**AGREEMENT**





**THIS
      AGREEMENT** is dated
      November 8, 2006 but made effective for all purposes as of first date of sales
      from Producing Properties described in attached Exhibit “B”, (the “Effective
      Date”) by and between Delta Oil and Gas, Inc., hereinafter referred to as
“Assignor”, and Production Specialties Company, hereinafter referred to as
“Assignee”, and together with Assignor, the “Parties.”





**RECITALS**





Assignor
      represents that it desires to sell to Assignee all of its interest in the
      Subject Leases, Agreements, Wells, Well Connections, all associated surface
      facilities and Pipelines (the Subject Leases, Agreements and Wells collectively
      hereinafter referred to as the “Producing Properties”).


Assignor
      represents it owns 12.50% (twelve and one half percent) working interest and
      8.5% (eight and one half percent) net revenue interest in these “Producing
      Properties” described herein. It is Assignee’s express intent to acquire 100%
      (one hundred percent) of Assignor’s working interest and 100% of Assignor’s net
      revenue interest in these “Producing Properties”.


Reference
      is made to that certain Assignment and Bill of Sale dated November 10, 2006,
      a
      copy of which is attached as Exhibit “C” by and between Delta Oil and Gas, Inc.,
      Assignor and Production Specialties Company, Assignee.





**THEREFORE** ,
      in
      consideration of the above recitals and of the covenants and agreements herein
      contained, Assignor and Assignee agree as follows:





1. Purchase
      and Assignment. Subject
      to and upon all of the terms and conditions hereinafter set forth, Assignor
      shall sell, transfer, assign, convey and deliver unto Assignee, as of the
      Effective Date, all of Assignor’s right, title and interest in and to the
      Producing Properties as described in Exhibit “B”, and Assignee shall purchase,
      receive, pay for and accept all of the interest of Assignor in the Producing
      Properties as described in Exhibit “B” from Assignor, as of the Effective Date.
      Assignor makes this sale without representative covenants or warranties as
      to
      title or quantum of interest conveyed, either express or implied.





2. Purchase
      Price. The
      sale
      price for the Producing Properties shall be One Million Five Hundred Thousand
      Dollars ($1,500,000.00) and shall be payable by wire transfer to the account
      of
      Assignor.





3. Conditions
      Precedent to Obligation of Each Party to Close. The
      Parties shall consummate the sale and purchase of the Producing Properties
      contemplated by this Agreement at Closing, provided the following conditions
      have been satisfied or waived by both Parties:





(a)
      No
      suits, actions or other proceedings are pending before any court or governmental
      entity in which a third party is seeking to restrain, enjoin or otherwise
      prohibit the consummation of or obtain material damages associated with the
      transactions contemplated by this Agreement (or the sale of any one or more
      of
      the Producing Properties), nor are there (to the best of the Parties’ knowledge
      and belief) any such actions pending that may result in any suit, action or
      other proceedings seeking to restrain, enjoin or otherwise prohibit the
      consummation of the transaction





contemplated
      by this Agreement (or the sale of any one or more of the Producing Properties).
      If on Closing a suit, action or other proceeding applicable to some (but not
      all) of the Producing Properties is pending, Closing with respect to the
      unaffected Producing Properties will not be delayed and the Parties will
      undertake a second closing when the above referenced condition to Closing is
      removed. If the above referenced condition to Closing is not removed as to
      the
      affected Producing Properties within sixty (60) days after the Closing, the
      affected Producing Properties will be removed from this Agreement and the
      Parties will have no further obligations to each other with respect to the
      same.





4. Closing. The
      Closing shall be held on or before November 22, 2006 or such earlier date
      mutually agreed to by the Parties. At Closing the following will
      occur:





(a)
      Assignor and Assignee shall execute, acknowledge and deliver a copy of this
      Agreement.





(b)
      Assignee shall deliver to Assignor by wire transfer the Purchase Price as
      specified in Section 2, hereinabove.





(c)
      Assignor and Assignee shall execute any necessary forms required by governmental
      or local agencies for the transfer of the Producing Properties and Assignee
      shall file same immediately following Closing.





(d)
      Assignor shall (subject to the terms of any applicable agreements and to the
      other provisions hereof) deliver to Assignee exclusive possession of the
      Producing Properties, effective as of the Effective Date.





5. Reservations
      and Exceptions .
      The
      assignment and purchase of the Producing Properties is made subject to all
      reservations, exceptions, limitations, contracts and other burdens or
      instruments that are of record or of which Assignee has actual or constructive
      notice. The burdens are to be limited to those described in those certain letter
      agreements described in Exhibit “A” attached hereto and made a part of this
      Agreement.





6. Assumption
      of Liabilities and Indemnities :
      As used
      in this Paragraph 6, "claims" shall include claims, demands, causes of action,
      liabilities, damages, penalties, fines, assessments, and judgments of any kind
      or character and all costs and fees in connection therewith. Assignee shall,
      (i)
      at the Effective Date assume, and be solely responsible for and comply with
      all
      duties and obligations of Assignor, express or implied, with respect to the
      Interests, including, without limitation, those arising under or by virtue
      of
      any lease, contract, operating agreement, other agreement, document, permit,
      applicable statute or rule, regulation or order of any governmental authority
      (specifically including, without limitation, any governmental request or
      requirement to plug, re-plug, and/or abandon any well of whatsoever type, status
      or classification, or take any clean-up or other action with respect to the
      property or premises), and (ii) defend, indemnify and hold Assignor free and
      harmless from any and all claims in connection therewith.





7. Adjustments .
      All
      Oil, gas and other production from or attributable to the Producing Properties
      which was produced after the Effective Date shall belong to Assignee. It is
      agreed and understood that it shall be Assignor’s responsibility to pay for any
      costs and joint interest billings attributable to the Properties previously
      received and received after the Effective Date, but only for costs related
      to
      drilling, completing, and tie-in of said wells described in  Exhibit
      B
      attached to and made a part of this Purchase and Sale Agreement. Within sixty
      (60) days after closing, Assignor and Assignee will effect a cash adjustment
      to
      account for any costs and expenses for incurred by


2


Assignor
      prior and after the Effective Date attributable to the Producing Properties
      prior to sales point which have not been paid by Assignor as of the Closing
      Date
      and (c) such other adjustments as may be agreed upon by the
      parties.





8. Taxes. Ad
      valorem taxes, real property taxes and similar obligations (“Property Taxes”)
      shall be prorated as of the Effective Date and settlement shall be made within
      sixty (60) days after Closing. If any such Property Taxes are not due at
      Closing, Assignee will thereafter be responsible for payment of same and will
      invoice Assignor for its pro rata share, providing supporting documentation
      therefore, and such pro rata share shall be due upon receipt of such
      billing.





9. Post-Closing
      Adjustments. After
      Closing, Assignee shall prepare, in accordance with this Agreement and with
      generally accepted accounting principles consistently applied, a statement
      (“Final Settlement Statement”), a copy of which shall be delivered by Assignee
      to Assignor no later than sixty (60) days after the Closing, setting forth
      each
      adjustment to the Purchase Price necessary to determine the Final Purchase
      Price
      and showing the calculation of such adjustments. Assignor shall have ten (10)
      days after receipt of the Final Settlement Statement to review such statement
      and to provide written notice to Assignee of Assignor’s objection to any item on
      the statement. If Assignor does not provide written objection(s) within the
      ten
      (10) day period, the Final Settlement Statement shall be deemed correct. If
      Assignor provides written objection(s), then the Final Settlement Statement
      shall be deemed correct with respect to items not objected to by Assignor.
      Assignor and Assignee shall immediately meet to resolve and negotiate the
      objections.





10. Notices .
      All
      communications required or permitted under this Agreement shall be in writing
      and any communication or delivery hereunder shall be deemed to have been fully
      made if actually delivered, or if mailed by registered or certified mail,
      postage prepaid, to the address as set forth below.





**Assignor**





Delta
      Oil
      and Gas, Inc.


#300-1055
      West Hastings Street


Vancouver,
      B.C. V6E 2E9


CANADA








**Assignee**





Production
      Specialties Company


P.O.
      Box
      22497


Bakersfield,
      CA. 93390-2497






11. Further
      Assurances .
      After
      Closing the Parties shall execute, acknowledge and deliver to the other such
      further instruments, and take such other actions as may be reasonably necessary
      to carry out the provisions of this Agreement. However, Assignee shall assume
      all responsibility for notifying the purchasers of production from the Producing
      Properties, and such other designated persons who may be responsible for
      disbursing payments for the purchase of such production, of the change of
      ownership of the Producing Properties. Assignee shall take all actions necessary
      to effectuate the transfer of such payments to Assignee as of the Effective


3


Date.
      Assignor shall have no responsibility or liability for the proper distribution
      of proceeds from and after the Effective Date.





12. Entire
      Agreement .
      This
      instrument states the entire agreement between the Parties and may be
      supplemented, altered, amended, modified or revoked by writing only, signed
      by
      all parties.





13. Survival .
      The
      representations, warranties and agreements contained in this Agreement and
      in
      any assignment or certificate or other instrument delivered by or on behalf
      of
      either party pursuant to this Agreement shall survive the Closing and shall
      be
      unaffected by any investigation made by the other party.





14. Headings .
      The
      headings and captions used in this Agreement are for the convenience of the
      parties only and shall have no significance in the interpretation of this
      Agreement.





15. Governing
      Law .
      This
      Agreement and the rights and obligations of the parties hereto shall be
      governed, construed and enforced in accordance with the laws of the State of
      California. The parties agree that any litigation relating directly or
      indirectly to this Agreement must be brought before and determined by a court
      of
      competent jurisdiction within the State of California.





16. Counterparts. This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument.





IN
      WITNESS WHEREOF, this agreement is executed effective the 10th day of November,
      2006.








**ASSIGNOR**





Delta
      Oil
      and Gas, Inc.








By:
      /s/ Doug Bolen


Doug
      Bolen


President














**ASSIGNEE**





Production
      Specialties Company





By:
      /s/ Dero Parker


Dero
      D.
      Parker Jr.


President


4








**EXHIBIT
      “A”**





Attached
      to and made part of that certain Purchase and Sale Agreement dated effective
      from first date of sales from Producing Properties described on Exhibit “B”
between Production Specialties Company and Lario Oil & Gas
      Company








**AGREEMEN** **TS**





NA














**SUBJECT
      LEASES**





Lease: 05037


Lessor: C&C
      Minerals LTD


Lessee: NNG


Legal: T-4-N
      R-3-E


Sec 7: SW, S2NW, NWNW, SWNE, N2SE


Containing
      400
      acres


Sec
      6: SW, NWSE Pt


Containing
      80
      acres


Sec
      18: NE


Containing
      160
      acres


Sec
      17: W2NW Pt


Containing
      185
      acres


All
      in Solano County,
      California




5





**EXHIBIT
      B**


**ATTACHED
      TO AND MADE A PART OF AGREEMENT DATE**


**EFFECTIVE
      FROM FIRST DATE OF SALES FROM WELLS LISTED BELOW , BY AND
      BETWEEN**


**PRODUCTION
      SPECIALTIES COMPANY AND LARIO OIL & GAS COMPANY**














**WELLS,
      pipelines and all associated equipment:** All
      located in Solano County, California








C&C
      Minerals NNG #7-1


T-4-N
      R-3-E Section 7





C&C
      Minerals NNG #7-2


1500’
      North & 420’ West from the S.E. corner of Section 7, Township 4 North, Range
      3 East, M.D.B.&M.