Document:

EXHIBIT 10.2

                           CORONADO INDUSTRIES, INC.

                             STOCK OPTION AGREEMENT
                     UNDER 2004 EXECUTIVE STOCK OPTION PLAN

                                                  Date of Grant: _________, 2005

     CONSULT YOUR PERSONAL TAX ADVISOR: SUBSTANTIAL TAX CONSEQUENCES WILL RESULT
FROM YOUR EXERCISE OF THIS STOCK OPTION

     CORONADO INDUSTRIES,  INC., a Nevada corporation (the "Corporation") hereby
grants  to  _______________________  (the  "Optionee"),  pursuant  to  the  2004
Executive  Stock  Option  Plan  of  the   Corporation   (the  "Plan")  which  is
incorporated   herein  by   reference,   an  option  to   purchase  a  total  of
___________________  (________) Shares as defined in the Plan (the "Option"), on
the terms and  conditions  set forth in the Plan and  hereinafter.  This  Option
shall not be exercisable  later than _________, 2015 (herein  referred to as the
"Expiration Date").

     1.   VESTING.  Subject to the terms and conditions of this  Agreement,  the
Shares  subject  to this  Option  shall be fully  vested and  exercisable  as of
_________, 2005.

     2.   OPTION PRICE. The Option price for the _________ Shares of this Option
shall be $_____ per share.

     3.   TERMINATION.  This option and all rights  hereunder to the extent such
rights shall not have been exercised shall terminate and become null and void if
the Optionee ceases to be a employee of the Company or its subsidiaries (whether
by resignation,  retirement,  dismissal, death or otherwise), except that (a) in
the event of the death or  disability  of the Optionee  while an employee of the
Company,  this  option  only to the extent  exercisable  at the date of death or
disability  may be  exercised  within the  applicable  period of time and by the
persons  indicated  in Article VII (6) of the Plan,  and (b) in the event of the
termination  of the  Optionee's  employment by the Company for any other reason,
this option only to the extent  exercisable at the date of such  termination may
be exercised  prior to the  expiration of three (3) months from the date of such
termination,  and shall terminate in all other respects; PROVIDED, HOWEVER, that
in no event may this option be exercised after the Expiration Date.

     4.   EXERCISE. This Option is exercisable with respect to all, or from time
to time with respect to any portion, of the Shares described above which have at
that time become vested, by delivering  written notice of such exercise,  in the
form  prescribed by the Board,  to the principal  office of the Secretary of the
Corporation.  Each such notice  shall be  accompanied  by payment in full of the
Option price of such Shares. In the event the Company is merged into or acquired
by another corporation (other than the Company being the surviving corporation),
the Board of  Directors  may grant to the Optionee the right to make payment for
the Shares of this Option pursuant to Article VIII of the Plan (i.e., with Stock
Appreciation Rights).

     5.   NON-TRANSFERABLE.  This Option shall during the Optionee's lifetime be
exercisable  only by the  Optionee,  and  neither  this  Option  nor  any  right
thereunder  shall  be  transferable  except  by  will or  laws  of  descent  and
distribution,  or be subject to attachment,  execution or other similar process.

<PAGE>

In the  event of any  attempt  by the  Optionee  to  alienate,  assign,  pledge,
hypothecate or otherwise dispose of the Option or any right  thereunder,  except
as provided for herein, or in the event of the levy of any attachment, execution
or similar process upon the rights or interest hereby conferred, the Corporation
may  terminate  this  Option by notice to the  Optionee  and this  Option  shall
thereupon become null and void.

     6.   LEGAL  RESTRICTIONS.  If the sale of the Shares purchased hereunder is
not  registered  under the Securities Act of 1933, but an exemption is available
which  requires  an  investment  or other  representation,  the  Optionee  shall
represent and agree at the time of exercise that the Shares being  acquired upon
exercising this Option are being acquired for  investment,  and not with view to
the sale or distribution  thereof, and shall make such other  representations as
are deemed  necessary or  appropriate  by the  Corporation  and its counsel.  In
addition,  the Optionee agrees that the following  legend may be included on the
certificate representing the Shares:

          The  shares  represented  hereby  have not been  registered  under the
United States Securities Act of 1933, as amended,  and may not be sold, pledged,
or otherwise  transferred without an effective  registration  thereof under such
act or an opinion of counsel,  satisfactory to the company and its counsel, that
such registration is not required.

     7.   CORPORATE  TRANSACTIONS.  If the Corporation is merged or consolidated
into or with another  corporation  (other than by a merger or  consolidation  in
which the  Corporation is the surviving  corporation)  or the Corporation or the
Corporation's assets are purchased by another company in exchange for stock, the
Corporation shall give the Optionee written notice of the Corporation's  initial
or preliminary  agreement to the  transaction and the details of the transaction
at least 60 days prior to the closing of the  transaction  and an  additional 30
days  written  notice  prior to the  closing  date of the  transaction  and each
postponed closing date of the transaction.  The then exercisable but unexercised
Shares  granted in the Option may be exercised by the Optionee at any time prior
to the closing date of the transaction  and such exercised  Shares shall then be
deemed outstanding at the close of the transaction.

     8.   TAX  CONSEQUENCES.  This Stock Option is NOT intended as an "Incentive
Stock  Option"  under  Section  422A of the Internal  Revenue  Code of 1986,  as
amended.  Substantial tax  consequences are involved in the decision to exercise
this Option.  Therefore,  the Optionee  should consult with and seek advice from
his personal tax consultant prior to exercising this Option.

     9.   MISCELLANEOUS.

          (a)  Neither  the  granting of this  Option nor the  exercise  thereof
shall be construed as conferring  upon the Optionee any right to continue in the
engagement of the Corporation or any of its subsidiaries, or as interfering with
or  restricting  in any way the  right  of the  Corporation  to  terminate  such
engagement at any time.

          (b)  Neither the  Optionee,  nor any person  entitled to exercise  his
rights in the event of his death,  shall have any of the rights of a stockholder
with respect to the Shares  subject to this  Option,  except after such date the
Optionee  or such person has been  issued the Shares by the  Corporation  or its
agent.

                                       2
<PAGE>

          (c)  The   Corporation   is  relieved   from  any  liability  for  the
non-issuance  or  non-transfer  or any delay in the  issuance or transfer of any
Shares  subject  to  this  Option  which  results  from  the  inability  of  the
Corporation to obtain,  or in any delay in obtaining,  from each regulatory body
having  jurisdiction all requisite  authority to issue or transfer Shares of the
Corporation in satisfaction of this Option if counsel for the Corporation  deems
such authority necessary for the lawful issuance or transfer of any such shares.

          (d)  No Shares  acquired by  exercise of this Option  shall be sold or
otherwise  disposed of in  violation of any federal or state  securities  law or
regulation in the Untied States.

          (e)  This  Option  shall  be  exercised   in   accordance   with  such
administrative  regulations  as the  Corporation's  Board  may from time to time
adopt. All decisions of the Board upon any legitimate question arising under the
Plan or under this Stock Option  Agreement  shall be conclusive and binding upon
the Optionee and all other persons, if determined in good faith.

     IN WITNESS WHEREOF, this Stock Option Agreement has been executed as of the
day and year first written above.

                                        CORONADO INDUSTRIES, INC.

                                        By:
                                            ------------------------------------
                                            Gary R. Smith, President

                                       3
<PAGE>

                            CORONADO INDUSTRIES, INC.

                             STOCK OPTION AGREEMENT

                     UNDER 2004 EXECUTIVE STOCK OPTION PLAN

                                                  Date of Grant: _________, 2005

     CONSULT YOUR PERSONAL TAX ADVISOR: SUBSTANTIAL TAX CONSEQUENCES WILL RESULT
FROM YOUR EXERCISE OF THIS STOCK OPTION

     CORONADO INDUSTRIES,  INC., a Nevada corporation (the "Corporation") hereby
grants  to  _________________________  (the  "Optionee"),  pursuant  to the 2004
Executive  Stock  Option  Plan  of  the   Corporation   (the  "Plan")  which  is
incorporated   herein  by   reference,   an  option  to   purchase  a  total  of
____________________________  (_________)  Shares  as  defined  in the Plan (the
"Option"),  on the terms and conditions  set forth in the Plan and  hereinafter.
This Option shall not be exercisable later than _________, 2010 (herein referred
to as the "Expiration Date").

     1.   VESTING.  Subject to the terms and conditions of this  Agreement,  the
Shares  subject  to this  Option  shall be fully  vested and  exercisable  as of
_________, 2006.

     2.   OPTION PRICE. The Option price for the _________ Shares of this Option
shall be $_____ per share.

     3.   TERMINATION.  This option and all rights  hereunder to the extent such
rights shall not have been exercised shall terminate and become null and void if
the Optionee ceases to be a employee of the Company or its subsidiaries (whether
by resignation,  retirement,  dismissal, death or otherwise), except that (a) in
the event of the death or  disability  of the Optionee  while an employee of the
Company,  this  option  only to the extent  exercisable  at the date of death or
disability  may be  exercised  within the  applicable  period of time and by the
persons  indicated  in Article VII (6) of the Plan,  and (b) in the event of the
termination  of the  Optionee's  employment by the Company for any other reason,
this option only to the extent  exercisable at the date of such  termination may
be exercised  prior to the  expiration of three (3) months from the date of such
termination,  and shall terminate in all other respects; PROVIDED, HOWEVER, that
in no event may this option be exercised after the Expiration Date.

     4.   EXERCISE. This Option is exercisable with respect to all, or from time
to time with respect to any portion, of the Shares described above which have at
that time become vested, by delivering  written notice of such exercise,  in the
form  prescribed by the Board,  to the principal  office of the Secretary of the
Corporation.  Each such notice  shall be  accompanied  by payment in full of the
Option price of such Shares.

     5.   NON-TRANSFERABLE.  This Option shall during the Optionee's lifetime be
exercisable  only by the  Optionee,  and  neither  this  Option  nor  any  right
thereunder  shall  be  transferable  except  by  will or  laws  of  descent  and
distribution,  or be subject to attachment,  execution or other similar process.
In the  event of any  attempt  by the  Optionee  to  alienate,  assign,  pledge,
hypothecate or otherwise dispose of the Option or any right  thereunder,  except
as provided for herein, or in the event of the levy of any attachment, execution
or similar process upon the rights or interest hereby conferred, the Corporation

<PAGE>

may  terminate  this  Option by notice to the  Optionee  and this  Option  shall
thereupon become null and void.

     6.   LEGAL  RESTRICTIONS.  If the sale of the Shares purchased hereunder is
not  registered  under the Securities Act of 1933, but an exemption is available
which  requires  an  investment  or other  representation,  the  Optionee  shall
represent and agree at the time of exercise that the Shares being  acquired upon
exercising this Option are being acquired for  investment,  and not with view to
the sale or distribution  thereof, and shall make such other  representations as
are deemed  necessary or  appropriate  by the  Corporation  and its counsel.  In
addition,  the Optionee agrees that the following  legend may be included on the
certificate representing the Shares:

          The  shares  represented  hereby  have not been  registered  under the
United States Securities Act of 1933, as amended,  and may not be sold, pledged,
or otherwise  transferred without an effective  registration  thereof under such
act or an opinion of counsel,  satisfactory to the company and its counsel, that
such registration is not required.

     7.   CORPORATE  TRANSACTIONS.  If the Corporation is merged or consolidated
into or with another  corporation  (other than by a merger or  consolidation  in
which the  Corporation is the surviving  corporation)  or the Corporation or the
Corporation's assets are purchased by another company in exchange for stock, the
Corporation shall give the Optionee written notice of the Corporation's  initial
or preliminary  agreement to the  transaction and the details of the transaction
at least 60 days prior to the closing of the  transaction  and an  additional 30
days  written  notice  prior to the  closing  date of the  transaction  and each
postponed closing date of the transaction.  The then exercisable but unexercised
Shares  granted in the Option may be exercised by the Optionee at any time prior
to the closing date of the transaction  and such exercised  Shares shall then be
deemed outstanding at the close of the transaction.

     8.   TAX CONSEQUENCES. This Stock Option is intended as an "Incentive Stock
Option"  under  Section 422A of the Internal  Revenue Code of 1986,  as amended.
Substantial  tax  consequences  are  involved in the  decision to exercise  this
Option.  Therefore,  the Optionee  should  consult with and seek advice from his
personal tax consultant prior to exercising this Option.

     9.   MISCELLANEOUS.

          (a)  Neither  the  granting of this  Option nor the  exercise  thereof
shall be construed as conferring  upon the Optionee any right to continue in the
engagement of the Corporation or any of its subsidiaries, or as interfering with
or  restricting  in any way the  right  of the  Corporation  to  terminate  such
engagement at any time.

          (b)  Neither the  Optionee,  nor any person  entitled to exercise  his
rights in the event of his death,  shall have any of the rights of a stockholder
with respect to the Shares  subject to this  Option,  except after such date the
Optionee  or such person has been  issued the Shares by the  Corporation  or its
agent.

          (c)  The   Corporation   is  relieved   from  any  liability  for  the
non-issuance  or  non-transfer  or any delay in the  issuance or transfer of any

                                       2
<PAGE>

Shares  subject  to  this  Option  which  results  from  the  inability  of  the
Corporation to obtain,  or in any delay in obtaining,  from each regulatory body
having  jurisdiction all requisite  authority to issue or transfer Shares of the
Corporation in satisfaction of this Option if counsel for the Corporation  deems
such authority necessary for the lawful issuance or transfer of any such shares.

          (d)  No Shares  acquired by  exercise of this Option  shall be sold or
otherwise  disposed of in  violation of any federal or state  securities  law or
regulation in the Untied States.

          (e)  This  Option  shall  be  exercised   in   accordance   with  such
administrative  regulations  as the  Corporation's  Board  may from time to time
adopt. All decisions of the Board upon any legitimate question arising under the
Plan or under this Stock Option  Agreement  shall be conclusive and binding upon
the Optionee and all other persons, if determined in good faith.

     IN WITNESS WHEREOF, this Stock Option Agreement has been executed as of the
day and year first written above.

                                        CORONADO INDUSTRIES, INC.

                                        By:
                                            ------------------------------------
                                            Gary R. Smith, President

                                       3EXHIBIT 10.16

                              ASSET SALE AGREEMENT

     THIS AGREEMENT dated the 23rd day of February, 2005

BETWEEN:

     RALLY ENERGY CORP., a body corporate incorporated under the laws of the
     Province of Ontario, having offices at Calgary, Alberta

     (hereinafter called the "Vendor")

                                     - and -

     SHANNON INTERNATIONAL RESOURCES INC., a body corporate incorporated under
     the laws of the State of Nevada, having offices at Calgary, Alberta

     (hereinafter called the "Purchaser").

     WHEREAS the Vendor is the legal and beneficial owner of the Assets and
wishes to sell to the Purchaser, and the Purchaser wishes to purchase from the
Vendor, such Assets in accordance with the provisions of this Agreement;

     AND WHEREAS the Parties wish to document the arrangement they have reached
with respect to the foregoing.

     NOW THEREFORE in consideration of the premises and the mutual agreements
set out in this Agreement, the Parties intend to be legally bound and hereby
agree as follows:

                                   Article 1
                                 INTERPRETATION
1.1      Definitions

In this Agreement, including the recitals and any Schedule attached hereto,
unless otherwise stated or unless the context otherwise requires:

     (a)  "Abandonment and Reclamation Obligations" means all obligations
          respecting the abandonment or plugging of any Wells and the
          abandonment of any other Tangibles (including, without limitation, any
          associated closing, decommissioning, dismantling and removal of any
          foundations, structures or equipment in connection with such
          abandonment) and the restoration and reclamation of the surface or
          subsurface of any part of the Assets, all in compliance with
          Applicable Laws;

     (b)  "Agreement" means this agreement and all schedules attached hereto
          together with all instruments supplemental hereto or in amendment or
          confirmation hereof;

     (c)  "Applicable Laws" means all applicable statutes, laws (including
          common law), regulations, by-laws, rules, judicial or arbitral or
          ministerial or departmental or regulatory judgments, orders,
          decisions, rulings or awards, binding on or affecting the Person
          referred to in the context in which that word is used and "Applicable
          Law" means any one of them;

<PAGE>

     (d)  "Assets" means the Vendor's entire interest (including all of its
          right, title, estate and interest) in and to the Petroleum and Natural
          Gas Rights, the Leases, the Tangibles, the Geological Information and
          the Miscellaneous Interests;

     (e)  "Benefits and Obligations" means all income, expenses and other
          monetary benefits and obligations of every kind and nature accruing,
          paid, payable, received or receivable in respect of the Assets
          including, without limitation, maintenance, development, capital and
          operating costs and production sales proceeds, but specifically
          excluding income taxes and Environmental Liabilities;

     (f)  "Business Day" means any day other than a Saturday, Sunday or
          statutory holiday in the Province of Alberta;

     (g)  "Certificate" means the written certification of a matter or matters
          of fact which, if required from a corporation, shall be made by a duly
          authorized officer of the corporation on behalf of the corporation and
          without personal liability being assumed by such officer;

     (h)  "Closing" means the conveyance of the Assets by the Vendor to the
          Purchaser, the payment of the consideration contemplated in Article 2
          of this Agreement and the completion of all other matters incidental
          thereto which are contemplated in this Agreement to be completed as at
          the Closing Time;

     (i)  "Closing Date" means the date on which the Vendor receives payment in
          full of the outstanding Promissory Notes or such other later date as
          the parties may mutually agree;

     (j)  "Closing Place" means the offices of the Purchaser's Solicitors
          located at 3000 Shell Centre, 400 - 4th Avenue S.W., Calgary, Alberta;

     (k)  "Closing Time" means 10:00 a.m. on the Closing Date or such earlier or
          later time as may be agreed to by the Parties;

     (l)  "Common Shares" means the common shares in the capital of Shannon
          International Resources Inc.;

     (m)  "Consents" means all such consents, waivers, approvals, orders and
          authorizations (or registrations, declarations, filings or recordings
          with any Government Entities) as may be required on the Vendor's part
          with respect to the execution of this Agreement, the Closing or the
          performance of any terms and conditions contained in this Agreement;

     (n)  "Conveyance" means a general conveyance in the form attached hereto as
          Schedule "D";

     (o)  "Counsel" means any barrister, solicitor or attorney or firm thereof
          retained by the Vendor or Purchaser as the case may be;

     (p)  "Court" means the Court of Queen's Bench of the Province of Alberta;

     (q)  "Effective Time" has the meaning given to it in Section 2.2;

     (r)  "Environment" means:

          (i)  air, land or water;

<PAGE>

          (ii) plant and animal life, including humans;

          (iii) any building, structure, machine, other device or tangible
               personal or real property; and

          (iv) any part or combination of the foregoing and the
               interrelationships between or among any two or more of them;

     (s)  "Environmental Liabilities" means:

          (i)  all liabilities and obligations related to or arising from any
               breach of environmental laws which results in impairment or
               damage to the Environment and is caused by the Assets or
               operations (or lack thereof) in relation thereto;

          (ii) any Abandonment and Reclamation Obligations; and

          (iii) all liabilities and obligations related to or arising from,
               directly or indirectly, any Release.

     (t)  "Exchange" means the NASD OTC Bulletin Board;

     (u)  "GAAP" means generally accepted accounting principles and procedures
          adopted from time to time by the Canadian Institute of Chartered
          Accountants consistently applied;

     (v)  "General Conveyance" means a conveyance substantially in the form of
          the Conveyance attached as Schedule "D" to this Agreement;

     (w)  "Geological Information" means, subject to any applicable
          confidentiality obligations of the Vendor, all seismic, geological,
          geophysical, aeromag and engineering reports and maps, including
          reports and interpretations prepared by or on behalf of the Vendor
          relating to the information contained in such reports and maps,
          relating to or pertinent to the Petroleum and Natural Gas Rights, the
          production therefrom or operations therein;

     (x)  "GOR" means the gross overriding royalty of 2% granted by the Vendor
          in favour of Scimitar Hydrocarbons Corporation on December 13, 2004 on
          the working interests being conveyed pursuant to this Agreement, which
          working interests are specifically set out in Schedule "A";

     (y)  "Government Entity" means any court or tribunal in any jurisdiction or
          any federal, provincial, municipal or other government body, agency,
          authority, department, commission, board or instrumentality;

     (z)  "GST" means the goods and services tax exigible pursuant to the Excise
          Tax Act (Canada) with respect to the subject transaction;

     (aa) "Interim Period" means the period from and after the date hereof up to
          the Closing Time;

     (bb) "Lands" means the lands set forth and described in Schedule "A" and
          any other lands with which such lands have been unitized, pooled or
          otherwise combined and includes the Petroleum Substances within, upon
          or under such lands to the extent noted in Schedule "A" together with
          the right to explore for, drill for, win, take, remove, recover and
          own the same, the right to share in the production of such Petroleum
          Substances and the right to share in the proceeds generated by, or the
          right to receive payments calculated by reference to the quantity or
          value of, such production insofar as and to the extent that such
          Petroleum Substances and rights are granted by the Leases;

<PAGE>

     (cc) "Leases" means collectively the leases, reservations, permits,
          licenses or other documents of title by virtue of which the Vendor is
          entitled to drill for, win, take, own or remove petroleum, natural gas
          or related hydrocarbons, underlying any part of the Lands, including
          the Permits;

     (dd) "Losses" means, in respect of any matter, any and all claims, demands,
          actions, proceedings, causes of action, losses, damages, liabilities,
          deficiencies, interest, penalties, fines, and amounts paid in
          settlement, costs and expenses of every nature and kind whatsoever
          (including, without limitation, all legal fees rendered on a solicitor
          and his own client basis and other professional fees and
          disbursements) arising directly or indirectly as a consequence of such
          matter;

     (ee) "Miscellaneous Interests" means all real and personal property, assets
          and rights of every nature and kind pertaining to the Petroleum and
          Natural Gas Rights, the Leases, the Geological Information and the
          Tangibles (other than the Petroleum and Natural Gas Rights, Leases,
          Geological Information and the Tangibles per se) including, without
          limitation, the following:

          (i)  all contracts and other documents pertaining to the Petroleum and
               Natural Gas Rights, the Leases, the Geological Information and
               the Tangibles;

          (ii) all files and other records (excluding financial records)
               pertaining to the Petroleum and Natural Gas Rights, the Leases,
               the Geological Information and the Tangibles;

          (iii) all subsisting rights of the Vendor to enter upon, use and
               occupy the surface of any of the Lands or any of the lands with
               which the Lands have been pooled or unitized or any lands upon
               which the Tangibles are located or any lands to be crossed in
               order to gain access to any of the Lands or the Tangibles or to
               carry out operations on the Lands;

          (iv) all subsisting rights to perform operations relating to the
               Assets, including without limitation all easements, wells,
               pipeline or other Permits, licenses and authorizations;

          (v)  all geological and engineering data and other information;

          (vi) all subsisting rights to enter upon, use and occupy the surface
               of any related lands; and

          (vii) the wellbores and casing for the Wells,

provided that unless otherwise agreed to in writing by the Parties, the
Miscellaneous Interests shall not include agreements, documents or data to the
extent that they are owned or licensed by third parties with restrictions on
their deliverability or disclosure by the Seller or any assignee;

<PAGE>

     (ff) "Parties" means the parties to this Agreement and "Party" means any
          one of them;

     (gg) "Permit 04-01" means oil and natural gas Permit 04-01 issued by the
          Province of Prince Edward Island to the Vendor dated August 20, 2004;

     (hh) "Permit 04-04" means oil and natural gas Permit 04-04 issued by the
          Province of Prince Edward Island to the Vendor dated August 20, 2004;

     (ii) "Permit 02-01" means oil and natural gas Permit 02-01 issued by the
          Province of Prince Edward Island to the Vendor dated August 4, 2004;

     (jj) "Permits" means, to the extent that same may exist, all permits,
          licenses, approvals, orders, surface leases, crossing agreements, road
          crossing approvals, pipeline licenses and any required authorizations,
          including but without limitation, authorizations issued by any
          government or agency thereof, and required for the continued operation
          of the Petroleum and Natural Gas Rights, Leases and Tangibles,
          including Permit 04-01, Permit 04-04 and Permit 02-01;

     (kk) "Permitted Encumbrances" means:

          (i)  Easements: Easements, rights of way, servitudes or other similar
               rights in land including, without limitation, rights of way and
               servitudes for highways and other roads, railways, sewers,
               drains, gas and oil pipelines, gas and water mains, electric
               light, power, telephone, telegraph or cable television conduits,
               poles, wires and cables;

          (ii) Governmental Right to Terminate: The right reserved to or vested
               in any Government Entity or other public authority by the terms
               of any instrument or statutory provision to terminate any of the
               Leases or to require annual or other periodic payments as a
               condition to the continuance thereof;

          (iii) Taxes and Production Rates: The power of any Government Entity
               or other public authority to levy taxes on the Assets or the
               income or revenue therefrom and governmental requirements as to
               production rates on the operation of any property or otherwise
               affecting the value of any property;

          (iv) Agreement Terms and Conditions: The terms and conditions of the
               Leases and any other agreements relating to the Assets
               (including, without limitation, any agreements relating to
               pooling or unitization);

          (v)  Governmental Controls and Regulations: Rights reserved to or
               vested in any municipality or governmental, statutory or public
               authority to control or regulate any of the Assets in any manner
               and all Applicable Laws;

          (vi) Governmental Liens: Undetermined or inchoate liens incurred or
               granted in the ordinary course of business to a public utility,
               municipality or Government Entity in connection with operations
               conducted with respect to the Assets;

          (vii) Non-Governmental Liens: Undetermined or inchoate liens incurred
               or created as security in favour of persons conducting operations
               in relation to the Assets for the Vendor's share of the costs and
               expenses associated with such operations including, without
               limitation, undetermined or inchoate mechanics', builders' and
               materialmen's liens in respect of services rendered or goods
               supplied;

<PAGE>

          (viii) Crown Reservations: The reservations, limitations, provisos and
               conditions contained in any original grants from the Crown of any
               of the Lands or interests therein and statutory exceptions to
               title;

          (ix) Penalties and Forfeitures: Provisions for penalties and
               forfeitures under agreements as a consequence of
               non-participation in operations;

          (x)  Royalties: The GOR and all crown royalties payable under the
               Permits; and

          (xi) any other encumbrance, burden, circumstance, matter or thing
               disclosed in any Schedule hereto;

     (ll) "Person" means any individual, corporation, body corporate,
          partnership, joint venture, association, trust, Government Entity, or
          other legal entity;

     (mm) "Petroleum and Natural Gas Rights" means the Vendor's working and
          royalty interests in and to the Lands and the Leases, including all
          petroleum, natural gas and hydrocarbons within, upon or under such
          lands, as such interests are set forth in Schedule "A" attached
          hereto;

     (nn) "Petroleum Substances" means petroleum, natural gas and related
          hydrocarbons and any other substances, whether gaseous, liquid or
          solid and whether hydrocarbons or not, associated therewith which are
          granted under and by virtue of the Leases insofar only as they pertain
          to the Lands;

     (oo) "Promissory Notes" means collectively the promissory note from the
          Purchaser in favour of the Vendor dated September 23, 2004 in an
          aggregate principal amount of $168,561.74 and the promissory note from
          the Purchaser in favour of the Vendor dated September 23, 2004 in an
          aggregate principal amount of $71,145.57;

     (pp) "Purchase Price" means the purchase price for the Assets as set forth
          in Article 2 of this Agreement;

     (qq) "Purchaser's Representations and Warranties" means the Purchaser's
          representations and warranties as set forth in Article 5;

     (rr) "Purchaser's Solicitor" means Davis & Company;

     (ss) "Release" means any unauthorized release, spill, emission, leaking,
          pumping, injection, deposit, disposal, discharge, dispersal, leaching
          or migration into the Environment or into or out of any of the Assets;

     (tt) "Releases and Discharges" means all such general and specific releases
          and discharges, in registerable form where applicable, as may be
          required with respect to any mortgages, liens, charges, pledges, or
          other similar financial encumbrances affecting the Assets;

     (uu) "Representations and Warranties" means all or any of the Vendor's
          Representations and Warranties and the Purchaser's Representations and
          Warranties;

     (vv) "Rights of First Refusal" means rights of first refusal, pre-emptive
          rights of purchase or similar rights whereby a third party has the
          right to acquire or purchase all or any of the Assets as a consequence
          of the Vendor having agreed to sell and convey the Assets to the
          Purchaser;

<PAGE>

     (ww) "Securities" means the Common Shares and the Warrants delivered in
          satisfaction of the Purchase Price and the Common Shares issuable upon
          the exercise of the Warrants;

     (xx) "September Agreement" means the agreement dated September 23, 2004
          between the Vendor and the Purchaser, whereby the Vendor agreed to
          assign, transfer and convey to the Purchaser an undivided 20% working
          interest in Permit 04-01 and Permit 04-04 and the Purchaser agreed to
          assume certain abandonment costs and liabilities in exchange for the
          Promissory Notes;

     (yy) "Specific Conveyances" means all such further and specific conveyances
          and other documentation as may be required in addition to the General
          Conveyance in order to convey the Assets to, or otherwise vest legal
          (to the extent the Vendor has legal title) and beneficial title
          thereto in, the Purchaser;

     (zz) "Tangibles" means all tangible depreciable property and assets situate
          in, on or about the Lands, appurtenant thereto or used or intended for
          use in connection therewith or with the production, processing,
          transmission or treatment of Petroleum Substances, or operations
          thereon or relative thereto or appurtenant to or used in connection
          with all producing or shut-in wells located on the Lands or lands with
          which the Lands have been pooled or unitized including the oil and/or
          natural gas producing or shut-in wells or a water source or injection
          wells;

     (aaa) "Title Defect" means any defect or deficiency in the title of the
          Vendor in and to any of the Petroleum and Natural Gas Rights that
          could, on a reasonable assessment thereof, cause a reasonable buyer to
          refuse to purchase such rights, but notwithstanding anything to the
          contrary herein, specifically excludes:

          (i)  any builders' liens or other financial encumbrance created by,
               through or under the Vendor;

          (ii) the Permitted Encumbrances;

          (iii) any Lands which have expired or been terminated between the date
               hereof and the Time of Closing;

          (iv) any missing or unsigned documents in the chain of the Vendor's
               title to the Assets where:

               A.   such document is not reasonably required to confirm the
                    creation, establishment or maintenance of such title or the
                    current status of title can be confirmed with reasonable
                    certainty independently through search of public records;

               B.   such document represents a reduction of the Vendor's
                    interest therein to Lands reflected in Schedule "A"; or

               C.   the Vendor or its predecessor's interest in the Assets being
                    a beneficial interest rather than a legal interest;

     (bbb) "U.S. Securities Act" means the United States Securities Act of 1933;

     (ccc) "Vendor's Representations and Warranties" means the Vendor's
          representations and warranties as set forth in Article 5;

<PAGE>

     (ddd) "Vendor's Solicitor" means McCarthy Tetrault LLP;

     (eee) "Warrants" means the Common Share purchase warrants in Shannon
          International Resources Inc., with each Warrant entitling the holder
          thereof to acquire one (1) Common Share at an exercise price of $0.85
          USD per share for a period of twelve (12) months from the date of
          issuance;

     (fff) "Wells" means all producing, suspended, shut-in, abandoned, water
          source, observation, disposal, storage, injection or other wells
          located upon or bottoming under the Lands or otherwise directly
          relating to the Vendor's operations in relation thereto and includes,
          without limitation, the wells drilled by the Vendor described in
          Schedule "B";

     (ggg) "USD" means United States dollars; and

     (hhh) "2003 Private Placement" means the private placement completed by the
          Purchaser on or about October 31, 2003 pursuant to which the Purchaser
          distributed to seven (7) qualified investors 4,000,000 units at a
          price of $0.25 per unit, each unit consisting of one Common Share of
          the Purchaser and one Common Share purchase warrant entitling the
          holder thereof to acquire an additional common share of the Purchaser
          at a price of $0.40 each until September 30, 2004.

1.2     Incorporation of Schedules

The following schedules are attached hereto, form a part hereof and are
incorporated herein as fully as though contained in the main body of this
Agreement:

                  Schedule "A"      -       Legal Description of Lands
                  Schedule "B"      -       Wells
                  Schedule "C"      -       Leased Assets
                  Schedule "D"      -       General Conveyance
                  Schedule "E"      -       Registration Rights Agreement

Wherever any provisions of any Schedule to this Agreement conflicts with any
provisions of the body of this Agreement, the provisions of the body of this
Agreement shall prevail. References herein to a Schedule shall be a reference to
a Schedule to this Agreement. References in any Schedule to this Agreement shall
mean a reference to this Agreement. Reference in any Schedule to another
Schedule shall mean a reference to a Schedule to this Agreement.

1.3     Article, Clause, Subclause, Paragraph and Subparagraph References

A reference in the main body of this Agreement or in any Schedule to an article,
clause, subclause, section, subsection, paragraph or subparagraph shall be a
reference to an article, clause, subclause, section, subsection, paragraph or
subparagraph within the main body of this Agreement or such Schedule, as
applicable.

1.4      Statutory References

A reference in the main body of this Agreement or in any Schedule to a statute
shall include and shall be deemed to be a reference to both the statute and all
associated regulations, all amendments made thereto and in force from time to
time and any statute or regulation that may be passed which has the effect of
supplementing or superseding the aforesaid statute or regulations.

<PAGE>

1.5      Construction

Except as otherwise provided for herein, "this Agreement", "hereto", "hereof",
"hereby", "hereunder", "herein" and similar expressions refer to this Agreement
as a whole, including all Schedules attached hereto, and not to any particular
article, clause, subclause, section, subsection, paragraph, subparagraph or
other portion hereof.

1.6      Headings

The headings of articles, clauses, subclauses, sections, subsections, paragraphs
and subparagraphs in this Agreement are inserted for convenience of reference
only and shall not affect the construction of the provisions thereof.

1.7      Gender and Number

This Agreement shall be read with all changes in gender and number as may be
required by the context.

1.8      Knowledge and Awareness

Where in this Agreement a representation or warranty is made on the basis of a
Party's knowledge or awareness, such knowledge or awareness consists only of the
actual knowledge or awareness of the current officers of such Party directly
responsible for the matter in question and does not include the knowledge or
awareness of any other person.

1.9      Currency and Mode of Payment

Except to the extent indicated otherwise, all dollar amounts referenced in this
Agreement are expressed in Canadian dollars and, except as otherwise
specifically provided, all payments to be made hereunder are to be made by way
of certified cheque or bank draft issued by a Canadian chartered bank or other
such transfer of immediately available funds as may be acceptable to the Vendor.

                                   ARTICLE 2
                 PURCHASE AND SALE, PAYMENT, GST AND ALLOCATION

2.1      Purchase and Sale of the Assets

Subject to the terms and conditions of this Agreement and on the basis of and in
reliance upon the representations, warranties, covenants and agreements set
forth herein, the Vendor agrees to sell, assign, transfer and convey to the
Purchaser and the Purchaser agrees to purchase from the Vendor the Assets to
have and to hold the same absolutely, together with all benefits and advantage
to be delivered therefrom, subject to the respective terms and conditions of the
Leases.

2.2      Transfer and Assignment

The purchase and sale as contemplated in Section 2.1 shall be effective as of
the Closing Date. Possession and beneficial ownership of, and risk of loss and
title to, the Assets on an as is basis shall pass from the Vendor to the
Purchaser on and be effective as at the Closing Time (the "Effective Time").

2.3      Purchase Price

The Purchase Price for the Assets shall be $1,230,000.00, payable on the Closing
Date by the Purchaser to the Vendor. The Purchase Price shall be satisfied in
full by the Purchaser issuing and delivering the following:

<PAGE>

     (a)  the issuance of 2,500,000 Common Shares having a deemed value of U.S.
          $0.40 per share, which Common Shares shall be eligible for trading on
          the Exchange upon the effectiveness of one or more registration
          statements covering such Common Shares; and

     (b)  the issuance of 500,000 Warrants.

2.4      GST

The Purchaser shall remit to the Vendor on Closing a cheque in the amount of
$700.00 dollars representing the Goods and Services Tax applicable to that
portion of the Purchase Price allocated to the Tangibles in accordance with the
Excise Tax Act (Canada).

2.5      Allocation

The Purchase Price shall, in the first instance, be allocated among the Assets
as follows:

            Petroleum and Natural Gas Rights          $1,051,437.26
            Geological Information                    $168,561.74
            Tangibles                                 $10,000.00
            Miscellaneous Interests                   ($1.00)
                                                      -------------
                     Total:                           $1,230,000.00

The Parties agree that any further allocation or breakdown of the Purchase Price
to or among specific Assets for the purposes of the Income Tax Act (Canada)
shall be carried out on a proportionate basis having regard to their relative
fair market values as at the Effective Time and as determined by the Parties
acting reasonably.

2.6      Extension of Promissory Notes

Notwithstanding the terms and provisions set out in the Promissory Notes, the
Vendor hereby agrees that the payment date under the Promissory Notes is hereby
extended to the date that is the earlier of the Closing Date or February 23,
2005. Furthermore, the Vendor agrees that it will not commence any enforcement
action against the Purchaser to realize on the Promissory Notes until after
February 23, 2005.

                                   ARTICLE 3
                         CLOSING TIME AND INTERIM PERIOD

3.1      Closing Time

If Closing occurs, the transfer and conveyance of the Assets shall be effective
as of the Effective Time. Possession of the Assets shall not pass to the
Purchaser until the Closing Time, and the Vendor shall maintain the Assets on
behalf of the Purchaser during the Interim Period pursuant to the provisions of
Section 3.2 hereof.

3.2      Interim Period

     (a)  Maintenance of Assets: During the Interim Period, the Vendor (to the
          extent the nature of its interest permits and subject to the terms of
          all agreements applicable to the Assets and the Vendor) shall:

          (i)  Maintain Assets: Physically maintain the Assets in a proper and
               prudent manner in accordance with generally accepted oil and gas
               industry practices; and

          (ii) Perform Leases and Other Agreements: Perform and comply with all
               covenants and conditions contained in the Leases and all other
               agreements relating to the Assets.

     (b)  Conduct of Business: During the Interim Period, the Vendor shall not,
          without the prior written consent of the Purchaser:

          (i)  Assume New Obligations or Commitments: Enter into any new
               agreement or commitment other than in the ordinary course of
               business, with respect to the Assets;

          (ii) Surrender or Abandon Assets: Surrender or abandon any of the
               Assets including any abandonment of wells located on the Lands,
               or release or abandon any portion of the Leases except in
               compliance with any abandonment or reclamation orders or
               directions as may be issued by a Government Entity in respect of
               any of the Assets and which is applicable to a period up to and
               including the Closing Date;

         (iii) Amend, Terminate or Negotiate Agreements: Amend or terminate any
               material agreement or enter into any new agreement adversely
               affecting the Assets;

          (iv) Dispose of Assets: Sell, transfer, encumber or otherwise dispose
               of any of the Assets, or any part thereof other than to the
               extent required to comply with any Rights of First Refusal; or

          (v)  Grant Encumbrances: Grant a security interest or any other
               encumbrance with respect to any of the Assets.

3.3      No Action

During the Interim Period, the Purchaser shall not (unless it has the prior
written consent of the Vendor or the Court) propose to the Vendor, or request
that the Vendor propose to others, the conduct of any operations or the exercise
of any option respecting the Assets.

During the Interim Period, the Vendor shall not directly or indirectly, solicit
or encourage any inquiries or proposals, or enter into any discussions or
negotiations with any third party for the purchase and sale of the Assets nor
accept any offers to sell the Assets in respect thereof.

                                   ARTICLE 4
                                    CLOSING

4.1      Time and Location

Closing shall take place at the Closing Place at the Closing Time. The parties
agree that the Closing shall only occur upon the Vendor receiving payment in
full of the outstanding Promissory Notes. Unless an extension of time is granted
by the Vendor to the Purchaser, if payment of the Promissory Notes has not
occurred on or before February 23, 2005, then this Agreement shall be deemed to
have been terminated provided, however, that any such termination shall not
reduce or affect the Purchaser's obligations under the Promissory Notes.

<PAGE>

4.2      Vendor Documentation

The Vendor shall cause the following documents (fully authorized and executed,
where applicable, by all appropriate Parties except the Purchaser) to be
delivered to the Purchaser at Closing:

     (a)  Officer's Certificate: A certificate of an officer of the Vendor
          stating that all the Vendor's Representations and Warranties set forth
          hereto are true and correct as at the Closing Date;

     (b)  Directors' Resolution: A certified copy of a resolution of the
          Vendor's Board of Directors authorizing the execution and delivery of
          this Agreement and the completion of the sale of the Assets in
          accordance with the provisions of this Agreement;

     (c)  Written Consents or Approvals: Documentation in form and substance
          satisfactory to the Purchaser, acting reasonably, of any Government
          Entity having jurisdiction in connection with the subject transactions
          contemplated herein;

     (d)  Assignments, Transfers, etc: All specific assignments, registerable
          transfers, novation agreements, trust agreements and other instruments
          which may be required to convey the Vendor's interest in the Assets to
          the Purchaser, unless and to the extent that the Purchaser allows the
          Vendor to deliver such documents to the Purchaser at a later date, and
          the Purchaser hereby agrees to act reasonably in connection with any
          such request from the Vendor;

     (e)  General Conveyance: A General Conveyance, in the form attached as
          Schedule "D", duly executed by the Vendor;

     (f)  Registration Rights Agreement: A Registration Rights Agreement, in the
          form attached hereto as Schedule "E", duly executed by the Vendor;

     (g)  Originals: Originals of the Vendor's records, files (not including
          financial records), reports and data pertaining to the Assets, insofar
          as such delivery is permitted and required hereunder, unless and to
          the extent that the Purchaser agrees to allow the Vendor to deliver
          such records, files, reports and data at a later date, and the
          Purchaser hereby agrees to act reasonably in connection with any such
          request from the Vendor;

     (h)  Receipts: Receipts in favour of the Purchaser acknowledging the
          consideration contemplated in Section 2.3; and

     (i)  such other documents as may be specifically required hereunder or as
          may be reasonably requested by the Purchaser upon reasonable notice to
          the Vendor.

4.3      Purchaser Documentation

The Purchaser shall cause the following documents (fully authorized and
executed, where applicable, by all appropriate Parties except the Vendor) to be
delivered to the Vendor at or prior to Closing:

     (a)  Share Certificates: Share certificate(s) representing 2,500,000 Common
          Shares;

     (b)  Warrant Certificates: Warrant certificate(s) representing 500,000
          Warrants;

<PAGE>

     (c)  Acknowledgement of the GOR: A duly executed acknowledgement of the
          existence of the GOR and assignment thereof by Scimitar Hydrocarbons
          Corporation to Grand Bow Petroleum Limited;

     (d)  Officer's Certificate: A certificate of an officer of the Purchaser
          certifying that the Purchaser's Representations and Warranties are
          true in all material respects at the Closing Time;

     (e)  Directors' Resolution: A certified copy of a resolution of the Board
          of Directors of the Purchaser authorizing the execution and delivery
          of this Agreement and the completion of the purchase of the Assets in
          accordance with the provisions of this Agreement, and authorizing the
          issuance of Common Shares and Warrants to the Vendor;

     (f)  Written Consents or Approvals: Documentation in form and substance
          satisfactory to the Vendor, acting reasonably, of any Government
          Entity having jurisdiction in connection with the subject transactions
          contemplated herein;

     (g)  General Conveyance: A General Conveyance, in the form attached as
          Schedule "D", duly executed by the Purchaser;

     (h)  Registration Rights Agreement: A Registration Rights Agreement, in the
          form attached hereto as Schedule "E", duly executed by the Purchaser;

     (i)  Cheque: A cheque in the full amount of the Goods and Services Tax
          applicable to that portion of the Purchase Price allocated to the
          Tangibles as set forth in Section 2.5 hereof, made payable to the
          Vendor;

     (j)  2003 Private Placement Waivers: A certified list of the seven (7)
          investors under the 2003 Private Placement and executed waivers from
          investors under the 2003 Private Placement, holding at least 75% of
          the securities purchased under the 2003 Private Placement, waiving the
          failure of the Purchaser to file a registration statement by October
          31, 2003 as required by the terms of the 2003 Private Placement; and

     (k)  such other documents as may be specifically required hereunder or as
          may be reasonably requested by the Vendor upon reasonable notice to
          the Purchaser.

4.4      Vendor's Closing Conditions

The Vendor's obligation to complete the transactions contemplated herein is
subject to the satisfaction at or prior to the Closing Time of the following
conditions precedent:

     (a)  Purchaser's Representations and Warranties are True: All of the
          Purchaser's Representations and Warranties shall be true and correct
          in all material respects at and as of the Closing Time and the
          Purchaser shall furnish a Certificate dated on the Closing Date,
          stating that the representations and warranties contained in Article 5
          hereof, are true and correct in all respects as at the Closing Time;

     (b)  Performance by Purchaser: The Purchaser shall have performed and
          satisfied all covenants required herein to be performed and satisfied
          by it at or prior to the Closing Time in all material respects;

     (c)  Legal Proceedings: There shall be no legal proceedings initiated
          against the Purchaser or initiated or threatened by a third party
          against the Purchaser of which the Purchaser is actually aware, in
          connection with the Common Shares or Warrants or any portion thereof;

<PAGE>

     (d)  Payment of Promissory Notes: The Purchaser shall have fully paid to
          the Vendor all amounts to the Vendor pursuant to the Promissory Notes;
          and

     (e)  Delivery of Documents: The Purchaser shall deliver to the Vendor all
          documents and materials satisfying the requirements of and set out in
          Section 4.3.

4.5      Waiver

The conditions precedent as set forth in Section 4.4 hereof shall be for the
benefit of the Vendor, and may, without prejudice to any of the rights of the
Vendor hereunder, be waived by it in writing, in whole or in part, at any time,
at or before the Closing Date or such other date as hereinbefore set forth. In
the event that the conditions precedent as set forth in Section 4.4 hereof shall
not be complied with, or waived by the Vendor at or before the Closing Date or
such other date as hereinbefore set forth, the Vendor may terminate this
Agreement by written notice to the Purchaser and, in such event, the Purchaser
and the Vendor shall be released from all other obligations hereunder.

4.6      Purchaser's Closing Conditions

The Purchaser's obligation to complete the transactions contemplated herein is
subject to the satisfaction at or prior to the Closing Time of the following
conditions precedent:

     (a)  Vendor's Representations and Warranties are True: All of the Vendor's
          Representations and Warranties shall be true and correct in all
          material respects at and as of the Closing Time and the Vendor shall
          furnish a Certificate dated on the Closing Date, stating that the
          Representations and Warranties contained in Article 5 hereof, are true
          and correct in all respects as at the Closing Time;

     (b)  Alterations to the Assets: No substantial damage to or alteration in
          the Assets, or any part of portion thereof, save as shall have been
          approved in writing by the Purchaser, shall have occurred between the
          date of this Agreement and the Closing Date which, in the Purchaser's
          opinion, acting reasonably, would materially effect the value of the
          Assets;

     (c)  Free & Clear Title: The Assets shall be free of any and all
          encumbrances, liens, charges, and demands of whatsoever nature save
          and except lessor royalties, the Permitted Encumbrances and other
          encumbrances acceptable to the Purchaser, acting reasonably;

     (d)  Discharges and Releases: The Vendor shall deliver or cause to be
          delivered to the Purchaser discharges or releases, in registerable
          form to the extent registration is possible, satisfactory to the
          Purchaser's Counsel, acting reasonably, of or relative to all
          undertakings, assignments and security granted by the Vendor, or
          otherwise howsoever secured with respect to the Assets provided that a
          "no interest" letter from the Vendor's bankers holding any such
          undertakings or security shall suffice with respect thereto;

     (e)  Legal Proceedings: There shall be no legal proceedings initiated
          against the Vendor or initiated or threatened by a third party against
          the Vendor of which the Vendor is actually aware, in connection with
          the Assets or any part or portion thereof;

<PAGE>

     (f)  Contractual Commitments: Between the date of this Agreement and the
          Closing Date, no agreement or commitment shall have been entered into
          by the Vendor pertaining to the Assets and no variations of existing
          commitments or transactions pertaining to the Assets, or any portion
          thereof, shall have been made or effected by the Vendor, other than
          those entered into in the ordinary course of business pursuant to
          Section 3.2(b)(i) hereof, except with the prior written consent of the
          Purchaser or as otherwise contemplated in this Agreement hereof; and

     (g)  Delivery of Documents: The Vendor shall deliver to the Purchaser all
          documents and materials satisfying the requirements of Section 4.2
          hereof.

4.7      Waiver

The conditions precedent as set forth in Section 4.6 hereof shall be for the
benefit of the Purchaser, and may, without prejudice to any of the rights of the
Purchaser hereunder, be waived by it in writing, in whole or in part, at any
time, at or before the Closing Date or such other date as hereinbefore set
forth. In the event that the conditions precedent as set forth in Section 4.6
hereof shall not be complied with, or waived by the Purchaser at or before the
Closing Date or such other date as hereinbefore set forth, the Purchaser may
terminate this Agreement by written notice to the Vendor and, in such event, the
Purchaser and the Vendor shall be released from all other obligations hereunder.

4.8      Commercially Reasonable Efforts

All Parties hereto covenant and agree with the other Party to use all reasonable
efforts until the Closing Date to take or refrain from taking any actions with
the intent that the conditions precedent as set forth in Sections 4.4 and 4.6
above shall be satisfied.

4.9      Termination

In the event this Agreement is terminated as a result of the conditions
precedent in Sections 4.4 and 4.6 hereof not being satisfied, all Parties hereto
shall be released from all obligations hereunder and shall have no further
recourse against the other and each Party hereto shall take all reasonable
actions to return the other Parties to the position relative to the Assets which
such Party occupied prior to the execution hereof.

4.10     Post-Closing Matters

If Closing occurs, the Vendor undertakes to promptly attend to the registration
or circulation to all relevant third parties of all documentation contemplated
herein to be registered, circulated or executed on a post-closing basis
(including, without limitation, the Releases and Discharges and Specific
Conveyances, such as well transfers) and will, if requested, provide the
Purchaser with written monthly reports concerning the registration, circulation
or execution status of all such documentation, together with any supporting
material that the Purchaser may reasonably request.

4.11     Conditions Subsequent

The purchase and sale of the Assets shall be subject to the following conditions
subsequent, which the Parties hereby undertake to complete as soon as reasonably
possible following the Closing Date and upon the Promissory Notes being paid in
full:

     (a)  subject to the Purchaser providing the necessary corporate bonds or
          other indemnities as required by any applicable Governmental Entity,
          the Vendor shall, at its sole cost, execute and file all necessary
          documentation to properly effect the transfer of the working interests
          being conveyed by this Agreement to the Purchaser, including without
          limitation, all necessary filings with applicable governmental bodies;

<PAGE>

     (b)  subject to the Purchaser providing the necessary corporate bonds or
          other indemnities as required by any applicable Governmental Entity,
          the Vendor shall, at its sole cost, execute and file all necessary
          documentation to properly effect the transfer of the interests being
          conveyed by the September Agreement to the Purchaser, including
          without limitation, all necessary filings with applicable governmental
          bodies;

     (c)  the Purchaser shall fully perform and comply with its obligations
          pursuant to the Registration Rights Agreement; and

     (d)  within ninety (90) days following the Closing Date, the Purchaser
          shall, at its sole cost, file, in accordance with applicable
          securities laws, and diligently pursue an application with the
          securities regulatory authorities for the Purchaser to become a
          "reporting issuer" in at least one jurisdiction in Canada, and in the
          event that such application is unsuccessful, the Purchaser will use
          commercially reasonable efforts to make such exemption applications as
          may be necessary in order to allow the Vendor to sell the Securities
          free of any resale restrictions under applicable Canadian securities
          legislation. The Purchaser shall permit the Vendor and the Vendor's
          Solicitor to review and comment on all applications made pursuant to
          this Section 4.11(d).

                                   ARTICLE 5
                         REPRESENTATIONS AND WARRANTIES

5.1      Vendor

The Vendor hereby represents and warrants to the Purchaser as of the date hereof
and acknowledges that the Purchaser is relying on same in connection with the
transaction contemplated by this Agreement, as follows:

     (a)  Standing: It is duly organized, validly existing and in good standing
          under the laws of its jurisdiction of incorporation and duly
          registered and in good standing under the laws of each jurisdiction in
          which the Assets are located;

     (b)  Requisite Authority: The Vendor has good right, full power and
          absolute authority to bargain, sell, transfer and assign the Assets
          for the purposes and in the manner contemplated by this Agreement and
          the consummation of the transactions contemplated herein have been
          duly authorized by all necessary corporate action on its part;

     (c)  No Conflicts: The execution and delivery of this Agreement and each
          and every agreement and instrument to be executed and delivered
          hereunder and the consummation of the transactions contemplated herein
          will not violate, nor be in conflict with any judgment, decree, law,
          order, statute, rule or regulation applicable to it or by which it is
          bound or its constating documents, bylaws or other governing
          documents;

     (d)  Execution and Enforceability: This Agreement has been duly executed
          and delivered by it, all other agreements and documents required
          thereunder to be executed and delivered by it will be duly executed
          and delivered by it and this Agreement does, and such other agreements
          and documents will, constitute legal, valid and binding obligations
          enforceable against it in accordance with their respective terms
          subject to the qualifications that such enforceability may be limited
          by bankruptcy, insolvency, liquidation, reorganization or other laws
          of general application relating to or affecting creditors' rights and
          that equitable remedies are discretionary and may not be ordered;

<PAGE>

     (e)  No Proceedings or Investigations: The Vendor is not a party to any
          action, suit or other legal, administrative or arbitration proceeding
          or government investigation, actual or threatened, which has or could
          have a material adverse affect on the Assets or the subject
          transaction and, to the best of its knowledge, information and belief,
          there is no particular circumstance, matter or thing which could
          reasonably be anticipated to give rise to any such action, suit or
          other legal, administrative or arbitration proceeding or government
          investigation;

     (f)  Material Default: The Vendor has not received notice of any material
          default under any agreement affecting the Assets;

     (g)  Warrant Title: The Vendor does not warrant title to the Lands or
          Leases but does represent and warrant that it has not encumbered or
          alienated the Lands or Leases or any interest therein except for the
          Permitted Encumbrances and, at the Closing Date, the Assets will be
          free and clear of all liens, mortgages, pledges, encumbrances, adverse
          claims, demands and royalties created by, through or under the Vendor,
          except the Permitted Encumbrances;

     (h)  Use and Benefit: Subject to the rents, covenants, conditions and
          stipulations in the Leases reserved and contained and on the lessee's
          or holder's part thereunder to be paid, performed and observed, the
          Purchaser may enter into and upon, and hold and enjoy the Assets for
          the residue of their respective terms and all renewals or extensions
          thereof for its own use and benefit without any lawful interruption of
          or by the Vendor or any other person whomsoever claiming or to claim
          by, through or under the Vendor;

     (i)  Authorization for Expenditures: Except as may be specifically set
          forth in this Agreement or otherwise disclosed to the Purchaser in
          writing, the Vendor has not received or prepared any authorizations
          for expenditures pursuant to which expenditures are or may be made,
          nor any other financial commitments which are now outstanding or due,
          or hereafter may become due in respect of the Assets or operations in
          respect thereof for which the Purchaser shall become liable to pay;

     (j)  Reduction in Value: The Assets are not subject to reduction by virtue
          of the conversion or other alteration of the interest of any third
          party under existing agreements pertaining to the Assets, except as
          may be specifically set forth in this Agreement;

     (k)  Taxes and Assessment: All ad valorem, property, production, severance
          and similar taxes and assessments based on or measured by the
          ownership of the Assets or the production of Petroleum Substances from
          and/or receipt of proceeds therefrom payable to the Closing Date and
          all prior years have been properly paid;

     (l)  Compliance: In respect of that portion of the Assets which the Vendor
          operates, all laws, regulations and orders of all Government Entities
          having jurisdiction over the Assets have been materially complied with
          by the Vendor and the Vendor has not received notice of and is
          otherwise not aware of any material default or material non-compliance
          of any law, regulation or order of any governmental agency having
          jurisdiction over the Assets, and in respect of that portion of the
          Assets which the Vendor does not operate, to the best of the
          knowledge, information and belief of the Vendor, all laws, regulations
          and orders of all Government Entities having jurisdiction over the
          Assets have been materially complied with;

<PAGE>

     (m)  Full Disclosure: The Vendor has made available to the Purchaser all
          material information within the Vendor's possession, and has not
          knowingly withheld any such information from the Purchaser, relevant
          to environmental damage or contamination or other environmental
          problems pertaining to the Assets;

     (n)  Wells: To the best of the knowledge, information and belief of the
          Vendor, each well has been drilled and, if completed, it has been
          completed, operated and produced in accordance with good oil and gas
          field practices and in compliance with all applicable rules and
          regulations;

     (o)  Production Penalty: The Vendor has not received notice that the Wells
          are subject to a production penalty of any nature;

     (p)  Abandonment of Wells: The Vendor has not agreed to abandon any Wells
          which at the Closing Date were not abandoned at a cost for which the
          Vendor is or the Purchaser may be liable in association with the
          abandonment of such Well;

     (q)  No Production: There has been no production of Petroleum Substances
          from the Wells on the Lands during the term of the Permits;

     (r)  No Rights of First Refusal: The Vendor has not granted any Rights of
          First Refusal or other pre-emptive rights relating to the Assets;

     (s)  Rental Fees: All rental fees as set out in the Permits have been paid
          to the Crown with respect to the Lands and all filings in respect of
          such rental fees have been properly made in accordance with applicable
          legislation or agreement

     (t)  Royalties: In respect of the Lands which the Vendor does not operate,
          to the best of the knowledge, information and belief of the Vendor,
          all royalties have been paid to the Crown, lessors and other holders
          of royalties and similar interests with respect to all production or
          sale of Petroleum Substances from the Lands and will be paid until the
          Closing Date and all filings in respect of such royalties have been
          properly made in accordance with applicable legislation or agreement;

     (u)  Tangibles: In respect of that portion of the Assets which the Vendor
          does not operate, to the best of the knowledge, information and belief
          of the Vendor, the Tangibles are in good and operable conditions and
          are satisfactory for their intended use, in accordance with good oil
          and natural gas field practices;

     (v)  No Facilities: There are no production, gathering, processing,
          treating, transportation or storage facilities on the Lands;

     (w)  Proceeds: The Vendor has not assigned or in any way restricted its
          rights to receive the proceeds from the sale of Petroleum Substances
          produced from the Assets;

     (x)  Employment: The Vendor is not a party to any contract of employment
          which would require the Purchaser to employ personnel previously in
          the employment of the Vendor relating to the Assets;

     (y)  Operating or Service Agreements: To the best of the knowledge,
          information and belief of the Vendor there are no operating or service
          agreements outside of the ordinary course of business affecting or
          pertaining to the operation and servicing of the Assets pursuant to
          which the Purchaser may become liable;

<PAGE>

     (z)  Environmental Liability: To the best of the knowledge, information and
          belief of the Vendor, there are no claims relating to the Lands for
          loss, liability or damages arising from Environmental Liabilities;

     (aa) Tax Residency: The Vendor is not a non-resident of Canada within the
          meaning and for the purposes of the Income Tax Act (Canada);

     (bb) Bonds and Indemnities: The only bonds or indemnities granted by the
          Vendor in connection with the Assets, as required by any applicable
          Governmental Entity is as follows:

          (i)  a promissory note dated August 17, 2004 in the amount of
               $80,966.25 to the Province of Prince Edward Island that will
               become payable if the work commitments are not met pursuant to
               Permit 04-04;

          (ii) a promissory note dated August 17, 2004 in the amount of
               $107,548.00 to the Province of Prince Edward Island that will
               become payable if the work commitments are not met pursuant to
               Permit 04-01;

          (iii) a promissory note dated July 9, 2002 in the amount of $31,000.00
               to the Province of Prince Edward Island that will become payable
               if the work commitments are not met pursuant to Permit 02-01; and

          (iv) a promissory note dated June 18, 2003 in the amount of $57,299.00
               to the Province of Prince Edward Island with respect to the
               abandonment and reclamation of the Seaview No. 1 well;

     (cc) Violation of Laws: To the best of the knowledge, information and
          belief of the Vendor, the entering into of this Agreement by the
          Vendor and the completion by the Vendor of the purchase of the Assets
          pursuant hereto will not result in the violation of any law of the
          Province of Alberta or the laws of Canada applicable therein.

5.2      Purchaser's Representations and Warranties

The Purchaser hereby represents and warrants to the Vendor as of the date hereof
and acknowledges that the Vendor is relying on same in connection with the
transaction contemplated by this Agreement, as follows:

     (a)  Standing: The Purchaser is duly organized, validly existing and in
          good standing under the laws of its jurisdiction of incorporation, and
          is extra-provincially registered and in good standing in each province
          where the Assets are located;

     (b)  Requisite Authority: The Purchaser has all requisite capacity, power
          and authority to enter into this Agreement and the Registration Rights
          Agreement and to perform its obligations under each such agreement and
          the execution and delivery of this Agreement and the Registration
          Rights Agreement and the consummation of the transactions contemplated
          under each such agreement including, without limitation, the issuance
          of the securities as described in Section 2.3 hereof, have been duly
          authorized by all necessary corporate action required on the part of
          the Purchaser;

     (c)  No Conflicts: The execution and delivery of this Agreement and each
          and every agreement and instrument to be executed and delivered
          thereunder including, without limitation, the Registration Rights
          Agreement and the consummation of the transactions contemplated herein
          and therein will not violate, nor be in conflict with, the performance
          of the provisions of any agreement, instrument, permit or authority to
          which the Purchaser is a party or by which the Purchaser is bound, any
          judgment, decree, law, order, statute, rule or regulation applicable
          to the Purchaser or by which the Purchaser is bound or the Purchaser's
          constating documents, bylaws or other governing documents;

<PAGE>

     (d)  Execution and Enforceability: This Agreement has been duly executed
          and delivered by the Purchaser, all other agreements and documents
          required thereunder to be executed and delivered by the Purchaser will
          be duly executed and delivered by it and this Agreement does, and such
          other agreements and documents will, constitute legal, valid and
          binding obligations enforceable against the Purchaser in accordance
          with their respective terms subject to the qualifications that such
          enforceability may be limited by bankruptcy, insolvency, liquidation,
          reorganization or other laws of general application relating to or
          affecting creditors' rights and that equitable remedies are
          discretionary and may not be ordered;

     (e)  No Proceedings or Investigations: The Purchaser is not party to any
          action, suit or other legal, administrative or arbitration proceeding
          or government investigation, actual or threatened, which has or could
          have a material adverse affect on its assets or the value of the
          Common Shares or the subject transaction and, to the best of its
          knowledge, there is no particular circumstance, matter or thing which
          could reasonably be anticipated to give rise to any such action, suit
          or other legal, administrative or arbitration proceeding or government
          investigation;

     (f)  Share Capital: The authorized capital of the Purchaser consists of
          200,000,000 Common Shares having a par value of $0.001 per share, of
          which 26,145,000 Common Shares are currently issued and outstanding as
          fully paid and non-assessable;

     (g)  Options: No individual, firm, corporation or other person holds any
          securities convertible into Common Shares or has any agreement,
          warrant, option, right or privilege capable of becoming an agreement,
          warrant, option or right for the purchase of any Common Shares other
          than the 3,250,000 Common Share purchase warrants that are outstanding
          and the 3,025,000 options to purchase Common Shares that are
          outstanding;

     (h)  Minute Book: The minute book materials of the Purchaser provided to
          the Vendor's Solicitor contain the constating documents of the
          Purchaser, or accurate copies thereof, and contain the minutes of all
          meetings and all resolutions of the directors and shareholders of the
          Purchaser;

     (i)  Issuance of Common Shares: The issuance of the 2,500,000 Common Shares
          has been duly and validly authorized by all requisite corporate action
          on the part of the Purchaser and all requisite regulatory approvals
          for the issuance of such Common Shares will be obtained prior to
          Closing;

     (j)  Issuance of Warrants: The issuance of the 500,000 Warrants and the
          500,000 Common Shares issuable upon exercise of the Warrants has been
          duly and validly authorized by all requisite corporate action on the
          part of the Purchaser and all requisite regulatory approvals for the
          issuance of the 500,000 Warrants and the 500,000 Common Shares
          issuable upon exercise of the Warrants will be obtained prior to
          Closing;

     (k)  Prior Registration Rights: Other than pursuant to the Registration
          Rights Agreement attached hereto as Schedule "E", the only other
          registration rights granted by the Purchaser are contained in the
          subscription agreements entered into by the Purchaser with certain
          subscribers in connection with the 2003 Private Placement (a true copy
          of which has been provided to the Vendor and Vendor's Solicitor) and
          such other registration rights do not adversely affect the
          registration rights of the Vendor pursuant to the Registration Rights
          Agreement attached hereto as Schedule "E"; and

<PAGE>

     (l)  Violation of Laws: To the best of the knowledge, information and
          belief of the Purchaser, the entering into of this Agreement by the
          Purchaser and the completion by the Purchaser of the purchase of the
          Assets pursuant hereto will not result in the violation of any law of
          its jurisdiction of incorporation, the Province of Alberta or the laws
          of Canada applicable therein.

5.3      Non-Transferable

The Representations and Warranties made by each Party are made for the exclusive
benefit of the other Party, are not transferable and shall not be the subject of
any rights of subrogation granted in favour of any other person.

5.4      Disclaimers

Neither Party makes any representations of warranties whatsoever except, and to
the extent, of the Vendor's Representations and Warranties or the Purchaser's
Representations and Warranties, as the case may be, and each Party disclaims,
and shall not be liable for, any representation or warranty which may have been
made or alleged to have been made prior to the date hereof in any document or
instrument relative hereto or in any statement or information made or
communicated in any manner including, without limitation, any opinion,
information or advice which may have been provided to the Purchaser by the
Vendor, any of its affiliates or any director, officer, employee, shareholder,
agent, consultant or other representative of the Vendor or any such affiliates.
In particular, the Vendor makes no representations or warranties whatsoever with
respect to:

     (a)  Title: Its title to the Assets;

     (b)  Reserves: The amount, quality, recoverability or deliverability of
          reserves of Petroleum Substances attributable to the Lands;

     (c)  Quality, Fitness, Condition or Merchantability: The quality, fitness,
          condition or merchantability of the Assets;

     (d)  Interpretations and Evaluations: Any engineering, geological or other
          interpretations or evaluations respecting the Assets; and

     (e)  Value, Production Rates, Revenue Estimates and Transportation: The
          value of the Assets, production rates, estimates of prices or future
          cash flows arising from the sale of reserves of Petroleum Substances
          attributable to the lands or other revenues attributable to the Assets
          or the availability (or continued availability) of transportation to
          sell such Petroleum Substances.

The Purchaser acknowledges and agrees that the Vendor is selling, and that the
Purchaser is acquiring, the Assets on an "as is, where is" basis in such a state
as they shall exist at the Closing Time. The Purchaser has made and will make
prior to the Closing Time its own independent investigations, analyses,
evaluations and inspections with respect to the Assets and the state and
condition thereof and has and will rely solely on such investigations, analyses,
evaluations and inspections in assessing the condition, quantum and value of
such Assets and the Purchaser shall not have any claim or action against the
Vendor in respect of the location, state or condition of all or any of the
Assets or the suitability or fitness of such Assets for the Purchaser's intended
use or purpose.

<PAGE>

5.5      No Merger

The foregoing Representations and Warranties shall either be set forth in or, if
not, shall be deemed to apply to, all assignments, transfers, conveyances,
novations or other documents conveying the Assets hereunder, and there shall not
be any merger of any covenant, representation or warranty in such assignments,
transfers, conveyances, or documents, any rule of law, equity or statute to the
contrary notwithstanding.

5.6      Limitation

Notwithstanding anything to the contrary herein expressed or implied and in the
absence of fraud, no claim in respect of the Representations and Warranties
shall be made or be enforceable whether by legal proceedings or otherwise
howsoever unless written notice of such claim is given by the claimant to the
other party within the period of two (2) years from the Closing Date.

                                   ARTICLE 6
                                 CONFIDENTIALITY

6.1      Confidentiality

All information related to the transactions contemplated herein shall be treated
as confidential, including this Agreement and each and every agreement to be
entered into hereunder and all terms and provisions hereof and thereof and the
intent to proceed with the transactions contemplated hereby, except for
disclosure to their respective representatives who have a need to know (and who
agree to observe this confidentiality obligation) and except as required by law,
regulation or legal process or in order to obtain the requisite consents and
approvals for the transactions. For a period of 60 days from the Closing Date,
the parties agree to consult with each other prior to making any disclosure or
announcement of or pertaining to this Agreement and any such disclosure shall be
satisfactory to both parties.

                                   ARTICLE 7
                             SECURITIES LAW MATTERS

7.1  Provided the Vendor's representation and warranty in Section 7.2 is true
     and correct, the Purchaser represents and warrants to the Vendor that, in
     the Province of Alberta, the issuance and distribution of the Securities to
     the Vendor will be exempt for the registration and prospectus requirements
     of the Securities Act (Alberta). The Vendor acknowledges and agrees that
     the Securities will be subject to the resale restrictions prescribed by
     Section 2.5 of Multilateral Instrument 45-102. The Purchaser also
     represents and warrants to the Vendor, in part in reliance on the
     representations, warranties and agreements made by the Vendor in Section
     7.3, that the offer and sale of the Securities will be exempt from the
     registration requirements of the U.S. Securities Act by reason of the
     exemption contained in Section 4(2) thereof.

7.2  The Vendor represents and warrants to the Purchaser that the Vendor is a
     resident in the Province of Alberta and is an "accredited investor" within
     the meaning of Multilateral Instrument 45-103 and acknowledges that the
     Purchaser is relying on such representations and warranties in connection
     with the issuance of the Securities.

<PAGE>

7.3  The Vendor represents, warrants and agrees that:

     (a)  it is an "accredited investor" as defined in Rule 501(a)(3) of
          Regulation D under the U.S. Securities Act because it is a corporation
          not formed for the purpose of acquiring the Securities and has total
          assets in excess of U.S. $5,000,000;

     (b)  it is acquiring the Securities for its own account and not with a view
          to the distribution thereof in violation of the registration
          requirements of the U.S. Securities Act;

     (c)  the Securities will be "restricted securities" as defined in Rule
          144(a) under the Securities Act and may not be offered, resold or
          otherwise transferred except: (a) to the Purchaser; (ii) pursuant to
          an effective registration statement under the U.S. Securities Act;
          (iii) outside the United States pursuant to Regulation S under the
          U.S. Securities Act or (iv) pursuant to an exemption from registration
          under the U.S. Securities Act, provided that prior to any transfer
          pursuant to the foregoing clause (iv), the Vendor shall have furnished
          to the Purchaser a written opinion of counsel to the effect that such
          transfer may be effected without registration under the U.S.
          Securities Act and any applicable state securities laws; and

     (d)  the Vendor agrees that the certificates for the Securities may have
          endorsed thereon a legend to reflect the foregoing restrictions on
          transfer and that appropriate stop transfer orders may be lodged with
          the transfer agent for the Securities in implementation thereof.

                                   ARTICLE 8
                                 MISCELLANEOUS
8.1      Termination

The Parties agree that, unless an extension of time is granted by the Vendor to
the Purchaser, in the event that the Promissory Notes are not paid in full by
February 23, 2005, this Agreement shall terminate and be of no further force or
effect provided, however, that any such termination shall not reduce or affect
the Purchaser's obligations under the Promissory Notes.

8.2      Prior to Closing Access

The Vendor shall provide the Purchaser and its duly appointed representatives
with reasonable access to the Assets and all corresponding books, records, files
and title documents in the possession of the Vendor or to which the Vendor has
access to, prior to the Closing Date, in order that the Purchaser may satisfy
itself as to the title of the Assets and all matters related to operations
thereof and to otherwise determine the accuracy of the matters set forth herein.
The Purchaser shall provide the Vendor and its duly appointed representatives
with reasonable access to the minute books and other records of the Purchaser
prior to the Closing Date in order that the Vendor may satisfy itself as to all
matters related to the Securities and to otherwise determine the accuracy of the
matters set forth herein.

8.3      Public Announcements

Prior to the Closing Time, each of the Parties shall cooperate with the other in
relaying information concerning this Agreement and the transactions herein
provided for and shall furnish to, discuss with and obtain written approval from
the other Party for all press and other releases prior to publication, which
approval may be reasonably withheld; provided, however, that nothing contained
herein shall prevent either Party, at any time, from furnishing any information
to any governmental agency or regulatory authority or to the public if, but only
to the extent, required by Applicable Law.

<PAGE>

8.4      Operatorship

The Purchaser acknowledges that the Vendor, to the extent it operates any of the
Assets, is unable to unilaterally assign operatorship of those Assets. The
Vendor does, however, undertake on a commercially reasonable basis to assist the
Purchaser in its efforts should it wish to succeed the Vendor as operator of any
such Assets.

8.5      Signs and Notifications

Following Closing, the Vendor may remove any signs that indicate the Vendor's
ownership or operation of the Assets. It will be the Purchaser's responsibility,
where necessary, to erect or install any signs that may be required to indicate
the Purchaser's ownership or operation of the Assets and to notify suppliers,
contractors, Governmental Entities and other affected third Parties of the
Purchaser's interest in the Assets.

8.6      Post-Closing Administration

After Closing, until the Purchaser becomes the recognized successor to the
Vendor's current interest in a particular Asset, the following provisions shall
apply:

     (a)  Possession: If requested by the Purchaser, the Vendor shall hold the
          Assets on behalf of the Purchaser;

     (b)  Trust Account: If requested by the Purchaser, the Vendor shall open a
          trust account separate and apart from its other accounts, and all
          revenues, proceeds and other benefits in respect of the Assets, and
          any advances for costs, expenses or capital expenditures in respect of
          the Assets, shall be paid into such trust account. All monies from
          time to time held in such account related to the Assets shall be for
          the account of the Purchaser;

     (c)  Benefits: The Vendor shall promptly account to the Purchaser for all
          revenues, proceeds and other benefits received in respect of such
          Assets after deducting any amounts owed by the Purchaser in respect
          thereof;

     (d)  Third Party Communications: The Vendor shall deliver to the Purchaser
          all third party notices or other communications received in respect of
          such Assets (including, without limitation, statements of operations,
          third party invoices, cash calls and other billings) in a timely
          manner;

     (e)  Response by Purchaser: The Purchaser agrees to promptly respond to the
          Vendor in writing in respect of all third party notices or other
          communications provided by the Vendor to the Purchaser pursuant to
          Section 7.6(d) above, such that the Vendor may respond on the
          Purchaser's behalf to all such third party notices and communications
          prior to the expiry thereof. Subject to the expenditures referred to
          in Sections 8.6(f)(i)A and B which the Vendor is permitted to make, if
          the Purchaser fails to provide the Vendor with written notice as
          aforesaid, the Purchaser shall be deemed to have elected not to
          participate in an operation or shall be deemed to have waived a Right
          of First Refusal, as the case may be;

     (f)  Operations: The Vendor (to the extent the nature of its interest
          permits) shall maintain such Assets in a proper and prudent manner in
          accordance with the operating practices and agreements currently in
          place. The Vendor shall not, without the prior approval of the
          Purchaser:

<PAGE>

          (i)  Expenditures: Authorize or incur expenditures other than:

               A.   usual operating expenditures incurred or allocable to the
                    Assets pursuant to existing operating agreements with arm's
                    length third parties;

               B.   expenditures which the operator of the Assets deems
                    necessary to protect life, property, income or the
                    Environment;

          (ii) Operations: Propose or initiate any operations in respect of the
               Assets;

          (iii) Surrender or Abandon Assets: Surrender or abandon any of the
               Assets; or

          (iv) Amend, Terminate or Negotiate Agreements: Amend or terminate any
               material agreement or enter into any new agreement adversely
               affecting the Assets;

     (g)  Reimbursement and Indemnification: The Purchaser shall:

          (i)  Advance of Funds: If requested by the Vendor, deposit in the
               trust account referred to in Section 8.6(b) above sufficient
               funds to enable the Vendor to pay on the Purchaser's behalf all
               third party costs, expenses and all surface and mineral rentals
               which become due within two (2) months of Closing. To the extent
               that the Vendor pays any amounts on behalf of the Purchaser prior
               to an advance being made by the Purchaser, the Purchaser shall
               reimburse the Vendor therefor within fifteen (15) days of being
               provided with an invoice and, if not paid within such fifteen
               (15) day period, each such invoice will thereafter bear interest
               until paid at the prime lending rate of the Vendor's bankers
               calculated daily and not compounded; and

          (ii) Indemnification: Forthwith indemnify and save the Vendor
               (including its directors, officers and employees) harmless from
               and against any and all direct or indirect obligations,
               liabilities, losses, costs, expenses, penalties, fines, claims,
               actions or damages of any kind or nature whatsoever (including,
               without limitation, court costs, legal costs on a solicitor and
               his own client basis and accounting and other professional
               expenses) it may suffer or incur as a result of actions taken, or
               omitted to be taken, in the performance of its duties and
               responsibilities pursuant to this Section 8.6, unless and to the
               extent the same are attributable to gross negligence or wilful or
               wanton misconduct; provided, however, no act or omission will be
               regarded as gross negligence or wilful or wanton misconduct if it
               was done or omitted to be done in accordance with the
               instructions, or with the concurrence, of the Purchaser; and

     (h)  No Claim against the Vendor: The Purchaser shall have no claim against
          the Vendor to the extent that the Purchaser's failure to give the
          Vendor written notice as required under Section 8.6(d) results in the
          non-exercise of a Right of First Refusal, or the non-participation in
          an operation, including without limitation any claim that the
          non-participation caused the Vendor's interest in the Assets to be
          terminated or otherwise subject to penalty.

8.7      Indemnity

<PAGE>

If Closing occurs, the Purchaser shall indemnify the Vendor, its Affiliates and
their respective officers, directors, employees, agents and consultants, and any
successors or permitted assignees or legal personal representatives of the
foregoing (collectively, the "Vendor Indemnified Parties") from and against, and
the Purchaser shall hold each Vendor Indemnified Party harmless from and
against, all losses, expenses (including legal fees on a full indemnity basis)
and damages, excluding indirect, punitive, exemplary or consequential damages
(collectively, the "Vendor Indemnified Losses"), sustained or incurred by any
Vendor Indemnified Party resulting from or in connection with all abandonment or
environmental claims, actions, liabilities and losses pertaining to or in
respect of the Assets, without regard to when the same accrued or occurred,
unless such Vendor Indemnified Losses arise in consequence of a
misrepresentation or breach of warranty by the Vendor herein, provided that the
maximum aggregate of all Vendor Indemnified Losses for which the Vendor
Indemnified Parties shall be entitled to seek indemnification hereunder shall
not exceed the Purchase Price. 8.8 Tax Treatment

Except as provided in this Agreement, no Party makes any representations,
regarding the tax consequences of the transaction contemplated by this
Agreement. The Parties each acknowledge that they have been advised of the tax
consequences of the transactions contemplated by this Agreement by their own tax
advisors, and that they are relying on their tax advisors in determining their
respective tax consequences in connection with the transactions contemplated in
this Agreement.

8.9      Further Assurances

The Vendor will from time to time, on and after the Closing Date, at the request
and expense of the Purchaser, execute and deliver all such other additional
instruments, notices, releases, assurances and other documents and shall do all
such other acts and things as may be reasonably necessary to more fully assure
the conveyance of the Assets to the Purchaser, and insofar as is possible, with
full substitution and subrogation of the Purchaser in and to all covenants and
warranties by others therefore given or made in respect of the Assets.

8.10     Assignment

The Parties hereto specifically reserve the right to assign their rights and
obligations hereunder, upon providing prior written notice to the other party,
provided that no such assignment shall relieve the obligation of the party to
fulfill all of the terms, conditions and obligations herein set forth on the
part of the party.

8.11     Governing Law

This Agreement shall, in all respects, be subject to and be construed and
enforced in accordance with the laws in effect in the Province of Alberta. Each
Party attorns to the jurisdiction of the courts of the Province of Alberta and
all courts of appeal therefrom for such purposes.

8.12     Invalidity of Provisions

If any provision of this Agreement or the application thereof to any person or
circumstance shall to any extent be held invalid, illegal or unenforceable by a
court of competent jurisdiction, the remainder of this Agreement, the
application of such provision to persons or circumstances other than those to
which it is held invalid, illegal or unenforceable or the validity, legality or
enforceability of such provision in any other jurisdiction shall not in any way
be affected or impaired thereby and such provision shall be severable from this
Agreement to the extent of such invalidity, illegality or unenforceability.

<PAGE>

8.13     Entire Agreement and Amendment

This Agreement supersedes and replaces any and all prior agreements,
understandings, negotiations and discussions, whether written or verbal, between
the Parties concerning the transactions contemplated therein and states and
comprises the entire agreement between the Parties in relation thereto and may
only be amended by a formal written instrument executed by proper signing
officers for both Parties.

8.14     No Waiver

No waiver by a Party or any breach of any of the provisions of this Agreement to
any other Party shall take effect or be binding upon the waiving Party unless in
writing and signed by such Party. Unless otherwise provided therein, such waiver
shall not limit or affect the rights of the Party with respect to any such
breach.

8.15     No Release

Except where as otherwise provided, any assignment of this Agreement or any
obligation under this Agreement shall not release a Party hereto from the full
obligations hereunder, without the prior written consent of the other Party.

8.16     Time of the Essence

Time shall be of the essence in this Agreement.

8.17     Further Assurances

Each Party, without further consideration, shall in a timely fashion do or
perform or cause to be done or performed all such further and other acts and
things, execute, acknowledge and deliver or cause to be executed, acknowledged
and delivered all such further and other instruments, deeds and other writings
and generally shall take or cause to be taken all such further and other actions
as may be reasonably necessary or desirable to carry out its obligations
hereunder or to ensure and give full force and effect to the provisions and
intent, purpose and meaning of this Agreement.

8.18     Enurement

This Agreement shall be binding upon and enure to the benefit of the Parties and
their respective successors and permitted assigns.

8.19     Costs

Except as otherwise provided, each Party shall bear and be responsible for all
other costs and expenses incurred by it in negotiating and preparing this
Agreement, any deeds, documents and other writings delivered in conjunction with
or in furtherance hereof and in otherwise performing the transactions
contemplated herein. Such costs include all their respective legal, accounting,
brokerage, consulting fees and/or finders' fees incurred in connection with the
subject transactions.

8.20     Notices

The initial addresses of the Parties for Delivery of Documents or any other
writings required, permitted or desired hereunder shall be as follows:

<PAGE>

(a) to the Vendor:

                  Rally Energy Corp.
                  2000, 715-5th Avenue S.W.
                  Calgary, Alberta
                  T2P 2X6

                  Attention:  Kenneth A. Morrison, Vice President, Negotiations
                  & Contracts
                  Fax:  (403) 538-3705

(b) to the Purchaser:

                  Shannon International Resources Inc.
                  2000, 715-5th Avenue S.W.
                  Calgary, Alberta
                  T2P 2X6

                  Attention:  Blair Coady, President & CEO
                  Fax:  (403) 538-0003

Any such notice or other writing may be served by personal service, by mailing
the same by prepaid post in a properly addressed envelope addressed to the
intended addressee at its address for service hereunder or by fax to the number
hereunder. Any notice given by personal service shall be deemed to be given on
the date of such service if delivered during the regular business hours of the
recipient or, if delivered outside such regular business hours, the next
Business Day. Any notice given by mail shall be deemed to be given to and
received by the addressee on the third Business Day (except days upon which the
postal service in Canada is interrupted) after the mailing thereof. Any notice
given by fax with appropriate answerback acknowledged shall be deemed to be
given to and received by the addressee on the date of transmission if such
transmission is completed during the regular business hours of the recipient or,
if transmitted outside such regular business hours, the next Business Day after
the successful transmission thereof. In the event the postal service in Canada
is, or is threatened to be, interrupted, all notices and other writings shall be
served by personal service or fax.

Either Party may from time to time change its address for service herein by
giving written notice to the other Party in the manner herein provided.

Any elections or notices to be made or served pursuant to this Agreement shall
be made in writing and served in the manner outlined above.

8.21     Counterpart and Facsimile Execution

This Agreement may be executed in any number of counterparts and any Party
hereto may execute any such counterpart, each of which when executed and
delivered shall be deemed to be an original and all of which counterparts taken
together shall constitute but one and the same instrument. This Agreement shall
become binding when one or more counterparts taken together shall have been
executed and delivered by the Parties. It shall not be necessary in making proof
of this Agreement or any counterpart hereof to produce or account for any of the
other counterparts. Execution and delivery of counterparts of this Agreement by
telecopier by any Party shall be binding on all Parties to this Agreement.

<PAGE>

IN WITNESS WHEREOF the Parties have executed this Agreement as of the date and
year above first written.

                               RALLY ENERGY CORP.

                               Per:  /s/ Kenneth A. Morrison
                                     -----------------------------------------
                                     Kenneth A. Morrison
                                     Vice President, Negotiations & Contracts

                               Per:  /s/ Doug Urch
                                     ------------------------------------------
                                     Doug Urch
                                     Vice President, Finance and
                                     Chief Financial Officer

                               SHANNON INTERNATIONAL
                               RESOURCES INC.

                               Per:  /s/ Blair Coady
                                     ------------------------------------------
                                     Blair Coady
                                     President & Chief Executive Officer

<PAGE>

       SCHEDULE "A" ATTACHED TO AN ASSET SALE AGREEMENT DATED FEBRUARY
       23, 2005 MADE BETWEEN RALLY ENERGY CORP., AS VENDOR, AND
       SHANNON INTERNATIONAL RESOURCES INC., AS PURCHASER

<TABLE>
<CAPTION>

                           LEGAL DESCRIPTION OF LANDS
                           --------------------------

------------------------------- ----------------------------------------- ------------------ -------------------------
 PEI Ministry of Environment,                                                                   Vendor's Undivided
     Energy and Forestry                         Lands                          Zones           Working Interest *
          Permit No.
------------------------------- ----------------------------------------- ------------------ -------------------------
<S>         <C>                 <C>                                             <C>                   <C>
            04-01               Sections  6-10,  16-20,   26-30,  36-40,         All                   72%
                                46-50,   56-60,   66-70,  76-80,  86-90,
                                96-100  of Grid  Area N.  Lat.  46-20 W.
                                Long  63-30,  and all  Sections  of Grid
                                Area N. Lat.  46-30 W.  Long.  63-30 and
                                Sections  1-5,  11-15,   21-25,   31-35,
                                41-45,   51-55,   61-65,  71-75,  81-85,
                                91-95  of Grid  Area N.  Lat.  46-40  W.
                                Long. 63-30
------------------------------- ----------------------------------------- ------------------ -------------------------
            04-04               All sections of Grid Area N. Lat.  46-20         All                   72%
                                W.  Long.   63-00,  and  Sections  6-1-,
                                16-20,   26-30,   36-40,  46-50,  56-60,
                                66-70,  76-80,  86-90,  96-100  of  Grid
                                Area N. Lat. 46-20 W. Long. 63-00
------------------------------- ----------------------------------------- ------------------ -------------------------
            02-01               Southeast  quarter  of Grid Area N. Lat.         All                   92%
                                46-40 W.  Long.  64-00 and the east half
                                of Grid  Area N.  Lat.  46-30  W.  Long.
                                64-00
------------------------------- ----------------------------------------- ------------------ -------------------------

*        Subject to the GOR

</TABLE>

<PAGE>

       SCHEDULE "B" ATTACHED TO AN ASSET SALE AGREEMENT DATED FEBRUARY
       23, 2005 MADE BETWEEN RALLY ENERGY CORP., AS VENDOR, AND
       SHANNON INTERNATIONAL RESOURCES INC., AS PURCHASER

Wells

1. Irishtown Well #2 located nine kilometres northeast of Kensington, P.E.I. on
Permit 96-06 (drilled and abandoned).

2. Seaview #1 located 18 kilometres north of Kensington, P.E.I. (cased).

<PAGE>

      SCHEDULE "C" ATTACHED TO AN ASSET SALE AGREEMENT DATED FEBRUARY
      23, 2005 MADE BETWEEN RALLY ENERGY CORP., AS VENDOR, AND
      SHANNON INTERNATIONAL RESOURCES INC., AS PURCHASER

                                  Leased Assets

1. Surface lease with respect to Seaview #1 well by way of Indenture of Lease
dated May 28, 2003 between Petrus J. Lauwerijssen, Johanes P. Lauwerijssen and
Rally Energy Corp.

<PAGE>

         SCHEDULE "D" ATTACHED TO AN ASSET SALE AGREEMENT DATED FEBRUARY
         23, 2005 MADE BETWEEN RALLY ENERGY CORP., AS VENDOR, AND
         SHANNON INTERNATIONAL RESOURCES INC., AS PURCHASER

         THIS GENERAL CONVEYANCE dated the 23rd day of February, 2005.

BETWEEN:

          RALLY ENERGY CORP., a body corporate incorporated under the laws of
          the Province of Ontario, having offices at Calgary, Alberta

          (hereinafter called the "Vendor")

                                     - and -

          SHANNON INTERNATIONAL RESOURCES INC., a body corporate incorporated
          under the laws of the State of Nevada, having offices at Calgary,
          Alberta

          (hereinafter called the "Purchaser")

     WHEREAS the Vendor has agreed to convey, and the Purchaser has agreed to
accept, the Assets.

     NOW THEREFORE in consideration of the premises and the mutual agreements
set out in this Agreement, the Parties agree as follows:

1.       Definitions

In this Conveyance the following words and phrases shall have the meanings
ascribed thereto below, namely:

"Asset Sale Agreement" means that certain Asset Sale Agreement made as of
February 23, 2005 between the Vendor and the Purchaser' and

"Conveyance" means this conveyance together with all instruments supplemental
hereto or in amendment or confirmation hereof.

In addition, the definitions in the Asset Sale Agreement are incorporated herein
by this reference.

2.       Headings

The headings of clauses herein are inserted for convenience of reference only
and shall not affect or be considered to affect the construction of the
provisions hereof.

3.       Subordinate Document

This Conveyance is executed and delivered by the Parties pursuant to the Asset
Sale Agreement, and the provisions of the Asset Sale Agreement shall prevail and
govern in the event of a conflict or variance between the two instruments.

<PAGE>

4.       Governing Law

This Conveyance shall, in all respects, be subject to and be construed and
enforced in accordance with the laws in effect in the Province of Alberta and
each Party attorns to the jurisdiction of the courts of the Province of Alberta
and all courts of appeal therefrom for such purposes.

5.       Conveyance

The Vendor assigns, transfers, conveys and sets over to the Purchaser the Assets
to have and to hold the same, together with all benefit and advantage to be
derived therefrom, absolutely and the Purchaser, in turn, accepts the Assets
from the Vendor on the aforesaid terms.

6.       Closing Time

This Conveyance shall be effective as of the Closing Time.

7.       Further Assurances

Each Party, without further consideration, shall in a timely fashion do or
perform or cause to be done or performed all such further and other acts and
things, execute, acknowledge and deliver or cause to be executed, acknowledged
and delivered all such further and other instruments, deeds and other writings
and generally shall take or cause to be taken all such further and other actions
as may be reasonably necessary or desirable to carry out its obligations
hereunder or to ensure and give full force and effect to the provisions and
intent, purpose and meaning of this Conveyance.

8.       Enurement

This Conveyance shall be binding upon and shall enure to the benefit of the
Parties and their respective successors, receivers, receiver-managers, trustees
and permitted assigns.

9.       Counterpart and Facsimile Execution

This Conveyance may be executed in one or more counterparts, each of which shall
be considered an original but all of which together shall constitute one and the
same instrument. In addition, facsimile copies of executed counterparts shall be
conclusively regarded for all purposes as originally executed counterparts
pending the delivery of the originals.

         IN WITNESS WHEREOF the Parties have executed this Agreement as of the
date and year above first written.

                             RALLY ENERGY CORP.

                             Per:  /s/ Kenneth A. Morrison
                                   -----------------------------------------
                                   Kenneth A. Morrison
                                   Vice President, Negotiations & Contracts

                             SHANNON INTERNATIONAL
                             RESOURCES INC.

                             Per:  /s/ Blair Coady
                                   ------------------------------------------
                                   Blair Coady
                                   President & Chief Executive Officer

<PAGE>

   SCHEDULE "E" ATTACHED TO AN ASSET SALE AGREEMENT DATED FEBRUARY 23,
   2005 MADE BETWEEN RALLY ENERGY CORP., AS VENDOR, AND SHANNON
   INTERNATIONAL RESOURCES INC., AS PURCHASER

<PAGE>

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