PURCHASE AGREEMENT

PURCHASE AGREEMENT
(Cook Inlet)

          THIS AGREEMENT, dated effective as of October 10, 2007, is between DANIEL K. DONKEL (“Donkel”), MONTE J. ALLEN (“Allen”) and SAMUEL H. CADE (“Cade”)(hereinafter collectively referred to as " Sellers " ) and FOX PETROLEUM (ALASKA), INC. (hereinafter called " Buyer " ).

Recitations

          1. State of Alaska Oil and Gas Leases ADL 390746, 390751 and 390752, covering the lands more particularly described on attached Exhibit A (hereinafter called the “ Issued Leases ”), are owned by one or more of the Sellers as reflected by the records of the Division of Oil and Gas, Department of Natural Resources of the State of Alaska;

          2 State of Alaska Oil and Gas Leases ADL 391272, 391274 and 391275, covering the lands more particularly described on attached Exhibit A (hereinafter called the “ Un-issued Leases ”), have not been issued by the State of Alaska as of the date of this Agreement, but Sellers own the rights to said Un-issued Leases as more fully reflected by the records of the Division of Oil and Gas, Department of Natural Resources of the State of Alaska, which said Sellers contemplate will be issued at a date subsequent to the Closing (as hereinafter defined), subject to payment of the remaining cash bonus amount with respect to each of the Un-Issued Leases (being an aggregate amount of approximately $142,250.00) together with the first year rental payment on each Un-Issued Lease (being an aggregate amount of approximately $17,280.00);

          3. For the purposes of this Agreement, the Issued Leases and the Un-issued Leases are hereinafter collectively referred to as the “ Leases ”; and

          4. Sellers desire to sell and convey to Buyer, and Buyer desires to purchase and acquire from Sellers, the Leases upon the terms and conditions hereinafter provided for in this Agreement.

          IN CONSIDERATION of the above recitals and of the benefits to be derived by each of the parties to this Agreement, it is hereby agreed as follows:

Agreement

          1. Sale and Purchase : Sellers agree to sell and convey to Buyer, and Buyer agrees to purchase and acquire from the Sellers, the Leases, subject to the terms and conditions of this Agreement.

          2. Purchase Price : The total purchase price to be paid by the Buyer to the Sellers for the Leases shall be the sum of $750,000.00 (the " Purchase Price " ), payable as

provided below. The Purchase Price is allocated between and among the various Leases as follows:

          3. Payment of Purchase Price.

               (a) The Purchase Price as set forth in Section 2 above shall be paid by the Buyer in installments on the following dates and in the indicated amounts:

$125,000 shall be due and payable on or before Wednesday, October 25, 2007;
$ 75,000 shall be due and payable on or before Friday, November 2, 2007;
$100,000 shall be due and payable on or before Friday, December 7, 2007;
$150,000 shall be due and payable on or before Friday, January 4, 2008;
$150,000 shall be due and payable on or before Friday, February 1, 2008; and
$150,000 shall be due and payable on or before Friday, March 7, 2008; and

               (b) Buyer shall deliver each of the installments of the Purchase Price as set forth in subparagraph (a) above by wire transfer in immediately available funds to an escrow account established by the accounting firm of Ryan, Gunsauls & O’Donnell (the “ Escrow Agent ” ) exclusively for this transaction. The wire transfer instructions are as follows:

               (c) Buyer shall have the right to prepay any installment amount, but not a lesser amount, provided that such prepayment shall not defer or postpone the scheduled date of payment for any remaining installment payment provided for herein.

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          4. Execution and Delivery of Lease Assignments. Within a reasonable time following the Closing, Sellers shall execute, acknowledge (where applicable) and deliver to the Buyer, or cause to be executed, acknowledged (where applicable) and delivered to the Buyer, Assignments of each of the Issued Leases in the form attached as Exhibit B transferring 100% of the record title to the Leases from Sellers to Buyer, or the Buyer’s designee, but reserving to Sellers, in the proportions reflected on attached Exhibit C, an overriding royalty equal to five percent (5%) of 8/8ths, which overriding royalty shall also apply to all renewals and extensions of the Issued Leases

          5. Sellers’ Representations : Each of the Sellers (who makes the following representations only to the extent of the interests owned by each of the Sellers in the Leases) represents, warrants and agrees to and with Buyer that:

               (a) As of the Closing, the Issued Leases are in full force and effect, and Seller has or will have as of the Closing fully complied with all of the terms and provisions thereof which it is obligated to perform for all periods up to the Closing. Sellers shall own or otherwise have the right to assign and convey or cause to be assigned and conveyed the Issued Leases, all of which shall be free and clear of any liens and encumbrances and provide for a net revenue interest to Sellers of not less than 87.5%, prior to reservation of an overriding royalty equal to five percent (5%) of 8/8ths as provided for below.

               (b) At such time as the Un-issued Leases are issued, Sellers shall own or otherwise have the right to assign and convey or cause to be assigned and conveyed the Un-issued Leases, all of which shall be free and clear of any liens and encumbrances and provide for a net revenue interest to Sellers of not less than 87.5%, prior to reservation of an overriding royalty equal to five percent (5%) of 8/8ths as provided for below.

               (c) There is no litigation or governmental investigation or proceeding pending or, to the knowledge of the Sellers, threatened affecting the Leases or which would have the effect of restraining or prohibiting any of the transactions contemplated by this Agreement.

               (d) This Agreement constitutes the valid and binding agreement of Sellers in accordance with its terms, and all instruments required hereunder to be executed by Sellers at the Closing shall constitute valid and binding agreements of Sellers in accordance with their terms. The execution, delivery and performance of this Agreement and the transactions contemplated hereby have been duly and validly authorized by all requisite action on the part of Sellers;

               (e) This Agreement has been duly executed and delivered by Sellers and all instruments required hereunder to be delivered by each party at the Closing shall be duly executed and delivered by Seller;

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               (f) Sellers have incurred no liability, contingent or otherwise, for brokers' or finders' fees in respect of this transaction for which Buyer shall have any responsibility whatsoever;

               (g) Sellers shall not enter into any new agreements or commitments or incur, or agree to incur, any contractual obligation or liability (absolute or contingent) affecting or relating to any of the Leases which extend beyond the Closing except in connection with the consummation of the transactions contemplated in this Agreement, without the written consent of Buyer; and

               (h) Sellers have relied upon their own independent investigation made by each of them and their respective representatives, if any, and have made such investigation of the Leases as deemed appropriate under the circumstances. No Seller has been given any oral or written representations or assurances from any other Seller or the Buyer other than as set forth herein.

          6. Buyer's Representations : Buyer represents, warrants and agrees to and with Sellers that:

               (a) This Agreement constitutes the valid and binding agreement of Buyer in accordance with its terms, and all instruments required hereunder to be executed by Buyer at the Closing shall constitute valid and binding agreements of Buyer in accordance with their terms;

               (b) Buyer has good right and lawful authority to purchase and pay for the Leases as contemplated by this Agreement;

               (c) This Agreement has been duly executed and delivered by Buyer and all instruments required hereunder to be delivered by Buyer at the Closing shall be duly executed and delivered by Buyer;

               (d) Buyer has incurred no liability, contingent or otherwise, for brokers' or finders' fees in respect of this transaction, for which Sellers shall have any responsibility whatsoever; and

               (e) Buyer has relied upon his own independent investigation made by him and his respective representatives, if any, and have made such investigation of the Leases as deemed appropriate under the circumstances. Buyer has not been given any oral or written representations or assurance from Sellers other than as set forth herein.

          7. Sellers’ Conditions of Closing : The obligations of Sellers under this Agreement are subject, at the option of Sellers, to the satisfaction at or prior to the Closing of the following conditions:

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               (a) All representations and warranties of Buyer contained in this Agreement shall be true in all material respects at and as of the Closing as if such representations and warranties were made at and as of the Closing; and

               (b) Buyer shall have performed and satisfied all agreements required by this Agreement to be performed and satisfied by Buyer at or prior to the Closing, including payment on or at Closing to the Escrow Agent of that portion of the Purchase Price which Buyer is obligated to pay as set forth in Section 3(a) above.

          Should the above conditions not be satisfied to Sellers’ satisfaction as of the Closing, Sellers may terminate this Agreement without further liability of either Sellers or Buyer.

          8. Buyer's Conditions of Closing : The obligations of Buyer under this Agreement are subject, at the option of Buyer, to the satisfaction at or prior to the Closing of the following conditions:

               (a) All representations and warranties of Sellers contained in this Agreement shall be true in all material respects at and as of the Closing as if such representations and warranties were made at and as of the Closing; and

               (b) Sellers shall have performed and satisfied all agreements required by this Agreement to be performed and satisfied by Sellers at or prior to the Closing.

          Should the above conditions not be satisfied to Buyer's satisfaction as of the Closing, Buyer shall, as his sole and exclusive remedy, terminate this Agreement without further liability between the Buyer and Sellers.

          9. Closing : Unless extended pursuant to the terms of this Agreement, the closing of this transaction (the “ Closing ”) shall be held on October 25, 2007, at a place and time mutually agreed to by the parties. Notwithstanding the foregoing or any other provision herein, if, by the close of business on October 25, 2007, Anchorage, Alaska time, this Agreement is not fully executed by all signatory parties hereto and if the initial $200,000 installment payment provided for in Section 3(a) above has not been received by the Escrow Agent, then this Agreement shall be null and void and the Buyer and Sellers shall have no further rights or obligations hereunder.

          10. Actions at Closing. At the Closing, the parties shall proceed as follows:

               (a) The Escrow Agent shall release the initial One Hundred Twenty Five Thousand and 00/100 Dollars ($125,000.00) of the Purchase Price received in the Escrow Account to the Sellers in the following amounts:

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               (b) At the Closing and thereafter as may be necessary, all of the parties hereto shall, without further consideration, execute, acknowledge and deliver such other instruments and shall take such other action as may be necessary to carry out their obligations under this Agreement.

          11. Post-Closing Actions by Sellers. Within a reasonable time following the Closing, the Sellers shall execute and deliver the Assignments for each of the Issued Leases to the Buyer in accordance with the provisions of Section 4 above.

          12. Post-Closing Actions by Escrow Agent. After the Closing, the Escrow Agent shall proceed as follows:

               (a) Upon receipt from Buyer of the $75,000.00 installment obligation of the Purchase Price due and payable on or before Friday, November 2, 2007, the Escrow Agent shall release such funds to the Sellers in the following amounts:

               (b) Upon receipt from Buyer of the $100,000.00 installment obligation of the Purchase Price due and payable on or before Friday, December 7, 2007, the Escrow Agent shall release such funds to the Sellers in the following amounts:

               (c) Upon receipt from Buyer of the $150,000 installment obligation of the Purchase Price due and payable on or before Friday, January 4, 2008, the Escrow Agent shall release such funds to the Sellers in the following amounts:

               (d) Upon receipt from Buyer of the $150,000 installment obligation of the Purchase Price due and payable on or before Friday, February 1, 2008, the Escrow Agent shall release such funds to the Sellers in the following amounts:

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               (e) Upon receipt from Buyer of the final $150,000 installment payment (the “ Escrowed Funds ”) of the Purchase Price due and payable on or before Friday, March 7, 2008, the Escrow Agent shall use the Escrowed Funds to pay to the State of Alaska all balances, if any, due on the Un-issued Leases in order to secure the issuance of said Un-issued Leases. Escrow Agent agrees to deliver all funds requested in writing by Sellers in order to secure the issuance of the Un-issued Leases, and to deliver to Sellers the balance, if any, of said Escrowed Funds. If such Un-issued Leases have not been issued by the State of Alaska by September 1, 2008 through no fault of Sellers, Buyer shall have the option to require that all of the Escrowed Funds be remitted to Buyer and further require that Donkel and Cade repay to the Buyer and aggregate of $225,000.00, being the balance of the Purchase Price attributable to the Un-Issued Leases. In such event, Buyer shall have no further claim to the Un-issued Leases. Sellers and Buyer agree to indemnify and hold Escrow Agent harmless for any acts or omissions of Escrow Agent in carrying out the terms of this Agreement; and

               (f) With respect to the additional Seventeen Thousand Two Hundred Eighty and 00/100 Dollars ($17,280.00), the Escrow Agent shall use these funds to:

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