PURCHASE AND SALE AGREEMENT

Exhibit 10.4

PURCHASE AND SALE AGREEMENT

     THIS AGREEMENT dated this 11 ^th day of June, 2008, (the “Effective Date”) is between MACUM ENERGY, INC., a Montana corporation (“Macum”), with its offices located at 730 Main Street, Suite 103, Billings, MT 59105; Harold & Eva Holden Living Trust dated 1995, Harold & Eva Holden, Trustees, Box 1743, Billings, MT 59103; Winifred Gas Partnership, 3015 Stanford Drive, Billings, MT 59102; Goodridge Resources, Inc., 2049 Interlachen Drive, Billings, MT 59105; Vincent T. Larsen, P.O. Box 2297, Billings, MT 59103; Dr. David T. Larsen, 4815 Cranbrook Drive East, Colleyville, TX 76034; Pic Productions, Inc., 3024 MacTavish Circle, Billings, MT 59101; Stanley & Beverly Stott Living Trust dated 4/30/96, Stanley & Beverly Stott, Trustees, 211 Glenhaven Drive, Billings, MT 59105; and Faith Drilling Inc., P.O. Box 369 Chinook, MT 59523.(collectively referred to herein as “Seller”), and KYKUIT RESOURCES, LLC, an Ohio corporation, or its nominee (“Buyer”), with its offices located at 8500 Station Street, Suite 345, Mentor, Ohio 44060.

     WHEREAS, Seller desires to sell, and Buyer desires to purchase, upon the terms and conditions hereinafter set forth, all of Seller’s right, title and interest in and to the following:

	(i)		All of Seller’s interest in, to and under approximately 34,971 acres of oil and gas leases located in Blaine and Fergus Counties, Montana, including leasehold interests, mineral fee interest, rights and interests attributable or allocable to the oil and gas leases or leasehold interest by virtue of pooling, unitization, communitization, and operating agreements, licensees, permits and other agreements, all more particularly described on Exhibit “A” hereto, together with identical undivided interests in and to all the property and rights incident thereto (collectively the “Leases”), including, but not limited to, all rights in, to and under all agreements, product purchase and sale contracts, including any and all past, present and future take-or-pay claims, leases, permits, rights-of-way, easements, licenses, farmouts, farmins, options, orders and other contracts or agreements of similar nature in any way relating thereto;
	(ii)		All of Seller’s interest attributable to the Leases in and to all of the wells described on Exhibit “B” (the “Wells”), and all equipment, inventory, materials and other personal property, fixtures and improvements on the Leases or relating to the Wells as of the Closing Date, or used or obtained in connection with the Leases or the Wells or with the production, treatment, sale or disposal of hydrocarbons or waste produced therefrom or attributable thereto, and all other appurtenances thereunto belonging (the “Equipment”);
	(iii)		The pipeline facilities attributable to the Leases that are identified on Exhibit “C” attached hereto (the “Pipelines”);
	(iv)		All other leasehold interests, royalty and overriding royalty interest owned by Seller in, to and under the Leases or attributable to production therefrom attributable to the Leases as of the Closing Date (as hereinafter defined);

	(v)		All unitization, communitization, pooling, operating or transportation agreements, and the units created thereby which relate to the Leases, the Wells, or the Pipelines attributable to the Leases, all of which are identified on Exhibit “D” attached hereto;
	(vi)		All rights to claim revenues or gas resulting from any underproduction attributable to Seller’s interest in the Leases; and
	(vii)		All lease files, land files, well files, oil and gas sales contracts files, gas processing files, division order files, abstracts, title opinions, and all other books, files, maps, logs and records, and all rights thereto, of Seller related to and necessary to the realization of value by Buyer of any of the property purchased hereunder (the “Records”). All of Seller’s interest in the assets described in paragraphs (i) through (vi) above is hereinafter collectively referred to as the “Interests”.

     The Interests sold and assigned under this Agreement do not include trade credits, accounts and notes receivable, and adjustments or refunds (including without limitation transportation tariff refunds, take-or-pay claims, and audit adjustments) attributable to the property with respect to any period before the Closing Date.

     NOW, THEREFORE, in consideration of the above recitals and of the covenants and agreements herein contained, Seller and Buyer agree as follows:

1. Purchase and Sale . Subject to an upon all of the terms and conditions herein set forth, Seller shall sell, transfer, assign, convey and deliver the Interests to Buyer, and Buyer shall purchase, receive, pay for an accept the Interests from Seller, effective as of 12:01 a.m. of the day following the Closing Date (as hereinafter defined). Except as otherwise specifically provided in this Agreement, all costs, expenses and obligations relating to the Interest which were incurred or accrue prior to the Closing Date shall be paid and discharged by Seller; and all costs, expenses and obligations relating to the Interests which were incurred or accrue after the Closing Date shall be paid and discharged by Buyer.

2. Purchase Price .

(a)

The purchase price for the Interests shall be Two Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00) (the “Purchase Price”), subject to any applicable purchase price adjustment as provided for herein;

Seller and Buyer agree that the Purchase Price has been calculated based upon a purchase price for the Leases of Fifty Dollars ($50,00) per acre. In the event that, due to a due diligence defect, Seller purchases more or less than 34,971 acres at Closing, the Purchase Price shall be adjusted up or down accordingly.

(b)

The Purchase Price, as adjusted, shall be paid by Purchaser as follows:

(i)

Within five (5) business days after receiving a fully executed copy of this Agreement from Seller, Buyer shall pay a deposit in the amount of Fifty

Thousand and 00/100 Dollars ($50,000.00) (the “Initial Deposit”) to Seller as an earnest money deposit, to be credited against the Purchase Price at Closing. The Initial Deposit shall be nonrefundable except in the event of a Seller’s Default, as defined herein, in which case Seller shall return the Initial Deposit to Buyer within three (3) business days after Buyer notifies Seller of its termination pursuant to Section 24(b) hereof.

(ii)

The balance of the Purchase Price shall be paid in immediately available funds to Seller on the Closing Date.

3. Definitions . As used herein, the term:

(a)

“Defensible Title” shall mean, as to the Interest, such title held by Seller, that subject to and except for Permitted Encumbrances (as hereinafter defined);

	(i)		Entitles Seller to receive not less than the “Net Revenue Interest” as set forth in Exhibit “F” of all oil, gas and associated liquid and gaseous hydrocarbons produced, saved and marketed from the Interests;
	(ii)		Obligates Seller to bear costs and expenses relating to the maintenance, development, and operation of all wells located on the Interests in an amount not greater than the “Working Interests” set forth in Exhibit “F”; and is free and clear of any and all encumbrances, liens and defects.

(b)

The term “Permitted Encumbrances”, as used herein, shall mean:

	(i)		Lessors’ royalties, overriding royalties, and reversionary interests if the net cumulative effect of such burdens does not operate to reduce the Net Revenue Interest of any Interest to less than the Net Revenue Interest set forth in Exhibit “F”;
	(ii)		Sales contracts covering oil, gas or associated liquid or gaseous hydrocarbons, all of which are identified on Exhibit “G” attached hereto;
	(iii)		Any required third party consents to assignments and similar agreements with respect to which waivers or consents are obtained from the appropriate parties, all of which are identified on Exhibit “H” attached hereto;
	(iv)		Liens for taxes or assessments not due or not delinquent on Closing;
	(v)		All rights to consent by, required notices to, filings with, or other actions by governmental agencies in connection with the sale or conveyance of oil and gas leases or interests therein or sale of production therefrom if the same are prudently obtained subsequent to such sale or conveyance;
	(vi)		Easements, rights-of-way, servitudes, permits, surface leases, and other rights of public record with respect of surface operations on or over any of

the Interests which do not operate to interfere with current or proposed operations on the Interests; and

(vii)

Any Title Defects or other defects that are expressly waived by Buyer pursuant to the terms of this Agreement.

(c)

The term “Title Defect”, as used herein, shall mean:

	(i)		Any encumbrance, encroachment, irregularity, defect in or objection to Seller’s title to the Interests (expressly excluding Permitted Encumbrances) that renders Seller’s title to the Interests less than Defensible Title;
	(ii)		Seller is in default under some material provision of a lease, farmout agreement or other contract or agreement affecting the Interests which could interfere with the operation, value or use thereof, prevent Seller from receiving the proceeds of production attributable to Seller’s interest therein; or result in cancellation of Seller’s interest therein;
	(iii)		Any provision or obligation affecting the Interests contained in any contract or agreement disclosed in the Records which is not customary to currently accept oil and gas industry standards and requires an extraordinary expenditure in connection with the acquisition, exploration, development or operation of the Interests or would materially diminish the Net Revenue Interest set forth on Exhibit “F”, or materially increase the Working Interest set forth on Exhibit “F”.

	(d)		The term “Due Diligence Defect” shall mean (i) any Title Defect(s), and (ii) any other condition which Buyer discovers in its Due Diligence Review Period which renders the Interests unfit for Buyer’s intended use for any reason whatsoever in Buyer’s sole and absolute discretion.
	(e)		The term “Environmental Defect” shall mean a violation (i) of any environmental or work place safety statute, rule, regulation or order of any governmental agency having jurisdiction over the Interests and (ii) to which remedial or corrective action either is required or would be undertaken by a prudent operator.

4. Due Diligence Investigation . From and after the Effective Date of this Agreement and continuing for a period of thirty (30) days (the “Original Due Diligence Review Period “), Seller will make available to Buyer for examination and copying any of the Records as Buyer may request, including, but not limited to, engineering and geological data, reports, maps, electric logs, mud logs, production logs, well records relating to the Interests, files relating to claims against or relating to the Interests, and information relating to the physical condition of the Interests and the land adjoining the Interest, including, if any, results of any water or soil testing, NORM and PCB evaluations, and all other records of Seller connected with the Interests which are necessary or desirable in order for Buyer to conduct a due diligence review (the “Due Diligence Investigation”). In the event that Seller fails to provide any documents requested by Buyer as part of its due diligence review, then the Due Diligence Review Period shall be

automatically extended by the number of days of Seller’s delay. Buyer may extend the Due Diligence for an additional fifteen (15) days upon written notice to Seller delivered prior to the expiration of the Original Due Diligence Period. If Buyer exercises its right to extend the Due Diligence Period, then the Original Due Diligence Period and the fifteen (15) day extension period shall be collectively referred to herein as the “Due Diligence Review Period”.

5. Due Diligence Defects and Remedies . Buyer shall notify Seller in writing of any Due Diligence Defect within twenty (20) days after the end of the Due Diligence Review Period. Such notice shall contain a detailed description of each due Diligence Defect. Any matters that may otherwise constitute a Due Diligence Defect but that are not specifically and timely raised in writing by Buyer shall be deemed to have been waived, provided, however, that Seller shall be required to remove all monetary liens encumbering the Interests prior to Closing regardless of whether Buyer timely objects to the same in writing.

     Upon receipt of such notice from Buyer, Seller shall have the right, but not the obligation, to correct any Due Diligence Defect prior to Closing, other than monetary liens which must be satisfied by Seller prior to Closing. In the event Seller determines it is unwilling to correct a Due Diligence Defect, Seller shall so notify Buyer in writing within fifteen (15) days of receipt of notice from Buyer of such Due Diligence Defect.

     In the event Seller declines to correct any Due Diligence Defect and that Due Diligence Defect is not waived by Buyer, then the parties shall meet to attempt to determine a mutually agreeable reduction in the Purchase Price to reflect the reduced value of the Interests as a result of the Due Diligence Defect. In the event that, despite the parties’ good faith negotiations, no agreement as to an adjustment to the Purchase Price can be reached, then either party may terminate this Agreement as provided in Section 22 hereof.

6. Conditions of Closing by Buyer . The obligation of Buyer to close is subject to the satisfaction of the following conditions:

	(a)		Buyer shall have completed its Due Diligence Investigation and shall not have terminated this Agreement as a result of any Due Diligence Defect pursuant to Section 5 hereof;
	(b)		Seller shall have obtained and delivered to Buyer all prerequisite waivers of preferential rights of purchase and all necessary consents for transfer of the Interests;
	(c)		The representations of Seller contained in Section 8 shall be true on and as of closing;
	(d)		Seller shall have performed in all material respects all of its covenants and agreements contained in this Agreement;
	(e)		Prior to Closing, there shall not have been a material adverse change in the Interests, in the reasonable opinion of Buyer, taken as a whole, excepting depletion due to normal production and depreciation of equipment through ordinary wear and tear;

	(f)		Prior to or at Closing, neither Seller nor Buyer shall have knowledge of any bona fide suit, action or other proceeding or investigation before any court or before any governmental agency or submission by any governmental agency of information relating to the subject matter of the transaction contemplated under this Agreement or any other bona fide material claim or demand, pending (1) in which the consummation of this Agreement or the transaction contemplated hereby may be restrained, prohibited, invalidated, set aside or delayed in whole or in part, or (2) in which damages are sought in connection with the consummation of this Agreement. Buyer has specifically acknowledges that it has been made aware of the following lawsuit: CV 00-039-6F-DWM;
	(g)		All actions to be taken by Seller in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be satisfactory in form and substance to Buyer; and
	(h)		Prior to Closing, Buyer shall have obtained all material permits, licenses or consents required by any governmental authority or other entity.

7. Conditions of Closing by Seller . The obligation of Seller to close is subject to the satisfaction of the following conditions:

	(a)		[INTENTIONALLY OMITTED]
	(b)		The representations of Buyer contained in Section 9 hereof are true on and as of Closing.

8. Representations of Seller . Each Seller jointly and severally represents to Buyer that to the best of his/her/its knowledge:

	(a)		Macum is a corporation validity existing and in good standing under the laws of the State of Montana and is duly qualified to own its properties and assets and to carry on its business as now being conducted;
	(b)		Each Seller has the requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by each Seller and the consummation of the transactions contemplated hereby have been duly authorized;
	(c)		This Agreement has been duly executed and delivered by each Seller and constitutes the valid and binding obligation of each Seller, enforceable against it in accordance with the terms hereof, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights. No other act, approval or proceeding on the part of any Seller or any other party is required to authorize the execution and delivery of this Agreement by any Seller or the consummation of the transactions contemplated hereby;

	(d)		With regard to each Seller that is a corporation or other entity, this Agreement, and the execution and delivery hereof by each such Seller, does not and the consummation of the transactions contemplated hereby will not conflict with or result in a breach of the charter or bylaws of any such Seller or any other governing documents of any such Seller;
	(e)		This Agreement, and the execution and delivery hereof by each Seller, does not and the consummation of the transactions contemplated hereby will not violate, or conflict with, or constitute a default under, or result in the creation or imposition of any security interest, lien or encumbrance upon any property or assets of any Seller under any mortgage, indenture or agreement to which it is a party or by which the Interests are bound, which violation, conflict or default might adversely affect the ability of any Seller to perform its obligation under this Agreement, or (ii) violate and statute or law or any judgment, decree, order, writ, injunction, regulation or rule of any court or governmental authority, which violation might adversely affect the ability of any Seller to perform its obligations under this Agreement;
	(f)		The Leases are in full force and effect, enforceable on their terms, and comply with all regulatory requirements and laws, ordinances, statutes and regulations and convey good and marketable title to the mineral rights described therein, and are fre