Filed by Automated Filing Services Inc. (604) 609-0244 - Red Sky Resources Inc. - Exhibit 10.1





 EXHIBIT 10.3 

 AGREEMENT AND PLAN OF MERGER 

                THIS
  AGREEMENT AND PLAN OF MERGER (the “Merger Agreement”) is entered
  into on the 6th of December, 2004 by Pacific Petroleum Inc., a Delaware corporation
  (“Pacific Petroleum”) and Red Sky Resources Inc., a Nevada corporation
  (“Red Sky”). 

 PRELIMINARY STATEMENTS 

                Red
  Sky is a wholly owned subsidiary of Pacific Petroleum.

                The
  Boards of Directors of Red Sky and Pacific Petroleum deem it desirable
  and in the best interests of their respective shareholders that Pacific Petroleum
  be merged with and into Red Sky (the “Merger”) on the terms and
  conditions of this Agreement. 

                The
  Boards of Directors of Red Sky and Pacific Petroleum, by resolutions duly adopted,
  have approved and adopted this Agreement.

                The
  shareholders of Pacific Petroleum have approved the merger. 

                It
  is intended that the Merger be completed pursuant to Section 253 of the Delaware
  General Corporation Law and Article 92A.190 of the Nevada Revised Statutes.


                It
  is intended that the Merger will qualify as a reorganization within the meaning
  of Section 368 of the Internal Revenue Code of 1986, as amended, and the rules
  and regulations promulgated thereunder 

                NOW
  THEREFORE the parties do hereby adopt the plan of reorganization encompassed
  by this Merger Agreement and do hereby agree that Pacific Petroleum shall merge
  with and into Red Sky on the following terms, conditions and other provisions:


 STATEMENT OF TERMS 

 SECTION 1 

  THE MERGER 

                1.1               
  The Merger. Pacific Petroleum will be merged with and into Red Sky in
  accordance with this Agreement, the Certificate of Merger substantially in the
  form of Exhibit A attached to this Agreement (the “Certificate
  of Merger”), and the applicable provisions of the Delaware General Corporation
  Law (the “Delaware Law”) and the Articles of Merger substantially
  in the form of Exhibit B attached to this Agreement (the “Articles of
  Merger”) and the Nevada Revised Statutes (the “Nevada Law”).
  Following the Merger, Red Sky will continue as the surviving corporation (the
  “Surviving Corporation”) and the separate existence of Pacific Petroleum
  will cease, except insofar as it may be continued by the Delaware Law and the
  Nevada Law. 

                1.2               
  Effective Time of the Merger. The Merger will be effective at the time
  (the “Effective Time”) of the later of (i) the filing of the Certificate
  of Merger with the Secretary of State of the State of Delaware, and (ii)
  the filing of the Articles of Merger with the Secretary of State of the State
  of Nevada, which filings are to be completed as soon as practicable following
  the execution of this Agreement. 

                1.3               
  Effect of the Merger. The Merger will have the effects set forth in the
  Delaware Law, including section 259 of the Delaware Law, and Section 92A.250
  of the Nevada Law. Without limiting the generality of the foregoing, and subject
  thereto, at the Effective Time all the property, rights, privileges, powers
  and franchises of Red Sky and Pacific Petroleum will vest in 








 Surviving Corporation without further act or deed, and all
  debts, liabilities and duties of Red Sky and Pacific Petroleum will become the
  debts, liabilities and duties of the Surviving Corporation.

                1.4               
  Articles of Incorporation; Bylaws. 

                                     (a)
                 The
  articles of incorporation of Red Sky in effect immediately prior to the Effective
  Time will continue unchanged and will be the articles of incorporation of the
  Surviving Corporation until thereafter amended in accordance with the terms
  thereof and in accordance with applicable law. 

                                     (b)
                 At
  the Effective Time, the by-laws of Red Sky in effect immediately prior to the
  Effective Time, will be the by-laws of the Surviving Corporation until thereafter
  amended in accordance with the terms thereof and in accordance with applicable
  law. 

                1.5               
  Directors. The directors of Red Sky immediately prior to the Effective
  Time will be the directors and officers, respectively, of the Surviving Corporation
  after the Effective Time. The directors will hold office until their successors
  are duly elected, appointed or qualified or until their earlier death, resignation
  or removal in accordance with certificate of incorporation and bylaws of the
  Surviving Corporation.

                1.6               
  Officers. The officers of Red Sky immediately prior to the Effective
  Time will be the directors of the Surviving Corporation after the Effective
  Time. The officers will hold office until their successors are duly elected,
  appointed or qualified or until their earlier death, resignation or removal
  in accordance with articles of incorporation and bylaws of the Surviving Corporation.

                1.7               
  Taking of Necessary Action. If after the Effective Time any further action
  is necessary to carry out the purposes of this Agreement or to vest the Surviving
  Corporation with full title to all assets, rights, approvals, immunities and
  franchises of either Red Sky or Pacific Petroleum, and the officers and directors,
  or the former officers and directors, as the case may be, of Red Sky and Pacific
  Petroleum and the Surviving Corporation will take all such necessary action.


 SECTION 2 

  MERGER CONSIDERATION 

                2.1               
  Merger Consideration.

                                     (a)
                 
  Conversion of Pacific Petroleum Common Stock. Each share of Pacific Petroleum
  common stock, par value $0.0001 per share (“Pacific Petroleum Common
  Stock”) issued and outstanding immediately prior to the Effective Time
  will, by virtue of the Merger and without any action on the part of the holder
  thereof, be converted into one share of common stock of Red Sky (each a share
  of “Red Sky Common Stock”). 

                                     (b)
                 
  Conversion of Red Sky Common Stock. Each share of Red Sky common stock
  par value $0.0001 per share (“Red Sky Common Stock”) issued
  and outstanding immediately prior to the Effective Time will, by virtue of the
  Merger and without any action on the part of the holder thereof, be cancelled
  and returned to the status of authorized but unissued shares. 

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                2.2               
  Conversion Procedure. After the Effective Time, each holder of Pacific
  Petroleum Common Stock will be entitled to exchange his, her, or its certificate
  representing such Pacific Petroleum Common Stock (“Pacific Petroleum Stock
  Certificate”) for a certificate representing the number of shares of Red
  Sky Common Stock into which the number of shares of Pacific Petroleum Stock
  previously represented by such certificate surrendered have been converted pursuant
  to Section 2.1(a) of this Agreement. Each holder of Pacific Petroleum Common
  Stock may exchange his, her or its Pacific Petroleum Stock Certificate by delivering
  it to the Surviving Corporation duly endorsed in blank (or accompanied by duly
  executed stock powers duly endorsed in blank), in each case in proper form for
  transfer, with signatures guaranteed, and, if applicable, with all stock transfer
  and any other required documentary stamps affixed thereto and with appropriate
  instructions to allow the transfer agent to issue certificates for the Red Sky
  Common Stock to the holder thereof. Until surrendered as contemplated by this
  Section 2.2, each Pacific Petroleum Stock Certificate will be deemed at any
  time after the Effective Time to represent only the right to receive Red Sky
  Common Stock certificates representing the number of whole shares of Red Sky
  Common Stock into which the shares of Pacific Petroleum Common Stock formerly
  represented by such certificate have been converted. Upon receipt of such duly
  endorsed Pacific Petroleum Stock Certificates, the Surviving Corporation will
  cause the issuance of the number of shares of Red Sky Common Stock as converted
  pursuant to Section 2.1(a) of this Agreement.

                2.3               
  No Fractional Shares. No fractional shares of Red Sky Common Stock will
  be issued as a result of the Merger. In lieu of any such fractional shares,
  each holder of Pacific Petroleum Common Stock who would otherwise have been
  entitled to receive a fraction of a share of Red Sky Common Stock in the Merger
  will be rounded up to the next nearest whole number of shares of Red Sky Common
  Stock. 

                2.4               
  No Further Ownership Rights in Pacific Petroleum Stock. The promise to
  exchange the Pacific Petroleum Common Stock for shares of Red Sky Common Stock
  in accordance with the terms of this Section 2 will be deemed to have been given
  in full satisfaction of all rights pertaining to the Pacific Petroleum Common
  Stock, and there will be no further registration of transfers on the stock transfer
  books of Pacific Petroleum of the shares of Pacific Petroleum Common Stock that
  were outstanding immediately prior to the Effective Time. From and after the
  Effective Time, the holders of Pacific Petroleum Common Stock outstanding immediately
  prior to the Effective Time will cease to have any rights with respect to such
  Pacific Petroleum Common Stock, except as otherwise provided in this Agreement
  or by law. 

                2.5               
  Distributions with Respect to Unsurrendered Pacific Petroleum Stock.
  No dividends or other distributions with a record date after the Effective Time
  will be paid to the holder of any unsurrendered Pacific Petroleum Stock Certificate
  until the surrender of such Pacific Petroleum Stock Certificate in accordance
  with Section 2.2(a) of this Agreement. Following surrender of any such Pacific
  Petroleum Stock Certificate, the Surviving Corporation will pay to the holder
  of the Red Sky Common Stock certificate issued in exchange the Pacific Petroleum
  Stock Certificate, without interest, (i) at the time of such surrender, the
  amount of dividends or other distributions with a record date after the Effective
  Time previously paid with respect to such Red Sky Common Stock, which such holder
  is entitled pursuant to Section 2.1(a) of this Agreement, and (ii) at the appropriate
  payment date, the amount of dividends or other distributions with a record date
  after the Effective Time but prior to such surrender and with a payment date
  subsequent to such surrender, payable with respect to such Red Sky Common Stock.

                2.6               
  Lost, Stolen or Destroyed Certificates. If any certificate representing
  Pacific Petroleum Common Stock has been lost, stolen or destroyed, upon the
  making of an affidavit of that fact by the person claiming such certificate
  or agreement to be lost, stolen or destroyed and, if required by the Surviving
  Corporation, the posting by such person of a bond in such reasonable amount
  as the Surviving Corporation may direct as indemnity against any claim that
  may be made against it with respect to such certificate, the Surviving Corporation
  will cause to be issued 

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 in exchange for such lost, stolen or destroyed certificate,
  the applicable Red Sky Common Stock deliverable in respect thereof, pursuant
  to Section 2.1 of this Agreement. 

 SECTION 3 

  MISCELLANEOUS PROVISIONS 

                3.1               
  Further Assurances. Each of the parties hereto will cooperate with the
  others and execute and deliver to the other parties hereto such other instruments
  and documents and take such other actions as may be reasonably requested from
  time to time by any other party hereto as necessary to carry out, evidence,
  and confirm the intended purposes of this Agreement. 

                3.2               
  Amendment. This Agreement may not be amended except by an instrument
  in writing signed by each of the parties. 

                3.3               
  Abandonment. At any time before the Effective Date, this Merger Agreement
  may be terminated and the Merger abandoned by either the board of directors
  of Pacific Petroleum or Red Sky, or both, notwithstanding any prior approval
  of the Merger by the shareholders of Pacific Petroleum. 

                3.4               
  Governing Law. This Agreement will be governed by and construed in accordance
  with the laws of the State of Nevada. 

                3.5               
  Counterparts. This Agreement may be executed in one or more counterparts,
  all of which will be considered one and the same agreement and will become effective
  when one or more counterparts have been signed by each of the parties and delivered
  to the other parties, it being understood that all parties need not sign the
  same counterpart. 

                3.6               
  Fax Execution. This Agreement may be executed by delivery of executed
  signature pages by fax and such fax execution will be effective for all purposes.


                3.7               
  Schedules and Exhibits. The schedules and exhibits are attached to this
  Agreement and incorporated herein. 

                IN
  WITNESS WHEREOF, this Agreement and Plan of Merger, having first been duly approved
  by the board of directors of Pacific Petroleum and Red Sky, is hereby executed
  on behalf of each corporation. 

	 PACIFIC PETROLEUM INC.  	 
	 a Delaware Corporation  	 
	  	 
	  	 
	 /s/ D. Barry Lee  	 
	 D. Barry Lee, Chief Executive Officer  	 
	  	 
	  	 
	  	 
	  	 
	 RED SKY RESOURCES INC.  	 
	 a Nevada Corporation  	 
	  	 
	  	 
	 /s/ D. Barry Lee  	 
	 D. Barry Lee, Chief Executive Officer  	 


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