PURCHASE AND SALE AGREEMENT

Exhibit 10.1

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is dated the 2 ^nd day of February, 2005, by and between NEWARK VALLEY OIL & GAS INC. (hereinafter referred to as “Seller”) and ZIER & ASSOCIATES, LTD., (hereinafter referred to as “Buyer”).

WHEREAS, Seller desires to sell, assign and convey to Buyer and Buyer desires to purchase and accept certain oil and gas leasehold interests and related property rights of Seller located in Valley and Phillips Counties, Montana; and

WHEREAS, the parties have reached agreement regarding such sale and purchase.

NOW, THEREFORE, for valuable consideration and the mutual covenants and agreements herein contained, Seller and Buyer agree as follows:

ARTICLE 1. DEFINITIONS

1. Definitions: In this Agreement, capitalized terms have the meanings provided in this Article, unless expressly provided otherwise in other Articles. All defined terms include both the singular and the plural. All references to Articles refer to Articles in this Agreement, and all Exhibits refer to Exhibits attached to and made a part of this Agreement.

“Affiliate” means and includes any entity that, directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with the entity specified. Control means ownership of 50% of the voting stock of such entity.

“Assignment” means an assignment conveying the Properties in the form attached hereto as Exhibit C.

“Business Days ” means the days of Monday through Friday, except legal holidays.

“Claim” or “Claims” means any and all claims, demands, suits, causes of action, losses, damages, liabilities, fines, penalties and costs (including reasonable attorneys’ fees and costs of arbitration, mediation, investigation or litigation).

“Closing” means the consummation of the conveyance of the Properties from Seller to Buyer.

“Closing Date” means the execution date of this Agreement such that Closing shall occur simultaneously with the execution of this Agreement.

“Effective Time” means 12:01 a.m., Mountain Standard Time, on the Closing Date.

“Environmental Laws” means all Laws which are promulgated, issued or enacted by a governmental entity or tribal authority having appropriate jurisdiction that relate to (a) the prevention of pollution or environmental damage, (b) the remediation of pollution or environmental damage, or (c) the protection of the environment generally, including without limitation, the Clean Air Act, as amended, the Clean Water Act, as amended, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Federal Water Pollution Control Act, as amended, the Resource Conservation and Recovery Act of 1976, as amended, the Safe Drinking Water Act, as amended, the Toxic Substance and Control Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as amended, the Hazardous and the Solid Waste Amendments Act of 1984, as amended, and the Oil Pollution Act of 1990, as amended, and analogous state Laws.

“ Gulf Coast Agreement ” means that certain “Offer to Purchase” by and between Gulf Coast Oil and Gas Company and Howell Spear (jointly as “vendor”), and Newark Valley Oil & Gas Inc., (as “purchaser”), executed by the vendor on December 19, 2001, as terminated in accordance with the terms and provisions of that certain Termination of Offer to Purchase and Agreement to Reduce Overriding Royalty Interest by and among Gulf Coast Oil and Gas Company, Estate of Howell Spear, Deceased; and Newark Valley Oil & Gas, Inc., and ratified therein by Zone Exploration, Inc., John Fredlund, and Zier & Associates, Ltd., dated effective January 24, 2005.

“Laws” means laws, statutes, ordinances, permits, decrees, orders, judgments, rules or regulations (including, without limitation, Environmental Laws) which are promulgated, issued or enacted by a governmental entity or tribal authority having appropriate jurisdiction.

“Permitted Encumbrances” means:

“Properties” means:

a. All of Seller’s right, title and interest in, to and under, or derived from, all of the oil and gas leases and other mineral leases described on Exhibit A (the “Leases”), subject only to the overriding royalties and similar burdens set forth on Exhibit A;

b. All interests that Seller may hereafter acquire in Federal oil and gas leases for which Seller made application within the Area of Mutual Interest established under the Gulf Coast Agreement, the issuance of which has been suspended by the Bureau of Land Management, to the extent that such applications are listed on Exhibit “A” attached hereto (as Pre-Sale Offers) and to the extent that such applications are subsequently issued to Applicant (the “Suspended Leases”);

c. all of the presently existing and contracts and agreements pertaining to the Leases, including, without limitation, farmout agreements, farmin agreements, joint operating agreements, surface use agreements, and similar agreements to the extent, and only to the extent, described on Exhibit B (the “Contracts”);

d. all files, records, property tax reports and records, and right-of-way records, surveys, maps, plats, correspondence and other documents and instruments pertaining to the Leases and the other properties described in a., through d., above (the “Records”).

The “Properties” expressly excludes, and Buyer will not acquire, any wells or wellbores, whether or not plugged and abandoned, located on the Leases.

ARTICLE 2. TRANSFER OF THE PROPERTIES

2.1 Purchase and Sale . On the Closing Date and effective as of the Effective Time, and upon the terms and conditions herein set forth, Seller agrees to sell and assign the Properties to Buyer and Buyer agrees to buy and accept the Properties; provided, however, the Suspended Leases shall be assigned to Buyer at the time, if at all, that the Suspended Leases are issued to Applicant.

ARTICLE 3. PURCHASE PRICE AND ACCOUNTING

3.1 Purchase Price . The total consideration paid by Buyer for the Properties shall be an amount equal to One Million One Hundred and Thirty Five Thousand and No/100 Dollars ($1,135,000.00). The Purchase Price shall be paid in accordance with the terms and conditions of the Escrow Agreement attached hereto as Exhibit E. At the time that the Suspended Leases are issued to Applicant and assigned to Buyer, no additional consideration will be due Seller for such Suspended Leases.

3.2 Expenses . Seller shall be and remain responsible for all expenses and related accounts payable arising in the ordinary course of business attributable to the Properties, to the extent they relate to the time prior to the Effective Time. Buyer shall be responsible for the payment of all expenses and related accounts payable arising in the ordinary course of business attributable to the Properties, to the extent they relate to time after the Effective Time.

ARTICLE 4. [Intentionally Omitted]

ARTICLE 5. INDEMNITIES

5.1 Seller’s Retained Obligations . Seller shall remain liable for all Claims, obligations and liabilities relating to, arising out of, or connected, directly or indirectly, with the ownership, use or operation of the Properties pertaining to the period of time before the Closing Date during which Seller owned record title to the Leases, including without limitation, claims relating to (a) injury or death of any person or persons whomsoever, (b) damage to or loss of any property or resources, (c) pollution, environmental damage or violation of Environmental Laws, (d) common law causes of action such as negligence, gross negligence, strict liability, nuisance or trespass, or (e) fault imposed by statute, rule, regulation or otherwise (the “Retained Obligations”).

5.2 Seller’s Indemnity Obligation . Seller shall release Buyer from and shall fully protect, indemnify and defend Buyer, its officers, agents, employees and Affiliates, and each of their respective successors and assigns, and hold them harmless from and against any and all Claims arising directly or indirectly out of the Retained Obligations.

5.3 Buyer’s Assumed Obligations. Buyer shall assume all Claims, obligations and liabilities relating to, arising out of, or connected, directly or indirectly, with the ownership, use or operation of the Properties pertaining to the period of time on and after the Closing Date, including without limitation, claims relating to (a) injury or death of any person or persons whomsoever, (b) damage to or loss of any property or resources, (c) pollution, environmental damage or violation of Environmental Laws, (d) common law causes of action such as negligence, gross negligence, strict liability, nuisance or trespass, or (e) fault imposed by statute, rule, regulation or otherwise (the “Assumed Obligations”).

5.4 Buyer’s Indemnity Obligation . Buyer shall release Seller from and shall fully protect, indemnify and defend Seller, its officers, agents, employees and Affiliates, and each of their respective successors and assigns and hold them harmless from and against any and all Claims arising directly or indirectly out of the Assumed Obligations.

5.5 Notice and Cooperation . If a Claim is asserted against a party for which the party would be liable under the provisions of this Article, it is a condition precedent to the indemnifying party’s obligations hereunder that the indemnified party gives the indemnifying party written notice of such Claim setting forth full particulars of the Claim, as known by the indemnified party, including a copy of the Claim (if it was a written Claim). The indemnified party shall make a good faith effort to notify the indemnifying party within one (1) month of receipt of a Claim and shall in all events effect such notice within such time as will allow the indemnifying party to defend against such Claim and no later than three (3) calendar months after receipt of the Claim by the indemnified party. The notice of a Claim given hereunder is referred to as a “Claim Notice.” Notwithstanding that written notice is a condition precedent to the indemnifying party’s obligation hereunder, indemnification shall not be denied for failure to provide such written notice through inadvertence, error, omission, or otherwise, unless such failure to provide written notice materially adversely affects the defense against the Claim.

5.6 Defense of Claims .

a. Counsel . Upon receipt of a Claim Notice, the indemnifying party may assume the defense thereof with counsel selected by the indemnifying party and reasonably satisfactory to the indemnified party. The indemnified party shall cooperate in all reasonable respects in such defense. If any Claim involves Claims with respect to which Buyer indemnifies Seller and also Claims for which Seller indemnifies Buyer, each party shall have the right to assume the defense of and hire counsel for that portion of the Claim for which it may have liability. The indemnified party shall have the right to employ separate counsel in any Claim and to participate in the defense thereof, provided the fees and expenses of counsel employed by an indemnified party shall be at the expense of the indemnified party, unless otherwise agreed between the parties.

b. Settlement . If the indemnifying party does not notify the indemnified party within the earlier to occur of: (i) time response is due in any litigation matter, or (ii) three (3) calendar months after receipt of the Claim Notice, that the indemnifying party elects to undertake the defense thereof, the indemnified party has the right to defend, at the expense of the indemnifying party, the Claim with counsel of its own choosing, subject to the right of the indemnifying party to assume the defense of any Claim at any time prior to settlement or final determination thereof. In such event, the indemnified party shall send a written notice to the indemnifying party of any proposed settlement of any Claim, which settlement the indemnifying party may accept or reject, in its reasonable judgment, within thirty (30) days of receipt of such notice, unless the settlement offer is limited to a shorter period of time in which case the indemnifying party shall have such shorter period of time in which to accept or reject the proposed settlement. Failure of the indemnifying party to accept or reject such sett