PURCHASE AND SALE AGREEMENT


   This Purchase and Sale Agreement is made and entered into
on this the 8th day of July, 1999, between Humphrey Oil
Interests, L. P., a Texas limited partnership, ("Seller"),
and Gladstone Resources, Inc., a Washington corporation
("Buyer"). The purpose of this Agreement is to set out the
terms and condition by which Gladstone Resources, Inc.
("Gladstone") will acquire Fifty Percent (50%) of those
certain properties known as the Right Hand Creek Field
located in Allen and Beauregard Parishes, Louisiana, (the
"Properties") such properties being further described on
Exhibit "A."


     1.   SALE AND PURCHASE OF THE PROPERTIES.  Subject to
the terms and conditions herein set forth, Seller agrees to
sell, assign, convey and deliver to Buyer and Buyer agrees
to purchase and acquire from Seller at the Closing (as
hereinafter defined), but effective as of May 1, 1999, (the
"Effective Date"), Fifty Percent (50%) of Seller's right,
title and interest, that Seller acquired from EXCO
Resources, Inc. under Purchase and Sale Agreement dated May
24, 1999.


     2.   EXCO AGREEMENT.  The acquisition of the Properties
are subject in full to that certain Purchase and Sale
Agreement dated the 24th day of May, 1999, by and between
EXCO Resources, Inc., as Seller, and Humphrey Oil Interests,
L.P., as buyer (the "EXCO Agreement") which is attached
hereto as Exhibit "B" and made a part hereof.


     3.   PURCHASE PRICE.  The purchase price for the
Properties shall be $349,125.00 (the "Purchase Price"), or
50% of the price tendered by Seller to EXCO, with post-
closing adjustments.


     4.   REPRESENTATIONS OF SELLER.  Seller  represents to
Buyer that:

     4.1  ORGANIZATION.    Humphrey Oil Interests, L. P. is
a Texas limited partnership, validly existing and in good
standing under the laws of the State of Texas and is
qualified to do business in  the States of Texas and
Louisiana.

     4.2  AUTHORITY.  Subject to applicable preferential
purchase rights and restrictions of assignment as may be
contained in any Joint Operating Agreement or other
agreement affecting the properties, and to rights to consent
by, required notices to, and filing with or action by other
governmental entities, Seller has full power and authority
and has taken all requisite actions, corporate or otherwise,
to authorize it to carry on its business as presently
conducted, to enter into this Agreement, and to perform its
obligations under this Agreement.

     4.3  ENFORCEABILITY.  This Agreement has been duly
executed and delivered on behalf of Seller and constitutes
the legal, valid and binding obligation of Seller
enforceable in accordance with its terms.  At the Closing,
all documents required hereunder to be executed and
delivered by Seller shall be duly authorized, executed and
delivered and shall constitute legal, valid and binding
obligations of Seller enforceable in accordance with their
respective terms.


<PAGE>


     4.4  ENCUMBRANCES.   The Properties are currently
subject to a bank lien in favor of Compass Bank.  Seller
hereby agrees to use its best efforts to cause Compass Bank
to release said security interest in and to the Properties
or to transfer same to become security affixed to a loan or
debt agreement in the name of Buyer.  Seller has secured
partial financing for the Buyer with Compass Bank under the
terms and conditions as outlined on the Preliminary Term
Sheet dated June 28, 1999 attached hereto as Exhibit "C".
It is solely the responsibility of Buyer to fulfill the
Bank's borrower requirements in order to obtain the funding
of this loan and consummate the purchase. To the best of
Seller's knowledge, no other claim, demand, filing, cause of
action, administrative proceeding, lawsuit or other
litigation is pending or threatened that could now or
hereafter materially affect the ownership, operation or
value of any of the Properties.

     4.5  ASSIGNMENT WITH SPECIAL WARRANTY.  Assignment of
said Properties will cover 50% of the original interest
acquired by Seller from EXCO, and will be made without
warranty, express or implied, except as by, through, and
under Seller.


     5.   REPRESENTATIONS OF BUYER.  Buyer represents to
Seller that:

     5.1  ORGANIZATION.  Buyer is a Washington corporation,
validly existing and in good standing under the laws of the
State of Washington and is qualified to do business in  the
States of Texas and Louisiana.

     5.2  AUTHORITY AND CONFLICTS.  Buyer has full power and
authority to carry on its business as presently conducted,
to enter into this Agreement, to purchase the Properties on
the terms described in this Agreement and to perform its
other obligations under this Agreement.

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

     5.4  ENFORCEABILITY.  This Agreement has been duly
executed and delivered on behalf of Buyer, and constitutes a
legal, valid and binding obligation of Buyer enforceable in
accordance with its terms.  At the Closing all documents
required hereunder to be executed and delivered by Buyer
shall be duly authorized, executed and delivered and shall
constitute legal, valid and binding obligations of Buyer
enforceable in accordance with their respective terms.

     6.   EXPENSES, FEES AND TAXES.  Each of the parties
hereto shall pay its own fees and expenses incident to the
negotiation and preparation of this Agreement and
consummation of the transactions contemplated hereby.  Buyer
shall be responsible for the cost of all fees for the
recording of transfer documents and any and all transfer
fees, as well as the costs of providing Seller with a copy
of all recorded documents.  All other costs shall be borne
by the party incurring such costs.  If a determination is
ever made that a sales tax or other tax arising from the
sale of the Properties applies, Buyer shall be liable for
such tax as well as any applicable conveyance, transfer and
recording fees, and real estate transfer stamps or taxes
imposed on any transfer of property pursuant to this
Agreement.  Buyer shall indemnify and hold Seller harmless
with respect to the payment of any of such taxes, including
any interest or penalties assessed thereon.


     7.   CLOSING.  Closing shall occur on or before July
15, 1999, unless otherwise extending in writing by both
parties hereto.

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     8.   POST CLOSING OBLIGATIONS:

          a)   Seller will pay to Buyer the sum of $15,000 in cash
               within five (5) business days of closing and funding of the
               proposed purchase to reimburse it for any allocable
               expenses, administrative time and any and all compensation
               due regarding this proposed purchase or any other matter to
               date, except as provided herein.

          b)   The Parties hereto agree to share the 3rd party costs
               of Haas Engineering for evaluation of the Right Hand Creek
               Prospect for the initial HOI, L.P./EXCO purchase on a 50/50
               basis.

          c)   Further, the Buyer has agreed to pay  the Haas
               Engineering costs of the Fair Market Value ("FMV")
               evaluation of the HOI, L.P. property set which was being
               evaluated as a potential purchase.  Negotiations on this
               potential purchase have been terminated with no further
               obligations or agreements existing between the parties
               regarding same.

          d)   It is anticipated that at the time of closing no
               financial transactions will have occurred on the property
               between HOI, L.P. and the Operator, EXCO, regarding JIBs or
               revenue distributions.  The Parties hereto agree to
               reimburse each other for any post closing accounting
               adjustments regarding same within 30 days of closing.


     9.   EXHIBITS.  The following Exhibits are incorporated herein.

          Exhibit A -  Schedule of Interests Acquired by
                  Humphrey Oil Interests, L. P. from EXCO
                  Resources, Inc.

          Exhibit B -  Purchase and Sale Agreement by and
                  between EXCO Resources, Inc. and Humphrey
                  Oil Interests, L. P.

          Exhibit C -  Preliminary Bank Loan Term Sheet
                  dated June 28, 1999.


     10.  ENTIRE AGREEMENT; AMENDMENTS; WAIVERS.  Should the
Seller and Buyer fail to close this transaction, this
Agreement shall become null and void.  However, should the
Seller and Buyer consummate this transaction, this Agreement
constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof, superseding all
prior negotiations, discussions, agreements and
understandings, whether oral or written, relating to such
subject matter.

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<PAGE>

     Executed as of the date set forth above.


                    SELLER:

                    HUMPHREY OIL INTERESTS, L. P.


                    By::   /s/ CHARLES B. HUMPHREY
                         -----------------------------------------
                         Humphrey Oil Corporation, General Partner
                         Charles B. Humphrey, President


                    BUYER:

                    GLADSTONE RESOURCES, INC,

                    By:   /s/ JOHNATHAN M. HILL
                         ------------------------------------------
                         Johnathan M. Hill, President





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