Document:

EXHIBIT 10.11

                           PURCHASE AND SALE AGREEMENT

                                   DATED AS OF

                                DECEMBER 31, 2012

                                 BY AND BETWEEN

                                THREE FORKS, INC.

                                       AND

                              THREE FORKS NO. 1 LLC

<PAGE>

                           PURCHASE AND SALE AGREEMENT

         This AGREEMENT, dated as of December 31, 2012 (the "Agreement"), by and
between Three Forks, Inc. ("TFI"), a Colorado  Corporation and Three Forks No. 1
LLC ("LLC") a Colorado Limited Liability Corporation.

         WHEREAS,  TFI has  entered  into a  certain  Produce  to  Earn  Farmout
Agreement  as Farmee a copy of said  Agreement  is attached  hereto as Exhibit A
(the "Farmout Agreement"); and

         WHEREAS,  TFI has a one hundred percent working interest (100% W.I.) in
the property subject to the Farmout Agreement; and

         WHEREAS TFI is the manager of the LLC; and

         WHEREAS  TFI  desires  to sell  and  the  LLC  desires  to  purchase  a
participation in the Farmout Agreement.

         NOW,  THEREFORE,  in  consideration of the foregoing and the respective
representations,  warranties, covenants and agreements set forth herein, and for
other good and  valuable  consideration  the receipt  and  adequacy of which are
hereby  acknowledged,  and intending to be legally bound hereby,  the parties do
hereby agree as follows:

                                    ARTICLE I
                                THE CONSIDERATION

SECTION 1.01 CONSIDERATION.

         In  consideration of undertaking the drilling and completion of 9 wells
in Archer  County Texas on the Farmout  property,  TFI will assign 87 percent of
the working interest in the Farmout to LLC.

SECTION 1.02 EFFECTS OF THE PURCHASE

         At the Effective  Time and by virtue of the Purchase the LLC shall have
the right and obligation to drill and complete the wells on the property subject
to the Farmout Agreement.

                                      -2-
<PAGE>

                                   ARTICLE II
                                  TITLE MATTERS

SECTION 2.01 SELLERS TITLE.

         Seller  as  Farmee  under  the  Farmout  has the  title to the  Farmout
property without warranty of title, however Seller has consulted Geoffrey Hale a
land title person in Oklahoma and is satisfied that the Farmor has the authority
to enter into the Farmout Agreement and deliver the rights thereunder.

                                   ARTICLE III
                                     CLOSING

SECTION 3.01 CLOSING

         The  Closing  shall  take  place  immediately  upon  execution  of this
Purchase and Sale  Agreement.  TFI shall execute an  assignment  and transfer 87
percent of its working interest in the said Farmout to LLC.

                                   ARTICLE IV
                      REPRESENTATIONS AND WARRANTIES OF TFI

SECTION 4.01 ORGANIZATION OF TFI; AUTHORITY

         TFI is an Entity duly organized,  validly existing and in good standing
under the laws of the State of Colorado.  TFI has all requisite  corporate power
and corporate authority to enter into the Transaction Documents to which it is a
party, to consummate the transactions  contemplated  hereby and thereby, to own,
lease and operate its  properties  and to conduct its  business.  Subject to the
receipt  of its  board of  director's  approval,  the  execution,  delivery  and
performance by TFI of the  Transaction  Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby shall have been
duly authorized by all necessary corporate action on the part of TFI, including,
without limitation, the approval of the board of directors of TFI..

SECTION 4.02 NO VIOLATION; CONSENTS AND APPROVALS

         The execution  and delivery by TFI of the  Transaction  Documents  does
not, and the  consummation of the transactions  contemplated  hereby and thereby
and  compliance  with the terms  hereof and thereof will not,  conflict  with or
result in any  violation of or default (or an event which,  with notice or lapse
of time or both, would constitute a default) under, (a) the terms and conditions
or provisions of the certificate of  incorporation or by-laws of TFI (b) any Law
applicable  to TFI or the  property  or assets  of TFI,  or (c) give rise to any
right of  termination,  cancellation  or  acceleration  under,  or result in the
creation  of any lien upon any of the  properties  of TFI under any  contract to
which TFI is a party or by which TFI or any assets of TFI may be bound,  except,
in the case of clauses (b) and (c), for such  conflicts,  violations or defaults
which are set forth in of the TFI Disclosure  Schedule and as to which requisite
waivers  or  consents  will have been  obtained  prior to the  Closing or which,
individually  or in the aggregate,  would not have a material  adverse effect on
TFI.  No  Governmental  Approval  is  required to be obtained or made by or with
respect to TFI in connection  with the execution and delivery of this  Agreement
or the consummation by TFI of the transactions contemplated hereby.

                                      -3-
<PAGE>

SECTION 4.03 LITIGATION; COMPLIANCE WITH LAWS

         There are: (i) no claims, actions, suits, investigations or proceedings
pending  or,  to the  knowledge  of  TFI,  threatened  against,  relating  to or
affecting  TFI, the  business,  the assets,  or any current  employee,  officer,
director,  stockholder,  or independent contractor of TFI in their capacities as
such, and (ii) no orders of any  Governmental  Entity or arbitrator  outstanding
against TFI, the business or the assets of TFI, or that could prevent or enjoin,
or delay in any respect, consummation of the transactions contemplated hereby.

         TFI has complied and is in compliance in all material respects with all
laws  applicable  to TFI, its  business or its assets,  nor has TFI has received
notice from any Governmental Entity or other Person of any material violation of
law  applicable  to TFI, its business or assets.  TFI has obtained and holds all
required  Licenses  (all of  which  are in  full  force  and  effect)  from  all
Government Entities applicable to TFI, its business or its assets. No violations
are or have been  recorded in respect of any such license and no  proceeding  is
pending,  or, to the  knowledge of TFI,  threatened  to revoke or limit any such
License.

                                    ARTICLE V
                      REPRESENTATIONS AND WARRANTIES OF LLC

SECTION 5.01      ORGANIZATION OF LLC

         LLC is a Limited Liability Company duly organized, validly existing and
in good  standing  under the laws of the State of Colorado and has all requisite
corporate power and corporate authority to enter into the Transaction Documents,
to consummate the transactions  contemplated  hereby and thereby,  to own, lease
and operate its properties and to conduct its business.  It is acknowledged that
TFI is the manager and is acting on the behalf of LLC in the transaction.

SECTION 5.02      NO VIOLATION; CONSENTS AND APPROVALS

         The execution  and delivery by LLC of the  Transaction  Documents  does
not, and the  consummation of the transactions  contemplated  hereby and thereby
and  compliance  with the terms hereof and thereof will not  conflict  with,  or
result in any  violation of or default (or an event which,  with notice or lapse
of time or both,  would constitute a default) under, the terms and conditions or
provisions of the Articles of Organization or Operating Agreement of LLC,

SECTION 5.03      LITIGATION; COMPLIANCE WITH LAWS

         (a)  There  are:  (i) no  claims,  actions,  suits,  investigations  or
proceedings pending or, to the knowledge of LLC, threatened against, relating to
or affecting LLC, its business, its assets, or any employee,  officer, director,
stockholder,  or  independent  contractor of LLC in LLC  capacities as such, and
(ii) no orders of any Governmental  Entity or arbitrator are outstanding against
LLC, its business, its assets, or any employee, officer, director,  stockholder,
that could  prevent  or enjoin,  or delay in any  respect,  consummation  of the
transactions contemplated hereby.

                                      -4-
<PAGE>

         (b) LLC has complied and is in compliance in all material respects with
all Laws  applicable  to LLC, its  business or its assets.  LLC has not received
notice from any Governmental Entity or other Person of any material violation of
Law applicable to it, its business or its assets.

                                   ARTICLE VI

SECTION 6.01 TAX MATTERS

         No  representation  is made  with  respect  to the  taxability  of this
transaction.

                                   ARTICLE VII
                   SURVIVAL OF REPRESENTATIONS AND WARRANTIES

         None of the  representations and warranties of the parties set forth in
this  Agreement  shall  survive the  Closing.  Following  the Closing  Date with
respect to any particular representation or warranty, no party hereto shall have
any further liability with respect to such representation and warranty.  None of
the covenants,  agreements  and  obligations of the parties hereto shall survive
the Closing.

                                   ARTICLE VII
                                  MISCELLANEOUS

SECTION 7.01 NOTICES

         All notices,  requests and other  communications to any party hereunder
shall be in writing and shall be deemed given or made as of the date  delivered,
if delivered personally or by e-mail, one day after being delivered by overnight
courier  or three  days after  being  mailed by  registered  or  certified  mail
(postage  prepaid,  return receipt  requested),  to the parties at the following
addresses:

         if to TFI to:              Three Forks, Inc.
                                    555 Eldorado Blvd., Suite 100
                                    Broomfield, CO 80021

         if to LLC to:              Three Forks No.1  LLC
                                    555 Eldorado Blvd. Suite 100
                                    Broomfield, CO 80021

or such other address or e-mail address as such party may hereafter  specify for
the purpose by notice to the other party hereto.

                                      -5-
<PAGE>

SECTION 7.02 AMENDMENT; WAIVER

         This Agreement may be amended, modified or supplemented, and waivers or
consents to departures  from the provisions  hereof may be given,  provided that
the same are in writing and signed by or on behalf of the parties hereto.

SECTION 7.03 SUCCESSORS AND ASSIGNS

         The provisions of this Agreement shall be binding upon and inure to the
benefit  of the  parties  hereto  and LLC  respective  successors  and  assigns,
provided that no party shall assign,  delegate or otherwise  transfer any of its
rights or obligations  under this Agreement  without the written  consent of the
other party hereto.

SECTION 7.04 GOVERNING LAW

         This  Agreement  shall be construed in accordance  with and governed by
the law of the State of Colorado  without  regard to  principles  of conflict of
laws.

SECTION 7.05 WAIVER OF JURY TRIAL

         Each party hereto hereby  irrevocably  and  unconditionally  waives any
rights to a trial by jury in any legal action or  proceeding in relation to this
Agreement and for any counterclaim therein.

SECTION 7.06 CONSENT TO JURISDICTION

         Each of the Parties hereby irrevocably and  unconditionally  submits to
the exclusive  jurisdiction of any court of the State of Colorado or any federal
court sitting in Colorado for purposes of any suit,  action or other  proceeding
arising out of this Agreement and the  Transaction  Documents (and agrees not to
commence any action,  suit or proceedings  relating  hereto or thereto except in
such courts).  Each of the Parties agrees that service of any process,  summons,
notice or  document  pursuant  to the laws of the State of  Colorado  and on the
parties  designated in Section 10 shall be effective  service of process for any
action, suit or proceeding brought against it in any such court.

SECTION 7.07 COUNTERPARTS; EFFECTIVENESS

         Facsimile  transmissions  of  any  executed  original  document  and/or
retransmission of any executed facsimile  transmission shall be deemed to be the
same as the delivery of an executed  original.  This  Agreement may be signed in
any number of  counterparts,  each of which shall be an original,  with the same
effect as if the signatures thereto and hereto were upon the same instrument.

                                      -6-
<PAGE>

SECTION 7.08 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES; RIGHTS OF OWNERSHIP

         Except as expressly  provided  herein,  this  Agreement  (including the
documents  and  the  instruments  referred  to  herein)  constitute  the  entire
agreement and supersede all prior  agreements and  understandings,  both written
and oral, among the parties with respect to the subject matter hereof. Except as
expressly  provided  herein,  this  Agreement is not intended to confer upon any
person  other than the  parties  hereto any rights or  remedies  hereunder.  The
parties  hereby  acknowledge  that no person  shall have the right to acquire or
shall be deemed to have  acquired  shares  of  common  stock of the other  party
pursuant to the Exchange until consummation thereof.

SECTION 7.09 HEADINGS

         The headings  contained in this  Agreement are for  reference  purposes
only and shall not in any way  affect  the  meaning  or  interpretation  of this
Agreement.

SECITON 7.10 NO STRICT CONSTRUCTION

         The parties hereto have  participated  jointly in the  negotiation  and
drafting of this  Agreement.  In the event an ambiguity or question of intent or
interpretation  arises under any  provision of this  Agreement,  this  Agreement
shall  be  construed  as if  drafted  jointly  by the  parties  thereto,  and no
presumption or burden of proof shall arise favoring or disfavoring  any party by
virtue of the authorship of any of the provisions of this Agreement.

SECTION 7.11 SEVERABILITY

         If any term or other provision of this Agreement is invalid, illegal or
unenforceable, all other provisions of this Agreement shall remain in full force
and  effect  so long as the  economic  or legal  substance  of the  transactions
contemplated  hereby is not affected in a manner that is  materially  adverse to
any party.

         IN WITNESS  WHEREOF,  the parties  hereto have caused this Purchase and
Sale Agreement to be duly executed as of the day and year first above written.

                             THREE FORKS, INC.
                             A COLORADO CORPORATION

                             By:
                                ------------------------------------------------
                                Name: Donald Walford
                                Title: CEO

                             THREE FORKS NO. 1  LLC
                             A COLORADO LIMITED LIABILITY COMPANY

                             By:
                                ------------------------------------------------
                                Name: Donald Walford
                                Title: CEO of Three Forks Inc. Manager

                                      -7-
<PAGE>

                                   EXHIBIT "A"

                                FARMOUT AGREEMENT
<PAGE>

                                FARMOUT AGREEMENT

                               (THREE FORKS, INC.)

         This FARMOUT AGREEMENT is entered into as of ____________________, 2012
by and between Holms Energy Development Corporation and Three Forks, Inc.

                                   WITNESSETH

         WHEREAS  Holms Energy  Development  Corporation,  ("Farmor") a Colorado
corporation,  whose  address  is Helena  Montana  wishes to enter into a FARMOUT
agreement with  Three Forks,  Inc., a Colorado  corporation , ("Farmee"),  whose
operating office is located at 555 Eldorado Blvd. Suite 100 Broomfield, Colorado
for the development of certain lands, and

         WHEREAS,  Holms  Energy  Development  Corporation,  desires to have the
Farmout acreage explored and developed for oil, gas and methane production; and

         WHEREAS,  Three Forks,  Inc. has expressed its willingness to make such
exploration and development on the terms and conditions hereof;

         NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants  herein  contained and to be performed by the parties hereto,  and the
mutual benefits to be received hereunder,  the parties hereto do hereby agree as
follows;

         FARMOR  hereby  grants  FARMEE the right to explore for oil and gas and
methane  production on the subject  tracts and mineral  interests  listed on the
attached Exhibit "A" under the terms hereof as follows:

1.   DEFINITIONS

(A)  "Contract  Depth"  means  a  depth  sufficient  to  test  the  through  the
     Ellenberger formation (5,000 feet or less).

(B) "Effective Date" will mean the execution date of this agreement.

(C)  "Farmout  Lands"  means the  Farmor's  net  interest in and to the minerals
     owned by Farmor which are set forth in Exhibit "A" attached hereto and made
     a part hereof which may be amended or modified from time to time  hereafter
     by mutual agreement in writing exclusively.  Farmout lands shall be subject
     to modification and adjustments based upon GPS survey and future agreements
     of the parties.

2.   EXHIBITS

The following  Schedules and Exhibits are attached  hereto and made part of this
Agreement:

(A)  Exhibit "A" is a schedule of all individual  sections or tracts  comprising
     approximately  _________  gross acres,  more or less, on which the minerals
     are owned or leased by Farmor.

(B)  Exhibit "B" is a map  providing  an overview  and  general  description  of
     "Farmout"  tracts  located  in  Archer  County,  Texas,  subject  to formal
     description and survey by the parties hereafter.

                                      -1-
<PAGE>

3. CONSIDERATION AND COMMITMENT

(A)  FARMEE  agrees that on or before March 31, 2013,  it will commence or cause
     to be commenced the actual  drilling of a minimum of 3 wells for oil and or
     gas, hereinafter  sometimes referred to as "Initial Wells" at a location of
     its  choice  in any one tract  described  in  Exhibit  "A" and that it will
     prosecute  the  drilling  of  said  well  with  due  diligence  to a  depth
     sufficient to test the Ellenberger  formation  (hereinafter called Contract
     Depth"). The well shall be drilled, and completed with reasonable diligence
     and dispatch,  or if a  non-commercial  well, shall be properly plugged and
     abandoned.  All drilling,  equipping,  plugging and abandonment,  and other
     operations shall be performed at the sole risk and expense of Farmee.

     In the event an unusual  event or delay  occurs in drilling  or  permitting
     which is pending on March 31,  2013,  Farmee,  upon  showing that permit is
     pending or that drilling rig is contracted and  scheduled,  will receive up
     to a 30 day extension in drilling first well, hereunder.

(C)  In the event the initial  well is  commenced,  drilled and  completed  as a
     producing  well or plugged and abandoned as a dry hole in  accordance  with
     this  agreement,  Farmee  shall  have  the  exclusive  right,  but  not the
     obligation,  within days from the date of completion  rig release from said
     Initial  Well to commence  the  drilling of the Second at a location of its
     choice in any one tract described in "Exhibit "A". The Second Well shall be
     drilled,  and  completed  pursuant  to the same  terms  and  provisions  as
     contained  herein for the drilling of the Initial Well.  Farmee shall drill
     up to 7 additional  wells  hereunder at a location of its choice so long as
     no more than 60 days lapse between the release of the  completion  rig from
     the  previous  well and the  spudding of the next,  on the subject  farmout
     lands.

(D)  If because of encountering  impenetrable substances,  lost circulation,  or
     because of mechanical conditions making further drilling impractical before
     contract  depth is reached or if Initial  well is  completed as a dry hole,
     Farmee shall have the right to drill a substitute well at a location of its
     choice  on  the  lease  acreage,  provided  the  actual  drilling  of  said
     substitute  well  shall  be  commenced  not  later  than  120  days for the
     cessation  of the  operations  of such  well.  If such  substitute  well is
     commenced,  drilled and  completed  as provided  herein,  Farmee shall have
     complied with this agreement to the same extent as if the well for which it
     is a substitute had been  commenced,  drilled,  and completed in accordance
     herewith.  Farmee shall be allowed to drill as many substitute  wells as it
     may deem feasible at its own discretion,  risk and expense, in an effort to
     comply with this agreement.

4. OPERATOR OF WELLS

     Farmor shall be the operator of record until Farmee shall become  qualified
to be an operator in the State of Texas but Farmee shall manage the  development
wells drilled on behalf of Farmee on the behalf of Farmor.

5. INTEREST EARNED

(A)  Farmor represents to Farmee that Farmor owns or leases 100% of the minerals
     in the  Farmout  Lands  listed  on  Exhibit  "A",  subject  to 2% in  total
     overriding royalties on the leasehold acreage.

(B)  In the event any Well hereunder is drilled,  and completed as, a commercial
     producer of oil and/or gas or methane at any depth and such well is located
     upon any portion of the lease  acreage on Exhibit "A" Farmor  shall  assign
     and  transfer  to  Farmee,  in the  section  in which the well is  located,
     subject  to  the  limitation  in  the  last  sentence  of  this  paragraph,
     one-hundred  percent (100%) of its right,  title and interest in and to the
     oil and gas produced  until payout under 5c hereof  subject to a Overriding
     Royalty interest  reserved to Bill Baber of 2%, such overriding  royalty to
     be  free  and  clear  of any and all  exploration,  development,  drilling,

                                      -2-
<PAGE>

     completion,  production,  processing , water  disposal,  and gas  gathering
     costs  (the   parties   recognize   that  an  existing   other  ORRR's  are
     outstanding).  The Net Revenue  Interest earned by Farmee shall not be less
     than 80% of 100% in tracts  listed on Exhibit "A" such wells shall hold the
     mineral  interest in the acreage only to the depth completed after 2 years.
     During the 2 year period  after  completion,  Farmee may explore any deeper
     horizons  without  limitation  and if completed  as a producer,  such wells
     shall hold the acreage to depth completed.

(C)  After date Farmee has received net revenues equal to its total costs Farmor
     shall "Backin" to a 25% working interest in the farmed land revenues.

(D)  This  Farmout  Agreement  is  intended  to be a "drill  to earn"  agreement
     whereby  Farmor  intends to convey its interest to Farmee ONLY by virtue of
     Farmee drilling and completing 3 wells capable of commercial  production of
     oil and/or  gas by the timely  drilling  and  completing  of each well on a
     location by location  basis.  Farmee  shall have the  exclusive  continuous
     drill to earn  option for all  acreage  listed on Exhibit  "A,"  subject to
     other terms and limitations hereof.

7. RENTALS

     Farmor represents from the date of execution of this Agreement there are no
rentals due from Farmee and that Farmee  shall not pay rentals on any  leasehold
or on any leasehold Farmee earns by production.

8. ADDITIONAL PROVISIONS

(A)  Farmor  shall not make any  proposal  for the drilling of a new well on the
     farmout  lands  subject to this  agreement  during any time the  continuous
     development  period  remains in effect  without  the  written  consent  and
     participation of Farmee

(B)  Farmor agrees to defend the title to the lands listed on Exhibit "A."

(C)  The parties  hereto,  their  successors  and assigns,  shall have equal and
     concurrent  rights of ingress and egress on the farmout  lands and adjacent
     lands for the purpose of laying  pipelines,  water lines,  dig pits,  erect
     structures,  and to do and perform any and all other things incident to the
     rights and interest of the parties. These rights shall be exercised in such
     a manner as not to  interfere  unduly with the similar  rights of the other
     party thereto. Parties recognize and agree that Surface Use Agreements with
     Surface Owners will have  provisions  with which the parties have to comply
     and the parties agree to fully cooperate in so doing.

(D)  Force Majeure provisions shall apply to all drilling commitments hereunder.
     Should  Farmee be  prevented  from  complying  with any  express or implied
     covenant of this farmout,  from conducting drilling or reworking operations
     thereon or from producing oil or gas by operation of a force majeure, which
     shall include ONLY natural disasters or wars directly affecting the farmout
     lands,  any  state or  federal  law or any  order,  rule or  regulation  of
     governmental  authority,  then  while so  prevented,  Farmee's  obligations
     hereunder  shall be suspended and Farmee shall not be liable in damages for
     failure to comply  therewith;  and this farmout shall be extended while and
     so long as Farmee is prevented by any such cause from  conducting  drilling
     or reworking  operations on or from producing oil or gas from the premises,
     and the time while  Farmee is so  prevented  shall not be  counted  against
     Farmee,  so long as after a force majeure  occurrence,  upon termination of
     such event,  the Farmee shall promptly  recommence  its efforts  hereunder.
     Farmee's obligation to drill shall be suspended by acts of God, access road
     closures to drill sites or production areas,  inclement weather prohibiting
     equipment  from moving or working,  or the  inability  to obtain  drilling,
     production  or  pipeline  materials  due to  shortages,  but  equipment  or
     drilling or material  related  suspensions  are limited to 90 days from the

                                      -3-
<PAGE>

     scheduled  event. In the event that gas production  become "shut-in" due to
     lack of pipeline capacity,  the parties agree that such "shut-in" condition
     shall suspend this Agreement's  terms for not longer than 1 (one) year from
     date it becomes  "shut-in,"  during  which  year  Farmee  shall  propose an
     acceptable  remedy  (acceptable in Farmors sole  discretion)  and implement
     such remedy so that market rate (in the area)  revenue for gas  produced is
     commenced or  recommenced.  In the event of a dispute under this provision,
     Farmor shall send a written Notice of Intended  Cancellation  to Farmee and
     Farmee shall have 30 days  thereafter  to cure and  recommence  substantial
     activities.

(E)  Geological  information and well data from any Well drilled hereunder shall
     be provided to Farmor by Farmee, in confidence, as trade secrets, not to be
     published  except  as  required  by law or as  directed  by a  governmental
     authority having jurisdiction.

(F)  Farmee may assign all of the  rights  and  obligations  created  under this
     Agreement,  Subject to Farmor's written permission,  which permission shall
     not be unreasonably withheld.

(G)  Farmor and Farmees shall enter into an "Area of Mutual Interest"  Agreement
     for a radius of one mile around the subject  farmout lands on or before the
     drilling of the initial  well, on terms  acceptable  to Farmor,  concurrent
     herewith

(H)  Farmor will provide an Abstract and Mineral Title  Lawyer's  Opinion within
     sixty days  hereafter  on the Farmout  Lands or on a tract by tract  basis.
     Farmee shall pay any costs thereof.  If any title defects are noted, Farmor
     agrees to take  whatever  action is  appropriate  to correct  the  defects,
     promptly, to allow drilling to commence.

(I)  Farmee shall comply with all  provisions of the Surface  Owners  Agreements
     negotiated by Farmor including payments required thereby to Surface Owners

(J)  Farmee  shall  permit,  upon  request,  Farmor's  access  to  ALL  drilling
     information,  logs,  samples,  completion  records,  production records and
     product analysis.

(K)  Each Party  shall  permit  access to any  pipeline  owned by other Party or
     assigns, likewise, on reasonable industry rates customary in the basin

(L)  Each Party shall permit usage of any road  improvements by other Parties or
     assigns,  however,  such  Party  shall  share  its  proportionate  share of
     maintenance  and  Surface  Owners  payment  expenses  for  roads so used in
     connection  with  its  own  oil and gas  operations,  whether  drilling  or
     production.

(M)  There  are  no  depth  restrictions  imposed  on  Farmee  subject  to  this
     agreement, except to designated horizon specified herein above

(N)  Farmor  and Farmee  agree as  follows;  Not  withstanding  anything  to the
     contrary contained herein, Farmees rights shall automatically  terminate to
     all rights  below 100' below the  stratagraphic  equivalent  of the deepest
     common  source of  supply  penetrated  in any well  spud 2 years  after the
     completion  date of the well in the section,  provided  however,  if farmee
     should  commence  operations to drill,  deepen,  or rework a well under the
     terms of this farmout  agreement within such 2 years, the farmee shall have
     the right to drill such well to completion and/or continue deepening and/or
     complete reworking operations with reasonable  diligence and dispatch,  and
     if oil or gas be found in  paying  quantities  earn an  assignment  of such
     stratagraphic equivalent.

                                      -4-
<PAGE>

(O)  Farmee may negotiate  additional  surface  agreements,  if  necessary,  for
     drilling, construction of pipelines, compression and production facilities,
     however,  Farmee shall  request  Farmor's  assistance in  negotiating  such
     agreements, and Farmor shall use its best efforts in assisting Farmee.

(P)  Each party agrees to pay all costs  incurred or created by it in connection
     with its own  development  and  business  activities.  Farmee  shall not be
     responsible for debt created by prior or future development,  drilling,  or
     completion  activities of Farmor  unless agreed to in writing,  except that
     Farmee shall be responsible for and liable for any payments  required under
     the Surface Use Agreements with Surface Owners attributable to its drilling
     and operational activities.

(Q)  When and if both parties (or their assigns) are producing bydrocarbons, the
     Parties agree to share compression and treating equipment and facilities on
     a percentage of product processed basis for cost sharing.

9. ADDRESS FOR SERVICE

     The address  for each of the  Parties  for  service of notices  shall be as
follows:

FARMOR:                                          FARMEE:

Holms Energy Development Corporation             Three Forks, Inc.
Helena, Montana                                  555 Eldorado Blvd.
                                                 Suite 100
                                                 Broomfield, CO 80021

10. ENTIRE AGREEMENT

     This Agreement and the documents and instruments and other agreements among
the  parties  hereto as  contemplated  by or referred  to herein  contain  every
obligation and understanding  between the parties relating to the subject matter
hereof  and  merges  all  prior   discussions,   negotiations,   agreements  and
understandings,  both written and oral, if any,  between  them,  and none of the
parties  shall  be  bound  by  any  conditions,   definitions,   understandings,
warranties or  representations  other than as expressly  provided or referred to
herein. All schedules,  exhibits and other documents and agreements executed and
delivered  pursuant  hereto  are  incorporated  herein  as if set forth in their
entirety herein.

11. BINDING EFFECT

     This  Agreement  shall be  binding  upon and  inure to the  benefit  of the
parties hereto and their respective successors, heirs, personal representatives,
legal representatives, and permitted assigns.

12. WAIVER AND AMENDMENT

     Any representation, warranty, covenant, term or condition of this Agreement
which may legally be waived,  may be waived, or the time of performance  thereof
extended,  at any time by the party hereto entitled to the benefit thereof,  and
any term,  condition or covenant  hereof  (including,  without  limitation,  the
period  during  which  any  condition  is  to be  satisfied  or  any  obligation
performed)  may be amended by the parties  thereto at any time. Any such waiver,
extension or amendment  shall be evidenced by an instrument in writing  executed
on behalf of the party  against  whom such  waiver,  extension  or  amendment is

                                      -5-
<PAGE>

sought to be charged. No waiver by any party hereto, whether express or implied,
of its rights under any provision of this Agreement shall constitute a waiver of
such party's rights under such  provisions at any other time or a waiver of such
party's rights under any other  provision of this  Agreement.  No failure by any
party thereof to take any action against any breach of this Agreement or default
by  another  party  shall  constitute  a waiver of the former  party's  right to
enforce any provision of this Agreement or to take action against such breach or
default or any subsequent breach or default by such other party.

13. NO THIRD PARTY BENEFICIARY

     Nothing  expressed or implied in this  Agreement  is intended,  or shall be
construed,  to confer upon or give any Person other than the parties  hereto and
their  respective  heirs,  personal   representatives,   legal  representatives,
successors and permitted  assigns,  any rights or remedies under or by reason of
this Agreement, except as otherwise provided herein.

14. SEVERABILITY

     In the  event  that  any one or more of the  provisions  contained  in this
Agreement,  or the  application  thereof,  shall be  declared  invalid,  void or
unenforceable  by a court  of  competent  jurisdiction,  the  remainder  of this
Agreement  shall  remain in full force and effect  and the  application  of such
provision to other Persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such  invalid,  void or  unenforceable  provision  with a valid and  enforceable
provision that will achieve, to the extent possible, the economic,  business and
other purposes of such invalid, void or unenforceable provision.

15. EXPENSES

     Except as otherwise  provided  herein,  each party  agrees to pay,  without
right of  reimbursement  from the other party, the costs incurred by it incident
to the performance of its obligations  under this Agreement and the consummation
of the transactions  contemplated hereby, including,  without limitation,  costs
incident to the preparation of this Agreement, and the fees and disbursements of
counsel,  accountants  and  consultants  employed  by such  party in  connection
herewith.

16. HEADINGS

     The  section  and  other  headings  contained  in  this  Agreement  are for
reference  purposes only and shall not affect the meaning or  interpretation  of
any provisions of this Agreement.

17. 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. Facsimile signatures shall be deemed valid and binding.

18. GOVERNING LAW

     This Agreement has been entered into and shall be construed and enforced in
accordance  with the laws of the State of  Colorado,  without  reference  to the
choice of law principles thereof.

                                      -6-
<PAGE>

19. JURISDICTION AND VENUE

     This Agreement shall be subject to the exclusive jurisdiction of the courts
of  Jefferson  County  Colorado.  The parties to this  Agreement  agree that any
breach of any term or condition of this Agreement shall be deemed to be a breach
occurring  in the State of  Colorado  by virtue of a failure  to  perform an act
required to be performed  under this  Agreement  and  irrevocably  and expressly
agree to submit to the  jurisdiction  of the courts of the State of Colorado for
the  purpose of  resolving  any  disputes  among the  parties  relating  to this
Agreement  or the  transactions  contemplated  hereby.  The parties  irrevocably
waive, to the fullest extent  permitted by law, any objection which they may now
or  hereafter  have to the  laying  of venue of any suit,  action or  proceeding
arising out of or relating to this  Agreement,  or any  judgment  entered by any
court in respect  hereof  brought in  Jefferson  County,  Colorado,  and further
irrevocably  waive any claim  that any suit,  action or  proceeding  brought  in
Jefferson County, Colorado has been brought in an inconvenient forum.

20. PARTICIPATION OF PARTIES

     The  parties  hereby  agree  that  they  have  had  the  opportunity  to be
represented  by counsel during the  negotiation  and execution of this Agreement
and, therefore,  waive the application of any law, regulation,  holding, or rule
of  construction  providing  that  ambiguities in an agreement or other document
will be construed against the party drafting such agreement or document.

21. FURTHER ASSURANCES

     The parties hereto shall deliver any and all other instruments or documents
reasonably required to be delivered pursuant to, or necessary or proper in order
to give effect to, all of the terms and provisions of this Agreement  including,
without limitation,  all necessary assignments,  division orders, and such other
instruments  of transfer as may be necessary or  desirable  to  effectuate  this
Agreement.

                                      -7-
<PAGE>

     FURTHER,  this agreement and its exhibits constitute the entire contract of
the parties and there are no agreements,  undertakings,  obligations,  promises,
assurances  or  conditions,   whether  precedent  or  otherwise,   except  those
specifically  set forth.  IN WITNESS  WHEREOF,  the Parties have  executed  this
Agreement as of the date first written above.

                                    Holms Energy Development Corporation

                                    By: ____________________________
                                    President

                                    THREE FORKS, INC.

                                    By: _____________________________
                                    President

STATE OF                                 )
COUNTY OF                                )

     On  this  _____  day of  ________________________,  2012,  before  me,  the
undersigned,  a  Notary  Public  in and for  said  State,  personally  appeared,
President of Holms Energy Development Corporation,  known to be the person whose
name is subscribed to this within this instrument,  and who upon oath swore that
the statements therein contained are true and correct.

WITNESS my hand and official seal.                My Commission expires:

----------------------------------------          -------------------------
Notary Public

STATE OF                                 )
COUNTY OF                                )

     On this  _____  day of  _________________________,  2012,  before  me,  the
undersigned,  a  Notary  Public  in and for  said  State,  personally  appeared,
President of Three Forks,  Inc., known to be the person whose name is subscribed
to this  within  this  instrument,  and who upon oath swore that the  statements
therein contained are true and correct.

WITNESS my hand and official seal.                My Commission expires:

-----------------------------------------         -------------------------
Notary Public

                                      -8-EXHIBIT 10.12

                    PURCHASE SALE AND PARTICIPATION AGREEMENT

                                    REGARDING

                    CERTAIN PROPERTIES IN LOUISIANA AND TEXAS

                               BETWEEN 5 JAB, INC.
                             AS OPERATOR AND SELLER

                                       AND

                                THREE FORKS, INC.

                            AS PARTICIPANT AND BUYER

                          DATED AS OF FEBRUARY 27, 2013

                                      -1-
<PAGE>
                      PURCHASE AND PARTICIPATION AGREEMENT
                                      FOR
                    SELECT PROPERTIES IN LOUISIANA AND TEXAS

This Agreement (the  "Agreemento) is made and entered into as of the 27th day of
February,  2013 by and between the following named Parties (the "Partieso) whose
addresses,  telephone, and facsimile numbers are set forth with their respective
names, to-wit:

               Five J.A.B.Inc. ('Operator") or ("Seller)"
                               16202 Butera Rd,
                               Magnolia, TX 77355

                               Attention:
                               James ("Bubba") Bohannon
                               Telephone: (281) 356-7767
                               Fax: (281) 252-0575

                                       and

             THREE FORKS, INC. ("Participant") or ("Buyer")
                               555 Eldorado Blvd., Suite 100
                               Broomfield, Colorado 80021
                               Attention: Donald Walford, CEO
                               Telephone: (303)404-2160
                               Fax:

                              W I T N E S S E T H:

Precis.  Five J.A.B.,  Inc.  ("Operator")  of Magnolia,  Texas, is the owner and
operator of certain oil and gas wells and leases (the opropertieso) described in
Exhibit  "A",  attached  hereto  and made a part  hereof.  The  Participant  has
reviewed  geological,   engineering,  and  production  data  pertaining  to  the
Properties  and has  made the  determination  to  purchase  an  interest  in the
Properties.  The precise working interest and net revenue  interest  percentages
(the  "Interests")  to be purchased by the Participant are Identified in Exhibit
"A". In addition,  the  Participant  has  determined,  in  concurrence  with the
Operator,  that  the  production  from the  Properties  can be  enhanced  by the
application  of  a  ten  (10)  well  workover  and   development   program  (the
"Development Program"), described below. This Agreement sets forth the terms and
conditions upon which (i) the Participant  agrees to purchase the Interests from
the Operator and (ii) the parties describe the proposed  Development  Program to
develop the Properties.

1. THE  PROPERTIES.  The  Properties  are comprised of the oil and gas wells and
leases  described in the attached  Exhibit "A". The Properties were acquired and
are currently operated by the Operator.

2.  AGREEMENT TO PURCHASE THE  INTERESTS.  The Operator  hereby  agrees to sell,
transfer and assign seventy-five percent (75.0%) all of the Seller's right title
and interest to the following (such interests are collectively herein called the
"Assets"):

                                      -2-
<PAGE>

     a.   the oil and  gas  leases,  mineral  executive  interests,  contractual
          rights,  rights to  explore,  produce  and  develop,  rights to drain,
          wellbore  interests  and/or  properties  listed and  described  in any
          manner on Exhibit A (including any renewals, extensions, ratifications
          and  amendments  to  such  interests  whether  or not  such  renewals,
          extensions,  ratifications  or amendments  are described on Exhibit A)
          (any such rights or interests individually referred to as a "Lease" or
          collectively, the "Leases");

     b.   all oil and gas wells, salt water disposal wells,  Injection wells and
          other wells located on, or pooled or unitized with, any of the Leases,
          as listed on Exhibit A (collectively the "Wells");

     c.   all structures,  facilities,  foundations,  wellheads,  tanks,  pumps,
          compressors, separators, heater treaters, valves, fittings, equipment,
          machinery, fixtures, flowlines,  pipelines,  platforms, tubular goods,
          materials,  tools,  supplies,   improvements,   and  any  other  real,
          personal,  immovable  and  mixed  property  located  on,  used  in the
          operation of, or relating to the production, treatment,  non-regulated
          transportation,  gathering,  marketing, sale, processing,  handling or
          disposal of hydrocarbons, water, and associated substances produced or
          drained  from the Leases  (the  "Facilities"),  but  excluding  all of
          Operator's  vehicles,  equipment,  supplies,  tools and other personal
          property  not  used  solely  to  operate  the  Properties  or  used in
          Operator's general business operations;

     d.   all natural gas,  casing head gas, drip  gasoline,  natural  gasoline,
          natural  gas  liquids,  condensate,  products,  crude  oil  and  other
          hydrocarbons,  whether gaseous or liquid,  produced or drained from or
          allocable to the Assets (as defined  above) on and after the Effective
          Date (the "Hydrocarbons");

     e.   to the extent  transferable,  all contracts,  permits,  rights-of-way,
          easements,  licenses,  servitudes,  transportation agreements, pooling
          agreements,    operating   agreements,   gas   balancing   agreements,
          participation and processing agreements,  confidentiality  agreements,
          side letter agreements and any other agreement, document or instrument
          listed on  Exhibit  A INSOFAR  ONLY as they  directly  relate  and are
          attributable to the Leases, Wells, Hydrocarbons,  or Facilities or the
          contractual and wellbore rights thereon or therein or the ownership or
          operation  thereof,  or  the  production,  treatment,  non-  regulated
          transportation,   gathering,  marketing,  sale,  processing,  handling
          disposal,  storage  or  transportation  of  hydrocarbons,   water,  or
          substances associated therewith {the "Assumed Contracts"); and

     f.   copies of records relating to the Leases, Wells, Hydrocarbons, Assumed
          Contracts and Facilities in the  possession of Seller (the  "Recordso)
          and including as follows: all (i) lease,  mineral interest,  land, and
          division  order  files  (including  any  abstracts  of  title,   title
          opinions,   certificates  of  title,  title  curative  documents,  and
          division orders contained therein), (ii) the Assumed Contracts;  (iii)
          all well, facility, operational, environmental, regulatory, compliance
          and historic  production files and (iv) all geological and geophysical
          files relating to the Leases (the "Geologic Data"),  but not including
          any records which (i) Seller is prohibited from  transferring to Buyer
          by law or existing contractual  relationship  (including Geologic Data
          that is not transferable  without payment of a fee or other penalty to
          any third party which  Buyer has not  separately  agreed in writing to
          pay).  Operator's general accounting,  legal,  corporate and financial
          records  shall be excluded  from the Records.  Such records  listed in
          this  Paragraph 2 (f) shall be stored and maintained at the offices of
          the Seller and made  available  to the Buyer upon  reasonable  advance
          notice, during non-business hours, for the purposes of perusal or

                                      -3-

<PAGE>

          duplication at Buyer's expense.

2.1  RESERVED.

2.2  CONVEYANCING  INSTRUMENTS.  The  Assets to be  conveyed  by Seller to Buyer
     shall  be  conveyed  "AS IS,  WHERE  IS" with the  express  conditions  and
     limitations  contained  in this  Agreement,  and they shall be  transferred
     pursuant to a Conveyance,  Assignment and Bill of Sale in substantially the
     form of Exhibit B (the oAssignment)  which shall contain a special warranty
     of title.  Such  Special  Warranty  will limit the  Seller's  covenants  of
     warranty to encumbrances  and defects caused by the Seller and will require
     the Seller to  warrant  and  defend  title for claims by,  through or under
     Seller, but against none other.

2.3  PURCHASE PRICE. As partial  consideration for the sale of the Assets, Buyer
     shall pay to Seller or its respective designee, three million seven hundred
     fifty thousand US dollars  ($3,750,000.00)  (the opurchase Priceo),  as set
     forth below.  The Purchase Price as adjusted in accordance with Section 2.5
     shall  be  referred  to as the  "Adjusted  Purchase  Price".  The  Adjusted
     Purchase  Price  shall  be paid at  Closing  by  Buyer  by  completed  wire
     transfer, In Immediately available funds, as directed in writing by Seller.

2.4  ALLOCATION  OF PURCHASE  PRICE.  The Purchase  Price shall be allocated for
     consent, defect and casualty loss adjustments as set forth in Schedule 2.4.
     Within 30 days after Closing, Buyer and Seller shall agree in writing as to
     the  allocation  of the  Purchase  Price among the Assets for tax  purposes
     under the methodology required by Section 1060 of the Internal Revenue Code
     of 1986, as amended (the "code") and the Treasury  Regulations  promulgated
     thereunder.  Such allocation may be revised, from time to time, by a mutual
     written consent of Buyer and Seller, so as to reflect any matters that need
     updating (Including  Purchase Price adjustments,  if any). Buyer and Seller
     agree to be bound by such  allocation  of the  Purchase  Price  for all tax
     purposes;  to consistently  report such allocations for all federal,  state
     and local Income tax purposes  (including for purposes of Internal  Revenue
     Service  Form 8594);  and to timely  file all reports  required by the Code
     concerning the Purchase.

2.5  ADJUSTMENTS  TO PURCHASE  PRICE.  The  Purchase  Price shall be adjusted in
     accordance with this Section 2.5.

     (a). The  Purchase  Price  shall  be  increased  by the  following  amounts
          (without duplication}:

          (i)  The amount of all  expenses  relating  to the Assets  incurred by
               Seller and  attributable  to the period after the Effective Date,
               including,  without limitation,  (a) all operating  expenditures,
               (b)  all  capital  expenditures,   royalty   disbursements,   and
               severance and production tax payments,  (c) all prepaid  expenses
               paid by Seller and attributable to the period after the Effective
               Date (other than delay rentals due prior to the Effective  Date),
               and (d) all other expenses under applicable  operating agreements
               (including   overhead  chargeable   thereunder),   participation,
               production  handling,  production  processing,   exploration  and
               development  agreements  and other  similar  types of  agreements
               which  cover or relate to any of the  Assets  between  Seller and
               Buyer or any other  unaffiliated  third  party (to the extent not
               reimbursed by other parties and to the extent not related  solely
               to the negotiations and consummation of this Agreement);

          (ii) An amount equal to the value of all hydrocarbons In storage above
               the pipeline  connection on the Effective  Date that are produced
               from,  attributable  to, or  otherwise  credited  to the  Assets,
               priced at the closing spot price for Louisiana  Light Sweet Crude
               three (3) days prior to the Closing;

                                      -4-
<PAGE>
          (iii)The amount of any property or ad valorem taxes  assessed  against
               or related to the  Assets  that were paid by Seller  prior to the
               Effective Date but allocable to the period of time from and after
               the Effective Date;

     (b). The Purchase Price shall be decreased by the following amounts:

          (i)  If the average gross oil  production  attributable  to the entire
               8/8ths or 100% WI ownership  position in the Leases at the end of
               the 15-day period immediately prior to the Effective Date is less
               than 100 Barrels of 011 Equivalent Per Day "BOEPD"), the Purchase
               Price payable to Seller shall be reduced by $31,250.00 per barrel
               per barrel of oil equivalent  deficiency as follows: the Purchase
               Price  issued  hereunder  shall be  adjusted  by a  reduction  in
               Purchase Price of $31,250.00  per barrel of oil equivalent  times
               the  difference  between 100 BOEPD and the actual  average  daily
               production.  However,  in no event  shall the  Purchase  Price be
               reduced below $3,750,000.00. For the purposes hereof, 33 MMBTU of
               gas production per day shall equal 1 barrel of oil production per
               day.  Buyer's  and  Operator's   closing   obligations  are  each
               contingent  upon  average  daily  production  of 100 BOEPD for at
               least 15 days prior to closing; provided, however, that Buyer and
               Operator  each  reserve  the  right  to  waive  their  respective
               conditions to Close set forth in this Section 2.5(b);

          (ii) An amount equal to the gross proceeds received by Seller from the
               sale of Hydrocarbons produced from, attributable to, or otherwise
               credited to the Assets after the Effective Date;

          (iii)The amount of any property or ad valorem taxes  assessed  against
               or  related to the  Assets  that will be paid by Buyer  after the
               Effective  Date but  allocable to the period of time prior to the
               Effective Date;

          (iv) Any other amount agreed upon by Seller and Buyer in writing.

2.6  CLOSING STATEMENT.  Seller shall prepare and deliver to Buyer an accounting
     statement to be executed at Closing (the closing  Statement)  no later than
     two (2) business days prior to Closing that shall set forth the adjustments
     to the Purchase  Price made in  accordance  with this  Agreement,  it being
     understood and agreed that the Closing  Statement shall contain  reasonable
     estimates  where  actual  amounts  are not known at the Closing and that as
     actual  costs and  revenues  are known,  these  amounts  will be taken into
     account in the Final Accounting  Statement.  The Closing Statement shall be
     prepared in accordance with generally accepted  accounting  principles used
     in the oil and gas industry.

2.7  EFFECTIVE  DATE OF SALE.  The effective  date of the sale of the Properties
     described  in Section  1.1,  hereof,  shall be May 1, 2013 (the  oeffective
     Date").

2.8  CLOSING.  The closing of this  transaction  (the  closingo)  shall be on or
     before May 1, 2013, at the offices of the Operator,  or such other time and
     place as the Parties may agree or as adjusted  pursuant to this  Agreement.
     Participant  may elect,  by written notice  delivered to Operator not later
     than 5:00 p.m.  CST on April 24, 2013,  to extend the day of Closing  until
     May 15, 2013.  If the Closing  Date is extended  under this (or any other )
     Section,  the  Effective  Date shall also be extended and the new Effective
     Date  shall be the date on which  Closing  actually  occurs  (the  "Closing
     Dateo). At the Closing, Participant shall deliver to Operator in good funds
     the Adjusted Purchase Price,  together with an executed  counterpart of the
     Operating  Agreement  provided for in Section 6, below,  and Operator shall
     execute and deliver to Participant the Assignment of Participant's interest
     in the  Properties.  At the  closing,  Participant  agrees to indicate  its
     acceptance  of the  Development  Program by providing  the signature of its
     appropriate officer on the signatory line on the last page of each Stage of
     the

                                      -5-
<PAGE>
     Development  Program.  Within  ninety  (90) days after the date of Closing,
     Seller shall prepare a final  accounting  statement for the  adjustments to
     the  Purchase  Price  provided  for in Section 2 and any other  adjustments
     arising  pursuant  to  this  Agreement.   Seller  shall  submit  the  Final
     Accounting  Statement  to Buyer,  along with copies of third  party  vendor
     invoices in excess of $10,000.00,  or other evidence of expenses  agreed to
     by Seller and Buyer and Buyer  shall have ten (1O) days to review  same and
     confirm  accuracy  thereof  (failure to deliver a written  objection within
     such 10-day  period  shall be deemed  agreement  with the Final  Accounting
     Statement).  Upon  agreement by Seller and Buyer or upon the  expiration of
     said ten (10) day period  Seller or Buyer,  whichever  the case maybe shall
     promptly  pay to the  other  such sum as may be  found  due,  after  making
     adjustments for any payments made at Closing In accordance with the Closing
     Statement.

2.9  POST-CLOSING  ACTIONS FOR  DEVELOPMENT  PROGRAM.  The  Development  Program
     consists of the working over of,  replacement of pumps in, or  recompletion
     of ten (10) wells, each of which is included in the Properties and has been
     determined  by the  Operator  to  possess  enhanced  production  potential.
     Operator  may  determine  and  propose  the  operations   relating  to  the
     Development  Program in accordance with the JOA. It is anticipated that the
     initiation of the  Development  Program shall commence on or before May 21,
     2013.  However,  the  description  of  the  Development  Program,  and  the
     timeframe for the operations  contemplated by the Development  Program, set
     forth  herein,  are a present  expression  of intent  only and shall not be
     binding  on  the  parties.  A  binding  commitment  to  participate  in any
     operations within the Development  Program shall only arise pursuant to the
     JOA and proposals made thereunder.

3.  OPERATING  AGREEMENT.  There is attached to this Agreement as Exhibit 11co a
form of Joint Operating Agreement (the "JOA") naming Operator as "operator". The
JOA shall be  deemed  effective  by and  between  Operator  and  Participant  at
Closing. All operations  associated with the Properties shall be governed by the
provisions  of the  JOA.  In the  event of a  conflict  between  the  provisions
contained in this Agreement and the JOA, or any other Annex attached hereto, the
provisions of the JOA shall prevail.

4. ASSUMPTION OF OBLIGATIONS OF OPERATOR BY PARTICIPANT; MUTUAL INDEMNITIES.

     (a). As a result of its purchase of the Assets,  the Participant  shall own
          an undivided  working  interest in the  Properties,  thereby  becoming
          obligated to bear its pro rata share of the cost and expense of all of
          the duties,  liabilities and burdens otherwise borne by Operator under
          the terms and provisions of the Leases and any other related documents
          burdening  the title,  as it was acquired by Operator.  If the Closing
          occurs, then from and after the Closing,  except for matters for which
          Seller  indemnifies  Buyer  hereunder,  Buyer shall indemnify and hold
          harmless Seller (and its partners,  affiliates,  directors,  officers,
          officers   and  agents)   from  and   against  any  Claims,   damages,
          liabilities,   losses,   costs  and   expenses   (including,   without
          limitation,  attorneys'  fees) of any kind arising from or relating to
          (i) the ownership or operation of the Assets,  whether  arising before
          or  after  the  Closing,  (ii) the  breach  of any  representation  or
          warranty  of Buyer,  and (iii) the breach of any of Buyer's  covenants
          hereunder. THE FOREGOIING ASSUMPTIONS AND INDEMNIFICATIONS SHALL APPLY
          WHETHER  OR NOT  SUCH  DUTIES,  OBLIGATIONS  OR  LIABILITIES,  OR SUCH
          CLAIMS, ACTIONS, CAUSES OF ACTION, LIABILITIES, DAMAGES, LOSSES, COSTS
          OR EXPENSES ARISE OUT OF (I) NEGLIGENCE  (INCLUDING  SOLE  NEGLIGENCE,
          SIMPLE   NEGLIGENCE,   CONCURRENT   NEGLIGENCE,   ACTIVE  OR   PASSIVE
          NEGLIGENCE,  BUT  EXPRESSLY  NOT INCLUDING  GROSS  NEGLIGENCE)  OF ANY
          INDEMNIFIED PARTY, OR (II) STRICT LIABILITY.

     (b). If the Closing occurs,  then from and after the Closing,  Seller shall
          indemnify  and hold  harmless  Buyer  (and its  partners,  affiliates,
          directors, officers, officers and agents) from and against any Claims,

                                      -6-
<PAGE>

          damages, liabilities,  losses, costs and expenses (including,  without
          limitation, attorneys' fees) arising from or related to (i) the breach
          of Seller's  representations and warranties  hereunder (limited to the
          survival period of such representations and warranties),  and (ii} the
          breach of Seller's covenants hereunder.  The sole and exclusive remedy
          of Buyer with  respect to the Assets  shall be pursuant to the express
          provisions  of this  Agreement  (and  the  special  warranty  of title
          contained in the Assignment). Without limitation of the foregoing, the
          sole and exclusive remedy of Buyer for any and all {a) claims relating
          to any representations, warranties, covenants and agreements contained
          In this Agreement,  (b) other claims pursuant to or in connection with
          this  Agreement  and (c) other  claims  relating to the Assets and the
          purchase and sale thereof shall be any right to  indemnification  from
          such claims that is expressly  provided in this  Agreement,  and if no
          such right of indemnification Is expressly provided,  then such claims
          are hereby  waived to the  fullest  extent  permitted  by law  (except
          claims arising under the special warranty of title in the Assignment).
          Notwithstanding  anything in this  Agreement to the  contrary,  Seller
          shall  never have any  liability  to Buyer under this  Agreement,  for
          breaches of Seller's  representations or warranties,  in excess of ten
          percent  {10%)  of  the  unadjusted   Purchase  Price,   and  Seller's
          indemnification  obligations,  for breaches of representations  and/or
          warranties, shall be capped at such maximum amount.

5. WELL  INFORMATION.  With  respect to each Stage of the  Development  Program,
Operator shall:

     a.   furnish Participant with all information,  including daily reports, as
          such  information  becomes  available from the  undertaking of Program
          activities;

     b.   permit Participant, Its agents and representatives, access to the well
          sites associated with the Development Program at all times: and

     c.   notify Participant in time for its  representatives to be present when
          Operator plans to perform any test on any Program-related well.

6.  RELATIONSHIP  OF THE  PARTIES.  It is not the  intention  or  purpose of the
Parties to create hereunder any partnership,  mining or otherwise, joint venture
or  association  relationship  or the  relationship  of agency or  employer  and
employee,  and neither this Agreement nor any of the operations  hereunder shall
be construed as creating any such relationship. The Parties expressly agree that
no Party shall be responsible for the obligations of the other Party, each Party
being  severally  responsible  only for its  obligations  arising  hereunder and
liable  only for its  proportionate  share of the  costs and  expenses  incurred
hereunder.

7. POWER AND AUTHORITY.  Each Party represents  hereby that it has all necessary
and  appropriate  authority to execute,  deliver,  and fulfill the  requirements
imposed by this Agreement.

8. PENDING  LITIGATION.  Operator  represents  that there are no pending  suits,
actions, notices of violations, or other governmental proceedings (collectively,
"Claims" or to Operator's  knowledge,  any such  threatened  Claims in which (i)
Operator is or may be a party that relate to the  Properties or (ii) that affect
the  execution  and  delivery  of  this  Agreement  or the  consummation  of the
transactions contemplated hereby.

9. BASIC  DOCUMENTS.  The Operator  represents and warrants that, to the best of
its  knowledge,  the  following  documents  are in full  force  and  effect  and
constitute valid and binding obligations of the parties thereto:

     a.   the oil, gas and/or  mineral  leases which are included as part of the
          Oil and Gas Properties;

                                      -7-

<PAGE>
     b.   all  contracts  and  agreements,   licenses,  permits  and  easements,
          rights-of-way and other  rights-of-surface  use comprising any part of
          or otherwise relating to the Properties; and

     c.   all contracts and  agreements  that are  reasonably  necessary to own,
          operate,  develop,  or maintain the Properties In accordance  with the
          prudent practices of the oil and gas industry.

10.1 NO  NOTICE OF  VIOLATION.  Operator  represents  and  warrants  that it has
received no written  notice of violation  from any person,  (Including,  without
limitation,  federal or state governmental  agencies or owners of the surface of
the lands covered by any Lease) alleging or claiming that any of the Assets,  or
any of  Operator's  operations  with  respect  to  the  Assets,  Is In  material
violation of any laws, orders or regulations  pertaining to human health and the
environment, waste materials or hazardous substances ("Environmental Laws").

10.2 OTHER COMPLIANCE WITH LAWS. The Operator represents and warrants:

     a.   that the  ownership  and  operation of the  Properties by Operator has
          been and remains in  conformity,  in all material  respects,  with all
          applicable  laws,  rules,  regulations  guidelines  and  orders of all
          governmental agencies having jurisdiction, relating to the Properties,
          other than  Environmental  Laws (which are addressed solely by Section
          10.1 above); and

     b.   that all wells operated by Operator on the Properties that are shut In
          or temporarily inactive are In material compliance with all applicable
          regulations,  laws or rules other than  Environmental  Laws (which are
          addressed solely by Section 10.1 above).

11. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and warrants, as of
the date of this Agreement and as of the Closing, that:

     a.   Buyer is  acquiring  the Assets for its own  account  and not with the
          Intent to make a  distribution  in violation of the  Securities Act of
          1933 as amended (and the rules and regulations  pertaining thereto) or
          In  violation  of any  other  applicable  securities  laws,  rules  or
          regulations.

     b.   Buyer has (and had prior to  negotiations  regarding  the Assets) such
          knowledge and  experience  in financial and business  matters as to be
          able to evaluate the merits and risks of an  investment in the Assets.
          Buyer Is able to bear the risks of an  investment  in the  Assets  and
          understands  the risks of,  and other  considerations  relating  to, a
          purchase of the Assets. Buyer is an "Accredited Investor" as that term
          is defined by Rule 501 of Regulation D of the  Securities and Exchange
          Commission, and understands the risks Involved in an Investment in the
          Assets,  including  that  there may be no market for Buyer to sell the
          Assets after  Closing and that revenue  therefrom  Is  contingent  and
          dependent upon many factors which cannot be predicted with  certainty.
          BUYER  UNDERSTANDS THAT THESE ASSETS HAVE NOT BEEN REGISTERED WITH THE
          SECURITIES AND EXCHANGE  COMMISSION,  THE TEXAS  SECURITIES  BOARD, OR
          WITH THE  SECURITIES  COMMISSION OF ANY OTHER STATE AND MAY NOT BE RE-
          OFFERED FOR SALE OR RESOLD UNLESS IT IS REGISTERED  UNDER SUCH ACTS OR
          IN A  TRANSACTI  ON EXEMPT  UNDER  SUCH  ACTS.NEITHER  THE  SECURITIES
          EXCHANGE  COMMISSION NOR THE TEXAS  SECURITIES  COMMISSIONER  (NOR THE
          APPLICABLE AUTHORITY OF ANY OTHER STATE)

                                      -8-

<PAGE>
          RECOMMENDS NOR ENDORSES THE PURCHASE OF THE ASSETS.

12. BUYER'S DUE DILIGENCE; TITLE AND ENVIRONMENTAL DEFECTS.

     a.   Participant may, to the extent it deems appropriate,  conduct,  at its
          sole cost,  such title  examination or other  investigation  as it may
          choose to conduct with respect to the  Properties.  To facilitate such
          review,   Operator  shall,   promptly  after  the  execution  of  this
          Agreement, grant Buyer access to Operator's title opinions, abstracts,
          runsheets,  and other  title  documentation  relating  to the  Assets.
          Should,  as  a  result  of  such  examination  and  investigation,  or
          otherwise,   matters  come  to  Participant's  attention  which  would
          constitute  "Defects"  (as defined  below)  Participant  shall  notify
          Operator in writing of such  Defects at least ten (10)  business  days
          prior to the Closing.  Such Defects of which  Participant  so provides
          notice are herein called  "Asserted  Defects".  To be  effective,  the
          notice must describe the Asserted Defect(s) with reasonable detail.

     b.   "Defects" shall mean any of the following:

          (i)  Seller's  ownership of the working interest in a Lease or Well is
               clearly less than that set forth on Exhibit A.

          (ii) Liens. Seller's ownership of a Lease or Well ls subject to a lien
               other than (A) a lien for taxes which are not yet  delinquent  or
               (B) a mechanic's or  materialmen's  lien (or other similar lien),
               or a lien under an operating  agreement or similar agreement,  to
               the extent the same  relates to expenses  incurred  which are not
               yet  delinquent  or (C) liens which will be released at or before
               Closing.

          (iii)Environmental  Matters.   Except  as  disclosed  on  any  Exhibit
               hereto, an Asset is in material violation of Environmental Laws.

          Defects shall not include (i) defects or irregularities that have been
          cured  by  the  passage  of  time,   including,   without  limitation,
          applicable  statutes of limitation or statutes for prescription;  (ii)
          minor  defects  relating to capacity,  authority,  or marital  status,
          (iii)  defects or  irregularities  in title  that have not  delayed or
          prevented  Seller (or Seller's  predecessor)  within the last 5 years,
          from  receiving its share of the proceeds of production  from any unit
          or Well;  or (iv) the  presence or absence in Seller's  files of title
          opinions,  abstracts,  records,  documents,  or other information,  it
          being  acknowledged  and agreed  that Buyer shall be  responsible  for
          obtaining  any title or other  information  it deems  necessary  for a
          complete evaluation of the Assets.

     c.   In the event that Participant  notifies  Operator of Asserted Defects,
          Operator  shall have the right (but not the  obligation} to attempt to
          cure  such  Asserted   Defects  to  the  reasonable   satisfaction  of
          Participant,  and for the  purpose of curing  such  Asserted  Defects,
          Operator may on written notice to  Participant  elect to delay Closing
          as to the Asset(s) directly  affected by the Asserted  Defects,  for a
          period not to exceed 30 days,  in which  event the  Purchase  Price at
          Closing shall be adjusted  downward by the value allocated on Schedule
          2.4 to the Asset(s) as to which Closing is delayed.  If Operator cures
          an  Asserted  Defect to the  reasonable  satisfaction  of  Participant
          within such time, the Parties shall hold a supplemental  closing as to
          the applicable cured Asset(s).

                                       -9-
<PAGE>
     d.   If Operator  cannot or chooses not to cure any  Asserted  Defect,  the
          Parties  shall  attempt  in good  faith to agree  upon an  appropriate
          adjustment  for the  Asserted  Defects.  If the  Parties are unable to
          agree upon such adjustment  amount,  Operator may elect to exclude the
          affected Asset(s) from this  transaction,  in which event the Purchase
          Price shall be reduced by the value allocated thereto on Schedule 2.4,
          provided   however  that   Operator  may  elect  to  designate  as  an
          appropriate adjustment (which shall be deemed agreed to):

          (1)  for defects  described in Section  12(b)(i),  the  deficiency  in
               working  interest,  multiplied  by  the  allocated  value  of the
               affected Asset(s);

          (2)  for defects  described  In Section  12(b)(ll),  the lesser of the
               amount  required to remove the  applicable  lien or the allocated
               value of the affected Asset(s);

          (3)  for defects  described in Section 12(iii),  the amount reasonably
               required to bring the affected Asset(s) into material  compliance
               with Environmental Law.

          Notwithstanding  the  foregoing,  there shall be no adjustment for any
          uncured  Asserted  Defect  except  to the  extent  the  amount of such
          adjustment exceeds $30,000.

13.  CONDITIONS  PRECEDENT  TO THE  OBLIGATIONS  OF THE  PARTIES  TO CLOSE.  The
obligations  of  the  Parties,  respectively,  to  consummate  the  transactions
contemplated  in  this  Agreement  at  Closing  are  subject  to  the  following
conditions:

     a.   Each and every  representation  and  warranty of the other Party under
          this Agreement shall be true and accurate in all material  respects as
          of the date when made and,  for the purposes of serving as a condition
          to Close,  shall be true and accurate in all material  respects at and
          as of the time of  Closing,  as if It had been made again at and as of
          the time of Closing.

     b.   The other Party shall have complied In all material  respects with its
          covenants under this Agreement.

     c.   The downward  adjustments to the Purchase Price under Section 12 shall
          not exceed ten percent (10%) of the unadjusted Purchase Price.

     d.   There has been average  daily  production of 100 BOEPD from the Assets
          for at least 15 days prior to Closing.

          If Buyer's  conditions  to close are unmet on the Closing  Date, or if
          the  Closing  does not occur on the  Closing  Date and Buyer is not in
          material breach of this Agreement, Buyer may terminate this Agreement.
          If Seller's  conditions  to close are unmet on the Closing Date, or if
          the Closing  does not occur on the  Closing  Date and Seller is not In
          material  breach  of  this   Agreement,   Seller  may  terminate  this
          Agreement. If either Party proceeds to Closing with knowledge that any
          of its  conditions  to closing are not met, such Party shall be deemed
          to have waived all claims related to such condition(s).

14. DISCLAIMERS.

THE  EXPRESS  REPRESENTATIONS  AND  WARRANTI  ES OF  SELLER  CONTAINED  IN  THIS
AGREEMENT,  AND THE SPECIAL  WARRANTY OF TITLE IN THE ASSIGNMENT,  ARE EXCLUSIVE
AND ARE IN LIEU OF ALL OTHER REPRESENTATI ONS AND WARRANTIES,  EXPRESS, IMPLIED,
STATUTORY OR OTHERWISE,  AND SELLER  EXPRESSLY  DISCLAIMS ANY AND ALL SUCH OTHER
REPRESENTATIONS AND WARRANTI ES, INCLUDING, WITHOUT LIMITATION AS THE CONDITION,
QUANTITY, QUALITY, FITNESS FOR A PARTICULAR PURPOSE

                                      -10-

<PAGE>
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OR  MERCHANTABILITY OF EQUIPMENT OR
ITS FITNESS FOR ANY PURPOSE, AND, WITHOUT ANY EXPRESS, IMPLIED OR OTHER WARRANTY
OR REPRESENTATION AS TO THE QUALITY OR QUANTITY OF HYDROCARBONS  ATTRIBUTABLE TO
THE  ASSETS OR THE  ABILITY  OF THE  ASSETS  TO  PRODUCE  HYDROCARBONS.  WITHOUT
LIMITATION OF BUYER'S RIGHTS TO ASSERT DEFECTS AS PROVIDED  HEREIN,  BUYER SHALL
HAVE INSPECTED,  OR WAIVED (AND UPON CLOSING SHALL BE DEEMED TO HAVE WAIVED) ITS
RIGHT TO INSPECT THE  PROPERTIES  FOR ALL  PURPOSES AND  SATISFIED  ITSELF AS TO
THEIR PHYSICAL AND ENVIRONMENTAL CONDITION,  BOTH SURFACE AND SUBSURFACINCLUDING
BUT NOT LIMITED TO CONDITIONS  SPECIFICALLY RELATED TO THE PRESENCE,  RELEASE OR
DISPOSAL OF  HAZARDOUS  SUBSTANCES,  SOLID  WASTES,  ASBESTOS AND OTHER MAN MADE
FIBERS, OR NATURALLY OCCURRING  RADIOACTIVE  MATERIALS.  BUYER IS RELYING SOLELY
UPON ITS OWN  INSPECTION  OF THE  PROPERTIES,  AND BUYER SHALL ACCEPT ALL OF THE
SAME IN THEIR  "AS IS",  "WHERE  IS",  CONDITION.  ALL DATA,  RECORDS,  REPORTS,
PROJECTIONS,  INFORMATION  AND OTHER  MATERIALS  (WRITTEN OR ORAL)  FURNISHED BY
SELLER OR OTHERWISE MADE AVAILABLE OR DISCLOSED TO BUYER ARE PROVIDED BUYER AS A
CONVENIENCE,  AND SELLER MAKES NO  REPRESENTATION OR WARRANTY AS TO THE ACCURACY
OF SUCH INFORMATION,  WHICH SHALL NOT CREATE OR GIVE RISE TO ANY LIABILITY OF OR
AGAINST SELLER.

15. MISCELLANEOUS.

     a.   This  document  contains  the  entire  understanding  of  the  Parties
          relative  to the  purchase  of  the  Assets,  and  there  is no  other
          agreement,  either oral or written, between them governing the subject
          matter hereof (other than the JOA referred to above}.  This  Agreement
          may be  amended  by the  consent  of both of the  parties to a written
          document  setting  forth  the  amendment.  No  rights of either of the
          parties  may be waived  without a written  waiver  signed by the Party
          sought to be charged with the waiver.

     b.   Any notice required to be given pursuant to this Agreement shall be in
          writing  and shall be  delivered  in  person,  or by  private  courier
          service, with written receipt of acceptance returned to the sender, or
          via registered mail, return receipt requested,  postage prepaid, or by
          telecopier {with confirmation of receipt by telecopier sent within one
          hour of completion of transmission,  with the result that, if there is
          no such confirmation of receipt by telecopy,  the original notice sent
          by  telecopier  shall not be deemed  effective  notice} to each of the
          Parties at the address,  or at the telecopier number, set forth in the
          opening  paragraph  of this  Agreement.  The agent for  receipt of any
          notice  shall be the  individual  who has executed  this  Agreement on
          behalf of each of the Parties.  The agent  and/or  address for each of
          the Parties may be unilaterally altered by either Party upon providing
          written  notice  thereof to the other  Party.  Notice  shall be deemed
          delivered  when  received  at each of the  addresses  set forth in the
          opening   paragraph  of  this   Agreement,   except  with  respect  to
          telecopies,  which shall be deemed  received as provided above in this
          section.

     c.   The  failure  of any party to seek  redress  for any  violation  or to
          insist upon the strict performance, of any provision of this Agreement
          shall not prevent any party from  seeking  redress for any  subsequent
          act, or failure to act, or to insist  upon the strict  performance  of
          this Agreement.  No single or partial exercise by a Party of any right
          or remedy hereunder shall preclude other, or further exercise thereof,
          or the exercise of any other right or remedy.

     d.   This  Agreement  shall be  governed by the laws of the State of Texas,
          and  venue for any  litigation  arising  to  resolve  dispute  arising
          hereunder shall lie in Harris County, Texas.

                                      -11-

<PAGE>
     e.   This Agreement shall be binding upon and shall inure to the benefit of
          each  of the  Parties  and  their  respective,  heirs,  successors  or
          assigns.

     f.   Time is of the essence of this agreement.

     g.   The  representations  and warranties  made herein by the Parties shall
          terminate six (6) months after the Closing  (provided that the special
          warranty of title in the Assignment shall survive forever).

     h.   This  Agreement  may not be assigned,  in whole or in part,  by either
          Party  without the express  written  consent of the other Party (which
          may be withheld in such Party's sole  discretion),  and any assignment
          that is made without such consent shall be void.

     i.   NOTWITHSTANDING  ANYTHI NG HEREIN TO THE CONTRARY  NEITHER PARTY SHALL
          HAVE ANY LIABILITY  UNDER THIS  AGREEMENT,  OR OTHERWISE IN CONNECTION
          HEREWITH, FOR ANY SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES.

                             Signature page follows

                                      -12-

<PAGE>
IN WITNESS  WHEREOF,  this Agreement Is executed  effective as of the date first
set forth  above,  (but the  transfer of the Assets shall be effective as of the
Effective Date, as provided above}.

OPERATOR:                                       PARTICIPANT:
SELLER                                          BUYER
Five J.A.B., Inc.                               Three Forks, Inc.

By: /s/ James A. Bohannon, Jr.                  By: /s/ W. Edward Nichols
-------------------------------                 ----------------------------
James A. Bohannon, Jr.                          Edward Nichols
President                                       Chairman and Counsel

                                      -13-

<PAGE>
                                    EXHIBIT A
                DESCRIPTION OF THE PROPERTIES, INTEREST AND WELLS

                                    (omitted)

<PAGE>

                                    EXHIBIT B
                 FORM OF CONVEYANCE, ASSIGNMENT AND BILL OF SALE

                                    (omitted)

<PAGE>
                                    EXHIBIT C
                               OPERATING AGREEMENT

                                    (omitted)

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