FM ENERGY LLC
                                 7827 BERGER AVE
                             PLAYA DEL RAY, CA 90298
                                 (310) 823-7495



November 2, 1998


Board of Directors
Colorado Wyoming Reserve Company
1801 Broadway, Suite 600
Denver, CO  80202

Re:     Offer to Purchase
        Lake Darling Prospect
        Renville Co., ND

Gentlemen:

FM Energy LLC ("FM LLC") hereby offers to purchase all of Colorado Wyoming
Reserve Company's ("CWRC") one hundred percent (100%) interest in and to the
Mustang Oil Company and CRWC properties including the leasehold, wells,
fixtures, personal property and equipment located on the leasehold or used in
connection with the operation of any well, including any other rights and
interests appurtenant or incident to the foregoing (hereinafter referred to as
"Properties"), further described on Exhibit "A" Attached hereto.

As consideration for the Properties, FM LLC shall deliver the following to CWRC:

        (1) Fifty thousand dollars ($50,000.00) in the form of a cashiers check
or a wire transfer to presented to CWRC at the time of closing.

        (2) All past due compensation to Kim Fuerst for his services as
President of CWRC for the months of June, July, August, September and October,
1998, totaling Fifty Thousand Dollars ($50,000.00) shall be considered paid in
full to Kim Fuerst.



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Colorado Wyoming Reserve Company
Page 2
November 2, 1998


        (3) An extension past the previously due date of October 31, 1998, until
November 30, 1998, of the loan repayment date for the "Bridge Loan" granted by
Jim Moore to CWRC in the amount of $120,000.00.

Additionally, FM LLC agrees to make the purchase subject to the following:

        (1) That certain Contract Operator Agreement and Operating Agreement
entered into March 13, 1998 between CWRC and S T Oil Company ("STOC"), which
appoints STOC as its managing agent and attorney-in-fact to act in CWRC's name
and to serve as operator of record of the Properties, and which entitles STOC to
a Five Percent (5.00%) working interest in the Leases and Wells, at payout,
being further defined in the referenced Contract Operator Agreement.

        (2) STOC's approval of the assignment of CRWC's rights and obligations
created in the aforementioned Contract Operator Agreement and Operating
Agreement dated March 13, 1998.

        (3) That certain Consulting Agreement dated October 16, 1997, between
CWRC and Trinity Petroleum Exploration, Inc. ("TPE") whereby TPE is entitled to
a ten percent (10%) leasehold working interest in and to all the Properties,
said interest to be free of the costs of drilling, plugging and abandoning or
completing any wells drilled thereon through the tanks, which interest shall
automatically increase to an undivided twenty percent (20%) leasehold working
interest at Payout, being further defined in the referenced agreement.

        (4) CWRC shall not warrant title nor fitness of the equipment. The
Properties shall be delivered in their "as is, where is" condition, including
environmental liabilities, known or unknown.

        (5) Following closing, FM LLC agrees to assume responsibility for and
indemnify CWRC against all claims relating to the Properties, including without
limitation, all claims relating to the plugging, abandonment and reclamation of
all Wells.

        (6) Following acceptance of this letter by the parties hereto, FM LLC
            and CRWC enter into a mutually acceptable Sale and Purchase
            Agreement, more particularly setting forth the terms and
            conditions of this transaction.



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Colorado Wyoming Reserve Company
Page 3
November 2, 1998


        If the foregoing is acceptable to you, please so indicate by executing
below.

Very truly yours,

FM Energy LLC


By:  /S/ KIM FUERST                         By: /S/ JAMES E. MOORE
   ---------------------------------           --------------------------------
        Kim Fuerst                                 James E. Moore
        Co-Chairman                                Co-Chairman


Agreed to and accepted by

COLORADO WYOMING RESERVE COMPANY


By /S/ FAISAL CHAUDHARY
  ----------------------------------
Faisal Chaudhary
Secretary and Director