PRODUCT
      SALE & PURCHASE CONTRACT

    


    BY
      & BETWEEN

    


    RANCHER
      ENERGY CORP.

    


    (BUYER)

    


    and
      

    


    ANADARKO
      PETROLEUM CORPORATION

    


    (SELLER)

    


    


    DATED 

    


    December
      15, 2006

    
       

       

      
         

      

      
         

        
          

        

      

      
         

      

    


    INDEX

    


    
      	
              ARTICLE

            	
              PAGE

            
	 	 	 
	
              I

            	
              DEFINITIONS

            	
              1

            
	 	 	 
	
              II.

            	
              CONTRACT
                TERM

            	
              4

            
	 	 	 
	
              III.

            	
              SCOPE
                OF CONTRACT

            	
              4

            
	 	 	 
	
              IV.

            	
              QUANTITIES

            	
              5

            
	 	 	 
	
              V.

            	
              PRODUCT
                PRICE

            	
              7

            
	 	 	 
	
              VI.

            	
              DELIVERY
                POINT AND PRESSURE

            	
              9

            
	 	 	 
	
              VII.

            	
              TAXES

            	
              9

            
	 	 	 
	
              VIII.

            	
              ACCOUNTING

            	
              10

            
	 	 	 
	
              IX.

            	
              QUALITY
                SPECIFICATIONS

            	
              11

            
	 	 	 
	
              X.

            	
              MEASUREMENT

            	
              13

            
	 	 	 
	
              XI.

            	
              MEASURING
                EQUIPMENT AND TESTING

            	
              14

            
	 	 	 
	
              XII.

            	
              WARRANTIES

            	
              15

            
	 	 	 
	
              XIII.

            	
              INDEMNIFICATION

            	
              15

            
	 	 	 
	
              XIV

            	
              FORCE
                MAJEURE

            	
              16

            
	 	 	 
	
              XV.

            	
              SUCCESSORS
                AND ASSIGNS

            	
              16

            
	 	 	 
	
              XVI.

            	
              NOTICES

            	
              17

            
	 	 	 
	
              XVII.

            	
              MISCELLANEOUS

            	
              18

            
	 	 	 
	
              XVIII.

            	
              DISPUTE
                RESOLUTION

            	
              20

            
	 	 	 
	 	
              EXHIBIT
                “A”

            	
              22

            
	 	 	 
	 	
              EXHIBIT
                “B”

            	
              23

            


    

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    PRODUCT
      SALE & PURCHASE CONTRACT

    


    THIS
      PRODUCT SALE & PURCHASE CONTRACT (the “Contract”),
      is made
      and entered into as of December 15, 2006 by and between Anadarko Petroleum
      Corporation with a business address of 1201 Lake Robbins Drive, The Woodlands,
      Texas 77380 (“Seller”) and Rancher Energy Corp. with a business address of
      1050-17th
      Street,
      Suite 1700 Denver, Colorado 80202 (“Buyer”).

    


    WITNESSETH:

    


    WHEREAS,
      Seller
      owns certain rights to market carbon dioxide (“Product”) and Seller desires to
      sell and tender for delivery to Buyer, and Buyer desires to purchase and accept
      from Seller, certain quantities of Product under the terms and conditions of
      this Contract; and

    


    WHEREAS,
      Seller
      has certain rights to transport Product on ExxonMobil’s 60-mile, 20-inch
      CO2
      pipeline
      from La Barge to Bairoil, Wyoming (the “ExxonMobil Pipeline”). Seller also has
      certain rights to transport Product on Seller’s 125-mile, 16-inch CO2
      pipeline
      from Bairoil to Seller’s Salt Creek oil field (the “Anadarko Pipeline”); and


    


    WHEREAS,
      Buyer
      wishes to purchase and accept Product from Seller
      from the Anadarko Pipeline at the Delivery Point and Buyer will be responsible
      for the construction and operation of a CO2
      pipeline
      from the Delivery Point to the southeastern portion of Buyer’s fields in the
      South Glenrock Area of Wyoming (“Buyer’s Pipeline”); 

    


    NOW,
      THEREFORE,
      for and
      in consideration of the premises and the mutual benefits and covenants herein
      contained, Seller and Buyer hereby agree as follows:

    


    ARTICLE
      I - DEFINITIONS

    


    1.1 Defined
      Words and Terms.
      Except
      where the context otherwise requires another or different meaning or intent,
      the
      following words and terms as used herein shall have the meanings
      indicated:

    


    (a)  “Actual
      Monthly Amount”
      means an
      amount determined by multiplying the actual quantity of Product, in Mcf,
      delivered to Buyer at the Delivery Point during the Month, by the Unit Price
      for
      such Month; provided, however, that if Buyer fails to take 25MMcf on any Day
      during such Month, the Actual Monthly Amount shall be the sum of the Unit Price
      multiplied by (i) plus the Unit Price multiplied by (ii), where (i) is the
      actual quantity of Product delivered to Buyer for each Day during the Month
      on
      which Buyer was delivered 25 MMcf or more, and (ii) is 25 MMcf for each Day
      during the Month on which Buyer was delivered less than 25 MMcf.

    


    (b)  “Annual
      Quantity”
      means
      for each Contract Year, the DCQ multiplied by the number of Days in that
      Contract Year.

    


    (c)  “Bcf”
      means 1
      Billion Cubic Feet.

    


    
      
         

      

      
        Page
          1

        
          

        

      

      
         

      

       

    

    (d) “Calendar
      Quarter”
means
      a
      three-month period beginning on January 1, April 1, July 1, or October 1 of
      any
      Contract Year.

    


    (e) “CO2”
      or
“Carbon
      Dioxide”
      means a
      substance composed of molecules, each containing one atom of carbon and two
      atoms of oxygen.

    


    (f)  “Contract
      Year”
      means a
      one-year period beginning on the first Day of the first Month following the
      date
      on which Product has first been delivered hereunder and on each subsequent
      anniversary of such first Day, provided that any period from the date of first
      deliveries to the first Day of the Month next following shall be deemed a part
      of the first Contract Year.

    


    (g) “Cubic
      Foot”
      means
      the amount of Product which would occupy one cubic foot of space at a base
      pressure of 14.65 Psia and at a base temperature of 60o
      degrees
      Fahrenheit.

    


    (h)
       “DCQ”
      or
“Daily
      Contract Quantity”
      for any
      period means the Daily quantity of Product set out in Exhibit “A” or as
      otherwise determined under this Contract for such period.

    


    (i) “Day”
      means a
      period beginning at 7:00 a.m. (Mountain Time) on a calendar day and ending
      at
      7:00 a.m. (Mountain Time) on the next succeeding calendar day. The date of
      a Day
      shall be that of its beginning.

    


    (j)
       “Delivery
      Point”
      means
      the outlet flange of the meter station at the end of the Anadarko Pipeline
      in
      the Salt Creek oil field, as made available to Seller and as requested by
      Buyer.

    


    (k)
       “Mcf”
      means
      1,000 Cubic Feet.

    


    (l) “MCQ”
      or
“Minimum
      Contract Quantity”
      means
      the quantity of Product determined by multiplying 25 MMcf by the number of
      Days
      in the Primary Term.

    


    (m) “MMA”
      or
“Minimum
      Monthly Amount”
      means
      the amount determined by multiplying the Minimum Monthly Quantity by the Unit
      Price.

    


    (n) “MMQ”
      or
“Minimum
      Monthly Quantity”
      means
      the arithmetical sum for each Day during any given Month of the quantity of
      Product nominated for delivery hereunder by Buyer and confirmed by
      Seller.

    Notwithstanding
      the foregoing, and except as excused by events of force majeure as defined
      in
      Article XIV or as provided in Paragraph 3.2, the Minimum Monthly Quantity shall
      not be less than 25 MMcf multiplied by the number of Days in the
      Month.

    


    (o) “MPR”
      or
“Minimum
      Purchase Requirement”
      means
      the product
      of 25 MMcf multiplied by 365 multiplied by 10.

    


    (p)  “MMcf”
      means
      1,000,000 Cubic Feet.

    


    (q)  “MMcf/d”
      means
      1,000,000 Cubic Feet per Day.

    


    
      
         

      

      
        Page
          2

        
          

        

      

      
         

      

       

    

    (r)  “Month”
      means a
      period beginning at 7:00 a.m. (Mountain Time) on the first Day of a calendar
      month and ending at 7:00 a.m. (Mountain Time) on the first Day of the next
      succeeding calendar month.

    


    (s)
       “Psia”
      means
      pounds per square inch absolute.

    


    (t)
        “Psig”
      means
      pounds per square inch gauge.

     

    (u) "Product"
      means a
      substance composed primarily of Carbon Dioxide and meeting the specifications
      set forth in Article IX hereof.

    


    (v)  “Tender
      for Delivery”
      means
      Seller making a certain quantity of Product available to Buyer at the Delivery
      Point(s) pursuant to the terms and conditions herein.

    


    (w) “Termination
      Payment”
      means an
      amount of money Buyer will pay Seller if Buyer elects to terminate this contract
      pursuant to Paragraph 5.6.

    


    (x)  “Total
      Contract Quantity”
      means
      the sum of the Annual Quantity for each Contract Year during the Primary Term
      of
      the Contract, which shall be reduced at the end of each Contract Year in
      accordance with Paragraph 4.1 hereof.

    


    (y)  “Unit
      Price”
      means,
      as to any period, the applicable Product price per Mcf determined pursuant
      to
      Article V. 

    


    ARTICLE
      II - CONTRACT TERM

    


    2.1 Primary
      Term.
      The
      Primary Term of this Contract will commence upon the later to occur of January
      1, 2008, or the date of the first delivery of Product hereunder. The Primary
      Term of this Contract shall terminate on the earlier of (i) the Day that the
      Total Contract Quantity has been taken and paid for by Buyer, or (ii) ten (10)
      years from the commencement of the Primary Term.

     

    ARTICLE
      III - SCOPE OF CONTRACT

    


    3.1 Sale
      and Commitment of Product.
      Subject
      to the terms, conditions and limitations of this Contract, Seller shall sell
      and
      Tender for Delivery to Buyer, and Buyer shall purchase and receive from Seller,
      at the Delivery Point, the quantities of Product requested by Buyer up to the
      Daily Contract Quantity as specified in Exhibit “A,” and, if applicable, up to
      the amount of any Excess Deliveries, pursuant to the provisions of Section
      4.4
      hereof. It is intended that the Daily Contract Quantity will be 40 MMcf/d,
      but
      Seller will endeavor to Tender for Delivery quantities up to 120% of the DCQ
      and
      Buyer will nominate at least 25 MMcf/d.

    


    3.2 Other
      Sales/Purchases.
      Seller
      reserves the right to utilize Product for its own needs and to sell or contract
      to deliver Product to parties other than Buyer. At all times, Seller shall
      be
      entitled to fully satisfy its own needs for Product before having any obligation
      to Buyer hereunder. If at any time, or from time to time after satisfying its
      own needs for Product, Seller is unable to deliver the entire amount of Buyer’s
      nominated Product requirements hereunder as well as the daily contract quantity
      of other parties, Buyer shall be entitled to receive its share of Seller’s
      available deliverability based on the ratio that Buyer’s Product requirements
      bear to the daily contract quantities of all parties other than Seller.
      Subsequent to the execution of this Contract, Seller shall make a good faith
      effort to anticipate Product availability to meet Buyer’s requirements, and
      shall not knowingly utilize, sell, or contract to deliver volumes of Product
      to
      third parties so as to cause Seller to be unable to deliver Buyer’s
      requirements. Buyer
      recognizes and agrees that Seller will use commercially reasonable efforts
      to
      deliver Buyer’s requirements but if Seller is unable to meet such requirements
      for any reason, including its own needs exclusive of third parties, there shall
      be no penalty to Seller and adjustments shall be made to Buyer’s minimum
      obligations hereunder.
      

    


    
      
         

      

      
        Page
          3

        
          

        

      

      
         

      

       

    

    3.3 Carbon
      Dioxide Reserves/Transportation.
      Seller
      and Buyer understand and agree that Seller makes no warranty, either expressed
      or implied, of carbon dioxide volumes or reserves at any source, carbon dioxide
      deliverability, or the transportation of carbon dioxide.

    


    3.4
       Operations.
      Seller
      reserves the sole and exclusive right to control, manage, and operate the
      sources of the Product as Seller in its sole discretion shall determine. Buyer
      agrees to take appropriate action to obtain and reserve the greenhouse gas
      reduction rights addressed in Paragraph 5.8, and otherwise Buyer reserves the
      sole and exclusive right to control, manage, and operate Buyer’s fields on which
      the Carbon Dioxide is used. 

    


    3.5
       Seller’s
      Processing Rights.
      Seller
      reserves the right, prior to delivery, to process and/or treat the Carbon
      Dioxide sold hereunder for any purpose, provided only that any Product delivered
      shall meet the quality specifications hereof unless waived by Buyer pursuant
      to
      Paragraph 9.3.

    


    3.6. Right
      of First Refusal.
      (a) If
      for any reason Buyer elects to sell Buyer’s Pipeline or any of its interests
      within the Area of Mutual Interest (“Interest”), Buyer shall not transfer or
      convey such Interest except in accordance with this Paragraph 3.6. Any proposed
      transfer or conveyance of any such Interest shall be made subject to Article
      XV
      and to the preferential right of Seller to purchase the Interest under the
      same
      terms and conditions as the proposed transferee. In such case, Buyer shall
      notify
      Seller in writing of the same and provide at least sixty (60) Days’ notice for
      Seller to determine if it desires to purchase the Interest. Such
      notice, to be effective, shall be accompanied by an agreement executed by Buyer
      and the proposed transferee (the "Purchase Agreement") containing all
      relevant information regarding the proposed sale, transfer, assignment or
      conveyance, including the name and address of the prospective transferee (who
      must be ready, willing and able to purchase), the purchase price, a legal
      description sufficient to identify the property, and all other terms of the
      proposed transfer or sale.
      The
      Purchase Agreement shall demonstrate that completion of the sale is contingent
      only upon (i) the non-exercise of rights of first refusal under this Paragraph
      3.6, (ii) obtaining any required governmental approvals and (iii) the
      satisfaction of a standard due diligence review, including such items as title,
      environmental, and certain other specifically itemized defects. Seller shall
      have the option to purchase such Interest on the same terms as set forth in
      the
      Purchase Agreement by giving written notice (the “Election Notice”) to Buyer
      prior to the expiration of the sixty (60) day period set forth above. If Seller
      has elected to purchase such Interest within the sixty (60) day period, Seller
      shall be irrevocably obligated to purchase such Interest. Such sale, transfer,
      assignment and/or conveyance to Seller shall occur as soon as reasonably
      possible following the receipt by Buyer of the Election Notice from Seller.
      Upon
      completion of the transaction, the Interest shall be 100% vested in Seller.
      

    


    (b)
      If
      Seller does not exercise its preferential right to purchase by providing written
      notice within such sixty (60) day period, then Buyer may effect the transfer
      described in the notice at any time not later than ninety (90) days after the
      end of the sixty (60) day option period, at a price not less than and on terms
      no more favorable to the transferee than the price and term stated in the notice
      provided for hereinabove. If such a transfer is made, the preferential right
      to
      purchase shall continue as to the Interest acquired by said transferee. If
      the
      Interest is not transferred within such ninety (90) day period, then any
      subsequent proposal to transfer the same shall be subject to the provisions
      of
      this Paragraph 3.6 as though such Interest had never been offered for transfer.
      If
      the
      sale or transfer is not completed within the one hundred fifty (150) day period,
      all of the Interest originally offered shall again become subject to the
      provisions of this Paragraph 3.6.

    


    
      
         

      

      
        Page
          4

        
          

        

      

      
         

      

       

    

    (c)
      All
      such
      transfers or conveyances of any such Interest of Buyer shall be made expressly
      subject to this Contract, and shall not be binding on Seller until a certified
      or other verifiable copy of the instrument evidencing such transfer or
      conveyance has been delivered to Seller, together with an agreement in writing,
      satisfactory to all parties, whereby the transferee agrees to be bound by the
      terms and provisions of this Contract and expressly assumes all of the
      obligations of Buyer as set forth herein.

    


    ARTICLE
      IV - QUANTITIES

    


    4.1 Commencement
      of Deliveries and Daily Contract Quantity.
      Commencing with the first Day of the Primary Term, Seller shall Tender for
      Delivery and Buyer shall take at the Delivery Point, all quantities of Product
      requested by Buyer, up to Buyer’s then currently effective DCQ, as specified in
      Exhibit “A.” The Total Contract Quantity shall be reduced at the end of each
      Contract Year on a cumulative basis through the Primary Term of this Contract
      ("Contract Quantity Balance"), by the greater of: (i) the actual quantity of
      Product delivered to Buyer in that Contract Year, or (ii) by the Annual Quantity
      applicable for that Contract Year, until the Contract Quantity Balance equals
      zero (0).

    


    4.2 Delivery
      Rates.
      Buyer
      and Seller recognize that due to actual operating conditions, the delivery
      or
      take of Product may not necessarily be of a constant rate. However, Buyer and
      Seller agree to cooperate fully with one another to maintain as constant a
      rate
      of take as is operationally possible and in adjusting Daily and Monthly
      deliveries hereunder. 

    


    4.3 Monthly
      Delivery Nominations.
      Buyer
      shall notify Seller Monthly by giving at least seven (7) Days’ advance written
      notice, of its daily Product volume requirements for the next succeeding Month.
      In the event Buyer fails to give to Seller the requisite seven (7) Days’ prior
      notice, then the daily Product volume requirements shall be the same as those
      for the then current Month. Upon agreement by Seller, Buyer may request a change
      in its daily requirements for any particular Month by giving Seller twenty-four
      (24) hours’ prior notice of such changes in its daily requirements from time to
      time. Upon receipt of such notice given to Seller at the location and number
      set
      out below, and subject to Seller’s agreement, Seller shall undertake to conform
      its deliveries to Buyer’s revised requirements and shall notify Buyer as soon as
      practical if it is unable to do so. Buyer shall utilize its commercially
      reasonable efforts to minimize the number of changes in the Monthly nominations.
      Each oral request for changes in Buyer’s requirements shall be confirmed by
      written notice by Buyer to Seller within seven (7) business Days after such
      request.

    


    4.4 Excess
      Deliveries.
      On any
      given Day during the Primary Term of this Contract, Buyer may request and Seller
      may Tender for Delivery, a quantity of Product up to 120% of the Daily Contract
      Quantity, provided however, it is at Seller’s sole discretion to make available
      to Buyer deliveries in excess of 100 % of the Daily Contract Quantity, if
      any.

    


    4.5 Reduced
      Deliveries Due to Common Carrier Obligations.
      If any
      of the ExxonMobil Pipeline, the Anadarko Pipeline or Buyer’s Pipeline is or
      becomes a common carrier facility by operation of law or otherwise, and if
      the
      capacity of said pipeline is insufficient to accommodate (1) the shipments
      tendered by Seller under all contracts (including this Contract) to which Seller
      is a party which require transportation by Buyer’s Pipeline, and (2) all
      shipments tendered by other shippers, then Seller shall be obligated to deliver
      to Buyer only that volume which may be transported under common carrier rules
      and regulations.

    


    
      
         

      

      
        Page
          5

        
          

        

      

      
         

      

       

    

    4.6 Emergency
      Shutdown.
      In the
      event of an emergency that poses danger to life or property, no prior notice
      shall be necessary before partial or total shutdown by either Seller or Buyer,
      but notice of such shutdown and the reason therefor shall be given as soon
      as
      practical thereafter, by telephone, facsimile, e-mail or other electronic means
      at the locations and numbers set out below. The party causing the shutdown
      shall
      immediately take all steps reasonable under the circumstances to end such
      shutdown. In the event any Government regulatory requirement mandates a shutdown
      by either Seller or Buyer, notice shall be given to the other party to this
      Contract as soon as practical after receipt of the governmental notice requiring
      such shutdown.

    


    
      	
              Seller:

            	
              Buyer:

            
	 	 
	
              Anadarko
                Petroleum Corporation

            	
              Rancher
                Energy Corp.

            
	
              Attn.
                Danny Morse:

            	
              Attn.
                John Works

            
	
              Production
                Superintendent

            	
              999-18th
                Street,Suite 1740

            
	
              Salt
                Creek Operations Center

            	
              Denver,
                Colorado 80202 

            
	
              Phone:
                +1.307.437.9500

            	
              Phone:
                +1.303.629.1122

            
	 	
              Fax:
                +1.720.904.5698

            


    

     

    4.7 Planned
      Shutdown.
      In the
      event a planned shutdown becomes necessary for either Seller or Buyer on a
      non-emergency basis, such party shall provide thirty (30) Days’ notice to the
      other as provided in the Article XVI hereof.

    


    ARTICLE
      V - PRODUCT PRICE

    


    5.1 Unit
      Price.
      

     

    (a)
       Buyer
      shall pay to Seller a Unit Price for each Mcf of Product. The Unit Price for
      each Calendar Quarter shall be determined by indexing to the average price
      per
      barrel posted by Chevron Crude Oil Marketing and Tesoro Refining and Marketing
      Company (or their successors) for Southwestern Wyoming Sweet Crude Oil price
      as
      follows:

     

    (i)
      the
preceding
      Calendar Quarter's simple average of each Day's closing prices per barrel for
      Southwestern Wyoming Sweet Crude Oil shall be calculated (“Wyoming
      Sweet Average Price”)

     

    (ii)
      the
      Wyoming Sweet Average Price shall be compared to an index price of $40.00 per
      barrel (“Index Price”)

     

    (iii)
      if
      the Wyoming Sweet Average Price is greater than the Index Price, the Unit Price
      for such Calendar Quarter shall be increased by the arithmetic ratio of such
      difference.

     

    (iv)
      if
      the Wyoming Sweet Average Price is equal to at least $30.01, but is less than
      $40.00, the Unit Price for such Calendar Quarter shall be $1.50

     

    (v)
      if
      the Wyoming Sweet Average Price is $30.00 or less, the Unit Price for such
      Calendar Quarter shall be $1.35.

     

    
      
         

      

      
        Page
          6

        
          

        

      

      
         

      

       

    

    (b)
       
      For the
      initial Calendar Quarter (or portion thereof) under the Contract, the Unit
      Price
      shall be $1.50 per Mcf. For all subsequent Calendar Quarters under the Contract,
      the Unit Price shall be calculated by as provided in this Article
      V.

    


    (c)
       Notwithstanding
      the provisions of Paragraph 5.1(b), the Unit Price shall never be less than
      $1.35 per Mcf. If Seller’s cost of Product to be delivered under this Contract
      ever exceeds the Unit Price, then at Seller’s option, Buyer will meet with
      Seller and attempt in good faith to negotiate a revised Unit Price affording
      Seller a reasonable return under this Contract. If Buyer and Seller are unable
      to agree upon a revised Unit Price, then Seller may terminate this Contract
      by
      giving written notice of termination to Buyer and Buyer shall pay Seller the
      Termination Payment due pursuant to Paragraph 5.6.

    


    5.2 Take-or-Pay
      Obligation.

    


    (a) Each
      Month during the Primary Term of this Contract, Buyer shall pay Seller an amount
      equal to the greater of: (i) the Minimum Monthly Amount, or (ii) the Actual
      Monthly Amount.

    


    (b) The
      Minimum Monthly Amount shall be reduced each Month for any deficiencies in
      the
      amount of Product made available by Seller to Buyer due to (i) force majeure
      as
      defined in Article XIV, or (ii) failure by Seller to deliver quantities of
      Product up to Buyer’s take or pay obligation.

    


    (c) Buyer
      shall provide Seller with a surety bond to ensure Buyer’s payment of any take or
      pay obligation incurred pursuant to this Paragraph 5.2. Such bond shall name
      Seller as beneficiary, shall be approved by Seller as to form and issuer, shall
      be maintained for the life of the Contract and shall be of sufficient size
      to
      cover Buyer’s yearly take or pay requirements and the DCQ requirements.


    


    5.3 Overriding
      Royalty.
      As
      further compensation hereunder Buyer shall convey to Seller an overriding
      royalty interest in any production from its fields within the Area of Mutual
      Interest described in Exhibit “B” attached hereto and incorporated herein by
      this reference. Such overriding royalty interest shall be of 8/8ths interest
      proportionally reduced to the working interest of Buyer and shall be equal
      to
      one percent (1%) in Contract Year Number One; two percent (2%) in Contract
      Year
      Number Two; three percent (3%) in Contract Year Number Three; four percent
      (4%)
      in Contract Year Number Four; and five percent (5%) in Contract Year Number
      Five
      and in all subsequent years. The Overriding Royalty shall be in the form of
      a
      recordable assignment acceptable to Seller and shall cover all depths in which
      Product is utilized, whether by direct injection, recycling, zone recharge
      or
      other utilization in the lands subject to the Area of Mutual Interest.


    


    5.4 Deficiency
      Credit.
      If in
      any Month the MMQ is less than 25 MMcf multiplied by the number of Days in
      such
      Month and Buyer makes a payment to Seller under Paragraph 5.2 applicable to
      such
      Month, the amount of such Paragraph 5.2 payment will be credited to Buyer as
      a
“Deficiency Credit.” If a Deficiency Credit balance has been established, the
      Deficiency Credit balance will be increased each Month by any amount that Buyer
      pays pursuant to Paragraph 5.2 or decreased each Month by the amount that
      Buyer’s payment for such Month exceeds the product of 40 MMcf per Day of such
      Month multiplied by the applicable Unit Price. Seller’s monthly invoice to Buyer
      will be adjusted to reflect any decreases in the Deficiency Credit by the lesser
      of the Deficiency Credit or the amount of the latest payment Buyer has made
      to
      Seller pursuant to Paragraph 5.2. In no event will the Deficiency Credit balance
      be increased or decreased until Buyer makes payment to Seller pursuant to
      Section 5.2, and in no event will the Deficiency Credit balance be less than
      zero.

    


    
      
         

      

      
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          7

        
          

        

      

      
         

      

       

    

    5.5 Deficiency
      Credit Expiration.
      Buyer
      may carry forward Deficiency Credit balances for a period not to exceed 48
      months after the Month that the Deficiency Credit is earned, and with a time
      limit of 24 months after the end of the Primary Term. Any Deficiency Credit
      not
      applied by the earlier of (a) within 48 months after it is earned or (b) within
      24 months after the end of the Primary Term, shall automatically terminate
      without further action or obligation of Buyer or Seller. 

    


    5.6 Termination
      Payment.
      Buyer
      shall have the right to terminate this Contract at any time during the Primary
      Term by delivering a written notice to Seller and a payment in the amount of
      the
      Termination Payment. The Termination Payment shall equal an amount determined
      by
      multiplying the Unit Price for the Calendar Quarter immediately preceding
      Seller’s receipt of such termination notice by a volume of Product equal to
      one-fourth (1/4) of the arithmetical difference between the Total Contract
      Quantity and cumulative quantity of Product paid for by Buyer at the time of
      the
      notice. 

    For
      purposes of illustration only, the Termination Payment shall be calculated
      as
      follows:

    


    P
      Term
      =
P
      Unit
      x
      (146 BCF - V cum)

    4

    


    
      	
            	Where	
              P
                Term
                =
                Termination Payment

            


    

    P
      Unit
      =
      Unit
      Price at time Termination Payment is determined

    V
      Cum
      =
      Cumulative quantity of Product paid for by the Buyer at the time of the
notice

    


    If
      this
      Contract is terminated due to Buyer's default, then Buyer shall on or before
      sixty (60) Days following the receipt of notice from Seller of such default,
      pay
      to Seller an amount equal to the Termination Payment. Without limiting either
      party’s rights to indemnification hereunder, Seller’s right to receive the
      Termination Payment shall be Seller’s sole remedy under this Contract for any
      such default by Buyer. If the Contract is terminated due to Seller’s default,
      Buyer will not be obligated to make any Termination Payment.

    


    5.7Commencement
      of Payment.
      Buyer’s
      obligation to pay Seller pursuant to this Article V shall begin on the first
      Day
      of the Primary Term.

    


    5.8Greenhouse
      Gas Reduction Rights.
      Greenhouse
      Gas Reduction Rights (“GHGRR”) means the recognition, award, or allocation of
      credits, allowances, permits, or other tangible rights, whether created through
      government program or private contract now or in the future, associated with
      the
      production, avoidance, capture, sequestration, or other control of greenhouse
      gases.

    


    
      	 	
              a.)

            	
              Buyer
                and Seller agree that Buyer shall retain 25% of the GHGRR and provide
                or
                convey to Seller 75% of the GHGRR in kind or in value at Sellers
                sole
                discretion.

            


    

    


    
      	 	
              b.)

            	
              Buyer
                and Seller agree that Buyer and Seller each shall have the exclusive
                right
                to apply for, claim, use, or sell all GHGRR associated with its share
                of
                the carbon dioxide sold under this Contract as specified in paragraph
                5.8(a) consistent with applicable laws of the United States and
                international law, including the right to sell or
                trade domestically or internationally.  This right includes the right
                to count or claim any applicable reductions pursuant to the Department
                of
                Energy’s Climate Challenge Program as modified from time to time, to
                register all such reductions pursuant to § 1605 of the Energy Policy Act
                of 1992 and other related public and private registries, and any
                other
                governmental, public, or private program designed to encourage or
                reward
                the reduction of greenhouse gas emissions or emission
                reductions.

            


    

    


    
      
         

      

      
        Page
          8

        
          

        

      

      
         

      

    

     

    
      	 	
              c.)

            	
              Seller
                and Buyer each agrees to provide the necessary information and to
                take
                reasonably appropriate action to obtain and reserve GHGRR's and
                to monitor, document and preserve GHGRR in such form needed to qualify
                as
                an emission reduction. 

            


    

    


    ARTICLE
      VI - DELIVERY POINT AND PRESSURE

    


    6.1 Delivery
      Point and Pressure.
      Seller
      shall Tender Product for Delivery to Buyer at the Delivery Point. Title to
      and
      ownership of all Product delivered under this Contract shall pass to and vest
      in
      Buyer at the Delivery Point. Seller shall Tender Product
      for Delivery at a sufficient pressure to enter the
      Delivery Point; provided, however, Seller shall not be obligated to deliver
      Product at a pressure greater than 2,500 Psig. Seller shall install a tap and
      control station as required to supply Buyer with Product at Delivery Point,
      and
      Buyer shall reimburse Seller for Seller’s actual cost incurred to install such
      tap and control station.

    


    ARTICLE
      VII - TAXES 

    


    7.1
       Tax
      Liability.
      Seller
      shall pay or cause to be paid all taxes and assessments imposed on Seller with
      respect to the Product delivered hereunder prior to its delivery to Buyer,
      and
      Buyer shall pay or cause to be paid all taxes and assessments imposed on Buyer
      with respect to the Product delivered hereunder upon and after its receipt
      by
      Buyer. Neither party shall be responsible or liable for any taxes or other
      statutory charges levied or assessed on or against any of the facilities of
      the
      other party. 

    


    7.2
        Tax
      Reimbursement.
      Subject
      to the conditions hereinafter set forth, Buyer shall pay to Seller fifty percent
      (50%) of any new or additional tax imposed on the Product delivered hereunder
      by
      any governmental authority. The term "new or additional tax" shall mean any
      occupation, service, production, severance, gathering, transmission, value-added
      or excise fee, tax or assessment levied, assessed or fixed by governmental
      authority and shall include taxes similar in nature or equivalent in effect
      (but
      not including income, excess profits, capital stock, franchise, or general
      property taxes) in respect of or applicable to the Product delivered hereunder,
      in addition to or greater than any being assessed as of the effective date
      of
      this Contract, and for which Seller shall be liable, either directly or
      indirectly, or through an obligation to reimburse others. Reimbursement of
      any
      additional tax shall be effected as a part of Buyer's regular monthly payment
      for Product hereunder. The tax reimbursement provided for herein shall not
      apply
      to any delinquent interest or penalty payments associated with any such new
      or
      additional tax.

     

    7.3
       Transaction
      Taxes.
      Buyer
      agrees that the Unit Price under this Contract does not include sales, use,
      or
      like taxes (“Transaction Tax”) currently or prospectively imposed by a Federal,
      State, or local taxing authority. As applicable, Seller shall collect any such
      Transaction Tax from Buyer at the time the invoice for the Carbon Dioxide is
      due. Seller shall separately state the amount of Transaction Tax, the
      Transaction Tax rate, and name of the taxing authority on the invoice. In lieu
      of remitting any billed Transaction Tax, Buyer may submit a properly completed
      and signed exemption certificate or other written evidence of exemption, so
      long
      as the evidence meets requirements cited by the applicable taxing
      authority.

    


    
      
         

      

      
        Page
          9

        
          

        

      

      
         

      

       

    

    7.4 Termination
      by Seller.
      Buyer
      will begin accepting delivery of Product by January 1, 2008. If Buyer has not
      initiated delivery of Product hereunder by January 1, 2008, Seller may
terminate
      this Contract by giving written notice of termination to Buyer and Buyer shall
      pay Seller the Termination Payment due pursuant to Paragraph 5.6. If Buyer
      fails
      to take delivery of Product hereunder in any six months within any twelve
      consecutive month period, then Seller may terminate this Contract by giving
      written notice of termination to Buyer and Buyer shall pay Seller the
      Termination Payment due pursuant to Paragraph 5.6.

    


    ARTICLE
      VIII - ACCOUNTING

    


    8.1 Payment.
      Seller
      shall notify Buyer of the total volume of Product delivered by Seller at the
      Delivery Point during any Month by the tenth (10th) business Day following
      the
      end of such Month. Seller shall furnish to Buyer a Monthly invoice showing
      the
      total quantity of Product delivered hereunder during the preceding Month and
      such invoice shall include any Deficiency Credit balance calculated under
      Paragraph 5.4. Buyer shall make payment to Seller of the amounts of such
      invoices on or before twenty (20) Days after the date of receipt of such
      invoice. All payments shall be mailed or electronically transferred
      to:

    


    
      	
              Electronic
                Transfer Payments:

            	
              Mail
                Check Payments to:

            


    

     

     

    8.2 Failure
      to Pay.
      If Buyer
      fails to pay an amount payable to Seller hereunder when due, Seller shall have
      the right, upon five (5) Days’ prior written notice to Buyer, to stop delivery
      of the Product until Buyer pays said amount, plus interest, and brings Buyer’s
      account current. If Buyer disputes the amount or a portion of the amount
      invoiced by Seller, Buyer shall pay the invoiced amount and shall notify Seller
      of the amount in dispute. Buyer and Seller shall reconcile such disputes within
      a reasonable time period, but not to exceed sixty (60) Days, whereupon either
      party discovered to be owed monies, shall submit an invoice to the other party
      for the amount owed plus interest. The other party shall make payment in
      immediately available U.S. funds by check or electronic transfer to the owed
      party and tender such to the owed party on or before the twentieth (20th) Day
      after the date of such invoice. Interest shall accrue and be payable at the
      lesser of: (i) the highest legally permissible rate allowed by the State of
      Wyoming, or (ii) the Prime or Base lending rate established by the J.P. Morgan
      Chase Bank, N.A., New York. Interest will accrue from the date when the disputed
      amount was due until the date payment of the disputed amount is made. The
      exercise of such rights shall not constitute a waiver of, nor in any way
      prejudice, other remedies available to such party. If any disputes can not
      be
      settled within sixty (60) Days, then the matter shall be settled in accordance
      with Article 18 hereof.

    


    8.3 Refunds.
      If at
      any time it is determined that Buyer or Seller has made an inaccurate payment
      to
      the other party under this Contract, and such deficiency or excess payment
      is
      the result of a good faith error in the Monthly statement furnished by Seller,
      or is or becomes the subject of a good faith dispute between Seller and Buyer,
      then Seller or Buyer shall, within thirty (30) Days of such determination,
      pay
      or refund to the other party the full amount of the deficiency or excess payment
      together with interest calculated and paid as set forth in Paragraph
      8.2.
      The
      exercise of such rights shall not constitute a waiver of nor in any way
      prejudice other remedies available to such party.

    


    
      
         

      

      
        Page
          10

        
          

        

      

      
         

      

    

    


    ARTICLE
      IX - QUALITY SPECIFICATIONS

    


    9.1 Specifications.
      The
      Product delivered by Seller to Buyer at the Delivery Point shall meet the
      following specifications, which herein are collectively called “Quality
      Specifications”:

    


    
      	 	
              (a)

            	
              Product.
                Substance containing at least ninety-five mole percent (95%) of Carbon
                Dioxide.

            


    

    


    
      	 	
              (b)

            	
              Water.
                Product shall contain no free water, and shall not contain more than
                thirty (30) pounds of water per MMcf in the vapor
                phase.

            


    

    


    
      	 	
              (c)

            	
              Hydrogen
                Sulfide.
                Product shall not contain more than twenty (20) parts per million,
                by
                weight, of hydrogen sulfide.

            


    

    


    
      	 	
              (d)

            	
              Total
                Sulfur.
                Product shall not contain more than thirty-five (35) parts per million,
                by
                weight, of total sulfur.

            


    

    


    
      	 	
              (e)

            	
              Temperature.
                Product shall not exceed a temperature of one hundred twenty degrees
                Fahrenheit (120oF).

            


    

    


    
      	 	
              (f)

            	
              Nitrogen.
                Product shall not contain more than four mole percent (4%) of
                nitrogen.

            


    

    


    
      	 	
              (g)

            	
              Hydrocarbons.
                Product shall not contain more than five mole percent (5%) of hydrocarbons
                and the dew point of Product (with respect to such hydrocarbons)
                shall not
                exceed minus twenty degrees Fahrenheit (-20oF).

            


    

    


    
      	 	
              (h)

            	
              Oxygen.
                Product shall not contain more than ten (10) parts per million by
                weight,
                of oxygen.

            


    

    


    
      	 	
              (i)

            	
              Glycol.
                Product shall not contain more than 0.3 (three tenths) gallons of
                glycol
                per MMCF and at no time shall such glycol be present in a liquid
                state at
                the pressure and temperature conditions of the
                pipeline.

            


    

    


    9.2 Testing.
      Seller
      shall ensure that tests to determine the quality of Product are made as often
      as
      reasonably required, but at least quarterly, by approved standard methods in
      general use by the industry. Buyer may from time to time request, and Seller
      shall ensure performance of, such additional tests as Buyer reasonably deems
      necessary; provided, however, Buyer shall not request such additional tests
      more
      than once during any ninety (90) Day period. Buyer shall reimburse Seller for
      all expenses associated with such additional tests unless such additional tests
      show that the substance does not meet the Quality Specifications. Seller shall
      promptly furnish Buyer with copies of all test results upon
      request.

    


    
      
         

      

      
        Page
          11

        
          

        

      

      
         

      

       

    

    9.3 Failure
      to Meet Quality Specifications.
      In the
      event any Volumes delivered hereunder to Buyer fail to meet the Quality
      Specifications, Buyer shall have the right to waive such failure by written
      notice to Seller and to continue to accept and receive such Volumes. However,
      Buyer shall also have the right to refuse to accept such Volume in whole or
      part, at any time including after a waiver of such failure in accordance with
      the prior sentence, and may require Seller to immediately cease or reduce
      deliveries of such Volume to Buyer hereunder. Subject to the provisions hereof,
      Buyer shall have no obligation to receive or purchase any volumes which fail
      to
      meet Quality Specifications at the Delivery Point under this Contract. If Seller
      has so reduced or ceased deliveries hereunder, then Seller may elect, after
      written notice from Buyer as provided above, to remedy the cause of such failure
      and, if Seller so elects, Seller shall proceed with all due diligence, to timely
      effect such remedy. Notwithstanding anything herein to the contrary, if Seller
      does not satisfactorily remedy such defect within ninety (90) Days after written
      notice of failure to meet Quality Specifications, Buyer may cancel this Contract
      by written notice to Seller. As to such cancellation, the respective duties
      and
      obligations of Seller and Buyer hereunder shall terminate without further
      duties, obligations, and liabilities to either party, subject to settlement
      of
      previously incurred duties, obligations and liabilities. The cancellation of
      this Contract as herein provided shall not serve to alter Buyer’s obligations to
      pay for Product received. Any
      such
      termination shall be without waiver of any remedy to which the party not in
      default may be entitled for violation of this Contract.

    


    ARTICLE
      X - MEASUREMENT

    


    10.1 Measurement
      Point.
      The
      measurement point shall be located at a mutually agreeable point at or upstream
      of the Delivery Point, in accordance with the standards set out in this Article
      X. Seller shall ensure that the Product delivered hereunder shall be measured
      for custody transfer at the Delivery Point in accordance with the standards
      set
      forth herein.

    


    10.2 Procedure.
      Custody
      transfer measurement of Product shall be determined on the basis of pound-mass
      quantities, which will be converted to cubic foot quantities on the basis of
      the
      molecular weight of the metered stream of Product calculated from the
      compositional analyses. The calculations for the conversion of pound mass units
      to cubic foot units will be made on the basis of equation-of-state calculations
      embodied in the CO2PROP
      program or another mutually acceptable method correcting for the non-ideal
      behavior of high content Product mixtures. Upon request, Seller shall give
      Buyer
      legible copies of recent measurement documents.

    


    10.3 Atmospheric
      Pressure.
      The
      atmospheric pressure at the Delivery Point shall be based upon 14.73 Psia at
      sea
      level, corrected to actual elevation in accordance with the October 1981
      standards in the American Petroleum Institute, Manual of Petroleum Standards,
      and may be assumed to be constant for calculation purposes.

     

    10.4 Meter
      Standards.
      The
      Product delivered hereunder shall be measured with orifice meters constructed
      and installed in accordance with the October 1981 standards in the American
      Petroleum Institute, Manual of Petroleum Measurement Standards,
      Chapter
      14, with any subsequent amendments, revisions, and additions which may be
      mutually acceptable to Seller and Buyer.

    


    10.5 Temperature.
      The
      temperature of the Product shall be determined by an on-line thermometer so
      installed that it will sense the temperature of the Product flowing through
      the
      meters. The thermometer will be accurate to plus or minus 0.1o
      Fahrenheit.

    


    10.6 Density.
      The
      density of the Product shall be determined by equation-of-state calculation
      based on the composition of the Product or by another mutually acceptable
      method.

    


    
      
         

      

      
        Page
          12

        
          

        

      

      
         

      

       

    

    10.7 Samples.
      A
      composite sample of the metered Product stream shall be accumulated during
      each
      month and analyzed for its composition. Composition of the Product stream may
      also be determined by using a mean monthly average of an on-line
      chromatograph.

    


    ARTICLE
      XI - MEASURING EQUIPMENT AND TESTING

    


    11.1 Meter
      Stations.
      Seller
      shall ensure that the measuring station for measurement of Product delivered
      hereunder is installed, operated, and maintained in accurate working order
      at or
      near the Delivery Point at no cost or expense to Buyer. Such meter station
      shall
      be equipped in accordance with the standards referenced in Article X and will
      initially consist of orifice meters of standard type, sensors, and transmitters
      for pressure and temperature measurement and a flow computer for real-time
      calculation of metered Product flow. Measurement equipment will be subject
      to
      change to allow use of improved technology under such standards if the parties
      mutually agree to such a change.

    


    11.2 Meter
      Tests.
      Seller
      shall ensure that its measuring equipment is accurate and is operated and
      maintained in good repair, and that tests are made at least once each Month
      to
      ensure the accuracy of such metering equipment. Seller shall ensure that Buyer
      is given at least forty-eight (48) hours’ notice of each such test of the
      measuring equipment in order that, if Buyer desires, Buyer may have its
      representative present to witness such tests. If, upon any test, the measuring
      equipment is found to be inaccurate to the extent that it affects the aggregate
      measurement accuracy by an amount exceeding two percent (2%), registrations
      thereof shall be corrected for a period extending back to the time such
      inaccuracy occurred. If such time is not ascertainable, then the registrations
      will be corrected for the period extending back one-half (1/2) of the time
      elapsed since the last date of calibration; provided, no retroactive correction
      shall be made for recorded inaccuracies of two percent (2%) or less in the
      aggregate. Meters will be adjusted or repaired on a timely basis. Special tests
      of the measuring equipment can be requested of Seller by Buyer at any time,
      with
      the cost thereof being paid by Buyer unless the meter is found to be inaccurate
      by an amount exceeding two percent (2%).

    


    11.3 Meter
      Out of Service.
      If, for
      any reason, any meter is out of service or under repair so that the amount
      of
      Product delivered cannot be ascertained or computed from the readings thereof
      or
      corrected under Section 11.2, the Product delivered during the period such
      meter
      is out of service or under repair shall be estimated and agreed upon by Buyer
      and Seller upon the basis of the best data available.

    


    11.4 Record
      Retention.
      Buyer
      and Seller agree to retain detailed delivery records and measurement documents
      for metered quantities of Product for a period of two (2) calendar years
      following the end of the calendar year in which the documents are generated.
      Seller and Buyer shall have the right to examine and audit at reasonable times
      such delivery records and documents of the other party to the extent necessary
      to verify the accuracy of any statements, charges, computations, or demands
      made
      under or pursuant to any of the provisions of this Contract. Any inaccuracies
      shall be promptly corrected when discovered. Copies of such delivery records
      and
      documents will be provided to the other party upon the inquiring party’s written
      request and at the inquiring party’s expense. This Section shall survive any
      termination of this Contract for a period of six (6) Months.

    


    
      
         

      

      
        Page
          13

        
          

        

      

      
         

      

    

    


    ARTICLE
      XII - WARRANTIES

    


    12.1 Seller’s
      Warranty of Title.
      Seller
      warrants title to the Product sold and delivered to Buyer
      hereunder.

    


    12.2 Title
      Passage.
      As to
      the Product delivered and sold hereunder, title and risk of loss shall pass
      from
      Seller to Buyer at the Delivery Point.

    


    12.3 Other
      Warranties.
      Neither
      party hereto makes any warranties, including any warranties of merchantability
      or fitness for a particular purpose, except as expressly set forth in this
      Contract.

    


    ARTICLE
      XIII - INDEMNIFICATION

    


    13.1 BUYER
      ASSUMES ALL LIABILITY FOR AND AGREES TO DEFEND, RELEASE, INDEMNIFY AND HOLD
      SELLER, ITS AFFILIATES, ITS AND THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
      INSURERS, AND SUBCONTRACTORS (COLLECTIVELY “SELLER INDEMNITEES”), HARMLESS FROM
      ALL CLAIMS FOR: (i) BODILY INJURY, DEATH OR DAMAGE TO THE PROPERTY OF BUYER’S
      EMPLOYEES, SUBCONTRACTORS AND THEIR EMPLOYEES, AND BUYER’S INVITEES; AND (ii)
      DAMAGE TO BUYER’S PROPERTY, ARISING OUT OF OR RESULTING FROM THE PERFORMANCE OF
      THIS CONTRACT, EVEN
      IF A PART OR ALL THE CLAIM IS CAUSED BY THE NEGLIGENCE, WILLFUL MISCONDUCT,
      STRICT LIABILITY, OR OTHER FAULT, OF ANY MEMBER OF SELLER INDEMNITEES, AND/OR
      INVITEES OR THIRD PARTIES.

    


    13.2 SELLER
      ASSUMES ALL LIABILITY FOR AND AGREES TO DEFEND, RELEASE, INDEMNIFY AND HOLD
      BUYER, ITS AFFILIATES, ITS AND THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
      INSURERS, AND SUBCONTRACTORS (COLLECTIVELY “BUYER INDEMNITEES”), HARMLESS FROM
      ALL CLAIMS FOR: (i) BODILY INJURY, DEATH OR DAMAGE TO THE PROPERTY OF SELLER’S
      EMPLOYEES, SUBCONTRACTORS AND THEIR EMPLOYEES, AND SELLER’S INVITEES; AND (ii)
      DAMAGE TO SELLER’S PROPERTY, ARISING OUT OF OR RESULTING FROM THE PERFORMANCE OF
      THIS AGREEMENT, EVEN
      IF A PART OR ALL OF THE CLAIM IS CAUSED BY THE NEGLIGENCE, WILLFUL MISCONDUCT,
      STRICT LIABILITY, OR OTHER FAULT, OF ANY MEMBER OF BUYER INDEMNITEES, AND/OR
      INVITEES OR THIRD PARTIES.

    


    13.3 The
      above
      indemnities do not include claims for special, consequential or indirect damages
      suffered by a party to this Contract, and each party waives any claim it may
      have against the other party for such damages. The above indemnity obligations
      also do not include indemnification for punitive or exemplary
      damages.

    


    ARTICLE
      XIV - FORCE MAJEURE

    


    14.1 Force
      Majeure.
      If
      Buyer or Seller is rendered unable, in whole or in part, by an event of force
      majeure to carry out its obligations hereunder (except obligations to pay money
      either (a) which have already been incurred at the time of the occurrence of
      the
      event of force majeure, or (b) which accrue under Buyer’s Take or Pay
      obligations as set out in Paragraph 5.2), then upon such party’s giving notice
      and reasonably full particulars of such event of force majeure in writing,
      or by
      facsimile, by e-mail, or other equivalent means, to the other party within
      a
      reasonable time after the occurrence of the event of force majeure, the
      obligations of the party giving such notice, so far as they are affected by
      such
      event of force majeure, shall be suspended during the continuance of any
      inability so caused, but for no longer period, and such cause shall so far
      as
      possible be remedied with all reasonable dispatch.

    


    
      
         

      

      
        Page
          14

        
          

        

      

      
         

      

       

    

    The
      term
      "event of force majeure" as used herein shall mean any cause not reasonably
      within the control of the party claiming suspension and which, by the exercise
      of due diligence such party is unable to prevent or overcome. Such term shall
      include but not be limited to: acts of God; strikes, lockouts, or other
      industrial disturbances; acts of a public enemy; wars; blockades; insurrections;
      riots; epidemics; landslides; lightning; earthquakes; storms; floods; washouts;
      civil disturbances; fires; freezing of wells or of pipelines, including any
      interruption of Seller’s transportation rights on any third party pipeline, and
      any other causes, whether of the kind herein enumerated or otherwise, affecting
      the equipment or property of either party and not reasonably within the control
      of the party claiming suspension.

    


    The
      settlement of strikes or lockouts or other labor disputes shall be entirely
      within the discretion of the party having the difficulty, and the requirement
      that any event of force majeure shall be remedied with all reasonable dispatch
      shall not require the settlement of such dispute by acceding to the demands
      of
      an opposing party, when such course is inadvisable in the discretion of the
      party having the difficulty.

    


    ARTICLE
      XV - SUCCESSORS AND ASSIGNS

    


    15.1
      Successors
      and Assigns.
      The
      rights and obligations of Buyer under this Contract shall not be assigned or
      delegated without the prior written consent of Seller, which consent may be
      withheld at Seller’s discretion. 

    


    This
      Contract shall extend to and be binding upon the respective successors and
      assigns of the parties hereto. Any actual or attempted assignment, transfer,
      or
      conveyance of this Contract shall be only to a creditworthy entity and shall
      expressly require that the assignee, transferee, or grantee shall assume and
      agree to discharge the duties and obligations of its assignor under this
      Contract, and any such actual or attempted assignment, transfer, or conveyance
      hereof shall be ineffective as between the parties hereto unless such express
      requirement shall therein be contained, and unless each assignee, transferee,
      or
      grantee shall agree to impose an identical requirement upon any subsequent
      assignee, transferee, or grantee. No such actual or attempted assignment,
      transfer, or conveyance shall in any way operate to enlarge, alter, or modify
      any obligations of the other party hereto.

    


    Any
      entity which shall succeed by purchase, merger or consolidation to substantially
      all of the assets of either party hereunder shall be subject to the duties
      and
      obligations of its predecessor in interest under this Contract.

    


    Nothing
      contained in this provision shall in any way prevent either party from pledging
      or mortgaging its rights hereunder for security of its
      indebtedness.

    


    ARTICLE
      XVI - NOTICES

    


    16.1
      Notices.
      Except
      as otherwise specifically set forth in this Contract, all notices, invoices,
      and
      other communications under this Contract must be in writing and shall be deemed
      given on the date of the addressee’s receipt thereof and shall be given only by
      U.S. Mail, hand delivery, overnight delivery, facsimile, e-mail, or other
      electronic means as follows:

    


    
      	
            	If
              to Seller:	
              Anadarko
                Petroleum Corporation

            


    

    Attn.
      Craig Walters: 

    1201
      Lake
      Robbins Drive

    The
      Woodlands, Texas 77380

    Telephone:
      1.832.636.3085

    


    
      	
            	If
              to Buyer:	
              Rancher
                Energy Corp.

            


    

    Attn.:
      CO2
      Contracts Dept.

    999
      18th
      Street

    Denver,
      Colorado 80202

    Telephone:
      303-629-1122 

    FAX:
      720-904-5698

    
      
         

      

      
        Page
          15

        
          

        

      

      
         

      

    

    


    ARTICLE
      XVII - MISCELLANEOUS

    


    17.1 Entirety
      of Contract, Modification, and Non-Waiver. 
      This
      Contract constitutes the entire agreement for the sale and purchase of Product
      between Buyer and Seller. No statement or agreement, oral or written, made
      prior
      to or at the signing of this Contract, shall vary or modify the written terms
      hereof, and neither party shall claim any amendment to, modification of, or
      release from any provision by mutual agreement unless such agreement is in
      writing, signed by the authorized representatives of the parties to this
      Contract or by an exchange of facsimiles concerning the mutual agreement between
      the parties of the particular modification or amendment thereof specifically
      and
      conspicuously stating that it is a modification or amendment of this Contract.
      No provisions, terms, or conditions contained in any document including, by
      way
      of illustration but not by way of limitation, invoices or purchase orders,
      shall
      affect this Contract or be binding upon the parties unless the provisions,
      terms, or conditions have been previously agreed to in writing by the authorized
      representatives of the parties hereto. Buyer’s only authorized representatives
      who may make a mutual written modification or amendment of this Contract include
      Buyer’s Officers or Attorneys-in-Fact. Seller’s only representatives who may
      make a mutual written modification or amendment to this Contract include
      Seller’s Officers or Attorneys-in-Fact.

    


    Waiver
      of
      performance of any obligations by either party or agreement by the other
      hereunder shall not operate as a waiver of performance of any other obligation
      or a future waiver of the same obligation or a waiver of any future
      default.

    


    17.2 Headings.
      The
      topical headings used herein are inserted for convenience only and shall not
      be
      construed as having any substantive significance or meaning whatsoever or as
      indicating that all of the provisions of this Contract relating to any
      particular topic are to be found in any particular Section.

    


    17.3 Exhibits.
      Each
      exhibit referred to in this Contract hereby is incorporated in this Contract
      by
      reference. All obligations of any party under such exhibit shall be considered
      as obligations under this Contract.

    


    17.4 Counterpart
      Execution.
      This
      Contract may be executed in any number of counterparts, each of which shall
      be
      considered an original for all purposes.

    


    
      
         

      

      
        Page
          16

        
          

        

      

      
         

      

       

    

    17.5 Third
      Party Rights.
      This
      Contract is intended for the exclusive benefit of the parties to this Contract
      and their respective heirs, successors, and assigns, and nothing contained
      in
      this Contract shall be constructed as creating any rights or benefits in or
      to
      any third party.

    


    17.6 Safety.
      The
      agents and employees of each party to this Contract shall comply with all safety
      regulations of the other when such agents and employees are upon the premises
      of
      the other in connection with the performance of this Contract.

    


    17.7 Termination
      Upon Default.
      If
      either Seller or Buyer defaults in the performance of any material obligation
      imposed hereunder, the other party may terminate this entire Contract by giving
      written notice to the defaulting party of such election. The defaulting party
      shall have thirty (30) Days after receipt of such notice in which to remedy
      such
      default or to indemnify the other party to the other party's reasonable
      satisfaction, in which event this Contract shall continue in force and effect.
      If such remedy or indemnity is not timely made, this Contract shall, at the
      end
      of said thirty (30) Day period, become null and void except for Buyer’s
      obligations under Article V to make the Termination Payment if the default
      is
      Buyer’s default, and except for any other provisions of which this Contract
      provides for survival after termination hereof. Notwithstanding anything
      contained herein to the contrary, if Buyer terminates this Contract due to
      a
      default by Seller that is not remedied within the thirty (30) Day period, Buyer
      shall have no obligation for the Termination Payment. Any
      such
      termination shall be without waiver of any remedy to which the party not in
      default may be entitled for violation of this Contract.

    


    17.8 Applicable
      Law.
      ALL
      QUESTIONS CONCERNING THE VALIDITY OR MEANING OF THIS CONTRACT OR RELATING TO
      THE
      RIGHTS AND OBLIGATIONS OF THE PARTIES WITH RESPECT TO PERFORMANCE UNDER THIS
      CONTRACT SHALL BE CONSTRUED AND RESOLVED UNDER THE LAWS OF THE STATE OF WYOMING
      EXCEPT TO THE EXTENT SPECIFICALLY REGULATED BY FEDERAL LAWS, EXCLUDING ONLY
      ANY
      RULE OR PRINCIPLE CONCERNING CONFLICT OF LAWS WHICH MIGHT REFER TO THE LAWS
      OF
      ANOTHER JURISDICTION. 

    


    17.9 Relationship
      to the Parties.
      Notwithstanding any provision contained in this Contract to the contrary, this
      Contract is not intended to create, nor shall it be construed to create, a
      relationship of partnership, an association for profit, or any other
      relationship except that of seller and purchaser.

    


    17.10 Invalidity.
      In the
      event any part of this Contract is declared to be invalid for any reason, this
      ruling shall not affect the validity of the rest of the Contract or any other
      part thereof.

    


    17.11 Origin
      of Contract.
      This
      Contract has been jointly prepared by Buyer and Seller and there shall be no
      presumptions regarding such preparation which will be used against either party
      in connection with any subsequent judicial construction of this
      Contract.

    


    17.12 Confidentiality.
      Notwithstanding anything to the contrary contained in this Contract, the
      provisions of this Contract shall be considered “Confidential
      Information.”

    


    The
      phrase “Confidential Information” as used in this Contract shall also mean all
      other proprietary and non-public information, data, reports, and records which
      were disclosed to either Buyer or Seller, in the course of negotiation or
      performance of this Contract, whether in writing or orally; provided however,
      the information described above shall not be considered “Confidential
      Information” to the extent it falls into the following categories:

    


    
      
         

      

      
        Page
          17

        
          

        

      

      
         

      

       

    

    a.
      Information specifically allowed in writing to be disclosed to third
      parties;

    b.
      Information which at the time of disclosure was already in the public
      domain;

    c.
      Information which enters the public domain through no act or failure on the
      part
of
      the
      other party; 

    d.
      Information which prior to disclosure was already in the possession of the
      recipient; and,

    e.
      Information disclosed to a party’s successors and assigns or to third parties
      that have entered into a confidentiality agreement with such party in a form
      satisfactory to such party in its sole discretion.

    


    Buyer
      and
      Seller shall keep the Confidential Information secret and confidential
      throughout the term of this Contract. 

    


    If
      either
      party is requested or required by legal process to disclose any of the
      Confidential Information, it will provide to the other party notice of such
      request or requirement so that the other party may seek an appropriate
      protective order or other remedy.

    


    The
      confidentiality obligations and restrictions of this Section 17.12 shall not
      apply to a disclosure to a governmental agency, to the public, including press
      releases, or in judicial, administrative, or governmental proceedings pursuant
      to a valid subpoena or other applicable valid rule or order, but only to the
      extent the party intending to make a disclosure in good faith believes it is
      required by law or by the rules of any stock exchange or securities regulatory
      authority; provided however, that: (i) Prior to making any such disclosure,
      it
      shall notify the other party, and such notice shall specify and include: (A)
      the
      written statement (of the party intending to disclose) as to why such disclosure
      is required, (B) the date on which it intends to make such disclosure, and
      (C)
      the text of the proposed stock exchange announcement or other disclosure; (ii)
      The party intending to disclose shall give due consideration to any comments
      received from the other party within three (3) days following the date notice
      was received by such other party; provided however, that if the party intending
      to disclose believes such disclosure must be made prior to the end of such
      three
      (3) days, its notice to the other party shall convey such belief and it shall
      give due consideration to comments received from the other party prior to the
      date that it intends to make such disclosure; (iii) The party intending to
      disclose shall disclose only that portion of the Confidential Information
      required to be disclosed and shall take all reasonable efforts to preserve
      the
      confidentiality thereof, including obtaining protective orders; and (iv) The
      party intending to disclose shall have the burden of proving that disclosure
      under this Paragraph 17.12 was required.

    


    ARTICLE
      XVIII - DISPUTE RESOLUTION

    


    
      
        18.1
          Dispute
          Resolution.
          

      

    

    


    (a) The
      senior managements of Buyer and Seller will attempt to resolve any and all
      disputes arising from this Contract. Failing a settlement between the parties,
      any matters shall be handled as set forth in this Section 18.1.

    


    
      
         

      

      
        Page
          18

        
          

        

      

      
         

      

       

    

    (b) Arbitration. Any
      controversy, cause of action, dispute or claim arising out of, relating to,
      or
      in connection with, this Contract, or the breach, termination or validity
      thereof, shall be settled by arbitration in accordance with the Commercial
      Arbitration Rules (the “Rules”) of the American Arbitration Association, as
      amended and in effect from time to time. The tribunal for the arbitration shall
      consist of three arbitrators, one to be designated by each party and the third
      to be selected by the mutual agreement of the two arbitrators. Each party shall
      designate its arbitrator within twenty (20) Days of receiving a notice of
      arbitration. Prior to acceptance of appointment as an arbitrator, each
      arbitrator shall have read and affirmatively agreed to observe all provisions
      of
      the American Arbitration Association’s Code of Ethics for Arbitrators in
      Commercial Disputes. THE EXPEDITED PROCEDURES SET FORTH IN THE RULES SHALL
      APPLY
      AND THE SUBSTANTIVE AND PROCEDURAL LAWS OF THE STATE OF WYOMING (EXCLUDING
      ANY
      CONFLICTS OF LAWS RULES OR PRINCIPLES AS APPLIED IN WYOMING) SHALL APPLY. This
      Contract involves interstate commerce in several ways, including, without
      limitation, the fact that Seller’s facilities buy and sell materials in
      interstate commerce and work performed in Seller’s facilities affects interstate
      commerce. The choice of Wyoming law shall not be interpreted as a choice to
      exclude applicability of the Federal Arbitration Act to the enforceability
      and
      scope of this arbitration provision. It is therefore specifically understood
      that both Wyoming and federal law, neither to the exclusion of the other, apply
      to the enforceability and scope of this provision, and, in the event of a
      conflict between Wyoming and federal law, the law maximizing the enforceability
      and scope of this provision, including laws relating to appellate remedies,
      may
      be invoked, without excluding applicability of other law, by the Party seeking
      to compel arbitration. If, for purposes of determining Wyoming or federal law,
      a
      conflict or difference of opinion exists between lower state courts and lower
      federal courts, as the case may be, this arbitration provision, by contract,
      selects the precedent of that lower state court or that lower federal court
      that
      maximizes the enforceability and scope of this arbitration provision. The
      arbitration shall take place in Denver, Colorado. The parties specifically
      agree
      that the judgment or award of the tribunal shall be final and binding on each
      party and for all purposes. Judgment upon an arbitration award may be entered
      in
      any court having jurisdiction. This arbitration provision shall survive the
      termination of this Contract. Should the parties ever be prevented by applicable
      law from utilizing arbitration to resolve disputes hereunder, then the choice
      of
      law and forum provisions of this Section shall nevertheless remain in full
      force
      and effect.

    


    IN
      WITNESS WHEREOF,
      this
      Contract shall be effective as set forth in this Contract.

     

     

    
      	 	
              BUYER:

              Rancher
                Energy Corp.

            
	 	 
	Date:
              ________________________	
              By:
                _____________________________________

              Printed
                Name: John
                Works

              Title:
                President and CEO

            
	 	 
	 	
              SELLER:

              Anadarko
                Petroleum Corporation

            
	 	 
	Date:
              ________________________	
              By:
                _____________________________________

              Printed
                Name: 

              Title:
                

            


    

     

    
      
         

      

      
        Page
          19

        
          

        

      

      
         

      

    

    


    EXHIBIT
      “A”

    TO
      PRODUCT SALE AND PURCHASE CONTRACT

    December
      15, 2006

    


    Attached
      to and made a part of that certain Product Sale and Purchase Contract dated
      December 15, 2006 by and between Anadarko Petroleum Corporation as Seller and
      Rancher Energy Corp. as Buyer.

    


    
      	
              Contract
                Quantity Schedule

            
	 	 	 
	 	
              DCQ*

            	
              Annual
                Quantity

            
	
              Contract
                Year

            	
              Mcf/d

            	
              MMcf
                

            
	
              1

            	
              40,000

            	
              14,600

            
	
              2

            	
              40,000

            	
              14,600

            
	
              3

            	
              40,000

            	
              14,600

            
	
              4

            	
              40,000

            	
              14,600

            
	
              5

            	
              40,000

            	
              14,600

            
	
              6

            	
              40,000

            	
              14,600

            
	
              7

            	
              40,000

            	
              14,600

            
	
              8

            	
              40,000

            	
              14,600

            
	
              9

            	
              40,000

            	
              14,600

            
	
              10

            	
              40,000

            	
              14,600

            
	 	 	 
	Total Contract
              Quantity	
              146
                BCF

            


    

    


    *In
      no
      event shall the DCQ be less than 25,000 Mcf on any Day Subject to provisions
      of
      this Agreement. 

    


    
      
         

      

      
        Page
          20

        
          

        

      

      
         

      

    

    


    EXHIBIT
      “B”

    TO
      PRODUCT SALE AND PURCHASE CONTRACT

    December
      15, 2006

    


    Attached
      to and made a part of that certain Product Sale and Purchase Contract dated
      December 15, 2006 by and between Anadarko Petroleum Corporation as Seller and
      Rancher Energy Corp. as Buyer.

    


    


    Area
      of Mutual Interest

    


    See
      Attached Map

    


    
      
         

      

      
        Page
          21