MEMORANDUM OF UNDERSTANDING



March 26, 2001

Attention: Mr. Mark Erickson
Gasco Energy, Inc.
14 Inverness Drive East
Building H, Suite 236
Englewood, Colorado
U.S.A. 80112

Dear Sirs:

Re:      Proposed Business Combination Involving Gasco Energy, Inc. and New
         Energy West Corporation

Further to our recent discussions concerning a proposed transaction involving
Gasco Energy, Inc. ("Gasco") and New Energy West Corporation ("NEW"), this
letter is intended to set out the mutual understanding of NEW and Gasco as to a
potential combination of the respective assets and businesses of Gasco and NEW.

1.       Business Combination

It is anticipated that the business combination of Gasco and NEW will be
effected by way of a plan of arrangement. The provisions set out in Clause 2
below and in the attached Exhibit "A" outline the parties' mutual understanding
of certain of the business terms of the proposed plan of arrangement.
Accordingly, these provisions are intended to provide a framework for the
parties' negotiation and conclusion of definitive legal agreements giving effect
to the business combination, and are subject always to the results of the
parties' due diligence investigations.

2.       Conditions Precedent

In addition to any other conditions precedent which may be negotiated between
the parties, the following are specific conditions precedent in effecting any
transaction arising from the negotiations contemplated by paragraph 1:

         (a)      receipt of board approval by Gasco and NEW to this Memorandum
                  of Understanding by April 6, 2001;

         (b)      formal acquisition agreement evidencing this transaction, in
                  form and substance satisfactory to both parties acting
                  reasonably, being executed on or before April 20, 2001;

<PAGE>

         (c)      the insiders of NEW having executed and delivered to Gasco on
                  or before April 20, 2001, lock-up agreements (with terms and
                  conditions that are customary in such agreements) whereby they
                  agree to vote their shares in favour of the proposed plan of
                  arrangement;

         (d)      the transaction contemplated the Agreement and Plan of
                  Reorganization dated January 31, 2001 among San Joaquin
                  Resources Inc., Nampa Oil & Gas Ltd. and Pannonian Energy, Inc
                  having been concluded on or before April 10, 2001;

         (e)      the completion, prior to April 16, 2001 by each party to its
                  sole satisfaction of such due diligence investigations of the
                  business and assets of the other as such party may consider
                  appropriate in the circumstances;

         (f)      the receipt of all required governmental, regulatory, stock
                  exchange, financial institution, shareholder and other third
                  party consents and approvals to the combination;

         (g)      there being no material adverse changes in the business,
                  assets or liabilities of either Gasco or NEW after March 1,
                  2001 (assuming that the Pannonian merger transaction with
                  Gasco was accomplished at that date) and no claims or actions
                  materially affecting their respective businesses and assets;

         (h)      on or before April 30, 2001, Gasco shall prepare and file an
                  application for listing of the common shares of Gasco on the
                  American Stock Exchange, and Gasco shall prosecute such
                  application using best efforts and good faith;

         (i)      listing of the common shares of Gasco on the American Stock
                  Exchange shall have occurred on or before September 21, 2001;

         (j)      approval of the proposed business combination by the
                  shareholders of NEW on or before June 29, 2001;

         (k)      shareholders of NEW holding no more than 20% of the issued and
                  outstanding common share of NEW having exercised rights of
                  dissent pursuant to applicable corporate and securities laws.

3.       No Negotiations With Other Persons
From the date hereof and for so long as this Memorandum of Understanding remains
in place (the "Review Period"), the parties will not, without the prior consent
of the other party, directly or indirectly, initiate, discuss or negotiate with
any other corporation, firm or person or entertain, solicit or consider any
inquiries or proposals relating to any possible business combination,
disposition of all or substantially all of their assets, or of their shares or
other equity interest, or furnish to any entity or person any information in
connection therewith.

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<PAGE>

4.       Confidentiality

Except as required by law and any stock exchange or securities requirements, the
parties agree to keep confidential from third parties the terms of this
Memorandum of Understanding and the transaction to be discussed hereunder as
well as any confidential information provided to either of them in connection
herewith or which they may discover as a result hereof. Subject to applicable
law, the parties shall agree with each other on the form, content and timing of
any public announcement regarding the proposed business combination.
Specifically, Gasco will prepare and issue a press release announcing the
signing of this Memorandum of Understanding, and shall file said press release
with the SEC by means of Form 8-K. On or before March 30, 2001, Gasco shall
include a description of this Memorandum of Understanding as a subsequent event
in its annual Report on Form 10-KSB.

5.       Termination

In the event that the parties have not been able to enter into definitive legal
documentation with respect to the combination of their businesses and assets by
April 20, 2001, each party shall be free to initiate, discuss or negotiate
possible business combinations or other similar transactions with any and all
other third parties and this Memorandum of Understanding shall cease to have any
effect except fore the confidentiality requirements. If discussions terminate,
Gasco and NEW will each bear their respective costs associated with such
discussions and their investigations carried out under the Memorandum of
Understanding.

6.       Access to Information

During the Review Period, each party hereto shall give the other party, and the
representatives and agents of such party, such access t its premises, records
and other information as the other may reasonably require in order to conduct
their due diligence investigations.

7.       Execution

If the foregoing is acceptable, would you kindly arrange for the execution and
return of the duplicate original copy of this letter on or before 4:00 p.m.
(Calgary time), on March 26, 2001, which will then indicate the expression of
the parties' agreement to the terms hereof.

Yours very truly,

NEW ENERGY WEST CORPORATION

per: /s/ Matthew Heysel
     ----------------------------
     Matthew Heysel, President

ACKNOWLEDGED AND AGREED TO this 26 day of March, 2001.

GASCO ENERGY INC.

per: /s/ Mark Erickson
     -------------------------
     Mark Erickson, President

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<PAGE>

                                   EXHIBIT "A"

                                 BUSINESS TERMS

1.       The proposed plan of arrangement between Gasco and NEW will include the
         following provisions:

         (a)      Gasco will incorporate a Canadian subsidiary ("Canco");

         (b)      The shareholders of NEW will exchange all of the issued and
                  outstanding shares of NEW for Five Million (5,000,000) Common
                  Shares of Canco ("Canco Shares");

         (c)      The Canco Shares will be exchangeable for common shares of
                  Gasco;

         (d)      Prior to the completion of the business combination the
                  holders of warrants or options for common shares of NEW shall
                  either be exercised or surrendered and cancelled;
         (e)      The balance sheet of NEW shall have no negative working
                  capital and no debt.

2.       The name of the continuing entity will be Gasco Energy, Inc.

3.       Gasco will use its best efforts to cause the nomination and election of
         Matthew Heysel to the Board of Directors of Gasco following closing of
         the transaction. Subject to the foregoing, all existing directors and
         officers of NEW shall resign on completion of the business combination
         and provide release of any and all claims they may have against NEW.

4.       The  employment  and services of all employees and  consultants  of NEW
         shall  be  terminated  on or  before  the  completion  of the  business
         combination  on terms and  conditions  satisfactory  to NEW,  and Gasco
         shall be satisfied  that NEW does not have any ongoing  obligations  or
         liabilities to any such employees or  consultants,  or any other former
         employees or consultants of NEW, or to any government agencies or other
         third parties in respect of the employment of, or services  provide by,
         any such individual.

5.       Subject to the  exercise of existing  options for shares of New,  Gasco
         and NEW agree that while this Memorandum of  Understanding is in effect
         no additional voting common shares or any other type or class of equity
         share or stock  options of either  company shall be issued or redeemed,
         and that no  additional  debt shall be incurred by the parties  (except
         for drawings on existing  bank lines of credit in the normal  course of
         business).  Each of Gasco and NEW acknowledge and agree that the number
         of issued and outstanding  common shares,  special warrants,  warrants,
         stock options and other similar  entitlements of each company as of the
         date hereof are as follows:

---------------------------- ------------------------ ------------------------
                                  Gasco                          NEW
---------------------------- ------------------------ ------------------------
Common Shares                     25,700,000                  26,610,429
---------------------------- ------------------------ ------------------------
Warrants/share Options             2,200,000                   9,575,000
---------------------------- ------------------------ ------------------------
Fully Diluted                     27,900,000                  36,185,429
---------------------------- ------------------------ ------------------------

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