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                                     WARRANT



                           Quest Resource Corporation

                              a Nevada Corporation
                                 (the "Company")

                              To Purchase 1,600,000

                      Shares of the Company's Common Stock

                                    issued to

                        Wells Fargo Energy Capital, Inc.
                               a Texas Corporation
                                 ( "Purchaser")



                                November 7, 2002




     This  Warrant and the Shares  issued upon  exercise  thereof are subject to
repurchase by the Company as provided in the Warrant  Purchase  Agreement  dated
November 7, 2002.

     This Warrant and any Shares acquired upon the exercise of this Warrant have
not been registered under the Securities Act of 1933, as amended, and may not be
transferred,  sold or otherwise  disposed of in the absence of such registration
or an exemption  therefrom  under such Act.  This Warrant and such Shares may be
transferred only in compliance with the conditions specified in this Warrant and
the Warrant Purchase Agreement, a copy of which is available from the Company to
holders of this Warrant.





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<PAGE>

                           Quest Resource Corporation


                                     Warrant



No. W-1                                                       November 7, 2002


     Quest Resource Corporation (the "Company"), a Nevada corporation, for value
received,  hereby  certifies  that Wells Fargo  Energy  Capital,  Inc.,  a Texas
corporation,  or  Permitted  Transferee  (as herein  defined),  is  entitled  to
purchase from the Company 1,600,000 duly authorized,  validly issued, fully paid
and non-assessable  shares of Common Stock, $.001 par value (the "Common Stock")
at any time or from time to time prior to 5:00 p.m., Houston, Texas time, on the
Expiration  Date (as  herein  defined),  all  subject to terms,  conditions  and
adjustments set forth in this Warrant.

     This is the Warrant  (the  "Warrant")  (such term to include  any  warrants
issued in  substitution  therefor)  originally  issued  pursuant  to the Warrant
Purchase Agreement of even date herewith. Certain capitalized terms used in this
Warrant are defined in Article VII; unless otherwise specified, references to an
"Exhibit" mean one of the exhibits attached to this Warrant,  references to an "
Article" mean one of the articles in this Warrant and references to a "Section "
mean one of the sections of this Warrant.

                         ARTICLE I. EXERCISE OF WARRANT

     Section  1.1.  Manner of  Exercise.  This  Warrant may be  exercised by the
holder hereof,  in whole (and not in part) , during normal business hours on any
Business  Day,  by  surrender  of this  Warrant  to the  Company  at its  office
maintained  pursuant  to  subdivision  (a)  of  Section  6.2,  accompanied  by a
subscription in substantially the form attached to this Warrant (or a reasonable
facsimile  thereof) duly executed by such holder and accompanied by payment,  in
cash or by certified or official  bank check payable to the order of the Company
in the amount obtained by multiplying (b) the number of shares of Common Stock (
without giving effect to any adjustment thereof) designated in such subscription
by (c) the Initial Price, and such holder shall thereupon be entitled to receive
the number of duly  authorized,  validly issued,  fully paid and  non-assessable
shares of Common Stock (or Other Securities)  determined as provided in Articles
II through IV. In lieu of  delivering  the number of shares of Common  Stock (or
Other Securities)  calculated under the previous sentence,  the Company shall if
requested  by the holder of this  Warrant,  issue to the holder of this  Warrant
upon  exercise  a number of duly  authorized,  validly  issued,  fully  paid and
non-assessable  shares  of  Common  Stock  (or  Other  Securities)  equal to the
following,  rounded to the nearest whole share:  the quotient of (i) the product
of (x) the  number  of  shares of  Common  Stock  (or  Other  Securities)  to be
delivered  under such  previous  sentence  multiplied by the Market Price of the
Common  Stock  (or  Other  Securities)  on the date of  exercise  minus  (y) the
aggregate  amount the holder is  required  to pay to the  Company as provided in
such sentence upon such exercise, divided by (ii) the Market Price of the Common
Stock (or Other Securities) on the date of exercise.


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<PAGE>


If the Company delivers shares of Common Stock (or Other  Securities)  under the
preceding sentence, then the holder shall not be required to make any payment in
connection with the exercise of this Warrant.

     Section1.2. When Exercise Effective. Each exercise of this Warrant shall be
deemed to have been effected  immediately  prior to the close of business on the
Business Day on which this Warrant shall have been surrendered to the Company as
provided in Section 1.1, and at such time the Person or Persons in whose name or
names any  certificate  or  certificates  for  shares of Common  Stock (or Other
Securities)  shall be  issuable  upon such  exercise  as provided in Section 1.3
shall be deemed to have become the holder or holders of record thereof.

     Section 1.3.  Delivery of Stock  Certificates.  etc. As soon as practicable
after each exercise of this Warrant,  and in any event within five Business Days
thereafter,  the  Company,  at its expense  (including  the payment by it of any
applicable issue taxes), will cause to be issued in the name of and delivered to
the holder  hereof,  subject to Article V, as such holder (upon  payment by such
holder  of  any  applicable   transfer  taxes)  may  direct,  a  certificate  or
certificates for the number of duly authorized,  validly issued,  fully paid and
non-assessable shares of Common Stock (or Other Securities) to which such holder
shall be entitled upon such exercise  plus, in lieu of any  fractional  share to
which such holder would  otherwise  be entitled,  cash in an amount equal to the
same  fraction of the Market Price per share on the Business Day next  preceding
the date of such exercise.

          ARTICLE II. ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERCISE

     Section 2.1.  General:  Warrant Price. The number of shares of Common Stock
which the holder of this Warrant  shall be entitled to receive upon the exercise
hereof shall be determined by  multiplying  the number of shares of Common Stock
which would  otherwise  (but for the  provisions of this Article II) be issuable
upon such exercise,  as designated by the holder hereof pursuant to Section 1.1,
by a fraction (the "Dilution  Factor") (a) the numerator of which is the Initial
Price and (b) the  denominator  of which is the  Warrant  Price in effect at the
effective  time of such  exercise  (as  provided in Section  1.2).  The "Warrant
Price" shall  initially be the Initial  Price,  shall be adjusted and readjusted
from  time  to time as  provided  in this  Article  II and,  as so  adjusted  or
readjusted,  shall remain in effect until a further  adjustment or  readjustment
thereof is required by this Article II.

     Section 2.2.  Issuance of Additional  Shares of Common  Stock.  In case the
Company at any time or from time to time after the date  hereof  shall  issue or
sell Additional  Shares of Common Stock (including  Additional  Shares of Common
Stock deemed to be issued pursuant to section 2.4 or 2.5) without  consideration
or for a consideration per share less than the Dilutive Basis, then, and in each
such case, such Warrant Price shall be reduced,  concurrently with such issue or
sale, to the lower of the prices  (calculated to the nearest cent) determined as
follows:

          (a) by multiplying  the Warrant Price then in existence by a fraction,
     the  numerator  of which shall be (i) the number of shares of Common  Stock
     outstanding immediately prior to such issue or sale plus (ii) the number of
     shares of Common Stock which the  aggregate  consideration  received by the
     Company for the total number of such Additional Shares of


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<PAGE>


     Common Stock so issued or sold would  purchase at the Current Market Price,
     and the  denominator of which shall be the number of shares of Common Stock
     outstanding  immediately  after such issue or sale,  provided that, for the
     purposes of this Section 2.2, (i) immediately  after any Additional  Shares
     of Common  Stock are deemed to have been issued  pursuant to Section 2.4 or
     2.5,  such  Additional  Shares  of  Common  Stock  shall  be  deemed  to be
     outstanding,   and  (ii)  treasury   shares  shall  not  be  deemed  to  be
     outstanding; and

          (b) by  dividing  (i) an amount  equal to the sum of (1) the number of
     shares of Common Stock  outstanding  immediately  prior to such issuance or
     sale multiplied  times the then effective  Warrant Price plus (2) the total
     consideration,  if any,  received  and deemed  received by the Company upon
     such  issue or sale,  by (ii) the total  number  of shares of Common  Stock
     outstanding and deemed outstanding immediately after such issue or sale.

     Section 2.3. Extraordinary  Dividends and Distributions.  If the Company at
any time or from time to time after the date hereof shall declare, order, pay or
make a  dividend  or other  distribution  (including,  without  limitation,  any
distribution  of other or  additional  stock or Other  Securities or property or
Options by way of dividend or spin-off,  reclassification,  recapitalization  or
similar corporate  rearrangement) on the Common Stock, other than (a) a dividend
payable in Additional  Shares of Common Stock or (b) a dividend  payable in cash
or other  property and  declared out of the earned  surplus of the Company as at
the date thereof as increased by any credits (other than credits  resulting from
a revaluation  of property) and decreased by any debits made thereto,  then, and
in each such case, the Warrant Price in effect immediately prior to the close of
business on the record date fixed for the  determination of holders of any class
of  securities  entitled  to receive  such  dividend  or  distribution  shall be
reduced,  effective as of the close of business on such record date,  to a price
(calculated to the nearest cent) determined by multiplying such Warrant Price by
a fraction:

          (a) the numerator of which shall be the Current Market Price in effect
     on such record date or, if the Common Stock trades on an ex-dividend basis,
     on the date prior to the  commencement  of  ex-dividend  trading,  less the
     amount of such dividend or distribution (as determined in good faith by the
     Board of Directors of the Company) applicable to one share of Common Stock,
     and

          (b) the denominator of which shall be the Current Market Price on such
     record date, or if the Common Stock trades on an ex-dividend  basis, on the
     date prior to the commencement of ex-dividend trading.

     Section 2.4. Treatment of Options and Convertible  Securities.  In case the
Company  at any time or from time to time  after the date  hereof  shall  issue,
sell,  grant or  assume,  or shall fix a record  date for the  determination  of
holders  of any  class  of  securities  entitled  to  receive,  any  Options  or
Convertible  Securities,  then, and in each such case, solely for the purpose of
the  calculations  to be made pursuant to this Article II, the maximum number of
Additional  Shares of Common  Stock  (as set  forth in the  instrument  relating
thereto,  without  regard to any provisions  contained  therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or, in the
case


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<PAGE>


of Convertible  Securities and Options  therefor,  the conversion or exchange of
such Convertible Securities,  or, in the case of Appreciation Rights, the number
computed in Section 2.9,  shall be deemed to be the number of Additional  Shares
of Common Stock issued as of the time of such issue,  sale,  grant or assumption
or,  in case  such a record  date  shall  have  been  fixed,  as of the close of
business on such record date (or, if the Common Stock  trades on an  ex-dividend
basis, on the date prior to the commencement of ex-dividend  trading);  provided
that such  Additional  Shares of Common  Stock  shall not be deemed to have been
issued unless the consideration  per share (determined  pursuant to Section 2.6)
of such shares  would be less than the  Dilutive  Basis in effect on the date of
and immediately  prior to such issue,  sale,  grant or assumption or immediately
prior to the close of business  on such  record  date (or,  if the Common  Stock
trades  on an  ex-dividend  basis,  on the  date  prior to the  commencement  of
ex-dividend  trading),  as the case may be; and provided,  further,  that in any
such case in which Additional  Shares of Common Stock are deemed to be issued no
further  adjustment of the Warrant Price shall be made upon the subsequent issue
or sale of Convertible  Securities or Additional Shares of Common Stock upon the
exercise of such  Options or the  conversion  or  exchange  of such  Convertible
Securities.

     Section 2.5. Treatment of Stock Dividends.  Stock Splits.  etc. In case the
Company at any time or from time to time after the date hereof shall  declare or
pay any dividend on the Common Stock payable in Common Stock,  or shall effect a
subdivision of the  outstanding  shares of Common Stock into a greater number of
shares of Common Stock (by  reclassification  or otherwise  than by payment of a
dividend in Common  Stock),  then, and in each such case,  Additional  Shares of
Common  Stock  shall be deemed to have been  issued  (a) in the case of any such
dividend,  immediately  after the close of  business  on the record date for the
determination  of holders of any class of  securities  entitled to receive  such
dividend,  or (b) in the case of any such subdivision,  at the close of business
on the day immediately prior to the day upon which such corporate action becomes
effective.


     Section 2.6.  Computation of Consideration.  For the purpose of Article II,
the following  shall be used to determine the  consideration  received or deemed
received by the Company:

          (a) Shares Actually Issued. The consideration for the issue or sale of
     any Additional Shares of Common Stock shall, irrespective of the accounting
     treatment of such consideration,

               (i) insofar as it consists of cash, be computed at the net amount
          of cash received by the Company,  without  deducting any expenses paid
          or incurred by the Company or any commissions or compensations paid or
          concessions or discounts  allowed to  underwriters,  dealers or others
          performing similar services in connection with such issue or sale,

               (ii)  insofar as it consists of property  (including  securities)
          other than cash,  be computed at the fair value thereof at the time of
          such  issue or  sale,  as  determined  in good  faith by the  Board of
          Directors of the Company, and


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<PAGE>


               (iii) in case  Additional  Shares of Common  Stock are  issued or
          sold  together  with other stock or  securities or other assets of the
          Company for a consideration  which covers both, be the portion of such
          consideration  so  received,  computed  as provided in clauses (i) and
          (ii) above,  applicable to such Additional Shares of Common Stock, all
          as determined in good faith by the Board of Directors of the Company.

          (b) Shares Deemed Issued.  Additional Shares of Common Stock deemed to
     have  been  issued  pursuant  to  Section  2.4,  relating  to  Options  and
     Convertible  Securities,  shall  be  deemed  to  have  been  issued  for  a
     consideration per share determined by dividing,

               (i) the  present  value  (using a  discount  factor  equal to the
          average  interest rate on the Company's  outstanding  indebtedness  to
          financial  institutions and assuming any  consideration  receivable by
          the Company  shall be received at the latest date  possible  under the
          terms of such Options or Convertible  Securities) of the total amount,
          if any,  received and receivable by the Company as  consideration  for
          the issue,  sale,  grant or assumption  of the Options or  Convertible
          Securities  in  question,  plus the  present  value  (using a discount
          factor equal to the average interest rate on the Company's outstanding
          indebtedness to financial  institutions and assuming any consideration
          receivable  by the  Company  shall  be  received  at the  latest  date
          possible under the terms of the Options and Convertible Securities) of
          the minimum aggregate amount of additional consideration (as set forth
          in the instruments  relating thereto,  without regard to any provision
          contained therein for a subsequent adjustment of such consideration to
          protect against  dilution) payable to the Company upon the exercise in
          full of such Options or the conversion or exchange of such Convertible
          Securities or, in the case of Options for Convertible Securities,  the
          exercise of such Options for Convertible Securities and the conversion
          or exchange of such  Convertible  Securities,  in each case  computing
          such consideration as provided in the foregoing subdivision (a), by

               (ii) the maximum number of Additional  Shares of Common Stock (as
          set forth in the instruments  relating thereto,  without regard to any
          provision contained therein for a subsequent adjustment of such number
          to  protect  against  dilution)  issuable  upon the  exercise  of such
          Options or the conversion or exchange of such Convertible Securities.

          (c) Stock Dividends,  etc. Additional Shares of Common Stock issued or
     deemed to have been  issued  pursuant  to Section  2.5,  relating  to stock
     dividends,  stock splits,  etc., shall be deemed to have been issued for no
     consideration.


                                       5





<PAGE>


          (d)  Services.  Additional  Shares of Common  Stock  issued or sold or
     deemed issued or sold in exchange for services shall be deemed to have been
     issued  for the  consideration  determined  in good  faith by the  Board of
     Directors of the Company; not withstanding anything herein to the contrary,
     the term  "Additional  Shares of Common Stock" shall not include any shares
     issued or sold in exchange  for  services if the value of the  services per
     share of Common Stock (as determined above) is equal to at least 75% of the
     Current Market Price (determined as of the valuation date).

     Section 2.7.  Adjustments  for  Combinations,  etc. In case the outstanding
shares of Common Stock shall be combined or consolidated, by reclassification or
otherwise,  into a lesser number of shares of Common Stock, the Warrant Price in
effect   immediately   prior  to  such  combination  or   consolidation   shall,
concurrently  with the  effectiveness of such combination or  consolidation,  be
proportionately increased.

     Section  2.8.  Dilution  in Case of Other  Securities.  In case  any  Other
Securities shall be issued or sold or shall become subject to issue or sale upon
the conversion or exchange of any stock (or Other Securities) of the Company (or
any issuer of Other Securities or any other Person referred to in Article II) or
to subscription, purchase or other acquisition pursuant to any Options issued or
granted by the Company (or any such other issuer or Person) for a  consideration
such as to dilute,  on a basis consistent with the standards  established in the
other  provisions  of this  Article  II,  the  purchase  rights  granted by this
Warrant,  then,  and in  each  such  case,  the  computations,  adjustments  and
readjustments  provided for in this Article II with respect to the Warrant Price
shall be made as nearly as  possible  in the manner so  provided  and applied to
determine the amount of Other  Securities  from time to time receivable upon the
exercise of the Warrant,  so as to protect the holder of the Warrant against the
effect of such dilution.

     Section  2.9.   Appreciation   Rights.  If  the  Company  issues  or  sells
Appreciation  Rights,  a number of  Additional  Shares of Common  Stock shall be
deemed issued for purposes of this Article II and shall be computed as follows:

          (a) Value Based on Dividends.  If the Appreciation  Rights entitle the
     holder thereof to  distributions  or payments  based on or determined  with
     reference  to  dividends  paid or  payable on Common  Stock,  the number of
     Additional  Shares of Common  Stock  deemed  issued  will be the  number of
     shares of Common  Stock that would be  required  to be issued such that the
     holder thereof would receive  distribution  payments equal to those paid or
     payable with respect to such Appreciation Rights.

          (b) Value  Based on  Liquidating  Distributions.  If the  Appreciation
     Rights entitle the holder thereof to  distributions or payments based on or
     determined with reference to liquidation  distributions paid or payable on,
     or  consideration  received,  in  connection  with the  sale,  exchange  or
     transfer of Common Stock,  the number of Additional  Shares of Common Stock
     deemed  issued  will be the number of shares of Common  Stock that would be
     required  to  be  issued  such  that  the  holder   thereof  would  receive
     distributions  or payments  equal to those paid or payable  with respect to
     such Appreciation rights.


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<PAGE>


          (c) Value Based on Dividends  and  Liquidating  Distributions.  If the
     Appreciation Rights entitle the holder thereof to distributions based on or
     determined  with  reference to either  dividends  paid or payable on Common
     Stock and  liquidating  distributions  paid or payable or on  consolidation
     received in connection with the sale, exchange or transfer of Common Stock,
     the number of  Additional  Shares of Common Stock deemed issued will be the
     greater of the amount computed under (a) or (b) above.

          (d) Other  Profits.  If the  Appreciation  Rights  entitle  the holder
     thereof to.  distributions  based on or  determined  with  reference to any
     other measure of profit of the Company,  the number of Additional Shares of
     Common Stock deemed issued will be the value of the Appreciation  Right, as
     determined in the good faith judgment of the Board of Directors, divided by
     the Current Market Price of the Common Stock on the date of issuance of the
     Appreciation Right.

     Section 2.10. Business Combination  Transactions.  Notwithstanding anything
herein to the contrary,  the term "Additional  Shares of Common Stock" shall not
include any shares issued or sold by the Company in connection  with a merger or
consolidation  with,  a purchase  of all or  substantially  all of the assets or
equity of, or any other business  combination  transaction with, another Person,
if the value of the consideration per share of Common Stock (determined pursuant
to Section 2.6(a))  received or receivable from such Person in such  transaction
is equal to at least 75% of the Current Market Price  (determined as of the date
of the definitive agreement for such transaction).

                    ARTICLE III. CONSOLIDATION, MERGER, ETC.

     Section 3.1. Consolidation,  Merger, Sale of Assets,  Reorganization,  etc.
From and after the date hereof,  without the prior consent of the holder of this
Warrant, except as contemplated in Section 3.2 hereof, the Company shall not (a)
consolidate  with or merge  into any  other  Person  if the  Company  is not the
continuing or surviving  corporation of such consolidation or merger, (b) permit
any other Person to  consolidate  with or merge into the Company even though the
Company shall be the continuing or surviving  Person if, in connection with such
consolidation  or merger,  the Common Stock or Other Securities shall be changed
into or exchanged  for stock or other  securities of any other Person or cash or
any other property,  (c) transfer all or substantially  all of its properties or
assets  to  any  other  Person,  or  (d)  effect  a  capital  reorganization  or
reclassification  of the Common Stock or Other Securities  (other than a capital
reorganization or  reclassification  resulting in the issue of Additional Shares
of Common Stock for which adjustment in the Warrant Price is provided in Section
2.2 or 2.3).

     Section 3.2. Assumption of Obligations.  Notwithstanding anything contained
in this Warrant to the contrary,  the Company may effect any of the transactions
described  in  clauses  (a)  through  (d)  of  Section  3.1  if,  prior  to  the
consummation thereof, each Person (other than the Company) which may be required
to deliver any stock,  securities,  cash or property  upon the  exercise of this
Warrant as provided herein shall assume, by written instrument delivered to, and
reasonably  satisfactory to, the holder of this Warrant,  (a) the obligations of
the Company under this Warrant (and if the


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<PAGE>


Company shall survive the  consummation  of such  transaction,  such  assumption
shall be in addition to, and shall not release the Company from,  any continuing
obligations of the Company under this Warrant) and (b) the obligation to deliver
to such holder such shares of stock, securities, cash or property as such holder
may be  entitled  to  receive.  Nothing in this  Article  III shall be deemed to
authorize the Company to enter into any transaction  not otherwise  permitted by
the Loan Agreement.

                ARTICLE IV. OTHER PROVISIONS CONCERNING DILUTION

     Section 4.1.  Other  Dilutive  Events.  In case any event shall occur as to
which the  provisions of Article II or III are not strictly  applicable  but the
failure to make any  adjustment  would not fairly  protect the  purchase  rights
represented  by this  Warrant  in  accordance  with  the  essential  intent  and
principles of such sections, then, in each such case, the Company and the holder
of this Warrant shall in good faith negotiate an appropriate adjustment, if any,
on a basis  consistent with the essential  intent and principles  established in
Articles II and III,  necessary  to  preserve,  without  dilution,  the purchase
rights represented by this Warrant.

     Section 4.2. No Dilution or Impairment.  The Company will not, by amendment
of its  certificate  of  incorporation  or through  any  consolidation,  merger,
reorganization,  transfer of assets, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant,  but will at all times in good faith assist
in the  carrying  out of all such terms and in the taking of all such  action as
may be necessary or  appropriate in order to protect the rights of the holder of
this  Warrant  against  dilution  or  other  impairment.  Without  limiting  the
generality  of the  foregoing,  the Company (a) will not permit the par value of
any shares of stock  receivable  upon the exercise of this Warrant to exceed the
amount payable therefor upon such exercise, (b) will take all such action as may
be  necessary or  appropriate  in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock on the exercise of the
Warrant  from time to time  outstanding,  and (c) will not take any action which
results in any  adjustment of the Warrant Price if the total number of shares of
Common Stock (or Other  Securities)  issuable after the action upon the exercise
of the Warrant would exceed the total number of shares of Common Stock (or Other
Securities) then authorized by the Company's  certificate of  incorporation  and
available for the purpose of issuance upon such exercise.

     Section  4.3.  Company's  Report  as to  Adjustments.  In each  case of any
adjustment or readjustment  in the shares of Common Stock (or Other  Securities)
issuable  upon the  exercise of this  Warrant,  the Company at its expense  will
promptly compute such adjustment or readjustment in accordance with the terms of
this Warrant and prepare a report setting forth such  adjustment or readjustment
and showing in reasonable detail the method of calculation thereof and the facts
upon which such adjustment or  readjustment  is based,  including a statement of
(a)  the  consideration  received  or to be  received  by the  Company  for  any
Additional  Shares of Common Stock issued or sold or deemed to have been issued,
(b)  the  number  of  shares  of  Common  Stock  outstanding  or  deemed  to  be
outstanding, and (c) the Warrant Price in effect immediately prior to such issue
or. sale and as adjusted and  readjusted  (if required by Article II) on account
thereof.  The Company  shall also prepare and certify a report  stating that any
computation  of the fair value of property by the Board of Directors was done in
good faith by the Board of Directors as required herein. The Company will


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<PAGE>


forthwith  mail a copy of each such  report to each  holder of this  Warrant and
will, upon the written request at any time of such holder of a Warrant,  furnish
to such holder a like  report  setting  forth the  Warrant  Price at the time in
effect and showing in reasonable  detail the manner in which it was  calculated.
The Company will also keep copies of all such  reports at its office  maintained
pursuant  to  subdivision  (a) of  Section  6.2 and  will  cause  the same to be
available for  inspection at such office  during normal  business  hours by such
holder.

     Section  4.4.  Notices of  Corporate  Action.  In the event that any of the
following occurs,

          (a) any taking by the  Company of a record of the holders of any class
     of securities  for the purpose of determining  the holders  thereof who are
     entitled to receive any dividend  (other than a regular  periodic  dividend
     payable in cash out of earned surplus in an amount not exceeding the amount
     of the  immediately  preceding  cash  dividend  for such  period)  or other
     distribution,  or any right to subscribe for, purchase or otherwise acquire
     any shares of stock of any class or any other  securities  or property , or
     to receive any other right, or

          (b) any capital reorganization of the Company, any reclassification or
     recapitalization  of the capital stock of the Company or any  consolidation
     or merger involving the Company and any other Person or any transfer of all
     or substantially all the assets of the company to any other Person, or

          (c)  any  voluntary  or   involuntary   dissolution,   liquidation  or
     winding-up  of the  Company,  the  Company  will mail to the holder of this
     Warrant a notice  specifying  (i) the date or expected date as of which any
     such record is to be taken for the purpose of such  dividend,  distribution
     or right,  and the amount and character of such dividend,  distribution  or
     right, and (ii) the date or expected date on which any such reorganization,
     reclassification,   recapitalization,  consolidation,  merger,  transfer  ,
     dissolution,  liquidation  or  winding-up is to take place and the time, if
     any such time is to be fixed,  as of which the  holders of record of Common
     Stock (or Other  Securities)  shall be entitled to exchange their shares of
     Common Stock (or Other  Securities)  for the  securities or other  property
     deliverable upon such reorganization,  reclassification,  recapitalization,
     consolidation,  merger, transfer,  dissolution,  liquidation or winding-up.
     Such  notice  shall be  mailed at least 20 days  prior to the date  therein
     specified.


                                       9





<PAGE>


     Section 4.5.  Registration of Common Stock Prior To Exercise. If any shares
of Common Stock required to be reserved for purposes of exercise of this Warrant
require  registration  with or approval of any governmental  authority under any
federal or state law (other than the  Securities  Act) before such shares may be
issued upon exercise,  the Company will, at its expense and as  expeditiously as
possible,  use its commercially  reasonable best efforts to cause such shares to
be duly  registered or approved,  as the case may be. At any such time as Common
Stock is listed on any national  securities  exchange,  the Company will, at its
expense,  obtain the notice of issuance of the shares of Common  Stock  issuable
upon  exercise of the Warrant and  maintain  the listing of such  shares"  after
their  issuance;  and the  Company  will also list on such  national  securities
exchange,  will  register  under the Exchange Act and will maintain such listing
of, any Other  Securities  that at any time are  issuable  upon  exercise of the
Warrant,  if and at the time  that any  securities  of the same  class  shall be
listed on such national securities exchange by the Company.

     Section 4.6.  Availability of Information.  The Company will cooperate with
the holder of this Warrant or Restricted  Security in supplying such information
as may be  reasonably  requested  by  such  holder  to  complete  and  file  any
information reporting forms presently or hereafter required by the Commission to
report such holder's beneficial ownership of Common Stock or Other Securities or
as a condition to the  availability  of an exemption  from the provisions of the
Securities Act for the sale of any Restricted Securities.

     Section  4.7.  Reservation  of Stock.  etc.  The Company  will at all times
reserve and keep  available,  solely for issuance and delivery  upon exercise of
the  Warrant,  the number of shares of Common Stock (or Other  Securities)  from
time to time issuable  upon exercise of the Warrant.  All shares of Common Stock
(or Other  Securities)  issuable  upon  exercise  of the  Warrant  shall be duly
authorized and, when issued upon such exercise,  shall be validly issued and, in
the case of shares,  fully paid and non-assessable with no liability on the part
of the holders thereof.

     Section 4.8.  Registration  of Common Stock.  If at any time after the date
hereof the Company is eligible to utilize a Form S-3 registration statement, and
continuing for a period of five (5) years thereafter,  a majority in interest of
the holders of the Warrant can require Company to file a Registration  Statement
("Registration  Statement")  pursuant to the  Securities  Act to  register  such
majority in  interest's  shares of common  stock  underlying  the  Warrant  (the
"Registration  Shares") with the  Commission.  The  Registration  Statement will
include the  Registration  Shares.  The Company will use  reasonable  efforts to
cause  the   Registration   Statement  to  become  effective  and  to  keep  the
Registration  Statement  current  until the earlier of (i) the  expiration  of a
period  of two (2)  years  after  the  date  hereof  and (ii)  such  time as the
Registration  Shares may be sold pursuant to Rule 144 without  restriction.  The
Company shall not be obligated to effect more than one registration on behalf of
the holders of the Warrant under this section. The procedure for registering the
Registration  Shares  shall be the  procedure  set  forth in  Section  4.9 below
(provided,   however,  that  no  such  registration  shall  be  pursuant  to  an
underwriting).

     Section 4.9.  Company  Registration of Registration  Shares.  (a) If at any
time or from time to time,  the Company  shall  determine to register any of its
securities, other than a registration


                                       10



<PAGE>


relating solely to employee benefit plans on Form S-8 or similar forms which may
be  promulgated  in  the  future  relating  solely  to  a  Commission  Rule  145
transaction, the Company will:

               (i)  promptly  give written  notice  thereof to the holder of the
          Warrant; and

               (ii) include in such registration (and any related  qualification
          under  blue  sky laws or other  compliance),  and in any  underwriting
          involved therein,  all the Registration  Shares specified in a written
          request or  requests,  made within  thirty (30) days after  receipt of
          such written  notice from the  Company,  by the holder of the Warrant,
          except  as may be  limited  by the  provisions  set  forth in  Section
          4.9(b).

          (b)  Underwriting.  If the  registration  of which the  Company  gives
     notice is for a registered public offering  involving an underwriting,  the
     Company  shall so advise the holder of the Warrant as a part of the written
     notice  given  pursuant to this Section 4.9. In such event the right of the
     holder of the Warrant to registration pursuant to this Section 4.9 shall be
     conditioned upon the holders'  participation  in such  underwriting and the
     inclusion  of the  Registration  Shares in the  underwriting  to the extent
     provided herein.  If the holder of the Warrant proposes to distribute their
     securities through such an underwriting it shall (together with the Company
     and the other shareholders,  if any,  distributing their securities through
     such underwriting)  enter into an underwriting  agreement in customary form
     with  the  underwriter  selected  for  such  underwriting  by  the  Company
     ("Underwriter").  Notwithstanding  any other provision of this Section 4.9,
     if the Underwriter  determines that marketing  factors require a limitation
     of the shares to be  underwritten,  the Underwriter may limit the amount of
     securities  to be  included in the  registration  and  underwriting  by the
     Company's  shareholders;  provided,  however,  the  number  of shares to be
     included in such registration and underwriting by the holder of the Warrant
     shall not be reduced to less than a pro rata basis equal to the  percentage
     ownership  of the  holder's  Common  Stock  relative to the total number of
     shares that might be sold  pursuant to such  registration  statement by all
     Persons  having rights  similar to the  provisions of this Section 4.9. The
     number of shares that may be included in the  registration and underwriting
     shall be allocated among all such shareholders in proportion,  as nearly as
     practicable,  to the respective amounts of securities entitled to inclusion
     in such registration held by such shareholders at the time of filing of the
     registration statement. If any such shareholder disapproves of the terms of
     any such underwriting, he may elect to withdraw therefrom by written notice
     to the Company and the  Underwriter.  Any  Registration  Shares excluded or
     withdrawn from such underwriting shall be excluded from such registration.

          (c) Expenses of Registration.  All registration expenses of the holder
     and the  Company  pursuant  to  Sections  4.8 and 4.9 shall be borne by the
     Company.  All Selling Expenses shall be borne by the Persons  participating
     in the  registration  on a pro rata basis  based on the number of shares so
     registered.


                                       11







<PAGE>


          (d)  Registration  Procedures.  In  the  case  of  each  registration,
     qualification,  or  compliance  effected  by the  Company  pursuant to this
     Agreement,  the Company  will,  upon  request,  inform the holder as to the
     status of each such  registration,  qualification,  and compliance.  At its
     expense the Company will:

               (i) Use  reasonable  efforts to keep such  registration,  and any
          qualification,  or compliance  under state  securities  laws which the
          Company  determines  to obtain,  effective for a period of one hundred
          twenty (120) days or until the holder has completed  the  distribution
          described in the registration  statement  relating thereto,  whichever
          first occurs;

               (ii)  Furnish  such number of  prospectuses  and other  documents
          incident  thereto  as the  holder  from  time to time  may  reasonably
          request.

               (iii) Supply to the holder drafts of the  registration  statement
          for its  review and the  holder  shall  have the right to approve  the
          portions of the registration  statement which relate,  either directly
          or  indirectly,  to the holder,  prior to filing,  provided  that such
          approval is not to be unreasonably withheld;

               (iv) Use its  reasonable  efforts to  register  and  qualify  the
          securities  covered by such  registration  statement  under such other
          securities or blue sky laws of Texas and such other  jurisdictions  as
          shall be reasonably requested by the holder, provided that the Company
          shall  not be  required  in  connection  therewith  or as a  condition
          thereto  to  qualify to do  business  or to file a general  consent to
          service of process in any such states or jurisdictions; and

               (v)  Notify  the  holder  when  a  prospectus  relating  to  such
          registration   statement  is  required  to  be  delivered   under  the
          Securities  Act,  at any time that the  Company  becomes  aware of the
          happening of any event as a result of which the prospectus included in
          such  registration  statement,  as then in effect,  includes an untrue
          statement  of a  material  fact or  omits  to  state a  material  fact
          required  to be stated  therein or  necessary  to make the  statements
          therein  not  misleading  in  the  light  of  the  circumstances  then
          existing.

          (e) Indemnification. In the event any Registration Shares are included
     in a registration  statement  under this Section 4.9: (i) The holder will ,
     if  Registration  Shares held by such holder are included in the securities
     as to  which  such  registration  is  being  effected,  indemnify  and hold
     harmless the Company , each of its  directors,  each of its officers,  each
     person,  if any,  who  controls  the  Company  within  the  meaning  of the
     Securities  Act,  each  underwriter,  if any, of the  Company's  securities
     covered by such  registration,  each person who controls  such  underwriter
     within the meaning of the Securities Act, any other holder


                                       12




<PAGE>


      selling  securities in such registration and any controlling person of any
      such other holder  against any losses,  claims,  damages,  or  liabilities
      (joint  or  several)  to which any of the  foregoing  persons  may  become
      subject,  under the Securities Act or the Exchange Act or other Federal or
      state law,  insofar as such losses,  claims,  damages or  liabilities  (or
      actions  in  respect  thereto)  arise out of or are based  upon any of the
      following   statements,   omissions   or   violations   (collectively,   a
      "Violation"):  (A) any untrue statement (or alleged untrue statement) of a
      material  fact  contained in such  registration  statement,  including any
      preliminary  prospectus  or  final  prospectus  contained  therein  or any
      amendments or supplements thereto; (B) any omission or alleged omission to
      state therein a material fact required to be stated therein,  or necessary
      to make the  statements  therein not  misleading;  or (C) any violation or
      alleged  violation by the Company of the Securities Act, the Exchange Act,
      any  rule  or  regulation  promulgated  under  the  Securities  Act or the
      Exchange  Act or other  Federal or state  law;  in each case to the extent
      that such Violation is a result of the reliance on any written information
      furnished  by such holder  (solely in its capacity as a  stockholder)  for
      inclusion  in such  registration;  and the holder will pay, as suffered or
      incurred,  any legal or other expenses  suffered or incurred by any person
      intended to be  indemnified  pursuant to this Section 4.9(e) in connection
      with investigating or defending any such loss, claim,  damage,  liability,
      or action, , provided,  however, that the indemnity agreement contained in
      this Section  4.9(e) shall not apply to amounts paid in  settlement of any
      such loss,  claim,  damage,  liability,  or action if such  settlement  is
      effected without the consent of the holder,

               (ii) The Company will indemnify and hold harmless the holder,  if
          Registration Shares held by such holder are included in the securities
          as to which such  registration is being effected,  against any losses,
          claims,  damages,  or  liabilities  (joint or  several)  to which such
          holder may be subject, under the Securities Act or the Exchange Act or
          other Federal or state law, insofar as such losses, claims, damages or
          liabilities (or actions in respect  thereto) arise out of or are based
          upon any  Violation to the extent that such  Violation is based on any
          untrue  statement or omission or alleged untrue  statement or omission
          made in reliance upon and in conformity  with any written  information
          furnished  by the  Company;  and the Company  will pay, as suffered or
          incurred , any legal or other  expenses  suffered  or incurred by such
          holder in connection  with  investigating  or defending any such loss,
          claim,  damage,  liability,  or action;  provided,  however,  that the
          indemnity  agreement  contained in this Section 4.9(e) shall not apply
          to  amounts  paid in  settlement  of any  such  loss,  claim,  damage,
          liability or action if such settlement is effected without the consent
          of the Company,  which consent shall not be unreasonably  withheld and
          provided,  further,  that the Company will not be liable, with respect
          to any preliminary prospectus, to any holder for any expenses, claims,
          losses,   damages  and  liabilities  arising  from  the  sale  of  any
          Registration  Shares by such holder to any person if (A) a copy of the
          prospectus  (as  amended  or   supplemented   if  such  amendments  or
          supplements  shall have been furnished to such holder one business day
          prior to the


                                       13



<PAGE>


           confirmation  of the sale involved) shall not have been sent or given
           by or on behalf of such  holder to such  person,  if required by law,
           with or prior to the written  confirmation of the sale involved,  and
           (B) the untrue statement or omission , or alleged untrue statement or
           omission, of a material fact contained in such preliminary prospectus
           from which such  expenses,  claims  losses,  damages and  liabilities
           arose was corrected in the prospectus (as amended or  supplemented if
           such  amendments or supplements  thereto shall have been furnished as
           aforesaid).

          (f) Defense of Claims.  (i) Promptly  after receipt by an  indemnified
     party under this  Section 4.9 of notice of the  commencement  of any action
     (including any  governmental  action),  such  indemnified  party will, if a
     claim in respect thereof is to be made against any indemnifying party under
     Sections 4.8 and 4.9, deliver to the indemnifying party a written notice of
     the commencement thereof and the indemnifying party shall have the right to
     participate in such action at the indemnifying party's expense, and, to the
     extent  the  indemnifying   party  so  desires,   jointly  with  any  other
     indemnifying  party similarly  noticed,  to assume the defense thereof with
     counsel mutually  satisfactory to the parties at the  indemnifying  party's
     expense;  provided,  however,  that an indemnified party (together with all
     other indemnified  parties which may be represented without conflict by one
     counsel )shall have the right to retain one separate counsel, with the fees
     and expenses to be paid by the  indemnifying  party, if  representation  of
     such  indemnified  party or  parties,  as the case may be,  by the  counsel
     retained by the indemnifying  party would be inappropriate due to actual or
     potential  conflicts of interests  between such  indemnified  party and any
     other party represented by such counsel in such proceeding. No indemnifying
     party, in defense of any such claim or litigation,  shall,  except with the
     consent of each  indemnified  party,  consent to entry of any  judgement or
     enter into any settlement which does not include as an  unconditional  term
     thereof the giving by the claimant or plaintiff to the indemnified party of
     a release from all liability in respect to such claim or litigation.

               (ii) If the  indemnification  provided for in this Section 4.9 is
          held by a court of  competent  jurisdiction  to be  unavailable  to an
          indemnified party with respect to any loss, liability,  claim, damage,
          or expense referred to therein, then the indemnifying party in lieu of
          indemnifying such indemnified party hereunder, shall contribute to the
          amount paid or payable by such  indemnified  party as a result of such
          loss,  liability,  claim,  damage, or expense in such proportion as is
          appropriate to reflect the relative fault of the indemnifying party on
          the one hand and of the  indemnified  party on the other in connection
          with  the   statements  or  omissions  that  resulted  in  such  loss,
          liability,  claim,  damage,  or expense as well as any other  relevant
          equitable considerations. The relative fault of the indemnifying party
          and of the  indemnified  party shall be  determined  by reference  to,
          among other things,  whether the untrue or alleged untrue statement of
          a material  fact or the  omission to state a material  fact relates to
          information  supplied by the indemnifying  party or by the indemnified
          party and the parties' relative intent,


                                       14

<PAGE>


           knowledge,  access to  information,  and  opportunity  to  correct or
           prevent such  statement or  omission.  Moreover,  no person or entity
           guilty of fraudulent  misrepresentation within the meaning of Section
           11(f) of the  Securities Act shall be entitled to  contribution  from
           any  person  or  entity  that  was  not  guilty  of  such  fraudulent
           misrepresentation.

               (iii)The  obligations  of each of the parties  under this Section
          4.9 shall  survive the  completion  of any  offering  of  Registration
          Shares   in   a   registration   statement   under   this   Agreement.

          (g)  Information  by Holder.  As a condition  to the  inclusion of its
     Registration Shares, the holder of the Warrant shall furnish to the Company
     such information  regarding it and the distribution  proposed by the holder
     as the  Company  may  request  in  writing  and as  shall  be  required  in
     connection with any registration,  qualification, or compliance referred to
     in Section 4.8 or 4.9 of this Agreement.

          (h) Rule 144 Reporting.  With a view to making available to the holder
     of the  Warrant  the  benefits  of  certain  rules and  regulations  of the
     Commission which permit the sale of the  Registration  Shares to the public
     without registration, the Company agrees to:

               (i) From the date of this Agreement, to use reasonable efforts to
          make  and keep  public  information  available,  as  those  terms  are
          understood and defined in Rule 144 under the Securities Act;

               (ii) Use its reasonable  efforts to file with the SEC in a timely
          manner all reports and other  documents  required of the Company under
          the  Securities  Act and the Exchange Act at any time it is subject to
          such reporting requirements; and

               (iii) From the date of this  Agreement  and so long as the holder
          owns any unregistered  Registration Shares, furnish to the holder upon
          request a written  statement by the issuer as to its  compliance  with
          the reporting requirements of said Rule 144, and of the Securities Act
          and the  Exchange  Act, a copy of the most recent  annual or quarterly
          report of the  Company,  and such other  reports and  documents of the
          Company as the holder may reasonably request in availing itself of any
          rule or  regulation  of the SEC  allowing a purchaser to sell any such
          securities without registration.

          (i) No Transfer of Registration Rights. The right to cause the Company
     to register its Registration Shares granted to the holder of the Warrant by
     the Company  under Section 4.8 and 4.9 may not be assigned by the holder of
     the Warrant.


                                       15



<PAGE>


          (j) Limitations on Subsequent  Registration Rights. From and after the
     date of this  Agreement,  neither the Purchaser nor Company shall,  without
     the prior written consent of the holder of the Warrant, which consent shall
     not be unreasonably  withheld,  enter into any agreement with any holder or
     prospective  holder of any securities of the Company which would allow such
     holder  or  prospective  holder  (a)  to  include  such  securities  in any
     registration filed under provisions similar to Sections 4.8 and 4.9, unless
     under the terms of such  agreement,  such holder or prospective  holder may
     include such  securities in any such  registration  only to the extent that
     the  inclusion  of  its  securities  will  not  reduce  the  amount  of the
     Registration  Shares of the holder of the Warrant  which is included or (b)
     to make a demand  registration  which  could  result  in such  registration
     statement  being declared  effective prior to the date set forth in Section
     4.9(a) or within one hundred twenty (120) days of the effective date of any
     registration effected pursuant to Section 4.9.

                       ARTICLE V. RESTRICTIONS ON TRANSFER

     Section 5.1.  Restriction on Transfer.  This Warrant may not be transferred
or assigned except to a Permitted Transferee.

     Section 5.2.  Restrictive  Legends.  Except as otherwise  permitted by this
Article V, each Warrant  (including each Warrant issued upon the transfer of any
Warrant) shall be stamped or otherwise  imprinted with a legend in substantially
the following form:

     "This  Warrant and any shares  acquired  upon the  exercise of this Warrant
have not been registered  under the Securities Act of 1933, as amended,  and may
not be  transferred,  sold  or  otherwise  disposed  of in the  absence  of such
registration  or an exemption  therefrom  under such Act.  This Warrant and such
Shares may be transferred  only in compliance  with the conditions  specified in
this Warrant."

Except as otherwise  permitted by this  Article V, each  certificate  for Common
Stock (or Other  Securities)  issued upon the exercise of any Warrant,  and each
certificate  issued  upon  the  transfer  of any such  Common  Stock  (or  Other
Securities),   shall  be  stamped  or  otherwise  imprinted  with  a  legend  in
substantially the following form:

     "The shares  represented by this certificate have not been registered under
     the  Securities  Act of 1933 and may not be  transferred  in the absence of
     such registration or an exemption therefrom under such Act."

     Section 5.3. Notice of Proposed Transfer: Opinions of Counsel. Prior to any
transfer  of any  Restricted  Securities  which  are  not  registered  under  an
effective  registration  statement under the Securities Act, the holder thereof,
will give  written  notice to the Company of such  holder's  intention to effect
such  transfer and to comply in all other  respects  with this Section 5.2. Each
such notice (a) shall  describe  the manner and  circumstances  of the  proposed
transfer  and (b) shall  include an opinion of legal  counsel  addressed  to the
Company, in form and substance reasonably satisfactory to the


                                       16




<PAGE>


Company, to the effect that such transfer does not violate the Securities Act of
1933 and applicable state securities laws.

     Section 5.4. Termination of Restrictions.  The restrictions imposed by this
Article V upon the  transferability  of  Restricted  Securities  shall cease and
terminate as to any particular  Restricted Securities when such securities shall
have  been  sold  pursuant  to an  effective  registration  statement  under the
Securities Act or otherwise  become freely  transferable  by the holder thereof.
Whenever  such  restrictions  shall  cease and  terminate  as to any  Restricted
Securities,  the holder  thereof  shall be entitled to receive from the Company,
without expense (other than applicable transfer taxes, if any), new certificates
representing  the  securities  not bearing the  applicable  legends  required by
Section 5.1.

           ARTICLE VI. OWNERSHIP, TRANSFER AND SUBSTITUTION OF WARRANT


     Section  6.1.  Ownership  of  Warrant.  The Company may treat the person in
whose name any Warrant is  registered  on the register kept at the office of the
Company  maintained  pursuant to subdivision (a) of Section 6.2 as the owner and
holder  thereof for all purposes.  Subject to Article V, a Warrant,  if properly
assigned,  may be exercised by a new holder  without a new Warrant  first having
been issued.

     Section 6.2. Office, Transfer and Exchange of Warrant.

          (a) The Company will maintain an office where  notices,  presentations
     and  demands in respect of this  Warrant  may be made upon it.  Such office
     shall be maintained at 914 N.W. 73rd Street,  Oklahoma City, OK 73116 until
     such time as the  Company  shall  notify  each holder of the Warrant of any
     change of location of such office.

          (b) New Warrant.  Upon  surrender of the Warrant (at the office of the
     Company  maintained  pursuant  to  subdivision  (a) of this  Section  6.2),
     properly endorsed, for registration of a Permitted Transfer, the Company at
     its expense will  (subject to  compliance  with  Article V, if  applicable)
     execute  and  deliver  to or upon the  order of the  holder  thereof  a new
     Warrant of like tenor, in the name of such Permitted Transferee.

     Section 6.3.  Replacement of Warrant.  Upon receipt of evidence  reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of the
Warrant, the Company at its expense will execute and deliver, in lieu thereof, a
new Warrant of like tenor.

                            ARTICLE VII. DEFINITIONS

     As used herein, unless the context otherwise requires,  the following terms
have the following respective meanings:


                                       17

<PAGE>


      Additional Shares of Common Stock: All shares (including  treasury shares)
of Common Stock  issued or sold (or pursuant to Section 2.4, 2.5 or 2.9,  deemed
to be issued) by the Company after the date hereof,  whether or not subsequently
reacquired or retired by the Company, other than

          (a) shares issued upon the exercise of the Warrant,

          (b) such  additional  number of shares as may become issuable upon the
     exercise of any of the securities  referred to in the foregoing  clause (a)
     by reason of  adjustments  required  pursuant to  anti-dilution  provisions
     applicable to such securities as in effect on the date hereof,  but only if
     and to the extent that such  adjustments  are required as the result of the
     original issuance of the Warrant, and

          (c) such  additional  number of shares as may become issuable upon the
     exercise of any of the securities  referred to in the foregoing  clause (a)
     by reason of  adjustments  required  pursuant to  anti-dilution  provisions
     applicable to such securities as in effect on the date hereof,  in order to
     reflect any subdivision or combination of Common Stock, by reclassification
     or otherwise, or any dividend on Common Stock payable in Common Stock.

     Affiliate:  A person  that  directly,  or  indirectly  through  one or more
intermediaries,  controls or is controlled  by, or is under common control with,
such person.

     Appreciation  Rights: All stock appreciation  rights, net profits interests
or other rights  entitling the holder or owner thereof to receive payments based
upon or  determined  with  reference to the  distributions  to holders of Common
Stock or the profits of the Company.

     Business  Day:  Any day other than a Saturday or a Sunday or a day on which
commercial  banking  institutions  in  the  States  of  Texas  or New  York  are
authorized by law to be closed.  Any reference to "days"  (unless  Business Days
are specified) shall mean calendar days.

     Commission:  The  Securities  and Exchange  Commission or any other federal
agency at the time administering the Securities Act.

     Common Stock: As defined in the introduction to this Warrant,  such term to
include  (i) any stock into which such Common  Stock shall have been  changed or
any stock  resulting from any  reclassification  of such Common Stock,  (ii) all
other  stock of any class or classes  (however  designated)  of the  Company the
holders of which have the right, without limitation as to amount,  either to all
or to a share of the  balance of current  dividends  and  liquidating  dividends
after the  payment of  dividends  and  distributions  on any shares  entitled to
preference and (iii) all stock  appreciation  rights,  phantom stock and similar
contract  rights  the  holders of which are  entitled  to  payments  based on or
determined by reference to the value of the Common Stock, dividends payable with
respect to Common Stock,  or liquidating  distributions  payable with respect to
Common Stock.


                                       18

<PAGE>


     Company:  As  defined in the  introduction  to this  Warrant,  such term to
include  any Person  which  shall  succeed to or assume the  obligations  of the
Company hereunder in compliance with Article III.

     Convertible  Securities:  Any  evidences of  indebtedness,  shares of stock
(other than Common Stock) or other securities directly or indirectly convertible
into or exchangeable for Additional Shares of Common Stock;  provided,  however,
that the term  "Convertible  Securities" shall not include any securities of the
Company outstanding as of the date of this Warrant.

     Current  Market  Price:  On any date  specified  herein,  the average daily
Market Price during the period of the most recent 20 days,  ending on such date,
on which the national securities exchanges were open for trading, except that if
no Common Stock is then listed or admitted to trading on any national securities
exchange or quoted in the over-the-counter market or the OTC Bulletin Board, the
Current Market Price shall be the Market Price on such date.

     Dilution Factor: As defined in Section 2.1.

     Dilutive Basis: With respect to any issuance or sale or any deemed issuance
or sale of Additional Shares of Common Stock from and after the date hereof, the
greater of (i) the Current Market Price on the day  immediately  before issuance
or deemed  issuance  and (ii) the  Warrant  Price on the day before  issuance or
deemed issuance.

     Exchange Act: The Securities  Exchange Act of 1934, or any similar  federal
statute, and the rules and regulations of the Commission thereunder,  all as the
same shall be in effect at the time.

     Expiration  Date:  November 7, 2007 unless  extended as provided in Section
8.4.

     Initial Price: $0.001.

     Loan  Agreement:  The  mezzanine  revolving  credit  facility  of even date
herewith  pursuant  to which  Purchaser  is  lending  up to  $20,000,000  to the
Company.

     Market Price:  On any date  specified  herein,  the amount per share of the
Common  Stock,  equal to (a) the last sale price of such Common  Stock,  regular
way, on such date or, if no such sale takes  place on such date,  the average of
the  closing  bid and  asked  prices  thereof  on  such  date,  in each  case as
officially  reported on the principal national securities exchange on which such
Common Stock is then listed or admitted to trading,  or (b) if such Common Stock
is not then listed or admitted to trading on any  national  securities  exchange
but is designated as a national  market  system  security by the NASD,  the last
trading  price of the Common Stock on such date, or (c) if there shall have been
no trading on such date or if the Common Stock is not so designated, the average
of the closing bid and asked prices of the Common Stock on such date as shown by
the NASD  automated  quotation  system,  or (d) if such Common Stock is not then
listed  or  admitted  to  trading  on any  national  exchange  or  quoted in the
over-the-counter market or the OTC Bulletin Board, the fair value thereof


                                       19

<PAGE>


determined  in good faith by the Board of  Directors of the Company as of a date
which is within 20 days of the date as of which the determination is to be made.

     NASD: The National Association of Securities Dealers, Inc.

     Options:  Rights,  options  or  warrants  to  subscribe  for,  purchase  or
otherwise  acquire  either  Additional  Shares  of Common  Stock or  Convertible
Securities;  provided,  however,  that the term "Options"  shall not include any
securities of the Company outstanding as of the date of this Warrant.

     Other Securities:  Any stock (other than Common Stock) and other securities
of the Company or any other Person  (corporate or otherwise) which the holder of
the Warrant at any time shall be entitled  to  receive,  or shall have  received
upon the exercise of the Warrant,  in lieu of or in addition to Common Stock, or
which at any time shall be issuable or shall have been issued in exchange for or
in  replacement of Common Stock or Other  Securities  pursuant to Article III or
otherwise.

     Permitted  Transferee:  Any Person who is an Affiliate of the  Purchaser or
who has purchased,  assumed or otherwise acquired, or participates in the rights
of the Purchaser under the Loan Agreement and all of the Loan Documents (as that
term is defined in the Loan Agreement).

     Person: Any corporation,  association,  partnership,  joint venture, trust,
estate,   limited  liability  company,   organization,   business,   individual,
government or political subdivision thereof or governmental agency.

     Registration Shares: means share of Common Stock underlying this Warrant.

     Restricted  Securities:  All of the following:  (a) any Warrant bearing the
applicable  legend or legends referred to in Article V, (b) any shares of Common
Stock (or Other  Securities)  which have been  issued  upon the  exercise of the
Warrant and which are evidenced by a  certificate  or  certificates  bearing the
applicable  legend or legends  referred  to in such  section  and (c) unless the
context  otherwise  requires,  any shares of Common Stock (or Other  Securities)
which are at the time issuable upon the exercise of the Warrant and which,  when
so issued,  will be  evidenced  by a  certificate  or  certificates  bearing the
applicable legend or legends referred to in such section.

     Securities Act: The Securities Act of 1933, or any similar federal statute,
and the rules and  regulations  of the  Commission  thereunder,  all as the same
shall be in effect at the time.

     Selling Expenses: means all underwriting discounts, selling commissions and
stock transfer taxes  applicable to the  Registration  Shares  registered by the
holder of this Warrant and fees of counsel to such holder.

     Transfer: Any sale, assignment, pledge or other disposition of any security
, or of any interest  therein,  which could  constitute a "sale" as that term is
defined in section 2(3) of the Securities Act.

     Purchaser: Wells Fargo Energy Capital, Inc..


                                       20
<PAGE>


     Warrant Price: As defined in Section 2.1 of this Warrant.

     Warrant Purchase Agreement:  That certain Warrant Purchase Agreement by and
between the Company and Purchaser, of even date.

                           ARTICLE VIII. MISCELLANEOUS

     Section 8.1.  Remedies.  The Company stipulates that the remedies at law of
the holder of this Warrant in the event of any default or threatened  default by
the Company in the  performance  of or compliance  with any of the terms of this
Warrant  are not and  will not be  adequate  and  that,  to the  fullest  extent
permitted by law,  such terms may be  specifically  enforced by a decree for the
specific  performance  of any  agreement  contained  herein or by an  injunction
against a violation of any of the terms hereof or otherwise.

     Section 8.2. No Rights or  Liabilities as  Stockholder.  The holder of this
Warrant  and all  subsequent  holders  thereof  hereby  agree that except to the
extent set forth  herein,  no provision  of this  Warrant  shall be construed as
conferring  upon the holder hereof any rights as a stockholder of the Company or
as imposing  any  obligation  on such holder to purchase  any  securities  or as
imposing any liabilities on such holder as a stockholder of the Company, whether
such  obligation or  liabilities  are asserted by the Company or by creditors of
the Company.

     Section  8.3.  Notices.  All  notices and other  communications  under this
Warrant shall be in writing and shall be mailed by registered or certified mail,
return receipt requested,  addressed (a) if to any holder of any Warrant, to the
registered  address  of such  holder  as set forth in the  register  kept at the
principal office of the Company,  or (b) if the Company, to the attention of its
Chief Financial Officer at its office maintained  pursuant to subdivision (a) of
Section 6.2, provided that the exercise of any Warrant shall be effective in the
manner provided in Article I.

     Section 8.4. Miscellaneous.

          (a) This Warrant may be amended, waived,  discharged or terminated and
     the Company may take any action herein required to be performed by it, only
     if the Company shall have obtained the written  consent to such  amendment,
     action or omission to act, of the holder of the Warrant.

          (b) THIS WARRANT SHALL BE CONSTRUED  AND ENFORCED IN  ACCORDANCE  WITH
     AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS

          (c)  The  section  headings  in  this  Warrant  are  for  purposes  of
     convenience only and shall not constitute a part hereof.


                                       21

<PAGE>


                                    QUEST RESOURCE CORPORATION


                                    By:         /s/ Douglas L. Lamb
                                          ----------------------------------
                                          Douglas L. Lamb
                                          President


                                    By:         /s/ Jerry D. Cash
                                          ----------------------------------
                                          Jerry D. Cash
                                          Treasurer/Chief Financial Officer


                                       22

<PAGE>


                              FORM OF SUBSCRIPTION

To________________________________:

     The undersigned  registered holder of the within Warrant hereby irrevocably

exercises such Warrant for, and purchases  _________*  shares of Common Stock of

___________________________,   and  herewith   makes  payment  of   $___________

therefore,  and requests that the  certificates  for such shares be -- issued in

the  name  of,  and  delivered  to   _____________________,   whose  address  is

_________________________________________.



Dated:                                       (Signature must conform in all
                                             respects to name of holder as
                                             specified on the face or Warrant)


                                             ________________________________
                                             (Street Address)


                                             ________________________________
                                             (City) (State) (Zip Code)


                                             ________________________________



     *Insert the number of shares called for on the face of this Warrant without
making any adjustment  for Additional  Shares of Common Stock or any other stock
or other  securities  or  property or cash  which,  pursuant  to the  adjustment
provisions of this Warrant, may be delivered upon exercise.


                                       23

<PAGE>


                               FORM OF ASSIGNMENT


                 [To be executed only upon transfer of Warrant]

     For value received, the undersigned registered holder of the within Warrant

hereby sells,  assigns and transfers unto the right  represented by such Warrant

to  purchase  shares of  Common  Stock of to which  such  Warrant  relates,  and

appoints  Attorney  to make such  transfer on the books of  maintained  for such

purpose,  with  full power  of  substitution in the  premises.


Dated:                                       (Signature must conform in all
                                             respects to name of holder as
                                             specified on the face or Warrant)


                                             ________________________________
                                             (Street Address)


                                             ________________________________
                                             (City) (State) (Zip Code)


                                             ________________________________


Signed in the presence of:

_________________________________


                                       24