November 26, 2004
DELTA OIL & GAS INC.
1122 - 6 Ave. N Seattle, Washington
98109 USA
Re: Participation
Proposal
Todd Creek Property,
Alberta
______________________________________________________________
Whereas Win Energy Corporation
(“Win”) has acquired a land position in the above noted
property and whereas Delta Oil & Gas Inc. (“Delta”)
has expressed an interest in participating with Win in future
operations in its Todd Property, the following proposal is
submitted for review and consideration:
1. Win currently owns a 100% working
interest in the lands and leases described as the “Purchase
Lands” in Schedule “A” attached hereto. In
addition Win
controls the lands described as the “Option Lands” in
Schedule “A”
2. Delta shall pay the sum of five hundred
ninety seven thousand two hundred and sixty three ($597,263 US)
dollars (US Funds) (hereinafter referred to as
the “Purchase Price”) to Win to acquire 20% of
Win’s interest in the Purchase Lands subject only to the
encumbrances shown in Schedule “A”.
3. The Purchase Price shall be payable to
Win in the form of a certified cheque and shall be payable and
received by Win on or before December 31,
2004.
4. Upon receipt of the Purchase Price from
Delta by Win, Win shall prepare and circulate for execution by
Delta a Joint Operating Agreement incorporating
the 1981 Operating Procedure together with the 1996 PASC Accounting
Procedure utilizing standard rates, elections and amendments. The
Joint
Operating Agreement shall govern all operations on the Purchase
Lands between the parties hereto. The parties hereto agree in
advance that the 1981
Operating
Win Energy Corporation
Suite
240, 640 - 8 th Avenue S.W. Calgary, Alberta, T2P
1G7
Bus:
(403) 265-7787 - Fax (403) 265-7767
Procedure shall utilize elective 2401 (B) establishing a right of
first refusal on subsequent dispositions by the parties hereto.
5. Win shall be named Initial Operator
under the Joint Operating Agreement and shall conduct all
operations with respect to the Purchase Lands in
accordance therewith.
6. Delta shall have an option exercisable
in writing to acquire a 15% working interest in the Option Lands on
the following terms and conditions:
a) In the event Win proposes the drilling
of a well on the Option Lands, Delta shall have the option to
participate in the drilling of the well by paying
20% of the cost to drill, complete, cap or abandon the well. Upon
completion or abandonment, Delta shall have earned a 15% interest
in the
section on which the well was drilled as well as 1 additional
section of Option Lands selected by Win.
b) The election of Delta to participate in
the drilling of a well under this clause shall be in writing within
fifteen days of receipt of a notice by Win of its
intent to drill on the Option Lands.
c)
This option shall terminate on December 31, 2006.
d)
Failure of Delta to respond to a notice provided pursuant to clause
6 (b) shall be deemed an election not to participate in the
proposed well and its
