AGREEMENT OF PURCHASE AND SALE SELLER

Exhibit  10.1   

AGREEMENT OF
PURCHASE AND SALE

ASPEN EXPLORATION CORPORATION

NAUTILUS POPLAR, LLC
HUNTER ENERGY LLC

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AGREEMENT OF PURCHASE AND SALE

     THE AGREEMENT made as of February 24, 2009 BETWEEN:

Aspen Exploration Corporation (“Seller”)
-and-

Nautilus Poplar, LLC and Hunter Energy LLC (hereinafter each
individually a “Purchaser,” and collectively called the “Purchasers”).

     WHEREAS the Seller wishes to sell and the Purchaser wishes to purchase the interests of the Seller in and to the Assets, subject to and in accordance with the terms and conditions of the Agreement;

     NOW THEREFORE THE PARTIES TO THIS AGREEMENT WITNESSETH that in consideration of the premises and the mutual covenants and agreements hereinafter set forth, the Parties have agreed as follows:

      ARTICLE 1
INTERPRETATION

     1.1    Definitions .

     In the Agreement, unless the context otherwise requires:

(a)    “ Agreement ” means this document and all schedules attached hereto;

(b)    “ Assets ” means the Petroleum and Natural Gas Rights, the Tangibles and the Miscellaneous Interests, but excluding the Excluded Assets;

(c)    “ Business Day ” means a day other than a Saturday, a Sunday or a statutory holiday in Billings, Montana;

(d)    “ Certificate ” means a written certification of a matter or matters of fact which, if required from a corporation or other entity, shall be made by an officer of the corporation or manager of the other entity, on behalf of the corporation or other entity and not in any personal capacity;

(e)    “ Closing ” means the closing of the purchase and sale herein provided for;

(f)    “ Closing Date ” means February 24, 2009, or such other time and date as may be provided in the Agreement or agreed upon in writing by the Seller and the Purchaser;

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     (g)    “ Closing Place ” means Suite 1000, 6400 South Fiddler’s Green Circle, Greenwood Village, Colorado 80111 at 10:00 a.m. on the Closing Date, or such other place as may be agreed upon in writing by the Seller and the Purchaser;

     (h)    “ Effective Date ” means 12:01 a.m. Mountain Standard Time on January 1, 2009;

     (i)    “ Excluded Assets ” means any assets owned by Seller that are not located in Roosevelt County, Montana, whether or not such assets relate to the Assets;

     (j)    “ Lands ” means the lands set out in Schedule “A-1” under the heading “Description”;

     (k)    “ Leased Substances ” means all Petroleum Substances, rights to or in respect of which are granted, reserved or otherwise conferred by or under the Unit Agreements, or by or under the Title Documents (but only to the extent that the Title Documents pertain to the Lands);

     (l)    “ Leases ” means the leases described on attached Schedule “A-1”;

     (m)   “ Miscellaneous Interests ” means, subject to any and all limitations and exclusions provided for in this definition, all property, assets, interests and rights pertaining to the Petroleum and Natural Gas Rights and the Tangibles, or either of them, but only to the extent that such property, assets, interests and rights pertain to the Petroleum and Natural Gas Rights and the Tangibles, or either of them, including without limitation any and all of the following:

     (i)      contracts and agreements relating to the Petroleum and Natural Gas Rights and the Tangibles, or either of them;

     (ii)      fee simple rights to, and rights to enter upon, use or occupy, the surface of any lands which are or may be used to gain access to or otherwise use the Petroleum and Natural Gas Rights and the Tangibles, or either of them;

     (iii)    all records, books, documents, licenses, reports and data which relate to the Petroleum and Natural Gas Rights and the Tangibles, or either of them, including any of the foregoing that pertain to Seismic, geological or geophysical matters, to the extent assignable and to the extent any assignment would not be in breach of any confidentiality agreements or similar documents;

    (iv)    the Wells, including the wellbores and any and all casing;

    (v)    permits and licenses issued from, by or through any federal, state or local regulatory agency, to the extent assignable;

    (vi)    to the extent assignable, the benefits of all representations, warranties, indemnities and other agreements Seller or its predecessor in interest may have received with respect to any of the properties described on attached Schedule “A-1” or Schedule “A-2” including, without limitation, those from prior owners of any of the properties described on attached Schedule “A-1” or Schedule “A-2”;

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(vii)    the Tule Creek Gathering System;

(viii)    two warehouses located at Highway 2 East, Poplar, Montana;

 (ix)    all other real and personal property of every kind and description which is located in Roosevelt County, Montana, owned by the Seller and which are used in connection with or associated with Seller’s operation of the East Poplar Unit, the N.W. Poplar Field and the Tule Creek Gathering System; and

 (x)    Aspen’s interest in that certain agreement dated as of January 1, 2007 between Aspen and Roland E. Blauer;

     (n)    “ Murphy/Ballard Agreement ” means the Purchase and Sale Agreement dated effective January 1, 2002, between Murphy Exploration & Production Company and MUNOCO Company L.C., as seller, and Ballard Petroleum Holdings LLC, as purchaser;

     (o)    “ Party ” means a party to the Agreement;

     (p)    “ Net Revenue Interest ” or “ NRI ” means the Seller’s share of production after satisfaction of all royalties, overriding royalties, oil payments or other non-operating interests, as shown on attached Schedule “A-2” for the Wells and Unit listed on attached Schedule “A-2”;

     (q)    “ Permitted Encumbrances ” means:

     (i)   liens for taxes, assessments and governmental charges which are not due or the validity of which is being diligently contested in good faith by or on behalf of Seller;

     (ii)    liens incurred or created in the ordinary course of business as security in favor of the person who is conducting the development or operation of the property to which such liens relate for Seller’s proportionate share of the costs and expenses of such development or operation;

     (iii)    materialmen’s, mechanics’, construction, repairmen’s, employees’, contractors’, operators’ or other similar liens or charges arising in the ordinary course of business incidental to construction, maintenance or operation of the Assets (i) if they have not been filed pursuant to law and the time for filing them has expired, (ii) if filed, they have not yet become due and payable or payment is being withheld as provided by law, or (iii) if their validity is being contested in good faith by appropriate action;

     (iv)    easements, rights of way, servitudes and 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 and cable television conduits, poles, wires and cables) which do not materially impair the use of the Assets affected thereby;

     (v)    the rights reserved to or vested in any municipality or government or other public authority (including any tribal authority) by the terms of any lease, license,

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franchise, grant or permit or by any statutory provision, to terminate any such lease, license, franchise, grant or permit or to require annual or other periodic payments as a condition of the continuance thereof;

     (vi)    rights of general application reserved to or vested in any governmental authority (including any tribal authority) to levy taxes on the Leased Substances or any of them or the income therefrom, and governmental requirements and limitations of general application (including those of any tribal authority) as to production rates or the operations of any Asset;

     (vii)    statutory exceptions to title, and the reservations, limitations, provisos and conditions in any original grants from the United States, the State of Montana or tribal authority of any of the mines and minerals within, upon or under the Lands;

     (viii) any security held by any Third Party encumbering Seller’s interest in and to the Assets or any part or portion thereof, in respect of which Seller delivers a discharge, release or satisfaction at or prior to Closing;

     (ix)    the production contracts, division orders and agreement or agreements (if any) for the sale of Leased Substances that are terminable on not greater than 90 days’ notice (without a material early termination penalty or other material cost);

     (x)    lessors’ royalties, overriding royalties, net profits interests, production payments, reversionary interests and similar burdens, if the net cumulative effect of all such burdens does not operate to reduce the NRI for a particular Well or Unit below that set forth on Schedule “A-2”;

     (xi)    any preferential rights to purchase and required third party consents to assignments of contracts and similar agreements for which written waivers or consents are obtained prior to Closing;

     (xii)    all rights to consent by, required notices to, filings with, or other actions by federal, state, local or tribal entities in connection with the sale or conveyance of the Assets if the same are customarily obtained subsequent to such sale or conveyance;

     (xiii)    rights of reassignment, to the extent any exist as of the date of this Agreement, upon the surrender or expiration of any Lease;

     (xiv) such Title Defects as Purchaser has waived and such Title Defects which have been otherwise provided for as provided in Article 10;

     (xv)    calls on or preferential rights to purchase production held by parties other than Seller or an affiliate of Seller; and

     (xvi)    all other liens, charges, encumbrances, contracts, agreements, instruments, obligations, defects, and irregularities affecting any of the Assets to which they relate that, individually or in the aggregate:

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     a.    are not such as to interfere with the operation, value or use of the Assets (or portion thereof) affected thereby;

     b.    have not delayed the receipt or prevented Seller from receiving its share of the proceeds or production from any of the Units or Wells described on Schedule “A-2”;

     c.    do not reduce the interest of Seller with respect to all oil and gas produced from any Unit or Well to which the Leases relate below the NRI set forth on Schedule “A-2” for such Unit or Well; and

     d.    do not increase Seller’s portion of the costs and expenses relating to the operations on and the maintenance and development of the lands included in any Unit or Well to which the Leases relate above the WI set forth on Schedule “A-2” for such Unit or Well, without at least a proportionate increase in the share of production to which Seller is entitled to receive from such Unit or Well;

     (r)    “ Petroleum and Natural Gas Rights ” means all rights to and in respect of the Unit Agreements, the Leased Substances and the Title Documents of the Seller, including but not limited to the interests in Lands set out in Schedule “A-1” and in Leases set out in Schedule “A-2”;

     (s)    “ Petroleum Substances ” means any of crude oil, crude bitumen and products derived therefrom, synthetic crude oil, petroleum, natural gas, natural gas liquids, and any and all other substances related to any of the foregoing, whether liquid, solid or gaseous;

     (t)    “ Purchase Price ” means the sum of money set out in section 2.5;

     (u)    “ Seismic ” means (to the extent assignable and to the extent any assignment would not be in breach of any confidentiality agreements or similar documents) all records, books, documents, licenses, reports and data and all sale, trading and reproduction rights associated with the seismic line or lines including without limitation:

     (i)    all permanent records of basic field data including, but not limited to, any and all microfilm or paper copies of seismic driller’s reports, monitor records, observer’s reports and survey notes and any and all copies of magnetic field tapes or conversions thereof;

     (ii)    all permanent records of the processed field data including, but not limited to, any and all microfilm or paper copies of shot point maps, pre- and post-stacked record sections including amplitude, phase and structural displays, post-stack data manipulations including filters, migrations and wavelet enhancements, and any and all copies of final stacked tapes and any manipulations and conversions thereof;

     (iii)    in the case of 3D seismic, in addition to the foregoing, all permanent records, data processing information, and all other relevant information; and

     (iv)    any and all interpretations of the foregoing;

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     (v)    “ Specific Conveyances ” means all conveyances, deeds, assignments, transfers, notice of transfers, novations and other documents or instruments that are reasonably required or desirable to convey, assign and transfer the interest of Seller in and to the Assets to the Purchaser and to novate the Purchaser in the place and stead of the Seller with respect to the Assets;

     (w)   “ Tangibles ” means, any and all tangible property and assets which are located within, upon or in the vicinity of the Lands and which are used or are intended to be used to produce, process, gather, treat, measure, make marketable or inject the Leased Substances or any of them or in connection with water injection or removal operations that pertain to the Petroleum and Natural Gas Rights, including without limitation any and all inventory, gas plants, oil batteries, buildings, production equipment, pipelines, pipeline connections, meters, generators, motors, compressors, treaters, dehydrators, scrubbers, separators, pumps, tanks, boilers, and motor vehicles;

     (x)    “ Third Party ” means any individual or entity other than the Seller and the Purchaser, including without limitation any partnership, limited liability company, corporation, trust, unincorporated organization, union, government and any department and agency thereof and any heir, executor, administrator, personal representative or other legal representative of an individual;

     (y)    “ Title Documents ” means, collectively, and to the extent assignable, any and all certificates of title, Leases, reservations, permits, licenses, assignments, trust declarations, operating agreements, royalty agreements, gross overriding royalty agreements, participation agreements, farm-in agreements, sale and purchase agreements, pooling agreements and any other documents and agreements granting, reserving or otherwise conferring rights to (i) explore for, drill for, produce, take, use or market Petroleum Substances, (ii) share in the production of Petroleum Substances, (iii) share in the proceeds from, or measured or calculated by reference to the value or quantity of, Petroleum Substances which are produced, and (iv) rights to acquire any of the rights described in items (i) to (iii) of this definition, but only if the foregoing pertain in whole or in part to Petroleum Substances within, upon or under the Lands, including without limitation those, if any, set out in Schedule “A-1”;

     (z)    “ Unit ” or “ Units ” means all unit or units relating to the Petroleum and Natural Gas Rights described on attached Schedule “A-2”;

     (aa)    “ Unit Agreements ” means the unit agreement(s) and unit operating agreement(s), including any and all amendment(s) thereto, pertaining to the unit or units, set out in Schedule “A-2”;

     (bb)    “ Wells ” means all wells which are or may be used in connection with the Petroleum and Natural Gas Rights, including without limitation, those wells listed on Schedule “A-2” and shut-in, abandoned, water source, water disposal and water injection wells; and

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     (cc)    “ Working Interest ” or “ WI ” means Seller’s share of the costs and expenses relating to the maintenance, development and operation of each Well or Unit as shown on attached Schedule “A-2” for the Wells and Unit listed on attached Schedule “A-2.”

         1.2     Headings .

     (a)    The expressions “Article,” “section,” “subsection,” “clause,” “subclause,” “paragraph,” and “Schedule” followed by a number or letter or combination thereof mean and refer to the specified article, section, subsection, clause, subclause, paragraph and schedule of or to the Agreement.

     (b)    The expressions “herein,” “hereto” and “hereof” and similar expressions mean and refer to the Agreement.

1.3    Interpretation Not Affected by Headings .

          The division of the Agreement into Articles, sections, subsections, clauses, subclauses and paragraphs and the provision of headings for all or any thereof are for convenience and reference only and shall not affect the construction or interpretation of the Agreement.

          1.4 Included Words .

          When the context reasonably permits, words suggesting the singular shall be construed as suggesting the plural and vice versa, and words suggesting gender or gender neutrality shall be construed as suggesting the masculine, feminine and neutral genders.

          1.5 Schedules .

          There are appended to the Agreement the following schedules pertaining to the following matters:

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     Such schedules are incorporated herein by reference as though contained in the body hereof. Wherever any term or condition of such schedules conflicts or is at variance with any term or condition in the body of the Agreement, such term or condition in the body of the Agreement shall prevail.

     1.6     Damages .

     When used herein, the term “Damages” means all losses, costs, claims, damages, expenses and liabilities in respect of which a Party has a claim pursuant to the Agreement including without limitation reasonable legal fees and disbursements on a counsel and client basis, but does not include consequential Damages.

ARTICLE 2
PURCHASE AND SALE AND CLOSING

     2.1    Purchase and Sale .

     The Seller hereby agrees to sell, assign, transfer, convey and set over to the Purchasers the Seller’s entire interest in the Assets in the percentages set forth opposite each Purchaser’s name:

Each Purchaser hereby agrees to purchase from the Seller, the percentage set out above in all of the right, title, estate and interest of the Seller (whether absolute or contingent, legal or beneficial) in and to the Assets on the Closing Date as of the Effective Date subject to and in accordance with the terms of the Agreement.

     2.2    Closing .

     Closing shall take place at the Closing Place on the Closing Date if there has been satisfaction or waiver of the conditions of Closing herein contained. Subject to all other provisions of the Agreement, possession, risk and beneficial ownership of the Seller’s right, title, estate and interest in and to the Assets shall pass from the Seller to the Purchaser on the Closing Date effective as of the Effective Date.

     2.3    Specific Conveyances .

     All Specific Conveyances shall be executed and delivered by the Parties at Closing. Forthwith after Closing, the Purchaser shall at its cost record or file, as the case may be, all Specific Conveyances that by their nature may be recorded or filed. The form of Specific Conveyance for the transfer to the Purchaser of all of the Assets shall be in the form of attached Schedule “E,” provided that transfer of fee interests may be by separate deed and transfer of motor vehicles and federal, state or tribal Leases shall be on approved federal, state or tribal forms.

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     2.4    Purchase Price .

     The aggregate consideration to be paid by the Purchaser to the Seller at the Closing for the Seller’s right, title, estate and interest in and to the Assets shall be One Million Two Hundred Thousand and No/100 Dollars ($1,200,000.00), subject to the operating adjustments pursuant to section 7.1, and subject to reduction by an amount equal to Seller’s proportionate share of the outstanding balance as of the Effective Date (expected to be in the approximate amount of $225,000) of that certain