November 24, 2004

Mr Martin A. Vaughan Midwest
EOR, Inc. 2409 East Skelly Drive,
Suite 103 Tulsa, OK 74105-6083

              RE: Letter of Intent to acquire Bandwheel Waterflood:

Dear Mr. Vaughan:

      Pursuant to our previous communications, Packard Gas Company ("Packard")
      hereby presents the following proposal:

1.    Purchase of Assets. Packard will purchase, effective December 1st 2004,
      (the "Effective Date"), Midwest EOR, Inc 's ("Seller") rights and
      obligations to the Bandweel waterflood propertyC'Properry") including all
      the tangible and intangible equipment associated with the production of
      the Property as scheduled in Exhibit "A" attached. Packard shall also
      purchase certain other assets ("Assets') which shall include pulling
      units, storage warehouse, tools and other miscellaneous equipment all
      scheduled in Exhibit "B" attached

2.    Purchase Price. The aggregate consideration for this purchase, ("the
      Purchase Price") will be Five hundred and twelve thousand dollars
      ($512,000) paid by Packard under the following schedule:

      o     $12,000 paid in cash on the closing date. The closing is scheduled
            for 7th of December 04. Upon receipt of the payment, Seller shall
            convey by an assignment 100% working Interest ( 82.33% NRI oil -
            81.25% NRI gas) to the Property as scheduled in Exhibit "A'~ and
            deliver a bill of sale for Assets as scheduled in exhibit "B" The
            property and the Assets shall be free of any liens and encumbrances
            other than those described herein.

      o     $200,000 will be paid with one million (1,000,000) Capco Energy,
            Inc. free trading common stock to be issued and free trading prior
            to June 30th, 2005.

      o     $300,000 shall be paid as net profit interest ("MT(7)) from one
            third (l/3rd) of the production from the property. The NPI shall be
            paid monthly by 30th of the month from the production of the
            preceding month's production. NPI shall be calculated by deducting
            the royalties and operating costs from the revenues If in any month
            the costs are higher than the revenues, then such costs shall be
            accrued and shall be recovered in subsequent periods from Seller's
            share of NPI Seller shall retain a security interest in the Property
            and the Assets until Seller has received the full payment as
            described further herinbelow

      o     Packard Gas Company shall invest a minimum of $100,000 within one
            year from the effective date of this purchase. None of this $100,000
            may be utilized as expenses in calculating the above NPI,

               2815 E Skelly Drive, Ste. 823, Tulsa, OK 74105-6236
                    Phone (918) 712-7930 Fax (918) 712-7941
                      E-maU: lArryi@eapcoe_________________

<PAGE>

3     Partial Release Sellers security interest shall be on the Property and the
      assets however upon receipt of the one million shares of Capco Energy,
      Inc. free trading common stock. Seller shall provide a release for the
      Assets but shall continue to retain the security on the Property until
      full payment has been received

4.    Osage County Bond. Within 90 days of closing, Packard shall release any
      Bonds held by the Seller for the sole purpose of the property,

5.    Confidentiality. All information related to all parties involved with this
      transaction shall be kept strictly confidential and not disclosed without
      the permission of all parties unless otherwise required by law.
      Notwithstanding the foregoing, Packard may disclose confidential
      information to its partners, employees, lenders and professional advisors
      as necessary to complete the transaction

If this proposal meets with your approval, then please so indicate by signing in
the space provided below and returning to Packard. If a signed copy of this
proposal is not returned to Packard within 3 business days upon receipt of this
proposal we will consider our proposal to be rejected unless the parties agree
to extend.


/s/ Packard Gas
---------------------------
Packard Gas,, Company


BY:
   -------------------------------
   Larry Burroughs, President


Accepted this ____ day of November 2004
Midwest EOR, Inc.


BY /s/ Martin A Vaughaa
   ---------------------------------
   Martin A Vaughaa, President

               2815 E SkelJy Drive, Ste. 823, Tuba, OK 74105-6236
                     Phone (918) 712-7930 Fax (918) 712-7941
                          E-mail: larry@capcoenergy.com