Document:

CONSULTING
      AGREEMENT

     

    THIS
      CONSULTING AGREEMENT (“Agreement”) is entered into effective August 7, 2006 (the
“Effective Date”), by and between TRULITE, INC. (“the Company”)
      and
      Boru Enterprises, Inc. (“Consultant”). The Company and Consultant shall
      collectively be referred to herein as “the Parties.”

     

    WHEREAS,
      the Company
      desires to obtain the benefit of the knowledge and experience of Consultant
      by
      retaining Consultant on an independent contractor basis, and Consultant is
      willing to render such services to the Company on the terms and conditions
      set
      forth herein. 

     

    NOW
      THEREFORE, in consideration of the promises and mutual covenants contained
      herein, the receipt and sufficiency of which is acknowledged, the Parties agree
      as follows:

     

    1.    Consulting
      Services.
      The
      Company hereby retains Consultant to perform certain services for the Company,
      and Consultant hereby agrees to provide such services (the “Services”). The
      Services will include, and be limited to, the following:

     

    a.
      The
      Consultant will assist Trulite with identifying a NASD member firm to make
      the
      15c2-11 filing in a timely manner after the appropriate SEC filings by the
      Company have been declared effective.

     

    b.
      The
      consultant will coordinate with Trulite and its legal counsel in filing the
      Form
      SB-2 registration statement with the SEC.

     

    c.
      After
      the SB-2 is declared effective, the Consultant will introduce the Company to
      NASD Member Firms that might have an interest in helping the Company raise
      capital in the public markets.

     

    d.
      The
      Consultant will identify potential investors to the Company so that the Company
      or the NASD member firms engaged by the Company can discuss any investment
      in
      the Company directly with the potential investors. The Consultant will not
      directly solicit or negotiate an investment from these potential or current
      investors.

     

    e.
      The
      Consultant will provide general consulting advice regarding the process for
      going public on an as-needed basis.

     

    All
      of
      Consultant’s services will be subject to the Company’s final approval and will
      be performed in accordance with the Company standards, but Consultant shall
      direct the details and means by which the services are accomplished. Consultant
      shall conform to the rules, regulations, instructions, practices and policies
      of
      the Company now in force or hereafter enacted which are applicable to
      consultants or independent contractors engaged by the Company.

     

    2.    Location.
      Consultant will work out of his office. 

     

    3.    Compensation
      for Services.
      The
      Company has compensated the Consultant by issuing 250,000 shares of Trulite’s
      restricted common stock and 250,000 Five Year Warrants to purchase Trulite’s
      common stock at a strike price of $3.00 per share to Consultant and Consultant’s
      designees. The Company and the Consultant agree that the stock and the warrants
      that have been issued are a full and complete compensation for the services
      to
      be provided under the terms of this contract. No compensation is contingent
      on
      performance of the services. The Consultant will be responsible for all of
      its
      own reasonable and customary expenses including but not limited to travel,
      entertainment, lodging, office and communications expenses.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    5.    Term.
      The
      term of this Agreement for providing consulting services shall end on June
      30,
      2008 or until otherwise terminated.. Either Consultant or the Company may
      terminate this Agreement at any time and for any reason during the term.

     

    6.    Independent
      Contractor Relationship.
      In
      rendering Services hereunder it is expressly understood and agreed that
      Consultant is not an employee of or controlled by the Company, but that
      Consultant is, in all respects, an independent contractor, and as such
      Consultant has no right or authority to make any disbursements or purchases
      or
      to incur any liabilities on behalf of the Company or to otherwise obligate
      the
      Company in any manner whatsoever, unless specifically authorized to do so by
      the
      Company. The Consultant may not act as an agent of the Company. The Consultant
      may not solicit funds from investors and may not act as a broker or dealer
      in
      the securities of the Company.

     

    The
      Company will make no deductions from any of the payments in stock made to
      Consultant hereunder for state or federal tax purposes. Consultant agrees that
      he will be solely responsible for any and all taxes and other payments due
      on
      payments received by Consultant from the Company hereunder, including
      withholding of state and federal income, sales or ad valorem taxes, unemployment
      compensation, workers’ compensation, Federal Insurance Contributions Act,
      Federal Unemployment Tax Act or other taxes, costs or expenses incurred in
      the
      performance of any engagement hereunder. Consultant expressly indemnifies and
      holds the Company harmless from any such liabilities. 

     

    Consultant
      understands and agrees that the Company is not responsible for paying any
      retirement, worker’s compensation or unemployment benefits to Consultant.

     

    7.    Confidentiality.
      Consultant will be required, as a condition of this Agreement, to strictly
      maintain the confidentiality of any confidential business matters pertaining
      to
      the Company. Consultant agrees not to use any confidential information acquired
      by Consultant’s in connection with performing the Services for Consultant’s own
      personal benefit or for the benefit of persons other than the Company.
      Consultant agrees that Consultant’s obligations under this paragraph shall
      continue in effect for five years after termination of the Agreement, regardless
      of the reason or reasons for termination, and whether such termination is
      voluntary or involuntary on Consultant’s part.

     

    8.    No
      Conflicting Agreements.
      Consultant represents and warrants that he is not a party to, subject to, or
      otherwise bound by any other agreement, arrangement, or understanding, written
      or otherwise, which prohibits, restricts, or anyway whatsoever conflicts with
      Consultant’s ability to enter into and fulfill his obligations under this
      Agreement.

     

    9.    Choice
      of Law, Venue and Forum.
      This
      Agreement, the entire relationship of the Parties hereto, and any litigation
      between the Parties (whether grounded in contract, tort, statute, law or equity)
      shall be governed by, construed in accordance with, and interpreted pursuant
      to
      the laws of the State of Texas, without giving effect to its choice of laws
      principles. Exclusive venue for any litigation between the Parties hereto shall
      be in Harris County, Texas, and shall be brought in the State District Courts
      of
      Harris County, Texas, or in the United States District Court for the Southern
      District of Texas, Houston Division. The Parties hereto waive any challenge
      to
      personal jurisdiction or venue (including without limitation a challenge based
      on inconvenience) in Harris County, Texas, and specifically consent to the
      jurisdiction of the State District Courts of Harris County and the United States
      District Court for the Southern District of Texas, Houston Division.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    10.    Counterparts.
      This
      Agreement may be executed in multiple counterparts, all of which shall
      constitute one agreement and each of which shall constitute an original of
      this
      Agreement.

     

    11.    Headings.
      The
      headings used in this Agreement have been included only in order to make it
      easier to locate the subject covered by each provision and are not to be used
      in
      construing this Agreement.

     

    12.    Entire
      Agreement.
      This
      Agreement supersedes and replaces any prior understandings or agreements,
      whether oral, written or implied, between Consultant and the Company regarding
      the matters described in this letter.

     

    13.    Invalid
      Provisions.
      Should
      any portion of this Agreement be adjudged or held to be invalid, unenforceable
      or void, such holding shall not have the effect or invalidating or voiding
      the
      remainder of this agreement and the parties hereby agree that the portion so
      held invalid, unenforceable or void shall, if possible, be deemed amended or
      reduced in scope, or otherwise be stricken from this letter to the extent
      required for the purposes of validity and enforcement thereof.

     

    [Signature
      page follows.]

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
      as
      of the Effective Date.

     

     

    COMPANY:

     

    TRULITE,
      INC.

     

    By:
      Trulite, Inc.

    

     

    Name:/s/
      Jonathan
      Godshall                               

    Title:
      President

    Date:
      August 7, 2006

     

     

    CONSULTANT:

     

     

    /s/
      John
      Moran                                                      

    Boru
      Enterprises

    Date:
      August 7, 2006EXHIBIT
      10.1

     

     

    SOUTH
      GLENROCK AND SOUTH COLE CREEK

    

    PURCHASE
      AND SALE AGREEMENT

    BY
      AND BETWEEN

    

    NIELSON
      & ASSOCIATES, INC.

    AS
      SELLER

    

    AND

    

    RANCHER
      ENERGY CORP.

    AS
      BUYER

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    TABLE
      OF CONTENTS

     

    PAGE

    
      	 	 	 
	
              1.

            	
              SALE
                AND PURCHASE OF THE ASSETS

            	
              1

            
	
              1.1

            	
              Acquired
                Assets

            	
              1

            
	
              1.2

            	
              Assumed
                Liabilities

            	
              2

            
	 	 	 
	
              2.

            	
              PURCHASE
                PRICE

            	
              3

            
	
              2.1

            	
              Purchase
                Price

            	
              3

            
	
              2.2

            	
              Deposit

            	
              3

            
	
              2.3

            	
              Adjustments
                to the Base Purchase Price

            	
              3

            
	
              2.4

            	
              Allocation

            	
              4

            
	 	 	 
	
              3.

            	
              CLOSING

            	
              5

            
	
              3.1

            	
              Closing

            	
              5

            
	
              3.2

            	
              Delivery
                by Seller

            	
              5

            
	
              3.3

            	
              Delivery
                by Buyer

            	
              5

            
	
              3.4

            	
              Further
                Cooperation

            	
              6

            
	 	 	 
	
              4.

            	
              ACCOUNTING
                ADJUSTMENTS

            	
              6

            
	
              4.1

            	
              Closing
                Adjustments

            	
              6

            
	
              4.2

            	
              Strapping
                and Gauging

            	
              6

            
	
              4.3

            	
              Taxes

            	
              6

            
	
              4.4

            	
              Post-Closing
                Adjustments

            	
              7

            
	
              4.5

            	
              Suspended
                Funds

            	
              8

            
	
              4.6

            	
              Audit
                Adjustments

            	
              8

            
	
              4.7

            	
              Cooperation

            	
              8

            
	 	 	 
	
              5.

            	
              DUE
                DILIGENCE: TITLE MATTERS

            	
              8

            
	
              5.1

            	
              General
                Access

            	
              8

            
	
              5.2

            	
              Defensible
                Title

            	
              9

            
	
              5.3

            	
              Defect
                Letters

            	
              10

            
	
              5.4

            	
              Effect
                of Title Defect

            	
              12

            
	
              5.5

            	
              Possible
                Upward Adjustment

            	
              13

            
	
              5.6

            	
              Preferential
                Rights and Consents

            	
              14

            
	 	 	 
	
              6.

            	
              ENVIRONMENTAL
                ASSESSMENT

            	
              15

            
	
              6.1

            	
              Physical
                Condition of the Assets

            	
              15

            
	
              6.2

            	
              Inspection
                and Testing

            	
              16

            
	
              6.3

            	
              Notice
                of Adverse Environmental Conditions

            	
              17

            
	
              6.4

            	
              Rights
                and Remedies for Adverse Environmental Conditions

            	
              18

            
	
              6.5

            	
              Remediation
                by Seller

            	
              19

            
	 	 	 
	
              7.

            	
              REPRESENTATIONS
                AND WARRANTIES OF SELLER

            	
              20

            
	
              7.1

            	
              Seller’s
                Representations and Warranties

            	
              20

            
	
              7.2

            	
              Scope
                of Representations of Seller

            	
              22

            

    

     

    
      
         

      

      
        -i-

        
          

        

      

      
         

      

    

     

    
      	
              8.

            	
              REPRESENTATIONS
                AND WARRANTIES OF BUYER

            	
              23

            
	
              8.1

            	
              Buyer’s
                Representations and Warranties

            	
              23

            
	 	 	 
	
              9.

            	
              CERTAIN
                AGREEMENTS OF SELLER

            	
              24

            
	
              9.1

            	
              Maintenance
                of Assets

            	
              24

            
	
              9.2

            	
              Records

            	
              25

            
	 	 	 
	
              10.

            	
              CERTAIN
                AGREEMENTS OF BUYER

            	
              25

            
	
              10.1

            	
              Plugging
                Obligation

            	
              25

            
	
              10.2

            	
              Plugging
                Bond

            	
              25

            
	
              10.3

            	
              Seller’s
                Logos

            	
              26

            
	
              10.4

            	
              Like-Kind
                Exchanges

            	
              26

            
	 	 	 
	
              11.

            	
              CONDITIONS
                PRECEDENT TO OBLIGATIONS OF BUYER

            	
              26

            
	
              11.1

            	
              No
                Litigation

            	
              26

            
	
              11.2

            	
              Representations
                and Warranties

            	
              26

            
	 	 	 
	
              12.

            	
              CONDITIONS
                PRECEDENT TO THE OBLIGATIONS OF SELLER

            	
              26

            
	
              12.1

            	
              No
                Litigation

            	
              26

            
	
              12.2

            	
              Representations
                and Warranties

            	
              26

            
	 	 	 
	
              13.

            	
              TERMINATION

            	
              27

            
	
              13.1

            	
              Causes
                of Termination

            	
              27

            
	
              13.2

            	
              Effect
                of Termination

            	
              27

            
	
              13.3

            	
              Seller’s
                Breach

            	
              28

            
	
              13.4

            	
              Termination
                Pursuant to Section 13.1

            	
              28

            
	
              13.5

            	
              Effect
                of Termination

            	
              28

            
	 	 	 
	
              14.

            	
              INDEMNIFICATION

            	
              28

            
	
              14.1

            	
              Indemnification
                by Seller

            	
              28

            
	
              14.2

            	
              Indemnification
                by Buyer

            	
              30

            
	
              14.3

            	
              Physical
                Inspection

            	
              31

            
	
              14.4

            	
              Notification

            	
              31

            
	 	 	 
	
              15.

            	
              MISCELLANEOUS

            	
              32

            
	
              15.1

            	
              Casualty
                Loss

            	
              32

            
	
              15.2

            	
              Confidentiality

            	
              32

            
	
              15.3

            	
              Notices

            	
              33

            
	
              15.4

            	
              Press
                Releases and Public Announcements

            	
              33

            
	
              15.5

            	
              Comnliance
                with Express Negligence Test

            	
              34

            
	
              15.6

            	
              Governing
                Law

            	
              34

            
	
              15.7

            	
              Exhibits

            	
              34

            
	
              15.8

            	
              Fees,
                Expenses, Taxes and Recording

            	
              34

            
	
              15.9

            	
              Assignment

            	
              35

            
	
              15.10

            	
              Entire
                Agreement

            	
              35

            
	
              15.11

            	
              Severability

            	
              35

            
	
              15.12

            	
              Captions

            	
              35

            

    

    

      
        
           

        

        
          -ii-

          
            

          

        

        
           

        

      

    

     

    
      	
              15.13

            	
              Time
                of the Essence

            	
              35

            
	
              15.14

            	
              Counterparts

            	
              35

            

    

    

    EXHIBITS

     

    
      	
              1.1(A)

            	
              Oil
                and Gas Leases and Land

            
	
              1.1(B)

            	
              Deeded
                Land

            
	
              1.1(C)

            	
              Other
                Personal Property

            
	
              2.4

            	
              Allocation

            
	
              3.2(A)

            	
              Form
                of Assignment and Bill of Sale

            
	
              3.2(G)

            	
              Form
                of Warranty Deed

            
	
              7.1(E)

            	
              AFE’s

            
	
              7.1(G)

            	
              Pending
                Litigation

            
	
              7.1(K)

            	
              Material
                Agreements

            
	
              7.1(L)

            	
              Consents
                and Preferential Purchase Rights

            
	
              7.1(M)

            	
              Gas
                Imbalances

            

    

    
      
         

      

      
        -iii-

        
          

        

      

      
         

      

    

     

    INDEX
      OF DEFINED TERMS

     

    
      	
              DEFINED
                TERM

            	 	
              PAGE

            	 	
              SECTION

            
	
              Adverse
                Environmental Condition

            	 	 	 	
              6.3

            
	
              Agreement

            	 	
              1

            	 	
              Preamble

            
	
              Allocated
                Value

            	 	 	 	
              2.4

            
	
              Allocated
                Values

            	 	 	 	
              2.4

            
	
              Assets

            	 	 	 	
              1.1

            
	
              Assumed
                Liabilities

            	 	 	 	
              1.2

            
	
              Base
                Purchase Price

            	 	 	 	
              2.1

            
	
              Buyer

            	 	 	 	
              Preamble

            
	
              Buyer
                Group

            	 	 	 	
              14.1

            
	
              Buyer’s
                Response

            	 	 	 	
              5.3(C)(ii)

            
	
              Casualty

            	 	 	 	
              15.1(A)

            
	
              Casualty
                Loss

            	 	 	 	
              15.1(B)

            
	
              Closing

            	 	 	 	
              3.1

            
	
              Closing
                Adjustment Statement

            	 	 	 	
              4.1

            
	
              Closing
                Date

            	 	 	 	
              3.1

            
	
              Confidential
                Information

            	 	 	 	
              15.2(A)

            
	
              Deeded
                Land

            	 	 	 	
              1.1(B)

            
	
              Deposit

            	 	 	 	
              2.2

            
	
              Easements

            	 	 	 	
              1.1(A)

            
	
              Effective
                Time

            	 	 	 	
              2.3(A)(iii)

            
	
              Environmental
                Consultant

            	 	 	 	
              6.4(F)

            
	
              Environmental
                Defect Deductible

            	 	 	 	
              6.3

            
	
              Environmental
                Defect Notice

            	 	 	 	
              6.3

            
	
              Environmental
                Defect Value

            	 	 	 	
              6.3

            
	
              Environmental
                Laws

            	 	 	 	
              6.2(C)

            
	
              Equipment

            	 	 	 	
              1.1(B)

            
	
              Exclusion
                Adjustment

            	 	 	 	
              5.6(A)

            
	
              Indemnity
                Deductible

            	 	
              28

            	 	
              14.1(D)(iv)

            
	
              Interest
                Addition

            	 	 	 	
              5.5

            
	
              Land

            	 	 	 	
              1.1(A)

            
	
              Leases

            	 	 	 	
              1.1(A)

            
	
              Loss

            	 	 	 	
              14.1(A)

            
	
              Losses

            	 	 	 	
              14.1(A)

            
	
              Net
                Revenue Interest

            	 	 	 	
              5.2(A)(i)

            
	
              NORM

            	 	 	 	
              6.1(B)

            
	
              Notice

            	 	 	 	
              5.3(A)

            
	
              Oil
                and Gas

            	 	 	 	
              1.1(D)

            
	
              Parties

            	 	 	 	
              Preamble

            
	
              Party

            	 	 	 	
              Preamble

            
	
              Permits

            	 	 	 	
              1.1(A)

            
	
              Permitted
                Encumbrances

            	 	 	 	
              5.2(C)

            
	
              Post-Closing
                Adjustment Statement

            	 	 	 	
              4.4(A)

            

    

     

    
      
         

      

      
        -iv-

        
          

        

      

      
         

      

    

     

    
      
        	
                DEFINED
                  TERM

              	 	
                PAGE

              	 	
                SECTION

              
	
                Property
                  Taxes

              	 	 	 	
                4.3(A)

              
	
                Purchase
                  Price

              	 	 	 	
                2.3

              
	
                Records

              	 	 	 	
                1.1(F)

              
	
                Remediate

              	 	 	 	
                6.4(E)

              
	
                Remediation

              	 	 	 	
                6.4(E)

              
	
                Rights-of-Way

              	 	 	 	
                1.1(A)

              
	
                Seller

              	 	 	 	
                Preamble

              
	
                Seller’s
                  Group

              	 	 	 	
                6.2(B)

              
	
                Seller’s
                  Response

              	 	 	 	
                5.3(C)(i)

              
	
                Severance
                  Taxes

              	 	 	 	
                4.3(C)

              
	
                Survival
                  Period

              	 	 	 	
                14.1(D)(i)

              
	
                Title
                  Consultant 

              	 	 	 	
                5.3(C)(iii)

              
	
                Title
                  Defect

              	 	 	 	
                5.3(A)

              
	
                Title
                  Defect Deductible

              	 	 	 	
                5.3(A)

              
	
                Title
                  Defect Value

              	 	 	 	
                5.4(B)

              
	
                Value
                  of Interest Addition

              	 	 	 	
                5.5

              
	
                Wells

              	 	 	 	
                1.1(B)

              
	
                Working
                  Interest

              	 	 	 	
                5.2(A)(ii)

              

      

       

      
        
           

        

        
          -v-

          
            

          

        

        
           

        

      

       

      PURCHASE
        AND SALE AGREEMENT

    

     

    This
      Purchase and Sale Agreement (this “Agreement”) is entered into this 1st day of
      October, 2006, by and between Nielson & Associates, Inc., a Wyoming
      Corporation (“Seller”)
      and
      Rancher Energy Corp., a Nevada Corporation, doing business in Wyoming as Rancher
      Energy Oil & Gas Corp. (“Buyer”).
      Buyer
      and Seller are collectively referred to herein as the “Parties”
and
      sometimes individually referred to as a “Party.”

     

    RECITALS:

     

    
      	
              A.

            	
              Seller
                desires to sell to Buyer certain oil, gas and mineral properties
                and other
                assets on the terms and conditions set forth in this
                Agreement.

            

    

     

    
      	
              B.

            	
              Buyer
                desires to purchase from Seller such oil, gas and mineral properties
                and
                other assets on the terms and conditions set forth in this
                Agreement.

            

    

     

    WITNESSETH:

     

    In
      consideration of the mutual agreements contained in this Agreement, Buyer and
      Seller agree as follows:

     

     

    1.    SALE
      AND PURCHASE OF THE ASSETS

     

    
      1.1    Acquired
        Assets.
        Subject
        to the terms and conditions of this Agreement, Seller agrees to sell, convey
        and
        deliver to Buyer and Buyer agrees to purchase, acquire and assume from Seller
        the following (collectively, the “Assets”):

       

      (A)    All
        of
        Seller’s right, title, interest and obligations in, to and under the oil and gas
        leases described in Exhibit
        1.1(A)
        attached
        hereto (the “Leases”),
        covering the land described in Exhibit
        1.1(A)
        (the
“Land”),
        whether or not such interests or land are accurately or completely described
        on
Exhibit
        1.1(A),
        together with all the property and rights incident thereto, including without
        limitation Seller’s rights and obligations in, to and under all operating
        agreements; pooling, communitization and unitization agreements; farmout
        agreements; joint venture agreements; product purchase and sale contracts;
        transportation, processing, treatment or gathering agreements; leases; permits
        (the “Permits”);
        rights-of-way (the “Rights-of-Way”),
        including but not limited to the rights-of-way described in Exhibit
        1.1(A);
        surface
        use agreements; surface leases; easements (the “Easements”),
        including but not limited to the easements described in Exhibit
        1.1(A);
        licenses; options; declarations; orders; contracts; and instruments in any
        way
        relating to the Leases;

       

      (B)    All
        of
        Seller’s right, title and interest in and to the wells (“Wells”)
        situated on or used in conjunction with operations on the Leases and Land
        or on
        land pooled, communitized or unitized therewith (“Pooled Land”), and the real
        property described in Exhibit
        1.1( B)
        (the
“Deeded
        Land”),
        together with all of Seller’s interests in and to all of the personal property,
        fixtures, improvements and other property, whether real,
        personal

      
        
           

        

        
          -1-

          
            

          

        

        
           

        

      

       

      (C)    or
        mixed,
        now or as of the Effective Time on, appurtenant to or used or obtained by
        Seller
        in connection with the Leases, Land, Pooled Land, Deeded Lands or Wells or
        with
        the production, injection, treatment, sale or disposal of hydrocarbons and
        all
        other substances produced therefrom or attributable thereto (collectively,
        the
“Equipment”),
        including, without limitation, producing and non-producing wells, injection
        wells, disposal wells, water supply wells, well equipment, casing, tubing,
        tanks, generators, boilers, buildings, pumps, motors, machinery, pipelines,
        gathering systems, power lines, telephone and telegraph lines, roads, field
        processing plants, field offices and other furnishings related thereto,
        equipment leases, trailers, inventory in storage, storage yards, and all
        other
        improvements or appurtenances thereunto belonging;

       

      (D)    All
        of
        Seller’s right, title and interest in and to the other personal property
        described in Exhibit 1.1(C)
        attached
        hereto;

       

      (E)    All
        of
        the oil and gas and associated hydrocarbons (“Oil
        and
        Gas”)
        in and
        under or otherwise attributable to the Leases, Land, Pooled Land and Deeded
        Land
        or produced from the Wells;

       

      (F)    To
        the
        extent assignable, all governmental permits, licenses and authorizations,
        as
        well as any applications for the same, related to the Leases, Land, Pooled
        Land,
        Deeded Land and Wells or the use thereof; and

       

      (G)    All
        of
        the files, records, and data of Seller relating to the items described in
        subsections (A), (B), (C), (D) and (E) above (the “Records”),
        including, without limitation, lease records, well records, and division
        order
        records; well files and prospect files; title records (including abstracts
        of
        title, title opinions and memoranda, and title curative documents related
        to the
        Leases and Wells); contracts and contract files; correspondence; computer
        data
        files; micro-fiche data files; geological, geophysical and seismic records,
        interpretations, data, maps and information; production records, electric
        logs,
        core data, pressure data, decline curves and graphical production curves;
        and
        accounting records, including all records regarding income, expenses and
        taxes,
        to the extent only that the Records can be transferred without violation
        of any
        third-party restriction and are not protected by Seller’s attorney-client
        privilege. The Records do not include any appraisals or other evaluation
        materials related to Seller’s preparation of the Assets for sale hereunder, any
        reservoir and/or development studies prepared by or on behalf of Seller,
        nor any
        of Seller’s income tax returns or files related thereto.

       

      1.2    Assumed
        Liabilities.
        On the
        Closing Date, Buyer shall assume and agree to timely and fully pay, perform
        and
        otherwise discharge, without recourse to Seller or its affiliates, all of
        the
        liabilities and obligations of Seller and its affiliates, predecessors,
        successors, assigns or representatives, direct or indirect, known or unknown,
        asserted or unasserted, absolute or contingent, accrued or unaccrued, which
        relate, directly or indirectly, to the Assets (other than the Excluded Assets),
        whether such liabilities and obligations accrue before, on or after the
        Effective Time (collectively, the “Assumed
        Liabilities”).
        Notwithstanding the foregoing, Assumed Liabilities shall not include, and
        there
        is excepted, reserved and excluded from such liabilities assumed
        by

      
        
           

        

        
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      Buyer,
        the liabilities and obligations for which Seller indemnifies Buyer pursuant
        to
        Section 14.1.

       

      2.    PURCHASE
        PRICE.
        

       

      2.1    Purchase
        Price.
        The
        purchase price for the Assets is Forty-Eight Million Dollars ($48,000,000.00)
        (the “Base
        Purchase Price”),
        subject to the adjustments provided for herein, of which Forty-Five Million
        Dollars ($45,000,000.00) shall be due at Closing, and the balance of Three
        Million Dollars ($3,000,000.00) shall be due no later than sixty (60) days
        from
        the first (1st) day of the calendar month in which the average total production
        from the Assets is greater than or equal to a calendar day average of one
        thousand (1,000) barrels of oil per day, as accurately reported to the Wyoming
        Oil and Gas Conservation Commission on Form 2.

       

      2.2    Deposit.
        Within
        three (3) business days following the execution of this Agreement, Buyer
        shall
        pay to Seller, in cash by wire transfer in immediately-available funds, a
        non-refundable Deposit in an amount equal to Three Million, Six Hundred Thousand
        Dollars ($3,600,000.00), said amount being equivalent to 7.5% of the Base
        Purchase Price (the “Deposit”).
        The
        Deposit, together with interest thereon, shall be distributed to Seller and
        credited to the Base Purchase Price at Closing, or if this Agreement is
        terminated, shall be distributed or retained pursuant to Article 13. In the
        event the Deposit is not paid to Seller as set forth herein, this Agreement
        shall immediately terminate.

       

      2.3    Adjustments
        to the Base Purchase Price.
        At
        Closing, appropriate adjustments to the Base Purchase Price shall be made
        as
        follows in accordance with Section 4.1 (as adjusted, the “Purchase
        Price”):

       

      (A)    The
        Base
        Purchase Price shall be adjusted upward by:

       

      (i)    any
        amount determined to be due Seller pursuant to Section 4.2;

       

      (ii)    Property
        Taxes and Severance Taxes related to the Assets paid by Seller for the period
        following the Effective Time as determined pursuant to Section 4.3;

       

      (iii)    an
        amount
        equal to the costs, expenses and other expenditures (whether capitalized
        or
        expensed) paid by Seller in accordance with this Agreement that are attributable
        to the Assets for the period from and after 7:00 a.m. (Mountain Time) on
        December 1, 2006 (the “Effective
        Time”);

       

      (iv) a
        fixed
        monthly rate, prorated if necessary, per active Well, as provided in the
        applicable operating agreement, for operation and maintenance

      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      

       

      (v)    expenses
        (excluding workover costs, plugging and abandoning costs, and major costs)
        incurred by Seller while operating the Assets from and after the Effective
        Time
        until the election of a new operator of the Assets has occurred and that
        party
        has assumed operations. If Seller owns a 100% working interest or if no
        operating agreement applies, the fixed monthly rate per active producing
        Well
        shall be Five Hundred Dollars ($500);

       

      (vi)    any
        amount related to the Value of Interest Additions as determined pursuant
        to
        Section 5.5;

       

      (vii)    an
        amount
        equal to the amount of proceeds derived from the sale of Oil and Gas, net
        of
        royalties and severance taxes paid by Buyer, actually received by Buyer and
        directly attributable to the Wells which are, in accordance with generally
        accepted accounting procedures, attributable to the period of time prior
        to the
        Effective Time; and

       

      (viii)    any
        other
        amount agreed upon in writing by Seller and Buyer.

       

      (B)    The
        Base
        Purchase Price shall be adjusted downward by:

       

      (i)    an
        amount
        equal to the amount of proceeds derived from the sale of Oil and Gas, net
        of
        royalties and severance taxes paid by Seller, actually received by Seller
        and
        directly attributable to the Wells which are, in accordance with generally
        accepted accounting procedures, attributable to the period of time from and
        after the Effective Time;

       

      (ii)    an
        amount
        equal to all expenditures, liabilities and costs relating to the Assets (other
        than Taxes related to the Assets) that are unpaid as of the Closing Date
        and
        assessed for or attributable to periods of time or the ownership of production
        prior to the Effective Time regardless how such expenditures, liabilities
        and
        costs are calculated provided that to the extent the actual amounts cannot
        be
        determined prior to the agreement of Buyer and Seller with respect to the
        Closing Adjustment Statement, a reasonable estimate of such expenditures,
        liabilities and costs shall be used (and to such extent Buyer shall assume
        the
        liability and responsibility for payment therefor);

       

      (iii)    all
        amounts related to Title Defects as determined pursuant to Section 5.4, consents
        and preferential rights as determined pursuant to Section 5.6, Adverse
        Environmental Conditions as determined pursuant to Section 6.4, Exclusion
        Adjustments as determined pursuant to Sections 5.6 or 6.4, and Casualty Losses
        as determined pursuant to Section 15.1;

       

      (iv)    Property
        Taxes and Severance Taxes related to the Assets to be paid by Buyer for the
        period prior to the Effective Time as determined pursuant to Section 4.3;
        and

       

      (v)    any
        other
        amount agreed upon in writing by Seller and Buyer.

      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      

       

      (vi)    Seller
        shall have the right to collect any receivable, refund or other amounts
        associated with periods prior to the Effective Time. To the extent that Buyer
        collects any such receivable, refund or other amounts, then Buyer shall promptly
        remit any such amounts to Seller.

       

      2.4    Allocation.
        The
        Base Purchase Price shall be allocated to the Assets as set forth in
Exhibit 2.4.
        The
        Parties agree that the values allocated to various portions of the Assets,
        which
        are set forth on Exhibit
        2.4
        (singularly with respect to each item, the “Allocated
        Value”
and
        collectively, the “Allocated
        Values”),
        shall
        be binding on Seller and Buyer and shall be used only for the purposes of
        adjusting the Base Purchase Price pursuant to Sections 4.3 (relating to Taxes),
        5.4 (relating to Title Defects), and 15.1 (relating to Casualty Losses),
        and are
        not intended as a measure of value for any other purpose.

       

      3.    CLOSING.
        

       

      3.1    Closing.
        The
        sale and purchase of the Assets (“Closing”)
        shall
        be held on or before December 15, 2006 (“Closing
        Date”).
        The
        Closing will take place at the offices of Nielson & Associates, Inc., in
        Cody, WY, or at another location mutually agreed upon by Seller and
        Buyer.

       

      3.2    Delivery
        by Seller.
        At
        Closing, Seller shall deliver to Buyer:

       

      (A)    An
        Assignment and Bill of Sale, substantially in the form attached hereto as
        Exhibit
        3.2(A),
        effecting the sale, transfer, conveyance and assignment of the Assets, with
        (i)
        a special warranty of the real property title by, through and under Seller
        but
        not otherwise, and (ii) with all personal property and fixtures conveyed
“AS IS,
        WHERE IS,” with no warranties whatsoever, express, implied or
        statutory.

       

      (B)    Any
        governmental forms required to effect transfer in accordance with applicable
        regulations;

       

      (C)    Letters
        in lieu of transfer orders instructing purchasers of production to pay to
        Buyer
        the proceeds of sales of Oil and Gas from the Assets for sales occurring
        from
        and after the first (1st) day of any month in which Buyer assumes
        operations;

       

      (D)    Executed
        change of operator forms as required by applicable governmental
        regulation;

       

      (E)    Releases
        of the mortgages in favor of any bank that may be currently encumbering the
        Assets;

       

      (F)    The
        Closing Adjustment Statement;

      
        
           

        

        
          -5-

          
            

          

        

        
           

        

      

       

      (G)    A
        Warranty Deed, substantially in the form attached hereto as Exhibit 3.2(G),
        effecting the sale, transfer and conveyance of the Deeded Land;

       

      (H)    Possession
        of the Records and all other Assets; and

       

      (I)    Letters
        of resignation as operator of the Assets, along with ballot forms to the
        partners as directed by the applicable operating agreement(s).

       

      3.3    Delivery
        by Buyer.
        At
        Closing, Buyer shall deliver to Seller or Seller’s designee the Purchase Price
        set forth in the Closing Adjustment Statement by wire transfer in immediately
        available funds, less the Deposit. Buyer shall also deliver evidence that
        it has
        provided replacement instruments for each guaranty, bond, letter of credit
        or
        similar contingent obligation given by Seller as required by law or the
        provisions of any Lease or other agreement, along with the appropriate
        instruments necessary to qualify Buyer to receive approval as operator of
        the
        Assets. Buyer shall execute and deliver the Assignment and Bill of Sale,
        Closing
        Adjustment Statement and other closing documents as necessary or
        appropriate.

       

      3.4    Further
        Cooperation.
        At the
        Closing and thereafter as may be necessary, Seller and Buyer shall execute
        and
        deliver such other instruments and documents and take such other actions
        as may
        be reasonably necessary to evidence and effectuate the transactions contemplated
        by this Agreement.

       

      4.    ACCOUNTING
        ADJUSTMENTS.
        

       

      4.1    Closing
        Adjustments.
        With
        respect to matters that can be determined as of the Closing, Seller shall
        prepare, in accordance with the provisions of this Article 4, a statement
        (the
“Closing
        Adjustment Statement”)
        with
        relevant supporting information setting forth each adjustment to the Base
        Purchase Price submitted by Seller. Seller shall submit the Closing Adjustment
        Statement to Buyer, together with all records or data supporting the calculation
        of amounts presented on the Closing Adjustment Statement, no later than five
        (5)
        business days prior to the scheduled Closing Date. Prior to the Closing,
        Buyer
        and Seller shall review the adjustments proposed by Seller in the Closing
        Adjustment Statement. Agreed adjustments shall be taken into account in
        computing any adjustments to be made to the Base Purchase Price at the Closing.
        When available, actual figures will be used for the adjustments at Closing.
        To
        the extent actual figures are not available, estimates shall be used subject
        to
        final adjustments as described in Section 4.4 below.

      
        
           

        

        
          -6-

          
            

          

        

        
           

        

      

       

      4.2    Strapping
        and Gauging.
        Seller
        will cause the Oil and Gas in the storage facilities located on, or utilized
        in
        connection with, the Leases to be measured, gauged or strapped as of the
        Effective Time. Seller will cause the production meter charts (or if such
        do not
        exist, the sales meter charts) on the pipelines transporting Oil and Gas
        from
        the Leases to be read as of such time. The Oil and Gas in such storage
        facilities above the load line or through the meters on the pipelines as
        of the
        Effective Time shall belong to Seller and shall be valued based upon the
        price
        actually paid for Oil and Gas produced from the Assets for the calendar month
        prior to the Effective Time, and the Oil and Gas placed in such storage
        facilities after the Effective Time and production upstream of the aforesaid
        meters shall belong to Buyer and become part of the Assets. Buyer or Buyer’s
        representative shall have the option to witness the gauging by Seller. In
        the
        event Buyer or Buyer’s representative exercising the option to witness the
        gauging by Seller, Buyer agrees that the waiver and release provisions set
        forth
        in Section 5.1(A) of this Agreement shall apply thereto.

       

      4.3    Taxes.
        

       

      (A)    Property
        Taxes.
        All ad
        valorem taxes, real property taxes, personal property taxes and similar
        obligations assessed on the Assets (“Property
        Taxes”)
        shall
        be apportioned as of the Effective Time between Buyer and Seller. Buyer shall
        file or cause to be filed all required reports and returns incident to Property
        Taxes which are due on or after the Closing, and shall pay or cause to be
        paid
        to the taxing authorities all such taxes reflected on such reports and returns.
        The Post-Closing Adjustment Statement shall settle all liability for Property
        Taxes, using estimates based on previous assessments to the extent current
        assessments are not known. For clarification purposes, the 2006 ad valorem
        tax
        bill that is based on 2005 production will be for the account of Seller.
        The
        2007 ad valorem tax bill that is based on 2006 production will be for the
        account of Buyer, prorated to the Effective Date between the
        parties.

       

      (B)    Sales
        Taxes, Filing Fees, Etc.
        The
        Base Purchase Price is net of any sales taxes or other transfer taxes. Buyer
        shall be liable for any sales tax or other transfer tax as well as any
        applicable conveyance, transfer and recording fees, and real estate transfer
        stamp or taxes imposed upon the sale pursuant to this Agreement. If Seller
        is
        required by applicable state law to report and pay these taxes or fees, Buyer
        shall promptly reimburse Seller in fun payment of the invoice.

       

      (C)    Severance
        Taxes.
        All
        production, severance or excise taxes, conservation fees and other similar
        such
        taxes or fees (other than income taxes) payable on a current basis with respect
        to Oil and Gas produced and sold from the Assets (“Severance
        Taxes”)
        shall
        be borne by Seller to the extent the production on which such taxes are based
        occurs during Seller’s ownership prior to the Effective Time and shall be borne
        by Buyer to the extent such production occurs after the Effective
        Time.

      
        
           

        

        
          -7-

          
            

          

        

        
           

        

      

       

      4.4    Post-Closing
        Adjustments.
        A
        post-closing adjustment statement (the “Post-Closing
        Adjustment Statement”)
        based
        on the actual income and expenses shall be prepared and delivered by Seller
        to
        Buyer within ninety (90) days after the Closing, proposing further adjustments
        to the calculation of the Purchase Price based on the information then
        available. Seller or Buyer, as the case may be, shall be given access to
        and
        shall be entitled to review and audit the other Party’s records pertaining to
        the computation of amounts claimed in such Post-Closing Adjustment
        Statement.

       

      (A)    Within
        thirty (30) days after receipt of the Post-Closing Adjustment Statement,
        Buyer
        shall deliver to Seller a written statement describing in reasonable detail
        its
        objections (if any) to any amounts or items set forth on the Post-Closing
        Adjustment Statement. If Buyer does not raise objections within such period,
        then the Post-Closing Adjustment Statement shall become final and binding
        upon
        the Parties at the end of such period.

       

      (B)    If
        Buyer
        raises objections, the Parties shall negotiate in good faith to resolve any
        such
        objections. If the Parties are unable to resolve any disputed item within
        thirty
        (30) days after Buyer’s receipt of the Post-Closing Adjustment Statement, any
        disputed accounting item shall be submitted to a nationally recognized
        independent accounting firm mutually agreeable to the Parties who shall be
        instructed to resolve such disputed item within thirty (30) days. The resolution
        of disputes by the accounting firm so selected shall be set forth in writing
        and
        shall be conclusive, binding and non-appealable upon the Parties with respect
        to
        the accounting matters submitted and the Post-Closing Adjustment Statement
        shall
        become final and binding upon the Parties on the date of such resolution.
        The
        fees and expenses of such accounting firm shall be paid one-half by Buyer
        and
        one-half by Seller.

       

      (C)    After
        the
        Post-Closing Adjustment Statement has become final and binding on the Parties,
        Seller or Buyer, as the case may be, shall pay to the other such sums as
        are due
        to settle accounts between the Parties due to differences between the estimated
        Purchase Price paid pursuant to the Closing Adjustment Statement and the
        actual
        Purchase Price set forth on the Post-Closing Adjustment Statement.

       

      4.5    Suspended
        Funds.
        At the
        Closing, Seller shall provide to Buyer a listing showing all proceeds from
        production attributable to the Leases which are currently held in suspense
        and
        shall transfer to Buyer all of those suspended proceeds. Buyer shall be
        responsible for proper distribution of all the suspended proceeds, to the
        extent
        turned over to it by Seller, to the parties lawfully entitled to them, and
        any
        claims related thereto, and Buyer hereby agrees to indemnify, defend and
        hold
        harmless Seller from and against any and all claims, liabilities, losses,
        costs
        and expenses arising out of or relating to those suspended proceeds and any
        claims related thereto after the Effective Date.

       

      4.6    Audit
        Adjustments.
        Seller
        retains all rights to adjustments resulting from any operating agreement
        and
        other audit claims asserted against third party operators on transactions
        occurring prior to the Effective

      
        
           

        

        
          -8-

          
            

          

        

        
           

        

      

       

      Time
        (which includes Buyer, if applicable). Any credit received by Buyer pertaining
        to such an audit claim shall be paid to Seller within thirty (30) days after
        receipt.

       

      4.7    Cooperation.
        Each
        Party covenants and agrees to promptly inform the other with respect to amounts
        owing under Sections 4.4 and 4.6 hereof.

       

      5.    DUE
        DILIGENCE; TITLE MATTERS.
        

       

      5.1    General
        Access.
        

       

      (A)    During
        reasonable business hours, Seller agrees to grant Buyer physical access to
        the
        Leases and Wells to allow Buyer to conduct, at Buyer’s sole risk and expense,
        on-site inspections and environmental assessments of the Leases and Wells.
        Buyer
        agrees not to enter onto the Leases or contact field vendors, employees or
        contractors without Seller’s prior knowledge and approval, such approval not to
        be unreasonably withheld. In connection with any such on-site inspections,
        Buyer
        agrees not to interfere with the normal operation of the Leases and Wells
        and
        agrees to comply with all requirements of the operators of the Wells. If
        Buyer
        or its agents prepares an environmental assessment of any Lease or Well,
        Buyer
        agrees to keep such assessment confidential and to furnish copies thereof
        to
        Seller. In connection with granting such access, Buyer represents that it
        is
        adequately insured and waives, releases and agrees to indemnify the Seller
        against all claims for injury to, or death of, persons or for damage to
        operations or property arising in any way from the access afforded to Buyer
        hereunder or the activities of Buyer. This waiver, release and indemnity
        by
        Buyer shall survive termination of this Agreement.

       

      (B)    Prior
        to
        Closing, Seller shall give Buyer and its representatives, employees,
        consultants, independent contractors, attorneys and other advisors reasonable
        access to the Records during regular office hours for any and all inspections
        and copying.

       

      5.2    Defensible
        Title.
        As used
        herein the term Defensible Title shall mean:

       

      (A)    As
        to the
        Assets, that record title or operating rights of Seller which:

       

      (i)    entitles
        Seller to receive not less than the interests shown in Exhibit
        2.4
        as the
“Net
        Revenue Interest”
of
        all
        Oil and Gas produced, saved and marketed from or allocated to the formations
        in
        the associated Wells which are producing as of the date of this Agreement
        or
        which have otherwise been given Allocated Value, all without reduction,
        suspension or termination except as stated in such Exhibit or otherwise
        permitted as Permitted Encumbrances; and

      
        
           

        

        
          -9-

          
            

          

        

        
           

        

      

       

      (ii)    obligates
        Seller to bear a percentage of the costs and expenses relating to the
        maintenance and development of, and operations relating to, the producing
        formations in each associated Well not greater than the “Working
        Interest”
shown
        in Exhibit
        2.4
        (without
        a proportionate increase in the Net Revenue Interest), all without increase
        except as stated in such Exhibit or otherwise permitted as Permitted
        Encumbrances; and

       

      (B)    That
        title of Seller to the Assets is tree and clear of liens, encumbrances and
        defects that materially and adversely affect the ownership, operation or
        use of
        the Assets, except for Permitted Encumbrances.

       

      (C)    As
        used
        herein, the term “Permitted
        Encumbrances”
shall
        mean anyone or more of the following:

       

      (1)    The
        provisions of the Leases and any lessors’ royalties, overriding royalties, net
        profits interests, carried interests, production payments, reversionary
        interests and similar burdens reflected in the public records or in the Records,
        if the net cumulative effect of the burdens does not operate to reduce the
        Net
        Revenue Interest of Seller below the interests described in Section
        2.4;

       

      (2)    Any
        increase in lessor’s royalty occasioned by the repeal or suspension of any
        governmental regulation providing for the reduction of royalty for wells
        producing below defined threshold amounts;

       

      (3)    Division
        orders and production sales contracts terminable without penalty upon no
        more
        than ninety (90) days notice to the purchaser;

       

      (4)    Preferential
        Rights and required third party consents to assignment and similar agreements
        with respect to which waivers or consents are obtained from the appropriate
        parties, or the appropriate time period for asserting any such right has
        expired
        without an exercise of the right;

       

      (5)    Materialman’s,
        mechanic’s, repairman’s, employee’s, contractor’s, operator’s and other similar
        liens or charges arising in the ordinary course of business for obligations
        that
        are not delinquent or that will be paid and discharged in the ordinary course
        of
        business, or if delinquent, that are being contested in good faith by
        appropriate action of which Buyer is notified in writing before
        Closing;

       

      (6)    All
        rights to consent by, required notices to, filings with, or other actions
        by
        governmental entities in connection with the sale or conveyance of oil and
        gas
        leases or interests therein if they are routinely obtained subsequent to
        the
        sale or conveyance;

       

      (7)    Easements,
        rights-of-way, servitudes, permits, surface leases and other rights in respect
        of surface operations that do not materially interfere with the oil and gas
        operations to be conducted on any Well or Lease;

       

      (8)    All
        operating agreements, unit agreements, unit operating agreements, pooling
        agreements and pooling designations affecting the Assets that are either
        (i)
        of

      
        
           

        

        
          -10-

          
            

          

        

        
           

        

      

       

      record
        in
        Seller’s chain of title or (ii) reflected or referenced in the Records or (iii)
        included as Material Agreements on Exhibit 7.1(K);

       

      (9)    Conventional
        rights of reassignment prior to release or surrender requiring notice to
        the
        holders of the rights;

       

      (10)    All
        rights reserved to or vested in any governmental, statutory or public authority
        to control or regulate any of the Assets in any manner, and all applicable
        laws,
        rules and orders of governmental authority;

       

      (11)    All
        agreements affecting the Assets that are of record in Seller’s chain of title,
        or are reflected or referenced in the Records;

       

      (12)    Defects
        that are defensible by possession under applicable statutes of limitation
        for
        adverse possession or for prescription; and

       

      (13)    All
        other
        liens, charges, encumbrances, contracts, agreements, instruments, obligations,
        defects and irregularities affecting the Assets that individually or in the
        aggregate are not such as to materially interfere with the operation, value
        or
        use of any of the Assets or have not prevented, and cannot reasonably be
        expected to prevent, Buyer from receiving the proceeds of production from
        the
        affected Assets.

       

      5.3    Defect
        Letters.
        

       

      (A)    Buyer
        may
        from time to time and no later than five (5) business days prior to Closing
        notify Seller in writing (a “Notice”)
        of any
        matter which would cause title to all or part of the Assets not to be Defensible
        Title (“Title
        Defect”),
        provided that no title Defect shall be deemed to exist unless the Title Defect
        Value thereof exceeds Twenty-Five Thousand Dollars ($25,000.00). Further,
        there
        shall be no adjustment to the Base Purchase Price unless and only to the
        extent
        that the aggregate Title Defect Values of all Title Defects exceed Two Hundred
        Fifty Thousand Dollars ($250,000) (the “Title
        Defect Deductible”)
        (such
        amount being a deductible, not a threshold) and then only for the amount
        exceeding the Title Defect Deductible. In order to provide Seller a reasonable
        opportunity to cure any Title Defects prior to Closing, Buyer shall use
        reasonable efforts to provide the Notice as soon as reasonably possible after
        becoming aware of or making its determination of the Title Defect.

       

      (B)    In
        the
        Notice, Buyer must describe with reasonable detail each alleged Title Defect
        it
        has discovered and the steps required to cure each Title Defect, include
        Buyer’s
        reasonable estimate of the Title Defect Value attributable to each, and include
        all data and information in Buyer’s possession or control bearing thereon. Buyer
        shall be deemed to have conclusively waived all Title Defects not disclosed
        to
        Seller in a Notice before five (5) business days prior to Closing. Buyer
        waives
        any remedy against Seller for Title Defects that do not exceed the Title
        Defect
        Deductible or for which timely notice is not given as provided hereunder
        or for
        which adjustment is made as hereafter provided.

      
        
           

        

        
          -11-

          
            

          

        

        
           

        

      

       

      (C)    Upon
        timely delivery of a Notice by Buyer:

       

      (i)    within
        three (3) business days after Seller’s receipt of the Title Defects Notice,
        Seller shall notify Buyer whether Seller agrees with Buyer’s claimed Title
        Defects and/or the proposed Title Defect Values therefore (“Seller’s
        Response”).
        If
        Seller does not agree with any claimed Title Defect and/or the proposed Title
        Defect Value therefor, then the Parties shall enter into good faith negotiations
        and shall attempt to agree on such matters;

       

      (ii)    within
        one (1) business day after Seller’s notice of its cure of a Title Defect, Buyer
        shall notify Seller whether Buyer agrees with Seller’s proposed cure of a Title
        Defect (“Buyer’s
        Response”).
        If
        Buyer does not agree with any such cure, then the Parties shall enter into
        good
        faith negotiations and shall attempt to agree on such matters;

       

      (iii)    if
        the
        Parties cannot reach agreement concerning either the existence of a Title
        Defect, Seller’s proposed cure of a Title Defect, or a Title Defect Value within
        ten (10) days after Buyer’s receipt of Seller’s Response or Seller’s receipt of
        Buyer’s Response, as applicable, upon either Party’s request, the Parties shall
        mutually agree on and employ an attorney experienced in title examination
        in the
        state where the Assets are located (“Title
        Consultant”)
        to
        resolve all points of disagreement relating to Title Defects and Title Defect
        Values; provided that Seller may elect not to proceed to Closing with regard
        to
        such Assets and adjust the Base Purchase Price in the amount of the Allocated
        Value and not submit such matter to arbitration;

       

      (iv)    if
        at any
        time any Title Consultant so chosen fails or refuses to perform hereunder,
        a new
        Title Consultant shall be chosen by the Parties. The cost of any Title
        Consultant shall be borne fifty percent (50%) by Seller and fifty percent
        (50%)
        by Buyer. Each Party shall present a written statement of its position on
        the
        Title Defect and/or Title Defect Value in question to the Title Consultant
        within five (5) days after the Title Consultant is selected, and the Title
        Consultant shall make a determination of all points of disagreement in
        accordance with the terms and conditions of this Agreement within ten (10)
        business days of receipt of such position statements. The determination by
        the
        Title Consultant shall be conclusive and binding on the Parties, and shall
        be
        enforceable against any Party in any court of competent jurisdiction. If
        necessary, the Closing Date shall be deferred only as to those Assets affected
        by any unresolved disputes regarding the existence of a Title Defect and/or
        the
        Title Defect Value until the Title Consultant has made a determination of
        the
        disputed issues with respect thereto and all subsequent dates and required
        activities with respect to any such Assets having reference to the Closing
        Date
        shall be correspondingly deferred; provided, however, that, unless Seller
        and
        Buyer mutually agree to the contrary, the Closing Date shall not be deferred
        in
        any event for more than thirty (30) days beyond the scheduled Closing Date
        in
        Section 3.1. Once the Title Consultant’s determination has been expressed to
        both Parties, if applicable, Seller shall have five (5) days in which to
        advise
        Buyer in writing which of the options available to

      
        
           

        

        
          -12-

          
            

          

        

        
           

        

      

       

      (v)    Seller
        under Section 5.4 that Seller elects regarding each of the Assets as to which
        the Title Consultant has made a determination. In evaluating whether a Title
        Detect exists, due consideration shall be given to the length of time that
        the
        particular Asset has been producing Oil and Gas and whether such fact,
        circumstance or condition is of the type expected to be encountered in the
        area
        involved and is usual and customarily acceptable to reasonable and prudent
        operators, working interest owners and/or purchasers engaged in the business
        of
        the exploration, development, and operation of oil and gas
        properties.

       

      5.4    Effect
        of Title Defect.
        

       

      (A)    In
        the
        event Buyer provides Seller with a timely Notice and the Title Defects are
        valid
        and exceed the Title Defect Deductible, for those Title Defects not cured
        by
        Closing, Seller and Buyer shall, upon their mutual agreement:

       

      (i)    adjust
        the Base Purchase Price in the amount of the Title Defect Value of the Asset
        to
        which such Title Defect relates and proceed to Closing on all Assets; provided
        that Seller shall not be obligated to transfer any Assets for which the Title
        Defect Value equals or exceeds such Asset’s Allocated Value; or

       

      (ii)    proceed
        with (a) Closing on those Assets not affected by the valid Title Defects
        and
        such Assets to which a Title Defect relates but for which Seller and Buyer
        have
        elected to proceed to Closing with an adjustment of the Base Purchase Price
        in
        the amount of the Title Defect Value of such Assets and (b) defer Closing
        on those other Assets to which a Title Defect relates and for which Seller
        has
        agreed to attempt to cure such Title Defect and to not proceed to Closing,
        for
        which Buyer shall place into escrow an amount equal to the Allocated Values
        of
        the Assets affected by the valid Title Defects, which withheld amount shall
        be
        paid to Seller when the Asset affected by any valid Title Defect is cured
        or the
        Title Defect is waived by Buyer and the affected Asset is conveyed from Seller
        to Buyer. If neither of the above occurs and if Seller and Buyer later determine
        that Seller will not cure a Title Defect on or before six (6) months from
        the
        Closing Date, the amount in the escrow account attributable to such Title
        Defect
        will be returned to Buyer and Seller shall retain such Asset affected by
        such
        Title Defect.

       

      (B)    The
        diminution in value of an Asset attributable to a valid Title Defect (the
        “Title
        Defect Value”)
        notified in a Notice shall be determined by the following:

       

      (i)    if
        the
        valid Title Defect asserted is that the actual Net Revenue Interest attributable
        to the producing or valued formation in any Asset is less than that stated
        in
        the applicable Exhibit, then the Title Defect Value is the product of the
        Allocated Value attributed to the affected formation(s) in such Asset,
        multiplied by a traction, the numerator of which is the difference between
        the
        Net Revenue Interest set forth in the applicable Exhibit and the actual Net
        Revenue

       

      (ii)    Interest,
        and the denominator of which is the Net Revenue Interest stated in the
        applicable Exhibit; or

      
        
           

        

        
          -13-

          
            

          

        

        
           

        

      

       

      (iii)    if
        the
        valid Title Defect represents an obligation, encumbrance, burden or charge
        upon
        the affected Asset (including any increase in Working Interest for which
        there
        is not a proportionate increase in Net Revenue Interest), the amount of the
        Title Defect Value is to be determined by taking into account the Allocated
        Value of such Asset, the portion of the Asset affected by the Title Defect,
        the
        legal effect of the Title Defect, the potential economic effect of the Title
        Defect over the life of the affected Asset, and the Title Defect Values placed
        upon the Title Defect by Buyer and Seller.

       

      (iv)    Notwithstanding
        the above, in no event shall the total of the Title Defect Values related
        to a
        particular Asset exceed the Allocated Value of such Asset.

       

      (C)    If
        the
        aggregate value of (i) the Base Purchase Price adjustment for Title Defect
        Values plus (ii) the Allocated Value of Assets which are retained in lieu
        of
        cure or adjustment equals or exceeds ten percent (10%) of the Base Purchase
        Price, then by notice delivered prior to the Closing either Party may terminate
        this Agreement and neither Party shall have any further obligation to conclude
        the transfer of the Assets under this Agreement.

       

      5.5    Possible
        Upward Adjustment.
        Promptly on discovery, but no later than five business days prior to Closing,
        Buyer shall in good faith notify Seller of any interest that would be an
        Asset
        hereunder, but that is not listed, including any interest that entitles Seller
        to receive more than the Net Revenue Interest shown on Exhibit
        2.4
        or
        obligates Seller to bear costs and expenses in an amount less than the Working
        Interest shown on Exhibit
        2.4
        without
        a proportionate change in Net Revenue Interest, and that increases the Allocated
        Value of the affected Asset by more than $25,000, with such interest being
        an
“Interest
        Addition.”
Buyer
        acknowledges and agrees to comply with the affirmative obligation set forth
        in
        the preceding sentence. Seller shall give Buyer written notice of Interest
        Additions of which it becomes aware as soon as possible, but in no event
        later
        than on or before five (5) business days prior to the Closing. Such notices
        shall be in writing and shall include (i) a description of the Interest
        Addition, (ii) the basis for the Interest Addition, (iii) the Allocated Value
        of
        the Asset affected by the Interest Addition, (iv) the value of the Interest
        Addition or the amount by which Seller (or Buyer) believes the Allocated
        Value
        of the Asset has been increased by the Interest Addition (“Value
        of
        Interest Addition”)
        and
        the associated computations and supporting documentation. The Value of the
        Interest Addition shall be determined by the Parties in good faith taking
        into
        account all relevant factors. The Purchase Price shall be increased for Interest
        Additions only to the extent that the aggregate of the Value of all Interest
        Additions net of the sum of all Title Defect Values for all of the Assets
        exceeds the Title Defect Deductible, and then only for the amount exceeding
        the
        Title Defect Deductible.

       

      5.6    Preferential
        Rights and Consents.
        Seller
        shall use its best efforts to obtain all required consents and to give notices
        required in connection with preferential purchase rights, so that the third
        party election date to exercise the preferential right will occur at least
        seven
        (7) business days prior to Closing. If Buyer discovers other affected Assets
        during the course of Buyer’s due diligence activities, Buyer shall notify Seller
        immediately and Seller shall use its best efforts to obtain such consents
        and to
        give the notices required in connection with the preferential fights prior
        to
        Closing.

       

      
        
           

        

        
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      (A)    Consents.
        Except
        for consents and approvals which are customarily obtained post-Closing and
        those
        consents which would not invalidate the conveyance of the Assets, if a necessary
        consent to assign any Lease has not been obtained as of the Closing that
        would
        invalidate the conveyance of the Asset, then (i) the portion of the Assets
        for
        which such consent has not been obtained shall not be conveyed at the Closing,
        (ii) the Allocated Value for that Asset shall not be paid to Seller, and
        (iii)
        Seller shall use best efforts to obtain such consent as promptly as possible
        following Closing. If such consent has been obtained as of the date on which
        the
        Post-Closing Adjustment Statement becomes final, Seller shall convey the
        affected Asset to Buyer effective as of the Effective Time and Buyer shall
        pay
        Seller the Allocated Value of the affected Asset, less any proceeds from
        the
        affected Asset received by Seller attributable to the period of time after
        the
        Effective Time (calculated in accordance with Section 2.3). If such consent
        has
        not been obtained as of the date on which the Post-Closing Adjustment Statement
        becomes final, Seller and Buyer shall mutually agree to (i) allow Seller
        to
        challenge in court the enforceability of such consent right, in which event
        Seller shall retain the affected Asset until such legal challenge is finally
        resolved by settlement or unappealable court order, after which either Seller
        shall convey the affected Asset to Buyer under the terms of this Agreement
        and
        Buyer shall pay the Allocated Value of the Purchase Price for such Asset,
        less
        any proceeds received by Seller attributable to such Asset for the period
        from
        and after the Effective Time (calculated in accordance with Section 2.3)
        or (ii)
        Seller shall retain the affected Asset and the Purchase Price shall be reduced
        by an amount equal to the Allocated Value of the retained Asset (with such
        adjustment being an “Exclusion
        Adjustment”).
        Buyer
        shall reasonably cooperate with Seller in obtaining any required consent
        including providing assurances of reasonable financial conditions, but Buyer
        shall not be required to expend funds or make any other type of financial
        commitments a condition of obtaining such consent.

       

      (B)    Preferential
        Purchase Rights.
        

       

      (i)    If
        any
        preferential right to purchase any portion of the Assets is exercised prior
        to
        the Closing Date, or if the time frame for the exercise of such preferential
        purchase rights has not expired and Seller has not received notice of an
        intent
        not to exercise or waiver of the preferential purchase right, that portion
        of
        the Assets affected by such preferential purchase right shall be excluded
        from
        the Assets and the Purchase Price shall be adjusted downward by an amount
        equal
        to the Allocated Value of such affected Assets without the requirement for
        Buyer
        to give notice (with such adjustment being an “Exclusion Adjustment”).
        Notwithstanding any other provision in this Agreement, if a preferential
        purchase right subject to this Agreement is exercised, Buyer has the right,
        at
        its sole discretion, to terminate this Agreement in the event the allocated
        value of all

       

      (ii)    preferential
        rights actually exercised is equal to or greater than ten percent (10%) of
        the
        Base Purchase Price.

      
        
           

        

        
          -15-

          
            

          

        

        
           

        

      

       

      (iii)    If
        a
        third party exercises its preferential right to purchase, but fails to
        consummate the purchase prior to the Closing, Seller shall retain the affected
        Assets and the Purchase Price shall be adjusted downward by an amount equal
        to
        the Allocated Value of such affected Assets (with such adjustment being an
        “Exclusion Adjustment”).

       

      (iv)    If
        a
        third party exercises its preferential right to purchase, but does not
        consummate the purchase within the time frame specified in the preferential
        purchase right, Seller agrees to convey the affected Asset to Buyer effective
        as
        of the Effective Time, and Buyer agrees to pay Seller the Allocated Value
        of the
        affected Asset.

       

      (v)    If
        a
        preferential purchase right is not discovered prior to Closing, and the affected
        Asset is conveyed to Buyer at Closing, and the preferential purchase right
        is
        exercised and subsequently consummated after Closing, Buyer agrees to convey
        the
        affected Asset to the party exercising such right on the same terms and
        conditions under which Seller conveyed the Asset to Buyer and retain all
        amounts
        paid by the party exercising such preferential right to purchase. In the
        event
        of such exercise, Buyer shall prepare, execute and deliver a form of conveyance
        of such Asset to such exercising party, such conveyance to be in form and
        substance as provided in this Agreement, and Seller agrees to hold harmless
        and
        indemnify Buyer from any and all liabilities and obligations associated with
        such conveyed Asset.

       

      (C)    Exclusive
        Remedy.
        The
        remedies set forth in this Section 5.6 are the exclusive remedies under this
        Agreement for exercised preferential purchase rights and required consents
        to
        assign the Assets.

       

      6.    ENVIRONMENTAL
        ASSESSMENT.
        

       

      6.1    Physical
        Condition of the Assets.
        

       

      (A)    Buyer
        acknowledges that the Assets have been used for oil and gas drilling and
        production operations and possibly for the storage and disposal of waste
        materials or hazardous substances related to standard oil field operations.
        Physical changes in or under the Assets or adjacent lands may have occurred
        as a
        result of such uses. The Assets also may contain previously plugged and
        abandoned wells, buried pipelines, storage tanks and other equipment, whether
        or
        not of a similar nature, the locations of which may not now be known by Seller
        or be readily apparent by a physical inspection of the Assets. Buyer understands
        that Seller does not have the requisite information with which to determine
        the
        exact nature or condition of the Assets nor the effect any such use

      
        
           

        

        
          -16-

          
            

          

        

        
           

        

      

       

      (B)    has
        had
        on the physical condition of the Assets. Pursuant to the Safe Water Drinking
        and
        Toxic Enforcement Act of 1986, Buyer is hereby notified and assumes the risk
        that detectable amounts of chemicals known to cause cancer, birth defects
        and
        other reproductive harm may be found in, on or around the Assets. Upon
        consummation of the Closing Buyer shall be deemed to have assumed the risk
        of
        expense, claim, damage or liability arising from any such matter referred
        to in
        this section, including without limitation the risk that the Assets may contain
        waste or contaminants and that adverse physical conditions, including the
        presence of waste or contaminants, may not have been revealed by Buyer’s
        investigation. Consummation of the Closing shall transfer all responsibility
        and
        liability related to disposal, spills, waste or contamination from, on or
        below
        the Assets from Seller to Buyer.

       

      (C)    In
        addition, Buyer acknowledges that some oil field production equipment located
        on
        the Assets may contain asbestos and/or naturally-occurring radioactive material
        (“NORM”).
        In
        this regard, Buyer expressly understands that NORM may affix or attach itself
        to
        inside of wells, materials and equipment as scale or in other forms, and
        that
        wells, materials and equipment located on the Assets described herein may
        contain NORM and that NORM-containing materials may be buried or have been
        otherwise disposed of on the Assets. Buyer also expressly understands that
        special procedures may be required for the removal and disposal of asbestos
        and
        NORM from the Assets where it may be found, and that upon consummation of
        the
        Closing Buyer shall be deemed to have assumed all liability when such activities
        are performed.

       

      6.2    Inspection
        and Testing.
        

       

      (A)    Prior
        to
        Closing, Buyer shall have the right, at its sole cost and risk, to review
        Seller’s Phase I environmental assessments of the Assets and to conduct any
        further environmental assessment of the Assets it deems appropriate, to the
        extent that Seller has the authority to grant such right to Buyer; provided
        that
        Seller shall have the right to review and approve any plan to conduct such
        an
        environmental assessment, with such approval not to be unreasonably withheld,
        delayed or conditioned by Seller. Buyer shall immediately provide to Seller
        any
        data obtained from such assessments, including any reports and conclusions.
        Seller and Buyer shall keep all information relating to such assessments
        strictly confidential whether or not Closing occurs, except as may be required
        pursuant to any Environmental Laws.

       

      (B)    Buyer
        waives and releases all claims against Seller, its affiliates, and each of
        their
        respective directors, officers, employees, agents, and other representatives
        and
        their successors and assigns (collectively, the “Seller’s
        Group”),
        for
        injury to or death of persons, or damage to property, arising in any way
        from
        the exercise of rights granted to Buyer hereby or the activities of Buyer
        or its
        employees, agents or contractors on the Assets. BUYER SHALL INDEMNIFY THE
        SELLER’S GROUP AGAINST AND HOLD THE MEMBERS OF THE SELLER’S GROUP HARMLESS FROM
        ANY AND ALL LOSS, COST, DAMAGE, EXPENSE OR LIABILITY, INCLUDING REASONABLE
        ATTORNEY’S FEES, WHATSOEVER ARISING OUT OF (I) ANY

      
        
           

        

        
          -17-

          
            

          

        

        
           

        

      

       

      (C)    AND
        ALL
        STATUTORY OR COMMON LAW LIENS OR OTHER ENCUMBRANCES FOR LABOR OR MATERIALS
        FURNISHED IN CONNECTION WITH SUCH TESTS, SAMPLINGS, STUDIES OR SURVEYS AS
        BUYER
        MAY CONDUCT WITH RESPECT TO THE ASSETS; AND (II) ANY INJURY TO OR DBA TH
        OF
        PERSONS OR DAMAGE TO PROPERTY OCCURRING IN, ON OR ABOUT THE ASSETS AS A RESULT
        OF SUCH EXERCISE OR ACTIVITIES.

       

      (D)    “Environmental
        Laws”
means
        all applicable local, state, and federal laws, rules, regulations, and orders
        regulating or otherwise pertaining to: (i) the use, generation, migration,
        storage, removal, treatment, remedy, discharge, release, transportation,
        disposal, or cleanup of pollutants, contamination, hazardous wastes, hazardous
        substances, hazardous materials, toxic substances or toxic pollutants; (ii)
        surface waters, ground waters, ambient air and any other environmental medium
        on
        or off any Lease; or (iii) the environment, habitat protection or health
        and
        safety-related matters; including the following as from time to time amended
        and
        all others whether similar or dissimilar: the Comprehensive Environmental
        Response, Compensation, and Liability Act of 1980, as amended by the Superfund
        Amendments and Reauthorization Act of 1986, the Resource Conservation and
        Recovery Act of 1976, as amended by the Used Oil Recycling Act of 1980, the
        Solid Waste Disposal Act Amendments of 1980, and the Hazardous and Solid
        Waste
        Amendments of 1984, the Hazardous Materials Transportation Act, the Toxic
        Substance Control Act, the Clean Air Act, the Clean Water Act, the Safe Drinking
        Water Act, the National Environmental Policy Act, the Endangered Species
        Act,
        the Oil Pollution Act of 1990, and all regulations promulgated pursuant
        thereto.

       

      6.3    Notice
        of Adverse Environmental Conditions.
        No
        later than five (5) business days prior to Closing, Buyer shall notify Seller
        in
        writing of any Adverse Environmental Condition with respect to the Assets.
        Such
        notice shall describe in reasonable detail the Adverse Environmental Condition
        and include the estimated Environmental Defect Value attributable thereto
        (the
“Environmental
        Defect Notice”)
        based
        on a verifiable, written estimate of the cost to Remediate the Adverse
        Environmental Condition. No Adverse Environmental Condition shall be deemed
        to
        exist unless the Environmental Defect Value exceeds Twenty Five Thousand
        Dollars
        ($25,000.00) in each individual case. Further, there shall be no adjustment
        to
        the Base Purchase Price unless and only to the extent that the aggregate
        Environmental Detect Values of all Adverse Environmental Conditions satisfying
        the condition in clause (i) exceeds Two Hundred Fifty Thousand dollars
        ($250,000.00) (the “Environmental
        Defect Deductible”)
        (such
        amount being a deductible, not a threshold) and then only for the amount
        exceeding the Environmental Defect Deductible. The “Environmental
        Defect Value”
        attributable to any Adverse Environmental Condition shall be the estimated
        amount (net to Seller’s interest) of all reasonable costs and claims necessary
        to Remediate the Adverse Environmental Conditions, as reasonably determined
        and
        estimated by Buyer. The term “Adverse
        Environmental Condition”
means
        (i) the failure of the Assets to be in material compliance with all applicable
        Environmental Laws; (ii) the Assets being subject to any agreements, consent
        orders, decrees or judgments currently in existence based on any Environmental
        Laws that negatively and materially impact the future use of any portion
        of the
        Assets or that require any material change in the present conditions of any
        of
        the Assets; or (iii)

      
        
           

        

        
          -18-

          
            

          

        

        
           

        

      

       

      the
        Assets being subject to any material uncured notices of violations of or
        non-compliance with any applicable Environmental Laws or any claim of material
        violation of any Environmental Laws to the extent not disclosed to Buyer
        prior
        to execution of this Agreement. Buyer shall be deemed to have conclusively
        waived (i) all Adverse Environmental Conditions not contained in an
        Environmental Defect Notice delivered to Seller at least five (5) business
        days
        prior to Closing and (ii) any remedy against Seller for Adverse Environmental
        Conditions that do not exceed the Environmental Defect Deductible.

       

      6.4    Rights
        and Remedies for Adverse Environmental Conditions.
        

       

      (A)    With
        respect to any Adverse Environmental Conditions affecting one or more of
        the
        Assets which exceed the Environmental Defect Deductible, Seller and Buyer
        shall,
        upon mutual agreement, on an Asset-by-Asset basis: (i) Remediate the Adverse
        Environmental Conditions and proceed to Closing with no adjustment of the
        Base
        Purchase Price; (i) proceed to Closing and adjust the Base Purchase Price
        in an
        amount equal to the applicable Environmental Defect Value; provided that
        such
        adjustment shall not exceed the Allocated Value for such Asset; or (iii)
        Seller
        shall retain the affected Asset and reduce the Base Purchase Price by the
        Allocated Value of the affected Asset (“Exclusion Adjustment”).

       

      (B)    Buyer
        waives any Adverse Environmental Condition for which Buyer has received an
        adjustment to the Base Purchase Price in accordance with Section
        6.4(A).

       

      (C)    If
        Buyer
        delivers a valid Environmental Defect Notice to Seller and if the aggregate
        of
        the Environmental Defects claimed is less than or equals the Environmental
        Defect Deductible, Buyer will be deemed to have accepted the Assets “where-is,
        as-is” with respect to all Adverse Environmental Conditions in, on or under the
        Assets and the Adverse Environmental Condition(s) in, on and under the Assets
        will be deemed to be part of the Assumed Liabilities. The Environmental Defect
        Deductible is a deductible and not a threshold. The Environmental Defect
        Deductible and the Title Defect Deductible are separate and distinct and
        operate
        independently.

       

      (D)    If
        the
        aggregate value of (i) the Base Purchase Price adjustment for Adverse
        Environmental Conditions plus (ii) any Exclusion Adjustments in lieu of
        Remediating any Adverse Environmental Conditions equals or exceeds ten percent
        (10%) of the Base Purchase Price, either Party may terminate this Agreement
        and
        neither Party shall have any further obligation to conclude the transfer
        of the
        Assets under this Agreement.

       

      (E)    The
        term
“Remediate”
or
        “Remediation”
means,
        with respect to any valid Adverse Environmental Condition, the undertaking
        and
        completion of those actions and activities necessary to eliminate or correct
        such Adverse Environmental Condition to the degree sufficient that such Adverse
        Environmental Condition no longer constitutes an Adverse Environmental Condition
        as defined above. Seller shall promptly notify Buyer at such time as it believes
        that it has Remediated an Adverse Environmental Condition. 

       

      (F)    Buyer
        shall promptly notify Seller whether it agrees such condition is Remediated.
        If
        Buyer fails to notify Seller of its determination with respect to such
        Remediation within ten (10) business days following Seller’s notice, such
        Adverse Environmental Condition shall be deemed Remediated.

      
        
           

        

        
          -19-

          
            

          

        

        
           

        

      

       

      (G)    If
        Seller
        and Buyer are unable to agree on the amount of the Environmental Defect Value
        within ten (10) business days after Seller’s receipt of the Environmental Defect
        Notice or that an Adverse Environmental Condition exists, has been Remediated
        or
        is required to be Remediated, then the dispute will be submitted to TRC
        Consultants or another mutually acceptable company with recognized expertise
        in
        the oil and gas environmental remediation and regulation field (the “Environmental
        Consultant”)
        whose
        determination shall be final and binding upon the Parties. Seller and Buyer
        shall each bear their respective costs and expenses incurred in connection
        with
        any such dispute, and one-half (1/2) of the fees, costs and expenses charged
        by
        the Environmental Consultant. Each Party shall present a written statement
        of
        its position on the Adverse Environmental Condition and/or the Environmental
        Defect Value in question to the Environmental Consultant within five (5)
        business days after the Environmental Consultant is selected, and the
        Environmental Consultant shall make a determination of all points of
        disagreement in accordance with the terms and conditions of this Agreement
        within ten (10) business days of receipt of such position statements. If
        necessary, the Closing Date shall be deferred only as to those Assets affected
        by any unresolved disputes regarding the existence of an Adverse Environmental
        Condition and/or the Environmental Defect Value until the Environmental
        Consultant has made a determination of the disputed issues with respect thereto
        and all subsequent dates and required activities with respect to any such
        Assets
        having reference to the Closing Date shall be correspondingly deferred;
        provided, however, that, unless Seller and Buyer mutually agree to the contrary,
        the Closing Date shall not be deferred in any event for more than thirty
        (30)
        days beyond the scheduled Closing Date in Section 3.1. All Assets as to which
        no
        such dispute(s) exist shall be conveyed to Buyer subject to the terms of
        this
        Agreement at Closing. Once the Environmental Consultant’s determination has been
        expressed to both Parties, if applicable, Seller shall have five (5) business
        days in which to advise Buyer in writing which of the options available to
        Seller under Section 6.4(A) Seller elects regarding each of the Assets as
        to
        which the Environmental Consultant has made a determination.

       

      6.5    Remediation
        by Seller.
        If
        Seller and Buyer have mutually agreed to Remediate an Adverse Environmental
        Condition or Seller is required by a governmental or regulatory agency to
        Remediate an Adverse Environmental Condition, the following will govern the
        Remediation:

       

      (A)    Seller
        shall be responsible for all negotiations and contacts with federal, state,
        and
        local agencies and authorities. Buyer may not make any independent contacts
        with
        any agency, authority, or other third party with respect to the Adverse
        Environmental Condition or Remediation and shall keep all information regarding
        the Adverse Environmental Condition and Remediation confidential, except
        in each
        instance to the extent required by applicable law.

       

      (B)    Seller
        shall Remediate the Adverse Environmental Condition to the level agreed upon
        by
        Seller and Buyer (or failing such agreement to the level determined by the
        Environmental Consultant), but in no event shall Seller be required to Remediate
        the Adverse Environmental Condition beyond the level required by the
        Environmental Laws in effect at the Effective Time.

      
        
           

        

        
          -20-

          
            

          

        

        
           

        

      

       

      (C)    Buyer
        shall grant and warrant access and entry to the Assets after Closing to Seller
        and third parties conducting assessments or Remediation, to the extent and
        as
        long as necessary to conduct and complete the assessment or Remediation work,
        to
        remove equipment and facilities, and to perform any other activities reasonably
        necessary in connection with assessment or Remediation.

       

      (D)    Buyer
        shall facilitate Seller’s ingress and egress or assessment or Remediation
        activities after the Closing. Seller shall make reasonable efforts to perform
        the work so as to minimize disruption to Buyer’s business
        activities.

       

      (E)    Seller
        shall continue Remediation of the Adverse Environmental Condition until the
        first of the following occurs:

       

      (i)    the
        appropriate governmental authorities provide notice to Seller or Buyer that
        no
        further Remediation of the Adverse Environmental Condition is required;
        or

       

      (ii)    the
        Adverse Environmental Condition has been Remediated to the level required
        by the
        Environmental Laws or as agreed by the Parties.

       

      Upon
        the
        occurrence of either (i) or (ii) above, Seller shall notify Buyer that
        Remediation of the Adverse Environmental Condition is complete and provide
        a
        copy of the notification described in (i) above, if applicable. Upon delivery
        of
        said notice, Seller shall be released from all liability and have no further
        obligations under any provisions of this Agreement in connection with an
        Adverse
        Environmental Condition.

       

      (F)    Until
        Seller completes Remediation of an Adverse Environmental Condition, Seller
        and
        Buyer shall each notify the other of any pending or threatened claim, action,
        or
        proceeding by any authority or private party that relates to or would affect
        the
        environmental condition, the assessment, or the Remediation of the
        Assets.

       

      7.    REPRESENTATIONS
        AND WARRANTIES OF SELLER.
        

       

      7.1    Seller’s
        Representations and Warranties.
        Except
        as set forth in the exhibits to this Agreement or as otherwise disclosed
        to
        Buyer by Seller in connection with preparation of Buyer’s offer to purchase the
        Assets, Seller represents and warrants the following as of the date of execution
        of this Agreement and the Closing:

      
        
           

        

        
          -21-

          
            

          

        

        
           

        

         

      

      (A)    Status
        of
        Incorporation.
        Seller
        is in good standing under the laws of the State of Wyoming.

       

      (B)    Corporate
        Authority.
        Seller
        owns the Assets and has the requisite power and authority to enter into this
        Agreement, to carry out the transactions contemplated hereby, to transfer
        the
        Assets in the manner contemplated by this Agreement, and to undertake all
        of the
        obligations of Seller set forth in this Agreement.

       

      (C)    Validity
        of Obligations.
        This
        Agreement and any documents or instruments delivered by Seller at the Closing
        shall constitute legal, valid and binding obligations of Seller enforceable
        in
        accordance with their terms subject, however, to the effects of bankruptcy,
        insolvency, reorganization, moratorium and other laws for the protection
        of
        creditors, as well as to general principles of equity, regardless whether
        such
        enforceability is considered in a proceeding in equity or at law.

       

      (D)    No
        Violation.
        The
        execution and delivery of this Agreement does not, and the fulfillment of
        and
        compliance with the terms and conditions hereof will not, as of Closing,
        violate, or be in conflict with, any provision of Seller’s governing documents,
        or any statute, rule or regulation applicable to Seller or any agreement
        or
        instrument to which Seller is a party or by which it is bound, or, to Seller’s
        knowledge, violate, or be in conflict with any judgment, decree or order
        applicable to Seller or require the approval or consent of any third party
        (subject to governmental consents and approvals customarily obtained after
        the
        Closing).

       

      (E)    AFE’s.
        With
        respect to the joint, unit or other operating agreements relating to the
        Assets,
        except as set forth in Exhibit
        7.1(E),
        there
        are no material outstanding calls or payments under authorities for expenditures
        for payments relating to the Assets which are due or which Seller has committed
        to make which have not been made.

       

      (F)    Contractual
        Restrictions.
        Except
        to the extent otherwise permitted by this Agreement, Seller has not entered
        into
        any contracts for or received prepayments, take-or-pay arrangements, buydowns,
        buyouts for Oil and Gas, or storage of the same relating to the Assets which
        Buyer shall be obligated to honor and make deliveries of Oil and Gas or pay
        refunds of amounts previously paid under such contracts or
        arrangements.

       

      (G)    Litigation.
        Except
        as set forth in Exhibit
        7.1(G),
        there
        is no suit or action pending, arising out of, or to Seller’s knowledge
        threatened that would have a material adverse affect upon the ownership,
        operation or value of the Assets.

       

      (H)    Permits
        and Consents.
        To
        Seller’s knowledge, with respect to Assets for which Seller is the operator,
        Seller has (i) acquired all material permits, licenses, approvals and consents
        from appropriate governmental bodies, authorities and agencies to conduct
        operations on the Assets in compliance with applicable laws, rules, regulations,
        ordinances and orders; and (ii) is in material compliance with all such permits,
        licenses, approvals and consents.

      
        
           

        

        
          -22-

          
            

          

        

        
           

        

      

       

      (I)    Broker’s
        Fees.
        Seller
        shall retain the obligation or liability, contingent or otherwise, for brokers’
or finders’ fees in respect of the matters provided for in this Agreement and
        Buyer shall have no responsibility therefor.

       

      (J)    Taxes.
        (i)
        Seller has filed (with respect to the Assets) all material returns for Property
        Taxes and Severance Taxes that are due, (ii) all payments (with respect to
        the
        Assets) shown to be due on such returns have been paid, and (iii) there is
        no
        material dispute or claim concerning any Property Tax or Severance Tax liability
        of the Seller (with respect to the Assets) claimed or raised by any tax
        authority in writing.

       

      (K)    Material
        Agreements.
        To the
        best of Seller’s knowledge, all agreements material to the ownership, operation
        or value of the Assets are listed in Exhibit
        7.1(K)
        (“Material Agreements”).

       

      (L)    Consents
        and Preferential Purchase Rights.
        To the
        best of Seller’s knowledge, Exhibit
        7.1(L)
        lists
        all consents and preferential purchase rights contained in the Leases or
        Material Agreements.

       

      (M)    Gas
        Imbalances.
        To the
        best of Seller’s knowledge, Exhibit
        7.1(M)
        lists
        all gas imbalances with respect to the Assets as of the Effective
        Time.

       

      7.2    Scope
        of Representations of Seller.
        

       

      (A)    Information
        About the Assets.
        Except
        as expressly set forth in this Agreement, Seller disclaims all liability
        and
        responsibility for any representation, warranty, statements or communications
        (orally or in writing) to Buyer, including any information contained in any
        opinion, information or advice that may have been provided to Buyer by any
        employee, officer, director, agent, consultant, engineer or engineering firm,
        representative, partner, member, beneficiary, owner or contractor of Seller
        wherever and however made, including those made in any data room or internet
        site and any supplements or amendments thereto or during any negotiations
        with
        respect to this Agreement or any confidentiality agreement previously executed
        by the Parties with respect to the Asset. EXCEPT AS SET FORTH IN ARTICLE
        7 OF
        THIS AGREEMENT, SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS, STATUTORY
        OR IMPLIED, AS TO (i) THE ACCURACY, COMPLETENESS OR MATERIALITY OF ANY DATA,
        INFORMATION OR RECORDS FURNISHED TO BUYER IN CONNECTION WITH THE ASSETS OR
        OTHERWISE CONSTITUTING A PORTION OF THE ASSETS; (ii) THE PRESENCE, QUALITY
        AND
        QUANTITY OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE ASSETS, INCLUDING
        WITHOUT LIMITATION SEISMIC DATA AND SELLER’S INTERPRETATION AND OTHER ANALYSIS
        THEREOF; (iii) THE ABILITY OF THE ASSETS TO PRODUCE HYDROCARBONS, INCLUDING
        WITHOUT LIMITATION PRODUCTION RATES, DECLINE RATES AND RECOMPLETION
        OPPORTUNITIES; (iv) IMBALANCE OR PAYOUT ACCOUNT INFORMATION, ALLOWABLES,
        OR
        OTHER REGULATORY

      
        
           

        

        
          -23-

          
            

          

        

        
           

        

      

       

      (B)    MATTERS;
        (v) THE PRESENT OR FUTURE VALUE OF THE ANTICIPATED INCOME, COSTS OR PROFITS,
        IF
        ANY, TO BE DERIVED FROM THE ASSETS; (vi) THE ENVIRONMENTAL CONDITION OF THE
        ASSETS; (vii) ANY PROJECTIONS AS TO EVENTS THAT COULD OR COULD NOT OCCUR;
        (viii)
        THE TAX ATTRIBUTES OF ANY ASSET; (ix) ANY OTHER MATTERS CONTAINED IN OR OMITTED
        FROM ANY INFORMATION OR MATERIAL FURNISHED TO BUYER BY SELLER OR OTHERWISE
        CONSTITUTING A PORTION OF THE ASSETS; AND, (x) THE COMPLETENESS OR ACCURACY
        OF
        THE INFORMATION CONTAINED IN ANY EXHIBIT HERETO. ANY DATA, INFORMATION OR
        OTHER
        RECORDS FURNISHED BY SELLER ARE PROVIDED TO BUYER AS A CONVENIENCE AND BUYER’S
        RELIANCE ON OR USE OF THE SAME IS AT BUYER’S SOLE RISK.

       

      (C)    Independent
        Investigation.
        Buyer
        agrees that it has, or by Closing will have, made its own independent
        investigation, analysis and evaluation of the Assets and the transaction
        contemplated by this Agreement (including Buyer’s own estimate and appraisal of
        the extent and value of Seller’s Oil and Gas reserves attributable to the Assets
        and an independent assessment and appraisal of the environmental risks and
        liabilities associated with the acquisition of the Assets). Buyer agrees
        that it
        has had, or will have prior to Closing, access to all information necessary
        to
        perform its investigation and has not relied and will not rely on any
        representations by Seller other than those expressly set forth in this
        Agreement

       

      8.    REPRESENTATIONS
        AND WARRANTIES OF BUYER.
        

       

      8.1    Buyer’s
        Representations and Warranties.
        Buyer
        represents and warrants as follows as of the date hereof and the
        Closing:

       

      (A)    Status
        of Incorporation.
        Buyer
        is a corporation duly incorporated, validly existing and in good standing
        under
        the laws of the State of Nevada, and doing business in the State of Wyoming
        as
        Rancher Energy Oil & Gas Corp.

       

      (B)    Corporate
        Authority.
        Buyer
        has the corporate power and authority to enter into this Agreement, to carry
        out
        the transactions contemplated hereby and to undertake all of the obligations
        of
        Buyer set out in this Agreement.

       

      (C)    Validity
        of Obligations.
        The
        consummation of the transactions contemplated by this Agreement will not
        in any
        respect violate, nor be in conflict with, any provision of Buyer’s charter,
        by-laws or other governing documents, or any agreement or instrument to which
        Buyer is a party or is bound, or any judgment, decree, order, statute, rule
        or
        regulation applicable to Buyer (subject to governmental consents and approvals
        customarily obtained after the Closing). This Agreement and the documents
        executed and delivered by Buyer in connection with the Closing constitute
        legal,
        valid and binding obligations of Buyer, enforceable in accordance with their
        terms.

       

      (D)    Qualification
        and Bonding.
        Buyer
        is in compliance with the bonding and liability insurance requirements of
        all
        applicable state or federal laws or regulations that could affect Buyer’s
        ability or authority to own and operate the Assets and is qualified to own
        any
        federal or state oil and gas leases that constitute part of the
        Assets.

      
        
           

        

        
          -24-

          
            

          

        

        
           

        

      

       

      (E)    Non-Security
        Acquisition.
        Buyer
        intends to acquire the Assets for its own benefit and account and is not
        acquiring the Assets with the intent of distributing fractional undivided
        interests thereof such as would be subject to regulation by federal or state
        securities laws, and if, in the future, it should sell, transfer or otherwise
        dispose of the Assets or fractional undivided interests therein, it will
        do so
        in compliance with any applicable federal and state securities
        laws.

       

      (F)    Evaluation.
        By
        reason of Buyer’s knowledge and experience in the evaluation, acquisition and
        operation of oil and gas properties, Buyer has evaluated the merits and risks
        of
        purchasing the Assets from Seller and has formed an opinion based solely
        upon
        Buyer’s knowledge and experience and not upon any representations or warranties
        by Seller.

       

      (G)    Financing.
        Buyer
        has sufficient cash, available lines of credit or other sources of immediately
        available funds to enable it to pay the Purchase Price to Seller at the
        Closing.

       

      (H)    Broker’s
        Fees.
        Buyer
        has incurred no obligation or liability, contingent or otherwise, for brokers’
or finders’ fees in respect of the matters provided for in this Agreement, and,
        if any such obligation or liability exists, it shall remain an obligation
        of
        Buyer, and Seller shall have no responsibility therefor.

       

      (I)    No
        Knowledge of Seller’s Breach.
        As of
        the Closing Date, Buyer has no knowledge of any breach by Seller of any
        representation or warranty of Seller, or of any other fact, event, condition
        or
        circumstance that would excuse Buyer from the timely performance of its
        obligations hereunder.

       

       

      9.    CERTAIN
        AGREEMENTS OF SELLER.
        SELLER
        AGREES AND COVENANTS THAT, UNLESS BUYER SHALL HAVE OTHERWISE AGREED IN WRITING,
        THE FOLLOWING PROVISIONS SHALL APPLY: 

       

      9.1    Maintenance
        of Assets.
        From
        the Effective Time until the election of a new operator of the Assets has
        occurred and that party has assumed operations, Seller agrees that, for those
        Assets which it operates, it shall:

       

      (A)    Administer
        and operate the Assets in accordance with the applicable operating
        agreements.

       

      (B)    Not
        introduce any new methods of management, operation or accounting with respect
        to
        any or all of the Assets.

      
        
           

        

        
          -25-

          
            

          

        

        
           

        

      

       

      (C)    Use
        commercially reasonable efforts to maintain and keep the Assets in full force
        and effect; and fulfill all contractual or other covenants, obligations and
        conditions imposed upon Seller with respect to the Assets, including, but
        not
        limited to, payment of royalties, delay rentals, shut-in gas royalties and
        any
        and all other required payments.

       

      (D)    Except
        to
        the extent necessary or advisable to avoid forfeiture or penalties, not enter
        into agreements to drill new wells or to rework, plug back, deepen, plug
        or
        abandon any Well, nor commence any drilling, reworking or completing or other
        operations on the Leases which requires estimated expenditures exceeding
        Twenty-Five Thousand Dollars ($25,000.00), net to the working interest of
        Seller, for each operation (except for emergency operations and operations
        required under presently existing contractual obligations) without obtaining
        the
        prior written consent of Buyer (which consent shall not be unreasonably
        withheld, delayed or conditioned); provided that the terms of this paragraph
        (D)
        shall not apply to any expenditures of Seller which will not be charged to
        Buyer.

       

      (E)    Not
        voluntarily relinquish its position as operator to anyone other than Buyer
        with
        respect to any of the Assets or voluntarily abandon any of the Wells other
        than
        as required pursuant to the terms of a Lease or by regulation.

       

      (F)    Not,
        without the prior written consent of Buyer (which consent shall not be
        unreasonably withheld, delayed or conditioned), (i) enter into any agreement
        or
        arrangement (other than one constituting a Permitted Encumbrance) transferring,
        selling or encumbering any of the Assets (other than in the ordinary course
        of
        business, including ordinary course sales of production, inventory or salvage
        or
        with respect to any Assets with a value less than $25,000 or pursuant to
        any
        agreements existing on the date hereof); (ii) grant any preferential or other
        right to purchase or agree to require the consent of any party not otherwise
        required to consent to the transfer and assignment of the Assets to Buyer;
        (iii)
        enter into any new sales contracts or supply contracts which cannot be cancelled
        upon thirty (30) days prior notice; or (iv) incur or agree to incur any
        contractual obligation (absolute or contingent) with respect to the Assets
        except as otherwise provided herein (including ordinary course sales of
        production, inventory or salvage or with respect to any Assets with a value
        less
        than $25,000 net to Seller or pursuant to any disclosed AFEs covering the
        Assets).

       

      (G)    To
        the
        extent known to Seller, provide Buyer with written notice of (i) any claims,
        demands, suits or actions made against Seller which materially affect the
        Assets; or (ii) any proposal from a third party to engage in any material
        transaction (e.g., a farmout) with respect to the Assets.

       

      9.2    Records.
        Seller
        shall have the right to make and retain copies of the Records as Seller may
        desire prior to the delivery of the Records to Buyer. Buyer, for a period
        of
        seven (7) years after the Closing Date, shall make available to Seller (at
        the
        location of such Records in Buyer’s organization) access to such Records as
        Buyer may have in its possession (or to which it may

      
        
           

        

        
          -26-

          
            

          

        

        
           

        

      

       

      have
        access) upon written request of Seller, during normal business hours; provided,
        however, that Buyer shall not be liable to Seller for the loss of any Records
        by
        reason of clerical error or inadvertent loss or destruction of
        Records.

       

      10.    CERTAIN
        AGREEMENTS OF BUYER.
        BUYER
        AGREES AND COVENANTS THAT UNLESS SELLER SHALL HAVE CONSENTED OTHERWISE IN
        WRITING, THE FOLLOWING PROVISIONS SHALL APPLY: 

       

      10.1    Plugging
        Obligation.
        Upon
        consummation of the Closing, Buyer shall perform and assume all liability
        for
        the necessary and proper plugging and abandonment of all Wells and all surface
        restoration and reclamation required by law or the Leases.

       

      10.2    Plugging
        Bond.
        Buyer
        shall post, prior to Closing, the necessary bonds or letters of credit as
        required by the state in which the Leases are located for the plugging of
        all
        Wells, and provide Seller with a copy of same, and provide proof satisfactory
        to
        Seller that the applicable state has accepted such bonds or letters of credit
        as
        sufficient assurance to cover the plugging of all Wells and related matters.
        Further, Buyer shall provide to Seller copies of the approval by any applicable
        regulatory agencies concerning change of operatorship of the Assets, provided
        that Buyer is duly elected as operator of the Assets.

       

      10.3    Seller’s
        Logos.
        Commencing no later than thirty (30) days after Closing, Buyer shall promptly
        cover or cause to be covered by decals or new signage any names and marks
        used
        by Seller, and all variations and derivatives thereof and logos relating
        thereto, from the Assets and shall not thereafter make any use whatsoever
        of
        such names, marks and logos.

       

      10.4    Like-Kind
        Exchanges.
        Each
        party consents to the other party’s assignment of its rights and obligations
        under this Agreement to its Qualified Intermediary (as that term is defined
        in
        Section 1.1031(k)-1(g)(4)(v) of the Treasury Regulations), or to its Qualified
        Exchange Accommodation Titleholder (as that term is defined in Rev. Proc.
        2000-37), in connection with effectuation of a like-kind exchange. However,
        Seller and Buyer acknowledge and agree that any assignment of this Agreement
        to
        a Qualified Intermediary or to a Qualified Exchange Accommodation Titleholder
        does not release either party from any of their respective liabilities and
        obligations to each other under the Agreement. Each party agrees to cooperate
        with the other to attempt to structure the transaction as a like-kind
        exchange.

       

      11.    CONDITIONS
        PRECEDENT TO OBLIGATIONS OF BUYER.
        All
        obligations of Buyer under this agreement are, at Buyer’s election, subject to
        the fulfillment, prior to or at the Closing, of each of the following
        conditions:

      
        
           

        

        
          -27-

          
            

          

        

        
           

        

      

       

      11.1    No
        Litigation.
        At the
        Closing, no suit, action or other proceeding shall be pending before any
        court
        or governmental agency which attempts to prevent the occurrence of the
        transactions contemplated by this Agreement.

       

      11.2    Representations
        and Warranties.
        All
        representations and warranties of Seller contained in this Agreement shall
        be
        true in all material aspects as of the Closing as if such representations
        and
        warranties were made as of the Closing Date (except for those representations
        or
        warranties that are expressly made only as of another specific date, which
        representations and warranties shall be true in all material respects as
        of such
        other date) and Seller shall have performed and satisfied in all material
        respects all covenants and fulfilled all conditions required by this Agreement
        to be performed and satisfied by Seller at or prior to the Closing.

       

      12.    CONDITIONS
        PRECEDENT TO THE OBLIGATIONS OF SELLER.
        All
        obligations of Seller under this agreement are, at Seller’s election, subject to
        the fulfillment, prior to or at the Closing, of each of the following
        conditions: 

       

      12.1    No
        Litigation.
        At the
        Closing, no suit, action or other proceeding shall be pending before any
        court
        or governmental agency which attempts to prevent the occurrence of the
        transactions contemplated by this Agreement.

       

      12.2    Representations
        and Warranties.
        All
        representations and warranties of Buyer contained in this Agreement shall
        be
        true in all material aspects as of the Closing, as if such representations
        and
        warranties were made as of the Closing Date (except for those representations
        or
        warranties that are expressly made only as of another specific date, which
        representations and warranties shall be true in all material respects as
        of such
        other date) and Buyer shall have performed and satisfied in all material
        respects all covenants and fulfilled all conditions required by this Agreement
        to be performed and satisfied by Buyer at or prior to the Closing.

       

      13.    TERMINATION.
        

       

      13.1    Causes
        of Termination.
        This
        Agreement and the transactions contemplated herein may be
        terminated:

       

      (A)    At
        any
        time by mutual consent of the Parties.

       

      (B)    By
        either
        Party as provided in Sections 5.4(C) or 6.4(C) pertaining to Title Defects
        or
        Adverse Environmental Conditions, respectively.

      
        
           

        

        
          -28-

          
            

          

        

        
           

        

      

       

      (C)    By
        Buyer
        if, on the Closing Date, any of the conditions set forth in Article 11 hereof
        shall not have been satisfied or waived; provided, however, that Seller shall
        have the right to satisfy such condition for a period of twenty (20) days
        following delivery of notice from Buyer regarding such failure or, if such
        condition cannot reasonably be satisfied within such 20-day period, Seller
        shall
        have the right to commence the actions necessary to satisfy such condition
        within such 20-day period and thereafter to diligently continue such actions
        beyond such period until such satisfaction has been effected.

       

      (D)    By
        Seller
        if, on the Closing Date, any of the conditions set forth in Article 12 hereof
        shall not have been satisfied or waived; provided, however, that with respect
        to
        any condition other than a material failure of Buyer to perform its obligations
        under Section 3.2, as to which the granting of any cure period shall be entirely
        within Seller’s sole and absolute discretion, Buyer shall have the right to
        satisfy such condition for a period of twenty (20) days following delivery
        of
        notice from Seller regarding such failure or, if such condition cannot
        reasonably be satisfied within such 20-day period, Buyer shall have the right
        to
        commence the actions necessary to satisfy such condition within such 20-day
        period and thereafter to diligently continue such actions beyond such period
        until such satisfaction has been effected.

       

      13.2    Effect
        of
        Termination.
        

       

      (A)    Buyer’s
        Breach.
        If
        Closing does not occur because Buyer wrongfully fails to tender performance
        at
        Closing or otherwise breaches this Agreement prior to Closing, and Seller
        is
        ready to close, Seller shall retain the Deposit, together with interest thereon,
        as liquidated damages. Buyer’s failure to close shall not be considered wrongful
        if (i) conditions to Buyer’s obligation to close under Article II are not
        satisfied through no fault of Buyer and are not waived, or (ii) Buyer has
        terminated this Agreement as of right under Section 13.1. The remedy set
        forth
        herein shall be Seller’s sole and exclusive remedy for Buyer’s wrongful failure
        to close hereunder and Seller expressly waives any and all other remedies,
        legal
        and equitable, that it otherwise may have for Buyer’s failure to
        close.

       

      (B)    Seller’s
        Breach.
        If
        Closing does not occur because Seller wrongfully fails to tender performance
        at
        Closing or otherwise breaches this Agreement prior to Closing, and Buyer
        is
        ready to close, Seller will return the Deposit, together with interest thereon,
        to Buyer immediately after the determination that the Closing will not occur
        and
        Buyer shall retain all legal remedies for Seller’s breach of this Agreement;
        provided, however, that (i) Buyer’s total damages arising out of or related to
        Seller’s breach of any provision of this Agreement shall be limited to the
        amount of the Deposit, and (ii) Seller shall not have any liability to Buyer
        for
        consequential, special, punitive or exemplary damages arising out of or related
        to Seller’s breach of any provision of this Agreement Seller’s

       

      (C)    failure
        to close shall not be considered wrongful if (i) conditions to Seller’s
        conditions to close under Article 12 are not satisfied through no fault of
        Seller and are not waived; or (ii) Seller has terminated this Agreement as
        of
        right under Section 13.1.

      
        
           

        

        
          -29-

          
            

          

        

        
           

        

      

       

      (D)    Termination
        Pursuant to Section 13.1.
        If
        Buyer or Seller terminates this Agreement pursuant to Section 13.1 in the
        absence of a breach by the other Party, Seller shall distribute the Deposit
        to
        Buyer and neither Buyer nor Seller shall have any liability to the other
        Party
        for termination of this Agreement. If Buyer or Seller terminates this Agreement
        pursuant to Section 13.1 and asserts that a breach of this Agreement has
        occurred, the notice of termination shall include a statement describing
        the
        nature of the alleged breach together with supporting
        documentation.

       

      (E)    Effect
        of Termination.
        In the
        event of the termination of this Agreement pursuant to the provisions of
        this
        Article 13 or elsewhere in this Agreement, this Agreement shall become void
        and
        have no further force and effect and, except for the indemnities provided
        for in
        Sections 6.2(B) and 14.3, any breach of this Agreement prior to such termination
        and any continuing confidentiality requirement, neither Party shall have
        any
        further right, duty or liability to the other hereunder. Upon termination,
        Buyer
        agrees to return to Seller or destroy all materials, documents and copies
        thereof provided, obtained or discovered in the course of any due diligence
        investigations of the Assets.

       

      14.    INDEMNIFICATION.
        

       

      14.1    Indemnification
        by Seller.
        UPON
        CLOSING, SELLER SHALL TO THE FULLEST EXTENT PERMITTED BY LAW, RELEASE, DEFEND,
        INDEMNIFY, AND HOLD HARMLESS BUYER ITS AFFILIATES, AND EACH OF THEIR RESPECTIVE
        DIRECTORS, OFFICERS, EMPLOYEES, AGENTS AND OTHER REPRESENTATIVES (COLLECTIVELY
        THE “BUYER
        GROUP”)
        FROM
        AND AGAINST THE FOLLOWING:

       

      (A)    MISREPRESENTATIONS.
        ALL
        CLAIMS, DEMANDS, LIABILITIES, JUDGMENTS, LOSSES AND REASONABLE COSTS, EXPENSES
        AND ATTORNEYS’ FEES (INDIVIDUALLY A “LOSS”
AND
        COLLECTIVELY, THE “LOSSES”)
        ARISING FROM THE BREACH BY SELLER OF ANY REPRESENTATION OR WARRANTY SET FORTH
        IN
        THIS AGREEMENT THAT SURVIVES CLOSING:

       

      (B)    BREACH
        OF COVENANTS.
        ALL
        LOSSES ARISING FROM THE BREACH BY SELLER OF ANY COVENANT SET FORTH IN THIS
        AGREEMENT; AND

       

      (C)    OWNERSHIP
        AND OPERATION.
        ALL
        LOSSES ARISING FROM SELLER’S OWNERSHIP AND OPERATION OF THE ASSETS PRIOR TO
        THE

      
        
           

        

        
          -30-

          
            

          

        

        
           

        

      

       

      (D)    EFFECTIVE
        TIME DIRECTLY ASSOCIATED WITH THE FOLLOWING MATTERS:

       

      (i)    DAMAGES
        TO PERSONS OR PROPERTY FOR CLAIMS ASSERTED BY ANY THIRD PARTY PRIOR TO THE
        EFFECTIVE TIME;

       

      (ii)    THE
        VIOLATION BY SELLER OF THE TERMS OF ANY AGREEMENT BINDING UPON SELLER;
        AND

       

      (iii)    CLAIMS
        AGAINST SELLER BY CO-OWNERS, PARTNERS, JOINT VENTURERS AND OTHER PARTICIPANTS
        IN
        THE WELLS.

       

      (E)    Notwithstanding
        the above, the following limitations shall apply to Seller’s indemnification
        obligations:

       

      (i)    Seller
        shall not be obligated to indemnify Buyer for any Loss unless Buyer has
        delivered a written notice of such Loss within the Survival Period (as defined
        below) applicable to such Loss. Any Loss for which Seller does not receive
        written notice before the end of the Survival Period shall be deemed to be
        an
        Assumed Liability. The “Survival
        Period”
        applicable to Losses shall mean:

       

      (1)    With
        regard to a breach of representations and warranties contained in Sections
        7.1(A), (B), (C) and (D), for a period of one (1) year following the
        Closing;

       

      (2)    An
        of the
        other representations and warranties by Seller in this Agreement for a period
        of
        six (6) months following the Closing;

       

      (3)    With
        regard to a breach of covenants, an indefinite period following the
        Closing;

       

      (4)    With
        regard to the matters covered by Section 14.1(C), for a period of two (2)
        years
        after the Closing Date.

       

      (ii)    The
        indemnification obligations of Seller pursuant to this Agreement shall be
        limited to actual Losses and shall not include incidental, consequential,
        indirect, punitive, or exemplary Losses or damages;

       

      (iii)    Seller’s
        aggregate liabilities and obligations under this Article 14 shall not exceed
        Two
        Million Five Hundred Thousand Dollars ($2,500,000.00);

       

      (iv)    Seller
        shall have no liability or obligation for any Losses, unless and until and
        only
        to the extent that the aggregate Losses for which Buyer is entitled to recover
        under this Agreement exceeds Two Hundred Fifty Thousand Dollars ($250,000.00)
        (such amount being a deductible and not a threshold).

      
        
           

        

        
          -31-

          
            

          

        

        
           

        

      

       

      (v)    Seller
        shall have no liability in excess of the Allocated Value, less any prior
        adjustments to the Base Purchase Price, for any Losses associated with the
        claim
        that Seller does not have Defensible Title associated with a particular
        Asset;

       

      (vi)    The
        amount of Losses required to be paid by Seller to indemnify Buyer pursuant
        to
        this Agreement shall be reduced to the extent of any amounts actually received
        by Buyer pursuant to the terms of the insurance policies (if any) covering
        such
        claim and any tax benefits received by Buyer.

       

      (vii)    Seller’s
        indemnification obligations shall not cover any liabilities, duties and
        obligations relating to properly plugging and abandoning wells, restoring
        and
        reclaiming the surface, removal of all pipelines, equipment, and related
        facilities now or hereafter located on the Assets, and cleaning up, restoring
        and Remediation of the Assets in accordance with the Environmental Laws and
        the
        relevant Leases, or any other violation or claimed violation of Environmental
        Laws (including but not limited to the payment of fines, penalties, monetary
        sanctions or other civil liabilities) or the presence, disposal, release
        or
        threatened release of any hazardous substance or hazardous waste from the
        Assets
        into the atmosphere or into or upon land or any water course or body of water,
        including groundwater, whether or not attributable to Seller’s activities or the
        activities of third parties. All such matters are covered exclusively by
        Article
        6 of this Agreement.

       

      (viii)    Buyer
        acknowledges and agrees that the indemnification provisions in this Article
        14
        and the termination rights in Article 13 shall be the exclusive remedies
        of
        Buyer with respect to the transactions contemplated by this
        Agreement.

       

      14.2    Indemnification
        by Buyer.
        UPON
        CLOSING, BUYER SHALL TO THE FULLEST EXTENT PERMITTED BY LAW, RELEASE, DEFEND,
        INDEMNIFY, AND HOLD HARMLESS SELLER’S GROUP FROM AND AGAINST THE
        FOLLOWING:

       

      (A)    MISREPRESENTATIONS.
        ALL
        LOSSES ARISING FROM THE BREACH BY BUYER OF ANY REPRESENTATION OR WARRANTY
        SET
        FORTH IN THIS AGREEMENT THAT SURVIVES CLOSING;

       

      (B)    BREACH
        OF COVENANTS.
        ALL
        LOSSES ARISING FROM THE BREACH BY BUYER OF ANY COVENANT SET FORTH IN THIS
        AGREEMENT;

       

      (C)    ASSUMED
        LIABILITIES.
        ALL
        LOSSES ARISING FROM OR COMPRISING THE ASSUMED LIABILITIES.

      
        
           

        

        
          -32-

          
            

          

        

        
           

        

      

       

      14.3    Physical
        Inspection.
        BUYER
        INDEMNIFIES AND AGREES TO RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS THE
        SELLER’S GROUP FROM AND AGAINST ANY AND ALL CLAIMS ARISING FROM BUYER’S
        INSPECTING AND OBSERVING THE ASSETS, INCLUDING (A) CLAIMS FOR PERSONAL INJURIES
        TO OR DEATH OF EMPLOYEES OF THE BUYER, ITS CONTRACTORS, AGENTS, CONSULTANTS
        AND
        REPRESENTATIVES, AND DAMAGE TO THE PROPERTY OF BUYER OR OTHERS ACTING ON
        BEHALF
        OF BUYER; AND (B) CLAIMS, DEMANDS, LOSSES, DAMAGES, LIABILITIES, JUDGMENTS,
        CAUSES OF ACTION, COSTS OR EXPENSES FOR PERSONAL INJURIES TO OR DEATH OF
        EMPLOYEES OF THE SELLER’S GROUP OR THIRD PARTIES, AND DAMAGE TO THE PROPERTY OF
        THE SELLER’S GROUP OR THIRD PARTIES. THE FOREGOING INDEMNITY INCLUDES, AND THE
        PARTIES INTEND IT TO INCLUDE, AN INDEMNIFICATION OF THE SELLER’S GROUP FROM AND
        AGAINST CLAIMS ARISING OUT OF OR RESULTING, IN WHOLE OR PART, FROM THE CONDITION
        OF THE ASSETS OR THE SELLER’S GROUP’S SOLE, JOINT, COMPARATIVE, OR CONCURRENT
        NEGLIGENCE, STRICT LIABILITY OR FAULT. 

       

      14.5    Notification.
        As soon
        as reasonably practical after obtaining knowledge thereof, the indemnified
        Party
        shall notify the indemnifying Party of any claim or demand which the indemnified
        Party has determined has given or could give rise to a claim for indemnification
        under this Article 14. Such notice shall specify the agreement, representation
        or warranty with respect to which the claim is made, the facts giving rise
        to
        the claim and the alleged basis for the claim, and the amount (to the extent
        then determinable) of liability for which indemnity is asserted. In the event
        any action, suit or proceeding is brought with respect to which a Party may
        be
        liable under this Article 14, the defense of the action, suit or proceeding
        (including all settlement negotiations and arbitration, trial, appeal, or
        other
        proceeding) shall be at the discretion of and conducted by the indemnifying
        Party. If an indemnified Party shall settle any such action, suit or proceeding
        without the written consent of the indemnifying Party (which consent shall
        not
        be unreasonably withheld), the right of the indemnified Party to make any
        claim
        against the indemnifying Party on account of such settlement shall be deemed
        conclusively denied. An indemnified Party shall have the right to be represented
        by its own counsel at its own expense in any such action, suit or proceeding,
        and if an indemnified Party is named as the defendant in any action, suit
        or
        proceeding, it shall be entitled to have its own counsel and defend such
        action,
        suit or proceeding with respect to itself at its own expense. Subject to
        the
        foregoing provisions of this Article 14, neither Party shall, without the
        other
        Party’s written consent, settle, compromise, confess judgment or permit judgment
        by default in any action, suit or proceeding if such action would create
        or
        attach any liability or obligation to the other Party. The Parties agree
        to make
        available to each other, and to their respective counsel and accountants,
        all
        information and documents reasonably available to them which relate to any
        action, suit or proceeding, and the Parties agree to render to each other
        such
        assistance as they may reasonably require of each other in order to ensure
        the
        proper and adequate defense of any such action, suit or proceeding.

       

      15.    MISCELLANEOUS.

      
        
           

        

        
          -33-

          
            

          

        

        
           

        

      

       

      15.1    Casualty
        Loss.
        

      

      (A)    An
        event
        of casualty means volcanic eruptions, acts of God, fire, explosion, earthquake,
        wind storm, flood, drought, condemnation, the exercise of any right of eminent
        domain, confiscation and seizure (a “Casualty”).
        A
        Casualty does not include depletion due to normal production and depreciation
        or
        failure of equipment or casing.

       

      (B)    If,
        prior
        to the Closing, a Casualty occurs (or Casualties occur) which results in
        a
        reduction in the value of any of the Assets in excess of twenty-five percent
        (25%) of the Allocated Value of the affected Assets (“Casualty
        Loss”),
        (i)
        Seller may retain such Asset and such Asset shall be the subject of an
        adjustment to the Base Purchase Price in the same manner set forth in Section
        5.4 hereof, or (ii) at the Closing, Seller shall assign to Buyer the right
        to
        receive all insurance proceeds or other sums payable to Seller by reason
        of such
        Casualty Loss, the Base Purchase Price shall not be adjusted by reason of
        such
        payment, and Seller shall convey the affected Assets to Buyer.

       

      (C)    For
        purposes of determining the diminution in value of an Asset as a result of
        a
        Casualty Loss, the Parties shall use the same methodology as applied in
        determining the diminution in value of an Asset as a result of a Title Defect
        as
        set forth in Section 5.5.

       

      15.2    Confidentiality.
        

       

      (A)    Prior
        to
        Closing, to the extent not already public, Buyer shall not disclose to any
        party
        that it is conducting negotiations with Seller or has entered into this
        Agreement other than as expressly permitted in the confidentiality agreement
        executed by Buyer in Seller’s favor prior to the execution of this Agreement,
        which shall continue to apply until the Closing and thereafter in the event
        of
        termination of this Agreement prior to the Closing. Buyer shall exercise
        all due
        diligence in safeguarding and maintaining secure all engineering, geological
        and
        geophysical data, seismic data, reports and maps, the results and findings
        of
        Buyer with regard to its due diligence associated with the Assets (including
        without limitation with regard to due diligence associated with environmental
        and title matters) and other data relating to the Assets (collectively, the
        “Confidential
        Information”).
        Buyer
        acknowledges that, prior to Closing, all Confidential Information shall be
        treated as confidential and shall not be disclosed to third parties without
        the
        prior written consent of Seller.

       

      (B)    In
        the
        event of termination of this Agreement for any reason, Buyer shall not use
        or
        knowingly permit others to use such Confidential Information in a manner
        detrimental to Seller, and will not disclose any such Confidential Information
        to any person, firm, corporation, association or other entity for any reason
        or
        purpose whatsoever, except to Seller or to a governmental agency pursuant
        to a
        valid subpoena or other order or pursuant to applicable governmental
        regulations, rules or statutes.

       

      (C)    The
        undertaking of confidentiality shall not diminish or take precedence over
        any
        separate confidentiality agreement between the Parties. Should this Agreement
        terminate, such separate confidentiality agreement shall remain in full force
        and effect.

      
        
           

        

        
          -34-

          
            

          

        

        
           

        

      

       

      15.3    Notices.
        Any
        notice, request, demand, or consent required or permitted to be given hereunder
        shall be in writing and delivered in person or by certified letter, with
        return
        receipt requested, or by facsimile addressed to the Party for whom intended
        at
        the following addresses:

       

      SELLER:

       

      Nielson
        & Associates, Inc.

      1501
        Stampede Ave.

      Third
        Floor

      PO
        Box
        2850

      Cody,
        Wyoming 82414

      Tel:
        (307) 587-2445

      Fax:
        (307) 527-4943

      Attn:
        Tom
        Fitzsimmons

       

      BUYER:

       

      Rancher
        Energy Corp.

      1050-17th
        Street, Suite 1700

      Denver,
        Colorado 80265

      Tel:
        (303) 629-1122

      Fax:
        (720) 904-5698

      Attn:
        John Works

       

      or
        at
        such other address as any of the above shall specify by like notice to the
        other.

       

      15.4    Press
        Releases and Public Announcements.
        No
        Party shall issue any press release or make any public announcement relating
        to
        the subject matter of this Agreement prior to the Closing without the prior
        written approval of the other Party; provided, however, that any Party may
        make
        any public disclosure it believes in good faith is required by applicable
        law or
        any listing or trading agreement concerning its or its affiliates’
publicly-traded securities (in which case the disclosing Party shall provide
        the
        other Party is not less than three (3) full days’ advance notice of the press
        release and/or public announcement prior to making the disclosure).
        Notwithstanding the foregoing, no press release or any public announcement
        shall
        identify Seller or the principals of Seller without Seller’s prior written
        consent, which may be withheld by Seller in its sole and absolute discretion.
        Furthermore, and notwithstanding any other provision of this Agreement, Buyer
        shall in no event issue any press release or make any public announcement
        relating to the subject matter of this Agreement until: (a) this Agreement
        has
        been fully executed by all Parties hereto; (b) the Deposit required under
        this
        Agreement has been paid in full as set forth in Section 2.2 of this Agreement;
        and, (c) 5:00 p.m., Mountain Time, October 4, 2006.

      
        
           

        

        
          -35-

          
            

          

        

        
           

        

         

      

      15.4    Compliance
        with Express Negligence Test.
        THE
        PARTIES AGREE THAT THE INDEMNIFICATION OBLIGATIONS OF THE INDEMNIFYING PARTY
        SHALL BE WITHOUT REGARD TO THE NEGLIGENCE OR STRICT LIABILITY OF THE INDEMNIFIED
        PERSON(S), WHETHER THE NEGLIGENCE OR STRICT LIABILITY IS ACTIVE, PASSIVE,
        JOINT,
        CONCURRENT OR SOLE.

       

      15.5    Governing
        Law.
        This
        Agreement is governed by and must be construed according to the laws of the
        State of Wyoming, excluding any conflicts-of-law rule or principle that might
        apply the law of another jurisdiction. All disputes related to this Agreement
        shall be submitted exclusively to the jurisdiction of the courts of the State
        of
        Wyoming and venue shall be in the civil district courts of the City of Cody
        and
        County of Park, Wyoming.

       

      15.6    Exhibits.
        The
        Exhibits attached to this Agreement are incorporated into and made a part
        of
        this Agreement.

       

      15.7    Fees,
        Expenses, Taxes and Recording.
        

       

      (A)    Each
        Party shall be solely responsible for all costs and expenses incurred by
        it in
        connection with this transaction (including, but not limited to fees and
        expenses of its counsel and accountants) and shall not be entitled to any
        reimbursements from the other Party, except as otherwise provided in this
        Agreement.

       

      (B)    Buyer
        shall file all necessary Tax returns and other documentation with respect
        to all
        transfer, documentary, sales, use, stamp, registration and other similar
        Taxes
        and fees, and, if required by applicable law, Seller shall join in the execution
        of any such Tax returns and other documentation. Notwithstanding anything
        set
        forth in this Agreement to the contrary, Buyer shall pay any transfer,
        documentary, sales, use, stamp, registration and other similar Taxes and
        fees
        incurred in connection with this Agreement and the transactions contemplated
        hereby. Buyer shall also pay any equipment lease transfer fees or other fees
        or
        expenses incurred in connection with transfer of the Assets to Buyer except
        as
        otherwise provided by this Agreement.

       

      (C)    Buyer
        shall, at its own cost, immediately record all instruments of conveyance
        and
        sale in the appropriate office of the state and county in which the lands
        covered by such instrument are located. Buyer shall immediately file for
        and
        obtain the necessary approval of all federal, Indian, tribal or state government
        agencies to the assignment of the Assets. The assignment of any state, federal
        or Indian tribal oil and gas leases shall be filed in the appropriate
        governmental offices on a form required and in compliance with the applicable
        rules of the applicable government agencies. Buyer shall supply Seller with
        a
        true and accurate photocopy reflecting the recording information of all the
        recorded and filed assignments within a reasonable period of time after
        their

       

      (D)    recording
        and filing. In the event that Seller undertakes to record and/or file the
        conveyance instruments and other documents associated with the transfer of
        the
        Assets and interests therein, Buyer shall reimburse Seller at Post Closing
        for
        all fees and costs associated with such recording and/or filing.

      
        
           

        

        
          -36-

          
            

          

        

        
           

        

      

       

      15.8    Assignment.
        This
        Agreement or any part hereof may not be assigned by either Party without
        the
        prior written consent of the other Party; provided, however, upon notice
        to the
        other Party, either Party shall have the right to assign all or part of its
        rights (but none of its obligations) under this Agreement in order to qualify
        transfer of the Assets as a ‘“like-kind” exchange for federal tax purposes.
        Subject to the foregoing, this Agreement is binding upon the Parties hereto
        and
        their respective successors and assigns.

       

      15.9    Entire
        Agreement.
        This
        Agreement constitutes the entire agreement reached by the Parties with respect
        to the subject matter hereof, superseding all prior negotiations, discussions,
        agreements and understandings, whether oral or written, relating to such
        subject
        matter.

       

      15.10    Severability.
        In the
        event that anyone or more covenants, clauses or provisions of this Agreement
        shall be held invalid or illegal, such invalidity or unenforceability shall
        not
        affect any other provisions of this Agreement.

       

      15.11    Captions.
        The
        captions in this Agreement are for convenience only and shall not be considered
        a part of or affect the construction or interpretation of any provision of
        this
        Agreement.

       

      15.12    Time
        of the Essence.
        The
        parties recognize and agree that time is of the essence of this
        Agreement.

       

      15.13    Counterparts.
        This
        Agreement may be executed in multiple originals, each of which individually
        and
        all of which together shall constitute one and the same document.

      
        
           

        

        
          -37-

          
            

          

        

        
           

        

         

      

      Executed
        as of the day and year first above written.

       

      SELLER:

       

      NIELSON
        & ASSOCIATES, INC.

       

      By: 
        /s/
        Tom
        Fitzsimmons

        
          

        

      

      Name: Tom
        Fitzsimmons

      Title: Executive
        Vice President & COO

       

      BUYER:

       

      RANCHER
        ENERGY CORP.

       

      By: 
        /s/
        John
        Works

        
          

        

      

      Name: John
        Works

      Title: President
        & CEO

      
        
           

        

          -38-

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