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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): January 18, 2008

DAYBREAK OIL AND GAS, INC.

(Exact Name of Registrant as Specified in its Charter)

Washington	000-50107	91-0626366
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

601 W. Main Ave., Suite 1012 Spokane, WA	99201
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (509) 232-7674

N/A

(Former Name or Former Address if Changed Since Last Report)

Check the appropriate box below if the Form 8K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[     ] Written communications pursuant to Rule 425 under the Securities Act (17CFR230.425)

[     ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17CFR 240.14a-12)

[     ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[     ] Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

SEC 873 (6-04)                                 Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

Item 1.01 Entry into a Material Definitive Agreement.

On January 18, 2008, Daybreak Oil and Gas, Inc.  ("Daybreak"), as seller, entered into a definitive purchase and sale agreement to sell its Tuscaloosa Project properties located in Tensas and Franklin Parishes, Louisiana for $8 million dollars to Lasso Partners , LLC.  The transaction will close in two tranches; the first closing for $2 million, representing 25% of Daybreak's working interest, closed on January 18, 2008.  The second closing in the amount of $6 million is scheduled for March 31, 2008, for the remaining 75% of the Company's working interest.  The sale includes Daybreak's interests in the Tensas Farms A-1, B-1, F-1, F-2 and F-3 wells; and all of its remaining acreage and infrastructure in the project area.  Under terms of the PSA, the effective dates for the respective closings will be January 1, 2008 and, March 1, 2008 and are subject to customary closing conditions.

The foregoing description is qualified by reference to our press release announcing an agreement to sell its Tuscaloosa Project properties located in Tensas and Franklin Parishes, Louisiana, which is filed as Exhibit 99.1 and incorporated by reference herein.

Item 7.01. Regulation FD Disclosure.

The information included under Item 1.01 “Entry into a Material Definitive Agreement” of this report is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

A copy of the press release announcing the agreement to sell its Tuscaloosa Project properties located in Tensas and Franklin Parishes, Louisiana for $8 million dollars is attached hereto as Exhibit 99.1 and the information contained therein is incorporated by reference herein.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

DAYBREAK OIL AND GAS, INC.

By: /s/ James F. Westmoreland                                                                

James F. Westmoreland, Chief Financial Officer

Date:  January 22, 2008

Exhibits

99.1 Press release issued by Daybreak Oil and Gas, Inc. on January 22, 2008, announcing the agreement to sell its Tuscaloosa Project properties located in Tensas and Franklin Parishes, Louisiana for $8 million dollars.

EX-99.1

Exhibit 99.1

Daybreak Sells Louisiana Tuscaloosa Properties for $8 Million,

Prepares to Drill California East Slopes Exploration Project

SPOKANE, Wash., January 22, 2008 -- Daybreak Oil and Gas, Inc. (OTC Bulletin Board: DBRM) (“Daybreak” or “the Company’) a Washington Corporation, today announced that the Company has signed a Purchase and Sale Agreement (“PSA”) to sell its Tuscaloosa Project properties located in Tensas and Franklin Parishes, Louisiana for $8 million dollars to an undisclosed buyer.  The transaction will close in two tranches, the first closing for $2 million, representing 25% of Daybreak's working interest closed on January 18, 2008.  The second closing in the amount of $6 million is scheduled for March 31, 2008, for the remaining 75% of the Company's working interest.  The sale includes Daybreak's interests in the Tensas Farms A-1, B-1, F-1, F-2 and F-3 wells; and all of its remaining acreage and infrastructure in the project area.  Under terms of the PSA, the effective dates for the respective closings will be January 1, 2008 and March 1, 2008, and are subject to customary closing conditions.

Dale Lavigne, Chairman of the Board stated, “The Tuscaloosa Project was one of Daybreak’s legacy properties, and while we feel it still has potential, today’s announced sale will strengthen the Company's balance sheet; provide the Company with current liquidity; position the Company to develop its East Slopes project in Kern County California; and provide capital resources in 2008 which will allow the Company to diversify and expand its portfolio into other areas that will provide opportunities to create value for its shareholders.”

Timothy Lindsey, President and Chief Executive Officer, further commented, “The sale of our interests in the Tuscaloosa Project will provide Daybreak immediate capital to quickly move forward with plans to drill the first four wells in our California East Slopes Project.  We expect to begin drilling in the first or second quarter of 2008.  As announced on January 9, 2008, the 3-D seismic acquisition over the AMI area has been completed and the data is currently being processed.  A portfolio of future drilling prospects will be identified beginning in February 2008.  The wells at East Slopes will be relatively inexpensive to drill and complete compared to the Tuscaloosa wells; a multi-well drilling program targeting moderately risked potential oil resources affords the Company exposure to attractive economic upside.  Available capital resulting from the Tuscaloosa transaction also provides Daybreak with the financial flexibility to pursue other possible projects on a select basis.”

For more information about Daybreak Oil and Gas Inc., please visit its website at www.daybreakoilandgas.com.

Contact:

Tim Lindsey	Telephone:	281-253-4576
	Email:	timl@daybreakoilandgas.com
James Westmoreland	Telephone:	713-829-6062
	Email:	jimw@daybreakoilandgas.com

"Safe Harbor" Statement under Private Securities Litigation Reform Act of 1995: Certain statements contained herein constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Information contained herein contains "forward-looking statements" which can be identified by the use of forward-looking terminology such as "believe", "expect", "may", "should", "up to", "approximately", "likely", or "anticipates" or the negative thereof or given that the future results covered by such forward looking statements will be achieved. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.