Exhibit
      10.18

     

    CERTAIN
      INFORMATION (INDICATED BY ASTERISKS) IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
      SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT
      HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

     

    


      

      


      October
        26, 2006

      


      


      
        	
                Fairway
                  Exploration LLC.

                27981
                  Man O War Trail

                Evergreen,
                  CO 80439

                Attn:
                  Mr.
                  Steve Swanson

              	
                0770890
                  B.C. Ltd

                Suite
                  1003, 409 Granville Street

                Vancouver,
                  BC V6C 1T2

              
	 	 
	
                Prospector
                  Oil, Inc.

                2812
                  First Avenue North, Suite 307

                Billings,
                  MT 59101

                Attn:
                  Mr. Richard “Dick” Findley

              	
                Rover
                  Resources Inc.

                Suite
                  1003, 409 Granville Street

                Vancouver,
                  BC V6C 1T2

              


      

       

      RE: Pebble
        Beach U.S. Prospect Acquisition Agreement

      


      Gentlemen:

      


      Eternal
        Energy Corp. (“EERG”),
        and
        Rover Resources Inc. (“Rover”),
        which
        is a wholly owned subsidiary of 0770890 B.C. Ltd (“Newco”)
        hereby
        offer to purchase all right, title and interest of Fairway Exploration LLC
        (“Fairway”)
        and
        Prospector Oil, Inc. (“POI”) in
        and to
        the captioned prospect in the Western United States outlined on a schedule
        identified as Exhibit “A” which has been delivered herewith and initialed by the
        parties hereto for reference and which forms a part of this Agreement but
        which
        is not attached for reasons of confidentiality, (the “Prospect”)
        subject to the following terms and conditions. EERG, Rover, Newco, Fairway
        and
        POI may sometimes be referred to herein collectively as the “Parties.”


      


      In
        consideration of the mutual agreements contained herein, the Parties agree
        as
        follows:

      


      1) Fairway
        and POI hereby agree to sell all right, title and interest in and to the
        Prospect as outlined on Exhibit “A” to EERG as to ten percent (10%) thereof and
        to Rover as to ninety percent (90%) thereof. Each of Fairway and POI hereby
        represent and warrant to EERG, Rover and Newco that it has not disclosed
        the
        Prospect to any third parties, recommended to any third parties that they
        submit
        a bid in connection with the sale of any lands in the Prospect as outlined
        in
        Exhibit “A”, which the Parties agree is an area of mutual interest (the “AMI”).
        Fairway and POI further represent and warrant that they are working and will
        work exclusively with the Parties hereto during the term hereof and they
        are not
        participating with any other parties directly or indirectly in any manner
        in the
        Prospect. In conjunction therewith, Fairway and POI agree to provide to each
        of
        EERG and Rover, no later than March 1, 2007, one digital copy and two hard
        copy
        sets of the following information:

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      

        Fairway
          Exploration, LLC

        October
          26, 2006

        Page
          2
of
          5

      

      
 

      
        	 	
                ·

              	
                Prospect
                  maps including, but not limited to, isopach maps of the potential
                  pay zone
                  and underlying formations, net porosity maps and resistivity maps
                  of the
                  potential pay zones defining the prospective limits and a map of
                  available
                  leasehold properties.

              


      

      


      
        	 	
                ·

              	
                All
                  logs of every well penetrating the prospective zone of interest
                  copied
                  from the top of the [***].

              


      

      


      
        	 	
                ·

              	
                Well
                  tickets for every well penetrating the prospective zone of
                  interest.

              


      

      


      
        	 	
                ·

              	
                Various
                  cross sections documenting the regional facies distributions of
                  the
                  prospective pay zone throughout the Prospect as outlined on Exhibit
                  A.

              


      

      


      
        	 	
                ·

              	
                Maps,
                  logs and data documenting the [***]
                  as
                  a similar analog to the Prospect.

              


      

      


      
        	 	
                ·

              	
                Scoping
                  economics for the Prospect.

              


      

      


      
        	 	
                ·

              	
                Detailed
                  geologic write-up of the Prospect.

              


      

      


      
        	 	
                ·

              	
                Copies
                  of various literature documenting other [***]
                  producing fields and other possible analog fields from around the
                  world.

              


      

      


      The
        intent is for Fairway and POI to deliver to EERG and Rover any and all materials
        necessary to fully document the Prospect in order to best develop an exploration
        and development strategy and to be able to provide same to any interested
        potential new partners or investors. Fairway
        and POI also agree to recommend parcels of land within the AMI for acquisition
        from time to time during the term of this Agreement based on their reasonable
        judgment and analysis. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        Fairway
          Exploration, LLC

        October
          26, 2006

        Page
          3
of
          5

      

      
 

      2) In
        consideration for the above, EERG, Rover and their successors or assigns,
        agree
        to: 

      


      
        	 	
                ·

              	
                Pay
                  Fairway and POI the total sum of US Four Hundred Thousand Dollars
                  (US$400,000.00) as an initial prospect fee, which shall be allocated
                  between Fairway and POI each as to fifty percent (50%) or as they
                  may
                  otherwise agree upon in writing. Such payment shall be made prior
                  to May
                  1, 2007; and, 

              


      

      


      
        	 	
                ·

              	
                To
                  assign, or to provide, to Fairway and POI an overriding royalty
                  interest
                  on all acreage acquired by the Parties in the Prospect. The overriding
                  royalty interest will be equal to the difference between existing
                  burdens
                  of record at the time of acquisition of any acreage in the Prospect
                  and
                  twenty percent (20%), the intent being to deliver a net revenue
                  interest
                  of eighty percent (80%) to EERG and Rover. In no event, however,
                  shall the
                  overriding royalty interest of Fairway and POI be less than one
                  and
                  one-half percent (1.5%). The
                  overriding royalty interest will be calculated on a well-by-well
                  basis and
                  calculated in the same manner as the landowner
                  royalty.

              


      

      


      
        	 	
                ·

              	
                During
                  the term hereof, pay Fairway and POI a total fee of US Five Dollars
                  (US$5.00) per net acre for any acreage acquired in the Prospect
                  by, or on
                  behalf of EERG, Newco, or their successors and assignees.
                  

              


      

      


      
        	 	
                ·

              	
                Consider
                  the purchase of additional acreage within the AMI as may be recommended
                  by
                  Fairway and POI from time to time, it being understood that EERG
                  and Rover
                  shall have the right, but not the obligation, to purchase further
                  acreage.
                  The US Five Dollars (US$5.00) per acre fee referred to above shall
                  apply
                  to any such additional acreage, whether acquired by way of a lease
                  entered
                  into with the State, an existing State lease assigned to EERG and/or
                  Rover, or a lease, license or other form of oil and gas lease agreement
                  granted by any private landowners. 

              


      

      


      
        	
                3)

              	
                The
                  effective date of this agreement is set out on the first page of
                  this
                  agreement. The term of this agreement will be for a period of seven
                  (7)
                  years from the effective date.

              


      

      


      The
        Parties acknowledge that they (other than Rover) are parties to an agreement
        dated October 15, 2006 respecting certain PNG rights in Canada (the
“Canadian
        Prospect Acquisition Agreement”).
        Pursuant to the Canadian Prospect Acquisition Agreement, Fairway and POI
        agreed
        to provide consulting services to EERG and Newco or Rover (as its subsidiary)
        for a period of two (2) years for the purposes and on the terms and conditions
        set out therein. The Parties acknowledge and agree that the consulting services
        of Fairway and POI shall be extended to include provision of like services
        in
        relation to the Prospect under this Agreement. The number of consulting hours
        provided pursuant to this Agreement and the Canadian Prospect
        Acquisition Agreement
        shall be aggregated for the purposes of calculating the total number of
        consulting hours provided and required to be provided by Fairway and POI.
        

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      
        Fairway
          Exploration, LLC

        October
          26, 2006

        Page
          4
of
          5



      In
        conjunction with the agreement of Fairway and POI to sell their interest
        in the
        Prospect to EERG and Rover, EERG, Rover and Newco (as Rover’s guarantor) agree
        to jointly develop the Prospect for the benefit of the Parties subject to
        the
        following general terms and conditions:

      


      
        	
                1.

              	
                Rover
                  has been incorporated by Newco for the purpose of acquiring the
                  acreage
                  over the lands comprising the Prospect and developing the Prospect.
                  Rover
                  will beneficially own ninety percent (90%) of the working interest
                  in the
                  Prospect and EERG will beneficially own ten percent (10%) of the
                  working
                  interest in the Prospect. Rover and EERG agree to enter into a
                  joint
                  venture agreement respecting the exploration and development of
                  the
                  Prospect and to share all exploration and development costs on
                  a 90/10
                  basis in accordance with their interests. Rover (or its successor
                  or
                  nominee) shall be the operator of the Prospect. The joint venture
                  agreement shall be consistent with U.S. industry standards using
                  as the
                  “base document” the 1982 AAPL Form 610 Operating Agreement. The
                  Parties agree to negotiate in good faith with a view to entering
                  into the
                  joint venture agreement and Operating Agreement within one hundred
                  eighty
                  (180) days following the effective agreement of the Parties hereto.
                  If
                  Rover and EERG cannot reach agreement respecting the joint venture,
                  either
                  party may refer the matter for binding arbitration in accordance
                  with the
                  provisions of the Commercial Arbitration Act (British Columbia)
                  in
                  accordance with its rules for international arbitrations.
                  

              


      

      


      
        	
                2.

              	
                Rover
                  shall pay ninety percent (90%) and EERG ten percent (10%) of all
                  the fees
                  payable to Fairway and POI as set forth above.


              


      

      


      This
        agreement contains the entire understanding of the Parties with respect to
        the
        subject matter hereof and will supersede and replace any and all prior
        understandings and agreements. No Party may assign this Agreement without
        the
        prior written consent of all Parties. This Agreement will inure to the benefit
        of and be binding on the parties and their respective successors and permitted
        assigns.

      


      If
        you
        agree to the foregoing terms and conditions, please so indicate by signing
        in
        the space provided below and returning one (1) originally signed duplicate
        of
        this letter to Brad Colby at the letterhead address. This Agreement may be
        executed in counterparts and delivered by hand, courier, mail, fax or scanned
        email, which will constitute effective execution and delivery. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        Fairway
          Exploration, LLC

        October
          26, 2006

        Page
          5
of
          5



      


      Should
        you have any questions, please contact Brad Colby at (303) 385-1230. Thank
        you
        in advance for your prompt reply.

      


      Sincerely,


      


      Eternal
        Energy Corp.

      


      


      /s/
        BRAD COLBY

      


      Brad
        Colby

      President


      


      


      Agreed
        to
        and accepted as of the date first above written

      


      


      
        	
                Fairway
                  Exploration LLC.

                 

                 

                By:
                  /s/
                  STEVE
                  SWANSON                 
                  

                Steve
                  Swanson, President

                 

                 

              	
                0770890
                  B.C. Ltd

                 

                 

                By:
                  /s/
                  GERALD
                  SHIELDS              
                  

                
                  Gerald
                    Shields 

                

              
	
                Prospector
                  Oil, Inc.

                 

                 

                By:
                  /s/
                  RICHARD L.
                  FINDLEY          
                  

                Richard
                  L. “Dick” Findley

              	
                Rover
                  Resources Inc.

                 

                 

                By:
                  /s/
                  GERALD
                  SHIELDS              
                  

                
                  Gerald
                    Shields