PRODUCT SALE AND PURCHASE CONTRACT

EXHIBIT 10.12

SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL
TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL
HAS BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
AND THE REDACTED TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

PRODUCT SALE AND PURCHASE CONTRACT

BY AND BETWEEN

RESOLUTE NATURAL RESOURCES COMPANY

(BUYER)

AND

KINDER MORGAN CO ₂ COMPANY, L.P.

(SELLER)

DATED

July 1, 2007

INDEX

PRODUCT SALE AND PURCHASE CONTRACT

      THIS CONTRACT, is made and entered into as of the “Effective Date” of July 1, 2007 by and between Resolute Natural Resources Company individually and on behalf of working interest owners in Aneth Unit, McElmo Creek Unit, and Ratherford Unit with a business address of 1675 Broadway, Suite 1950, Denver, CO 80202 (“Buyer”) and Kinder Morgan CO2 Company, L.P., a Texas Limited Partnership, with a business address of 500 Dallas, Suite 1000, Houston, TX 77002 (“Seller”).

WITNESSETH:

      WHEREAS, Seller desires to sell and tender for delivery to Buyer, and Buyer desires to purchase and accept from Seller, certain quantities of carbon dioxide (“Product”) for use at the Aneth, McElmo Creek, and Ratherford Units in San Juan County, Utah under the terms and conditions of this Contract; and

      WHEREAS, Seller owns certain Product reserves at McElmo Dome in Montezuma and Dolores Counties, Colorado and Doe Canyon in Dolores County, Colorado. Seller has certain rights to deliver Product into the McElmo Creek Pipeline; and

      WHEREAS, Buyer wishes to purchase and accept Product from Seller near McElmo Dome Unit at the interconnect between the McElmo Dome Unit Hovenweep Facility and the McElmo Creek Pipeline, and

      NOW, THEREFORE, for and in consideration of the premises and the mutual benefits and covenants herein contained, Seller and Buyer hereby agree as follows:

ARTICLE I — DEFINITIONS

     1.1 Defined Words and Terms . Except where the context otherwise indicates another or different meaning or intent, the following words and terms as used herein shall have the meanings indicated:

(a) “Actual Monthly Amount” means an amount determined by multiplying the actual quantity of Product, in MCF, delivered to Buyer at the Delivery Point during the Month, by the Unit Price.

(b) “Annual Quantity” means for each Contract Year the DCQ times the number of Days in that Contract Year.

(c) “Anticipated Initial Delivery Date” means August 1, 2007 for Exhibit “A” quantities.

(d) “BCF” means 1,000,000,000 Cubic Feet of Product.

(e) “CO ₂ ” or “Carbon Dioxide” means a substance composed of molecules, each containing one atom of carbon and two atoms of oxygen.

(f) “Contract Year” means the periods set out in Exhibit “A”.

(g) “Cubic Foot” means the amount of Product which would occupy one cubic foot of space at a base pressure of 14.65 Psia and at a base temperature of 60° degrees Fahrenheit.

(h) “DCQ” or “Daily Contract Quantity” for any period means the daily quantity of Product set out in Section 4.1, Exhibit “A”, or as otherwise determined under this Contract for that period.

(i) “Day” means a period beginning at 7:00 a.m. (Central Standard time) on a calendar day and ending at 7:00 a.m. (Central Standard time) on the next succeeding calendar day. The date of a Day shall be that of its beginning.

(j) “Delivery Point” means the interconnection of the McElmo Dome Unit Hovenweep Facility and the McElmo Creek Pipeline.

(k) “Injection Projects” means Buyer’s enhanced oil recovery projects at the Aneth, Ratherford, and McElmo Creek Units in San Juan County, Utah, which includes all unit operations associated with the use of Product for increased hydrocarbon recovery.

(1) “MCF” means 1,000 Cubic Feet of Product.

(m) “Minimum Contract Quantity” means the quantity of Product determined by multiplying the Total Contract Quantity, in MCF, by the MPR, (i.e. Total Contract Quantity x MPR).

(n) “Minimum Monthly Amount” means the amount determined by multiplying the applicable TDCQ, in MCF per Day, by the MPR, by the Unit Price, by the number of Days in the Month, (i.e. DCQ x MPR x Unit Price x # Days in the Month).

(o) “Minimum Monthly Quantity” means the quantity of Product determined by multiplying the applicable TDCQ, in MCF per Day, by the MPR, by the number of Days in the Month, (i.e. DCQ x MPR x # Days in the Month).

(p) “MPR” or “Minimum Purchase Requirement” means the percentage of the Total Contract Quantity of Product that Buyer agrees to take and pay for, or pay for, if not taken, during the Term of this Contract. For purposes of this Contract, the MPR shall be ( ** ) percent (** %).

(q) “MMCF” means 1,000,000 Cubic Feet of Product.

(r) “MMCF/D” means 1,000,000 Cubic Feet of Product per Day.

(s) “Month” means a period beginning at 7:00 a.m. (Central Standard time) on the first Day of a calendar month and ending at 7:00 a.m. (Central Standard time) on the first Day of the next succeeding calendar month.

(t) “OMTCQ” or “Optional Maximum Total Contract Quantity” means the maximum Total Contract Quantity that Buyer may elect pursuant to Sections 3.1, 3.2 and 4.7 of this Contract. For purposes of this Contract, the OMTCQ shall be One Hundred Thirty- E ight Million Seventy Thousand (138,070,000) MCF of Product.

(u) “P-5 WTI” means, for each calendar month, the average of the daily P-5 WTI postings as published in Platt’s “North American Crude Wire” US spot crude assessments (US$/bbl). The P-5 WTI price for Saturdays, Sundays and Monday Holidays and/or any other holidays shall be last posted prices prior thereto.

(v) “Psia” means pounds per square inch absolute,

(w) “Psig” means pounds per square inch gauge.

(x) “Product” means a substance composed primarily of Carbon Dioxide and meeting the specifications set forth in Article IX herein.

(y) “Tender for Delivery” means Seller makes available to Buyer at the Delivery Point, a certain quantity of Product, pursuant to the terms and conditions herein.

(z) “Termination Payment” means an amount of money Buyer will pay Seller if Buyer elects to terminate this contract pursuant to Section 5.5.

(aa) “TDCQ” or “Total Daily Contract Quantity” for any period, means the sum of each Daily Contract Quantity of Product set out in Exhibit “A” for that period, to be delivered for all Injection Projects.

(bb) “Total Contract Quantity” means the sum of the Annual Quantity for each Contract Year during the Term of the Contract per Exhibit “A”.

(cc) “TYQ” or “Total Yearly Quantity” for any period, means the sum of each Injection Project’s Daily Contract Quantity of Product set out in Exhibit “A” for that Year, to be delivered for all Injection Projects, times the number of Days in that Year.

(dd) “Unit Price” means, as to any period, the applicable Product price per MCF determined pursuant to Article V.

ARTICLE II — CONTRACT TERM

     2.1 Term . This Contract shall commence on the date written above as the “Effective Date”. This Contract shall continue to the earlier of 1) the date the Seller has delivered and the Buyer has taken the Total Contract Quantity or 2) December 31, 2016.

     2.2 Extension of Term Due to Force Majeure . The term of this Contract shall automatically extend by the number of days of any suspension of Product delivery or receipt due to a claim of force majeure under Article XIV hereunder. Any such single extension of the Term due to Force Majeure will be limited to one (1) year or until such time as the Force Majeure concludes, whichever is sooner.

ARTICLE III — SCOPE OF CONTRACT

     3.1 Sale and Commitment of Product . Subject to the terms, conditions and limitations of this Contract, Seller shall sell and Tender for Delivery to Buyer, and Buyer shall purchase and receive from Seller, at the Delivery Point, the quantities of Product requested by Buyer, up to the Daily Contract Quantity as specified in Exhibit “A”, and, if applicable, up to the maximum delivery rate, subject to the provisions of Section 4.4 hereunder. Subject only to Seller’s inability to deliver Product as provided for in this Contract, commencing on the Effective Date forward, Seller shall have the exclusive right during the Term of this Contract to supply Buyer with Buyer’s Product requirements for Injection Project(s) except Buyer’s product requirements at existing CO2 Injection Projects that were under contract prior to the Effective Date of this Contract. A projection of Buyer’s Probable Net Uncontracted CO2 Demand is set out in Exhibit B. Should Buyer’s said Product requirements increase, Buyer shall have the obligation to increase, with 180 Days advance written notice to Seller, the DCQ(s), and the TDCQ(s), TYQ(s) and TCQ respectively, up to the OMTCQ, in accordance with the provisions of Section 4.7, except Buyer shall have ninety (90) days from the date of this Contract to elect into the Aneth Unit Expansion volume on Exhibit “B”. If Buyer fails to notify Seller its elects into the Aneth Unit Expansion volume on Exhibit “B”, the OMTCQ will be reduced by 40.62 BCF. Should Buyer so notify Seller of increases such that the TDCQ(s) and the TYQ(s) are greater than quantities projected for corresponding years as set out in Exhibit B, then Seller shall have the right to limit the TDCQ(s) and the TYQ(s) to quantities less than those quantities requested, but not less than the projected TDCQ(s) and the TYQ(s) set out in Exhibit B.

     3.2 Buyer’s Right to Decrease Quantities . If, during the term of this Contract, Buyer sells and conveys subject to Article XV to a third party its interest in an Injection Project that is under CO2 injection, then Buyer may remove such Injection Project, and reduce the TDCQ(s), TYQ(s) and the TCQ respectively, by the quantity of Product specified for such Injection Project in accordance with the provisions of Section 4.7 provided that such third party executes a contract with identical terms and conditions of this Contract to purchase such quantity of product from Seller at the Unit Price provided herein for such Injection Project. In addition, if, during the term of this Contract, Buyer sells and conveys to a third party its interest in an Injection Project that is not under CO2 injection, then neither Buyer nor such third party will have any further obligation to Seller under this Contract as to such Injection Project.

     3.3 Seller’s Right to Decrease Quantities . Seller shall have the right at any time, with 60 Days advance written notice to Buyer, to lower the OMTCQ by the OMTCQ volume not then elected by Buyer in accordance with Section 3.1. Should Seller so notify Buyer of its intention to

lower the OMTCQ, Buyer may, during such 60-Day period, add Injection Projects and/or increase the DCQ(s), TDCQ, TYQ and TCQ, respectively, in accordance with Section 3.1.

     3.4 Other Sales/Purchases . Seller reserves the right to utilize, sell or contract to deliver Product to parties other than Buyer. If at any time, or from time to time, Seller should suffer an inability to deliver the entire TDCQ and the daily contract quantity of other parties, Buyer shall be entitled as its sole and exclusive remedy to receive its share of Seller’s deliverability based on the ratio that the TDCQ bears to the daily contract quantities of all parties. Subsequent to the execution of this Contract, Seller shall make a reasonable good faith effort to anticipate Product availability to meet the TDCQ, and shall not knowingly utilize, sell or contract to deliver volumes of Product to third parties so as to occasion Seller to not be able to Tender for Delivery the TDCQ.

     3.5 Resale of Product . Buyer agrees the purchase of Product under the terms and conditions of this Contract are for Buyer’s sole use exclusively in the Injection Projects and that Buyer shall not resell or exchange Product delivered hereunder to any third party. Produced gas (including Carbon Dioxide) from the Injection Projects is owned by the working interest owners for their own use and may be used or sold at their sole discretion.

     3.6 Carbon Dioxide Reserves/Transportation . SELLER AND BUYER UNDERSTAND AND AGREE THAT SELLER MAKES NO WARRANTY, EITHER EXPRESSED OR IMPLIED, OF CARBON DIOXIDE VOLUMES OR RESERVES AT ANY SOURCE FIELD, CARBON DIOXIDE DELIVERABILITY OR THE TRANSPORTATION OF CARBON DIOXIDE.

     3.7 Operations . Seller reserves the sole and exclusive right to control, manage and operate the source fields as Seller in its sole discretion shall determine. Buyer, and its affiliates, or their successors or assigns, reserves the sole and exclusive right to control, manage and operate the fields on which the Injection Project(s) are located. This shall include by way of example, but not of limitation, the following: (i) drilling of new wells, (ii) repairing, abandoning or reworking of old wells, (iii) the renewal or extension, in whole or in part, of any lease or unit and (iv) the surrender, termination or release of all or any part of a lease.

     3.8 Seller’s Processing Rights . Seller reserves the right, prior to delivery, to process and/or treat carbon dioxide committed hereto for any purpose; provided, only that any Product delivered shall meet the quality specifications hereof, unless waived by Buyer as provided in Section 9.3 of this Contract.

     3.9 Termination of Sale and Purchase Agreement . With the Effective Date of this Agreement, that certain Carbon Dioxide Sale and Purchase Contract between Resolute Natural Resources Company (Buyer) and Kinder Morgan CO2 Company, L.P. (Seller) dated May 25, 2005, as amended, shall be terminated in its entirety. Disposition of any Deficiency Credit Balance will be addressed under Article 5.8 of this Agreement.

ARTICLE IV — QUANTITIES

     4.1 Commencement of Deliveries and Daily Contract Quantity . Commencing with the first day of the Term, Seller shall Tender for Delivery and Buyer shall take at the Delivery Point(s), all quantities of Product requested by Buyer, up to Buyer’s then currently effective DCQ, as specified for each Contract Year in Exhibit “A”, attached hereto. The Total Contract Quantity for Exhibit “A”, which is Seller’s total obligation herein to sell and deliver a quantity of Product, shall be reduced at the end of each Contract Year on a cumulative basis through the Term of this Contract (“Contract Quantity Balance”), by the greater of: (i) the actual quantity of Product delivered to Buyer in that Contract Year, or (ii) by the Annual Quantity applicable for that Contract Year, until the Contract Quantity Balance equals zero.

     4.2 Delivery Rates . Buyer and Seller recognize that due to actual operating conditions, the delivery or receipt of Product may not necessarily be of a constant rate. However, Buyer and Seller agree to cooperate fully with one another to maintain as constant a rate of take as operationally possible and in adjusting Daily and Monthly deliveries hereunder. Seller will not be obligated to Tender for Delivery an amount of Product which can not be accurately measured — such amount being approximately 1 MMCF/D of Product.

     4.3 Monthly Delivery Nominations . Buyer shall notify Seller Monthly by giving at least seven (7) Days advance written notice, of its daily Product volume requirements for the next succeeding Month. In the event Buyer fails to give to Seller the requisite seven (7) Days prior notice, then the daily Product volume requirements shall be the same as those for the then current Month. Upon agreement by Seller, Buyer may request a change in its daily requirements for any particular Month by giving Seller twenty-four (24) hours prior notice of such changes in its daily requirements as may be necessary from time to time. Upon receipt of such notice given to the Seller at the location and number set out below, and subject to Seller’s agreement. Seller shall undertake to conform its deliveries to Buyer’s revised requirements and shall notify Buyer as soon as practical if it is unable to do so. Buyer shall utilize its commercially reasonable efforts to minimize the number of changes in the Monthly nominations. Each oral request for changes in Buyer’s requirements shall be confirmed by written notice by Buyer to Seller within seven (7) business Days after such request.

     4.4 Excess Deliveries . On any given Day during the Term of this Contract, Buyer may request and Seller may Tender for Delivery, a quantity of Product up to 120 % of the Daily Contract Quantity, provided however, it is at Seller’s sole discretion to make available to Buyer deliveries in excess of 100 % of the Daily Contract Quantity, if any.

     4.5 Emergency Shutdown . In the event of an emergency which poses danger to life or property, no prior notice shall be necessary before partial or total shutdown by either Seller or Buyer, but notice of such shutdown and the reason therefore shall be given as soon as practical thereafter, by telephone, facsimile, e-mail or other electronic means at the locations and numbers set out below. The party causing the shutdown shall immediately take all steps commercially reasonable under the circumstances necessary to end such shutdown.

     4.6 Planned Shutdown . In the event a planned shutdown becomes necessary for either Seller or Buyer on a non-emergency basis, such party shall provide thirty (30) Days notice to the other as provided in the Article XVI hereof.

     4.7 Increases and Decreases in Carbon Dioxide Requirements. Buyer shall, in accordance with Sections 3.1, 3.2 and 3.3, increase the OMTCQ and/or add or delete Injection Project(s) and/or increase DCQ(s), and TDCQ(s), TYQ(s) and TCQ respectively, by giving at least 180 Days advance written notice to Seller. With such notice, Buyer shall provide Seller a “Revised Exhibit “A” (containing the DCQ(s) and the initial delivery and anticipated delivery dates attributable to the Injection Project(s) as well as the commensurate adjustments to the DCQ(s), TDCQ(s), TYQ(s) and TCQ up to the OMTCQ).

ARTICLE V — PRODUCT PRICE

     5.1 Unit Price . Effective with the date of first delivery the Unit Price shall be ( ** ) percent ( ** %) times the monthly average of P-5 WTI postings published daily in Platts “North American Crude Wire”. The Unit Price shall never be less than seventy cents ($0.70) per MCF. In the event Buyer fails to exercise the option to add quantities for the Aneth Unit Expansion as provided in Section 3.1 the Unit Price shall be ( ** ) percent ( ** %) times the monthly average of P-5 WTI postings published daily in Platts “North American Crude Wire”, and the Unit Price shall never be less than eighty cents ($0.80) per MCF for the remaining Total Contract Quantity herein.

     5.2 Take-or-Pay Obligation .

     5.3 Deficiency Credit . When the Actual Monthly Amount is less than the Minimum Monthly Amount, the difference between the Minimum Monthly Amount and the Actual Monthly Amount will be credited to Buyer as a “Deficiency Credit”. After a Deficiency Credit balance has been established, the Deficiency Credit balance will be increased each Month by the amount that the Actual Monthly Amount is less than the Minimum Monthly Amount or will be decreased each Month by the amount that the Actual Monthly Amount is greater than the Minimum Monthly Amount. For each Month that the Deficiency Credit is decreased, the Buyer’s Monthly invoice amount will be decreased by the amount that the Actual Monthly Amount is greater than the Minimum Monthly Amount or by the Deficiency Credit balance, whichever is less. In no event will the Deficiency Credit balance be increased or decreased until Buyer makes payment to Seller pursuant to Section 5.2 hereinabove, and in no event will the Deficiency Credit balance be less than zero.

     5.4 Deficiency Credit Expiration . Buyer may carry forward Deficiency Credit balances as its sole and exclusive remedy for a period not to exceed 48 months after the month that the Deficiency Credit is earned, and with a time limit of 24 months after the end of the Term per the terms in Article 2.1. Any Deficiency Credit not applied within 48 months after it is earned, or not applied within 24 months after the end of the Term, hereunder shall automatically terminate without further obligation of Seller.

5.5 Total Contract Quantity Reduction Buyout . One (1) time during the Term of this Contract, Buyer shall have the option but not the obligation to reduce the Total Contract Quantity by not less than ten (10) BCF and not to exceed forty and sixty two hundredths (40.62) BCF by making a payment to the Seller calculated using the following formula:

     Buyout Payment = Current Unit Price per Section 5.1 X Buyout Quantity

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The Contract DCQ’s will be pro-rata reduced over the remaining term of the Contract after payment is received by Seller and a new Exhibit “A” and/or “B” is furnished to Seller by Buyer.

This Section 5.5 applies only to Aneth Unit Expansion volumes so elected under Section 3.1 within ninety days (90) from the effective date of this Contract.

     5.6 Termination Payment . If this Contract is terminated for any reason by Buyer (including, but not limited to Buyer’s failure or inability to remedy a Force Majeure event with all reasonable dispatch as provided in Section 14.1), Buyer will make a Termination Payment to Seller which will be calculated using the following formula:

Termination Payment =

Current Unit Price per Section 5.1 X Total Contract Quantity per Current Exhibit A minus Buyout Option Quantities if Buyer has exercised option under Section 5 . 5 minus Paid For Quantities

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Without limiting each party’s rights to indemnity hereunder, Seller’s right to receive the Termination Payment shall be Seller’s sole and exclusive remedy under this contract for any such default by Buyer. In the event of a finding or judgment that Seller has defaulted on any material obligations of the Seller hereunder, Buyer will not be obligated to make this Termination Payment.

     5.7 Commencement of Payment . Buyer’s obligation to pay Seller, pursuant to this Article V, shall begin on the first day of the Term per Article 2.1

     5.8 Deficiency Credit Balance . In the event Buyer has a Deficiency Credit Balance under that certain Carbon Dioxide Sale and Purchase Contract dated May 25, 2005 as amended between Buyer and Seller, Buyer may then apply such Deficiency Credit Balance to first purchases first taken under this Agreement and applied according to terms of this Agreement.

ARTICLE VI — DELIVERY POINT AND PRESSURE

     6.1 Delivery Point and Pressure . Seller shall Tender for Delivery the Product to Buyer at the Delivery Point. Title to and ownership of all Product delivered under this Contract shall pass to and vest in Buyer at the Delivery Point. Seller shall Tender for Delivery Product at the Delivery Point at a minimum pressure of 1900 Psig, provided that the Seller shall never be obligated to Deliver Product at pressures in excess of 2200 Psig.

ARTICLE VII — TAXES

     7.1 Tax Liability . Seller shall pay or cause to be paid all taxes and assessments imposed on Seller with respect to the