of a receiver to
                                    take possession of all or  substantially  of
                                    their assets;

                           (d)      suffered the  attachment  or other  judicial
                                    seizure of all or substantially all of their
                                    assets;

                           (e)      made an offer of  settlement,  extension  or
                                    composition to its creditors;



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<PAGE>

                           (f)      failed to pay debts or other  obligations of
                                    Reef as the same come due,  except for those
                                    creditors and amounts set forth on Exhibit C
                                    which will be paid from the  Purchase  Price
                                    at Closing; or

                           (g)      failed to pay debts or other  obligations of
                                    Seller as the same come due,  except for (i)
                                    those  creditors  and  amounts  set forth on
                                    Exhibit  C  which  will  be  paid  from  the
                                    Purchase  Price at  Closing;  and (ii) those
                                    creditors   of  Reef  who  are  owed  monies
                                    allocable to the calendar  year 2003,  which
                                    creditors  and  amounts  are  set  forth  on
                                    Exhibit F hereto  and will be paid by Buyer,
                                    on behalf of Reef Ventures.

                  (xiii)   Employment  Liabilities.  The  Sold  Interest  can be
                           transferred to Buyer at Closing free and clear of any
                           employment  contract  attendant to the  operation and
                           maintenance of Reef.

                  (xiv)    Gas  Contracts.  The Gas  Contracts are in full force
                           and effect and constitute all contracts  necessary to
                           meet   gas   purchase   and   delivery    commitments
                           contemplated in the Gas Project.

                  (xv)     Contracts  for Liquids  Project.  As of the Effective
                           Time,  neither  Seller nor Reef has entered  into any
                           contractual agreements with third parties, other than
                           Blackrock Capital Corporation,  whereby third parties
                           would have the right to  participate  in the  Liquids
                           Project. Further, neither Seller nor Reef has entered
                           any marketing agreement,  transportation agreement or
                           other contractual  arrangement respecting the Liquids
                           Project as of the Effective Time.

                  (xvi)    Violations  of Law.  Reef is not in  violation of any
                           statute,  law,  rule or  regulation  or any judgment,
                           order,  writ,  injunction  or  decree of any court or
                           tribunal   in  any   jurisdiction   or  any   public,
                           governmental or regulatory body, agency,  department,
                           commission,   board,   bureau,   or  other  authority
                           (domestic or foreign)  which would  adversely  affect
                           the  Project,  and no material  expenditures  are, or
                           based on present  requirements  will be,  required of
                           Reef  in  order   for  it  to  comply  or  remain  in
                           compliance  with  any  such  laws,  statutes,  rules,
                           regulations, orders, judgments, writs, injunctions or
                           decrees.  Seller  and  Reef  have  not  received  any
                           notification of any asserted  present or past failure
                           by Reef to comply with any such law, rule, regulation
                           or other requirements.

                  (xvii)   Default.  Neither Seller nor Reef is in default under
                           any obligation,  contract, plan or arrangement, which
                           default  or   defaults   would,   singly  or  in  the
                           aggregate,  have a material  adverse  effect upon the
                           Sold Interest or Project  subsequent to the Effective
                           Time.


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<PAGE>

                  (xviii)  Reef  Payables.  Upon  payment  at  Closing to Reef's
                           creditors  identified  in  Exhibits  C and  F of  the
                           amounts  set  forth  therein,   100%  of  all  debts,
                           payables  and  other  obligations  of  Reef as of the
                           Effective Time shall have been paid in full.

         (b)      Survival.   The   representations  and  warranties  of  Seller
                  contained  in Section 3(a) above shall  survive  Closing for a
                  period of four years.

4.       Representations of Buyer.

         (a)      Buyer hereby represents and warrants to Seller that:

                  (i)      Organization  and  Qualification.  (a)  Impact  is  a
                           limited  liability  company  duly formed and validity
                           existing under the law and  jurisdiction of Oklahoma,
                           and (b) Coahuila is a limited  liability company duly
                           formed  and  validly  existing  under  the  laws  and
                           jurisdiction of Oklahoma.

                  (ii)     Due Authorization. Buyer has full power to enter into
                           and perform its obligations  under this Agreement and
                           has taken all  proper  action to  authorize  entering
                           into   this   Agreement   and   performance   of  its
                           obligations hereunder.

                  (iii)    Approvals. Neither the execution and delivery of this
                           Agreement,  nor the  consummation of the transactions
                           contemplated  hereby,  nor the  compliance  with  the
                           terms  hereof,  will result in any default  under any
                           agreement or  instrument to which Buyer is a party or
                           violate any order, writ, injunction, decree, statute,
                           rule or regulation applicable to Buyer.

                  (iv)     Valid,   Binding  and  Enforceable.   This  Agreement
                           constitutes the legal,  valid and binding  obligation
                           of Buyer, enforceable in accordance with its terms.

                  (v)      Litigation.  There are no pending suits,  actions, or
                           other  proceedings  in which Buyer is a party (or, to
                           Buyer's  knowledge,  which have been threatened to be
                           instituted  against Buyer) which affect the execution
                           and delivery of this Agreement or the consummation of
                           the transactions contemplated hereby.

         (b)      Survival.   The   representations   and  warranties  of  Buyer
                  contained  in Section 4(a) above shall  survive  Closing for a
                  period of four years.

6.       Closing.  The closing  (herein called the "Closing") of the transaction
         contemplated  hereby  shall  take  place  in the  offices  of  Seller's
         counsel,  Pray,  Walker,  Jackman,  Williamson  & Marlar,  100 West 5th
         Street,  Suite 900, Tulsa,  Oklahoma 74103, on or before April 16, 2003
         at 8:00 a.m.  Central Daylight Savings Time, or at such other location,
         date and time as the Buyer and  Seller  may  mutually  agree upon (such
         location, date and time, as changed pursuant to mutual agreement of the
         parties, being herein called the "Closing Date"). At the Closing:


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         (a)      Delivery of Assignment.  Seller shall execute, acknowledge and
                  deliver  to Buyer an  assignment  of the  Sold  Interest  (the
                  "Assignment"), in the form attached hereto as Exhibit G.

         (b)      Payment to Seller.  Buyer shall  deliver to the Seller and the
                  third-party creditors of Seller and Reef identified in Exhibit
                  C, by wire transfer of immediately available funds to accounts
                  (designated by Seller and such third parties) in banks located
                  in the United States, an amount equal to the Purchase Price.

         (c)      Non-Foreign  Status  Affidavit.  If Buyer so requests,  Seller
                  will  execute  and  deliver  to  Buyer an  affidavit  or other
                  certification (as permitted by such code) that Seller is not a
                  "foreign  person"  within  the  meaning  of  Section  1445 (or
                  similar  provisions)  of the Internal  Revenue Code of 1986 as
                  amended  (i.e.,  that  Seller  is  not a  non-resident  alien,
                  foreign  corporation,  foreign  partnership,  foreign trust or
                  foreign  estate as those  terms are  defined  in such code and
                  regulations promulgated thereunder).

         (d)      Corporate  Resolutions.  Buyer and Seller shall deliver to the
                  other   Secretary's   Certificates,   with  board  resolutions
                  attached,  approving  the  transaction  contemplated  in  this
                  Agreement and under the Agreement of Limited  Partnership  for
                  Reef Ventures,  and authorizing  their respective  officers to
                  execute the  contracts,  assignments  and other  documents  in
                  connection therewith.

7.       Indemnifications.

         (a)      Indemnification  by  Seller.  Seller  shall  and  does  hereby
                  indemnify,  defend and hold  harmless  Reef and  Buyer,  their
                  respective   subsidiary   companies,    partners   and   other
                  affiliates,   and  their   respective   officers,   directors,
                  employees,  attorneys,  contractors  and  agents  (hereinafter
                  collectively  referred  to as the  "Buyer  Group"),  from  and
                  against  any  and  all  claims,  actions,  causes  of  action,
                  demands, assessments, losses, damages, liabilities, judgments,
                  settlements,   penalties,   costs  and   expenses   (including
                  reasonable  attorneys'  fees  and  expenses),  of  any  nature
                  whatsoever   (collectively,   "Damages"),   asserted  against,
                  resulting  to,  imposed  upon, or incurred by the Buyer Group,
                  directly or indirectly, by reason of or resulting from (i) any
                  breach  by  Seller of  Seller's  representations,  warranties,
                  covenants   or   agreements   contained   in  this   Agreement
                  (collectively,  "Buyer Claims"), to the extent and only to the
                  extent that such Buyer  Claims arise and are  communicated  in
                  writing to Seller  prior to the  expiration  of the  four-year
                  anniversary  of the  Closing  Date,  and (ii) any claim  which
                  relates to, arises from or is associated  with Reef and/or the
                  Project for periods prior to the Effective Time, to the extent
                  and  only  to  the  extent  that  such  claim  arises  and  is
                  communicated  in  writing  to  Seller  prior to the  four-year
                  anniversary of the Closing Date.


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<PAGE>

         (b)      Indemnification   by  Buyer.   Buyer  shall  and  does  hereby
                  indemnify, defend and hold harmless Reef and Seller, and their
                  respective   subsidiary   companies,    partners   and   other
                  affiliates,   and  their   respective   officers,   directors,
                  employees,  attorneys,  contractors  and  agents  (hereinafter
                  collectively  referred  to as the  "Seller  Group"),  from and
                  against any and all Damages  asserted  against,  resulting to,
                  imposed  upon or  incurred  by the Seller  Group,  directly or
                  indirectly, by reason of or resulting from any breach by Buyer
                  of  any  of  its  representations,  warranties,  covenants  or
                  agreements contained in this Agreement (collectively,  "Seller
                  Claims"),  to the  extent  and only to the  extent  that  such
                  Seller Claims arise and are  communicated  in writing to Buyer
                  prior to the four-year anniversary of the Closing Date.

         (c)      Limitation on Liability.  The  indemnification  obligations of
                  the parties hereto pursuant to this Section 7 shall be subject
                  to the following limitations:

                  (i)      The  amount  of  Damages  required  to be paid by any
                           party to indemnify  any other party  pursuant to this
                           Section  7(c) as a result of any Seller  Claim or any
                           Buyer  Claim  shall be  reduced  to the extent of any
                           amounts  actually  received by such other party after
                           the  Closing  Date  pursuant  to  the  terms  of  the
                           insurance policies (if any) covering such claim.

                  (ii)     The   indemnification   obligations  of  the  parties
                           pursuant to this Agreement shall be limited to actual
                           Damages  and  shall  not,  except  in the  case  of a
                           willful breach of this Agreement, include incidental,
                           consequential,   indirect,   punitive,  or  exemplary
                           Damages, provided that any incidental, consequential,
                           indirect, punitive, or exemplary Damages recovered by
                           a third party (including any  governmental  entities)
                           against a person  entitled to  indemnity  pursuant to
                           this  Section  7(c) shall be  included in the Damages
                           recoverable under such indemnity.

         (d)      Procedure for  Indemnification.  Promptly  after receipt by an
                  indemnified  party under Section 7(a) or 7(b) of notice of the
                  commencement of any action, such indemnified party shall, if a
                  claim in respect thereof is to be made against an indemnifying
                  party  under  such  Section,   give  written   notice  to  the
                  indemnifying party of the commencement thereof. The failure so
                  to notify  the  indemnifying  party  shall  relieve  it of any
                  liability  that it may  have  to any  indemnified  party  with
                  respect  to such  action.  In case  any such  action  shall be
                  brought against an indemnified party and it shall give written
                  notice to the indemnifying party of the commencement  thereof,
                  the  indemnifying  party  shall  be  entitled  to  participate
                  therein  and,  to the extent  that it may wish,  to assume the
                  defense thereof with counsel  reasonably  satisfactory to such
                  indemnified  party. If the indemnifying party elects to assume
                  the defense of such action,  the indemnified  party shall have
                  the right to employ separate counsel at its own expense and to
                  participate in the defense thereof.  If the indemnifying party
                  elects not to assume (or fails to assume)  the defense of such
                  action,  the indemnified party shall be entitled to assume the
                  defense of such action with counsel of its own choice,  at the
                  expense of the indemnifying party.



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<PAGE>

8.       No Commissions Owed. Seller agrees to indemnify and hold harmless Buyer
         and  Reef  (and  their  affiliates,   and  their  respective  officers,
         directors, employees, attorneys,  contractors and agents of Buyer, Reef
         and such  affiliates)  from and against  any and all  claims,  actions,
         causes of  action,  liabilities,  damages,  losses,  costs or  expenses
         (including, without limitation, court costs and attorneys' fees) of any
         kind or  character  arising  out of or  resulting  from any  agreement,
         arrangement or understanding alleged to have been made by, or on behalf
         of,  Seller  and/or Reef with any broker or finder in  connection  with
         this Agreement or the transaction  contemplated hereby. Buyer agrees to
         indemnify and hold harmless Seller and Reef (and their affiliates,  and
         the respective officers, directors, employees,  attorneys,  contractors
         and agents of Seller,  Reef and such  affiliates)  from and against any
         and all  claims,  actions,  causes  of  action,  liabilities,  damages,
         losses, costs or expenses (including,  without limitation,  court costs
         and  attorneys  fees)  of  any  kind  or  character  arising  out of or
         resulting from any agreement,  arrangement or understanding  alleged to
         have been made by, or on behalf of,  Buyer with any broker or finder in
         connection with this Agreement or the transaction contemplated hereby.

9.       Notices.  All  notices  and other  communications  required  under this
         Agreement shall (unless otherwise  specifically  provided herein) be in
         writing and be delivered  personally,  by recognized commercial courier
         or delivery  service  which  provides a receipt,  by fax (with  receipt
         acknowledged), or by registered or certified mail (postage prepaid), at
         the following addresses:

         If to Seller:              Tidelands Oil & Gas Corporation
                                    13330 Leopard, Suite 26
                                    Corpus Christi, Texas  78410
                                    Attn:  Michael R. Ward
                                    Fax:   (361) 241-5292

         If to Buyer:               Impact International, LLC
                                    601 South Boulder, Suite 700
                                    Tulsa, Oklahoma  74119
                                    Attn:  Don Jacobsen
                                    Fax:  (918) 587-0076

                                    Coahuila Pipeline, LLC
                                    601 South Boulder, Suite 700
                                    Tulsa, Oklahoma  74119
                                    Attn:  Don Jacobsen
                                    Fax:  (918) 587-0076

         Such notices and other  communications  will be  considered as properly
         made,  given or served as follows:  (i) if delivered in person,  on the
         date of the personal  delivery;  (ii) if sent by certified mail, on the
         date which is five (5) business  days after  deposit of the same in the
         United States mail, postage prepaid,  addressed as set forth herein and
         certified  with return  receipt  requested;  (iii) if sent by overnight


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<PAGE>

         courier,  on the  business day next  following  delivery of same to the
         courier  service,  addressed  as set forth  herein;  or (iv) if sent by
         facsimile,  on the date the facsimile is  transmitted to the recipient,
         as evidenced by the sender's confirmation.  Either party may specify as
         its proper address any other post office address within the continental
         limits of the United States by giving notice to the other party, in the
         manner  provided in this  Section,  at least ten (10) days prior to the
         effective date of such change of address.

9.       Miscellaneous Matters.

         (a)      Further Assurances.  Seller agrees that, after the Closing, it
                  shall  execute and deliver,  and shall  otherwise  cause to be
                  executed  and  delivered,  from  time to  time,  such  further
                  instruments,  notices, and other documents,  and do such other
                  and further acts and things, as may be reasonably necessary to
                  (i) more fully and  effectively  grant,  convey and assign the
                  Sold Interest to Buyer,  and (ii) cure or otherwise remedy any
                  inaccuracy in Seller's  representations  and warranties  under
                  this   Agreement,   discovered  by  Buyer  after  Closing  and
                  materially affecting the Project.

         (b)      Parties Bear Own  Expenses.  Each party shall bear and pay all
                  expenses (including,  without limitation, legal fees) incurred
                  by it in connection with the transaction  contemplated by this
                  Agreement.

         (c)      Entire Agreement.  This Agreement  (together with the exhibits
                  hereto)  contains  the  entire  understanding  of the  parties
                  hereto with respect to subject  matter  hereof and  supersedes
                  all  prior  agreements,   understandings,   negotiations,  and
                  discussions  among the parties  with  respect to such  subject
                  matter.

         (d)      Amendments,  Waivers. This Agreement may be amended, modified,
                  supplemented,  restated or discharged (and  provisions  hereof
                  may be waived) only by an instrument in writing  signed by the
                  party against whom enforcement of the amendment, modification,
                  supplement, restatement or discharge (or waiver) is sought.

         (e)      Choice of Law.  Without  regard to  principles of conflicts of
                  law,  this  Agreement  shall  be  construed  and  enforced  in
                  accordance   with  and   governed  by  the  laws  of  Oklahoma
                  applicable  to  contracts  made and to be  performed  entirely
                  within  such  state  and the  laws  of the  United  States  of
                  America, except that, to the extent that the law of a state or
                  country in which a portion of the  properties  comprising  the
                  Project is located necessarily  governs, the law of such state
                  or country  shall  apply as to that  portion  of the  property
                  located in (or  otherwise  subject to the laws of ) such state
                  or country.

         (f)      Successors and Assigns.  The Agreement shall be binding on and
                  inure  to  the  benefit  of  the  parties   hereto  and  their
                  respective successors and assigns.



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<PAGE>

         (g)      Counterpart  Execution.  This  Agreement  may be  executed  in
                  counterparts,  all of  which  are  identical  and all of which
                  constitute  one and  the  same  instrument.  It  shall  not be
                  necessary for Buyer and Seller to sign the same counterpart.

         (h)      Venue.  This  Agreement has been entered into in the county in
                  Oklahoma where Buyer's address for notice purposes is located,
                  and it shall be  performable  for all purposes in such county.
                  Courts  within the State of Oklahoma,  County of Tulsa,  shall
                  have  jurisdiction  over any and all disputes arising under or
                  pertaining  to this  Agreement and venue for any such disputes
                  shall be in the county or  judicial  district  where  Seller's
                  address for notice purposes is located.

         IN WITNESS WHEREOF, this Agreement is executed by the parties hereto on
the date set forth above.

                                                         "SELLER"

                                                 TIDELANDS OIL & GAS
                                                 CORPORATION


                                                 By:____________________________
                                                     Michael R. Ward, President



                                                          "BUYER"

                                                 IMPACT INTERNATIONAL, LLC
                                                 by its Managing Member,
                                                 Impact Energy Services, LLC


                                                 By:____________________________
                                                       Don Jacobsen, Manager


                                                 COAHUILA PIPELINE, LLC
                                                 by its Sole Member,
                                                 Impact Energy Services, LLC


                                                 By:____________________________
                                                       Don Jacobsen, Manager






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