COMPRESSION FACILITY AGREEMENT

     THIS GAS PURCHASE  AGREEMENT (this "Agreement") made and entered into as of
the 9th day of January,  2004 (the "Effective  Date"),  by and between Nathaniel
Energy Corporation  ("Nathaniel"),  8001 South InterPort  Boulevard,  Suite 260,
Englewood,  Colorado 80112, and Nexus Energy Company  ("Nexus"),  300 North Main
Street,  Wichita,  Kansas  67202,  each  referred  to herein  as a  "Party"  and
collectively referred to as the "Parties".

                                    RECITALS:

     WHEREAS,  Nexus  gathers  and/or  transports  gas  throughout  Eastern Baca
     County, Colorado; and

     WHEREAS,  said gas is  delivered to two separate  central  delivery  points
     ("CDP")in Baca County; and

     WHEREAS,  Nathaniel's  CDP named the "Spelunker CDP" situated in Section 20
     of T335-R43W, Baca County, Colorado, receives 2.2 to 2.5 MMCFPD from Nexus;
     and

     WHEREAS,  the Duke Field  Services CDP named the "Flank  CDP",  situated in
     Section 33 of T335, R42W, receives 3.2 to 4.0 MMCFPD from Nexus; and

     WHEREAS,  Spelunker  CDP gas volume  has a helium  content of 1.7% of total
     flow and the Flank CDP gas volume has a helium content of 1% of total flow;
     and

     WHEREAS,  Nexus  proposes  to move gas from the Flank CDP to the  Spelunker
     CDP, which will require an estimated  6,065 feet of eight-inch  (8") supply
     line to be provided and installed by Nexus.

     NOW, THEREFORE,  in consideration of the  representations,  covenants,  and
     conditions herein contained, the receipt and sufficiency of which is hereby
     acknowledged, the Parties hereto agree as follows:

                                   ARTICLE 1.
COMBINED VOLUMES AND COSTS ASSOCIATED WITH THE PROJECT

1.1 Nexus shall  deliver  3.2 to 4.0 MMCFPD from the Flank CDP to the  Spelunker
CDP which will require installation of compression at the Spelunker CDP in order
to manage line pressure on the Flank and Spelunker systems.

1.2 The parties agree that estimated suction pressure of 20 psig and a discharge
pressure  of 110 psig on the  compression,  with  the  combined  volumes  of the
Spelunker and Flank CDP systems will produce an expected  increase of gas volume
yield to 6.9  MMCFPD.

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1.3 The term of this Agreement  shall be for an initial period of ten (10) years
from the in-service date, and shall be extended for a second ten (10) year term,
provided  that Nexus is capable of producing  commercial  quantities of gas from
the Flank and Spelunker CDP's.  Nexus shall use all reasonable means to acquire,
install,  test and startup the pipeline and compression facility by February 15,
2004.

1.4  Costs  associated  with  this  project  include,  but  are not  limited  to
Compression, Compression Installation, Daily Compression Monitoring, Coolant and
Lubricants,  compressor  fuel gas. The equipment and related  services  shall be
itemized  and   specifically  set  forth  in  Exhibit  A,  attached  hereto  and
incorporated herewith by reference.

1.5 Itemization of costs shall be substantial and verified by bids,  invoices or
other  authentication  and/or  documentation  Nathaniel  shall have the right to
request  copies of all  documentation  related to charges  associated  with this
facility and shall have the right to audit Nexus' books on an annual basis.

1.6   Nathaniel  and  Nexus  shall   mutually   review  and  share  equally  the
aforementioned costs,  amortized over the term of this Agreement,  provided that
costs of  acquisition  shall  terminate at such time as the costs of  respective
equipment or leases thereof are paid in full. Aforementioned estimated costs and
related services are specifically  listed and set forth in Exhibit "A" and shall
be paid per the terms of Article 1.7 and Exhibit A..

1.7 Payment for costs shall be paid equally  between the  parties.  Two payments
shall be made by Nathaniel for compressor installation, The first payment of one
half of the estimated installation costs agreed upon by the parties being due 30
days after successful startup of the facility. The second payment will be due 60
days after successful  startup of the facility and will be based on actual final
costs. Payments for compressor lease,  maintenance,  operating labor, fluids and
fuel gas shall be billed  monthly based on actual costs per the terms of Exhibit
A.

1.8 Any  additional  costs  shall be  evaluated  by the  respective  parties and
mutually agreed to in advance via signed writing.

                                   ARTICLE 2.
                         EQUIPMENT AND RELATED SERVICES

2.1 Nexus shall be responsible for the acquisition,  installation,  maintenance,
and monitoring of the  compression  equipment.  Nexus shall provide all required
Federal,  State and local permits. Nexus shall provide a detailed description to
Nathaniel  of  compressor   specifications,   including  horsepower,   operating
pressures,  manufacturer recommended annual maintenance, and daily fuel usage. A
copy of the lease agreement is attached as Exhibit C.

                                2
<PAGE>


2.2 Nexus shall supply the trained and certified personnel necessary to maintain
and monitor the compression equipment. (See description of compression equipment
and related  services,  attached hereto in Exhibit A and incorporated  herein by
reference).

2.3  Nexus  shall be  responsible  for  establishing  the  associated  utilities
(electrical) and! or fuel gas as required for compression.

2.4 Nathaniel shall acquire and install a new meter run at the Spelunker CDP.

2.5 Nexus shall be responsible  for the costs  associated  with the purchase and
installation  of the V6,065  linear feet of 8" supply line from the Flank CDP to
the Spelunker CDP.

2.6  Nexus  shall  indemnify  and  hold  Nathaniel  harmless  from  any  and all
environmental  damages  which  result  from  operation  of  the  compression  or
gathering facilities or pipeline.

2.7 Nexus shall provide Nathaniel with easements or other right of access to the
compressor facility for the term of the agreement or any extensions.

2.8 Nexus and  Nathaniel  shall be equal owners of the  facility  and  Nathaniel
shall have first right of refusal in the event Nexus offers  their  ownership in
the compression facility, gathering or pipeline for sale.

2.9 Nexus shall obtain  mechanics lien waivers and hold  Nathaniel  harmless for
failure to pay any  subcontractor  in the  construction  or  maintenance  of the
compressor facility over the term of this Agreement.

2.10 Gas delivered  shall be free of salts,  and other  contaminants,  and shall
have a free water content of less than 1 pound per MMCF.


                                   ARTICLE 3.
                        PAYMENT RATE FOR GAS TRANSPORTED

3.1.  Nexus will pay  Nathaniel  $0.05 per MCF  transported  on the Keyes Helium
gathering line from Spelunker to the Keyes Helium plant at Keyes, Oklahoma.

3.2.  Nexus  will  pay  Nathaniel  a  compression  fee  equal  to 4% of all  the
dekatherms  compressed  at Spelunker  CDP. For the purpose of example,  if Nexus
delivers  160,000  dekatherms  in a given month for  compression  at  Spelunker,
Nathaniel  would be entitled to 6,400  dekatherms.  Nexus will sell  Nathaniel's
6,400 dekatherm as a part of their marketing agreement. If the market price were
$4.50 per dekatherm, Nathaniel would be entitled to a payment of $28,800 for the
given month.

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<PAGE>


3.3 The  contained  Helium will be acquired  based on the  percentage  of Helium
content by volume of the gas stream gathered from the Flank CDP to the Spelunker
CDP to the Keyes  Helium  plant at  Keyes,  Oklahoma  under  this  agreement  as
detailed in Exhibit "B", attached hereto and incorporated by reference.

3.4 Nexus will  dedicate all gas gathered on the  Spelunker and Flank systems to
the Keyes Helium system.  Nexus shall,  however,  have the option to take all of
their gas to the Flank CDP during those times that El Paso,  Northern Natural or
Keyes Helium are unable to accept the Nexus volumes. When flow can be resumed to
the Keyes Helium system, Nexus will return flow to the Spelunker CDP.

3.5  Nathaniel  acknowledges  that Nexus  volumes are subject to  interruptions.
Circumstances  that could  possibly lead to  interruption  include,  but are not
limited to: pipeline repair, dehydration repair, gas well shut-in or abandonment
and termination of gathering  agreements.  In the event of interruptions,  Nexus
will  restore  volumes as soon as  practically  possible.  Nexus  shall  provide
immediate notice to all affected parties of interruptions and an estimate of the
duration of the interruption.

                                   ARTICLE 4.
                                  MISCELLANEOUS

4.1 This  Agreement  was jointly  drafted by counsel for Nathaniel and Nexus and
shall not be strictly construed against either Nathaniel or Nexus.

4.2 Any  communications  provided for  hereunder or in regard to this  Agreement
shall be in writing and  addressed to the  attention of the parties as described
below via U.S.  Mail or  facsimile.  Communications  mailed to Nathaniel  Energy
shall be sent to 8001 South InterPort Boulevard, Suite 260, Englewood,  Colorado
80112,  phone:  (303) 690-8300,  fax: (303) 539-0741,  to the attention of Cliff
Barker. Communications mailed to Nexus Energy Company shall be sent to 300 North
Main Street,  Suite 309, Wichita,  Kansas,  67202,  phone: (316) 267-0155,  fax:
(316)  267-0145,  to the attention of Rick  Wightman.  The person  designated to
receive  communications  or the  address  to  receive  mail  may be  changed  by
providing written notice to the other party.

4.3 The parties  hereto each  acknowledge  that this Agreement  constitutes  the
entire  agreement among them with respect to the matter  discussed  herein.  All
prior  negotiations,  statements or representations are superseded and displaced
hereby.

4.4  Notwithstanding  any  provision  herein to the apparent  contrary,  nothing
herein contained is intended, nor shall it be construed to create,  recognize or
ratify any third party beneficial rights.

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<PAGE>


4.5 The  laws of the  State  of  Colorado  shall  govern  the  construction  and
interpretation of this Agreement and any claim,  dispute or other matter arising
out of this Agreement.

4.6 In the  event  that  any  one or more of the  provisions  contained  in this
Agreement shall be held to be invalid,  illegal or  unenforceable in any respect
such  invalidity,  illegality,  or  unenforceability  shall not affect any other
provision  hereof,  and this  Agreement  shall be construed as if such  invalid,
illegal or unenforceable provision did not exist.

4.7 All of the  definitions,  provisions and tenns hereof (with the exception of
headings) are contractual and are not mere recitals.

4.8 This Agreement may be executed in multiple counterparts,  all of which shall
constitute a single  agreement.  Execution of this Agreement via facsimile shall
be effective,  and signatures  received via ftiesimile shall be binding upon the
parties hereto and shall be effective as originals.

4.9 Dispute  Resolution.  As to any  controversy,  claim or dispute  between the
parties arising out of the  interpretation  or performance of this Agreement the
parties  shall first  negotiate  in good faith to resolve such  dispute.  If the
parties are unable to resolve the dispute to their  mutual  satisfaction  within
thirty  (30) days after one party  gives  written  notice to such  effect to the
other,  either party may submit the dispute to arbitration for final  settlement
conducted in accordance  with the commercial  arbitration  rules of the American
Arbitration  Association  (the "AAA").  Unless the  decision of the  arbitrators
shall otherwise direct, the parties shall bear equally the costs and expenses of
the  arbiiration and each party shall bear its own costs and expenses of its own
counsel, advisors and experts.

EXECUTED in multiple  originals,  each of equal dignity,  on the dates set forth
below:

NATHANIEL ENERGY CORPORATION                NEXUS ENERGY COMPANY
----------------------------                --------------------

By: /s/ George Cretecos                     By: /s/ Rick Wightman
   --------------------                        ------------------

Name: George Cretecos                       Name: Rick Wightman
                                                  -------------
Title: Chief Operating Officer              Title: Manager
                                                  -------------
Dated: January 9, 2004                      Dated: 1/9/03
                                                  -------------

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<PAGE>

                                    EXHIBIT A
                                    ---------

This Exhibit A is  incorporated  and made part of the Agreement dated January 9,
2004 between Nathaniel and Nexus.  Nathaniel and Nexus shall mutually review and
share equally the costs  associated  with the equipment and services  identified
below,  amortized  over  the  term of this  Agreement,  provided  that  costs of
acquisition shall terminate at such time as the costs of respective equipment or
leases thereof are paid in fu11.

These estimated equipment costs and related services are described and set forth
below:




        DESCRIPTION:                                    ANNUAL COSTS:
        -----------                                     ------------

1:      Compression Equipment                           $163,000

2:      Compression Installation                        $35,000

3:      Ancillary Equipment & Parts                     $10,000

4:      Daily Compression Monitoring & Support          $15,000

5:      Compressor Fluids (Coolant and Lubricants)      $1,200

7:      Fuel Gas                                         TBD



Payment  for costs  shall be paid  equally  between the  parties.  Payments  for
Nathaniel's  share of the compressor  lease and  maintenance  agreement shall be
made on a monthly basis from actual billings by the compressor  vendor to Nexus.
Compressor facility installation payment shall be made based on actual costs and
paid per the  terms of  Article  1 .7.  Ancillary  Equipment  and  Parts are not
anticipated  and will be billed on a mutually agreed basis if greater than $500.
Daily Monitoring and Support and Compressor Fluids shall be billed monthly on an
actual  basis.  Fuel gas shall be metered  and billed  monthly on an actual cost
basis


<PAGE>
                                   EXHIBIT B
                                   ---------

This Exhibit B is  incorporated  and made part of the Agreement dated January 9,
2004 between  Nexus and  Nathaniel.  If the stream of gas delivered to Keyes has
helium  content  of 1.5% or  greater  then  KHC  will  pay  N/EAC  $.l0  per MCF
delivered. If the blended stream is 1.2% to 1 .5% the compensation drops to $.09
per MCF  delivered.  1% to 1.2% equals $.08 per MCF  delivered.  Below 1% equals
$.05. This proposal is consistent with the existing processing agreement.

"Nathaniel  will  compensate  Nexus for  helium  recovered  from the gas  stream
delivered to the Spelunker CDP utilizing the following parameters:

          Should the blended gas stream at the Spelunker CDP contain 1.5% helium
          by volume,  Nathaniel will pay Nexus $.10 MCF of blended gas delivered
          to the Spelunker CDP
          For volumes of blended gas with  helium  content  from 1.2% to 1.5% by
          volume, Nathaniel will pay Nexus $.09 per MCF of blended gas delivered
          to the Spelunker CDP.
          For  volumes of blended  gas with  helium  content  from 1% to 1.2% by
          volume, Nathaniel will pay Nexus $.08 per MCF of blended gas delivered
          to the Spelunker CDP.
          For  volumes of blended gas with  helium  content  below 1% by volume,
          Nathaniel  will pay Nexus $.05 per MCF of blended gas delivered to the
          Spelunker CDP.

Nexus will be responsible for  distribution of helium revenue to the appropriate
producer upstream of the Spelunker CDP. Producers  receiving helium distribution
will be responsible any royalty and tax and payments  associated with the helium
payments."