<PAGE>   1
                                                                EXHIBIT (10)(pp)


                          REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into effective as of the 10th day of May, 2000, by and among SOUTH TEXAS
DRILLING & EXPLORATION, INC., a Texas corporation (the "Company"), and WEDGE
ENERGY SERVICES, L.L.C., a Delaware limited liability company (such entity being
referred to herein as the "Investor").

                                   WITNESSETH:

         WHEREAS, Investor is acquiring 3,678,161 of the $0.10 par value common
stock of the Company (the "Common Stock") in accordance with a Common Stock
Purchase Agreement dated May 10, 2000 (the "Stock Purchase Agreement") and has
previously acquired 1,153,846 shares of Common Stock in accordance with a
Subscription Agreement dated February 28, 2000 (the "Subscription Agreement");
and

         WHEREAS, the Company has agreed to provide the Investor with certain
registration rights with respect to the Registrable Securities (as defined
herein).

         WHEREAS, the parties desire that this Agreement supercede in every way
that certain Registration Rights Agreement between them entered into incident to
the Subscription Agreement, which Registration Rights Agreement is hereby
canceled and rendered a nullity by agreement of the parties.

         NOW THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the parties hereto
hereby agree as follows:

         Section 1. Certain Definitions. As used in this Agreement, the
following definitions shall apply:

                  "Affiliate" means a Person who directly or indirectly
controls, is controlled by, or is under common control with, the Person referred
to. For this purpose, "control" means the ability to direct or cause the
direction of the management or affairs of a Person, whether through the
ownership of voting securities, by contract or otherwise.

                  "Commission" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar successor federal statute, and the rules and regulations
thereunder, all as the same shall be in effect from time to time.

                  "Holder" means any holder of outstanding Registrable
Securities.

                  "Person" means any natural Person, any unincorporated
organization or association, and any partnership, limited liability company,
corporation, estate, trust, nominee, custodian or other individual or entity.

                  The terms "register," "registered" and "registration" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act (and any post-effective amendments thereto
filed or required to be filed), and the declaration or ordering of the
effectiveness of such registration statement.

                  "Registrable Securities" means: (i) the Common Stock held by
the Investor issued pursuant to the Subscription Agreement or the Stock Purchase
Agreement, (ii) any Common Stock hereafter acquired by the Investor, and (ii)
any securities of the Company held by the Investor that are or were issued or
issuable, directly or indirectly, in respect of or by way of exchange for such
Common Stock or any capital stock into which such Common Stock may be converted,
together with any other securities which are issued with respect thereto by way
of any stock split, stock dividend, recapitalization, reorganization, or similar
event; provided, however, that Registrable Securities shall not include any
Registrable Securities which have previously been registered or sold to the
public.



<PAGE>   2

                  "Registration Expenses" means all expenses incurred by the
Company in complying with registration obligations hereunder, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company and the
reasonable fees and disbursements of not more than one counsel chosen by the
Holders who are the holders of a majority of Registrable Securities being
registered, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company). Registration Expenses shall not include fees of counsel for the
Holders other than of one counsel as set forth above or Selling Expenses as
defined below.

                  "Requisite Holders" means Holders of not less than 50% of the
Registrable Securities who are also holders of at least 2% of the then
outstanding equity securities of the Company.

                  "Requisite Securities" means Registrable Securities equal to
no less than 5% of the then outstanding equity securities of the Company.

                  "Restricted Securities" means the securities of the Company
required to bear the legend set forth in Section 2 hereof.

                  "Rule 144" means Rule 144 promulgated under the Securities
Act, or any similar successor rule, as the same shall be in effect from time to
time.

                  "Rule 145" means Rule 145 promulgated under the Securities
Act, or any similar successor rule, as the same shall be in effect from time to
time.

                  "Rule 415" means Rule 415 promulgated under the Securities
Act, or any similar successor rule, as the same shall be in effect from time to
time.

                  "Selling Expenses" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the sale of
Registrable Securities.

                  "Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, as shall be in effect at the time.

                  "Securities Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules, regulations and interpretations promulgated
thereunder.

         Section 2. Demand Registrations.

                  (a) Request for Registration. If, at any time after November
10, 2000, the Company shall receive from the Requisite Holders a written request
that the Company effect the registration under the Securities Act of the resale
of Registrable Securities held by such Requisite Holders (a "Demand
Registration"), then the Company shall:

                           (i) promptly give written notice of the proposed
registration to all other Holders;

                           (ii) use its best efforts to effect, as soon as
practicable, the registration under the Securities Act of the Registrable
Securities which the Company has been so requested to register, together with
all or such portion of the Registrable Securities of any Holders joining in such
request as are specified in a written request received by the Company within 20
days after the Company mails such written notice in accordance with the
registration procedures set forth in Section 6 hereof and to keep effective for
120 days after the effective date;

provided, however, that the Company shall not be obligated to take any action to
effect any such registration under the Securities Act:


                                    PAGE -2-    WEDGE - REGISTRATION RIGHTS AGMT
<PAGE>   3


                                (A) after the Company has effected three such
registrations pursuant to this Section 2 which have been declared or ordered
effective and pursuant to which securities have been sold; or

                                (B) If less than the Requisite Securities are
requested to be included in the registration.

                           (iii) the Holder shall be entitled to make a request
for one shelf registration pursuant to Rule 415 of the Securities Act, which
request may be for a shelf registration of not more than 12 month duration. This
shall count as one Demand Registration under Section 2(a)(ii)(A).

Subject to the foregoing clauses 2(a)(ii)(A), 2(a)(ii)(B) and 2(a)(iii) the
Company shall file a registration statement covering the Registrable Securities
so requested to be registered as soon as practicable, and in any event within 90
days, after receipt of the request or requests of the Requisite Holders;
provided, however, that if the Company shall within five days of such demand
furnish to such Holder a certificate signed by the president of the Company
stating that in the good faith judgment of the board of directors of the
Company, it would be detrimental to the Company or its shareholders for such
registration statement to be filed on or before the date filing would be
required and it is therefore essential to defer the filing of such registration
statement, the Company shall have the right to defer such filing for a
reasonable period not to exceed 90 days from receipt of such Holder's request.
The Company's right to delay such registration as set forth in the previous
sentence may only be exercised one time during any twelve month period.

                  (b) Underwritten Demand Registrations. The offering of the
Registrable Securities pursuant to such Demand Registration shall be in the form
of an underwritten offering except for one such Demand Registration which may be
for a shelf registration in compliance with the provisions of this Section 2. In
the event the managing underwriter or underwriters of the Demand Registration
advise the Company and the Requisite Holders in writing that the total amount of
Registrable Securities requested to be included in such offering would exceed
the maximum amount of securities which can be marketed at a price reasonably
related to the current fair market value of such securities without adversely
affecting such offering (the "Underwriters Maximum Number"), the Company will be
required to include in such registration to the extent of the Underwriters
Maximum Number: first, all of the Registrable Securities requested to be
included in such registration by the Holders thereof, allocated pro rata among
such Holders on the basis of the number of Registrable Securities requested to
be included therein by each such Holder, and second, any equity securities
requested to be included in such registration by the Company and any other
holders of such securities, allocated as determined by the Company subject to
any agreements between the Company and any such holders.

                  (c) Selection of Underwriters. The managing underwriter or
underwriters to be used in connection with such registration shall be selected
by the Requisite Holders holding a majority of the Registrable Securities being
registered. The Company shall have the right to approve the selection of any
such underwriters, which approval shall not be unreasonably withheld.

                  (d) Underwriting Agreements. The Company shall (together with
all Holders selling Registrable Securities) enter into an underwriting,
agreement in customary form with the managing underwriter selected for such
underwriting by a majority in interest of the Requisite Holders, and each Holder
selling Registrable Securities shall participate in such underwriting.

                  (e) Withdrawal from Underwriting. If any Holder of Registrable
Securities disapproves of the terms of the underwriting, such person may elect
to withdraw therefrom by written notice to the Company, the managing underwriter
and the Requisite Holders. The Registrable Securities and/or other securities so
withdrawn shall also be withdrawn from registration, and such Registrable
Securities shall not be transferred in a public distribution prior to 60 days
after the effective date of such registration, or such other shorter period of
time as the underwriters may require. If by the withdrawal of such Registrable
Securities a greater number of Registrable Securities held by other Holders may
be included in such registration (up to the maximum of any limitation imposed by
the underwriters), then the Company shall offer to all Holders who have included
Registrable Securities in the registration the right to include additional
Registrable Securities in the same proportion and manner used in determining the
underwriter limitation in this Section 2.


                                    PAGE -3-    WEDGE - REGISTRATION RIGHTS AGMT
<PAGE>   4

                  (f) Inclusion as a Demand Registration. For purposes of this
Section 2, a registration will not count as a Demand Registration until it has
become effective; provided, however, if the Requisite Holders withdraw their
Registrable Securities (whether before or after the effectiveness of such
registration) such demand will count as a Demand Registration for purposes of
this Section 2 unless the Requisite Holders pay all of the Registration Expenses
associated with such attempted registration. Notwithstanding the foregoing, the
failure of a Demand Registration to become effective as a direct or indirect
result of wrongful actions by the Company, or if such Demand Registration does
not occur as a result of any action by the managing underwriters or
underwriters, then such registration will not count as a Demand Registration.

         Section 3. Piggyback Registration.

                  (a) Right to Include Registrable Securities. Whenever the
Company proposes to register the sale of any of its equity securities under the
Securities Act other than on Form S-4 or Form S-8 promulgated under the
Securities Act or any similar form then in effect, the Company shall give
written notice thereof to each Holder as soon as practicable (but in any event
at least 30 days before such filing), offering such Holder the opportunity to
register on such registration statement such number of Registrable Securities as
such Holder may request in writing, subject to the provisions of section 3(b),
not later than 20 days after the date of the giving of such notice (a "Piggyback
Registration"). Upon receipt by the Company of any such request, the Company
shall use reasonable efforts to, or in the case of an underwritten offering, to
cause the managing underwriter or underwriters to, include such Registrable
Securities in such registration statement (or in a separate registration
statement concurrently filed) and to cause such registration statement to become
effective with respect to such Registrable Securities in accordance with the
registration procedures set forth in Section 6 hereof. If the Company's
registration is to be effected pursuant to an underwritten offering, Registrable
Securities registered pursuant to this Section 3 shall be distributed in
accordance with such offering. Notwithstanding the foregoing, if at any time
after giving written notice of its intention to register its equity securities
and before the effectiveness of the registration statement filed in connection
with such registration, the Company determines for any reason either not to
effect such registration or to delay such registration, the Company may, at its
election, by delivery of written notice to each Holder (A) in the case of a
determination not to effect registration, relieve itself of its obligation to
register the Registrable Securities in connection with such registration or (B)
in the case of a determination to delay registration, delay the registration of
such Registrable Securities for the same period as the delay in the registration
of such other equity securities. Each Holder requesting inclusion in a
registration pursuant to this Section 3 may, at any time before the effective
date of the registration statement relating to such registration, revoke such
request by delivering written notice of such revocation to the Company (which
notice shall be effective only upon receipt by the Company); provided, however,
that if the Company, in consultation with its financial and legal advisors,
determines that such revocation would materially delay the registration or
otherwise require a recirculation of the prospectus contained in the
registration statement, then such holder shall have no right to so revoke its
request

                  (b) Priority in Piggyback Registration. Notwithstanding the
foregoing, with respect to a Piggyback Registration that is underwritten and
with respect to which the managing underwriter or underwriters advise the
Company of an Underwriters Maximum Number, then the Company will so notify all
Holders requesting inclusion in such registration and will be required to
include in such registration, to the extent of the Underwriters Maximum Number:
first, any equity securities that the Company proposes to sell for its own
account; second, the Registrable Securities requested by Holders to be included
in such registration allocated pro rata with Wm. Stacy Locke and Michael E.
Little, the only other holders of equity securities who may have piggyback
registration rights as of the date hereof on the basis of the number of
securities requested to be included therein by each such holder, provided,
however, in no event will the number of shares to be included by the Holder be
reduced to less than 25% of the total shares available to be requested; and
third, to the extent that the Underwriters Maximum Number has not been filled
by the application of the preceding clauses, any further equity securities that
the Company proposes to sell for its own account and/or any equity securities
requested to be included in such registration by other holders of such
securities, allocated as determined by the Company subject to agreements between
the Company and any such holders.

                  (c) Selection of Underwriters. If any Piggyback Registration
is in the form of an underwritten offering, the managing underwriter or
underwriters and any additional investment bankers and managers to be used in
connection with such registration shall be selected by the Company (subject to
any separate agreement with the holders on behalf of which a secondary
underwritten offering is being made).


                                    PAGE -4-    WEDGE - REGISTRATION RIGHTS AGMT

<PAGE>   5

                  (d) Underwriting Agreements. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company, and each
Holder selling Registrable Securities shall participate in such underwriting.

                  (e) Withdrawal from Underwriting. If any Holder or other
holder disapproves of the terms of any such underwriting, he may elect to
withdraw therefrom by written notice to the Company and the managing
underwriter. Any securities excluded or withdrawn from such underwriting shall
be withdrawn from such registration, and shall not be transferred in a public
distribution prior to 180 days after the effective date of the registration
statement relating thereto, or such other shorter period of time as the
underwriters may require. Sales under Rule 144 shall not be considered a public
distribution for purposes of this paragraph.

                  (f) Right to Terminate Registration. The Company shall have
the right to terminate or withdraw any registration initiated by it under this
Section 3 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.

         Section 4. Market Standoff. If the Company at any time shall register
the offer and sale of shares of Common Stock to the public under the Securities
Act (including any registration pursuant to Sections 2 or 3), the Holders shall
not sell publicly, make any short sale of, grant any option for the purchase of,
or otherwise dispose publicly of, any Registrable Securities (other than those
shares of Common Stock included in such registration pursuant to Sections 2 or
3) without the prior written consent of the Company for a period designated by
the Company in writing to the Holders, which period shall begin not more than 10
days prior to the effectiveness of the registration statement pursuant to which
such public offering shall be made and shall not last more than 120 days after
the effective date of such registration statement. The Company shall obtain the
agreement of any person permitted to sell shares of stock in a registration to
be bound by and to comply with this Section 4 as if such person was a Holder
hereunder.

         Section 5. Expenses of Registration. All Registration Expenses incurred
in connection with the Demand Registrations and the Piggyback Registrations
shall be borne by the Company. All Selling Expenses relating to securities so
registered as well as all Registration Expenses relating to Demand Registrations
and Piggyback Registrations not required to be borne by the Company shall be
borne by the holders of such securities pro rata on the basis of the number of
shares of securities so registered on their behalf.

         Section 6. Registration Procedures. If and whenever the Company is
required by the provisions of Section 2 or 3 hereof to use its best efforts to
effect promptly the registration of Registrable Securities, the Company shall:

                  (a) Prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become and remain effective as provided
herein;

                  (b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
current and to comply with the provisions of the Securities Act with respect to
the sale of or other disposition of all Registrable Securities covered by such
registration statement, including such amendments and supplements as may be
necessary to reflect the intended method of disposition of the prospective
seller or sellers of such Registrable Securities, but for no longer than one
hundred twenty (120) days subsequent to the effective date of such registration;
provided, however, that (i) such period shall be extended for a period of time
equal to the period the Holder refrains from selling any securities included in
such registration at the request of an underwriter of Common Stock (or other
securities) of the Company; and (ii) in the case of any registration of
Registrable Securities on Form S-3 which are intended to be offered on a
continuous or delayed basis, such period shall be extended, if necessary, to
keep the registration statement effective until all such Registrable Securities
are sold, provided that Rule 415 permits an offering on a continuous or delayed
basis, and provided further that applicable rules under the Securities Act
governing the obligation to file a post-effective amendment permit, in lieu of
filing a post-effective


                                    PAGE -5-    WEDGE - REGISTRATION RIGHTS AGMT
<PAGE>   6

amendment that (I) includes any prospectus required by Section 10(a)(3) of the
Securities Act or (II) reflects facts or events representing a material or
fundamental change in the information set forth in the registration statement.
The incorporation by reference of information required to be included in (I) and
(II) above to be contained in periodic reports filed pursuant to Section 13 or
15(d) of the Exchange Act in the registration statement;

                  (c) Furnish to each prospective seller of Registrable
Securities such number of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents, as such seller may reasonably request in order to facilitate
the public sale or other disposition of the Registrable Securities of such
seller;

                  (d) Notify each seller of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing, and at the request of any such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing;

                  (e) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange or approved for quotation on
any inter-dealer quotation system on which similar securities issued by the
Company are then listed or quoted;

                  (f) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such registration statement and a CUSIP number
of all such Registrable Securities, in each case not later than the effective
date of such registration;

                  (g) Use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any Holder may reasonably request and do any and all other acts
and things which may be reasonably necessary or advisable to enable any Holder
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such Holder provided, however, that the Company will not be
required to qualify generally to do business, subject itself to general taxation
or consent to general service of process in any jurisdiction where it would not
otherwise be required to do so but for this paragraph (g);

                  (h) Use its best efforts to cause such Registrable Securities
to be registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and operations of the
Company to enable each Holder holding such Registrable Securities to consummate
the disposition of such Registrable Securities;

                  (i) Subject to the execution of confidentiality agreements in
form and substance satisfactory to the Company, make available upon reasonable
notice and during normal business hours, for inspection by each Holder holding
such Registrable Securities, any underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant or other
agent retained by any Holder or underwriter (collectively, the "Inspectors"),
all pertinent financial and other records, pertinent corporate documents and
properties of the Company as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such Inspector in connection with such registration statement;

                  (j) Use its best efforts to obtain from its independent
certified public accountants "cold comfort" letters in customary form and at
customary times and covering matters of the type customarily covered by cold
comfort letters;

                  (k) Use its best efforts to obtain from its counsel an opinion
or opinions in customary form;


                                    PAGE -6-    WEDGE - REGISTRATION RIGHTS AGMT
<PAGE>   7

                  (l) Issue to any underwriter to which any Holder holding such
Registrable Securities may sell shares in such offering certificates evidencing
such Registrable Securities;

                  (m) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but not more than eighteen
months, beginning with the first month after the effective date of the
Registration Statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act;

                  (n) In connection with any offering pursuant to a registration
statement filed pursuant to Section 2 hereof, enter into an underwriting
agreement reasonably necessary to effect the sale of the Common Stock, provided
such underwriting agreement contains customary underwriting provisions; and
provided further that if the underwriter so requests, the underwriting agreement
will contain a customary contribution provision; and

                  (o) Use its best efforts to take all other steps necessary to
effect the registration of such Registrable Securities contemplated hereby.

         Section 7. Indemnification. In the event any of the Registrable
Securities are included in a registration statement under this Section:

                  (a) The Company will indemnify each Holder, each of such
Holder's officers and directors and partners (and each partner's officers,
directors and partners) and such Holder's separate legal counsel and independent
accountants, and each person controlling such Holder within the meaning of
Section 15 of the Securities Act, and each underwriter, if any, and each person
who controls any underwriter within the meaning of Section 15 of the Securities
Act, against all expenses, claims, losses, damages or liabilities (or actions in
respect thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained, on the
effective date thereof; in any registration statement, any prospectus contained
therein, or any amendment or supplement thereto, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading, or any
violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company in connection with any such
registration, qualification or compliance, and the Company will reimburse each
such Holder, each of its officers, directors and partners (and each partner's
officers, directors and partners) and such Holders' separate legal counsel and
independent accountants and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder or underwriter and stated
to be specifically for use therein.

                  (b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers and its legal counsel and independent accountants,
each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such underwriter
within the meaning of Section 15 of the Securities Act, and each other such
Holder, each of its officers and directors and each person controlling such
Holder within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained, on the effective date thereof, in any such registration
statement, any prospectus contained therein, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading, and will
reimburse the Company, such Holders, such directors, officers, persons,
underwriters or control persons for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission



                                    PAGE -7-    WEDGE - REGISTRATION RIGHTS AGMT
<PAGE>   8
(or alleged omission) is made in such registration statement or prospectus in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder and stated to be
specifically for use therein; provided, however, that the obligations of any
such Holder hereunder shall be limited to an amount equal to the proceeds to
each such Holder of Registrable Securities sold as contemplated herein.

          (c) Each party entitled to indemnification under this Section (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 7 to the extent such failure is not
prejudicial. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.

          (d) If the indemnification provided for in this Section 7 is held by a
court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage or expense referred to herein,
then the Indemnifying Party, in lieu of indemnifying the Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party with
respect to such loss, liability, claim, damage or expense in the proportion that
is appropriate to reflect the relative fault of the Indemnifying Party and the
Indemnified Party in connection with the statements or omissions that resulted
in such loss, liability, claim, damage or expense, as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of material fact or the omission
(or alleged omission) to state a material fact relates to information supplied
by the Indemnifying Party or by the Indemnified Party, and the parties, relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

     Section 8. Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Section.

     Section 9. Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Restricted Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, the
Company shall use its best efforts to:

          (a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, beginning 90 days
after (i) the Registration Date, or (ii) the Company issues an offering circular
meeting the requirements of Regulation A under the Securities Act;

          (b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Securities
Exchange Act (at any time after it has become subject to such reporting
requirements); and

          (c) Furnish to any Holder promptly upon request a written statement as
to its compliance with the reporting requirements of Rule 144 and the Securities
Act and the Securities Exchange Act, a copy of the most recent annual or
quarterly report of the Company and such other reports and documents of the
Company and other information in the possession of or reasonably obtainable by
the Company as a Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Holder to sell any such securities
without registration.


                                    PAGE -8-    WEDGE - REGISTRATION RIGHTS AGMT


<PAGE>   9


     Section 10. Assignment of Registration Rights. The rights to cause the
Company to register securities granted under this Agreement may be assigned to a
transferee or assignee in connection with the transfer assignment of shares of
Registrable Securities (i) to Affiliates of the Holder, (ii) to the Company,
(iii) to Persons to whom the Registrable Securities are transferred by reason of
the Holder's death or involuntarily by operation of law, (iv) pursuant to a
transfer approved by the Company in its sole and absolute discretion, or (v) to
Persons to whom the Registrable Securities are transferred in accordance with
the transfer restriction provisions, if any, in the Subscription Agreement,
articles of incorporation, bylaws, any Shareholder's Agreement among the
Holders, the Company and other holders of capital stock of the Company or other
documents or agreements of Holder, provided, however, that the Company is given
written notice thereof.

     Section 11. Subsequent Purchasers. Without the affirmative vote of the
Holders of at least 66-2/3% of the Registrable Securities, the Company shall not
grant to any purchaser of the Company's securities any demand registration
rights, or any piggyback registration rights that would provide any rights
greater than those granted to the Investor or that would be inconsistent or in
conflict with the provisions hereof. Moreover, for so long as the Holders of
the Registrable Securities are entitled to exercise the registration rights
described herein, they shall receive the benefit of any and all registration
rights granted by the Company to any other person who is as of the date of this
Agreement securities holder in the Company (or any affiliate of such existing
securities holder) which are more favorable than the registration rights granted
to the Investor herein.

     Section 12. Term. This Agreement and all rights granted to the Investor
hereunder shall expire on the fifteenth anniversary of the date hereof.

     Section 13. Miscellaneous.

          (a) Notices. Any notice or other communications required or permitted
hereunder shall be deemed to be sufficient if contained in a written instrument
delivered in person or by nationally-recognized overnight courier or duly sent
by First Class certified mail, postage prepaid, or by telecopy addressed to such
party at the address or telecopy number set forth below or such other address or
telecopy number as may hereafter be designated in writing by the addressee to
the address or listing all parties:

           If to the Company:    South Texas Drilling & Exploration, Inc.
                                         9310 Broadway, Bldg. 1
                                         San Antonio, Texas 78217
                                         ATTN: Wm. Stacy Locke

           If to the Investor:        WEDGE Energy Services, L.L.C.
                                         1415 Louisiana Street, Suite 3000
                                         Houston, Texas 77002
                                         ATTN: President

          (b) Entire Agreement: Amendments. This Agreement represents the entire
agreement of the parties hereto, and supersedes any other agreements among the
parties with respect to the subject matter hereof. The terms and provisions of
this Agreement may not be modified or amended, or any of the provisions hereof
waived, except pursuant to the written consent of the Company and holders of a
majority of the Registrable Securities.

          (c) Assignment. This Agreement may not be assigned by any party
without the prior written consent of the other parties, except by a Holder in
accordance with Section 10 above. Any assignment which contravenes this Section
shall be void ab initio.

          (d) Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.

          (e) Headings; Interpretations. The headings of the various sections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be a part of this Agreement. Whenever the context requires,
references in this Agreement to the singular number shall include the


                                    PAGE -9-    WEDGE - REGISTRATION RIGHTS AGMT


<PAGE>   10


plural and, likewise, the plural number shall include the singular, and words
denoting gender shall include the masculine, feminine and neuter.

          (f) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas without regard to the
principles of conflicts of law thereof.

          (g) Separability. In case any one or more of the provisions contained
in this Agreement or any application thereof shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and other applications thereof shall not
in any way be affected or impaired thereby.


                                    PAGE -10-   WEDGE - REGISTRATION RIGHTS AGMT


<PAGE>   11


     IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be executed the day and date above written.


                                        SOUTH TEXAS DRILLING & EXPLORATION, INC.


                                        By:   /s/ WM. STACY LOCKE
                                              ----------------------------------
                                        Name:  Wm. Stacy Locke
                                              ----------------------------------
                                        Title: President
                                              ----------------------------------


                                        WEDGE ENERGY SERVICES, LLC.


                                        By:   /s/ WILLIAM H. WHITE
                                              ----------------------------------
                                        Name: William H. White
                                              ----------------------------------
                                        Title: President
                                              ----------------------------------


                                    PAGE -11-   WEDGE - REGISTRATION RIGHTS AGMT


<PAGE>   12
                         IRI INTERNATIONAL CORPORATION
                              TERMS AND CONDITIONS

1.   GENERAL: The Terms and Conditions outlined herein shall apply to the sale
by IRI International Corporation (hereinafter referred to as Company) of
products, equipment and parts relating thereto (hereinafter referred to as
Equipment). Unless prior written agreement is reached, it shall be understood
that: the Company's proceeding with any work shall be in accordance with the
Terms and Conditions outlined herein.

     The Company will comply with all Federal, State and local laws and
regulations as they may apply to manufacturing facilities. Such compliance
shall not include the use and/or operation of the Equipment nor its
installation and use in conjunction with other equipment or apparatus.

2.   TITLE AND RISK OF LOSS: The legal title, right to possession and control,
beneficial ownership, risk of loss and all other incidents of ownership of the
Equipment (herein referred to as Title and Risk of Loss) sold hereunder shall
remain in Company until the shipment is delivered on board the vessel at the
port of shipment (the Passage of Title point) notwithstanding how the Equipment
sold hereunder is consigned, how payment is effectuated, the place where
shipping documents are endorsed, the form of shipping documents utilized, or
prices stated. Terms such as FOB, FAS, CIF and C&F are intended only as price
terms and any presumption as to the intention respecting the Passage of Title to
the Equipment otherwise than expressed in this Article which might arise from
the use of such terms is hereby specifically negated. Risk of Loss shall pass to
Purchaser at the Passage of Title point and if the Equipment does not reach such
point, there is no sale. If the Company insures the shipment, it is agreed that
the insurance policy shall cover the Purchaser as its interest may appear. If
the Purchaser insures the shipment, it is agreed that the insurance policy will
cover and protect the interests of the Company as legal owner of the goods until
the Passage of title. "Ownership," "legal title," or "title" as used herein
means full beneficial ownership of the merchandise and not bare legal title
retained for security purposes.

3.   ASSIGNMENT: Neither party shall assign or transfer this contract (except to
their own affiliated company) without the prior written consent of the other
party. As a condition to any such written consent, such assignment shall be
subject to the Terms and Conditions herein and no greater rights or remedies
shall be available to the assignee.

4.   DELIVERY AND DELAYS: Delivery dates shall be quoted by the Company. Such
dates shall be interpreted as estimated and in no event shall such dates be
construed as falling within the meaning of "time is of the essence." The Company
shall not be liable for loss, damage, detention or delay due to war, riots,
civil insurrection or acts of the common enemy, fire, flood, strikes or other
labor difficulty, acts of civil or military authority, including governmental
laws, orders, priorities or regulation, acts of the Purchaser, embargo, car
shortage, wrecks or delay in transportation, inability to obtain necessary
labor, materials or manufacturing facilities from usual sources, faulty forgings
or casings, or other causes beyond the reasonable control of the Company. In the
event of delay in performance due to any such cause, the date of delivery or
time for completion will be adjusted to reflect the actual length of time lost
by reason of such delay. The Purchaser's receipt of Equipment shall constitute a
waiver of any claim for delay.

5.   TAXES: The price does not include any property, license, privilege, sales,
use, excise, gross receipts, value added, duties, or other like taxes which may
be now or hereafter applicable to, measured by, or imposed upon or with respect
to this transaction, the Equipment, its sale, its value or its use, or any
services performed in connection therewith, imposed by any governmental
authority in the country of destination. If any such taxes are required to be
paid by the Company, they shall be added to the prices herein and shall be paid
to the Company by the Purchaser.

6.   SETOFFS: Neither Purchaser nor any affiliated company or assignee shall
have the right to claim compensation or setoff against any amounts which
become payable to the Company under this contract, or otherwise.

7.   PATENTS: The Company shall defend any suit or proceeding brought against
the Purchaser and shall pay any adverse judgment entered therein so far as
such suit or proceeding is based upon a claim that the use of the Equipment or
any part thereof manufactured by Company and furnished under this contract
constitutes infringement of any patent of a country where the Equipment is sold
or of a country where the Company is aware at the date of the sale that the
Equipment will be used, providing the Company is promptly notified in writing
and given authority, information and assistance for defense of same, and the
Company shall, at its option, procure for the Purchaser the right to continue
to use said Equipment, or to modify it so that it becomes non-infringing, or to
replace the same with non-infringing equipment, or to remove said Equipment and
to refund the purchase price. The foregoing shall not be construed to include
any agreement by the Company to accept any liability whatsoever in respect to
patents for inventions including more than the Equipment furnished hereunder,
or in respect of patents for methods and processes to be carried out with the
aid of said Equipment, except those which are inherent in the Equipment as
furnished. The foregoing states the entire liability of Company with regard to
patent infringement. If any Equipment shall be sold by Company to meet
Purchaser's specifications or requirements and is not a part of Company's
standard line offered by it to the trade generally in the usual course of
Company's business. Purchaser agrees to defend, protect, indemnify and save
harmless Company from any loss, damage or injury arising out of a claim, suit
or action at law or in equity for actual or alleged infringement because of the
sale of such Equipment, and to defend any such suits or actions which may be
brought against the Company.

8.   WARRANTY: The Company warrants that the Equipment manufactured by and
delivered hereunder will be free of defects in material and workmanship for a
period of six (6) months from the date of placing the Equipment in operation,
and/or twelve (12) months from date of shipment from U.S. whichever comes
first. Should any failure to conform to this warranty be reported in writing
to the Company within said period, the Company shall, at its option, correct
such nonconformity by suitable repair to such Equipment, or furnish a
replacement part FOB point of shipment, provided the purchaser has stored,
installed, maintained and operated such Equipment in accordance with good
industry practices and has complied with specific recommendations of the
Company. Accessories or equipment furnished by the Company, but manufactured by
others, shall carry whatever warranty the manufacturers have conveyed to the
Company and which can be passed on to the Purchaser. The Company shall not be
liable for any repairs, replacements or adjustments to the Equipment or any
costs of labor performed by the Purchaser or others without the Company's prior
written approval.

     The effects of corrosion, erosion and normal wear and tear are
specifically stated within the Company's warranty. Performance warranties are
limited to those specifically excluded from the Company's proposal. Unless
responsibility for meeting such performance warranties are limited to specified
shop or field tests, the Company's obligation shall be to correct in the manner
and for the period of time provided above.

     THE COMPANY MAKES NO OTHER WARRANTY OR REPRESENTATION OF ANY KIND
WHATSOEVER, EXPRESSED OR IMPLIED, EXCEPT THAT OF TITLE, AND ALL IMPLIED
WARRANTIES, INCLUDING ANY WARRANTY OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE ARE HEREBY DISCLAIMED.

     Correction by the Company of nonconformities, whether patent or latent, in
the manner and for the period of time provided above, shall constitute
fulfillment of all liabilities of the Company for such nonconformities, whether
based on contract, warranty, negligence, indemnity, strict liability, or
otherwise, with respect to or arising out of such Equipment.

9.   LIMITATION OF LIABILITY: The remedies of the Purchaser set forth herein
are exclusive and the total liability of the Company with respect to this
contract, or the Equipment and services furnished hereunder, in connection with
the performance or breach thereof, or from the manufacture, sale, delivery,
installation, repair or technical direction covered by or furnished under this
contract, whether based on contract, warranty, negligence, indemnity, strict
liability, or otherwise, shall not exceed the purchase price of the equipment.
Company shall in no event be liable to Purchaser, any successors in interest or
any beneficiary or assignee of this contract for any consequential, incidental,
indirect, special or punitive damages arising out of this contract, or any
breach thereof or any defect in, or failure of, or malfunction of the Equipment
hereunder, whether based upon loss of use, lost profits or revenue, interest,
lost goodwill, work stoppage, impairment of other goods, loss by reason of
shutdown or nonoperation, increased expenses of operation, cost of purchase of
replacement power or claims of Purchaser or customers of Purchaser for service
interruption whether or not such loss or damage is based on contract, warranty
negligence, indemnity, strict liability or otherwise.

10.  GOVERNING LAW: The rights and obligations of Purchaser and Company shall
be governed by the laws of the State of Texas, U.S.A.

11.  VIOLATIONS OF LAW: The Company shall not be bound by or required to adhere
to any form or provision of a purchase order, quotation, bid, letter of credit
or like document, or any provision of law, regulation or custom, which would
cause the Company or any of its parents or affiliates to be in violation of the
export laws, taxing statutes or regulations of the country wherein the goods
are manufactured or from which they are exported or are otherwise subject to
jurisdiction.

12.  EXECUTION: The Company shall not be bound by any contract until approved in
writing by an authorized representative of the Company. The contract, when so
approved, shall supersede all previous communications, either oral or written.
No modification shall be binding upon the parties unless such modification shall
be in writing, duly executed by the Purchaser and approved by an authorized
representative of the Company.



                                                        [INITIALS]    [INITIALS]


                                                               IRI INTERNATIONAL