<PAGE>

                                                                Exhibit 10.118

                        FIRST AMENDMENT TO LOAN AGREEMENT


         THIS FIRST AMENDMENT TO LOAN AGREEMENT (the "Amendment"), dated as of
November 8, 1996, is among CASTLE TEXAS PIPELINE LIMITED PARTNERSHIP, a Texas
limited partnership ("Pipeline"), CEC GAS MARKETING LIMITED PARTNERSHIP, a Texas
limited partnership ("Marketing"), CASTLE EXPLORATION COMPANY, INC., a
Pennsylvania corporation ("Exploration"), CASTLE TEXAS PRODUCTION LIMITED
PARTNERSHIP, a Texas limited partnership ("Production," and together with
Pipeline, Marketing and Exploration, the "Borrowers"), CASTLE PIPELINE COMPANY,
a Texas corporation, CASTLE PRODUCTION COMPANY, a Texas corporation, CEC
MARKETING COMPANY, a Texas corporation (collectively, the "General Partners"),
CASTLE ENERGY CORPORATION, a Delaware corporation ("Castle") and COMMERCIAL
NATIONAL BANK IN SHREVEPORT ("Lender").

                                    RECITALS:

         A. Borrowers, the General Partners, Castle and Lender entered into that
certain Loan Agreement dated as of April 30, 1996 (as the same may be amended or
otherwise modified from time to time, the "Agreement").

         B. Pursuant to the Agreement, Castle executed that certain Guaranty
Agreement (the "Castle Guaranty") dated as of April 30, 1996 which guaranteed to
Lender the payment and performance of the Obligations (as defined in the
Agreement).

         C. The Borrowers, General Partners, Castle and Lender now desire to
amend the Agreement as herein set forth.

         NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

                                    ARTICLE I

                                   Definitions

         1.1 Definitions. Capitalized terms used in this Amendment, to the
extent not otherwise defined herein, shall have the same meanings as in the
Agreement, as amended hereby.



FIRST AMENDMENT TO LOAN AGREEMENT - Page 1
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                                   ARTICLE II

                                   Amendments

             2.1 Amendment to Agreement. Effective as of the date hereof, the
         Agreement is hereby amended to add the following section thereto to
         read in its entirety as follows:

             SECTION 2A AMOUNT AND TERM OF SECOND TERM LOAN

             2.1A Second Term Loan. Subject to and upon the terms and conditions
         set forth herein, Lender agrees to make a second term loan (the "Second
         Term Loan") to the Borrowers, on a joint and several basis, in one or
         more advances to be made on or prior to December 6, 1996 in the
         aggregate principal amount of up to Three Million Dollars ($3,000,000).
         Amounts borrowed and repaid under the Second Term Loan cannot be
         reborrowed.

             2.2A Second Term Note. The Second Term Loan made by Lender shall be
         evidenced by a single promissory note of the Borrowers, substantially
         in the form of Exhibit A-1 (the "Second Term Note"), with appropriate
         insertions, payable to the order of Lender and in the aggregate
         principal amount equal to the Second Term Loan. The Second Term Note
         shall (i) be dated November 8, 1996, (ii) represent the joint and
         several obligations of the Borrowers to pay the principal amount of and
         interest on the Second Term Loan, (iii) provide for the payment of
         interest in accordance with subsection 2.5A, (iv) be entitled to the
         benefit of this Agreement and the Collateral Security Documents, (v)
         mature on August 29, 1997, and (vi) be payable in five (5) consecutive
         monthly installments in an amount equal to the lesser of (a) the
         outstanding principal balance of the Second Term Note, plus accrued and
         unpaid interest thereon, or (b) Five Hundred Thousand Dollars
         ($500,000) each, plus accrued and unpaid interest thereon, commencing
         on March 4, 1997, and continuing on each Installment Payment Date
         thereafter until and including July 4, 1997, with a final installment
         in the amount of all outstanding principal of the Second Term Loan,
         plus all accrued and unpaid interest thereon due and payable on August
         29, 1997.

             2.3A Use of Proceeds. The proceeds of the Second Term Loan shall be
         used by the Borrowers to make a loan to Castle, the proceeds of which
         will be used by Castle to repurchase outstanding shares of its common
         stock. With reference to Sections 6.8 and 6.13, Lender hereby consents
         to such loan to Castle on such terms as the Borrowers may, in their
         discretion, approve.

             2.4A Prepayments. (a) Mandatory Prepayments.

                  (i) If an Event of Loss shall occur, the Borrowers shall
             prepay in full the unpaid principal amount of the then outstanding
             Second Term Note, together with accrued interest thereon to the
             date of prepayment and all other amounts owing hereunder and under



FIRST AMENDMENT TO LOAN AGREEMENT - Page 2

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             the Collateral Security Documents, on the earlier of (A) the date
             occurring 60 days after the date of such Event of Loss and (B)
             the date on which insurance proceeds are received with respect to
             such Event of Loss.

                  (ii) Notwithstanding anything to the contrary otherwise
             contained in this Agreement, in the event that (A) the Senior Loan
             Termination Date has not occurred on or before September 4, 1997,
             (B) the principal amount of the Senior Obligations is increased
             (other than in accordance with the terms of the Senior Loan
             Agreement as in effect on the date hereof) to an amount in excess
             of the principal amount of the Senior Obligations outstanding on
             the Closing Date, or (C) the Term Loan Interest Rate (as defined in
             the GE Capital Loan Agreement) is modified such that it is greater
             than 8.33%, the Obligations shall become immediately due and
             payable and the Borrowers shall, within three (3) days of such
             event, prepay in full the unpaid principal amount of the then
             outstanding Second Term Note, together with accrued and unpaid
             interest thereon to the date of prepayment and all other amounts
             owing hereunder and under the Collateral Security Documents.

                  (iii) Notwithstanding anything to the contrary otherwise
             contained in this Agreement, in the event that the Borrowers and
             the Lender consummate the transactions contemplated by that certain
             commitment letter dated October 17, 1996, Lender's commitment to
             make advances under the Second Term Loan shall terminate and the
             Obligations shall be refinanced pursuant to the revolving credit
             facility described in such commitment letter.

             (b) Optional Prepayments. The Borrowers may on at least three (3)
         Business Days prior notice to Lender, at any time and from time to time
         prepay the Second Term Loan, in whole or in part, without premium or
         penalty but with accrued and unpaid interest to the date of prepayment
         on the amount so prepaid. Partial prepayments shall be in a principal
         amount of $100,000.00 or an integral multiple thereof.

             (c) Partial Prepayments. Partial prepayment of the Second Term Loan
         shall be applied to the installments thereof in the inverse order of
         maturity.

             2.5A Interest Rate and Payment Dates. (a) The Second Term Loan
         shall bear interest on the unpaid principal amount thereof at the Term
         Loan Interest Rate.

             (b) If all or a portion of the principal amount of the Second Term
         Loan made hereunder or any other amount due and payable hereunder shall
         not be paid when due (whether at the stated maturity, by acceleration
         or otherwise), the Second Term Loan or other amount shall bear interest
         at a rate per annum which is 2% above the Term Loan Interest Rate from
         the date of such non-payment until paid in full (as well after as
         before judgment).



FIRST AMENDMENT TO LOAN AGREEMENT - Page 3
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             (c) Interest on the unpaid principal amount of the Second Term Loan
         shall be payable monthly in arrears on each Installment Payment Date
         and on the date the Second Term Loan is paid in full; provided that
         interest accruing pursuant to subsection 2.5A(b) shall be payable from
         time to time on demand.

             2.6A Payments and Payment Dates. (b) All payments (including
         prepayments hereunder) due hereunder or under the Second Term Note on
         account of principal, interest, fees, or any other obligation incurred
         hereunder shall be paid to the Lender at its office at 333 Texas
         Street, P.O. Box 21119, Shreveport, Louisiana 71152, in freely
         transferable Dollars and in immediately available funds without set-off
         or counterclaim. Borrowers shall, at the time of making each such
         payment, specify to Lender the sums payable by Borrowers under this
         Agreement, the Second Term Note or other Loan Documents to which such
         payment is to be applied (and in the event Borrowers fail to so specify
         or if an Event of Default has occurred and is continuing, Lender may
         apply such payment to the Obligations in such order and manner as it
         may elect in its sole discretion). All payments hereunder shall be made
         without any presentment of the Second Term Note to the Borrowers, but
         upon payment in full of the Second Term Note, the holder thereof shall
         cancel it and return it to the Borrowers.

             (b) If any payment hereunder becomes due and payable on a day other
         than a Business Day, such payment shall be extended to the next
         succeeding Business Day and, with respect to payments of principal,
         interest thereon shall be payable at the then applicable rate during
         such extension.

             2.7A Computation of Interest and Fees. Interest on the Second Term
         Loan and all fees hereunder shall be calculated on the basis of a
         360-day year and the actual number of days elapsed (including the first
         day but excluding the last day of any relevant period).

             2.8A Applicable Law. In the event that Lender shall have determined
         that any change in any Applicable Law regarding capital adequacy or in
         the interpretation or application thereof or compliance by Lender or
         any corporation controlling Lender with any request or directive
         regarding capital adequacy (whether or not having the force of law)
         from any Governmental Authority made subsequent to the date hereof does
         or shall have the effect of reducing the rate of return on Lender's or
         such corporation's capital as a consequence of its obligations
         hereunder to a level below that which Lender or such corporation could
         have achieved but for such change or compliance (taking into
         consideration Lender's or such corporation's policies with respect to
         capital adequacy) by an amount deemed by Lender to be material, then
         from time to time, after submission by Lender to the Borrowers of a
         written request therefor, the Borrowers shall pay to Lender such
         additional amount or amounts as will compensate Lender for such
         reduction. A certificate as to any additional amounts payable pursuant
         to this subsection 2.8A submitted by Lender to the Borrowers shall be
         conclusive in the absence of manifest error.



FIRST AMENDMENT TO LOAN AGREEMENT - Page 4
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             2.9A Joint and Several Obligations. The Borrowers shall, subject to
         the terms of the Intercreditor Agreement with respect to Pipeline and
         Marketing, be jointly and severally liable for all payments of
         principal and interest on the Second Term Note and for the observance
         and performance of all obligations, covenants, conditions, indemnities
         and other terms and provisions hereunder applicable to the Borrowers or
         to any Borrower.

             2.10A Commitment Fee. The Borrowers have agreed to pay to Lender a
         non-refundable commitment fee in the aggregate amount of $60,000, which
         shall be payable on January 2, 1997.

             2.11A Maximum Interest Rate. Anything to the contrary
         notwithstanding, the Lender shall not charge, take or receive and the
         Borrowers shall not be obligated to pay to the Lender, any amounts
         constituting interest on the Second Term Loan in excess of the maximum
         rate permitted by applicable law. The Second Term Loan is made for
         commercial and business purposes as contemplated by La. R.S. 9:3509.

             2.12A Recourse to Borrowers. Subject to the terms of the
         Intercreditor Agreement, there shall be full recourse to the Borrowers
         and all of their assets for the liabilities and obligations of the
         Borrowers under this Agreement and the Second Term Note, but in no
         event shall there be any recourse against any partners or any officer,
         director, employee, shareholder or holder of any equity interest in any
         Borrower or any partner, or any affiliate thereof, nor shall any
         partners or any officer, director, employee, shareholder or holder of
         any equity interest in any Borrower or any partner, or any affiliate
         thereof, be personally liable or obligated for such liabilities and
         obligations of the Borrowers, except that each party hereto shall be
         liable for (i) any representations and warranties made by it and (ii)
         any obligations of such party specifically provided for in any other
         Loan Document to which such Person is a party. Subject to the terms of
         the Intercreditor Agreement with respect to Pipeline and Marketing,
         nothing herein contained shall limit or be construed to limit the
         liabilities and obligations of any such Person for any representations
         made by it or limit such Person's obligations and liabilities set forth
         in any other Basic Document creating such liabilities and obligations
         to which such Person is a party.

             2.13A Borrowing Procedure. The Borrowers shall give the Lender
         notice of each requested advance under the Second Term Loan by means of
         an Advance Request Form substantially in the form of Exhibit L attached
         hereto ("Advance Request Form") containing the information therein
         required on at least one Business Day before the requested date of each



FIRST AMENDMENT TO LOAN AGREEMENT - Page 5
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         such advance. At its option the Lender may accept telephonic
         requests for advances, provided that such acceptance shall not
         constitute a waiver of the Lender's right to delivery of an Advance
         Request Form in connection with subsequent advances. Any telephonic
         request for an advance by the Borrowers shall be promptly confirmed by
         submission of a properly completed Advance Request Form to Lender.

         2.2 Amendment to Section 7. Effective as of the date hereof, clause (i)
of subsection 7(e) of the Agreement is hereby amended in its entirety to read as
follows:

             (e) Any Borrower or any General Partner shall (i) default in
         any payment of principal or interest on any Indebtedness (other than
         the Term Note or the Second Term Note) or in the payment of any
         Guarantee Obligation, for a period in excess of the period of grace, if
         any, provided in the instrument and agreement under which such
         Indebtedness or Guarantee Obligation was created;

         2.3 Amendment to Agreement. Effective as of the date hereof, the
Agreement is hereby amended to add Exhibits A-1 and L thereto to read in their
respective entireties as set forth on Annexes 1 and 2 attached hereto.

         2.4 Amendments to Appendix A.

             (a) Effective as of the date hereof, Appendix A to the Agreement is
         hereby amended to add the following definitions thereto to read in
         their respective entireties as follows:

             "Second Term Loan" shall have the meaning assigned to such term in
         subsection 2.1A of the Loan Agreement.

             "Second Term Note" shall have the meaning assigned to such term in
         subsection 2.2A of the Loan Agreement.

             (b) Effective as of the date hereof, the definitions of Loan
         Documents and Obligations set forth in Appendix A to the Agreement are
         hereby amended and restated to read in their entireties as follows:

             "Loan Documents" shall be the collective reference to the Loan
         Agreement, the Term Note, the Second Term Note and the Collateral
         Security Documents.

             "Obligations" shall mean all the unpaid principal amount of, and
         accrued and unpaid interest on, the Term Note, the Second Term Note and
         all other obligations and liabilities of the Borrowers or any other
         Person to the Lender, whether direct or indirect, absolute or
         contingent, due or to become due, or now existing or hereafter
         incurred, which may arise under, out of or in connection with the Loan
         Agreement, the Term Note, the Second Term Note, the Collateral Security



FIRST AMENDMENT TO LOAN AGREEMENT - Page 6
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         Documents, or any other Loan Document whether on account of principal,
         interest, reimbursement obligations, fees, indemnities, costs, expenses
         (including, without limitation, all fees and disbursements of counsel
         to Lender) or otherwise.

                                   ARTICLE III

                              Conditions Precedent

         3.1 Conditions. The effectiveness of this Amendment is subject to the
satisfaction of the following conditions precedent:

             (a) Lender shall have received all of the following, each dated
             (unless otherwise indicated) the date of this Amendment, in form
             and substance satisfactory to Lender:

             (1) Resolutions. Resolutions of the Board of Directors of each
             General Partner certified by its Secretary or an Assistant
             Secretary which authorize the execution, delivery, and performance
             by such General Partner and the relevant Borrower of this Amendment
             and the other Loan Documents to which such General Partner and the
             relevant Borrower are or are to be parties hereunder;

             (2) Incumbency Certificate. A certificate of incumbency certified
             by the Secretary or an Assistant Secretary of each General Partner
             certifying the names of the officers of such Person authorized to
             sign this Amendment and each of the other Loan Documents to which
             such Person or the relevant Borrower is or is to be a party
             hereunder (including the certificates contemplated herein) together
             with specimen signatures of such officers;

             (3) Second Term Note. The Second Term Note executed by the
             Borrowers in substantially the form of Annex 1 attached hereto;

             (4) Consents. Any and all consents, waivers, authorizations and
             approvals from third parties necessary for the execution, delivery
             and performance of this Amendment and the Second Term Note by
             Borrowers shall have been obtained;

             (5) Opinion of Counsel. A favorable opinion of Akin, Gump, Strauss,
             Hauer & Feld L.L.P., legal counsel to the Borrowers, the General
             Partners and Castle, addressing the matters set forth on Annex II
             attached hereto;

             (6) Additional Information. Lender shall have received such
             additional documents, instruments and information as Lender or its
             legal counsel, Winstead Sechrest & Minick P.C., may request; and



FIRST AMENDMENT TO LOAN AGREEMENT - Page 7
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             (a) The representations and warranties contained herein and in all
             other Loan Documents, as amended hereby, shall be true and correct
             as of the date hereof as if made on the date hereof;

             (b) No Event of Default shall have occurred and be continuing and
             no event or condition shall have occurred that with the giving of
             notice or lapse of time or both would be an Event of Default.

             (c) All corporate proceedings taken in connection with the
             transactions contemplated by this Amendment and all documents,
             instruments, and other legal matters incident thereto shall be
             satisfactory to Lender and its legal counsel, Winstead Sechrest &
             Minick P.C.

                                   ARTICLE IV

                  Ratifications, Representations and Warranties

         4.1 Ratifications. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Agreement and except as expressly modified and superseded by this Amendment,
the terms and provisions of the Agreement and the other Loan Documents are
ratified and confirmed and shall continue in full force and effect. Borrower and
Lender agree that the Agreement as amended hereby and the other Loan Documents
shall continue to be legal, valid, binding and enforceable in accordance with
their respective terms. Each of the Borrowers and the General Partners
acknowledge and agree that the indebtedness, liabilities and obligations of the
Borrowers under the Second Term Note constitute a portion of the Obligations and
are secured by the Collateral Security Documents.

         4.2 Representations and Warranties. Each Borrower hereby represents and
warrants to Lender that (i) the execution, delivery and performance of this
Amendment and any and all other Loan Documents executed and/or delivered in
connection herewith have been authorized by all requisite corporate action on
the part of such Borrower and will not violate the articles of incorporation or
bylaws of such Borrower or breach the terms of any material agreement to which
such Borrower is a party, (ii) the representations and warranties contained in
the Agreement, as amended hereby, and any other Loan Document are true and
correct on and as of the date hereof as though made on and as of the date
hereof, (iii) no Event of Default has occurred and is continuing and no event or
condition has occurred that with the giving of notice or lapse of time or both
would be an Event of Default, and (iv) such Borrower is in full compliance with
all covenants and agreements contained in the Agreement as amended hereby.



FIRST AMENDMENT TO LOAN AGREEMENT - Page 8
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                                    ARTICLE V

                                  Miscellaneous

         5.1 Survival of Representations and Warranties. All representations and
warranties made in this Amendment or any other Loan Document including any Loan
Document furnished in connection with this Amendment shall survive the execution
and delivery of this Amendment and the other Loan Documents, and no
investigation by Lender or any closing shall affect the representations and
warranties or the right of Lender to rely upon them.

         5.2 Reference to Agreement. Each of the Loan Documents, including the
Agreement and any and all other agreements, documents, or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Agreement as amended hereby, are hereby amended so that any
reference in such Loan Documents to the Agreement shall mean a reference to the
Agreement as amended hereby.

         5.3 Expenses of Lender. As provided in the Agreement, the Borrowers
agree to pay on demand all costs and expenses incurred by Lender in connection
with the preparation, negotiation, and execution of this Amendment and the other
Loan Documents executed pursuant hereto and any and all amendments,
modifications, and supplements thereto, including without limitation the costs
and fees of Lender's legal counsel, and all costs and expenses incurred by
Lender in connection with the enforcement or preservation of any rights under
the Agreement, as amended hereby, or any other Loan Document, including without
limitation the costs and fees of Lender's legal counsel.

         5.4 Severability. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.

         5.5 Applicable Law. This Amendment and all other Loan Documents
executed pursuant hereto shall be deemed to have been made and to be performable
in Shreveport, Caddo Parish, Louisiana and shall be governed by and construed in
accordance with the laws of the State of Louisiana.

         5.6 Successors and Assigns. This Amendment is binding upon and shall
inure to the benefit of Lender, Borrowers, the General Partners and Castle and
their respective successors and assigns, except no Borrower may assign or
transfer any of its rights or obligations hereunder without the prior written
consent of Lender.

         5.7 Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.



FIRST AMENDMENT TO LOAN AGREEMENT - Page 9
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         5.8 Effect of Waiver. No consent or waiver, express or implied, by
Lender to or for any breach of or deviation from any covenant, condition or duty
by any Borrower, any General Partner or Castle shall be deemed a consent or
waiver to or of any other breach of the same or any other covenant, condition or
duty.

         5.9 Headings. The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.

         5.10 ENTIRE AGREEMENT. THIS AMENDMENT AND ALL OTHER INSTRUMENTS,
DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS
AMENDMENT EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND
SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS AMENDMENT, AND MAY NOT
BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL
AGREEMENTS AMONG THE PARTIES HERETO.

         Executed as of the date first written above.

                               Borrowers:

                               CASTLE TEXAS PIPELINE
                                LIMITED PARTNERSHIP

                               By:  Castle Pipeline Company,
                                    its General Partner



                               By:
                                  -------------------------------------
                                  Richard E. Staedtler, Vice President

                               CEC GAS MARKETING LIMITED
                                PARTNERSHIP

                               By:  CEC Marketing Company,
                                    its General Partner



                               By:
                                  ---------------------------------------
                                  Richard E. Staedtler, Vice President



FIRST AMENDMENT TO LOAN AGREEMENT - Page 10
<PAGE>

                               CASTLE EXPLORATION COMPANY, INC.



                               By:
                                  ---------------------------------------
                                  Richard E. Staedtler, Vice President

                               CASTLE TEXAS PRODUCTION LIMITED
                                PARTNERSHIP

                               By:  Castle Production Company,
                                    its General Partner



                               By:
                                  ---------------------------------------
                                  Richard E. Staedtler, Vice President

                               CASTLE PIPELINE COMPANY



                               By:
                                  ---------------------------------------
                                  Richard E. Staedtler, Vice President

                               CASTLE PRODUCTION COMPANY



                               By:
                                  ---------------------------------------
                                  Richard E. Staedtler, Vice President

                               CEC MARKETING COMPANY



                               By:
                                  ---------------------------------------
                                  Richard E. Staedtler, Vice President

                               CASTLE ENERGY CORPORATION



                               By:
                                  ---------------------------------------
                                  Richard E. Staedtler, Vice President

FIRST AMENDMENT TO LOAN AGREEMENT - Page 11
<PAGE>

                               Lender:

                               COMMERCIAL NATIONAL BANK
                                IN SHREVEPORT



                               By:
                                  ---------------------------------------
                                  Martin W. Wilson
                                  Assistant Vice President

         Each of the undersigned hereby consents and agrees to this Amendment
and agrees that the Loan Documents executed by such Person shall remain in full
force and effect and shall continue to be the legal, valid and binding
obligation of such Person enforceable against such Person in accordance with
their respective terms. Each of the undersigned hereby further acknowledges and
agrees that the indebtedness, obligations and liabilities of the Borrowers under
the Second Term Note constitute a portion of the Obligations and are secured by
the Collateral Security Documents.

                               CASTLE ENERGY CORPORATION
                               CASTLE PRODUCTION RESOURCES
                                COMPANY
                               CASTLE PIPELINE RESOURCES COMPANY
                               CEC MARKETING RESOURCES COMPANY



                               By:
                                  ---------------------------------------
                                  Richard E. Staedtler
                                  Vice President of each of the above

                               DEERLICK CREEK FIELD LIMITED
                               PARTNERSHIP

                               By:  Pennsylvania Castle Energy Corporation
                                    Its:  General Partner



                                    By:
                                       ----------------------------------
                                       Richard E. Staedtler
                                       Vice President



FIRST AMENDMENT TO LOAN AGREEMENT - Page 12
<PAGE>

                                     ANNEX 1

                                Second Term Note
<PAGE>

                                     ANNEX 2

                              Advance Request Form