PURCHASE AND SALE AGREEMENT

1.

SALE AND PURCHASE OF ASSETS

1.1

Assets To Be Sold .

1.1.1

Seller shall sell, transfer, assign, and deliver to Buyer, and Buyer shall purchase and receive all of Seller's right, title, and interest in and to the Assets set forth on Exhibit “A” attached hereto.

1.1.2

The transfer of the Assets shall occur and be made at Closing (as hereinafter defined in Section 9.2.1), and title to the Assets shall be made effective as of the Effective Date (as hereinafter defined in Section 2.2).  Seller and Buyer shall execute such additional documents as may be necessary to transfer the interests herein sold and purchased on the records of any purchaser of hydrocarbons produced from or allocable to the Assets.

1.2

Conveyancing Instruments .  The Assets to be conveyed by Seller to Buyer pursuant to Section 1.1.1 shall be conveyed subject to the express conditions, warranties and limitations contained in this Agreement.  The Assets to be transferred to Buyer pursuant to Section 1.1.1 shall be transferred pursuant to an Assignment and Bill of Sale.

2.

PURCHASE PRICE AND EFFECTIVE DATE

2.1

Purchase Price .  As consideration for the sale of the Assets, Buyer shall pay to Seller or its respective designee the purchase price set forth in Exhibit “B” attached hereto.

2.2

Effective Date of Sale .  The effective date of the sale of the Assets described in Section 1.1, hereof, shall be as of 5:00 p.m. on October 22, 2009, Central Time Zone (the "Effective Date”).

3.

ASSUMPTION OF LIABILITIES AND INDEMNIFICATION .

3.1

Abandonment Obligations .  Seller shall continue to operate the Assets on behalf of Buyer after Closing pursuant to an industry standard operating agreement and shall continue to be responsible for timely and fully satisfying all Abandonment Obligations (as defined below) associated with the Assets.  As used herein, the term “Abandonment Obligations” shall mean and include all obligations associated with and liability for (i) the plugging and abandonment of the Wells, (ii) the removal of structures, facilities, foundations, wellheads, tanks, pipelines, flowlines, pumps, compressors, separators, heater treaters, valves, fittings and equipment and machinery of any nature located on or used in connection with the Assets,  and (iii) the clearance, restoration and remediation of the surface and cleanup of the lands covered by the Leases associated with the Assets.

3.2

Contract Obligations .  Seller’s affiliates shall continue to serve as the Operator for the Assets on and after the Effective Date, and shall observe and comply with all covenants, terms, and provisions, express or implied, contained in the Assumed Contracts and Buyer, subject to and conditioned upon the occurrence of the closing, as of the Effective Date, hereby assumes and agrees to be responsible for all obligations of Seller accruing under such Assumed Contracts on or after the Effective Date.  If any agreement or contract which is not an Assumed Contract and which materially affects the value of the Assets is discovered by Buyer or brought to Buyer’s attention by a third party after Closing, Seller and Buyer shall negotiate to resolve the assignment of rights and the assumption of obligations under such agreement or contract.  In the event the parties are unable to agree, then the matter shall be resolved by arbitration in accordance with provisions of Section 10.3. Seller shall retain all obligations and liabilities under any such disputed contract during the pendency of arbitration.

3.3

Buyer’s General Indemnification .  Buyer shall indemnify, defend and hold Seller, its directors, officers, employees, agents and representatives and affiliated or parent companies (which additional parties are hereinafter collectively referred to as the “Seller’s Parties”) harmless from any and all Claims (as hereinafter defined) arising out of, related to or connected with Buyer’s ownership of the Assets on or after the Effective Date, or arising out of any of the obligations or liabilities assumed by Buyer hereunder.  As used in any provision of this Agreement,  “Claims” shall mean all liabilities, losses, costs, damages, fees and expenses (including, without limitation, expenses associated with investigation of claims, testing, assessment and remedial actions), penalties, fines, obligations, judgments, costs of investigation, attorney’s fees, expert’s fees and disbursements of any kind or of any nature whatsoever, claims, actions, causes of action, demands, filings, investigations, and all costs of any administrative proceedings, arbitrations, settlements, mediations, suits or other legal proceedings.

3.4

Assumption and Indemnification of Environmental Risk and Environmental Liabilities by Buyer .  Buyer shall assume full responsibility for, and shall comply with and perform all environmentally-related duties and obligations with respect to the Assets for periods of time from and after the Effective Date and shall indemnify, defend and hold harmless Seller from and against any and all Claims under any Environmental Law (hereafter defined) with respect to the Assets for periods of time from and after the Effective Date.  The term “Environmental Law” here and in Section 4.6 means the Occupational Safety and Health Act, 29 U.S.C.A. §651, et seq .; the Resource Conservation and Recovery Act, 42 U.S.C.A. §6901, et seq .; the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.A. §9601, et seq .; the Clean Water Act, 33 U.S.C.A. §1251 et seq .; the Clean Air Act, 42 U.S.C.A. §7401, et seq .; the Safe Drinking Water Act, 42 U.S.C.A. §3001, et seq .; the Toxic Substances Control Act, 15 U.S.C.A. §2601 et seq .; the Oil Pollution Act of 1990, 33 U.S.C.A. §2701 et seq .; and all rules, regulations and orders adopted under the foregoing statutes applicable to any waste material, produced water, tank bottoms, sludge, or constituents thereof, radioactive materials, or hazardous substances on or included with the Assets or the presence, disposal, release or threatened release of all waste material, produced water, tank bottoms, sludge, or constituents thereof, radioactive materials, or hazardous substances on, included with, or from the Assets into the atmosphere or in or upon land or any water course or body of water, whether above or below the ground, and all other federal, state and local environmental and oil and gas laws and regulations, as well as all acts, laws, and regulations amendatory or supplemental thereto. As of the Effective Date, Seller represents that it not aware of any breach of any Environmental Law pertaining to the Assets.

3.5

Nothing contained in this section 3 shall act as a release or waiver of Seller for any acts or conditions in existence prior to the Effective Date.

3.6

Buyer expressly acknowledges and agrees that Claudio R. Roman has acted solely in his capacity as President and CEO of Seller, and not individually, with respect to this transaction and has no personal responsibility, involvement or liability for this matter in his individual capacity.

4.

TAXES AND PAYABLES

4.1

Payment of Taxes . All real estate, occupation, ad valorem, Equipment taxes and charges on any of the Assets, whether past, present or future, known or unknown, matured or unmatured, shall be prorated between Buyer and Seller as of the Effective Date.  Buyer shall be responsible for all oil and gas production taxes, severance taxes, windfall profits taxes, and any other similar taxes applicable to the Assets arising after the Effective Date. Both of the parties believe that the sale of the Assets is one occasional sale exempt from sales or use taxes.  In the event that any such taxes would be assessed against the transaction, however, Buyer assumes the sole risk and responsibility therefor and shall be solely responsible for all such taxes.

5.

REPRESENTATIONS AND WARRANTIES

5.1

Seller's Representations and Warranties .  Seller represents and warrants to Buyer that, as of the date  hereof and as of Closing, the following statements are accurate:

5.1.1

Formation .  Seller is a corporation duly organized and validly existing, in good standing, under the laws of the State of Texas. Seller has the corporate power and authority to own the Assets and to carry on its business as now conducted and to enter into and to carry out the terms of this Agreement.

5.1.2

Authorization .  The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on behalf of Seller and Seller is not subject to any charter, by-law, lien, or encumbrance of any kind, agreement, instru­ment, order, or decree of any court or governmental body (other than any governmental approval required) which would prevent consummation of the transactions contemplated by this Agreement.

5.1.3

No Brokers .  Seller is not a party to, or in any way obligated under, nor does Seller have any knowledge of, any contract or outstanding claim for the payment of any broker's or finder's fee in connection with the origin, negotiation, execution, or performance of this Agreement for which Buyer will have any liability.

5.1.4

Asset Value .  As of the Effective Date, Seller warrants and guarantees that the Assets shall have a minimum fair market value of at least $22,500,000. The term “fair market value” as used herein means the Present Value Discounted by 10% as used by the NYMEX (PV10). In the event that the fair market value of the Assets as of the Effective Date is determined to be less than $22,500,000 pursuant to the third party Reserve Report provided by Seller and acceptable to Buyer, then the parties agree that the purchase Price for the Assets shall be adjusted accordingly and the parties shall execute such documents as are reasonably necessary to accomplish such adjustment. Seller further represents and warrants that there is no pending or threatened environmental claim or dispute under any Environmental Law and to the best of Seller’s good faith knowledge and belief, none is likely to occur as a result of all facts known to Seller about the Assets.

5.2

Buyer's Representations and Warranties .  Buyer represents and warrants to Seller that, as of the date hereof and as of Closing, the following statements are accurate:

5.2.1

Formation .  Buyer is a corporation duly organized and validly existing, in good standing, under the laws of the State of Nevada and is or will be prior to Closing, duly qualified to carry on its business in each of the states in which it is required to be qualified and has the corporate power and authority to own its property and to carry on its business as now conducted and to enter into and to carry out the terms of this Agreement and the transactions contemplated by this Agreement.

5.2.2

Authorization .  The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on behalf of Buyer and Buyer is not subject to any charter, by-law, lien or encumbrance of any kind, agreement, instrume­nt, order or decree of any court or governmental body which would prevent consummation of the actions contemplated by this Agreement.

5.2.3

No Brokers .  Buyer is not a party to, or in any way obligated under, nor does Buyer have any knowledge of, any contract or outstanding claim for the payment of any broker's or finder's fee in connection with the origin, negotiation, execution, or performance of this Agreement for which Seller will have any liability.

5.2.4

DISCLAIMER OF WARRANTY BY SELLER . EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, SELLER MAKES THIS SALE OF THE ASSETS TO BUYER WITHOUT ANY WARRANTY AS TO THE CONDITION OF THE ASSETS, INCLUDING ABSENCE OF VICES OR DEFECTS (WHETHER APPARENT OR LATENT, KNOWN OR UNKNOWN, EASILY DISCOVERABLE OR HIDDEN), FITNESS FOR ANY ORDINARY USE, OR FITNESS FOR ANY INTENDED USE OR PARTICULAR PURPOSE, EVEN FOR RETURN OR REDUCTION OF THE PURCHASE PRICE OR OTHERWISE, IT BEING UNDERSTOOD THAT BUYER TAKES THE ASSETS "AS IS" AND "WHERE IS".  IN ADDITION, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, BUYER ACKNOWLEDGES THAT SELLER HAS MADE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE CONDITION OF THE ASSETS, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OR REPRESENTATIONS AS TO ABSENCE OF VICES OR DEFECTS (WHETHER APPARENT OR LATENT, KNOWN OR UNKNOWN, EASILY DISCOVERABLE OR HIDDEN), FITNESS FOR ANY ORDINARY USE, FITNESS FOR ANY INTENDED USE OR PARTICULAR PURPOSE, TAX CONSEQUENCES, ENVIRONMENTAL CONDITION. IN ADDITION, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, SELLER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AS TO THE ACCURACY OR COMPLETENESS OF ANY DATA, REPORTS, RECORDS, PROJECTIONS, INFORMATION OR MATERIALS NOW, HERETOFORE OR HEREAFTER FURNISHED OR MADE AVAILABLE TO BUYER IN CONNECTION WITH THIS SALE, INCLUDING WITHOUT LIMITATION, THE QUALITY, QUANTITY OR ENVIRONMENTAL CONDITION OF THE ASSETS OR ANY OTHER MATTERS CONTAINED IN THE DATA OR ANY OTHER MATERIALS FURNISHED OR MADE AVAILABLE TO BUYER BY SELLER, ITS AGENTS, REPRESENTATIVES OR EMPLOYEES.  ANY AND ALL SUCH DATA, RECORDS, REPORTS, PROJECTIONS, INFORMATION AND OTHER MATERIALS FURNISHED BY SELLER OR OTHERWISE MADE AVAILABLE TO BUYER ARE PROVIDED TO BUYER AS A CONVENIENCE, AND EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, SHALL NOT CREATE OR GIVE RISE TO ANY LIABILITY OF OR AGAINST SELLER.

6.

DUE DILIGENCE REVIEW