<PAGE>

                              POTOMAC ENERGY CORPORATION
                                 1400 FOUNDERS TOWER
                                 5900 MOSTELLER DRIVE
                          OKLAHOMA CITY, OKLAHOMA 73112-4605
                     TELEPHONE 405/840-1427     FAX 405/840-4697

                                    April 24, 1997

The GHK Company, L.L.C.
6305 Waterford Boulevard, Suite 470
Oklahoma City, Oklahoma 73118

Attention: Larry A. Ray

Re:  Letter of Intent dated February 27, 1997, by and between the GHK Company,
     L.L.C. and Potomac Energy Corporation (the "Letter of Intent")

Dear Larry:

     Please be advised that Potomac Energy Corporation has assigned all of its
right, title and interest under the Letter of Intent to Potomac Energy
(Bermuda), Ltd.  Potomac Energy (Bermuda), Ltd. by its signature below agrees to
be bound by all of the terms and conditions of the Letter of Intent the same as
if it were a signature party thereto.

Please indicate the GHK Company L.L.C.'s agreement to the aforesaid assignment
by signing and returning one copy of this letter to us.

                                             Sincerely yours,

                                             /s/ Frank Mahan,
                                             --------------------------
                                             Frank Mahan, President


AGREED TO AND ACCEPTED BY:                   AGREED TO AND ACCEPTED BY:

THE GHK COMPANY, L.L.C.                      POTOMAC ENERGY (BERMUDA), LTD.

/s/ Larry A. Ray   4/24/97                   /s/ Frank Mahan, President
--------------------------                   --------------------------
Larry A. Ray                                 Frank Mahan, President

<PAGE>

                                   LETTER OF INTENT

The GHK Company L.L.C. (GHK), 6305 Waterford Boulevard, Suite 470, Oklahoma
City, OK 73118 and Potomac Energy Corporation (PEC), 1400 Founders Tower, 5900
Mosteller Drive, Oklahoma City, OK 73112 have had various communications
regarding properties in Colombia, South America referred to as the Rosa Blanca
Block and the Montecristo Block.  The Montecristo Block has sometimes been
referred to as Rosa Blanca Block II.  These lands are more fully set out on the
plat attached as Exhibit "A" hereto and are hereinafter referred to as the
"Blocks."

PEC has for some time been in communication with Empresa Colombiana De Petroleos
(Ecopetrol) concerning the issuance of Association Contracts covering the
Blocks.  At PEC's invitation, GHK has visited the Ecopetrol data room in Bogota,
Colombia and reviewed various seismic and other information pertaining to the
Blocks.  GHK is now interested in pursuing, along with PEC, the issuance of
these Association Contracts from Ecopetrol.  GHK and PEC now believe that they
should go forward together in negotiating said Association Contracts from
Ecopetrol with joint GHK and PEC commitments as hereinafter set out:

(1)  Successful negotiation of the Association Contracts shall result in 75%
     ownership to GHK's Columbian branch company and 25% ownership to PEC's
     Colombian branch company.  Both GHK and PEC are aware that in order to hold
     title under an Association Contract a branch company must be formed and
     approved in Colombia, S.A.
(2)  The maximum work commitments to be negotiated with Ecopetrol for each
     Association Contract will be as follows:
          (a)  Rosa Blanca Block: (i) First Year reprocess two hundred miles of
               seismic, landsat acquisition and interpretation, aerial photo
               work and also conduct additional surface geology work which may
               or may not include some geochemical surveys.  Anticipated costs
               for this program, excluding overhead, are approximately U.S.
               $120,000.00 (this is confidential to GHK and PEC).  (ii) Years
               two through six (Exploration) drill one well per year or release.

               Ecopetrol has advised us the Buturama Block has been shown on
               maps as being reserved by Ecopetrol, but that this is in error
               and we could probably get this acreage included in our Rosa
               Blanca contract.

          (b)  Montecristo Block: (i) First Year reprocess three hundred and
               fifty miles of seismic and in addition perform similar landsat
               acquisition and interpretation, aerial photo work and surface
               geology work as proposed for the Rosa Blanca Block.  Anticipated
               costs, excluding overhead, are approximately U.S. $180,000.00
               (again confidential to GHK and PEC).  (ii) Years two through six
               (Exploration) drill one well per year or release.

<PAGE>

          (c)  There will be an annual Transfer of Technology obligation of
               approximately $50,000.00 in each of the Association Contracts
               during the initial six (6) year Exploration Period.

(3)  GHK will perform the negotiations with Ecopetrol, but will work with PEC
     and keep them advised of the status at all times.  If GHK does not agree to
     Ecopetrol's terms, it will stand aside and let PEC pursue the Association
     Contracts for its own account at PEC's sole cost and expense.
(4)  Upon successful issuance of the Association Contracts, GHK agrees to pay
     PEC the sum of $150,000.00.
(5)  GHK will be responsible for and put up any initial guarantee for the
     performance of exploratory works under the Association Contracts if
     required by Ecopetrol.
(6)  The usual Association Contract requires the Colombian branch of the
     Associate to be qualified within sixty (60) days after issuance.  If PEC is
     not qualified for 25% of the Contracts to issue in its Colombian branch at
     that time, GHK will hold in trust such interest for an additional period of
     three (3) months.  Within said three (3) month period PEC shall: (a) become
     qualified to do business in Colombia, (b) reimburse GHK 25% of any initial
     guarantees required for the signing of the Association Contracts, and (c)
     be financially capable and agree to pay 25% of the costs to perform the
     First Year obligations of the Association Contracts from issuance.  If PEC
     is unable, within said three (3) month additional period, to pay for its
     share of any guaranty to Ecopetrol or First Year obligations under the
     Association Contracts, PEC shall forfeit all rights to its interest in the
     Association Contracts.
(7)  GHK and PEC agree that their Colombian branch subsidiaries will enter into
     an International Operating Agreement with accounting procedure for each
     Contract area naming the GHK Colombian branch company as Operator.  The
     International Operating Agreement with attached accounting procedure shall
     be in the form attached hereto as Exhibit "B".

The Parties hereto confirm their understanding of the above set out terms and
conditions by signing in the spaces provided herein below this 27th day of
February, 1997.

                                             THE GHK COMPANY, L.L.C.

                                             By: /s/ Larry A. Ray
                                                 -------------------

                                             POTOMAC ENERGY COMPANY

                                             By: /s/ [ILLEGIBLE]
                                                 -------------------