THESE  SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
     1933  OR THE  LAWS OF ANY  STATE.  THEY  MAY NOT BE SOLD OR  OTHERWISE
     TRANSFERRED  UNLESS THEY ARE REGISTERED  UNDER SUCH ACT AND APPLICABLE
     STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.


                                                                975,000 Warrants

                            CHAPARRAL RESOURCES, INC.
                               WARRANT CERTIFICATE


     This warrant certificate ("Warrant  Certificate")  certifies that for value
received Allen & Company  Incorporated  or registered  assigns (the "Holder") is
the owner of the number of warrants  specified above, each of which entitles the
Holder  thereof  to  purchase,  at any time on or  before  the  Expiration  Date
(hereinafter  defined), one fully paid and non-assessable share of Common Stock,
$.10 par value  ("Common  Stock"),  of  Chaparral  Resources,  Inc.,  a Colorado
corporation  (the  "Company"),  for the Purchase  Price  (defined in Paragraph 1
below) in lawful money of the United States of America (subject to adjustment as
hereinafter provided).

     1. Warrant; Purchase Price

     This Warrant shall entitle the Holder  initially to purchase 975,000 shares
of Common Stock of the Company,  and the purchase price payable upon exercise of
the Warrant (the "Purchase Price") shall be $3.50 per share of Common Stock. The
Purchase  Price and number of shares of Commo n Stock  issuable upon exercise of
this  Warrant are  subject to  adjustment  as provided in Article 6 hereof.  The
shares of Common  Stock  issuable  upon  exercise of the Warrant  (and/or  other
shares of common  stock so  issuable  by reason of any  adjustments  pursuant to
Article 6) are sometimes referred to herein as the "Warrant Shares".

     2. Exercise; Expiration Date

     2.1 The Warrant is exercisable, at the option of the Holder, in whole or in
part at any time and from time to time after the  Exercisability  Date and on or
before the Expiration  Date,  upon surrender of this Warrant  Certificate to the
Company together with a duly completed Notice of Exercise,  in the form attached
hereto as Exhibit A, and payment of the Purchase  Price. In the case of exercise
of less than the entire  Warrant  represented by this Warrant  Certificate,  the
Company  shall cancel the Warrant  Certificate  upon the  surrender  thereof and
shall  execute  and deliver a new  Warrant  Certificate  for the balance of such
Warrant.

     2.2 The term  "Exercisability  Date" shall mean (i) with respect to 195,000
Warrants, the date of this Warrant Certificate, and (ii) with respect to 780,000
Warrants,  the date that is 31 days after the date of this Warrant  Certificate,
provided,  however,  that  if  within  30  days  of the  date  of  this  Warrant
Certificate  the  Company  has  prepaid  all of the  outstanding  principal  and

<PAGE>


interest  under  the  loan  made  pursuant  to that  certain  Subordinated  Loan
Agreement  dated  June 4, 1998 among the  Company,  the  initial  Holder of this
Warrant  and the other  lenders  party  thereto,  the  Exercisability  Date with
respect to such 780,000  Warrants  shall not occur,  and such Warrants shall not
become exercisable  thereafter.  The term "Expiration Date" shall mean 5:00 p.m.
New York time on  November  25,  2002,  or if such day shall in the State of New
York be a holiday or a day on which  banks are  authorized  to close,  then 5:00
p.m. New York time the next  following day which in the State of New York is not
a holiday or a day on which banks are authorized to close.

     3. Registration and Transfer on Company Books

     3.1 The Company shall maintain books for the  registration  and transfer of
the Warrant and the registration and transfer of the Warrant Shares.

     3.2 Prior to due presentment  for  registration of transfer of this Warrant
Certificate,  or the  Warrant  Shares,  the  Company  may  deem  and  treat  the
registered Holder as the absolute owner thereof.

     4. Reservation of Shares

     The Company  covenants that it will at all times reserve and keep available
out of its  authorized  capital  stock,  solely  for the  purpose  of issue upon
exercise of the Warrant, such number of shares of capital stock as shall then be
issuable upon the exercise of all  outstanding  Warra nt. The Company  covenants
that all shares of capital  stock which shall be issuable  upon  exercise of the
Warrant shall be duly and validly issued and fully paid and  non-assessable  and
free from all taxes,  liens and charges with respect to the issue  thereof,  and
that upon  issuance  such  shares  shall be listed on each  national  securities
exchange, if any, on which the other shares of such outstanding capital stock of
the Company are then listed.

     5. Loss or Mutilation

     Upon receipt by the Company of reasonable  evidence of the ownership of and
the loss,  theft,  destruction or mutilation of any Warrant  Certificate and, in
the case of loss, theft or destruction,  of indemnity reasonably satisfactory to
the Company,  or, in the case of mutilation,  upon surrender and cancellation of
the mutilated Warrant Certificate, the Company shall execute and deliver in lieu
thereof a new  Warrant  Certificate  representing  an equal  number  of  Warrant
Shares.

                                       2
<PAGE>


     6. Adjustment of Purchase Price and Number of Shares Deliverable

     6.1 The number of  Warrant  Shares  purchasable  upon the  exercise  of the
Warrant  and the  Purchase  Price with  respect to the Warrant  Shares  shall be
subject to adjustment as follows:

          (a) In case  the  Company  shall  (i)  declare  a  dividend  or make a
     distribution  on its Common Stock  payable in shares of its capital  stock,
     (ii) subdivide its  outstanding  shares of Common Stock through stock split
     or otherwise,  (iii) combine its outstanding  shares of Common Stock into a
     smaller number of shares of Common Stock, or (iv) issue by reclassification
     of its of Common Stock (including any reclassification in connection with a
     consolidation or merger in which the Company is the continuing corporation)
     other securities of the Company, the number and/or nature of Warrant Shares
     purchasable upon exercise of the Warrant immediately prior thereto shall be
     adjusted  so that the Holder  shall be  entitled  to  receive  the kind and
     number of Warrant Shares or other  securities of the Company which he would
     have owned or have been  entitled to receive  after the happening of any of
     the events  described  above,  had such Warrant been exercised  immediately
     prior to the  happening  of such  event or any  record  date  with  respect
     thereto.  Any  adjustment  made pursuant to this paragraph (a) shall become
     effective retroactively as of the record date of such event.

          (b) In the event of any capital reorganization or any reclassification
     of the  capital  stock of the  Company or in case of the  consolidation  or
     merger of the Company with another  corporation (other than a consolidation
     or merger in which the outstanding shares of the Company's Common Stock are
     not converted into or exchanged for other rights or  interests),  or in the
     case of any sale,  transfer or other disposition to another  corporation of
     all or  substantially  all the  properties  and assets of the Company,  the
     Holder of the Warrant  shall  thereafter  be  entitled to purchase  (and it
     shall  be a  condition  to the  consummation  of any  such  reorganization,
     reclassification,   consolidation,   merger,   sale,   transfer   or  other
     disposition that  appropriate  provisions shall be made so that such Holder
     shall  thereafter be entitled to purchase) the kind and amount of shares of
     stock and other  securities and property  (including cash) which the Holder
     would  have been  entitled  to  receive  had such  Warrant  been  exercised
     immediately   prior  to  the   effective   date  of  such   reorganization,
     reclassification,   consolidation,   merger,   sale,   transfer   or  other
     disposition;  and in any such case appropriate adjustments shall be made in
     the  application of the provisions of this Article 6 with respect to rights
     and  interest  thereafter  of the Holder of the Warrant to the end that the
     provisions  of this Article 6 shall  thereafter be  applicable,  as near as
     reasonably may be, in relation to any shares or other  property  thereafter
     purchasable  upon the  exercise  of the  Warrant.  The  provisions  of this
     Section  6.1(b)  shall  similarly  apply  to  successive   reorganizations,
     reclassifications,  consolidations,  mergers,  sales,  transfers  or  other
     dispositions.

                                       3
<PAGE>

          (c)  Whenever  the  number  of  Warrant  Shares  purchasable  upon the
     exercise of the Warrant is  adjusted,  as provided in this Section 6.1, the
     Purchase  Price with  respect to the  Warrant  Shares  shall be adjusted by
     multiplying such Purchase Price  immediately  prior to such adjustment by a
     fraction,  of which the  numerator  shall be the number of  Warrant  Shares
     purchasable  upon the  exercise  of the Warrant  immediately  prior to such
     adjustment,  and of which the  denominator  shall be the  number of Warrant
     Shares so purchasable immediately thereafter.

     6.2 Whenever the number of Warrant Shares  purchasable upon the exercise of
the Warrant or the Purchase Price of such Warrant Shares is adjusted,  as herein
provided,  the Company  shall mail to the  Holder,  at the address of the Holder
shown on the books of the Company,  a notice of such  adjustment or adjustments,
prepared and signed by the Chief Financial  Officer or Secretary of the Company,
which sets forth the number of Warrant Shares  purchasable  upon the exercise of
the Warrant and the Purchase Price of such Warrant Shares after such adjustment,
a brief  statement of the facts requiring such adjustment and the computation by
which such adjustment was made.

     6.3 In the event that at any time prior to the  expiration  of the  Warrant
and prior to its exercise:

          (a) the  Company  shall  declare any  distribution  (other than a cash
     dividend or a dividend payable in securities of the Company with respect to
     the Common Stock); or

          (b) the  Company  shall offer for  subscription  to the holders of the
     Common  Stock  any  additional  shares  of stock of any  class or any other
     securities  convertible  into  Common  Stock  or any  rights  to  subscribe
     thereto; or

          (c) the  Company  shall  declare  any  stock  split,  stock  dividend,
     subdivision,  combination,  or  similar  distribution  with  respect to the
     Common Stock, regardless of the effect of any such event on the outstanding
     number of shares of Common Stock; or

          (d) the  Company  shall  declare a  dividend,  other  than a  dividend
     payable in shares of the Company's own Common Stock; or

          (e) there shall be any  capital  change in the Company as set forth in
     Section 6.1(b); or

          (f)  there  shall  be  a   voluntary   or   involuntary   dissolution,
     liquidation,  or winding up of the Company (other than in connection with a
     consolidation, merger, or sale of all or substantially all of its property,
     assets and business as an entity);

(each such event hereinafter being referred to as a "Notification  Event"),  the
Company  shall cause to be mailed to the Holder,  not less than 20 days prior to
the record date, if any, in connection with such  Notification  Event (provided,
however,  that if  there  is no  record  date,  or if 20 days  prior  notice  is

                                       4

                               
<PAGE>

impracticable,  as soon as practicable)  written notice specifying the nature of
such  event  and the  effective  date of,  or the date on which the books of the
Company shall close or a record shall be taken with respect to, such event. Such
notice shall also set forth facts  indicating  the effect of such action (to the
extent  such  effect may be known at the date of such  notice)  on the  Purchase
Price and the kind and  amount of the  shares  of stock or other  securities  or
property deliverable upon exercise of the Warrant.

     7. Conversion Rights

     7.1 In lieu of  exercise  of any  portion  of the  Warrant as  provided  in
Section 2.1 hereof, the Warrant  represented by this Warrant Certificate (or any
portion  thereof)  may, at the  election of the Holder,  be  converted  into the
nearest whole number of shares of Common Stock equ al to: (1) the product of (a)
the number of Warrant  Shares to be so converted and (b) the excess,  if any, of
(i) the Market Price per share with respect to the date of conversion  over (ii)
the  purchase  price  per  Warrant  Share in  effect  on the  business  day next
preceding the date of conversion, divided by (2) the Market Price per share with
respect to the date of conversion.

     7.2 The conversion rights provided under this Section 7 may be exercised in
whole or in part and at any time and from time to time while any  portion of the
Warrant remains outstanding.  In order to exercise the conversion privilege, the
Holder shall surrender to the Company, at its offices,  this Warrant Certificate
accompanied by a duly completed Notice of Conversion in the form attached hereto
as Exhibit B. The Warrant (or so much thereof as shall have been surrendered for
conversion)  shall be  deemed to have been  converted  immediately  prior to the
close of  business  on the day of  surrender  of such  Warrant  Certificate  for
conversion  in  accordance  with  the  foregoing  provisions.   As  promptly  as
practicable on or after the  conversion  date, the Company shall issue and shall
deliver to the Holder (i) a certificate or certificates  representing the number
of shares of Common  Stock to which the Holder  shall be entitled as a result of
the conversion,  and (ii) if the Warrant  Certificate is being converted in part
only,  a new  certificate  of  like  tenor  and  date  for  the  balance  of the
unconverted portion of the Warrant Certificate.

     7.3 "Market  Price",  as used with  reference  to any share of stock on any
specified date, shall mean:

     (i) if such  stock is listed  and  registered  on any  national  securities
     exchange  or traded on The Nasdaq  Stock  Market  ("Nasdaq"),  (A) the last
     reported  sale  price  on such  exchange  or  Nasdaq  of such  stock on the
     business day  immediately  preceding  the  specified  date, or (B) if there
     shall have been no such  reported  sale price of such stock on the business
     day  immediately  preceding  the  specified  date,  the average of the last
     reported  sale  price on such  exchange  or on  Nasdaq  on (x) the day next
     preceding the specified  date for which there was a reported sale price and
     (y) the day next  succeeding  the  specified  date for  which  there  was a
     reported sale price; or

                                       5


<PAGE>


     (ii) if such stock is not at the time listed on any such exchange or traded
     on Nasdaq but is traded on the  over-the-counter  market as reported by the
     National Quotation Bureau or other comparable  service,  (A) the average of
     the  closing  bid and  asked  prices  for such  stock on the  business  day
     immediately  preceding the specified  date, or (B) if there shall have been
     no such  reported  bid and asked  prices for such stock on the business day
     immediately  preceding the specified  date, the average of the last bid and
     asked prices on (x) the day next  preceding  the  specified  date for which
     such information is available and (y) the day next succeeding the specified
     date for which such information is available; or

     (iii) if clauses (i) and (ii) above are not applicable,  the fair value per
     share of such stock as determined  in good faith and on a reasonable  basis
     by the Board of Directors of the Company and, if requested,  set forth in a
     certificate  delivered to the holder of this  Warrant  upon the  conversion
     hereof.

     8. Voluntary Adjustment by the Company

     The Company may, at its option, at any time during the term of the Warrant,
reduce the then current  Purchase Price to any amount deemed  appropriate by the
Board of Directors of the Company  and/or  extend the date of the  expiration of
the Warrant.

     9. Registration Rights

     The Company has agreed with the Holder that the Company  will  register for
resale the  Warrant  Shares at the time the  Company  next files a  registration
statement with the United States Securities and Exchange  Commission to register
any of its securities.

     Notwithstanding  the  foregoing,  the Holder  agrees  that any  certificate
representing  Warrant Shares will have a restrictive legend thereon stating that
the  Warrant  Shares  cannot  be  transferred  except  in  compliance  with  the
Securities Act of 1933, as amended, and any applicable state securities laws.

     10. Governing Law

     This Warrant  Certificate  shall be governed by and construed in accordance
with the laws of the State of New York.

                                       6
<PAGE>





     IN WITNESS WHEREOF,  the Company has caused this Warrant  Certificate to be
duly executed by its officers  thereunto duly  authorized and its corporate seal
to be affixed hereon, as of this 4th day of June, 1998.


                                             CHAPARRAL RESOURCES, INC.



                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

[SEAL]



Attest:


-------------------------------
Name:
Title:


                                        7


<PAGE>


                                                                       EXHIBIT A


                               NOTICE OF EXERCISE


     The undersigned hereby irrevocably elects to exercise,  pursuant to Section
2 of the  Warrant  Certificate  accompanying  this Notice of  Exercise,  _______
Warrants of the total number of Warrants  owned by the  undersigned  pursuant to
the accompanying Warrant Certificate, and herewith makes payment of the Purchase
Price of such shares in full.




                                             -----------------------------------
                                             Name of Holder


                                             -----------------------------------
                                             Signature

                                             Address:

                                             -----------------------------------

                                             -----------------------------------

                                             -----------------------------------


                                                   
                                       8

<PAGE>
                                                                       EXHIBIT B


                              NOTICE OF CONVERSION


The undersigned hereby  irrevocably elects to convert,  pursuant to Section 7 of
the Warrant Certificate accompanying this Notice of Conversion, _______ Warrants
of the  total  number  of  Warrants  owned by the  undersigned  pursuant  to the
accompanying  Warrant Certificate into shares of the Common Stock of the Company
(the "Shares").

The number of Shares to be received by the  undersigned  shall be  calculated in
accordance  with the  provisions  of  Section  7.1 of the  accompanying  Warrant
Certificate.



                                             -----------------------------------
                                             Name of Holder                     
                                                                                
                                                                                
                                             -----------------------------------
                                             Signature                          
                                                                                
                                             Address:                           
                                                                                
                                             -----------------------------------
                                                                                
                                             -----------------------------------
                                                                                
                                             -----------------------------------

                                       9
                                             
<PAGE>     



     THESE  SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
     1933  OR THE  LAWS OF ANY  STATE.  THEY  MAY NOT BE SOLD OR  OTHERWISE
     TRANSFERRED  UNLESS THEY ARE REGISTERED  UNDER SUCH ACT AND APPLICABLE
     STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.


                                                                 25,000 Warrants

                            CHAPARRAL RESOURCES, INC.
                               WARRANT CERTIFICATE


     This warrant certificate ("Warrant  Certificate")  certifies that for value
received John McMillian or registered assigns (the "Holder") is the owner of the
number of warrants specified above, each of which entitles the Holder thereof to
purchase,  at any time on or before the Expiration Date  (hereinafter  defined),
one fully paid and non-assessable share of Common Stock, $.10 par value ("Common
Stock"), of Chaparral  Resources,  Inc., a Colorado corporation (the "Company"),
for the  Purchase  Price  (defined in  Paragraph 1 below) in lawful money of the
United States of America (subject to adjustment as hereinafter provided).

     1. Warrant; Purchase Price

     This Warrant shall entitle the Holder  initially to purchase  25,000 shares
of Common Stock of the Company,  and the purchase price payable upon exercise of
the Warrant (the "Purchase Price") shall be $3.50 per share of Common Stock. The
Purchase  Price and number of shares of Common Stock  issuable  upon exercise of
this  Warrant are  subject to  adjustment  as provided in Article 6 hereof.  The
shares of Common  Stock  issuable  upon  exercise of the Warrant  (and/or  other
shares of common  stock so  issuable  by reason of any  adjustments  pursuant to
Article 6) are sometimes referred to herein as the "Warrant Shares".

     2. Exercise; Expiration Date

     2.1 The Warrant is exercisable, at the option of the Holder, in whole or in
part at any time and from time to time after the  Exercisability  Date and on or
before the Expiration  Date,  upon surrender of this Warrant  Certificate to the
Company together with a duly completed Notice of Exercise,  in the form attached
hereto as Exhibit A, and payment of the Purchase  Price. In the case of exercise
of less than the entire  Warrant  represented by this Warrant  Certificate,  the
Company  shall cancel the Warrant  Certificate  upon the  surrender  thereof and
shall  execute  and deliver a new  Warrant  Certificate  for the balance of such
Warrant.

     2.2 The term  "Exercisability  Date"  shall mean (i) with  respect to 5,000
Warrants, the date of this Warrant Certificate,  and (ii) with respect to 20,000
Warrants,  the date that is 31 days after the date of this Warrant  Certificate,
provided,  however,  that  if  within  30  days  of the  date  of  this  Warrant
Certificate  the  Company  has  prepaid  all of the  outstanding  principal  and


                                       
<PAGE>



interest  under  the  loan  made  pursuant  to that  certain  Subordinated  Loan
Agreement  dated  June 4, 1998 among the  Company,  the  initial  Holder of this
Warrant  and the other  lenders  party  thereto,  the  Exercisability  Date with
respect to such 20,000  Warrants  shall not occur,  and such Warrants  shall not
become exercisable  thereafter.  The term "Expiration Date" shall mean 5:00 p.m.
New York time on  November  25,  2002,  or if such day shall in the State of New
York be a holiday or a day on which  banks are  authorized  to close,  then 5:00
p.m. New York time the next  following day which in the State of New York is not
a holiday or a day on which banks are authorized to close.

     3. Registration and Transfer on Company Books

     3.1 The Company shall maintain books for the  registration  and transfer of
the Warrant and the registration and transfer of the Warrant Shares.

     3.2 Prior to due presentment  for  registration of transfer of this Warrant
Certificate,  or the  Warrant  Shares,  the  Company  may  deem  and  treat  the
registered Holder as the absolute owner thereof.

     4. Reservation of Shares

     The Company  covenants that it will at all times reserve and keep available
out of its  authorized  capital  stock,  solely  for the  purpose  of issue upon
exercise of the Warrant, such number of shares of capital stock as shall then be
issuable upon the exercise of all  outstanding  Warra nt. The Company  covenants
that all shares of capital  stock which shall be issuable  upon  exercise of the
Warrant shall be duly and validly issued and fully paid and  non-assessable  and
free from all taxes,  liens and charges with respect to the issue  thereof,  and
that upon  issuance  such  shares  shall be listed on each  national  securities
exchange, if any, on which the other shares of such outstanding capital stock of
the Company are then listed.

     5. Loss or Mutilation

     Upon receipt by the Company of reasonable  evidence of the ownership of and
the loss,  theft,  destruction or mutilation of any Warrant  Certificate and, in
the case of loss, theft or destruction,  of indemnity reasonably satisfactory to
the Company,  or, in the case of mutilation,  upon surrender and cancellation of
the mutilated Warrant Certificate, the Company shall execute and deliver in lieu
thereof a new  Warrant  Certificate  representing  an equal  number  of  Warrant
Shares.

                                       2


<PAGE>


     6. Adjustment of Purchase Price and Number of Shares Deliverable

     6.1 The number of  Warrant  Shares  purchasable  upon the  exercise  of the
Warrant  and the  Purchase  Price with  respect to the Warrant  Shares  shall be
subject to adjustment as follows:

          (a) In case  the  Company  shall  (i)  declare  a  dividend  or make a
     distribution  on its Common Stock  payable in shares of its capital  stock,
     (ii) subdivide its  outstanding  shares of Common Stock through stock split
     or otherwise,  (iii) combine its outstanding  shares of Common Stock into a
     smaller number of shares of Common Stock, or (iv) issue by reclassification
     of its of Common Stock (including any reclassification in connection with a
     consolidation or merger in which the Company is the continuing corporation)
     other securities of the Company, the number and/or nature of Warrant Shares
     purchasable upon exercise of the Warrant immediately prior thereto shall be
     adjusted  so that the Holder  shall be  entitled  to  receive  the kind and
     number of Warrant Shares or other  securities of the Company which he would
     have owned or have been  entitled to receive  after the happening of any of
     the events  described  above,  had such Warrant been exercised  immediately
     prior to the  happening  of such  event or any  record  date  with  respect
     thereto.  Any  adjustment  made pursuant to this paragraph (a) shall become
     effective retroactively as of the record date of such event.

          (b) In the event of any capital reorganization or any reclassification
     of the  capital  stock of the  Company or in case of the  consolidation  or
     merger of the Company with another  corporation (other than a consolidation
     or merger in which the outstanding shares of the Company's Common Stock are
     not converted into or exchanged for other rights or  interests),  or in the
     case of any sale,  transfer or other disposition to another  corporation of
     all or  substantially  all the  properties  and assets of the Company,  the
     Holder of the Warrant  shall  thereafter  be  entitled to purchase  (and it
     shall  be a  condition  to the  consummation  of any  such  reorganization,
     reclassification,   consolidation,   merger,   sale,   transfer   or  other
     disposition that  appropriate  provisions shall be made so that such Holder
     shall  thereafter be entitled to purchase) the kind and amount of shares of
     stock and other  securities and property  (including cash) which the Holder
     would  have been  entitled  to  receive  had such  Warrant  been  exercised
     immediately   prior  to  the   effective   date  of  such   reorganization,
     reclassification,   consolidation,   merger,   sale,   transfer   or  other
     disposition;  and in any such case appropriate adjustments shall be made in
     the  application of the provisions of this Article 6 with respect to rights
     and  interest  thereafter  of the Holder of the Warrant to the end that the
     provisions  of this Article 6 shall  thereafter be  applicable,  as near as
     reasonably may be, in relation to any shares or other  property  thereafter
     purchasable  upon the  exercise  of the  Warrant.  The  provisions  of this
     Section  6.1(b)  shall  similarly  apply  to  successive   reorganizations,
     reclassifications,  consolidations,  mergers,  sales,  transfers  or  other
     dispositions.

                                       3

<PAGE>

          (c)  Whenever  the  number  of  Warrant  Shares  purchasable  upon the
     exercise of the Warrant is  adjusted,  as provided in this Section 6.1, the
     Purchase  Price with  respect to the  Warrant  Shares  shall be adjusted by
     multiplying such Purchase Price  immediately  prior to such adjustment by a
     fraction,  of which the  numerator  shall be the number of  Warrant  Shares
     purchasable  upon the  exercise  of the Warrant  immediately  prior to such
     adjustment,  and of which the  denominator  shall be the  number of Warrant
     Shares so purchasable immediately thereafter.

     6.2 Whenever the number of Warrant Shares  purchasable upon the exercise of
the Warrant or the Purchase Price of such Warrant Shares is adjusted,  as herein
provided,  the Company  shall mail to the  Holder,  at the address of the Holder
shown on the books of the Company,  a notice of such  adjustment or adjustments,
prepared and signed by the Chief Financial  Officer or Secretary of the Company,
which sets forth the number of Warrant Shares  purchasable  upon the exercise of
the Warrant and the Purchase Price of such Warrant Shares after such adjustment,
a brief  statement of the facts requiring such adjustment and the computation by
which such adjustment was made.

     6.3 In the event that at any time prior to the  expiration  of the  Warrant
and prior to its exercise:

          (a) the  Company  shall  declare any  distribution  (other than a cash
     dividend or a dividend payable in securities of the Company with respect to
     the Common Stock); or

          (b) the  Company  shall offer for  subscription  to the holders of the
     Common  Stock  any  additional  shares  of stock of any  class or any other
     securities  convertible  into  Common  Stock  or any  rights  to  subscribe
     thereto; or

          (c) the  Company  shall  declare  any  stock  split,  stock  dividend,
     subdivision,  combination,  or  similar  distribution  with  respect to the
     Common Stock, regardless of the effect of any such event on the outstanding
     number of shares of Common Stock; or

          (d) the  Company  shall  declare a  dividend,  other  than a  dividend
     payable in shares of the Company's own Common Stock; or

          (e) there shall be any  capital  change in the Company as set forth in
     Section 6.1(b); or

          (f)  there  shall  be  a   voluntary   or   involuntary   dissolution,
     liquidation,  or winding up of the Company (other than in connection with a
     consolidation, merger, or sale of all or substantially all of its property,
     assets and business as an entity);

(each such event hereinafter being referred to as a "Notification  Event"),  the
Company  shall cause to be mailed to the Holder,  not less than 20 days prior to
the record date, if any, in connection with such  Notification  Event (provided,
however,  that if  there  is no  record  date,  or if 20 days  prior  notice  is

                                       4


<PAGE>


impracticable,  as soon as practicable)  written notice specifying the nature of
such  event  and the  effective  date of,  or the date on which the books of the
Company shall close or a record shall be taken with respect to, such event. Such
notice shall also set forth facts  indicating  the effect of such action (to the
extent  such  effect may be known at the date of such  notice)  on the  Purchase
Price and the kind and  amount of the  shares  of stock or other  securities  or
property deliverable upon exercise of the Warrant.

     7. Conversion Rights

     7.1 In lieu of  exercise  of any  portion  of the  Warrant as  provided  in
Section 2.1 hereof, the Warrant  represented by this Warrant Certificate (or any
portion  thereof)  may, at the  election of the Holder,  be  converted  into the
nearest whole number of shares of Common Stock equ al to: (1) the product of (a)
the number of Warrant  Shares to be so converted and (b) the excess,  if any, of
(i) the Market Price per share with respect to the date of conversion  over (ii)
the  purchase  price  per  Warrant  Share in  effect  on the  business  day next
preceding the date of conversion, divided by (2) the Market Price per share with
respect to the date of conversion.

     7.2 The conversion rights provided under this Section 7 may be exercised in
whole or in part and at any time and from time to time while any  portion of the
Warrant remains outstanding.  In order to exercise the conversion privilege, the
Holder shall surrender to the Company, at its offices,  this Warrant Certificate
accompanied by a duly completed Notice of Conversion in the form attached hereto
as Exhibit B. The Warrant (or so much thereof as shall have been surrendered for
conversion)  shall be  deemed to have been  converted  immediately  prior to the
close of  business  on the day of  surrender  of such  Warrant  Certificate  for
conversion  in  accordance  with  the  foregoing  provisions.   As  promptly  as
practicable on or after the  conversion  date, the Company shall issue and shall
deliver to the Holder (i) a certificate or certificates  representing the number
of shares of Common  Stock to which the Holder  shall be entitled as a result of
the conversion,  and (ii) if the Warrant  Certificate is being converted in part
only,  a new  certificate  of  like  tenor  and  date  for  the  balance  of the
unconverted portion of the Warrant Certificate.

     7.3 "Market  Price",  as used with  reference  to any share of stock on any
specified date, shall mean:

     (i) if such  stock is listed  and  registered  on any  national  securities
     exchange  or traded on The Nasdaq  Stock  Market  ("Nasdaq"),  (A) the last
     reported  sale  price  on such  exchange  or  Nasdaq  of such  stock on the
     business day  immediately  preceding  the  specified  date, or (B) if there
     shall have been no such  reported  sale price of such stock on the business
     day  immediately  preceding  the  specified  date,  the average of the last
     reported  sale  price on such  exchange  or on  Nasdaq  on (x) the day next
     preceding the specified  date for which there was a reported sale price and
     (y) the day next  succeeding  the  specified  date for  which  there  was a
     reported sale price; or

                                       5

<PAGE>


     (ii) if such stock is not at the time listed on any such exchange or traded
     on Nasdaq but is traded on the  over-the-counter  market as reported by the
     National Quotation Bureau or other comparable  service,  (A) the average of
     the  closing  bid and  asked  prices  for such  stock on the  business  day
     immediately  preceding the specified  date, or (B) if there shall have been
     no such  reported  bid and asked  prices for such stock on the business day
     immediately  preceding the specified  date, the average of the last bid and
     asked prices on (x) the day next  preceding  the  specified  date for which
     such information is available and (y) the day next succeeding the specified
     date for which such information is available; or

     (iii) if clauses (i) and (ii) above are not applicable,  the fair value per
     share of such stock as determined  in good faith and on a reasonable  basis
     by the Board of Directors of the Company and, if requested,  set forth in a
     certificate  delivered to the holder of this  Warrant  upon the  conversion
     hereof.

     8. Voluntary Adjustment by the Company

     The Company may, at its option, at any time during the term of the Warrant,
reduce the then current  Purchase Price to any amount deemed  appropriate by the
Board of Directors of the Company  and/or  extend the date of the  expiration of
the Warrant.

     9. Registration Rights

     The Company has agreed with the Holder that the Company  will  register for
resale the  Warrant  Shares at the time the  Company  next files a  registration
statement with the United States Securities and Exchange  Commission to register
any of its securities.

     Notwithstanding  the  foregoing,  the Holder  agrees  that any  certificate
representing  Warrant Shares will have a restrictive legend thereon stating that
the  Warrant  Shares  cannot  be  transferred  except  in  compliance  with  the
Securities Act of 1933, as amended, and any applicable state securities laws.

     10. Governing Law

     This Warrant  Certificate  shall be governed by and construed in accordance
with the laws of the State of New York.

                                       6
<PAGE>


     IN WITNESS WHEREOF,  the Company has caused this Warrant  Certificate to be
duly executed by its officers  thereunto duly  authorized and its corporate seal
to be affixed hereon, as of this 4th day of June, 1998.


                                           CHAPARRAL RESOURCES, INC.



                                           By:
                                              ----------------------------------
                                              Name:
                                              Title:

[SEAL]



Attest:


-------------------------------
Name:
Title:


                                        7

<PAGE>


                                                                       EXHIBIT A


                               NOTICE OF EXERCISE


     The undersigned hereby irrevocably elects to exercise,  pursuant to Section
2 of the  Warrant  Certificate  accompanying  this Notice of  Exercise,  _______
Warrants of the total number of Warrants  owned by the  undersigned  pursuant to
the accompanying Warrant Certificate, and herewith makes payment of the Purchase
Price of such shares in full.




                                          --------------------------------------
                                          Name of Holder


                                          --------------------------------------
                                          Signature

                                          Address:

                                          --------------------------------------

                                          --------------------------------------

                                          --------------------------------------






                                        8

<PAGE>

                                                                       EXHIBIT B


                              NOTICE OF CONVERSION


The undersigned hereby  irrevocably elects to convert,  pursuant to Section 7 of
the Warrant Certificate accompanying this Notice of Conversion, _______ Warrants
of the  total  number  of  Warrants  owned by the  undersigned  pursuant  to the
accompanying  Warrant Certificate into shares of the Common Stock of the Company
(the "Shares").

The number of Shares to be received by the  undersigned  shall be  calculated in
accordance  with the  provisions  of  Section  7.1 of the  accompanying  Warrant
Certificate.




                                          --------------------------------------
                                          Name of Holder                        
                                                                                
                                                                                
                                          --------------------------------------
                                          Signature                             
                                                                                
                                          Address:                              
                                                                                
                                          --------------------------------------
                                                                       
                                          --------------------------------------
                                                                                
                                          --------------------------------------


                                       9