PROMISSORY NOTE

US$1,008,768.00  September 10, 1998

FOR VALUE RECEIVED,  Challenger Oil Services, PLC, a corporation organized under
the  law of  England  ("Maker"),  promises  to pay to  the  order  of  Chaparral
Resources,  Inc., a Colorado  corporation  ("Payee"),  or its designated  Fiscal
Agent, in lawful money of the United States of America, the principal sum of one
million eight  thousand  seven hundred and sixty eight dollars  ($1,008,768.00),
together with interest on the unpaid  principal  balance at an annual rate equal
to the three (3) month London  Interbank  Offered Rate  ("LIBOR") in effect from
time to time  during  the term of this  loan as  published  in the  Wall  Street
Journal plus one (1) percentage  point in the manner  provided  below.  Interest
shall be calculated  on the basis of a year of 365 or 366 days,  as  applicable,
and charged for the actual number of days elapsed.

This Note has been executed and delivered pursuant to and in accordance with the
terms and conditions of the Loan  Agreement,  dated as of September 10, 1998, by
and between Maker and Payee, (the "Loan Agreement"), and is subject to the terms
and  conditions of the  Agreement,  which are, by this  reference,  incorporated
herein  and made a part  hereof.  Capitalized  terms  used in this Note  without
definition shall have the respective meanings set forth in the Agreement.

1. PAYMENTS

1.1 PRINCIPAL AND INTEREST

The principal  amount of this Note together with any accrued and unpaid interest
thereon shall be due and payable as follows:

(a) From the date hereof until the Repayment  Commencement  Date,  interest will
accrue, but no payment will be required.

(b)  Beginning  with the  Payment  Commencement  Date,  and on the  next  eleven
consecutive  (11) monthly  anniversaries  thereof,  Maker will pay to Payee, the
amount of eighty four  thousand and two United  States  dollars and seventy five
cents  (US$84,002.75) plus interest at the Interest Rate on the unpaid principal
of the Loan Amount. Such interest payments shall be due and payable on or before
the last day of each calendar quarter following the Repayment Commencement Date;
provided,  however that the last interest payment shall be made at the same time
as the last principal payment of the Loan Amount.

1.2 MANNER OF PAYMENT

 All  payments  of  principal  and  interest  on this Note shall be made by wire
transfer of  immediately  available  funds to an account  designated by Payee in
writing.

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1.3 PREPAYMENT

Maker may, without premium or penalty, at any time and from time to time, prepay
all or any  portion of the  outstanding  principal  balance due under this Note,
provided that each such  prepayment is  accompanied  by accrued  interest on the
amount of  principal  prepaid  calculated  to the date of such  prepayment.  Any
partial  prepayments  shall be applied to  installments  of principal in inverse
order of their maturity.

1.4 NO RIGHT OF SET-OFF

Maker  shall not have the right to withhold  and set-off  against any amount due
hereunder the amount of any claim for  indemnification  or payment of damages to
which Maker may be entitled under the Drilling Contract, provided there has been
no default by KKM thereunder.

2. MISCELLANEOUS

2.1 WAIVER

The rights and  remedies  of Payee under this Note shall be  cumulative  and not
alternative.  No waiver by Payee of any right or remedy under this Note shall be
effective unless in a writing signed by Payee. Neither the failure nor any delay
in exercising  any right,  power or privilege  under this Note will operate as a
waiver of such right,  power or privilege  and no single or partial  exercise of
any such right,  power or privilege by Payee will  preclude any other or further
exercise of such right,  power or  privilege or the exercise of any other right,
power or privilege.  To the maximum extent  permitted by applicable  law, (a) no
claim or right of Payee arising out of this Note can be discharged by Payee,  in
whole or in part, by a waiver or  renunciation of the claim or right unless in a
writing,  signed by  Payee;  (b) no  waiver  that may be given by Payee  will be
applicable  except in the specific  instance  for which it is given;  and (c) no
notice to or demand on Maker will be deemed to be a waiver of any  obligation of
Maker or of the right of Payee to take further  action  without notice or demand
as provided in this Note. Maker hereby waives presentment,  demand,  protest and
notice of dishonor and protest.

2.2 NOTICES

Any  notice  required  or  permitted  to be  given  hereunder  shall be given in
accordance with Section 11.4 of the Agreement.

2.3 SEVERABILITY

If any provision in this Note is held invalid or  unenforceable  by any court of
competent  jurisdiction,  the other  provisions of this Note will remain in full

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force and effect.  Any provision of this Note held invalid or unenforceable only
in part or degree  will  remain in full  force and effect to the extent not held
invalid or unenforceable.

2.4 GOVERNING LAW

This Note will be governed by the laws of the State of Texas  without  regard to
conflicts of laws principles.

(1) Maker submits, for itself and its property, to the exclusive jurisdiction of
the courts of the State of Texas and any federal  court of the United  States of
America,  in either case,  sitting in Harris  County,  Texas,  and any appellate
court therefrom,  in any action based upon,  resulting from,  arising out of, or
relating to this  Promissory  Note,  or in  connection  with the  authorization,
preparation,  negotiation, execution, delivery, administration,  performance, or
enforcement  hereof,  or for the  recognition  or  enforcement  of any  judgment
resulting from any such action;

(2) Maker agrees that it will not  commence any action  except in any such court
of the State of Texas; waives,

(3) Maker agrees that it will not plead or make,  any  objection to the venue of
any state or  federal  court of the State of Texas and  agrees  that it will not
plead or make, any claim that any such action in any such state or federal court
of the State of Texas has been brought in an improper or otherwise  inconvenient
forum; and

(4) Maker agrees that the summons and complaint or any other process in any such
action may be served by mailing to any of the  addresses  set forth herein or by
hand  delivery to a person of suitable age and  discretion  at any such address,
and that any such  service  shall be  deemed  to be  complete  on the date  such
process  is so  mailed or  delivered  and to have the same  force and  effect as
personal service within the State of Texas.

2.5 PARTIES IN INTEREST

This Note shall  bind Maker and its  successors  and  assigns.  This Note may be
assigned or transferred by Payee without the consent of Maker.

2.6 SECTION HEADINGS, CONSTRUCTION

The headings of Sections in this Note are provided for convenience only and will
not affect its  construction or  interpretation.  All references to "Section" or
"Sections"  refer to the  corresponding  Section or Sections of this Note unless
otherwise specified.

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All words used in this Note will be  construed to be of such gender or number as
the  circumstances  require.  Unless  otherwise  expressly  provided,  the words
"hereof"  and  "hereunder"  and  similar  references  refer to this  Note in its
entirety and not to any specific section or subsection hereof.


IN WITNESS  WHEREOF,  Maker has executed and delivered  this Note as of the date
first stated above.

CHALLENGER OIL SERVICES, PLC


By:

Title:

 


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